Exhibit 99.1
(Ohio Casualty Corporation Letterhead)
Analyst contact:
Dennis E. McDaniel
Vice President of Strategic Planning and Investor Relations
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
OHIO CASUALTY CORPORATION ANNOUNCES
RESULTS OF PROCESS RE-ENGINEERING INITIATIVE
FAIRFIELD, Ohio, February 11, 2004 --- Ohio Casualty Corporation (Nasdaq:
OCAS) today announced the results of the first phase of an intense company-
wide process re-engineering initiative, which is a key aspect of the
long-term cost structure efficiency effort to reduce expenses that the
company has undertaken.
The initiative has resulted in an initial reduction of approximately 260 staff
and managerial positions in its eight major field Claims and Commercial Lines
underwriting operations around the country, as well as at its Home Office
location in Fairfield, Ohio. An additional 150-250 positions are expected to
be reduced company-wide before the end of 2nd quarter 2004 as other areas of
the company complete their review of processes and implement improvements. "We
sincerely regret the impact of these reductions on employees and would have
preferred to adjust staffing through normal attrition," said President and
Chief Executive Officer Dan R. Carmichael, CPCU.
Other aspects of the initiative:
- The process re-engineering initiative represents actions taken to
improve productivity and customer service.
- These initial reductions are the result of continued advances in
technology, productivity efficiencies achieved through process
improvements, and shifts in business needs.
-- Specifically, the Commercial Lines Division has leveraged
technological advances to enhance its abilities to centralize some
backroom processing transactions for Commercial Lines underwriting.
Commercial Lines processing will be transferred from one branch
location to other offices; similar actions had been taken in two
other branch locations this past year. Process improvements have
been implemented in its remaining field offices, resulting in staff
reductions in all these locations.
-- In the Claims Department, the reductions are primarily in response
to a continued decrease in the number of claims handled, as well as
process improvements. In February of 2003, the department began the
process by reducing claims staff based on a declining claims count,
which has continued.
"We are systematically streamlining workflows in every functional area, which
improves productivity while maintaining or enhancing the quality of service to
agents and policyholders," said Mr. Carmichael. "While we are reducing the
size of many field offices, we are maintaining a strong underwriting,
marketing ,and claims presence in all locations that currently provide
services to agents and policyholders. We began the streamlining process in
our Commercial Lines and Claims field operations. The process improvement
initiative is continuing in all functional areas, with estimated further
reductions based on our re-engineering experience thus far."
Outside the process re-engineering effort, the company has made progress the
past two years in improving its cost structure and reducing expenses. In
addition to the Commercial Lines underwriting and Claims Department actions
outlined above, the Company has:
- addressed its loss adjustment expenses by reducing claims litigation
costs;
- reduced expenses through the centralization of its Personal Lines
Division;
- improved procurement practices, including a reduction in
telecommunications expenses;
- leveraged emerging technology to streamline, simplify and speed up
processes; and
- steadily reduced its employee count and personnel-related expenses.
Today's announced reduction of approximately 260 positions will result in a
net savings of approximately $5.5 million in 2004, which includes a 1st quarter
2004 charge of approximately $4.6 million for severance pay and other related
expenses. This reduction is expected to result in approximately $14.9 million
in annual savings beginning in 2005, with approximately 60% of the savings
reflected in the underwriting expense ratio and approximately 40% reflected in
the loss adjustment expense ratio.
Added Mr. Carmichael: "We needed to take assertive actions to arrive at proper
staffing levels to provide improved customer service and achieve expense
objectives. We are determined to achieve our expense reduction goals to make
us more competitive, increase the company's financial strength in the market,
enhance the ability to profitably grow our business, continue to deliver
quality services to customers and provide value to shareholders."
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
45th among U.S. property/casualty insurance groups based on net premiums
written (Best's Review, July 2003). 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 $5.2
billion as of December 31, 2003.
Safe Harbor Statement
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 operations, performance and
development of the Corporation's business are subject to risks and
uncertainties, which may cause actual results to differ materially from those
contained in or supported by the forward-looking statements in this release.
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 to appoint and/or retain agents; 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. Investors
are also advised to consult any further disclosures made on related subjects
in the Company's reports filed with the Securities and Exchange Commission or
in subsequent press releases.