-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QzKC0b2jKdKhUV/srd0+Qveszi9oPS6xZEM67vbGy8hsoznbhInVXOJPPoVLgPn8 KEj9wtpg/qVYU+O/jj6WuQ== 0000073952-07-000012.txt : 20070430 0000073952-07-000012.hdr.sgml : 20070430 20070430160818 ACCESSION NUMBER: 0000073952-07-000012 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070331 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070430 DATE AS OF CHANGE: 20070430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO CASUALTY CORP CENTRAL INDEX KEY: 0000073952 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 310783294 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05544 FILM NUMBER: 07800518 BUSINESS ADDRESS: STREET 1: 9450 SEWARD ROAD CITY: FAIRFIELD STATE: OH ZIP: 45014 BUSINESS PHONE: 5136032400 MAIL ADDRESS: STREET 1: 9450 SEWARD ROAD CITY: FAIRFIELD STATE: OH ZIP: 45014 8-K 1 f8k4-30.txt FORM 8-K, ITEMS 2.02 AND 9.01 ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 30, 2007 -------------- OHIO CASUALTY CORPORATION (Exact name of registrant as specified in its charter) OHIO 0-5544 31-0783294 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 9450 Seward Road, Fairfield, Ohio 45014 (Address of principal executive offices) (Zip Code) (513) 603-2400 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Page 1 of 3 ============================================================================== ITEM 2.02. Results of Operations and Financial Condition - ---------- (a) On April 30, 2007, Ohio Casualty Corporation (the "Corporation") issued a press release announcing its earnings for the first quarter ended March 31, 2007. The Corporation also issued on April 30, 2007 certain Supplemental Financial Information with respect to its earnings for the first quarter ended March 31, 2007. The press release and the Supplemental Financial Information were posted on the Corporation's website at http://www.ocas.com and are attached hereto as Exhibits 99.1 ------------------- and 99.2, respectively, and hereby incorporated by reference. ITEM 9.01. Financial Statements and Exhibits - ---------- (c) Exhibits Exhibit No. Description ----------- ----------- 99.1 Press release dated April 30, 2007 issued by Ohio Casualty Corporation and posted on the Corporation's website at http://www.ocas.com. ------------------- 99.2 Financial Information issued by Ohio Casualty Corporation on April 30, 2007 and posted on the Corporation's website at http://www.ocas.com. ------------------- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OHIO CASUALTY CORPORATION ------------------------- (Registrant) April 30, 2007 /s/Debra K. Crane -------------------------------------- Debra K. Crane, Senior Vice President, General Counsel and Secretary Page 2 of 3 Exhibit Index ------------- Current Report on Form 8-K Dated: April 30, 2007 Exhibit No. Description - ----------- ----------- 99.1 Press release dated April 30, 2007 issued by Ohio Casualty Corporation and posted on the Corporation's website at http://www.ocas.com. ------------------- 99.2 Financial Information issued by Ohio Casualty Corporation on April 30, 2007 and posted on the Corporation's website at http://www.ocas.com. ------------------- Page 3 of 3 EX-99 2 exh99-1.txt OHIO CASUALTY CORP 1Q FINANCIAL RESULTS Exhibit 99.1 Analyst contact: Dennis E. McDaniel Vice President, Investor Relations 513-603-2197 dennis.mcdaniel@ocas.com Media contact: Cindy L. Denney Assistant Vice President, Corporate Communications 513-603-2074 (ofc.), 513-703-7372 (cell) cindy.denney@ocas.com For Immediate Release OHIO CASUALTY CORPORATION REPORTS --------------------------------- FINANCIAL RESULTS FOR FIRST QUARTER ----------------------------------- FAIRFIELD, OHIO, April 30, 2007 --- Ohio Casualty Corporation (NASDAQ:OCAS) today announced the following results for its first quarter ended March 31, 2007, compared with the same period of the prior year: - Net income of $63.1 million, or $1.03 per diluted share, versus $51.9 million, or $0.80 per diluted share; - All Lines combined ratio (GAAP) of 89.2% versus 94.9%; and - Operating income (A) of $57.9 million ($0.94 per diluted share) versus $42.7 million ($0.66 per diluted share). President and Chief Executive Officer Dan Carmichael commented, "In 2007, we are off to another great start, with an All Lines combined ratio below 90%. Once again all three business segments are generating an underwriting profit. Our performance reflects substantial favorable development from prior accident years, as we continue to maintain our long-term commitment to underwriting discipline and expense management. We also re-confirmed our commitment to shareholders by raising our quarterly dividend 44% and continued our share repurchase program, while growing book value per share." "Still, competition continues to pressure our premium volume as new business premiums written declined. We have commenced implementation of our agency management and product development initiatives as outlined in our Strategic Plan. We will be sharing more details of these initiatives, as well as the agent centric services initiatives, as the year progresses and results develop." The major components of net income are summarized in the table below:
Three months Summary Income Statement ended March 31, ($ in millions, except share data) 2007 2006 - ---------------------------------- ---- ---- Premiums and finance charges earned $349.6 $357.7 Investment income less expenses 51.7 50.9 Investment gains realized, net 8.0 14.2 ------ ------ Total revenues 409.3 422.8 Losses and benefits for policyholders 161.9 189.0 Loss adjustment expenses 38.6 36.7 Underwriting expenses 111.5 113.8 Corporate and other expenses 11.1 10.1 ------ ------ Total expenses 323.1 349.6 Income before income tax expense 86.2 73.2 Income tax expense: On investment gains realized 2.8 5.0 On all other income 20.3 16.3 ------ ------ Total income tax expense 23.1 21.3 Net income $ 63.1 $ 51.9 ====== ====== Average shares outstanding - diluted 61,343,139 64,836,502 Net income, per share - diluted $1.03 $0.80
Operating Results Premium Revenue --------------- ($ in millions) Three months ended March 31, 2007 2006 % Chg ---- ---- ----- Net Premiums Written Commercial Lines $209.4 $212.4 (1.4)% Specialty Lines 34.6 35.8 (3.4)% Personal Lines 101.3 105.9 (4.3)% ------ ------ All Lines $345.3 $354.1 (2.5)% ====== ======
All Lines net premiums written declined for the three month period ended March 31, 2007 when compared with the same period of the prior year, due primarily to a decline in new business premium production in the Commercial Lines segment and the commercial umbrella/other product line, a decline in premium rates for both Personal and Commercial Lines, lower Commercial Lines assumed premiums from mandatory workers' compensation and commercial auto pools as well as lower in-force policy counts in the Personal Lines segment and commercial umbrella/other product line. This decline was partially offset by continued growth in the fidelity and surety bond product line; improved retention rates in the Personal Lines segment and commercial umbrella/other product line and a substantially unchanged retention rate for Commercial Lines segment when compared to the same period of the prior year.
Combined Ratio -------------- Three months ended March 31, 2007 2006 ---- ---- Commercial Lines 94.4% 101.8% Specialty Lines 63.6% 75.2% Personal Lines 87.9% 89.2% ----- ------ All Lines 89.2% 94.9%
The improvement in the All Lines combined ratio for the first quarter is the result of a 5.8 point improvement in the loss and LAE ratio driven by a significant increase in favorable prior year reserve development partially offset by increased catastrophe losses and margin compression caused by increasing loss costs and declining prices. Catastrophe losses for the first quarter 2007 were $5.2 compared to $3.6 in the first quarter 2006. Favorable prior year loss and LAE reserve development was $37.7 million (10.8 points) and $12.9 million (3.6 points) in the first quarter 2007 and 2006, respectively. Reserve development was favorable for almost all product lines during the first quarter 2007 and is primarily attributable to actual severity being lower than expected, much of which is occurring in the casualty product lines, a result of our more disciplined underwriting and improved claims handling practices which commenced in the 2000-2001 timeframe. Other Highlights Book value per share increased $0.86 or 3.3% to $26.65 at March 31, 2007, compared to $25.79 at December 31, 2006. During the first quarter of 2007, the Corporation repurchased 578,604 shares of its common stock at an average cost of $29.63. As of March 31, 2007, the Corporation has $54.9 million of share repurchase authority remaining. On March 20, 2007, A.M. Best Company announced that it had upgraded the financial strength rating to A for the Ohio Casualty Group and its subsidiaries and upgraded the senior unsecured debt rating to bbb from bbb-. The rating outlook is stable. Supplemental financial information for the first quarter ended March 31, 2007, including certain financial measures, is available on Ohio Casualty Corporation's website at www.ocas.com and was also filed on Form 8-K with the SEC. A discussion of the differences between statutory accounting principles and U.S. generally accepted accounting principles is included in Item 15 of the Ohio Casualty Corporation's Annual Report on Form 10-K for the year ended December 31, 2006. Investors are advised to read the safe harbor statement at the end of this release. Conference Call Ohio Casualty Corporation will conduct a teleconference call, including a slide presentation, to discuss information included in this news release and related matters at 10:00 a.m. EDT on Tuesday, May 1, 2007. The call is being webcast by Vcall and can be accessed (as well as the related slides) directly through Ohio Casualty Corporation's website www.ocas.com and Vcall's Investor Calendar website www.investorcalendar.com. The webcast will be available for replay through August 2, 2007. To listen to call playback by telephone, dial 1-800-642-1687, then enter ID code 4846210. Call playback begins at 1 p.m. EDT on May 1, 2007 and extends through 11:59 p.m. on May 3, 2007. Quiet Period Ohio Casualty Corporation observes a quiet period and will not comment on financial results or expectations during quiet periods. The quiet period for the second quarter will start July 1, 2007 extending through the time of the earnings conference call, tentatively scheduled for July 31, 2007. Corporate Profile Ohio Casualty Corporation is the holding company of The Ohio Casualty Insurance Company, which is one of six property-casualty insurance companies that make up the Ohio Casualty Group, collectively referred to as Consolidated Corporation. The Ohio Casualty Insurance Company was founded in 1919 and is licensed in 49 states. Ohio Casualty Group is ranked 50th among U.S. property/casualty insurance groups based on net premiums written (Best's Review, July 2006). The Group's member companies write auto, home and business insurance. Ohio Casualty Corporation trades on the NASDAQ Stock Market under the symbol OCAS and had assets of approximately $5.7 billion as of March 31, 2007. Safe Harbor Statement 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 news release 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. 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; 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 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 Ohio Casualty Corporation's reports filed with the SEC or in subsequent press releases. (A) Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures Reconciliation of Net Income to Operating Income 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, both in dollar amounts and per share amounts, are reconciled to net income and net income per share in the table below:
Three months ended March 31, ($ in millions, except per share data) 2007 2006 - -------------------------------------- ---- ---- Operating income $57.9 $42.7 After-tax net realized gains 5.2 9.2 ----- ----- Net income $63.1 $51.9 ===== ===== Operating income per share - diluted $0.94 $0.66 After-tax net realized gains per share- diluted 0.09 0.14 ----- ----- Net income per share - diluted $1.03 $0.80 ===== =====
Reconciliation of Net Income Return on Equity to Operating Income Return on Equity Operating income return on equity is a ratio management calculates using non-GAAP financial measures. It is calculated by dividing the annualized consolidated operating income (see calculation below) for the most recent quarter by the adjusted average shareholders' equity for the quarter using a simple average of beginning and ending balances for the quarter, excluding from equity after-tax unrealized investment gains and losses. This ratio provides management with an additional measure to evaluate the results excluding the unrealized changes in the valuation of the investment portfolio that can fluctuate between periods. The following table reconciles operating income return on equity to net income return on equity, the most directly comparable GAAP measure:
Three months ended March 31, ($ in millions) 2007 2006 - --------------- ---- ---- Net income $ 63.1 $ 51.9 Average shareholders' equity 1,576.3 1,434.1 Return on equity based on annualized net income 16.0% 14.5% ===== ===== Operating income $ 57.9 $ 42.7 Adjusted average shareholders' equity 1,385.4 1,246.7 Return on equity based on annualized operating income 16.7% 13.7% ===== ===== Average shareholders' equity $1,576.3 $1,434.1 Average unrealized gains 190.9 187.4 -------- -------- Adjusted average shareholders' equity $1,385.4 $1,246.7 ======== ========
EX-99 3 exh99-2.txt 1Q SUPPLEMENTAL FINANCIAL INFORMATION 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)
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