Liberty Mutual Makes $2.7 Billion Offer For Ohio Casualty

Ohio Casualty Corp., based In Fairfield, Ohio, is the holding company of The Ohio Casualty Insurance Company and five other property and casualty insurance companies, which are referred to under the marketing brand Ohio Casualty Group.

Ohio Casualty Group sells personal, commercial and bond insurance products through independent agents and brokers. The company ranks 50th among property and casualty insurers based upon net premiums written.

Liberty Mutual said it intends to fund the purchase with cash on hand and short-term debt, and the transaction is not subject to any financing contingencies.

The proposed deal, which has been approved by the boards of both companies, is subject to approval by Ohio Casualty shareholders and customary regulatory approvals and conditions, and is expected to close in the third quarter of 2007.

The companies said that following the acquisition, Ohio Casualty will be part of Liberty Mutual Group's Agency Markets business unit.

The eleven companies in Liberty Mutual Agency Markets have more than 6,800 employees and approximately 6,500 appointed agencies. In 2006, Liberty Mutual Agency Markets' net written premium was $5.9 billion.

Ohio Casualty, which has approximately 2,100 employees and operations in 48 states, has approximately 3,400 appointed agencies. In 2006, Ohio Casualty's net written premium was $1.4 billion.

Mr. Kelly said the acquisition will give Liberty Mutual combined net written premium exceeding $7.3 billion, make its regional-company independent agency business significantly stronger and strengthen its agency relationships.

He said Ohio Casualty President and CEO Dan Carmichael had made Ohio Casualty "a premier regional property and casualty company" that is "a great fit with our Agency Markets business."

Mr. Carmichael said Ohio Casualty looks forward to being "an important component of Liberty Mutual Agency Markets' continuing success."

He said he believed the transaction will benefit "our key constituents and enable our shareholders to realize significant value for their investment in Ohio Casualty."

Gary Gregg, president of Liberty Mutual Agency Markets, said he would be working with Mr. Carmichael and Ohio Casualty's leadership, "who will play a key role in the joint integration team tasked with combining the best of both organizations to create a stronger Liberty Mutual Agency Markets."

He said because of securities regulatory restrictions he could not comment on what Mr. Carmichael's eventual role might be or that of any other individuals with Ohio Casualty.

From public sources Mr. Gregg said Liberty Mutual determined "the overlap among the two agency forces is not significant."

Mr. Gregg said the combined organization intends to "maintain a significant presence in the Cincinnati area and will continue to support local charities in the communities in which we do business."

Liberty Mutual Group is the sixth largest property and casualty insurer in the United States based on 2005 direct written premium. As of December 31, 2006, Liberty Mutual Group had $85.5 billion in consolidated assets.

Mr. Gregg said the transaction is subject to securing regulatory approvals and the companies expect there will be a closing "sometime this summer."

He said Liberty Mutual approached Ohio Casualty with a purchase offer during the first quarter with "a meeting in the Midwest" and a series of continuing discussions.

Liberty Mutual offers insurance products and services, including personal automobile, homeowners, commercial multiple peril, commercial automobile, general liability, workers' compensation, global specialty, group disability, assumed reinsurance, fire and surety.

Liberty Mutual Group employs over 39,000 people in more than 900 offices throughout the world.

Both Liberty Mutual and Ohio Casualty are "members and supporters" of the Trusted Choice independent agent marketing effort, Mr. Gregg said.