Good morning, my name is Steve and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] Thank you. Dennis McDaniel, Investor Relations Officer, you may begin your conference.

Hello, this is Dennis McDaniel from Cincinnati Financial. Thank you for joining us for our fourth quarter 2014 earnings conference call. Late yesterday, we issued a news release on our results, along with our supplemental financial package, including our quarter-end investment portfolio. To find copies of any of these documents please visit our Investor website, cinfin.com/investors. The shortest route to the information is the quarterly results link in the navigation menu on the far left. On this call you’ll first hear from Steve Johnston, President and Chief Executive Officer; and then from Chief Financial Officer, Mike Sewell. After their prepared remarks, investors participating on the call may ask questions. At that time some responses maybe made by others in the room with us, including Cincinnati Insurance Company’s Executive Committee Chairman, Jack Schiff, Jr.; Chairman of the Board, Ken Stecher; Chief Insurance Officer for the Cincinnati Insurance Company, J.F. Scherer; Principal Accounting Officer, Eric Matthews; Chief Investment Officer, Marty Hollenbeck; and Chief Claims Officer for Cincinnati Insurance, Marty Mullen. First, please note that some of the matters we will be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties. With respect to these risks and uncertainties, we direct your attention to our news release and to our various filings with the SEC. Also a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP. With that, I’ll turn the call over to Steve.

Thank you, Dennis, and good morning everyone. As in recent years, I am speaking with you today from Murfreesboro, Tennessee, the fourth stop on our tour of sales meetings with our independent agents and more than 20 states. Meeting annually with agents is essential to our relationship oriented agency strategy. We also enjoy this part of our job and find it energizing. It’s important to sincerely thank our agents in person for contributing to another year of underwriting profit and premium growth and for trusting Cincinnati Insurance as we only opportunity to serve the people and businesses in their communities. Turning to our financial performance, we feel good about the strong operating results we reported for the fourth quarter and for the year 2014. They continue to reflect steady executing in our underwriting and pricing. We had our seventh consecutive quarter as investment income growth and rising valuations in equity security markets help this book value for your company. Careful underwriting and discipline pricing along with an improved expense ratio led to a fourth quarter 2014 combined ratio of 90.4%, lowering the full year ratio to 95.6%. We are further segmenting our book of business, using pricing position and risk selection decisions that combine data models and underwriter judgment on a policy by policy basis. That’s an ongoing focus as we see to further improve underwriting results. We think those actions will continue to provide benefits overtime as we aim for a combine ration below 95% in 2015. Working with our agents, we benefit from the local presence of our field underwriters who make those decisions for all of our commercial new business. Their decisions are informed by analytics and risk inspecting data from our ongoing loss control program. We’re pleased that 2014 was another year in which we met…

Great, thank you Steve and thanks to all of you for joining us today. I’ll start with some analysis of the investment results. The income and book value for the fourth quarter and full year 2014 benefited from our equity investing strategy. Dividend income from our stock portfolio were 6% for the quarter and 13% for the year. And our core portfolio of 50 common stocks, all 50 improved their annual regular dividend over the 12 month period ending December 2014 with a medium increase of 8.3%. Somewhere to others in our industry, used for our borrowing portfolio continue to decline. The fourth quarter 2014, pre-tax average yield recorded at 4.72% was 13 basis points lower than a year ago, while that measure on a full year was 14 basis lower. Taxable bonds representing nearly 70% of our bond portfolio, had a pretax yield of approximately 5.25% at the end of the fourth quarter of 2014. The average yield for new taxable bonds purchased during the quarter was 4.49%. For the same period, our tax exempt bond portfolio yield was 3.78%, and purchases during the quarter yielded 3.26%. Our bond portfolio’s effective duration remained at the same level as one quarter ago at 4.4 years. Cash flow from operating activities continues to help our investment income growth. Funds generated from net operating cash flows for the year 2014 were up 10% to $873 million contributing to $324 million of net purchases of securities for investment portfolio. Careful expense management continues to be a priority and together it’s a premium growth contributed to a 1.3 percent points of improvement to our full year 2014 underwriting expense ratio. We like to analyze the underwriting expense ratios to components, commission and non-commission expenses. The commission components tend to vary with recent year underwriting…

Thank Mike. In closing our prepared remarks, I’ll note that during the fourth quarter, these ratings and invest occurring the strong ratings of our companies. We were especially pleased that announces positive outlook on the issuer credit ratings of our newest company the Cincinnati Specialty Underwriters. Since its startup in 2008, our excess and surplus lines business has established a good track record and we expected to continue attracting more of our agents business. That’s just one of many factors that gave us confidence we can perform and benefit shareholders over the coming years. The Board of Directors demonstrated that they issued a confidence by increasing the cash dividend to $0.46 per share that action sets the stage for 55 consecutive years of dividend increases. We appreciate this opportunity to respond to your questions and also look forward meeting the person with many of you during the remainder of the year. As a reminder with Mike and me today are Jack Schiff, Jr., Ken Stecher, J.F. Scherer, Eric Matthews, Marty Mullen and Marty Hollenbeck. Steven, please open the call for questions.

Thank you. [Operator Instructions] And our first question comes from the lines of Vincent DeAugustino. Your line is open.

Good morning, Cincinnati.

Good morning, Venice.

Just two I guess starts, the press release noted some actions on the agency management side in terms of territories and then an affirmation of the commitment to agent service. And so I am just curious of any of the plans there reflect any changes in the competitive landscape or if it’s really just that as an affirmation of kind of that agent model.

And so this is J.F. just an affirmation of the agent model that’s the theme of our sales meeting this week is how pleased we are with how they are performing for us. The way we define if for our agencies is that we obviously want to them when it comes to writing the insurance and helping them look their success there. But we’re also very much interested in helping with their business management, agency management, sales management types of things, providing capital for them. So that’s really what we’re hitting that there.

Okay and then just for Steve and Mike. Sorry I was trying follow-on along with the reserve comments and simultaneously moving to your schedule piece which I mean I’ve got a little last year, but I heard thing right, we’re taking IBNR reserve movement primarily on accidents years 2005 and ’07 for commercial casualty, was that adjust?

Yes, that’s exactly where I - they was - really those two areas where we did see some increased payments you know as we do look at paid losses that helps to project our IBNR pitch. And so with some increased payments and then also couple of reserve changes that were really just in those accident years and so is that new information that we usually take consistent approach to setting servers. And so that’s really what we did.

Okay and I guess like where the…

Just I may just tag on there that - this is Steve. As we looked at 2005, 2007, the largest as Mike just mentioned was one claim in 2005, one in 2007 that emerged in the umbrella line. And I think we’ve had 26 years now favorable development. There is two ways we could have looked at that, we could have said well they are normal and we’ll just let that emergence come out of IBNR or I think the prudent approach and consistent with the way we do things as to actually react to that by increasing our factors which would then subsequently roll through the accident years and add additional IBNR to all those accident years. I think it’s the prudent way to look at that. I mean I think - I am confident as you look at our schedule piece that you will find our reserves and balance sheet at least as strong at the end of ’14 and should do at the end of ’13.

Okay, I guess the route of the question and I appreciate all that Steven at what kind of onboard with. Believe that you guys are acting prudently through what you saying, so no more question there. I guess mechanically when I look at kind of schedule piece, and right now just put and through CMP and then two other liability lines and really IBNR know how years that last year’s maturity is really come small and so when I kind of look at the reserve movements in the quarter and maybe I am not capturing everything with those three line. But am I missing anything there and thinking that by this point of maturity that really shouldn’t be that much movement and I guess that question would then be where these couple of claims just really large in size?

Yeah, I think it is more of the normally that I think well for about 5 million movements, about 4. And I do think is we look at where we carry IBNR, there is more uncertainty in the more recent years then there is in the older years and I do think that they tended to be out layers.

Okay, so sorry to just take that point and kind of confirm my understanding. So was the claim activity on those years and that influent some IBNR moves here in more recent years as well.

That’s correct.

Okay, I understand it much better now, thank you. And then just one last one for Marty on the investment side, so we can obviously see the energy MLP in equity energy investments move around a little bit. So the historical stuff were good with. When I am kind of curious about is, just in the current environment, do you this is an opportunity on the energy side or is it something where you kind of cautiously proceeding?

I think we are probably a little bit more cautious. I mean we were fairly probably invested as a sector in the energy a large claims with the other common stock portfolio that is fairly like Chevron. The end of these phases was never particularly large one for us and we had that adding to that and we see years. So I think we are just kind of study our revenue.

Okay, thanks for all the answers and best of luck guys. Thank you.

Thank you, Venice.

Thank you. Your next question comes from the line of Mark Dwelle with RBC Capital Markets. Your line is open.

Yeah. Good morning. I think you just covered some of my question but just to kind of finalize I guess hopefully finalize on the reserve addition. So the total reserve addition in the quarter was about $32 million in the commercial segment, if nine of it was related to specific claims, what was the total amount of addition and I guess where they are offsetting releases in other areas that kind of made it down to the 32 million?

I think that’s true. As looked at the accident year by - for each accident year within each line of business and so you are going to have areas moving in different direction with offset.

Can you provide the amounts of what the overall positive was and the overall negative that net it down to the 32, I suppose I can drive it from the schedule P, but?

I am trying to see the 32, this is not my - but on the commercial, on the one item I am looking at and there is quite - total commercial, it was 26 million that was added, 29 million was from commercial casualty scribed in, commercial auto was strength in 15 million, the large offsets was the - made that liability which was favorable by 12 million, workers comp was favorable by 7 million and commercial property was slightly favorable probably 2 million for the quarter.

Okay, maybe I just - maybe I did my math wrong, I was taking the 4.4 combined ration points and dividing it backwards, I guess netting down the catastrophe losses, maybe it comes to that what we’re figuring.

That maybe exactly - that’s exactly right. So as Steve said, you do some offsetting and that all those numbers I just I gave a straight over several accident years evenly strength basically.

Got it. Okay.

Thank you.

That completely satisfies me on that topic. Let’s move over to new business. The amount of new business in the quarter was a nice uptick relative to last quarter, but it was still down a little bit year-over-year, which I was a little bit surprised that I - any comments you can provide there.

Mark, this is J.F. We mentioned in the release that workers comp was down a fair amount for this year. We had a significant year in 2013 and it’s - that in the area of larger workers comp. It’s an area that we are conservative on very pleased with the progress we are making on the loss ratio for a lot reason. But we just simply did not write as many larger workers comp claims and that can tend to have a slightly muting effect on overall package business, because typically our agents like to put the workers comp with the package. So I choke that up to conservatives on that particular like of business, maybe overly conservative I suppose, but that would have been a factor. The other factor that occurred and really started occur I think maybe in the second quarter, but clearly I think more carriers are feeling they’ve reached pretty close right accuracy and rather than signaling to their agents that they would be asking for and requiring fairly substantial rate increase that have renewal instead they are defending the renewals more strongly. The atmosphere we are competing in is one where - there aren’t as many but I would consider to be good accounts, easier of more desirable accounts out in the marketplace. We still have our pipeline for but segmentation is playing through that for every carrier and so the accounts that need the most rate or might have the more poor experience to the ones that are more likely out in the marketplace. So it’s just tougher from that standpoint. You know few other things I would comment on and I don’t know how that affects our carriers but the M&A activity that’s occurred over the last three, four years, that’s fairly disruptive at the agency level, some producers leave, the acquires change the appetites for some agencies. We react that and in some cases it works out favorable for us and in some cases the consequence might be that we would have point more agencies and that takes a little bit more time for things to gear up. So very panic but in term of the fact of new business was down, surety act us in surplus lines, the vision continues to call, we think we have tremendous potential there. Personal lines is stabilized and we think that they will see an increase in new business in 2015 there. So it’s maybe little wordy but there is a kind of observations that we have, it’s very reinforcing that out this week with their agencies and here their opinions of the marketplace and their confidence in us. So we’ll keep our pipeline full and we’ll be good selector of business to thing year proceeds.

Great answer J.F., you actually knocked up the next two questions that I was going to ask. Good job, thanks very much.

Trying to be efficient.

Thank you. [Operator Instructions] Your next question comes from the line Paul Newsome from Sandler O'Neill. You line is open.

Good morning, folks. The - if I heard it correctly, you are hoping to get a demand ratio next year below 95 which is about where you were today and tell me if I am wrong. But my first question is that, is that a hope to get the accident year lower as well or is that also function of the normalization of reserve releases actively?

You are correct that we do want to have the calendar year go blow 95 but that also implies a actually a year improvement as well and no change in our relative reserve margin.

Terrific and then you know big picture. Where do you see the best opportunities for underwriting improvement, is it on the personal line side or the commercial line side?

I told mighty since worth here, we’re putting a lot of effort and we’ve mentioned this the last several quarter and to - I guess you might say none of rate related improvement. We still are seeing rate increases both in personal and commercial line as already been mentioned.

I might add, you know particular on the accounts that renew and also lot of what’s being said by agents that have interviewed or brokers that have interviewed, we’re not hearing that of being quite so there is talking to our agencies this week. So we think there is still opportunities with modest rate increase. But we put a lot of effort in the last few years, we’re going to continue to accelerate that in loss control, in claim specialization, in underwriting specialization, so - and just general inspections of business. So we expect those kinds of activities will help us discover accounts that when we wrote them perhaps years ago, they were better accounts than they are today, so we will react accordingly there. And then our loss control efforts will help mitigation efforts. Marty might want to comment on the claim side of things but the great improvement we’ve had in worker’s comp for example, we think can continue and that the progress we’ve making there and that’s been a combination of loss control, but most especially claim specialization.

You know I just add that the continued segmentation is part - is exactly a part of what J.F. was just mentioning and that will continue as well.

So that sounds like more opportunity on the commercial side and personalize that, so given the - it’s primarily a commercial lines thing?

Well our loss control would be but the inspection initiative, we’ve been inspecting about a 100,000 structures a year in personal lines and not that are agencies don’t keep track of things but where we’ve taken the approach that we are going to do what our agencies do by really inspecting 100% for example of the all the new business that were writing. And we have quite a few houses and our policies on the books that need someone to take a look at as well. So I fully expected there is going to be lift on personal lines from that initiative.

This is Steve. I agree totally with J.F. it was nice to see this year 2014 that all of our business segments came in 100, I think they are all as J.F. mentioned working seriously, they continue to improve and I see improvement potential in all segments.

Great, thank you.

Thank you. Our next question comes from line of Josh Shanker with Deutsche Bank. Your line is open.

Yeah. Good morning, everyone.

Good morning, Josh.

I was curious about the life insurance business to the extent that over the years I know you’ve always captured the small part of the portfolio, how much capital does it tie up an is it accretive to ROE or above the same ROE as the rest of the business, could you potentially unlock value if you were to send that business elsewhere.

Josh, this is Mike. There is a difference between GAAP and stock reporting and how much you need to where you are setting the reserves which ends up with the capital that you have. And so from a GAAP standpoint, you have less reserves that are required, so you have more capital. And so when you look at the capital that we have and it’s producing I would say in round numbers $40 million of net income that is a little bit lower ROE then whether would be on a statutory standpoint. There will be - the states are looking at principle based reserves and when we get there we think we can free up some of the capital at the - in the life company. If we had this principle based reserves today, I would suspect that our capital in the life company would be somewhere in the $350 million to $400 million range, so there would a 10% ROE that you would have there, which would be right in line with our 10% to 13% go for our DCR. So it’s - we’re excited about the life company, we hope that the principle based reserves will be change, we will get to it and it’s producing a nice result and it’s added to the overall DCR for us.

Do you have any initiative in place to grow it.

Do we have any initiative in place to grow the life company?

Yes.

We’re still working on that and that’s a part of and we’ve been doing it, they are part of the sales meeting that they go out, trying to really expand the sales especially related to the term product. Our terms product was up 7% for the year which were we’re excited about. Dave Popplewell, the President of the Life Insurance Company is out beating the bushes and he is around the sales meeting, talking to the property casualty agencies about cross selling and been able to increase and improve the top line results. J.F. please?

Josh, 70% of our new life premiums tend to come from property and casualty agencies. One other things that we’re doing is trying to link together our homeowner sales in an automated way through simplified issue polices to write more term insurance and help agencies in the course of writing personalize business. So that’s been the case, we continue to fortify our field presence in our life insurance company what tends to work very well when you have a good professional is calling on the agencies when it comes to the more business life insurance types of things to help navigate that process. So yeah, what we continue, it’s a - like a lot of things that we do, it’s a very nice complement to the overall relationship we with our agencies and our agencies appreciate it.

Well, thank you and good luck with that.

Thank you, Josh.

Thank you. Our next question comes from the line of Vincent DeAugustino with KBW. Your line is open.

Hi thanks for taking the follow-up. So I think I may ask this question every year around this time, so here you go. But with the agency sales meetings, I am just curious if agents are giving you any wish where they like to see any new products or maybe it’s a technology which widgets from Cincinnati?

Vincent, we’ve been really hitting them pretty hard with the lot of the things that we’re doing. I’d have to say that the general tone is between what buildup and people is doing in the high net worth area. We’re pleased to hear about that, they are also pleased to hear that when it comes to middle market personal lines. As we are enforcing our activity there, they are pleased with the automation that we have there. We’ve gone through several years, our rate increases pretty down, strong rate increases in the homeowner area and that’s not a strong anyway so the pressure is going there. CSU is a - we had a lot of feedback on that, our agency is right, ballpark $2 billion in excess and surplus lines premium and so we have tremendous opportunity to growth our ENS company there. We gradually increase our appetite in that line of business. And so they are pleased to hear the news on that. Our target market’s division have 17 programs and that’s going to expand. If there is anything I guess it’s really created most of a wish list or discussion at our sales meetings would be that they would ask we continue to growth that particular division. Every agency, every aggressive agency I would say is they have producers, they go after certain industry class. And well it’s not unusual for carriers to have that but it is but unusual from our standpoint is the fact that we have some managers in those areas they will go out and travel with, agencies go out and make sales calls with those agencies. So we - maybe we outwork the competition a little bit better in that category. So I would say those would be the major areas that we’ve improved. Loss control continues to be a benefit, our agencies are good at taking our loss control rep, our claims rep and I feel that underwriters have actually on the sales call and feedback we get on that is excellent. So no particular area, cyber has talked about a bit, it’s been talked about by everyone, but that’s on the radar screen for everyone is an emerging coverage that we’re pleased to tell and we have something that works on.

Okay, sounds good. Thanks for the answers and look forward to talking soon.

Thank you. There are no further questions at this time. Steve Johnston, I turn the call back to you.

Thank you Steven and thanks to everyone for joining us today. We appreciate you interest in Cincinnati Financial and we look forward to speaking with you again on our first quarter 2015 call. Have a great day.

And this concludes today conference call. You may now disconnect.