UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
 
Date of Report: July 28, 2015
(Date of earliest event reported)
 
 
CINCINNATI FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 
Ohio
0-4604
31‑0746871
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
 
 
6200 S. Gilmore Road, Fairfield, Ohio
45014‑5141
(Address of principal executive offices)
(Zip Code)
 
 
Registrant’s telephone number, including area code: (513) 870-2000
 
N/A
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))


Item 2.02 Results of Operations and Financial Condition.

On July 28, 2015, Cincinnati Financial Corporation issued the attached news release titled “Cincinnati Financial Reports Second-Quarter 2015 Results,” furnished as Exhibit 99.1 hereto and incorporated herein by reference. On July 28, 2015, the company also distributed the attached information titled “Supplemental Financial Data,” furnished as Exhibit 99.2 hereto and incorporated herein by reference.




Item 7.01 Regulation FD Disclosure

On July 28, 2015, Cincinnati Financial Corporation issued the attached news release titled “The Cincinnati Insurance Company Adds Reinsurance Assumed Expertise,” furnished as Exhibit 99.3 hereto and incorporated herein by reference.

This report should not be deemed an admission as to the materiality of any information contained in the news releases or supplemental financial data.

In accordance with general instruction B.2 of Form 8-K, the information furnished in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.




Item 9.01 Financial Statements and Exhibits.

(c)     Exhibits

Exhibit 99.1 – News release dated July 28, 2015, “Cincinnati Financial Reports Second-Quarter 2015 Results”

Exhibit 99.2 – Supplemental Financial Data for the period ending June 30, 2015 distributed July 28, 2015.

Exhibit 99.3 – News release dated July 28, 2015, “The Cincinnati Insurance Company Adds Reinsurance Assumed Expertise”


Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
CINCINNATI FINANCIAL CORPORATION
 
 
 
 
 
 
Date: July 28, 2015
/S/Michael J. Sewell
 
Michael J. Sewell, CPA
 
Chief Financial Officer, Senior Vice President and Treasurer
 
 




Exhibit 99.1 2Q15
 
The Cincinnati Insurance Company n The Cincinnati Indemnity Company
The Cincinnati Casualty Company n The Cincinnati Specialty Underwriters Insurance Company
The Cincinnati Life Insurance Company n CFC Investment Company n CSU Producer Resources Inc.

Investor Contact: Dennis E. McDaniel, 513-870-2768
CINF-IR@cinfin.com

Media Contact: Betsy E. Ertel, 513-603-5323
Media_Inquiries@cinfin.com

Cincinnati Financial Reports Second-Quarter 2015 Results

Cincinnati, July 28, 2015 – Cincinnati Financial Corporation (Nasdaq: CINF) today reported:
•
Second-quarter 2015 net income of $176 million, or $1.06 per share, compared with $84 million, or 51 cents per share, in the second quarter of 2014.
•
$63 million or 84 percent rise in operating income* to $138 million, or 83 cents per share, up from $75 million, or 46 cents per share, in the second quarter of last year.
•
$92 million increase in second-quarter 2015 net income, reflecting the after-tax net effect of two primary items: $59 million improvement in the contribution from property casualty underwriting, including a favorable effect of $23 million from lower natural catastrophe losses; and a $29 million increase from net realized investment gains.
•
$39.60 book value per share at June 30, 2015, down 54 cents or 1 percent since December 31, 2014.
•
0.9 percent value creation ratio for the first six months of 2015, compared with 6.6 percent for the same period of 2014.

Financial Highlights
(Dollars in millions except per share data)
Three months ended June 30,
Six months ended June 30,
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Revenue Data
 
 
 
 
 
 
 
 
 
 
 
 
   Earned premiums
 
$
1,111

 
$
1,059

 
5
 
$
2,205

 
$
2,086

 
6
   Investment income, net of expenses
 
140

 
136

 
3
 
279

 
271

 
3
   Total revenues
 
1,316

 
1,214

 
8
 
2,601

 
2,403

 
8
Income Statement Data
 
 
 
 
 
 
 
 
 
 
 
 
   Net income
 
$
176

 
$
84

 
110
 
$
304

 
$
175

 
74
   Realized investment gains, net
 
38

 
9

 
322
 
69

 
23

 
200
   Operating income*
 
$
138

 
$
75

 
84
 
$
235

 
$
152

 
55
Per Share Data (diluted)
 
 
 
 
 
 
 
 
 
 
 
 
   Net income
 
$
1.06

 
$
0.51

 
108
 
$
1.84

 
$
1.06

 
74
   Realized investment gains, net
 
0.23

 
0.05

 
360
 
0.42

 
0.14

 
200
   Operating income*
 
$
0.83

 
$
0.46

 
80
 
$
1.42

 
$
0.92

 
54
 
 
 
 
 
 
 
 
 
 
 
 
 
   Book value
 
 
 
 
 
 
 
$
39.60

 
$
38.77

 
2
   Cash dividend declared
 
$
0.46

 
$
0.44

 
5
 
$
0.92

 
$
0.88

 
5
   Diluted weighted average shares outstanding
 
165.5

 
165.1

 
0
 
165.5

 
165.1

 
0

*
The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures defines and reconciles measures presented in this release that are not based on U.S. Generally Accepted Accounting Principles.
**
Forward-looking statements and related assumptions are subject to the risks outlined in the company’s safe harbor statement.


CINF 2Q15 Release 1

Insurance Operations Second-Quarter Highlights
•
92.4 percent second-quarter 2015 property casualty combined ratio, improved from 100.9 percent for
second-quarter 2014.
•
6 percent growth in second-quarter net written premiums, reflecting price increases and insured exposure growth.
•
$138 million second-quarter 2015 property casualty new business written premiums, up $5 million. Agencies appointed since the beginning of 2014 contributed $9 million or 7 percent of total new business written premiums.
•
7 cents per share contribution from life insurance operating income, up 1 cent from second-quarter 2014.
Investment and Balance Sheet Highlights
•
3 percent or $4 million increase in second-quarter 2015 pretax investment income, including 3 percent growth for both stock portfolio dividends and bond interest income.
•
Three-month increase of less than 1 percent in fair value of total investments plus cash at June 30, 2015, including a 1 percent increase for the bond portfolio and a 1 percent decrease for the equity portfolio.
•
$1.787 billion parent company cash and marketable securities at June 30, 2015, up approximately $3 million from year-end 2014.

Improving Underwriting Results
Steven J. Johnston, president and chief executive officer, commented: “Operating income rose 84 percent and net income more than doubled last year’s second-quarter result. Property casualty insurance underwriting profits rose $90 million before taxes, taking net income to the highest level for any second quarter since 2007. Pretax income from our investment portfolio also contributed, growing 3 percent above the total reported for last year’s second quarter.

“A relatively quiet spring storm season helped our steady progress on insurance profitability initiatives shine through. Our second-quarter combined ratio improved to 92.4 percent – 8.5 points better than the same quarter a year ago. While roughly half of the improvement came from lower weather-related catastrophe losses, we attribute much of the remainder to the positive effects of further pricing precision and segmentation, continued use of data analytics, increasing staff expertise and our ongoing underwriting programs.

“Favorable prior accident year reserve releases for the quarter improved the combined ratio by 6.6 percentage points, essentially matching last year’s benefit. Based on our assessment of paid loss trends for our auto lines of business, we prudently increased loss reserves, mostly for the more subjective component of reserves known as IBNR, representing losses our policyholders have incurred but not yet reported. For auto claims that were reported to us, or case incurred claims, the good news is that we have achieved small decreases for two quarters in a row in the ratio for losses and loss expenses, which may indicate an improving trend.”

Continued Steady Growth
“The growth rate for our consolidated property casualty net written premiums rebounded, doubling our first-quarter 2015 pace. Total net written premiums grew by 4 percent for the first half of 2015 compared with the first half of 2014, reflecting the combined effects of modest pricing increases, strategic expansion of our independent agency force and overall insured exposure growth.

“Personal lines net written premiums rose 5 percent in the first half as the growth in personal lines new business accelerated to 20 percent. Agents are responding favorably to our broadened underwriting appetite and pricing changes. Together, we are successfully attracting more larger-sized personal lines accounts.”

Managing for Long-Term Value
“Rising interest rates pressured the bond markets in the second quarter. The lower market values at June 30 are reflected in our total portfolio’s net unrealized gain position, still exceptionally strong at $2.4 billion. The change in net unrealized gains contributed to a 1 percent decline in book value to $39.60 at June 30 compared with year-end 2014.

“Our long-term strategies include several advantages that support book value growth over time. First, our generally laddered bond portfolio allows us to capture higher yield as we reinvest proceeds from interest payments and bond redemptions. Second, our high-quality, dividend paying equity portfolio gives us steady dividend income and long-term capital appreciation potential. Finally and most importantly, our ongoing initiatives to drive premium growth and improve underwriting profitability of our property casualty insurance operations have been successful. We believe their impact will continue to benefit future periods. Our insurance business is in excellent shape to provide cash for investment, earnings that support our shareholder dividend and increase book value over time.”


CINF 2Q15 Release 2

Insurance Operations Highlights
Consolidated Property Casualty Insurance Results
(Dollars in millions)
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Earned premiums
 
$
1,059

 
$
1,006

 
5

 
$
2,100

 
$
1,985

 
6

Fee revenues
 
2

 
2

 
0

 
4

 
3

 
33

   Total revenues
 
1,061

 
1,008

 
5

 
2,104

 
1,988

 
6

 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expenses
 
654

 
707

 
(7
)
 
1,343

 
1,383

 
(3
)
Underwriting expenses
 
324

 
308

 
5

 
651

 
613

 
6

   Underwriting profit (loss)
 
$
83

 
$
(7
)
 
nm

 
$
110

 
$
(8
)
 
nm

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Loss and loss expenses
 
61.8
 %
 
70.2
 %
 
(8.4
)
 
63.9
 %
 
69.7
 %
 
(5.8
)
     Underwriting expenses
 
30.6

 
30.7

 
(0.1
)
 
31.0

 
30.9

 
0.1

           Combined ratio
 
92.4
 %
 
100.9
 %
 
(8.5
)
 
94.9
 %
 
100.6
 %
 
(5.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
 
 
 
 
 
% Change
Agency renewal written premiums
 
$
1,018

 
$
974

 
5

 
$
2,001

 
$
1,930

 
4

Agency new business written premiums
 
138

 
133

 
4

 
254

 
256

 
(1
)
Other written premiums
 
(14
)
 
(25
)
 
44

 
(47
)
 
(67
)
 
30

   Net written premiums
 
$
1,142

 
$
1,082

 
6

 
$
2,208

 
$
2,119

 
4

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Current accident year before catastrophe losses
 
60.9
 %
 
64.8
 %
 
(3.9
)
 
62.0
 %
 
63.6
 %
 
(1.6
)
     Current accident year catastrophe losses
 
7.5

 
11.9

 
(4.4
)
 
6.3

 
10.9

 
(4.6
)
     Prior accident years before catastrophe losses
 
(6.6
)
 
(6.0
)
 
(0.6
)
 
(3.9
)
 
(4.1
)
 
0.2

     Prior accident years catastrophe losses
 
0.0

 
(0.5
)
 
0.5

 
(0.5
)
 
(0.7
)
 
0.2

           Loss and loss expense ratio
 
61.8
 %
 
70.2
 %
 
(8.4
)
 
63.9
 %
 
69.7
 %
 
(5.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year combined ratio before catastrophe
  losses
 
91.5
 %
 
95.5
 %
 
(4.0
)
 
93.0
 %
 
94.5
 %
 
(1.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 

•
$60 million or 6 percent growth of second-quarter 2015 property casualty net written premiums and six-month growth of 4 percent. The increases were largely due to price increases and a higher level of insured exposures.
•
$5 million or 4 percent increase in second-quarter 2015 new business premiums written by agencies, primarily due to contributions from new agency appointments. Six-month new business premiums decreased $2 million, although standard market property casualty production from agencies appointed since the beginning of 2014 increased $12 million and excess and surplus lines increased $2 million.
•
1,493 agency relationships in 1,913 reporting locations marketing property casualty insurance products at June 30, 2015, compared with 1,466 agency relationships in 1,884 reporting locations at year-end 2014. During the first six months of 2015, 53 new agency appointments were made.
•
8.5 and 5.7 percentage-point second-quarter and first-half 2015 combined ratio improvement, including decreases of 3.9 and 4.4 points for losses from natural catastrophes.
•
1.4 and 2.2 percentage-point second-quarter and first-half 2015 decrease in the ratio for noncatastrophe weather-related losses.
•
6.6 percentage-point second-quarter 2015 benefit from favorable prior accident year reserve development of $70 million, compared with 6.5 points or $66 million for second-quarter 2014.
•
3.9 percentage-point six-month 2015 benefit from favorable prior accident year reserve development before catastrophe losses, similar to the six-month 2014 benefit of 4.1 points.
•
1.6 percentage-point improvement, to 62.0 percent, for the six-month 2015 ratio of current accident year losses and loss expenses before catastrophes, largely due to lower noncatastrophe weather-related losses and a 0.7 point decrease in the ratio for current accident year losses of $1 million or more per claim.
•
Negligible change from last year in the second-quarter and first-half 2015 underwriting expense ratio, reflecting higher earned premiums and ongoing expense management efforts.

CINF 2Q15 Release 3


Commercial Lines Insurance Results
(Dollars in millions)
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Earned premiums
 
$
745

 
$
714

 
4

 
$
1,478

 
$
1,406

 
5

Fee revenues
 
1

 
1

 
0

 
2

 
2

 
0

   Total revenues
 
746

 
715

 
4

 
1,480

 
1,408

 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expenses
 
417

 
461

 
(10
)
 
891

 
930

 
(4
)
Underwriting expenses
 
232

 
226

 
3

 
466

 
448

 
4

   Underwriting profit
 
$
97

 
$
28

 
246

 
$
123

 
$
30

 
310

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Loss and loss expenses
 
56.0
 %
 
64.5
 %
 
(8.5
)
 
60.3
 %
 
66.2
 %
 
(5.9
)
     Underwriting expenses
 
31.2

 
31.8

 
(0.6
)
 
31.6

 
31.9

 
(0.3
)
           Combined ratio
 
87.2
 %
 
96.3
 %
 
(9.1
)
 
91.9
 %
 
98.1
 %
 
(6.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
 
 
 
 
 
% Change
Agency renewal written premiums
 
$
699

 
$
669

 
4

 
$
1,429

 
$
1,382

 
3

Agency new business written premiums
 
93

 
95

 
(2
)
 
172

 
185

 
(7
)
Other written premiums
 
(5
)
 
(16
)
 
69

 
(31
)
 
(48
)
 
35

   Net written premiums
 
$
787

 
$
748

 
5

 
$
1,570

 
$
1,519

 
3

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Current accident year before catastrophe losses
 
58.7
 %
 
63.4
 %
 
(4.7
)
 
59.9
 %
 
61.5
 %
 
(1.6
)
     Current accident year catastrophe losses
 
5.8

 
9.1

 
(3.3
)
 
5.6

 
9.0

 
(3.4
)
     Prior accident years before catastrophe losses
 
(8.6
)
 
(7.5
)
 
(1.1
)
 
(4.6
)
 
(3.8
)
 
(0.8
)
     Prior accident years catastrophe losses
 
0.1

 
(0.5
)
 
0.6

 
(0.6
)
 
(0.5
)
 
(0.1
)
           Loss and loss expense ratio
 
56.0
 %
 
64.5
 %
 
(8.5
)
 
60.3
 %
 
66.2
 %
 
(5.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year combined ratio before catastrophe
  losses
 
89.9
 %
 
95.2
 %
 
(5.3
)
 
91.5
 %
 
93.4
 %
 
(1.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 

•
$39 million or 5 percent increase in second-quarter 2015 commercial lines net written premiums, as higher renewal written premiums offset lower new business written premiums. Three percent increase in six-month net written premiums.
•
$30 million or 4 percent rise in second-quarter renewal written premiums with commercial lines renewal pricing increases averaging in the low-single-digit percent range.
•
$2 million or 2 percent decrease in second-quarter 2015 new business written by agencies, reflecting underwriting and pricing discipline in a competitive market environment. For the six-month period, the decrease was 7 percent.
•
9.1 and 6.2 percentage-point second-quarter and first-half 2015 combined ratio improvement, including decreases of 2.7 and 3.5 points for losses from natural catastrophes.
•
1.2 and 1.8 percentage-point second-quarter and first-half 2015 decrease in the ratio for noncatastrophe weather-related losses.
•
8.5 percentage-point second-quarter 2015 benefit from favorable prior accident year reserve development of $63 million, compared with 8.0 points or $57 million for second-quarter 2014.
•
4.6 percentage-point six-month 2015 benefit from favorable prior accident year reserve development before catastrophe losses exceeded the six-month 2014 benefit of 3.8 points.
•
1.6 percentage-point improvement, to 59.9 percent, for the six-month 2015 ratio of current accident year losses and loss expenses before catastrophes, driven by lower noncatastrophe weather-related losses and a 1.6 point decrease in the ratio for current accident year losses of $1 million or more per claim.

CINF 2Q15 Release 4


Personal Lines Insurance Results
(Dollars in millions)
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Earned premiums
 
$
272

 
$
258

 
5

 
$
540

 
$
512

 
5

Fee revenues
 
—

 
1

 
(100
)
 
1

 
1

 
0

   Total revenues
 
272

 
259

 
5

 
541

 
513

 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expenses
 
216

 
227

 
(5
)
 
407

 
415

 
(2
)
Underwriting expenses
 
81

 
72

 
13

 
162

 
145

 
12

   Underwriting loss
 
$
(25
)
 
$
(40
)
 
38

 
$
(28
)
 
$
(47
)
 
40

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Loss and loss expenses
 
79.6
 %
 
87.7
 %
 
(8.1
)
 
75.3
 %
 
81.0
 %
 
(5.7
)
     Underwriting expenses
 
29.6

 
28.1

 
1.5

 
30.0

 
28.4

 
1.6

           Combined ratio
 
109.2
 %
 
115.8
 %
 
(6.6
)
 
105.3
 %
 
109.4
 %
 
(4.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
 
 
 
 
 
% Change
Agency renewal written premiums
 
$
285

 
$
276

 
3

 
$
508

 
$
494

 
3

Agency new business written premiums
 
30

 
24

 
25

 
54

 
45

 
20

Other written premiums
 
(6
)
 
(6
)
 
0

 
(12
)
 
(14
)
 
14

   Net written premiums
 
$
309

 
$
294

 
5

 
$
550

 
$
525

 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Current accident year before catastrophe losses
 
65.9
 %
 
67.1
 %
 
(1.2
)
 
66.3
 %
 
67.5
 %
 
(1.2
)
     Current accident year catastrophe losses
 
12.8

 
21.0

 
(8.2
)
 
9.2

 
17.2

 
(8.0
)
     Prior accident years before catastrophe losses
 
1.1

 
0.2

 
0.9

 
0.2

 
(2.2
)
 
2.4

     Prior accident years catastrophe losses
 
(0.2
)
 
(0.6
)
 
0.4

 
(0.4
)
 
(1.5
)
 
1.1

           Loss and loss expense ratio
 
79.6
 %
 
87.7
 %
 
(8.1
)
 
75.3
 %
 
81.0
 %
 
(5.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year combined ratio before catastrophe
  losses
 
95.5
 %
 
95.2
 %
 
0.3

 
96.3
 %
 
95.9
 %
 
0.4

 
 
 
 
 
 
 
 
 
 
 
 
 

•
$15 million or 5 percent increase in second-quarter 2015 personal lines net written premiums, including growth in new business and higher renewal written premiums that benefited from rate increases. Five percent increase in six-month net written premiums.
•
$6 million or 25 percent growth in second-quarter new business written by agencies, raising the six-month growth rate to 20 percent. The strong growth in part reflected more larger-sized policy submissions due to broadened underwriting appetite and pricing changes, plus increased visibility of underwriters and marketing efforts directed towards our agencies.
•
6.6 and 4.1 percentage-point second-quarter and first-half 2015 combined ratio improvement, including decreases of 7.8 and 6.9 points for losses from natural catastrophes.
•
2.1 and 3.5 percentage-point second-quarter and first-half 2015 decrease in the ratio for noncatastrophe weather-related losses.
•
0.9 percentage-point second-quarter 2015 unfavorable prior accident year reserve development of $2 million, reflecting a $7 million personal auto reserve addition, compared with 0.4 points of benefit from favorable development of $1 million for second-quarter 2014.
•
0.2 percentage-point six-month 2015 benefit from favorable prior accident year reserve development was less than the six-month 2014 benefit of 3.7 points, primarily due to unfavorable development for our personal auto line of business.
•
1.2 percentage-point improvement, to 66.3 percent, for the six-month 2015 ratio of current accident year losses and loss expenses before catastrophes, reflecting lower noncatastrophe weather-related losses that were partially offset by a 2.6 point increase in the ratio for current accident year losses of $1 million or more per claim.
•
1.5 and 1.6 percentage-point second-quarter and first-half 2015 increases in the underwriting expense ratio, primarily due to changes in estimates related to allocations of deferred acquisition costs by segment.

CINF 2Q15 Release 5


Excess and Surplus Lines Insurance Results
(Dollars in millions)
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Earned premiums
 
$
42

 
$
34

 
24

 
$
82

 
$
67

 
22

Fee revenues
 
1

 
—

 
nm

 
1

 
—

 
nm

   Total revenues
 
43

 
34

 
26

 
83

 
67

 
24

 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expenses
 
21

 
19

 
11

 
45

 
38

 
18

Underwriting expenses
 
11

 
10

 
10

 
23

 
20

 
15

   Underwriting profit
 
$
11

 
$
5

 
120

 
$
15

 
$
9

 
67

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Loss and loss expenses
 
49.6
 %
 
57.0
 %
 
(7.4
)
 
54.4
 %
 
56.8
 %
 
(2.4
)
     Underwriting expenses
 
26.4

 
28.0

 
(1.6
)
 
27.7

 
29.1

 
(1.4
)
           Combined ratio
 
76.0
 %
 
85.0
 %
 
(9.0
)
 
82.1
 %
 
85.9
 %
 
(3.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
 
 
 
 
 
% Change
Agency renewal written premiums
 
$
34

 
$
29

 
17

 
$
64

 
$
54

 
19

Agency new business written premiums
 
15

 
14

 
7

 
28

 
26

 
8

Other written premiums
 
(3
)
 
(3
)
 
0

 
(4
)
 
(5
)
 
20

   Net written premiums
 
$
46

 
$
40

 
15

 
$
88

 
$
75

 
17

 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios as a percent of earned premiums:
 
 
 
 
 
Pt. Change
 
 
 
 
 
Pt. Change
     Current accident year before catastrophe losses
 
69.3
 %
 
75.4
 %
 
(6.1
)
 
70.7
 %
 
77.9
 %
 
(7.2
)
     Current accident year catastrophe losses
 
0.6

 
2.3

 
(1.7
)
 
0.9

 
2.6

 
(1.7
)
     Prior accident years before catastrophe losses
 
(20.2
)
 
(21.3
)
 
1.1

 
(17.0
)
 
(24.1
)
 
7.1

     Prior accident years catastrophe losses
 
(0.1
)
 
0.6

 
(0.7
)
 
(0.2
)
 
0.4

 
(0.6
)
           Loss and loss expense ratio
 
49.6
 %
 
57.0
 %
 
(7.4
)
 
54.4
 %
 
56.8
 %
 
(2.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year combined ratio before catastrophe
  losses
 
95.7
 %
 
103.4
 %
 
(7.7
)
 
98.4
 %
 
107.0
 %
 
(8.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 

•
$6 million or 15 percent increase in second-quarter 2015 excess and surplus lines net written premiums, including growth in new business and higher renewal written premiums that benefited from rate increases averaging near the low end of the mid-single-digit range. Seventeen percent increase in six-month net written premiums.
•
$1 million or 7 percent increase in second-quarter new business written by agencies, rising in part due to enhanced service to agencies provided by recent-quarter additions to our excess and surplus lines field staff.
•
9.0 and 3.8 percentage-point second-quarter and first-half 2015 combined ratio improvement driven by lower ratios for current accident year loss experience.
•
20.3 percentage-point second-quarter 2015 benefit from favorable prior accident year reserve development of $9 million, compared with 20.7 points or $8 million for second-quarter 2014.
•
17.0 percentage-point six-month 2015 benefit from favorable prior accident year reserve development before catastrophe losses was less than the six-month 2014 benefit of 24.1 points.
•
7.2 percentage-point improvement, to 70.7 percent, for the six-month 2015 ratio of current accident year losses and loss expenses before catastrophes, including a 1.9 point decrease in the ratio for current accident year losses of $1 million or more per claim.


CINF 2Q15 Release 6


Life Insurance Results
(Dollars in millions)
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Term life insurance
 
$
35

 
$
33

 
6

 
$
69

 
$
65

 
6

Universal life insurance
 
9

 
12

 
(25
)
 
19

 
20

 
(5
)
Other life insurance, annuity, and disability income
  products
 
8

 
8

 
0

 
17

 
16

 
6

    Earned premiums
 
52

 
53

 
(2
)
 
105

 
101

 
4

Investment income, net of expenses
 
37

 
37

 
0

 
74

 
72

 
3

Other income
 
1

 
1

 
0

 
2

 
3

 
(33
)
Total revenues, excluding realized investment gains and losses
 
90

 
91

 
(1
)
 
181

 
176

 
3

Contract holders’ benefits incurred
 
58

 
56

 
4

 
118

 
112

 
5

Underwriting expenses incurred
 
16

 
19

 
(16
)
 
34

 
34

 
0

    Total benefits and expenses
 
74

 
75

 
(1
)
 
152

 
146

 
4

Net income before income tax and realized investment
  gains, net
 
16

 
16

 
0

 
29

 
30

 
(3
)
Income tax
 
5

 
6

 
(17
)
 
10

 
11

 
(9
)
Net income before realized investment gains, net
 
$
11

 
$
10

 
10

 
$
19

 
$
19

 
0

 
 
 
 
 
 
 
 
 
 
 
 
 

•
$1 million or 2 percent decrease in second-quarter 2015 earned premiums, including a 6 percent increase for term life insurance, our largest life insurance product line. Three- and six-month growth rates for term life were similar.
•
$3 million decrease to $17 million in six-month 2015 fixed-annuity deposits received. Cincinnati Life does not offer variable or indexed annuities.
•
$19 million in six-month 2015 profit, matching the same period in 2014. Mortality experience was favorable for the first six months of 2015.
•
$9 million or 1 percent six-month 2015 decrease to $896 million in GAAP shareholders’ equity for The Cincinnati Life Insurance Company, largely reflecting a decrease in fair value of the fixed-maturity portfolio due to an increase in interest rates.



CINF 2Q15 Release 7


Investment and Balance Sheet Highlights
Investments Results
(Dollars in millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Investment income, net of expenses
 
$
140

 
$
136

 
3

 
$
279

 
$
271

 
3

Investment interest credited to contract holders’
 
(22
)
 
(20
)
 
(10
)
 
(43
)
 
(41
)
 
(5
)
Realized investment gains, net
 
60

 
14

 
329

 
107

 
36

 
197

      Investments profit
 
$
178

 
$
130

 
37

 
$
343

 
$
266

 
29

 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
   Interest
 
$
106

 
$
103

 
3

 
$
211

 
$
207

 
2

   Dividends
 
35

 
34

 
3

 
71

 
66

 
8

   Other
 
1

 
1

 
0

 
1

 
2

 
(50
)
   Less investment expenses
 
2

 
2

 
0

 
4

 
4

 
0

      Investment income, before income taxes
 
140

 
136

 
3

 
279

 
271

 
3

      Less income taxes
 
33

 
33

 
0

 
66

 
65

 
2

      Total investment income
 
$
107

 
$
103

 
4

 
$
213

 
$
206

 
3

 
 
 
 
 
 
 
 
 
 
 
 
 
Investment returns:
 
 
 
 
 
 
 
 
 
 
 
 
      Effective tax rate
 
23.9
%
 
23.8
%
 


 
23.7
%
 
23.9
%
 


 Average invested assets plus cash and cash
  equivalents
 
$
14,534

 
$
13,743

 
 
 
$
14,488

 
$
13,686

 
 
      Average yield pretax
 
3.85
%
 
3.96
%
 


 
3.85
%
 
3.96
%
 


      Average yield after-tax
 
2.94

 
3.00

 


 
2.94

 
3.10

 


Fixed-maturity returns:
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
27.2
%
 
27.1
%
 


 
27.1
%
 
27.1
%
 


Average amortized cost
 
$
9,143

 
$
8,664

 
 
 
$
9,085

 
$
8,679

 
 
Average yield pretax
 
4.64
%
 
4.76
%
 


 
4.65
%
 
4.77
%
 


Average yield after-tax
 
3.38

 
3.47

 


 
3.39

 
3.48

 


 
 
 
 
 
 
 
 
 
 
 
 
 

•
$4 million or 3 percent rise in second-quarter 2015 pretax investment income, including 3 percent growth in equity portfolio dividends and 3 percent growth in interest income.
•
$319 million or 12 percent second-quarter 2015 decrease in pretax net unrealized investment portfolio gains, including a $135 million decrease for the equity portfolio. The total decrease included the offsetting effect of $63 million of pretax net realized gains from investment portfolio security sales or called bonds during the second quarter of 2015, including $56 million from the equity portfolio.

CINF 2Q15 Release 8

Balance Sheet Highlights
(Dollars in millions except share data)
 
At June 30,
 
At December 31,
 
2015
 
2014
Balance sheet data:
 
 
 
 
   Total investments
 
$
14,551

 
$
14,386

   Total assets
 
18,888

 
18,753

   Short-term debt
 
49

 
49

   Long-term debt
 
791

 
791

   Shareholders’ equity
 
6,497

 
6,573

   Book value per share
 
39.60

 
40.14

   Debt-to-total-capital ratio
 
11.4
%
 
11.3
%

•
$15.038 billion in consolidated cash and total investments at June 30, 2015, up less than 1 percent from $14.977 billion at year-end 2014.
•
$9.675 billion bond portfolio at June 30, 2015, with an average rating of A2/A. Fair value increased $79 million or 1 percent during the second quarter of 2015, reflecting $243 million in net purchases of fixed-maturity securities.
•
$4.734 billion equity portfolio was 32.5 percent of total investments, including $1.906 billion in pretax net unrealized gains at June 30, 2015. Second-quarter 2015 decrease in fair value of $55 million or 1 percent.
•
$4.419 billion of statutory surplus for the property casualty insurance group at June 30, 2015, down $53 million from $4.472 billion at year-end 2014, after declaring $200 million in dividends to the parent company. The ratio of net written premiums to property casualty statutory surplus for the 12 months ended June 30, 2015, was 1.0-to-1, up from 0.9-to-1 at year-end 2014.
•
Value creation ratio of 0.9 percent for the first six months of 2015, reflecting 3.5 percent from net income before net realized investment gains, which includes underwriting and investment income, and negative 2.5 percent from investment portfolio realized gains and changes in unrealized gains.

For additional information or to register for our conference call webcast, please visit cinfin.com/investors.
 
About Cincinnati Financial
Cincinnati Financial Corporation offers business, home and auto insurance, our main business, through The Cincinnati Insurance Company and its two standard market property casualty companies. The same local independent insurance agencies that market those policies may offer products of our other subsidiaries, including life and disability income insurance, fixed annuities and surplus lines property and casualty insurance. For additional information about the company, please visit cinfin.com.

Mailing Address:                        Street Address:
P.O. Box 145496                        6200 South Gilmore Road
Cincinnati, Ohio 45250-5496                    Fairfield, Ohio 45014-5141



CINF 2Q15 Release 9

Safe Harbor Statement
This is our “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2014 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 33.
Factors that could cause or contribute to such differences include, but are not limited to:
•
Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns, environmental events, terrorism incidents or other causes
•
Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance
•
Inadequate estimates or assumptions used for critical accounting estimates
•
Declines in overall stock market values negatively affecting the company’s equity portfolio and book value
•
Domestic and global events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:
◦
Significant or prolonged decline in the value of a particular security or group of securities and impairment of the asset(s)
◦
Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities
◦
Significant rise in losses from surety and director and officer policies written for financial institutions or other insured entities
•
Prolonged low interest rate environment or other factors that limit the company’s ability to generate growth in investment income or interest rate fluctuations that result in declining values of fixed-maturity investments, including declines in accounts in which we hold bank-owned life insurance contract assets
•
Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies
•
Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our ability to conduct business and our relationships with agents, policyholders and others
•
Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products
•
Delays or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness
•
Increased competition that could result in a significant reduction in the company’s premium volume
•
Changing consumer insurance-buying habits and consolidation of independent insurance agencies that could alter our competitive advantages
•
Inability to obtain adequate reinsurance on acceptable terms, amount of reinsurance purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers
•
Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability
•
Inability of our subsidiaries to pay dividends consistent with current or past levels
•
Events or conditions that could weaken or harm the company’s relationships with its independent agencies and hamper opportunities to add new agencies, resulting in limitations on the company’s opportunities for growth, such as:
◦
Downgrades of the company’s financial strength ratings
◦
Concerns that doing business with the company is too difficult
◦
Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace
◦
Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace
•
Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:
◦
Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates
◦
Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations
◦
Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business
◦
Add assessments for guaranty funds, other insurance‑related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes
◦
Increase our provision for federal income taxes due to changes in tax law
◦
Increase our other expenses

CINF 2Q15 Release 10

◦
Limit our ability to set fair, adequate and reasonable rates
◦
Place us at a disadvantage in the marketplace
◦
Restrict our ability to execute our business model, including the way we compensate agents
•
Adverse outcomes from litigation or administrative proceedings
•
Events or actions, including unauthorized intentional circumvention of controls, that reduce the company’s future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002
•
Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others
•
Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location
Further, the company’s insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. The company also is subject to public and regulatory initiatives that can affect the market value for its common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.


* * *

Cincinnati Financial Corporation
Condensed Consolidated Balance Sheets and Statements of Income (unaudited)
(Dollars in millions)
 
 
 
June 30,
December 31,
 
 
 
 
 
2015
 
2014
Assets
 
 
 
 
 
 
 
   Investments
 
 
 
 
$
14,551

 
$
14,386

   Cash and cash equivalents
 
 
 
 
487

 
591

   Premiums receivable
 
 
 
 
1,509

 
1,405

   Reinsurance recoverable
 
 
 
 
535

 
545

Deferred policy acquisition costs
 
 
 
 
600

 
578

   Other assets
 
 
 
 
1,206

 
1,248

      Total assets
 
 
 
 
$
18,888

 
$
18,753

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
   Insurance reserves
 
 
 
 
$
7,234

 
$
6,982

   Unearned premiums
 
 
 
 
2,191

 
2,082

   Deferred income tax
 
 
 
 
717

 
840

   Long-term debt and capital lease obligations
 
 
 
 
823

 
827

   Other liabilities
 
 
 
 
1,426

 
1,449

      Total liabilities
 
 
 
 
12,391

 
12,180

 
 
 
 
 
 
 
 
Shareholders’ Equity
 
 
 
 
 
 
 
   Common stock and paid-in capital
 
 
 
 
1,613

 
1,611

   Retained earnings
 
 
 
 
4,658

 
4,505

   Accumulated other comprehensive income
 
 
 
 
1,514

 
1,744

   Treasury stock
 
 
 
 
(1,288
)
 
(1,287
)
      Total shareholders’ equity
 
 
 
 
6,497

 
6,573

      Total liabilities and shareholders’ equity
 
 
 
 
$
18,888

 
$
18,753

 
 
 
 
 
 
 
 
(Dollars in millions except per share data)
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
   Earned premiums
$
1,111

 
$
1,059

 
$
2,205

 
$
2,086

   Investment income, net of expenses
140

 
136

 
279

 
271

   Realized investment gains, net
60

 
14

 
107

 
36

   Other revenues
5

 
5

 
10

 
10

      Total revenues
1,316

 
1,214

 
2,601

 
2,403

 
 
 
 
 
 
 
 
Benefits and Expenses
 
 
 
 
 
 
 
   Insurance losses and contract holders' benefits
712

 
763

 
1,461

 
1,495

   Underwriting, acquisition and insurance expenses
340

 
328

 
685

 
648

   Interest expense
13

 
13

 
26

 
27

   Other operating expenses
3

 
3

 
7

 
7

      Total benefits and expenses
1,068

 
1,107

 
2,179

 
2,177

 
 
 
 
 
 
 
 
Income Before Income Taxes
248

 
107

 
422

 
226

 
 
 
 
 
 
 
 
Provision for Income Taxes
72

 
23

 
118

 
51

 
 
 
 
 
 
 
 
Net Income
$
176

 
$
84

 
$
304

 
$
175

 
 
 
 
 
 
 
 
Per Common Share:
 
 
 
 
 
 
 
   Net income—basic
$
1.07

 
$
0.51

 
$
1.85

 
$
1.07

   Net income—diluted
1.06

 
0.51

 
1.84

 
1.06


CINF 2Q15 Release 11


Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures
(See attached tables for reconciliations; additional prior-period reconciliations available at cinfin.com/investors.)
Cincinnati Financial Corporation prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners’ (NAIC) Accounting Practices and Procedures Manual, and therefore is not reconciled to GAAP data.
Management uses certain non-GAAP and non-statutory financial measures to evaluate its primary business areas – property casualty insurance, life insurance and investments. Management uses these measures when analyzing both GAAP and non-GAAP measures to improve its understanding of trends in the underlying business and to help avoid incorrect or misleading assumptions and conclusions about the success or failure of company strategies. Management adjustments to GAAP measures generally: apply to non-recurring events that are unrelated to business performance and distort short-term results; involve values that fluctuate based on events outside of management’s control; or relate to accounting refinements that affect comparability between periods, creating a need to analyze data on the same basis.
•
Operating income: Operating income is calculated by excluding net realized investment gains and losses (defined as realized investment gains and losses after applicable federal and state income taxes) from net income. Management evaluates operating income to measure the success of pricing, rate and underwriting strategies. While realized investment gains (or losses) are integral to the company’s insurance operations over the long term, the determination to realize investment gains or losses in any period may be subject to management’s discretion and is independent of the insurance underwriting process. Also, under applicable GAAP accounting requirements, gains and losses can be recognized from certain changes in market values of securities without actual realization. Management believes that the level of realized investment gains or losses for any particular period, while it may be material, may not fully indicate the performance of ongoing underlying business operations in that period.
For these reasons, many investors and shareholders consider operating income to be one of the more meaningful measures for evaluating insurance company performance. Equity analysts who report on the insurance industry and the company generally focus on this metric in their analyses. The company presents operating income so that all investors have what management believes to be a useful supplement to GAAP information.
•
Value creation ratio: This is a measure of shareholder value creation that management believes captures the contribution of the company’s insurance operations, the success of its investment strategy and the importance placed on paying cash dividends to shareholders. The value creation ratio measure is made up of two primary components: (1) rate of growth in book value per share plus (2) the ratio of dividends declared per share to beginning book value per share. Management believes this non-GAAP measure is a useful supplement to GAAP information, providing a meaningful measure of long-term progress in creating shareholder value. It is intended to be all-inclusive regarding changes in book value per share, and uses originally reported book value per share in cases where book value per share has been adjusted, such as adoption of Accounting Standards Updates with a cumulative effect of a change in accounting.
•
Statutory accounting rules: For public reporting, insurance companies prepare financial statements in accordance with GAAP. However, insurers also must calculate certain data according to statutory accounting rules as defined in the NAIC’s Accounting Practices and Procedures Manual, which may be, and has been, modified by various state insurance departments. Statutory data is publicly available, and various organizations use it to calculate aggregate industry data, study industry trends and compare insurance companies.
•
Written premium: Under statutory accounting rules, property casualty written premium is the amount recorded for policies issued and recognized on an annualized basis at the effective date of the policy. Management analyzes trends in written premium to assess business efforts. Earned premium, used in both statutory and GAAP accounting, is calculated ratably over the policy term. The difference between written and earned premium is unearned premium.

CINF 2Q15 Release 12

Cincinnati Financial Corporation
Balance Sheet Reconciliation
(Dollars are per share)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Value creation ratio:
 
 
 
 
 
 
 
 
   End of period book value
 
$
39.60

 
$
38.77

 
$
39.60

 
$
38.77

   Less beginning of period book value
 
40.22

 
37.73

 
40.14

 
37.21

   Change in book value
 
(0.62
)
 
1.04

 
(0.54
)
 
1.56

   Dividend declared to shareholders
 
0.46

 
0.44

 
0.92

 
0.88

   Total value creation
 
$
(0.16
)
 
$
1.48

 
$
0.38

 
$
2.44

 
 
 
 
 
 
 
 
 
Value creation ratio from change in book value*
 
(1.5
)%
 
2.7
%
 
(1.4
)%
 
4.2
%
Value creation ratio from dividends declared to
  shareholders**
1.1

 
1.2

 
2.3

 
2.4

Value creation ratio
 
(0.4
)%
 
3.9
%
 
0.9
 %
 
6.6
%
 
 
 
 
 
 
 
 
 
* Change in book value divided by the beginning of period book value
 
 
** Dividend declared to shareholders divided by beginning of period book value
 
 

 Net Income Reconciliation
 
(Dollars in millions except per share data)
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
2015
 
2014
   Net income
 
$
176

 
$
84

 
$
304

 
$
175

   Realized investment gains, net
 
38

 
9

 
69

 
23

   Operating income
 
138

 
75

 
235

 
152

   Less catastrophe losses
 
(51
)
 
(74
)
 
(79
)
 
(131
)
   Operating income before catastrophe losses
 
189

 
149

 
$
314

 
$
283

 
 
 
 
 
 
 
 
 
Diluted per share data:
 
 
 
 
 
 
 
 
   Net income
 
$
1.06

 
$
0.51

 
$
1.84

 
$
1.06

   Realized investment gains, net
 
0.23

 
0.05

 
0.42

 
0.14

   Operating income
 
0.83

 
0.46

 
1.42

 
0.92

   Less catastrophe losses
 
(0.31
)
 
(0.45
)
 
(0.48
)
 
(0.79
)
   Operating income before catastrophe losses
 
1.14

 
0.91

 
$
1.90

 
$
1.71

 
 
 
 
 
 
 
 
 




CINF 2Q15 Release 13

Cincinnati Financial Corporation
Property Casualty Insurance Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Three months ended June 30, 2015
 
Consolidated
Commercial
Personal
E&S
Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
   Written premiums
 
$
1,142

 
 
$
787

 
 
$
309

 
 
$
46

 
   Unearned premiums change
 
(83
)
 
 
(42
)
 
 
(37
)
 
 
(4
)
 
   Earned premiums
 
$
1,059

 
 
$
745

 
 
$
272

 
 
$
42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statutory ratios:
 
 
 
 
 
 
 
 
 
 
 
 
   Combined ratio
 
90.7
 %
 
 
85.9
 %
 
 
105.8
%
 
 
78.7
 %
 
   Contribution from catastrophe losses
 
7.5

 
 
5.9

 
 
12.6

 
 
0.5

 
   Combined ratio excluding catastrophe losses
 
83.2
 %
 
 
80.0
 %
 
 
93.2
%
 
 
78.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Commission expense ratio
 
17.9
 %
 
 
17.8
 %
 
 
17.0
%
 
 
26.7
 %
 
   Other underwriting expense ratio
 
11.0

 
 
12.1

 
 
9.2

 
 
2.4

 
   Total expense ratio
 
28.9
 %
 
 
29.9
 %
 
 
26.2
%
 
 
29.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP ratios:
 
 
 
 
 
 
 
 
 
 
 
 
   Combined ratio
 
92.4
 %
 
 
87.2
 %
 
 
109.2
%
 
 
76.0
 %
 
   Contribution from catastrophe losses
 
7.5

 
 
5.9

 
 
12.6

 
 
0.5

 
   Prior accident years before catastrophe losses
 
(6.6
)
 
 
(8.6
)
 
 
1.1

 
 
(20.2
)
 
Current accident year combined ratio before catastrophe losses
 
91.5
 %
 
 
89.9
 %
 
 
95.5
%
 
 
95.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Six months ended June 30, 2015
 
Consolidated
Commercial
Personal
E&S
Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
   Written premiums
 
$
2,208

 
 
$
1,570

 
 
$
550

 
 
$
88

 
   Unearned premiums change
 
(108
)
 
 
(92
)
 
 
(10
)
 
 
(6
)
 
   Earned premiums
 
$
2,100

 
 
$
1,478

 
 
$
540

 
 
$
82

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statutory ratios:
 
 
 
 
 
 
 
 
 
 
 
 
   Combined ratio
 
93.3
 %
 
 
90.2
 %
 
 
103.3
%
 
 
83.9
 %
 
   Contribution from catastrophe losses
 
5.8

 
 
5.0

 
 
8.8

 
 
0.7

 
   Combined ratio excluding catastrophe losses
 
87.5
 %
 
 
85.2
 %
 
 
94.5
%
 
 
83.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Commission expense ratio
 
17.9
 %
 
 
17.3
 %
 
 
18.0
%
 
 
26.7
 %
 
   Other underwriting expense ratio
 
11.5

 
 
12.6

 
 
10.0

 
 
2.8

 
   Total expense ratio
 
29.4
 %
 
 
29.9
 %
 
 
28.0
%
 
 
29.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP ratios:
 
 
 
 
 
 
 
 
 
 
 
 
   Combined ratio
 
94.9
 %
 
 
91.9
 %
 
 
105.3
%
 
 
82.1
 %
 
   Contribution from catastrophe losses
 
5.8

 
 
5.0

 
 
8.8

 
 
0.7

 
   Prior accident years before catastrophe losses
 
(3.9
)
 
 
(4.6
)
 
 
0.2

 
 
(17.0
)
 
Current accident year combined ratio before catastrophe losses
 
93.0
 %
 
 
91.5
 %
 
 
96.3
%
 
 
98.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on dollar amounts in thousands.


CINF 2Q15 Release 14
Exhibit 99.2 2Q15


Cincinnati Financial Corporation
Supplemental Financial Data
for the period ending June 30, 2015

6200 South Gilmore Road
Fairfield, Ohio 45014-5141
cinfin.com

Investor Contact:
Media Contact:
Shareholder Contact:
Dennis E. McDaniel
Betsy E. Ertel
Molly A. Grimm
513-870-2768
513-603-5323
513-870-2697

 
A.M. Best
Fitch
Moody's
Standard &
 Poor's
Cincinnati Financial Corporation
 
 
 
 
Corporate Debt
a-
BBB+
A3
BBB+
 
 
 
 
 
The Cincinnati Insurance Companies
 
 
 
 
Insurer Financial Strength
 
 
 
 
 
 
 
 
 
Property Casualty Group
 
 
 
 
      Standard Market Subsidiaries:
 
 
 
 
             The Cincinnati Insurance Company
A+
A+
A1
A+
             The Cincinnati Indemnity Company
A+
A+
A1
A+
             The Cincinnati Casualty Company
A+
A+
A1
A+
      Surplus Lines Subsidiary:
 
 
 
 
             The Cincinnati Specialty Underwriters Insurance Company
A
—
—
—
 
 
 
 
 
The Cincinnati Life Insurance Company
A
A+
—
A+

Ratings are as of July 27, 2015, under continuous review and subject to change and/or affirmation. For the current ratings, select Financial Strength on cinfin.com.
The consolidated financial statements and financial exhibits that follow are unaudited. These consolidated financial statements and exhibits should be read in conjunction with the consolidated financial statements and notes included with our periodic filings with the U.S. Securities and Exchange Commission. The results of operations for interim periods may not be indicative of results to be expected for the full year.

CINF Second-Quarter 2015 Supplemental Financial Data
1


 
Cincinnati Financial Corporation
 
Supplemental Financial Data
 
for the period ending June 30, 2015
 
 
 
 
 
Page
 
Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures
3
 
 
 
Consolidated
 
 
Quick Reference
4
 
CFC and Subsidiaries Consolidation – Six Months Ended June 30, 2015
5
 
CFC and Subsidiaries Consolidation – Three Months Ended June 30, 2015
6
 
CFC Insurance Subsidiaries – Selected Balance Sheet Data
7
 
 
 
 
 
 
Consolidated Property Casualty Insurance Operations
 
 
Statutory Statements of Income
8
 
Consolidated Cincinnati Insurance Companies – Losses Incurred Detail
9
 
Consolidated Cincinnati Insurance Companies – Loss Ratio Detail
10
 
Consolidated Cincinnati Insurance Companies – Loss Claim Count Detail
11
 
Direct Written Premiums by Risk State by Line of Business
12
 
Quarterly Property Casualty Data – Commercial Lines
13
 
Quarterly Property Casualty Data – Personal Lines and Excess & Surplus Lines
14
 
Loss and Loss Expense Analysis – Six Months Ended June 30, 2015
15
 
Loss and Loss Expense Analysis – Three Months Ended June 30, 2015
16
 
 
 
Reconciliation Data
 
 
Quarterly Property Casualty Data – Consolidated
17
 
Quarterly Property Casualty Data – Commercial Lines
18
 
Quarterly Property Casualty Data – Personal Lines
19
 
Quarterly Property Casualty Data – Excess & Surplus Lines
20
 
 
 
Life Insurance Operations
 
 
Statutory Statements of Income
21



CINF Second-Quarter 2015 Supplemental Financial Data
2


Definitions of Non-GAAP Information and
Reconciliation to Comparable GAAP Measures
Cincinnati Financial Corporation prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners' (NAIC) Accounting Practices and Procedures Manual, and therefore is not reconciled to GAAP data.
Management uses certain non-GAAP and non-statutory financial measures to evaluate its primary business areas - property casualty insurance, life insurance and investments. Management uses these measures when analyzing both GAAP and non-GAAP measures to improve its understanding of trends in the underlying business and to help avoid incorrect or misleading assumptions and conclusions about the success or failure of company strategies. Management adjustments to GAAP measures generally: apply to non-recurring events that are unrelated to business performance and distort short-term results; involve values that fluctuate based on events outside of management's control; or relate to accounting refinements that affect comparability between periods, creating a need to analyze data on the same basis.
•
Operating income: Operating income is calculated by excluding net realized investment gains and losses (defined as realized investment gains and losses after applicable federal and state income taxes) from net income. Management evaluates operating income to measure the success of pricing, rate and underwriting strategies. While realized investment gains (or losses) are integral to the company's insurance operations over the long term, the determination to realize investment gains or losses in any period may be subject to management's discretion and is independent of the insurance underwriting process. Also, under applicable GAAP accounting requirements, gains and losses can be recognized from certain changes in market values of securities without actual realization. Management believes that the level of realized investment gains or losses for any particular period, while it may be material, may not fully indicate the performance of ongoing underlying business operations in that period.
For these reasons, many investors and shareholders consider operating income to be one of the more meaningful measures for evaluating insurance company performance. Equity analysts who report on the insurance industry and the company generally focus on this metric in their analyses. The company presents operating income so that all investors have what management believes to be a useful supplement to GAAP information.
•
Value creation ratio: This is a measure of shareholder value creation that management believes captures the contribution of the company's insurance operations, the success of its investment strategy and the importance placed on paying cash dividends to shareholders. The value creation ratio measure is made up of two primary components: (1) rate of growth in book value per share plus (2) the ratio of dividends declared per share to beginning book value per share. Management believes this non-GAAP measure is a useful supplement to GAAP information, providing a meaningful measure of long-term progress in creating shareholder value. It is intended to be all-inclusive regarding changes in book value per share, and uses originally reported book value per share in cases where book value per share has been adjusted, such as adoption of Accounting Standards Updates with a cumulative effect of a change in accounting.
•
Statutory accounting rules: For public reporting, insurance companies prepare financial statements in accordance with GAAP. However, insurers also must calculate certain data according to statutory accounting rules as defined in the NAIC's Accounting Practices and Procedures Manual, which may be, and has been, modified by various state insurance departments. Statutory data is publicly available, and various organizations use it to calculate aggregate industry data, study industry trends and compare insurance companies.
•
Written premium: Under statutory accounting rules, property casualty written premium is the amount recorded for policies issued and recognized on an annualized basis at the effective date of the policy. Management analyzes trends in written premium to assess business efforts. Earned premium, used in both statutory and GAAP accounting, is calculated ratably over the policy term. The difference between written and earned premium is unearned premium.



CINF Second-Quarter 2015 Supplemental Financial Data
3


Cincinnati Financial Corporation
Quick Reference
 
—
Second Quarter 2015
(all data shown is for the three months ended or as of June 30, 2015)
 
 
 
 
 
 
 
 
 
(Dollars in millions except per share data)
6/30/2015
 
Year over year change %
 
 
6/30/2015
 
Year over year change %
Revenues:
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial lines net written premiums
$
787

 
5

 
Commercial lines loss and loss expenses
$
417

 
(10
)
Personal lines net written premiums
309

 
5

 
Personal lines loss and loss expenses
216

 
(5
)
Excess & surplus lines net written premiums
46

 
15

 
Excess & surplus lines loss and loss expenses
21

 
11

   Property casualty net written premiums
1,142

 
6

 
Life and health contract holders' benefits incurred
58

 
4

Life and accident and health net written premiums
56

 
4

 
Underwriting, acquisition and insurance expenses
340

 
4

Annuity net written premiums
9

 
(26
)
 
Interest expenses
13

 
0

   Life, annuity and accident and health net written premiums
65

 
(1
)
 
Other operating expenses
3

 
0

Commercial lines net earned premiums
745

 
4

 
Total benefits & expenses
1,068

 
(4
)
Personal lines net earned premiums
272

 
5

 
Income before income taxes
248

 
132

Excess & surplus lines net earned premiums
42

 
24

 
Total income tax
72

 
213

Property casualty net earned premiums
1,059

 
5

 
 
 
 
 
Fee revenue
3

 
0

 
Balance Sheet:
 
 
 
Life and accident and health net earned premiums
52

 
(2
)
 
 
 
 
 
Investment income
140

 
3

 
Fixed maturity investments
$
9,675

 
 
Realized investment gains, net
60

 
329

 
Equity securities
4,734

 
 
Other revenue
2

 
0

 
Other investments
142

 
 
Total revenues
1,316

 
8

 
  Total invested assets
$
14,551

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expense reserves
$
4,691

 
 
 
 
 
 
 
Life policy and investment contract reserves
2,543

 
 
Income:
 
 
 
 
Long-term debt and capital lease obligations
823

 
 
 
 
 
 
 
Shareholders' equity
6,497

 
 
Operating income
$
138

 
84

 
 
 
 
 
Realized investment gains, net
38

 
322

 
Key ratios:
 
 
 
Net income
176

 
110

 
 
 
 
 
 
 
 
 
 
Commercial lines GAAP combined ratio
87.2
 %
 
 
 
 
 
 
 
Personal lines GAAP combined ratio
109.2

 
 
 
 
 
 
 
Excess & surplus lines GAAP combined ratio
76.0

 
 
 
 
 
 
 
Property casualty GAAP combined ratio
92.4

 
 
Per share (diluted):
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial lines STAT combined ratio
85.9
 %
 
 
Operating income
$
0.83

 
80

 
Personal lines STAT combined ratio
105.8

 
 
Realized investment gains, net
0.23

 
360

 
Excess & surplus lines STAT combined ratio
78.7

 
 
Net income
1.06

 
108

 
Property casualty STAT combined ratio
90.7

 
 
Book value
39.60

 
2

 
 
 
 
 
Weighted average shares outstanding
165.5

 
0

 
Value creation ratio
(0.4
)%
 
 

CINF Second-Quarter 2015 Supplemental Financial Data
4


Cincinnati Financial Corporation and Subsidiaries
Consolidated Statements of Income for the Six Months Ended June 30, 2015
 
 
 
 
 
 
 
(Dollars in millions)
CFC
CONSOL P&C
CLIC
CFC-I
ELIM
Total
Revenues
 
 
 
 
 
 
  Premiums earned:
 
 
 
 
 
 
    Property casualty
$
—

$
2,174

$
—

$
—

$
—

$
2,174

    Life
—

—

133

—

—

133

    Premiums ceded
—

(74
)
(28
)
—

—

(102
)
      Total earned premium
—

2,100

105

—

—

2,205

  Investment income, net of expenses
24

181

74

—

—

279

  Realized investment gains, net
9

92

2

—

4

107

  Fee revenues
—

4

2

—

—

6

  Other revenues
7

1

—

3

(7
)
4

Total revenues
$
40

$
2,378

$
183

$
3

$
(3
)
$
2,601

 
 
 
 
 
 
 
Benefits & expenses
 
 
 
 
 
 
  Losses & contract holders' benefits
$
—

$
1,366

$
144

$
—

$
—

$
1,510

  Reinsurance recoveries
—

(23
)
(26
)
—

—

(49
)
  Underwriting, acquisition and insurance expenses
—

651

34

—

—

685

  Interest expense
26

—

—

—

—

26

  Other operating expenses
14

—

—

1

(8
)
7

Total expenses
$
40

$
1,994

$
152

$
1

$
(8
)
$
2,179

 
 
 
 
 
 
 
Income before income taxes
$
—

$
384

$
31

$
2

$
5

$
422

 
 
 
 
 
 
 
Provision (benefit) for income taxes
 
 
 
 
 
 
  Current operating income
$
(4
)
$
85

$
(3
)
$
1

$
(1
)
$
78

  Capital gains/losses
3

33

1

—

1

38

  Deferred
(5
)
(8
)
13

—

2

2

Total provision (benefit) for income taxes
$
(6
)
$
110

$
11

$
1

$
2

$
118

 
 
 
 
 
 
 
Operating income
$
—

$
215

$
19

$
1

$
—

$
235

 
 
 
 
 
 
 
Net income - current year
$
6

$
274

$
20

$
1

$
3

$
304

 
 
 
 
 
 
 
Net income - prior year
$
3

$
148

$
22

$
1

$
1

$
175

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding.
 
 
 


CINF Second-Quarter 2015 Supplemental Financial Data
5


Cincinnati Financial Corporation and Subsidiaries
Consolidated Statements of Income for the Three Months Ended June 30, 2015
 
 
 
 
 
 
 
(Dollars in millions)
CFC
CONSOL P&C
CLIC
CFC-I
ELIM
Total
Revenues
 
 
 
 
 
 
  Premiums earned:
 
 
 
 
 
 
    Property casualty
$
—

$
1,096

$
—

$
—

$
—

$
1,096

    Life
—

—

68

—

—

68

    Premiums ceded
—

(37
)
(16
)
—

—

(53
)
      Total earned premium
—

1,059

52

—

—

1,111

  Investment income, net of expenses
12

91

37

—

—

140

  Realized investment gains, net
8

50

1

—

1

60

  Fee revenues
—

2

1

—

—

3

  Other revenues
3

1

—

2

(4
)
2

Total revenues
$
23

$
1,203

$
91

$
2

$
(3
)
$
1,316

 
 
 
 
 
 
 
Benefits & expenses
 
 
 
 
 
 
  Losses & contract holders' benefits
$
—

$
676

$
72

$
—

$
—

$
748

  Reinsurance recoveries
—

(22
)
(14
)
—

—

(36
)
  Underwriting, acquisition and insurance expenses
—

324

16

—

—

340

  Interest expense
13

—

—

—

—

13

  Other operating expenses
6

—

—

1

(4
)
3

Total expenses
$
19

$
978

$
74

$
1

$
(4
)
$
1,068

 
 
 
 
 
 
 
Income before income taxes
$
4

$
225

$
17

$
1

$
1

$
248

 
 
 
 
 
 
 
Provision (benefit) for income taxes
 
 
 
 
 
 
  Current operating income
$
(4
)
$
52

$
—

$
1

$
(1
)
$
48

  Capital gains/losses
3

18

1

—

—

22

  Deferred
(1
)
(4
)
6

—

1

2

Total provision (benefit) for income taxes
$
(2
)
$
66

$
7

$
1

$
—

$
72

 
 
 
 
 
 
 
Operating income
$
1

$
127

$
10

$
—

$
—

$
138

 
 
 
 
 
 
 
Net income - current year
$
6

$
159

$
10

$
—

$
1

$
176

 
 
 
 
 
 
 
Net income (loss) - prior year
$
(3
)
$
74

$
13

$
—

$
—

$
84

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding.
 
 
 


CINF Second-Quarter 2015 Supplemental Financial Data
6


Cincinnati Financial Corporation Insurance Subsidiaries
Selected Balance Sheet Data
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
12/31/2015
9/30/2015
6/30/2015
3/31/2015
12/31/2014
9/30/2014
6/30/2014
3/31/2014
Cincinnati Insurance Consolidated
 
 
 
 
 
 
 
 
   Fixed maturities (fair value)


$
6,435

$
6,325

$
6,260

$
6,344

$
6,215

$
6,111

   Equities (fair value)


3,108

3,108

3,195

3,121

3,094

3,022

   Fixed maturities - pretax net unrealized gain


280

387

366

379

414

361

   Equities - pretax net unrealized gain


1,297

1,397

1,478

1,387

1,434

1,349

   Loss and loss expense reserves - STAT


4,357

4,302

4,158

4,112

4,129

4,037

   Equity - GAAP


5,485

5,593

5,594

5,480

5,481

5,384

   Surplus - STAT


4,419

4,436

4,472

4,364

4,332

4,308

 
 
 
 
 
 
 
 
 
The Cincinnati Life Insurance Company
 
 
 
 
 
 
 
 
   Fixed maturities (fair value)


$
3,176

$
3,199

$
3,126

$
3,102

$
3,091

$
2,989

   Equities (fair value)


8

9

9

8

8

14

   Fixed maturities - pretax net unrealized gain


151

220

197

195

225

186

   Equities - pretax net unrealized gain


3

4

3

3

3

6

   Equity - GAAP


896

927

904

893

901

867

   Surplus - STAT


217

219

223

228

224

232

 
 
 
 
 
 
 
 
 


CINF Second-Quarter 2015 Supplemental Financial Data
7


Consolidated Cincinnati Insurance Companies
Statutory Statements of Income
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30,
For the Six Months Ended June 30,
(Dollars in millions)
2015
2014
Change
% Change
2015
2014
Change
% Change
Underwriting income
 
 
 
 
 
 
 
 
Net premiums written
$
1,142

$
1,082

$
60

6

$
2,208

$
2,119

$
89

4

Unearned premiums increase
83

76

7

9

108

134

(26
)
(19
)
Earned premiums
$
1,059

$
1,006

$
53

5

$
2,100

$
1,985

$
115

6

 
 
 
 
 
 
 
 
 
Losses incurred
$
558

$
612

$
(54
)
(9
)
$
1,125

$
1,178

$
(53
)
(4
)
Allocated loss expenses incurred
39

39

—

—

99

90

9

10

Unallocated loss expenses incurred
57

56

1

2

119

115

4

3

Other underwriting expenses incurred
327

314

13

4

643

611

32

5

Workers compensation dividend incurred
3

4

(1
)
(25
)
7

8

(1
)
(13
)
 
 
 
 
 
 
 
 
 
     Total underwriting deductions
$
984

$
1,025

$
(41
)
(4
)
$
1,993

$
2,002

$
(9
)
—

Net underwriting profit (loss)
$
75

$
(19
)
$
94

nm

$
107

$
(17
)
$
124

nm

 
 
 
 
 
 
 
 
 
Investment income
 
 
 
 
 
 
 
 
Gross investment income earned
$
94

$
93

$
1

1

$
186

$
184

$
2

1

Net investment income earned
92

91

1

1

183

181

2

1

Net realized capital gains
34

22

12

55

60

28

32

114

     Net investment gains (net of tax)
$
126

$
113

$
13

12

$
243

$
209

$
34

16

 
 
 
 
 
 
 
 
 
     Other income
$
2

$
1

$
1

100

$
4

$
3

$
1

33

 
 
 
 
 
 
 
 
 
Net income before federal income taxes
$
203

$
95

$
108

114

$
354

$
195

$
159

82

Federal and foreign income taxes incurred
$
53

$
23

$
30

130

$
84

$
40

$
44

110

     Net income (statutory)
$
150

$
72

$
78

108

$
270

$
155

$
115

74

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding.
*nm - Not meaningful
*Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the
  appropriate regulatory bodies.

    

CINF Second-Quarter 2015 Supplemental Financial Data
8


Consolidated Cincinnati Insurance Companies
Losses Incurred Detail
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


$
5

$
12

$
12

$
7

$
11

$
—

$
17

$
12


$
19


$
30

Current accident year losses $1,000,000-$5,000,000


24

37

46

51

52

23

61

74


125


172

Large loss prior accident year reserve development


(4
)
15

(14
)
(6
)
17

10

11

27


21


7

   Total large losses incurred


$
25

$
64

$
44

$
52

$
80

$
33

$
89

$
113


$
165


$
209

Losses incurred but not reported


38

43

112

17

(17
)
21

81

5


22


133

Other losses excluding catastrophe losses


417

418

365

432

436

427

835

863


1,295


1,660

Catastrophe losses


78

42

(13
)
11

112

86

120

197


208


197

   Total losses incurred


$
558

$
567

$
508

$
512

$
611

$
567

$
1,125

$
1,178


$
1,690


$
2,199

Commercial Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


$
5

$
12

$
12

$
7

$
11

$
—

$
17

$
12


$
19


$
30

Current accident year losses $1,000,000-$5,000,000


14

24

39

45

47

18

38

64


109


149

Large loss prior accident year reserve development


(4
)
15

(11
)
(7
)
15

10

11

25


18


7

   Total large losses incurred


$
15

$
51

$
40

$
45

$
73

$
28

$
66

$
101


$
146


$
186

Losses incurred but not reported


17

31

95

8

(35
)
22

48

(12
)

(4
)

90

Other losses excluding catastrophe losses


274

272

240

282

292

282

546

574


856


1,096

Catastrophe losses


43

29

(10
)
7

59

58

72

116


123


114

   Total losses incurred


$
349

$
383

$
365

$
342

$
389

$
390

$
732

$
779


$
1,121


$
1,486

Personal Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—


$
—


$
—

Current accident year losses $1,000,000-$5,000,000


10

12

6

6

4

4

22

8


14


20

Large loss prior accident year reserve development


—

—

(3
)
2

2

—

—

2


4


1

   Total large losses incurred


$
10

$
12

$
3

$
8

$
6

$
4

$
22

$
10


$
18


$
21

Losses incurred but not reported


14

7

12

3

9

(5
)
21

4


7


19

Other losses excluding catastrophe losses


136

134

119

144

138

138

270

276


420


539

Catastrophe losses


34

13

(4
)
4

52

27

47

79


83


79

   Total losses incurred


$
194

$
166

$
130

$
159

$
205

$
164

$
360

$
369


$
528


$
658

Excess & Surplus Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—


$
—


$
—

Current accident year losses $1,000,000-$5,000,000


—

1

1

—

1

1

1

2


2


3

Large loss prior accident year reserve development


—

—

—

(1
)
—

—

—

—


(1
)

(1
)
   Total large losses incurred


$
—

$
1

$
1

$
(1
)
$
1

$
1

$
1

$
2


$
1


$
2

Losses incurred but not reported


7

5

5

6

9

4

12

13


19


24

Other losses excluding catastrophe losses


7

12

6

6

6

7

19

13


19


25

Catastrophe losses


1

—

1

—

1

1

1

2


2


4

   Total losses incurred


$
15

$
18

$
13

$
11

$
17

$
13

$
33

$
30


$
41


$
55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. The sum of quarterly amounts may not equal the full year as each is computed independently.


CINF Second-Quarter 2015 Supplemental Financial Data
9


Consolidated Cincinnati Insurance Companies
Loss Ratio Detail
 
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


0.5
 %
1.0
%
1.0
 %
0.7
 %
1.1
 %
—
 %
0.8
%
0.6
 %

0.6
 %
 
0.7
 %
Current accident year losses $1,000,000-$5,000,000


2.1

3.6

4.7

4.8

5.0

2.3

2.9

3.8


4.2

 
4.3

Large loss prior accident year reserve development


(0.3
)
1.4

(1.4
)
(0.5
)
1.7

1.1

0.5

1.4


0.7

 
0.2

   Total large loss ratio


2.3
 %
6.0
%
4.3
 %
5.0
 %
7.8
 %
3.4
 %
4.2
%
5.8
 %

5.5
 %
 
5.2
 %
Losses incurred but not reported


3.6

4.2

10.7

1.7

(1.6
)
2.2

3.9

0.2


0.8

 
3.3

Other losses excluding catastrophe losses


39.6

40.1

35.2

42.3

43.4

43.6

39.8

43.5


43.0

 
41.0

Catastrophe losses


7.3

4.1

(1.1
)
1.0

11.1

8.7

5.7

9.9


6.9

 
4.9

   Total loss ratio


52.8
 %
54.4
%
49.1
 %
50.0
 %
60.7
 %
57.9
 %
53.6
%
59.4
 %

56.2
 %
 
54.4
 %
Commercial Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


0.7
 %
1.6
%
1.5
 %
1.0
 %
1.6
 %
—
 %
1.2
%
0.8
 %

0.9
 %
 
1.0
 %
Current accident year losses $1,000,000-$5,000,000


1.7

3.3

5.6

5.9

6.5

2.6

2.6

4.6


5.1

 
5.2

Large loss prior accident year reserve development


(0.5
)
2.0

(1.5
)
(0.9
)
2.1

1.4

0.7

1.8


0.9

 
0.3

   Total large loss ratio


1.9
 %
6.9
%
5.6
 %
6.0
 %
10.2
 %
4.0
 %
4.5
%
7.2
 %

6.9
 %
 
6.5
 %
Losses incurred but not reported


2.2

4.3

12.8

1.1

(4.8
)
3.2

3.2

(0.9
)

(0.2
)
 
3.1

Other losses excluding catastrophe losses


37.0

37.1

32.6

39.6

41.0

40.6

37.0

40.8


40.2

 
38.4

Catastrophe losses


5.8

4.0

(1.1
)
0.8

8.3

8.3

4.9

8.3


5.8

 
4.0

   Total loss ratio


46.9
 %
52.3
%
49.9
 %
47.5
 %
54.7
 %
56.1
 %
49.6
%
55.4
 %

52.7
 %
 
52.0
 %
Personal Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


—
 %
—
%
—
 %
—
 %
—
 %
—
 %
—
%
—
 %

—
 %
 
—
 %
Current accident year losses $1,000,000-$5,000,000


3.5

4.5

2.2

2.5

1.7

1.4

4.1

1.5


1.8

 
1.9

Large loss prior accident year reserve development


0.1

—

(1.1
)
0.8

0.6

0.3

—

0.5


0.7

 
0.1

   Total large loss ratio


3.6
 %
4.5
%
1.1
 %
3.3
 %
2.3
 %
1.7
 %
4.1
%
2.0
 %

2.5
 %
 
2.0
 %
Losses incurred but not reported


5.1

2.7

4.5

1.3

3.5

(2.0
)
3.9

0.8


0.9

 
1.8

Other losses excluding catastrophe losses


50.0

49.9

44.8

54.1

53.6

54.5

49.8

54.0


54.1

 
51.9

Catastrophe losses


12.5

4.9

(1.5
)
1.7

20.0

10.6

8.7

15.4


10.7

 
7.6

   Total loss ratio


71.2
 %
62.0
%
48.9
 %
60.4
 %
79.4
 %
64.8
 %
66.5
%
72.2
 %

68.2
 %
 
63.3
 %
Excess & Surplus Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year losses greater than $5,000,000


—
 %
—
%
—
 %
—
 %
—
 %
—
 %
—
%
—
 %

—
 %
 
—
 %
Current accident year losses $1,000,000-$5,000,000


—

2.5

3.3

—

3.1

3.2

1.2

3.1


1.9

 
2.3

Large loss prior accident year reserve development


—

—

(1.8
)
(1.3
)
—

(0.3
)
—

(0.1
)

(0.5
)
 
(0.9
)
   Total large loss ratio


—
 %
2.5
%
1.5
 %
(1.3
)%
3.1
 %
2.9
 %
1.2
%
3.0
 %

1.4
 %
 
1.4
 %
Losses incurred but not reported


18.3

11.8

12.4

14.6

25.7

13.1

15.1

19.6


17.7

 
16.4

Other losses excluding catastrophe losses


17.5

29.9

17.7

15.3

15.1

21.6

23.5

18.3


17.1

 
17.2

Catastrophe losses


0.4

0.8

2.9

(0.7
)
2.7

3.0

0.6

2.8


1.4

 
1.8

   Total loss ratio


36.2
 %
45.0
%
34.5
 %
27.9
 %
46.6
 %
40.6
 %
40.4
%
43.7
 %

37.6
 %
 
36.8
 %
*Certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.


CINF Second-Quarter 2015 Supplemental Financial Data
10


Consolidated Cincinnati Insurance Companies
Loss Claim Count Detail
 
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year reported losses greater
   than $5,000,000


1

2

2

1

2

—

3

2


3

 
5

Current accident year reported losses
   $1,000,000 - $5,000,000


14

27

31

31

34

15

42

52


83

 
120

Prior accident year reported losses on
   large losses


9

15

4

13

10

8

27

18


26

 
32

   Non-Catastrophe reported losses on
      large losses total


24

44

37

45

46

23

72

72


112

 
157

Commercial Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year reported losses greater
than $5,000,000


1

2

2

1

2

—

3

2


3

 
5

Current accident year reported losses
$1,000,000 - $5,000,000


9

18

27

24

30

11

26

43


68

 
99

Prior accident year reported losses on
large losses


9

14

3

11

9

7

26

17


23

 
28

   Non-Catastrophe reported losses on
large losses total


19

34

32

36

41

18

55

62


94

 
132

Personal Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year reported losses greater
than $5,000,000


—

—

—

—

—

—

—

—


—

 
—

Current accident year reported losses
$1,000,000 - $5,000,000


5

8

3

6

3

3

15

7


13

 
18

Prior accident year reported losses on
large losses


—

1

—

2

1

1

1

1


3

 
3

   Non-Catastrophe reported losses on
large losses total


5

9

3

8

4

4

16

8


16

 
21

Excess & Surplus Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year reported losses greater
than $5,000,000


—

—

—

—

—

—

—

—


—

 
—

Current accident year reported losses
$1,000,000 - $5,000,000


—

1

1

1

1

1

1

2


2

 
3

Prior accident year reported losses on
large losses


—

—

1

—

—

—

—

—


—

 
1

   Non-Catastrophe reported losses on
large losses total


—

1

2

1

1

1

1

2


2

 
4

*The sum of quarterly amounts may not equal the full year as each is computed independently.


CINF Second-Quarter 2015 Supplemental Financial Data
11


 Consolidated Cincinnati Insurance Companies
Direct Written Premiums by Risk State by Line of Business for the Six Months Ended June 30, 2015
 
Commercial Lines
 
 Personal Lines
 
E & S
 
Consolidated
Comm'l
Change
%
Personal
Change
%
E & S
Change
%
Consol
Change
%
Risk
State
Comm
Casualty
Comm
Property
Comm
Auto
Workers'
Comp
Other Comm
 
Personal
Auto
Home Owner
Other
Personal
 
All
Lines
 
2015
2014
 
 
 
Total
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 OH
$
84.7

$
69.2

$
42.0

$
—

$
18.9

 
$
63.7

$
54.4

$
17.6

 
$
7.5

 
$
358.0

$
351.0

4.4

(1.2
)
5.1

2.2

 IL
35.1

28.1

15.7

27.8

7.4

 
16.0

15.0

4.3

 
6.5

 
155.9

157.8

(2.2
)
(0.5
)
16.4

(1.2
)
 IN
29.7

27.3

16.6

16.9

6.8

 
16.7

18.0

4.1

 
5.4

 
141.5

137.8

3.3

(1.6
)
3.5

1.9

 PA
32.7

23.5

21.3

27.4

6.1

 
6.8

5.4

2.1

 
4.3

 
129.6

127.7

(0.1
)
6.3

39.1

1.5

 GA
20.3

20.0

14.0

7.1

6.7

 
20.3

21.8

5.4

 
5.4

 
121.0

115.0

4.2

5.5

18.2

5.3

 MI
22.8

19.0

11.6

10.4

6.1

 
23.1

16.1

2.7

 
4.1

 
115.9

109.9

(0.5
)
14.8

23.8

5.3

 NC
22.1

24.0

12.0

9.5

6.9

 
16.6

13.5

4.0

 
3.4

 
112.0

107.3

(0.2
)
16.6

2.5

4.4

 TN
19.6

19.1

11.4

5.0

5.9

 
9.5

11.3

3.0

 
2.2

 
87.0

85.3

(0.5
)
8.7

4.1

1.9

 KY
14.2

16.7

10.1

2.0

3.3

 
13.9

12.9

3.1

 
2.7

 
78.9

76.9

2.0

2.5

13.2

2.5

 AL
14.2

17.4

6.8

0.5

4.6

 
10.4

16.9

3.4

 
4.1

 
78.3

77.0

(0.4
)
3.8

8.0

1.7

 VA
18.3

15.8

11.6

9.5

5.1

 
5.9

5.1

1.6

 
2.7

 
75.6

74.8

—

7.5

(2.9
)
1.0

 MN
18.2

13.2

6.5

7.0

2.7

 
9.2

9.3

2.6

 
2.5

 
71.2

62.8

12.7

12.2

32.6

13.2

 WI
17.1

12.9

8.2

16.5

3.5

 
4.5

4.6

1.8

 
1.5

 
70.6

72.4

(2.7
)
1.0

(18.5
)
(2.6
)
 TX
23.5

14.4

14.7

0.7

2.2

 
—

—

—

 
8.4

 
63.9

62.3

0.2

(39.8
)
21.7

2.6

 MO
15.3

16.0

7.9

7.6

3.3

 
3.3

4.6

1.0

 
3.6

 
62.6

61.1

1.7

5.3

9.1

2.6

 MD
10.7

6.4

8.0

6.5

1.9

 
3.9

3.1

0.9

 
1.5

 
42.9

39.2

4.9

31.5

16.9

9.4

 IA
10.0

9.9

4.3

8.5

3.0

 
2.4

2.8

0.8

 
1.1

 
42.8

44.2

(3.5
)
(1.0
)
4.0

(3.0
)
 NY
17.2

8.6

6.4

1.6

1.9

 
2.3

1.1

0.3

 
1.4

 
40.8

38.5

3.7

42.4

—

6.1

 AR
5.6

9.7

3.8

1.3

2.8

 
5.0

5.6

1.3

 
1.4

 
36.5

34.2

1.8

15.3

9.4

6.2

 FL
13.4

8.6

4.8

0.6

1.5

 
2.3

0.7

0.4

 
3.3

 
35.6

39.3

4.1

(63.4
)
49.9

(9.1
)
 AZ
8.6

4.7

5.9

3.2

1.5

 
3.0

2.1

0.8

 
1.8

 
31.6

29.6

0.7

31.0

38.1

7.0

 UT
9.2

4.9

6.3

0.2

1.9

 
4.2

2.2

0.5

 
1.5

 
30.9

27.4

9.3

14.3

54.4

11.9

 SC
6.2

5.7

4.1

1.8

2.2

 
4.8

3.2

0.9

 
1.6

 
30.5

27.5

3.7

25.2

41.0

10.8

 KS
6.2

7.3

3.4

3.9

1.9

 
2.5

3.6

0.7

 
0.7

 
30.2

29.8

1.5

(3.2
)
56.2

1.4

 CO
9.3

5.1

6.0

0.4

1.0

 
—

0.2

—

 
3.2

 
25.2

22.4

9.5

14.1

40.0

12.7

 MT
9.4

4.9

4.9

—

0.9

 
1.3

1.5

0.3

 
0.4

 
23.6

21.0

13.5

9.1

(9.5
)
12.4

 NE
5.2

5.5

2.7

5.0

1.3

 
0.4

0.5

0.1

 
1.0

 
21.7

19.5

14.2

(1.3
)
(10.7
)
11.9

 ID
7.1

4.2

4.2

0.1

1.1

 
1.7

1.1

0.3

 
0.8

 
20.6

19.3

5.2

14.5

2.9

6.4

 OR
5.6

3.5

3.8

0.1

1.1

 
1.3

0.6

0.2

 
2.5

 
18.7

13.5

32.4

102.4

40.1

38.7

 WV
5.5

4.6

3.7

1.1

0.7

 
—

0.2

0.1

 
1.5

 
17.4

18.3

(4.9
)
(14.8
)
3.7

(4.4
)
 VT
2.5

2.3

1.4

3.2

1.0

 
0.7

0.7

0.2

 
0.4

 
12.4

12.9

(3.7
)
1.8

(17.9
)
(3.6
)
 ND
4.7

3.3

2.3

—

0.7

 
0.4

0.4

0.1

 
0.2

 
12.1

12.4

(1.6
)
2.1

(31.7
)
(1.9
)
 NM
4.3

2.2

2.5

0.6

0.8

 
—

—

—

 
0.4

 
10.8

8.6

25.8

(35.0
)
9.1

25.0

 WA
3.6

2.5

2.5

—

1.0

 
—

—

—

 
0.9

 
10.5

9.7

6.4

(200.7
)
26.4

7.8

 NH
2.1

1.8

1.1

1.8

0.3

 
0.9

0.8

0.3

 
0.3

 
9.4

9.4

1.0

(1.9
)
(6.4
)
0.1

 CT
2.1

2.1

1.2

0.8

0.4

 
0.5

0.5

0.2

 
0.3

 
8.1

5.1

39.2

664.4

81.7

59.1

 DE
2.7

1.6

1.5

1.1

0.5

 
—

—

—

 
0.2

 
7.6

6.4

19.4

(100.0
)
60.5

20.4

 SD
1.5

1.8

1.0

1.5

0.5

 
—

—

—

 
0.3

 
6.6

7.4

(9.7
)
67.2

(5.6
)
(9.6
)
 WY
1.3

1.2

0.7

—

0.3

 
—

—

—

 
0.3

 
3.8

3.2

18.9

23.5

11.0

18.3

 All Other
2.7

1.1

1.7

3.6

1.1

 
—

—

—

 
0.6

 
10.8

10.8

1.0

20.9

25.4

2.3

 Total
$
544.5

$
450.1

$
298.6

$
194.8

$
120.8

 
$
257.5

$
239.8

$
65.1

 
$
91.9

 
$
2,263.1

$
2,188.7

2.4

4.4

15.4

3.4

 Other Direct
—

1.0

2.2

3.6

—

 
5.6

0.1

—

 
—

 
12.5

11.3

9.3

11.0

nm

10.0

 Total Direct
$
544.5

$
451.1

$
300.8

$
198.4

$
120.8

 
$263.1
$
239.9

$
65.1

 
$
91.9

 
$
2,275.6

$
2,200.0

2.5

4.5

15.4

3.4

*Dollar amounts shown are rounded to the nearest hundred thousand; certain amounts may not add due to rounding. Percentage changes are calculated based on whole dollar amounts.
*nm - Not meaningful

CINF Second-Quarter 2015 Supplemental Financial Data
12


Quarterly Property Casualty Data - Commercial Lines
 
 
 
 
 
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Commercial casualty:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
274

$
266

$
234

$
228

$
249

$
258

$
540

$
507


$
735


$
969

Earned premiums


252

244

243

237

234

224

496

458


695


938

Current accident year before catastrophe losses


59.6
 %
59.2
 %
59.2
 %
60.2
 %
61.7
 %
56.3
 %
59.4
 %
59.1
 %

59.4
 %

59.4
 %
Current accident year catastrophe losses


—

—

—

—

—

—

—

—


—


—

Prior accident years before catastrophe losses


(9.1
)
1.1

12.1

(3.6
)
(10.5
)
3.6

(4.1
)
(3.6
)

(3.6
)

0.5

Prior accident years catastrophe losses


—

—

—

—

—

—

—

—


—


—

   Total loss and loss expense ratio


50.5
 %
60.3
 %
71.3
 %
56.6
 %
51.2
 %
59.9
 %
55.3
 %
55.5
 %

55.8
 %

59.9
 %
Commercial property:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
218

$
206

$
192

$
194

$
197

$
193

$
424

$
390


$
584


$
776

Earned premiums


201

196

191

186

180

171

399

351


537


728

Current accident year before catastrophe losses


42.1
 %
53.6
 %
45.7
 %
54.3
 %
50.8
 %
53.4
 %
47.8
 %
52.1
 %

52.9
 %

51.0
 %
Current accident year catastrophe losses


19.6

16.7

0.5

5.2

25.8

27.7

18.2

26.7


19.3


14.3

Prior accident years before catastrophe losses


(2.0
)
(1.9
)
1.8

(3.1
)
(9.8
)
(0.6
)
(2.0
)
(5.3
)

(4.6
)

(2.9
)
Prior accident years catastrophe losses


0.1

(3.8
)
(2.7
)
(1.3
)
(2.3
)
(0.9
)
(1.8
)
(1.6
)

(1.5
)

(1.8
)
   Total loss and loss expense ratio


59.8
 %
64.6
 %
45.3
 %
55.1
 %
64.5
 %
79.6
 %
62.2
 %
71.9
 %

66.1
 %

60.6
 %
Commercial auto:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
149

$
149

$
131

$
128

$
144

$
145

$
298

$
289


$
417


$
548

Earned premiums


139

136

137

133

132

126

275

258


391


528

Current accident year before catastrophe losses


75.8
 %
72.3
 %
65.6
 %
69.1
 %
72.1
 %
68.0
 %
74.1
 %
70.0
 %

69.8
 %

68.7
 %
Current accident year catastrophe losses


1.3

—

(0.1
)
(0.6
)
4.1

—

0.7

2.1


1.2


0.9

Prior accident years before catastrophe losses


8.3

8.6

11.2

9.3

9.0

(0.2
)
8.4

4.5


6.1


7.4

Prior accident years catastrophe losses


(0.2
)
(0.1
)
—

—

—

(0.2
)
(0.2
)
(0.1
)

(0.1
)

(0.1
)
   Total loss and loss expense ratio


85.2
 %
80.8
 %
76.7
 %
77.8
 %
85.2
 %
67.6
 %
83.0
 %
76.5
 %

77.0
 %

76.9
 %
Workers' compensation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
89

$
104

$
81

$
86

$
92

$
106

$
193

$
198


$
284


$
365

Earned premiums


90

93

90

93

95

92

183

187


280


370

Current accident year before catastrophe losses


77.6
 %
71.5
 %
75.9
 %
75.0
 %
83.2
 %
76.8
 %
74.5
 %
80.0
 %

78.4
 %

77.8
 %
Current accident year catastrophe losses


—

—

—

—

—

—

—

—


—


—

Prior accident years before catastrophe losses


(44.8
)
(16.1
)
(7.5
)
(16.1
)
(21.2
)
(10.3
)
(30.3
)
(15.8
)

(15.9
)

(13.9
)
Prior accident years catastrophe losses


—

—

—

—

—

—

—

—


—


—

   Total loss and loss expense ratio


32.8
 %
55.4
 %
68.4
 %
58.9
 %
62.0
 %
66.5
 %
44.2
 %
64.2
 %

62.5
 %

63.9
 %
Other commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
55

$
58

$
61

$
68

$
66

$
69

$
113

$
135


$
203


$
264

Earned premiums


61

64

69

71

73

79

125

152


223


292

Current accident year before catastrophe losses


42.7
 %
54.4
 %
58.5
 %
50.2
 %
59.6
 %
46.7
 %
48.6
 %
52.9
 %

52.0
 %

53.4
 %
Current accident year catastrophe losses


3.4

9.7

(2.7
)
2.0

17.8

17.9

6.6

17.9


12.8


9.2

Prior accident years before catastrophe losses


(13.6
)
(0.2
)
(13.8
)
(5.6
)
(4.2
)
3.5

(6.7
)
(0.2
)

(1.9
)

(4.8
)
Prior accident years catastrophe losses


1.2

(2.6
)
(1.2
)
(0.8
)
0.8

(1.3
)
(0.7
)
(0.3
)

(0.5
)

(0.7
)
   Total loss and loss expense ratio


33.7
 %
61.3
 %
40.8
 %
45.8
 %
74.0
 %
66.8
 %
47.8
 %
70.3
 %

62.4
 %

57.1
 %
*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts. The sum of quarterly amounts may not equal the full year as each is computed independently.

CINF Second-Quarter 2015 Supplemental Financial Data
13


Quarterly Property Casualty Data - Personal Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Personal auto:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
142

$
114

$
114

$
135

$
133

$
107

$
256

$
240


$
375


$
489

Earned premiums


125

123

122

121

117

116

248

233


354


476

Current accident year before catastrophe losses


79.7
 %
81.6
 %
70.2
 %
73.9
 %
80.5
 %
79.5
 %
80.8
 %
80.1
 %

77.9
 %

76.0
 %
Current accident year catastrophe losses


2.3

0.2

(1.2
)
1.1

4.9

0.5

1.2

2.7


2.2


1.3

Prior accident years before catastrophe losses


5.8

3.0

2.8

2.0

(1.7
)
(3.4
)
4.4

(2.6
)

(1.0
)

—

Prior accident years catastrophe losses


(0.1
)
(0.2
)
—

—

(0.2
)
(0.4
)
(0.3
)
(0.3
)

(0.2
)

(0.2
)
   Total loss and loss expense ratio


87.7
 %
84.6
 %
71.8
 %
77.0
 %
83.5
 %
76.2
 %
86.1
 %
79.9
 %

78.9
 %

77.1
 %
Homeowner:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
132

$
98

$
107

$
123

$
128

$
98

$
230

$
226


$
349


$
456

Earned premiums


114

114

113

110

111

109

228

220


330


443

Current accident year before catastrophe losses


52.9
 %
55.5
 %
44.3
 %
51.1
 %
59.5
 %
61.3
 %
54.1
 %
60.4
 %

57.4
 %

54.0
 %
Current accident year catastrophe losses


25.6

12.3

(0.9
)
4.8

41.5

28.3

19.0

35.0


25.0


18.3

Prior accident years before catastrophe losses


(2.4
)
(5.1
)
(0.2
)
(0.7
)
3.6

(6.5
)
(3.7
)
(1.4
)

(1.2
)

(0.9
)
Prior accident years catastrophe losses


(0.3
)
(1.2
)
(1.2
)
(1.2
)
(0.9
)
(5.4
)
(0.7
)
(3.2
)

(2.6
)

(2.2
)
   Total loss and loss expense ratio


75.8
 %
61.5
 %
42.0
 %
54.0
 %
103.7
 %
77.7
 %
68.7
 %
90.8
 %

78.6
 %

69.2
 %
Other personal:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
35

$
29

$
28

$
36

$
33

$
26

$
64

$
59


$
95


$
123

Earned premiums


33

31

31

32

30

29

64

59


91


122

Current accident year before catastrophe losses


58.2
 %
49.6
 %
44.3
 %
59.3
 %
42.3
 %
46.5
 %
53.9
 %
44.3
 %

49.6
 %

48.3
 %
Current accident year catastrophe losses


8.4

2.8

0.5

0.4

7.9

7.8

5.6

7.8


5.2


4.0

Prior accident years before catastrophe losses


(4.9
)
1.1

(1.3
)
17.3

(5.4
)
(1.9
)
(1.9
)
(3.6
)

3.8


2.5

Prior accident years catastrophe losses


0.0

(0.8
)
(0.1
)
(0.4
)
(0.5
)
0.2

(0.4
)
(0.1
)

(0.2
)

(0.2
)
   Total loss and loss expense ratio


61.7
 %
52.7
 %
43.4
 %
76.6
 %
44.3
 %
52.6
 %
57.2
 %
48.4
 %

58.4
 %

54.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarterly Property Casualty Data - Excess & Surplus Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Excess & Surplus:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Written premiums


$
46

$
42

$
39

$
39

$
40

$
35

$
88

$
75


$
114


$
153

Earned premiums


42

40

39

42

34

33

82

67


109


148

Current accident year before catastrophe losses


69.3
 %
72.1
 %
62.1
 %
57.8
 %
75.4
 %
80.6
 %
70.7
 %
77.9
 %

70.2
 %

68.1
 %
Current accident year catastrophe losses


0.6

1.2

2.9

(0.7
)
2.3

3.0

0.9

2.6


1.4


1.8

Prior accident years before catastrophe losses


(20.2
)
(13.6
)
(16.1
)
(15.4
)
(21.3
)
(27.1
)
(17.0
)
(24.1
)

(20.8
)

(19.6
)
Prior accident years catastrophe losses


(0.1
)
(0.3
)
0.1

0.1

0.6

0.1

(0.2
)
0.4


0.2


0.2

   Total loss and loss expense ratio


49.6
 %
59.4
 %
49.0
 %
41.8
 %
57.0
 %
56.6
 %
54.4
 %
56.8
 %

51.0
 %

50.5
 %
*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts. The sum of quarterly amounts may not equal the full year as each is computed independently


CINF Second-Quarter 2015 Supplemental Financial Data
14


Cincinnati Insurance Companies Consolidated
Loss and Loss Expense Analysis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
Change in
 
Change in
 
Change in
 
Total
 
 
 
 
 
Loss
 
 
 
Paid
 
Paid loss
 
Total
 
case
 
IBNR
 
loss expense
 
change in
 
Case
 
IBNR
 
expense
 
Total
 
losses
 
expense
 
paid
 
reserves
 
reserves
 
reserves
 
reserves
 
incurred
 
incurred
 
incurred
 
incurred
Gross loss and loss expense incurred for the six months ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty
 
$
124

 
$
70

 
$
194

 
$
54

 
$
18

 
$
9

 
$
81

 
$
178

 
$
18

 
$
79

 
$
275

  Commercial property
 
209

 
18

 
227

 
32

 
4

 
—

 
36

 
241

 
4

 
18

 
263

  Commercial auto
 
154

 
27

 
181

 
7

 
29

 
12

 
48

 
161

 
29

 
39

 
229

  Workers' compensation
 
90

 
19

 
109

 
(12
)
 
(1
)
 
(8
)
 
(21
)
 
78

 
(1
)
 
11

 
88

  Other commercial
 
65

 
11

 
76

 
(18
)
 
(1
)
 
2

 
(17
)
 
47

 
(1
)
 
13

 
59

    Total commercial lines
 
642

 
145

 
787

 
63

 
49

 
15

 
127

 
705

 
49

 
160

 
914

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Personal auto
 
155

 
29

 
184

 
3

 
22

 
5

 
30

 
158

 
22

 
34

 
214

  Homeowners
 
123

 
13

 
136

 
21

 
1

 
(1
)
 
21

 
144

 
1

 
12

 
157

  Other personal
 
28

 
2

 
30

 
1

 
6

 
—

 
7

 
29

 
6

 
2

 
37

    Total personal lines
 
306

 
44

 
350

 
25

 
29

 
4

 
58

 
331

 
29

 
48

 
408

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty & property
 
12

 
8

 
20

 
8

 
12

 
4

 
24

 
20

 
12

 
12

 
44

    Total excess & surplus lines
 
12

 
8

 
20

 
8

 
12

 
4

 
24

 
20

 
12

 
12

 
44

      Total property casualty
 
$
960

 
$
197

 
$
1,157

 
$
96

 
$
90

 
$
23

 
$
209

 
$
1,056

 
$
90

 
$
220

 
$
1,366

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ceded loss and loss expense incurred for the six months ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty
 
$
2

 
$
2

 
$
4

 
$
(4
)
 
$
1

 
$
—

 
$
(3
)
 
$
(2
)
 
$
1

 
$
2

 
$
1

  Commercial property
 
—

 
—

 
—

 
17

 
—

 
—

 
17

 
17

 
—

 
—

 
17

  Commercial auto
 
—

 
—

 
—

 
1

 
—

 
—

 
1

 
1

 
—

 
—

 
1

  Workers' compensation
 
5

 
—

 
5

 
1

 
(1
)
 
—

 
—

 
6

 
(1
)
 
—

 
5

  Other commercial
 
3

 
—

 
3

 
(4
)
 
—

 
—

 
(4
)
 
(1
)
 
—

 
—

 
(1
)
    Total commercial lines
 
10

 
2

 
12

 
11

 
—

 
—

 
11

 
21

 
—

 
2

 
23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Personal auto
 
1

 
—

 
1

 
(1
)
 
—

 
—

 
(1
)
 
—

 
—

 
—

 
—

  Homeowners
 
1

 
—

 
1

 
—

 
—

 
—

 
—

 
1

 
—

 
—

 
1

  Other personal
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

    Total personal lines
 
2

 
—

 
2

 
(1
)
 
—

 
—

 
(1
)
 
1

 
—

 
—

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty & property
 
(1
)
 
—

 
(1
)
 
1

 
(1
)
 
—

 
—

 
—

 
(1
)
 
—

 
(1
)
    Total excess & surplus lines
 
(1
)
 
—

 
(1
)
 
1

 
(1
)
 
—

 
—

 
—

 
(1
)
 
—

 
(1
)
      Total property casualty
 
$
11

 
$
2

 
$
13

 
$
11

 
$
(1
)
 
$
—

 
$
10

 
$
22

 
$
(1
)
 
$
2

 
$
23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss and loss expense incurred for the six months ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty
 
$
122

 
$
68

 
$
190

 
$
58

 
$
17

 
$
9

 
$
84

 
$
180

 
$
17

 
$
77

 
$
274

  Commercial property
 
209

 
18

 
227

 
15

 
4

 
—

 
19

 
224

 
4

 
18

 
246

  Commercial auto
 
154

 
27

 
181

 
6

 
29

 
12

 
47

 
160

 
29

 
39

 
228

  Workers' compensation
 
85

 
19

 
104

 
(13
)
 
—

 
(8
)
 
(21
)
 
72

 
—

 
11

 
83

  Other commercial
 
62

 
11

 
73

 
(14
)
 
(1
)
 
2

 
(13
)
 
48

 
(1
)
 
13

 
60

    Total commercial lines
 
632

 
143

 
775

 
52

 
49

 
15

 
116

 
684

 
49

 
158

 
891

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Personal auto
 
154

 
29

 
183

 
4

 
22

 
5

 
31

 
158

 
22

 
34

 
214

  Homeowners
 
122

 
13

 
135

 
21

 
1

 
(1
)
 
21

 
143

 
1

 
12

 
156

  Other personal
 
28

 
2

 
30

 
1

 
6

 
—

 
7

 
29

 
6

 
2

 
37

    Total personal lines
 
304

 
44

 
348

 
26

 
29

 
4

 
59

 
330

 
29

 
48

 
407

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty & property
 
13

 
8

 
21

 
7

 
13

 
4

 
24

 
20

 
13

 
12

 
45

    Total excess & surplus lines
 
13

 
8

 
21

 
7

 
13

 
4

 
24

 
20

 
13

 
12

 
45

      Total property casualty
 
$
949

 
$
195

 
$
1,144

 
$
85

 
$
91

 
$
23

 
$
199

 
$
1,034

 
$
91

 
$
218

 
$
1,343

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

CINF Second-Quarter 2015 Supplemental Financial Data
15


Cincinnati Insurance Companies Consolidated
Loss and Loss Expense Analysis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
Change in
 
Change in
 
Change in
 
Total
 
 
 
 
 
Loss
 
 
 
Paid
 
Paid loss
 
Total
 
case
 
IBNR
 
loss expense
 
change in
 
Case
 
IBNR
 
expense
 
Total
 
losses
 
expense
 
paid
 
reserves
 
reserves
 
reserves
 
reserves
 
incurred
 
incurred
 
incurred
 
incurred
Gross loss and loss expense incurred for the three months ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty
 
$
73

 
$
36

 
$
109

 
$
21

 
$
3

 
$
(5
)
 
$
19

 
$
94

 
$
3

 
$
31

 
$
128

  Commercial property
 
113

 
8

 
121

 
5

 
13

 
(2
)
 
16

 
118

 
13

 
6

 
137

  Commercial auto
 
76

 
13

 
89

 
3

 
17

 
9

 
29

 
79

 
17

 
22

 
118

  Other commercial
 
45

 
9

 
54

 
(5
)
 
(13
)
 
(2
)
 
(20
)
 
40

 
(13
)
 
7

 
34

  Specialty packages
 
28

 
5

 
33

 
(9
)
 
—

 
(4
)
 
(13
)
 
19

 
—

 
1

 
20

    Total commercial lines
 
335

 
71

 
406

 
15

 
20

 
(4
)
 
31

 
350

 
20

 
67

 
437

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Personal auto
 
78

 
14

 
92

 
1

 
15

 
2

 
18

 
79

 
15

 
16

 
110

  Homeowners
 
76

 
7

 
83

 
4

 
—

 
(1
)
 
3

 
80

 
—

 
6

 
86

  Other personal
 
11

 
1

 
12

 
2

 
6

 
—

 
8

 
13

 
6

 
1

 
20

    Total personal lines
 
165

 
22

 
187

 
7

 
21

 
1

 
29

 
172

 
21

 
23

 
216

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty & property
 
8

 
4

 
12

 
1

 
8

 
2

 
11

 
9

 
8

 
6

 
23

    Total excess & surplus lines
 
8

 
4

 
12

 
1

 
8

 
2

 
11

 
9

 
8

 
6

 
23

      Total property casualty
 
$
508

 
$
97

 
$
605

 
$
23

 
$
49

 
$
(1
)
 
$
71

 
$
531

 
$
49

 
$
96

 
$
676

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ceded loss and loss expense incurred for the three months ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty
 
$
2

 
$
1

 
$
3

 
$
(2
)
 
$
—

 
$
—

 
$
(2
)
 
$
—

 
$
—

 
$
1

 
$
1

  Commercial property
 
—

 
—

 
—

 
18

 
—

 
—

 
18

 
18

 
—

 
—

 
18

  Commercial auto
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

  Workers' compensation
 
2

 
—

 
2

 
1

 
(1
)
 
—

 
—

 
3

 
(1
)
 
—

 
2

  Other commercial
 
2

 
—

 
2

 
(3
)
 
—

 
—

 
(3
)
 
(1
)
 
—

 
—

 
(1
)
    Total commercial lines
 
6

 
1

 
7

 
14

 
(1
)
 
—

 
13

 
20

 
(1
)
 
1

 
20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Personal auto
 
—

 
(1
)
 
(1
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
(1
)
  Homeowners
 
1

 
—

 
1

 
—

 
—

 
—

 
—

 
1

 
—

 
—

 
1

  Other personal
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

    Total personal lines
 
1

 
(1
)
 
—

 
—

 
—

 
—

 
—

 
1

 
—

 
(1
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty & property
 
—

 
—

 
—

 
1

 
1

 
—

 
2

 
1

 
1

 
—

 
2

    Total excess & surplus lines
 
—

 
—

 
—

 
1

 
1

 
—

 
2

 
1

 
1

 
—

 
2

      Total property casualty
 
$
7

 
$
—

 
$
7

 
$
15

 
$
—

 
$
—

 
$
15

 
$
22

 
$
—

 
$
—

 
$
22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss and loss expense incurred for the three months ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty
 
$
71

 
$
35

 
$
106

 
$
23

 
$
3

 
$
(5
)
 
$
21

 
$
94

 
$
3

 
$
30

 
$
127

  Commercial property
 
113

 
8

 
121

 
(13
)
 
13

 
(2
)
 
(2
)
 
100

 
13

 
6

 
119

  Commercial auto
 
76

 
13

 
89

 
3

 
17

 
9

 
29

 
79

 
17

 
22

 
118

  Workers' compensation
 
43

 
9

 
52

 
(6
)
 
(12
)
 
(2
)
 
(20
)
 
37

 
(12
)
 
7

 
32

  Other commercial
 
26

 
5

 
31

 
(6
)
 
—

 
(4
)
 
(10
)
 
20

 
—

 
1

 
21

    Total commercial lines
 
329

 
70

 
399

 
1

 
21

 
(4
)
 
18

 
330

 
21

 
66

 
417

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Personal auto
 
78

 
15

 
93

 
1

 
15

 
2

 
18

 
79

 
15

 
17

 
111

  Homeowners
 
75

 
7

 
82

 
4

 
—

 
(1
)
 
3

 
79

 
—

 
6

 
85

  Other personal
 
11

 
1

 
12

 
2

 
6

 
—

 
8

 
13

 
6

 
1

 
20

    Total personal lines
 
164

 
23

 
187

 
7

 
21

 
1

 
29

 
171

 
21

 
24

 
216

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Commercial casualty & property
 
8

 
4

 
12

 
—

 
7

 
2

 
9

 
8

 
7

 
6

 
21

    Total excess & surplus lines
 
8

 
4

 
12

 
—

 
7

 
2

 
9

 
8

 
7

 
6

 
21

      Total property casualty
 
$
501

 
$
97

 
$
598

 
$
8

 
$
49

 
$
(1
)
 
$
56

 
$
509

 
$
49

 
$
96

 
$
654

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

CINF Second-Quarter 2015 Supplemental Financial Data
16


Consolidated Cincinnati Insurance Companies
Quarterly Property Casualty Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


$
1,018

$
983

$
906

$
958

$
974

$
956

$
2,001

$
1,930


$
2,888


$
3,794

   Agency new business written premiums


138

116

122

125

133

123

254

256


381


503

   Other written premiums


(14
)
(33
)
(41
)
(46
)
(25
)
(42
)
(47
)
(67
)

(113
)

(154
)
   Net written premiums – statutory*


$
1,142

$
1,066

$
987

$
1,037

$
1,082

$
1,037

$
2,208

$
2,119


$
3,156


$
4,143

   Unearned premium change


(83
)
(25
)
48

(12
)
(76
)
(58
)
(108
)
(134
)

(146
)

(98
)
   Earned premiums


$
1,059

$
1,041

$
1,035

$
1,025

$
1,006

$
979

$
2,100

$
1,985


$
3,010


$
4,045

Year over year change %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


5
%
3
 %
6
 %
5
 %
11
 %
13
 %
4
 %
12
 %

9
 %

9
 %
   Agency new business written premiums


4

(6
)
(5
)
(11
)
(4
)
(9
)
(1
)
(7
)

(8
)

(7
)
   Other written premiums


44

21

45

(84
)
26

(320
)
30

(52
)

(64
)

(8
)
   Net written premiums – statutory*


6

3

9

1

10

7

4

8


6


6

Paid losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Losses paid


$
501

$
448

$
478

$
543

$
517

$
484

$
949

$
1,001


$
1,543


$
2,021

   Loss expenses paid


97

98

98

96

98

100

195

198


295


392

   Loss and loss expenses paid


$
598

$
546

$
576

$
639

$
615

$
584

$
1,144

$
1,199


$
1,838


$
2,413

Incurred losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss and loss expense incurred


$
654

$
689

$
622

$
622

$
707

$
676

$
1,343

$
1,383


$
2,005


$
2,627

   Loss and loss expenses paid as a % of incurred


91.4
%
79.2
 %
92.6
 %
102.7
 %
87.0
 %
86.4
 %
85.2
 %
86.7
 %

91.7
 %

91.9
 %
Statutory combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss ratio


52.7
%
54.4
 %
49.0
 %
50.0
 %
60.7
 %
57.9
 %
53.6
 %
59.4
 %

56.2
 %

54.4
 %
   Loss adjustment expense ratio


9.1

11.7

11.1

10.7

9.5

11.2

10.3

10.3


10.4


10.6

   Net underwriting expense ratio


28.9

30.0

31.7

30.6

29.4

29.0

29.4

29.2


29.7


30.1

   Statutory combined ratio


90.7
%
96.1
 %
91.8
 %
91.3
 %
99.6
 %
98.1
 %
93.3
 %
98.9
 %

96.3
 %

95.1
 %
   Contribution from catastrophe losses


7.5

4.1

(0.9
)
1.2

11.4

8.9

5.8

10.2


7.1


5.1

   Statutory combined ratio excl. catastrophe losses


83.2
%
92.0
 %
92.7
 %
90.1
 %
88.2
 %
89.2
 %
87.5
 %
88.7
 %

89.2
 %

90.0
 %
GAAP combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   GAAP combined ratio


92.4
%
97.5
 %
90.4
 %
91.0
 %
100.9
 %
100.3
 %
94.9
 %
100.6
 %

97.3
 %

95.6
 %
   Contribution from catastrophe losses


7.5

4.1

(0.9
)
1.2

11.4

8.9

5.8

10.2


7.1


5.1

   GAAP combined ratio excl. catastrophe losses


84.9
%
93.4
 %
91.3
 %
89.8
 %
89.5
 %
91.4
 %
89.1
 %
90.4
 %

90.2
 %

90.5
 %
*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts. The sum of quarterly amounts may not
 equal the full year as each is computed independently.
*nm - Not meaningful
*Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the appropriate regulatory bodies.


CINF Second-Quarter 2015 Supplemental Financial Data
17


Cincinnati Insurance Companies
Quarterly Property Casualty Data - Commercial Lines
 
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


$
699

$
730

$
645

$
651

$
669

$
713

$
1,429

$
1,382


$
2,033


$
2,678

   Agency new business written premiums


93

79

86

89

95

90

172

185


274


360

   Other written premiums


(5
)
(26
)
(32
)
(36
)
(16
)
(32
)
(31
)
(48
)

(84
)

(116
)
   Net written premiums – statutory*


$
787

$
783

$
699

$
704

$
748

$
771

$
1,570

$
1,519


$
2,223


$
2,922

   Unearned premium change


(42
)
(50
)
31

16

(34
)
(79
)
(92
)
(113
)

(97
)

(66
)
   Earned premiums


$
745

$
733

$
730

$
720

$
714

$
692

$
1,478

$
1,406


$
2,126


$
2,856

Year over year change %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


4
 %
2
 %
6
 %
3
 %
11
 %
13
 %
3
 %
12
 %

9
 %

8
 %
   Agency new business written premiums


(2
)
(12
)
(7
)
(13
)
(4
)
(7
)
(7
)
(6
)

(8
)

(8
)
   Other written premiums


69

19

49

(140
)
33

nm

35

(100
)

(115
)

(14
)
   Net written premiums – statutory*


5

2

10

(2
)
10

6

3

8


5


6

Paid losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Losses paid


$
329

$
303

$
325

$
368

$
347

$
327

$
632

$
674


$
1,041


$
1,366

   Loss expenses paid


71

73

75

74

75

76

144

151


226


300

   Loss and loss expenses paid


$
400

$
376

$
400

$
442

$
422

$
403

$
776

$
825


$
1,267


$
1,666

Incurred losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss and loss expense incurred


$
417

$
474

$
454

$
428

$
461

$
469

$
891

$
930


$
1,358


$
1,812

   Loss and loss expenses paid as a % of incurred


95.9
 %
79.3
 %
88.1
 %
103.3
 %
91.5
 %
85.9
 %
87.1
 %
88.7
 %

93.3
 %

91.9
 %
Statutory combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss ratio


46.9
 %
52.2
 %
49.9
 %
47.5
 %
54.7
 %
56.1
 %
49.6
 %
55.4
 %

52.8
 %

52.0
 %
   Loss adjustment expense ratio


9.1

12.5

12.4

11.9

9.8

11.8

10.7

10.8


11.1


11.5

   Net underwriting expense ratio


29.9

29.9

32.5

32.2

30.5

28.5

29.9

29.5


30.3


30.8

   Statutory combined ratio


85.9
 %
94.6
 %
94.8
 %
91.6
 %
95.0
 %
96.4
 %
90.2
 %
95.7
 %

94.2
 %

94.3
 %
   Contribution from catastrophe losses


5.9

4.0

(1.0
)
1.0

8.6

8.5

5.0

8.5


6.0


4.3

   Statutory combined ratio excl. catastrophe losses


80.0
 %
90.6
 %
95.8
 %
90.6
 %
86.4
 %
87.9
 %
85.2
 %
87.2
 %

88.2
 %

90.0
 %
GAAP combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   GAAP combined ratio


87.2
 %
96.6
 %
93.6
 %
90.7
 %
96.3
 %
99.9
 %
91.9
 %
98.1
 %

95.6
 %

95.1
 %
   Contribution from catastrophe losses


5.9

4.0

(1.0
)
1.0

8.6

8.5

5.0

8.5


6.0


4.3

   GAAP combined ratio excl. catastrophe losses


81.3
 %
92.6
 %
94.6
 %
89.7
 %
87.7
 %
91.4
 %
86.9
 %
89.6
 %

89.6
 %

90.8
 %
*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts. The sum of quarterly amounts may not
 equal the full year as each is computed independently.
*nm - Not meaningful
*Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the appropriate regulatory bodies.


CINF Second-Quarter 2015 Supplemental Financial Data
18


Cincinnati Insurance Companies
Quarterly Property Casualty Data - Personal Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


$
285

$
223

$
233

$
278

$
276

$
218

$
508

$
494


$
772


$
1,005

   Agency new business written premiums


30

24

24

23

24

21

54

45


68


92

   Other written premiums


(6
)
(6
)
(8
)
(7
)
(6
)
(8
)
(12
)
(14
)

(21
)

(29
)
   Net written premiums – statutory*


$
309

$
241

$
249

$
294

$
294

$
231

$
550

$
525


$
819


$
1,068

   Unearned premium change


(37
)
27

17

(31
)
(36
)
23

(10
)
(13
)

(44
)

(27
)
   Earned premiums


$
272

$
268

$
266

$
263

$
258

$
254

$
540

$
512


$
775


$
1,041

Year over year change %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


3
%
2
%
4
 %
8
 %
10
 %
12
 %
3
%
11
 %

10
 %

8
 %
   Agency new business written premiums


25

14

0

(18
)
(20
)
(25
)
20

(22
)

(21
)

(16
)
   Other written premiums


—

25

11

13

25

—

14

13


13


12

   Net written premiums – statutory*


5

4

4

6

8

7

5

8


7


6

Paid losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Losses paid


$
165

$
139

$
147

$
170

$
167

$
152

$
304

$
319


$
489


$
636

   Loss expenses paid


22

22

21

19

20

21

44

41


60


81

   Loss and loss expenses paid


$
187

$
161

$
168

$
189

$
187

$
173

$
348

$
360


$
549


$
717

Incurred losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss and loss expense incurred


$
216

$
191

$
148

$
177

$
227

$
188

$
407

$
415


$
592


$
740

   Loss and loss expenses paid as a % of incurred


86.6
%
84.3
%
113.5
 %
106.8
 %
82.4
 %
92.0
 %
85.5
%
86.7
 %

92.7
 %

96.9
 %
Statutory combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss ratio


71.1
%
61.9
%
48.9
 %
60.5
 %
79.4
 %
64.8
 %
66.6
%
72.2
 %

68.2
 %

63.3
 %
   Loss adjustment expense ratio


8.5

9.1

6.9

6.9

8.3

9.3

8.8

8.8


8.1


7.8

   Net underwriting expense ratio


26.2

30.4

29.3

26.3

26.6

30.5

28.0

28.3


27.6


28.0

   Statutory combined ratio


105.8
%
101.4
%
85.1
 %
93.7
 %
114.3
 %
104.6
 %
103.3
%
109.3
 %

103.9
 %

99.1
 %
   Contribution from catastrophe losses


12.6

4.9

(1.4
)
2.0

20.4

10.8

8.8

15.7


11.0


7.8

   Statutory combined ratio excl. catastrophe losses


93.2
%
96.5
%
86.5
 %
91.7
 %
93.9
 %
93.8
 %
94.5
%
93.6
 %

92.9
 %

91.3
 %
GAAP combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   GAAP combined ratio


109.2
%
101.4
%
83.7
 %
95.0
 %
115.8
 %
103.0
 %
105.3
%
109.4
 %

104.5
 %

99.2
 %
   Contribution from catastrophe losses


12.6

4.9

(1.4
)
2.0

20.4

10.8

8.8

15.7


11.0


7.8

   GAAP combined ratio excl. catastrophe losses


96.6
%
96.5
%
85.1
 %
93.0
 %
95.4
 %
92.2
 %
96.5
%
93.7
 %

93.5
 %

91.4
 %
*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts. The sum of quarterly amounts may not
 equal the full year as each is computed independently.
*nm - Not meaningful
*Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the appropriate regulatory bodies.


CINF Second-Quarter 2015 Supplemental Financial Data
19


Cincinnati Insurance Companies
Quarterly Property Casualty Data - Excess & Surplus Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Three months ended
Six months ended
Nine months ended
Twelve months ended
 
12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
6/30/14
3/31/14
6/30/15
6/30/14
9/30/15
9/30/14
12/31/15
12/31/14
Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


$
34

$
30

$
28

$
29

$
29

$
25

$
64

$
54


$
83


$
111

   Agency new business written premiums


15

13

12

13

14

12

28

26


39


51

   Other written premiums


(3
)
(1
)
(1
)
(3
)
(3
)
(2
)
(4
)
(5
)

(8
)

(9
)
   Net written premiums – statutory*


$
46

$
42

$
39

$
39

$
40

$
35

$
88

$
75


$
114


$
153

   Unearned premium change


(4
)
(2
)
0

3

(6
)
(2
)
(6
)
(8
)

(5
)

(5
)
   Earned premiums


$
42

$
40

$
39

$
42

$
34

$
33

$
82

$
67


$
109


$
148

Year over year change %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Agency renewal written premiums


17
%
20
%
17
%
16
 %
12
 %
32
%
19
%
20
 %

19
 %

18
 %
   Agency new business written premiums


7

8

0

18

56

20

8

37


30


21

   Other written premiums


—

50

50

(50
)
(50
)
0

20

(25
)

(33
)

(13
)
   Net written premiums – statutory*


15

20

15

15

21

30

17

25


21


20

Paid losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Losses paid


$
8

$
5

$
6

$
5

$
3

$
5

$
13

$
8


$
13


$
19

   Loss expenses paid


3

4

2

3

3

3

7

6


9


11

   Loss and loss expenses paid


$
11

$
9

$
8

$
8

$
6

$
8

$
20

$
14


$
22


$
30

Incurred losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss and loss expense incurred


$
21

$
24

$
20

$
17

$
19

$
19

$
45

$
38


$
55


$
75

   Loss and loss expenses paid as a % of incurred


52.4
%
37.5
%
40.0
%
47.1
 %
31.6
 %
42.1
%
44.4
%
36.8
 %

40.0
 %

40.0
 %
Statutory combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Loss ratio


36.1
%
44.9
%
34.4
%
27.9
 %
46.6
 %
40.6
%
40.4
%
43.7
 %

37.6
 %

36.8
 %
   Loss adjustment expense ratio


13.5

14.5

14.6

13.9

10.4

0.1

14.0

13.1


13.4


13.7

   Net underwriting expense ratio


29.1

29.9

31.4

34.0

29.1

30.4

29.5

29.7


31.2


31.3

   Statutory combined ratio


78.7
%
89.3
%
80.4
%
75.8
 %
86.1
 %
71.1
%
83.9
%
86.5
 %

82.2
 %

81.8
 %
   Contribution from catastrophe losses


0.5

0.9

3.0

(0.6
)
2.9

3.1

0.7

3.0


1.6


2.0

   Statutory combined ratio excl. catastrophe losses


78.2
%
88.4
%
77.4
%
76.4
 %
83.2
 %
68.0
%
83.2
%
83.5
 %

80.6
 %

79.8
 %
GAAP combined ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   GAAP combined ratio


76.0
%
88.3
%
77.8
%
70.2
 %
85.0
 %
86.9
%
82.1
%
85.9
 %

79.9
 %

79.4
 %
   Contribution from catastrophe losses


0.5

0.9

3.0

(0.6
)
2.9

3.1

0.7

3.0


1.6


2.0

   GAAP combined ratio excl. catastrophe losses


75.5
%
87.4
%
74.8
%
70.8
 %
82.1
 %
83.8
%
81.4
%
82.9
 %

78.3
 %

77.4
 %
*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts. The sum of quarterly amounts may not
 equal the full year as each is computed independently.
*nm - Not meaningful
*Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the appropriate regulatory bodies.


CINF Second-Quarter 2015 Supplemental Financial Data
20


The Cincinnati Life Insurance Company
Statutory Statements of Income
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30,
For the Six Months Ended June 30,
(Dollars in millions)
2015
2014
Change
% Change
2015
2014
Change
% Change
Net premiums written
$
64

$
65

$
(1
)
(2
)
$
125

$
123

$
2

2

Net investment income
38

37

1

3

76

74

2

3

Amortization of interest maintenance reserve
1

2

(1
)
(50
)
2

2

—

—

Commissions and expense allowances on reinsurance ceded
2

1

1

100

3

3

—

—

Income from fees associated with Separate Accounts
1

2

(1
)
(50
)
2

3

(1
)
(33
)
Total revenues
$
106

$
107

$
(1
)
(1
)
$
208

$
205

$
3

1

 
 
 
 
 
 
 
 
 
Death benefits and matured endowments
$
21

$
22

$
(1
)
(5
)
$
46

$
48

$
(2
)
(4
)
Annuity benefits
15

16

(1
)
(6
)
30

30

—

—

Disability benefits and benefits under accident and health contracts
1

1

—

—

1

1

—

—

Surrender benefits and group conversions
4

6

(2
)
(33
)
8

11

(3
)
(27
)
Interest and adjustments on deposit-type contract funds
3

3

—

—

5

5

—

—

Increase in aggregate reserves for life and accident and health contracts
44

47

(3
)
(6
)
85

88

(3
)
(3
)
Payments on supplementary contracts with life contingencies
—

—

—

nm

—

—

—

nm

Total benefit expenses
$
88

$
95

$
(7
)
(7
)
$
175

$
183

$
(8
)
(4
)
 
 
 
 
 
 
 
 
 
Commissions
$
10

$
10

$
—

—

$
18

$
19

$
(1
)
(5
)
General insurance expenses and taxes
11

10

1

10

21

20

1

5

Increase in loading on deferred and uncollected premiums
(2
)
(2
)
—

—

—

(3
)
3

100

Net transfers from Separate Accounts
—

(4
)
4

100

—

(4
)
4

100

Other deductions
—

—

—

nm

—

—

—

nm

Total underwriting expenses
$
19

$
14

$
5

36

$
39

$
32

$
7

22

 
 
 
 
 
 
 
 
 
Federal and foreign income tax benefit
(1
)
(1
)
—

—

(3
)
(3
)
—

—

 
 
 
 
 
 
 
 
 
Net loss from operations before realized capital gains
$
—

$
(1
)
$
1

100

$
(3
)
$
(7
)
$
4

57

 
 
 
 
 
 
 
 
 
Net realized gains net of capital gains tax
(1
)
—

(1
)
nm

(1
)
—

(1
)
nm

 
 
 
 
 
 
 
 
 
Net loss (statutory)
$
(1
)
$
(1
)
$
—

—

$
(4
)
$
(7
)
$
3

43

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding.
*nm - Not meaningful
*Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the
  appropriate regulatory bodies.


CINF Second-Quarter 2015 Supplemental Financial Data
21
Exhibit 99.3 2Q15


 
The Cincinnati Insurance Company n The Cincinnati Indemnity Company
The Cincinnati Casualty Company n The Cincinnati Specialty Underwriters Insurance Company
The Cincinnati Life Insurance Company n CFC Investment Company n CSU Producer Resources Inc.

Investor Contact: Dennis E. McDaniel, 513-870-2768
CINF-IR@cinfin.com

Media Contact: Betsy E. Ertel, 513-603-5323
Media_Inquiries@cinfin.com

The Cincinnati Insurance Company Adds
Reinsurance Assumed Expertise

Cincinnati, July 28, 2015 - Cincinnati Financial Corporation (Nasdaq: CINF) announced that John A. Davis and Paul B. LeStourgeon joined The Cincinnati Insurance Company, adding expertise to the newly expanded reinsurance assumed initiative known as Cincinnati ReSM. Davis and LeStourgeon report to James W.B. Hole, managing director, head of Cincinnati Re.

Davis, managing director, head of casualty reinsurance, will oversee the strategic direction, underwriting and marketing of the company’s casualty reinsurance assumed portfolio. A 20-year veteran of the reinsurance industry, Davis most recently served as head of North American casualty treaty reinsurance for Endurance Reinsurance and has held senior underwriting roles at Partner Re and ACE Tempest Reinsurance. He holds a Bachelor of Science in Finance from Providence College.

LeStourgeon, managing director, head of reinsurance analytics, will drive the reinsurance assumed actuarial and catastrophe modeling analytics. He has been in the reinsurance industry for more than 20 years focused on actuarial consulting, pricing and financial modeling. LeStourgeon is a Fellow of the Casualty Actuarial Society, a Chartered Financial Analyst (CFA) and a Chartered Enterprise Risk Analyst (CERA). He holds a Bachelor of Science in Economics and Mathematics from Duke University and a Master of Business Administration from Temple University.

James Hole, managing director, head of Cincinnati Re, commented, “John and Paul both possess skills that complement our current team. The depth of their reinsurance experience and broad industry knowledge will help us realize profitable long-term opportunities as we focus on building relationships and maintaining underwriting discipline.”

In April, the company announced the expansion of its reinsurance assumed operations - a relatively small line of business for the company since the 1990s. Reinsurance assumed adds diversified risk, and the company’s high-quality, diversifying counterparty credit makes it well positioned to build the business slowly over time, focusing on opportunities that will benefit shareholders over the long term.




About Cincinnati Financial
Cincinnati Financial Corporation offers business, home and auto insurance, our main business, through The Cincinnati Insurance Company and its two standard market property casualty companies. The same local independent insurance agencies that market those policies may offer products of our other subsidiaries, including life and disability income insurance, fixed annuities and surplus lines property and casualty insurance. For additional information about the company, please visit cinfin.com.

Mailing Address:                            Street Address:
P.O. Box 145496                                6200 South Gilmore Road
Cincinnati, Ohio 45250-5496                        Fairfield, Ohio 45014-5141





Safe Harbor Statement
This is our “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2014 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 33.
Factors that could cause or contribute to such differences include, but are not limited to:
•
Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns, environmental events, terrorism incidents or other causes
•
Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance
•
Inadequate estimates or assumptions used for critical accounting estimates
•
Declines in overall stock market values negatively affecting the company’s equity portfolio and book value
•
Domestic and global events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:
◦
Significant or prolonged decline in the value of a particular security or group of securities and impairment of the asset(s)
◦
Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities
◦
Significant rise in losses from surety and director and officer policies written for financial institutions or other insured entities
•
Prolonged low interest rate environment or other factors that limit the company’s ability to generate growth in investment income or interest rate fluctuations that result in declining values of fixed-maturity investments, including declines in accounts in which we hold bank-owned life insurance contract assets
•
Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies
•
Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our ability to conduct business and our relationships with agents, policyholders and others
•
Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products
•
Delays or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness
•
Increased competition that could result in a significant reduction in the company’s premium volume
•
Changing consumer insurance-buying habits and consolidation of independent insurance agencies that could alter our competitive advantages
•
Inability to obtain adequate reinsurance on acceptable terms, amount of reinsurance purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers
•
Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability
•
Inability of our subsidiaries to pay dividends consistent with current or past levels
•
Events or conditions that could weaken or harm the company’s relationships with its independent agencies and hamper opportunities to add new agencies, resulting in limitations on the company’s opportunities for growth, such as:
◦
Downgrades of the company’s financial strength ratings
◦
Concerns that doing business with the company is too difficult
◦
Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace
◦
Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace
•
Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:
◦
Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates
◦
Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations
◦
Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business
◦
Add assessments for guaranty funds, other insurance‑related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes
◦
Increase our provision for federal income taxes due to changes in tax law
◦
Increase our other expenses
◦
Limit our ability to set fair, adequate and reasonable rates
◦
Place us at a disadvantage in the marketplace




◦
Restrict our ability to execute our business model, including the way we compensate agents
•
Adverse outcomes from litigation or administrative proceedings
•
Events or actions, including unauthorized intentional circumvention of controls, that reduce the company’s future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002
•
Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others
•
Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location
Further, the company’s insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. The company also is subject to public and regulatory initiatives that can affect the market value for its common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.
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