14. Statutory accounting Information

Insurance companies’ financial statements are presented on the basis of accounting practices prescribed or permitted by applicable state insurance departments of domicile. Insurance companies use statutory accounting practices (SAP) as recognized by various states. We have adopted the National Association of Insurance Commissioners’ (NAIC) Accounting Practices and Procedures manual, version effective January 1, 2001, and updates through the current year as a component of prescribed or permitted practices by laws of the state of domicile. The primary differences between SAP and GAAP include the valuation of unrealized investment gains and losses, expensing of policy acquisition costs, actuarial assumptions for life insurance reserves and deferred income taxes based on differences in statutory and taxable income.

Statutory net income and capital and surplus are determined in accordance with SAP prescribed or permitted by insurance regulatory authorities for five legal entities, our insurance subsidiary and its four insurance subsidiaries. Statutory capital and surplus for our insurance subsidiary, The Cincinnati Insurance Company, includes capital and surplus of its four insurance subsidiaries. The statutory net income and statutory surplus are presented below:



(In millions)	SAP Net Income (Loss)						Capital and Surplus
		Years ended December 31,					At December 31,
		2012		2011		2010		2012		2011
The Cincinnati Insurance Company	$	334	$	120	$	318	$	3,914	$	3,747
The Cincinnati Casualty Company		10		15		10		293		280
The Cincinnati Indemnity Company		2		2		2		76		73
The Cincinnati Specialty Underwriters Insurance Company		6		11		1		199		186
The Cincinnati Life Insurance Company		5		(13)		15		276		281