01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Cincinnati Financial Corporation (CINF) is a diversified insurance company that primarily operates through its lead subsidiary, The Cincinnati Insurance Company.
The company focuses on property casualty insurance, marketed through a select network of independent insurance agents across 37 states. In 2009, CINF navigated a challenging economic environment, reporting a slight increase in net income to $432 milliona, or $2.65 per diluted share, compared to $429 million in 2008. The company's strategic focus remains on effective capital management, improving insurance profitability, and driving premium growth.
Despite a decline in property casualty earned premiums, the company maintained a strong capital position and continued to invest in technology and agent relationships to support long-term value creation. The company also continued its long-standing practice of increasing shareholder dividends.
02—Key points
Key Highlights
- Net income for 2009 was $432 million, a slight increase from $429 million in 2008.
- Diluted earnings per share were $2.65 in 2009, up from $2.62 in 2008.
- Property casualty earned premiums decreased by 3.3% to $2,911 million in 2009.
- The company's combined ratio for property casualty operations was 104.5% in 2009, indicating an underwriting loss.
- The company continued its strategy of managing capital effectively, improving insurance profitability, and driving premium growth.
- Financial strength ratings remained strong, although Fitch Ratings lowered some ratings in August 2009 due to underwriting performance.
- The company has a record of increasing cash dividends for 49 consecutive years through 2009.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $3.90B$3.82B | +2.1% |
| Interest Expense | $55.00M$53.00M | +3.8% |
| Net Income | $432.00M$429.00M | +0.7% |
| EPS (Basic) | $2.66$2.63 | +1.1% |
| EPS (Diluted) | $2.65$2.62 | +1.1% |
| Shares Outstanding (Basic) | 162.60M— | — |
| Shares Outstanding (Diluted) | 162.87M— | — |
05—Questions
Frequently Asked Questions
What is Cincinnati Financial Corporation's primary business?
Cincinnati Financial Corporation's primary business is property casualty insurance, marketed through a select group of independent insurance agents in 37 states. It also offers life insurance and financial services.
How did the company perform financially in 2009?
In 2009, Cincinnati Financial Corporation reported net income of $432 million, a slight increase from $429 million in 2008. Diluted earnings per share were $2.65, up from $2.62 in the prior year. However, property casualty earned premiums declined, and the combined ratio indicated an underwriting loss.
What are the company's key strategies for future success?
The company's core strategies are to manage capital effectively, improve insurance profitability, and drive premium growth. This includes focusing on underwriting expertise, expense management, technology development, geographic expansion, and strengthening relationships with its independent agency network.
What is the company's approach to managing investments?
Cincinnati Financial Corporation manages a diversified investment portfolio, emphasizing a high-quality fixed-maturity portfolio and a diversified equity portfolio. The company aims to achieve a total return on its equity portfolio that exceeds the S&P 500 index over a five-year period.
How does the company handle catastrophe losses?
The company utilizes catastrophe modeling and reinsurance to mitigate the impact of catastrophe losses, which can significantly affect earnings volatility. Despite these measures, catastrophe losses in 2009 contributed 5.7 percentage points to the property casualty combined ratio.
06—Continue