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Executives

Ken Stecher - Chairman

Lisa Love - SVP, General Counsel and Corporate Secretary

Melissa Bruner - Assistance Secretary, Cincinnati Insurance

Brandon McIntosh - Senior Shareholder Services Manager, Cincinnati Insurance

Eric Mathews - VP and PAO

Patricia Karr Seabrook - Miller Howard Investment

Steve Johnson - President and CEO

Analysts

Cincinnati Financial Corporation (CINF) 2013 Annual Meeting of Shareholders April 27, 2013 9:30 AM ET

Ken Stecher

Good morning. Thank you for coming today and it’s my honor to be with you at Cincinnati Financial Corporation’s Annual Meeting of shareholders. I am Ken Stecher chairman of Cincinnati Financial.

At this time, I’d like to formally call the meeting to order. If any registered shareholder wishes to turn in your proxy, please raise your hand and one of the inspectors of election will collect it. Also, any registered shareholder wishing to vote in person, can now come to see the inspectors of election here to my left to facilitate voting in person. Thank you.

I will ask Lisa Love, Senior Vice President, General Counsel and Corporate Secretary to read the notice of the meeting, Lisa?

Lisa Love

Thank you Mr. Chairman. I certify that on March 15, 2012 notice of the annual meeting of the shareholders was mailed to those persons who were shareholders of record of the company on March 1, 2013. That notice provided that the annual meeting will be held at 9:30 AM on Saturday, April 27, 2013 at the Cincinnati Art Museum. And that the items of business to be considered at the meeting are; electing 15 directors for one-year term; ratifying the selection of Deloitte & Touche LLP as the company's independent registered public accounting firm for 2013; voting on a non-binding proposal to approve compensation for the company's named executive officers and voting on the shareholder proposal if properly introduced at the meeting and any other business that may properly come before the meeting. I will include a copy of the notice along with the minutes of the meeting in the company's records.

Ken Stecher

Thank you Lisa. Let me now introduce our appointed inspectors of elections. Molly Grimm, the Cincinnati Insurance Secretary; Tom Hogan Cincinnati Insurance Vice President and Corporate Counsel; Brian Judkins Dinsmore & Shohl LLP, Brandon McIntosh, Cincinnati Insurance Senior shareholder services manager, Todd Pendery, Cincinnati Insurance Vice President.

Inspectors please tabulate the shares represented in person and by proxy at this meeting. While inspectors tabulate the shares, let me follow with some introductions.

First I would like to introduce your company's directors. Please hold your applause until the end and we will recognize all of them at once and please stand as your name is called. The nominees for election at this year's meeting are Bill Bahl; Greg Bier; Linda Clement-Holmes, Dirk Debbink, Steven Johnston, Ken Lichtendahl, Rodney McMullen, Gretchen Price, Jack Schiff, Jr., Thomas Schiff, Douglas Skidmore, John S. Steele, Jr., Larry Webb, and Tony Woods. I am also on the standing for reelection at today’s meeting. I think, we should give all these directors a great round of applause.

Next I'll introduce the officers who in addition to me are on the stage, Jack Schiff Jr. is Chairman of the Executive Committee, Steve Johnson who is our President and Chief Executive Officer, Mike Sewell our Chief Financial Officer, Senior Vice President and Treasurer, Geoff Shear, Chief Insurance Officer and Executive Vice President of the Cincinnati Insurance Company, Marty Hollenbeck, Chief Investment Officer and Senior Vice President of Cincinnati Insurance and President and Chief Operating Officer of CFC Investment Company; Dave Popplewell, President and Chief Operating Officer of The Cincinnati Life Insurance Company; and Lisa Love, Senior Vice President, General Counsel and Corporate Secretary. We have many company officers here in attendance today and I would ask all of those to please stand.

And also would all the other associates who are here today please stand so we can recognize you also. Now I'd like to take a minute to welcome some other special guests to the meeting today, we have quite a few first time attendees, I would like to recognize you and thank you for coming and hopefully I did not miss anybody. We have Abby Johnston, Debbie Johnston, Andrew Jump, Jessie Moore, Karen Jones and Terry Jones, Jeff Hetfield, Juliet Signer, Barbara Pope, Melanie Elphan, Michael Old, and Bambi Branchfield. Thanks again for coming, we also have some first time and youngest attendees, we have three children from Brett Star, twins Cameron and Boden, I'm not sure who is the third one, but Brett thanks for bringing them to the meeting and they're going to be long time shareholders hopefully.

I also understand today that Nina and Miller Rogers are here so I want to welcome them, thank them for coming. And then there's a gentlemen who some of you know Bud Holmand, who has been a long time shareholder, he may be the oldest, but I'm not going to say that he is but we're going to thank Bud for coming and sharing this meeting with us.

From Deloitte and Touche, in case you have questions for them later I want to introduce (inaudible) the team of Deloitte and Touche, we have Scott Shark, Steve Suholtz, Sean Fullen, Matt Riggs and Mack Fratman. And I know we have a couple of retired Directors here today; I have seen Jim Benoski, and Alan Weiler and hopefully I have not missed anyone else but thank you for coming but thank you for coming.

This is our 30th consecutive year we held our Shareholder meeting here at the Cincinnati Art Museum and we thank Aaron Betsky, Museum Director and the Museum staff for beautiful this facility available to us.

At this time, the Inspectors maybe ready with their proxy's; Mr. McIntosh how many shares are represented in today's meeting?

Brandon McIntosh

Mr. Chairman, we the under signed inspectors of election duly appointed to act at the annual meeting of shareholders of Cincinnati Financial Corporation held on the 27th day of April 2013 respectively report as follows.

Number of shares represented in person-zero; number of shares represented by proxy 141, 550,000,591. Total number of shares represented 141,550,000,591 that’s 86% of the shares outstanding.

Respectively submitted Molly Graham, Tom Hogan, Brian Judkins, Todd Pendery and Brandon McIntosh.

Ken Stecher

Thank you, Brandon. We have quorum present and a meeting may proceed. Is there a motion to waive the reading of the minutes from the last shareholder meeting of April 28th 2012?

Lisa Love

Waive the reading of the minutes of the last annual meeting of shareholders and to approve the minutes as written.

Ken Stecher

Thank you Lisa; is there a second; thank you, all in favor? Opposed? Motion carried, thank you very much. We have four items of business to present this year before our inspectors tally the votes. I would like to also note that the polls are now open for each matter to be voted on at this meeting.

The first is the election of Directors. To nominate this slate of Directors listed on the proxy statement I will call on Melissa Bruner, Cincinnati Insurance Assistance Secretary.

Melissa Bruner

Mr. Chairman, I hereby nominate William F. Bahl, Gregory T. Bier, Linda W. Clement-Holmes, Dirk J. Debbink, Steven J. Johnston, Kenneth C. Lichtendahl , W. Rodney McMullen, Gretchen W. Price, John J. Schiff, Jr., Thomas R. Schiff, Douglas S. Skidmore, Ken W. Stecher, John F. Steele, Jr., Larry R. Webb and E. Anthony Woods for election of directors of the Company to serve for the term ending on the date of the annual meeting of shareholders in 2014 and until their successors are elected.

Kenneth Stecher

Thank you Melissa, are there any other nominations? Seeing none, I declared the nominations closed. The second order of bidders is to ratify the selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for 2013. To present that proposal I call Eric Mathews, Cincinnati Financial Vice President and Principal Accounting Officer.

Eric Mathews

Good morning, Mr. Chairman. I proposed that shareholders ratify the selection to Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for 2013.

Kenneth Stecher

Thank you, Eric. Is there any other discussion at this time? The third order of business is voting on nonbinding resolution to approve compensation for the Company’s’ named executive officers. To present this proposal I will call Betsy Erdle, Cincinnati Insurance Assistant Secretary.

Betsy Erdle

Mr. Chairman, I proposed shareholders approve the nonbinding resolution to approve compensation for the Company’s named executive officers.

Kenneth Stecher

Thank you, Betsy. Is there any discussion on this resolution? The last order of business to shareholders proposal requesting sustainability reporting, Patricia Karr Seabrook from Miller Howard Investment is here to present this proposal.

Patricia Karr Seabrook

Good morning, Miller Howard Investment filed a shareholder proposal for Cincinnati Financial to publish an annual sustainability report and reporting on the Company’s short and long term responses to environmental, social, and governance related issues relevant policies, practices, metrics and goals and topics such as greenhouse gas emission, water conversation, waste minimization, energy efficiency.

Additionally Miller Howard request with the Company is subject to role and reducing systemic harm to the United States and global economy as a side of well there is some climate change, is our position that the insurance industry in an unique position to leverage its expertise to communicate and to act on climate change and risks by informing public policy making by supporting the climate awareness among its customers by providing insurance product with the focus around clean energy and energy efficiency by providing incentives to customers to lower their carbon footprint incorporating climate change into investments strategies, reducing its environmental impact of business and reporting and being accountable, thank you.

Kenneth Stecher

Thank you, Patricia. Is there any other discussion at this point? Again, I would invite any registered shareholders present who want to vote in person to come down and see the inspectors of election. Well raise your hand and we’ll come to you for your comments. Seeing and hearing none, there is no further discussion on the proposals and no further business at this time, the polls are now closed for each matter to be voted on at this meeting. While the inspectors of election are tallying the votes, Steve and I will talk about your company’s 2012 performance and trends that may affect 2013 and beyond. You will have an opportunity to ask questions at the end of the meeting so please let us know if you want to hear more on any subject.

As we begin, let me remind you that some of the matters we will discuss are forward-looking and may involve certain risk and uncertainties. You may refer to various filings with the SEC and factors that could cause results to differ materially from those discussed. You can find reconciliations for non-GAAP measures in our most recent quarterly earnings news release which is available on the Investors webpage of our website cinfin.com.

We have a lot to be excited about Cincinnati Financial. The company is moving in the right direction using our proven strengths of financial stability, (AMC) relationships, and claims excellence, and working to add new strengths. We are confident in our ability to create future value and to be the carrier of choice for independent insurance agents.

To start our 2012 recap, I will mention two items that happened last fall which benefited the leadership of your company. First we expanded our Board of Directors in November to 15, adding someone who may be familiar to you from his past service at Cincinnati Financial, Dirk Debbink. Our shareholders benefit from our strongly engaged Board of Directors who share their perspectives for a wide variety of experiences.

Dirk has achieved outstanding success with his independent business in Wisconsin and with his service to our nation as I say Vice Admiral in Chief and Navy Reserve and Commander, Navy Reserve Forces. His leadership and experience in both realms get even more depth to our Board in management discussions.

Second, Geoff Shear accepted the additional responsibility of Chief Insurance Officer in September. Naming a Chief Insurance Officer unites our team of leaders responsible for profitable growth of our commercial, personal and excess and surplus lines of business. J. F. has brought people together, increasing collaboration to drive achievement of our shared goals. Your company’s management team is excited about the progress the entire company has made to improve performance and the plans we have to continue to profitably growing our insurance operations.

To share with you details of that progress please welcome Cincinnati Financial President and CEO Steven Johnston.

Steven Johnston

Thank you Mr. Chairman, and thanks to all of you. It is juts great to see so many shareholders here today. I think we have a great message. This morning I am going to talk about our vision, our strategy, our goals and the progress that we are making together as a team towards achieving those goals. Our vision is quite simply to be best company serving independent agents.

Our strategy is an independent agency strategy. We were founded by independent agents over 60 years ago. Everything that we do strategically aligns our success with the agents that represent us with their success. A second and very important pillar of our strategy is our field focus. All of our field people work from their homes, in the communities of the agencies, and I think very important and something that differentiates us is that our field people have the ability, the authority and the expectation to make decisions. The third pillar, claims excellence. And you will see a little bit about this in more detail later. But we know that if we can shine on a claim that is our best form of advertisement. That is really where the river meets the road, and what we really strive to do.

The fourth pillar, financial strength, we are A+ rated by A. M. Best, we have over 5.7 billion in GAAP equity, supporting about 3.5 billion in net written premium. We sell a promise and we need to be there to deliver on that promise. The entire strategy then rest on a foundation of ethical behavior. We try to execute the golden rule to treat each person the way we would want to be treated. And we are happy that we were recognized by Forbes Magazine again this year, amongst their most top trustworthy companies, and in fact the most trustworthy or highest score in the insurance category.

Having the clear vision, a great strategy has put us in position to put out some very ambitious challenging but achievable goals. We went over this last year and will go over them again today. Our goal in terms of growth is to be at 5 billion in direct written premiums by 2015. We need to that profitably with the goal of a combined ratio of 95% or better. We need to do it efficiently with an expense ratio of 30% or better.

We also recognize the importance of deep ties with independent agents and we have a goal to continue to be number one or number two and 75% of the agents that have represented us for 5 years or more. Then of course investing is an important part of our strategy and our goal is to outperform the S&P 500 with our equity portfolio and to grow investment incomes. We think our clear vision, our winning strategy clearly articulated goals is showing up in our numbers.

Here we show net income and operating income from 2009 through the first quarter. The green bars are the overall net income, the lines represent operating income. The only difference is

The realized and unrealized gains in our investment portfolio.

Now, we see a nice strong trend. If you look at the line there, we were up to $2.40 in operating earnings per share at the end of 2012. The positive trend continued into the first quarter with $0.78 which is 62.5% over the 48% that we showed in the same quarter year ago.

Driving this is underwriting profitability. After four consecutive years with an underwriting profit that was unsatisfactorily above 100 in 2012, as you see by the bar here, we came in at 96.1 and that’s a 13.2% improvement over 2011. I think importantly, if we look at the core or ex-cat combined ratio, it also showed good improvement down to 86.1 and so we really need to continue to strive, we’re not quite to that 95% goal yet but we’re making good progress. We continued into the first quarter with the combined ratio of 91.2 down from 99.1, a year ago.

So, very important and it’s very much a team effort, everybody on the team has contributed to this underwriting profit including our agents they’re our frontline underwriters.

Premium growth is important, look at this trend in our premium growth. We were actually negative or not growing back in 2009 is steadily increased to 12% growth in 2012 and we’re actually up 15% in the first quarter. I think it’s very solid growth and that we’re seeing it from every single PNC sector has grew by double-digits in 2012.

It was fueled by new business, this chart shows our new business and we hit 501 million in new business a year ago, that’s the first time in the history of Cincinnati Insurance Company that we’ll ever be close to 500 million in all-time record.

Here we see something that's benefiting our growth. There is appointment of new agents. We appointed in 2012 agents to take us to 1,758 relationships. In terms of the overall premium volume that the agents that we appointed in 2012 growth it was $2.2 billion and we have a track record we’re for in an agency for 10 years or more, our share gets to 18%. So, you can see the confidence that we have to sustain our growth with the appointment of new agents.

I think very important, we’re talking lot about team in terms of our growth, in terms of our sales is been our team effort to sales. Starts with the agent, obviously as the appoint person but we also from Cincinnati will provide sales representatives, loss control people, claims people everybody in our organization is in the sales department. We have a short video that we would like to show you here that describes the team approach to selling.

[Video]

How about that, what a nice team approach to selling. Thank you that's great. You can see why that gives us such confidence in our sales goals, and with this next slide we show the direct written premium that of all everything including life insurance as we move towards 5 billion by 2015, you can see the good steady growth that we've had. And one thing that's nice to see here in the first quarter we eclipsed one billion so if you multiply that by four and annualize we're over 4 billion on a run rate basis.

Cincinnati life insurance also contributes greatly. Here you can see their earnings per share and how steady they are, it's not dependent on the weather so they give us a nice balance and we're off to a good start in 2013 with $0.08 a share.

Investing is a very important part of our strategy, these bars show the growth in investment income and you can see nice steady growth from 2009, just over 500 million up to 531 million at the end of 2012 and it's really tough, because everybody knows how interest rates are going down as bonds mature we have to reinvest, there's a lower rate, but I think the prudent investing in common stocks that pay a dividend and increase the dividend is helping us to grow our investment income.

And then we look at the appreciation of the assets, this also has been very important, and if we look back at 2009, where the unrealized gains in the investment portfolio were just over a billion to where we are today at over 2.2 billion. When you think about it in terms of writing 3.5 billion in written premium we nearly have enough capital just in the gains on our investment to support our operations. So investments are extremely important to us.

The good profitability, the good growth, the good investing, the showing up in our balance sheet, these charts show our statutory surplus which are the green bars and our GAAP equity which are the blue bars. The statutory surplus is now up over $4 billion against a 3.5 billion in net written premium so the premium to surplus ratio under one very strong, when we throw in the cash and marketable securities that the holding company, we're now up to nearly 5.8 billion in GAAP equity. We divide that by the number of shares the GAAP equity we get to each shareholders book value per share, and again its reflecting very steady growth and the strong growth in the balance sheet has allowed us to increase our dividend and in fact we increased our dividends for the 52nd year in 2012. So, not just paid evidence every year for 52 years, we have increased it every year for 52 years. That can only be matched by nine other publicly traded companies. When we look at the appreciation on book value, we look at the dividend; the total of those is our value creation ratio.

Our primary financial goal, we reflect the reason that we really focus on value creation ratios is very correlated to the total shareholder's return of your stock.

If we started in with a dollar back in 1987 and invested them at a rate of the value creation ratio. It would go up along this light blue line; Carolina blue. The dark line is the total shareholder return. We will call that (inaudible) blue. This will keep anybody from North Carolina; we will keep you involved here.

We can see the strong correlation and why we strive to increase book value to increase dividends because that drives shareholder value and the value of your shares.

This is another picture that shows the performance we have had with the total shareholder return stock. Each one of these bars, sets of bars, compares us to the S&P 500, the Cincinnati stock to the S&P 500 and S&P's index of property and casualty stocks.

And they contemplate a holding period up through April the 19th. So, if we look at the most recent one, year-to-date performance, the blue bar Cincinnati Financial total shareholder return 22.8% so far this year versus the S&P 500 which is at 9.7 in the index of P&C stocks which is up 17.3 so we've outperformed.

We go back another year to a purchase date of the end of 2011, we see the same thing strong out performance worth 64.8% out performing both index. If we go back to another year, to 2010-the same picture, 2009 the same picture and then back from year end 2009 to April 19'th your money had more than doubled at a 119% out pacing both indexes. And over the longer pull also back to 2002, over 100% appreciation from the purchase date at the end of 2002 through April 19th. The progress, the performance it's all being recognized.

Now you have seen a lot of very good performance, a lot of good numbers, good stock performance but they're really all byproducts. The driver is to execute and run a great insurance company. You have seen how teams selling come into play in terms of selling the product. I think most importantly how we settle claims differentiates us. by differentiating the claim we’re providing great value and if we continue to do that all the numbers will take care of themselves. So, I have another short video that really will demonstrate the value of the claim service.

[Video]

How about that? Now we yes we have several members from our claims department here led by Marty Mullen, Marty why don’t you and all the claims people stand up? We would like to recognize you. Jim you too. (Inaudible).

I think in conclusion what we'd like to communicate today is we have a clear vision. We have a very effective strategy. We have set of demanding but achievable goals and I think most importantly we are affectively as a team executing and delivering great value from the loss control to the point of sale to the claims of the ability of our insurance company. I think that should give you great confidence as we go forward into continued growth in the value of Cincinnati Financial Corporation. Thank you and I would like to turn it back over to our Chairman Mr. Ken Stecher.

Ken Stecher

Before we hear from the inspectors of election I would like to remind shareholders of a service we can provide for you. Shareholders of record can choose to hold shares and book entry form instead of keeping track of paper certificates. We want to make it easy to own Cincinnati Financial stock and to reinvest dividends compounding your returns overtime as Steve showed in one of the slides and Steve also your company again qualified for the S&P 500 dividend aristocrat our 52 year record of increasing dividends is matched by only a handful of companies. Inspectors do you have the preliminary results of the voting?

Molly Grimm

Mr. Chairman we the undersigned inspectors of election duly appointed to act at the annual meeting of shareholders of Cincinnati Financial Corporation told on the 27th day of April 2013 hereby submit our preliminary report on results of the voting. for the first proposal the election of directors each of this year's nominees received at least 92% of the shares present or represented and entitled to vote at the meeting for the second proposal approximately 98% of the votes cast were voted in favor of ratification of the appointment LLP as the Deloitte & Touche company’s independent audit firm for the third proposal approximately 97% of the shares present or represented and entitled to vote at the meeting were voted in favor of the non-binding proposal to approve the compensation for the company’s named executive officers. For the fourth proposal, approximately 24% of the shares present or represented and entitled to vote at the meeting were voted in favor of the shareholder proposal to require sustainability reporting. Respectfully submitted, Molly Grimm, Tom Hogan, Brian Judkins, Todd Pendery and Brandon McIntosh.

Ken Stecher

Thank you, Molly. It appears all directors have been elected. The proposal to ratify the appointment of Deloitte & Touché LLP as the company's independent audit firm, and a non-binding proposal to approve compensation for the company's named executive officers have passed. And a shareholder proposal to require a sustainability reporting did not pass.

The Inspectors of Election will furnish the Secretary with a written report of the final vote count with respect to the matters voted on today to be included in the minutes of this meeting. We’ll announce results once they are certified early next week.

Question-and-Answer Session

At this time, we will welcome your questions. We want to learn more about your interest in our business. Please come down to one of the two microphones we’ve set up to share your comment, or to ask your question, so that we can keep the meeting on schedule and allow everyone to speak, who wishes to. Please keep your comments or questions to two minutes or less.

Steve would you please join me at the lectern to help answer the questions. Is there any questions please.

Seeing no one moving forward, and it seems like there are no questions, but we would like to say Cincinnati Financial team and to our shareholders, we thank you very much for coming and showing the interest in our company. I think you saw today, the strength of the management team, the objectives that we have, the plan that we have going forward. We are executing on that now. We know we have to continue to execute to deliver the value to all of you but believe me we are intent on doing that. We have great opportunities to expand our business. We see great times ahead. As soon as the economy improves a little more and interest rate start to go up, as you can see, the earnings would really have an opportunity to increase, once the interest rates return. So thanks again for your interest. Please take a few minutes afterwards to talk to each other, share some additional refreshments, look forward to seeing you again next year. Thank you very much.

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