Exhbit 99.3
OHIO CASUALTY CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIOD ENDING
DECEMBER 31, 2003
Contents: Page 1 GAAP Income Statement Data
Page 2 Statutory P&C Data
Page 3 P&C Accident Year Data
Page 4 Additional P&C Accident Year Data
Page 5 Consolidated Balance Sheet Data and
Related Information
Page 6 Supplemental Information
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 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 releases.
OHIO CASUALTY CORPORATION
SUMMARY INCOME STATEMENT - GAAP BASIS (in thousands, except per share data)
FOURTH QUARTER, 2003
(2003 Data Unaudited)
Three Months Ended Dec 31
------------------------------------------------
CONSOLIDATED 2003 2002
- ---------------------------------------- ---------------------- ------------------------
Premiums and finance charges earned $ 363,457 $ 367,793
Investment income less expenses 53,170 53,764
Investment gains realized, net 3,861 18,409
----------- -----------
Total revenues 420,488 439,966
Losses 209,935 216,751
Loss adjustment expenses 46,650 48,459
Underwriting expenses 122,629 122,997
Corporate and other expenses 6,596 12,502
----------- -----------
Total expenses 385,810 400,709
Income tax (benefit) expense:
On investment gains realized 1,351 6,443
On all other income (loss) 5,559 3,707
----------- -----------
Total income tax (benefit) expense 6,910 10,150
Net income (loss) $ 27,768 $ 29,107
============ ============
Average shares outstanding - diluted 61,736 61,125
Net income (loss), per share - diluted $ 0.45 $ 0.48
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 363,457 $ 367,793
Investment income less expenses 52,390 53,217
Investment gains realized, net 4,632 18,410
Losses 209,935 57.8% 216,751 58.9%
Loss adjustment expenses 46,650 12.8% 48,459 13.2%
Underwriting expenses 122,629 33.7% 122,997 33.4%
----------- ------- ----------- -------
Total expenses 379,214 104.3% 388,207 105.5%
Effective tax rate on investment income 33.1% 35.7%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expense $ 780 $ 547
Investment gains (losses) realized, net (771) (1)
Agent relationships asset expenses 3,278 9,920
Corporate expenses 3,318 2,582
Year
------------------------------------------------
CONSOLIDATED 2003 2002
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 1,424,353 $ 1,450,467
Investment income less expenses 208,723 207,133
Investment gains realized, net 35,872 45,192
----------- -----------
Total revenues 1,668,948 1,702,792
Losses 852,474 902,731
Loss adjustment expenses 174,896 227,081
Underwriting expenses 503,194 489,465
Corporate and other expenses 30,809 90,221
----------- -----------
Total expenses 1,561,373 1,709,498
Income tax (benefit) expense:
On investment gains realized 12,555 15,817
On all other income (loss) 19,176 (21,632)
----------- -----------
Total income tax (benefit) expense 31,731 (5,815)
Net income (loss) $ 75,844 $ (891)
============ ============
Average shares outstanding - diluted 61,327 61,284
Net income (loss), per share - diluted $ 1.24 $ (0.01)
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 1,424,353 $ 1,450,467
Investment income less expenses 204,874 205,794
Investment gains realized, net 35,026 45,371
Losses 852,474 59.8% 902,731 62.2%
Loss adjustment expenses 174,896 12.3% 227,081 15.7%
Underwriting expenses 503,194 35.3% 489,465 33.7%
----------- ------- ----------- -------
Total expenses 1,530,564 107.4% 1,619,277 111.6%
Effective tax rate on investment income 33.7% 33.9%
CORPORATE/OTHER
- ----------------------------------------
Investment income less expense $ 3,849 $ 1,339
Investment gains (losses) realized, net 846 (179)
Agent relationships asset expenses 18,690 79,699
Corporate expenses 12,119 10,522
-1-
OHIO CASUALTY CORPORATION
PROPERTY AND CASUALTY INSURANCE DATA - STATUTORY BASIS (in thousands)
FOURTH QUARTER, 2003
(2003 Data Unaudited)
THREE MONTHS ENDED DEC 31
-------------------------------------------------
2003 2002
OPERATING SEGMENTS and ----------------------- ----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 180,663 119.0% $ 182,266 106.9%
Workers' compensation 27,531 137.6% 31,984 130.2%
Commercial auto 51,113 108.3% 48,231 111.8%
General liability 18,582 128.2% 18,924 96.9%
CMP, BOP, fire and inland marine 83,437 116.8% 83,127 95.6%
Specialty Lines 40,311 60.9% 47,208 77.0%
Commercial umbrella 29,745 56.4% 31,911 87.8%
Fidelity and surety 10,566 74.2% 15,298 52.5%
Personal Lines 120,144 97.0% 118,335 119.1%
New Jersey personal auto (40) 5964.5% (708) 251.6%
Other personal lines 120,184 95.0% 119,043 113.9%
Other personal auto 71,692 103.0% 71,076 125.3%
Homeowners 39,876 86.1% 39,689 97.4%
------------ ------ ------------ ------
Total All Lines $ 341,118 104.7% $ 347,809 107.5%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 341,118 $ 347,809
Premiums earned 363,335 367,764
Losses incurred 208,512 57.4% 216,695 58.9%
Loss adjustment expenses 46,650 12.8% 48,459 13.2%
Underwriting expenses 117,554 34.5% 123,198 35.4%
------ ------
Underwriting loss (9,381) 104.7% (20,588) 107.5%
====== ======
Investment income 52,133 53,217
Investment gains realized 4,174 25,736
Other income/expense - -
Federal income tax expense (benefit) 11,543 1,136
------------ ------------
Net income $ 35,383 $ 57,229
============ ============
Included above:
Dividends to policyholders 165 0.0% (3,009) -0.9%
Paid loss & loss adjustment expense 244,589 260,665
YEAR
--------------------------------------------------
2003 2002
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 792,587 112.3% $ 762,189 115.1%
Workers' compensation 132,358 123.0% 143,911 129.2%
Commercial auto 228,333 105.5% 213,364 110.2%
General liability 83,448 122.6% 84,474 171.3%
CMP, BOP, fire and inland marine 348,448 109.7% 320,440 95.8%
Specialty Lines 164,851 77.2% 179,879 94.0%
Commercial umbrella 120,943 80.5% 132,655 97.7%
Fidelity and surety 43,908 68.1% 45,599 81.7%
Personal Lines 484,112 105.6% 506,560 114.1%
New Jersey personal auto (1,095) 648.1% 24,172 154.8%
Other personal lines 485,207 104.0% 482,388 107.9%
Other personal auto 293,820 105.2% 297,117 107.1%
Homeowners 157,184 106.9% 153,678 110.3%
------------ ------ ------------ ------
Total All Lines $ 1,441,550 106.1% $ 1,448,628 112.8%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 1,441,550 $ 1,448,628
Premiums earned 1,424,349 1,450,377
Losses incurred 850,550 59.7% 902,201 62.2%
Loss adjustment expenses 174,896 12.3% 227,081 15.7%
Underwriting expenses 491,241 34.1% 506,204 34.9%
------ ------
Underwriting loss (92,338) 106.1% (185,109) 112.8%
====== ======
Investment income 204,874 205,794
Investment gains realized 31,870 53,011
Other income/expense - (7,707)
Federal income tax expense (benefit) 25,289 (9,159)
------------ ------------
Net income $ 119,117 $ 75,148
============ ============
Included above:
Dividends to policyholders 796 0.1% (3,868) -0.3%
Paid loss & loss adjustment expense 975,319 1,032,544
-2-
OHIO CASUALTY CORPORATION
PROPERTY AND CASUALTY ACCIDENT YEAR DATA
FOURTH QUARTER, 2003
(Data Unaudited)
STATUTORY COMBINED RATIO
-------------------------------------------------------
Accident Accident Accident
Earned Prem Year 2003(A) Year 2002(A) Year 2002(A)
OPERATING SEGMENTS and Twelve Months Twelve Months Measured Measured Measured
SELECTED PRODUCT LINES Ended Ended as of as of as of
or MARKETS Dec 31, 2003 Dec 31, 2003 Dec 2003 Dec 2002 Dec 2003
- ---------------------- ------------ ------------ ------------ ------------ ------------
Commercial Lines $ 777,365 112.3% 107.1% 104.9% 101.3%
Workers' compensation 134,730 123.0% 115.9% 123.0% 116.1%
Commercial auto 221,085 105.5% 104.6% 101.7% 99.0%
General liability 84,379 122.6% 114.4% 113.4% 108.8%
CMP, BOP, fire and inland
marine 337,171 109.7% 103.3% 96.1% 93.8%
Specialty Lines 162,666 77.2% 90.3% 95.4% 89.4%
Commercial umbrella 120,546 80.5% 93.3% 98.8% 94.5%
Fidelity and surety 41,837 68.1% 81.1% 84.4% 74.2%
Personal Lines 484,322 105.6% 102.7% 111.8% 111.2%
New Jersey personal auto 1,231 648.1% 257.3% 136.5% 138.3%
Other personal lines 483,091 104.0% 102.1% 107.9% 107.1%
Other personal auto 295,157 105.2% 102.6% 108.0% 106.7%
Homeowners 154,578 106.9% 105.8% 111.3% 111.4%
----------- ------- ------- ------- -------
Total All Lines $1,424,353 106.1% 103.7% 106.9% 104.2%
Note: (A) The loss and LAE ratio component of the accident year combined ratio
measures losses and LAE arising from insured events that occurred in the
respective accident year. The current accident year excludes losses and LAE
for insured events that occurred in prior accident years. Accident year 2003
as of Dec 31, 2003 measures insured events for the twelve months of 2003.
Accident year 2002 as of Dec 31, 2002 measures insured events for the twelve
months of 2002 with related outstanding liabilities estimated as of Dec 31,
2002. Accident year 2002 as of Dec 31, 2003 measures insured events for the
twelve months of 2002 with remaining related liabilities estimated as of
Dec 31, 2003. Partial and complete accident periods may not be comparable due
to seasonality, claim reporting and development patterns, claim settlement
rates and other factors.
-3-
OHIO CASUALTY CORPORATION
ADDITIONAL PROPERTY AND CASUALTY ACCIDENT YEAR AND CATASTROPHE DATA
(in millions, except ratio data)
FOURTH QUARTER, 2003
(Data Unaudited)
THREE MONTHS
PRIOR ACCIDENT YEAR LOSS & LAE ENDED DEC 31 YEAR
by SEGMENT 2003 2002 2003 2002
- ------------------------------ ----------------------- -----------------------
Commercial Lines $ 26.9 $ 9.1 $ 41.0 $ 73.9
Specialty Lines (9.2) (7.5) (21.3) (2.2)
Personal Lines 6.7 7.6 14.4 12.7
------- ------- ------- -------
Total All Lines Accident Year
Development 24.4 9.2 34.1 84.4
PRIOR ACCIDENT YEAR LOSS & LAE
- ------------------------------
Accident Year 2002 $ (5.5) $(39.0)
Accident Year 2001 1.9 $ 5.6 8.0 $(15.8)
Accident Year 2000 and Prior 28.0 3.6 65.1 100.2
------- ------- ------- -------
Total Accident Year Development 24.4 9.2 34.1 84.4
CATASTROPHE LOSS RATIO
- ------------------------------
Commercial Lines 1.4% 0.6% 2.6% 0.5%
Specialty Lines -0.1% -1.9% 0.0% -0.2%
Personal Lines -0.1% 2.6% 4.8% 3.1%
Homeowners -1.7% 6.8% 11.8% 8.7%
Total All Lines 0.7% 1.0% 3.1% 1.4%
-4-
OHIO CASUALTY CORPORATION
CONSOLIDATED BALANCE SHEET DATA AND RELATED INFORMATION
(in thousands, except share data)
FOURTH QUARTER, 2003
(2003 Data Unaudited)
December 31, December 31,
2003 2002
ASSETS ------------- -------------
Investments:
U.S. government fixed maturities $ 43,260 $ 29,082
Tax exempt fixed maturities 79,137 46,788
Taxable fixed maturities:
Available for sale, at fair value 2,899,793 3,063,904
Held-to-maturity, at amortized cost 356,100 -
------------ ------------
Total fixed maturities 3,378,290 3,139,774
Equity securities, at fair value 329,049 312,537
Short-term investments, at fair value 40,448 49,839
------------ ------------
Total investments 3,747,787 3,502,150
Cash 16,494 12,384
Premiums and other receivables, net of
allowance for bad debts of $4,200 and
$4,300, respectively 347,863 324,759
Deferred policy acquisition costs 169,351 181,276
Property and equipment, net of
accumulated depreciation of $152,905
and $145,863, respectively 89,212 97,798
Reinsurance recoverable 592,688 419,870
Agent relationships, net of accumulated
amortization of $39,093 and $34,100,
respectively 142,634 161,323
Interest and dividends due or accrued 47,489 45,961
Deferred income taxes - 2,411
Other assets 15,393 31,062
------------ ------------
Total assets $ 5,168,911 $ 4,778,994
============ ============
Shares outstanding 60,957,043 60,725,368
Book value per share $18.80 $17.43
FAS 115 component of book value per shar $1.96 $1.76
December 31, December 31,
2003 2002
Liabilities ------------- -------------
Insurance reserves:
Losses $ 2,163,720 $ 1,978,743
Loss adjustment expenses 464,134 454,907
Unearned premiums 703,015 668,707
Debt 198,042 198,288
Reinsurance treaty funds held 150,512 129,403
Deferred income taxes 12,763 -
Other liabilities 330,891 290,243
------------ ------------
Total liabilities 4,023,077 3,720,291
Shareholders' Equity
Common stock, $.125 par value
Authorized: 150,000,000
Issued shares: 72,418,344; 72,418,344 9,052 9,052
Common stock purchase warrants - 21,138
Accumulated other comprehensive income 254,654 246,160
Retained earnings 1,033,404 936,687
Treasury stock, at cost:
(Shares: 11,461,301; 11,692,976) (151,276) (154,334)
------------ ------------
Total shareholders' equity 1,145,834 1,058,703
------------ ------------
Total liabilities and
shareholders' equity $ 5,168,911 $ 4,778,994
============ ============
-5-
OHIO CASUALTY CORPORATION
SUPPLEMENTAL INFORMATION (in thousands, except employee count and ratio data)
FOURTH QUARTER, 2003
(2003 Data Unaudited)
THREE MONTHS ENDED DEC 31 YEAR
------------------------- ----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Gross Premiums Written
Commercial Lines $ 188,349 $ 189,249 $ 824,398 $ 796,579
Specialty Lines 67,366 58,265 271,884 235,236
Personal Lines 121,217 118,328 494,143 520,591
---------- ---------- ---------- ----------
Total 376,932 365,842 1,590,425 1,552,406
New Business Gross Premiums Written
Commercial Lines 43,373 47,942 187,905 186,165
Commercial Umbrella 16,991 19,354 72,027 78,858
Personal Lines 11,054 10,093 43,939 34,593
Average Renewal Price Increase
Commercial Lines 7.7% 14.2% 11.4% 16.3%
Commercial Umbrella 14.5% 29.3% 18.1% 37.6%
Amortization of Deferred Acquisition Costs 92,470 96,792 383,976 376,223
Agent Relationships Asset Expenses
Write-down 1,454 7,881 11,244 69,510
Amortization 1,824 2,039 7,446 10,189
---------- ---------- ---------- ----------
Total 3,278 9,920 18,690 79,699
- ----------------------------------------------------------------------------
DEC 31, 2003 DEC 31, 2002
------------ ------------
Statutory Insurance Reserves:
Unearned premiums $ 642,414 $ 625,310
Losses 1,690,454 1,647,343
Loss adjustment expense 438,396 431,380
Statutory policyholders' surplus 867,627 725,748
Ratio of net premiums written to
statutory surplus 1.7 to 1.0 2.0 to 1.0
Employee Count 2,669 3,004
Note: For further information on differences between statutory accounting
principles and generally accepted accounting principles (GAAP), refer to
item 15 on pages 67 and 68 of the Corporation's Form 10-K for the year
ended December 31, 2002.
-6-