Cincinnati Financial: May Storm Losses at $50 Million

June 3, 2004

Cincinnati Financial Corp. announced a preliminary estimate of approximately $50 million for May 2004 pretax catastrophe losses resulting from three periods of severe weather between May 17 and May 31. The Cincinnati Insurance Companies’ policyholders across 18 Midwestern and mid-Atlantic states were affected by these storms.

Based on these preliminary estimates, the storm losses are expected to contribute approximately seven percentage points to the second-quarter property casualty combined ratio. The impact on after-tax earnings per share for the second quarter would be approximately 19 cents.

For the second-quarter 2003 period, catastrophe losses were $47 million, contributing 7.1 percentage points to the combined ratio, with an 18 cent impact on earnings per share. (Per share amounts have been adjusted for the five percent stock dividend payable June 15, 2004, to shareholders of record on April 30, 2004.)

Chairman and CEO John Schiff, Jr., commented, “All of us at The Cincinnati Insurance Companies extend our deepest sympathy to people whose lives have been disrupted by these storms. We assure policyholders in all of the affected communities that we are working hard for your recovery from property losses. At times like these, our local field claims staff and independent agency representatives demonstrate our person-to- person approach and the true value of Cincinnati’s insurance coverage and service. Teams of experienced claims representatives are assisting local staff in several areas with a high concentration of reported claims, including Louisville and Lexington, Kentucky and Canton, Ohio.”

Schiff noted, “Through mid-May, we had not incurred any catastrophe losses this year. However, we typically experience heavy property losses due to tornadoes and hailstorms in the second and third quarters, leading to a higher impact in these periods. Our target for the full-year 2004 GAAP combined ratio remains at 94 percent (93.5 percent on a statutory basis). This target anticipates that full-year storm losses will be approximately $90 million to $100 million, contributing in the range of 3.0 to 3.5 percentage points to the full-year combined ratio. We will review our target if further severe weather occurs or as adjustments are needed to these early estimates. Policyholders often require a large window of time to discover and report hail damage.

“Importantly, excluding these storm losses, underwriting results for the first two months of the second quarter remain healthy,” Schiff concluded.

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