Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (March 2018)
17 slides from Cincinnati Financial's investor presentation, Mar 5, 2018
Slide 1: Investor Handout
INVESTOR HANDOUT The POWER of personal NASDAQ: CINF porsiad uncertainties. Please refer to our various filings with the U.S. Securities and from those discussed, disclosed, be effective only as of that date.
Slide 2: Strategy Overview
CCopyight ©2018 Cincinnati STRATEGY OVERVIEW, eee i Competitive advantages: + Relationships leading to agents’ best accounts + Financial strength for stability and confidence * Local decision making and claims excellence Other distinguishing factors: + 57 years of shareholder dividend in + Common st
Slide 3: Long-Term Value Creation
LONG-TERM VALUE CREATION enone * Targeting annual rate of growth in book value plus the percentage of dividends to beginning book value to average 10% to 13% over the next five-year period BON VR 2047 ease compared wi 1 Tom sonra Wor ae beet eto ists st te liability revaluation related to U.S. tax r
Slide 4: Cincinnati Financial at a Glance
CINCINNATI FINANCIAL AT A GLANCE _ pees gl + Top 25 U.S. P&C insurer + A.M. Best rating: A+ Superior + $5.0 billion 2017 premiums: 64" cial 25% Personal 4% Excess & Surplus 5% Life 2% Cincinnati Re®™ + Agency-centered business model is time-tested + 57 consecutive years of shareholder alr increases
Slide 5: Outperforming the Industry
OUTPERFORMING THE INDUSTRY Statutory combined ratio Industry data excludes mortgage and financial guaranty 2017 f= 5.7%, 1Oyoar = 6.8% STRATEGIES FOR LONG-TERM SUCCESS Pperee) + Financial strength for consistent support to agencies - portfolio, 7 4 0.7 ‘0 municipal exposure exceeded 0.3% rise in int
Slide 6: Manage Insurance Profitability; Drive Premium Growth
MANAGE INSURANCE PROFITABILITY: power perso * Ongoing underwriting expertise enhancement precision and segmentation on an individual policy basis + Improving efficiencies and ease of use with technology Steaming processing fr agencies anh company = Helps optimize personalized ser * Investing for the
Slide 7: Select Group of Agencies
SELECT GROUP OF AGENCIES IN 42 STATES 4.702 agency relationships with 2256 locations P&C Market Share: BH 1% and higher Less than 1% Inactive stats © Headquarters (no branches) Ohio, Sent nan cg ABH ean op (Our Commercial Top Five = 38% Indiana, North Carolina ‘Our Personal Toy 2% Ohio, Georgia, coo
Slide 8: Appendix: Fourth-Quarter 2017 Highlights
vorourn ol APPENDIX Income, Dividend & Cash Flow Trends cial Strength Ratings & Valuation Comparison to Peers FOURTH-QUARTER 2017 HIGHLIGHTS. rowss~ personal} . Ere of $3. 88 per share vs. $0.60 in 4Q16 tax reform + Investment income rose 2% — Dividend income was up 5%, interest income was up 1% = i
Slide 9: Income and Shareholder Dividends
INCOME AND SHAREHOLDER DIVIDENDS. $4.00 's0.00 2013 2014 2015 2016 207 s=aNet Income STRONG OPERATING CASH FLOW CONTRIBUTED TO $518M OF FULL-YEAR 2017 NET PURCHASES ININVESTMENT PORTFOLIO personal {omion) nant aarepeloseo pa $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 so 2018 2014 201
Slide 10: Cash Dividend Payout Ratio
CASH DIVIDEND PAYOUT RATIO "ASH FLOW SUPPORT PAYOUT. LEVELS peor is aus {67% avorage payout for 2008 through 2017 80% 60% 40% 20% 0% 2009 2010 2011" 2012 2013 2014 201520162017" +21 pyar ut cre, 211% cprg ner ae) a shown on a nah lag ees 1 ir belie te to ae eh an haere sat arson en SUS DIVIDEND AS A
Slide 11: Property Casualty Reserves
PROPERTY CASUALTY RESERVES YEARS personal} Vertical bar represents reasonably likely range ge at 12-91-17 Low end $4,709 (omitions) High end $5,155 CCatied at 72% prcantio $3,942 (forme) ($147) (308) (s188) (5188) 9) 2013 2018 2015 2016 GREATER PRICING PRECISION IMPROVING PROFIT MARGINS ‘personal ”
Slide 12: Commercial Casualty Ratios
COMMERCIAL CASUALTY RATIOS LOSS & ALAE FOR AC 12 MONTHS " ron EN" | iy EI 520% 520% s20% 520% Une = Rate Component Pa, 1ONR) 33 PSRTRTRRTGRTTT TE tot Lose AE us one COMMERCIAL CASUALTY RATIOS THROUGH 1 sey RESET EE z 5 (r= Eos tina Los ALAE Ratt Ear Preis i | i i : ; i 20
Slide 13: Premium Growth vs. Industry
PREMIUM GROWTH VS. INDUSTRY 6.8% CAGR APPROXIMATELY DOUBLED INDUSTRY". bowen! Property casualty net written premium growth s=xcinconat MARKET FOR 75% OF AGENCY'S TYPICAL RISKS 2017 NET EARNED PREMIUMS RASH Consolidated $4,954 Billion Property Casualty $4.722 Billion cess Supls. Cro Re 2% Contest Pro
Slide 14: Investment Income
INVESTMENT. INCOME |ROWTH IN 2017: DIVIDENDS UP 6%, INTEREST UP 1% ;pneranine POWER 01 (in ations) $625 $600 $575 $550 $525 $500 $475 $450 $425 2013 2014 2015 2016 2017 hecho le 480% 476% 470% 4.60% 442% (wort Pretax book yield for bonds acquired in 2017: 3.61% 2019=6.09%, 2020=4.75% 9% in 2019, 6.9
Slide 15: Diversified Equity Portfolio
DIVERSIFIED EQUITY PORTFOLIO* BALANCES INCOME STABILITY & CAPITAL APPRECIATION POTENTIAL December 31, 2017 Portfolio Highlights at 12-31-17 }0_| + JP Magan Chas largest Raking the POWER of Sap 50 Seer CFC | Weigntings | + 4.0% of pubic traded com tod pri FEET TE] + Lketll nvaninont peo 162 | 148 | -
Slide 16: Reinsurance Ceded Program
SOD REINSURANCE CEDED PROGRAM \LANCES COSTS WI SHAREHOLDERS" EQUITY PROTECTION & Retention Sum (cates 207 cao ror ey 82010) Property catastrophe ($43 maton) For a single event: + Retain 100% ‘$60 milion for severe convective storms Set business pls Gna Re (exe Cer various combinatons combined fo tie
Slide 17: Financial Strength
FINANCIAL STRENGTH RATINGS COMPARISON AM. Bost Fitch Moody's VALUATION COMPARISON TO PEERS ‘parronal "IL LOLEPL LP YS Copyight © 2018 Cincinnati Financial Coporation Al igh served. Do not
Cincinnati Financial — Investor Presentation (March 2018) on 6ix