8-KMaterial AgreementsFinancial Events

CINCINNATI FINANCIAL CORP 8-K Report, Material Agreement (Aug 31, 2009)

Filed August 31, 2009For Securities:CINF

Summary

Cincinnati Financial Corporation (CINF) filed an 8-K on August 31, 2009, reporting on key financial arrangements. The company renewed its unsecured line of credit with PNC Bank, N.A., establishing a new $75 million facility available until August 29, 2010. This credit line, which can be used for general corporate purposes and includes CFC Investment Company as a borrower, features a 0.25% unused commitment fee and offers interest rate options tied to LIBOR or a Base Rate. In addition to the new credit facility, CINF also entered into an interest rate swap contract with PNC Bank, N.A., effective the same day and set to expire on August 31, 2012. This three-year swap, with a fixed rate of 2.245% per annum, is designed to hedge against interest rate fluctuations on a notional amount of $49 million of variable-rate debt maturing in August 2010. These actions demonstrate the company's proactive approach to managing its liquidity and interest rate risk.

Key Highlights

  • 1Renewal of a $75 million unsecured line of credit with PNC Bank, N.A., available until August 29, 2010.
  • 2The new credit facility is for general corporate purposes and includes subsidiary CFC Investment Company as a borrower.
  • 3The PNC line of credit carries a 0.25% per annum unused commitment fee.
  • 4Interest rate options on the PNC credit line include LIBOR plus 100 basis points or a Base Rate.
  • 5Entry into a three-year interest rate swap contract with PNC Bank, N.A., effective August 31, 2009, expiring August 31, 2012.
  • 6The interest rate swap has a fixed rate of 2.245% per annum.
  • 7The swap aims to hedge interest payment fluctuations on $49 million notional amount of variable-rate debt maturing August 29, 2010.

Frequently Asked Questions

CINF reported the renewal of a $75 million unsecured line of credit with PNC Bank, N.A., and the initiation of a three-year interest rate swap agreement with PNC Bank, N.A.

The new $75 million line of credit is available for general corporate purposes and can be utilized until August 29, 2010. CFC Investment Company, a subsidiary, is also a borrower under this facility.

The company entered into the interest rate swap to hedge against potential fluctuations in interest payments on $49 million of variable-rate debt that matures in August 2010. This provides certainty regarding interest costs at a fixed rate of 2.245% for the duration of the swap.

The interest rate options for the PNC line of credit are either the LIBOR rate plus 100 basis points, or a Base Rate which is defined as the highest of the Prime Rate, the Federal Funds Open Rate plus 50 basis points, or the Daily LIBOR Rate plus 100 basis points.