Cincinnati Financial Corporation

Chairman and President's Letter

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Condensed Balance Sheets and Income Statements

Cincinnati Financial Corporation and Subsidiaries
(Dollars in millions)		At December 31,
		2007				2006
Assets
Investments			12,261				13,759
Cash and cash equivalents			226				202
Premiums receivable			1,107				1,128
Reinsurance receivable			754				683
Other assets			2,289				1,450
Total assets		$	16,637			$	17,222
Liabilities
Insurance reserves		$	5,445			$	5,305
Unearned premiums			1,564				1,579
Deferred income tax			977				1,653
6.125% senior notes due 2034			371				371
6.9% senior debentures due 2028			28				28
6.92% senior debentures due 2028			392				392
Other liabilities			1,931				1,086
Total liabilities			10,708				10,414
Shareholders’ Equity
Common stock and paid-in capital			1,442				1,406
Retained earnings			3,404				2,786
Accumulated other comprehensive income			2,151				3,379
Treasury stock			(1,068)				(763)
Total shareholders’ equity			5,929				6,808
Total liabilities and shareholders’ equity		$	16,637			$	17,222

(Dollars in millions except per share data)		Years ended December 31,
		2007				2006				2005
Revenues
Earned premiums		$	3,250			$	3,278			$	3,153
Investment income, net of expenses			608				570				526
Realized investment gains and losses			382				684				61
Other income			19				18				16
Total revenues			4,259				4,550				3,767
Benefits and Expenses
Insurance losses and policyholder benefits			1,963				2,128				1,911
Commissions			624				630				627
Other operating expenses			480				463				406
Total benefits and expenses			3,067				3,221				2,944
Income Before Income Taxes			1,192				1,329				823
Provision for Income Taxes			337				399				221
Net Income		$	855			$	930			$	602
Per Common Share
Net income — basic		$	5.01			$	5.36			$	3.44
Net income — diluted		$	4.97			$	5.30			$	3.40

This report contains forward-looking statements that involve potential risks and uncertainties. For factors that could cause results to differ materially from those discussed, please see the most recent edition of our safe harbor statement under the Private Securities Litigation Reform Act of 1995. To view or print the edition in effect as of this report's initial publication date, please view this document as a printable PDF.

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