cinf-20201211

0000020286-20-000103.txt : 20201211 0000020286-20-000103.hdr.sgml : 20201211 20201211160645 ACCESSION NUMBER: 0000020286-20-000103 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20201211 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20201211 DATE AS OF CHANGE: 20201211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINCINNATI FINANCIAL CORP CENTRAL INDEX KEY: 0000020286 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 310746871 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-04604 FILM NUMBER: 201383646 BUSINESS ADDRESS: STREET 1: 6200 S GILMORE RD CITY: FAIRFIELD STATE: OH ZIP: 45014 BUSINESS PHONE: 5138702000 MAIL ADDRESS: STREET 1: P.O. BOX 145496 CITY: CINCINNATI STATE: OH ZIP: 45250 8-K 1 cinf-20201211.htm 8-K cinf-20201211

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: December 11, 2020

(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.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	CINF	Nasdaq Global Select Market

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§203.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐ Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Items 1.01 Entry into Material Definitive Agreements.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet

Arrangement of a Registrant.

On December 11, 2020, Cincinnati Financial Corporation and CFC Investment Company, a subsidiary of Cincinnati Financial Corporation (Borrowers) entered into a Limited Consent to Credit Agreement ("2020 Extension") for the Amended and Restated Credit Agreement, dated May 13, 2014, as amended (the "Credit Agreement"), by and among the lenders party thereto; PNC Bank, N.A., as Administrative Agent; PNC Capital Markets, LLC, as Sole Bookrunner and Joint Lead Arranger; Fifth Third Bank, N.A. as Joint Lead Arranger and Syndication Agent; and The Huntington National Bank and U.S Bank, N.A. as Documentation Agents. The 2020 Extension changes the Expiration Date of the Credit Agreement to February 4, 2026, which is a one-year extension of the prior expiration. All other terms and conditions of the Credit Agreement, as amended are unchanged and remain in full force and effect.

The foregoing description of the 2020 Extension does not purport to be complete and is qualified in its entirety by the full terms of the Credit Agreement and the First, Second, Third and Fourth Amendments and the extensions thereto, each of which is incorporated herein by reference.

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 2019 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 35 and Item 1A, Risk Factors in our subsequent Quarterly Reports on Form 10-Q.

Factors that could cause or contribute to such differences include, but are not limited to:

•Effects of the COVID-19 pandemic that could affect results for reasons such as:

◦Securities market disruption or volatility and related effects such as decreased economic activity that affect the company’s investment portfolio and book value

◦An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses

◦An unusually high level of insurance losses, including risk of legislation or court decisions extending business interruption insurance in commercial property coverage forms to cover claims for pure economic loss related to the COVID-19 pandemic

◦Decreased premium revenue from disruption to our distribution channel of independent agents, consumer self-isolation, travel limitations, business restrictions and decreased economic activity

◦Inability of our workforce, agencies or vendors to perform necessary business functions

•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, assumptions or reliance on third-party data used for critical accounting estimates

•Declines in overall stock market values negatively affecting the company’s equity portfolio and book value

•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

•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 fair 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

•Our inability to integrate Cincinnati Global and its subsidiaries into our on-going operations, or disruptions to our on-going operations due to such integration

•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; disrupt our relationships with agents, policyholders and others; cause reputational damage, mitigation expenses and data loss and expose us to liability under federal and state laws

•Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products

•Delays, inadequate data developed internally or from third parties, 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 ceded reinsurance on acceptable terms, amount of reinsurance coverage 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.

Item 9.01 Financial Statements and Exhibits.

Exhibit 10.1 – Amended and Restated Credit Agreement, dated May 13, 2014 (incorporated herein by reference to the Company’s Current Report on Form 8-K dated May 13, 2014, Exhibit 10.1 )

Exhibit 10.2 – First Amendment to Amended and Restated Credit Agreement, dated February 8, 2016 (incorporated herein by reference to the Company’s Current Report on Form 8-K dated February 8, 2016, Exhibit 10.1)

Exhibit 10.3 – Second Amendment to Amended and Restated Credit Agreement, dated March 31, 2016 (incorporated herein by reference to the Company’s Current Report on Form 8-K dated March 31, 2016, Exhibit 10.1)

Exhibit 10.4 – Third Amendment to Amended and Restated Credit Agreement, dated February 4, 2019 (incorporated herein by reference to the Company’s Current Report on Form 8-K dated February 4, 2019, Exhibit 10.1)

Exhibit 10.5 – Fourth Amendment to Amended and Restated Credit Agreement, dated February 26, 2019 (incorporated herein by reference to the Company's Current Report on Form 8-K dated February 25, 2019, Exhibit 10.6)

Exhibit 10.6 – Limited Consent to Credit Agreement, dated December 6, 2019 (incorporate d herein by reference to t he Company's Current Report on Form 8-K dated December 6, 2020, Exhibit 10.6)

Exhibit 10.7 – L imited Consent to Credit Agreement, dated December 11, 2020, among Cincinnati Financial Corporation, CFC Investment Company, PNC Ban k, N.A., Fifth Th ird Bank, N.A., The Hun tington National Bank, U.S. Bank , N.A., and Trust Bank .

Exhibit 104 – The cover page from this Current Report on Form 8-K, formatted as Inline XBRL

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: December 11, 2020			/S/ Michael J. Sewell
			Michael J. Sewell, CPA
			Chief Financial Officer, Senior Vice President and Treasurer
			(Principal Accounting Officer)

EX-10.7 2 limitedconsenttocredit.htm EX-10.7 Document

LIMITED CONSENT TO CREDIT AGREEMENT

THIS LIMITED CONSENT TO CREDIT AGREEMENT (this “Consent”), dated as of December 11, 2020, is entered into by and among Cincinnati Financial Corporation, an Ohio corporation (the “Company”), CFC Investment Company, an Ohio corporation (“CFC-I” and together with the Company, each a “Borrower” and together, the “Borrowers”), the Lenders party hereto, and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders under the Credit Agreement (the “Administrative Agent”). Unless otherwise specified herein, capitalized terms used in this Consent shall have the meanings ascribed to them in the Credit Agreement (as hereinafter defined) as amended hereby.

A. WHEREAS, the Administrative Agent, the Lenders and the Borrowers are parties to that certain Amended and Restated Credit Agreement, dated as of May 13, 2014 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”); and

B. WHEREAS, the Borrowers have requested that the Administrative Agent and each of the Lenders consent to the Extension described below, and, subject to the terms and conditions set forth herein, the Administrative Agent and each of the Lenders have agreed to consent to the Extension as set forth herein.

NOW, THEREFORE, for and in consideration of the premises and mutual agreements herein contained and for the purposes of setting forth the terms and conditions of this Consent and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be bound, hereby agree as follows:

1. Limited Consent.

(a) Pursuant to Section 2.13(i) of the Credit Agreement, each of the Lenders party hereto consents to the extension of the Expiration Date to February 4, 2026 (the “Extension”).

(b) The parties hereto agree that the limited consent set forth in this Section shall be limited precisely as written and, except as expressly set forth in this Section, shall not be deemed to be a consent to any future extension of the Expiration Date or any other amendment, waiver or modification of any other term or condition of the Credit Agreement or any other Loan Document.

2. Effectiveness. This Consent shall be deemed to be effective upon receipt by the Administrative Agent of (a) a copy of this Consent duly executed by the Borrowers and each of the Lenders, (b) the receipt by the Administrative Agent of the Upfront Fee described below and (b) payment by the Borrowers to the Administrative Agent of all fees and expenses payable under the Credit Agreement or any other Loan Document, including, without limitation, those set forth in Section 3(b) hereof.

3. Fees and Expenses.

(a) The Borrowers agree to pay an upfront fee payable to the Administrative Agent for the ratable benefit of the Lenders in an amount equal to 1.5 basis points of the aggregate Revolving Credit Commitments (or $45,000) on the date hereof (the “Upfront Fee”).

(b) The Borrowers agree to pay on demand all reasonable out-of-pocket costs and expenses of or incurred by the Administrative Agent, including but not limited to, reasonable fees and disbursements of counsel to the Administrative Agent, in connection with the preparation, negotiation, execution and delivery of this Consent.

739022338.3 12403011

4. Representations and Warranties. In order to induce the Administrative Agent and the Lenders to enter into this Consent, Borrowers hereby represent and warrant that (a) the representations, warranties and agreements contained in Article 5 of the Credit Agreement, are true and correct in all material respects on and as of the date hereof, after giving effect to this Consent (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date); (b) no Event of Default or Potential Default exists on the date hereof, both before and after giving effect to this Consent; (c) the execution, delivery and performance by Borrowers of this Consent have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, amendment or approval of, notice to or action by, any Person (including any federal, foreign, state or local governmental authority) in order to be effective and enforceable; and (d) no Borrower nor any Subsidiary has any claims against Administrative Agent, any Lender or any of their respective partners, stockholders, officers, directors, employees, successors, assignees, affiliates, agents or attorneys of any nature arising out of or related to the Borrowers, the Subsidiaries, any dealings with such Borrower or any of its Subsidiaries, the Collateral, any of the Loan Documents or any transactions pursuant thereto or contemplated thereby or otherwise.

5. Ratification. Except as expressly modified by Section 1 of this Consent, all of the terms, provisions and conditions of the Credit Agreement and the other Loan Documents to which the Borrowers are a party shall remain unchanged and in full force and effect. The Credit Agreement and each other Loan Document to which the Borrowers are a party are hereby ratified and confirmed and shall remain in full force and effect according to their terms, as expressly modified by Section 1 of this Consent. The execution, delivery and effectiveness of this Consent shall not operate as a waiver of any right, power or remedy of Administrative Agent or the Lenders under the Credit Agreement or any of the other Loan Documents, or constitute a waiver of any provision of the Credit Agreement or any of the other Loan Documents. This Consent shall not constitute a course of dealing with Administrative Agent or the Lenders at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Administrative Agent or the Lenders to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future. The Borrowers acknowledge and expressly agree that Administrative Agent or any of the Lenders reserve the right to, and do in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents

6. Governing Law. THIS CONSENT SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF OHIO WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES.

7. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS CONSENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS CONSENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

739022338.3 12403011

8. Construction. The words “hereof”, “herein”, and “hereunder”, and other words of a similar import refer to this Consent as a whole and not to the individual Sections in which such terms are used. References to Sections and other subdivisions of this Consent are to the designated Sections and other subdivisions of this Consent as originally executed. The headings of this Consent are for convenience only and shall not define or limit the provisions hereof. Where the context so requires, words used in singular shall include the plural and vice versa, and words of one gender shall include all other genders.

9. Successors and Assigns. Upon execution and delivery of this Consent, the provisions hereof shall be binding upon and inure to the benefit of the Lenders, the Administrative Agent and the Borrowers and their respective successors and assigns, subject to restrictions on assignment contained in the Credit Agreement and the Loan Documents.

10. References. From and after the date hereof, all references in the Credit Agreement and in each of the Loan Documents shall be deemed to be references to the Credit Agreement as amended hereby.

11. Counterparts; Facsimile Signatures Binding. This Consent may be executed in counterparts, all of which, when taken together, shall constitute a single instrument. In making proof of this Consent, it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought. Delivery of an executed counterpart of this Consent by email .pdf, telefax or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Consent.

12. Recitals. The Recitals to this Consent are incorporated herein as an integral part hereto.

13. No Prejudice; No Impairment. This Consent shall not prejudice, limit, restrict or impair any rights, privileges, powers or remedies of the Administrative Agent or the Lenders under the Credit Agreement or any other Loan Documents as hereby amended. The Administrative Agent and each Lender reserves, without limitation, all rights which the Administrative Agent and each Lender has now or in the future against any guarantor or endorser of the Obligations.

[Signatures Immediately Follow]

739022338.3 12403011

IN WITNESS WHEREOF, the undersigned have executed this Limited Consent to Credit Agreement as of the date first written above.

CINCINNATI FINANCIAL CORPORATION

By: /S/ Michael J. Sewell

Name: Michael Sewell

Title: CFO

CFC INVESTMENT COMPANY

By: /S/ Michael J. Sewell

Name: Michael Sewell

Title: CFO