Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (May 2009)
16 slides from Cincinnati Financial's investor presentation, May 20, 2009
Slide 1: Cincinnati Financial Corporation
Cincinnati Financial Corporation May 2009 < NASDAQ: CINF * Today's 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 fro
Slide 2: Cincinnati Financial at a Glance
Cincinnati Financial at a Glance Profile 1Q09 Highlights + 22nd largest US. PIC writer + EPS of $0.22 vs. ($0.26) + AM. Best Rating: A+ * Operating eamings deciined + $3.1 billion annual premiums: — 21% from worse catastrophes ~ 74% commercial ‘and WC reserve strengthening 22% personal — 23% from lo
Slide 3: 2009 vs. Longer Term
2009 vs. Longer Term + Weak economy — lower base for insurable risks + Soft insurance market pricing + Growth initiatives have not reached their full contribution * Cost of continued investment in our business + Diversification of the investment portfolio + External factor assumptions: — Firming of
Slide 4: Current Valuation Is Attractive
Current Valuation Is Attractive Closing price to tangible book value as of 1009 eamings teleconferences Preserve Capital + Maintain a diversified and stabilized investment portfolio ~ High-quality fixed-maturity portfolio that matches or exceeds total insurance reserves = 26% of portfolio invested i
Slide 5: Improve Profitability
Improve Profitability Implement technology projects to improve critical efficiencies and streamline processes for our agencies — Predictive modeling tool - 2009 — Commercial lines policy administration system - By year- end 2009, deploy a new system for commercial package and auto to 11 states — Per
Slide 6: Drive Premium Growth (continued)
Drive Premium Growth (continued) > Surplus lines insurance — = Agencies write $2.5 billion annually of surplus lines business with other carriers + Personal lines — — New agencies: + In 2008 we began writing personal ines or significantly expanded our product offerings in five states + Added Idaho a
Slide 7: Appendix
Appendix Performance Measure Trends Investment Portfolio Analysis Quality of Loss/LAE Reserves Financial Strength Rating Comparison Trend reflects higher catastrophe losses, lower pricing and investment income Income and Dividends to Shareholders 1081009 mm operating come = BN Inco 8-Dividende Paid
Slide 8: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio Strong capital and cash flow support current level 1999 2000" 2001 2002 2003" 2004 2005 2006 2007 2008 [[lDvidend Payout Ratio Net income — m DWidend Payout Rato = Operating como ] Strong Cash Flow and Liquidity 1,000 Consolidated operating cash flow, in millions ‘Annual p
Slide 9: History of Industry-leading Profitability
History of Industry-leading Profitability ‘Statutory combined ratio. 2008 || amos0e "amos 09 ast rer AM Bes ct asses Tasty ese ct Losses Commercial Lines 74% of consolidated earned premiums GAAP combined ratio__+ Three-months 2009: 105% — Net written premiums up 0.1% — 102.2% GAAP combined ratio — 9
Slide 10: Personal Lines
Personal Lines 22% of consolidated earned premiums + Three-months 2009: (GAAP combined ratio = Net written premiums =D down 3.5% ~ 120.7% GAAP combined rato, 9, = 99.5% GAAP combined ratio before cat losses and prior years reserve development 10% + Business lines: — Personal auto — Homeowner — Other
Slide 11: Market for 75% of Agency's Typical Risks
Market for 75% of Agency’s Typical Risks 2008 net earned premiums Consolilated commer ‘ irs vue. 52196 Bion Us ied Property Casualty $3.010 Billion = cing Stak Honus Pena ena Ato 22% ‘Commercial ~~ Amine er Paonl = — eet: Sono commer Maya oom Sean Potential in the Property Casualty Market Direct Wei
Slide 12: Successful Agencies
Successful Agencies 8.3% CAGR in agency total premiums since 2004 (nen Agencies On) 2007 2006 2005 Property Casualty Agency Billed Premiums: Cincinnati $3267 $3264 «$3,193 Agency Total $23,553 $21,656 $20,312 [cincinnati Agency Relationships: 1,092 1,086 1,024 [Cincinnati Agency Penetration: 13.9% 1
Slide 13: Ample Capacity for Future
Ample Capacity for Future New Business and Investment ‘Net wnitten premiums to statutory surplus 3/34/2009 Investment Portfolio Invest for Income and Appreciation $8.8 billion at March 31, 2009 Tax Exempt Common Equities $2233 Cash and Other $0.13
Slide 14: Investment Income
Investment Income Declined 11.6% in 2008, expect growth in 2HO9 [004 milions = ez = = . io El ; 3mos 08 __3mn0s 09, Stable Capital Fixed-maturity portfolio — $6.48 billion at March 31, 2009 Rated AAA, AA and A $4,480 billion (69%) Rated BBB $1.541 billion (24%) Rated BB and below $263 milion ar) Unr
Slide 15: Diversified Equity Portfolio
Diversified Equity Portfolio* Income and appreciation potential, 56% of P&C surplus March 3, 2009 December 31,2007 Sector ef] ee l= Les co Ex 155% [103% 120% Soo 5 oa 102 Ere 18 no [as 20 | a | = (Z| es 0 Oo [4 26 Dera 2 a8 28 a5 ra es a7 18 is Tecra 5 780 18 168 aa 2 33 feo 33 Toco Sa a7 40 00 26 *
Slide 16: Stability and Integrity
Stability and Integrity Insurer Financial Strength Ratings Pro} Excess & Lite Cacualty ‘Surplus AM, Best At A A (2 of 16) (3of16) | (3of16) Fitch AA- nla AA (4 of 21) (4 of 21) Moody's AL nla nla (5 of 21) Sap AY nla At (6 0f21) (of 21) Financial Strength Ratings Comparison [eters Far
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