Exhibit 99.2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIODS ENDING
DECEMBER 31, 2006 and 2005
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, 2006 and 2005
(Data Unaudited)
THREE MONTHS ENDED DEC 31
------------------------------------------------
CONSOLIDATED 2006 2005
- ---------------------------------------- ----------------------- -----------------------
Premiums and finance charges earned $ 354,511 $ 363,233
Investment income less expenses 54,566 52,935
Investment gains realized, net 12,753 11,232
----------- -----------
Total revenues 421,830 427,400
Losses 159,398 165,009
Loss adjustment expenses 41,738 29,201
Underwriting expenses 106,755 118,639
Corporate and other expenses 11,271 9,639
----------- -----------
Total expenses 319,162 322,488
Income before income tax expense 102,668 104,912
Income tax expense:
On investment gains realized 4,464 1,470
On all other income 22,677 26,122
----------- -----------
Total income tax expense 27,141 27,592
Net income $ 75,527 $ 77,320
============ ============
Average shares outstanding - diluted 61,981 64,728
Net income, per share - diluted $ 1.22 $ 1.19
Net income - return on equity 19.9% 21.9%
Operating income* $ 67,238 $ 67,559
Operating income - earnings per share* $ 1.08 $ 1.04
Operating income - return on equity* 20.3% 22.6%
Effective tax rate on investment income 24.6% 23.8%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- ------- --------- ------- ---------
Losses 45.0% 45.0% 45.4% 45.1%
Loss adjustment expenses 11.8% 11.8% 8.0% 8.0%
Underwriting expenses 30.1% 32.0% 32.7% 34.7%
------- -------- ------- -------
Combined ratio 86.9% 88.8% 86.1% 87.8%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 4,454 $ 4,025
Investment gains/(losses) realized, net 444 4,597
Agent relationships asset expenses 3,778 2,140
Corporate expenses 7,493 7,499
YEAR
-----------------------------------------------
CONSOLIDATED 2006 2005
- ---------------------------------------- -----------------------------------------------
Premiums and finance charges earned $ 1,423,982 $ 1,453,568
Investment income less expenses 208,685 201,357
Investment gains realized, net 43,622 47,426
----------- -----------
Total revenues 1,676,289 1,702,351
Losses 736,488 752,280
Loss adjustment expenses 156,963 155,033
Underwriting expenses 441,430 461,907
Corporate and other expenses 40,602 52,409
----------- -----------
Total expenses 1,375,483 1,421,629
Income before income tax expense 300,806 280,722
Income tax expense:
On investment gains realized 15,268 5,871
On all other income 67,228 62,158
----------- -----------
Total income tax expense 82,496 68,029
Net income $ 218,310 $ 212,693
============ ============
Average shares outstanding - diluted 63,393 67,194
Net income, per share - diluted $ 3.44 $ 3.19
Net income - return on equity 14.6% 15.6%
Operating income* $ 189,956 $ 171,139
Operating income - earnings per share* $ 3.00 $ 2.57
Operating income - return on equity* 14.7% 15.3%
Effective tax rate on investment income 25.7% 27.1%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 51.7% 51.7% 51.7% 51.7%
Loss adjustment expenses 11.0% 11.0% 10.7% 10.7%
Underwriting expenses 31.0% 31.8% 31.8% 31.8%
-------- ------- ------- -------
Combined ratio 93.7% 94.5% 94.2% 94.2%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 16,328 $ 15,071
Investment gains/(losses) realized, net (167) 11,572
Agent relationships asset expenses 12,807 12,268
Corporate expenses 27,795 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 February 7, 2007 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)
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2006 and 2005
(Data Unaudited)
THREE MONTHS ENDED DEC 31
-------------------------------------------------
2006 2005
OPERATING SEGMENTS and ----------------------- ----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 207,606 89.9% $ 208,971 87.4%
Workers' compensation 33,322 117.7% 34,851 139.1%
Commercial auto 56,196 82.9% 58,332 72.0%
General liability 26,146 108.0% 24,073 97.9%
CMP, fire and inland marine 91,942 78.9% 91,715 74.7%
Specialty Lines 38,071 51.3% 35,349 94.1%
Commercial umbrella/other 23,900 39.9% 21,830 97.5%
Fidelity and surety 14,171 70.3% 13,519 88.7%
Personal Lines 108,834 93.6% 118,913 81.6%
Personal auto incl. personal umbrella 63,840 104.1% 70,024 87.0%
Personal property 44,994 78.8% 48,889 73.8%
------------ ------ ------------ ------
Total All Lines $ 354,511 86.9% $ 363,233 86.1%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 186,005 91.7% $ 188,948 90.7%
Workers' compensation 29,782 120.4% 31,262 142.7%
Commercial auto 46,994 82.7% 50,607 75.6%
General liability 23,432 110.6% 21,674 101.9%
CMP, fire and inland marine 85,797 81.2% 85,405 77.6%
Specialty Lines 34,556 56.7% 33,636 91.5%
Commercial umbrella/other 20,753 47.2% 20,841 91.5%
Fidelity and surety 13,803 70.7% 12,795 91.8%
Personal Lines 105,171 94.5% 114,366 81.8%
Personal auto incl. personal umbrella 62,862 105.4% 67,206 87.4%
Personal property 42,309 79.0% 47,160 73.9%
------------ ------ ------------ ------
Total All Lines $ 325,732 88.8% $ 336,950 87.8%
YEAR
--------------------------------------------------
2006 2005
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 827,868 98.0% $ 827,440 101.9%
Workers' compensation 137,247 126.6% 134,510 142.4%
Commercial auto 226,113 89.2% 230,471 82.2%
General liability 99,130 103.2% 93,308 111.3%
CMP, fire and inland marine 365,378 90.6% 369,151 96.9%
Specialty Lines 147,396 76.5% 143,151 95.3%
Commercial umbrella/other 92,957 78.8% 92,235 101.9%
Fidelity and surety 54,439 72.8% 50,916 83.2%
Personal Lines 448,718 91.8% 482,977 80.8%
Personal auto incl. personal umbrella 263,425 97.4% 288,340 85.8%
Personal property 185,293 83.8% 194,637 73.5%
------------ ------ ------------ ------
Total All Lines $ 1,423,982 93.7% $ 1,453,568 94.2%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 829,707 98.7% $ 823,490 102.3%
Workers' compensation 137,490 127.0% 138,582 142.6%
Commercial auto 223,422 89.5% 227,702 82.6%
General liability 101,079 103.8% 95,680 111.8%
CMP, fire and inland marine 367,716 92.1% 361,526 97.6%
Specialty Lines 145,269 78.2% 150,423 89.9%
Commercial umbrella/other 85,583 80.9% 97,165 94.6%
Fidelity and surety 59,686 70.4% 53,258 81.7%
Personal Lines 437,181 92.4% 475,494 81.2%
Personal auto incl. personal umbrella 259,582 98.0% 283,741 86.3%
Personal property 177,599 84.6% 191,753 73.8%
------------ ------ ------------ ------
Total All Lines $ 1,412,157 94.5% $ 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)
AT DECEMBER 31, 2006 and 2005
(Data Unaudited)
Dec 31, Dec 31,
2006 2005
Assets ------------- -------------
Investments:
U.S. government fixed maturities $ 25,004 $ 25,940
Tax exempt fixed maturities 1,408,275 1,277,318
Taxable fixed maturities:
Available-for-sale, at fair value 2,107,487 2,224,456
Held-to-maturity, at amortized cost 235,831 264,422
------------ ------------
Total fixed maturities 3,776,597 3,792,136
Equity securities, at fair value 430,007 375,079
------------ ------------
Total investments 4,206,604 4,167,215
Cash and cash equivalents 45,549 54,575
Premiums and other receivables, net of
allowance for bad debts of $1,500 and
$4,200, respectively 316,041 309,190
Deferred policy acquisition costs 150,211 153,671
Property and equipment, net of
accumulated depreciation of $183,041
and $177,239, respectively 80,531 80,079
Reinsurance recoverable, net of allowance
of $3,690 633,842 741,800
Agent relationships, net of accumulated
amortization of $48,422 and $45,531,
respectively 96,919 109,726
Interest and dividends due or accrued 51,181 54,942
Deferred tax asset - 14,846
Other assets 117,684 77,021
------------ ------------
Total assets $ 5,698,562 $ 5,763,065
============ ============
Shares outstanding 60,322,692 63,281,136
Book value per share $25.79 $22.54
Unrealized gain component of
book value per share* $3.12 $3.13
Dec 31, Dec 31,
2006 2005
Liabilities ------------- -------------
Insurance reserves:
Losses $ 2,390,457 $ 2,435,028
Loss adjustment expenses 521,879 511,817
Unearned premiums 662,974 679,601
Debt 199,570 200,401
Reinsurance treaty funds held 117,564 150,367
Deferred tax liability 7,246 -
Other liabilities 243,072 359,444
------------ ------------
Total liabilities 4,142,762 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 25,428 18,810
Accumulated other comprehensive income 194,121 177,992
Retained earnings 1,559,474 1,360,547
Treasury stock, at cost:
(Shares: 12,095,652, 9,137,208) (232,275) (139,994)
------------ ------------
Total shareholders' equity 1,555,800 1,426,407
------------ ------------
Total liabilities and
shareholders' equity $ 5,698,562 $ 5,763,065
============ ============
Statutory Insurance Reserves
Losses $ 1,849,179 $ 1,800,683
Loss adjustment expense 473,753 457,843
Unearned premiums 633,755 645,579
Other Statutory Data
Statutory policyholders' surplus $ 1,082,718 $ 1,004,545
Ratio of net premiums written
to surplus 1.3 to 1.0 1.4 to 1.0
*The unrealized gain component of book value per share excludes $7.8
million and $10.1 million at December 31, 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)
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2006 and 2005
(Data Unaudited)
THREE MONTHS ENDED DEC 31 YEAR
-------------------------- ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 191,372 $ 193,292 $ 852,109 $ 840,974
Specialty Lines 46,467 50,414 194,934 210,795
Personal Lines 106,874 114,865 443,181 478,282
---------- ---------- ---------- ----------
Total 344,713 358,571 1,490,224 1,530,051
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 34,050 $ 34,532 $ 157,210 $ 143,800
Commercial umbrella/other 6,735 8,206 28,891 34,835
Personal Lines 9,947 8,872 39,929 37,195
Policy Retention Ratio
- -----------------------------------
Commercial Lines 78.6% 76.1%
Commercial umbrella/other 73.1% 68.5%
Personal Lines 84.4% 83.1%
Average Renewal Price Change
- ------------------------------
Commercial Lines -0.6% 0.5% -0.3% 1.3%
Commercial umbrella/other 1.1% 0.5% 1.4% 3.7%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 0.8% -1.2% 1.6% 2.2%
Specialty Lines 0.0% 0.0% 0.0% 0.0%
Personal Lines 3.8% 1.9% 4.3% 1.5%
Total All Lines 1.6% -0.1% 2.3% 1.8%
Prior Accident Year Loss & LAE by Segment (GAAP Basis)
- ------------------------------------------------------
(Favorable)/Unfavorable
Commercial Lines $ (2.8) $ (0.8) $ (7.4) $ 29.1
Specialty Lines (11.3) (5.0) (31.8) (12.3)
Personal Lines (0.7) (10.7) (13.0) (36.9)
---------- ---------- ---------- ----------
Total All Lines Accident Year
Development (14.8) (16.5) (52.2) (20.1)
Prior Accident Year Loss & LAE (GAAP Basis)
- -------------------------------------------
(Favorable)/Unfavorable
Accident Year 2005 $ (11.4) $ - $ (21.2) $ -
Accident Year 2004 (9.9) (11.7) (25.3) (30.8)
Accident Year 2003 and Prior 6.5 (4.8) (5.7) 10.7
---------- ---------- ---------- ----------
Total Accident Year Development (14.8) (16.5) (52.2) (20.1)
4
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SEGMENT UNDERWRITING PROFITABILTIY - GAAP BASIS
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2006 and 2005
(Data Unaudited)
THREE MONTHS ENDED DEC 31 YEAR
-------------------------- --------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
SEGMENT RESULTS
- ---------------
Commercial Lines
- ----------------
Losses 44.8% 45.9% 53.3% 55.6%
Loss adjustment expenses 15.0% 8.5% 12.9% 13.0%
Underwriting expenses 30.1% 33.0% 31.8% 33.3%
------- ------- ------- -------
Combined Ratio 89.9% 87.4% 98.0% 101.9%
Specialty Lines
- ----------------
Losses 10.5% 34.0% 30.8% 42.0%
Loss adjustment expenses 3.9% 14.4% 7.1% 9.4%
Underwriting expenses 36.9% 45.7% 38.6% 43.9%
------- ------- ------- -------
Combined Ratio 51.3% 94.1% 76.5% 95.3%
Personal Lines
- --------------
Losses 57.3% 48.0% 55.8% 48.1%
Loss adjustment expenses 8.5% 5.4% 8.9% 7.1%
Underwriting expenses 27.8% 28.2% 27.1% 25.6%
------- ------- ------- -------
Combined Ratio 93.6% 81.6% 91.8% 80.8%
5