CINCINNATI FINANCIAL CORPORATION INVESTOR HANDOUT
NOVEMBER 2020
NASDAQ: CINF
This presentation contains forward-looking statements that involve risks and uncertainties. Please refer to our various filings with the U.S. Securities and Exchange Commission for factors that could cause results to materially differ from those discussed.
The forward-looking information in this presentation has been publicly disclosed,
most recently on November 16, 2020, and should be considered to be effective only as of that date.
Its inclusion in this document is not intended to be an update or reaffirmation of the forward-looking information as of any later date.
Reconciliations of non-GAAP measures are in our most recent quarterly earnings news release, which is available at cinfin.com/investors.
Copyright © 2020 Cincinnati Financial Corporation. All rights reserved. Do not reproduce or post online, in whole or in part, without written permission. | 1 |
STRATEGY OVERVIEW
- Competitive advantages:
- Relationships leading to agents' best accounts
- Financial strength for stability and confidence
- Local decision making and claims excellence
- Other distinguishing factors:
- 60 years of shareholder dividend increases
- Common stocks are approximately 38% of investment portfolio
- 31 years of favorable reserve development
CUMULATIVE TOTAL RETURN*
Cincinnati Financial Corporation S&P 500 Index S&P Composite 1500 Property & Casualty Insurance Index
$119
$236 | ||||||
$185 | $181 | |||||
$174 | ||||||
$170 | $166 | $171 | ||||
$160 | ||||||
$156 | ||||||
$154 | ||||||
$149 | ||||||
$128 | $138 | $132 |
$110 $113
$101
2015 | 2016 | 2017 | 2018 | 2019 | YTD 11-2-20 |
- $100 invested on December 31, 2014, in CINF stock or indexes shown, including reinvestment of dividends. Periods shown represent each respective fiscal year ending December 31.
Copyright © 2020 Cincinnati Financial Corporation. All rights reserved. Do not reproduce or post online, in whole or in part, without written permission. | 2 |
LONG-TERM VALUE CREATION
- Targeting average Value Creation Ratio of 10% to 13% over the next five-year period
- Value creation ratio (VCR) = annual rate of growth in book value plus the percentage of dividends to beginning book value
- VCR for 2015 through 2019 averaged 14.2%
- Three performance drivers:
- Premium growth above industry average
- Combined ratio consistently within the range of 95% to 100%
- Investment contribution
- Investment income growth
- Compound annual total return for equity portfolio over five-year period exceeding return for S&P 500 Index
INCREASE VALUE FOR SHAREHOLDERS
MEASURED BY VALUE CREATION RATIO
Target for the next five-year period: Annual VCR averaging 10% to 13%
29% | ||||||||||||||||||||
26% | ||||||||||||||||||||
23% | ||||||||||||||||||||
20% | ||||||||||||||||||||
17% | ||||||||||||||||||||
Ratio | 14% | |||||||||||||||||||
11% | ||||||||||||||||||||
Creation | ||||||||||||||||||||
5% | ||||||||||||||||||||
8% | ||||||||||||||||||||
Value | 2% | |||||||||||||||||||
-1% | ||||||||||||||||||||
Investment Income | ||||||||||||||||||||
-4% | & Other in 2017 | |||||||||||||||||||
includes 7.0% benefit | ||||||||||||||||||||
-7% | from tax reform | |||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||
Actual VCR: | 3.4% | 14.5% | 22.9% | (0.1)% | 30.5% | |||||||||||||||
VCR - Investment Income & Other | VCR - P&C Underwriting | VCR - Bond Portfolio Gains | ||||||||||||||||||
VCR - Equity Portfolio Gains | Total Shareholder Return (TSR) | |||||||||||||||||||
50%
40%
30%
20%
10%
0%
-10%
Total Shareholder Return
Copyright © 2020 Cincinnati Financial Corporation. All rights reserved. Do not reproduce or post online, in whole or in part, without written permission. | 3 |
PERFORMANCE TARGETS & TRENDS
-
3.0% VCR for YTD 9-30-20 was below target:
10% to 13% annual average over the next five-year period - 2.8% contribution from non-GAAP operating income, 1.3% contribution from investment portfolio net gains and losses (negative 1.1% net contribution from other items)
- Related performance drivers at YTD 9-30-20 compared with long-term targets:
- 6% growth in P&C net written premiums, vs. 3% YTD 6-30-20 estimated for the industry
- 101.8% combined ratio, exceeds 95% to 100% long-term target range
- 4% investment income growth ahead of 3.3% five-year CAGR as of year-end 2019
- Strong YTD underwriting performance before catastrophe effects; solid cash flow
- 3.2 percentage point improvement in combined ratio for accident year 2020 before catastrophe losses
- 27% increase in cash flow from operating activities, to $1.1 billion
PANDEMIC FINANCIAL EFFECTS
- Premiums: Growth slowed, but 3Q20 net written premiums still grew 3%
- Insured exposure levels were reduced for some lines of business due to economic effects
- Growth for net written premiums slowed from 10% growth for 1Q20 and full-year 2019
- Loss and expenses: $72 million YTD 9-30-20 that were pandemic-related
- $26 million for business interruption claims (Cincinnati Re or Cincinnati Global), $22 million legal expenses
- $8 million for credit losses-uncollectible premiums, $16 million personal auto policyholder credit
Copyright © 2020 Cincinnati Financial Corporation. All rights reserved. Do not reproduce or post online, in whole or in part, without written permission. | 4 |
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Cincinnati Financial Corporation published this content on 16 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2020 13:46:05 UTC
