By David Plumb
Bloomberg News

Cincinnati Financial Corp., a property and casualty insurer, said it moved $1.6 billion of stock investments from its holding company to an insurance unit to avoid a regulatory change that threatened to trigger bond repayments.

The insurer sought to reduce stocks at its holding company after saying in June that the Securities and Exchange Commission may classify the company as an investment firm.

A reclassification would increase regulatory oversight, limit the insurer's ability to sell debt and may permit bondholders to demand immediate repayment, the company said in June.

The shift drops stock investments to 36.4 percent of holding company assets, below the 40 percent threshold used by the SEC, the insurer said in a statement. The SEC hasn't yet responded to the change, spokeswoman Joan Shevchik said.

"This transfer of assets shows our commitment to clarifying the holding company's status," chairman and chief executive officer John J. Schiff said in a statement.

The company's shares fell 6 cents, or 0.2 percent, to $40.29 in Nasdaq Stock Market trading.

Cincinnati Financial moved 32 million shares of Fifth Third Bancorp to its main insurance underwriting unit, the company said. The insurer is Fifth Third's largest shareholder.

"The worst-case scenario was a sale of assets," said Fox-Pitt Kelton Inc. analyst Daniel Baransky in a research note. "This is a modest positive." SEC spokesman John Nester declined to comment.