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0000906318-06-000101.txt : 20061124 0000906318-06-000101.hdr.sgml : 20061123 20061124084144 ACCESSION NUMBER: 0000906318-06-000101 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20061117 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061124 DATE AS OF CHANGE: 20061124 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: 061237621 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 cinfin8k111706.htm FORM 8-K .


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 (Date of earliest event reported)		November 17, 2006
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

(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


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

Item 5.02(b)(d)(e) Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 20, 2006, Cincinnati Financial Corporation issued the attached news release “Cincinnati Financial Corporation Elects New Director.” The news release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference. This report should not be deemed an admission as to the materiality of any information contained in the news release.

On November 17, 2006, the compensation committee of Cincinnati Financial Corporation’s board of directors granted increases in 2007 annual base salaries and awarded 2006 cash bonuses to executive officers with leadership roles and responsibilities. Below are the amounts for the five named executive officers whose compensation was detailed in the Proxy Statement for the company's 2006 Annual Meeting of Shareholders.


	New Annual Base Salary	2006 Variable Pay (Cash Bonus)
John J. Schiff, Jr., chairman and chief executive officer	$775,000	$425,750
James E. Benoski, chief insurance officer, president and chief operating officer	$656,861	$456,337


	New Annual Base Salary	2006 Variable Pay (Cash Bonus)
Kenneth W. Stecher, chief financial officer and executive vice president, secretary, treasurer	$552,264	$335,351
Jacob F. Scherer, Jr., senior vice president – sales and marketing	$409,829	$362,507
Thomas A. Joseph, senior vice president – commercial lines	$363,341	$261,896

The company’s named executive officers are at-will employees, and these salary and bonus amounts are not subject to any employment agreements. These salaries and bonuses do not include short-term and long-term incentive compensation amounts under shareholder-approved performance-based plans, the company’s contributions to defined contribution plans, the company’s contributions to other employee benefit programs on behalf of the named executive officers or any other form of compensation.

Additionally, the compensation committee approved stock awards under the company’s Holiday Stock Bonus Plan, which awards one share of stock on a non-discounted basis to each full-time associate for each year of service up to a maximum of 10 years. Under the Holiday Stock Bonus Plan, the named executive officers each received 10 shares valued at $45.20 per share.

Item 7.01 Regulation FD Disclosure

On November 17, 2006, Cincinnati Financial Corporation issued the attached news release “Cincinnati Financial Corporation Declares Regular Quarterly Cash Dividend.” The news release is furnished as Exhibit 99.2 hereto and is incorporated herein by reference. This report should not be deemed an admission as to the materiality of any information contained in the news release.

The information furnished in Item 7.01 of this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

Exhibit 99.1– News release dated November 20, 2006, titled “Cincinnati Financial Corporation Elects New Director”

Exhibit 99.2 – News release dated November 20, 2006, titled “Cincinnati Financial Corporation Declares Regular Quarterly Cash Dividend”

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: November 24, 2006

/s/ Kenneth W. Stecher

Kenneth W. Stecher

Chief Financial Officer, Executive Vice President, Secretary and Treasurer

(Principal Accounting Officer)

EX-99 2 ex991.htm EXHIBIT 99.1 .

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 Corporation Elects New Director

· Increases board to 15 members

· Indicates slate of nominees for election by shareholders on May 5, 2007

CINCINNATI, November 20, 2006 -- Cincinnati Financial Corporation (Nasdaq: CINF) today announced that the board of directors elected Gregory T. Bier, CPA, to the board and its investment committee at the regularly scheduled meeting of the board on November 17, 2006. The board also appointed Bier to its audit committee, subject to final determination of his status as an independent director under the company’s corporate governance guidelines and relevant NASDAQ definitions. In conjunction with the appointment of Bier, the size of the board was increased to 15 members. As reported in the company’s 2006 proxy statement, nine of the 14 current directors meet the applicable criteria for independence.

At the company's next annual meeting of shareholders on May 5, 2007, Bier will stand for election for a three-year term to expire in 2010, and directors Dirk J. Debbink and Douglas S. Skidmore will stand for re-election for the same term. The board determined that two current directors will not stand for re-election.

Bier, 60, retired in 2002 from Deloitte & Touche LLP. At retirement, he was managing partner of the Cincinnati Office, having previously served as lead partner on audits of locally based companies including The E.W. Scripps Co., Fifth Third Bancorp, The Midland Company and The Procter & Gamble Co. He was lead partner from 1994 through 1997 and an advisory partner from 1998 through 2002 on Deloitte’s audits of Cincinnati Financial Corporation.

Bier joined Haskins & Sells, which later became part of Deloitte, after graduating in 1968 from Xavier University in Cincinnati. He has been a certified public accountant since 1970. He currently serves on the audit committee of Catholic Healthcare Partners, a Cincinnati-based not-for-profit health system.

Chairman and Chief Executive Officer John J. Schiff, Jr., CPCU, commented, “Greg brings to our board his substantial financial expertise, along with his knowledge of our company and other local public companies in which we are long-time investors. This addition complements the many strengths of the 14 directors who continue on our board at this time. Just as important, it helps keep us in good shape to continue serving shareholders when two current directors do not stand for re-election next May, according to our corporate governance guideline on
director age.”

Schiff noted that directors Michael Brown and John M. Shepherd, both members of the executive committee, will not stand for re-election at the May 2007 annual meeting of shareholders. “Our board and shareholders have benefited for 26 years from the superb business acumen of Mike Brown, president of the Cincinnati Bengals, Inc. For the past five years, we have had the benefit of an independent business perspective from John Shepherd, chairman and chief executive officer of The Shepherd Chemical Company. We thank both of these individuals for their roles in helping the company fulfill our promises, building a foundation for growth and stability that should benefit our shareholders, agents, policyholders and associates and community far into the future.”

Separately, the board of directors of the company's life insurance subsidiary, The Cincinnati Life Insurance Company, named Chief Insurance Officer James E. Benoski to the additional post of chief executive officer, and Chief Financial Officer Kenneth W. Stecher to the additional posts of executive vice president and chairman of the board. The Cincinnati Life board’s action reflected the roles Benoski and Stecher have been filling for the past several years, in parallel with similar recognition and the same titles given in May 2006 by the boards of the company’s property casualty insurance subsidiaries.

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.

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 2005 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 21. Although we often review or update our forward-looking statements when events warrant, we caution our readers that we undertake no obligation to do so.

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

Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns, environmental events, terrorism incidents or other causes

Increased frequency and/or severity of claims

Inaccurate estimates or assumptions used for critical accounting estimates

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

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

○

Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace or

○

Regulations or laws that change industry or company practices for our agents.

Delays or inadequacies in the development, implementation, performance and benefits of technology projects and enhancements

Ability to obtain adequate reinsurance on acceptable terms, amount of reinsurance purchased, financial strength of reinsurers and the potential for non-payment or delay in payment by reinsurers

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 competitive advantages

Actions of insurance departments, state attorneys general or other regulatory agencies that:

○

Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations

○

Increase our expenses

○

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

○

Limit our ability to set fair, adequate and reasonable rates

○

Place us at a disadvantage in the marketplace or

○

Restrict our ability to execute our business model, including the way we compensate agents

Sustained decline in overall stock market values negatively affecting the company’s equity portfolio and book value; in particular a sustained decline in the market value of Fifth Third Bancorp (NASDAQ:FITB) shares, a significant equity holding

Recession or other economic conditions or regulatory, accounting or tax changes resulting in lower demand for insurance products

Events that lead to a significant decline in the value of a particular security and impairment of the asset

Prolonged medium- and long-term 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

Investment activities or market value fluctuations that trigger restrictions applicable to the parent company under the Investment Company Act of 1940

Events, such as an avian flu epidemic, natural catastrophe or construction delays, 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, 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.

EX-99 3 ex992.htm EXHIBIT 99.2 .

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 Corporation Declares Regular Quarterly Cash Dividend

CINCINNATI, November 20, 2006 -- Cincinnati Financial Corporation (Nasdaq: CINF) today announced that the board of directors has declared a 33½ cents per share regular quarterly cash dividend payable January 16, 2007, to shareholders of record on December 22, 2006. The current dividend level reflects the 9.8 percent increase in the quarter dividend rate announced by the board in February. That action set the stage for the 46th consecutive increase in the indicated annual cash dividend.

Chairman and Chief Executive Officer John J. Schiff, Jr., CPCU commented, “Many aspects of our performance through the first nine months of this year were exemplary and strengthened our board’s confidence in our long-term outlook. We believe that our full-year 2006 performance will support our ability to reward shareholders over the long term.”

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

Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns, environmental events, terrorism incidents or other causes

Increased frequency and/or severity of claims

Inaccurate estimates or assumptions used for critical accounting estimates

○

Downgrade 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 or

○

Regulations or laws that change industry or company practices for our agents.

Delays or inadequacies in the development, implementation, performance and benefits of technology projects and enhancements

Ability to obtain adequate reinsurance on acceptable terms, amount of reinsurance purchased, financial strength of reinsurers and the potential for non-payment or delay in payment by reinsurers

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 competitive advantages

Actions of insurance departments, state attorneys general or other regulatory agencies that:

○

Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations

○

Increase our expenses

○

Limit our ability to set fair, adequate and reasonable rates

○

Place us at a disadvantage in the marketplace or

○

Restrict our ability to execute our business model, including the way we compensate agents

Recession or other economic conditions or regulatory, accounting or tax changes resulting in lower demand for insurance products

Events that lead to a significant decline in the value of a particular security and impairment of the asset

Prolonged medium- and long-term 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

Investment activities or market value fluctuations that trigger restrictions applicable to the parent company under the Investment Company Act of 1940

Events, such as an avian flu epidemic, natural catastrophe or construction delays, that could hamper our ability to assemble our workforce at our headquarters location