Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (March 2010)
16 slides from Cincinnati Financial's investor presentation, Mar 16, 2010
Slide 1: Cincinnati Financial Corporation
Cincinnati Financial Corporation March 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 t
Slide 2: Cincinnati Financial at a Glance
Cincinnati Financial at a Glance Profile + Top 25 US. P/C writer + AM, Best Rating: A+ + $3.1 billion 2009 premiums: = "72% commercial = 22% personal = 5% Ife = 1% excess & surplus + Competitive advantages: ~ Relationships leading to agents’ best accounts. = Financial strength for stability and conf
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 forthe period 2010-2014: VCR averaging 12% to 15% 18% 10% 5% 0% 5% 2004 2005 20082007 20082000 2010 2011 2012 2013214 Value Creation Ratio (VCR) -l+ Total Shar
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: al other major commercial ines, personal auto + Technology is improving efficiencies, streamlining processing for agencies and the company = Comme
Slide 6: Premium Growth Potential
Premium Growth Potential * Historically, we earn approximately 10% market share in new agencies within 10 years after appointment = Over 5% share earned in 2009 for all agencies appointed during 2004 = Nearly 2% share earned in 2009 for all agencies appointed during 2008 + Our agencies currently wri
Slide 7: Appendix
Appendix Performance Measure Trends Premium Growth Potential Investment Portfolio Overview Investment Quality and Reserve Strength, Financial Strength Rating Comparison Income and Shareholder Dividends $5.00 7Past two years reflect higher catastrophe losses, soft market pricing, Jand lower investmen
Slide 8: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio 420%, _Stfong capital and cash flow support current dividend payout level 110% 100% 70% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 [Bb idend Payous Ratio Nat income Ww Dividend Payout Rato— Operating oor | Dividend as a Percentage of Net Cash Flow from Operations 60
Slide 9: Operating Cash Flow
Operating Cash Flow 1,000 $800 $600 $400 $200 so+ 2008 2008 2008 2007 2009 History of Industry-Leading Profitability Five-year average 95.4% is 3.5 points better than industry ions Statutory combined ratio 105% 100% 08% 20% o5% 20% 7336 70% o8% 2008 2008 2007 2008 2008 ‘cet = at see eaccnserat—ent e
Slide 10: Commercial Lines
Commercial Lines 72% of consolidated earned premiums 120% GAAP OTE * Full-Year 2009: ~ Net written premiums down 5.6% ~ 101.6% GAAP combined ratio ~ 105.2% GAAP combined ratio before cat losses and prior year 100% reserve development + Business lines: ~ Commercial casualty ~ Commercial property = Co
Slide 11: Economy and Pricing Pressure
Economy and Pricing Pressure Requires disciplined underwriting 50% Property casualty net written premium growth 20% 50% 2008 2006 2007 2008 2009 Ee Chrcinnat Estimated Industry (AM. Best) Market for 75% of Agency Typical Risks 2009 net earned premiums Consolidated Commercial Esse $3,054 Billion Line
Slide 12: Potential in the Property Casualty Market
Potential in the Property Casualty Market Direct Written = Total P/C Premiums Cinconn | Industry | {Bolas in ions) (2008) enetration Ohio $ 614 |$ 13,065 | 4.7% ilinois 284 20,777 | 1.4% Indiana 216 8,504 2.5% Pennsylvania 190 19,529 1.0% Georgia 164 13,700 | 1.2% North Carolina 1s | 12,248 | 13% Al
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% 76% 46% 2008 2004-2007 1999-2003 Pre-1999 ‘aseaon 208 agen) Wen Premiums (Ercuairg ose ae sul es) Investment Portfolio Invest for income and appreciation $10.6 billion fair value at December
Slide 14: Stable Capital
Stable Capital Fixed-maturity portfolio - $7.9 billion at 12-31-09 Rated BBB '$2.302 billion (29%) 19%) Rated BB and below $355 milion Unrated $237 milion (3%) Taxable $4.9 billion (62%) Diversified Equity Portfolio* Balances income stability and capital appreciati jon potential December31, 2009 | D
Slide 15: Investment Income
Investment Income 4.7% growth for 4"" quarter 2009 pre-tax 3700 300 3590 3490 $900 $200 3100 so 2005 2008 2007 2008 2008 3199 Property Casualty Reserves Objective: modestly redundant reserves Values shown are carried loss and loss expense reserves net of reinsurance Vertical bar represents reasonabl
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 46) (3 of 46) (3 of 46) Fiteh At n/a At (6 of 24) (5 of 24) Moody's AL n/a n/a (6 of 24) Sap At n/a At (6 of 24) (5 of 24) Financial Strength Ratings Comparison AM.Bost Eten 1a s
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