Kenneth W. Stecher, president and chief executive officer, commented, "The balance sheet strength of Cincinnati Financial Corporation grew as of September 30, 2010, with assets topping $15 billion and shareholders' equity reaching $5 billion.

"Book value per share rose 6 percent during the third quarter and 5 percent over the nine-month period. The increase for both periods was primarily due to increased fair value of our investment portfolio, with our common stock portfolio growing more than the bond portfolio during the third quarter. Investment income rose compared with the year-ago quarter, but the trend for the sequential quarter declined as we replaced matured or called bonds with ones that generally pay lower interest.

" We sold our Verisk holding during the third quarter and plan to reinvest the proceeds - more than $80 million of after-tax realized gains - in dividend-paying equities. Realized investment gains on equity sales more than offset a negative income contribution from property casualty insurance operations, with market and economic pressures continuing to affect demand and pricing in our commercial business segment.

" We expect initiatives already in progress to drive incremental improvement of our insurance underwriting results. In the interim, our exceptional level of financial strength lets us honor our strong relationships with shareholders, independent agent representatives and policyholders by maintaining consistency and a long-term approach. This month, shareholders received a regular cash dividend that reflected 50 consecutive years of annual increases, a record matched by only a handful of public companies."

Stecher noted, "With the support of our agents, we are declining business we consider underpriced and, at the same time, enjoying growth in states and lines of business that we have targeted for premium growth. Our total new business premiums rose $2 million over last year's third quarter, thanks to increases from states where we began marketing since 2008, as well as from personal lines. Overall written premiums, which include renewing policies at our high policy retention rate, also rose slightly for the quarter. Written premium growth in personal lines and excess and surplus lines more than offset the 3 percent decline in our larger commercial segment.

"Our overall property casualty combined ratio was unsatisfactory at 103.9 percent for the quarter and 104.7 percent for the nine months. Profitability of commericial casualty, our largest line of business and representing nearly one-third of our commercial segment, continued strong.

"Our challenge remains to improve performance of our homeowner personal line of business and our workers' compensation commercial line, which have been offsetting otherwise profitable overall underwriting results. One of the ways we evaluate the effects of our underwriting initiatives is to look at the loss and loss expenses ratio before catastrophe losses and prior accident year reserve development. For the nine months, that measure for commercial lines came within 1 percentage point of full-year 2009 although pricing trends worsened. The same measure for personal lines, while still below a break-even point, improved almost 3 percentage points.

"We believe pricing precision accounts for much of the improvement, and we will repair our underperforming lines by targeting further precision. We first used predictive analytics tools for this purpose in homeowners, then workers' compensation and more recently for the personal auto line of business, and we are developing them for our other major lines of commercial business.

"In addition, we are addressing underwriting performance through several other initiatives. We are taking selective rate increases for homeowners, speeding up our response to workers' compensation claims, providing more specialized staff support for that line and expanding our proactive loss control services. All of these actions, together with our reserve practices that consistently produce favorable development over time, put us on track to resume historical underwriting results well above industry averages.

"In conclusion, we remain confident in our ability to deliver better results and shareholder value over the long term. Our time-tested business model and financial strength is the foundation. Strategic initiatives to improve operating performance are beginning to bear fruit and also place us in a better position to grow earnings at a faster pace when market conditions are more favorable."

For additional information or to hear a replay of our October 28 conference call webcast, please visit www.cinfin.com/investors.

(See attached tables for 2010 reconciliations; prior-period reconciliations available at www.cinfin.com/investors.)

Cincinnati Financial Corporation prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners' (NAIC) Accounting Practices and Procedures Manual and therefore is not reconciled to GAAP data.

Management uses certain non-GAAP and non-statutory financial measures to evaluate its primary business areas - property casualty insurance, life insurance and investments. Management uses these measures when analyzing both GAAP and non-GAAP measures to improve its understanding of trends in the underlying business and to help avoid incorrect or misleading assumptions and conclusions about the success or failure of company strategies. Management adjustments to GAAP measures generally: apply to non-recurring events that are unrelated to business performance and distort short-term results; involve values that fluctuate based on events outside of management's control; or relate to accounting refinements that affect comparability between periods, creating a need to analyze data on the same basis.