Exhibit 99
Contacts: Analyst contact: Dennis E. McDaniel
Vice President, Financial Accounting and Investor Relations
513-603-2197
dennis.mcdaniel@ocas.com
Media contact: Cindy L. Denney
Assistant Vice President, Corporate Communications
513-603-2074
cindy.denney@ocas.com
For Immediate Release
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OHIO CASUALTY CORPORATION
REPORTS 2001 FIRST QUARTER RESULTS
FAIRFIELD, Ohio, May 2, 2001 --- Ohio Casualty Corporation (Nasdaq:OCAS)
today announced a net loss of $4.1 million, or $.07 per share, for the
first quarter ended March 31, 2001. In the comparable quarter of 2000, the
Corporation reported a net loss of $75.0 million, or $1.25 per share.
After-tax operating loss for the first three months of 2001 was $12.3
million, or $.20 per share, compared with an after-tax operating loss
of $70.9 million, or $1.18 per share, for the first three months of 2000.
The operating losses for both periods were impacted by poor results in the
workers' compensation line of business.
President and Chief Executive Officer Dan Carmichael, CPCU, commented,
"While significant renewal price increases for the commercial lines
business are encouraging, and while the expense reduction efforts taken in
2000 have been maintained during the first quarter of 2001, the continued
poor experience in the workers' compensation line of business is
unacceptable. The workers' compensation results were $28.8 million of the
$54.2 million total statutory underwriting loss for the first quarter of
2001. We have already taken aggressive underwriting actions to return this
line of business to profitability - including but not limited to eliminating
dividends on new and renewal policies, increasing prices and rates where
permitted and instituting more restrictive renewal underwriting guidelines.
These actions are expected to begin having a positive impact on results by
year end."
Net investment income before tax was $51.3 million for the current quarter,
compared with $51.8 million for the first quarter 2000. For the current
quarter, after-tax realized capital gains were $8.2 million, or $.13 per
share, compared with capital losses of $4.1 million, or $.07 per share for
the quarter ending March 31, 2000.
Ohio Casualty Corporation did not repurchase any shares during the first
quarter. The Corporation has remaining authorization to repurchase
1,649,824 additional shares. During the first quarter 2001, the minimum
statutory surplus covenant for the Corporation's credit facility agreement
was amended from $750 million to $675 million for the quarters ending March
31, 2001 and June 30, 2001. At March 31, 2001, statutory surplus was $765.2
million.
Property-Casualty Operations
First quarter 2001 net premiums written totaled $371.3 million, a decrease
of $23.3 million or 5.9% from the first quarter 2000. Agency cancellations
and tighter underwriting guidelines combined with strong competition in
personal lines contributed to a 5.1% decrease in personal lines premiums for
the current quarter. Commercial lines average renewal price increases
for direct premiums written improved to 12.5% in the current quarter from
11.7% in the fourth quarter of 2000. Despite the renewal price increases,
management's decision in 2000 to cancel all Managing General Agents and
eliminate other consistently unprofitable business led to a decrease in
commercial lines net premiums written of 7.1% in the first quarter 2001.
That decision included the non-renewal of unprofitable workers' compensation
business of approximately $50 million in annual premium volume which
contributed to a $17.4 million decrease in net premiums written for that
line in the current quarter. Excluding workers' compensation, commercial
lines net premiums written for the current quarter increased 1.3%.
The statutory combined ratio improved for the quarter to 115.2%, decreasing
from 122.9% in the 2000 first quarter and decreasing from 117.3% in the 2000
fourth quarter. The improvement in the statutory combined ratio is
attributable to the actions taken in 2000 to reduce expenses and improve the
loss results. All three quarters were negatively impacted by high losses in
the workers' compensation line of business. Excluding the workers'
compensation line of business, the statutory combined ratio for the first
quarter 2001 for all other lines was 7.0 points less at 108.2%. Poor results
for New Jersey private passenger auto business added 6.4 points to the
countrywide private passenger automobile loss ratio and 1.7 points to the all
lines loss ratio for the current quarter.
The year-to-date March 31, 2001 accident year loss ratio of 67.2% was better
than the calendar year-to-date loss ratio of 69.8%. Severe cold weather near
the end of December 2000 resulted in late reported claims for the first
quarter 2001 that were approximately $4.5 million higher than historical
levels. Large losses (claims over $250,000) for accident year 2001 totaled
$10.4 million as of March 31, 2001, approximately $3.2 million more than
accident year 2000 as of March 31, 2000.
Weather-related catastrophe losses in the quarter were $1.8 million, a
significant decrease of $6.1 million from the same period one year ago.
Catastrophe losses added .5 points to the statutory combined ratio in the
first quarter of 2001, compared with a 2.1 point catastrophe impact in the
first quarter last year.
The first quarter 2001 statutory underwriting expense ratio improved to 33.2%
from 34.5% in the same quarter of 2000, and from 35.2% in the fourth quarter
of 2000. The decrease is due mostly to lower salary expense and decreased
advertising expenditures, both a result of expense reduction initiatives
during 2000. Salary expense was $5.2 million lower in the first quarter of
2001 compared with 2000. The employee count of 3,450 at March 31, 2001 is
down slightly from 3,470 at year-end 2000 and down significantly from 3,802
at March 31, 2000.
Assets, Investments and Shareholders' Equity
Consolidated corporate assets were $4.44 billion at March 31, 2001,
decreasing from $4.49 billion at December 31, 2000. Investments in
securities were $2.73 billion at cost, with an estimated fair market value
of $3.28 billion at March 31, 2001, compared with $2.75 billion at cost,
with an estimated fair market value of $3.33 billion at December 31, 2000.
Shareholders' equity was $1.09 billion at March 31, 2001, compared with
$1.12 billion at December 31, 2000. Book value per share is $18.21, compared
with $18.59 at December 31, 2000.
Conference Call
The Corporation will conduct a conference call to discuss information
included in this news release and related matters at 1:30 p.m. EST on
Wednesday, May 2, 2001. The conference call will be Webcast simultaneously
in a listen only mode via Investor Broadcast Network's Vcall Website, located
at http://www.vcall.com. To listen to the live call, please go to the
Website at least fifteen minutes early to register, download, and install any
necessary audio software. There is no charge to access the call.
Corporate profile
Ohio Casualty Corporation is the holding company of The Ohio Casualty
Insurance Company, which is one of six property-casualty subsidiary
companies that make up Ohio Casualty Group. The Ohio Casualty Insurance
Company was founded in 1919 and is licensed in 49 states. Ohio Casualty
Group is ranked 36th among U.S. property/casualty insurance groups based on
net premiums written (Best's Review, July 2000). The Group's member
companies write auto, home and business insurance. Ohio Casualty Corporation
trades on the NASDAQ Stock Market under the symbol OCAS and has assets of
approximately $4.44 billion as of March 31, 2001.
Ohio Casualty Corporation publishes forward-looking statements relating to
such matters as anticipated financial performance, business prospects and
plans, regulatory developments and similar matters. The statements contained
in this news release that are not historical information, are forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor under The Securities Act of 1933 and The Securities Exchange Act
of 1934 for forward-looking statements. The risks and uncertainties that may
affect the operations, performance, development and results of the
Corporation's business include the following: changes in property and
casualty reserves; catastrophe losses; premium and investment growth; product
pricing environment; availability of credit; changes in government regulation;
performance of financial markets; fluctuations in interest rates;
availability and pricing of reinsurance; litigation and administrative
proceedings; ability of Ohio Casualty to integrate and retain business
acquired from the Great American Insurance Company; and general economic and
market conditions.
(Table Follows)
OHIO CASUALTY CORPORATION
EARNINGS FOR THE FIRST QUARTER OF 2001
(in thousands) (Unaudited)
Three Months Ended
March 31
2001 2000
--------------------------
Premiums and finance charges earned $ 383,496 $ 387,188
Operating income (loss) after tax $ (12,294) $ (70,913)
Per share $ (0.20) $ (1.18)
Investment gain (loss) realized
Before tax $ 12,613 $ (6,308)
Per share $ 0.21 $ (0.10)
After tax $ 8,199 $ (4,100)
Per share $ 0.13 $ (0.07)
Net income (loss) $ (4,095) $ (75,013)
Per share $ (0.07) $ (1.25)
Effect Prop 103 after tax,incl above $ 0 $ (397)
Per share $ 0.00 $ (0.01)
Statutory property and casualty results:
Premium written $ 371,349 $ 394,644
Combined ratio 115.2% 122.9%
Investment income $ 50,723 $ 50,773
Per share $ 0.84 $ 0.85
Net income (loss) $ (1,541) $ (71,549)
Per share $ (0.03) $ (1.19)
Average common shares outstanding $ 60,073 $ 60,080
Supplemental Information as of March 31
Total assets $4,441,493 $4,396,768
Agent relationships asset $ 256,101 $ 248,328
Total liabilities $3,347,398 $3,372,774
Notes payable $ 210,643 $ 241,283
Total shareholders' equity $1,094,095 $1,042,861
Number of common shares outstanding 60,072 60,074
Statutory policyholders' surplus $ 765,171 $ 832,079
Visit our home page at www.ocas.com
Contact: Ohio Casualty Corporation
Fairfield, Ohio
Analyst contact:
Dennis E. McDaniel (513)603-2197
Vice President, Financial Accounting
and Investor Relations
dennis.mcdaniel@ocas.com
Media contact:
Cindy Denney (513)603-2074
.... (513)703-7372 (cell)
Assistant Vice President, Corporate
Communications
cindy.denney@ocas.com