Fitch Ratings Downgrades Cincinnati Financial (CINF); Rating Outlook Negative

July 17, 2008 2:04 PM EDT

Fitch Ratings has downgraded the Issuer Default Rating (IDR) of Cincinnati Financial Corporation (CFC)(Nasdaq: CINF) to 'A' from 'AA-' and its senior debt ratings to 'A-' from 'A+.' Additionally, Fitch has downgraded the insurer financial strength (IFS) ratings of CFC's three standard market property and casualty insurance subsidiaries led by The Cincinnati Insurance Company (CIC) and its life insurance subsidiary, The Cincinnati Life Insurance Company, to 'AA-' from 'AA'. The ratings are removed from Rating Watch Negative. The Rating Outlook is Negative.

The rating action is primarily driven by a significant decrease in shareholders' equity in 2008 as a result of a decline in the value of CFC's investment portfolio. In addition, CFC's operating results have been affected by an unusually high level of catastrophe losses, lower investment income, and less favorable market conditions.

The Negative Outlook reflects the continued downside risk in CFC's investment portfolio, particularly within its financial sector equity holdings, coupled with competitive market conditions across a number of insurance lines and a lower level of investment income that will have an impact on operating income. Fitch will continue to monitor the company's efforts to reduce its equity concentration risk and re-balance its investment portfolio.

Cincinnati Financial Corporation (CFC) markets commercial insurance policies and personal life insurance policies through a select group of independent agencies that offer its property casualty insurance products. [SM]

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