8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report: November 4, 2019

(Date of earliest event reported)

CINCINNATI FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	0-4604		31-0746871
(State or other jurisdiction of incorporation)	(Commission File Number)		(I.R.S. Employer Identification No.)
6200 S. Gilmore Road	Fairfield,	Ohio	45014‑5141
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (513) 870-2000

N/A

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	CINF	Nasdaq Global Select Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§203.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Items 1.01 Entry into Material Definitive Agreements.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On November 4, 2019 Cincinnati Financial Corporation (the “Company”) as borrower, entered into an Amendment Letter No. 1 (the “First Amendment”) to the Letter of Credit Facility Agreement, dated February 25, 2019 (the “Facility Agreement”) with The Bank of Nova Scotia, as issuing lender. The First Amendment amends the cover page to remove the reference to $238,445,927.35, multiple references from the year 2019 to 2020, Section 1.01 to update the Company’s subsidiary entity names, Section 1.01 Expiration Date to February 28, 2024, Section 6.2.14 Own FAL requirements, and Schedule 1.1(B) to reduce the LC Commitment amount from $238,445,927.35 to $130,924,545.13.

All other terms and conditions of the Facility Agreement are unchanged and remain in full force and effect. The First Amendment filed as Exhibit 10.1 hereto and the description set forth above is qualified in its entirety by the full terms of the Facility Agreement dated February 25, 2019.

Safe Harbor Statement

This is our “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2018 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 33.

Factors that could cause or contribute to such differences include, but are not limited to:

• Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns, environmental events, terrorism incidents or other causes

• Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance

• Inadequate estimates, assumptions or reliance on third-party data used for critical accounting estimates

• Declines in overall stock market values negatively affecting the company’s equity portfolio and book value

• Prolonged low interest rate environment or other factors that limit the company’s ability to generate growth in investment income or interest rate fluctuations that result in declining values of fixed-maturity investments, including declines in accounts in which we hold bank-owned life insurance contract assets

• Domestic and global events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:

◦ Significant or prolonged decline in the fair value of a particular security or group of securities and impairment of the asset(s)

◦ Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities

◦ Significant rise in losses from surety and director and officer policies written for financial institutions or other insured entities

• Our inability to integrate Cincinnati Global and its subsidiaries into our on-going operations, or disruptions to our on-going operations due to such integration

• Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies

• Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our ability to conduct business; disrupt our relationships with agents, policyholders and others; cause reputational damage, mitigation expenses and data loss and expose us to liability under federal and state laws

• Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products

• Delays, inadequate data developed internally or from third parties, or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness

• Increased competition that could result in a significant reduction in the company’s premium volume

• Changing consumer insurance-buying habits and consolidation of independent insurance agencies that could alter our competitive advantages

• Inability to obtain adequate ceded reinsurance on acceptable terms, amount of reinsurance coverage purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers

• Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability

• Inability of our subsidiaries to pay dividends consistent with current or past levels

• Events or conditions that could weaken or harm the company’s relationships with its independent agencies and hamper opportunities to add new agencies, resulting in limitations on the company’s opportunities for growth, such as:

◦ Downgrades of the company’s financial strength ratings

◦ Concerns that doing business with the company is too difficult

◦ Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace

◦ Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace

• Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:

◦ Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates

◦ Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations

◦ Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business

◦ Add assessments for guaranty funds, other insurance‑related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes

◦ Increase our provision for federal income taxes due to changes in tax law

◦ Increase our other expenses

◦ Limit our ability to set fair, adequate and reasonable rates

◦ Place us at a disadvantage in the marketplace

◦ Restrict our ability to execute our business model, including the way we compensate agents

• Adverse outcomes from litigation or administrative proceedings

• Events or actions, including unauthorized intentional circumvention of controls, that reduce the company’s future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002

• Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others

• Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location

Further, the company’s insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. The company also is subject to public and

regulatory initiatives that can affect the market value for its common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.

Item 9.01 Financial Statements and Exhibits.

(c)     Exhibits

Exhibit 10.1 - Amendment Letter No. 1 to the Letter of Credit Facility Agreement dated November 4, 2019.

Exhibit 10.2 - Letter of Credit Facility Agreement, dated February 25, 2019, between Cincinnati Financial Corporation and The Bank of Nova Scotia (incorporated herein by reference to the company’s Current Report on Form 8-K dated February 28, 2019, Exhibit 10.1).

Exhibit 104 – The cover page from this Current Report on Form 8-K, formatted as Inline XBRL

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CINCINNATI FINANCIAL CORPORATION
Date: November 5, 2019	/S/ Michael J. Sewell
	Michael J. Sewell, CPA
	Chief Financial Officer, Senior Vice President and Treasurer
	(Principal Accounting Officer)

EX-10.1

EXECUTION VERSION

AMENDMENT LETTER NO. 1 (LETTER OF CREDIT FACILITY AGREEMENT)

To:    The Bank of Nova Scotia (the "Bank")

November 4, 2019

$238,445,927.35 letter of credit facility agreement dated as of February 25, 2019 between Cincinnati Financial Corporation as Borrower and The Bank of Nova Scotia as Bank (the "Facility Agreement")

1. We refer to the Facility Agreement. Capitalized terms used but not defined herein shall have the meanings given to them in the Facility Agreement.

2. With effect from the Effective Date:

(a) The cover page of the Facility Agreement shall be amended such that the reference to "$238,445,927.35" thereon shall be deleted.

(b) The second WHEREAS clause in the recitals of the Facility Agreement shall be amended such that the reference therein to "2019" shall be deleted and replaced with reference to "2020".

(c) Section 1.01 of the Facility Agreement shall be further amended by deleting the following definitions in their entirety and replacing them with the following:

(i) "Corporate Member shall mean Cincinnati Global Dedicated No 2 Limited (formerly known as Beaufort Dedicated No 2 Limited), a corporation incorporated under the laws of England & Wales, which is a Member."

(ii) "Expiration Date shall mean February 28, 2024".

(iii) "Managed Syndicate shall mean Cincinnati Global Syndicate 318; provided that the Managed Syndicate shall at all times be managed by the Managing Agent."

(iv) "Managing Agent shall mean Cincinnati Global Underwriting Agency Ltd, (formerly known as Beaufort Underwriting Agency Ltd)."

(d) Section 1.01 of the Facility Agreement shall be further amended by inserting the following definitions in proper alphabetical order:

(i) "Amendment No.1 shall mean that certain amendment letter No. 1 (letter of credit facility agreement) dated as of November 4, 2019 between the Borrower and the Bank, which amends this Agreement."

(ii) "Amendment No.1 Effective Date shall mean the Effective Date as defined in Amendment No. 1."

(e) Section 2.1 of the Facility Agreement shall be amended by inserting "or in such other form as the Borrower and the Bank may otherwise agree" immediately after the reference to "Exhibit 4" therein.

(f) Section 2.3.1 shall be amended such that each reference therein to "2019" shall be deleted and replaced with references to "2020".

(g) Section 6.2.14 of the Facility Agreement shall be deleted in its entirely and replaced with the following:

	1
356045660

EXECUTION VERSION

(i) "6.2.14 Own FAL. The Borrower shall not permit the Own FAL of the Corporate Member to be less than (i) on the Amendment No.1 Effective Date, 30% of Total FAL, and (ii) thereafter, the applicable requirements of Lloyd's from time to time."

(h) Part I of Schedule 1.1(B) to the Facility Agreement shall be amended by replacing the reference to $238,445,927.35 therein with "$130,924,545.13".

(i) Part I of Schedule 1.1(B) to the Facility Agreement shall be amended by replacing the reference to "Ashurst LLP Time Square Tower, 7 Times Square, New York, NY 10036" therein with "Ashurst LLP 55 Hudson Yards, 18th Floor, New York, NY 10001".

(as amended, the "Amended Facility Agreement").

3. This amendment letter shall take effect on the date (the "Effective Date") on which the Bank confirms to the Borrower that it has received in form and substance satisfactory to it:

(a) a duly executed copy of this amendment letter signed by the Bank and an Authorized Officer of the Borrower;

(b) resolutions of the board of directors of the Borrower approving this amendment letter and the Amended Facility Agreement and authorizing specified persons to execute this amendment letter on the Borrower's behalf;

(c) officer's certificates signed by the Borrower and dated as of the Amendment No. 1 Effective Date substantially in the forms delivered to the Bank on the Closing Date pursuant to Section 5.1.1(i) and (ii) of the Facility Agreement;

(d) certified copies of the business plan for the 2020 year of account prepared in relation to the Managed Syndicate and (if separate) the Realistic Disaster Scenario relating thereto;

(e) satisfactory evidence that, as of October 30, 2019 the Own FAL of the Corporate Member is not less than 30% of Total FAL;

(f) a letter from the Borrower to the Bank requesting that the Letter of Credit issued under the Facility Agreement be amended to give effect to the amendments contemplated under this amendment letter and that any notice of non-extension issued with respect to the Letter of Credit be revoked; and

(g) such other documents as the Bank may reasonably request.

4. The Borrower (a) repeats and restates its representations and warranties contained in Section 4 of the Facility Agreement as of the date of this amendment letter and as of the Effective Date, except to the extent such representations and warranties relate to an earlier date and (b) confirms that with effect from (and including) the Effective Date, its liabilities and obligations arising under the Amended Facility Agreement form part of (but do not limit) the obligations which are secured by the FAL LC Documents and that all of its obligations and the liens granted thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this amendment letter.

5. Promptly after the Effective Date, the Borrower shall deliver to the Bank a Letter of Comfort signed on behalf of Lloyd's.

6. Promptly after the Effective date, the Borrower shall deliver to the Bank a certified copy of the reinsurance resume of the Managed Syndicate for the 2020 year of account and each year of account then open.

7. Exceptas varied by the terms of this amendment letter, the Facility Agreement and the other FAL LC Documents will remain in full force and effect and each party hereto confirms all of its obligations under the Amended Facility Agreement and under the other FAL LC Documents.

8. This amendment letter constitutes a FAL LC Document for the purposes of Amended Facility Agreement.

	2
356045660

EXECUTION VERSION

9. This amendment letter may be executed in any number of counterparts and all of those counterparts taken together will be deemed to constitute one and the same instrument. Delivery of an executed signature page of this amendment letter by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.

10. This amendment letter and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, the laws of the State of New York.

[SIGNATURE PAGES FOLLOW]

	3
356045660

Yours sincerely

CINCINNATI FINANCIAL CORPORATION,

as the Borrower

By:    _/S/ Michael J. Sewell___

Name:    _Michael J. Sewell_

Title:    Chief Financial Officer_

[Signature Page to Amendment Letter]

We hereby acknowledge and agree to the above.

THE BANK OF NOVA SCOTIA

as Bank

By:    __/S/ Michael Grad____

Name:    __Michael Grad_______

Title:    __Director___________

[Signature Page to Amendment Letter]

XML

Cover Page Cover Page	Nov. 04, 2019
Cover page.
Document Type	8-K
Document Period End Date	Nov. 04, 2019
Entity Registrant Name	CINCINNATI FINANCIAL CORP
Entity Incorporation, State or Country Code	OH
Entity File Number	0-4604
Entity Tax Identification Number	31-0746871
Entity Address, Address Line One	6200 S. Gilmore Road
Entity Address, City or Town	Fairfield,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	45014‑5141
City Area Code	513
Local Phone Number	870-2000
Title of 12(b) Security	Common stock
Trading Symbol	CINF
Security Exchange Name	NASDAQ
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000020286
Amendment Flag	false