Fitch Affirms Cincinnati Financial’s Debt, IFS Ratings

March 16, 2004

Fitch Ratings has affirmed the ‘A+’ senior debt rating for Cincinnati Financial Corporation (CFC) and the ‘AA’ insurer financial strength ratings of CFC’s three property and casualty subsidiaries led by The Cincinnati Insurance Company (CIC) and its life insurance subsidiary – The Cincinnati Life Insurance Company. The Rating Outlook is Stable.

CFC’s ratings are based on the strong financial condition of its operating subsidiaries, excellent financial flexibility and successful total return investment strategy. Furthermore, the company’s property casualty operation has exhibited strong operating profitability which is derived in part by above average premium growth relative to peers and competitive advantage derived from its successful single-channel distribution system that emphasizes building strong relationships with select independent agents, low non-commission expense structure and excellent claims service. CFC maintains excellent financial flexibility.

The company’s financial leverage at year-end 2003 of 10 percent is moderate, its operating subsidiaries are strongly capitalized and it maintains a strong ability to access the capital markets. Furthermore, substantial non-affiliated equity and fixed income securities holdings of $4.5 billion and nearly $300 million, respectively, were maintained at the parent holding company at year-end 2003.

The ratings also consider the property casualty operation’s significant investment concentration in common stocks, with a non-affiliated portfolio that exceeds policyholders’ surplus, geographic concentration in Ohio and Midwestern states that contributes to sizable catastrophe exposure and regulatory/legislative concentration as well as underperforming, but improving, homeowners line of business.

Fitch expects that CFC will continue to demonstrate strong operating performance and premium growth over the near- to intermediate-term.

Furthermore, capitalization is expected to remain strong, reflecting management’s conservative philosophy towards loss reserves, adequate catastrophic reinsurance protection, strong capitalization of operating subsidiaries that partially mitigates its significant investment concentration in common stocks, and in particular Fifth-Third Bancorp. Also, Fitch expects financial leverage, as measured by the ratio of debt to total capital, to remain below 15 percent.

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