EX-99 5 exh99-3.txt EXH 99-3 OHIO CASUALTY CORP SUPPLEMENTAL FINANCIAL INFORMATION Exhbit 99.3 OHIO CASUALTY CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2003 Contents: Page 1 GAAP Income Statement Data Page 2 Statutory P&C Data Page 3 P&C Accident Year Data Page 4 Additional P&C Accident Year Data Page 5 Consolidated Balance Sheet Data and Related Information Page 6 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 that are not historical information, are forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. The operations, performance and development of the 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. The risks and uncertainties that may affect the operations, performance, development and results of the Corporation's business include the following: changes in property and casualty reserves; catastrophe losses; premium and investment growth; product pricing environment; availability of credit; changes in government regulation; performance of financial markets; fluctuations in interest rates; availability 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, or to update them to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events. Investors are also advised to consult any further disclosures made on related subjects in the Company's reports filed with the Securities and Exchange Commission or in subsequent releases. OHIO CASUALTY CORPORATION SUMMARY INCOME STATEMENT - GAAP BASIS (in thousands, except per share data) FOURTH QUARTER, 2003 (2003 Data Unaudited)
Three Months Ended Dec 31 ------------------------------------------------ CONSOLIDATED 2003 2002 ---------------------------------------- ---------------------- ------------------------ Premiums and finance charges earned $ 363,457 $ 367,793 Investment income less expenses 53,170 53,764 Investment gains realized, net 3,861 18,409 ----------- ----------- Total revenues 420,488 439,966 Losses 209,935 216,751 Loss adjustment expenses 46,650 48,459 Underwriting expenses 122,629 122,997 Corporate and other expenses 6,596 12,502 ----------- ----------- Total expenses 385,810 400,709 Income tax (benefit) expense: On investment gains realized 1,351 6,443 On all other income (loss) 5,559 3,707 ----------- ----------- Total income tax (benefit) expense 6,910 10,150 Net income (loss) $ 27,768 $ 29,107 ============ ============ Average shares outstanding - diluted 61,736 61,125 Net income (loss), per share - diluted $ 0.45 $ 0.48 Ratio to Ratio to Premiums Premiums PROPERTY AND CASUALTY Earned Earned --------------------------------------- -------- -------- Premiums and finance charges earned $ 363,457 $ 367,793 Investment income less expenses 52,390 53,217 Investment gains realized, net 4,632 18,410 Losses 209,935 57.8% 216,751 58.9% Loss adjustment expenses 46,650 12.8% 48,459 13.2% Underwriting expenses 122,629 33.7% 122,997 33.4% ----------- ------- ----------- ------- Total expenses 379,214 104.3% 388,207 105.5% Effective tax rate on investment income 33.1% 35.7% CORPORATE/OTHER --------------------------------------- Investment income less expense $ 780 $ 547 Investment gains (losses) realized, net (771) (1) Agent relationships asset expenses 3,278 9,920 Corporate expenses 3,318 2,582
Year ------------------------------------------------ CONSOLIDATED 2003 2002 ---------------------------------------- ----------------------- ----------------------- Premiums and finance charges earned $ 1,424,353 $ 1,450,467 Investment income less expenses 208,723 207,133 Investment gains realized, net 35,872 45,192 ----------- ----------- Total revenues 1,668,948 1,702,792 Losses 852,474 902,731 Loss adjustment expenses 174,896 227,081 Underwriting expenses 503,194 489,465 Corporate and other expenses 30,809 90,221 ----------- ----------- Total expenses 1,561,373 1,709,498 Income tax (benefit) expense: On investment gains realized 12,555 15,817 On all other income (loss) 19,176 (21,632) ----------- ----------- Total income tax (benefit) expense 31,731 (5,815) Net income (loss) $ 75,844 $ (891) ============ ============ Average shares outstanding - diluted 61,327 61,284 Net income (loss), per share - diluted $ 1.24 $ (0.01) Ratio to Ratio to Premiums Premiums PROPERTY AND CASUALTY Earned Earned --------------------------------------- -------- -------- Premiums and finance charges earned $ 1,424,353 $ 1,450,467 Investment income less expenses 204,874 205,794 Investment gains realized, net 35,026 45,371 Losses 852,474 59.8% 902,731 62.2% Loss adjustment expenses 174,896 12.3% 227,081 15.7% Underwriting expenses 503,194 35.3% 489,465 33.7% ----------- ------- ----------- ------- Total expenses 1,530,564 107.4% 1,619,277 111.6% Effective tax rate on investment income 33.7% 33.9% CORPORATE/OTHER ---------------------------------------- Investment income less expense $ 3,849 $ 1,339 Investment gains (losses) realized, net 846 (179) Agent relationships asset expenses 18,690 79,699 Corporate expenses 12,119 10,522
-1- OHIO CASUALTY CORPORATION PROPERTY AND CASUALTY INSURANCE DATA - STATUTORY BASIS (in thousands) FOURTH QUARTER, 2003 (2003 Data Unaudited)
THREE MONTHS ENDED DEC 31 ------------------------------------------------- 2003 2002 OPERATING SEGMENTS and ----------------------- ---------------------- SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined MARKETS Written Ratio Written Ratio -------------------------- ------------ -------- ------------ -------- Commercial Lines $ 180,663 119.0% $ 182,266 106.9% Workers' compensation 27,531 137.6% 31,984 130.2% Commercial auto 51,113 108.3% 48,231 111.8% General liability 18,582 128.2% 18,924 96.9% CMP, BOP, fire and inland marine 83,437 116.8% 83,127 95.6% Specialty Lines 40,311 60.9% 47,208 77.0% Commercial umbrella 29,745 56.4% 31,911 87.8% Fidelity and surety 10,566 74.2% 15,298 52.5% Personal Lines 120,144 97.0% 118,335 119.1% New Jersey personal auto (40) 5964.5% (708) 251.6% Other personal lines 120,184 95.0% 119,043 113.9% Other personal auto 71,692 103.0% 71,076 125.3% Homeowners 39,876 86.1% 39,689 97.4% ------------ ------ ------------ ------ Total All Lines $ 341,118 104.7% $ 347,809 107.5% ALL LINES RESULTS Ratio Ratio --------------------- ----- ----- Premiums written $ 341,118 $ 347,809 Premiums earned 363,335 367,764 Losses incurred 208,512 57.4% 216,695 58.9% Loss adjustment expenses 46,650 12.8% 48,459 13.2% Underwriting expenses 117,554 34.5% 123,198 35.4% ------ ------ Underwriting loss (9,381) 104.7% (20,588) 107.5% ====== ====== Investment income 52,133 53,217 Investment gains realized 4,174 25,736 Other income/expense - - Federal income tax expense (benefit) 11,543 1,136 ------------ ------------ Net income $ 35,383 $ 57,229 ============ ============ Included above: Dividends to policyholders 165 0.0% (3,009) -0.9% Paid loss & loss adjustment expense 244,589 260,665
YEAR -------------------------------------------------- 2003 2002 OPERATING SEGMENTS and ----------------------- ----------------------- SELECTED PRODUCT LINES or Net Premiums Combined Net Premiums Combined MARKETS Written Ratio Written Ratio -------------------------- ------------ -------- ------------ -------- Commercial Lines $ 792,587 112.3% $ 762,189 115.1% Workers' compensation 132,358 123.0% 143,911 129.2% Commercial auto 228,333 105.5% 213,364 110.2% General liability 83,448 122.6% 84,474 171.3% CMP, BOP, fire and inland marine 348,448 109.7% 320,440 95.8% Specialty Lines 164,851 77.2% 179,879 94.0% Commercial umbrella 120,943 80.5% 132,655 97.7% Fidelity and surety 43,908 68.1% 45,599 81.7% Personal Lines 484,112 105.6% 506,560 114.1% New Jersey personal auto (1,095) 648.1% 24,172 154.8% Other personal lines 485,207 104.0% 482,388 107.9% Other personal auto 293,820 105.2% 297,117 107.1% Homeowners 157,184 106.9% 153,678 110.3% ------------ ------ ------------ ------ Total All Lines $ 1,441,550 106.1% $ 1,448,628 112.8% ALL LINES RESULTS Ratio Ratio --------------------- ----- ----- Premiums written $ 1,441,550 $ 1,448,628 Premiums earned 1,424,349 1,450,377 Losses incurred 850,550 59.7% 902,201 62.2% Loss adjustment expenses 174,896 12.3% 227,081 15.7% Underwriting expenses 491,241 34.1% 506,204 34.9% ------ ------ Underwriting loss (92,338) 106.1% (185,109) 112.8% ====== ====== Investment income 204,874 205,794 Investment gains realized 31,870 53,011 Other income/expense - (7,707) Federal income tax expense (benefit) 25,289 (9,159) ------------ ------------ Net income $ 119,117 $ 75,148 ============ ============ Included above: Dividends to policyholders 796 0.1% (3,868) -0.3% Paid loss & loss adjustment expense 975,319 1,032,544
-2- OHIO CASUALTY CORPORATION PROPERTY AND CASUALTY ACCIDENT YEAR DATA FOURTH QUARTER, 2003 (Data Unaudited)
STATUTORY COMBINED RATIO ------------------------------------------------------- Accident Accident Accident Earned Prem Year 2003(A) Year 2002(A) Year 2002(A) OPERATING SEGMENTS and Twelve Months Twelve Months Measured Measured Measured SELECTED PRODUCT LINES Ended Ended as of as of as of or MARKETS Dec 31, 2003 Dec 31, 2003 Dec 2003 Dec 2002 Dec 2003 ---------------------- ------------ ------------ ------------ ------------ ------------ Commercial Lines $ 777,365 112.3% 107.1% 104.9% 101.3% Workers' compensation 134,730 123.0% 115.9% 123.0% 116.1% Commercial auto 221,085 105.5% 104.6% 101.7% 99.0% General liability 84,379 122.6% 114.4% 113.4% 108.8% CMP, BOP, fire and inland marine 337,171 109.7% 103.3% 96.1% 93.8% Specialty Lines 162,666 77.2% 90.3% 95.4% 89.4% Commercial umbrella 120,546 80.5% 93.3% 98.8% 94.5% Fidelity and surety 41,837 68.1% 81.1% 84.4% 74.2% Personal Lines 484,322 105.6% 102.7% 111.8% 111.2% New Jersey personal auto 1,231 648.1% 257.3% 136.5% 138.3% Other personal lines 483,091 104.0% 102.1% 107.9% 107.1% Other personal auto 295,157 105.2% 102.6% 108.0% 106.7% Homeowners 154,578 106.9% 105.8% 111.3% 111.4% ----------- ------- ------- ------- ------- Total All Lines $1,424,353 106.1% 103.7% 106.9% 104.2%
Note: (A) The loss and LAE ratio component of the accident year combined ratio measures losses and LAE arising from insured events that occurred in the respective accident year. The current accident year excludes losses and LAE for insured events that occurred in prior accident years. Accident year 2003 as of Dec 31, 2003 measures insured events for the twelve months of 2003. Accident year 2002 as of Dec 31, 2002 measures insured events for the twelve months of 2002 with related outstanding liabilities estimated as of Dec 31, 2002. Accident year 2002 as of Dec 31, 2003 measures insured events for the twelve months of 2002 with remaining related liabilities estimated as of Dec 31, 2003. Partial and complete accident periods may not be comparable due to seasonality, claim reporting and development patterns, claim settlement rates and other factors. -3- OHIO CASUALTY CORPORATION ADDITIONAL PROPERTY AND CASUALTY ACCIDENT YEAR AND CATASTROPHE DATA (in millions, except ratio data) FOURTH QUARTER, 2003 (Data Unaudited)
THREE MONTHS PRIOR ACCIDENT YEAR LOSS & LAE ENDED DEC 31 YEAR by SEGMENT 2003 2002 2003 2002 ------------------------------ ----------------------- ----------------------- Commercial Lines $ 26.9 $ 9.1 $ 41.0 $ 73.9 Specialty Lines (9.2) (7.5) (21.3) (2.2) Personal Lines 6.7 7.6 14.4 12.7 ------- ------- ------- ------- Total All Lines Accident Year Development 24.4 9.2 34.1 84.4
PRIOR ACCIDENT YEAR LOSS & LAE ------------------------------ Accident Year 2002 $ (5.5) $(39.0) Accident Year 2001 1.9 $ 5.6 8.0 $(15.8) Accident Year 2000 and Prior 28.0 3.6 65.1 100.2 ------- ------- ------- ------- Total Accident Year Development 24.4 9.2 34.1 84.4
CATASTROPHE LOSS RATIO ------------------------------ Commercial Lines 1.4% 0.6% 2.6% 0.5% Specialty Lines -0.1% -1.9% 0.0% -0.2% Personal Lines -0.1% 2.6% 4.8% 3.1% Homeowners -1.7% 6.8% 11.8% 8.7% Total All Lines 0.7% 1.0% 3.1% 1.4%
-4- OHIO CASUALTY CORPORATION CONSOLIDATED BALANCE SHEET DATA AND RELATED INFORMATION (in thousands, except share data) FOURTH QUARTER, 2003 (2003 Data Unaudited)
December 31, December 31, 2003 2002 ASSETS ------------- ------------- Investments: U.S. government fixed maturities $ 43,260 $ 29,082 Tax exempt fixed maturities 79,137 46,788 Taxable fixed maturities: Available for sale, at fair value 2,899,793 3,063,904 Held-to-maturity, at amortized cost 356,100 - ------------ ------------ Total fixed maturities 3,378,290 3,139,774 Equity securities, at fair value 329,049 312,537 Short-term investments, at fair value 40,448 49,839 ------------ ------------ Total investments 3,747,787 3,502,150 Cash 16,494 12,384 Premiums and other receivables, net of allowance for bad debts of $4,200 and $4,300, respectively 347,863 324,759 Deferred policy acquisition costs 169,351 181,276 Property and equipment, net of accumulated depreciation of $152,905 and $145,863, respectively 89,212 97,798 Reinsurance recoverable 592,688 419,870 Agent relationships, net of accumulated amortization of $39,093 and $34,100, respectively 142,634 161,323 Interest and dividends due or accrued 47,489 45,961 Deferred income taxes - 2,411 Other assets 15,393 31,062 ------------ ------------ Total assets $ 5,168,911 $ 4,778,994 ============ ============ Shares outstanding 60,957,043 60,725,368 Book value per share $18.80 $17.43 FAS 115 component of book value per shar $1.96 $1.76
December 31, December 31, 2003 2002 Liabilities ------------- ------------- Insurance reserves: Losses $ 2,163,720 $ 1,978,743 Loss adjustment expenses 464,134 454,907 Unearned premiums 703,015 668,707 Debt 198,042 198,288 Reinsurance treaty funds held 150,512 129,403 Deferred income taxes 12,763 - Other liabilities 330,891 290,243 ------------ ------------ Total liabilities 4,023,077 3,720,291 Shareholders' Equity Common stock, $.125 par value Authorized: 150,000,000 Issued shares: 72,418,344; 72,418,344 9,052 9,052 Common stock purchase warrants - 21,138 Accumulated other comprehensive income 254,654 246,160 Retained earnings 1,033,404 936,687 Treasury stock, at cost: (Shares: 11,461,301; 11,692,976) (151,276) (154,334) ------------ ------------ Total shareholders' equity 1,145,834 1,058,703 ------------ ------------ Total liabilities and shareholders' equity $ 5,168,911 $ 4,778,994 ============ ============
-5- OHIO CASUALTY CORPORATION SUPPLEMENTAL INFORMATION (in thousands, except employee count and ratio data) FOURTH QUARTER, 2003 (2003 Data Unaudited)
THREE MONTHS ENDED DEC 31 YEAR ------------------------- ---------------------- 2003 2002 2003 2002 ---------- ---------- ---------- ---------- Gross Premiums Written Commercial Lines $ 188,349 $ 189,249 $ 824,398 $ 796,579 Specialty Lines 67,366 58,265 271,884 235,236 Personal Lines 121,217 118,328 494,143 520,591 ---------- ---------- ---------- ---------- Total 376,932 365,842 1,590,425 1,552,406 New Business Gross Premiums Written Commercial Lines 43,373 47,942 187,905 186,165 Commercial Umbrella 16,991 19,354 72,027 78,858 Personal Lines 11,054 10,093 43,939 34,593 Average Renewal Price Increase Commercial Lines 7.7% 14.2% 11.4% 16.3% Commercial Umbrella 14.5% 29.3% 18.1% 37.6% Amortization of Deferred Acquisition Costs 92,470 96,792 383,976 376,223 Agent Relationships Asset Expenses Write-down 1,454 7,881 11,244 69,510 Amortization 1,824 2,039 7,446 10,189 ---------- ---------- ---------- ---------- Total 3,278 9,920 18,690 79,699
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DEC 31, 2003 DEC 31, 2002 ------------ ------------ Statutory Insurance Reserves: Unearned premiums $ 642,414 $ 625,310 Losses 1,690,454 1,647,343 Loss adjustment expense 438,396 431,380 Statutory policyholders' surplus 867,627 725,748 Ratio of net premiums written to statutory surplus 1.7 to 1.0 2.0 to 1.0 Employee Count 2,669 3,004
Note: For further information on differences between statutory accounting principles and generally accepted accounting principles (GAAP), refer to item 15 on pages 67 and 68 of the Corporation's Form 10-K for the year ended December 31, 2002. -6-