Exhibit 99.2
OHIO CASUALTY CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIOD ENDING
MARCH 31, 2005
Contents: Page 1 GAAP Income Statement Data
Page 2 GAAP P&C Data
Page 3 Consolidated Balance Sheet Data
and Related Information
Page 4 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, unless
otherwise noted (in thousands, except per share data)
FIRST QUARTER, 2005
(Data Unaudited)
Three Months Ended March 31,
----------------------------------------------
CONSOLIDATED 2005 2004
- ---------------------------------------- ----------------------------------------------
Premiums and finance charges earned $ 362,302 $ 361,166
Investment income less expenses 48,456 50,476
Investment gains/(losses) realized, net (6) 3,657
----------- -----------
Total revenues 410,752 415,299
Losses 191,125 195,181
Loss adjustment expenses 42,968 41,272
Underwriting expenses 112,142 138,563
Corporate and other expenses 14,779 10,392
----------- -----------
Total expenses 361,014 385,408
Income before income taxes 49,738 29,891
Income tax expense:
On investment gains/(losses) realized (2) 1,280
On all other income 12,053 7,729
----------- -----------
Total income tax expense 12,051 9,009
Cumulative effect of an accounting change - (1,648)
----------- -----------
Net income $ 37,687 $ 19,234
============ ============
Average shares outstanding - diluted* 71,675 62,143
Net income, per share - diluted* $ 0.55 $ 0.31
Operating income** $ 37,691 $ 18,505
Operating income - earnings per share** $ 0.55 $ 0.30
Operating income - return on equity** 14.6% 8.4%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 52.8% 52.8% 54.0% 54.0%
Loss adjustment expenses 11.9% 11.9% 11.4% 10.6%
Underwriting expenses 30.9% 30.0% 38.4% 36.1%
-------- -------- --------- --------
Combined ratio 95.6% 94.7% 103.8% 100.7%
Effective tax rate on investment income 26.9% 32.9%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expenses $ 3,311 $ 827
Investment gains realized, net - 600
Agent relationships asset expenses 4,395 7,214
Corporate expenses 10,384 3,178
CONSOLIDATED Year 2004
- ---------------------------------------- -----------------------
Premiums and finance charges earned $ 1,446,624
Investment income less expenses 201,244
Investment gains/(losses) realized, net 22,920
-----------
Total revenues 1,670,788
Losses 777,580
Loss adjustment expenses 158,697
Underwriting expenses 504,812
Corporate and other expenses 43,214
-----------
Total expenses 1,484,303
Income before income taxes 186,485
Income tax expense:
On investment gains/(losses) realized 8,022
On all other income 48,442
-----------
Total income tax expense 56,464
Cumulative effect of an accounting change (1,648)
-----------
Net income $ 128,373
============
Average shares outstanding - diluted* 71,508
Net income, per share - diluted* $ 1.89
Operating income** $ 115,123
Operating income - earnings per share** $ 1.71
Operating income - return on equity** 12.3%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory
- --------------------------------------- -------- --------
Losses 53.7% 53.8%
Loss adjustment expenses 11.0% 10.7%
Underwriting expenses 34.9% 33.9%
-------- -------
Combined ratio 99.6% 98.4%
Effective tax rate on investment income 31.5%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expenses $ 4,323
Investment gains realized, net 3,719
Agent relationships asset expenses 20,640
Corporate expenses 22,574
*Average diluted shares outstanding and net income per share amounts for the
three months ended March 31, 2004 would 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 earnings per share amounts for periods prior to December 31, 2004 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. However,
since for this period the impact would have been anti-dilutive, these amounts
were not restated.
**Management of the Corporation believes the significant volatility of
realized investment gains and losses limits the usefulness of net income as
a measure of current operating performance. Accordingly, management uses the
non-GAAP financial measure of operating income to further evaluate current
operating performance. Operating income return on equity is calculated by
dividing the annualized consolidated operating income for the most recent
quarter by the average shareholders' equity for the quarter using a simple
average of beginning and ending balances for the quarter, excluding from
equity after-tax unrealized investment gains and losses. See press release
dated April 27, 2005 for reconciliation of operating income both in dollar
amounts and per share amounts and operating income return on equity to net
income, net income per share and net income return on equity, respectively.
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OHIO CASUALTY CORPORATION
PROPERTY AND CASUALTY INSURANCE DATA - GAAP BASIS
(in thousands, except ratio data)
FIRST QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED MARCH 31,
------------------------------------------------
2005 2004
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined
MARKETS Earned Ratio Earmed Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 205,598 106.3% $ 197,826 102.9%
Workers' compensation 33,010 148.9% 33,077 114.4%
Commercial auto 57,652 84.7% 56,846 95.6%
General liability 22,414 120.1% 20,983 121.1%
CMP, fire and inland marine 92,522 101.2% 86,920 98.9%
Specialty Lines 35,075 96.3% 41,684 90.1%
Commercial umbrella 22,578 102.1% 31,036 97.1%
Fidelity and surety 12,497 85.9% 10,648 69.4%
Personal Lines 121,629 77.2% 121,656 110.1%
Personal auto incl. personal
umbrella 72,822 77.2% 74,053 123.0%
Personal property 48,807 77.1% 47,603 90.1%
------------ ------ ------------ ------
Total All Lines $ 362,302 95.6% $ 361,166 103.8%
YEAR 2004
OPERATING SEGMENTS and ---------------------
SELECTED PRODUCT LINES or Net Premiums Combined
MARKETS Earned Ratio
- -------------------------- ------------ --------
Commercial Lines $ 807,925 100.6%
Workers' compensation 132,625 114.0%
Commercial auto 229,629 91.1%
General liability 86,563 109.9%
CMP, fire and inland marine 359,108 99.5%
Specialty Lines 150,262 96.7%
Commercial umbrella 105,089 103.2%
Fidelity and surety 45,173 81.5%
Personal Lines 488,437 98.9%
Personal auto incl. personal
umbrella 295,774 105.9%
Personal property 192,663 88.1%
------------ ------
Total All Lines $ 1,446,624 99.6%
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OHIO CASUALTY CORPORATION
CONSOLIDATED BALANCE SHEET DATA AND RELATED
INFORMATION (in thousands, except share data)
FIRST QUARTER, 2005
(2005 Data Unaudited)
March 31, December 31,
2005 2004
Assets --------- ------------
Investments:
U.S. government fixed maturities $ 36,677 $ 30,823
Tax exempt fixed maturities 1,115,258 1,036,697
Taxable fixed maturities:
Available-for-sale, at fair value 2,224,842 2,278,588
Held-to-maturity, at amortized cost 294,234 301,367
------------ ------------
Total fixed maturities 3,671,011 3,647,475
Equity securities, at fair value 351,940 357,458
Short-term investments, at fair value 273,076 239,105
------------ ------------
Total investments 4,296,027 4,244,038
Cash 11,449 13,461
Premiums and other receivables, net of
allowance for bad debts of $4,300 327,662 350,761
Deferred policy acquisition costs 154,176 159,849
Property and equipment, net of
accumulated depreciation of $169,674
and $167,362, respectively 82,346 82,946
Reinsurance recoverable, net of
allowance of $2,336 701,369 666,501
Agent relationships, net of accumulated
amortization of $42,064 and $41,438,
respectively 117,600 121,994
Interest and dividends due or accrued 46,659 49,859
Other assets 40,661 25,607
------------ ------------
Total assets $ 5,777,949 $ 5,715,016
============ ============
Shares outstanding 62,632,366 62,209,129
Book value per share $20.62 $20.82
Unrealized gain component of
book value per share* $3.71 $4.47
March 31, December 31,
2005 2004
Liabilities --------- ------------
Insurance reserves:
Losses $ 2,318,458 $ 2,269,565
Loss adjustment expenses 492,700 486,767
Unearned premiums 698,067 715,486
Debt 378,903 383,266
Reinsurance treaty funds held 196,073 195,015
Deferred income taxes 3,866 21,950
Other liabilities 398,229 348,024
------------ ------------
Total liabilities 4,486,296 4,420,073
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 213,462 259,131
Retained earnings 1,198,647 1,161,510
Treasury stock, at cost:
(Shares: 9,785,978; 10,209,215) (129,508) (134,750)
------------ ------------
Total shareholders' equity 1,291,653 1,294,943
------------ ------------
Total liabilities and
shareholders' equity $ 5,777,949 $ 5,715,016
============ ============
Statutory Insurance Reserves
Losses $ 1,754,944 $ 1,739,709
Loss adjustment expense 445,764 444,102
Unearned premiums 645,907 649,740
*The unrealized gain component of book value per share excludes $12.0
million and $12.7 million at March 31, 2005 and December 31, 2004,
respectively, which relates to the unrealized holding period gain on
the transfer of fixed maturity securities from the available-for-sale
classification to the held-to-maturity classification.
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OHIO CASUALTY CORPORATION
SUPPLEMENTAL INFORMATION (in thousands,
except ratios and accident year data)
FIRST QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED MARCH 31, YEAR
2005 2004 2004
---------- ---------- ----------
Net Premiums Written
- --------------------
Commercial Lines $ 205,596 $ 212,218 $ 828,216
Specialty Lines 39,092 34,810 135,499
Personal Lines 113,780 117,029 490,235
---------- ---------- ----------
Total 358,468 364,057 1,453,950
Gross Premiums Written
- ----------------------
Commercial Lines $ 211,177 $ 220,419 $ 856,212
Specialty Lines 53,178 61,833 251,505
Personal Lines 114,901 118,900 496,758
---------- ---------- ----------
Total 379,256 401,152 1,604,475
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 36,300 $ 43,026 $ 182,291
Commercial Umbrella 8,190 13,918 49,982
Personal Lines 8,784 10,066 41,322
Average Renewal Price Increase
- ------------------------------
Commercial Lines 2.0% 6.9% 5.0%
Commercial Umbrella 6.8% 12.9% 8.0%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 0.6% 0.8% 2.4%
Specialty Lines 0.0% 0.0% 0.0%
Personal Lines 1.0% 1.2% 4.9%
Homeowners 1.1% 2.6% 11.8%
Total All Lines 0.7% 0.8% 3.0%
Prior Accident Year Loss & LAE by Segment
- -----------------------------------------
Commercial Lines $ 12.2 $ (6.6) $ (15.0)
Specialty Lines (2.8) (3.1) (9.3)
Personal Lines (13.2) 7.2 2.6
---------- ---------- ----------
Total All Lines Accident Year Development (3.8) (2.5) (21.7)
Prior Accident Year Loss & LAE
- ------------------------------
Accident Year 2004 $ (9.3) $ - $ -
Accident Year 2003 (10.8) (14.1) (35.1)
Accident Year 2002 and Prior 16.3 11.6 13.4
---------- ---------- ----------
Total Accident Year Development (3.8) (2.5) (21.7)
Note: For information on differences between statutory accounting principles
and generally accepted accounting principles (GAAP), refer to Item 15 on
page 69 of the Corporation's Form 10-K for the year ended December 31, 2004.
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