NEW YORK, Nov 6 -Standard & Poor's Ratings Services said today that it affirmed its double-'A'-minus counterparty credit and financial strength ratings on The Cincinnati Insurance Co., The Cincinnati Life Insurance Co., The Cincinnati Casualty Co., and The Cincinnati Indemnity Co. (collectively referred to as CIC) based on CIC's strong competitive position, which stems from its extremely loyal and productive agency force, high business persistency, strong capitalization, and excellent financial flexibility.
Standard & Poor's also said that it affirmed its single-'A'-plus counterparty credit and senior debt ratings on Cincinnati Financial Corp., CIC's parent.
The outlook on these companies is stable.
Counteracting these positive factors are CIC's aggressive investment strategy and relatively slow response to significant market changes. "The continued long-term success of CIC's business model is partially dependent on market conditions remaining relatively steady because management's approach to the marketplace and CIC's aggressive position in stocks and catastrophe exposure could affect the quality of its capital," said Standard & Poor's credit analyst Polina Chernyak.
CIC's strong competitive position in the standard lines property/casualty market is largely a function of its well-established, long-term agency relationships. An understanding of the needs of independent agents--together with a very favorable contingent commission structure and competitive products and services--has resulted in an extremely loyal and productive distribution channel. This, in turn, has allowed CIC to report strong premium growth and strong historical operating performance relative to its peers.
Standard & Poor's believes CIC has adopted a very successful operating strategy, with underwriting and claims representatives working from their homes and living in the local markets they serve, eliminating the need for branch offices. This strategy allows the company to boast extremely low operating expenses relative to competitors and to use this advantage to pay very good commissions to its agents.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.