Converted by EDGARwiz

EX-99 2 ex991.htm EXHIBIT 99.1 Converted by EDGARwiz

CINCINNATI FINANCIAL CORPORATION

Mailing Address: P.O. Box 145496

CINCINNATI, OHIO 45250-5496

(513) 870-2000

Investor Contact: Heather J. Wietzel

(513) 870-2768

Media Contact: Joan O. Shevchik

(513) 603-5323

Cincinnati Financial Net Income Up 30.0% and Operating Income* Gains 13.5% for Third-quarter 2005

CINCINNATI, November 2, 2005 -- Cincinnati Financial Corporation (Nasdaq: CINF) today reported for the third quarter and first nine months of 2005:

Financial Highlights*

(Dollars in millions except share data)

Three months ended Nine months ended

September 30, September 30,

2005 2004 Change % 2005 2004** Change %

Revenue Highlights

Earned

premiums $790 $758 4.2 $2,361 $2,243 5.3

Investment

income 134 124 7.7 390 365 6.9

Total

revenues 944 879 7.4 2,801 2,672 4.8

Income Statement

Data

Net income $117 $90 30.0 $419 $392 7.1

Net realized

investment

gains and

losses 10 (5) 318.6 24 36 (33.7)

Operating

income* $107 $95 13.5 $395 $356 11.2

Per Share Data

(diluted) ***

Net income $0.66 $0.50 32.0 $2.37 $2.19 8.2

Net realized

investment

gains and

losses 0.05 (0.03) 266.7 0.14 0.20 (30.0)

Operating

income* $0.61 $0.53 15.1 $2.23 $1.99 12.1

Cash

dividend

declared $0.305 $0.26 16.4 $0.90 $0.77 16.9

Book

value $- $- $34.43 $34.49 (0.2)

Average shares

outstand-

ing 176,806,267 178,402,767 (0.9) 177,212,677 178,546,137 (0.7)

Corporate Highlights

- Continued strong property casualty insurance profitability and higher

investment income drove three-month and nine-month net income and

operating income* growth.

- Pretax investment income grew 7.7 percent for three months and 6.9

percent for nine months. Full-year growth now is expected to be in the

range of 6.5 percent to 7.0 percent.

- Book value remained below year-end 2004 level on lower unrealized

gains.

- Average shares outstanding down 1.3 million for nine months. Third-

quarter repurchases totaled 160,192 shares at a cost of $7 million.

Insurance Operations Highlights

- Agent-centered strategy led to 1.6 percent and 3.3 percent increases in

three-month and nine-month net written premiums for the property

casualty operations. Commercial lines net written premiums rose 2.6

percent and 5.3 percent for the same periods.

- Property casualty nine-month underwriting profit rose to $205 million

from $167 million a year ago.

- 91.0 percent GAAP combined ratio for first nine months reflected

continued strong commercial lines underwriting results, improved

personal lines performance and lower catastrophe losses.

- Catastrophe losses, including ceded and assumed reinsurance, were $83

million, pre-tax for nine months. Hurricane Wilma losses preliminarily

estimated at $23 million to $25 million.

- 2005 outlook remains positive. Including the preliminary estimate for

Hurricane Wilma, the company continues to expect the full-year 2005

GAAP combined ratio will be at or below 92 percent.

- Life insurance segment contributed 18 cents to nine-month net income,

up from 13 cents a year ago.

* The Definitions of Non-GAAP Information and Reconciliation to

Comparable GAAP Measures on Page 12 defines and reconciles measures

presented in this release that are not based on Generally Accepted

Accounting Principles or Statutory Accounting Principles.

** Nine-month 2004 income included a benefit of $21 million, or 11

cents per share, after tax, and GAAP combined ratio included a

benefit of 1.5 percentage points from the release of reserves for

uninsured/underinsured motorist (UM/UIM) losses.

*** Per share amounts for all periods have been adjusted for the 5

percent stock dividend paid April 26, 2005.

Marketplace Position

"The past two years have been remarkable for both the frequency and severity of severe weather events," commented Chairman and Chief Executive Officer John J. Schiff, Jr., CPCU. "Despite the magnitude of this year's hurricanes, our catastrophe losses through the first nine months of 2005 were below last year's level. In addition, we experienced continued strong performance from our commercial lines insurance operations, improved personal lines insurance profitability and higher investment income. As a result, third-quarter and nine-month results were ahead of last year's level, with both commercial lines and personal lines contributing an underwriting profit for the nine-month period.

"Catastrophic events are our chance to demonstrate The Cincinnati Insurance Companies' commitment to the financial strength and claims service excellence that sets us apart. We now have closed about 85 percent of the 2,500 claims reported in the wake of Hurricanes Dennis, Katrina and Rita and are responding to Hurricane Wilma claims. Our thanks go out to our independent agent representatives and company associates for delivering prompt and fair claims service, as well as making personal efforts to help hurricane survivors.

"Across our commercial lines market areas, we have seen continued signs of the soft market, with fewer increases and more declines in renewal pricing, aside from any changes in an account's exposures. Typically, account quality, class of business, size of account, location and the specific local market competition all continue to play a part in pricing levels. Commercial policyholders continue to respond favorably to our agents' presentation of the Cincinnati value proposition - customized coverage packages, personal claims service and high financial strength ratings -- all wrapped up in a convenient three-year commercial policy."

Schiff commented, "In the personal lines area, we are making territory-by-territory refinements to our rates and premium credits. These changes better position our agents to sell the value of our homeowner-auto package, superior claims service and financial strength. We believe the rate changes could help return policy retention to its usual high level near 90 percent and personal lines new business activity to a healthy pace."

Schiff added, "We've recently reached several milestones as a company -- more than 1,000 agency relationships being served in 100 field marketing territories by approximately 4,000 associates. We continue to seek ways of providing an ever-higher level of service so we can earn business from the independent agencies that represent the company. In total, we appointed 30 new agencies during the first nine months of 2005, putting us on track to achieve our target of 50 new agency appointments in both this year and next."

Looking Ahead

Schiff noted, "We remain positive about the outlook for full-year 2005. We continue to look for property casualty written premium growth in the low single digits based on market intelligence from insurance agents and field marketing representatives, production results for agencies and policy retention trends.

"In early October, we became more positive in our view of the full-year 2005 combined ratio target after assessing the impact of Hurricanes Dennis, Katrina and Rita. Later in October, Hurricane Wilma affected The Cincinnati Insurance Companies' policyholders in Florida. Taking that event into consideration, we remain comfortable with the revised target of a full-year 2005 combined ratio at or below 92 percent. As is our usual practice, that target assumes full-year catastrophe losses will contribute approximately 3.5 percentage points to the ratio. Our revised consolidated target also reflects our assumption that favorable loss reserve development will return to historical levels. We continue to anticipate that the 2005 commercial lines combined ratio will be at or below 90 percent and the 2005 personal lines combined ratio will be approximately 100 percent, assuming a normal level of personal lines catastrophe losses.

"Through the first nine months of 2005, catastrophe losses contributed 3.6 percentage points to the overall property casualty combined ratio of 91.0 percent. Hurricane Wilma losses are preliminarily estimated at $23 million to $25 million. This early estimate will be updated and included in results for the fourth quarter ending December 31, 2005.

"Investment income continues to benefit from the allocation of new investment dollars to fixed-income securities. We now believe growth for the full year will be in the range of 6.5 percent to 7.0 percent," Schiff added.

Schiff noted, "Since the second quarter of last year, almost all of our available cash flow has been used to purchase fixed-income investments to reduce the ratio of common stock to statutory surplus to a level more in line with our historic sub-100 ratio. During the same period, we took actions to reduce the parent company's ratio of investment assets to total assets. We now plan to maintain that ratio below 40 percent, as we have concluded that the SEC staff is not actively considering the company's application for exemptive relief under the Investment Company Act of 1940. Moving forward, we will take into consideration insurance department regulations and rating agency comments as well as the trend in these ratios to determine what portion of new cash flow could be invested in equity securities at the parent and operating company levels.

"Equity investing has played an important role in achieving our portfolio objectives, contributing to net unrealized investment gains of $4.988 billion at September 30, 2005. We remain committed to our long-term equity focus, which we believe is key to the company's long-term growth and stability."

Property Casualty Insurance Operations

(Dollars in millions) Three months ended Nine months ended

September 30, September 30,

2005 2004 Change % 2005 2004 Change %

Written premiums $761 $750 1.6 $2,349 $2,274 3.3

Earned premiums $765 $733 4.4 $2,283 $2,166 5.4

Loss and loss

expenses excluding

catastrophes 435 416 4.7 1,312 1,222 7.4

Catastrophe loss and

loss expense 66 86 (23.4) 83 133 (37.6)

Commission expenses 151 149 1.5 451 445 1.2

Underwriting expenses 84 64 30.8 225 191 17.7

Policyholder

dividends 3 2 56.5 7 8 (1.5)

Underwriting profit $26 $16 60.8 $205 $167 22.9

Combined ratio:

Loss and loss

expenses excluding

catastrophes 56.9% 56.7% 57.5% 56.5%

Catastrophe loss and

loss expenses 8.6 11.8 3.6 6.1

Loss and loss

expenses 65.5% 68.5% 61.1% 62.6%

Commission expenses 19.8 20.3 19.7 20.5

Underwriting

expenses 11.0 8.8 9.9 8.8

Policyholder

dividends 0.3 0.2 0.3 0.4

Combined ratio 96.6% 97.8% 91.0% 92.3%

- 1.6 percent increase in total property casualty net written premiums

for the third quarter and 3.3 percent increase for the nine months.

- New business written directly by agencies was $79 million and $231

million in the three months and nine months ended September 30, 2005,

compared with $87 million and $253 million in the comparable 2004

periods.

- 1.2 percentage-point improvement to 96.6 percent in the overall

property casualty combined ratio for the three months ended September

30, 2005 -- Catastrophe losses were lower and the improvement in the

personal lines loss and loss expense ratio excluding catastrophe losses

was in line with management expectations. These positive factors offset

a rise in the commercial lines and personal lines underwriting expense

ratios.

- Loss estimates for third-quarter catastrophe events included losses

from claims received as well as estimates of claims that have not yet

been reported.

Reported

2005 Claims Loss Estimate

Third-quarter States (as of (pretax, net

Event Dates Primarily Affected October 28) of reinsurance)

Hurricane July 9-11 Alabama, Florida,

Dennis Georgia, Mississippi 494 $8 million

Hurricane Aug. 25-30 Alabama, Florida, 1,986 $34 million

Katrina - Georgia, Louisiana,

direct Mississippi, Tennessee

Hurricane

Katrina -

assumed $18 million

Hurricane

Katrina -

total $52 million

Hurricane Sept. 20-24 Alabama, Louisiana, 17 $3 million

Rita Mississippi, Tennessee,

Texas

- Third-quarter catastrophe losses included $3 million from development

of prior-period catastrophes, primarily a July 2004 wind and hail storm

in the Midwest and other 2004 events.

- To restore the affected layers of the property catastrophe reinsurance

program following Katrina, the company incurred an $8 million

reinstatement premium in the third quarter. The Cincinnati Insurance

Company also assumed Katrina losses of $18 million from its

participation in reinsurance treaties that spread the risk of very high

catastrophe losses among many insurers.

* The Definitions of Non-GAAP Information and Reconciliation to

Comparable GAAP Measures on Page 12 defines and reconciles measures

presented in this release that are not based on Generally Accepted

Accounting Principles (non-GAAP).

Commercial Lines

(Dollars in millions) Three months ended Nine months ended

September 30, September 30,

2005 2004 Change % 2005 2004 Change %

Written premiums $546 $532 2.6 $1,741 $1,654 5.3

Earned premiums $564 $537 4.9 $1,678 $1,576 6.5

Loss and loss expenses

excluding catastrophes 307 285 7.6 942 826 14.0

Catastrophe loss and

loss expenses 53 48 10.5 62 65 (4.0)

Commission expenses 110 108 1.7 325 324 0.2

Underwriting expenses 64 48 34.0 160 135 18.1

Policyholder dividends 3 2 56.5 7 8 (1.5)

Underwriting profit $27 $46 (41.3) $182 $218 (16.4)

Combined ratio:

Loss and loss expenses

excluding catastrophes 54.4% 53.1% 56.1% 52.4%

Catastrophe loss and

loss expenses 9.5 9.0 3.7 4.1

Loss and loss expenses 63.9% 62.1% 59.8% 56.5%

Commission expenses 19.5 20.1 19.4 20.6

Underwriting expenses 11.4 8.9 9.5 8.6

Policyholder dividends 0.4 0.3 0.5 0.5

Combined ratio 95.2% 91.4% 89.2% 86.2%

- 2.6 percent rise in commercial lines net written premiums for the third

quarter and 5.3 percent rise for the nine months.

- New commercial lines business was $71 million and $206 million for the

three-month and nine-month periods compared with $73 million and $215

million last year.

- Growth slowed primarily because of the more competitive pricing

environment. The growth rate of commercial lines written premium

appeared to exceed the average for the overall industry, which A.M.

Best Co. estimated at 1.7 percent for the first six months of 2005.

- Loss and loss expenses excluding catastrophes rose in the three months

and nine months ended September 30, 2005, largely because the

comparable 2004 period benefited from a higher level of favorable loss

reserve development from prior accident years.

- The loss and loss expense ratio excluding catastrophes for the nine-

month period was increased 1.4 percentage points by a single large loss

in the first quarter. The ratio in the comparable 2004 period included

a 2.0 percentage point benefit from the release of UM/UIM reserves.

- Third-quarter commercial lines catastrophe losses were above last

year's level because of assumed losses of $18 million and direct

Hurricane Katrina and Rita losses in Louisiana, Mississippi or Texas

associated with accounts written by agents in other states.

- Commercial lines underwriting expense ratio rose 2.5 percentage points

in the third quarter of 2005 due to several factors: higher technology

expenses; slower premium growth that resulted in amortization of prior

period deferred acquisition expenses, more than offsetting deferred

acquisition expenses on current period written premiums; write-off of

older policy years in involuntary assumed pools; and non-recurring

expense savings in the third quarter of 2004 that reduced last year's

ratio.

- Higher spending on technology projects and adverse deferred acquisition

cost comparisons could result in expense ratios near the year-to-date

level in future quarters. The company continues to estimate a 2005

commercial lines combined ratio at or below 90 percent compared with

84.1 percent in 2004.

- For 2005, the company expects commercial lines written premium growth

of approximately 3 percent to 5 percent.

* The Definitions of Non-GAAP Information and Reconciliation to

Comparable GAAP Measures on Page 12 defines and reconciles measures

presented in this release that are not based on Generally Accepted

Accounting Principles (non-GAAP).

Personal Lines

(Dollars in Three months ended Nine months ended

millions) September 30, September 30,

2005 2004 Change % 2005 2004 Change %

Written premiums $215 $218 (0.9) $608 $620 (1.9)

Earned premiums $201 $196 2.8 $605 $590 2.5

Loss and loss

expenses

excluding

catastrophes 128 131 (1.8) 370 396 (6.5)

Catastrophe loss and

loss expenses 13 38 (66.8) 21 68 (69.3)

Commission expenses 41 41 0.9 126 121 3.9

Underwriting expenses 20 16 21.6 65 56 16.7

Underwriting

profit (loss) $(1) $(30) 96.4 $23 $(51) 145.9

Combined ratio:

Loss and loss

expenses

excluding

catastrophes 63.9% 66.9% 61.1% 67.1%

Catastrophe loss and

loss expenses 6.3 19.3 3.5 11.6

Loss and loss

expenses 70.2% 86.2% 64.6% 78.7%

Commission expenses 20.5 20.9 20.8 20.5

Underwriting expenses 9.8 8.3 10.7 9.4

Combined ratio 100.5% 115.4% 96.1% 108.6%

- 0.9 percent decline in personal lines net written premiums for the

third quarter and 1.9 percent decline for the nine months, because of

the competitive pricing environment for homeowner and auto business.

- Rate modifications in selected states and territories have been made to

better position the company's homeowner and auto products in the

market. Additional rate modifications are planned for later this year

and early 2006.

- Personal lines earned premiums for the three months and nine months

rose slightly, due to growth in homeowner written premiums over the

past 12 months following rate increases in 2003 and 2004.

- New personal lines business was $8 million and $25 million for the

three-month and nine-month periods compared with $14 million and $39

million last year.

- Excluding catastrophe losses, the personal lines GAAP combined ratio

improved in both the three-month and nine-month periods, primarily

because of marked improvement in homeowner profitability.

- Diamond, the company's personal lines policy processing system, is in

use in six states that represent approximately 62 percent of total 2004

personal lines earned premium volume. Through September 30, 2005,

policies representing approximately $372 million of in-force premium

have been issued through Diamond. During the third quarter, the

introduction of Diamond into Illinois, which represents about 7 percent

of total 2004 personal lines earned premium volume, was delayed until

November.

- Personal lines underwriting expense ratio rose 1.5 percentage points in

the third quarter of 2005 due to several factors: higher technology

expenses; slower premium growth that resulted in amortization of prior

period deferred acquisition expenses, more than offsetting deferred

acquisition expenses on current period written premiums; and non-

recurring expense savings in the third quarter of 2004.

- Higher spending on technology projects and adverse deferred acquisition

cost comparisons could result in expense ratios near the year-to-date

level in future quarters. Further, contingent commission expenses for

personal lines have been trending higher because of improved

profitability.

- Assuming a normal level of catastrophe losses, the full-year 2005

combined ratio is expected to be approximately 100 percent because of

the slower growth and commission and underwriting expense trends.

- For 2005, the company now expects a low-single-digit decline in

personal lines written premiums. This slightly more favorable outlook

recognizes that the benefit of homeowner rate increases is partially

offsetting lower policy retention rates and new business in both the

homeowner and personal auto lines.

* The Definitions of Non-GAAP Information and Reconciliation to

Comparable GAAP Measures on Page 12 defines and reconciles measures

presented in this release that are not based on Generally Accepted

Accounting Principles (non-GAAP).

Life Insurance Operations

(In millions) Three months ended Nine months ended

September 30, September 30,

2005 2004 Change % 2005 2004 Change %

Written premiums $56 $45 23.8 $163 $132 23.3

Earned premiums $25 $25 0.2 $78 $77 1.8

Investment income,

net of expenses 25 23 6.0 73 68 8.4

Other income 1 1 16.7 3 2 10.7

Total revenues,

excluding realized

investment gains

and losses 51 49 3.3 154 147 5.0

Policyholder benefits 27 23 16.8 77 71 8.0

Expenses 12 14 (17.2) 37 40 (6.9)

Total benefits and

expenses 39 37 4.2 114 111 2.7

Net income before

income tax and

realized investment

gains and losses 12 12 0.5 40 36 12.2

Income tax 4 4 (1.2) 13 12 12.3

Net income before

realized investment

gains and losses $8 $8 1.4 $27 $24 12.2

- Life insurance written premiums rose 23.8 percent for the three months

and 23.3 percent for the nine months. Annuity premiums contributed 20.1

percentage points and 20.6 percentage points, respectively, of the

written premium growth.

- Higher earned premiums and investment income led to revenue growth for

the three months and nine months.

- Face amount of life policies in force rose 11.1 percent to $49.929

billion at September 30, 2005, from $44.921 billion at year-end 2004.

For the first nine months of 2005, applications submitted rose 3.9

percent, with a 5.0 percent gain in worksite applications.

- Operating expenses remained relatively level and mortality experience

remained within pricing assumptions, resulting in improved results and

a higher contribution to earnings per share.

- A new term series of nine products replaced the existing term portfolio

during the second quarter of 2005. The Termsetter Plus series

includes an optional return-of-premium feature. Reaction to the new

portfolio has been favorable with approximately 25 percent of

applications requesting the return-of-premium feature.

- In 2005, Cincinnati Life is exploring additional programs to simplify

the worksite marketing sales process for independent property casualty

agencies, including electronic enrollment software. Plans call for

simplifying the worksite product portfolio to make it more attractive

to agents.

- Pending product development and introductions include features that

customers indicate are important, such as a new universal life product

that offers a secondary guarantee.

* The Definitions of Non-GAAP Information and Reconciliation to

Comparable GAAP Measures on Page 12 defines and reconciles measures

presented in this release that are not based on Generally Accepted

Accounting Principles (non-GAAP).

Investment Operations

(In millions) Three months ended Nine months ended

September 30, September 30,

2005 2004 Change % 2005 2004 Change %

Investment income:

Interest $70 $64 8.7 $208 $188 10.9

Dividends 64 58 8.8 180 176 2.7

Other 2 3 (31.6) 6 5 18.5

Investment expenses (2) (1) (24.5) (4) (4) (29.1)

Total net

investment

income $134 $124 7.7 $390 $365 6.9

Investment interest

credited to contract

holders $(13) $(11) 13.8 $(38) $(34) 13.5

Net realized

investment gains

and losses:

Other-than-temporary

impairment charges $(1) $(5) 82.5 $(1) $(8) 83.4

Realized investment

gains and losses 12 8 50.7 41 70 (41.5)

Change in valuation

of embedded

derivatives 5 (10) 145.7 (2) (7) 69.1

Net realized

investment gains $16 $(7) 339.2 $38 $55 (31.7)

Investment operations

income $137 $106 28.9 $390 $386 0.8

Balance Sheet

(Dollars in millions) September 30, December 31, September 30,

2005 2004 2004

Balance Sheet Data

Total assets $15,984 $16,107 $15,806

Invested assets 12,591 12,677 12,242

Shareholders' equity 6,015 6,249 6,084

Ratio Data

Return on equity, annualized 9.1% 9.4% 8.5%

Return on equity, annualized,

based on comprehensive income (0.8)% 4.6% 0.7%

- Growth in interest income from fixed-income securities and from common

stock dividends led to the increase in investment income for the three

months and nine months ended September 30, 2005.

- Dividend increases from common stocks more than offset the loss of

income from sales or calls of convertible preferred securities in the

past 12 months. Fifth Third Bancorp, the company's largest equity

holding, contributed 43.6 percent of total dividend income in the first

nine months of 2005.

- Dividend increases by Fifth Third and another 32 of the 48 common stock

holdings in the equity portfolio within the last 12 months should add

$23 million to annualized investment income.

- Realized investment gains in 2005 primarily were due to routine sales

and calls of securities. The realized loss in last year's third quarter

was primarily due to other-than-temporary impairment charges and fair

value declines for embedded securities. The realized gain in last

year's first nine months primarily was due to equity sales undertaken

as part of a program to support the company's insurer financial

strength ratings and return the property casualty ratio of common

stocks to statutory surplus to its historic sub-100 percent ratio.

- Investment income growth now is expected to be in the range of 6.5

percent to 7.0 percent for the year. This outlook is based on the

anticipated level of dividend income, the strong cash flow from

insurance operations and the higher-than-historical allocation of new

cash flow to fixed-income securities over the past 18 months.

- At September 30, 2005, statutory surplus for the property casualty

insurance group rose to $4.224 billion from $4.191 billion at year-end

2004. The ratio of common stock to statutory surplus for the property

casualty insurance group portfolio was 95.6 percent at September 30,

2005, compared with 103.5 percent at year-end 2004.

- The ratio of investment securities held at the holding-company level to

total holding-company-only assets was 34.1 percent at September 30,

2005, in line with management's below 40 percent target.

- The company repurchased 1,125,192 shares at a total cost of $45 million

in the first nine months of 2005, including 160,192 shares in the third

quarter.

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 offers commercial leasing and financing services. CinFin Capital Management Company provides asset management services to institutions, corporations and individuals. For additional information about the company, please visit 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 risk concentrations,

changes in weather patterns, environmental events, terrorism incidents

or other causes

- Ability to obtain adequate reinsurance on acceptable terms, amount of

reinsurance purchased and financial strength of reinsurers

- 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, particularly claims

service, is no longer a distinguishing characteristic in the

marketplace

- Increased competition that could result in a significant reduction in

the company's premium growth rate

- Underwriting and pricing methods adopted by competitors that could

allow them to identify and flexibly price risks, which could decrease

our advantage in these areas.

- Insurance regulatory actions, legislation or court decisions or legal

actions that increase expenses or place us at a disadvantage in the

marketplace

- Delays or inadequacies in the development, implementation, performance

and benefits of technology projects and enhancements

- Inaccurate estimates or assumptions used for critical accounting

estimates, including loss reserves

- Events that reduce the company's ability to maintain effective internal

control over financial reporting under the Sarbanes-Oxley Act of 2002

in the future

- 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 shares, a significant equity holding

- Events that lead to a significant decline in the 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

- Adverse outcomes from litigation or administrative proceedings

- Effect on the insurance industry as a whole, and thus on the company's

business, of the actions undertaken by the Attorney General of the

State of New York and other regulators against participants in the

insurance industry, as well as any increased regulatory oversight that

might result

- Investment activities or market value fluctuations that trigger

restrictions applicable to the parent company under the Investment

Company Act of 1940

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 herein.

Cincinnati Financial Corporation

Consolidated Balance Sheets

(Dollars in millions except per September 30, December 31,

share data) 2005 2004

Assets (unaudited)

Investments

Fixed maturities, at fair value (amortized

cost: 2005-$5,377; 2004-$4,854) $ 5,517 $ 5,141

Equity securities, at fair value

(cost: 2005-$2,043; 2004-$1,945) 7,031 7,498

Other invested assets 43 38

Cash 98 306

Investment income receivable 114 107

Finance receivable 100 95

Premiums receivable 1,163 1,119

Reinsurance receivable 711 680

Prepaid reinsurance premiums 14 15

Deferred policy acquisition costs 431 400

Property and equipment, net, for company use

(accumulated depreciation: 2005-$226; 2004-$206) 167 156

Other assets 108 75

Separate accounts 487 477

Total assets $ 15,984 $ 16,107

Liabilities

Insurance reserves

Loss and loss expense reserves $ 3,706 $ 3,549

Life policy reserves 1,337 1,194

Unearned premiums 1,606 1,539

Other liabilities 438 474

Deferred income tax 1,604 1,834

6.125% senior notes due 2034 371 371

6.90% senior debentures due 2028 28 420

6.92% senior debentures due 2028 392 0

Separate accounts 487 477

Total liabilities 9,969 9,858

Shareholders' equity

Common stock, par value-$2 per share;

authorized: 2005-500 million shares,

2004-200 million shares; issued: 2005-194

million shares, 2004-185 million shares 389 370

Paid-in capital 965 618

Retained earnings 1,958 2,057

Accumulated other comprehensive

income-unrealized gains on investments

and derivatives 3,329 3,787

Treasury stock at cost (2005-19 million

shares, 2004-18 million shares) (626) (583)

Total shareholders' equity 6,015 6,249

Total liabilities and

shareholders' equity $ 15,984 $ 16,107

Cincinnati Financial Corporation

Consolidated Statements of Income

(In millions except per

share data) Three months ended Nine months ended

Sept. 30, Sept. 30,

2005 2004 2005 2004

(unaudited) (unaudited)

Revenues

Earned premiums

Property casualty $ 765 $ 733 $ 2,283 $ 2,166

Life 25 25 78 77

Investment income, net

of expenses 134 124 390 365

Realized investment

gains and losses 16 (7) 38 55

Other income 4 4 12 9

Total revenues 944 879 2,801 2,672

Benefits and expenses

Insurance losses and

policyholder benefits 528 525 1,470 1,424

Commissions 160 157 476 468

Other operating expenses 74 63 213 192

Taxes, licenses and fees 17 16 52 55

Increase in deferred

policy acquisition costs (5) (6) (23) (29)

Interest expense 13 11 39 27

Other expenses 6 0 12 6

Total benefits and

expenses 793 766 2,239 2,143

Income before income taxes 151 113 562 529

Provision (benefit) for

income taxes

Current 19 78 126 120

Deferred 15 (55) 17 17

Total provision

for income taxes 34 23 143 137

Net income $ 117 $ 90 $ 419 $ 392

Per common share

Net income-basic $ 0.67 $ 0.51 $ 2.39 $ 2.22

Net income-diluted $ 0.66 $ 0.50 $ 2.37 $ 2.19

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. For the first three quarters of 2005 and 2004, diluted net income would have been reduced by approximately 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

(See attached tables for 2005 and 2004 data, prior-period reconciliations available at www.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 - when 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 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 (readers also may have seen this

measure defined 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.

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.

- 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, 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 analyzing trends in written premiums and statutory

ratios that make use of written premiums.

- 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 statutory 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 analyzing

written premiums and statutory ratios that make use of written

premiums.

- Life insurance gross written premiums: In analyzing the life insurance

company's gross written premiums, management excludes five larger,

single-pay life insurance policies (bank-owned life insurance or BOLIs)

written in 2004, 2002, 2000 and 1999 to focus on the trend in premiums

written through the independent agency distribution channel.

- One-time charges or adjustments: Management analyzes earnings and

profitability 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 BOLI policy that was

booked at the end of 1999 and 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.

Cincinnati Financial Corporation

Quarterly Net Income Reconciliation

(In millions except per share data)

Three months ended

12/31/05 09/30/05 06/30/05 03/31/05

Net income $117 $158 $144

One-time item 0 0 0

Net income before one-time

item 117 158 144

Net realized investment

gains and losses 10 8 6

Operating income before

one-time item 107 150 138

Less catastrophe losses (43) (9) (2)

Operating income before

catastrophe losses and

one-time item $150 $159 $140

Diluted per share data

Net income $0.66 $0.89 $0.81

One-time item 0.00 0.00 0.00

Net income before one-time

item 0.66 0.89 0.81

Net realized investment

gains and losses 0.05 0.05 0.03

Operating income before

one-time item 0.61 0.84 0.78

Less catastrophe losses (0.24) (0.05) (0.01)

Operating income before

catastrophe losses and

one-time item $0.85 $0.89 $0.79

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

Quarterly Net Income Reconciliation

(In millions except per share data)

Three months ended

12/31/04 09/30/04 06/30/04 03/31/04

Net income $192 $90 $155 $146

One-time item 0 0 0 0

Net income before one-time

item 192 90 155 146

Net realized investment gains

and losses 24 (5) 36 4

Operating income before one-time

item 168 95 119 142

Less catastrophe losses (10) (56) (30) 0

Operating income before

catastrophe losses and

one-time item $178 $151 $149 $142

Diluted per share data

Net income $1.09 $0.50 $0.87 $0.82

One-time item 0.00 0.00 0.00 0.00

Net income before one-time item 1.09 0.50 0.87 0.82

Net realized investment gains

and losses 0.14 (0.03) 0.20 0.03

Operating income before one-time

item 0.95 0.53 0.67 0.79

Less catastrophe losses (0.06) (0.31) (0.17) 0.00

Operating income before

catastrophe losses and

one-time item $1.10 $0.84 $0.84 $0.79

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

Quarterly Net Income Reconciliation

(In millions except per share data)

Six Nine Twelve

months ended months ended months ended

06/30/05 06/30/04 09/30/05 09/30/04 12/31/05 12/31/04

Net income $302 $301 $419 $392 $584

One-time item 0 0 0 0 0

Net income before

one-time item 302 301 419 392 584

Net realized

investment gains

and losses 14 40 24 36 60

Operating income

before one-time

item 288 261 395 356 524

Less catastrophe

losses (11) (30) (54) (86) (96)

Operating income

before catastrophe

losses and

one-time item $299 $291 $449 $442 $620

Diluted per share

data

Net income $1.70 $1.77 $2.37 $2.19 $3.28

One-time item 0.00 0.00 0.00 0.00 0.00

Net income before

one-time item 1.70 1.77 2.37 2.19 3.28

Net realized

investment gains

and losses 0.08 0.24 0.14 0.20 0.35

Operating income

before one-time

item 1.62 1.53 2.23 1.99 2.93

Less catastrophe

losses (0.06) (0.18) (0.30) (0.48) (0.54)

Operating income

before catastrophe

losses and

one-time item $1.68 $1.71 $2.53 $2.47 $3.47

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

12/31/05 9/30/05 6/30/05 3/31/05

Premiums

Adjusted written premiums

(statutory) $764 $781 $787

Written premium adjustment -

statutory only (3) 10 10

Reported written premiums

(statutory)* $761 $791 $797

Unearned premiums change 4 (26) (44)

Earned premiums $765 $765 $753

Statutory combined ratio

Reported statutory combined

ratio* 96.6 % 86.6 % 87.4 %

Written premium adjustment -

statutory only nm nm nm

One-time item 0.0 0.0 0.0

Adjusted statutory combined

ratio 96.6 % 86.6 % 87.4 %

Less catastrophe losses 8.6 2.0 0.3

Adjusted statutory combined

ratio excluding

catastrophe losses 88.0 % 84.6 % 87.1 %

Reported commission expense

ratio* 20.3 % 19.3 % 16.8 %

Written premium adjustment -

statutory only nm nm nm

One-time item 0.0 0.0 0.0

Adjusted commission expense

ratio 20.3 % 19.3 % 16.8 %

Reported other expense ratio* 10.8 % 10.3 % 9.8 %

Written premium adjustment -

statutory only nm nm nm

One-time item 0.0 0.0 0.0

Adjusted other expense ratio 10.8 % 10.3 % 9.8 %

Reported statutory expense

ratio* 31.1 % 29.6 % 26.6 %

Written premium adjustment -

statutory only nm nm nm

One-time item 0.0 0.0 0.0

Adjusted statutory expense

ratio 31.1 % 29.6 % 26.6 %

GAAP combined ratio

GAAP combined ratio 96.6 % 87.5 % 88.9 %

One-time item 0.0 0.0 0.0

GAAP combined ratio before one-

time item 96.6 % 87.5 % 88.9 %

Cincinnati Insurance Group

Quarterly Property Casualty Data - Consolidated

(Dollars in millions)

Three months ended

12/31/04 09/30/04 06/30/04 03/31/04

Premiums

Adjusted written premiums

(statutory) $748 $750 $761 $767

Written premium adjustment -

statutory only (25) 0 (27) 23

Reported written premiums

(statutory)* $723 $750 $734 $790

Unearned premiums change 31 (17) (17) (74)

Earned premiums $754 $733 $717 $716

Statutory combined ratio

Reported statutory combined

ratio* 83.6 % 97.9 % 91.2 % 85.1 %

Written premium adjustment -

statutory only nm nm nm nm

One-time item 0.0 0.0 0.0 0.0

Adjusted statutory combined

ratio 83.6 % 97.9 % 91.2 % 85.1 %

Less catastrophe losses 2.0 11.7 6.5 0.1

Adjusted statutory combined

ratio excluding

catastrophe losses 81.6 % 86.2 % 84.7 % 85.0 %

Reported commission expense

ratio* 19.7 % 19.9 % 18.9 % 18.3 %

Written premium adjustment -

statutory only nm nm nm nm

One-time item 0.0 0.0 0.0 0.0

Adjusted commission expense

ratio 19.7 % 19.9 % 18.9 % 18.3 %

Reported other expense ratio* 11.0 % 9.5 % 10.8 % 9.3 %

Written premium adjustment -

statutory only nm nm nm nm

One-time item 0.0 0.0 0.0 0.0

Adjusted other expense ratio 11.0 % 9.5 % 10.8 % 9.3 %

Reported statutory expense

ratio* 30.7 % 29.4 % 29.7 % 27.6 %

Written premium adjustment -

statutory only nm nm nm nm

One-time item 0.0 0.0 0.0 0.0

Adjusted statutory expense ratio 30.7 % 29.4 % 29.7 % 27.6 %

GAAP combined ratio

GAAP combined ratio 82.6 % 97.8 % 91.9 % 87.1 %

One-time item 0.0 0.0 0.0 0.0

GAAP combined ratio before one-

time item 82.6 % 97.8 % 91.9 % 87.1 %

Cincinnati Insurance Group

Quarterly Property Casualty Data - Consolidated

(Dollars in millions)

Twelve

Six months ended Nine months ended months ended

6/30/05 6/30/04 9/30/05 9/30/04 12/31/05 12/31/04

Premiums

Adjusted written

premiums

(statutory) $1,568 $1,528 $2,332 $2,278 $3,026

Written premium

adjustment -

statutory only 20 (4) 17 (4) (29)

Reported written

premiums

(statutory)* $1,588 $1,524 $2,349 $2,274 $2,997

Unearned premiums

change (70) (92) (66) (108) (78)

Earned premiums $1,518 $1,432 $2,283 $2,166 $2,919

Statutory combined

ratio

Reported

statutory

combined ratio* 86.9 % 88.1 % 90.1 % 91.4 % 89.4 %

Written premium

adjustment -

statutory only nm nm nm nm nm

One-time item 0.0 0.0 0.0 0.0 0.0

Adjusted

statutory

combined ratio 86.9 % 88.1 % 90.1 % 91.4 % 89.4 %

Less catastrophe

losses 1.1 3.3 3.6 6.1 5.1

Adjusted

statutory

combined ratio

excluding

catastrophe

losses 85.8 % 84.8 % 86.5 % 85.3 % 84.3 %

Reported

commission

expense ratio* 18.0 % 18.6 % 18.8 % 19.0 % 19.2 %

Written premium

adjustment -

statutory only nm nm nm nm nm

One-time item 0.0 0.0 0.0 0.0 0.0

Adjusted

commission

expense ratio 18.0 % 18.6 % 18.8 % 19.0 % 19.2 %

Reported other

expense ratio* 10.0 % 10.0 % 10.2 % 9.8 % 10.1 %

Written premium

adjustment -

statutory only nm nm nm nm nm

One-time item 0.0 0.0 0.0 0.0 0.0

Adjusted other

expense ratio 10.0 % 10.0 % 10.2 % 9.8 % 10.1 %

Reported

statutory

expense ratio* 28.0 % 28.6 % 29.0 % 28.9 % 29.3 %

Written premium

adjustment -

statutory only nm nm nm nm nm

One-time item 0.0 0.0 0.0 0.0 0.0

Adjusted

statutory

expense ratio 28.0 % 28.6 % 29.0 % 28.9 % 29.3 %

GAAP combined ratio

GAAP combined

ratio 88.2 % 89.5 % 91.0 % 92.3 % 89.8 %

One-time item 0.0 0.0 0.0 0.0 0.0

GAAP combined

ratio before

one-time item 88.2 % 89.5 % 91.0 % 92.3 % 89.8 %

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 - Commercial Lines

(Dollars in millions)

Three months ended

12/31/05 9/30/05 6/30/05 3/31/05

Premiums

Adjusted written premiums

(statutory) $547 $557 $617

Written premium adjustment --

statutory only (1) 9 12

Reported written premiums

(statutory)* $546 $566 $629

Unearned premiums change 18 (3) (78)

Earned premiums $564 $563 $551

Statutory combined ratio

Reported statutory combined

ratio* 95.5 % 83.9 % 85.5 %

Written premium adjustment --

statutory only nm nm nm

One-time item 0.0 0.0 0.0

Adjusted statutory combined

ratio 95.5 % 83.9 % 85.5 %

Less catastrophe losses 9.5 0.4 1.1

Adjusted statutory combined

ratio

excluding

catastrophe losses 86.0 % 83.5 % 84.4 %

GAAP combined ratio

GAAP combined ratio 95.2 % 84.8 % 87.5 %

One-time item 0.0 0.0 0.0

GAAP combined ratio before one-

time item 95.2 % 84.8 % 87.5 %

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

12/31/04 09/30/04 06/30/04 03/31/04

Premiums

Adjusted written premiums

(statutory) $555 $530 $537 $587

Written premium adjustment --

statutory only (23) 2 (25) 23

Reported written premiums

(statutory)* $532 $532 $512 $610

Unearned premiums change 19 5 8 (91)

Earned premiums $551 $537 $520 $519

Statutory combined ratio

Reported statutory combined

ratio* 79.1 % 92.0 % 84.1 % 80.3 %

Written premium adjustment --

statutory only nm nm nm nm

One-time item 0.0 0.0 0.0 0.0

Adjusted statutory combined

ratio 79.1 % 92.0 % 84.1 % 80.3 %

Less catastrophe losses 1.3 9.0 3.0 0.2

Adjusted statutory combined

ratio excluding

catastrophe losses 77.8 % 83.0 % 81.1 % 80.1 %

GAAP combined ratio

GAAP combined ratio 78.2 % 91.4 % 84.4 % 82.6 %

One-time item 0.0 0.0 0.0 0.0

GAAP combined ratio before one-

time item 78.2 % 91.4 % 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)

Twelve

Six months ended Nine months ended months ended

6/30/05 6/30/04 9/30/05 9/30/04 12/31/05 12/31/04

Premiums

Adjusted written

premiums

(statutory) $1,174 $1,124 $1,721 $1,656 $2,209

Written premium

adjustment --

statutory only 21 (2) 20 (2) (23)

Reported written

premiums

(statutory)* $1,195 $1,122 $1,741 $1,654 $2,186

Unearned

premiums

change (81) (84) (63) (79) (60)

Earned

premiums $1,114 $1,038 $1,678 $1,575 $2,126

Statutory combined

ratio

Reported

statutory

combined ratio* 84.6 % 82.0 % 88.1 % 85.4 % 83.7 %

Written premium

adjustment --

statutory only nm nm nm nm nm

One-time item 0.0 0.0 0.0 0.0 0.0

Adjusted

statutory

combined ratio 84.6 % 82.0 % 88.1 % 85.4 % 83.7 %

Less catastrophe

losses 0.8 1.6 3.6 4.1 0.0

Adjusted

statutory

combined ratio

excluding

catastrophe

losses 83.8 % 80.4 % 84.5 % 81.3 % 80.3 %

GAAP combined ratio

GAAP combined

ratio 86.1 % 83.5 % 89.2 % 86.2 % 84.1 %

One-time item 0.0 0.0 0.0 0.0 0.0

GAAP combined

ratio before

one-time item 86.1 % 83.5 % 89.2 % 86.2 % 84.1 %

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 - Personal Lines

(Dollars in millions)

Three months ended

12/31/05 09/30/05 06/30/05 03/31/05

Premiums

Adjusted written premiums

(statutory) $217 $223 $170

Written premium adjustment --

statutory only (2) 1 (2)

Reported written premiums

(statutory)* $215 $224 $168

Unearned premiums change (14) (22) 34

Earned premiums $201 $202 $202

Statutory combined ratio

Reported statutory combined

ratio* 99.9 % 93.6 % 94.0 %

Written premium adjustment --

statutory only nm nm nm

One-time item 0.0 0.0 0.0

Adjusted statutory combined

ratio 99.9 % 93.6 % 94.0 %

Less catastrophe losses 6.3 6.2 2.0

Adjusted statutory combined

ratio excluding

catastrophe losses 93.6 % 87.4 % 96.0 %

GAAP combined ratio

GAAP combined ratio 100.5 % 95.3 % 92.7 %

One-time item 0.0 0.0 0.0

GAAP combined ratio before

one-time item 100.5 % 95.3 % 92.7 %

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.

Cincinnati Insurance Group

Quarterly Property Casualty Data - Personal Lines

(Dollars in millions)

Three months ended

12/31/04 09/30/04 06/30/04 03/31/04

Premiums

Adjusted written premiums

(statutory) $194 $218 $224 $180

Written premium adjustment --

statutory only (3) (1) (2) 0

Reported written premiums

(statutory)* $191 $217 $222 $180

Unearned premiums change 12 (21) (25) 17

Earned premiums $203 $196 $197 $197

Statutory combined ratio

Reported statutory combined

ratio* 96.0 % 114.4 % 110.1 % 98.7 %

Written premium adjustment --

statutory only nm nm nm nm

One-time item 0.0 0.0 0.0 0.0

Adjusted statutory combined

ratio 96.0 % 114.4 % 110.1 % 98.7 %

Less catastrophe losses 4.2 19.3 15.7 0.0

Adjusted statutory combined

ratio excluding

catastrophe losses 91.8 % 95.1 % 94.4 % 98.9 %

GAAP combined ratio

GAAP combined ratio 94.5 % 115.4 % 111.6 % 98.8 %

One-time item 0.0 0.0 0.0 0.0

GAAP combined ratio before one-

time item 94.5 % 115.4 % 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)

Twelve

Six months ended Nine months ended months ended

6/30/05 6/30/04 9/30/05 9/30/04 12/31/05 12/31/04

Premiums

Adjusted

written

premiums

(statutory) $393 $404 $611 $623 $817

Written premium

adjustment --

statutory only (1) (2) (3) (3) (6)

Reported written

premiums

(statutory)* $392 $402 $608 $620 $811

Unearned

premiums change 8 (8) (3) (30) (18)

Earned premiums $404 $394 $605 $590 $793

Statutory combined

ratio

Reported statutory

combined ratio* 93.7 % 104.3 % 95.7 % 107.6 % 104.6 %

Written premium

adjustment --

statutory only nm nm nm nm nm

One-time item 0.0 0.0 0.0 0.0 0.0

Adjusted

statutory

combined ratio 93.7 % 104.3 % 95.7 % 107.6 % 104.6 %

Less catastrophe

losses 2.1 7.8 3.5 11.6 0.1

Adjusted statutory

combined ratio

excluding

catastrophe

losses 91.6 % 96.5 % 92.2 % 96.0 % 94.9 %

GAAP combined ratio

GAAP combined

ratio 94.0 % 105.2 % 96.1 % 108.6 % 105.0 %

One-time item 0.0 0.0 0.0 0.0 0.0

GAAP combined

ratio before

one-time item 94.0 % 105.2 % 96.1 % 108.6 % 105.0 %

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.