Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (May 2010)
16 slides from Cincinnati Financial's investor presentation, May 12, 2010
Slide 1: Cincinnati Financial Corporation
Cincinnati Financial Corporation May 2010 NASDAQ: CINF + 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 results to materially differ from tho
Slide 2: Cincinnati Financial at a Glance
Cincinnati Financial at a Glance Profile 410 Highlights + Top 25 US. P/C insurer + EPS of 42 cents vs. 22 cents + AM. Best Rating: A+ Superior ~ Operating eamings increased 70% + $3.1 billion 2009 premiums: to 39 cents per share primarily due ~ "72% commercial to stronger P/C insurance results = 22%
Slide 3: Increase Value for Shareholders
Increase Value for Shareholders Driven by performance 20% Rolling five-year average as of December 31 VCR for the year 2009 was 19.7% Target for the period 2010-2014: VCR averaging 12% to 15% 15% 10% oe 0% 2% 200s 2006 200 20072008008 20102011 2012 20122014 Hl Value Creation Ratio (VCR) “Total Share
Slide 4: Strategies for Long-Term Success
Strategies for Long-Term Success * Manage capital effectively * Improve insurance profitability * Drive premium growth * Factors impacting 2010 profit and growth performance: ~ Following financial market 2009 rally, investment portfolio valuations could decline or exhibit more volatility ~ Soft insu
Slide 5: Improve Profitability
Improve Profitability + Predictive modeling tool in use for workers’ compensation, enhanced version used for homeowner line of business = In development: all other major commercial lines, personal auto + Technology is improving efficiencies, streamlining processing for agencies and the company = Com
Slide 6: Premium Growth Potential
Premium Growth Potential + Historically, we earn approximately 10% market share in new agencies within 40 years after appointment ~ Over 5% share eared in 2009 for all agencies appointed during 2004 ~ Nearly 28 share earned in 2009 for all agencies appointed during 2008 * Our agencies currently writ
Slide 7: Appendix
Appendix Performance Measure Trends Premium Growth Potential Investment Portfolio Overview lnvestment Quality and Reserve Strength Financial Strength Rating Comparison Income and Shareholder Dividends 38.00 7Past two years reflect higher catastrophe losses, soft market pricing, Jand lower investment
Slide 8: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio 420% 4 _Stfong capital and cash flow support current dividend payout level 110% 100% 70% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ([iDviderd Payous Ratio Net income _w Dividend Payout Ratio Operating hoor ] Dividend as a Percentage of Net Cash Flow from Operations
Slide 9: Operating Cash Flow
Operating Cash Flow ‘8600 8400 $200 80 2005 «2008 «2007 «2008 -~=—- 2009 |amos.09 amos 10 History of Industry-Leading Profitability Five-year average 95.4% is 3.4 points better than industry athe Statutory combined ratio 108% 100% com 0% ‘2008 ‘2008 ‘2007 ‘2008 2000 1010 statutory combined ratio for
Slide 10: Commercial Lines
Commercial Lines 72% of consolidated earned premiums s00% GAAP combined ratio» First Quarter 204 ~ Net written premiums down 6% ~ 102.1% GAAP combined ratio ~ 105.8% GAAP combined ratio before cat losses and prior year reserve development * Business lines: ~ Commercial casualty ~ Commercial property
Slide 11: Economy and Pricing Pressure
Economy and Pricing Pressure Requires disciplined underwriting Property casualty net written premium growth 40% 20% 00% *°*7 Cincinnati’ five-year average of negative 0.6% is 0.4% better than the industry average 2008 2006 2007 2008 2009 Tal choinnat B+ Esimated Industry (AM. Best) Market for 75% of
Slide 12: Potential in the Property Casualty Market
Potential in the Property Casualty Market Direct writen — | cosine | TIE! | “Vane (Dotiars in millions) (2008) (2009) Penetration as Ohio $ 581 | $ 12,366 4.7% Illinois 262 19,473 1.3% Indiana 208 7,793 2.7% Pennsylvania 182 18,713 1.0% Georgia 160 12,922 1.2% North Carolina 147 11,488 1.3% |All Act
Slide 13: Steadily Increase Share of Agency Business
Steadily Increase Share of Agency Business Market share per reporting agency location by year appointed 21.6% 7.6% 4.6% 2008 2004-2007 1999-2003 Pre-1999 Bseeo on 2006 Agen) Wen Premiums ‘Escuang eres an cup ns) Investment Portfolio Invest for income and appreciation $10.9 billion fair value at Marc
Slide 14: Stable Capital
Stable Capital Fixed-maturity portfolio - $8.4 bil Rated BBB $2.434 billion (30%) | Uneated $217 milion (58) ion at 03-31-10 Diversified Equity Portfolio* Balances income stability and capital appreciation potential March 31, 2040 December 31, 2007 ‘S&P 500 S&P 500 Sector cre cre Weightings Weightin
Slide 15: Investment Income
Investment Income 5% growth for 1%* quarter 2010 (pre-tax) 3000 3500 3400 3300 $200 3190 A EL so 2008 2007 2008 zove | 2mosaa ames 10 Property Casualty Reserves Objective: modestly redundant reserves Values shown are carried loss and loss expense reserves net of reinsurance Vertical bar represents r
Slide 16: Stability and Integrity
Stability and Integrity Insurer Financial Strength Ratings Property Excess & Life Casualty Surplus A.M. Best At A A (2 of 16) (8 of 46) (3 of 46) Fitch AY n/a At (Sof 24) (5 of 24) Moody's AL n/a n/a (5 of 24) S&P At n/a At (5 of 24) (5 of 24) Financial Strength Ratings Comparison Fite car = 2 Ter =
Cincinnati Financial — Investor Presentation (May 2010) on 6ix