Exhibit 99.2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIODS ENDING
JUNE 30, 2006
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
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)
SECOND QUARTER, 2006
(Data Unaudited)
THREE MONTHS ENDED JUNE 30,
------------------------------------------------
CONSOLIDATED 2006 2005
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 355,499 $ 365,550
Investment income less expenses 51,858 48,512
Investment gains realized, net 5,268 13,796
----------- -----------
Total revenues 412,625 427,858
Losses 199,279 191,700
Loss adjustment expenses 42,733 40,308
Underwriting expenses 110,696 117,440
Corporate and other expenses 11,123 18,756
----------- -----------
Total expenses 363,831 368,204
Income before income taxes 48,794 59,654
Income tax expense:
On investment gains realized 1,843 4,829
On all other income 11,329 12,668
----------- -----------
Total income tax expense 13,172 17,497
Net income $ 35,622 $ 42,157
============ ============
Average shares outstanding - diluted 64,351 66,997
Net income, per share - diluted $ 0.55 $ 0.63
Operating income* $ 32,197 $ 33,190
Operating income - earnings per share* $ 0.50 $ 0.50
Operating income - return on equity* 10.2% 12.2%
Effective tax rate on investment income 26.1% 27.5%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 56.1% 56.1% 52.4% 52.4%
Loss adjustment expenses 12.0% 12.0% 11.0% 11.0%
Underwriting expenses 31.1% 32.0% 32.1% 30.7%
-------- ------- -------- -------
Combined ratio 99.2% 100.1% 95.5% 94.1%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 4,385 $ 3,899
Investment gains/(losses) realized, net (706) 4,941
Agent relationships asset expenses 4,478 3,295
Corporate expenses 6,645 15,461
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------
CONSOLIDATED 2006 2005
- ---------------------------------------- -----------------------------------------------
Premiums and finance charges earned $ 713,160 $ 727,852
Investment income less expenses 102,794 96,968
Investment gains realized, net 19,467 13,790
----------- -----------
Total revenues 835,421 838,610
Losses 388,287 382,825
Loss adjustment expenses 79,416 83,276
Underwriting expenses 224,508 229,512
Corporate and other expenses 21,253 33,605
----------- -----------
Total expenses 713,464 729,218
Income before income taxes 121,957 109,392
Income tax expense:
On investment gains realized 6,813 4,827
On all other income 27,625 24,721
----------- -----------
Total income tax expense 34,438 29,548
Net income $ 87,519 $ 79,844
============ ============
Average shares outstanding - diluted 64,592 69,328
Net income, per share - diluted $ 1.35 $ 1.18
Operating income* $ 74,865 $ 70,881
Operating income - earnings per share* $ 1.16 $ 1.05
Operating income - return on equity* 12.2% 13.3%
Effective tax rate on investment income 26.1% 27.2%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 54.4% 54.4% 52.6% 52.6%
Loss adjustment expenses 11.1% 11.1% 11.4% 11.4%
Underwriting expenses 31.5% 31.7% 31.5% 30.4%
-------- ------- -------- -------
Combined ratio 97.0% 97.2% 95.5% 94.4%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 8,085 $ 7,210
Investment gains/(losses) realized, net (826) 4,941
Agent relationships asset expenses 7,348 7,690
Corporate expenses 13,905 25,915
CONSOLIDATED YEAR 2005
- ---------------------------------------- ------------------------
Premiums and finance charges earned $ 1,453,568
Investment income less expenses 201,357
Investment gains realized, net 47,426
-----------
Total revenues 1,702,351
Losses 752,280
Loss adjustment expenses 155,033
Underwriting expenses 461,907
Corporate and other expenses 52,409
-----------
Total expenses 1,421,629
Income before income taxes 280,722
Income tax expense:
On investment gains realized 5,871
On all other income 62,158
-----------
Total income tax expense 68,029
Net income $ 212,693
============
Average shares outstanding - diluted 67,194
Net income, per share - diluted $ 3.19
Operating income* $ 171,139
Operating income - earnings per share* $ 2.57
Operating income - return on equity* 15.3%
Effective tax rate on investment income 27.1%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory
- --------------------------------------- -------- ---------
Losses 51.7% 51.7%
Loss adjustment expenses 10.7% 10.7%
Underwriting expenses 31.8% 31.8%
-------- -------
Combined ratio 94.2% 94.2%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 15,071
Investment gains/(losses) realized, net 11,572
Agent relationships asset expenses 12,268
Corporate expenses 40,141
*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, 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, respectively.
1
OHIO CASUALTY CORPORATION & SUBSIDIARIES
PROPERTY AND CASUALTY INSURANCE DATA
(in thousands, except ratio data)
SECOND QUARTER, 2006
(Data Unaudited)
THREE MONTHS ENDED JUNE 30,
------------------------------------------------
2006 2005
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 206,462 102.4% $ 206,794 102.6%
Workers' compensation 34,877 116.7% 32,345 148.8%
Commercial auto 56,536 92.4% 57,312 86.1%
General liability 24,002 93.7% 23,123 112.5%
CMP, fire and inland marine 91,047 105.3% 94,014 94.3%
Specialty Lines 35,860 102.0% 36,461 95.3%
Commercial umbrella 22,732 121.5% 24,294 106.9%
Fidelity and surety 13,128 68.9% 12,167 72.3%
Personal Lines 113,177 92.5% 122,295 83.8%
Personal auto incl. personal umbrella 66,333 92.6% 73,675 88.5%
Personal property 46,844 92.5% 48,620 76.7%
------------ ------ ------------ ------
Total All Lines $ 355,499 99.2% $ 365,550 95.5%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 223,926 102.3% $ 221,825 100.8%
Workers' compensation 37,562 115.8% 36,182 144.4%
Commercial auto 61,535 92.4% 62,359 84.2%
General liability 27,549 93.0% 26,388 110.7%
CMP, fire and inland marine 97,280 105.6% 96,896 93.5%
Specialty Lines 37,348 102.1% 39,727 88.6%
Commercial umbrella 21,861 121.6% 26,455 98.9%
Fidelity and surety 15,487 65.1% 13,272 68.4%
Personal Lines 111,569 95.2% 123,380 84.4%
Personal auto incl. personal umbrella 64,513 97.3% 72,222 89.8%
Personal property 47,056 92.4% 51,158 76.1%
------------ ------ ------------ ------
Total All Lines $ 372,843 100.1% $ 384,932 94.1%
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------
2006 2005
OPERATING SEGMENTS and ----------------------- ----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 411,102 102.1% $ 412,392 104.4%
Workers' compensation 68,869 128.8% 65,355 148.8%
Commercial auto 113,406 88.8% 114,964 85.4%
General liability 47,577 109.2% 45,537 116.2%
CMP, fire and inland marine 181,250 97.5% 186,536 97.8%
Specialty Lines 73,123 88.3% 71,536 95.8%
Commercial umbrella 46,925 98.5% 46,872 104.6%
Fidelity and surety 26,198 70.3% 24,664 79.2%
Personal Lines 228,935 90.9% 243,924 80.5%
Personal auto incl. personal umbrella 134,416 95.5% 146,497 82.9%
Personal property 94,519 84.3% 97,427 76.9%
------------ ------ ------------ ------
Total All Lines $ 713,160 97.0% $ 727,852 95.5%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 436,288 101.8% $ 427,421 103.3%
Workers' compensation 73,363 127.8% 71,459 146.0%
Commercial auto 120,572 88.7% 119,608 84.1%
General liability 52,463 108.2% 49,937 116.2%
CMP, fire and inland marine 189,890 98.4% 186,417 97.8%
Specialty Lines 73,132 88.5% 78,819 87.6%
Commercial umbrella 43,908 98.7% 53,263 94.5%
Fidelity and surety 29,224 67.0% 25,556 76.8%
Personal Lines 217,491 91.8% 237,160 80.9%
Personal auto incl. personal umbrella 131,370 95.8% 145,780 82.9%
Personal property 86,121 86.0% 91,380 76.9%
------------ ------ ------------ ------
Total All Lines $ 726,911 97.2% $ 743,400 94.4%
YEAR 2005
OPERATING SEGMENTS and ----------------------
SELECTED PRODUCT LINES Net Premiums Combined
GAAP BASIS: Earned Ratio
- -------------------------- ------------ --------
Commercial Lines $ 827,440 101.9%
Workers' compensation 134,510 142.4%
Commercial auto 230,471 82.2%
General liability 93,308 111.3%
CMP, fire and inland marine 369,151 96.9%
Specialty Lines 143,151 95.3%
Commercial umbrella 92,235 101.9%
Fidelity and surety 50,916 83.2%
Personal Lines 482,977 80.8%
Personal auto incl. personal umbrella 288,340 85.8%
Personal property 194,637 73.5%
------------ ------
Total All Lines $ 1,453,568 94.2%
Net Premiums Combined
STATUTORY BASIS: Written Ratio
- -------------------------- ------------ --------
Commercial Lines $ 823,490 102.3%
Workers' compensation 138,582 142.6%
Commercial auto 227,702 82.6%
General liability 95,680 111.8%
CMP, fire and inland marine 361,526 97.6%
Specialty Lines $ 150,423 89.9%
Commercial umbrella 97,165 94.6%
Fidelity and surety 53,258 81.7%
Personal Lines $ 475,494 81.2%
Personal auto incl. personal umbrella 283,741 86.3%
Personal property 191,753 73.8%
------------ ------
Total All Lines $ 1,449,407 94.2%
2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA AND RELATED INFORMATION
(in thousands, except share and per share data)
SECOND QUARTER, 2006
(2006 Data Unaudited)
June 30, December 31,
2006 2005
Assets --------- ------------
Investments:
U.S. government fixed maturities $ 24,949 $ 25,940
Tax exempt fixed maturities 1,340,341 1,277,318
Taxable fixed maturities:
Available-for-sale, at fair value 2,056,453 2,224,456
Held-to-maturity, at amortized cost 255,544 264,422
------------ ------------
Total fixed maturities 3,677,287 3,792,136
Equity securities, at fair value 385,245 375,079
------------ ------------
Total investments 4,062,532 4,167,215
Cash and cash equivalents 38,716 54,575
Premiums and other receivables, net of
allowance for bad debts of $2,100 and
$4,200, respectively 338,500 309,190
Deferred policy acquisition costs 153,740 153,671
Property and equipment, net of
accumulated depreciation of $181,646
and $177,239, respectively 79,694 80,079
Reinsurance recoverable, net of allowance
of $3,690 735,091 741,800
Agent relationships, net of accumulated
amortization of $46,707 and $45,531,
respectively 102,378 109,726
Interest and dividends due or accrued 52,599 54,942
Deferred tax asset 42,206 14,846
Other assets 74,318 77,021
------------ ------------
Total assets $ 5,679,774 $ 5,763,065
============ ============
Shares outstanding 61,421,475 63,281,136
Book value per share $22.39 $22.54
Unrealized gain component of
book value per share* $2.07 $3.13
June 30, December 31,
2006 2005
Liabilities --------- ------------
Insurance reserves:
Losses $ 2,463,165 $ 2,435,028
Loss adjustment expenses 519,408 511,817
Unearned premiums 690,938 679,601
Debt 199,890 200,401
Reinsurance treaty funds held 142,768 150,367
Other liabilities 288,447 359,444
------------ ------------
Total liabilities $ 4,304,616 4,336,658
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 20,609 18,810
Accumulated other comprehensive income 106,143 177,992
Retained earnings 1,439,625 1,360,547
Treasury stock, at cost:
(Shares: 10,996,869; 9,137,208) (200,271) (139,994)
------------ ------------
Total shareholders' equity 1,375,158 1,426,407
------------ ------------
Total liabilities and
shareholders' equity $ 5,679,774 $ 5,763,065
============ ============
Statutory Insurance Reserves
Losses $ 1,841,984 $ 1,800,683
Loss adjustment expense 463,836 457,843
Unearned premiums 659,331 645,579
Other Statutory Data
Statutory policyholders' surplus $ 1,007,017 $ 1,004,545
Ratio of net premiums written to
surplus 1.4 to 1.0 1.4 to 1.0
*The unrealized gain component of book value per share excludes $9.2 million
and $10.1 million at June 30, 2006 and December 31, 2005, 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 and accident year data)
SECOND QUARTER, 2006
(Data Unaudited)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------- --------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 229,909 $ 223,964 $ 447,960 $ 435,141
Specialty Lines 51,084 54,223 98,579 107,401
Personal Lines 113,028 123,199 220,223 238,100
---------- ---------- ---------- ----------
Total 394,021 401,386 766,762 780,642
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 44,804 $ 40,284 $ 87,120 $ 75,380
Commercial Umbrella 7,399 9,158 14,844 18,101
Personal Lines 10,156 9,658 19,104 18,442
Average Renewal Price Increase
- ------------------------------
Commercial Lines -0.1% 1.6% 0.2% 1.9%
Commercial Umbrella 0.2% 6.0% 0.8% 5.5%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 3.7% 1.4% 2.3% 1.0%
Specialty Lines -0.2% 0.0% -0.1% 0.0%
Personal Lines 7.6% 2.2% 4.5% 1.6%
Total All Lines 4.5% 1.5% 2.8% 1.1%
Prior Accident Year Loss & LAE by Segment (GAAP Basis)
- ------------------------------------------------------
Commercial Lines $ (2.3) $ 5.0 $ (1.8) $ 17.2
Specialty Lines (1.4) (1.5) (11.2) (4.3)
Personal Lines (7.1) (6.4) (10.7) (19.6)
---------- ---------- ---------- ----------
Total All Lines Accident Year
Development (10.8) (2.9) (23.7) (6.7)
Prior Accident Year Loss & LAE (GAAP Basis)
- -------------------------------------------
Accident Year 2005 $ (1.7) $ - $ (4.5) $ -
Accident Year 2004 (8.5) (6.6) (13.1) (15.9)
Accident Year 2003 and Prior (0.6) 3.7 (6.1) 9.2
---------- ---------- ---------- ----------
Total Accident Year Development (10.8) (2.9) (23.7) (6.7)
YEAR 2005
----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 840,974
Specialty Lines 210,795
Personal Lines 478,282
----------
Total 1,530,051
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 143,470
Commercial Umbrella 34,836
Personal Lines 37,195
Average Renewal Price Increase
- ------------------------------
Commercial Lines 2.0%
Commercial Umbrella 3.7%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 2.2%
Specialty Lines 0.0%
Personal Lines 1.5%
Total All Lines 1.8%
Prior Accident Year Loss & LAE by Segment (GAAP Basis)
- -----------------------------------------------------
Commercial Lines $ 29.1
Specialty Lines (12.3)
Personal Lines (36.9)
----------
Total All Lines Accident Year
Development (20.1)
Prior Accident Year Loss & LAE (GAAP Basis)
- -------------------------------------------
Accident Year 2005 $ -
Accident Year 2004 (30.8)
Accident Year 2003 and Prior 10.7
----------
Total Accident Year Development (20.1)
4