Exhibit 99.5
OHIO CASUALTY CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIOD ENDING
JUNE 30, 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)
SECOND QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED JUNE 30
------------------------------------------------
CONSOLIDATED 2005 2004
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 365,550 $ 367,093
Investment income less expenses 48,512 48,587
Investment gains realized, net 13,796 3,258
----------- -----------
Total revenues 427,858 418,938
Losses 191,700 203,098
Loss adjustment expenses 40,308 40,051
Underwriting expenses 117,540 120,984
Corporate and other expenses 18,656 7,762
----------- -----------
Total expenses 368,204 371,895
Income before income taxes 59,654 47,043
Income tax expense:
On investment gains realized 4,829 1,140
On all other income 12,668 13,214
------------ ------------
Total income tax expense 17,497 14,354
Cumulative effect of an accounting change - -
------------ ------------
Net income $ 42,157 $ 32,689
============ ============
Average shares outstanding - diluted* 66,997 71,372
Net income, per share - diluted* $ 0.63 $ 0.48
Operating income** $ 33,190 $ 30,571
Operating income - earnings per share** $ 0.50 $ 0.45
Operating income - return on equity** 12.2% 13.3%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- -------- -------- ---------
Losses 52.4% 52.4% 55.3% 55.3%
Loss adjustment expenses 11.0% 11.0% 10.1% 9.8%
Underwriting expenses 32.1% 30.7% 33.8% 33.1%
-------- ------- --------- -------
Combined ratio 95.5% 94.1% 99.2% 98.2%
Effective tax rate on investment income 27.5% 33.2%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expenses $ 3,899 $ 1,090
Investment gains realized, net 4,941 1,157
Agent relationships asset expenses 3,295 4,339
Corporate expenses 15,361 3,423
SIX MONTHS ENDED JUNE 30
-----------------------------------------------
CONSOLIDATED 2005 2004
- ---------------------------------------- -----------------------------------------------
Premiums and finance charges earned $ 727,852 $ 728,259
Investment income less expenses 96,968 99,063
Investment gains realized, net 13,790 6,915
----------- -----------
Total revenues 838,610 834,237
Losses 382,825 398,279
Loss adjustment expenses 83,276 78,411
Underwriting expenses 229,682 262,459
Corporate and other expenses 33,435 18,154
------------ ------------
Total expenses 729,218 757,303
Income before income taxes 109,392 76,934
Income tax expense:
On investment gains realized 4,827 2,420
On all other income 24,721 20,943
------------ ------------
Total income tax expense 29,548 23,363
Cumulative effect of an accounting change - (1,648)
------------ ------------
Net income $ 79,844 $ 51,923
============ ============
Average shares outstanding - diluted* 69,328 71,204
Net income, per share - diluted* $ 1.18 $ 0.78
Operating income** $ 70,881 $ 49,076
Operating income - earnings per share** $ 1.05 $ 0.74
Operating income - return on equity** 13.3% 10.9%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 52.6% 52.6% 54.7% 54.7%
Loss adjustment expenses 11.4% 11.4% 10.8% 10.2%
Underwriting expenses 31.5% 30.4% 36.0% 34.6%
-------- ------- --------- -------
Combined ratio 95.5% 94.4% 101.5% 99.5%
Effective tax rate on investment income 27.2% 33.0%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expenses $ 7,210 $ 1,917
Investment gains realized, net 4,941 1,757
Agent relationships asset expenses 7,690 11,553
Corporate expenses 25,745 6,601
CONSOLIDATED YEAR 2004
- ---------------------------------------- ------------------------
Premiums and finance charges earned $ 1,446,624
Investment income less expenses 201,244
Investment gains 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 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 and six months ended June 30, 2004 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.
**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 July 26, 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
(in thousands, except ratio data)
SECOND QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED JUNE 30
--------------------------------------------------
2005 2004
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 206,794 102.6% $ 202,338 102.1%
Workers' compensation 32,345 148.8% 34,669 106.0%
Commercial auto 57,312 86.1% 57,617 100.2%
General liability 23,123 112.5% 21,531 108.8%
CMP, fire and inland marine 94,014 94.3% 88,521 100.2%
Specialty Lines $ 36,461 95.3% $ 40,772 95.1%
Commercial umbrella 24,294 106.9% 29,913 96.0%
Fidelity and surety 12,167 72.3% 10,859 93.1%
Personal Lines $ 122,295 83.8% $ 123,983 95.8%
Personal auto incl. personal
umbrella 73,675 88.5% 76,013 96.4%
Personal property 48,620 76.7% 47,970 94.9%
------------ ------ ------------ ------
Total All Lines $ 365,550 95.5% $ 367,093 99.2%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 221,825 100.8% $ 220,306 100.7%
Workers' compensation 36,182 144.4% 36,596 108.1%
Commercial auto 62,359 84.2% 63,830 99.7%
General liability 26,388 110.7% 24,709 102.5%
CMP, fire and inland marine 96,896 93.5% 95,171 98.1%
Specialty Lines $ 39,727 88.6% $ 39,058 94.0%
Commercial umbrella 26,455 98.9% 26,415 93.3%
Fidelity and surety 13,272 68.4% 12,643 90.6%
Personal Lines $ 123,380 84.4% $ 127,307 95.5%
Personal auto incl. personal
umbrella 72,222 89.8% 74,929 96.5%
Personal property 51,158 76.1% 52,378 93.7%
------------ ------ ------------ ------
Total All Lines $ 384,932 94.1% $ 386,671 98.2%
SIX MONTHS ENDED JUNE 30
-------------------------------------------------
2005 2004
OPERATING SEGMENTS and ----------------------- ----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 412,392 104.4% $ 400,164 102.5%
Workers' compensation 65,355 148.8% 67,746 110.1%
Commercial auto 114,964 85.4% 114,463 97.9%
General liability 45,537 116.2% 42,514 114.9%
CMP, fire and inland marine 186,536 97.8% 175,441 99.5%
Specialty Lines $ 71,536 95.8% $ 82,456 92.6%
Commercial umbrella 46,872 104.6% 60,949 96.6%
Fidelity and surety 24,664 79.2% 21,507 81.3%
Personal Lines $ 243,924 80.5% $ 245,639 102.9%
Personal auto incl. personal
umbrella 146,497 82.9% 150,066 109.5%
Personal property 97,427 76.9% 95,573 92.5%
------------ ------ ------------ ------
Total All Lines $ 727,852 95.5% $ 728,259 101.5%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 427,421 103.3% $ 432,524 99.8%
Workers' compensation 71,459 146.0% 72,855 111.3%
Commercial auto 119,608 84.1% 123,964 96.2%
General liability 49,937 116.2% 46,785 106.5%
CMP, fire and inland marine 186,417 97.8% 188,920 96.0%
Specialty Lines $ 78,819 87.6% $ 73,868 93.6%
Commercial umbrella 53,263 94.5% 49,733 97.0%
Fidelity and surety 25,556 76.8% 24,135 79.2%
Personal Lines $ 237,160 80.9% $ 244,336 101.3%
Personal auto incl. personal
umbrella 145,780 82.9% 150,782 107.6%
Personal property 91,380 76.9% 93,554 91.2%
------------ ------ ------------ ------
Total All Lines $ 743,400 94.4% $ 750,728 99.5%
YEAR 2004
OPERATING SEGMENTS and ----------------------
SELECTED PRODUCT LINES Net Premiums Combined
GAAP BASIS: 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%
Net Premiums Combined
STATUTORY BASIS: Written Ratio
- -------------------------- ------------ --------
Commercial Lines $ 828,216 99.3%
Workers' compensation 132,932 115.4%
Commercial auto 233,539 90.3%
General liability 89,457 105.0%
CMP, fire and inland marine 372,288 97.5%
Specialty Lines $ 135,499 97.2%
Commercial umbrella 87,124 103.8%
Fidelity and surety 48,375 78.9%
Personal Lines $ 490,235 97.6%
Personal auto incl. personal
umbrella 294,114 104.7%
Personal property 196,121 86.8%
------------ ------
Total All Lines $ 1,453,950 98.4%
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OHIO CASUALTY CORPORATION
CONSOLIDATED BALANCE SHEET DATA AND RELATED
INFORMATION (in thousands, except share data)
SECOND QUARTER, 2005
(2005 Data Unaudited)
June 30, December 31,
2005 2004
Assets --------- ------------
Investments:
U.S. government fixed maturities $ 36,846 $ 30,823
Tax exempt fixed maturities 1,200,087 1,036,697
Taxable fixed maturities:
Available-for-sale, at fair value 2,284,814 2,278,588
Held-to-maturity, at amortized cost 283,260 301,367
------------ ------------
Total fixed maturities 3,805,007 3,647,475
Equity securities, at fair value 356,796 357,458
Short-term investments, at fair value 24,678 239,105
------------ ------------
Total investments 4,186,481 4,244,038
Cash 9,982 13,461
Premiums and other receivables, net of
allowance for bad debts of $4,000 and
$4,300, respectively 334,188 350,761
Deferred policy acquisition costs 152,928 159,849
Property and equipment, net of
accumulated depreciation of $171,938
and $167,362, respectively 81,921 82,946
Reinsurance recoverable, net of allowance
of $2,336 703,818 666,501
Agent relationships, net of accumulated
amortization of $43,007 and $41,438,
respectively 114,304 121,994
Interest and dividends due or accrued 52,244 49,859
Other assets 50,216 25,607
------------ ------------
Total assets $ 5,686,082 $ 5,715,016
============ ============
Shares outstanding 64,455,184 62,209,129
Book value per share $21.89 $20.82
Unrealized gain component of
book value per share* $4.26 $4.47
June 30, December 31,
2005 2004
Liabilities --------- ------------
Insurance reserves:
Losses $ 2,357,238 $ 2,269,565
Loss adjustment expenses 501,371 486,767
Unearned premiums 706,571 715,486
Debt 200,625 383,266
Reinsurance treaty funds held 171,652 195,015
Deferred income taxes 28,115 21,950
Other liabilities 309,815 348,024
------------ ------------
Total liabilities $ 4,275,387 $ 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
Additional paid-in capital 15,194 -
Accumulated other comprehensive income 254,447 259,131
Retained earnings 1,237,387 1,161,510
Treasury stock, at cost:
(Shares: 7,963,160; 10,209,215) (105,385) (134,750)
------------ ------------
Total shareholders' equity 1,410,695 1,294,943
------------ ------------
Total liabilities and
shareholders' equity $ 5,686,082 $ 5,715,016
============ ============
Statutory Insurance Reserves
Losses $ 1,776,988 $ 1,739,709
Loss adjustment expense 451,264 444,102
Unearned premiums 665,289 649,740
Other Statutory Data
Statutory policyholders' surplus $ 929,075 $ 972,040
Ratio of net premiums written to
surplus 1.6 to 1.0 1.5 to 1.0
*The unrealized gain component of book value per share excludes $11.4 million
and $12.7 million at June 30, 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.
-3-
OHIO CASUALTY CORPORATION
SUPPLEMENTAL INFORMATION (in thousands,
except ratios and accident year data)
SECOND QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
-------------------------- --------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 223,964 $ 225,864 $ 435,141 $ 446,283
Specialty Lines 54,223 66,787 107,401 128,620
Personal Lines 123,199 127,642 238,100 246,542
---------- ---------- ---------- ----------
Total 401,386 420,293 780,642 821,445
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 41,220 $ 47,218 $ 77,520 $ 90,244
Commercial Umbrella 9,074 13,582 17,264 27,500
Personal Lines 9,658 11,035 18,442 21,101
Average Renewal Price Increase
- ------------------------------
Commercial Lines 1.6% 4.5% 1.9% 5.7%
Commercial Umbrella 6.0% 8.2% 5.5% 9.7%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 1.4% 0.9% 1.0% 0.8%
Specialty Lines 0.0% 0.0% 0.0% 0.0%
Personal Lines 2.2% 8.0% 1.6% 4.7%
Homeowners 4.7% 18.4% 2.9% 10.5%
Total All Lines 1.5% 3.2% 1.1% 2.0%
Prior Accident Year Loss & LAE by Segment
- -----------------------------------------
Commercial Lines $ 5.0 $ (2.1) $ 17.2 $ (8.7)
Specialty Lines (1.5) (2.1) (4.3) (5.2)
Personal Lines (6.4) (6.0) (19.6) 1.2
---------- ---------- ---------- ----------
Total All Lines Accident Year
Development (2.9) (10.2) (6.7) (12.7)
Prior Accident Year Loss & LAE
- ------------------------------
Accident Year 2004 $ (6.6) $ - $ (15.9) $ -
Accident Year 2003 (6.5) (8.1) (17.3) (22.2)
Accident Year 2002 and Prior 10.2 (2.1) 26.5 9.5
---------- ---------- ---------- ----------
Total Accident Year Development (2.9) (10.2) (6.7) (12.7)
YEAR 2004
----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 856,212
Specialty Lines 251,505
Personal Lines 496,758
----------
Total 1,604,475
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 182,291
Commercial Umbrella 49,982
Personal Lines 41,322
Average Renewal Price Increase
- ------------------------------
Commercial Lines 5.0%
Commercial Umbrella 8.0%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 2.4%
Specialty Lines 0.0%
Personal Lines 4.9%
Homeowners 11.8%
Total All Lines 3.0%
Prior Accident Year Loss & LAE by Segment
- -----------------------------------------
Commercial Lines $ (15.0)
Specialty Lines (9.3)
Personal Lines 2.6
----------
Total All Lines Accident Year
Development (21.7)
Prior Accident Year Loss & LAE
- ------------------------------
Accident Year 2004 $ -
Accident Year 2003 (35.1)
Accident Year 2002 and Prior 13.4
----------
Total Accident Year Development (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.
-4-