Exhibit 99.2
OHIO CASUALTY CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIOD ENDING
DECEMBER 31, 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)
FOURTH QUARTER, 2004
(Data Unaudited)
Three Months Ended Dec 31
------------------------------------------------
CONSOLIDATED 2004 2003
- ---------------------------------------- ---------------------- ------------------------
Premiums and finance charges earned $ 361,743 $ 363,457
Investment income less expenses 57,230 53,170
Investment gains realized, net 20,327 3,861
----------- -----------
Total revenues 439,300 420,488
Losses 173,725 209,935
Loss adjustment expenses 42,059 46,650
Underwriting expenses 128,555 122,629
Corporate and other expenses 12,471 6,596
----------- -----------
Total expenses 356,810 385,810
Income tax expense:
On investment gains realized 7,115 1,351
On all other income 18,495 5,559
----------- -----------
Total income tax expense 25,610 6,910
Cumulative effect of an accounting change - -
------------ ------------
Net income $ 56,880 $ 27,768
============ ============
Average shares outstanding - diluted* 71,942 70,633
Net income, per share - diluted* $ 0.82 $ 0.42
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 361,743 $ 363,457
Investment income less expenses 57,552 52,390
Investment gains realized, net 18,284 4,632
Losses 173,725 48.0% 209,935 57.8%
Loss adjustment expenses 42,059 11.6% 46,650 12.8%
Underwriting expenses 128,555 35.5% 122,629 33.7%
----------- ------- ----------- -------
Total expenses 344,339 95.1% 379,214 104.3%
Effective tax rate on investment income 31.0% 33.1%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expense $ (322) $ 780
Investment gains (losses) realized, net 2,043 (771)
Agent relationships asset expenses 4,071 3,278
Corporate expenses 8,400 3,318
Year
------------------------------------------------
CONSOLIDATED 2004 2003
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 1,446,839 $ 1,424,353
Investment income less expenses 201,244 208,723
Investment gains realized, net 22,920 35,872
----------- -----------
Total revenues 1,671,003 1,668,948
Losses 777,580 852,474
Loss adjustment expenses 158,697 174,896
Underwriting expenses 504,812 503,194
Corporate and other expenses 43,429 30,809
----------- -----------
Total expenses 1,484,518 1,561,373
Income tax expense:
On investment gains realized 8,022 12,555
On all other income 48,442 19,176
----------- -----------
Total income tax expense 56,464 31,731
Cumulative effect of an accounting change (1,648) -
------------ ------------
Net income $ 128,373 $ 75,844
============ ============
Average shares outstanding - diluted* 71,508 70,224
Net income, per share - diluted* $ 1.89 $ 1.18
Ratio to Ratio to
Premiums Premiums
PROPERTY AND CASUALTY Earned Earned
- --------------------------------------- -------- --------
Premiums and finance charges earned $ 1,446,839 $ 1,424,353
Investment income less expenses 196,921 204,874
Investment gains realized, net 19,201 35,026
Losses 777,580 53.7% 852,474 59.8%
Loss adjustment expenses 158,697 11.0% 174,896 12.3%
Underwriting expenses 504,812 34.9% 503,194 35.3%
----------- ------- ----------- -------
Total expenses 1,441,089 99.6% 1,530,564 107.4%
Effective tax rate on investment income 31.5% 33.7%
CORPORATE/OTHER
- ----------------------------------------
Investment income less expense $ 4,323 $ 3,849
Investment gains (losses) realized, net 3,719 846
Agent relationships asset expenses 20,640 18,690
Corporate expenses 22,789 12,119
*Average diluted shares outstanding and net income per share amounts have
been restated, as required, in accordance with Emerging Issues Task Force
(EITF) 04-8 "The Effect of Contingently Convertible Debt on Diluted
Earnings Per Share." This EITF requires all prior period earnings per share
amounts to be restated since the issuance of the convertible notes in March
2002 using the "if-converted" method. The "if-converted" method gives
effect to the add back to net income of interest expense and amortization
of debt issuance costs, net of tax, associated with the convertible
instruments.
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OHIO CASUALTY CORPORATION
PROPERTY AND CASUALTY INSURANCE DATA - STATUTORY BASIS
(in thousands, except ratio data)
FOURTH QUARTER, 2004
(Data Unaudited)
THREE MONTHS ENDED DEC 31
-------------------------------------------------
2004 2003
OPERATING SEGMENTS and ----------------------- ----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 192,411 96.2% $ 180,663 119.0%
Workers' compensation 30,149 119.2% 27,531 137.6%
Commercial auto 51,864 79.8% 51,113 108.3%
General liability 20,149 117.3% 18,582 128.2%
CMP, fire and inland marine 90,249 93.2% 83,437 116.8%
Specialty Lines $ 32,887 95.1% $ 40,311 60.9%
Commercial umbrella 21,234 101.4% 29,745 56.4%
Fidelity and surety 11,653 82.0% 10,566 74.2%
Personal Lines $ 117,207 93.3% $ 120,144 97.0%
Personal auto incl. personal
umbrella 69,347 107.7% 72,541 104.8%
Personal property 47,860 72.3% 47,603 84.9%
------------ ------ ------------ ------
Total All Lines $ 342,505 95.0% $ 341,118 104.7%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 342,505 $ 341,118
Premiums earned 361,853 363,335
Losses incurred 174,098 48.1% 208,512 57.4%
Loss adjustment expenses 42,059 11.6% 46,650 12.8%
Underwriting expenses 120,804 35.3% 117,554 34.5%
------------ ------ ------------ ------
Underwriting gain/(loss) 24,892 95.0% (9,381) 104.7%
====== ======
Investment income 45,812 52,133
Investment gains realized 14,683 4,174
Federal income tax expense 32,130 11,543
------------ ------------
Net income $ 53,257 $ 35,383
============ ============
Included above:
Dividends to policyholders 168 0.0% 165 0.0%
Paid loss & loss adjustment expense 221,010 244,589
YEAR
--------------------------------------------------
2004 2003
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 828,216 99.3% $ 792,587 112.3%
Workers' compensation 132,932 115.4% 132,358 123.0%
Commercial auto 233,539 90.3% 228,333 105.5%
General liability 89,457 105.0% 83,448 122.6%
CMP, fire and inland marine 372,288 97.5% 348,448 109.7%
Specialty Lines $ 135,499 97.2% $ 164,851 77.2%
Commercial umbrella 87,124 103.8% 120,943 80.5%
Fidelity and surety 48,375 78.9% 43,908 68.1%
Personal Lines $ 490,235 97.6% $ 484,112 105.6%
Personal auto incl. personal
umbrella 294,114 104.7% 296,845 107.0%
Personal property 196,121 86.8% 187,267 103.3%
------------ ------ ------------ ------
Total All Lines $ 1,453,950 98.4% $ 1,441,550 106.1%
ALL LINES RESULTS Ratio Ratio
- --------------------- ----- -----
Premiums written $ 1,453,950 $ 1,441,550
Premiums earned 1,446,624 1,424,349
Losses incurred 777,698 53.8% 850,550 59.7%
Loss adjustment expenses 154,626 10.7% 174,896 12.3%
Underwriting expenses 492,672 33.9% 491,241 34.1%
------------ ------ ------------ ------
Underwriting gain/(loss) 21,628 98.4% (92,338) 106.1%
====== ======
Investment income 185,181 204,874
Investment gains realized 14,049 31,870
Federal income tax expense 57,141 25,289
------------ ------------
Net income $ 163,717 $ 119,117
============ ============
Included above:
Dividends to policyholders 1,229 0.1% 796 0.1%
Paid loss & loss adjustment expense 877,363 975,319
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OHIO CASUALTY CORPORATION
PROPERTY AND CASUALTY ACCIDENT YEAR DATA
(in thousands, except ratio data)
FOURTH QUARTER, 2004
(Data Unaudited)
STATUTORY COMBINED RATIO
----------------------------------------------------
Earned Accident Accident Accident
Premium Twelve Year 2004(A) Year 2003(A) Year 2003(A)
OPERATING SEGMENTS and Twelve Months Months Measured Measured Measured
SELECTED PRODUCT LINES Ended Ended as of as of as of
or MARKETS Dec 31, 2004 Dec 31, 2004 Dec 2004 Dec 2003 Dec 2004
- ---------------------- ------------ ------------ ------------ ------------ ------------
Commercial Lines $ 807,925 99.3% 101.1% 107.1% 103.7%
Workers' compensation 132,625 115.4% 112.3% 115.9% 111.8%
Commercial auto 229,629 90.3% 98.2% 104.6% 101.1%
General liability 86,563 105.0% 105.6% 114.4% 109.5%
CMP, fire and inland marine 359,108 97.5% 97.7% 103.3% 100.8%
Specialty Lines 150,262 97.2% 103.3% 90.3% 88.5%
Commercial umbrella 105,089 103.8% 108.7% 93.3% 92.6%
Fidelity and surety 45,173 78.9% 88.1% 81.1% 76.0%
Personal Lines 488,437 97.6% 97.2% 102.7% 101.4%
Personal auto, incl.
personal umbrella 295,774 104.7% 103.3% 103.4% 102.8%
Personal property 192,663 86.8% 87.6% 101.3% 98.9%
----------- ------- ------- ------- -------
Total All Lines $1,446,624 98.4% 99.8% 103.7% 101.2%
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 2004
as of Dec 31, 2004 measures insured events for the twelve months of 2004.
Accident year 2003 as of Dec 31, 2003 measures insured events for the twelve
months of 2003 with related outstanding liabilities estimated as of Dec 31,
2003. Accident year 2003 as of Dec 31, 2004 measures insured events for the
twelve months of 2003 with remaining related liabilities estimated as of
Dec 31, 2004. Partial and complete accident periods may not be comparable due
to seasonality, claim reporting and development patterns, claim settlement
rates and other factors.
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OHIO CASUALTY CORPORATION
ADDITIONAL PROPERTY AND CASUALTY ACCIDENT YEAR AND
CATASTROPHE DATA (in millions, except ratio data)
FOURTH QUARTER, 2004
(Data Unaudited)
THREE MONTHS
PRIOR ACCIDENT YEAR LOSS & LAE ENDED DEC 31 YEAR
by SEGMENT 2004 2003 2004 2003
- ------------------------------ ----------------------- -----------------------
Commercial Lines $ (2.8) $ 26.9 $(15.0) $ 41.0
Specialty Lines (1.9) (9.2) (9.3) (21.3)
Personal Lines (1.2) 6.7 2.6 14.4
------- ------- ------- -------
Total All Lines Accident Year
Development (5.9) 24.4 (21.7) 34.1
PRIOR ACCIDENT YEAR LOSS & LAE
- ------------------------------
Accident Year 2003 $ (3.8) $ - $(35.1) $ -
Accident Year 2002 (3.5) (5.5) (11.6) (39.0)
Accident Year 2001 and Prior 1.4 29.9 25.0 73.1
------- ------- ------- -------
Total Accident Year Development (5.9) 24.4 (21.7) 34.1
CATASTROPHE LOSS RATIO
- ------------------------------
Commercial Lines 0.2% 1.4% 2.4% 2.6%
Specialty Lines 0.0% -0.1% 0.0% 0.0%
Personal Lines 4.2% -0.1% 4.9% 4.8%
Homeowners 10.5% -1.7% 11.8% 11.8%
Total All Lines 1.5% 0.7% 3.0% 3.1%
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OHIO CASUALTY CORPORATION
CONSOLIDATED BALANCE SHEET DATA AND RELATED
INFORMATION (in thousands, except share data)
FOURTH QUARTER, 2004
(2004 Data Unaudited)
December 31, December 31,
2004 2003
ASSETS ------------- -------------
Investments:
U.S. government fixed maturities $ 30,823 $ 43,260
Tax exempt fixed maturities 1,036,697 79,137
Taxable fixed maturities:
Available for sale, at fair value 2,278,588 2,899,793
Held-to-maturity, at amortized cost 301,367 356,100
------------ ------------
Total fixed maturities 3,647,475 3,378,290
Equity securities, at fair value 357,458 329,049
Short-term investments, at fair value 239,105 40,448
------------ ------------
Total investments 4,244,038 3,747,787
Cash 13,461 16,494
Premiums and other receivables, net of
allowance for bad debts of $4,300 and
$4,200, respectively 350,761 347,863
Deferred policy acquisition costs 159,849 169,351
Property and equipment, net of
accumulated depreciation of $167,362
and $152,905, respectively 82,946 89,212
Reinsurance recoverable, net of allowance
of $2,336 and $2,454, respectively 666,501 592,688
Agent relationships, net of accumulated
amortization of $41,438 and $39,093,
respectively 121,994 142,634
Interest and dividends due or accrued 49,859 47,489
Other assets 25,607 15,393
------------ ------------
Total assets $ 5,715,016 $ 5,168,911
============ ============
Shares outstanding 62,209,129 60,957,043
Book value per share $20.82 $18.80
FAS 115 component of book value
per share $1.90 $1.96
December 31, December 31,
2004 2003
Liabilities ------------- -------------
Insurance reserves:
Losses $ 2,269,565 $ 2,163,720
Loss adjustment expenses 486,767 464,134
Unearned premiums 715,486 703,015
Debt 383,266 198,042
Reinsurance treaty funds held 195,015 150,512
Deferred income taxes 21,950 12,763
Other liabilities 348,024 330,891
------------ ------------
Total liabilities 4,420,073 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 259,131 254,654
Retained earnings 1,161,510 1,033,404
Treasury stock, at cost:
(Shares: 10,209,215; 11,461,301) (134,750) (151,276)
------------ ------------
Total shareholders' equity 1,294,943 1,145,834
------------ ------------
Total liabilities and
shareholders' equity $ 5,715,016 $ 5,168,911
============ ============
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OHIO CASUALTY CORPORATION
SUPPLEMENTAL INFORMATION (in thousands,
except employee count and ratio data)
FOURTH QUARTER, 2004
(Data Unaudited)
THREE MONTHS ENDED DEC 31 YEAR
------------------------- ----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Gross Premiums Written
Commercial Lines $ 199,401 $ 188,349 $ 856,212 $ 824,398
Specialty Lines 57,441 67,366 251,505 271,884
Personal Lines 119,559 121,217 496,758 494,143
---------- ---------- ---------- ----------
Total 376,401 376,932 1,604,475 1,590,425
New Business Gross Premiums Written
Commercial Lines 43,346 43,373 182,291 187,905
Commercial Umbrella 10,693 16,991 49,982 72,027
Personal Lines 9,491 11,054 41,322 43,939
Average Renewal Price Increase
Commercial Lines 2.5% 7.7% 5.0% 11.4%
Commercial Umbrella 6.5% 14.5% 8.0% 18.1%
Amortization of Deferred Acquisition Costs 89,638 92,470 365,202 383,976
Agent Relationships Asset Expenses
Write-down 2,412 1,454 13,737 11,244
Amortization 1,659 1,824 6,903 7,446
---------- ---------- ---------- ----------
Total 4,071 3,278 20,640 18,690
- --------------------------------------------------------------------------------------------
DEC 31, 2004 DEC 31, 2003
------------ ------------
Statutory Insurance Reserves:
Unearned premiums $ 649,740 $ 642,414
Losses 1,739,709 1,690,454
Loss adjustment expense 444,102 438,396
Statutory policyholders' surplus 972,040 867,627
Ratio of net premiums written to
statutory surplus 1.5 to 1.0 1.7 to 1.0
Employee Count 2,190 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.
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