Exhibit 99.2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIODS ENDING
SEPTEMBER 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)
THIRD QUARTER, 2006
(Data Unaudited)
THREE MONTHS ENDED SEPT 30
------------------------------------------------
CONSOLIDATED 2006 2005
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 356,311 $ 362,483
Investment income less expenses 51,325 51,454
Investment gains realized, net 11,402 22,404
----------- -----------
Total revenues 419,038 436,341
Losses 188,803 204,446
Loss adjustment expenses 35,809 42,556
Underwriting expenses 110,167 113,756
Corporate and other expenses 8,078 9,165
----------- -----------
Total expenses 342,857 369,923
Income before income taxes 76,181 66,418
Income tax expense (benefit):
On investment gains realized 3,991 (426)
On all other income 16,926 11,315
----------- -----------
Total income tax expense 20,917 10,889
Net income $ 55,264 $ 55,529
============ ============
Average shares outstanding - diluted 62,441 65,657
Net income, per share - diluted $ 0.89 $ 0.85
Operating income* $ 47,853 $ 32,699
Operating income - earnings per share* $ 0.77 $ 0.50
Operating income - return on equity* 15.1% 11.4%
Effective tax rate on investment income 25.5% 29.0%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 53.0% 53.0% 56.4% 56.4%
Loss adjustment expenses 10.0% 10.0% 11.7% 11.7%
Underwriting expenses 30.9% 31.9% 31.4% 32.1%
-------- ------- -------- -------
Combined ratio 93.9% 94.9% 99.5% 100.2%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 3,789 $ 3,836
Investment gains/(losses) realized, net 215 2,034
Agent relationships asset expenses 1,681 2,438
Corporate expenses 6,397 6,727
NINE MONTHS ENDED SEPT 30
-----------------------------------------------
CONSOLIDATED 2006 2005
- ---------------------------------------- -----------------------------------------------
Premiums and finance charges earned $ 1,069,471 $ 1,090,335
Investment income less expenses 154,119 148,422
Investment gains realized, net 30,869 36,194
----------- -----------
Total revenues 1,254,459 1,274,951
Losses 577,090 587,271
Loss adjustment expenses 115,225 125,832
Underwriting expenses 334,675 343,268
Corporate and other expenses 29,331 42,770
----------- -----------
Total expenses 1,056,321 1,099,141
Income before income taxes 198,138 175,810
Income tax expense (benefit):
On investment gains realized 10,804 4,401
On all other income 44,551 36,036
----------- -----------
Total income tax expense 55,355 40,437
Net income $ 142,783 $ 135,373
============ ============
Average shares outstanding - diluted 63,869 68,012
Net income, per share - diluted $ 2.24 $ 2.02
Operating income* $ 122,718 $ 103,580
Operating income - earnings per share* $ 1.92 $ 1.55
Operating income - return on equity* 13.0% 12.7%
Effective tax rate on investment income 25.9% 27.8%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 54.0% 54.0% 53.9% 53.9%
Loss adjustment expenses 10.8% 10.8% 11.5% 11.5%
Underwriting expenses 31.3% 31.8% 31.5% 31.0%
-------- ------- --------- -------
Combined ratio 96.1% 96.6% 96.9% 96.4%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 11,874 $ 11,046
Investment gains/(losses) realized, net (611) 6,975
Agent relationships asset expenses 9,029 10,128
Corporate expenses 20,302 32,642
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 (benefit):
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 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 November 1, 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)
THIRD QUARTER, 2006
(Data Unaudited)
THREE MONTHS ENDED SEPT 30
------------------------------------------------
2006 2005
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 209,160 97.6% $ 206,077 111.2%
Workers' compensation 35,056 130.6% 34,304 133.6%
Commercial auto 56,511 96.5% 57,175 86.0%
General liability 25,407 87.5% 23,698 115.4%
CMP, fire and inland marine 92,186 88.6% 90,900 117.5%
Specialty Lines 36,202 79.2% 36,266 95.2%
Commercial umbrella/other 22,132 78.2% 23,533 100.6%
Fidelity and surety 14,070 80.2% 12,733 85.0%
Personal Lines 110,949 91.8% 120,140 80.8%
Personal auto incl. personal umbrella 65,169 94.7% 71,819 90.5%
Personal property 45,780 87.7% 48,321 66.4%
------------ ------ ------------ ------
Total All Lines $ 356,311 93.9% $ 362,483 99.5%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- ---------------- ------------ -------- ------------ --------
Commercial Lines $ 207,414 99.1% $ 207,121 112.5%
Workers' compensation 34,345 131.6% 35,861 136.6%
Commercial auto 55,856 97.6% 57,487 87.2%
General liability 25,184 88.9% 24,069 117.0%
CMP, fire and inland marine 92,029 90.5% 89,704 118.3%
Specialty Lines 37,581 80.2% 37,968 93.9%
Commercial umbrella/other 20,922 79.8% 23,061 98.6%
Fidelity and surety 16,659 76.8% 14,907 81.9%
Personal Lines 114,519 91.8% 123,968 81.3%
Personal auto incl. personal umbrella 65,350 95.1% 70,755 91.1%
Personal property 49,169 87.1% 53,213 66.5%
------------ ------ ------------ ------
Total All Lines $ 359,514 94.9% $ 369,057 100.2%
NINE MONTHS ENDED SEPT 30
------------------------------------------------
2006 2005
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 620,262 100.6% $ 618,469 106.7%
Workers' compensation 103,925 129.5% 99,659 143.6%
Commercial auto 169,917 91.3% 172,139 85.6%
General liability 72,984 101.6% 69,235 115.9%
CMP, fire and inland marine 273,436 94.5% 277,436 104.2%
Specialty Lines 109,325 85.2% 107,802 95.6%
Commercial umbrella/other 69,057 92.0% 70,405 103.3%
Fidelity and surety 40,268 73.8% 37,397 81.2%
Personal Lines 339,884 91.3% 364,064 80.6%
Personal auto incl. personal umbrella 199,585 95.3% 218,316 85.4%
Personal property 140,299 85.5% 145,748 73.4%
------------ ------ ------------ ------
Total All Lines $ 1,069,471 96.1% $ 1,090,335 96.9%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 643,702 100.9% $ 634,542 106.4%
Workers' compensation 107,708 129.2% 107,320 142.8%
Commercial auto 176,428 91.6% 177,095 85.1%
General liability 77,647 101.4% 74,006 115.4%
CMP, fire and inland marine 281,919 95.8% 276,121 104.3%
Specialty Lines 110,713 85.7% 116,787 89.7%
Commercial umbrella/other 64,830 92.7% 76,324 95.7%
Fidelity and surety 45,883 70.4% 40,463 78.4%
Personal Lines 332,010 91.8% 361,128 81.1%
Personal auto incl. personal umbrella 196,720 95.6% 216,535 85.9%
Personal property 135,290 86.5% 144,593 73.8%
------------ ------ ------------ ------
Total All Lines $ 1,086,425 96.6% $ 1,112,457 96.4%
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/other 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/other 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)
THIRD QUARTER, 2006
(2006 Data Unaudited)
September 30, December 31,
2006 2005
ASSETS ------------- -------------
Investments:
U.S. government fixed maturities $ 27,221 $ 25,940
Tax exempt fixed maturities 1,423,292 1,277,318
Taxable fixed maturities:
Available-for-sale, at fair value 2,102,783 2,224,456
Held-to-maturity, at amortized cost 250,661 264,422
------------ ------------
Total fixed maturities 3,803,957 3,792,136
Equity securities, at fair value 404,372 375,079
------------ ------------
Total investments 4,208,329 4,167,215
Cash and cash equivalents 18,634 54,575
Premiums and other receivables, net of
allowance for bad debts of $1,800 and
$4,200, respectively 338,503 309,190
Deferred policy acquisition costs 155,360 153,671
Property and equipment, net of
accumulated depreciation of $184,068
and $177,239, respectively 79,285 80,079
Reinsurance recoverable, net of allowance
of $3,690 703,660 741,800
Agent relationships, net of accumulated
amortization of $48,096 and $45,531,
respectively 100,697 109,726
Interest and dividends due or accrued 47,388 54,942
Deferred tax asset 14,182 14,846
Other assets 125,577 77,021
------------ ------------
Total assets $ 5,791,615 $ 5,763,065
============ ============
Shares outstanding 61,204,073 63,281,136
Book value per share $24.14 $22.54
Unrealized gain component of
book value per share* $3.03 $3.13
September 30, December 31,
2006 2005
LIABILITIES ------------- -------------
Insurance reserves:
Losses $ 2,459,170 $ 2,435,028
Loss adjustment expenses 519,586 511,817
Unearned premiums 693,059 679,601
Debt 199,661 200,401
Reinsurance treaty funds held 121,896 150,367
Other liabilities 320,511 359,444
------------ ------------
Total liabilities 4,313,883 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 22,599 18,810
Accumulated other comprehensive income 162,835 177,992
Retained earnings 1,489,382 1,360,547
Treasury stock, at cost:
(Shares: 11,214,271; 9,137,208) (206,136) (139,994)
------------ ------------
Total shareholders' equity 1,477,732 1,426,407
------------ ------------
Total liabilities and
shareholders' equity $ 5,791,615 $ 5,763,065
============ ============
Statutory Insurance Reserves
Losses $ 1,858,315 $ 1,800,683
Loss adjustment expense 467,067 457,843
Unearned premiums 662,533 645,579
Other Statutory Data
Statutory policyholders' surplus 1,030,468 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 $8.7 million
and $10.1 million at September 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)
THIRD QUARTER, 2006
(Data Unaudited)
THREE MONTHS ENDED SEPT 30 NINE MONTHS ENDED SEPT 30
-------------------------- --------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 212,777 $ 212,541 $ 660,737 $ 647,682
Specialty Lines 49,888 52,980 148,467 160,381
Personal Lines 116,084 125,317 336,307 363,417
---------- ---------- ---------- ----------
Total 378,749 390,838 1,145,511 1,171,480
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 36,040 $ 33,888 $ 123,160 $ 109,268
Commercial umbrella/other 7,302 8,530 22,146 26,631
Personal Lines 10,878 9,881 29,982 28,323
Average Renewal Price Change
- ------------------------------
Commercial Lines -0.1% 1.5% 0.5% 2.3%
Commercial umbrella/other 1.9% 2.9% 1.2% 5.0%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 1.2% 8.2% 1.9% 3.4%
Specialty Lines 0.1% 0.0% 0.0% 0.0%
Personal Lines 4.4% 0.8% 4.5% 1.3%
Total All Lines 2.1% 4.9% 2.5% 2.4%
Prior Accident Year Loss & LAE by Segment (GAAP Basis)
- ------------------------------------------------------
Commercial Lines $ (2.8) $ 12.7 $ (4.6) $ 29.9
Specialty Lines (9.3) (3.0) (20.5) (7.3)
Personal Lines (1.6) (6.6) (12.3) (26.2)
---------- ---------- ---------- ----------
Total All Lines Accident Year
Development (13.7) 3.1 (37.4) (3.6)
Prior Accident Year Loss & LAE (GAAP Basis)
- -------------------------------------------
Accident Year 2005 $ (5.3) $ - $ (9.8) $ -
Accident Year 2004 (2.3) (3.2) (15.4) (19.1)
Accident Year 2003 and Prior (6.1) 6.3 (12.2) 15.5
---------- ---------- ---------- ----------
Total Accident Year Development (13.7) 3.1 (37.4) (3.6)
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/other 34,836
Personal Lines 37,195
Average Renewal Price Change
- ------------------------------
Commercial Lines 2.0%
Commercial umbrella/other 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-