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November 18, 2010

To Our Shareholders, Friends and Associates:

Your company, like others in our industry, faces significant challenges as we continue to adapt our operations in a tough insurance environment. Some insurers appear to be cutting prices to build market share and meet near-term goals. In keeping with the Cincinnati philosophy, we choose to pursue adaptive solutions that align with long-term strategies and relationships.

Our solutions involve offering our independent agency partners more to sell in terms of value and service, along with reasonable prices and a sound underwriting approach. We believe the best way to grow and profit is to help these agencies prosper. Our commitment to our agent-centered mission requires that we steadfastly meet their current needs while also evolving and adapting to become the company they and their clients need tomorrow.

We create opportunities to listen and fully understand the value agents place on current or proposed Cincinnati attributes and services. Our extensive team of field representatives interacts daily with agency staff; our executives travel regularly to meet with agents in their offices; and earlier this year we asked an independent firm to survey our agents.

The messages we hear are consistent. Agents tell us that a strong technology infrastructure is in a sense "the price of admission" to earning their business, and we have responded with new policy administration systems. They say they would welcome more direct client support before and after the sale, and we are working to do that with our new Target Markets programs, CinciSafe™ loss control services and further development of online services for policyholders.

In any phase of the insurance market cycle, improving the value and service we give agents and policyholders is the best route to assuring future solid performance of our property casualty insurance operations. One of our three overarching corporatewide goals includes growing our share of business within our appointed agencies. Our target is to earn the No. 1 or No. 2 carrier status in 80 percent of our agencies appointed for five or more years, up from the current measure of approximately 75 percent. To hit that target, we're focusing on improving our handling of small business accounts and our interactions with consumers, so agents can expect Cincinnati to give their clients a targeted, consistent, superior experience.

Inside this Letter to Shareholders, you'll read about initiatives to support two more corporatewide goals. The first goal is to continue building our already strong capital to create long-term value. We have the investment-related part of our house in good order to weather storms in financial markets, but it will be challenging to find opportunities to increase investment income in the near future. To accomplish our objectives related to building capital, we must operate our insurance business more profitably. We're harnessing the power of predictive analytics to assist in developing competitive, more precise pricing. The models and metrics we set up will help us identify trends and challenges early, allowing for management decisions informed by up-to-date, granular data. We expect to develop one- , three-, five- and 10-year growth and profitability plans for each territory, state and agency.

The third corporatewide goal involves improving our internal processes, both to support our other goals and to reduce costs. We are taking opportunities to implement straight-through processing for select life insurance products and working to identify similar opportunities in our property casualty operations. Our new automation is bringing more efficient processes and better use of staff resources. Ultimately, all of these efforts will reduce costs, improving our service, agent and policyholder satisfaction and your shareholder return.

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	/S/ Steven J. Johnston Steven J. Johnston, FCAS, MAAA, CFA Senior Vice President and Chief Financial 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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