|Cincinnati Financial Gives Early Online Access to Its Third-quarter Investment Portfolio Listing|
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Highlights financial strength and liquidity
CINCINNATI, Oct. 13 /PRNewswire-FirstCall/ -- Cincinnati Financial Corporation (Nasdaq: CINF) today posted a prelimary listing of its fixed-maturity and equity portfolio as of September 30, 2008, on its Web site at www.cinfin.com/investors. The company typically has provided online access to the portfolio listing when it reports quarterly results, which is not scheduled until October 29 for the third quarter.
"Current market conditions call for continued transparency to help our shareholders understand Cincinnati Financial Corporation's strength and liquidity," said Kenneth W. Stecher, president and chief executive officer. "We have strong cash flow from operations and healthy cash balances. Our highly rated insurance subsidiaries have capital that exceeds required levels and we hold significant additional assets at the parent company level.
"Our updated common stock portfolio shows the strategic actions we are taking to diversify away from concentrated positions in single stocks or industries. As we continued to apply recently adopted investment parameters, we sold portions of selected common stock holdings, including additional early October sales of approximately 9 million shares of Fifth Third Bancorp (NASDAQ: FITB)." Stecher noted, "In total, we have reduced our financial sector holdings 25 percent since mid year, moving this sector more in line with our longer-term targets. In large part, common stock sales occurred when we exercised appropriate sell discipline to lock in gains."
Subject to normal quarter-end reviews, the company's portfolio was valued at $10.4 billion at September 30, 2008, including approximately $350 million of cash, compared with $10.7 billion at June 30, 2008. The September 30 portfolio listing does not reflect the October sale of Fifth Third shares, which generated realized gains to be included in results for the fourth quarter ending December 31, 2008. Third-quarter pretax realized gains and losses are expected to be approximately $135 million. We expect net gains from investment sales and bond calls of approximately $275 million to be partially offset by other-than-temporary impairment charges, as announced on September 16. Those charges now are estimated at a total of approximately $140 million for the third quarter.
"Our highly rated taxable and tax-exempt fix maturity portfolio was valued at approximately $5.7 billion at quarter end. Because of the health of that portfolio, our company also is able to continue to invest in common stocks of growing, dividend-paying companies with favorable prospects. As of September 30, 2008, our equity portfolio's market value was approximately $4.1 billion, which includes more than $1.7 billion of unrealized gains that add to our book value. Our bond portfolio contains less than 1 percent, or approximately $50 million book value, of collateralized mortgage obligations we obtained in the termination of a securities lending program. We own no additional mortgage related securities nor any other derivative products."
Stecher added, "Our $10.4 billion in cash and investment assets at the end of the third quarter gives us flexibility through these difficult periods to maintain our dividend and to continue growing our insurance business. Our operations do not depend on bank loans to meet payroll, pay claims or cover other normal business expenses. Total borrowings were unchanged at September 30 from June 30, 2008, as we continue to maintain a conservative debt-to- capital ratio of approximately 15 percent.
"The third-quarter investment sales also give us flexibility to help build value for shareholders by reinvesting proceeds where we see potential in this market for both current income and long-term return. Further, recent events have not changed our insurance appetite. We are in good shape with the necessary financial strength to continue to actively look for growth opportunities."
Stecher concluded by reiterating the company's full-year 2008 outlook, making no changes from the update made in mid-September. "We expect the decline in full-year 2008 property casualty net written premiums could be slightly more than 5 percent. We also believe the full-year 2008 combined ratio might be modestly above 100 percent including up to 9 percentage points from catastrophe losses. Third-quarter catastrophe losses, net of reinsurance and favorable development from prior period events, now are estimated at approximately $60 million to $65 million. Finally, we continue to anticipate a decline in full-year investment income greater than 10 percent."
For the third quarter of 2008, Cincinnati Financial plans to report final results on Wednesday, October 29. A conference call to discuss the results will be held at 11:00 a.m. EDT on that day. Details regarding the Internet broadcast of the conference call also are posted on the company's Web site.
Cincinnati Financial Corporation offers property and casualty insurance, our main business, through our three standard market companies, The Cincinnati Insurance Company, The Cincinnati Indemnity Company and The Cincinnati Casualty Company. The Cincinnati Specialty Underwriters Insurance Company provides excess and surplus lines property and casualty insurance. The Cincinnati Life Insurance Company markets life and disability income insurance and annuities. CSU Producer Resources Inc., is our excess and surplus lines brokerage, serving the same local independent agencies that offer our standard market policies. CFC Investment Company offers commercial leasing and financing services. CinFin Capital Management Company provides asset management services to institutions, corporations and nonprofit organizations. For additional information about the company, please visit www.cinfin.com.
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 2007 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 21. Although we often review and update our forward-looking statements when events warrant, we caution our readers that we undertake no obligation to do so.
Factors that could cause or contribute to such differences include, but are not limited to:
Further, the company's insurance businesses are subject to the effects of changing social, 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 recent measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.
SOURCE Cincinnati Financial Corporation