Exhibit 99.2
OHIO CASUALTY CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIOD ENDING
JUNE 30, 2004
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 within the meaning of The Private Securities Litigation Reform Act
of 1995. 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 Corporation'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)
SECOND QUARTER, 2004
(2004 Data Unaudited)
Three Months Ended June 30
------------------------------------------------
CONSOLIDATED 2004 2003
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 367,188 $ 351,263
Investment income less expenses 48,587 51,331
Investment gains realized, net 3,258 6,838
----------- -----------
Total revenues 419,033 409,432
Losses 203,098 213,684
Loss adjustment expenses 40,051 41,445
Underwriting expenses 120,984 126,394
Corporate and other expenses 7,857 10,711
----------- -----------
Total expenses 371,990 392,234
Income tax expense:
On investment gains realized 1,140 2,394
On all other income 13,214 3,794
----------- -----------
Total income tax expense 14,354 6,188
Cumulative effect of an accounting change - -
Net income $ 32,689 $ 11,010
============ ============
Average shares outstanding - diluted 62,474 61,170
Net income, per share - diluted $ 0.52 $ 0.18
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 367,188 $ 351,263
Investment income less expenses 47,497 50,579
Investment gains realized, net 2,101 6,964
Losses 203,098 55.3% 213,684 60.8%
Loss adjustment expenses 40,051 10.9% 41,445 11.8%
Underwriting expenses 120,984 32.9% 126,394 36.0%
----------- ------- ----------- -------
Total expenses 364,133 99.1% 381,523 108.6%
Effective tax rate on investment income 33.2% 33.7%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expenses $ 1,090 $ 751
Investment gains realized, net 1,157 (126)
Agent relationships asset expenses 4,339 7,665
Corporate expenses 3,518 3,046
Six Months Ended June 30
-----------------------------------------------
CONSOLIDATED 2004 2003
- ---------------------------------------- -----------------------------------------------
Premiums and finance charges earned $ 728,333 $ 700,526
Investment income less expenses 99,063 104,578
Investment gains realized, net 6,915 26,131
----------- -----------
Total revenues 834,311 831,235
Losses 398,279 422,477
Loss adjustment expenses 78,411 88,848
Underwriting expenses 262,459 254,517
Corporate and other expenses 18,228 18,410
----------- -----------
Total expenses 757,377 784,252
Income tax expense:
On investment gains realized 2,420 9,146
On all other income 20,943 6,915
----------- -----------
Total income tax expense 23,363 16,061
Cumulative effect of an accounting change (1,648) -
Net income $ 51,923 $ 30,922
============ ============
Average shares outstanding - diluted 62,307 61,068
Net income, per share - diluted $ 0.83 $ 0.51
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 728,333 $ 700,526
Investment income less expenses 97,146 102,062
Investment gains realized, net 5,158 26,185
Losses 398,279 54.7% 422,477 60.3%
Loss adjustment expenses 78,411 10.8% 88,848 12.7%
Underwriting expenses 262,459 36.0% 254,517 36.3%
----------- ------- ----------- -------
Total expenses 739,149 101.5% 765,842 109.3%
Effective tax rate on investment income 33.0% 33.4%
CORPORATE/OTHER
- ----------------------------------------
Investment income less expenses $ 1,917 $ 2,515
Investment gains realized, net 1,757 (54)
Agent relationships asset expenses 11,553 12,451
Corporate expenses 6,675 5,959
CONSOLIDATED Year 2003
- ---------------------------------------- ------------------------
Premiums and finance charges earned $ 1,424,353
Investment income less expenses 208,723
Investment gains realized, net 35,872
-----------
Total revenues 1,668,948
Losses 852,474
Loss adjustment expenses 174,896
Underwriting expenses 503,194
Corporate and other expenses 30,809
-----------
Total expenses 1,561,373
Income tax expense:
On investment gains realized 12,555
On all other income 19,176
-----------
Total income tax expense 31,731
Cumulative effect of an accounting change -
Net income $ 75,844
============
Average shares outstanding - diluted 61,327
Net income, per share - diluted $ 1.24
Ratio to
Premiums
PROPERTY AND CASUALTY Earned
- --------------------------------------- --------
Premiums and finance charges earned $ 1,424,353
Investment income less expenses 204,874
Investment gains realized, net 35,026
Losses 852,474 59.8%
Loss adjustment expenses 174,896 12.3%
Underwriting expenses 503,194 35.3%
----------- -------
Total expenses 1,530,564 107.4%
Effective tax rate on investment income 33.7%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expenses $ 3,849
Investment gains realized, net 846
Agent relationships asset expenses 18,690
Corporate expenses 12,119
-1-
OHIO CASUALTY CORPORATION
PROPERTY AND CASUALTY INSURANCE DATA - STATUTORY BASIS
(in thousands, except ratio data)
SECOND QUARTER, 2004
(2004 Data Unaudited)
THREE MONTHS ENDED JUNE 30
------------------------------------------------
2004 2003
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 220,306 100.7% $ 210,005 111.6%
Workers' compensation 36,596 108.1% 35,697 113.3%
Commercial auto 63,830 99.7% 61,780 101.7%
General liability 24,709 102.5% 23,173 128.8%
CMP, fire and inland marine 95,171 98.1% 89,355 112.6%
Specialty Lines $ 39,058 94.0% $ 43,110 76.0%
Commercial umbrella 26,415 93.3% 31,480 85.7%
Fidelity and surety 12,643 90.6% 11,630 47.2%
Personal Lines $ 127,307 95.5% $ 122,751 107.7%
Personal auto incl. personal
umbrella 74,929 96.5% 73,246 106.2%
Personal property 52,378 93.7% 49,505 109.8%
------------ ------ ------------ ------
Total All Lines $ 386,671 98.2% $ 375,866 106.2%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 386,671 $ 375,866
Premiums earned 367,093 351,266
Losses incurred 202,987 55.3% 213,685 60.8%
Loss adjustment expenses 35,980 9.8% 41,445 11.8%
Underwriting expenses 127,956 33.1% 126,305 33.6%
------ ------
Underwriting gain/(loss) 170 98.2% (30,169) 106.2%
====== ======
Investment income 47,497 50,579
Investment gains (losses) realized (1,309) 8,005
Federal income tax expense 13,065 4,402
------------ ------------
Net income $ 33,293 $ 24,013
============ ============
Included above:
Dividends to policyholders 469 0.1% 117 0.0%
Paid loss & loss adjustment expense 199,059 248,056
SIX MONTHS ENDED JUNE 30
-------------------------------------------------
2004 2003
OPERATING SEGMENTS and ----------------------- ----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 432,524 99.8% $ 415,159 111.4%
Workers' compensation 72,855 111.3% 73,334 124.1%
Commercial auto 123,964 96.2% 120,637 103.8%
General liability 46,785 106.5% 43,385 127.0%
CMP, fire and inland marine 188,920 96.0% 177,803 106.9%
Specialty Lines $ 73,868 93.6% $ 76,052 83.8%
Commercial umbrella 49,733 97.0% 54,065 91.8%
Fidelity and surety 24,135 79.2% 21,988 60.4%
Personal Lines $ 244,336 101.3% $ 236,877 108.9%
Personal auto incl. personal
umbrella 150,782 107.6% 147,872 108.5%
Personal property 93,554 91.2% 89,005 109.7%
------------ ------ ------------ ------
Total All Lines $ 750,728 99.5% $ 728,088 107.5%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 750,728 $ 728,088
Premiums earned 728,259 700,569
Losses incurred 398,156 54.7% 421,907 60.2%
Loss adjustment expenses 74,340 10.2% 88,848 12.7%
Underwriting expenses 259,522 34.6% 251,806 34.6%
------ ------
Underwriting gain/(loss) (3,759) 99.5% (61,992) 107.5%
====== ======
Investment income 97,146 102,062
Investment gains (losses) realized 3,667 24,408
Federal income tax expense 25,068 12,935
------------ ------------
Net income $ 71,986 $ 51,543
============ ============
Included above:
Dividends to policyholders 818 0.1% 379 0.1%
Paid loss & loss adjustment expense 432,588 486,587
YEAR 2003
OPERATING SEGMENTS and ----------------------
SELECTED PRODUCT LINES or Net Premiums Combined
MARKETS Written Ratio
- -------------------------- ------------ --------
Commercial Lines $ 792,587 112.3%
Workers' compensation 132,358 123.0%
Commercial auto 228,333 105.5%
General liability 83,448 122.6%
CMP, fire and inland marine 348,448 109.7%
Specialty Lines $ 164,851 77.2%
Commercial umbrella 120,943 80.5%
Fidelity and surety 43,908 68.1%
Personal Lines $ 484,112 105.6%
Personal auto incl. personal
umbrella 296,845 107.0%
Personal property 187,267 103.3%
------------ ------
Total All Lines $ 1,441,550 106.1%
ALL LINES RESULTS Ratio
- --------------------- -----
Premiums written $ 1,441,550
Premiums earned 1,424,349
Losses incurred 850,550 59.7%
Loss adjustment expenses 174,896 12.3%
Underwriting expenses 491,241 34.1%
------
Underwriting gain/(loss) (92,338) 106.1%
======
Investment income 204,874
Investment gains (losses) realized 31,870
Federal income tax expense 25,289
------------
Net income $ 119,117
============
Included above:
Dividends to policyholders 796 0.1%
Paid loss & loss adjustment expense 975,319
-2-
OHIO CASUALTY CORPORATION
PROPERTY AND CASUALTY ACCIDENT YEAR DATA (in thousands, except ratio data)
SECOND QUARTER, 2004
(Data Unaudited)
STATUTORY COMBINED RATIO
-------------------------------------------------------
Earned Accident Accident Accident
Premiums Year 2004(A) Year 2003(A) Year 2003(A)
OPERATING SEGMENTS and Six Months Six Months Measured Measured Measured
SELECTED PRODUCT LINES Ended Ended as of as of as of
or MARKETS June 30, 2004 June 30, 2004 June 2004 June 2003 June 2004
- ---------------------- ------------- ------------- ------------ ----------- -----------
Commercial Lines $ 400,164 99.8% 102.0% 108.7% 105.0%
Workers' compensation 67,746 111.3% 113.7% 119.7% 113.6%
Commercial auto 114,463 96.2% 100.2% 104.2% 103.5%
General liability 42,514 106.5% 107.7% 115.7% 111.4%
CMP, fire and inland marine 175,441 96.0% 97.2% 105.2% 100.9%
Specialty Lines 82,456 93.6% 99.9% 96.8% 89.1%
Commercial umbrella 60,949 97.0% 101.3% 100.7% 92.4%
Fidelity and surety 21,507 79.2% 90.9% 82.7% 79.0%
Personal Lines 245,639 101.3% 100.8% 107.1% 101.9%
Personal auto, incl.
personal umbrella 150,066 107.6% 105.0% 104.8% 103.1%
Personal property 95,573 91.2% 94.1% 111.0% 99.7%
------- ------- ------- ------- -------
Total All Lines $ 728,259 99.5% 101.2% 106.9% 102.1%
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 2004
as of June 30, 2004 measures insured events for the first six months of 2004.
Accident year 2003 as of June 30, 2003 measures insured events for the first
six months of 2003. Accident year 2003 as of June 30, 2004 measures insured
events for the full year 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)
SECOND QUARTER, 2004
(Data Unaudited)
Three Months Six Months
PRIOR ACCIDENT YEAR LOSS & LAE Ended June 30 Ended June 30
by SEGMENT 2004 2003 2004 2003
- ------------------------------ ----- ----- ----- -----
Commercial Lines $ (2.1) $ 7.6 $ (8.7) $ 10.4
Specialty Lines (2.1) (6.3) (5.2) (10.2)
Personal Lines (6.0) 0.5 1.2 4.3
------- ------- ------- -------
Total All Lines Accident Year
Development (10.2) 1.8 (12.7) 4.5
PRIOR ACCIDENT YEAR LOSS & LAE
by SEGMENT Year 2003
- ------------------------------ ---------
Commercial Lines $ 41.0
Specialty Lines (21.3)
Personal Lines 14.4
-------
Total All Lines Accident Year
Development 34.1
Three Months Six Months
Ended June 30 Ended June 30
PRIOR ACCIDENT YEAR LOSS & LAE 2004 2003 2004 2003
- ------------------------------ ----- ----- ----- -----
Accident Year 2003 $ (8.1) $ - $ (22.2) $ -
Accident Year 2002 (2.4) (5.5) (5.5) (26.2)
Accident Year 2001 and Prior 0.3 7.3 15.0 30.7
------- ------- ------- -------
Total Accident Year Development (10.2) 1.8 (12.7) 4.5
PRIOR ACCIDENT YEAR LOSS & LAE Year 2003
- ------------------------------ ---------
Accident Year 2003 $ -
Accident Year 2002 (39.0)
Accident Year 2001 and Prior 73.1
-------
Total Accident Year Development 34.1
Three Months Six Months
Ended June 30 Ended June 30
CATASTROPHE LOSS RATIO 2004 2003 2004 2003
- ---------------------- ----- ----- ----- -----
Commercial Lines 0.9% 2.5% 0.8% 3.0%
Specialty Lines 0.0% 0.0% 0.0% 0.1%
Personal Lines 8.0% 7.7% 4.7% 5.6%
Homeowners 18.4% 17.9% 10.5% 13.5%
Total All Lines 3.2% 4.0% 2.0% 3.6%
CATASTROPHE LOSS RATIO Year 2003
- ---------------------- ---------
Commercial Lines 2.6%
Specialty Lines 0.0%
Personal Lines 4.8%
Homeowners 11.8%
Total All Lines 3.1%
-4-
OHIO CASUALTY CORPORATION
CONSOLIDATED BALANCE SHEET DATA AND RELATED
INFORMATION (in thousands, except share data)
SECOND QUARTER, 2004
(2004 Data Unaudited)
June 30, December 31,
2004 2003
ASSETS --------- ------------
Investments:
U.S. government fixed maturities $ 34,653 $ 43,260
Tax exempt fixed maturities 283,007 79,137
Taxable fixed maturities:
Available for sale, at fair value 2,772,822 2,899,793
Held-to-maturity, at amortized cost 329,204 356,100
------------ ------------
Total fixed maturities 3,419,686 3,378,290
Equity securities, at fair value 350,989 329,049
Short-term investments, at fair value 253,690 40,448
------------ ------------
Total investments 4,024,365 3,747,787
Cash 10,569 16,494
Premiums and other receivables, net of
allowance for bad debts of $4,200 and
$4,200, respectively 364,187 347,863
Deferred policy acquisition costs 172,648 169,351
Property and equipment, net of
accumulated depreciation of $161,705
and $152,905, respectively 86,404 89,212
Reinsurance recoverable 662,275 592,688
Agent relationships, net of accumulated
amortization of $39,983 and $39,093,
respectively 131,081 142,634
Interest and dividends due or accrued 46,924 47,489
Other assets 60,512 15,393
------------ ------------
Total assets $ 5,558,965 $ 5,168,911
============ ============
Shares outstanding 61,434,885 60,957,043
Book value per share $19.21 $18.80
FAS 115 component of book value per share $1.16 $1.96
June 30, December 31,
2004 2003
LIABILITIES -------- ------------
Insurance reserves:
Losses $ 2,264,445 $ 2,163,720
Loss adjustment expenses 465,888 464,134
Unearned premiums 729,981 703,015
Debt 395,919 198,042
Reinsurance treaty funds held 165,431 150,512
Deferred income taxes 133 12,763
Other liabilities 357,123 330,891
------------ ------------
Total liabilities $ 4,378,920 $ 4,023,077
SHAREHOLDERS' EQUITY
Common stock, $.125 par value
Authorized: 150,000,000
Issued shares: 72,418,344; 72,418,344 9,052 9,052
Accumulated other comprehensive income 231,509 254,654
Retained earnings 1,084,453 1,033,404
Treasury stock, at cost:
(Shares: 10,983,459; 11,461,301) (144,969) (151,276)
------------ ------------
Total shareholders' equity 1,180,045 1,145,834
------------ ------------
Total liabilities and
shareholders' equity $ 5,558,965 $ 5,168,911
============ ============
-5-
OHIO CASUALTY CORPORATION
SUPPLEMENTAL INFORMATION (in thousands, except employee count)
SECOND QUARTER, 2004
(2004 Data Unaudited)
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
-------------------------- --------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Gross Premiums Written
Commercial Lines $ 225,864 $ 219,389 $ 446,283 $ 433,191
Specialty Lines 66,787 70,119 128,620 128,598
Personal Lines 127,642 125,930 246,542 242,907
---------- ---------- ---------- ----------
Total 420,293 415,438 821,445 804,696
New Business Gross Premiums Written
Commercial Lines 47,218 51,431 90,244 95,910
Commercial Umbrella 13,582 18,902 27,500 35,254
Personal Lines 11,035 11,370 21,101 20,961
Average Renewal Price Increase
Commercial Lines 4.5% 10.9% 5.7% 11.5%
Commercial Umbrella 8.2% 22.4% 9.7% 22.7%
Amortization of Deferred Acquisition Costs 91,844 96,760 184,194 194,237
Agent Relationships Asset Expenses
Write-down 2,603 5,801 8,011 8,666
Amortization 1,736 1,864 3,542 3,785
---------- ---------- ---------- ----------
Total 4,339 7,665 11,553 12,451
YEAR 2003
----------
Gross Premiums Written
Commercial Lines $ 824,398
Specialty Lines 271,884
Personal Lines 494,143
----------
Total 1,590,425
New Business Gross Premiums Written
Commercial Lines 187,905
Commercial Umbrella 72,027
Personal Lines 43,939
Average Renewal Price Increase
Commercial Lines 11.4%
Commercial Umbrella 18.1%
Amortization of Deferred Acquisition Costs 383,976
Agent Relationships Asset Expenses
Write-down 11,244
Amortization 7,446
----------
Total 18,690
===============================================================================================
JUNE 30, 2004 JUNE 30, 2003 DEC 31, 2003
------------- ------------- ------------
Statutory Insurance Reserves:
Unearned premiums $ 664,884 $ 652,829 $ 642,414
Losses 1,731,163 1,665,377 1,690,454
Loss adjustment expense 437,595 437,514 438,396
Statutory policyholders' surplus 898,992 782,232 867,627
Ratio of net premiums written to
statutory surplus 1.6 to 1.0 1.8 to 1.0 1.7 to 1.0
Employee Count* 2,229 2,805 2,669
*Employee count as of 6/30/04 excludes employees receiving severance and
other related termination payments.
Note: For further information on differences between statutory accounting
principles and generally accepted accounting principles (GAAP), refer to
Item 15 on pages 73 and 74 of the Corporation's Form 10-K for the year ended
December 31, 2003.
-6-