Exhibit 99.2
OHIO CASUALTY CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIOD ENDING
SEPTEMBER 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)
THIRD QUARTER, 2004
(Data Unaudited)
Three Months Ended Sept 30
------------------------------------------------
CONSOLIDATED 2004 2003
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 356,763 $ 360,370
Investment income less expenses 44,951 50,976
Investment gains (losses) realized, net (4,322) 5,879
----------- -----------
Total revenues 397,392 417,225
Losses 205,576 220,062
Loss adjustment expenses 38,227 39,398
Underwriting expenses 113,798 126,048
Corporate and other expenses 12,730 5,803
----------- -----------
Total expenses 370,331 391,311
Income tax expense (beneft):
On investment gains (losses) realized (1,513) 2,058
On all other income 9,004 6,702
----------- -----------
Total income tax expense 7,491 8,760
Cumulative effect of an accounting change - -
Net income $ 19,570 $ 17,154
============ ============
Average shares outstanding - diluted 62,781 61,414
Net income, per share - diluted $ 0.31 $ 0.28
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 356,763 $ 360,370
Investment income less expenses 42,223 50,422
Investment gains (losses) realized, net (4,241) 4,209
Losses 205,576 57.6% 220,062 61.1%
Loss adjustment expenses 38,227 10.7% 39,398 10.9%
Underwriting expenses 113,798 31.9% 126,048 35.0%
----------- ------- ----------- -------
Total expenses 357,601 100.2% 385,508 107.0%
Effective tax rate on investment income 30.0% 35.4%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expense $ 2,728 $ 554
Investment gains (losses) realized, net (81) 1,670
Agent relationships asset expenses 5,016 2,961
Corporate expenses 7,714 2,842
Nine Months Ended Sept 30
------------------------------------------------
CONSOLIDATED 2004 2003
- ---------------------------------------- ---------------------- ------------------------
Premiums and finance charges earned $ 1,085,096 $ 1,060,896
Investment income less expenses 144,014 155,554
Investment gains (losses) realized, net 2,593 32,010
----------- -----------
Total revenues 1,231,703 1,248,460
Losses 603,855 642,539
Loss adjustment expenses 116,638 128,246
Underwriting expenses 376,257 380,565
Corporate and other expenses 30,958 24,213
----------- -----------
Total expenses 1,127,708 1,175,563
Income tax expense (beneft):
On investment gains (losses) realized 907 11,204
On all other income 29,947 13,617
----------- -----------
Total income tax expense 30,854 24,821
Cumulative effect of an accounting change (1,648) -
Net income $ 71,493 $ 48,076
============ ============
Average shares outstanding - diluted 62,463 61,181
Net income, per share - diluted $ 1.14 $ 0.79
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 1,085,096 $ 1,060,896
Investment income less expenses 139,369 152,484
Investment gains (losses) realized, net 917 30,394
Losses 603,855 55.6% 642,539 60.6%
Loss adjustment expenses 116,638 10.7% 128,246 12.1%
Underwriting expenses 376,257 34.7% 380,565 35.9%
----------- ------- ----------- -------
Total expenses 1,096,750 101.0% 1,151,350 108.6%
Effective tax rate on investment income 31.4% 34.8%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expense $ 4,645 $ 3,070
Investment gains (losses) realized, net 1,676 1,616
Agent relationships asset expenses 16,569 15,412
Corporate expenses 14,389 8,801
CONSOLIDATED Year 2003
- ---------------------------------------- ----------------------
Premiums and finance charges earned $ 1,424,353
Investment income less expenses 208,723
Investment gains (losses) 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 (beneft):
On investment gains (losses) 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 (losses) 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 expense $ 3,849
Investment gains (losses) 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)
THIRD QUARTER, 2004
(Data Unaudited)
THREE MONTHS ENDED SEPT 30
------------------------------------------------
2004 2003
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 203,281 101.4% $ 196,765 107.6%
Workers' compensation 29,928 119.9% 31,493 106.7%
Commercial auto 57,711 89.3% 56,583 106.1%
General liability 22,523 90.1% 21,481 108.9%
CMP, fire and inland marine 93,119 105.0% 87,208 107.8%
Specialty Lines $ 28,744 108.6% $ 48,488 82.2%
Commercial umbrella 16,157 127.5% 37,135 85.4%
Fidelity and surety 12,587 75.1% 11,354 76.5%
Personal Lines $ 128,692 94.9% $ 127,091 107.8%
Personal auto incl. personal
umbrella 73,985 95.9% 76,432 106.0%
Personal property 54,707 93.2% 50,659 110.5%
------------ ------ ------------ ------
Total All Lines $ 360,717 99.4% $ 372,344 104.7%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 360,717 $ 372,344
Premiums earned 356,512 360,445
Losses incurred 205,444 57.6% 220,131 61.1%
Loss adjustment expenses 38,227 10.7% 39,398 10.9%
Underwriting expenses 112,346 31.1% 121,881 32.7%
------------ ------ ------------ ------
Underwriting gain (loss) 495 99.4% (20,965) 104.7%
====== ======
Investment income 42,223 50,422
Investment gains (losses) realized (4,301) 3,288
Federal income tax expense 301 811
------------ ------------
Net income $ 38,116 $ 31,934
============ ============
Included above:
Dividends to policyholders 243 0.1% 252 0.1%
Paid loss & loss adjustment expense 223,765 244,143
NINE MONTHS ENDED SEPT 30
------------------------------------------------
2004 2003
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 635,805 100.4% $ 611,924 110.1%
Workers' compensation 102,783 114.3% 104,827 118.4%
Commercial auto 181,675 94.0% 177,220 104.6%
General liability 69,308 101.0% 64,866 120.8%
CMP, fire and inland marine 282,039 99.1% 265,011 107.2%
Specialty Lines $ 102,612 97.8% $ 124,540 83.0%
Commercial umbrella 65,890 104.5% 91,200 89.0%
Fidelity and surety 36,722 77.8% 33,342 66.0%
Personal Lines $ 373,028 99.1% $ 363,968 108.4%
Personal auto incl. personal
umbrella 224,767 103.8% 224,304 118.9%
Personal property 148,261 91.8% 139,664 122.7%
------------ ------ ------------ ------
Total All Lines $ 1,111,445 99.5% $ 1,100,432 106.6%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 1,111,445 $ 1,100,432
Premiums earned 1,084,771 1,061,014
Losses incurred 603,600 55.6% 642,038 60.5%
Loss adjustment expenses 112,567 10.4% 128,246 12.1%
Underwriting expenses 371,868 33.5% 373,687 34.0%
------------ ------ ------------ ------
Underwriting gain (loss) (3,264) 99.5% (82,957) 106.6%
====== ======
Investment income 139,369 152,484
Investment gains (losses) realized (634) 27,696
Federal income tax expense 25,011 13,746
------------ ------------
Net income $ 110,460 $ 83,477
============ ============
Included above:
Dividends to policyholders 1,061 0.1% 631 0.1%
Paid loss & loss adjustment expense 656,353 730,730
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)
THIRD QUARTER, 2004
(Data Unaudited)
STATUTORY COMBINED RATIO
--------------------------------------------------------
Earned Accident Accident Accident
Premiums Year 2004(A) Year 2003(A) Year 2003(A)
OPERATING SEGMENTS and Nine Months Nine Months Measured Measured Measured
SELECTED PRODUCT LINES Ended Ended as of as of as of
or MARKETS Sept 30, 2004 Sept 30, 2004 Sept 2004 Sept 2003 Sept 2004
- ---------------------- ------------ ------------- ------------ ------------ ------------
Commercial Lines $ 601,871 100.4% 102.4% 107.7% 104.2%
Workers' compensation 99,694 114.3% 111.5% 117.5% 112.5%
Commercial auto 171,630 94.0% 99.2% 104.5% 102.9%
General liability 64,577 101.0% 104.2% 111.5% 109.7%
CMP, fire and inland marine 265,970 99.1% 100.6% 104.7% 100.3%
Specialty Lines 114,473 97.8% 104.3% 93.0% 88.2%
Commercial umbrella 81,429 104.5% 109.6% 96.3% 92.2%
Fidelity and surety 33,044 77.8% 87.7% 82.4% 76.1%
Personal Lines 368,427 99.1% 98.0% 106.3% 101.5%
Personal auto, incl.
personal umbrella 224,549 103.8% 102.2% 103.6% 102.9%
Personal property 143,878 91.8% 91.6% 110.9% 99.1%
---------- ------- ------- ------- -------
Total All Lines $1,084,771 99.5% 101.0% 105.7% 101.5%
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 Sept 30, 2004 measures insured events for the first nine months
of 2004. Accident year 2003 as of Sept 30, 2003 measures insured events for
the first nine months of 2003. Accident year 2003 as of Sept 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)
THIRD QUARTER, 2004
(Data Unaudited)
Three Months Nine Months
PRIOR ACCIDENT YEAR LOSS & LAE Ended Sept 30 Ended Sept 30
by SEGMENT 2004 2003 2004 2003
- ------------------------------ ----- ----- ----- -----
Commercial Lines (3.5) 3.7 (12.2) 14.1
Specialty Lines (2.2) (1.9) (7.4) (12.1)
Personal Lines 2.6 3.4 3.8 7.7
------- ------- ------- -------
Total All Lines Accident Year
Development (3.1) 5.2 (15.8) 9.7
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 Nine Months
Ended Sept 30 Ended Sept 30
PRIOR ACCIDENT YEAR LOSS & LAE 2004 2003 2004 2003
- ------------------------------ ----- ----- ----- -----
Accident Year 2003 (9.1) - (31.3) -
Accident Year 2002 (2.6) (7.3) (8.1) (33.5)
Accident Year 2001 and Prior 8.6 12.5 23.6 43.2
------- ------- ------- -------
Total Accident Year Development (3.1) 5.2 (15.8) 9.7
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 Nine Months
Ended Sept 30 Ended Sept 30
CATASTROPHE LOSS RATIO 2004 2003 2004 2003
- ------------------------------ ----- ----- ----- -----
Commercial Lines 7.7% 3.2% 3.1% 3.1%
Specialty Lines 0.0% 0.0% 0.0% 0.0%
Personal Lines 6.3% 8.2% 5.2% 6.5%
Homeowners 15.5% 23.2% 12.2% 16.6%
Total All Lines 6.4% 4.5% 3.5% 3.9%
CATASTROPHE LOSS RATIO Year 2003
- ------------------------------ ---------
Commercial Lines 2.6%
Specialty Lines 0.0%
Personal Lines 4.8%
Homeownrers 11.8%
Total All Lines 3.1%
-4-
OHIO CASUALTY CORPORATION
CONSOLIDATED BALANCE SHEET DATA AND RELATED
INFORMATION (in thousands, except share data)
THIRD QUARTER, 2004
(2004 Data Unaudited)
September 30, December 31,
2004 2003
ASSETS ------------- -------------
Investments:
U.S. government fixed maturities $ 31,398 $ 43,260
Tax exempt fixed maturities 819,609 79,137
Taxable fixed maturities:
Available for sale, at fair value 2,444,566 2,899,793
Held-to-maturity, at amortized cost 316,419 356,100
------------ ------------
Total fixed maturities 3,611,992 3,378,290
Equity securities, at fair value 352,611 329,049
Short-term investments, at fair value 219,656 40,448
------------ ------------
Total investments 4,184,259 3,747,787
Cash 22,584 16,494
Premiums and other receivables, net of
allowance for bad debts of $4,200 and
$4,200, respectively 364,847 347,863
Deferred policy acquisition costs 169,969 169,351
Property and equipment, net of
accumulated depreciation of $164,371
and $152,905, respectively 84,729 89,212
Reinsurance recoverable 668,296 592,688
Agent relationships, net of accumulated
amortization of $40,616 and $39,093,
respectively 126,065 142,634
Interest and dividends due or accrued 44,461 47,489
Other assets 43,086 15,393
------------ ------------
Total assets $ 5,708,296 $ 5,168,911
============ ============
Shares outstanding 61,822,356 60,957,043
Book value per share $20.32 $18.80
FAS 115 component of book value per share $1.96 $1.96
September 30, December 31,
2004 2003
LIABILITIES ------------- -------------
Insurance reserves:
Losses $ 2,276,520 $ 2,163,720
Loss adjustment expenses 481,271 464,134
Unearned premiums 738,086 703,015
Debt 395,350 198,042
Reinsurance treaty funds held 181,479 150,512
Deferred income taxes 36,819 12,763
Other liabilities 342,718 330,891
------------ ------------
Total liabilities 4,452,243 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 282,129 254,654
Retained earnings 1,104,727 1,033,404
Treasury stock, at cost:
(Shares: 10,595,988; 11,461,301) (139,855) (151,276)
------------ ------------
Total shareholders' equity 1,256,053 1,145,834
------------ ------------
Total liabilities and
shareholders' equity $ 5,708,296 $ 5,168,911
============ ============
-5-
OHIO CASUALTY CORPORATION
SUPPLEMENTAL INFORMATION (in thousands, except employee count)
THIRD QUARTER, 2004
(Data Unaudited)
THREE MONTHS ENDED SEPT 30 NINE MONTHS ENDED SEPT 30
-------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Gross Premiums Written
Commercial Lines $ 210,528 $ 202,858 $ 656,811 $ 636,049
Specialty Lines 65,444 75,919 194,064 204,518
Personal Lines 130,657 130,019 377,199 372,926
---------- ---------- ----------- ----------
Total 406,629 408,796 1,228,074 1,213,493
New Business Gross Premiums Written
Commercial Lines 48,700 48,622 138,944 144,532
Commercial Umbrella 11,789 19,782 39,289 55,036
Personal Lines 10,730 11,924 31,831 32,885
Average Renewal Price Increase
Commercial Lines 2.9% 10.1% 5.3% 11.8%
Commercial Umbrella 5.6% 15.7% 7.9% 19.5%
Amortization of Deferred Acquisition Costs 91,370 97,269 275,564 291,506
Agent Relationships Asset Expenses
Write-down 3,314 1,124 11,325 9,790
Amortization 1,702 1,837 5,244 5,622
---------- ---------- ----------- ----------
Total 5,016 2,961 16,569 15,412
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
==============================================================================
SEPT 30, 2004 SEPT 30, 2003 DEC 31, 2003
------------- ------------- -----------
Statutory Insurance Reserves:
Unearned premiums $ 669,089 $ 664,728 $ 642,414
Losses 1,749,419 1,681,784 1,690,454
Loss adjustment expense 439,245 436,493 438,396
Statutory policyholders' surplus 931,085 813,921 867,627
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 2,206 2,757 2,669
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-