Exhibit 99.1
Cincinnati Financial Corporation Reports Second-Quarter 2004 Results
* Net income at 91 cents per share compared with 50 cents
* Operating income* up 42.9% to 70 cents per share
* Property casualty GAAP combined ratio at 91.9%, including 6.5
percentage points from catastrophe losses, with commercial lines
combined ratio at 84.4%
* Book value at $36.27 per share
CINCINNATI, July 22 /PRNewswire-FirstCall/ -- Cincinnati Financial
Corporation (Nasdaq: CINF) today reported second-quarter 2004 net income of
$155 million, or 91 cents per diluted share, up 83.9 percent from $84 million,
or 50 cents per share, in the second quarter of 2003. Net income per share
included net realized investment gains of 21 cents in 2004 versus a gain of 1
cent in the second quarter of 2003. Per-share amounts have been adjusted for
the 5 percent stock dividend paid June 15, 2004, to shareholders of record on
April 30, 2004.
Revenues from pretax investment income rose 5.6 percent to $121 million
for the second quarter. Total revenues advanced $124 million, or 15.6 percent,
to $923 million, reflecting 9.6 percent total earned premium growth and
substantially higher realized gains.
Financial Highlights*
(Dollars in millions, except share data)
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Income Statement Data
Net income $155 $84 $301 $141
Net realized investment
gains and losses 36 1 40 (39)
Operating income* $119 $83 $261 $180
Per Share Data (diluted)
Net income $0.91 $0.50 $1.77 $0.83
Net realized investment
gains and losses 0.21 0.01 0.24 (0.23)
Operating income* $0.70 $0.49 $1.53 $1.06
Cash dividend declared 0.275 0.238 0.55 0.476
Book value - - 36.27 34.83
Average shares
outstanding 170,176,122 169,712,585 170,151,367 169,867,580
* The Definitions of Non-GAAP Information and Reconciliation to
Comparable GAAP Measures on Page 10 of this news release defines and
reconciles measures presented in this release that are not based on
Generally Accepted Accounting Principles (non-GAAP).
Chairman and Chief Executive Officer John J. Schiff, Jr., CPCU, commented,
"The excellent results for the first half of 2004 show the steady progress
that is the centerpiece of our long-term strategy. These results put us in
good shape to achieve even better full-year results than we previously
expected. We are entering a period of heightened competition in the commercial
insurance marketplace from a position of strength. As planned, we are steadily
advancing toward profitability with year-over-year improvements for our
personal lines operations. And, our balance sheet's strength continues to
generate both short-term income and the potential for long-term appreciation,
supporting the financial flexibility that is so valuable to our policyholders
and shareholders."
Six-Month Results
Net income for the first six months was $301 million, or $1.77 per diluted
share, up 113.6 percent from $141 million, or 83 cents per share, in the first
six months of 2003. Net income per share included net realized investment
gains of 24 cents in 2004 versus losses of 23 cents in 2003. Reflecting the
Ohio Supreme Court's November 2003 decision to limit its earlier Scott-Pontzer
ruling, six-month results include the first-quarter 2004 release of $32
million pretax ($21 million, or 12 cents per share, after tax) from reserves
for uninsured motorist/underinsured motorist (UM/UIM) losses. UM/UIM-related
reserve changes had minimal effect on second-quarter 2004 results, and the
company believes that UM/UIM-related reserve changes will be immaterial in
coming quarters.
Revenues from pretax investment income rose 4.7 percent to $241 million
for the first six months of 2004. Total revenues advanced $288 million, or
19.1 percent, to $1.793 billion, reflecting 11.6 percent total earned premium
growth and substantial realized gains.
With only $1 million in catastrophe losses in the first quarter of 2004,
catastrophe losses for the six months totaled $47 million, contributing 3.3
percentage points to the six-month property casualty combined ratio. The
impact on after-tax earnings per share for the first half of 2004 was 18
cents. For the first half of 2003, catastrophe losses were $49 million,
contributing 3.8 percentage points to the combined ratio, with an effect on
earnings per share of 19 cents.
For the first six months of 2004, statutory net written premiums of the
property casualty insurance affiliates rose 7.9 percent to $1.524 billion
compared with $1.413 billion last year. Six-month new business written
directly by agencies was $167 million, up 7.7 percent over the first six
months of last year.
Property Casualty Insurance Operations
(Dollars in millions - GAAP)
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Income Statement Data
Earned premiums $717 $656 $1,432 $1,286
Loss and loss expenses
excluding catastrophe
losses 395 432 806 850
Catastrophe losses 46 47 47 49
Commissions 142 120 296 243
Underwriting expenses 76 46 133 102
Underwriting profit $58 $11 $150 $42
Ratio Data
Loss and loss expenses
excluding catastrophe
losses 55.0% 66.2% 56.2% 66.2%
Catastrophe losses 6.5 7.1 3.3 3.8
Commissions 19.8 18.4 20.7 19.0
Underwriting expenses 10.6 6.7 9.3 7.8
Combined ratio 91.9% 98.4% 89.5% 96.8%
For the second quarter, statutory net written premiums of the property
casualty insurance affiliates rose 1.1 percent to $734 million compared with
$726 million in last year's second quarter. While earned premium growth was
not materially affected, the growth rate of statutory net written premiums was
slowed by an actuarial adjustment to the estimate of premiums for policies
that were in process but not yet booked at quarter-end. On an adjusted basis
in both periods, net written premiums rose 7.6 percent to $761 million
compared with $707 million in last year's second quarter (see Definitions of
Non-GAAP Information and Reconciliation to Comparable GAAP Measures on Page 10
of this news release for reconciliation of this and other measures). Second-
quarter new business written directly by agencies was $87 million, including
$75 million in commercial lines new business and $12 million in personal lines
new business.
Schiff commented, "With reported year-to-date net written premiums up 7.9
percent and new business rising 7.7 percent, we remain comfortable with our
expectation of full-year 2004 net written premium growth in the high single
digits. Our confidence in our growth outlook is based on agency-by-agency
commentary and production results, feedback from our field marketing
representatives and account retention trends, as well as the plans for new
agency appointments and staffing of new marketing territories.
"Smaller territories allow our field marketing representatives to stay
fully engaged in agency activities, giving us the opportunity to win agency
business. So far this year, new marketing territories were staffed in upstate
New York, St. Louis, Cleveland and Milwaukee. In addition, imminent staffing
of territories in Birmingham, Alabama, and Kansas City, Missouri, will bring
the total to 93. Four additional territories have been identified and are
waiting for staffing."
Schiff added, "At the end of the second quarter, we determined that our
actuarial model to develop estimates of premium for policies in process did
not fully reflect recent success in reducing processing time for new and
renewal policy applications. This progress in our underwriting, rating and
data entry areas occurred even more quickly than we had anticipated. The
reported net written premium growth rate was slowed by a refinement to that
estimate in the second quarter, masking the positive underlying business
trends."
The second-quarter 2004 GAAP combined ratio improved 6.5 percentage points
to 91.9 percent with the loss and loss expense ratio declining 11.8 percentage
points. The commission expense ratio rose by 1.4 percentage points due to
higher contingent commissions. The other expense ratio increased by 3.9
percentage points, in part due to higher operating expenses related to
improving processing time through investments in technology and staffing.
Including a 2.2 percentage-point benefit from the release of the UM/UIM
reserves, the first-half 2004 GAAP combined ratio improved 7.3 percentage
points to 89.5 percent.
Schiff continued, "Second-quarter underwriting profitability typically is
affected by catastrophe losses, and this year was no different. Policyholders
across 18 Midwestern and mid-Atlantic states experienced three periods of
severe weather in May. As a result, second-quarter catastrophe losses were
$46 million, which contributed approximately 6.5 percentage points to the
second-quarter 2004 property casualty combined ratio. The effect on after-tax
earnings per share for the second quarter was approximately 18 cents."
Schiff said, "Teams of experienced claims representatives assisted local
staff in several areas with a high concentration of reported claims, including
Louisville and Lexington, Kentucky; St. Louis, Missouri; and Canton, Ohio. As
in the past, policyholders reported that our local field claims staff and
independent agency representatives did an outstanding job, demonstrating our
person-to-person approach and the true value of Cincinnati's insurance
coverage and service."
For the comparable 2003 quarter, $47 million in catastrophe losses
contributed 7.1 percentage points to the combined ratio, with an impact of 18
cents on earnings per share.
Commercial Lines
(Dollars in millions - GAAP)
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Income Statement Data
Earned premiums $520 $472 $1,038 $922
Loss and loss
expenses excluding
catastrophe losses 265 298 541 585
Catastrophe losses 15 14 16 18
Commissions 103 83 216 173
Underwriting expenses 56 37 94 75
Underwriting profit $81 40 $171 $71
Ratio Data
Loss and loss
expenses excluding
catastrophe losses 50.9% 63.2% 52.1% 63.5%
Catastrophe losses 3.0 2.9 1.6 2.0
Commissions 19.8 17.6 20.8 18.8
Underwriting expenses 10.7 7.7 9.0 8.0
Combined ratio 84.4% 91.4% 83.5% 92.3%
On an adjusted basis in both periods, net written premiums for commercial
lines of insurance rose 8.5 percent to $537 million for the second quarter,
compared with $495 million in last year's second quarter. Second-quarter
commercial lines new business written directly by agencies increased 5.9
percent to $75 million. The second-quarter 2004 commercial lines GAAP combined
ratio was 84.4 percent, including 3.0 percentage points from catastrophe
losses.
Schiff commented, "Our commercial lines results clearly demonstrate that
agents are bringing us their choice business and working closely with us to
ensure that underwriting remains a priority. We are fully staffed with
commercial lines underwriters who have acquired the skills to help us balance
growth and profitability. As our field marketing representatives focus on new
business opportunities, our underwriting team is seeing that we continue to
obtain adequate premium at renewal for the risks we cover.
"While competition in the commercial lines market continues to grow, we
see our approach providing us with key advantages. Our agents report that
renewal pricing increases are in the low single digits, with property lines
softening somewhat and modest increases for casualty-driven lines holding
steady. Our advantage lies in a field structure that puts us right where the
agent needs us, in particular for the mid-size accounts that require
negotiation in today's market. Our field team can react quickly. They can be
in the agent's office and the policyholder's place of business, making
decisions on the spot to meet the needs of our agents and their quality
accounts.
"As a result, we continue to expect that full-year commercial lines
written premiums could grow in the 10 percent range," Schiff added.
For the first six months of 2004, reported net written premiums for
commercial lines of insurance rose 8.6 percent to $1.122 billion, compared
with $1.033 billion last year. Six-month commercial lines new business written
directly by agencies increased 14.4 percent to $142 million. The commercial
lines GAAP combined ratio for the first six months of 2004 was 83.5 percent,
including a 3.0 percentage-point benefit from the release of UM/UIM reserves.
Personal Lines
(Dollars in millions - GAAP)
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Income Statement Data
Earned premiums $197 $184 $394 $364
Loss and loss
expenses excluding
catastrophe losses 130 134 265 265
Catastrophe losses 31 33 31 31
Commissions 39 37 80 70
Underwriting expenses 20 9 39 27
Underwriting
profit (loss) $(23) $(29) $(21) $(29)
Ratio Data
Loss and loss
expenses excluding
catastrophe losses 65.9% 73.1% 67.1% 72.9%
Catastrophe losses 15.7 17.8 7.8 8.4
Commissions 19.8 20.2 20.3 19.4
Underwriting expenses 10.2 5.0 10.0 7.4
Combined ratio 111.6% 116.1% 105.2% 108.1%
On an adjusted basis in both periods, net written premiums for personal
lines of insurance rose 5.6 percent to $224 million for the second quarter,
compared with $212 million in last year's second quarter. Second-quarter
personal lines new business written directly by agencies was $12 million,
compared with $16 million in last year's second quarter. The second-quarter
2004 personal lines GAAP combined ratio was 111.6 percent, including 15.7
percentage points from catastrophe losses. For the comparable 2003 period, the
ratio was 116.1 percent, including 17.8 percentage points from catastrophe
losses.
Schiff commented, "Again in the second quarter, personal lines premium
growth was driven by higher premiums per account on renewal business. In
addition to rate increases, deductible changes and modifications in policy
terms and conditions, we continue to fine tune our rate structure to
accomplish two objectives: profitability in all areas of personal lines and
marketable prices to attract our agencies' quality accounts. The personal
automobile line continues to perform very well. Our progress in the homeowner
line can be seen in the 9.1 percentage-point improvement in the loss and loss
expense ratio excluding catastrophes compared with a year ago.
"For the personal lines policyholders who know our agents and our company,
retention remains above 90 percent. For new accounts, the agents are guiding
us in refinement of our current rate structure while awaiting the introduction
of our new personal lines policy processing system in their states. Our focus
is to make the rollout of the new Diamond system as smooth as possible.
Diamond training for agencies in Michigan and Indiana was completed in the
second quarter, with training begun for Ohio agencies in late June. These are
three of our largest personal lines states, accounting for 53.1 percent of
personal lines premium volume."
For the first six months of 2004, reported net written premiums for
personal lines of insurance rose 5.9 percent to $402 million, compared with
$380 million last year. Personal lines new business written directly by
agencies for the first six months of 2004 was $25 million, compared with $31
million. Excluding catastrophes, the loss and loss expense ratio for the first
six months of 2004 was 67.1 percent, including a 0.2 percentage-point benefit
from the release of UM/UIM reserves, compared with 72.9 percent in the first
six months of 2003.
Life Insurance Operations
(In millions - GAAP) Second Quarter End Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Earned premiums $27 $23 $52 $44
Investment income,
net of expenses 22 22 44 44
Other income 1 1 2 1
Total revenues
excluding realized
investment gains
and losses $50 $46 $98 $89
Policyholder benefits 26 23 48 44
Expenses 13 12 26 22
Total benefits and
expenses $39 $35 $74 $66
Income before income
tax and realized
investment gains
and losses $11 $11 $24 $23
Income tax 4 4 8 8
Income before
realized investment
gains and losses $7 $7 $16 $15
The Cincinnati Life Insurance Company's second-quarter 2004 net earned
premiums increased 17.4 percent to $27 million. Income before realized
investment gains and losses increased 4.4 percent over the second quarter of
2003. For the second quarter, net income including net realized capital gains
and losses - a performance indicator for Cincinnati Life - rose 51.2 percent
to $10 million from $7 million for the comparable 2003 period.
Cincinnati Life President David H. Popplewell, FALU, LLIF, commented,
"Policy face amounts in force grew 8.5 percent since year-end on positive
response to our term life insurance product portfolio. Cincinnati Life also
experienced strong year-to-date growth in worksite marketing as our property
casualty agencies worked to round and protect their commercial lines accounts.
The worksite line of life insurance products lets employers offer voluntary
benefits to employees."
For the first six months of 2004, Cincinnati Life's net earned premiums
increased 16.8 percent to $52 million. Income before realized investment gains
and losses increased 2.9 percent over the first half of 2003. For the six
months, net income including net realized capital gains and losses rose to $19
million from $6 million for the comparable 2003 period.
Investment Operations
(In millions, pre-tax)
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Investment income:
Interest 62 58 $123 $118
Dividends $59 $55 117 111
Other 1 2 3 3
Investment expenses (1) (1) (2) (2)
Investment income,
net of expenses $121 $114 $241 $230
Net realized investment
gains and losses:
Other-than-temporary
impairment charges $(1) $(17) $(3) $(69)
Realized investment
gains and losses 53 8 62 9
Change in valuation
of embedded
derivatives 3 11 3 1
Net realized
investment gains
and losses $55 $2 $62 $(59)
Consolidated pretax investment income rose 5.6 percent for the second
quarter and 4.7 percent for the first six months of 2004, largely due to
dividend increases announced over the last 12 months by companies in the
equity portfolio and higher interest income due to cash flow invested in the
fixed-income portfolio. Dividend increases announced during the 12 months
ended June 30, 2004, by Fifth Third Bancorp and 31 other equity holdings will
add $16 million to investment income on an annualized basis.
Net realized investment gains were $55 million in this year's second
quarter, primarily due to net gains of $53 million from the sale of
securities. In last year's second quarter, net realized investment gains were
$2 million, including $17 million in other-than-temporary impairment charges.
Schiff noted, "As we discussed last quarter, our board and management
acted to adjust modestly the equity exposure of the property casualty company
portfolio, along with other actions to support our strong policyholder
surplus. Sales of equity securities in the second quarter achieved the planned
adjustment, with proceeds being reinvested in fixed-income and convertible
securities while generating the high realized gains."
At June 30, 2004, statutory surplus for the property casualty insurance
group was $2.884 billion, up $101 million from year-end 2003. The ratio of
common stock to statutory surplus for the property casualty insurance group
portfolio was 93.7 percent at June 30, 2004, compared with 114.7 percent at
year-end 2003. The company is evaluating its available options to address the
holding company status under the Investment Company Act of 1940, as announced
on June 28, 2004. Some actions under consideration could increase the property
casualty insurance group's statutory surplus and its ratio of common stock to
statutory surplus.
"Our equity approach remains the center of our investing strategy, and,
over the longer term, we anticipate continuing to allocate approximately 25
percent to 35 percent of new money to equities on a consolidated basis,"
Schiff noted.
During the second quarter, strong operating cash flow and $350 million in
net proceeds from security sales led to substantial new investments and a cash
balance of $285 million at June 30, 2004. Net purchases of fixed-income
securities totaled $255 million, bringing the market value of consolidated
fixed-maturity investments to $4.211 billion at June 30, 2004, from $3.925
billion at year-end 2003. The market value of consolidated equity securities
was $7.871 billion at June 30, 2004, down from $8.524 billion at year-end
2003, reflecting the equity sales as well as market value fluctuations of the
company's equity securities including Fifth Third, the company's largest
common stock holding. The company repurchased 25,000 shares of Cincinnati
Financial common stock at a total cost of $1 million, or $40.99 per share,
during the second quarter. Approximately 5 million shares remain authorized by
the board of directors for repurchase.
Balance Sheet
(Dollars in millions)
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Balance Sheet Data
Total assets - - $15,530 $14,930
Invested assets - - 12,117 11,889
Shareholders'
equity - - 6,103 5,870
Ratio Data
Return on equity,
annualized 10.1% 6.1% 9.8% 4.9%
Return on equity,
annualized,
based on
comprehensive
income (3.3) 55.2 (0.1) 13.7
At June 30, 2004, consolidated assets reached $15.530 billion compared
with $15.509 billion at year-end 2003. Shareholders' equity was $6.103
billion, or $36.27 per share, compared with $6.204 billion, or $36.85 per
share, at year-end 2003, due to lower unrealized gains in the investment
portfolio. Total debt declined to $512 million, including $92 million in
borrowings on short-term lines of credit, compared with $603 million,
including $183 million in borrowings on short-term lines, at year-end 2003.
"Prior to the announcement on June 28 of our application for exemptive
relief from the Investment Company Act, we paid down one of our short-term
credit lines and have paid it off since the end of the second quarter. We are
working with our lenders to re-establish the facility, which we would access
as needed to fund parent-company activities," Schiff said.
On June 29, Standard & Poor's Rating Service reaffirmed the insurance
subsidiaries' AA- (Very Strong) financial strength ratings and counterparty
credit ratings as well as the holding company's A credit rating, which it had
revised on June 9. Standard & Poor's moved the holding company credit rating
closer to its standard notching to reflect the rating firm's guidelines that
generally place an insurance holding company's credit rating two or three
levels (notches) below the insurer financial strength ratings of the
subsidiaries. Notching recognizes that in the event of financial problems,
obligations to policyholders would be paid before obligations to creditors.
Outlook Positive for Second Half of 2004
Schiff commented, "With softening commercial lines prices and our modest
shorter-term expectations for new personal lines business, we are maintaining
our full-year 2004 written premium growth target in the high single digits. In
light of the strong first half, we now believe we can achieve a full-year 2004
GAAP combined ratio in the range of 92 percent (91.5 percent on a statutory
basis), including a benefit of approximately 1 percentage point from our
first-quarter UM/UIM reserve release. We also see the potential for investment
income growth ahead of the 3.5 percent to 4.5 percent rate we had initially
anticipated."
Schiff added that the outlook for the year assumes catastrophe losses will
total between $90 million and $100 million and will affect the combined ratio
by approximately 3.0 to 3.5 percentage points over the full year. "Year-to-
date catastrophe losses totaled $47 million. Preliminary estimates indicate
that we may incur $15 million, net of reinsurance, in catastrophe and other
weather-related losses for storms in Illinois and Wisconsin in the first weeks
of July.
"The predictability of our approach to the insurance marketplace is one of
our greatest strengths. While we appreciate quarters such as this one when
results are exceptional, we don't overreact when they are not. Our true
objective is to achieve steady growth while performing as an industry
profitability leader over the longer term. We believe this balanced approach
benefits our relationships with agents and policyholders, shareholders and
company associates, generating dependable results year in and year out. We
look to the remainder of 2004 with optimism," Schiff concluded.
For additional information or to register for this afternoon's conference
call, please visit http://www.cinfin.com .
Cincinnati Financial Corporation offers property and casualty insurance,
its main business, through The Cincinnati Insurance Company, The Cincinnati
Indemnity Company and The Cincinnati Casualty Company. The Cincinnati Life
Insurance Company markets life and disability income insurance and annuities.
CFC Investment Company supports the insurance subsidiaries and their
independent agent representatives through commercial leasing and financing
activities. CinFin Capital Management Company provides asset management
services to institutions, corporations and individuals. For additional
information, please visit the company's Web site at http://www.cinfin.com .
This is a "Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995. Certain forward-looking statements contained herein
involve potential risks and uncertainties. The company's future results could
differ materially from those discussed. Factors that could cause or contribute
to such differences include, but are not limited to:
* unusually high levels of catastrophe losses due to changes in weather
patterns, environmental events or other causes
* increased frequency and/or severity of claims
* 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:
-- downgrade of the company's financial strength ratings,
-- concerns that doing business with the company is too difficult or
-- perceptions that the company's level of service is no longer a
distinguishing characteristic in the marketplace
* delays in the development, implementation and benefits of technology
enhancements
* amount of reinsurance purchased and financial strength of reinsurers
* inaccurate estimates or assumptions used for critical accounting
estimates, including loss reserves
* recession or other economic conditions or regulatory, accounting or tax
changes resulting in lower demand for insurance products
* sustained decline in overall stock market values negatively affecting
the company's equity portfolio, in particular a sustained decline in
the market value of Fifth Third Bancorp (Fifth Third) shares, a
significant equity holding
* events that lead to a significant decline in the market value of a
particular security and impairment of the asset
* prolonged low interest rate environment or other factors that limit the
company's ability to generate growth in investment income
* insurance regulatory actions, legislation or court decisions that
increase expenses or place the company at a disadvantage in the
marketplace
* adverse outcomes from litigation or administrative proceedings
* not receiving an exemptive order pursuant to the Investment Company Act
of 1940 from the SEC, and the resultant changes which would be required
in our operations
Further, the company's insurance businesses are subject to the effects of
changing social, 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 recent measures affecting corporate financial reporting and
governance. The ultimate changes and eventual effects, if any, of these
initiatives are uncertain.
Readers are cautioned that the company undertakes no obligation to review
or update the forward-looking statements included in this material.
Cincinnati Financial Corporation
Consolidated Balance Sheets
(Dollars in millions except share data)
June 30, December 31,
2004 2003
(unaudited)
Assets
Investments
Fixed maturities, at fair
value (amortized cost:
2004-$4,060; 2003-$3,669) $4,211 $3,925
Equity securities, at fair
value (cost: 2004-$2,527;
2003-$2,487) 7,871 8,524
Other invested assets 35 36
Cash 285 91
Investment income receivable 102 99
Finance receivable 93 81
Premiums receivable 1,149 1,060
Reinsurance receivable 655 617
Prepaid reinsurance premiums 14 13
Deferred policy acquisition costs 397 372
Property and equipment, net, for
company use (accumulated
depreciation: 2004-$196; 2003-$181) 134 136
Other assets 125 92
Separate accounts 459 463
Total assets $15,530 $15,509
Liabilities
Insurance reserves
Losses and loss expense $3,523 $3,415
Life policy reserves 1,098 1,025
Unearned premiums 1,546 1,446
Other liabilities 432 404
Deferred income tax 1,857 1,949
Notes payable 92 183
6.9% senior debenture due 2028 420 420
Separate accounts 459 463
Total liabilities 9,427 9,305
Shareholders' equity
Common stock, par value-$2 per
share; authorized 200 million
shares; issued: 2004-185 million
shares, 2003-176 million shares 370 352
Paid-in capital 651 306
Retained earnings 1,836 1,986
Accumulated other comprehensive
income-unrealized gains on
investments and derivatives 3,778 4,084
Treasury stock at cost (2004-17
million shares, 2003-16 million shares) (532) (524)
Total shareholders' equity 6,103 6,204
Total liabilities and
shareholders' equity $15,530 $15,509
Cincinnati Financial Corporation
Consolidated Statements of Income
(In millions except per share data)
Six Months Ended June 30,
2004 2003
(unaudited)
Revenues
Earned premiums
Property casualty $1,432 $1,286
Life 52 44
Investment income, net of expenses 241 230
Realized investment gains and losses 62 (59)
Other income 6 4
Total revenues 1,793 1,505
Benefits and expenses
Insurance losses and policyholder
benefits 899 942
Commissions 311 259
Other operating expenses 129 110
Taxes, licenses and fees 40 29
Increase in deferred policy
acquisition costs (24) (31)
Interest expense 17 17
Other expenses 6 7
Total benefits and expenses 1,378 1,333
Income before income taxes 415 172
Provision (benefit) for income
taxes
Current 42 44
Deferred 72 (13)
Total provision (benefit) for
income taxes 114 31
Net income $301 $141
Per common share
Net income - basic $1.79 $0.84
Net income - diluted $1.77 $0.83
Since 1996, Cincinnati Financial has disclosed the estimated impact of
stock options on net income and earnings per share in a Note to the
Financial Statements. In the second quarters of 2004 and 2003, net income
would have been reduced by less than 2 cents per share, if option
expense, calculated using the binomial option-pricing model, were
included as an expense.
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 - where analyzing both GAAP and certain non-GAAP
measures may improve understanding of trends in the underlying business,
helping 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 unrelated to business
performance that 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 (also described as net income before
realized investment gains and losses) is calculated by excluding net realized
investment gains and losses 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. Moreover,
under applicable GAAP accounting requirements, 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 be indicative of 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 operating income in their analyses. The company
presents operating income so all investors have what management believes to be
a useful supplement to GAAP information.
Statutory accounting rules: For public reporting, insurance companies
prepare financial statements in accordance with GAAP. However, certain data
also must be calculated 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 used by various organizations to calculate aggregate
industry data, study industry trends and make comparisons between various
insurance companies.
Written premium: Under statutory accounting rules, 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.
Written premium adjustment - statutory basis only: In 2002, the company
refined its estimation process for matching written premiums to policy
effective dates, which added $117 million to 2002 written premiums. To better
assess ongoing business trends, management may exclude this adjustment when
evaluating trends in written premiums and statutory ratios that make use of
written premiums.
One-time charges or adjustments: Management analyzes results excluding the
impact of one-time items.
* In 2003, as the result of a settlement negotiated with a vendor, pretax
results included the recovery of $23 million of the $39 million one-
time, pretax charge incurred in 2000.
* In 2000, the company recorded a one-time charge of $39 million, pre-
tax, to write down previously capitalized costs related to the
development of software to process property casualty policies.
* In 2000, the company earned $5 million in interest in the first quarter
from a $303 million single-premium bank-owned life insurance (BOLI)
policy booked at the end of 1999 that was segregated as a Separate
Account effective April 1, 2000. Investment income and realized
investment gains and losses from separate accounts generally accrue
directly to the contract holder and, therefore, are not included in the
company's consolidated financials.
Codification: Adoption of Codification of Statutory Accounting Principles
was required for Ohio-based insurance companies effective January 1, 2001. The
adoption of Codification changed the manner in which the company recognized
property casualty written premiums. As a result, 2001 statutory written
premiums included $402 million to account for unbooked premiums related to
policies with effective dates prior to January 1, 2001. To better assess
ongoing business trends, management excludes this $402 million when evaluating
written premiums and statutory ratios that make use of written premiums.
Life insurance gross written premiums: In analyzing life insurance company
gross written premiums, management excludes three larger, single-pay life
insurance policies (BOLIs) to focus on the trend in premiums written through
the agency distribution channel.
Cincinnati Financial Corporation and Subsidiaries
Quarterly Net Income Reconciliation
(In millions except per share data)
Three months ended
12/31/2004 9/30/2004 6/30/2004 3/31/2004
Net income $155 $146
One-time item 0 0
Net income before
one-time item $155 $146
Net realized investment
gains and losses 36 4
Operating income before
one-time item $119 $142
Less catastrophe losses 30 0
Operating income before
catastrophe losses and
one-time item $149 $142
Diluted per share data
Net income $0.91 $0.86
One-time item 0.00 0.00
Net income before
one-time item $0.91 $0.86
Net realized investment
gains and losses 0.21 0.03
Operating income before
one-time item $0.70 $0.83
Less catastrophe losses (0.18) 0.00
Operating income before
catastrophe losses and
one-time item $0.88 $0.83
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.
Cincinnati Financial Corporation and Subsidiaries
Quarterly Net Income Reconciliation
(In millions except per share data)
Three months ended
12/31/2003 9/30/2003 6/30/2003 3/31/2003
Net income $130 $104 $84 $57
One-time item 0 15 0 0
Net income before
one-time item $130 $89 $84 $57
Net realized investment
gains and losses 2 10 1 (40)
Operating income before
one-time item $128 $79 $83 $97
Less catastrophe losses 4 27 30 2
Operating income before
catastrophe losses and
one-time item $132 $106 $113 $99
Diluted per share data
Net income $0.76 $0.61 $0.50 $0.33
One-time item 0.00 0.09 0.00 0.00
Net income before
one-time item $0.76 $0.52 $0.50 $0.33
Net realized investment
gains and losses 0.01 0.06 0.01 (0.24)
Operating income before
one-time item $0.75 $0.46 $0.49 $0.57
Less catastrophe losses (0.03) (0.16) (0.18) (0.01)
Operating income before
catastrophe losses and
one-time item $0.78 $0.62 $0.67 $0.58
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.
Cincinnati Financial Corporation and Subsidiaries
Quarterly Net Income Reconciliation
(In millions except per share data)
Six months Nine months Twelve months
ended ended ended
6/30/04 6/30/03 9/30/04 9/30/03 12/31/04 12/31/03
Net income $301 $141 $245 $374
One-time item 0 0 15 15
Net income before
one-time item $301 $141 $230 $359
Net realized
investment gains
and losses 40 (39) (29) (27)
Operating income
before one-time
item $261 $180 $259 $386
Less catastrophe
losses 30 32 59 63
Operating income
before
catastrophe
losses and
one-time item $291 $212 $318 $449
Diluted per share data
Net income $1.77 $0.83 $1.44 $2.21
One-time item 0.00 0.00 0.09 $0.09
Net income before
one-time item 1.77 $0.83 $1.35 $2.12
Net realized
investment gains
and losses $0.24 (0.23) (0.17) (0.16)
Operating income
before one-time
item 1.53 $1.06 $1.52 $2.28
Less catastrophe
losses $(0.18) (0.19) (0.35) (0.37)
Operating income
before
catastrophe
losses and
one-time item $1.71 $1.25 $1.87 $2.65
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Consolidated
(Dollars in millions)
Three months ended
12/31/2004 9/30/2004 6/30/2004 3/31/2004
Premiums
Adjusted written premiums
(statutory) $761 $767
Written premium adjustment
statutory only (27) 23
Reported written premiums
(statutory)* $734 $790
Unearned premiums change (17) (74)
Earned premiums $717 $716
Statutory combined ratio
Reported statutory combined
ratio* 91.2% 85.1%
Written premium adjustment
statutory only NM NM
One-time item 0.0 0.0
Adjusted statutory combined
ratio 91.2% 85.1%
Less catastrophe losses 6.5 0.1
Adjusted statutory combined
ratio excluding catastrophe
losses 84.7% 85.0%
Reported commission expense
ratio* 18.9% 18.3%
Written premium adjustment
statutory only NM NM
One-time item 0.0 0.0
Adjusted commission expense
ratio 18.9% 18.3%
Reported other expense
ratio* 10.8% 9.3%
Written premium adjustment
statutory only NM NM
One-time item 0.0 0.0
Adjusted other expense ratio 10.8% 9.3%
Reported statutory expense
ratio* 29.7% 27.6%
Written premium adjustment
statutory only NM NM
One-time item 0.0 0.0
Adjusted statutory expense
ratio 29.7% 27.6%
GAAP combined ratio
GAAP combined ratio 91.9% 87.1%
One-time item 0.0 0.0
GAAP combined ratio
before one-time item 91.9% 87.1%
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.
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Consolidated
(Dollars in millions)
Three months ended
12/31/2003 9/30/2003 6/30/2003 3/31/2003
Premiums
Adjusted written
premiums
(statutory) $698 $714 $707 $667
Written premium
adjustment
statutory only (19) 9 19 20
Reported written premiums
(statutory)* $679 $723 $726 $687
Unearned premiums change 11 (45) (70) (58)
Earned premiums $690 $678 $656 $629
Statutory combined ratio
Reported statutory
combined ratio* 89.8% 96.3% 98.4% 92.8%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 3.1 0.0 0.0
Adjusted statutory
combined ratio 89.8% 99.4% 98.4% 92.8%
Less catastrophe losses 1.0 6.1 7.1 0.4
Adjusted statutory
combined ratio
excluding catastrophe
losses 88.8% 93.3% 91.3% 92.4%
Reported commission
expense ratio* 18.8% 18.5% 17.0% 16.4%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 0.0 0.0 0.0
Adjusted commission
expense ratio 18.8% 18.5% 17.0% 16.4%
Reported other expense
ratio* 10.9% 6.5% 8.2% 10.0%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 3.1 0.0 0.0
Adjusted other expense
ratio 10.9% 9.6% 8.2% 10.0%
Reported statutory
expense ratio* 29.7% 25.0% 25.2% 26.4%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 3.1 0.0 0.0
Adjusted statutory
expense ratio 29.7% 28.1% 25.2% 26.4%
GAAP combined ratio
GAAP combined ratio 89.1% 96.6% 98.4% 95.1%
One-time item 0.0 3.4 0.0 0.0
GAAP combined ratio
before one-time item 89.1% 100.0% 98.4% 95.1%
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.
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Consolidated
(Dollars in millions)
Six months Nine months Twelve months
ended ended ended
6/30/04 6/30/03 9/30/04 9/30/03 12/31/04 12/31/03
Premiums
Adjusted
written
premiums
(statutory) $1,528 $1,374 $2,090 $2,789
Written premium
adjustment
statutory only (4) 39 46 26
Reported
written
premiums
(statutory)* $1,524 $1,413 $2,136 $2,815
Unearned
premiums
change (92) (128) (173) (162)
Earned premiums $1,432 $1,286 $1,963 $2,653
Statutory combined
ratio
Reported
statutory
combined
ratio* 88.1% 95.7% 96.0% 94.2%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 0.0 1.0 0.8
Adjusted
statutory
combined ratio 88.1% 95.7% 97.0% 95.0%
Less
catastrophe
losses 3.3 3.8 4.6 3.6
Adjusted
statutory
combined ratio
excluding
catastrophe
losses 84.8% 91.9% 92.4% 91.4%
Reported
commission
expense ratio* 18.6% 16.7% 17.3% 17.6%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 0.0 0.0 0.0
Adjusted
commission
expense ratio 18.6% 16.7% 17.3% 17.6%
Reported other
expense ratio* 10.0% 9.0% 8.1% 8.9%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 0.0 1.0 0.8
Adjusted other
expense ratio 10.0% 9.0% 9.1% 9.7%
Reported
statutory
expense ratio* 28.6% 25.7% 25.5% 26.5%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 0.0 1.0 0.8
Adjusted
statutory
expense ratio 28.6% 25.7% 26.5% 27.3%
GAAP combined
ratio
GAAP combined
ratio 89.5% 96.8% 96.7% 94.7%
One-time item 0.0 0.0 1.2 0.8
GAAP combined
ratio before
one-time item 89.5% 96.8% 97.9% 95.5%
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Commercial Lines
(Dollars in millions)
Three months ended
12/31/2004 9/30/2004 6/30/2004 3/31/2004
Premiums
Adjusted written
premiums (statutory) $537 $587
Written premium
adjustment
statutory only (25) 23
Reported written
premiums
(statutory)* $512 $610
Unearned premiums
change 8 (91)
Earned premiums $520 $519
Statutory combined ratio
Reported statutory
combined ratio* 84.1% 80.3%
Written premium
adjustment
statutory only NM NM
One-time item 0.0 0.0
Adjusted statutory
combined ratio 84.1% 80.3%
Less catastrophe
losses 3.0 0.2
Adjusted statutory
combined
ratio excluding
catastrophe losses 81.1% 80.1%
GAAP combined ratio
GAAP combined ratio 84.4% 82.6%
One-time item 0.0 0.0
GAAP combined ratio
before one-time
item 84.4% 82.6%
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Commercial Lines
(Dollars in millions)
Three months ended
12/31/2003 9/30/2003 6/30/2003 3/31/2003
Premiums
Adjusted written premiums
(statutory) $507 $499 $495 $506
Written premium adjustment
statutory only (16) 8 12 20
Reported written premiums
(statutory)* $491 $507 $507 $526
Unearned premiums change 7 (19) (35) (76)
Earned premiums $498 $488 $472 $450
Statutory combined ratio
Reported statutory combined
ratio* 89.7% 91.9% 91.9% 90.3%
Written premium adjustment
statutory only NM NM NM NM
One-time item 0.0 2.9 0.0 0.0
Adjusted statutory combined
ratio 89.7% 94.7% 91.9% 90.3%
Less catastrophe losses 2.9 2.0 2.9 1.0
Adjusted statutory combined
ratio excluding
catastrophe losses 86.8% 92.7% 89.0% 89.3%
GAAP combined ratio
GAAP combined ratio 88.5% 92.1% 91.4% 93.2%
One-time item 0.0 2.9 0.0 0.0
GAAP combined ratio before
one-time item 88.5% 95.0% 91.4% 93.2%
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Commercial Lines
(Dollars in millions)
Six months Nine months Twelve months
ended ended ended
6/30/04 6/30/03 9/30/04 9/30/03 12/31/04 12/31/03
Premiums
Adjusted written
premiums
(statutory) $1,124 $1,001 $1,502 $2,009
Written premium
adjustment
statutory only (2) 32 38 22
Reported written
premiums
(statutory)* $1,122 $1,033 $1,540 $2,031
Unearned premiums
change (84) (111) (130) (123)
Earned premiums $1,038 $922 $1,410 $1,908
Statutory combined ratio
Reported statutory
combined ratio* 82.0% 91.1% 91.4% 90.9%
Written premium
adjustment
statutory only NM NM NM NM
One-time item 0.0 0.0 0.9 0.7
Adjusted statutory
combined ratio 82.0% 91.1% 92.3% 91.6%
Less catastrophe
losses 1.6 2.0 2.0 2.2
Adjusted statutory
combined ratio
excluding catastrophe
losses 80.4% 89.1% 90.3% 89.4%
GAAP combined ratio
GAAP combined ratio 83.5% 92.3% 92.2% 91.2%
One-time item 0.0 0.0 1.0 0.8
GAAP combined ratio
before one-time item 83.5% 92.3% 93.2% 92.0%
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Personal Lines
(Dollars in millions)
Three months ended
12/31/2004 9/30/2004 6/30/2004 3/31/2004
Premiums
Adjusted written
premiums
(statutory) $224 $180
Written premium
adjustment --
statutory only (2) 0
Reported written
premiums
(statutory)* $222 $180
Unearned premiums
change (25) 17
Earned premiums $197 $197
Statutory combined ratio
Reported statutory
combined
ratio* 110.1% 98.7%
Written premium
adjustment --
statutory only NM NM
One-time item 0.0 0.0
Adjusted statutory
combined ratio 110.1% 98.7%
Less catastrophe
losses 15.7 (0.2)
Adjusted statutory
combined ratio
excluding
catastrophe losses 94.4% 98.9%
GAAP combined ratio
GAAP combined ratio 111.6% 98.8%
One-time item 0.0 0.0
GAAP combined ratio
before one-time
item 111.6% 98.8%
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Personal Lines
(Dollars in millions)
Three months ended
12/31/2003 9/30/2003 6/30/2003 3/31/2003
Premiums
Adjusted written premiums
(statutory) $191 $215 $212 $161
Written premium
adjustment --
statutory only (3) 1 7 0
Reported written premiums
(statutory)* $188 $216 $219 $161
Unearned premiums change 4 (26) (35) 18
Earned premiums $192 $190 $184 $179
Statutory combined ratio
Reported statutory combined
ratio* 90.0% 108.1% 115.2% 99.5%
Written premium
adjustment --
statutory only NM NM NM NM
One-time item 0.0 3.8 0.0 0.0
Adjusted statutory
combined ratio 90.0% 111.9% 115.2% 99.5%
Less catastrophe losses (3.9) 16.6 17.8 (1.3)
Adjusted statutory combined
ratio excluding
catastrophe losses 93.9% 95.3% 97.4% 100.8%
GAAP combined ratio
GAAP combined ratio 90.7% 108.4% 116.1% 99.9%
One-time item 0.0 4.3 0.0 0.0
GAAP combined ratio before
one-time item 90.7% 112.7% 116.1% 99.9%
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.
Cincinnati Insurance Group
Quarterly Property Casualty Data - Personal Lines
(Dollars in millions)
Six months Nine months Twelve months
ended ended ended
6/30/04 6/30/03 9/30/04 9/30/03 12/31/04 12/31/03
Premiums
Adjusted written
premiums (statutory) $404 $373 $588 $780
Written premium
adjustment --
statutory only (2) 7 8 4
Reported written
premiums
(statutory)* $402 $380 $596 $784
Unearned premiums
change (8) (16) (43) (39)
Earned premiums $394 $364 $553 $745
Statutory combined ratio
Reported statutory
combined ratio* 104.3% 107.2% 107.5% 102.9%
Written premium
adjustment --
statutory only NM NM NM NM
One-time item 0.0 0.0 1.3 1.0
Adjusted statutory
combined ratio 104.3% 107.2% 108.8% 103.9%
Less catastrophe
losses 7.8 8.4 11.2 7.3
Adjusted statutory
combined ratio
excluding
catastrophe
losses 96.5% 98.8% 97.6% 96.6%
GAAP combined ratio
GAAP combined ratio 105.2% 108.1% 108.2% 103.6%
One-time item 0.0 0.0 1.5 1.1
GAAP combined ratio
before one-time
item 105.2% 108.1% 109.7% 104.7%
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.
SOURCE Cincinnati Financial Corporation
-0- 07/22/2004
/CONTACT: Investors, Heather J. Wietzel, +1-513-603-5236, or Media, Joan
O. Shevchik, +1-513-603-5323, both of Cincinnati Financial Corporation/
/Web site: http://www.cinfin.com /
(CINF)
CO: Cincinnati Financial Corporation
ST: Ohio
IN: FIN INS
SU: ERN CCA MAV