UPDATE 2-Cincinnati Financial Q4 oper profit falls

* Q4 operating income down 49 pct from yr-ago

* Catastrophe losses up

* Sees commercial insurance pricing firming in '09

* Says has capital to grow, pay dividend

* Says to enter Colorado and Wyoming in '09

(Recasts, adds details from conference call, analysts comments)

By Adheesha Sarkar

BANGALORE, Feb 5 (Reuters) - Cincinnati Financial Corp (CINF.O) posted quarterly operating income that almost halved from a year ago, hurt by a rise in catastrophe losses, and said it sees better pricing for commercial insurance in 2009.

The U.S. Midwestern property and casualty insurer said in a conference call with analysts that it has enough capital to support growth, fund investments, and pay dividend without raising additional capital.

Liquidity was never a concern for the company, Sandler O'Neil analyst Paul Newsome said. "The bigger issue for them is that their underwriting business is not terribly profitable." In the conference call, the company said it expects to appoint agencies that would write about $750 million in premiums annually, over the next 18 months.

Cincinnati also said it is preparing to enter Colorada and Wyoming in mid 2009.

"I think it's a good idea. But it's probably not going to have an immediate effect on their business," analyst Newsome said.

Q4 RESULTS

Net income for the fourth quarter fell about 14 percent to $161 million.

Operating income fell to $92 million, or 57 cents a share, compared with $179 million, or $1.07 a share last year.

Analysts expected earnings of 52 cents a share, before items, according to Reuters Estimates.