It's not too soon to think about the shareholders' meeting. Anyone who has been to or listened in knows this event is...uneventful. The most controversial question I've ever heard involved a man asking about facial hair.
Unfortunately, the CINF shareholders' meeting ends up being an employee gathering where management gets to say what they want to say and no one ever challenges them.
I say we do CINF a favor and start a list here. Ask the tough ones that have been on your mind and give them ample opportunity to carefully craft there response.
What questions would you like to ask. Perhaps someone can get the ball rolling?
Hey, see everyone at the meeting tomorrow! I expect this will be one of the most productive and informative meetings ever!
Since employees are not encouraged to ask honest questions, I hope I provided a few that will open dialogue during this period of "culture change" which upper management has promised.
I want to make it clear that when I speak of "diversity" I'm not referring to color. I'm talking about ideas and different points of view.
I don't intend to imply that CINF is racist or they need to hire African-Americans for the purpose of increasing their ranks.
My issue with CINF is staleness.
Some new blood has been injected, and I hope to see tangible efforts that show an effort to look at things in fresh, productive ways.
I'm all giddy like a little girl on Christmas Eve.
The shareholders' meeting is just around the corner, and senior leadership is preparing carefully crafted responsed to all our questions!
May I squeal with delight?
Please get all your questions in so CINF can address them this Saturday.
Have officers on company time ever been "encouraged" or pressured on company time to give money to political candidates friendly to the insurance industry? If so, is this ethical or legal?
On page 8 of the 2012 Annual Letter from the Chairman and the Chief Executive Officer, a section called "Continuous Improvement" mentions new efforts to measure performance and align compensation of every associate accordingly. Part of that involves the company's "value creation ratio," which stands at 6%, with a goal of 12%
Does this effort extend to officers and senior leadership? I've become dismayed with the idea of CINF's officership status, because I get the impression it has the same effect as tenure for university professors.
One becomes officer not necessarily because of value creation, but because of toeing the company line. I sense that officership is a stopping point for new ideas and productivity in many cases, not a catalyst for improvement.
I think the 5/3 debacle is a prime example of what I'm getting at. The elephant sat in the room for years, but before and after there was silence from senior leadership, officers, etc. Nothing to see here, move along...everything is fine. Give senior leadership a bonus.
Smug complacency while espousing the status quo or even backward views doesn't propel a company forward. While culture change is mentioned in the letter, I remain dubious. I'd like to believe that change is afloat, but it would be so out of character. Afterall, CINF is a company whose founder reportedly said the computer is a fad.
Officers are given a company car. If their position does not require regular automobile travel - and many do not - how does this expense contribute to "value creation"?
At a time when expenses have been cut company-wide in order to save the dividend, what is the justification for the costs of this program?
I just got around to perusing the 2011 10K. I didn't devote as much time to it as I would have liked, but speed reading it did provoke a few questions. Forgive the typos and sentence fragments as I'm doing this on the fly and there is no edit function:
On page 29, one of the risks mentioned involved faulty pricing models. I know as of 5 or 6 years ago, CINF's models were rudimentary compared to competitors. The use of credit scores is relatively new to CINF. What if any evolution in pricing models has occurred and how do these models stack up to competitors, say like Progressive or Safeco?
On page 39, it states the 5 five year investment income growth rate was negative 1.6%. The five year compound equity portfolio return was negative 4.7%. How much of that negative growth rate involved Fifth Third stock alone?
On page 116, there is a section about separate accounts. I'm noting the difference between the information contained this year vs. last year. This year fair value exceeds the contract holders' account value by $42M, which is a significant improvement over last year. Last year's 10K mentioned one account that exceeded over a half a billion dollars.
While these accounts are all legally separate accounts, it's my understanding that the largest - the half billion+ account - is written in a manner where CINF in on the hook if losses exceed a certain amount.
Point being, there is a potential liability on this large account if the market tanks (as it once did recently) and the account holder decides to cancel the policy. These holdings are legally separate, but they can end up being CINF's responsibility.
What is the composition of these holdings and what type of sensitivity analysis has been done in case of a market downturn?
I'm guessing BOLIs only represent 5% of CINF's overall investment portfolio, but I'm wondering about the potential for not insignificant losses.
Help me out here. I went on CINF's site to print up the latest investment portfolio...and couldn't find it. It was never easy to find to begin with, but now I can't find it at all. Did they remove this information so shareholders can't see it, or is it in a place I don't see?
As a long time shareholder, former employee,(78-83), and retired agent who also represented CIC,I have several questions with the buisness plan or lack thereof for the board. Unfortunatly without a serious, basic IT revamp the questions have no answer. They simply have to join the modern age as far as technology goes. e.g.(why do I get separate statements on several personal lines policies when they all have the same x date) What is wrong with one list bill.
The waste in paperwork is ridiculous. I am one account not ten separate ones.
To continue regarding my question about why there are two Schiff's on the investment committee, it is my understanding that Jack Jr. played an instrumental role in influencing/maintaining CINF's large position of Fifth Third stock during the time he was on the board of Fifth Third. I also heard that the large position - which I believe was once 25% of the investment portfolio - was questioned by rating agencies, investment analysts, and even internally...but it was Mr. Schiff's influence that set the stage for a billion plus loss of capital as well as the huge annual dividend - a number which at this time I do not recall.
The point is, if this is true - and personally believe it is - why is this man still sitting on the Investment Committee? Why are his Tom Schiff on the committee, when I understand he doesn't even provide input?
After the 5/3 debacle the rules were changed regarding exposures to various sectors and to any one company. But is this enough?
I want to know who on the Investment Committee voted to maintain this position. There are qualified money managers on the Investment Committee...did they endorse this exercise in fiduciary silliness.
It's insulting that the company's response seems to be, "Well when would we sell it?" or "We didn't lose money on it!"
Those responses are just stupid. That's right...stupid.
You can say this is water under the bridge, or you can wonder if it's business as usual since the players who reportedly caused this mess still have their hands in the pot.
Why are there two Schiffs on the investment committee? I understand Tom Schiff adds absolutely NO investment expertise and says nothing at meetings. He is nothing more than a Schiff vote.
With regards to Jack Jr., I wonder why he remains on the Investment Committee for reasons that involve another, more pointed question I have.
The obvious question is...... When are you going to start pricing your products with catastrophe exposures in mind?
Another one. How are you going to fund technology improvements going forward. From where I sit, they need to do a lot and don't have the scale to do it well. Maybe I'm wrong. We'll see.