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: May 2, 2015
(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 5.02(e) | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On May 2, 2015, the compensation committee of the board of directors of Cincinnati Financial Corporation approved a form of service-based restricted stock unit agreement with ratable vesting of shares for use with awards granted under the Cincinnati Financial Stock Compensation Plan of 2006. The agreement is furnished as Exhibit 10.1 hereto.
Item 5.07 | Submission of Matters to a Vote of Security Holders |
Item 7.01 | Regulation FD Disclosure |
On May 4, 2015, Cincinnati Financial Corporation issued the attached news release “Cincinnati Financial Corporation Holds Shareholders' and Directors' Meetings.” The news release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference. On May 4, 2015, Cincinnati Financial Corporation issued the attached news release “Cincinnati Financial Corporation Declares Regular Quarterly Cash Dividend.” The news release is furnished as Exhibit 99.2 hereto and is incorporated herein by reference.
Final voting results on matters properly brought before the annual meeting of shareholders held on May 2, 2015, are set forth below:
Total Outstanding Shares as of Record Date: 164,260,077
Shares Represented at Meeting: 139,554,150
Proposal 1—Election of Directors
For | Withhold | Broker Non-Votes | |
William F. Bahl | 112,528,633 | 10,058,897 | 16,966,620 |
Gregory T. Bier | 122,062,984 | 524,546 | 16,966,620 |
Linda W. Clement-Holmes | 121,419,606 | 1,167,924 | 16,966,620 |
Dirk J. Debbink | 122,039,125 | 548,405 | 16,966,620 |
Steven J. Johnston | 121,554,491 | 1,033,039 | 16,966,620 |
Kenneth C. Lichtendahl | 112,436,148 | 10,151,382 | 16,966,620 |
W. Rodney McMullen | 121,763,133 | 824,397 | 16,966,620 |
David P. Osborn | 122,086,880 | 500,650 | 16,966,620 |
Gretchen W. Price | 121,105,678 | 1,481,852 | 16,966,620 |
John J. Schiff, Jr. | 112,704,151 | 9,883,379 | 16,966,620 |
Thomas R. Schiff | 112,595,940 | 9,991,590 | 16,966,620 |
Douglas S. Skidmore | 112,397,711 | 10,189,819 | 16,966,620 |
Kenneth W. Stecher | 112,838,685 | 9,748,845 | 16,966,620 |
John F. Steele, Jr. | 113,082,988 | 9,504,542 | 16,966,620 |
Larry R. Webb | 112,625,936 | 9,961,594 | 16,966,620 |
Proposal 2—Ratify Selection of Deloitte & Touche LLP as Independent Registered Public Accounting Firm for 2015
For | Against | Abstain | Broker Non-Votes |
138,918,060 | 323,156 | 312,934 | -0- |
Proposal 3 —Approve Compensation for Named Executive Officers
For | Against | Abstain | Broker Non-Votes |
120,066,400 | 1,635,332 | 885,584 | 16,966,834 |
This report should not be deemed an admission as to the materiality of any information contained in the news release.
The information furnished in Item 7.01 of this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
Item 9.01 | Financial Statements and Exhibits |
(c) | Exhibits |
Exhibit 10.1–Form of Restricted Stock Unit Agreement (service based/ratable vesting) for the Cincinnati Financial Corporation 2006 Stock Compensation Plan.
Exhibit 99.1– News release dated May 4, 2015, titled “Cincinnati Financial Corporation Holds Shareholders' and Directors' Meetings”
Exhibit 99.2– News release dated May 4, 2015, titled “Cincinnati Financial Corporation Declares Regular Quarterly Cash Dividend”
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CINCINNATI FINANCIAL CORPORATION | ||
Date: May 6, 2015 | /s/Lisa A. Love | |
Lisa A. Love | ||
Senior Vice President, General Counsel and Corporate Secretary | ||
Exhibit 10.1
CINCINNATI FINANCIAL CORPORATION
P.O. BOX 145496
CINCINNATI, OH 45250-5496
(513) 870-2696
RESTRICTED STOCK UNIT AGREEMENT
SERVICE-BASED/RATABLE
PART I. AWARD INFORMATION
Participant Name: | Vesting Date Schedule: |
Grant Date: | # units vest on [Date] |
Grant Amount: | # units vest on [Date] |
Grant Type: | # units vest on [Date] |
CINCINNATI FINANCIAL CORPORATION (the "Company") hereby grants to the associate identified below (the "Participant") a Restricted Stock Unit Award (the "Award") under the Company's 2006 Stock Compensation Plan (the "Plan") with respect to the number of Restricted Stock Units (the "Units") specified under Part I – Award Information ("Award Information") above, all in accordance with and subject to the provisions set forth in Part II--Terms and Conditions.
THIS AWARD IS SUBJECT TO FORFEITURE AS PROVIDED IN THIS RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN.
By accepting this Award, the Participant acknowledges the receipt of a copy of this Restricted Stock Unit Agreement (including Part II -- Terms and Conditions) and a copy of the Prospectus and agrees to be bound by all the terms and provisions contained in them and in the Plan.
IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed as of the Award Date specified below.
CINCINNATI FINANCIAL CORPORATION | |||
By: | /s/ Steven J. Johnston | ||
President and CEO | |||
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PART II. TERMS AND CONDITIONS
1. Restricted Stock Units. Each Unit represents a hypothetical share of the Company's Common Stock (the "Shares"), and each Unit will at all times be equal in value to one Share. The Units will be credited to the Participant in an account established for the Participant and maintained by either the Company or its transfer agent. If and when Units vest as provided below, Shares in an amount equal to the number of vested Units will automatically be issued by crediting the Participant’s account.
2. Restrictions. Subject to Sections 3 and 4 below, the restrictions on the Units specified in the Award Information shall lapse and such Unit shall vest on the vesting date set forth in the Vesting Date Schedule of the Award Information (each “Vesting Date”), provided the Participant remains an employee of the Company (or a subsidiary of the Company) during the entire period commencing on the Award Date set forth in the Award Information and ending on and including a Vesting Date (the “Restriction Period”). Upon vesting, one Share shall be issued with respect to each vested Unit.
3. Participant Death or Disability During Restriction Period. In the event of the termination of the Participant’s employment with the Company (and with all subsidiaries of the Company) prior to a Vesting Date due to death or Disability all restrictions on the Units shall lapse, all of the Units shall become fully vested on the date of death or Disability, and one Share shall be issued with respect to each such vested Unit.
4. Other Termination of Employment During Restriction Period. If the Participant's employment with the Company (and with all subsidiaries of the Company) is terminated for any reason other than death or Disability prior to the end of a Restriction Period, the Participant shall forfeit all rights to any Units (and to the related Shares) as to which a Vesting Date has not yet occurred. Notwithstanding the foregoing, the Compensation Committee of the Board of Directors of the Company may, in its sole discretion, waive the restrictions on, and the vesting requirements for, the Units.
5. Shareholder Rights. The Participant shall not have the right to vote any Shares or to receive any cash dividends payable with respect to any Shares, or otherwise have any rights as a shareholder with respect to any Shares, unless and until the Shares have actually been issued to the Participant hereunder upon the vesting of Units as provided in this Agreement.
6. Transfer Restrictions. This Award and the Units (until they vest pursuant to the terms hereof and Shares are issued with respect thereto) are non-transferable and may not be assigned, hypothecated or otherwise pledged, except by will or the laws of descent and distribution, and shall not be subject to execution, attachment or similar process. Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and void and the Units shall be forfeited.
7. Withholding Taxes. The Company is authorized to satisfy the actual minimum statutory withholding taxes arising from the vesting of this Award, as the case may be by deducting the number of Shares having an aggregate value equal to the amount of withholding taxes due from the total number of Shares that would otherwise be issuable upon any Units vesting or otherwise becoming subject to current taxation. Shares deducted from this Award in satisfaction of actual minimum withholding tax requirements shall be valued at the Fair Market Value of the Shares on the date as of which the amount giving rise to the withholding requirement first became includible in the gross income of the Participant under applicable tax laws.
8. Death of Participant. If any of the Units shall vest upon the death of the Participant, the Shares issued as a result of such vesting shall be registered in the name of the estate of the Participant except that, if the Participant has designated a beneficiary where indicated in the Award Information, the Shares shall be registered in the name of the designated beneficiary.
9. Other Terms and Provisions. The terms and provisions of the Plan (a copy of which will be furnished to the Participant upon written request) are incorporated herein by reference. To the extent any provision of this Award is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern. For purposes of this Agreement, the term “Disability” means permanent and total disability as determined under procedures established by the Company from time to time. In any case in which the existence of a “Disability” is uncertain under the applicable definition and procedures hereunder, a final and binding determination shall be made by the Committee in its sole discretion.
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Exhibit 99.1
![]() |
The Cincinnati Insurance Company - The Cincinnati Indemnity Company The Cincinnati Casualty Company - The Cincinnati Specialty Underwriters Insurance Company The Cincinnati Life Insurance Company - CFC Investment Company - CSU Producer Resources Inc |
Investor Contact: Dennis E. McDaniel, 513-870-2768
CINF-IR@cinfin.com
Media Contact: Betsy E. Ertel, 513-603-5323
Media_Inquiries@cinfin.com
Cincinnati Financial Corporation Holds Shareholders' and Directors' Meetings
Cincinnati, May 4, 2015 – Cincinnati Financial Corporation (Nasdaq: CINF) today announced that based on preliminary voting results at the company’s annual meeting on May 2, 2015, shareholders elected all directors for one-year terms to the 15-member board. Shareholders also ratified the selection of Deloitte & Touche LLP as independent registered public accounting firm for 2015 and approved a nonbinding resolution to approve the compensation for the company’s named executive officers.
Kenneth W. Stecher, chairman of the board, commented: “We thank shareholders for approving our selection of Deloitte & Touche and our nominees to the board. We have a highly engaged group of directors who leverage their diverse business experiences to guide long-term strategic plans for Cincinnati Financial Corporation as we create value for shareholders.”
Directors elected to the board for terms of one year are:
· | William F. Bahl, CFA, CIC, chairman of Bahl & Gaynor Investment Counsel Inc. and the independent lead director of Cincinnati Financial Corporation |
· |
Gregory T. Bier, CPA, managing partner (retired) of Deloitte LLP |
· | Linda W. Clement-Holmes, chief information officer, The Procter & Gamble Company |
· | Dirk J. Debbink, chairman and chief executive officer of MSI General Corporation |
· | Steven J. Johnston, FCAS, MAAA, CFA, CERA, president and chief executive officer of Cincinnati Financial Corporation |
· | Kenneth C. Lichtendahl, director of development and sales of Heliosphere Designs LLC |
· | W. Rodney McMullen, chairman and chief executive officer of The Kroger Co. |
· | David P. Osborn, CFA, president of Osborn Rohs Williams & Donohoe LLC |
· | Gretchen W. Price, executive vice president and chief financial and administrative officer of Arbonne International LLC |
· | John J. Schiff, Jr., CPCU, former chairman and chief executive officer of Cincinnati Financial Corporation |
· | Thomas R. Schiff, chairman and chief executive officer of John J. & Thomas R. Schiff & Co. Inc. |
· | Douglas S. Skidmore, chief executive officer of Skidmore Sales & Distributing Company Inc. |
· | Kenneth W. Stecher, chairman of the board of Cincinnati Financial Corporation |
· | John F. Steele, Jr., chairman and chief executive officer of Hilltop Basic Resources Inc. |
· | Larry R. Webb, president of Webb Insurance Agency Inc. |
The board also met on May 2 and announced committee service for the coming year, in line with the independence requirements of applicable law and the listing standards of Nasdaq:
· | Audit – Gretchen W. Price (chairperson), William F. Bahl, Gregory T. Bier, Linda W. Clement-Holmes, Dirk J. Debbink, Kenneth C. Lichtendahl, David P. Osborn, Douglas S. Skidmore and John F. Steele, Jr. |
· | Compensation – W. Rodney McMullen (chairperson), William F. Bahl, Gregory T. Bier, Dirk J. Debbink and Gretchen W. Price |
· | Executive – Steven J. Johnston (chairperson), William F. Bahl, W. Rodney McMullen, Kenneth W. Stecher, John F. Steele, Jr. and Larry R. Webb |
· | Investment – Kenneth W. Stecher (chairperson), William F. Bahl, Gregory T. Bier, Steven J. Johnston, W. Rodney McMullen, David P. Osborne, John J. Schiff, Jr., Thomas R. Schiff and Larry R. Webb; Richard M. Burridge, CFA, continues to serve as committee adviser |
· | Nominating – William F. Bahl (chairman), Linda W. Clement-Holmes, Kenneth C. Lichtendahl, Gretchen W. Price and Douglas S. Skidmore |
1 |
About Cincinnati Financial
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, fixed annuities and surplus lines property and casualty insurance. For additional information about the company, please visit cinfin.com.
Mailing Address: | Street Address: |
P.O. Box 145496 | 6200 South Gilmore Road |
Cincinnati, Ohio 45250-5496 | Fairfield, Ohio 45014-5141 |
Safe Harbor
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 2014 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 33.
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 or development of claims that are unforeseen at the time of policy issuance |
· | Inadequate estimates or assumptions used for critical accounting estimates |
· | Declines in overall stock market values negatively affecting the company’s equity portfolio and book value |
· | Domestic and global events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to: |
o | Significant or prolonged decline in the value of a particular security or group of securities and impairment of the asset(s) |
o | Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities |
o | Significant 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 |
· | Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies |
· | Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our ability to conduct business and our relationships with agents, policyholders and others |
· | Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products |
· | Delays or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness |
· | Increased competition that could result in a significant reduction in the company’s premium volume |
· | 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 nonpayment 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 |
· | Inability of our subsidiaries to pay dividends consistent with current or past levels |
· | 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: |
o | Downgrades of the company’s financial strength ratings |
o | Concerns that doing business with the company is too difficult |
o | Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace |
o | Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace |
2 |
· | 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: |
o | Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates |
o | Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations |
o | Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business |
o | Add assessments for guaranty funds, other insurance-related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes |
o | Increase our provision for federal income taxes due to changes in tax law |
o | Increase our other expenses |
o | Limit our ability to set fair, adequate and reasonable rates |
o | Place us at a disadvantage in the marketplace |
o | Restrict 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 |
Further, the company’s insurance businesses are subject to the effects of changing social, global, 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.
***
3 |
Exhibit 99.2
![]() |
The Cincinnati Insurance Company - The Cincinnati Indemnity Company The Cincinnati Casualty Company - The Cincinnati Specialty Underwriters Insurance Company The Cincinnati Life Insurance Company - CFC Investment Company - CSU Producer Resources Inc. |
Investor Contact: Dennis E. McDaniel, 513-870-2768
CINF-IR@cinfin.com
Media Contact: Betsy E. Ertel, 513-603-5323
Media_Inquiries@cinfin.com
Cincinnati Financial Corporation Declares Regular Quarterly Cash Dividend
Cincinnati, May 4, 2015 – Cincinnati Financial Corporation (Nasdaq: CINF) announced that, at its regular meeting on May 2, 2015, the board of directors declared a 46-cents-per-share regular quarterly cash dividend. The dividend is payable July 15, 2015, to shareholders of record as of June 17, 2015.
Steven J. Johnston, president and chief executive officer, commented, “Our long-term view for managing the company benefits Cincinnati Financial shareholders with value creation through various business or market cycles. The board of directors expressed confidence in our ability to continue profitably growing our insurance business over the long term while rewarding shareholders through dividends in the short term. The dividend just declared matches the one paid last month, positioning the company for a 55th year of increasing annual cash dividends.”
About Cincinnati Financial
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, fixed annuities and surplus lines property and casualty insurance. For additional information about the company, please visit 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 2014 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 33.
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 or development of claims that are unforeseen at the time of policy issuance |
· | Inadequate estimates or assumptions used for critical accounting estimates |
· | Declines in overall stock market values negatively affecting the company’s equity portfolio and book value |
· | Domestic and global events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to: |
o | Significant or prolonged decline in the value of a particular security or group of securities and impairment of the asset(s) |
o | Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities |
o | Significant 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 |
· | Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies |
· | Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our ability to conduct business and our relationships with agents, policyholders and others |
1 |
· | Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products |
· | Delays or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness |
· | Increased competition that could result in a significant reduction in the company’s premium volume |
· | 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 nonpayment 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 |
· | Inability of our subsidiaries to pay dividends consistent with current or past levels |
· | 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: |
o | Downgrades of the company’s financial strength ratings |
o | Concerns that doing business with the company is too difficult |
o | Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace |
o | Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace |
· | 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: |
o | Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates |
o | Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations |
o | Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business |
o | Add assessments for guaranty funds, other insurance-related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes |
o | Increase our provision for federal income taxes due to changes in tax law |
o | Increase our other expenses |
o | Limit our ability to set fair, adequate and reasonable rates |
o | Place us at a disadvantage in the marketplace |
o | Restrict 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 |
Further, the company’s insurance businesses are subject to the effects of changing social, global, 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.
* * *
2 |
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