OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 19, 2002--A.M. Best Co. has affirmed the financial strength ratings of the subsidiaries of Cincinnati Financial Corporation (Fairfield, OH) (NASDAQ: CINF).
The affirmations include A++ (Superior) for the property/casualty group of The Cincinnati Insurance Companies and A+ (Superior) for The Cincinnati Life Insurance Company. A.M. Best has also affirmed the "aa" rating of a senior debt security issued by Cincinnati Financial Corporation. All rating outlooks are stable.
The ratings reflect The Cincinnati Insurance Companies' (the group's) superior capitalization, sustained profitability and the benefits that are derived from its long-standing independent agency strategy. These strengths are supported by the group's relatively moderate underwriting leverage, historically favorable operating profitability and advantages gained from its effective field support and agency management, market stability and its portfolio of insurance products. The ratings also reflect the financial flexibility of Cincinnati Financial Corporation, the group's parent, which maintains modest financial leverage and excellent cash flow to fund fixed charges and sustain short-term debt.
These strengths are somewhat offset by the group's high investment leverage, continued stockholder dividends and modest surplus growth caused by the recent decline in the equities markets and operating returns that are below the group's historical average. Nevertheless, A.M. Best views the rating outlooks as stable based on the expectation that risk-adjusted capitalization will continue to support The Cincinnati Insurance Companies' Superior rating, and underwriting and operating margins over the near term will improve, given management's initiatives such as stricter underwriting and price increases.
The rating affirmation of The Cincinnati Life Insurance Company is based on strong risk-adjusted capitalization and consistently positive operating results and new business growth. The rating is further supported by the company's strategic position within the group as well as the financial backing supplied by the parent. Partially offsetting these positives is the company's significant common stock leverage and its negative impact on overall capitalization in recent years.
The following members of The Cincinnati Insurance Companies have been affirmed at A++ (Superior) with a stable outlook:
-
The Cincinnati Insurance Company
-
The Cincinnati Indemnity Company
-
The Cincinnati Casualty Company
The financial strength rating of The Cincinnati Life Insurance Company has been affirmed at A+ (Superior) with a stable outlook.
The following debt rating has been affirmed:
Cincinnati Financial Corporation--
-
"aa" on the $420 million 6.90% senior debentures, due 2028
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.
CONTACTS: A.M. Best Co., Oldwick
Public Relations:
Jim Peavy, 908/439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Striegel, 908/439-2200, ext. 5378
rachelle.striegel@ambest.com
or
Analysts:
Koe Murphy / Daniel Ryan - P/C
908/439-2200, ext. 5036/5325
koe.murphy@ambest.com
daniel.ryan@ambest.com
or
Raj Shah - L/H
908/439-2200, ext. 5409
raj.shah@ambest.com