Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (March 2013)
16 slides from Cincinnati Financial's investor presentation, Mar 1, 2013
Slide 1: Cincinnati Financial Corporation
Cincinnati Financial Corporation March 2013 A CINCINNATI el ea els Nasdaq: CINF is presentation contains forward-looking statements that involve risks and uncertainties. Please refer to our various ings with the U.S. Securities and Exchange Commission for ictors that could cause results to materiall
Slide 2: Cincinnati Financial at a Glance
Cincinnati Financial at a Glance Top 25 U.S. P/C insurer A.M. Best Rating: A+ Superior $3.5 billion 2012 premiums: - 67% commercial — 25% personal — 5% life — 3% excess & surplus Competitive advantages: — Relationships leading to agents’ best accounts — Financial strength for stability and confidenc
Slide 3: Long-Term Value Creation
Long-Term Value Creation = Targeting annual rate of growth in book value plus the rate of dividend contribution to average 10% to 13% from 2013 through 2017 — Value creation ratio (VCR) for 2012 was 12.6%; 2009-12 average was 12.4% — 12.6% VCR for year 2012 was up 6.6 points from year 2011 o Realize
Slide 4: Combined Ratio Reflects Improving Underwriting Profitability Trends
Combined Ratio Reflects Improving Underwriting Profitability Trends + All combined ratios in the graph below exclude the effects of catastrophe losses * 2011 ratios also exclude the effects of $42 million reinsurance reinstatement premium 106.5% 105% 100% 95% 90% 85% 80% 75% Year 2010 Year 2011 Year
Slide 5: Improve Profitability
Improve Profitability » Enhancing underwriting expertise and knowledge — Property loss mitigation efforts that supplement rate increases and gradual geographic diversification include: Increasing specialized expertise of our claims and loss control staff © Revising underwriting guidelines and increa
Slide 6: Premium Growth Potential
Premium Growth Potential = Historically, we earn approximately 10% market share in new agencies within 10 years after appointment — demonstrated by: — 1% share earned in 2011 for all agencies appointed in 2010, 4% for appointments during 2007-10, 9% for appointments during 2002-06 = $50 million of $
Slide 7: Appendix: Income and Shareholder Dividends
Appendix Income, Dividend & Cash Flow Trends Underwriting & Premium Growth Trends Business Mix & Premium Growth Potential Reserve Adequacy & Development Trends Investment Portfolio Management & Performance Reinsurance, Ratings & Valuation Comparison to Peers AS CINCINNATI FINANCIAL CORPORATION Incom
Slide 8: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio Strong Capital and Cash Flow Support Recent-Year Payout Level 120% 57% average for years 2003 through 2012 (netincome basis) fo 100% 80% 60% 40% 20% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012 * 2011 payout ratios (159% net income basis, 211% opera
Slide 9: Operating Cash Flow
Operating Cash Flow Record-High Catastrophe Losses Lowered 2011 Cash Flow (in millions) $600 $500 $400 $300 $200 $100 $0 2008 2010 2011 2012 Cincinnati Typically Outperforms the Industry Statutory combined ratio Industry data excludes mortgage and financial guaranty 2008 2009 2010 2011 2012 ECincinn
Slide 10: Greater Pricing Precision
Greater Pricing Precision /s Improving Profit Margins Workers’ compensation renewal price increase averages by modeled rating segments Botlor= Rating segments considered higher quality Worse = Rating segments consiered lower quali 10.4% al 9.0% Year 2011 YTD 06-30-12 @Belter BMiddle GWorse Premium G
Slide 11: Market for 75% of Agency's Typical Risks
Market for 75% of Agency's Typical Risks 2012 Net Earned Premiums Consolidated __ $3,522 Billion Commercial E&S Lines Lines 67% 3%, Property Casualty $3.344 Billion Life 5%. Surety and Excess & — Workerg cue Risk Personal Auto Lines 25% Compensation. 10% Other Personal Commercial % ‘Auto 13% Commerc
Slide 12: Property Casualty Reserves
Property Casualty Reserves Favorable Development for 24 Consecutive Years Values shown are carried loss and loss expense reserves net of reinsurance Vertical bar represents reasonably likely range Reserve range at 12-31-12 Jn millions Low end $3,598 High end $3,918 Carried at 67" percentile Calendar
Slide 13: Investment Income
Investment Income 1% Growth for 2012, 2% CAGR since 2009 |pre-taxy $500 $400 $300 $200 $100 $0 2008 2009 2010 2011 2012 After-tax yield:(Gonds at amortized cost, stocks at fair value) 3.52% 3.45% 3.39% Pre-tax yield to book as of 12-31-12 for bonds maturing in 2013=4.5%, 2014=4.9%, 2015=4.5% Portion
Slide 14: Diversified Equity Portfolio
Diversified Equity Portfolio* Balances Income Stability & Capital Appreciation Potential Annual Returns in 2012 & 2011: 10.9% & 6.1% (S&P 500 Index: 16.0% & 2.1%) Largest equity holding at 12-31-12: Pepsico at 4.2% of publicly traded common stock portfolio, 1.1% of total investment portfolio. Decemb
Slide 15: Solid Reinsurance Program
Solid Reinsurance Program Balances Costs with Shareholders’ Equity Protection Major Treaties (Estimated 2013 ceded premiums) Property catastrophe ($60 million) + Treaty has one reinstatement provision + $100 milion additional coverage, including $28 million share by Cincinnati, collateralized by cat
Slide 16: Valuation Comparison to Peers
Valuation Comparison to Peers Ratio of closing price on 02-26-13 to latest reported tangible book value PEL ESSOL EZ EP ‘Copyright ©2013 Cincinnati Financial Corporation. Al ights reserved. Do nat reproduce or post online, in whole orin pat wehout writen permission. 16
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