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On Feb 21, 2013, we upgraded our recommendation on Cincinnati Financial Corp. (CINF - Analyst Report) to Outperform from Neutral following its better-than-expected fourth quarter earnings, which included a 122.0% positive earnings surprise. This property and casualty insurer carries a Zacks Rank #1 (Strong Buy).

Why the Upgrade?
 
Cincinnati Financial’s fourth quarter results reflected a steadily growing benefit of initiatives designed to improve insurance profitability, drive premium growth overtime and create shareholder value.
 
Cincinnati Financial grew premium in each of its property casualty segments.  Consolidated net written premiums for the fourth quarter rose by 10%, led by higher overall pricing.
 
The company reported an improvement in combined ratio in all three of its property casualty segments.
 
The company is also continuing to appoint agencies, which is one of its strategic goals for 2013. The increase in agency count is expected to bring in premium growth. 
 
Cincinnati Financial also boasts of a strong balance sheet with low reliance on debt witnessed by a debt to capital ratio of less than 14.1% as of Dec 31, 2012. Moreover, its consistent cash flows and prudent cash balances continue to create strong liquidity. The company is also a favorite among investors because it has fulfilled a commitment of increased dividend payment every year for the past 52 years. 
 
Other Stocks
 
Others players in the same industry State Auto Financial Corp. (STFC - Snapshot Report), XL Group plc (XL - Analyst Report) and Navigators Group Inc. (NAVG - Snapshot Report) carrying Zacks Rank #1 (Strong Buy) and are worth considering. 

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