Exhibit 99.2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIOD ENDING
SEPTEMBER 30, 2005
Contents: Page 1 GAAP Income Statement Data
Page 2 Statutory P&C Data
Page 3 Consolidated Balance Sheets
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 Consolidated
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 Consolidated 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 Ohio Casualty Corporation's reports filed with the Securities and
Exchange Commission or in subsequent releases.
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUMMARY INCOME STATEMENT - GAAP BASIS, unless
otherwise noted (in thousands, except per share data)
THIRD QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED SEPT 30
------------------------------------------------
CONSOLIDATED 2005 2004
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 362,483 $ 356,512
Investment income less expenses 51,454 44,951
Investment gains (losses) realized, net 22,404 (4,322)
----------- -----------
Total revenues 436,341 397,141
Losses 204,446 205,576
Loss adjustment expenses 42,556 38,227
Underwriting expenses 113,297 113,473
Corporate and other expenses 9,624 12,804
----------- -----------
Total expenses 369,923 370,080
Income before income taxes 66,418 27,061
Income tax expense (benefit):
On investment gains (losses) realized (426) (1,513)
On all other income 11,315 9,004
----------- -----------
Total income tax expense 10,889 7,491
Cumulative effect of an accounting change - -
----------- -----------
Net income $ 55,529 $ 19,570
============ ============
Average shares outstanding - diluted* 65,657 71,679
Net income, per share - diluted* $ 0.85 $ 0.30
Operating income** 32,699 22,379
Operating income - earnings per share** 0.50 0.34
Operating income - return on equity** 11.4% 9.4%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- ----------- --------- ------------ --------
Losses 56.4% 56.4% 57.7% 57.6%
Loss adjustment expenses 11.7% 11.7% 10.7% 10.7%
Underwriting expenses 31.4% 32.1% 31.9% 31.1%
----------- -------- ------------ --------
Combined ratio 99.5% 100.2% 100.3% 99.4%
Effective tax rate on investment income 29.0% 30.0%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expense $ 3,836 $ 2,728
Investment gains (losses) realized, net 2,034 (81)
Agent relationships asset expenses 2,438 5,016
Corporate expenses 7,186 7,788
NINE MONTHS ENDED SEPT 30
-----------------------------------------------
CONSOLIDATED 2005 2004
- ---------------------------------------- -----------------------------------------------
Premiums and finance charges earned $ 1,090,335 $ 1,084,771
Investment income less expenses 148,422 144,014
Investment gains (losses) realized, net 36,194 2,593
----------- -----------
Total revenues 1,274,951 1,231,378
Losses 587,271 603,855
Loss adjustment expenses 125,832 116,638
Underwriting expenses 342,979 375,932
Corporate and other expenses 43,059 30,958
----------- -----------
Total expenses 1,099,141 1,127,383
Income before income taxes 175,810 103,995
Income tax expense (benefit):
On investment gains (losses) realized 4,401 907
On all other income 36,036 29,947
----------- -----------
Total income tax expense 40,437 30,854
Cumulative effect of an accounting change - (1,648)
Net income $ 135,373 $ 71,493
============ ============
Average shares outstanding - diluted* 68,012 71,361
Net income, per share - diluted* $ 2.02 $ 1.07
Operating income** 103,580 71,455
Operating income - earnings per share** 1.55 1.07
Operating income - return on equity** 12.7% 10.4%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- ------------ --------- ------------ ---------
Losses 53.9% 53.9% 55.7% 55.6%
Loss adjustment expenses 11.5% 11.5% 10.8% 10.4%
Underwriting expenses 31.5% 31.0% 34.6% 33.5%
------------ --------- ------------ ---------
Combined ratio 96.9% 96.4% 101.1% 99.5%
Effective tax rate on investment income 27.8% 31.4%
CORPORATE/OTHER
- ---------------------------------------
Investment income less expense $ 11,046 $ 4,645
Investment gains (losses) realized, net 6,975 1,676
Agent relationships asset expenses 10,128 16,569
Corporate expenses 32,931 14,389
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 (benefit):
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 expense $ 4,323
Investment gains (losses) 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 nine months ended September 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 Consolidated 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 October 25, 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 & SUBSIDIARIES
PROPERTY AND CASUALTY INSURANCE DATA (in thousands, except ratio data)
THIRD QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED SEPT 30
--------------------------------------------------
2005 2004
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 206,077 111.2% $ 201,706 101.8%
Workers' compensation 34,304 133.6% 31,947 118.4%
Commercial auto 57,175 86.0% 57,166 89.3%
General liability 23,698 115.4% 22,064 92.8%
CMP, fire and inland marine 90,900 117.5% 90,529 105.9%
Specialty Lines $ 36,266 95.2% $ 32,018 108.0%
Commercial umbrella 23,533 100.6% 20,481 123.6%
Fidelity and surety 12,733 85.0% 11,537 80.1%
Personal Lines $ 120,140 80.8% $ 122,788 95.8%
Personal auto incl. personal
umbrella 71,819 90.5% 74,483 96.5%
Personal property 48,321 66.4% 48,305 94.8%
------------ ------ ------------ ------
Total All Lines $ 362,483 99.5% $ 356,512 100.3%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 207,121 112.5% $ 203,281 101.4%
Workers' compensation 35,861 136.6% 29,928 119.9%
Commercial auto 57,487 87.2% 57,711 89.3%
General liability 24,069 117.0% 22,523 90.1%
CMP, fire and inland marine 89,704 118.3% 93,119 105.0%
Specialty Lines $ 37,968 93.9% $ 28,744 108.6%
Commercial umbrella 23,061 98.6% 16,157 127.5%
Fidelity and surety 14,907 81.9% 12,587 75.1%
Personal Lines $ 123,968 81.3% $ 128,692 94.9%
Personal auto incl. personal
umbrella 70,755 91.1% 73,985 95.9%
Personal property 53,213 66.5% 54,707 93.2%
------------ ------ ------------ ------
Total All Lines $ 369,057 100.2% $ 360,717 99.4%
NINE MONTHS ENDED SEPT 30
--------------------------------------------------
2005 2004
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 618,469 106.7% $ 601,871 102.2%
Workers' compensation 99,659 143.6% 99,694 112.8%
Commercial auto 172,139 85.6% 171,630 95.0%
General liability 69,235 115.9% 64,577 107.3%
CMP, fire and inland marine 277,436 104.2% 265,970 101.7%
Specialty Lines $ 107,802 95.6% $ 114,473 96.9%
Commercial umbrella 70,405 103.3% 81,429 103.4%
Fidelity and surety 37,397 81.2% 33,044 80.9%
Personal Lines $ 364,064 80.6% $ 368,427 100.5%
Personal auto incl. personal
umbrella 218,316 85.4% 224,549 105.2%
Personal property 145,748 73.4% 143,878 93.2%
------------ ------ ------------ ------
Total All Lines $ 1,090,335 96.9% $ 1,084,771 101.1%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 634,542 106.4% $ 635,805 100.4%
Workers' compensation 107,320 142.8% 102,783 114.3%
Commercial auto 177,095 85.1% 181,675 94.0%
General liability 74,006 115.4% 69,308 101.0%
CMP, fire and inland marine 276,121 104.3% 282,039 99.1%
Specialty Lines $ 116,787 89.7% $ 102,612 97.8%
Commercial umbrella 76,324 95.7% 65,890 104.5%
Fidelity and surety 40,463 78.4% 36,722 77.8%
Personal Lines $ 361,128 81.1% $ 373,028 99.1%
Personal auto incl. personal
umbrella 216,535 85.9% 224,767 103.8%
Personal property 144,593 73.8% 148,261 91.8%
------------ ------ ------------ ------
Total All Lines $ 1,112,457 96.4% $ 1,111,445 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 192,631 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 & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA AND RELATED
INFORMATION (in thousands, except share data)
THIRD QUARTER, 2005
(2005 Data Unaudited)
September 30, December 31,
2005 2004
ASSETS ------------- -------------
Investments:
U.S. government fixed maturities $ 23,890 $ 30,823
Tax exempt fixed maturities 1,223,557 1,036,697
Taxable fixed maturities:
Available-for-sale, at fair value 2,306,008 2,278,588
Held-to-maturity, at amortized cost 273,794 301,367
------------ ------------
Total fixed maturities $ 3,827,249 $ 3,647,475
Equity securities, at fair value 352,191 357,458
Short-term investments, at fair value 48,477 239,105
------------ ------------
Total investments 4,227,917 4,244,038
Cash 5,785 13,461
Premiums and other receivables, net of
allowance for bad debts of $4,400 and
$4,300, respectively 325,032 350,761
Deferred policy acquisition costs 156,886 159,849
Property and equipment, net of
accumulated depreciation of $174,685
and $167,362, respectively 80,265 82,946
Reinsurance recoverable net of allowance
of $2,336 706,284 666,501
Agent relationships, net of accumulated
amortization of $44,226 and $41,438,
respectively 111,866 121,994
Interest and dividends due or accrued 51,177 49,859
Deferred tax asset 3,892 -
Other assets 46,115 25,607
------------ ------------
Total assets $ 5,715,219 $ 5,715,016
============ ============
Shares outstanding 64,037,865 62,209,129
Book value per share $21.75 $20.82
Unrealized gain component of
book value per share* $3.37 $4.47
September 30, December 31,
2005 2004
LIABILITIES ------------- -------------
Insurance reserves:
Losses $ 2,402,794 $ 2,269,565
Loss adjustment expenses 514,290 486,767
Unearned premiums 707,883 715,486
Debt 200,513 383,266
Reinsurance treaty funds held 163,006 195,015
Deferred income taxes - 21,950
Other liabilities 334,104 348,024
------------ ------------
Total liabilities $ 4,322,590 $ 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 16,607 -
Accumulated other comprehensive income 195,918 259,131
Retained earnings 1,288,994 1,161,510
Treasury stock, at cost:
(Shares: 8,380,479; 10,209,215) (117,942) (134,750)
------------ ------------
Total shareholders' equity 1,392,629 1,294,943
------------ ------------
Total liabilities and
shareholders' equity $ 5,715,219 $ 5,715,016
============ ============
Statutory Insurance Reserves
Losses $ 1,819,183 $ 1,739,709
Loss adjustment expense 463,571 444,102
Unearned premiums 671,863 649,740
Other Statutory Data
Statutory policyholders' surplus $ 937,003 $ 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 $10.7
million and $12.7 million at September 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.
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OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL INFORMATION (in thousands, except
ratios and accident year data)
THIRD QUARTER, 2005
(Data Unaudited)
THREE MONTHS ENDED SEPT 30 NINE MONTHS ENDED SEPT 30
-------------------------- --------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 212,541 $ 210,528 $ 647,682 $ 656,811
Specialty Lines 52,980 65,444 160,381 194,064
Personal Lines 125,317 130,657 363,417 377,199
---------- ---------- ---------- ----------
Total 390,838 406,629 1,171,480 1,228,074
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 35,580 $ 48,700 $ 113,100 $ 138,944
Commercial Umbrella 8,315 11,789 25,579 39,289
Personal Lines 9,881 10,730 28,323 31,831
Average Renewal Price Increase
- ------------------------------
Commercial Lines 1.5% 2.9% 2.3% 5.3%
Commercial Umbrella 2.9% 5.6% 5.0% 7.9%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 8.2% 7.7% 3.4% 3.1%
Specialty Lines 0.0% 0.0% 0.0% 0.0%
Personal Lines 0.8% 6.3% 1.3% 5.2%
Total All Lines 4.9% 6.4% 2.4% 3.5%
Prior Accident Year Loss & LAE by Segment
- -----------------------------------------
Commercial Lines $ 12.7 $ (3.5) $ 29.9 $ (12.2)
Specialty Lines (3.0) (2.2) (7.3) (7.4)
Personal Lines (6.6) 2.6 (26.2) 3.8
---------- ---------- ---------- ----------
Total All Lines Accident Year
Development 3.1 (3.1) (3.6) (15.8)
Prior Accident Year Loss & LAE
- ------------------------------
Accident Year 2004 $ (3.2) $ - $ (19.1) $ -
Accident Year 2003 (8.5) (9.1) (25.8) (31.3)
Accident Year 2002 and Prior 14.8 6.0 41.3 15.5
---------- ---------- ---------- ----------
Total Accident Year Development 3.1 (3.1) (3.6) (15.8)
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%
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 Ohio Casualty Corporation's Form 10-K for the year
ended December 31, 2004.
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