Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (August 2017)
16 slides from Cincinnati Financial's investor presentation, Aug 8, 2017
Slide 1: Investor Handout August 2017
FINANCIAL CORPORATI INVESTOR HANDOUT AUGUST 2017 The ne b NASDAQ: CINF the POWER of personal This presentation contains forward-looking statements that involve risks and uncertainties. Please refer to our various filings with the U.S. Securities and Exchange Commission for factors that could cause r
Slide 2: Strategy Overview
STRATEGY OVERVIEW rs powenel g * Competitive advantages: * Relationships leading to agents’ best accounts + Financial strength for stability and confidence * Local decision making and claims excellence * Other distinguishing factors: + 56 years of shareholder dividend increases * Common stocks are a
Slide 3: Long-Term Value Creation
LONG-TERM VALUE CREATION "eet ohial * Targeting annual rate of growth in book value plus the percentage of dividends to beginning book value to average 10% to 13% from 2013 through 2017 — Value creation ratio (VCR) for 2012 through 2016 averaged 11.8% Three performance drivers: — Premium growth abov
Slide 4: Cincinnati Financial at a Glance
CINCINNATI FINANCIAL AT A GLANCE ‘personal Top 25 U.S. P&C insurer A.M. Best rating: A+ Superior $4.7 billion 2016 premiums: 65% Commercial 25% Pers: 4% Excess & Surplus 5% Life 1% Chomad Res Agency-centered business model is time-tested — Agency relationships strengthened over time by in-person app
Slide 5: Outperforming the Industry
OUTPERFORMING THE INDUSTRY FIVE-YEAR AVERAGE COMBINED RATIO 5 POINTS BETTER ‘personal Statutory combined ratio Industry data excludes mortgage and financial guaranty 2012 2013 2015 ‘mECincinna~ exc. ct losses Est Industy (AM, Bost ~ exc. cat Le ‘-@-cincinnat— inc, cat. losses ares tae aeons haa ce 2
Slide 6: Manage Insurance Profitability
MANAGE INSURANCE PROFITABILITY ‘personal Ongoing underwriting expertise enhancement — Predictive modeling tools and analytics to improve property casualty pricing precision and segmentation on an individual policy basis — Data management for better it \d more granular pricing d — Staff specializatio
Slide 7: Select Group of Agencies
SELECT GROUP OF AGENCIES IN 41 STATES the POWER of personal 1,675 agency relationships with 2,203 locations (as of June 30,2017) Our Commercial Top Five = 39% Ohio, Illinois, Pennsylvania Indiana, North Carolina Qur Personal Top Five = 54% Ohio, Georgia, Michigan, Indiana, North Carolina Market Shar
Slide 8: Appendix; Second-Quarter 2017 Highlights
rs powenel g APPENDIX Income, Dividend & Cash Flow Trends Reserve Adequacy & Prior Accident Year Development Pricing Precision, Premium Growth Trends & Business Mix Investment Portfolio Management & Performance Reinsurance Ceded Program & Financial Strength Ratings Valuation Comparison to Peers SECO
Slide 9: Income and Shareholder Dividends
INCOME AND SHAREHOLDER DIVIDENDS epomanst 7 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2013 2014 2015 2016 6mos 16 6 mos 17 Per share basis =1Qperating Income miNet Income _-l+Ordinary dividends declared STRONG OPERATING CASH FLOW CONTRIBUTED TO $314M OF 1H17 NET PURCHASES IN rs powenel g
Slide 10: Cash Dividend Payout Ratio
CASH DIVIDEND PAYOUT RATIO STRONG CAPITAL, CASH FLOW SUPPORT PAYOUT LEVELS personal id 66% average payout for 2007 through 2016 (0etincome basis) 100% 80% 60% 40% 20% T 0% 2007 2016 2008 ©2009-2010 2011" 2012-2013 2014-2015 DIVIDEND AS A PERCENTAGE OF NET CASH FLOW FROM OPERATIONS ‘personal 100% 40%
Slide 11: Property Casualty Reserves
PROPERTY CASUALTY RESERVES vowen FAVORABLE DEVELOPMENT FOR 28 CONSECUTIVE. YEARS personal Values shown are Pate! loss and loss expense reserves net of reinsurance Vertical bar represents reasonably likely range Reserve range at 12-31-16 Low end $4,449. (In millions) High end $4,894 Carried at 65" pe
Slide 12: Premium Growth vs. Industry
PREMIUM GROWTH VS. INDUSTRY 8.1% CAGR APPROXIMATELY DOUBLED INDUSTRY ‘parsonal Property casualty net written premium growth =xCincinnati \M. Best) MARKET FOR 75% OF AGENCY'S TYPICAL RISKS 2016 NET EARNED PREMIUMS Consolidated ce ee $4.710 Billion Life 5% Cincinnat. Cincinnati Re Property Casualty Re
Slide 13: Investment Income
INVESTMENT INCOME 2% GROWTH YTD 6-30-17: DIVIDENDS UP 4%, INTEREST UP 1% (PRETAX) eK ONAL (In millions) $575 $550 $525 $500 $475 $450 $425 $400 2012 2013 2014 2015 2016 Pretax bond een 5.15% 4.90% 4.76% 4.70% 4.60% (Bonds: tized cost) Pretax book yield for bonds acquired in 2016: 3.75% rita ar yield
Slide 14: Diversified Equity Portfolio
DIVERSIFIED EQUITY PORTFOLIO* BALANCES INCOME STABILITY & CAPITAL APPRECIATION POTENTIAL ‘personal June 30, 2017 Portfoli Hishliants. at 6-30-17 + JP Morgan Chase & Ci S&P 500 Sector CFC | Weightings | _ is largest holding + 3.7% of pubiiy traded common Information technology 16.4% 22.3% . poker Fin
Slide 15: Solid Reinsurance Ceded Program
SOLID BEINOURSNEE CEDED PROGRAM BALANCES COSTS WI < POWER» SHAREHOLDERS’ EQUITY PROTECTION DEXA ONAL EJ Coverage & Retention Summary (ested 2017 ceded premio) hs Jaan 1, 2017) Property catastrophe ($39 milion) For a single event: + Treaty has one reinstatement provision + Retain 100% of first $100 m
Slide 16: Financial Strength; Valuation Comparison to Peers
FINANCIAL STRENGTH RATINGS COMPARISON “DeAA ons personal A.M. Best Fitch Moody's S&P Ly aS iy ® BE cy B RZ ry 5 ry ae cy Source: SNL Financial as of July 27, 201 VALUATION COMPARISON TO PEERS ‘personal Ratio of closing price on 08-04-17 to latest reported tangible book value
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