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Investing.com -- Fitch Ratings has upgraded Cincinnati Financial Corporation’s (NASDAQ:CINF) Insurer Financial Strength ratings to ’AA-’ from ’A+’ on Wednesday. The credit rating agency also raised the company’s Issuer Default Rating and senior unsecured notes to ’A+’ from ’A’ and to ’A’ from ’A-’, respectively. All ratings have a Stable outlook.
The upgrade primarily reflects Fitch’s improved assessment of CINF’s capitalization and its sustained strong underwriting performance, along with a very strong company profile. Fitch also noted the company’s above-industry risky asset ratio in its evaluation.
Cincinnati Financial’s balance sheet strengths include conservative operating subsidiary capitalization and modest financial leverage, with a financial leverage ratio of 5% as of June 30, 2025. The property/casualty group maintained an "Extremely Strong" score on Fitch’s Prism capital model at year-end 2024.
The company held $5.1 billion in cash and liquid assets at the holding company level as of June 30, 2025, with $4.7 billion invested in common stocks. Fitch pointed out that the company does not hedge its equity holdings.
For the first half of 2025, Cincinnati Financial reported a GAAP combined ratio of 104%, which was 8 percentage points worse than the same period last year, primarily due to elevated catastrophes, specifically the California wildfires. Despite this, Fitch projects that the second half of 2025 will be profitable enough to offset these losses, resulting in a modest underwriting profit for the full year.
Fitch highlighted the company’s established independent agency system as contributing to its value proposition and operating success. While a small portion of CINF’s business utilizes brokers, the company’s business profile remains focused on independent agents.
The rating agency noted that Cincinnati Financial’s asset allocation to equities remains nearly double industry norms, but its strong capitalization and cash flow provide protection against short-term valuation fluctuations. The company has reported favorable prior-year reserve development for 33 consecutive years.
Factors that could lead to a future downgrade include a reduction in capital assessment, sustained underwriting losses, or financial leverage exceeding 15%. Potential upgrade factors include an improved company profile, a sustained GAAP combined ratio of 93% or better, or further improvement in capital assessment.
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