Cincinnati Financial Corporation

2009 Third-quarter Letter to Shareholders

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December 1, 2009

To Our Shareholders, Friends and Associates:

Your shareholders' equity in Cincinnati Financial Corporation rose $444 million since year-end 2008, totaling $4.626 billion, or $28.44 on a book value per share basis, at September 30, 2009. Most of that increase took place during the third quarter as book value per share grew 11.6 percent. For the first time in several quarters, every major book value performance driver generated a positive contribution (shown after tax effects):

• 14 cents – Underwriting profit from property casualty insurance operations
• 4 cents – Life insurance earnings
• 41 cents – Investment income (other than life and reduced by non-insurance expenses)
• 46 cents – Realized investment gains
• $1.63 – Unrealized investment gains on bonds
• 66 cents – Unrealized investment gains on stocks

The total increase for the quarter was $2.95 per share, net of your 39.5 cent shareholder dividend declared in August. Your dividend includes a half-cent increase, marking the 49th consecutive year of dividend increases and keeping your company in the very elite ranks of companies with this long record of consistency.

We measure our value creation ratio, which combines book value growth plus shareholder dividend contributions. Historically, this measure strongly correlates over the long term with total shareholder return. Your company's 15.0 percent value creation ratio for the first nine months of 2009 is favorable for future shareholder returns.

We believe the adage that every challenge is an opportunity in disguise. In addressing the economic, market and business challenges that have arisen since 2008, we identified and acted on opportunities to become a stronger competitor, positioning your company for improved capital, profitability and growth over time. We are confident in our strategy and our ability to successfully execute on our plans over the coming quarters.

As milder third-quarter weather brought lower catastrophe losses, the clouds began to clear in other respects too. Income from our more diversified and balanced investment portfolio was up from the second quarter, and we expect by year-end to see a favorable trend for comparable quarters. Our new agencies appointed in 2008 or 2009 in Western states produced a healthy amount of our new business. Agents responded to our 2008-2009 product line expansions, including expansion of personal lines to several areas and introduction of excess and surplus lines. We continued applying predictive modeling techniques to refine our pricing of workers' compensation and homeowners policies, improving our ability to identify and attract higher quality accounts.

Our projects to develop new policy administration systems moved toward the deployment phase during the third quarter. Agents in five states began early in the fourth quarter to quote and issue commercial packages and auto policies from our new commercial system, which for the first time allows agents to choose company billing of the policyholder. We are in the testing phase for the next version of our Web-based personal lines administration system, with deployment planned for early 2010. Our real-time technology efforts, designed to increase transactional efficiency for our agents, recently qualified your company for the 2009 Interface Partner Award from insurance technology company Applied Systems.

We made good progress through the third quarter on all major initiatives, including steps to expand capabilities, achieve efficiencies and diversify risks. This work supports and increases the power of our agent-centered, relationship-based approach, increasing our financial and operational advantages. We are prepared to grow our business, and your shareholder value, as we respond to the challenges and opportunities that lie ahead.

Respectfully,

/S/ John J. Schiff, Jr. John J. Schiff, Jr., CPCU Chairman of the Board

/S/ Kenneth W. Stecher Kenneth W. Stecher President and Chief Executive Officer

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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