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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 26, 2004
CINCINNATI FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 0-4604 31-0746871
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6200 S. Gilmore Road, Fairfield, Ohio 45014-5141
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (513) 870-2000
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13a-4(c))
Item 7.01 Regulation FD Disclosure. On August 26, 2004, Cincinnati Financial
Corporation issued the attached news release titled "Cincinnati Financial
Transfers Investment Securities to Insurance Subsidiary." The news release is
furnished as Exhibit 99.1 hereto and is incorporated herein by reference. This
report should not be deemed an admission as to the materiality of any
information contained in the news release.
The information furnished in this report shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that Section, nor shall such information
be deemed incorporated by reference in any filing under the Securities Act of
1933, as amended.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CINCINNATI FINANCIAL CORPORATION
Date August 26, 2004
/s/ Kenneth W. Stecher
---------------------------------
Kenneth W. Stecher
Chief Financial Officer,
Senior Vice President, Secretary
and Treasurer
(Principal Accounting Officer)
Exhibit 99.1 - News release dated August 26, 2004, Cincinnati Financial
Transfers Investment Securities to Insurance Subsidiary
Exhibit 99.1
Cincinnati Financial Transfers Investment Securities to Insurance Subsidiary
- Transaction approved by Ohio Department of Insurance
- Ratio of holding-company investment securities to total
holding-company-only assets moves below 40%
CINCINNATI, Aug. 26 /PRNewswire-FirstCall/ -- Cincinnati Financial
Corporation (Nasdaq: CINF), an insurance holding company, today announced that
it has transferred investment securities with a market value of $1.600 billion
to The Cincinnati Insurance Company, its lead property casualty insurance
subsidiary. This action is related to the company's previously announced
application for exemptive relief under the Investment Company Act of 1940. The
transfer was authorized by Cincinnati Financial's board of directors on August
13, 2004, and approved by the Ohio Department of Insurance on August 24, 2004.
Chairman and Chief Executive Officer John J. Schiff, Jr. CPCU, commented,
"The Cincinnati Insurance Companies have long been among the best capitalized
and highest rated property casualty insurance groups in the country. That
financial strength has been supported by additional capital at the holding
company level. In many respects, the contribution of investment securities to
our lead insurance subsidiary is simply a housekeeping step. In fact,
consolidated financial statements of the corporation will not change as a
result of this action."
After the contribution of $1.600 billion in marketable investment
securities to The Cincinnati Insurance Company from the holding company, the
pro forma ratio of investment securities held at the holding company level
would have been 36.4 percent of total holding-company-only assets at June 30,
2004. While the transfer of the approximately 32 million shares of Fifth Third
Bancorp common stock lowers investment assets for the holding company, its
total assets are unchanged due to the offsetting increase in The Cincinnati
Insurance Company's net assets, which are reflected on the holding company
balance sheet as equity in net assets of subsidiaries.
Cincinnati Financial Corporation (holding company only)
Pro forma assets
(dollars in millions) Pro forma*
June 30, 2004 Adjustment June 30, 2004
Investment assets $4,517 $(1,600) $2,917
Equity in net assets of subsidiaries 3,350 1,600 4,950
Other assets 154 -- 154
Total assets $8,021 -- $8,021
Investment assets to total assets 56.3% -- 36.4%
* For comparison purposes, pro forma data adjusts the June 30, 2004,
balance sheet to show the effect as if the transfer of investment
securities had occurred on that date.
As announced on June 28, 2004, Cincinnati Financial Corporation
proactively had sought to clarify the holding company's status under the
Investment Company Act with the Securities and Exchange Commission. Cincinnati
Financial strongly believes the holding company is outside the intended scope
of the Investment Company Act because the company is primarily engaged in the
business of property casualty and life insurance through its subsidiaries.
Several tests and enumerated exemptions determine whether a company is an
investment company under the Investment Company Act. One test states that a
company is an investment company if it owns investment securities with a value
above 40 percent of its total assets (excluding assets of its subsidiaries).
Schiff added, "This transfer of assets shows our commitment to clarifying
the holding company's status. Even before the transfer, The Cincinnati
Insurance Company already had possessed generous capital and this is not a
means to accelerate growth or strengthen policy reserves. Rather, this action
provides us continued financial flexibility that supports our high financial
strength ratings, just as it did when the capital was held by the holding
company."
Cincinnati Financial Corporation offers property and casualty insurance,
its main business, through The Cincinnati Insurance Company, The Cincinnati
Indemnity Company and The Cincinnati Casualty Company. The Cincinnati Life
Insurance Company markets life and disability income insurance and annuities.
CFC Investment Company supports the insurance subsidiaries and their
independent agent representatives through commercial leasing and financing
activities. CinFin Capital Management Company provides asset management
services to institutions, corporations and individuals. For additional
information, please visit the company's Web site at http://www.cinfin.com .
This is a "Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995. Certain forward-looking statements contained herein
involve potential risks and uncertainties. The company's future results could
differ materially from those discussed. Factors that could cause or contribute
to such differences include, but are not limited to:
- unusually high levels of catastrophe losses due to changes in weather
patterns, environmental events, terrorism incidents or other causes
- increased frequency and/or severity of claims
- events or conditions that could weaken or harm the company's
relationships with its independent agencies and hamper opportunities to
add new agencies, resulting in limitations on the company's
opportunities for growth, such as:
- downgrade of the company's financial strength ratings,
- concerns that doing business with the company is too difficult or
- perceptions that the company's level of service is no longer a
distinguishing characteristic in the marketplace
- delays in the development, implementation, performance and benefits of
technology projects and enhancements
- amount of reinsurance purchased and financial strength of reinsurers
- inaccurate estimates or assumptions used for critical accounting
estimates, including loss reserves
- recession or other economic conditions or regulatory, accounting or tax
changes resulting in lower demand for insurance products
- sustained decline in overall stock market values negatively affecting
the company's equity portfolio, in particular a sustained decline in
the market value of Fifth Third Bancorp shares, a significant equity
holding
- events that lead to a significant decline in the market value of a
particular security and impairment of the asset
- prolonged low interest rate environment or other factors that limit the
company's ability to generate growth in investment income
- insurance regulatory actions, legislation or court decisions that
increase expenses or place the company at a disadvantage in the
marketplace
- adverse outcomes from litigation or administrative proceedings
- not receiving an exemptive order pursuant to the Investment Company Act
of 1940 from the SEC, and the resulting changes that would be required
in the company's operations
Further, the company's insurance businesses are subject to the effects of
changing social, economic and regulatory environments. Public and regulatory
initiatives have included efforts to adversely influence and restrict premium
rates, restrict the ability to cancel policies, impose underwriting standards
and expand overall regulation. The company also is subject to public and
regulatory initiatives that can affect the market value for its common stock,
such as recent measures affecting corporate financial reporting and
governance. The ultimate changes and eventual effects, if any, of these
initiatives are uncertain.
Readers are cautioned that the company undertakes no obligation to review
or update the forward-looking statements included in this material.
SOURCE Cincinnati Financial Corporation
-0- 08/26/2004
/CONTACT: Investors, Heather J. Wietzel, +1-513-603-5236, or Media,
Joan O. Shevchik, +1-513-603-5323, both of Cincinnati Financial Corporation/
/Web site: http://www.cinfin.com /
(CINF)
CO: Cincinnati Financial Corporation; Cincinnati Insurance Company; Fifth
Third Bancorp
ST: Ohio
IN: FIN INS
SU:
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