Exhibit 99.2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIODS ENDING
DECEMBER 31, 2005 and 2004
Contents: Page 1 GAAP Summary Income Statement Data
Page 2 Property and Casualty Insurance Data
Page 3 Consolidated Balance Sheet Data
and Related Information
Page 4 Supplemental Information
Page 5 Segment Underwriting Profitability
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 and supplemental financial information 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 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 and supplemental financial information. 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,
change in government regulation; performance of financial markets;
fluctuations in interest rates; availabiltiy 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 and
supplemental financial information, or to update them to reflect events or
circumstances occurring after the date of this release and supplemental
financial information, 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)
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2005 and 2004
(Data Unaudited)
THREE MONTHS ENDED DECEMBER 31
------------------------------------------------
CONSOLIDATED 2005 2004
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 363,233 $ 361,853
Investment income less expenses 52,935 57,230
Investment gains realized, net 11,232 20,327
----------- -----------
Total revenues 427,400 439,410
Losses 165,009 173,725
Loss adjustment expenses 29,201 42,059
Underwriting expenses 118,639 128,880
Corporate and other expenses 9,639 12,256
----------- -----------
Total expenses 322,488 356,920
Income before income taxes 104,912 82,490
Income tax expense:
On investment gains realized 1,470 7,115
On all other income 26,122 18,495
----------- -----------
Total income tax expense 27,592 25,610
Cumulative effect of an accounting change - -
----------- -----------
Net income $ 77,320 $ 56,880
============ ============
Average shares outstanding - diluted* 64,728 71,942
Net income, per share - diluted* $ 1.19 $ 0.82
Operating income** $ 67,559 $ 43,668
Operating income - earnings per share** $ 1.04 $ 0.64
Operating income - return on equity** 22.6% 17.7%
Effective tax rate on investment income 23.8% 32.4%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- -------- -------- ---------
Losses 45.4% 45.1% 48.0% 48.1%
Loss adjustment expenses 8.0% 8.0% 11.6% 11.6%
Underwriting expenses 32.7% 34.7% 35.6% 35.3%
-------- ------- --------- --------
Combined ratio 86.1% 87.8% 95.2% 95.0%
CORPORATE/OTHER
- ---------------------------------------
Net investment income (expense) $ 4,025 $ (322)
Investment gains realized, net 4,597 2,043
Agent relationships asset expenses 2,140 4,071
Corporate expenses 7,499 8,185
YEAR
-----------------------------------------------
CONSOLIDATED 2005 2004
- ---------------------------------------- ------------------- -------------------------
Premiums and finance charges earned $ 1,453,568 $ 1,446,624
Investment income less expenses 201,357 201,244
Investment gains realized, net 47,426 22,920
----------- -----------
Total revenues 1,702,351 1,670,788
Losses 752,280 777,580
Loss adjustment expenses 155,033 158,697
Underwriting expenses 461,907 504,812
Corporate and other expenses 52,409 43,214
----------- -----------
Total expenses 1,421,629 1,484,303
Income before income taxes 280,722 186,485
Income tax expense:
On investment gains realized 5,871 8,022
On all other income 62,158 48,442
----------- -----------
Total income tax expense 68,029 56,464
Cumulative effect of an accounting change - (1,648)
Net income $ 212,693 $ 128,373
============ ============
Average shares outstanding - diluted* 67,194 71,508
Net income, per share - diluted* $ 3.19 $ 1.89
Operating income** $ 171,139 $ 115,123
Operating income - earnings per share** $ 2.57 $ 1.71
Operating income - return on equity** 15.3% 12.3%
Effective tax rate on investment income 27.1% 31.9%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 51.7% 51.7% 53.7% 53.8%
Loss adjustment expenses 10.7% 10.7% 11.0% 10.7%
Underwriting expenses 31.8% 31.8% 34.9% 33.9%
-------- ------- --------- -------
Combined ratio 94.2% 94.2% 99.6% 98.4%
CORPORATE/OTHER
- ---------------------------------------
Net investment income (expense) $ 15,071 $ 4,323
Investment gains realized, net 11,572 3,719
Agent relationships asset expenses 12,268 20,640
Corporate expenses 40,141 22,574
*Average diluted shares outstanding, net income per share and operating
income per share for the twelve months ended December 31, 2005 and 2004
and for the three months ended December 31, 2004 have been adjusted, 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 to be adjusted 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 February 8, 2006 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.
-1-
OHIO CASUALTY CORPORATION & SUBSIDIARIES
PROPERTY AND CASUALTY INSURANCE DATA (in thousands, except ratio data)
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2005 and 2004
(Data Unaudited)
THREE MONTHS ENDED DECEMBER 31
-------------------------------------------------
2005 2004
OPERATING SEGMENTS and ----------------------- ----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 208,971 87.4% $ 206,054 95.9%
Workers' compensation 34,851 139.1% 32,931 117.9%
Commercial auto 58,332 72.0% 57,999 79.6%
General liability 24,073 97.9% 21,986 117.5%
CMP, fire and inland marine 91,715 74.7% 93,138 93.3%
Specialty Lines $ 35,349 94.1% $ 35,789 96.0%
Commercial umbrella 21,830 97.5% 23,660 102.7%
Fidelity and surety 13,519 88.7% 12,129 83.0%
Personal Lines $ 118,913 81.6% $ 120,010 93.9%
Personal auto incl. personal
umbrella 70,024 87.0% 71,225 108.2%
Personal property 48,889 73.8% 48,785 72.8%
------------ ------ ------------ ------
Total All Lines $ 363,233 86.1% $ 361,853 95.2%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 188,948 90.7% $ 192,411 96.2%
Workers' compensation 31,262 142.7% 30,149 119.2%
Commercial auto 50,607 75.6% 51,864 79.8%
General liability 21,674 101.9% 20,149 117.3%
CMP, fire and inland marine 85,405 77.6% 90,249 93.2%
Specialty Lines $ 33,636 91.5% $ 32,887 95.1%
Commercial umbrella 20,841 91.5% 21,234 101.4%
Fidelity and surety 12,795 91.8% 11,653 82.0%
Personal Lines $ 114,366 81.8% $ 117,207 93.3%
Personal auto incl. personal
umbrella 67,206 87.4% 69,347 107.7%
Personal property 47,160 73.9% 47,860 72.3%
------------ ------ ------------ ------
Total All Lines $ 336,950 87.8% $ 342,505 95.0%
YEAR
--------------------------------------------------
2005 2004
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 827,440 101.9% $ 807,925 100.6%
Workers' compensation 134,510 142.4% 132,625 114.0%
Commercial auto 230,471 82.2% 229,629 91.1%
General liability 93,308 111.3% 86,563 109.9%
CMP, fire and inland marine 369,151 96.9% 359,108 99.5%
Specialty Lines $ 143,151 95.3% $ 150,262 96.7%
Commercial umbrella 92,235 101.9% 105,089 103.2%
Fidelity and surety 50,916 83.2% 45,173 81.5%
Personal Lines $ 482,977 80.8% $ 488,437 98.9%
Personal auto incl. personal
umbrella 288,340 85.8% 295,774 105.9%
Personal property 194,637 73.5% 192,663 88.1%
------------ ------ ------------ ------
Total All Lines $ 1,453,568 94.2% $ 1,446,624 99.6%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 823,490 102.3% $ 828,216 99.3%
Workers' compensation 138,582 142.6% 132,932 115.4%
Commercial auto 227,702 82.6% 233,539 90.3%
General liability 95,680 111.8% 89,457 105.0%
CMP, fire and inland marine 361,526 97.6% 372,288 97.5%
Specialty Lines $ 150,423 89.9% $ 135,499 97.2%
Commercial umbrella 97,165 94.6% 87,124 103.8%
Fidelity and surety 53,258 81.7% 48,375 78.9%
Personal Lines $ 475,494 81.2% $ 490,235 97.6%
Personal auto incl. personal
umbrella 283,741 86.3% 294,114 104.7%
Personal property 191,753 73.8% 196,121 86.8%
------------ ------ ------------ ------
Total All Lines $ 1,449,407 94.2% $ 1,453,950 98.4%
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OHIO CASUALTY CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA AND RELATED INFORMATION
(in thousands, except share and per share data)
AT DECEMBER 31, 2005 and 2004
(Data Unaudited)
December 31, December 31,
2005 2004
Assets ------------- -------------
Investments:
U.S. government fixed maturities $ 25,940 $ 30,823
Tax exempt fixed maturities 1,277,318 1,036,697
Taxable fixed maturities:
Available-for-sale, at fair value 2,224,456 2,278,588
Held-to-maturity, at amortized cost 264,422 301,367
------------ ------------
Total fixed maturities 3,792,136 3,647,475
Equity securities, at fair value 375,079 357,458
------------ ------------
Total investments 4,167,215 4,004,933
Cash and cash equivalents 54,575 252,566
Premiums and other receivables, net of
allowance for bad debts of $4,200 and
$4,300, respectively 309,190 350,761
Deferred policy acquisition costs 153,671 159,849
Property and equipment, net of
accumulated depreciation of $177,239
and $167,362, respectively 80,079 82,946
Reinsurance recoverable, net of allowance
of $3,690 and $2,336, respectively 741,800 666,501
Agent relationships, net of accumulated
amortization of $45,531 and $41,438,
respectively 109,726 121,994
Interest and dividends due or accrued 54,942 49,859
Deferred tax asset 14,846 -
Other assets 77,021 25,607
------------ ------------
Total assets $ 5,763,065 $ 5,715,016
============ ============
Shares outstanding 63,281,136 62,209,129
Book value per share $22.54 $20.82
Unrealized gain component of
book value per share* $3.13 $4.47
December 31, December 31,
2005 2004
Liabilities ------------- -------------
Insurance reserves:
Losses $ 2,435,028 $ 2,269,565
Loss adjustment expenses 511,817 486,767
Unearned premiums 679,601 715,486
Debt 200,401 383,266
Reinsurance treaty funds held 150,367 195,015
Deferred income taxes - 21,950
Other liabilities 359,444 348,024
------------ ------------
Total liabilities 4,336,658 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 18,810 -
Accumulated other comprehensive income 177,992 259,131
Retained earnings 1,360,547 1,161,510
Treasury stock, at cost:
(Shares: 9,137,208, 10,209,215) (139,994) (134,750)
------------ ------------
Total shareholders' equity 1,426,407 1,294,943
------------ ------------
Total liabilities and
shareholders' equity $ 5,763,065 $ 5,715,016
============ ============
Statutory Insurance Reserves
Losses $ 1,800,683 $ 1,739,709
Loss adjustment expense 457,843 444,102
Unearned premiums 645,579 649,740
Other Statutory Data
Statutory policyholders' surplus $ 1,004,545 $ 972,040
Ratio of net premiums written to
surplus 1.4 to 1.0 1.5 to 1.0
*The unrealized gain component of book value per share excludes $10.1
million and $12.7 million at December 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.
-3-
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL INFORMATION (in thousands, except ratios)
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2005 and 2004
(Data Unaudited)
THREE MONTHS ENDED
DECEMBER 31 YEAR
-------------------------- --------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 193,292 $ 199,401 $ 840,974 $ 856,212
Specialty Lines 50,414 57,441 210,795 251,505
Personal Lines 114,865 119,559 478,282 496,758
---------- ---------- ---------- ----------
Total 358,571 376,401 1,530,051 1,604,475
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 35,790 $ 43,346 $ 148,890 $ 182,291
Commercial Umbrella 7,835 10,693 33,414 49,982
Personal Lines 8,872 9,491 37,195 41,322
Average Renewal Price Increase
- ------------------------------
Commercial Lines 0.4% 2.5% 2.0% 5.0%
Commercial Umbrella 0.5% 6.5% 3.7% 8.0%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines -1.2% 0.2% 2.2% 2.4%
Specialty Lines 0.0% 0.0% 0.0% 0.0%
Personal Lines 1.9% 4.2% 1.5% 4.9%
Total All Lines -0.1% 1.5% 1.8% 3.0%
Prior Accident Year Loss & LAE by
Segment (GAAP Basis)
- ---------------------------------
Commercial Lines $ (0.8) $ (2.8) $ 29.1 $ (15.0)
Specialty Lines (5.0) (2.0) (12.3) (9.4)
Personal Lines (10.7) (1.2) (36.9) 2.6
---------- ---------- ---------- ----------
Total All Lines Accident
Year Development (16.5) (6.0) (20.1) (21.8)
Prior Accident Year Loss & LAE (GAAP Basis)
- -------------------------------------------
Accident Year 2004 $ (11.7) $ - $ (30.8) $ -
Accident Year 2003 (6.2) (3.9) (32.0) (35.2)
Accident Year 2002 and Prior 1.4 (2.1) 42.7 13.4
---------- ---------- ---------- ----------
Total Accident Year Development (16.5) (6.0) (20.1) (21.8)
-4-
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SEGMENT UNDERWRITING PROFITABILTIY - GAAP BASIS
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2005 and 2004
(Data Unaudited)
THREE MONTHS ENDED
DECEMBER 31 YEAR
-------------------------- --------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
SEGMENT RESULTS
- ---------------
Commercial Lines
- ----------------
Losses 45.9% 48.0% 55.6% 52.8%
Loss adjustment expenses 8.5% 12.4% 13.0% 12.4%
Underwriting expenses 33.0% 35.5% 33.3% 35.4%
------- ------- ------- -------
Combined Ratio 87.4% 95.9% 101.9% 100.6%
Specialty Lines
- ----------------
Losses 34.0% 37.7% 42.0% 42.6%
Loss adjustment expenses 14.4% 5.9% 9.4% 4.8%
Underwriting expenses 45.7% 52.4% 43.9% 49.3%
------- ------- ------- -------
Combined Ratio 94.1% 96.0% 95.3% 96.7%
Personal Lines
- --------------
Losses 48.0% 51.1% 48.1% 58.7%
Loss adjustment expenses 5.4% 12.0% 7.1% 10.5%
Underwriting expenses 28.2% 30.8% 25.6% 29.7%
------- ------- ------- -------
Combined Ratio 81.6% 93.9% 80.8% 98.9%
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