SecProbe.io

CORRESP
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August 7, 2009

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

Securities and Exchange Commission

Division of Corporate Finance

Mail Stop 4720

Washington, D.C. 20549

RE:

Cincinnati Financial Corporation

Form 10-K for the Fiscal Year Ended December 31, 2008

Form 10-Q for the Quarter Ended March 31, 2009

File No. 0-04604

Dear Mr. Rosenberg:

We have received your letter dated July 9, 2009, in response to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and Form 10-Q for the quarter ended March 31, 2009. We appreciate that your review was intended to assist us in our compliance with applicable disclosure requirements and to enhance the overall disclosure in our filings.

The following response reflects our careful review of the comments you provided (keyed to your letter dated July 9):

Form 10-K for the Fiscal Year Ended December 31, 2008

Quantitative and Qualitative Disclosures About Market Risk

Application of Asset Impairment Policy, Page 87

QUESTION 1:

On page 88 you present a table that lists the number of securities and the gross unrealized gain or loss for various classes of your investments. This table also summarizes the length of time that securities in your portfolio have been in a continuous unrealized gain or loss position. It appears that the totals of the unrealized gains and losses from this table agree with the gross unrealized gains and losses presented in Note 2 to your financial statements on page 105. However, the unrealized losses from this table do not appear to agree with the table of loss duration in Note 2. As an example, it appears from your table on page 88 that the total gross unrealized losses on securities in a loss position from more than 12 months is $43 million (comprised of $25 million for those held 12 to 24 months and $18 million held more than 12 months) while the table on page 105 indicates that this amount is $119 million. Please revise your disclosure to clarify why these tables do not appear to agree.

RESPONSE TO QUESTION 1:

Upon review of your comment, we agree that our disclosure concerning the aging and severity of unrealized losses included in the tables and accompanying narrative explanations on pages 88 and 105, while accurate, could be difficult to follow. We believe that the difficulty stems from our use of two similar tables with different durations that were intended to convey different information about aging and duration of securities in unrealized loss positions. For future filings, beginning with our Form 10-Q for the quarterly period ended June 30, 2009, we have revised our disclosure such that the same table used on Form 10-K, Page 105 is shown in Form 10-Q Note 2, Page 10 and in the

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MD&A, Page 47, as set forth below. The revised disclosure below is included in MD&A on our Form 10-Q for the quarterly period ended June 30, 2009, filed on August 7, 2009.

The table below reviews fair values and unrealized losses by investment category and by the overall duration of the securities’ continuous unrealized loss position.

(In millions)

   Less than 12 months

   12 months or more

   Total

      Fair

value

   Unrealized

losses

   Fair

value

   Unrealized

losses

   Fair

value

   Unrealized

losses

At June 30,

2009

Fixed maturities:

  States, municipalities and political subdivisions

 $

 295

 $

 7

 $

 309

 $

 11

 $

 604

 $

 18

  Government-sponsored enterprises

   180

   2

   7

   0

   187

   2

  Short-term investments

   3

   0

   0

   0

   3

   0

  Collateralized mortgage obligations

   26

   15

   0

   0

   26

   15

  Corporate bonds

   702

   102

   769

   71

   1,471

   173

      Total

   1,206

   126

   1,085

   82

   2,291

   208

Equity securities

   518

   93

   227

   62

   745

   155

      Total

 $

 1,724

 $

 219

 $

 1,312

 $

 144

 $

 3,036

 $

 363

At December 31,

2008

Fixed maturities:

  States, municipalities and political subdivisions

 $

 592

 $

 26

 $

 94

 $

 5

 $

 686

 $

 31

  Government-sponsored enterprises

   141

   2

   0

   0

   141

   2

  All other corporate bonds and short-term investments

   1,562

   230

   292

   73

   1,854

   303

      Total

   2,295

   258

   386

   78

   2,681

   336

Equity securities

   820

   219

   79

   41

   899

   260

      Total

 $

 3,115

 $

 477

 $

 465

 $

 119

 $

 3,580

 $

 596

During the quarter ended June 30, 2009, we impaired nine securities. At June 30, 2009, 358 fixed-maturity investments with a total unrealized loss of $82 million had been in an unrealized loss position for 12 months or more. Of the total fixed maturity securities in an unrealized loss position for twelve months or more at June 30, 2009, two fixed maturity securities with a fair value of $2 million were trading under 70 percent of book value and accounted for $1 million in unrealized losses; 72 fixed maturity securities with a fair value of $265 million were trading from 70 percent to less than 90 percent of book value and accounted for $48 million in unrealized losses; and 284 fixed maturity securities with a fair value of $818 million were trading from 90 percent to less than 100 percent of book value and accounted for $33 million in unrealized losses.

Of the total equity securities in an unrealized loss position for twelve months or more at June 30, 2009, one equity security with a fair value of $50 million was trading under 70 percent of book value and accounted for $22 million in unrealized losses; seven equity securities with a fair value of $133 million were trading from 70 percent to less than 90 percent of book value and accounted for $37 million in unrealized losses; and one equity security with a fair value of $44 million was trading between 90 percent to less than 100 percent of book value and accounted for $3 million in unrealized losses.

During 2008, we impaired 126 securities. At December 31, 2008, 142 fixed maturity investments with a total unrealized loss of $78 million had been in an unrealized loss position for 12 months or more. Of that total, there were no fixed maturity investments trading below 70 percent of book value. Six equity investments with a total unrealized loss of $41 million had been in an unrealized loss position for 12 months or more as of December 31, 2008. Two of these equity investments were trading below 70 percent of book value.

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Financial Statements and Supplementary Data

Note 2. Investments, Page 104

QUESTION 2:

You provide disclosure with the number of securities in your fixed maturity investment portfolio that have been in an unrealized loss position for 12 months or more. Please revise your disclosure to provide similar disclosure related to your equity security investments for the periods provided as applicable.

RESPONSE TO QUESTION 2:

For future filings, beginning with the Form 10-Q for the quarterly period ended June 30, 2009 as filed on August 7, 2009, we have revised our disclosure included in Note 2 Investments beginning on Page 9 of our Form 10-Q, to additionally reflect the number of those equity securities in an unrealized loss position for a period of 12 months or more at the end of the applicable reporting period as shown below:

(In millions)

   Less than 12 months

   12 months or more

   Total

      Fair

value

   Unrealized

losses

   Fair

value

   Unrealized

losses

   Fair

value

   Unrealized

losses

At June 30,

2009

Fixed maturities:

  States, municipalities and political subdivisions

 $

 295

 $

 7

 $

 309

 $

 11

 $

 604

 $

 18

  Government-sponsored enterprises

   180

   2

   7

   0

   187

   2

  Short-term investments

   3

   0

   0

   0

   3

   0

  Collateralized mortgage obligations

   26

   15

   0

   0

   26

   15

  Corporate bonds

   702

   102

   769

   71

   1,471

   173

      Total

   1,206

   126

   1,085

   82

   2,291

   208

Equity securities

   518

   93

   227

   62

   745

   155

      Total

 $

 1,724

 $

 219

 $

 1,312

 $

 144

 $

 3,036

 $

 363

At December 31,

2008

Fixed maturities:

  States, municipalities and political subdivisions

 $

 592

 $

 26

 $

 94

 $

 5

 $

 686

 $

 31

  Government-sponsored enterprises

   141

   2

   0

   0

   141

   2

  All other corporate bonds and short-term investments

   1,562

   230

   292

   73

   1,854

   303

      Total

   2,295

   258

   386

   78

   2,681

   336

Equity securities

   820

   219

   79

   41

   899

   260

      Total

 $

 3,115

 $

 477

 $

 465

 $

 119

 $

 3,580

 $

 596

During the quarter ended June 30, 2009, we impaired nine securities. At June 30, 2009, 358 fixed-maturity investments with a total unrealized loss of $82 million had been in an unrealized loss position for 12 months or more. Of that total, there were two fixed maturity investments trading below 70 percent of book value. Nine equity securities with a total unrealized loss of $62 million had been in an unrealized loss position for 12 months or more as of June 30, 2009. Of that total, there was one equity security trading below 70 percent of book value. We perform a formal review of investment securities on a quarterly basis for the presence of other-than-temporary impairments (OTTI). For the 2009 second quarter, we adopted FSP No. FAS 115-2 and 124-2. As required by the new FSP for fixed maturity securities, OTTI is considered to have occurred (1) if we intend to sell the impaired fixed maturity security; (2) if it is more likely than not we will be required to sell the fixed maturity security before recovery of its amortized cost basis; or (3) the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. We have evaluated each of the fixed maturities with an unrealized loss for OTTI at June 30, 2009 and have determined that the unrealized losses are primarily the result of increased market volatility, wider liquidity spreads, and various non-credit related conditions. We do not consider these fixed maturity investments to be OTTI at June 30, 2009. For each of our equity securities in an unrealized loss position at June 30, 2009, we have applied the objective quantitative and qualitative criteria of our invested asset impairment policy for OTTI for equity securities, including facts and circumstances specific to individual securities, asset classes, the financial condition of the issuer, changes in dividend payments, the length of time fair value has been less than book value, the severity of the decline in fair value below book value, and our ability and intent to hold each position until its forecasted recovery. As of June 30, 2009, we determined that unrealized losses on equity securities were not OTTI.

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During 2008, we impaired 126 securities. At December 31, 2008, 142 fixed maturity investments with a total unrealized loss of $78 million had been in an unrealized loss position for 12 months or more. Of that total, there were no fixed maturity investments trading below 70 percent of book value. Six equity investments with a total unrealized loss of $41 million had been in an unrealized loss position for 12 months or more as of December 31, 2008. Two equity securities were trading below 70 percent of book value. For each of our equity securities in an unrealized loss position at December 31, 2008, we applied the objective quantitative and qualitative criteria of our invested asset impairment policy for OTTI for equity securities, including facts and circumstances specific to individual securities, asset classes, the financial condition of the issuer, changes in dividend payment, the length of time fair value has been less than book value, the severity of the decline in fair value below book value, and our ability and intent to hold each position until its forecasted recovery. As a result of this evaluation, we have not recorded an impairment on the six equity securities in an unrealized loss position in excess of twelve months at December 31, 2008.

QUESTION 3:

3.a.) Please revise your disclosure to explain why losses of $41 million on equity securities with a fair value of $79 million at December 31, 2008 that have been in a continuous loss position for more than 12 months were not considered to be other than temporary impairments and recognized as a loss under US GAAP. 3.b.) Please tell us if any of these equity securities at December 31, 2008 were subsequently sold and a realized loss was recognized. 3.c.) In addition, please explain to us why none of the securities comprising the $150 million in realized losses during the first quarter of 2009 as disclosed on page 32 of your March 31, 2009 Form 10-Q were not other-than temporary impaired at December 31, 2008.

RESPONSE TO QUESTION 3:

See responses to the sub-parts of Question 3 below.

QUESTION 3.a.):

Please revise your disclosure to explain why losses of $41 million on equity securities with a fair value of $79 million at December 31, 2008 that have been in a continuous loss position for more than 12 months were not considered to be other than temporary impairments and recognized as a loss under US GAAP.

RESPONSE TO QUESTION 3.a.):

Please refer to the revised disclosure set forth in response to Question 2 above, which we believe responds to this question.

QUESTION 3.b.):

Please tell us if any of these equity securities at December 31, 2008 were subsequently sold and a realized loss was recognized.

RESPONSE TO QUESTION 3.b.):

Yes. Of the six equity securities in an unrealized loss position for a period of 12 months or more at December 31, 2008, two small positions held in Medtronic and Avery Dennison, were sold in the first quarter of 2009 resulting in a realized loss of 176 thousand dollars. The number of shares sold was 5,000 from a position of 1,255,000 shares for Medtronic and 3,000 shares from a position of 525,138 for Avery Dennison. These shares were held by CinFin Capital Management Company, a former subsidiary of Cincinnati Financial Corporation, which ceased operations as of February 28, 2009. The sales, triggered by the closure of CinFin Capital in early 2009, were based on a decision to transfer cash, in lieu of securities, to efficiently distribute the assets to its parent, Cincinnati Financial Corporation and simplify recordkeeping. The method of transferring the assets of CinFin Capital to its parent was not determined until the first quarter of 2009. We continue to hold the remaining positions of these two securities, as well as the other four securities, in our consolidated equity portfolio as of June 30, 2009.

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QUESTION 3.c.):

In addition, please explain to us why none of the securities comprising the $150 million in realized losses during the first quarter of 2009 as disclosed on page 32 of your March 31, 2009 Form 10-Q were not other-than temporarily impaired at December 31, 2008.

RESPONSE TO QUESTION 3.c.):

Of the $150 million in realized losses on securities sold in the first quarter of 2009, $19.6 million of those losses were from securities in an unrealized gain position at December 31, 2008, securities accounting for $1.3 million in realized losses were sold in connection with dissolution of one of our subsidiaries as discussed above, and one security, which accounted for $0.4 million of the realized loss, was written down as an other-than-temporary impairment at December 31, 2008.

The remaining $128.3 million of the $150 million of realized losses in the first quarter of 2009 resulted from sales of securities related principally to the further decline in the financial services sector. These sales can be divided into two groups: bank preferred stocks and two common stocks.

Sales in the first quarter of 2009 of certain bank preferred stocks accounted for $66.5 million of realized losses. At year-end, bank preferred stocks