Kenneth W. Stecher, president and chief executive officer, commented, “As anticipated, 2009 is shaping up to be a challenging, transitional year for our company, our industry and our economy. Our first-quarter results affirm that view. At the same time, our progress on key initiatives affirms our confidence that we will emerge a stronger, more competitive company as conditions improve. Looking past 2009 to the 2010-2014 period, we continue to target a five-year value creation ratio of 12 percent to 15 percent growth, reflecting the total of our rate of growth in book value plus the rate of dividend contribution.

“The broader economic and investment market trends and the low pricing trend in commercial insurance all appeared to be in a holding pattern over the first months of 2009 — not getting much worse but not getting much better either. Continued soft pricing and two other items significantly affected our profitability for the first quarter. We announced on April 16 that our property casualty insurance operations — our main business — experienced high catastrophe losses from winter storms. Our claims representatives promptly assisted policyholders in the South, Midwest and East, and as of this week, 88 percent of the more than 8,600 reported claims from those storms are closed. We also reported on April 16 that we strengthened workers’ compensation reserves for claims incurred in prior years, recognizing that loss cost inflation, including medical costs, was higher than previously anticipated.

“We believe consistent and conservative reserving practices are never more important than during a period of economic distress. Likewise, we believe the superior claims service we provide in storm situations is an investment,” Stecher said. “It earns policyholder and agent loyalty, ultimately bringing us new business as policyholders spread the word. Our commitment to high standards of service and a long-term perspective persists through all phases of economic and industry cycles.

“We expect unfavorable economic, investment and insurance pricing trends to continue over the coming months, dampening 2009 results and masking the positive impact of progress on our strategic initiatives — which clearly are not in a holding pattern. Our strong capital, financial flexibility and commitment to our agency-centered business model have allowed us to push steadily forward with diversification of our equity investment portfolio; with geographical expansion that will better spread our risk and reduce our vulnerability to catastrophe losses; with our new surplus lines business; and with technology improvements that are making processing more efficient for our company and our independent agencies.”

Stecher continued, “Preserving capital is our first priority, supported by our initiative to diversify our $8.794 billion investment portfolio. At March 31, equity investments accounted for approximately 26.2 percent of our investment portfolio, reduced from 32.9 percent at year-end 2008 and now at the lowest level in many years. In the first quarter, we sold or reduced our holdings of some stocks that had appreciated to our target price, and others where we saw opportunities to improve portfolio diversification. Further, we sold our remaining bank stocks, consistent with our longstanding preference for dividend-paying stocks and the current lack of visibility on resumption of dividends from bank holdings. At quarter-end, no single sector accounted for more than 26 percent of the equity portfolio and no single holding accounted for more than 11 percent.

“Although we have reduced our near term exposure to the equity markets, we intend to continue to include common stocks as a key component of our investing strategy. Currently, we are purchasing more taxable and municipal bonds, which increased our pretax interest income for the first quarter by $20 million compared with interest income at this time last year. The increase was insufficient to offset a $46 million reduction in dividend income. We continue to invest for both income growth and potential for appreciation, anticipating that investment income may resume growth in the second half of the year.

“For our property casualty insurance operations, we are pursuing several new business growth initiatives, both to improve our long-term competitive position and to offset lower written premiums, which have been reduced by our emphasis on selectivity when writing or renewing accounts at prevailing low prices. While we do compete for high quality accounts, we do not aim to offer the lowest price due to the value of our coverages, claims service and multi-year policy contracts.

“New commercial business grew 14.9 percent in the first quarter. To generate increased new business that meets our standards, we continued adding to our sales force, appointing 18 new agencies in the first quarter. We added a third commercial marketing territory in our newest state of operations, Texas, and continued preparing to begin agency selection and marketing in Colorado and Wyoming later this year. Our personal lines operation also expanded in the first quarter; with the addition of Idaho and South Carolina, we now market homeowner and personal auto insurance in 29 states. These expansions help set the stage to diversify catastrophe risk arising from geographical concentration, although it generally takes time for new agency relationships to mature and for written premiums to grow.

“Our strong new business also reflected our agents’ very favorable response to our surplus lines products, available since the first quarter of 2008, when we wrote $1 million of new surplus lines business. Just a year later, our first-quarter 2009 new surplus lines business was $7 million.

“Our technology progress is making it possible to attract more professional agencies as we expand and to increase efficiencies that will save time and money for all of our agencies and our company. These advances also improve service for policyholders and give them more options. First-quarter milestones included enhancement of our claims system to allow many agencies to securely submit notice of loss online and introduction of a new online payment system for personal lines policyholders who are billed by our company instead of their agency. In the second quarter, we plan to begin offering direct billing of workers’ compensation policies.

“Our major projects are on track. We will take a major leap forward before year-end as agencies in 11 states begin using our new commercial policy administration system. It will offer efficiencies such as real time policy quote and issue and payment options including direct billing, monthly payments and electronic funds transfer. We expect this system to have a positive impact on future growth from our agencies.”

Stecher concluded, “First quarter was less than satisfactory for our company, and there are few signs that industry and economic conditions will improve in the near term. We are not daunted. We are carefully managing risk and prudently adapting, all the while working to build more value, service and stability for agents and policyholders, and ultimately more shareholder value.”

Additional information is available on our Web site, www.cinfin.com/investors, including an audio replay of the April 30^th conference call webcast.