Current economic and pricing pressures raise strategic importance of growth initiatives

Mild catastrophe losses in July and August followed by mid-September storms

Capital gains expected for quarter, despite sales and expected write-offs of financial services holdings

CINCINNATI, Sept. 16 /PRNewswire-FirstCall/ -- Cincinnati Financial Corporation (Nasdaq: CINF) management will participate in the RBC Capital Markets Financial Institutions Conference in Boston on September 16 and 17, 2008, and speak with investors in Chicago and New York the following week. At those meetings, management expects to comment on modest revisions to its outlook for full-year 2008.

'2008 has been an unusual year for our company, our industry and the overall economy,' said Kenneth W. Stecher, president and chief executive officer. 'While these events may hamper our near term results, we are staying focused on initiatives based on strategies that have produced value through many economic and insurance cycles. Over the years, we have deliberately created a large cushion of assets and financial flexibility, allowing us to consistently deliver superior products and service, increase shareholder dividends and invest in the future.'

Property Casualty Marketplace

Stecher said, 'With continued pressure on the economy and on insurance prices, our earlier estimate that full-year 2008 premiums would decline no more than 5 percent now appears slightly optimistic. Our premium base for important business coverages is policyholder revenues and payrolls, which appear to be contracting. On the positive side, our independent agents continue to bring us quality business, and we continue to establish and successfully open new paths to future growth.

'In the past months, we solidified our plans to appoint agencies and begin writing business in selected Texas markets by year end. We introduced our excess and surplus lines capabilities to additional agencies in more states, staying on track with our plans to market these products in 33 states by year-end. We continued to appoint new agencies and introduce personal lines capabilities in new geographies. We look to 2009 for momentum in all of these areas, as well as advances in our technology that will make it even easier for agents and their policyholders to do business with our company.'

Third-quarter Catastrophe Losses

Stecher noted, 'In our mid-year announcements, high catastrophe losses caused us to temper expectations for full-year property casualty profitability despite strong underlying trends. Through the first week of September, third-quarter severe weather losses appeared to return to a more normalized level and we are estimating total policyholder losses of up to $20 million for two July storms and one August storm.

'More recently, we believe our losses from Hurricane Ike in the Gulf Coast region will be minimal, but the hurricane led to September 14 wind storms in the Midwest. While it will be some time before power is fully restored to the region, our claims associates already are working alongside our agents to help policyholders and assess the extent of the damage.

'We will include complete third-quarter catastrophe loss data in our final third-quarter results to be announced on October 29, 2008,' Stecher added. 'On August 6, 2008, we had indicated that we believed our full-year combined ratio might exceed 100 percent, with catastrophe losses contributing as much as 9 percent to the ratio. Until more information is available on the September 14 wind losses as well as any subsequent catastrophe events, we cannot determine if these metrics require adjustment, although we continue to see strong underlying insurance profitability.'

Investment Portfolio

Stecher noted, 'As previously announced, financial market conditions have presented ongoing challenges to our investment portfolio in 2008, with full-year investment income now expected to decline more than 10 percent from 2007. These market events continue to offset the benefits of our actions.

'We manage our portfolio to balance near-term income generation with long-term book value growth potential. The July sale of more than half of our Fifth Third Bancorp (Nasdaq: FITB) position yielded a net after-tax realized investment gain of $225 million that will be included in third-quarter results with other sales that also produced gains.