0001144204-12-006641.txt : 20120208 0001144204-12-006641.hdr.sgml : 20120208 20120208162310 ACCESSION NUMBER: 0001144204-12-006641 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20120208 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120208 DATE AS OF CHANGE: 20120208 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: 12582203 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 v301550_8k.htm CURRENT REPORT

 

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: February 8, 2012

(Date of earliest event reported)

 

CINCINNATI FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

Ohio 0-4604 31-0746871
(State or other jurisdiction
of incorporation)		 (Commission
File Number)		 (I.R.S. Employer
Identification No.)

 

6200 S. Gilmore Road, Fairfield, Ohio 45014-5141
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (513) 870-2000

 

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

 

 
 

 

Item 2.02 Results of Operations and Financial Condition.

 

On February 8, 2012, Cincinnati Financial Corporation issued the attached news release titled “Cincinnati Financial Reports Fourth-Quarter and Full-Year 2011 Results,” furnished as Exhibit 99.1 hereto and incorporated herein by reference. On February 8, 2012, the company also distributed the attached information titled “Supplemental Financial Data,” furnished as Exhibit 99.2 hereto and incorporated herein by reference. This report should not be deemed an admission as to the materiality of any information contained in the news release or supplemental financial data.

 

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

 

 
 

 

Item 9.01 Financial Statements and Exhibits.

 

(c)Exhibits

 

Exhibit 99.1 – News release dated February 8, 2012, “Cincinnati Financial Reports Fourth-Quarter and Full-Year 2011 Results”

 

Exhibit 99.2 – Supplemental Financial Data for the period ending December 31, 2011 distributed February 8, 2012.

 

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: February 8, 2012 /S/Michael J. Sewell
  Michael J. Sewell, CPA
  Chief Financial Officer, Senior Vice President and Treasurer

 

 

 

 EX-99.1 2 v301550_ex99-1.htm NEWS RELEASE DATED FEBRUARY 8, 2012

 

The Cincinnati Insurance Company n The Cincinnati Indemnity Company

The Cincinnati Casualty Company n The Cincinnati Specialty Underwriters Insurance Company

The Cincinnati Life Insurance Company n CFC Investment Company n CSU Producer Resources Inc.

 

Investor Contact: Dennis E. McDaniel, 513-870-2768

CINF-IR@cinfin.com

Media Contact: Joan O. Shevchik, 513-603-5323

Media_Inquiries@cinfin.com

 

Cincinnati Financial Reports Fourth-Quarter and Full-Year 2011 Results

 

Cincinnati, February 8, 2012 – Cincinnati Financial Corporation (Nasdaq: CINF) today reported:

·Fourth-quarter 2011 net income of $134 million, or 83 cents per share, compared with $126 million, or 77 cents per share, in the fourth quarter of 2010; operating income* of $139 million, or 86 cents per share, up 23 percent compared with $113 million, or 70 cents per share. Net income and operating income for the fourth quarter of 2011 benefited from property casualty insurance profits that were up by $31 million after taxes.
·Full-year 2011 net income of $166 million, or $1.02 per share, compared with $377 million, or $2.31, in 2010. Operating income of $121 million, or 74 cents per share, down 56 percent compared with $274 million, or $1.68.
·$211 million decrease in full-year 2011 net income reflected the after-tax net effect of two major items: $149 million decrease in the contribution from property casualty underwriting – including $165 million from higher natural catastrophe losses, and a $58 million decrease from net realized investment gains.
·$31.16 book value per share at December 31, 2011, up 1 percent for the year and 5 percent for the quarter.
·6.0 percent value creation ratio for the year 2011, compared with 11.1 percent for 2010.

 

Financial Highlights

(Dollars in millions except share data)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
Revenue Highlights                              
Earned premiums  $827   $783    6   $3,194   $3,082    4 
Investment income, pre-tax   132    130    2    525    518    1 
Total revenues   955    936    2    3,803    3,772    1 
Income Statement Data                              
Net income  $134   $126    6   $166   $377    (56)
Net realized investment gains and losses   (5)   13    nm    45    103    (56)
Operating income*  $139   $113    23   $121   $274    (56)
Per Share Data (diluted)                              
Net income  $0.83   $0.77    8   $1.02   $2.31    (56)
Net realized investment gains and losses   (0.03)   0.07    nm    0.28    0.63    (56)
Operating income*  $0.86   $0.70    23   $0.74   $1.68    (56)
                               
Book value                 $31.16   $30.91    1 
Cash dividend declared  $0.4025   $0.40    1   $1.605   $1.59    1 
Weighted average shares outstanding   162,679,294    163,392,133    0    163,259,222    163,274,491    0 

 

Insurance Operations Fourth-Quarter Highlights

·87.6 percent fourth-quarter 2011 property casualty combined ratio and 5 percent increase in net written premiums. Full-year 2011 property casualty combined ratio at 109.2 percent, with 5 percent increase in net written premiums.
·$103 million fourth-quarter 2011 and $437 million full-year property casualty new business written premiums, down 4 percent and up 6 percent, respectively. Agencies appointed since the beginning of 2010 increased their contribution to new business premiums by $3 million for the quarter and $31 million for the year.
·4 cents per share contribution from life insurance operating income to fourth-quarter results, down 4 cents from 2010. Full-year 2011 contribution to operating income from life insurance was 20 cents per share, down 3 cents.

 

Investment and Balance Sheet Highlights

·2 percent growth in fourth-quarter 2011 after-tax investment income. 1 percent growth on a full-year basis, driven by 5 percent higher dividends with flat pre-tax interest income.
·3 percent full-year increase in fair value of invested assets plus cash at December 31, 2011, including fourth-quarter equity portfolio increase of 13 percent and a 1 percent decrease for the bond portfolio.
·$1.051 billion parent company cash and marketable securities at December 31, 2011, up 1 percent from a year ago.

 

*The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures on Page 13 defines and reconciles measures presented in this release that are not based on Generally Accepted Accounting Principles.

** Forward-looking statements and related assumptions are subject to the risks outlined in the company’s safe harbor statement (see Page 9).

 

CINF 4Q11 Earnings Release 1

 
 

 

Returning to Quarterly Underwriting Profit

 

Steven J. Johnston, president and chief executive officer, commented, “Fourth-quarter underwriting profits from our main business, property casualty insurance operations, rose to $98 million before taxes, the first underwriting profit for any 2011 quarter and our best result for any quarter since 2007. Strong fourth-quarter results reflected better core underwriting as well as our recently reported favorable impacts from lower catastrophe loss estimates, improving pricing trends for commercial insurance and higher securities valuations in our investment portfolio.

 

“Operating income of $139 million for the fourth quarter more than offset our nine-month operating loss of $18 million, leading to a full-year operating income of $121 million. While that total is roughly half of what we reported for 2010, we are pleased to be in a profit position after a year that brought us the two worst catastrophes in our company’s 60-year history.

 

“When those catastrophes hit, we focused on providing our affected policyholders and agents with service and value that would support our relationships and long-term perspective on business. This approach over time has helped build the financial strength and resources to absorb $402 million of pre-tax catastrophe losses in 2011 and still end the year with exceptionally strong policyholder reserves and with balance sheets that are stronger than at year-end 2010.

 

At December 31, 2011, our invested assets reached $11.8 billion, with total unrealized gains in the portfolio up 19 percent. Pre-tax investment income was up 1 percent for the year. Cash and marketable securities at the holding company level, which support liquidity and financial flexibility, exceeded $1 billion, up 1 percent. Book value improved to $31.16, also up 1 percent for the year. On top of that, we increased our shareholder dividend for a 51st year and repurchased shares, returning a total of $293 million, or 6 percent, of shareholders’ equity at the beginning of 2011.”

 

Driving Growth, Improving Profitability

 

“We are effectively executing on our plans to drive growth and improve profitability. Our net written and earned premiums rose for the fourth quarter and the full year in our commercial, personal and excess and surplus lines property casualty insurance segments. The 5 percent fourth-quarter increase benefited from steady retention of renewal business at improving rates. In commercial lines, which accounted for 73 percent of our 2011 property casualty premium revenues, pricing rose in the low- to mid-single-digit range for the fourth quarter. The strongest increases occurred in December, reflecting cumulative effects of the tools we have introduced to assist pricing precision and positive changes in the broader marketplace where our agents compete. We also continued to pursue price adequacy in personal lines, where we began in October to roll out homeowner increases that averaged approximately 8 percent, with lower increases for accounts with better risk characteristics.

 

“Pricing of new commercial business continues to be competitive, and our agents, field representatives and underwriters are applying their risk knowledge to select high quality accounts. Total property casualty new business grew 6 percent for the year, primarily due to ongoing expansion of our independent agency force, now 1,312 strong in our 39-state operating territory. For the fourth quarter, new business would have risen if not for a reduction in workers’ compensation production, where we are especially vigilant in risk selection. While industry loss ratios are deteriorating for workers’ compensation, our ratio improved 16 percentage points in 2011, and we continue to push toward profitability in this line.

 

“Profitable underwriting in the fourth quarter produced an 87.6 percent combined ratio for that period, bringing the full-year ratio to 109.2 percent including an unusually high 13.3 percentage points of catastrophe loss. To evaluate our core underwriting progress, we also look at the ratio without catastrophes and reinsurance reinstatement effects; on that basis, the ratio improved by 2 percentage points in 2011.

 

Johnston concluded, “We expect the effects of our ongoing work to improve underwriting, pricing and expense control to create further momentum, driving progress in 2012. Looking further out to 2015, we believe we are in position to create future shareholder value by partnering with our agents to profitably write as much as $5 billion of property casualty and life insurance business. As 2011 came to a close, A.M. Best Co. reviewed our position and affirmed its financial strength ratings of A+ (Superior), with a stable outlook, for our standard market property casualty insurance group and A (Excellent) for our excess and surplus lines company and our life insurance company.”

 

CINF 4Q11 Earnings Release 2

 
 

 

Consolidated Property Casualty Insurance Operations
(Dollars in millions)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
                         
Earned premiums  $785   $745    5   $3,029   $2,924    4 
Fee revenues   1    1    0    4    4    0 
Total revenues   786    746    5    3,033    2,928    4 
                               
Loss and loss expenses   437    455    (4)   2,335    2,015    16 
Underwriting expenses   251    240    5    974    960    1 
Underwriting profit (loss)  $98   $51    92   $(276)  $(47)   nm 
                               
Ratios as a percent of earned premiums:            Pt. Change             Pt. Change 
Loss and loss expenses   55.6%   60.9%   (5.3)   77.0%   68.9%   8.1 
Underwriting expenses   32.0    32.2    (0.2)   32.2    32.8    (0.6)
Combined ratio   87.6%   93.1%   (5.5)   109.2%   101.7%   7.5 
                               
             Change %             Change % 
Agency renewal written premiums  $712   $648    10   $2,867   $2,692    7 
Agency new business written premiums   103    107    (4)   437    414    6 
Other written premiums   (55)   (33)   (67)   (206)   (143)   (44)
Net written premiums  $760   $722    5   $3,098   $2,963    5 
                               
Ratios as a percent of earned premiums:            Pt. Change             Pt. Change 
Current accident year before catastrophe losses   65.7%   77.6%   (11.9)   73.0%   73.6%   (0.6)
Current accident year catastrophe losses   (1.9)   0.9    (2.8)   13.4    5.6    7.8 
Prior accident years before catastrophe losses   (7.3)   (17.4)   10.1    (9.3)   (9.8)   0.5 
Prior accident years catastrophe losses   (0.9)   (0.2)   (0.7)   (0.1)   (0.5)   0.4 
Total loss and loss expenses   55.6%   60.9%   (5.3)   77.0%   68.9%   8.1 
                               
Current accident year combined ratio before catastrophe losses   97.7%   109.8%   (12.1)   105.2%   106.4%   (1.2)

 

·5 percent increase for both fourth-quarter and full-year 2011 property casualty net written premiums. Full-year increase of $135 million reflects solid growth for renewal and new business premiums, partially offset by $42 million of ceded premiums to reinstate property catastrophe reinsurance coverage. Reinsurance reinstatement ceded premiums were largely responsible for the $63 million change in full-year other written premiums.
·$23 million increase to a record-high $437 million in 2011 new business written by agencies, reflecting the contribution from new agency appointments and other growth initiatives in recent years. $31 million of the increase was from standard market property casualty new business produced by agencies appointed since the beginning of 2010.
·1,312 agency relationships in 1,648 reporting locations marketing standard market property casualty insurance products at December 31, 2011, compared with 1,245 agency relationships in 1,544 reporting locations at year-end 2010. 133 new agency appointments were made during 2011, exceeding the initial full-year target of approximately 120.
·5.5 percentage-point fourth-quarter 2011 combined ratio improvement primarily due to 3.5 point decline in natural catastrophe losses.
·7.5 percentage-point rise in full-year combined ratio, driven by an 8.2 point increase in natural catastrophe losses.
·0.6 percentage-point improvement, to 73.0 percent, for full-year 2011 ratio of accident year losses and loss expenses before catastrophes. Loss ratio benefits from improved pricing were partially offset by a 1.0 point adverse effect from reinsurance reinstatement ceded premiums.
·8.2 and 9.4 percentage point fourth-quarter and full-year 2011 benefit from favorable prior accident year reserve development of $64 million and $285 million, compared with 17.6 percent and 10.3 percent from $131 million and $304 million of development for the same periods of 2010.
·0.2 and 0.6 percentage-point improvement in the fourth-quarter and full-year underwriting expense ratios, reflecting expense management efforts and higher earned premiums.

 

CINF 4Q11 Earnings Release 3

 
 

 

The following table shows incurred catastrophe losses for 2011 and 2010. 

(In millions, net of reinsurance)  Three months ended December 31,   Twelve months ended December 31,  
       Comm.   Pers.   E&S      Comm.   Pers.   E&S    
Dates  Event  Region   lines   lines   lines   Total   lines   lines   lines   Total 
2011                                              
First quarter catastrophes         $(3)  $(1)  $-   $(4)  $19   $15   $-   $34 
Second quarter catastrophes          (3)   1    -    (2)   145    135    -    280 
Third quarter catastrophes          (5)   (6)   -    (11)   47    20    -    67 
Oct. 28 - 31   Freezing, wind   East    1    1    -    2    1    1    -    2 
Nov. 30 - Dec. 2   Wind   West    2    2    -    4    2    2    -    4 
All other 2011 catastrophes          (2)   (2)   -    (4)   11    8    1    20 
Development on 2010 and prior catastrophes          (7)   -    -    (7)   2    (7)   -    (5)
Calendar year incurred total         $(17)  $(5)  $-   $(22)  $227   $174   $1   $402 
2010                                              
First quarter catastrophes         $-   $-   $-   $-   $8   $2   $-   $10 
Second quarter catastrophes          (4)   (3)   -    (7)   46    39    1    86 
Third quarter catastrophes          (1)   -    -    (1)   16    8    -    24 
Oct. 4-6   Hail, wind   South    6    1    -    7    6    1    -    7 
Oct. 26-28   Hail, wind,tornado   Midwest    6    4    -    10    6    4    -    10 
All other 2010 catastrophes          (1)   (1)   -    (2)   19    9    -    28 
Development on 2009 and prior catastrophes          -    (2)   -    (2)   (12)   (5)   -    (17)
Calendar year incurred total         $6   $(1)  $-   $5   $89   $58   $1   $148 

 

CINF 4Q11 Earnings Release 4

 
 

 

Insurance Operations Highlights

Commercial Lines Insurance Operations
(Dollars in millions)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
                         
Earned premiums  $567   $546    4   $2,197   $2,154    2 
Fee revenues   1    -    nm    3    2    50 
Total revenues   568    546    4    2,200    2,156    2 
                               
Loss and loss expenses   284    319    (11)   1,570    1,437    9 
Underwriting expenses   192    175    10    731    704    4 
Underwriting profit (loss)  $92   $52    77   $(101)  $15    nm 
                               
Ratios as a percent of earned premiums:            Pt. Change             Pt. Change 
Loss and loss expenses   50.1%   58.5%   (8.4)   71.4%   66.7%   4.7 
Underwriting expenses   33.8    32.1    1.7    33.3    32.7    0.6 
Combined ratio   83.9%   90.6%   (6.7)   104.7%   99.4%   5.3 
                               
             Change %             Change % 
Agency renewal written premiums  $514   $474    8   $2,063   $1,978    4 
Agency new business written premiums   74    76    (3)   307    289    6 
Other written premiums   (42)   (26)   (62)   (152)   (112)   (36)
Net written premiums  $546   $524    4   $2,218   $2,155    3 
                               
Ratios as a percent of earned premiums:            Pt. Change             Pt. Change 
Current accident year before catastrophe losses   60.9%   78.5%   (17.6)   71.8%   74.5%   (2.7)
Current accident year catastrophe losses   (1.7)   1.0    (2.7)   10.3    4.7    5.6 
Prior accident years before catastrophe losses   (7.9)   (21.0)   13.1    (10.8)   (11.9)   1.1 
Prior accident years catastrophe losses   (1.2)   0.0    (1.2)   0.1    (0.6)   0.7 
Total loss and loss expenses   50.1%   58.5%   (8.4)   71.4%   66.7%   4.7 
                               
Current accident year combined ratio before catastrophe losses   94.7%   110.6%   (15.9)   105.1%   107.2%   (2.1)

 

·4 percent and 3 percent growth in fourth-quarter and full-year 2011 commercial lines net written premiums, primarily due to higher renewal written premiums, helping to offset $24 million of full-year ceded premiums to reinstate property catastrophe reinsurance.
·$40 million and $85 million rise in fourth quarter and full-year renewal written premiums largely reflected the effects of slowly improving economic conditions on insured exposure levels plus fourth-quarter 2011 commercial lines pricing changes that increased on average in a low- to mid-single-digit range.
·$2 million decrease in fourth-quarter new business written premiums was driven by a $3 million decrease for the workers’ compensation line of business. $18 million increase to $307 million in full-year new business written premiums with growth in every commercial line of business except workers’ compensation and specialty packages.
·5.3 percentage-point rise in the full-year combined ratio primarily due to a 6.3 point increase in natural catastrophe losses. 6.7 percentage-point reduction in the fourth-quarter ratio primarily reflected lower current accident year losses.
·2.7 percentage-point improvement, to 71.8 percent, for the 2011 ratio of accident year losses and loss expenses before catastrophes, primarily from better pricing.

 

CINF 4Q11 Earnings Release 5

 
 

 

Personal Lines Insurance Operations
(Dollars in millions)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
                         
Earned premiums  $199   $186    7   $762   $721    6 
Fee revenues   -    1    (100)   1    2    (50)
Total revenues   199    187    6    763    723    6 
                               
Loss and loss expenses   145    130    12    723    537    35 
Underwriting expenses   53    60    (12)   221    240    (8)
Underwriting profit (loss)  $1   $(3)   nm   $(181)  $(54)   (235)
                               
Ratios as a percent of earned premiums:            Pt. Change             Pt. Change 
Loss and loss expenses   72.9%   69.9%   3.0    94.9%   74.4%   20.5 
Underwriting expenses   26.6    32.0    (5.4)   29.0    33.3    (4.3)
Combined ratio   99.5%   101.9%   (2.4)   123.9%   107.7%   16.2 
                               
             Change %             Change % 
Agency renewal written premiums  $185   $166    11   $755   $685    10 
Agency new business written premiums   22    23    (4)   95    90    6 
Other written premiums   (11)   (6)   (83)   (49)   (25)   (96)
Net written premiums  $196   $183    7   $801   $750    7 
                               
Ratios as a percent of earned premiums:            Pt. Change             Pt. Change 
Current accident year before catastrophe losses   81.0%   77.2%   3.8    76.7%   70.4%   6.3 
Current accident year catastrophe losses   (2.6)   0.5    (3.1)   23.6    8.8    14.8 
Prior accident years before catastrophe losses   (5.4)   (7.0)   1.6    (4.5)   (4.1)   (0.4)
Prior accident years catastrophe losses   (0.1)   (0.8)   0.7    (0.9)   (0.7)   (0.2)
Total loss and loss expenses   72.9%   69.9%   3.0    94.9%   74.4%   20.5 
                               
Current accident year combined ratio before catastrophe losses   107.6%   109.2%   (1.6)   105.7%   103.7%   2.0 

 

·7 percent growth in fourth-quarter and full-year 2011 personal lines net written premiums, primarily due to increases in renewal written premiums, helping to offset $18 million of full-year ceded premiums to reinstate property catastrophe reinsurance.
·16.2 percentage-point rise in full-year 2011 combined ratio primarily due to catastrophe losses that were 14.6 points higher. 2.4 point reduction in fourth-quarter ratio was driven by an underwriting expense ratio decrease of 5.4 points primarily due to lower commissions, including the portion based on profit-sharing agreements.
·6.3 percentage-point rise, to 76.7 percent, for 2011 ratio of accident year losses and loss expenses before catastrophes. Loss ratio improvements from better pricing were offset by the effect of reinsurance reinstatement ceded premiums that added 1.8 points, plus higher weather-related losses not part of an industry-designated catastrophe event – including 2.3 points alone from $22 million increase in homeowner wind, hail and lightning losses. Approximately 3 points were added due to a one-time adjustment from a refined allocation process for loss expenses related primarily to salaries of claims associates.
·4.3 percentage-point improvement in the full-year underwriting expense ratio was primarily due to lower commissions and higher first-quarter 2010 expenses from provisions for commitments and contingent liabilities.

 

CINF 4Q11 Earnings Release 6

 
 

 

 

Excess and Surplus Lines Insurance Operations

(Dollars in millions)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
                         
Earned premiums  $19   $13    46   $70   $49    43 
                               
Loss and loss expenses   8    6    33    42    41    2 
Underwriting expenses   6    5    20    22    16    38 
Underwriting profit (loss)  $5   $2    150   $6   $(8)   nm 
                               
Ratios as a percent of earned premiums:            Pt. Change             Pt. Change 
Loss and loss expenses   42.4%   39.6%   2.8    60.3%   83.7%   (23.4)
Underwriting expenses   32.4    35.7    (3.3)   31.9    31.7    0.2 
Combined ratio   74.8%   75.3%   (0.5)   92.2%   115.4%   (23.2)
                               
             Change %             Change % 
Agency renewal written premiums  $13   $8    63   $49   $29    69 
Agency new business written premiums   7    8    (13)   35    35    0 
Other written premiums   (2)   (1)   (100)   (5)   (6)   17 
Net written premiums  $18   $15    20   $79   $58    36 
                               
Ratios as a percent of earned premiums:             Pt. Change             Pt. Change 
Current accident year before catastrophe losses   50.6%   53.6%   (3.0)   71.0%   83.8%   (12.8)
Current accident year catastrophe losses   (0.3)   (0.1)   (0.2)   2.1    1.2    0.9 
Prior accident years before catastrophe losses   (7.9)   (13.9)   6.0    (12.9)   (1.3)   (11.6)
Prior accident years catastrophe losses   0.0    0.0    0.0    0.1    0.0    0.1 
Total loss and loss expenses   42.4%   39.6%   2.8    60.3%   83.7%   (23.4)
                               
Current accident year combined ratio before catastrophe losses   83.0%   89.3%   (6.3)   102.9%   115.5%   (12.6)

 

·$3 million and $21 million growth in fourth-quarter and full-year 2011 excess and surplus lines net written premiums, largely due to the opportunity to renew many accounts for the first time. Growth was also from average renewal price increases in a low- to mid-single-digit range for the year with the strongest increases occurring in the fourth quarter.
·13 percent decrease in new business written premiums for the fourth quarter and flat for the year, reflecting careful underwriting in a market that remains very competitive.
·23.2 percentage-point combined ratio improvement for full-year 2011 reflected lower current accident year loss and loss expense ratios plus higher net favorable reserve development on prior accident years. 0.5 point reduction in fourth-quarter ratio was driven by a lower underwriting expense ratio, primarily due to higher earned premiums.

 

Life Insurance Operations

(In millions)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
                         
Term life insurance  $26   $24    8   $105   $96    9 
Universal life insurance   8    6    33    32    35    (9)
Other life insurance, annuity, and disability income products   8    8    0    28    27    4 
Earned premiums   42    38    11    165    158    4 
Investment income, net of expenses   33    32    3    134    129    4 
Other income   -    -    nm    2    1    100 
Total revenues, excluding realized investment gains and losses   75    70    7    301    288    5 
Contract holders benefits   51    41    24    189    170    11 
Underwriting expenses   13    10    30    62    61    2 
Total benefits and expenses   64    51    25    251    231    9 
Net income before income tax and realized investment gains and losses   11    19    (42)   50    57    (12)
Income tax   4    7    (43)   18    20    (10)
Net income before realized investment gains and losses  $7   $12    (42)  $32   $37    (14)

 

·$7 million or 4 percent growth in full-year 2011 earned premiums, including 9 percent for term life insurance, our largest life insurance product line. 5 percent rise in face amount of life policies in force to $77.691 billion at December 31, 2011, from $74.124 billion at year-end 2010.
·$79 million decline to $122 million in full-year 2011 fixed annuity deposits received, slowing as planned. Cincinnati Life does not offer variable or indexed products.
·$5 million lower full-year profit was primarily due to less favorable mortality experience that increased contract holders benefits.
·$26 million or 3 percent full-year 2011 growth to $774 million in GAAP shareholders’ equity for The Cincinnati Life Insurance Company, after paying $25 million in dividends to The Cincinnati Insurance Company.

 

CINF 4Q11 Earnings Release 7

 
 

 

Investment and Balance Sheet Highlights

Investment Operations

(In millions)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
Total investment income, net of expenses, pre-tax  $132   $130    2   $525   $518    1 
Investment interest credited to contract holders   (20)   (19)   (5)   (81)   (79)   (3)
Realized investment gains and losses summary:                              
Realized investment gains and losses   18    15    20    128    185    (31)
Change in fair value of securities with embedded derivatives   (1)   4    nm    (1)   10    nm 
Other-than-temporary impairment charges   (24)   -    nm    (57)   (36)   (58)
Total realized investment gains and losses   (7)   19    nm    70    159    (56)
Investment operations profit  $105   $130    (19)  $514   $598    (14)
                               
(In millions)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   Change %   2011   2010   Change % 
Investment income:                              
Interest  $105   $105    0   $424   $423    0 
Dividends   27    26    4    104    99    5 
Other   1    1    0    4    4    0 
Investment expenses   (1)   (2)   50    (7)   (8)   13 
Total investment income, net of expenses, pre-tax   132    130    2    525    518    1 
Income taxes   (32)   (32)   0    (129)   (126)   (2)
Total investment income, net of expenses, after-tax  $100   $98    2   $396   $392    1 
                               
Effective tax rate   24.4%   24.2%        24.6%   24.4%     
                               
Average yield pre-tax   4.7%   4.6%        4.6%   4.7%     
Average yield after-tax   3.5%   3.5%        3.5%   3.5%     

 

·2 percent and 1 percent growth in fourth-quarter and full-year 2011 pre-tax investment income, driven by higher dividend income. Flat interest income reflected a larger bond portfolio base that offset lower bond market yields.
·$239 million or 19 percent full-year 2011 increase in pre-tax unrealized investment portfolio gains, including $39 million in the equity portfolio. $128 million of realized gains were harvested from the investment portfolio during 2011, including $111 million from the equity portfolio.
(Dollars in millions except share data)  At December 31,   At December 31, 
   2011   2010 
Balance sheet data          
Invested assets  $11,801   $11,508 
Total assets   15,668    15,095 
Short-term debt   104    49 
Long-term debt   790    790 
Shareholders' equity   5,055    5,032 
Book value per share   31.16    30.91 
Debt-to-total-capital ratio   15.0%   14.3%

 

·$12.239 billion in consolidated cash and invested assets at December 31, 2011, compared with $11.893 billion at year-end.
·$8.779 billion bond portfolio at December 31, 2011, with an average rating of A2/A. Fair value rose $396 million or 5 percent during the year 2011.
·$2.956 billion equity portfolio was 25.0 percent of invested assets, including $794 million in pre-tax net unrealized gains at December 31, 2011. $85 million or 3 percent full-year 2011 decrease in fair value.
·$3.747 billion of statutory surplus for the property casualty insurance group at December 31, 2011, down $30 million from $3.777 billion at year-end 2010, after declaring $180 million in dividends to the parent company. Ratio of net written premiums to property casualty statutory surplus for the 12 months ended December 31, 2011, of 0.8-to-1, unchanged from the 12 months ended December 31, 2010.
·Value creation ratio of 6.0 percent for the year 2011 is the total of 5.2 percent from shareholder dividends plus 0.8 percent from the change in book value per share.

 

For additional information or to register for our conference call webcast, please visit www.cinfin.com/investors.

 

CINF 4Q11 Earnings Release 8

 
 

 

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

 

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

 

Safe Harbor Statement

This is our “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2010 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 24.

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
·Inadequate estimates or assumptions used for critical accounting estimates
·Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies
·Declines in overall stock market values negatively affecting the company’s equity portfolio and book value
·Events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:
oSignificant or prolonged decline in the value of a particular security or group of securities and impairment of the asset(s)
oSignificant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities
oSignificant rise in losses from surety and director and officer policies written for financial institutions or other insured entities
·Prolonged low interest rate environment or other factors that limit the company’s ability to generate growth in investment income or interest rate fluctuations that result in declining values of fixed-maturity investments, including declines in accounts in which we hold bank-owned life insurance contract assets
·Increased competition that could result in a significant reduction in the company’s premium volume
·Delays in adoption and implementation of underwriting and pricing methods that could increase our pricing accuracy, underwriting profit and competitiveness
·Changing consumer insurance-buying habits and consolidation of independent insurance agencies that could alter our competitive advantages
·Inability to obtain adequate reinsurance on acceptable terms, amount of reinsurance purchased, financial strength of reinsurers and the potential for non-payment 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
·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:
oDowngrades of the company’s financial strength ratings
oConcerns that doing business with the company is too difficult
oPerceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace
oDelays or inadequacies in the development, implementation, performance and benefits of technology projects and enhancements
·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:
oImpose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates
oPlace the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations
oRestrict our ability to exit or reduce writings of unprofitable coverages or lines of business
oAdd 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
oIncrease our provision for federal income taxes due to changes in tax law
oIncrease our other expenses
oLimit our ability to set fair, adequate and reasonable rates
oPlace us at a disadvantage in the marketplace
oRestrict 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
·Difficulties with technology or data security breaches, including cyber attacks, that could negatively affect our ability to conduct business and our relationships with agents, policyholders and others

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 measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.

* * *

 

CINF 4Q11 Earnings Release 9

 
 

 

Cincinnati Financial Corporation
Condensed Consolidated Balance Sheets (unaudited)

(In millions except per share data)  December 31,   December 31, 
   2011   2010 
         
ASSETS          
Investments          
Fixed maturities, at fair value (amortized cost: 2011—$8,084; 2010—$7,888)  $8,779   $8,383 
Equity securities, at fair value (cost: 2011—$2,162; 2010—$2,286)   2,956    3,041 
Other invested assets   66    84 
Total investments   11,801    11,508 
Cash and cash equivalents   438    385 
Investment income receivable   119    119 
Finance receivable   76    73 
Premiums receivable   1,087    1,015 
Reinsurance receivable   622    572 
Prepaid reinsurance premiums   24    18 
Deferred policy acquisition costs   510    488 
Land, building and equipment, net, for company use (accumulated depreciation: 2011—$376; 2010—$352)   227    229 
Other assets   93    67 
Separate accounts   671    621 
Total assets  $15,668   $15,095 
           
LIABILITIES          
Insurance reserves          
Loss and loss expense reserves  $4,339   $4,200 
Life policy reserves   2,214    2,034 
Unearned premiums   1,633    1,553 
Other liabilities   548    556 
Deferred income tax   314    260 
Note payable   104    49 
Long-term debt   790    790 
Separate accounts   671    621 
Total liabilities   10,613    10,063 
           
SHAREHOLDERS' EQUITY          
Common stock, par value—$2 per share; (authorized: 2011—500 million shares, 2010—500 million shares; issued: 2011—196 million shares, 2010—196 million shares)   393    393 
Paid-in capital   1,096    1,091 
Retained earnings   3,885    3,980 
Accumulated other comprehensive income   901    769 
Treasury stock at cost (2011—34 million shares, 2010—34 million shares)   (1,220)   (1,201)
Total shareholders' equity   5,055    5,032 
Total liabilities and shareholders' equity  $15,668   $15,095 

 

CINF 4Q11 Earnings Release 10

 
 

 

 

Cincinnati Financial Corporation
Condensed Consolidated Statements of Income (unaudited)

(Dollars in millions except per share data)  Three months ended December 31,   Twelve months ended December 31, 
   2011   2010   2011   2010 
         
Revenues                    
Earned premiums  $827   $783   $3,194   $3,082 
Investment income, net of expenses   132    130    525    518 
Realized investment gains and losses   (7)   19    70    159 
Fee revenues   1    1    4    4 
Other revenues   2    3    10    9 
Total revenues   955    936    3,803    3,772 
                     
Benefits and Expenses                    
Insurance losses and policyholder benefits   488    494    2,524    2,180 
Underwriting, acquisition and insurance expenses   264    249    1,036    1,021 
Other operating expenses   3    5    13    16 
Interest expense   14    14    54    54 
Total benefits and expenses   769    762    3,627    3,271 
                     
Income Before Income Taxes   186    174    176    501 
                     
Provision (Benefit) for Income Taxes                    
Current   36    10    27    94 
Deferred   16    38    (17)   30 
Total provision for income taxes   52    48    10    124 
                     
Net Income  $134   $126   $166   $377 
                     
Per Common Share:                    
Net income—basic  $0.83   $0.78   $1.02   $2.32 
Net income—diluted  $0.83   $0.77   $1.02   $2.31 

 

CINF 4Q11 Earnings Release 11

 

 
 

 

Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures

 

(See attached tables for 2011 reconciliations; 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. Management uses these measures when analyzing both GAAP and non-GAAP measures to improve its understanding of trends in the underlying business and to help avoid incorrect or misleading assumptions and conclusions about the success or failure of company strategies. Management adjustments to GAAP measures generally: apply to non-recurring events that are unrelated to business performance and distort short-term results; involve values that fluctuate based on events outside of management’s control; or relate to accounting refinements that affect comparability between periods, creating a need to analyze data on the same basis.

 

·Operating income: Operating income is calculated by excluding net realized investment gains and losses (defined as realized investment gains and losses after applicable federal and state income taxes) from net income. Management evaluates operating income to measure the success of pricing, rate and underwriting strategies. While realized investment gains (or losses) are integral to the company’s insurance operations over the long term, the determination to realize investment gains or losses in any period may be subject to management’s discretion and is independent of the insurance underwriting process. Also, under applicable GAAP accounting requirements, gains and losses can be recognized from certain changes in market values of securities without actual realization. Management believes that the level of realized investment gains or losses for any particular period, while it may be material, may not fully indicate the performance of ongoing underlying business operations in that period.

 

For these reasons, many investors and shareholders consider operating income to be one of the more meaningful measures for evaluating insurance company performance. Equity analysts who report on the insurance industry and the company generally focus on this metric in their analyses. The company presents operating income so that all investors have what management believes to be a useful supplement to GAAP information.

 

·Statutory accounting rules: For public reporting, insurance companies prepare financial statements in accordance with GAAP. However, insurers also must calculate certain data according to statutory accounting rules as defined in the NAIC’s Accounting Practices and Procedures Manual, which may be, and has been, modified by various state insurance departments. Statutory data is publicly available, and various organizations use it to calculate aggregate industry data, study industry trends and compare insurance companies.

 

·Written premium: Under statutory accounting rules, property casualty written premium is the amount recorded for policies issued and recognized on an annualized basis at the effective date of the policy. Management analyzes trends in written premium to assess business efforts. Earned premium, used in both statutory and GAAP accounting, is calculated ratably over the policy term. The difference between written and earned premium is unearned premium.

 

Cincinnati Financial Corporation

Balance Sheet Reconciliation 
(Dollars are per share)  Three months ended December 31,    Twelve months ended December 31,  
   2011   2010   2011   2010 
Value creation ratio                
End of period book value  $31.16   $30.91   $31.16   $30.91 
Less beginning of period book value   29.54    30.80    30.91    29.25 
Change in book value   1.62    0.11    0.25    1.66 
Dividend declared to shareholders   0.4025    0.40    1.605    1.59 
Total contribution to value creation ratio  $2.02   $0.51   $1.86   $3.25 
Contribution to value creation ratio from change in book value*   5.5%   0.4%   0.8%   5.7%
Contribution to value creation ratio from dividends declared to shareholders**   1.3    1.3    5.2    5.4 
Value creation ratio   6.8%   1.7%   6.0%   11.1%

 

*Change in book value divided by the beginning of period book value
**Dividend declared to shareholders divided by beginning of period book value

 

CINF 4Q11 Earnings Release 12

 

 
 

 

Cincinnati Financial Corporation

Net Income Reconciliation
(In millions except per share data)  Three months ended   Twelve months ended 
   December 31, 2011   December 31, 2011 
Net income  $134   $166 
Net realized investment gains and losses   (5)   45 
Operating income   139    121 
Less catastrophe losses   14    (261)
Operating income before catastrophe losses  $125   $382 
           
Diluted per share data:          
Net income  $0.83   $1.02 
Net realized investment gains and losses   (0.03)   0.28 
Operating income   0.86    0.74 
Less catastrophe losses   0.09    (1.60)
Operating income before catastrophe losses  $0.77   $2.34 

 

Property Casualty Reconciliation
   Three months ended December 31, 2011 
   Consolidated   Commercial   Personal   E&S 
Premiums:                    
Written premiums  $760   $546   $196   $18 
Unearned premiums change   25    21    3    1 
Earned premiums  $785   $567   $199   $19 
                     
Statutory ratio:                    
Statutory combined ratio   88.5%   83.7%   103.9%   74.2%
Contribution from catastrophe losses   (2.8)   (2.9)   (2.7)   (0.3)
Statutory combined ratio excluding catastrophe losses   91.3%   86.6%   106.6%   74.5%
                     
Commission expense ratio   19.5%   18.9%   20.4%   26.0%
Other expense ratio   13.4    14.7    10.6    5.8 
Statutory expense ratio   32.9%   33.6%   31.0%   31.8%
                     
GAAP ratio:                    
GAAP combined ratio   87.6%   83.9%   99.5%   74.8%
Contribution from catastrophe losses   (2.8)   (2.9)   (2.7)   (0.3)
Prior accident years before catastrophe losses   (7.3)   (7.9)   (5.4)   (7.9)
GAAP combined ratio excluding catastrophe losses and prior years reserve development   97.7%   94.7%   107.6%   83.0%

 

 

   Twelve months ended December 31, 2011 
   Consolidated   Commercial   Personal   E&S 
Premiums:                    
Written premiums  $3,098   $2,218   $801   $79 
Unearned premiums change   (69)   (21)   (39)   (9)
Earned premiums  $3,029   $2,197   $762   $70 
                     
Statutory ratio:                    
Statutory combined ratio   108.9%   104.2%   124.2%   90.8%
Contribution from catastrophe losses   13.3    10.4    22.7    2.2 
Statutory combined ratio excluding catastrophe losses   95.6%   93.8%   101.5%   88.6%
                     
Commission expense ratio   18.6%   18.3%   18.6%   24.5%
Other expense ratio   13.3    14.5    10.7    6.0 
Statutory expense ratio   31.9%   32.8%   29.3%   30.5%
                     
GAAP ratio:                    
GAAP combined ratio   109.2%   104.7%   123.9%   92.2%
Contribution from catastrophe losses   13.3    10.4    22.7    2.2 
Prior accident years before catastrophe losses   (9.3)   (10.8)   (4.5)   (12.9)
GAAP combined ratio excluding catastrophe losses and prior years reserve development   105.2%   105.1%   105.7%   102.9%

   

Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.

 

CINF 4Q11 Earnings Release 13

 

 

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MRR^)_P#Y;S7F^6U^5YCE'Y^F_W_`.V[=-['Q3R:![L(F=!5I)[] M(5(2[9F79C#Q=CLWYHJO+BJ^89,>;\L799#D\_0)92TR\1XR$+9O_"C[I3\$ MS[L+OXP;^U/J07W^[8?2!E]^[][?3BOX_H7JY?FO+G M+1S>7(Y8SU2_M2AC5_++S*?]U\'^+F<_,>3\YK1IU%0TZ.;IT8/K= MCYB\P,N=-B6K/5R_!+^+1[?KA([_`"B^'*P/D?+7#5I+FD->9'FN;A(_ZF7* MYDCJD$X3,6#Y)>R7J.-_\YZ,C]UA5?L(!FO1/1O#] M6%Q_V[L\+QP[_"TV6WXIY1WRLO*:$\W5+3/493GQSE+'.)_NX[7\W;OC07\5 MU*\ER2OGDR][+0,$:9:YDHE*>,(ZL_P=VA?$"0"5\[GK[C]RQOHVGUKVZCO> MWWD^]P"7]1]N?+=GJW[7D.SR/[7;I1_S[0=/Y4FY:,I;S:R?F"YK*O+GS7/Y@F$^6U:U<-Z?ZU]W`-P]+'%?D?1O#_3Y?M\O^[W:*CXR;A2:I!_6 M>3RY%$]6,\`!XO:S[XZ67^6_R9=@WS19^0//&HYQJ-'*\&L.27^5+E:23/+& M/9M?\6?MS-WW@%D]._C'C#W<]2-=`EQPAY2Z?90+;%%\$R`>K^;%OO("K_[@ M`-VZ&?C'F6.5IU^<7HEES9IU=TLNZ4+G?D'X?=O,ESD_+]-YS4#K\ARJGD^T M9Z]'.U:L=69G"LR/_#/[BR;ZT&5QI_JC7^0`T8ZUZ=>G&6G5_PY\)2X0R7K^7/FJPK M\Z;=S4^<#/,%&7="?]R6YR,I/&<=]S?RD^3;W\>Y?RMYM/FM,Y[R7D&GD^[?N\IY=/RO=W?JW\#MWWZ_GJ-K_,5//49^F>,6];N3\/I ;_+S\OR4:)YZ=(TS[Y2GWQZ6M860:((-$$?_9 ` end EX-99.2 4 v301550_ex99-2.htm SUPPLEMENTAL FINANCIAL DATA

Cincinnati Financial Corporation

Supplemental Financial Data

for the period ending December 31, 2011

 

6200 South Gilmore Road

Fairfield, Ohio 45014-5141

www.cinfin.com

 

Investor Contact: Media Contact: Shareholder Contact:
Dennis E. McDaniel Joan O. Shevchik Jerry L. Litton
(513) 870-2768 (513) 603-5323 (513) 870-2639

 

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

 

Ratings are as of February 7, 2012, under continuous review and subject to change and/or affirmation. For the current ratings, select Financial Strength on www.cinfin.com.

 

The consolidated financial statements and financial exhibits that follow are unaudited. These consolidated financial statements and exhibits should be read in conjunction with the consolidated financial statements and notes included with our periodic filings with the U.S. Securities and Exchange Commission. The results of operations for interim periods may not be indicative of results to be expected for the full year.

 

 
 

 

Cincinnati Financial Corporation

Supplemental Financial Data

Fourth Quarter 2011

 

    Page
  Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures 3
     
Consolidated  
  Quick Reference 4
  CFC and Subsidiaries Consolidation – Twelve Months Ended December 31, 2011 5
  CFC and Subsidiaries Consolidation – Three Months Ended December 31, 2011 6
  5-Year Net Income Reconciliation 7
  CFC Insurance Subsidiaries – Selected Balance Sheet Data 8
     
Consolidated Property Casualty Insurance Operations  
  Statutory Statements of Income 9
  Consolidated Cincinnati Insurance Companies – Losses Incurred Detail 10
  Consolidated Cincinnati Insurance Companies – Loss Ratio Detail 11
  Consolidated Cincinnati Insurance Companies – Loss Claim Count Detail 12
  Direct Written Premiums by Line of Business and State 13
  Quarterly Property Casualty Data – Commercial Lines of Business 14
  Quarterly Property Casualty Data – Personal Lines of Business 15
  Loss and Loss Expense Analysis 16
     
Reconciliation Data  
  5-Year Property Casualty Data – Consolidated 17
  5-Year Property Casualty Data – Commercial Lines 18
  5-Year Property Casualty Data – Personal Lines 19
  5-Year Property Casualty Data – Excess & Surplus Lines 20
  Quarterly Property Casualty Data – Consolidated 21
  Quarterly Property Casualty Data – Commercial Lines 22
  Quarterly Property Casualty Data – Personal Lines 23
  Quarterly Property Casualty Data – Excess & Surplus Lines 24
     
Life Insurance Operations  
  Statutory Statements of Income 25

 

 
 

Definitions of Non-GAAP Information and
Reconciliation to Comparable GAAP Measures

Cincinnati Financial Corporation prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners’ (NAIC) Accounting Practices and Procedures Manual and therefore is not reconciled to GAAP data.

Management uses certain non-GAAP and non-statutory financial measures to evaluate its primary business areas – property casualty insurance, life insurance and investments. Management uses these measures when analyzing both GAAP and non-GAAP measures to improve its understanding of trends in the underlying business and to help avoid incorrect or misleading assumptions and conclusions about the success or failure of company strategies. Management adjustments to GAAP measures generally: apply to non-recurring events that are unrelated to business performance and distort short-term results; involve values that fluctuate based on events outside of management’s control; or relate to accounting refinements that affect comparability between periods, creating a need to analyze data on the same basis.

· Operating income: Operating income is calculated by excluding net realized investment gains and losses (defined as realized investment gains and losses after applicable federal and state income taxes) from net income. Management evaluates operating income to measure the success of pricing, rate and underwriting strategies. While realized investment gains (or losses) are integral to the company’s insurance operations over the long term, the determination to realize investment gains or losses in any period may be subject to management’s discretion and is independent of the insurance underwriting process. Also, under applicable GAAP accounting requirements, gains and losses can be recognized from certain changes in market values of securities without actual realization. Management believes that the level of realized investment gains or losses for any particular period, while it may be material, may not fully indicate the performance of ongoing underlying business operations in that period.
  For these reasons, many investors and shareholders consider operating income to be one of the more meaningful measures for evaluating insurance company performance. Equity analysts who report on the insurance industry and the company generally focus on this metric in their analyses. The company presents operating income so that all investors have what management believes to be a useful supplement to GAAP information.
· Statutory accounting rules: For public reporting, insurance companies prepare financial statements in accordance with GAAP. However, insurers also must calculate certain data according to statutory accounting rules as defined in the NAIC’s Accounting Practices and Procedures Manual, which may be, and has been, modified by various state insurance departments. Statutory data is publicly available, and various organizations use it to calculate aggregate industry data, study industry trends and compare insurance companies.
· Written premium: Under statutory accounting rules, property casualty written premium is the amount recorded for policies issued and recognized on an annualized basis at the effective date of the policy. Management analyzes trends in written premium to assess business efforts. Earned premium, used in both statutory and GAAP accounting, is calculated ratably over the policy term. The difference between written and earned premium is unearned premium.

 

3
 

 

Cincinnati Financial Corporation

Quick Reference - Fourth Quarter 2011

(all data shown is for the three months ended or as of December 31, 2011)

 

   12/31/2011   Year over year
change %		 
Revenues:          
           
Commercial lines net written premiums  $546    4 
Personal lines net written premiums   196    7 
Excess & surplus lines net written premiums   18    20 
Property casualty net written premiums   760    5 
Life and accident and health net written premiums   48    4 
Annuity net written premiums   16    (67)
Life, annuity and accident and health net written premiums   64    (32)
Commercial lines net earned premiums   567    4 
Personal lines net earned premiums   199    7 
Excess & surplus lines net earned premiums   19    46 
Property casualty net earned premiums   785    5 
Fee revenue   1    0 
Life and accident and health net earned premiums   42    11 
Investment income   132    2 
Realized gains on investments   (7)   nm 
Other revenue   2    (33)
Total revenues   955    2 
           
Income:          
           
Operating income  $139    23 
Net realized investment gains and losses   (5)   nm 
Net income   134    6 
           
Per share (diluted):          
           
Operating income  $0.86    23 
Net realized investment gains and losses   (0.03)   nm 
Net income   0.83    8 
Book value   31.16    1 
Weighted average shares   162,679,294    (1)

  

   12/31/2011   Year over year
change %		 
Benefits and expenses:          
           
Commercial lines loss and loss expenses  $284    (11)
Personal lines loss and loss expenses   145    12 
Excess & surplus lines loss and loss expenses   8    33 
Life and accident and health losses and policy benefits   51    24 
Underwriting, acquisition and insurance expenses   264    6 
Other operating expenses   3    (40)
Interest expenses   14    0 
Total benefits & expenses   769    1 
Income before income taxes   186    7 
Total income tax   52    8 
           
Balance Sheet:          
           
Fixed maturity investments  $8,779      
Equity securities   2,956      
Other invested assets   66      
Total invested assets  $11,801      
           
Equity in net assets of subsidiaries  $4,798      
           
Loss and loss expense reserves  $4,339      
Life policy reserves   2,214      
Total debt   894      
Shareholders' equity   5,055      
           
Key ratios:          
           
Commercial lines GAAP combined ratio   83.9%     
Personal lines GAAP combined ratio   99.5      
Excess & surplus lines GAAP combined ratio   74.8      
Property casualty GAAP combined ratio   87.6      
           
Commercial lines STAT combined ratio   83.7%     
Personal lines STAT combined ratio   103.9      
Excess & surplus lines STAT combined ratio   74.2      
Property casualty STAT combined ratio   88.5      
           
Value creation ratio   6.8%     

 

4
 

 

Cincinnati Financial Corporation

Consolidated Statements of Income for the Twelve Months Ended December 31, 2011

 

(In millions)  CFC   CONSOL P&C   CLIC   CFC-I   ELIM   Total 
Revenues:                              
Premiums earned:                              
Property casualty  $-   $3,248   $-   $-   $-   $3,248 
Life   -    -    213    -    -    213 
Accident health   -    -    7    -    -    7 
Premiums ceded   -    (219)   (55)   -    -    (274)
Total earned premium   -    3,029    165    -    -    3,194 
Investment income   41    350    134    -    -    525 
Realized gain (loss) on investments   15    72    (19)   1    1    70 
Fee revenue   -    4    -    -    -    4 
Other revenue   14    2    2    7    (15)   10 
Total revenues  $70   $3,457   $282   $8   $(14)  $3,803 
                               
Benefits & expenses:                              
Losses & policy benefits  $-   $2,613   $232   $-   $(1)  $2,844 
Reinsurance recoveries   -    (278)   (43)   -    1    (320)
Underwriting, acquisition and insurance expenses   -    974    62    -    -    1,036 
Other operating expenses   26    -    -    3    (16)   13 
Interest expense   53    -    -    1    -    54 
Total expenses  $79   $3,309   $251   $4   $(16)  $3,627 
                               
Income (loss) before income taxes  $(9)  $148   $31   $4   $2   $176 
                               
Provision (benefit) for income taxes:                              
Current operating income  $(5)  $(2)  $8   $1   $-   $2 
Capital gains/losses   5    25    (6)   1    -    25 
Deferred   (9)   (19)   10    1    -    (17)
Total provision (benefit) for income taxes  $(9)  $4   $12   $3   $-   $10 
                               
Operating income (loss)  $(10)  $97   $32   $1   $1   $121 
                               
Net income - current year  $-   $144   $19   $1   $2   $166 
                               
Net income - prior year  $4   $333   $38   $1   $1   $377 

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

 

5
 

 

Cincinnati Financial Corporation and Subsidiaries

Consolidated Statements of Income for the Three Months Ended December 31, 2011

 

(In millions)  CFC   CONSOL P&C   CLIC   CFC-I   ELIM   Total 
Revenues:                              
Premiums earned:                              
Property casualty  $-   $834   $-   $-   $-   $834 
Life   -    -    56    -    -    56 
Accident health   -    -    2    -    -    2 
Premiums ceded   -    (49)   (16)   -    -    (65)
Total earned premium   -    785    42    -    -    827 
Investment income   11    88    33    -    -    132 
Realized gain (loss) on investments   1    (16)   7    -    1    (7)
Fee revenue   -    1    -    -    -    1 
Other revenue   3    1    -    2    (4)   2 
Total revenues  $15   $859   $82   $2   $(3)  $955 
                               
Benefits & expenses:                              
Losses & policy benefits  $-   $424   $65   $-   $(1)  $488 
Reinsurance recoveries   -    13    (14)   -    1    - 
Underwriting, acquisition and insurance expenses   -    251    13    -    -    264 
Other operating expenses   7    -    -    -    (4)   3 
Interest expense   14    -    -    -    -    14 
Total expenses  $21   $688   $64   $-   $(4)  $769 
                               
Income (loss) before income taxes  $(6)  $171   $18   $2   $1   $186 
                               
Provision (benefit) for income taxes:                              
Current operating income  $7   $38   $(8)  $1   $-   $38 
Capital gains/losses   -    (6)   3    1    -    (2)
Deferred   (11)   15    12    -    -    16 
Total provision (benefit) for income taxes  $(4)  $47   $7   $2   $-   $52 
                               
Operating income (loss)  $(3)  $134   $7   $1   $-   $139 
                               
Net income - current year  $(2)  $124   $11   $-   $1   $134 
                               
Net income - prior year  $-   $111   $16   $-   $(1)  $126 

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

 

6
 

 

Cincinnati Financial Corporation

5-Year Net Income Reconciliation

 

(Dollars in millions except per share data)  Years ended December 31, 
   2011   2010   2009   2008   2007 
Net income  $166   $377   $432   $429   $855 
Net realized investment gains and losses   45    103    217    85    245 
Operating income   121    274    215    344    610 
Less catastrophe losses   (261)   (96)   (107)   (132)   (17)
Operating income before catastrophe losses  $382   $370   $322   $476   $627 
                          
Diluted per share data                         
Net income  $1.02   $2.31   $2.65   $2.62   $4.97 
Net realized investment gains and losses   0.28    0.63    1.33    0.52    1.43 
Operating income   0.74    1.68    1.32    2.10    3.54 
Less catastrophe losses   (1.60)   (0.59)   (0.66)   (0.81)   (0.10)
Operating income before catastrophe losses  $2.34   $2.27   $1.98   $2.91   $3.64 
                          
Return on equity                         
Return on average equity   3.3%   7.7%   9.7%   8.5%   13.4%
                          
Value creation ratio                         
Book value per share growth   0.8%   5.7%   13.6%   (27.9)%   (9.3)%
Shareholder dividend declared as a percentage of beginning book value   5.2    5.4    6.1    4.4    3.6 
Value creation ratio   6.0%   11.1%   19.7%   (23.5)%   (5.7)%
                          
Investment income                         
Investment income, net of expenses  $525   $518   $501   $537   $608 

 

* Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.

 

7
 

 

Cincinnati Financial Corporation Insurance Subsidiaries

Selected Balance Sheet Data

 

(In millions)  12/31/2011  9/30/2011  6/30/2011  3/31/2011  12/31/2010  9/30/2010  6/30/2010  3/31/2010
Cincinnati Insurance Consolidated                                        
  Fixed maturities (fair value)  $5,917   $5,975   $5,954   $5,850   $5,818   $5,924   $5,804   $5,759 
  Equities (fair value)   2,131    1,865    2,113    2,203    2,175    1,928    1,862    2,013 
  Short-term investments (fair value)   -    -    -    -    -    -    -    - 
  Fixed maturities - pretax net unrealized gain   461    439    388    320    314    494    363    287 
  Equities - pretax net unrealized gain   594    361    631    670    604    476    457    635 
  Loss and loss expense reserves - STAT   3,906    4,013    3,971    3,853    3,811    3,850    3,822    3,720 
  Equity GAAP   4,756    4,523    4,702    4,721    4,656    4,652    4,429    4,506 
  Surplus - STAT   3,747    3,513    3,743    3,833    3,777    3,641    3,537    3,692 
                                         
The Cincinnati Life Insurance Company                                        
  Fixed maturities (fair value)  $2,629   $2,652   $2,528   $2,449   $2,315   $1,867   $1,859   $2,055 
  Equities (fair value)   16    28    37    102    103    108    100    114 
  Short-term investments (fair value)   -    -    -    -    -    -    -    - 
  Fixed maturities - pretax net unrealized gain   195    197    174    149    148    215    154    110 
  Equities - pretax net unrealized gain (loss)   6    12    19    25    (4)   1    (7)   7 
  Equity - GAAP   774    769    783    756    748    775    729    700 
  Surplus - STAT   281    268    309    308    303    316    307    310 
                                         
    12/31/2009    9/30/2009    6/30/2009    3/31/2009    12/31/2008    9/30/2008    6/30/2008    3/31/2008 
Cincinnati Insurance Consolidated                                        
  Fixed maturities (fair value)  $5,663   $5,521   $5,521   $5,169   $4,309   $4,183   $4,304   $4,351 
  Equities (fair value)   1,910    2,477    2,477    2,247    2,432    3,210    3,537    4,186 
  Short-term investments (fair value)   5    10    10    11    19    162    -    51 
  Fixed maturities - pretax net unrealized gain (loss)   202    301    301    25    (108)   (132)   (33)   39 
  Equities - pretax net unrealized gain   592    590    590    487    627    1,016    1,187    1,831 
  Loss and loss expense reserves - STAT   3,661    3,673    3,673    3,686    3,498    3,509    3,535    3,448 
  Equity GAAP   4,405    4,283    4,283    3,795    3,667    3,947    4,011    4,498 
  Surplus - STAT   3,648    3,472    3,472    3,241    3,360    3,687    3,650    4,027 
                                         
The Cincinnati Life Insurance Company                                        
  Fixed maturities (fair value)  $1,927   $1,868   $1,868   $1,694   $1,467   $1,483   $1,551   $1,534 
  Equities (fair value)   108    119    119    103    122    200    265    307 
  Short-term investments (fair value)   -    1    1    1    -    -    -    - 
  Fixed maturities - pretax net unrealized gain (loss)   72    67    67    (43)   (115)   (79)   (35)   - 
  Equities - pretax net unrealized gain   1    11    11    (8)   (7)   61    92    127 
  Equity - GAAP   666    653    653    563    471    530    617    661 
  Short-term investments (fair value)   300    283    283    270    290    371    420    453 

 

8
 

 

Consolidated Cincinnati Insurance Companies

Statutory Statements of Income

 

   For the Three Months Ended December 31,  For the Twelve Months Ended December 31,
(Dollars in millions)  2011  2010  Change  % Change  2011  2010  Change  % Change
Underwriting income                                        
Net premiums written  $760   $721   $39    5   $3,099   $2,963   $136    5 
Unearned premiums increase   (25)   (24)   (1)   (4)   69    39    30    77 
Earned premiums  $785   $745   $40    5   $3,030   $2,924   $106    4 
                                         
Losses incurred  $346   $356   $(10)   (3)  $1,950   $1,652   $298    18 
Allocated loss expenses incurred   48    50    (2)   (4)   193    178    15    8 
Unallocated loss expenses incurred   43    48    (5)   (10)   192    185    7    4 
Other underwriting expenses incurred   245    236    9    4    971    960    11    1 
Workers compensation dividend incurred   5    4    1    25    16    14    2    14 
                                         
    Total underwriting deductions  $687   $694   $(7)   (1)  $3,322   $2,989   $333    11 
Net underwriting losses  $98   $51   $47    92   $(292)  $(65)  $(227)   (349)
                                         
Investment income                                        
Gross investment income earned  $90   $91   $(1)   (1)  $362   $360   $2    1 
Net investment income earned   90    90    —      0    357    355    2    1 
Net realized capital gains   (10)   6    (16)   nm    49    90    (41)   (46)
Net investment gains (excl. subs)  $80   $96   $(16)   (17)  $406   $445   $(39)   (9)
Dividend from subsidiary   —      —      —      nm    25    —      25    nm 
    Net investment gains (net of tax)  $80   $96   $(16)   (17)  $431   $445   $(14)   (3)
                                         
                                         
    Other income  $2   $1   $1    100   $6   $4   $2    50 
                                         
Net income before federal income taxes  $180   $148   $32    22   $145   $384   $(239)   (62)
Federal and foreign income taxes incurred  $38   $19   $19    100   $(4)  $53   $(57)   nm 
    Net income (statutory)  $142   $129   $13    10   $149   $331   $(182)   (55)

  

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.
*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.
*Excludes CSU Producers Resources Inc.

 

9
 

 

Consolidated Cincinnati Insurance Companies

Losses Incurred Detail

 

(In millions)  Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Consolidated                                                                      
New losses greater than $4,000,000  $21   $18   $6   $11   $15   $17   $11   $6   $16   $17   $34   $34   $56   $49 
New losses $1,000,000-$4,000,000   47    44    33    49    43    36    29    35    83    64    127    100    173    142 
New losses $250,000-$1,000,000   53    59    51    54    47    46    53    52    106    104    165    150    217    200 
Case reserve development above $250,000   68    57    51    34    45    66    30    37    85    68    142    134    210    178 
Large losses subtotal  $189   $178   $141   $148   $150   $165   $123   $130   $290   $253   $468   $418   $656   $569 
IBNR incurred   (11)   -    18    32    18    16    11    12    51    23    51    41    39    59 
Catastrophe losses incurred   (25)   90    289    41    5    28    100    15    330    114    419    143    395    148 
Remaining incurred   194    234    218    213    184    228    239    228    430    468    664    694    859    876 
Total losses incurred  $347   $502   $666   $434   $357   $437   $473   $385   $1,101   $858   $1,602   $1,296   $1,949   $1,652 
Commercial Lines                                                                      
New losses greater than $4,000,000  $21   $18   $6   $11   $10   $17   $11   $6   $16   $17   $34   $34   $56   $44 
New losses $1,000,000-$4,000,000   38    40    30    40    38    28    22    32    70    54    110    82    148    120 
New losses $250,000-$1,000,000   35    45    39    37    31    37    40    40    77    80    122    117    156    148 
Case reserve development above $250,000   58    52    46    31    41    62    29    32    77    61    129    123    187    164 
Large losses subtotal  $152   $155   $121   $119   $120   $144   $102   $110   $240   $212   $395   $356   $547   $476 
IBNR incurred   (5)   1    11    24    19    10    7    9    35    17    36    27    31    45 
Catastrophe losses incurred   (18)   58    157    26    5    17    57    10    183    66    241    84    223    89 
Remaining incurred   101    130    124    131    97    141    152    152    255    304    385    444    486    542 
Total losses incurred  $230   $344   $413   $300   $241   $312   $318   $281   $713   $599   $1,057   $911   $1,287   $1,152 
Personal Lines                                                                      
New losses greater than $4,000,000  $-   $-   $-   $-   $5   $-   $-   $-   $-   $-   $-   $-   $-   $5 
New losses $1,000,000-$4,000,000   9    4    3    9    5    5    7    3    13    10    17    15    25    20 
New losses $250,000-$1,000,000   13    11    10    14    14    7    10    10    23    20    35    27    48    41 
Case reserve development above $250,000   8    4    4    3    3    4    1    3    7    4    11    8    19    11 
Large losses subtotal  $30   $19   $17   $26   $27   $16   $18   $16   $43   $34   $63   $50   $92   $77 
IBNR incurred   (4)   (3)   4    4    1    4    2    1    9    2    6    7    1    8 
Catastrophe losses incurred   (6)   32    131    14    (1)   11    43    5    145    48    177    59    171    58 
Remaining incurred   90    103    91    80    86    84    83    75    170    159    273    243    364    328 
Total losses incurred  $110   $151   $243   $124   $113   $115   $146   $97   $367   $243   $519   $359   $628   $471 
Excess & Surplus Lines                                                                      
New losses greater than $4,000,000  $-   $-   $-   $-   $-   $-   $-   $-   $-   $-   $-   $-   $-   $- 
New losses $1,000,000-$4,000,000   -    -    -    -    -    3    -    -    -    -    -    3    -    3 
New losses $250,000-$1,000,000   5    3    2    3    2    2    3    2    6    5    8    6    13    9 
Case reserve development above $250,000   2    1    1    -    1    -    -    2    1    2    2    3    4    3 
Large losses subtotal  $7   $4   $3   $3   $3   $5   $3   $4   $7   $7   $10   $12   $17   $15 
IBNR incurred   (2)   2    3    4    (2)   2    2    2    7    5    9    7    7    4 
Catastrophe losses incurred   (1)   -    1    1    1    -    -    -    2    -    1    -    1    1 
Remaining incurred   3    1    3    2    1    3    4    1    5    4    6    7    9    9 
Total losses incurred  $7   $7   $10   $10   $3   $10   $9   $7   $21   $16   $26   $26   $34   $29 

 

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

 

10
 

 

Cincinnati Insurance Companies

Loss Ratio Detail

 

   Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Consolidated                                                                      
New losses greater than $4,000,000   2.8%   2.3%   0.8%   1.4%   2.0%   2.3%   1.5%   0.8%   1.1%   1.2%   1.5%   1.6%   1.9%   1.7%
New losses $1,000,000-$4,000,000   5.7    5.8    4.6    6.7    5.7    4.8    4.0    4.9    5.6    4.6    5.7    4.6    5.7    4.9 
New losses $250,000-$1,000,000   6.6    7.7    7.0    7.3    6.7    6.2    7.2    7.4    7.2    7.2    7.4    6.9    7.2    6.8 
Case reserve development above $250,000   8.7    7.5    6.9    4.6    5.9    8.9    4.2    5.3    5.8    4.7    6.3    6.2    6.9    6.1 
Large losses subtotal   23.8%   23.3%   19.3%   20.0%   20.3%   22.2%   16.9%   18.4%   19.7%   17.7%   20.9%   19.3%   21.7%   19.5%
IBNR incurred   (1.2)   0.1    2.5    4.4    2.5    2.3    1.6    1.7    3.4    1.6    2.3    1.8    1.4    2.0 
Total catastrophe losses incurred   (3.0)   11.7    39.6    5.5    0.7    3.8    13.6    2.1    22.3    7.9    18.7    6.5    13.1    5.1 
Remaining incurred   24.5    30.3    29.8    28.5    24.4    30.5    33.0    32.1    29.2    32.6    29.6    31.9    28.2    30.0 
Total loss ratio   44.1%   65.4%   91.2%   58.4%   47.9%   58.8%   65.1%   54.3%   74.6%   59.8%   71.5%   59.5%   64.4%   56.6%
Commercial Lines                                                                      
New losses greater than $4,000,000   3.9%   3.2%   1.1%   1.9%   1.8%   3.1%   2.0%   1.1%   1.5%   1.6%   2.1%   2.1%   2.6%   2.0%
New losses $1,000,000-$4,000,000   6.5    7.3    5.5    7.5    7.0    5.1    4.1    6.1    6.5    5.1    6.8    5.1    6.7    5.6 
New losses $250,000-$1,000,000   6.0    8.1    7.4    6.9    5.8    6.7    7.4    7.7    7.1    7.5    7.5    7.3    7.1    6.9 
Case reserve development above $250,000   10.3    9.3    8.7    5.7    7.4    11.4    5.4    6.2    7.2    5.8    7.9    7.7    8.5    7.6 
Large losses subtotal   26.7%   27.9%   22.7%   22.0%   22.0%   26.3%   18.9%   21.1%   22.3%   20.0%   24.3%   22.2%   24.9%   22.1%
IBNR incurred   (0.8)   0.2    2.0    4.4    3.3    1.9    1.3    1.8    3.3    1.6    2.2    1.7    1.4    2.1 
Total catastrophe losses incurred   (3.2)   10.4    29.6    4.9    1.0    3.2    10.5    1.8    17.1    6.2    14.7    5.2    10.2    4.1 
Remaining incurred   17.8    23.3    23.3    24.2    17.8    25.7    28.3    29.0    23.7    28.6    23.6    27.6    22.1    25.2 
Total loss ratio   40.5%   61.8%   77.6%   55.5%   44.1%   57.1%   59.0%   53.7%   66.4%   56.4%   64.8%   56.7%   58.6%   53.5%
Personal Lines                                                                      
New losses greater than $4,000,000   0.0%   0.0%   0.0%   0.0%   2.7%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.7%
New losses $1,000,000-$4,000,000   3.9    2.2    2.0    4.8    2.3    2.8    4.4    1.5    3.5    3.0    3.0    2.9    3.3    2.8 
New losses $250,000-$1,000,000   6.9    6.0    5.4    7.1    7.8    4.0    5.6    5.5    6.2    5.6    6.1    5.0    6.3    5.7 
Case reserve development above $250,000   4.2    1.9    2.3    1.7    1.8    2.0    0.6    1.9    2.0    1.2    2.0    1.5    2.5    1.6 
Large losses subtotal   15.0%   10.1%   9.7%   13.6%   14.6%   8.8%   10.6%   8.9%   11.7%   9.8%   11.1%   9.4%   12.1%   10.8%
IBNR incurred   (1.6)   (1.5)   2.4    2.3    0.8    2.4    0.9    0.3    2.3    0.6    1.0    1.2    0.3    1.1 
Total catastrophe losses incurred   (3.0)   16.4    73.0    7.4    (0.3)   6.0    23.8    3.0    39.2    13.5    31.4    11.0    22.5    8.1 
Remaining incurred   44.7    53.5    50.6    41.6    45.3    46.0    47.1    43.1    46.0    45.1    48.6    45.4    47.6    45.4 
Total loss ratio   55.1%   78.5%   135.7%   64.9%   60.4%   63.2%   82.4%   55.3%   99.2%   69.0%   92.1%   67.0%   82.5%   65.4%
Excess & Surplus Lines                                                                      
New losses greater than $4,000,000   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%
New losses $1,000,000-$4,000,000   0.0    0.0    0.0    0.0    0.0    19.4    0.0    0.0    0.0    0.0    0.0    7.1    0.0    5.1 
New losses $250,000-$1,000,000   22.6    13.5    12.4    25.8    17.5    16.7    18.8    16.9    18.7    19.9    16.8    18.7    18.4    18.4 
Case reserve development above $250,000   7.6    9.3    2.5    2.7    1.8    2.5    2.7    20.7    2.6    11.6    5.1    13.1    5.8    14.2 
Large losses subtotal   30.2%   22.8%   14.9%   28.5%   19.3%   38.6%   21.5%   37.6%   21.3%   31.5%   21.9%   38.9%   24.2%   37.7%
IBNR incurred   (10.4)   12.5    17.1    26.1    (13.2)   14.9    23.5    18.4    21.3    23.7    18.1    18.5    10.1    9.6 
Total catastrophe losses incurred   (0.4)   2.4    4.2    2.8    (0.1)   4.6    0.0    0.0    3.6    0.0    3.1    1.7    2.2    1.2 
Remaining incurred   14.5    3.4    13.4    20.2    14.7    14.2    32.5    9.4    16.6    18.3    11.8    18.8    12.5    17.4 
Total loss ratio   33.9%   41.1%   49.6%   77.6%   20.7%   72.3%   77.5%   65.4%   62.8%   73.5%   54.9%   77.9%   49.0%   65.9%
*Certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.
*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.

  

11
 

 

Cincinnati Insurance Companies

Loss Claim Count Detail

 

   Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Consolidated                                                                      
New losses greater than $4,000,000   4    3    1    2    3    3    2    1    3    3    6    6    10    9 
New losses $1,000,000-$4,000,000   23    25    18    30    23    20    18    19    48    37    73    57    96    80 
New losses $250,000-$1,000,000   115    129    122    122    123    112    117    123    244    240    373    352    488    475 
Case reserve development above $250,000   108    84    81    68    71    101    73    77    149    143    233    237    341    308 
Large losses total   250    241    222    222    220    236    210    220    444    423    685    652    935    872 
Commercial Lines                                                                      
New losses greater than $4,000,000   4    3    1    2    2    3    2    1    3    3    6    6    10    8 
New losses $1,000,000-$4,000,000   18    21    15    24    20    15    12    17    39    29    60    44    78    64 
New losses $250,000-$1,000,000   76    98    97    85    79    88    88    95    182    183    280    271    356    350 
Case reserve development above $250,000   90    72    70    59    70    93    70    67    129    137    201    230    291    300 
Large losses total   188    194    183    170    171    199    172    180    353    352    547    551    735    722 
Personal Lines                                                                      
New losses greater than $4,000,000   -    -    -    -    1    -    -    -    -    -    -    -    -    1 
New losses $1,000,000-$4,000,000   5    4    3    6    3    3    6    2    9    8    13    11    18    14 
New losses $250,000-$1,000,000   31    26    20    29    38    19    24    24    49    48    75    67    106    105 
Case reserve development above $250,000   15    9    10    8    -    7    2    5    18    7    27    14    42    23 
Large losses total   51    39    33    43    42    29    32    31    76    63    115    92    166    143 
Excess & Surplus Lines                                                                      
New losses greater than $4,000,000   -    -    -    -    -    -    -    -    -    -    -    -    -    - 
New losses $1,000,000-$4,000,000   -    -    -    -    -    2    -    -    -    -    -    2    -    2 
New losses $250,000-$1,000,000   8    5    5    8    6    5    5    4    13    9    18    14    26    20 
Case reserve development above $250,000   3    3    1    1    1    1    1    5    2    6    5    7    8    8 
Large losses total   11    8    6    9    7    8    6    9    15    15    23    23    34    30 

 

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

*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.

 

12
 

 

Consolidated Cincinnati Insurance Companies

Agency Direct Written Premiums by Agency State by Line of Business for the Twelve Months Ended December 31, 2011

 

(Dollars in millions)  Commercial Lines   Personal Lines   E&S   Consolidated   Comm'l   Personal   E & S   Consol 
Risk  Comm   Comm   Comm   Workers'   Spec   Surety &   Mach. &   Personal   Home   Other   All   2011   2010   Change   Change   Change   Change 
State  Casualty   Property   Auto   Comp   Packages   Exec Risk   Equipment   Auto   Owner   Personal   Lines   Total   Total   %   %   %   % 
                                                                     
 OH  $126.2   $93.6   $62.4   $-   $20.2   $22.7   $5.7   $123.9   $95.0   $33.2   $9.6   $592.5   $581.2    (0.1)   3.8    32.7    1.9 
 IL   55.6    42.1    27.6    53.7    12.0    7.4    3.2    29.5    23.5    7.6    5.2    267.3    260.4    0.6    9.4    12.1    2.7 
 IN   43.4    36.1    21.9    25.7    8.0    7.1    2.6    31.5    30.9    8.1    7.9    223.1    207.5    5.7    10.3    20.4    7.5 
 PA   45.9    31.3    30.5    46.3    10.1    6.2    2.2    8.6    6.8    3.8    3.3    195.0    184.4    5.0    10.9    19.3    5.8 
 GA   24.9    22.6    17.3    10.9    7.7    5.9    1.4    33.4    31.8    9.3    5.2    170.5    164.6    0.7    6.4    17.1    3.5 
 NC   32.2    29.3    19.2    18.0    14.2    8.2    2.1    17.1    12.3    5.4    3.0    161.2    149.0    1.7    37.0    31.1    8.1 
 MI   32.4    22.4    14.9    16.9    10.0    6.4    2.0    17.7    17.0    3.9    3.4    147.0    134.0    5.2    22.7    24.1    9.7 
 KY   21.2    22.8    14.5    3.1    6.2    4.0    1.2    24.7    19.8    5.4    3.0    125.9    118.2    4.5    8.6    27.7    6.5 
 VA   28.6    23.1    19.5    17.0    4.8    6.3    1.5    9.8    8.4    3.1    2.7    124.8    123.2    0.4    2.7    27.4    1.3 
 TN   22.4    21.4    14.4    8.6    10.1    5.5    1.5    11.5    12.3    4.2    1.6    113.5    105.6    4.6    16.9    10.5    7.5 
 AL   16.6    19.7    8.4    1.0    8.7    2.6    1.1    17.3    27.5    6.2    3.5    112.5    103.7    7.2    7.3    67.6    8.4 
 WI   24.0    17.0    10.5    24.5    4.0    2.9    1.7    8.9    8.2    3.6    2.4    107.7    104.4    2.1    5.1    30.2    3.2 
 MO   20.5    20.7    12.8    11.9    6.4    2.4    1.5    4.7    6.6    1.5    4.2    93.3    90.7    (0.4)   17.4    29.5    2.8 
 MN   19.5    16.9    8.0    7.6    3.5    2.5    1.4    9.0    8.6    3.2    2.3    82.5    75.0    6.3    20.4    25.9    10.0 
 IA   18.3    14.3    8.7    19.3    4.0    3.4    1.3    4.4    4.7    1.8    1.3    81.6    82.2    (3.5)   14.9    54.3    (0.8)
 FL   21.4    20.0    8.1    1.3    1.7    2.2    0.9    8.8    11.7    2.3    2.5    80.9    83.5    (1.6)   (9.0)   32.2    (3.0)
 TX   20.8    16.3    12.7    2.3    0.8    1.5    1.3    -    -    -    6.5    62.1    40.4    51.3    nm    77.8    53.6 
 NY   28.3    10.5    11.0    2.7    1.2    2.8    0.8    -    0.1    0.6    1.0    58.9    57.9    0.4    nm    26.1    1.7 
 MD   13.0    7.6    11.2    9.8    1.3    2.3    0.5    1.6    2.4    0.8    1.3    51.7    47.5    5.9    46.8    4.6    8.7 
 AR   7.9    11.7    5.4    3.0    5.5    1.8    0.8    4.0    4.6    1.4    1.6    47.7    44.1    3.2    25.8    33.1    8.0 
 KS   7.3    8.7    4.5    7.4    3.2    1.7    0.6    4.7    6.0    1.4    0.7    46.4    45.9    (1.2)   6.7    36.4    1.2 
 SC   10.7    8.2    6.7    3.5    2.3    2.0    0.4    2.6    1.9    0.7    0.8    39.8    39.8    (4.6)   50.3    (9.6)   — 
 UT   10.5    5.5    6.1    0.1    0.8    2.5    0.4    5.6    2.4    0.4    1.2    35.5    30.4    7.1    64.2    4.5    16.6 
 `   10.5    6.7    9.0    1.6    0.9    1.1    0.5    1.8    1.6    0.6    1.3    35.4    31.5    8.2    44.6    50.5    12.5 
 MT   10.7    6.7    5.8    -    1.1    0.6    0.5    2.0    1.7    0.4    0.4    29.8    29.1    (0.7)   25.2    17.2    2.4 
 NE   6.3    6.1    3.1    6.3    1.4    1.3    0.5    0.7    1.0    0.3    0.9    28.0    27.5    0.0    4.7    72.5    1.7 
 ID   7.8    5.5    5.1    0.1    0.8    1.1    0.4    1.8    1.1    0.3    0.5    24.6    21.8    7.3    57.0    32.0    12.5 
 WV   6.2    5.4    4.9    1.5    2.2    1.3    0.4    -    0.6    0.1    1.8    24.4    22.1    9.6    (3.4)   31.9    10.6 
 VT   4.6    3.7    2.6    5.9    1.0    1.3    0.3    1.1    1.3    0.4    0.7    22.8    23.0    (4.5)   21.1    39.6    (1.0)
 CO   5.8    5.3    4.1    0.4    -    0.9    0.4    -    0.3    -    0.6    17.7    11.6    54.4    12.3    30.4    52.4 
 ND   5.3    4.1    2.9    -    1.2    0.8    0.3    0.6    0.6    0.2    0.3    16.2    14.8    8.4    12.7    32.4    9.1 
 NH   2.9    2.2    1.2    2.7    0.6    0.9    0.2    1.0    1.1    0.4    0.5    13.7    12.4    7.5    27.5    11.8    10.9 
 DE   2.7    2.6    1.8    2.6    0.3    0.3    0.2    -    -    -    -    10.6    9.8    7.6    7.7    nm    7.6 
 WA   3.8    2.0    2.7    -    -    0.5    0.2    -    -    -    1.0    10.3    7.6    34.5    29.4    53.3    36.0 
 SD   2.3    2.0    1.4    2.4    0.5    0.8    0.2    -    -    -    0.3    9.9    9.1    7.7    7.2    23.4    8.1 
 NM   2.7    1.3    1.6    0.8    0.2    1.0    0.1    -    -    -    0.4    8.0    7.4    9.0    87.4    (18.1)   7.4 
 OR   1.5    0.8    1.2    0.1    -    0.4    0.1    -    -    -    0.7    4.7    0.6    nm    26.4    nm    nm 
 WY   1.6    1.3    0.6    -    -    0.2    0.1    -    -    -    0.3    4.0    1.7    128.4    6.4    254.5    133.9 
 CT   0.5    0.5    0.5    0.3    -    0.1    -    -    -    0.1    0.1    2.2    0.5    303.5    7.8    nm    307.1 
All
Other		   2.6    2.4    2.2    3.9    0.6    1.5    0.1    -    0.1    -    0.3    13.7    12.0    12.4    16.5    nm    14.6 
 Total  $729.8   $580.5   $406.9   $322.6   $157.8   $124.0   $40.4   $388.6   $351.6   $110.4   $84.5   $3,297.3   $3,116.4    3.7    9.8    30.8    5.8 
Other
Direct		   -    1.0    -    3.4    -    -    -    0.1    0.2    -    -    4.7    4.4    6.0    18.6    nm    6.7 
Total
Direct		  $729.8   $581.5   $406.9   $326.0   $157.8   $124.0   $40.4   $388.7   $351.8   $110.4   $84.5   $3,302.0   $3,120.8    3.7    9.8    30.8    5.8 

 

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

 

13
 

 

Quarterly Property Casualty Data - Commercial Lines

 

(Dollars in millions)  Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Commercial casualty:                                                                      
Written premiums  $169   $175   $177   $189   $166   $161   $168   $191   $366   $359   $541   $520   $710   $686 
Earned premiums   179    180    180    172    175    182    172    164    352    336    532    518    711    693 
Current accident year before catastrophe losses   70.4%   64.1%   66.0%   78.8%   100.3%   75.0%   73.6%   71.0%   72.3%   72.4%   69.5%   73.3%   69.7%   80.1%
Current accident year catastrophe losses   -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Prior accident years before catastrophe losses   11.6    (26.7)   (27.2)   (32.3)   (50.5)   (18.5)   (25.3)   (12.7)   (29.7)   (19.2)   (28.7)   (18.9)   (18.5)   (26.9)
Prior accident years catastrophe losses   -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Total loss and loss expense ratio   82.0%   37.4%   38.8%   46.5%   49.8%   56.5%   48.3%   58.3%   42.6%   53.2%   40.8%   54.4%   51.2%   53.2%
Commercial property:                                                                      
Written premiums  $125   $132   $123   $132   $122   $122   $124   $129   $255   $253   $387   $375   $512   $497 
Earned premiums   128    128    115    126    124    123    121    121    241    242    369    365    497    489 
Current accident year before catastrophe losses   31.1%   77.6%   76.8%   64.8%   54.6%   60.5%   56.5%   62.2%   70.5%   59.4%   73.0%   59.7%   62.1%   58.4%
Current accident year catastrophe losses   (5.3)   33.8    78.8    15.2    2.0    10.3    39.1    10.6    45.6    24.8    41.5    20.0    29.4    15.4 
Prior accident years before catastrophe losses   (17.5)   (4.9)   (1.7)   8.0    (1.2)   1.3    (3.1)   0.5    3.4    (1.4)   0.5    (0.4)   (4.1)   (0.6)
Prior accident years catastrophe losses   (5.3)   3.7    1.1    3.4    0.3    (1.3)   (2.4)   (2.3)   2.3    (2.3)   2.8    (2.0)   0.7    (1.4)
Total loss and loss expense ratio   3.0%   110.2%   155.0%   91.4%   55.7%   70.8%   90.1%   71.0%   121.8%   80.5%   117.8%   77.3%   88.1%   71.8%
Commercial auto:                                                                      
Written premiums  $100   $96   $102   $107   $92   $91   $99   $103   $209   $202   $305   $293   $405   $385 
Earned premiums   102    100    96    96    97    96    96    95    192    191    292    287    394    384 
Current accident year before catastrophe losses   81.3%   67.8%   72.6%   76.5%   75.5%   67.1%   69.5%   68.1%   74.5%   68.8%   72.2%   68.2%   74.5%   70.0%
Current accident year catastrophe losses   (1.5)   2.5    6.2    0.3    0.4    (0.5)   4.4    -    3.3    2.2    3.0    1.3    1.9    1.1 
Prior accident years before catastrophe losses   3.1    3.5    (11.0)   (24.2)   (20.8)   (5.3)   (0.8)   (6.1)   (17.6)   (3.4)   (10.3)   (4.0)   (6.9)   (8.2)
Prior accident years catastrophe losses   -    (0.1)   (0.1)   (0.4)   -    -    (0.2)   (1.0)   (0.2)   (0.6)   (0.2)   (0.4)   (0.2)   (0.3)
Total loss and loss expense ratio   82.9%   73.7%   67.7%   52.2%   55.1%   61.3%   72.9%   61.0%   60.0%   67.0%   64.7%   65.1%   69.3%   62.6%
Workers' compensation:                                                                      
Written premiums  $78   $71   $73   $90   $75   $68   $72   $95   $163   $167   $234   $235   $312   $310 
Earned premiums   83    78    81    76    81    77    79    74    157    153    235    230    318    311 
Current accident year before catastrophe losses   64.5%   119.2%   108.5%   95.6%   92.5%   127.5%   103.2%   103.3%   102.3%   103.2%   107.9%   111.3%   96.6%   106.5%
Current accident year catastrophe losses   -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Prior accident years before catastrophe losses   (58.2)   (28.4)   (28.9)   (4.1)   (9.8)   (15.3)   (13.3)   (11.9)   (16.9)   (12.6)   (20.7)   (13.5)   (30.5)   (12.6)
Prior accident years catastrophe losses   -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Total loss and loss expense ratio   6.3%   90.8%   79.6%   91.5%   82.7%   112.2%   89.9%   91.4%   85.4%   90.6%   87.2%   97.8%   66.1%   93.9%
Specialty package:                                                                      
Written premiums  $37   $36   $27   $37   $37   $37   $36   $39   $64   $75   $100   $112   $137   $149 
Earned premiums   38    36    27    37    37    38    37    37    64    74    100    112    138    149 
Current accident year before catastrophe losses   42.8%   91.6%   93.8%   62.7%   47.1%   60.8%   66.1%   70.5%   75.7%   68.2%   81.5%   65.8%   70.9%   61.1%
Current accident year catastrophe losses   (3.0)   25.7    223.8    9.2    7.2    18.9    23.0    8.5    99.4    15.9    72.7    16.8    51.8    14.5 
Prior accident years before catastrophe losses   (20.6)   19.6    1.8    15.1    (19.1)   9.6    (0.7)   17.4    9.5    8.3    13.2    8.7    3.9    1.8 
Prior accident years catastrophe losses   0.8    (0.9)   (0.7)   (1.5)   (0.3)   (0.2)   (2.8)   (7.4)   (1.1)   (5.1)   (1.1)   (3.4)   (0.6)   (2.6)
Total loss and loss expense ratio   20.0%   136.0%   318.7%   85.5%   34.9%   89.1%   85.6%   89.0%   183.5%   87.3%   166.3%   87.9%   126.0%   74.8%
Surety and executive risk:                                                                      
Written premiums  $26   $28   $26   $24   $23   $23   $24   $23   $50   $47   $78   $70   $104   $93 
Earned premiums   27    26    25    25    24    22    25    24    50    49    76    71    103    95 
Current accident year before catastrophe losses   96.4%   54.7%   47.9%   54.7%   75.7%   91.2%   53.9%   47.1%   51.3%   50.5%   52.4%   63.4%   63.7%   66.5%
Current accident year catastrophe losses   -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Prior accident years before catastrophe losses   38.8    32.5    19.4    41.4    43.8    (17.3)   (17.7)   4.0    30.2    (6.9)   31.0    (10.2)   33.0    3.4 
Prior accident years catastrophe losses   -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Total loss and loss expense ratio   135.2%   87.2%   67.3%   96.1%   119.5%   73.9%   36.2%   51.1%   81.5%   43.6%   83.4%   53.2%   96.7%   69.9%
Machinery and equipment:                                                                      
Written premiums  $11   $9   $9   $9   $9   $9   $9   $9   $18   $17   $27   $26   $38   $35 
Earned premiums   10    9    9    8    8    9    8    8    17    16    26    25    36    33 
Current accident year before catastrophe losses   10.0%   38.7%   32.0%   28.2%   21.4%   20.4%   48.3%   23.0%   30.1%   35.8%   33.1%   30.6%   26.9%   28.2%
Current accident year catastrophe losses   (2.3)   2.4    0.2    0.2    (0.3)   (1.7)   1.7    0.3    0.2    1.0    0.9    0.1    0.1    - 
Prior accident years before catastrophe losses   (7.8)   (1.6)   6.9    8.5    (3.3)   (6.8)   1.8    (15.9)   7.7    (6.9)   4.5    (6.9)   1.2    (6.0)
Prior accident years catastrophe losses   -    -    -    -    -    -    0.1    (1.3)   -    (0.6)   -    (0.4)   -    (0.3)
Total loss and loss expense ratio   (0.1)%   39.5%   39.1%   36.9%   17.8%   11.9%   51.9%   6.1%   38.0%   29.3%   38.5%   23.4%   28.2%   21.9%

 

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

14
 

 

Quarterly Property Casualty Data - Personal Lines

 

(Dollars in millions)  Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
                                                         
Personal auto:                                                                      
Written premiums  $92   $107   $104   $82   $84   $98   $97   $73   $186   $170   $293   $268   $385   $352 
Earned premiums   95    94    90    89    87    86    83    81    179    164    273    250    368    337 
Current accident year before catastrophe losses   103.4%   66.6%   67.3%   68.2%   81.0%   68.3%   70.8%   62.8%   67.7%   66.8%   67.4%   67.3%   76.7%   70.9%
Current accident year catastrophe losses   (0.9)   1.5    10.3    1.3    -    0.2    4.2    0.1    5.8    2.2    4.3    1.5    3.0    1.1 
Prior accident years before catastrophe losses   4.8    1.7    (5.0)   (5.3)   (2.4)   (0.3)   (1.2)   (4.5)   (5.1)   (2.8)   (2.8)   (1.9)   (0.8)   (2.1)
Prior accident years catastrophe losses   -    (0.1)   (0.1)   (0.4)   (0.1)   (0.1)   (0.2)   (0.2)   (0.2)   (0.2)   (0.2)   (0.2)   (0.2)   (0.1)
Total loss and loss expense ratio   107.3%   69.7%   72.5%   63.8%   78.5%   68.1%   73.6%   58.2%   68.2%   66.0%   68.7%   66.7%   78.7%   69.8%
                                                                       
Homeowner:                                                                      
Written premiums  $79   $87   $78   $68   $75   $83   $81   $60   $146   $141   $233   $224   $312   $299 
Earned premiums   78    74    66    76    74    72    72    70    142    142    216    214    294    289 
Current accident year before catastrophe losses   62.8%   86.2%   97.8%   71.4%   78.0%   72.0%   70.2%   67.2%   83.6%   68.6%   84.5%   69.8%   78.7%   72.0%
Current accident year catastrophe losses   (5.3)   40.3    175.4    22.1    0.9    15.5    54.2    7.2    92.7    30.9    74.7    25.8    53.6    19.3 
Prior accident years before catastrophe losses   (13.3)   (6.1)   (0.5)   2.6    (5.0)   (0.9)   0.8    1.9    1.1    1.3    (1.4)   0.6    (4.5)   (0.9)
Prior accident years catastrophe losses   (0.2)   (1.8)   (0.1)   (5.8)   (1.8)   (2.1)   (1.4)   (0.3)   (3.1)   (0.8)   (2.7)   (1.3)   (2.0)   (1.4)
Total loss and loss expense ratio   44.0%   118.6%   272.6%   90.3%   72.1%   84.5%   123.8%   76.0%   174.3%   100.0%   155.1%   94.9%   125.8%   89.0%
                                                                       
Other personal:                                                                      
Written premiums  $25   $28   $28   $23   $24   $27   $26   $22   $51   $48   $79   $75   $104   $99 
Earned premiums   26    25    24    25    24    24    24    23    49    47    74    71    100    95 
Current accident year before catastrophe losses   52.7%   87.0%   88.2%   55.9%   60.9%   70.1%   69.1%   56.1%   71.9%   62.6%   77.0%   65.1%   70.7%   64.1%
Current accident year catastrophe losses   (0.8)   10.4    34.5    3.8    1.3    4.7    5.9    3.2    19.0    4.6    16.1    4.7    11.7    3.8 
Prior accident years before catastrophe losses   (18.8)   (36.4)   (18.4)   2.3    (29.7)   (24.1)   (21.4)   (7.4)   (7.9)   (14.4)   (17.6)   (17.7)   (17.9)   (20.8)
Prior accident years catastrophe losses   (0.1)   (0.6)   (0.5)   (0.8)   (0.4)   (0.4)   (0.6)   (0.4)   (0.6)   (0.5)   (0.6)   (0.5)   (0.5)   (0.5)
Total loss and loss expense ratio   33.0%   60.4%   103.8%   61.2%   32.1%   50.3%   53.0%   51.5%   82.4%   52.3%   74.9%   51.6%   64.0%   46.6%

* 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.

 

15
 

 

Cincinnati Insurance Companies Consolidated

Loss and Loss Expense Analysis

 

                       Change in   Total                 
       Paid       Change in   Change in   loss   change           Loss     
   Paid   loss   Total   case   IBNR   expense   in   Case   IBNR   expense   Total 
 (In millions)  losses   expense   paid   reserves   reserves   reserves   reserves   incurred   incurred   incurred   incurred 
Gross loss and loss expense incurred at December 31, 2011                                    
Commercial casualty  $275   $129   $404   $(91)  $43   $3   $(45)  $184   $43   $132   $359 
Commercial property   423    29    452    60    22    4    86    483    22    33    538 
Commercial auto   246    37    283    3    (11)   2    (6)   249    (11)   39    277 
Workers' compensation   219    46    265    (10)   (1)   (39)   (50)   209    (1)   7    215 
Specialty packages   174    19    193    21    7    22    50    195    7    41    243 
Surety and executive risk   64    18    82    (4)   3    20    19    60    3    38    101 
Machinery and equipment   10    1    11    -    -    -    -    10    -    1    11 
Total commercial lines   1,411    279    1,690    (21)   63    12    54    1,390    63    291    1,744 
                                                        
Personal auto   235    38    273    2    (2)   24    24    237    (2)   62    297 
Homeowners   397    28    425    4    19    9    32    401    19    37    457 
Other personal   58    4    62    5    9    (4)   10    63    9    -    72 
Total personal lines   690    70    760    11    26    29    66    701    26    99    826 
                                                        
Commercial casualty & property   15    5    20    15    7    3    25    30    7    8    45 
Total excess & surplus lines   15    5    20    15    7    3    25    30    7    8    45 
Total property casualty  $2,116   $354   $2,470   $5   $96   $44   $145   $2,121   $96   $398   $2,615 
                                                        
Ceded loss and loss expense incurred at December 31, 2011                                                        
Commercial casualty  $8   $1   $9   $(14)  $-   $-   $(14)  $(6)  $-   $1   $(5)
Commercial property   65    2    67    27    7    -    34    92    7    2    101 
Commercial auto   3    -    3    -    -    -    -    3    -    -    3 
Workers' compensation   9    -    9    (3)   (1)   -    (4)   6    (1)   -    5 
Specialty packages   39    1    40    24    4    -    28    63    4    1    68 
Surety and executive risk   14    2    16    (14)   -    -    (14)   -    -    2    2 
Machinery and equipment   -    -    -    -    -    -    -    -    -    -    - 
Total commercial lines   138    6    144    20    10    -    30    158    10    6    174 
                                                        
Personal auto   6    1    7    -    1    -    1    6    1    1    8 
Homeowners   68    4    72    3    13    -    16    71    13    4    88 
Other personal   5    1    6    -    1    -    1    5    1    1    7 
Total personal lines   79    6    85    3    15    -    18    82    15    6    103 
                                                        
Commercial casualty & property   -    -    -    1    2    -    3    1    2    -    3 
Total excess & surplus lines   -    -    -    1    2    -    3    1    2    -    3 
Total property casualty  $217   $12   $229   $24   $27   $-   $51   $241   $27   $12   $280 
                                                        
Net loss and loss expense incurred at December 31, 2011                                                       
\  $267   $128   $395   $(77)  $43   $3   $(31)  $190   $43   $131   $364 
Commercial property   358    27    385    33    15    4    52    391    15    31    437 
Commercial auto   243    37    280    3    (11)   2    (6)   246    (11)   39    274 
Workers' compensation   210    46    256    (7)   -    (39)   (46)   203    -    7    210 
Specialty packages   135    18    153    (3)   3    22    22    132    3    40    175 
Surety and executive risk   50    16    66    10    3    20    33    60    3    36    99 
Machinery and equipment   10    1    11    -    -    -    -    10    -    1    11 
Total commercial lines   1,273    273    1,546    (41)   53    12    24    1,232    53    285    1,570 
                                                        
Personal auto   229    37    266    2    (3)   24    23    231    (3)   61    289 
Homeowners   329    24    353    1    6    9    16    330    6    33    369 
Other personal   53    3    56    5    8    (4)   9    58    8    (1)   65 
Total personal lines   611    64    675    8    11    29    48    619    11    93    723 
                                                        
Commercial casualty & property   15    5    20    14    5    3    22    29    5    8    42 
Total excess & surplus lines   15    5    20    14    5    3    22    29    5    8    42 
Total property casualty  $1,899   $342   $2,241   $(19)  $69   $44   $94   $1,880   $69   $386   $2,335 

 

16
 

 

Consolidated Cincinnati Insurance Companies

5-Year Property Casualty Data - All Lines

 

(Dollars in millions)  Years ended December 31, 
   2011   2010   2009   2008   2007 
Premiums                         
Adjusted written premiums – statutory*  $3,105   $2,952   $2,919   $3,040   $3,149 
Written premium adjustment – statutory   (7)   11    (8)   (30)   (32)
Reported written premiums – statutory**   3,098    2,963    2,911    3,010    3,117 
Unearned premium change   (69)   (39)   -    -    8 
Earned premiums (GAAP)  $3,029   $2,924   $2,911   $3,010   $3,125 
                          
Year-over-year growth rate:                         
Adjusted written premiums – statutory   5%   1%   (4)%   (3)%   (1)%
Written premiums – statutory   5%   2%   (3)%   (3)%   (2)%
Earned premiums   4%   -%   (3)%   (4)%   (1)%
                          
Statutory combined ratio                         
Reported statutory combined ratio*   108.9%   101.8%   104.4%   100.4%   90.3%
Less catastrophe losses   13.3    5.1    5.7    6.8    0.8 
Statutory combined ratio excluding catastrophe losses   95.6%   96.7%   98.7%   93.6%   89.5%
                          
Reported commission expense ratio*   18.6%   18.7%   19.0%   18.4%   19.2%
Reported other expense ratio*   13.3   14.2   13.7    13.7   12.5 
Reported statutory expense ratio*   31.9%   32.9%   32.7%   32.1%   31.7%
                          
GAAP combined ratio                         
GAAP combined ratio   109.2%   101.7%   104.5%   100.6%   90.3%
                          
Written premiums to surplus                         
Adjusted premiums to statutory surplus ratio   0.828    0.781    0.800    0.905    0.731 
Written premium adjustment   (0.002)   0.003    (0.002)   (0.009)   (0.007)
Reported premiums to statutory surplus ratio   0.826    0.784    0.798    0.896    0.724 

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.

*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.

 

17
 

 

Consolidated Cincinnati Insurance Companies

5-Year Property Casualty Data - Commercial Lines

 

(Dollars in millions)  Years ended December 31, 
   2011   2010   2009   2008   2007 
Premiums                         
Adjusted written premiums – statutory*  $2,225   $2,144   $2,190   $2,341   $2,444 
Written premium adjustment – statutory   (7)   11    (9)   (30)   (31)
Reported written premiums – statutory  $2,218   $2,155   $2,181   $2,311   $2,413 
Unearned premium change   (21)   (1)   18    5    (2)
Earned premiums (GAAP)  $2,197   $2,154   $2,199   $2,316   $2,411 
                          
Year-over-year growth rate:                         
Adjusted written premiums – statutory   4%   (2)%   (6)%   (4)%   0%
Written premiums – statutory   3%   (1)%   (6)%   (4)%   (1)%
Earned premiums   2%   (2)%   (5)%   (4)%   0%
                          
Statutory combined ratio                         
Reported statutory combined ratio*   104.2%   99.6%   101.8%   96.6%   89.2%
Less catastrophe losses   10.4    4.1    2.5    4.5    0.7 
Statutory combined ratio excluding catastrophe losses (adjusted)   93.8%   95.5%   99.3%   92.1%   88.5%
                          
GAAP combined ratio                         
GAAP combined ratio   104.7%   99.4%   101.6%   97.0%   89.2%

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.

*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.

 

18
 

 

Consolidated Cincinnati Insurance Companies

5-Year Property Casualty Data - Personal Lines

 

(Dollars in millions)  Years ended December 31, 
   2011   2010   2009   2008   2007 
Premiums                         
Adjusted written premiums – statutory*  $801   $750   $690   $685   $705 
Written premium adjustment – statutory   -    -    1    -    (1)
Reported written premiums – statutory  $801   $750   $691   $685   $704 
Unearned premium change   (39)   (29)   (6)   4    10 
Earned premiums (GAAP)  $762   $721   $685   $689   $714 
                          
Year-over-year growth rate:                         
Adjusted written premiums – statutory   7%   9%   1%   (3)%   (4)%
Written premiums – statutory   7%   9%   1%   (3)%   (4)%
Earned premiums   6%   5%   (1)%   (4)%   (6)%
Statutory combined ratio                         
Reported statutory combined ratio*   124.2%   107.1%   111.4%   111.6%   94.1%
Less catastrophe losses   22.7    8.1    16.1    14.5    1.3 
Statutory combined ratio excluding catastrophe losses (adjusted)   101.5%   99.0%   95.3%   97.1%   92.8%
                          
GAAP combined ratio                         
GAAP combined ratio   123.9%   107.7%   111.8%   111.9%   93.9%

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.

*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.

 

19
 

 

Consolidated Cincinnati Insurance Companies

5-Year Property Casualty Data - Excess & Surplus Lines 

 

(Dollars in millions)  Years ended December 31, 
   2011   2010   2009   2008   2007 
Premiums                         
Adjusted written premiums – statutory*  $79   $58   $39   $14   $ 
Written premium adjustment – statutory   -    -    -    -      
Reported written premiums – statutory  $79   $58   $39   $14   $ 
Unearned premium change   (9)   (9)   (12)   (9)     
Earned premiums (GAAP)  $70   $49   $27   $5   $  
                          
Year-over-year growth rate:                         
Adjusted written premiums – statutory   36%   49%   179%   na%    % 
Written premiums – statutory   36%   49%   179%   na%    % 
Earned premiums   43%   81%   440%   na%     % 
                          
Statutory combined ratio                         
Reported statutory combined ratio*   90.8%   118.9%   129.1%   190.6%    % 
Less catastrophe losses   2.2    1.2    0.2    0.4      
Statutory combined ratio excluding catastrophe losses (adjusted)   88.6%   117.7%   128.9%   190.2%    % 
                          
GAAP combined ratio                         
GAAP combined ratio   92.2%   115.4%   154.9%   266.0%    %

 

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.

*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.

*Excludes CSU Producers Resources Inc.

 

20
 

 

Consolidated Cincinnati Insurance Companies

Quarterly Property Casualty Data - Consolidated

 

(Dollars in millions)   Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Premiums                                                                      
Agency renewal written premiums  $712   $730   $717   $708   $648   $677   $685   $682   $1,425   $1,367   $2,155   $2,044   $2,867   $2,692 
Agency new business written premiums   103    115    117    102    107    109    106    92    219    198    334    307    437    414 
Other written premiums   (55)   (54)   (66)   (31)   (33)   (50)   (42)   (18)   (97)   (60)   (151)   (110)   (206)   (143)
Reported written premiums – statutory*  $760   $791   $768   $779   $722   $736   $749   $756   $1,547   $1,505   $2,338   $2,241   $3,098   $2,963 
Unearned premium change   25    (22)   (38)   (34)   23    7    (21)   (48)   (72)   (69)   (94)   (62)   (69)   (39)
Earned premiums  $785   $769   $730   $745   $745   $743   $728   $708   $1,475   $1,436   $2,244   $2,179   $3,029   $2,924 
Year over year change %                                                                      
Agency renewal written premiums   10%   8%   5%   4%   2%   1%   3%   (2)%   4%   0%   5%   1%   7%   1%
Agency new business written premiums   (4)   6    10    11    14    2    (1)   (5)   11    (3)   9    (1)   6    2 
Other written premiums   (67)   (8)   (57)   (72)   33    (9)   16    (29)   (62)   6    (37)   0    (44)   10 
Reported written premiums – statutory*   5    7    3    3    6    1    4    (3)   3    0    4    0    5    2 
Paid losses and loss expenses                                                                      
Losses paid  $455   $481   $560   $404   $400   $421   $382   $334   $964   $716   $1,442   $1,137   $1,899   $1,537 
Loss expenses paid   90    85    82    85    93    84    72    80    166    151    251    235    342    328 
Loss and loss expenses paid  $545   $566   $642   $489   $493   $505   $454   $414   $1,130   $867   $1,693   $1,372   $2,241   $1,865 
Statutory combined ratio                                                                      
Loss ratio   44.0%   65.4%   91.2%   58.4%   47.7%   58.8%   65.1%   54.3%   74.6%   59.8%   71.5%   59.5%   64.4%   56.5%
Allocated loss expense ratio   6.2    6.4    7.0    6.0    6.7    5.9    5.7    6.0    6.5    5.8    6.4    5.9    6.3    6.1 
Unallocated loss expense ratio   5.4    7.3    5.9    6.7    6.5    6.9    5.2    6.7    6.3    6.0    6.7    6.2    6.3    6.3 
Net underwriting expense ratio   32.9    31.1    31.3    32.2    33.3    32.9    31.3    34.1    31.8    32.7    31.5    32.8    31.9    32.9 
Statutory combined ratio   88.5%   110.2%   135.4%   103.3%   94.2%   104.5%   107.3%   101.1%   119.2%   104.3%   116.1%   104.4%   108.9%   101.8%
Contribution from catastrophe losses   (2.8)   12.0    39.8    5.5    0.7    3.8    13.6    2.1    22.5    8.0    18.9    6.5    13.3    5.1 
Statutory combined ratio excluding catastrophe losses   91.3%   98.2%   95.6%   97.8%   93.5%   100.7%   93.7%   99.0%   96.7%   96.3%   97.2%   97.9%   95.6%   96.7%
Commission expense ratio   19.5%   18.2%   18.2%   18.4%   19.9%   18.7%   17.9%   18.4%   18.3%   18.1%   18.2%   18.3%   18.6%   18.7%
Other expense ratio   13.4    12.9    13.1    13.8    13.4    14.2    13.4    15.7    13.5    14.6    13.3    14.5    13.3    14.2 
Statutory expense ratio   32.9%   31.1%   31.3%   32.2%   33.3%   32.9%   31.3%   34.1%   31.8%   32.7%   31.5%   32.8%   31.9%   32.9%
GAAP combined ratio                                                                      
GAAP combined ratio   87.6%   110.6%   136.6%   103.9%   93.1%   103.9%   107.6%   102.6%   120.1%   105.2%   116.8%   104.7%   109.2%   101.7%
Contribution from catastrophe losses   (2.8)   12.0    39.8    5.5    0.7    3.8    13.6    2.1    22.5    8.0    18.9    6.5    13.3    5.1 
GAAP combined ratio excluding catastrophe losses   90.4%   98.6%   96.8%   98.4%   92.4%   100.1%   94.0%   100.5%   97.6%   97.2%   97.9%   98.2%   95.9%   96.6%

 

*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.

 

21
 

 

Consolidated Cincinnati Insurance Companies

Quarterly Property Casualty Data - Commercial Lines

 

(Dollars in millions)  Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Premiums                                                                      
Agency renewal written premiums  $514   $507   $500   $542   $474   $479   $492   $533   $1,042   $1,025   $1,549   $1,504   $2,063   $1,978 
Agency new business written premiums   74    81    81    71    76    74    73    66    152    139    233    213    307    289 
Other written premiums   (42)   (41)   (44)   (25)   (26)   (42)   (33)   (11)   (69)   (44)   (110)   (86)   (152)   (112)
Reported written premiums – statutory*  $546   $547   $537   $588   $524   $511   $532   $588   $1,125   $1,120   $1,672   $1,631   $2,218   $2,155 
Unearned premium change   21    10    (4)   (48)   22    36    6    (65)   (52)   (59)   (42)   (23)   (21)   (1)
Earned premiums  $567   $557   $533   $540   $546   $547   $538   $523   $1,073   $1,061   $1,630   $1,608   $2,197   $2,154 
Year over year change %                                                                      
Agency renewal written premiums   8%   6%   2%   2%   (1)%   (2)%   1%   (4)%   2%   (2)%   3%   (2)%   4%   (2)%
Agency new business written premiums   (3)   9    11    8    13    (3)   (8)   (13)   9    (10)   9    (8)   6    (3)
Other written premiums   (62)   2    (33)   (127)   38    (14)   23    (57)   (57)   14    (28)   2    (36)   14 
Reported written premiums – statutory*   4    7    1    0    4    (3)   2    (6)   0    (3)   3    (3)   3    (1)
Paid losses and loss expenses                                                                      
Losses paid  $329   $326   $327   $290   $284   $290   $266   $230   $618   $497   $942   $786   $1,273   $1,070 
Loss expenses paid   75    65    63    69    75    65    58    63    131    120    197    186    271    261 
Loss and loss expenses paid  $404   $391   $390   $359   $359   $355   $324   $293   $749   $617   $1,139   $972   $1,544   $1,331 
Statutory combined ratio                                                                      
Loss ratio   40.6%   61.8%   77.5%   55.5%   44.2%   57.1%   59.0%   53.8%   66.4%   56.4%   64.8%   56.7%   58.5%   53.5%
Allocated loss expense ratio   7.7    7.7    8.9    7.0    7.9    6.9    6.5    7.1    8.0    6.8    7.9    6.8    7.9    7.1 
Unallocated loss expense ratio   1.8    7.3    4.4    6.7    6.4    6.7    4.8    6.6    5.5    5.7    6.1    6.0    5.0    6.1 
Net underwriting expense ratio   33.6    32.6    32.2    32.9    33.4    34.8    31.7    31.9    32.6    31.8    32.6    32.7    32.8    32.9 
Statutory combined ratio   83.7%   109.4%   123.0%   102.1%   91.9%   105.5%   102.0%   99.3%   112.5%   100.7%   111.4%   102.2%   104.2%   99.6%
Contribution from catastrophe losses   (2.9)   10.7    29.7    4.9    1.0    3.2    10.4    1.8    17.2    6.2    14.9    5.2    10.4    4.1 
Statutory combined ratio excluding catastrophe losses   86.6%   98.7%   93.3%   97.2%   90.9%   102.3%   91.6%   97.5%   95.3%   94.5%   96.5%   97.0%   93.8%   95.5%
Commission expense ratio   18.9%   18.1%   17.7%   18.5%   19.0%   19.0%   17.6%   17.2%   18.1%   17.4%   18.1%   17.9%   18.3%   18.1%
Other expense ratio   14.7    14.5    14.5    14.4    14.4    15.8    14.1    14.7    14.5    14.4    14.5    14.8    14.5    14.8 
Statutory expense ratio   33.6%   32.6%   32.2%   32.9%   33.4%   34.8%   31.7%   31.9%   32.6%   31.8%   32.6%   32.7%   32.8%   32.9%
GAAP combined ratio                                                                      
GAAP combined ratio   83.9%   107.9%   124.2%   104.0%   90.6%   103.4%   101.7%   102.1%   114.0%   101.9%   111.9%   102.4%   104.7%   99.4%
Contribution from catastrophe losses   (2.9)   10.7    29.7    4.9    1.0    3.2    10.4    1.8    17.2    6.2    14.9    5.2    10.4    4.1 
GAAP combined ratio excluding catastrophe losses   86.8%   97.2%   94.5%   99.1%   89.6%   100.2%   91.3%   100.3%   96.8%   95.7%   97.0%   97.2%   94.3%   95.3%

 

*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.

 

22
 

 

Consolidated Cincinnati Insurance Companies

Quarterly Property Casualty Data - Personal Lines

 

(Dollars in millions)  Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Premiums                                                                      
Agency renewal written premiums  $185   $209   $205   $156   $166   $189   $187   $143   $361   $330   $570   $519   $755   $685 
Agency new business written premiums   22    25    26    22    23    25    24    18    48    42    73    67    95    90 
Other written premiums   (11)   (12)   (21)   (5)   (6)   (6)   (7)   (6)   (26)   (13)   (38)   (19)   (49)   (25)
Reported written premiums – statutory*  $196   $222   $210   $173   $183   $208   $204   $155   $383   $359   $605   $567   $801   $750 
Unearned premium change   3    (29)   (30)   17    3    (26)   (25)   19    (13)   (6)   (42)   (32)   (39)   (29)
Earned premiums  $199   $193   $180   $190   $186   $182   $179   $174   $370   $353   $563   $535   $762   $721 
Year over year change %                                                                      
Agency renewal written premiums   11%   11%   10%   9%   8%   7%   6%   4%   9%   5%   10%   6%   10%   7%
Agency new business written premiums   (4)   0    8    22    15    19    26    29    14    24    9    22    6    20 
Other written premiums   (83)   (100)   (200)   17    0    25    (40)   0    (100)   0    (100)   10    (96)   4 
Reported written premiums – statutory*   7    7    3    12    10    9    7    7    7    7    7    8    7    9 
Paid losses and loss expenses                                                                      
Losses paid  $122   $151   $229   $109   $116   $128   $114   $103   $338   $217   $488   $345   $611   $461 
Loss expenses paid   14    18    18    15    17    17    14    17    33    30    51    48    66    65 
Loss and loss expenses paid  $136   $169   $247   $124   $133   $145   $128   $120   $371   $247   $539   $393   $677   $526 
Statutory combined ratio                                                                      
Loss ratio   55.1%   78.4%   135.7%   64.9%   60.5%   63.2%   82.4%   55.3%   99.3%   69.0%   92.2%   67.0%   82.5%   65.4%
Allocated loss expense ratio   1.8    1.9    3.0    2.3    2.5    1.9    2.0    1.9    2.6    2.0    2.4    1.9    2.2    2.1 
Unallocated loss expense ratio   16.0    7.0    10.7    6.9    6.9    7.2    6.7    7.2    8.8    6.9    8.2    7.1    10.2    6.9 
Net underwriting expense ratio   31.0    27.4    29.0    30.3    32.6    28.4    30.1    42.1    29.5    35.3    28.7    32.8    29.3    32.7 
Statutory combined ratio   103.9%   114.7%    178.4%    104.4%    102.5%    100.7%   121.2%   106.5%    140.2%   113.2%   131.5%   108.8%   124.2%   107.1%
Contribution from catastrophe losses   (2.7)   16.8    73.4    7.4    (0.3)   6.0    23.8    3.0    39.4    13.6    31.7    11.0    22.7    8.1 
Statutory combined ratio excluding catastrophe losses   106.6%   97.9%   105.0%   97.0%   102.8%   94.7%   97.4%   103.5%   100.8%   99.6%   99.8%   97.8%   101.5%   99.0%
Commission expense ratio   20.4%   17.6%   18.7%   17.9%   21.7%   17.1%   18.1%   22.4%   18.3%   20.0%   18.1%   19.0%   18.6%   19.6%
Other expense ratio   10.6    9.8    10.3    12.4    10.9    11.3    12.0    19.7    11.2    15.3    10.7    13.8    10.7    13.1 
Statutory expense ratio   31.0%   27.4%   29.0%   30.3%   32.6%   28.4%   30.1%   42.1%   29.5%   35.3%   28.8%   32.8%   29.3%   32.7%
GAAP combined ratio                                                                      
GAAP combined ratio   99.5%   119.7%   179.2%   101.4%   101.9%   103.4%   123.4%   102.5%   139.2%   113.1%   132.6%   109.8%   123.9%   107.7%
Contribution from catastrophe losses   (2.7)   16.8    73.4    7.4    (0.3)   6.0    23.8    3.0    39.4    13.6    31.7    11.0    22.7    8.1 
GAAP combined ratio excluding catastrophe losses   102.2%   102.9%   105.8%   94.0%   102.2%   97.4%   99.6%   99.5%   99.8%   99.5%   100.9%   98.8%   101.2%   99.6%

 

*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.

 

23
 

 

Consolidated Cincinnati Insurance Companies

Quarterly Property Casualty Data - Excess & Surplus Lines

 

(Dollars in millions)  Three months ended   Six months ended   Nine months ended   Twelve months ended 
   12/31/11   9/30/11   6/30/11   3/31/11   12/31/10   9/30/10   6/30/10   3/31/10   6/30/11   6/30/10   9/30/11   9/30/10   12/31/11   12/31/10 
Premiums                                                                      
Agency renewal written premiums  $13   $14   $12   $10   $8   $9   $6   $6   $22   $12   $36   $21   $49   $29 
Agency new business written premiums   7    9    10    9    8    10    9    8    19    17    28    27    35    35 
Other written premiums   (2)   (1)   (1)   (1)   (1)   (2)   (2)   (1)   (2)   (3)   (3)   (5)   (5)   (6)
Reported written premiums – statutory*  $18   $22   $21   $18   $15   $17   $13   $13   $39   $26   $61   $43   $79   $58 
Unearned premium change   1    (3)   (4)   (3)   (2)   (3)   (2)   (2)   (7)   (4)   (10)   (7)   (9)   (9)
Earned premiums  $19   $19   $17   $15   $13   $14   $11   $11   $32   $22   $51   $36   $70   $49 
Year over year change %                                                                      
Agency renewal written premiums   63%    56%    100%   67%   100%   200%   200%   500%   83%   500%   71%   320%   69%   190%
Agency new business written premiums   (13)   (10)   11    13    14    0    13    14    12    13    4    8    0    9 
Other written premiums   (100)   50    50    0    0    nm    nm    0    33    nm    40    (400)   17    (100)
Reported written premiums – statutory*   20    29    62    38    50    33    30    86    50    53    42    48    36    49 
Paid losses and loss expenses                                                                      
Losses paid  $3   $3   $4   $4   $1   $3   $1   $1   $8   $2   $12   $5   $15   $6 
Loss expenses paid   2    2    1    1    1    1    0    0    2    1    3    2    5    2 
Loss and loss expenses paid  $5   $5   $5   $5   $2   $4   $1   $1   $10   $3   $15   $7   $20   $8 
Statutory combined ratio                                                                      
Loss ratio   33.9%   41.1%   49.6%   77.6%   20.8%   72.3%   81.5%   65.4%   62.8%   73.5%   54.8%   73.1%   48.9%   58.1%
Allocated loss expense ratio   5.6    11.2    (12.8)   19.1    16.1    23.5    20.4    21.0    2.2    20.7    5.5    21.8    5.5    20.1 
Unallocated loss expense ratio   2.9    9.9    4.7    6.1    2.7    7.9    6.5    5.1    5.3    5.8    7.0    6.5    5.9    5.5 
Net underwriting expense ratio   31.8    30.7    31.6    27.6    39.0    30.8    33.5    38.5    29.8    35.8    30.1    33.9    30.5    35.2 
Statutory combined ratio   74.2%   92.9 %   73.1%    130.4%    78.6%    134.5%   141.9%   130.0%   100.1%    135.8%   97.4%    135.3%   90.8%    118.9%
Contribution from catastrophe losses   (0.3)   2.5    4.4    2.8    (0.1)   4.6    5.6    0.0    3.6    2.7    3.2    1.7    2.2    1.2 
Statutory combined ratio excluding catastrophe losses   74.5%   90.4%   68.7%   127.6%   78.7%   129.9%   136.3%   130.0%   96.5%   133.1%   94.2%   133.6%   88.6%   117.7%
Commission expense ratio   26.0%   25.1%   24.5%   22.2%   30.7%   27.0%   26.0%   28.2%   23.5%   27.0%   24.1%   27.0%   24.5%   27.9%
Other expense ratio   5.8    5.6    7.1    5.4    8.3    3.8    7.5    10.3    6.3    8.8    6.0    6.9    6.0    7.3 
Statutory expense ratio   31.8%   30.7%   31.6%   27.6%   39.0%   30.8%   33.5%   38.5%   29.8%   35.8%   30.1%   33.9%   30.5%   35.2%
GAAP combined ratio                                                                      
GAAP combined ratio   74.8%   93.6%   74.7%   133.0%   75.3%   129.8%   137.5%   127.1%   102.1%   132.4%   99.0%   131.4%   92.2%   115.4%
Contribution from catastrophe losses   (0.3)   2.5    4.4    2.8    (0.1)   4.6    5.6    0.0    3.6    2.7    3.2    1.7    2.2    1.2 
GAAP combined ratio excluding catastrophe losses   75.1%   91.1%   70.3%   130.2%   75.4%   125.2%   131.9%   127.1%   98.5%   129.7%   95.8%   129.7%   90.0%   114.2%

 

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

*nm - Not meaningful

* Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the appropriate regulatory bodies.

 

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The Cincinnati Life Insurance Company

Statutory Statements of Income

 

   For the Three Months Ended December 31,   For the Twelve Months Ended December 31, 
(Dollars in millions)  2011   2010   Change   % Change   2011   2010   Change   % Change 
                                 
Net premiums written  $63   $93   $(30)   (32)  $300   $369   $(69)   (19)
Net investment income   34    33    1    3    138    134    4    3 
Amortization of interest maintenance reserve   -    -    -    -    -    (2)   2    nm 
Commissions and expense allowances on reinsurance ceded   2    2    -    0    7    7    -    0 
Income from fees associated with Separate Accounts   -    1    (1)   nm    2    2    -    0 
Total revenues  $99   $129   $(30)   (23)  $447   $510   $(63)   (12)
                                         
Death benefits and matured endowments  $19   $17   $2    12   $66   $57   $9    16 
Annuity benefits   14    10    4    40    51    38    13    34 
Disability benefits and benefits under accident and health contracts   -    1    (1)   nm    (1)   2    (3)   nm 
Surrender benefits and group conversions   6    5    1    20    25    23    2    9 
Interest and adjustments on deposit-type contract funds   3    3    -    0    11    11    -    0 
Increase in aggregate reserves for life and accident and health contracts   39    74    (35)   (47)   215    296    (81)   (27)
Payments on supplementary contracts with life contingencies   -    -    -    -    -    -    -    - 
Total benefit expenses  $81   $110   $(29)   (26)  $367   $427   $(60)   (14)
                                         
Commissions  $10   $12   $(2)   (17)  $41   $46   $(5)   (11)
General insurance expenses and taxes   10    9    1    11    41    38    3    8 
Increase in loading on deferred and uncollected premiums   (1)   (1)   -    0    (6)   (6)   -    0 
Net transfers from Separate Accounts   (2)   -    (2)   nm    (2)   (2)   -    0 
Other deductions   -    -    -    -    -    -    -    - 
Total operating expenses  $17   $20   $(3)   (15)  $74   $76   $(2)   (3)
                                         
Federal and foreign income tax benefit   (7)   (1)   (6)   (600)   6    (6)   12    nm 
                                         
Net gain (loss) from operations before realized capital gains  $8   $-   $8    nm   $-   $13   $(13)   nm 
                                         
Net realized gains (losses) net of capital gains tax   5    -    5    nm    (13)   2    (15)   nm 
                                         
Net income (loss) (statutory)  $13   $-   $13    nm   $(13)  $15   $(28)   nm 

 

*Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. Ratios are calculated based on whole dollar amounts.

* Statutory data prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners and filed with the appropriate regulatory

 

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