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A.M. Best Downgrades Issuer Credit Ratings Of Cincinnati Financial Corporation And Certain Property/Casualty Subsidiaries; Affirms Financial Strength Ratings

Offsetting factors include the challenge of managing a growing percentage of interest sensitive reserves in the current low interest environment, relatively small contribution of net income to the enterprise, and incurring costs related to new business strain and XXX reserving, which is partially offset by being funded through capital and surplus.

While A.M. Best believes positive rating actions are unlikely in the near term, key factors that could trigger negative rating actions on CIC's ratings include the continued deterioration of underwriting and operating results, particularly if the resulting performance is materially below similarly rated peers and results in lower risk-adjusted capitalization.

The ICRs have been downgraded to “aa-” from “aa ” and the FSR of A+ (Superior) has been affirmed with a stable outlook for The Cincinnati Insurance Companies and its following property/casualty members:

  • The Cincinnati Insurance Company
  • The Cincinnati Indemnity Company
  • The Cincinnati Casualty Company

The FSR of A (Excellent) and ICR of “a+” have been affirmed with a stable outlook for:

  • The Cincinnati Life Insurance Company

The FSR of A (Excellent) and ICR of “a” have been affirmed with a stable outlook for:

  • The Cincinnati Specialty Underwriters Insurance Company

The following debt ratings have been downgraded to “a-” from “a”:

Cincinnati Financial Corporation—

-- $28.0 million 6.90% senior unsecured debentures, due 2028

-- $371 million 6.125% senior unsecured notes, due 2034

-- $391 million 6.92% senior unsecured debentures, due 2028

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition , which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “Catastrophe Analysis in A.M. Best Ratings”; Catastrophe Risk Management Incorporated Within the Rating Analysis”; “Natural Catastrophe Stress Test Methodology”; The Treatment of Terrorism Risk in the Rating Evaluation”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.



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