Exhibit 99
Analyst contact:
Dennis E. McDaniel
Vice President and Controller
513-603-2197
dennis.mcdaniel@ocas.com
Media contact:
Cindy L. Denney
Assistant Vice President, Corporate Communications
513-603-2074 (ofc.), 513-703-7372 (cell)
cindy.denney@ocas.com
For Immediate Release
OHIO CASUALTY CORPORATION
REPORTS FIRST QUARTER 2002 EARNINGS
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FAIRFIELD, Ohio, May 1, 2002 --- Ohio Casualty Corporation (Nasdaq:OCAS)
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today announced net income of $26.9 million, or $0.44 per share, for the first
quarter ended March 31, 2002. In the same quarter of 2001, the Corporation
reported a net loss of $4.1 million, or $0.07 per share.
After-tax operating income, which differs from net income by the exclusion of
realized investment gains (losses), for the first quarter of 2002 was $12.0
million, or $0.20 per share, compared with an operating loss of $12.3 million,
or $0.20 per share for the first three months of 2001. The improvement was
due to the overall improved loss results driven by underwriting actions and
improved pricing.
"The first quarter results confirm that the actions the Corporation has been
taking are improving the bottom line results. The results for the quarter
show continued overall improvement and are consistent with our targeted
results for 2002. This quarter was the first quarter with positive operating
income in several quarters. Now that we are seeing more favorable results, we
are even more determined to keep focused on improved underwriting results to
achieve our Corporate Strategic Plan underwriting targets" commented President
and Chief Executive Officer Dan Carmichael, CPCU. "The Corporation has also
had other significant events take place, including the refinancing of the bank
debt with a convertible debt issuance, the election of three highly skilled
directors to the Board of Directors, and the initial execution of the
previously announced exit from the New Jersey private passenger auto market."
Consolidated after-tax realized capital gains amounted to $14.8 million, or
$0.24 per share, for the quarter ended March 31, 2002. For the three months
ended March 31, 2001, after-tax realized capital gains were $8.2 million, or
$0.13 per share. The Group continues to reduce its equity holdings in order
to reduce the effect on statutory surplus of future stock market volatility.
Consolidated before-tax net investment income for the first quarter of 2002
was $50.9 million, or $0.83 per share, compared with $51.3 million, or $0.85
per share, in the first quarter of 2001. Although invested assets have
increased over the past year, a decline in interest rates led to the slight
decrease in investment income.
At March 31, 2002, statutory surplus was $778.7 million.
Property-Casualty Operations
The table below summarizes the statutory net premiums written for the business
units:
Statutory
Net Premiums Written First Quarter %
($ in millions) 2002 2001 Chg
- -------------------- ---- ---- ---
Commercial Lines $192.8 $178.4 8.1
Specialty Lines 39.5 30.0 31.4
Personal Lines 142.6 162.9 (12.5)
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All Lines $374.9 $371.3 1.0
Renewal price increases had a positive impact on net premiums written. The
first quarter 2002 average renewal price increase of 14.9%, including exposure
changes, for the commercial lines direct premiums written increased from the
12.3% average renewal price increase in the same period of 2001. The fourth
quarter 2001 average renewal price increase for commercial lines was 13.8%.
For commercial umbrella business in the specialty lines business unit, average
renewal price increases were 38.4% for the first quarter of 2002, compared
with 17.6% for the same quarter in 2001. Fourth quarter 2001 average renewal
price increases for commercial umbrella business were 23.4%.
The expected decrease in personal lines net premiums written was driven by
actions to eliminate and cancel the most unprofitable states and agents. The
exit from the New Jersey private passenger auto market contributed to a $4.5
million decrease in net premiums written in New Jersey for the first quarter
of 2002 compared with 2001. The Group continues to focus on growing the New
Jersey commercial lines business while exiting the New Jersey private
passenger auto market. New Jersey commercial and specialty lines net premiums
written increased $5.3 million in the current quarter from the same period in
2001. The withdrawal from certain other states for personal lines business
announced in the 2001 Corporate Strategic Plan contributed $2.9 million to the
personal lines net premiums written decrease. The cancellation of certain
unprofitable agents, as previously announced, also contributed approximately
$10 million to the decline in personal lines net premiums written.
The statutory combined ratio is a commonly used gauge of statutory
underwriting performance measuring the percentage of premium dollars used to
pay insurance losses and related expenses. The table below summarizes the
statutory combined ratio results by business unit for recent periods:
Calendar Year
First Quarter
Statutory Combined Ratio 2002 2001
- ------------------------ ---- ----
Commercial Lines 108.3% 123.6%
Specialty Lines 83.4% 71.7%
Personal Lines 107.3% 114.1%
All Lines 106.5% 115.2%
The improvement in the All Lines 2002 statutory combined ratio over 2001
results is attributable to price increases and more favorable loss results.
The major driver in the favorable loss results was the improvement in the
commercial lines loss ratio. The first quarter 2002 calendar year commercial
lines loss ratio improved 19.1 points compared with the same period of 2001.
The statutory loss and loss adjustment expense ratios were impacted negatively
in 2002 for adjustments to the provision for prior years' business. In total,
this increase in provisions for prior years' losses and loss adjustment
expenses added 1.2 points to the statutory combined ratio. This amount
includes increases in provisions for general liability construction defect
related reserves and for the National Workers' Compensation Pool.
The statutory loss adjustment expense ratio for the first three months of 2002
was 14.3%, 2.1 points higher than the first quarter 2001 loss adjustment
expense ratio of 12.2%. The increase is partially the result of expenditures
made to implement loss cost savings initiatives in order to improve loss
results while providing superior claims service to policyholders. A portion
of the increase is also due to increased estimates of legal costs on claims
from prior years.
Catastrophe losses in the first quarter of 2002 were $3.3 million, an increase
of $1.5 million from the same period of 2001. Catastrophe losses added 0.9
points to the statutory combined ratio in the first three months of 2002,
slightly above the 0.5 point catastrophe impact in the first three months of
2001.
The first quarter 2002 statutory underwriting expense as a percent of net
premiums written was 33.5%, compared with 33.2% in the comparable quarter of
2001. Although the Corporation continues to monitor and manage expenses
closely, an increase in commission expenses caused a slight increase in the
underwriting expense ratio. This increase in commission expense was partially
the result of higher than projected bonuses paid due to more favorable than
expected 2001 results from the Group's key agents. The elimination of ceding
commissions received on umbrella premiums ceded to reinsurers, as previously
announced in the February 5, 2002 Corporate Strategic Plan update, also
contributed to the increase in commission expense. The increase in commission
expenses was partially offset by a decrease in policyholder dividends
incurred.
The employee count continues to decline. As of March 31, 2002, the employee
count was 3,233, compared with 3,450 at March 31, 2001, and 3,365 at December
31, 2001.
Assets, Investments and Shareholders' Equity
Consolidated corporate assets were $4.52 billion on March 31, 2002, compared
with $4.52 billion at December 31, 2001. Investments in securities were $3.02
billion at cost, with an estimated fair market value of $3.32 billion at March
31, 2002, compared with $2.95 billion at cost, with an estimated fair market
value of $3.32 billion at December 31, 2001. Shareholders' equity was $1.07
billion at March 31, 2002, compared with $1.08 billion at December 31, 2001.
Book value per share at March 31, 2002 was $17.68, compared with $17.97 at
December 31, 2001. The change in book value in the first quarter of 2002 was
primarily driven by a decline in prices in the fixed income portfolio.
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 1,
2002. 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
37th among U.S. property/casualty insurance groups based on net premiums
written (Best's Review, July 2001). 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 had assets of approximately $4.52
billion as of December 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; rating
agency actions; acts of war and terrorist activities; ability of Ohio Casualty
to retain business acquired from the Great American Insurance Company; ability
to achieve targeted expense savings; ability to achieve premium targets and
profitability goals; and general economic and market conditions.
Ohio Casualty Corporation undertakes no obligation to publicly release any
revisions to the forward-looking statements contained in this release, or to
update them to reflect events or circumstances occurring after the date of
this release, or to reflect the occurrence of unanticipated events.
(Table Follows)
OHIO CASUALTY CORPORATION
EARNINGS FOR THE FIRST QUARTER OF 2002
(in thousands) (2002 Data Unaudited)
Three Months Ended
March 31
2002 2001
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Premiums and finance charges earned $ 361,007 $ 383,496
Investment income less expenses, before tax $ 50,902 $ 51,280
Investment gain realized, before tax $ 22,831 $ 12,613
Total Revenues $ 434,740 $ 447,389
Operating income (loss), after tax $ 12,033 $ (12,294)
Per share 0.20 (0.20)
Investment gain realized, after tax $ 14,840 $ 8,199
Per share 0.24 0.13
Net income (loss), after tax $ 26,873 $ (4,095)
Per share 0.44 (0.07)
Average shares outstanding - Diluted 61,062 60,073
Statutory property and casualty:
Premium written $ 374,901 $ 371,349
Combined ratio 106.5% 115.2%
Supplemental Information as of March 31
Total assets $4,516,774 $4,441,493
Investments in securities $3,320,467 $3,284,546
Agent relationships asset $ 233,008 $ 256,101
Total liabilities $3,450,674 $3,347,398
Loss and loss adjustment expense reserves $2,159,048 $2,023,396
Notes payable $ 199,067 $ 210,643
Total shareholders' equity $1,066,100 $1,094,095
Number of common shares outstanding 60,298 60,072
Statutory policyholders' surplus $ 778,697 $ 765,171
For more information and financial supplements, visit our home page at
www.ocas.com