Ohio Casualty Corp.

9450 Seward Road

Fairfield, Ohio 45014
(513) 603-2400
www.ocas.com

Sales

$1.7 billion

Business Description

Ohio Casualty Corporation (the Corporation) was incorporated in Ohio in 1969.
With its predecessors, the Corporation has been engaged in the property and
casualty insurance business since 1919. The Corporation has six direct and
indirect subsidiaries which are collectively known as the Ohio Casualty Group
(the Group). The Group writes both commercial and personal lines business
and is actively writing business in over 40 states. The Group consists of:

- The Ohio Casualty Insurance Company (the Company);
- West American Insurance Company (West American);
- Ohio Security Insurance Company (Ohio Security);
- American Fire and Casualty Company (American Fire);
- Avomark Insurance Company (Avomark); and
- Ohio Casualty of New Jersey, Inc. (OCNJ).

Segment Description

Commercial Lines Segment
The Group's Commercial Lines segment, which accounted for 55.0% of net
premiums written in 2003, includes primarily:

- commercial multi-peril insurance (CMP), which insures a business against
risks from property, liability, crime and boiler and machinery explosion
losses;
- commercial automobile insurance, which insures policyholders against
third party liability related to the ownership and operation of motor
vehicles used in the course of business and property damage to insured
vehicles. These policies may provide uninsured motorist coverage, which
provides coverage to insureds and their employees for bodily injury and
property damage caused by an uninsured party;
- workers' compensation insurance, which provides coverage to employers for
their obligations to provide workers' compensation benefits as required
by applicable statutes, including medical payments, rehabilitation costs,
lost wages, and disability and death benefits. These policies also
provide coverage to employees for their liability exposures under the
common law; and
- general liability insurance, which insures policyholders against third
party liability for bodily injury and property damage, including
liability for products sold and covers the cost of the defense of claims
alleging such damages.

Specialty Lines Segment
The Group's Specialty Lines segment, which accounted for 11.4% of net
premiums written in 2003 includes primarily:

- commercial umbrella insurance, which indemnifies policyholders for
liability and defense costs which exceed coverage provided by the
underlying primary policies, typically commercial automobile and general
liability policies, and provides coverage for some items not covered by
underlying policies; and
- fidelity and surety, which insure against dishonest acts of bonded
employees and the non-performance of parties under contracts,
respectively.

Personal Lines Segment

The Group's Personal Lines segment, which accounted for the remaining 33.6%
of net premiums written in 2003, includes primarily personal automobile and
homeowners' insurance sold to individuals.

The following table shows the Group's total property and casualty net
premiums written by operating segments and selected product lines for the
periods indicated. Net premiums written include gross premiums less premiums
ceded pursuant to reinsurance programs.

Marketing and Distribution

The Group is represented by approximately 3,000 independent insurance
agencies with over 5,100 agents. These agents also represent other
unaffiliated companies which may compete with the Group. The six claim and
seven underwriting and service offices operated by the Group assist these
independent agents in producing and servicing the Group's business.

Certain agencies that meet established profitability and production targets
are eligible for "key agent" status. At December 31, 2003, these agencies
represented 16.2% of the Group's total agency force and wrote 38.3% of its
book of business. The policies placed by key agents have consistently
produced a lower statutory loss ratio for the Group than policies placed by
other agents.

The Group targets small business customers for its Commercial Lines segment.
The Group's typical Commercial Lines customer is a small business with
minimal number of employees and a need to conveniently purchase a package of
coverages. For the year 2003, this Commercial Lines customer group,
categorized by commercial liability premium volume, included approximately
75% contractors/artisans, 10% mercantile, 9% building/premises, and 6%
manufacturers. The Group believes this small business customer group offers
an opportunity to achieve superior underwriting results through development
and maintenance of strong agent and customer relationships and application of
the Group's underwriting and pricing expertise.

The Group markets its Specialty Lines segment predominately to policyholders
who have purchased commercial automobile and general liability policies and
have a need for additional coverage under umbrella policies to cover costs
which might exceed the underlying policies limits or are not covered under
such policies.

The Group markets personal automobile insurance primarily to standard and
preferred risk drivers. Standard and preferred risk drivers are those who
have met certain criteria, including a driving record which reflects a low
historical incidence of at-fault accidents and moving violations of traffic
laws. The Group does not target "non-standard" risk drivers who fall outside
these criteria.
 

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