A.M. Best Affirms Credit Ratings of The Cincinnati Life Insurance Company

A.M. Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a+” of The Cincinnati
Life Insurance Company
(Cincinnati Life) (Fairfield, OH), a wholly
owned subsidiary of The Cincinnati Insurance Company (CIC), and
an indirect subsidiary of Cincinnati Financial Corporation (CINF)
[NASDAQ:CINF], CIC’s ultimate parent. The outlook of these Credit
Ratings (ratings) is stable.

The ratings reflect Cincinnati Life’s adequate risk-adjusted
capitalization, good quality investment portfolio, positive premium
growth trends in its core ordinary life insurance line of business and
its strategic role within CINF.

While Cincinnati Life’s risk-adjusted capital is adequate, it has been
declining on a year-over-year basis. The recent declines in statutory
surplus reflect operating losses primarily tied to retaining Regulation
XXX reserves, which have added to the statutory expense strain
associated with new business production. In addition to the challenges
in managing the statutory new business expense strain related to
ordinary life sales, the company continues to address spread compression
on legacy interest-sensitive reserves in the low interest rate
environment. On a GAAP basis, Cincinnati Life has reported increased net
income in recent years. However, the company contributes modestly to the
revenue and earnings of the enterprise. A.M. Best believes that with the
implementation of principles-based reserving in 2017, statutory
operating results will improve due to the elimination of Regulation XXX
reserving on new term life business.

This press release relates to Credit Ratings that have been published
on A.M. Best’s website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best’s
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best’s Credit Ratings

A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its
subsidiaries. ALL RIGHTS RESERVED.

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