Exhibit 99.2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE PERIODS ENDING
MARCH 31, 2007
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; 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
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)
FIRST QUARTER, 2007
(Data Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------- ------------------------
CONSOLIDATED 2007 2006
- ---------------------------------------- ------------------- ------------------------
Premiums and finance charges earned $ 349,643 $ 357,661
Investment income less expenses 51,676 50,936
Investment gains realized, net 8,004 14,199
----------- -----------
Total revenues 409,323 422,796
Losses 161,946 189,008
Loss adjustment expenses 38,567 36,683
Underwriting expenses 111,500 113,812
Corporate and other expenses 11,154 10,130
----------- -----------
Total expenses 323,167 349,633
Income before income taxes 86,156 73,163
Income tax expense:
On investment gains realized 2,801 4,970
On all other income 20,303 16,296
----------- -----------
Total income tax expense 23,104 21,266
Net income $ 63,052 $ 51,897
============ ============
Average shares outstanding - diluted 61,343 64,837
Net income, per share - diluted $ 1.03 $ 0.80
Net income - return on equity 16.0% 14.5%
Operating income* $ 57,849 $ 42,668
Operating income - earnings per share* $ 0.94 $ 0.66
Operating income - return on equity* 16.7% 13.7%
Effective tax rate on investment income 25.5% 26.8%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory GAAP Statutory
- --------------------------------------- -------- --------- -------- ---------
Losses 46.3% 46.3% 52.8% 52.8%
Loss adjustment expenses 11.0% 11.0% 10.3% 10.3%
Underwriting expenses 31.9% 33.5% 31.8% 31.4%
-------- ------- -------- -------
Combined ratio 89.2% 90.8% 94.9% 94.5%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 4,501 $ 3,700
Investment losses realized, net (872) (120)
Agent relationships asset expenses 3,534 2,870
Corporate expenses 7,620 7,260
CONSOLIDATED YEAR 2006
- ---------------------------------------- -----------------------
Premiums and finance charges earned $ 1,423,982
Investment income less expenses 208,685
Investment gains realized, net 43,622
-----------
Total revenues 1,676,289
Losses 736,488
Loss adjustment expenses 156,963
Underwriting expenses 441,430
Corporate and other expenses 40,602
-----------
Total expenses 1,375,483
Income before income taxes 300,806
Income tax expense:
On investment gains realized 15,268
On all other income 67,228
-----------
Total income tax expense 82,496
Net income $ 218,310
============
Average shares outstanding - diluted 63,393
Net income, per share - diluted $ 3.44
Net income - return on equity 14.6%
Operating income* $ 189,956
Operating income - earnings per share* $ 3.00
Operating income - return on equity* 14.7%
Effective tax rate on investment income 25.7%
KEY PROPERTY AND CASUALTY RATIOS GAAP Statutory
- --------------------------------------- -------- ---------
Losses 51.7% 51.7%
Loss adjustment expenses 11.0% 11.0%
Underwriting expenses 31.0% 31.8%
-------- -------
Combined ratio 93.7% 94.5%
CORPORATE/OTHER
- ---------------------------------------
Net investment income $ 16,328
Investment losses realized, net (167)
Agent relationships asset expenses 12,807
Corporate expenses 27,795
*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
April 30, 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)
FIRST QUARTER, 2007
(Data Unaudited)
THREE MONTHS ENDED MARCH 31,
------------------------------------------------
2007 2006
OPERATING SEGMENTS and ----------------------- -----------------------
SELECTED PRODUCT LINES Net Premiums Combined Net Premiums Combined
GAAP BASIS: Earned Ratio Earned Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 205,361 94.4% $ 204,640 101.8%
Workers' compensation 33,047 135.4% 33,992 141.3%
Commercial auto 56,064 98.4% 56,870 85.1%
General liability 24,833 77.8% 23,575 124.9%
CMP, fire and inland marine 91,417 81.9% 90,203 91.4%
Specialty Lines 36,695 63.6% 37,263 75.2%
Commercial umbrella/other 22,615 61.0% 24,193 76.8%
Fidelity and surety 14,080 67.6% 13,070 71.7%
Personal Lines 107,587 87.9% 115,758 89.2%
Personal auto incl. personal umbrella 63,287 93.1% 68,083 98.2%
Personal property 44,300 80.7% 47,675 76.3%
------------ ------ ------------ ------
Total All Lines $ 349,643 89.2% $ 357,661 94.9%
Net Premiums Combined Net Premiums Combined
STATUTORY BASIS: Written Ratio Written Ratio
- -------------------------- ------------ -------- ------------ --------
Commercial Lines $ 209,397 95.5% $ 212,362 101.3%
Workers' compensation 31,807 136.7% 35,801 140.1%
Commercial auto 62,111 99.6% 59,037 84.9%
General liability 24,989 78.0% 24,914 123.7%
CMP, fire and inland marine 90,490 83.0% 92,610 91.3%
Specialty Lines 34,592 66.7% 35,784 75.5%
Commercial umbrella/other 20,081 65.1% 22,047 77.2%
Fidelity and surety 14,511 66.4% 13,737 68.8%
Personal Lines 101,288 89.8% 105,922 88.3%
Personal auto incl. personal umbrella 64,364 94.3% 66,857 94.4%
Personal property 36,924 83.9% 39,065 80.0%
------------ ------ ------------ ------
Total All Lines $ 345,277 90.8% $ 354,068 94.5%
YEAR 2006
OPERATING SEGMENTS and ----------------------
SELECTED PRODUCT LINES Net Premiums Combined
GAAP BASIS: Earned Ratio
- -------------------------- ------------ --------
Commercial Lines $ 827,868 98.0%
Workers' compensation 137,247 126.6%
Commercial auto 226,113 89.2%
General liability 99,130 103.2%
CMP, fire and inland marine 365,378 90.6%
Specialty Lines 147,396 76.5%
Commercial umbrella/other 92,957 78.8%
Fidelity and surety 54,439 72.8%
Personal Lines 448,718 91.8%
Personal auto incl. personal umbrella 263,425 97.4%
Personal property 185,293 83.8%
------------ ------
Total All Lines $ 1,423,982 93.7%
Net Premiums Combined
STATUTORY BASIS: Written Ratio
- -------------------------- ------------ --------
Commercial Lines $ 829,707 98.7%
Workers' compensation 137,490 127.0%
Commercial auto 223,422 89.5%
General liability 101,079 103.8%
CMP, fire and inland marine 367,716 92.1%
Specialty Lines 145,269 78.2%
Commercial umbrella/other 85,583 80.9%
Fidelity and surety 59,686 70.4%
Personal Lines 437,181 92.4%
Personal auto incl. personal umbrella 259,582 98.0%
Personal property 177,599 84.6%
------------ ------
Total All Lines $ 1,412,157 94.5%
2
OHIO CASUALTY CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA AND RELATED
INFORMATION (in thousands, except share and per share data)
FIRST QUARTER, 2007
(2007 Data Unaudited)
March 31, December 31,
2007 2006
Assets --------- ------------
Investments:
U.S. government fixed maturities $ 25,086 $ 25,004
Tax exempt fixed maturities 1,418,756 1,408,275
Taxable fixed maturities:
Available-for-sale, at fair value 2,107,024 2,078,977
Held-to-maturity, at amortized cost 229,983 235,831
------------ ------------
Total fixed maturities 3,780,849 3,748,087
Equity securities, at fair value 468,332 458,517
------------ ------------
Total investments 4,249,181 4,206,604
Cash and cash equivalents 51,646 45,549
Premiums and other receivables, net of
allowance for bad debts of $1,500 310,682 316,041
Deferred policy acquisition costs 151,716 150,211
Property and equipment, net of
accumulated depreciation of $185,823
and $183,041, respectively 83,427 80,531
Reinsurance recoverable, net of
allowance $3,690 629,133 633,842
Agent relationships, net of accumulated
amortization of $48,777 and $48,422,
respectively 93,385 96,919
Interest and dividends due or accrued 45,468 51,181
Deferred tax asset 4,248 -
Other assets 88,619 117,684
------------ ------------
Total assets $ 5,707,505 $ 5,698,562
============ ============
Shares outstanding 59,907,567 60,322,692
Book value per share $26.65 $25.79
Unrealized gain component of
book value per share* $3.09 $3.12
March 31, December 31,
2007 2006
Liabilities --------- ------------
Insurance reserves:
Losses $ 2,390,526 $ 2,390,457
Loss adjustment expenses 521,649 521,879
Unearned premiums 656,450 662,974
Debt 199,480 199,570
Reinsurance treaty funds held 109,445 117,564
Deferred tax liability - 7,246
Other liabilities 233,167 243,072
------------ ------------
Total liabilities 4,110,717 4,142,762
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 28,514 25,428
Accumulated other comprehensive income 190,740 194,121
Retained earnings 1,614,737 1,559,474
Treasury stock, at cost:
(Shares: 12,510,777; 12,095,652) (246,255) (232,275)
------------ ------------
Total shareholders' equity 1,596,788 1,555,800
------------ ------------
Total liabilities and
shareholders' equity $ 5,707,505 $ 5,698,562
============ ============
Statutory Insurance Reserves
Losses $ 1,847,747 $ 1,849,179
Loss adjustment expense 473,412 473,753
Unearned premiums 629,388 633,755
Other Statutory Data
Statutory policyholders' suplus 1,092,848 1,082,718
Ratio of net premiums written to surplus 1.3 to 1.0 1.3 to 1.0
*The unrealized gain component of book value per share excludes $7.3 million
and $7.8 million at March 31, 2007 and December 31, 2006, 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)
FIRST QUARTER, 2007
(Data Unaudited)
THREE MONTHS ENDED MARCH 31, YEAR
2007 2006 2006
---------- ---------- ----------
Gross Premiums Written
- ----------------------
Commercial Lines $ 215,221 $ 218,051 $ 852,109
Specialty Lines 45,645 47,495 194,934
Personal Lines 102,589 107,195 443,181
---------- ---------- ----------
Total 363,455 372,741 1,490,224
New Business Gross Premiums Written
- -----------------------------------
Commercial Lines $ 36,873 $ 43,482 $ 157,210
Commercial umbrella/other 6,117 7,409 28,891
Personal Lines 9,458 8,948 39,929
Policy Retention Ratio
- ----------------------
Commercial Lines 78.5% 78.6% 78.6%
Commercial umbrella/other 72.5% 71.1% 73.1%
Personal Lines 84.9% 84.0% 84.4%
Average Renewal Price Change
- ----------------------------
Commercial Lines -0.5% -0.1% -0.3%
Commercial umbrella/other 2.1% 1.5% 1.4%
Catastrophe Loss Ratio
- ----------------------
Commercial Lines 1.1% 0.9% 1.6%
Specialty Lines 0.0% 0.0% 0.0%
Personal Lines 2.8% 1.5% 4.3%
Total All Lines 1.5% 1.0% 2.3%
Prior Accident Year Loss & LAE by Segment (GAAP Basis)
- ------------------------------------------------------
(Favorable)/Unfavorable
Commercial Lines $ (16.3) $ 0.5 $ (7.4)
Specialty Lines (12.5) (9.8) (31.8)
Personal Lines (8.9) (3.6) (13.0)
---------- ---------- ----------
Total All Lines Accident Year Dev (37.7) (12.9) (52.2)
Prior Accident Year Loss & LAE (GAAP Basis)
- -------------------------------------------
(Favorable)/Unfavorable
Accident Year 2006 $ (5.2) $ - $ -
Accident Year 2005 (12.1) (2.8) (21.2)
Accident Year 2004 and Prior (20.4) (10.1) (31.0)
---------- ---------- ----------
Total Accident Year Development (37.7) (12.9) (52.2)
4