Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

The Personal Lines Property Casualty Insurance segment offers coverage for personal auto and homeowners, as well as insurance products, such as dwelling fire, inland marine, personal umbrella liability, and watercraft coverages to individuals.

The Life Insurance segment provides term insurance; universal life insurance; whole life insurance; and worksite products, which include term, whole life, universal life, and disability insurance offered to employees through their employer. This segment also markets disability income insurance, deferred annuities, and immediate annuities.

The Investment segment invests in fixed maturity investments, equity investments, and short-term investment products. The company markets its insurance products through independent insurance agencies. It also provides insurance brokerage services; commercial leasing and financing services; and surplus lines insurance products. The company was founded in 1950 and is headquartered in Fairfield, Ohio.

Earnings in the first quarter were 83% better (42 cents vs 23 cents) than last year's first quarter. There were lower catastrophe losses, higher pricing on personal lines and better performance in investments. Insurance claims were also more favorable.

Oddly enough, revenues are forecast to continue their downtrend. In 2007, they were $3.125 billion, went to $3.010 billion, then $2.911 billion. This year, the estimate is $2.86 billion. But next year, they see a slightly larger number: $2.87 billion. For 20 consecutive years, the company had net earned premium growth. That stopped in 2006. The entire industry faced the same difficulties: pricing decreases, lower books of business, low investment yields (interest rates historically low), and fewer prior-year reserve releases. Most analysts see this trend into 2010. Hence, the lower revenue estimate for this year.

To combat these challenges, the company is adding new regions for coverage and offering new products. There has been an emphasis on training for regional needs in the salesforce, tailoring their pitches and offerings to regional markets. Furthermore, there is a new personal lines administration system that makes issuing new policies simple and efficient.

The dividend, in the meantime, has continued to increase. It was $1.31 a share in 2006, then went to $1.40, then $1.53. Last year, it hit $1.57. This year, it should be $1.58, only a penny more, but still another increase. The company is trying to say that investors' return is important, even if the dividend takes more than profits to pay. At this price, the yield is 5.6%.

More numbers: Market Cap is $4.49 billion. Trailing P/E is 9.66 while Forward P/E is 15.22. Price to sales ratio is 1.16. Price to book is .93. Book value is $29.85. Operating margin for the last 12 months was 17.64% while Profit margin was 11.92%. Return on equity was 10.63% and Return on assets was 3.10%. Total cash is $402 million for $2.47 per share. Total debt is $839 million or 15% of capital. Current ratio is 1.38.
Beta is .74. There are 162.98 million shares outstanding. The Float is 155.01 million. Insiders own 14.26% of the stock. Institutions have 62.60%.

Income investors will like what they find here, especially if the analysts are correct in the forecast for higher earnings this year and better revenues starting next. Be aware that while this is a diversified insurance company, any large natural catastrophe can put a real dent in earnings.

- Company Web site: www.cinfin.com