Cincinnati Financial Expects 99% Q2 Combined Ratio

July 15, 2003

Cincinnati Financial Corp. has announced that it expects strong second-quarter 2003 results as momentum carries over from 2002 and the first quarter of 2003.

Based on preliminary data, management expects second quarter 2003 property casualty net written premiums will increase approximately 16 percent over the second quarter of last year. The statutory combined ratio is expected to be approximately 99 percent, including approximately 7.1 percentage points due to catastrophe losses, improved from 107.2 percent, including 8.1 percentage points due to catastrophe losses, in the comparable quarter of 2002.

CEO John J. Schiff Jr. noted that the anticipated increase in premiums reflects growth in both commercial lines and personal lines. He added that the impact of catastrophe losses on this year’s second quarter is expected to be $47 million, net of reinsurance, reflecting the $48 million preliminary storm loss estimate issued on May 14, 2003, as well as favorable development from earlier periods. The impact on after-tax earnings per share of these catastrophe losses for the second quarter would be approximately 18 cents.

Catastrophe losses of $47 million in last year’s second quarter reduced after-tax earnings per share by 19 cents.

During the second quarter, a variety of economic and other external factors contributed to increasing values in the bond and equity markets. As a result of these gains, the company anticipates that other-than-temporary impairments for the second quarter will be below the $30 million to $55 million estimate it had earlier announced.

In addition, gains in the equity portfolio are expected to help restore book value to the $36.25 to $36.75 range at June 30, 2003, compared with $32.10 at March 31, 2003.

Schiff reiterated the company’s positive full-year outlook.

Weather-related property losses are typical during the second and third quarters of the year. Achievement of the company’s combined ratio target assumes that full-year storm losses will be approximately $75 million, or in the range of 3 percentage points. For the first six months of 2003, the company presently estimates total catastrophe losses are $49 million, or about 4 percentage points.

Cincinnati Financial plans to report final second-quarter results on Tuesday, July 29. A conference call to discuss the results will be held at 2:30 p.m. CDT on that day.

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