Schedule II - Condensed Financial Statements of Parent Company

12 Months Ended

Dec. 31, 2011

Schedule II - Condensed Financial Statements of Parent Company

Schedule II

Cincinnati Financial Corporation (parent company only)

Condensed Balance Sheets

	At December 31,
(In millions)	2011			2010
ASSETS
Investments
Fixed maturities, at fair value	$	225		$	241
Equity securities, at fair value		806			763
Investment real estate, net		-			5
Other invested assets		29			39
Cash and cash equivalents		20			38
Equity in net assets of subsidiaries		4,798			4,695
Investment income receivable		4			5
Land, building and equipment, net, for company use (accumulated depreciation: 2011—$94; 2010—$77)		158			159
Prepaid income tax		-			15
Other assets		13			15
Due from subsidiaries		65			54
Total assets	$	6,118		$	6,029
LIABILITIES
Dividends declared but unpaid	$	65		$	65
Deferred federal income tax		40			42
Long-term debt		790			790
Other liabilities		168			100
Total liabilities		1,063			997
SHAREHOLDERS' EQUITY
Common stock		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		(1,220	)		(1,201	)
Total shareholders' equity		5,055			5,032
Total liabilities and shareholders' equity	$	6,118		$	6,029

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8, Page 114.

Schedule II (continued)

Cincinnati Financial Corporation (parent company only)

Condensed Statements of Income

	Years ended December 31,
(In millions)	2011			2010			2009
REVENUES
Investment income, net of expenses	$	41		$	41		$	41
Realized gains on investments		15			17			135
Other revenue		14			14			15
Total revenues		70			72			191
EXPENSES
Interest expense		53			52			52
Other expenses		25			24			27
Total expenses		78			76			79
INCOME BEFORE INCOME TAXES AND EARNINGS OF SUBSIDIARIES		(8	)		(4	)		112
PROVISION (BENEFIT) FOR INCOME TAXES		(9	)		(7	)		32
NET INCOME BEFORE EARNINGS OF SUBSIDIARIES		1			3			80
Increase in equity of subsidiaries		165			374			352
NET INCOME	$	166		$	377		$	432

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8, Page 114.

Schedule II (continued)

Cincinnati Financial Corporation (parent company only)

Condensed Statements of Cash Flows

	Years ended December 31,
(In millions)	2011			2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	166		$	377		$	432
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7			7			8
Realized gains on investments		(15	)		(17	)		(135	)
Dividends from subsidiaries		180			220			50
Changes in:
Increase in equity of subsidiaries		(165	)		(374	)		(352	)
Investment income receivable		1			-			(1	)
Current federal income taxes		25			3			(104	)
Deferred income taxes		(10	)		2			24
Other assets		2			-			(2	)
Other liabilities		(23	)		(12	)		(22	)
Net cash (used in) provided by operating activities		168			206			(102	)
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of fixed-maturities		5			32			22
Call or maturity of fixed maturities		13			21			15
Sale of equity securities		101			85			408
Purchase of fixed maturities		-			(27	)		(206	)
Purchase of equity securities		(78	)		(92	)		(246	)
Change in short-term investments, net		-			-			65
Investment in buildings and equipment, net		(1	)		-			(1	)
Change in other invested assets, net		5			-			(5	)
Net cash provided by investing activities		45			19			52
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable		55			-			-
Payment of cash dividends to shareholders		(255	)		(252	)		(249	)
Purchase of treasury shares		(32	)		(10	)		1
Proceeds from stock options exercised		(4	)		(2	)		-
Net transfers to subsidiaries		2			21			8
Other		3			2			-
Net cash used in financing activities		(231	)		(241	)		(240	)
Net decrease in cash and cash equivalents		(18	)		(16	)		(290	)
Cash and cash equivalents at beginning of year		38			54			344
Cash and cash equivalents at end of year	$	20		$	38		$	54

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8, Page 114.