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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1999
REGISTRATION NO. 333-70761
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE
AMENDMENT NO. 3
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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OHIO CASUALTY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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OHIO 31-0783294
(State or Other Jurisdiction of Incorporation
or Organization) (I.R.S. Employer Identification Number)
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136 NORTH THIRD STREET
HAMILTON, OHIO 45025
(513) 867-3000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Office)
BARRY S. PORTER
CHIEF FINANCIAL OFFICER
OHIO CASUALTY CORPORATION
136 NORTH THIRD STREET
HAMILTON, OHIO 45025
(513) 867-3000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
Of Agent for Service)
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COPIES TO:
ROGER E. LAUTZENHISER, ESQ.
VORYS, SATER, SEYMOUR AND PEASE LLP
52 EAST GAY STREET, P.O. BOX 1008
COLUMBUS, OHIO 43216-1008
(614) 464-6291
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 1, 1999
PROSPECTUS
$300,000,000
DEBT SECURITIES
OHIO CASUALTY CORPORATION
136 North Third Street
Hamilton, Ohio 45025
(513) 867-3000
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OHIO CASUALTY CORPORATION MAY PERIODICALLY SELL IN ONE OR MORE OFFERINGS:
- its unsecured senior debt securities, consisting of debentures, notes
or other indebtedness, or
- its unsecured subordinated debt securities, consisting of debentures,
notes or other indebtedness.
This prospectus describes the securities that we may offer. We will provide the
specific terms of the securities that we may offer in supplements to this
prospectus. If we use an underwriter to sell the securities, we will describe
our arrangement with that underwriter in a prospectus supplement.
You should read this prospectus and the accompanying prospectus supplement
carefully before you invest.
The common shares of Ohio Casualty Corporation are traded on The Nasdaq National
Market under the symbol "OCAS".
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
YOU SHOULD READ CAREFULLY THE "RISK FACTORS" SECTION OF THIS PROSPECTUS
BEGINNING ON PAGE 3, WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH THESE
SECURITIES.
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, 1999.
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TABLE OF CONTENTS
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RISK FACTORS................................................ 3
If Ohio Casualty's subsidiaries are unable to pay
dividends to Ohio Casualty, then Ohio Casualty may be
unable to meet its financial obligations under the debt
securities............................................. 3
THE FOLLOWING FACTORS COULD ADVERSELY AFFECT THE
ABILITY OF OHIO CASUALTY'S INSURANCE SUBSIDIARIES TO
PAY DIVIDENDS TO OHIO CASUALTY:
Legal Restrictions on the Ability to Pay
Dividends..................................... 3
Unpredictable Events......................... 3
Inadequate Reinsurance....................... 4
Catastrophe Losses........................... 4
Governmental Regulation of the Insurance
Industry...................................... 4
Inadequate Loss Reserves..................... 5
Inadequate Loss Reserves for Environmental
and Asbestos Losses........................... 6
Intense Competition.......................... 6
Downgrade by a Rating Agency................. 7
Inability to Integrate Acquisition from Great
American Insurance Company.................... 7
If the year 2000 problem causes an interruption or
failure in the normal business operations of Ohio
Casualty and its subsidiaries, then Ohio Casualty may
be unable to meet its financial obligations under the
debt securities........................................ 7
OHIO CASUALTY CORPORATION AND THE OHIO CASUALTY GROUP....... 9
USE OF PROCEEDS............................................. 10
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES............. 10
DESCRIPTION OF THE DEBT SECURITIES.......................... 10
Senior Debt Indenture and Subordinated Debt
Indenture............................................. 10
Senior and Subordinated Debt Securities................ 11
Prospectus Supplements................................. 12
Global Debt Securities................................. 13
Covenants Applicable to the Debt Securities............ 15
Limitations on Liens.............................. 15
Consolidation, Merger and Sale of Assets.......... 16
Restrictions on Dispositions...................... 16
Events of Default...................................... 17
Discharge, Defeasance and Covenant Defeasance.......... 18
Modification of the Indentures......................... 19
Subordination under the Subordinated Debt Indenture.... 20
Governing Law.......................................... 20
The Indenture Trustee.................................. 21
PLAN OF DISTRIBUTION........................................ 21
Sale through Underwriters.............................. 21
Sale through Dealers................................... 21
Direct Sales and Sales through Agents.................. 21
Delayed Delivery Contracts............................. 21
Indemnification........................................ 22
Underwriting Discounts and Commissions, Listing of Debt
Securities and Transactions with Ohio Casualty......... 22
LEGAL MATTERS............................................... 22
EXPERTS..................................................... 22
MATTERS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITIES ACT
OF 1974................................................... 22
WHERE YOU CAN FIND MORE INFORMATION......................... 23
FORWARD LOOKING STATEMENTS.................................. 24
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RISK FACTORS
IF OHIO CASUALTY'S SUBSIDIARIES ARE UNABLE TO PAY DIVIDENDS TO OHIO CASUALTY,
THEN OHIO CASUALTY MAY BE UNABLE TO MEET ITS FINANCIAL OBLIGATIONS UNDER THE
DEBT SECURITIES.
Ohio Casualty engages in insurance and insurance premium finance through its
direct and indirect subsidiaries. Accordingly, Ohio Casualty relies on dividends
from those subsidiaries to meet its financial obligations, including its
financial obligation to pay principal, any premium and interest on the debt
securities. The inability of Ohio Casualty's subsidiaries to pay dividends to
Ohio Casualty could adversely affect Ohio Casualty's ability to meet its
obligations under the debt securities.
THE FOLLOWING FACTORS COULD ADVERSELY AFFECT THE ABILITY OF OHIO CASUALTY'S
INSURANCE SUBSIDIARIES TO PAY DIVIDENDS TO OHIO CASUALTY:
LEGAL RESTRICTIONS ON THE ABILITY TO PAY DIVIDENDS
The principal insurance subsidiaries of Ohio Casualty are domiciled in the
States of Ohio and Indiana. Ohio and Indiana laws governing the payment of
dividends by domestic insurance companies provide that an insurer domiciled in
either of these states must obtain the prior approval of the state's insurance
department for the declaration or payment of any dividend that, together with
other distributions made within the preceding twelve months, exceeds the greater
of 10% of the insurer's surplus or the insurer's net income for the twelve-month
period ending the preceding December 31st, in each case determined in accordance
with statutory accounting practices. In addition, Ohio and Indiana laws require
that any dividend paid from any source other than earned surplus must be
pre-approved by the state's insurance department. Earned surplus means an
insurer's adjusted unassigned funds as determined in accordance with statutory
accounting practice. These types of limitations could adversely affect the
ability of an insurance subsidiary to pay dividends to Ohio Casualty and the
resulting ability of Ohio Casualty to meet its financial obligations on the debt
securities.
Dividend payments to Ohio Casualty from its insurance subsidiaries are limited
to $112.1 million in 1999 without prior approval of the Ohio and Indiana
Insurance Departments.
UNPREDICTABLE EVENTS
The operating results and financial condition of Ohio Casualty's insurance
subsidiaries historically have been and will continue to be subject to
significant fluctuation and uncertainty. If an unpredictable event adversely
affects the operating results and financial condition of an insurance
subsidiary, then that subsidiary may be unable financially to pay dividends to
Ohio Casualty. In that event, Ohio Casualty could become unable to meet its
financial obligations under the debt securities.
Unpredictable events that can adversely affect the operating results and
financial condition of an insurance subsidiary include:
- catastrophes;
- changes in reserves resulting from general policyholder claims as
different types of claims arise and judicial interpretations relating
to the scope of liability for those claims develop;
- fluctuations in interest rates and other changes in the investment
environment, which affect the value of and returns on the subsidiary's
investment portfolio;
- inflationary pressures that affect the size of property and casualty
losses; and
- fluctuations in the demand for property and casualty insurance
products.
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INADEQUATE REINSURANCE
Ohio Casualty's insurance subsidiaries use reinsurance to help manage their
exposure to property and casualty risks. Reinsurance is a contract by which one
insurer, the reinsurer, agrees to cover a portion of the losses incurred by a
second insurer, in the event a claim is made under a policy issued by the second
insurer. If the reinsurance obtained by an Ohio Casualty insurance subsidiary
proves inadequate, then the operating results and financial condition of that
subsidiary will be adversely affected, as well as the resulting ability of that
subsidiary to pay dividends to Ohio Casualty. In that event, Ohio Casualty could
become unable to meet its financial obligations under the debt securities.
The availability and cost of reinsurance are subject to prevailing market
conditions which can affect the business volume and profitability of Ohio
Casualty's insurance subsidiaries. Although the reinsurer is liable to the
subsidiaries according to the terms of its reinsurance policy, the subsidiaries
remain primarily liable as the direct insurer on all risks reinsured. As a
result, reinsurance does not eliminate the obligation of the subsidiaries to pay
all claims and each subsidiary is subject to the risk that one or more of its
reinsurers will be unable to honor its obligations.
Ohio Casualty believes that the financial condition of its subsidiaries'
reinsurers is generally sound, based upon periodic reviews of the financial
statements and reputations of those reinsurers. Nevertheless, the reinsurers may
become financially unsound by the time that they are called upon to pay amounts
due, which may not occur for many years. In addition, reinsurance may prove
inadequate to protect against losses or may become unavailable in the future at
commercially reasonable rates.
CATASTROPHE LOSSES
Ohio Casualty's property and casualty insurance subsidiaries have experienced,
and can be expected in the future to experience, catastrophe losses. It is
possible that a catastrophic event could have a material adverse effect on the
operating results and financial condition of an insurance subsidiary, thereby
limiting the ability of that subsidiary to pay dividends to Ohio Casualty. In
that event, Ohio Casualty could become unable to meet its financial obligations
under the debt securities.
Various events can cause catastrophes, including hurricanes, windstorms,
earthquakes, hail, explosions, severe winter weather and fires. The incidence
and severity of these catastrophes are inherently unpredictable. For example, in
1997, Ohio Casualty's insurance subsidiaries incurred catastrophe losses that
were not covered by reinsurance of $21.4 million, as a result of 25
catastrophes. Similarly, in 1998, Ohio Casualty's insurance subsidiaries
incurred catastrophe losses that were not covered by reinsurance of $44.6
million, as a result of 37 catastrophes. Although catastrophes can cause losses
in a variety of property and casualty lines, most of the catastrophe-related
claims of Ohio Casualty's insurance subsidiaries have related to homeowner's and
commercial property coverages.
The insurance subsidiaries of Ohio Casualty generally seek to reduce their
exposure to catastrophe losses through underwriting and the purchase of
catastrophe reinsurance. Nevertheless, reinsurance may prove inadequate as
discussed above. Furthermore, a number of states from time to time have passed
legislation that has had the effect of limiting the ability of insurers to
manage risk, such as legislation prohibiting an insurer from withdrawing from
catastrophe-prone areas. Governmental regulation of this type is discussed
below.
GOVERNMENTAL REGULATION OF THE INSURANCE INDUSTRY
Ohio Casualty's insurance subsidiaries are subject to extensive regulation and
supervision in the jurisdictions in which they do business. Regulation is
generally designed to protect the interests of policyholders, as opposed to
stockholders or non-policyholder creditors. This type of regulation could
adversely impact the operations of the insurance subsidiaries, their financial
condition and their
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resulting ability to pay dividends to Ohio Casualty. As a result, Ohio Casualty
could become unable to meet its financial obligations on the debt securities.
An example of governmental regulation that has adversely impacted the operations
of Ohio Casualty's insurance subsidiaries is the adoption in several states of
legislation and other regulatory action intended to reduce the premiums paid for
automobile insurance by residents of those states. For example, in 1988 the
State of California adopted Proposition 103 which, as interpreted by the
California Supreme Court, required the rollback of automobile insurance premiums
for California policyholders in 1989 while allowing a "fair" return for
insurance companies. During the fourth quarter of 1994, the State of California
assessed the insurance subsidiaries of Ohio Casualty $59.9 million for
Proposition 103 liability. As a result of a challenge by those subsidiaries, a
California Administrative Judge issued a proposed ruling with a Proposition 103
liability of $24.4 million plus interest in 1998. As of March 31, 1999, the
insurance subsidiaries of Ohio Casualty maintained a contingent liability on
their books of $48.7 million for Proposition 103 liability while continuing to
contest their liability under Proposition 103.
Other forms of regulation that could adversely affect Ohio Casualty's insurance
subsidiaries include regulation of their statutory surplus and risk-based
capital requirements. Maintaining appropriate levels of statutory surplus, as
measured by statutory accounting practices and procedures, is considered
important by state insurance regulatory authorities and the private agencies
that rate insurers' claims-paying abilities and financial strength. The failure
of an insurance subsidiary to maintain levels of statutory surplus which are
sufficient for the amount of insurance written by it could result in increased
regulatory scrutiny, action by state regulatory authorities or a downgrade by
rating agencies. Similarly, the National Association of Insurance Commissioners
has adopted a system of assessing minimum capital adequacy, that is applicable
to Ohio Casualty's insurance subsidiaries. This system, known as risk-based
capital, is used to identify companies that merit further regulatory action by
analyzing the adequacy of the insurer's surplus in relation to statutory
requirements.
Because state and federal legislatures remain concerned about the availability
and affordability of property and casualty insurance, the insurance subsidiaries
of Ohio Casualty expect that they will continue to face efforts similar to those
set forth above to regulate their manner of operation. Any one of these efforts
could adversely affect the operating results and financial condition of the
insurance subsidiaries and their resulting ability to pay dividends to Ohio
Casualty.
INADEQUATE LOSS RESERVES
Ohio Casualty's insurance subsidiaries maintain property and casualty loss
reserves to cover their estimated ultimate liability for losses and loss
adjustment expenses with respect to reported and unreported claims incurred as
of the end of each accounting period. If the loss reserves of an insurance
subsidiary prove inadequate, then the insurance subsidiary's operating results
and financial condition will be adversely affected, as well as the resulting
ability of the insurance subsidiary to pay dividends to Ohio Casualty. In that
event, Ohio Casualty could become unable to meet its financial obligations under
the debt securities.
Reserves do not represent an exact calculation of liability. Instead, reserves
represent estimates, generally involving actuarial projections at a given time,
of what the subsidiaries expect the ultimate settlement and administration of
claims will cost. Estimates are based on assessments of known facts and
circumstances, estimates of future trends in claims severity and frequency,
judicial theories of liability and other factors. These variables are affected
by both internal and external events, such as changes in claims handling
procedures, economic inflation, judicial trends and legislative changes. Many of
these items are not directly quantifiable, particularly on a prospective basis.
Additionally, significant reporting lags may exist between the occurrence of an
insured event and the time it is actually reported. Ohio Casualty's insurance
subsidiaries continually refine their reserve
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estimates in a regular ongoing process as experience develops and further claims
are reported and settled.
The insurance subsidiaries of Ohio Casualty reflect adjustments to their
reserves in the results of the periods in which their estimates are changed.
These adjustments can result in an increase in liabilities as reflected on the
balance sheet. Because establishment of reserves is an inherently uncertain
process involving estimates of future losses, currently established reserves may
prove inadequate in light of subsequent actual experience.
INADEQUATE LOSS RESERVES FOR ENVIRONMENTAL AND ASBESTOS LOSSES
Ohio Casualty's insurance subsidiaries maintain loss reserves to cover their
estimated ultimate liability for environmental and asbestos losses. If these
loss reserves prove inadequate, then the insurance subsidiary's operating
results and financial condition will be adversely affected, as well as the
resulting ability of the insurance subsidiary to pay dividends to Ohio Casualty.
In that event, Ohio Casualty could become unable to meet its financial
obligations under the debt securities.
It is difficult to estimate the loss reserves for environmental and
asbestos-related claims due to the unpredictability of court decisions,
plaintiffs' expanded theories of liability, the risks inherent in major
litigation and other uncertainties. Conventional actuarial techniques are not
used to estimate these reserves.
The reserves carried for environmental and asbestos claims constitute the best
estimate by the insurance subsidiaries of Ohio Casualty of ultimate claims and
claim adjustment expenses based upon known facts and current law. However, the
conditions surrounding the final resolution of these claims continue to change.
Currently, the insurance subsidiaries of Ohio Casualty cannot predict changes in
the legal and legislative environment and their impact on the future development
of asbestos and environmental claims. Such development will be affected by
future court decisions and changes in legislation. Because of these future
unknowns, additional liabilities may arise for amounts in excess of current
reserves. These additional liabilities could result in liability exceeding
reserves by an amount that would be material to the operating results and
financial condition of Ohio Casualty's insurance subsidiaries.
INTENSE COMPETITION
The property and casualty insurance business is intensely competitive. Ohio
Casualty believes that the property and casualty insurance business will remain
intensely competitive with little prospect for periods of dramatically improved
pricing in the foreseeable future. Demand for low-cost, high quality insurance
products and services has created difficult conditions in the domestic property
and casualty market, as is evidenced by a leveling or reduction in premium rates
in the lines of business in which the insurance subsidiaries of Ohio Casualty
compete. The inability of an insurance subsidiary of Ohio Casualty to compete
successfully in the property and casualty business could adversely affect its
operating results and financial condition and its resulting ability to pay
dividends to Ohio Casualty. As a result, Ohio Casualty could become unable to
meet its financial obligations under the debt securities.
The insurance subsidiaries of Ohio Casualty compete with domestic and foreign
insurers, many of which have greater financial resources than the insurance
subsidiaries of Ohio Casualty. Competition involves many factors, including the
following:
- the perceived overall financial strength of the insurer;
- pricing and other terms and conditions of products;
- levels of customer service, including the speed with which the insurer
pays claims; and
- experience in the business.
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Ohio Casualty's insurance subsidiaries also compete with other companies that
use exclusive agents or salaried employees to sell their insurance products.
Because these companies generally do not pay commissions, they may be able to
obtain business at a lower cost than the insurance subsidiaries of Ohio
Casualty, which sell their products primarily through independent agents and
brokers who typically represent more than one insurance company.
DOWNGRADE BY A RATING AGENCY
Claims-paying and financial strength ratings have become an increasingly
important factor in establishing the competitive position of insurance
companies. Each of the rating agencies reviews its ratings periodically. A
significant downgrade in the ratings of an Ohio Casualty insurance subsidiary by
a recognized rating agency could result in a substantial loss of business for
that subsidiary as policyholders move to other companies with higher
claims-paying and financial strength ratings. Such a loss of business could have
a material adverse effect on the results of operations and financial condition
of that subsidiary and the resulting ability of that subsidiary to pay dividends
to Ohio Casualty. In that event, Ohio Casualty could become unable to meet its
financial obligations under the debt securities.
As of March 31, 1999, the insurance subsidiaries of Ohio Casualty had a combined
rating of A+ from each of A.M. Best Company and Standard & Poor's. Each of these
insurance subsidiaries had a combined rating of A2 as of the same date from
Moody's. These ratings are not in any way a measure of protection offered to
investors of the debt securities offered by this prospectus and potential
investors should not rely on these ratings with respect to making an investment
in the debt securities.
INABILITY TO INTEGRATE ACQUISITION FROM GREAT AMERICAN INSURANCE COMPANY
In December, 1998, Ohio Casualty acquired substantially all of the assets of the
commercial lines division of the Great American Insurance Company and its
affiliates. The acquisition was the largest single acquisition completed by Ohio
Casualty in its history. The acquisition requires the integration of the
acquired commercial lines business into the commercial lines operations of the
insurance subsidiaries of Ohio Casualty. The successful combination of the two
operations requires that the insurance subsidiaries:
- develop and maintain good business relationships with the independent
insurance agents who wrote the commercial lines insurance policies for
Great American;
- achieve substantial savings in the operating expenses for the combined
operations while maintaining a high level of customer service; and
- retain the customers of the acquired business.
The inability of the insurance subsidiaries of Ohio Casualty to successfully
integrate the acquired business operations could adversely affect their
financial condition and their resulting ability to pay dividends to Ohio
Casualty. In that event, Ohio Casualty could become unable to meet its financial
obligations under the debt securities.
IF THE YEAR 2000 PROBLEM CAUSES AN INTERRUPTION OR FAILURE IN THE NORMAL
BUSINESS OPERATIONS OF OHIO CASUALTY AND ITS SUBSIDIARIES, THEN OHIO CASUALTY
MAY BE UNABLE TO MEET ITS FINANCIAL OBLIGATIONS UNDER THE DEBT SECURITIES.
The year 2000 problem exists because many computer programs use only the last
two digits to refer to a year. Such computer programs do not distinguish a year
that begins with "20" from a year that begins with "19". If not corrected, these
computer programs could fail or create erroneous results.
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The year 2000 problem could adversely affect Ohio Casualty through:
- the failure of the information technology or non-information
technology systems of Ohio Casualty and its subsidiaries; or
- the failure of the information technology or non-information
technology systems of third-party providers of Ohio Casualty and its
subsidiaries including their agents, suppliers, vendors and customers.
The failure to correct a material year 2000 problem could result in a material
interruption in, or a failure of, the normal business operations of Ohio
Casualty and its subsidiaries, including a disruption or delay in premium or
claim processing or a disruption or delay in services to customers. This type of
interruption or failure could have a material adverse effect upon the financial
position, results of operations or liquidity of Ohio Casualty and its
subsidiaries, resulting in the potential inability of Ohio Casualty to meet its
financial obligations under the debt securities.
The year 2000 issue is also a concern from an underwriting standpoint regarding
the extent of liability for coverage under various general liability, property
and directors' and officers' liability products and policies issued by Ohio
Casualty's insurance subsidiaries. As of March 31, 1999, Ohio Casualty and its
insurance subsidiaries were managing this concern by directly providing
educational information on the year 2000 issue to policyholders and agents; by
adding clarification and exclusionary language to some insurance policies and by
adjusting underwriting practices. Nonetheless, the courts could find that
coverage exists for year 2000 related liability under some of the types of
policies written by Ohio Casualty's insurance subsidiaries.
In a worst-case scenario, Ohio Casualty and its subsidiaries could experience
disruption or delay in premium and claim processing, disruption in service to
customers, litigation of year 2000 related claims, adverse effects on its
ability to integrate the acquired business from Great American and loss of
electrical, water and other utility services which could result in a disruption
in services. Ohio Casualty and its subsidiaries cannot estimate the potential
liability and lost revenue that they could incur in these circumstances.
As of March 31, 1999, Ohio Casualty had spent approximately $2.4 million in its
efforts to address the year 2000 issue.
As set forth in the Year 2000 Information and Readiness Disclosure Act, the
statements contained in this section do not constitute year 2000 statements for
purposes of actions brought under the securities laws.
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OHIO CASUALTY CORPORATION AND THE OHIO CASUALTY GROUP
Ohio Casualty Corporation or "Ohio Casualty" is a holding company which engages
in the business of property and casualty insurance and insurance premium
financing through its subsidiaries. Ohio Casualty's insurance operations are
conducted by its insurance company subsidiaries which are collectively referred
to in this prospectus as the "Ohio Casualty Group". The principal executive
office of Ohio Casualty is located at 136 North Third Street, Hamilton, Ohio
45025 and its telephone number is (513) 867-3000.
The Ohio Casualty Group provides a wide range of commercial and personal
property and casualty insurance products to businesses, government units,
associations and individuals. The Ohio Casualty Group consists of four principal
insurance subsidiaries: The Ohio Casualty Insurance Company, West American
Insurance Company, Ohio Security Insurance Company and American Fire & Casualty
Company. The following table illustrates the corporate relationship of Ohio
Casualty and these four principal insurance company subsidiaries:
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OHIO CASUALTY CORPORATION
an Ohio corporation
Owned 100%
THE OHIO CASUALTY INSURANCE COMPANY
an Ohio corporation
Owned 100%, except as indicated
AMERICAN FIRE & CASUALTY COMPANY
an Ohio corporation
OHIO SECURITY INSURANCE COMPANY
an Ohio corporation
One shareholder owns .001% of the shares of Ohio Security
Insurance Company, with the remainder owned by The Ohio
Casualty Insurance Company
WEST AMERICAN INSURANCE COMPANY
an Indiana corporation
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The Ohio Casualty Group transacts business in over 40 states. The commercial
lines business of the Ohio Casualty Group, which accounted for 45.9% of net
written premiums in 1998, includes workers' compensation; general liability;
commercial multi-peril; commercial automobile; property, including fire and
allied lines; fidelity and surety and several specialty lines. The personal
lines business of the Ohio Casualty Group, which accounted for the remaining
54.1% of net written premiums in 1998, includes primarily personal automobile
and homeowner's insurance sold to individuals. As of March 31, 1999, Ohio
Casualty had total assets of $4.7 billion and shareholders' equity of $1.3
billion.
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USE OF PROCEEDS
Ohio Casualty expects to use the net proceeds from the sale of its senior and
subordinated debt securities for general corporate purposes. Such purposes may
include, but are not limited to:
- repayment or redemption of outstanding debt;
- repurchase of shares;
- working capital;
- acquisitions;
- other corporate purposes; and/or
- contributions to one or more of its subsidiaries for any of the above
listed purposes.
Pending the use of the proceeds for these purposes, Ohio Casualty will invest
the net proceeds from the sale of the debt securities in accordance with its
investment policy in effect at the time of the sale. Ohio Casualty may indicate
a different purpose for the sale of any debt securities in the prospectus
supplement relating to those securities.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for Ohio
Casualty and its consolidated subsidiaries for the periods indicated. Ohio
Casualty has calculated the ratio by dividing earnings by fixed charges. For
purposes of this calculation, earnings include income from continuing operations
before income taxes plus fixed charges. Fixed charges include interest expense
on debt, amortization of debt expense and the portion of rents representative of
the interest factor.
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FISCAL
QUARTER FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
PERIOD 1999 1998 1997 1996 1995 1994
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Ratio of earnings to
fixed charges...... 4.01 14.02 23.51 15.07 14.82 13.13
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DESCRIPTION OF THE DEBT SECURITIES
SENIOR DEBT INDENTURE AND SUBORDINATED DEBT INDENTURE
Ohio Casualty may issue its debt securities, consisting of notes, debentures or
other indebtedness, from time to time in one or more series. Ohio Casualty will
issue any senior debt securities pursuant to a senior indenture entered into
between Ohio Casualty and Chase Manhattan Trust Company, National Association,
as trustee. Ohio Casualty will issue any subordinated debt securities pursuant
to a subordinated indenture entered into between Ohio Casualty and Chase
Manhattan Trust Company, National Association, as trustee.
The senior debt indenture and the subordinated debt indenture are substantially
identical except that (1) the subordinated debt indenture, unlike the senior
debt indenture, provides for debt securities which are specifically made junior
in right of payment to other specified indebtedness of Ohio Casualty and (2) the
senior debt indenture, unlike the subordinated debt indenture, restricts the
ability of Ohio Casualty to use the shares of its principal insurance company
subsidiaries to secure any of its indebtedness, unless it grants a similar
security interest in these subsidiary shares to the holders of the debt
securities issued pursuant to the senior debt indenture. Neither the senior debt
indenture nor the subordinated debt indenture limit the aggregate principal
amount of indebtedness that Ohio Casualty may issue from time to time.
The senior debt indenture and the subordinated debt indenture are included as
exhibits to the registration statement of which this prospectus forms a part.
The following description provides a
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general summary of the material terms and conditions of each of these indentures
and the debt securities issued pursuant to these indentures.
BECAUSE THE FOLLOWING DISCUSSION IS ONLY A SUMMARY, THE INDENTURES MAY CONTAIN
LANGUAGE WHICH EXPANDS UPON OR LIMITS THE STATEMENTS MADE IN THIS PROSPECTUS.
ACCORDINGLY, WE STRONGLY ENCOURAGE YOU TO REFER TO THE INDENTURES FOR A COMPLETE
UNDERSTANDING OF THE TERMS AND CONDITIONS APPLICABLE TO THE INDENTURES AND THE
DEBT SECURITIES.
SENIOR AND SUBORDINATED DEBT SECURITIES
The debt securities will be unsecured senior or subordinated obligations of Ohio
Casualty. The term "senior" is generally used to describe debt obligations which
entitle the holder to receive payment of principal and interest upon the
happening of certain events prior to the holders of "subordinated" debt. Events
which can trigger the right of holders of senior indebtedness to receive payment
of principal and interest prior to payments to the holders of subordinated
indebtedness include insolvency, bankruptcy, liquidation, dissolution,
receivership, reorganization or an event of default under the senior
indebtedness.
Ohio Casualty may issue the senior debt securities, pursuant to the senior debt
indenture, in one or more series. All series of senior debt securities issued
under the senior debt indenture will be equal in ranking. The senior debt
securities also will rank equally with all other unsecured indebtedness of Ohio
Casualty, other than unsecured indebtedness expressly designated by the holders
thereof to be subordinate to the senior debt securities of Ohio Casualty.
The senior indebtedness issued pursuant to the senior debt indenture will rank
junior and be subordinate to any secured indebtedness of Ohio Casualty. In the
event of a bankruptcy or other liquidation event involving a distribution of
assets to satisfy outstanding indebtedness of Ohio Casualty or an event of
default under a loan agreement relating to the secured indebtedness, the holders
of Ohio Casualty's secured indebtedness would be entitled to receive payment of
principal and interest prior to payments on the senior indebtedness issued under
the senior debt indenture.
Additionally, the senior indebtedness issued pursuant to the senior debt
indenture will rank junior and be subordinate to any indebtedness of Ohio
Casualty's subsidiaries. In the event of a bankruptcy, receivership,
state-ordered rehabilitation, liquidation or similar event involving a
subsidiary, the assets of that subsidiary would be used to satisfy claims of
policyholders and creditors of the subsidiary rather than creditors of Ohio
Casualty. As a result of the application of the subsidiary's assets to satisfy
claims of policyholders and creditors, the value of the stock of the subsidiary
would be diminished and perhaps rendered worthless. Any such diminution in the
value of the shares of its subsidiaries would adversely impact Ohio Casualty's
financial condition and possibly impair Ohio Casualty's ability to meet its
obligations on the debt securities. In addition, any liquidation of the assets
of an Ohio Casualty subsidiary to satisfy claims of the subsidiary's
policyholders and creditors might make it impossible for such subsidiary to pay
dividends to Ohio Casualty. This inability to pay dividends would further impair
Ohio Casualty's ability to satisfy its obligations under the debt securities.
As of March 31, 1999, Ohio Casualty had no secured indebtedness which would have
ranked senior to any indebtedness issued under the senior debt indenture. In
addition, as of that date, Ohio Casualty had $255 million of unsecured
indebtedness to third parties for borrowed money which would have ranked equal
to indebtedness issued under the senior debt indenture. Also, as of March 31,
1999, Ohio Casualty's subsidiaries had no outstanding indebtedness to third
parties for borrowed money.
The debt securities issued under the subordinated debt indenture will be
subordinate in right of payment in respect of principal, any premium and
interest owing under the subordinated debt securities to all senior indebtedness
of Ohio Casualty in the manner described below under the caption "Subordination
under the Subordinated Debt Indenture."
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PROSPECTUS SUPPLEMENTS
Ohio Casualty will provide a prospectus supplement to accompany this prospectus
for each series of debt securities it offers. In the prospectus supplement, Ohio
Casualty will describe the following terms and conditions of the series of debt
securities which it is offering, to the extent applicable:
- Whether the securities are senior or subordinated, the specific
designation of the series of debt securities being offered, the
aggregate principal amount of debt securities of such series, the
purchase price for the debt securities and the denominations of the
debt securities.
- The currency or currencies in which the debt securities will be
denominated and in which principal, any premium and any interest will
or may be payable or a description of any units based on or relating
to a currency or currencies in which the debt securities will be
denominated.
- The date or dates upon which the debt securities are payable.
- The interest rate or rates applicable to the debt securities or the
method for determining such rate or rates, whether the rate or rates
are fixed or variable and the dates on which interest will be payable.
- The place or places where the principal of, any premium and any
interest on the debt securities will be payable.
- Any mandatory or optional redemption, repayment or sinking fund
provisions applicable to the debt securities. A redemption or
repayment provision could either obligate or permit Ohio Casualty to
buy back the debt securities on terms that it designates in the
prospectus supplement. A sinking fund provision could either obligate
or permit Ohio Casualty to set aside a certain amount of assets for
payments upon the debt securities, including payment upon maturity of
the debt securities or payment upon redemption of the debt securities.
- Whether the debt securities will be issued in registered form, in
bearer form or in both registered and bearer form. In general,
ownership of registered debt securities is evidenced by the records of
the issuing entity. Accordingly, a holder of registered debt
securities may transfer the securities only on the records of the
issuer. By contrast, ownership of bearer debt securities generally is
evidenced by physical possession of the securities. Accordingly, the
holder of a bearer debt security can transfer ownership merely by
transferring possession of the security.
- Any restrictions or special procedures applicable to (1) the place of
payment of the principal, any premium and any interest on bearer debt
securities, (2) the exchange of bearer debt securities for registered
debt securities or (3) the sale and delivery of bearer debt
securities. A holder of debt securities will not be able to exchange
registered debt securities into bearer debt securities except in
limited circumstances.
- Whether Ohio Casualty is issuing the debt securities in whole or in
part in global form. If debt securities are issued in global form, the
prospectus supplement will disclose the identity of the depositary for
such debt securities and any terms and conditions applicable to the
exchange of debt securities in whole or in part for other definitive
securities. Debt securities in global form are discussed in greater
detail below under the heading "Global Debt Securities".
- Any United States federal income tax consequences applicable to the
debt securities, including any debt securities denominated and made
payable, as described in the prospectus supplements, in foreign
currencies, or units based on or related to foreign currencies.
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- Any proposed listing of the debt securities on a securities exchange.
- Any right of Ohio Casualty to satisfy and discharge its obligations
under the debt securities, or terminate or eliminate restrictive
covenants or events of default in the indentures, by depositing money
or U.S. government obligations with the trustee of the indentures.
- The names of any trustee, depositary, authenticating or paying agent,
transfer agent, registrar or other agent with respect to the debt
securities.
- Any right of Ohio Casualty to defer payments of interest on the debt
securities.
- Any other specific terms of the debt securities, including any
modifications to the events of default under the debt securities and
any other terms which may be required by or advisable under applicable
laws or regulations.
Holders of the debt securities may present their securities for exchange and may
present registered debt securities for transfer in the manner described in the
applicable prospectus supplement. Except as limited by the applicable indenture,
Ohio Casualty will provide these services without charge, other than any tax or
other governmental charge payable in connection with the exchange or transfer.
Debt securities may bear interest at a fixed rate or a floating rate as
specified in the prospectus supplement. In addition, if specified in the
prospectus supplement, Ohio Casualty may sell debt securities bearing no
interest or interest at a rate that at the time of issuance is below the
prevailing market rate, at a discount below their stated principal amount. Ohio
Casualty will describe in the applicable prospectus supplement any special
United States federal income tax considerations applicable to these discounted
debt securities. These securities generally will be treated as having been
issued at a discount for United States federal income tax purposes.
Ohio Casualty may issue debt securities with the principal amount payable on any
principal payment date, or the amount of interest payable on any interest
payment date, to be determined by reference to one or more currency exchange
rates, commodity prices, equity indices or other factors. Holders of such debt
securities may receive a principal amount on any principal payment date, or a
payment of interest on any interest payment date, that is greater or less than
the amount of principal or interest otherwise payable on such dates, depending
upon the value on such dates of applicable currency, commodity, equity index or
other factors. Ohio Casualty will set forth information as to the methods for
determining the amount of principal or interest payable on any date, the
currencies, commodities, equity indices or other factors to which the amount
payable on that date is linked and certain additional tax considerations in the
applicable prospectus supplement.
GLOBAL DEBT SECURITIES
Ohio Casualty may issue registered debt securities in global form. This means
that one "global" debt security would be issued to represent a number of
registered debt securities. The denomination of the global debt security would
equal the aggregate principal amount of all registered debt securities
represented by that global debt security.
Ohio Casualty will deposit any registered debt securities issued in global form
with a depositary, or with a nominee of the depositary, that Ohio Casualty will
name in the applicable prospectus supplement. Any person holding an interest in
the global debt security through the depositary will be considered the
"beneficial" owner of that interest. A "beneficial" owner of a security is able
to enjoy rights associated with ownership of the security, even though the
beneficial owner is not recognized as the legal owner of the security. The
interest of the beneficial owner in the security is considered the "beneficial
interest." Ohio Casualty will register the debt securities in the name of the
depositary or the nominee of the depositary, as appropriate.
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The depositary or its nominee may only transfer a global debt security in its
entirety and only in the following circumstances:
- by the depositary for the registered global security to a nominee of
the depositary;
- by a nominee of the depositary to the depositary or to another nominee
of the depositary; or
- by the depositary or the nominee of the depositary to a successor of
the depositary or to a nominee of the successor.
These restrictions on transfer would not apply to a global debt security after
the depositary or its nominee, as applicable, exchanged the global debt security
for registered debt securities issued in definitive form.
Ohio Casualty will describe the specific terms of the depositary arrangement
with respect to any series of debt securities represented by a registered global
security in the prospectus supplement relating to that series. Ohio Casualty
anticipates that the following provisions will apply to all depositary
arrangements for debt securities represented by a registered global security.
Ownership of beneficial interests in a registered global security will be
limited to (1) participants that have accounts with the depositary for the
registered global security and (2) persons that may hold interests through those
participants. Upon the issuance of a registered global security, the depositary
will credit each participant's account on the depositary's book-entry
registration and transfer system with the principal amount of debt securities
represented by the registered global security beneficially owned by that
participant. Initially, the dealers, underwriters or agents participating in the
distribution of the debt securities will designate the accounts that the
depositary should credit.
Ownership of beneficial interests in the registered global security will be
shown on, and the transfer of ownership interests will be effected only through,
records maintained by the depositary for the registered global security, with
respect to interests of participants, and on the records of participants, with
respect to interests of persons holding through participants. The laws of some
states may require that purchasers of securities regulated by the laws of those
states take physical delivery of the securities in definitive form. Those laws
may impair the ability to own, transfer or pledge beneficial interests in
registered global securities.
As long as the depositary for a registered global security, or its nominee, is
the registered owner of the registered global security, that depositary or its
nominee will be considered the sole owner or holder of the debt securities
represented by the registered global security for all purposes under the
applicable indenture. Owners of beneficial interests in a registered global
security generally will not:
- be entitled to have the debt securities represented by the registered
global security registered in their own names;
- will not receive or be entitled to receive physical delivery of the
debt securities in definitive form; and
- will not be considered the owners or holders of the debt securities
under the applicable indenture.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for the registered global
security and, if that person owns through a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder under the applicable indenture.
Ohio Casualty understands that under existing industry practices, if Ohio
Casualty requests any action of holders of debt securities or if an owner of a
beneficial interest in a registered global security desires to give or take any
action which a holder of debt securities is entitled to give or take
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under the applicable indenture, the depositary for the registered global
security would authorize the participants holding the relevant beneficial
interests to give or take the action, and the participants would authorize
beneficial owners owning through the participants to give or take the action or
would otherwise act upon the instructions of beneficial owners owning through
them.
Ohio Casualty will make payments of principal, any premium and any interest on a
registered global security to the depositary or its nominee. None of Ohio
Casualty, the indenture trustee or any other agent of Ohio Casualty or agent of
the indenture trustee will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial ownership
interests in the registered global security or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
Ohio Casualty expects that the depositary for any registered global security,
upon receipt of any payment of principal, premium or interest in respect of the
registered global security, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the registered global security as shown on the records of the depositary.
Ohio Casualty also expects that standing customer instructions and customary
practices will govern payments by participants to owners of beneficial interests
in the registered global security owned through the participants.
Ohio Casualty will issue its debt securities in definitive form in exchange for
a registered global security, if the depositary for such registered global
security is at any time unwilling or unable to continue as depositary or ceases
to be a clearing agency registered under the Securities Exchange Act of 1934,
and if a successor depositary registered as a clearing agency under the
Securities Exchange Act of 1934 is not appointed within 90 days. In addition,
Ohio Casualty may at any time and in its sole discretion determine not to have
any of the debt securities of a series represented by a registered global
security and, in such event, will issue debt securities of the series in
definitive form in exchange for the registered global security.
Ohio Casualty will register any debt securities issued in definitive form in
exchange for a registered global security in such name or names as the
depositary shall instruct the indenture trustee. Ohio Casualty expects that the
depositary will base these instructions upon directions received by the
depositary from participants with beneficial interests in the registered global
security.
Ohio Casualty also may issue bearer debt securities of a series in global form.
Ohio Casualty will deposit these global bearer securities with a common
depositary or with a nominee for the depositary identified in the prospectus
supplement relating to the series. Ohio Casualty will describe the specific
terms and procedures of the depositary arrangement for the bearer debt
securities in the prospectus supplement relating to the series. Ohio Casualty
also will describe in the applicable prospectus supplement any specific
procedures for the issuance of debt securities in definitive form in exchange
for a bearer global security.
COVENANTS APPLICABLE TO THE DEBT SECURITIES
Limitations on Liens. Under section 3.9 of the senior debt indenture, neither
Ohio Casualty nor any of its restricted subsidiaries may use any voting stock of
a restricted subsidiary as security for any of its debts or other obligations
unless any debt securities issued under the senior debt indenture are secured to
the same extent as that debt or other obligation. This restriction does not
apply to liens existing at the time a corporation becomes a restricted
subsidiary of Ohio Casualty or any renewal or extension of the existing lien and
does not apply to shares of subsidiaries that are not "restricted subsidiaries".
To qualify as a "subsidiary" of Ohio Casualty, as defined in section 1.1 of the
indentures, Ohio Casualty must control, either directly or indirectly, more than
50% of the outstanding shares of voting stock of the corporation. Section 1.1 of
the indentures defines voting stock as any class or classes of stock having
general voting power under ordinary circumstances to elect a majority of the
board of
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directors of the corporation in question, except that, stock which carries only
the right to vote conditionally on the happening of an event is not considered
voting stock.
As defined in section 1.1 of the indentures, "restricted subsidiaries" of Ohio
Casualty include (1) The Ohio Casualty Insurance Company, West American
Insurance Company, Ohio Security Insurance Company and American Fire & Casualty
Company, so long as they remain subsidiaries of Ohio Casualty; (2) any other
present or future insurance company subsidiary of Ohio Casualty, the
consolidated total assets of which constitute at least 20% of the total
consolidated assets of Ohio Casualty; and (3) any successor to any such
subsidiary.
Consolidation, Merger and Sale of Assets. Section 9.1 of both the senior and
subordinated debt indentures provides that Ohio Casualty will not (1)
consolidate with or merge into a third party, (2) sell, other than for cash, or
lease all or substantially all of its assets to any third party or (3) purchase
all or substantially all of the assets of any third party; unless
- Ohio Casualty is the continuing entity in the transaction or, if not,
unless the successor entity expressly assumes Ohio Casualty's
obligations on the securities and under the indentures; and
- following the completion of the transaction, Ohio Casualty or the
successor entity in the transaction would be in compliance with the
covenants and conditions contained in the indentures.
In the context of a merger or consolidation or sale, lease or purchase of
assets, the successor entity is the entity that assumes or otherwise becomes
obligated for the rights and obligations of the other party or parties to the
transaction.
The limitations on the transactions described above do not apply to a
recapitalization, change of control, or highly leveraged transaction unless the
transaction involves a consolidation; a merger of Ohio Casualty into a third
party; a sale, other than for cash, or lease to a third party of all or
substantially all of the assets of Ohio Casualty; or a purchase by Ohio Casualty
of all or substantially all of the assets of a third party. In addition, the
indentures do not include any provisions that would increase interest, provide
an option to dispose of securities at a fixed price, or otherwise protect debt
security holders in the event of any recapitalization, change of control, or
highly leveraged transaction.
Restrictions on Dispositions. Section 9.3 of both the senior and subordinated
debt indentures provides that neither Ohio Casualty nor any of its restricted
subsidiaries may issue, sell, assign, transfer or otherwise dispose of any of
the voting stock of a restricted subsidiary so long as any of the debt
securities remain outstanding. However, exceptions to this restriction include
situations where:
- the action must be taken to comply with the order of a court or
regulatory authority, unless the order was requested by Ohio Casualty
or one of its restricted subsidiaries;
- the shares involved are "directors' qualifying shares," or shares
purchased by directors for the purpose of meeting the eligibility
requirements for directors;
- Ohio Casualty disposes of all of the voting stock of a restricted
subsidiary owned by it or by a restricted subsidiary for cash or other
property having a fair market value that is at least equal to the fair
market value of the disposed stock, as determined in good faith by the
board of directors of Ohio Casualty; or
- after completion of a sale or other disposition of the stock of a
restricted subsidiary, Ohio Casualty and its restricted subsidiaries
would own 80% or more of the voting stock of the restricted subsidiary
and the consideration received for the disposed stock is at least
equal to the fair market value of the disposed stock.
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The indentures do not restrict the transfer of assets from a restricted
subsidiary to any other person, including Ohio Casualty or another of its
subsidiaries.
EVENTS OF DEFAULT
With respect to any series of debt securities issued under either the senior or
subordinated debt indentures, section 5.1 of the indentures defines an event of
default as including:
- a default in payment of principal or any premium when due;
- a default for 30 days in payment of any interest;
- a default in payment of any sinking fund installment when due;
- a failure to observe or perform any other covenant or agreement in the
debt securities or indenture, other than a covenant or agreement
included solely for the benefit of a different series of debt
securities, after 60 days written notice of the failure;
- events of bankruptcy, insolvency or reorganization; or
- a continuing default, for more than 10 days after notice of the
default, under any other indenture, mortgage, bond, debenture, note or
other instrument, under which Ohio Casualty or its restricted
subsidiaries may incur recourse indebtedness for borrowed money in an
aggregate principal amount exceeding $10,000,000, if the default would
result in the acceleration of that indebtedness.
Section 5.1 of both the senior and subordinated debt indentures provides that,
under limited conditions specified in the indentures, where an event of default
occurs and is continuing, either the indenture trustee or the holders of not
less than 25% in principal amount of each affected series of debt securities
issued under the relevant indenture, treated as one class, may declare the
principal and accrued interest of all the affected debt securities to be due and
payable immediately. A similar right exists for the indenture trustee and the
holders of not less than 25% of all outstanding debt securities issued under an
indenture, in the event of a default in the performance of any covenants or
agreements applicable to all outstanding debt securities.
Upon conditions specified in the indentures, however, the holders of a majority
in principal amount of the affected outstanding series of debt securities, or of
all the debt securities as the case may be, may waive past defaults under the
indentures. Such an annulment may not occur where there is a continuing default
in payment of principal, any premium or interest on the affected debt
securities.
Section 6.2 of both the senior and subordinated debt indentures entitles the
trustee to obtain assurances of reasonable indemnity or security by the debt
security holders for any actions taken by the trustee at the request of the
security holders. The right of the indenture trustee to indemnity or security is
subject to the indenture trustee carrying out its duties with a level of care or
standard of care that is generally acceptable and reasonable under the
circumstances. An indemnity or indemnification is an undertaking by one party to
reimburse another upon the occurrence of an anticipated loss.
Subject to the right of the indenture trustee to indemnification as described
above and except as otherwise described in the indentures, section 5.9 of the
indentures provides that the holders of a majority of the aggregate principal
amount of the affected outstanding debt securities of each series, treated as
one class, may direct the time, method and place of any proceeding to exercise
any right or power conferred in the indentures or for any remedy available to
the trustee.
Section 5.6 of the senior and subordinated debt indentures provides that no
holders of debt securities may institute any action against Ohio Casualty,
except for actions for payment of overdue principal, any premium or interest,
unless
- such holder previously gave written notice of the continuing default
to the trustee;
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- the holders of at least 25% in principal amount of the outstanding
debt securities of each affected series, treated as one class, asked
the trustee to institute the action and offered indemnity to the
trustee for doing so;
- the trustee did not institute the action within 60 days of the
request; and
- the holders of a majority in principal amount of the outstanding debt
securities of each affected series, treated as one class, did not
direct the trustee to refrain from instituting the action.
Under section 3.4 of each indenture, Ohio Casualty will file annually with the
trustee a certificate either stating that no default exists or specifying any
default that does exist.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
If indicated in the applicable prospectus supplement, Ohio Casualty can
discharge and defease its obligations under the applicable indenture and debt
securities as set forth below and as provided in Article X of the senior and
subordinated debt indentures. For purposes of the indentures, obligations with
respect to debt securities are discharged and defeased when, through the
fulfillment of the conditions summarized below, Ohio Casualty is released and
discharged from performing any further obligations under the relevant indenture
with respect to the debt securities. Covenant defeasance occurs when Ohio
Casualty is released from performing any further obligations under specific
covenants in the indenture relating to the debt securities.
If provided for in the prospectus supplement, Ohio Casualty may elect to defease
and be discharged from any and all future obligations with respect to debt
securities of a particular series or debt securities within a particular series
(1) if the debt securities have not previously been delivered to the trustee for
cancellation and (2) have either become due and payable or are by their terms
due and payable, or scheduled for redemption within one year. Ohio Casualty may
make such discharge and defeasance election by irrevocably depositing cash or
U.S. government obligations with the trustee in an amount certified to be
sufficient to pay in full the principal, any premium and interest on the
relevant debt securities when due.
If provided for in the prospectus supplement, Ohio Casualty may elect to defease
and be discharged from its specific obligations under the covenants contained in
section 9.1 and section 3.5 of the indentures with respect to any debt
securities of or within a series and, if specified in the prospectus supplement,
its obligations under any other covenant contained in the indentures. Ohio
Casualty may make this covenant discharge and defeasance election by irrevocably
depositing cash or U.S. Government obligations with the trustee in an amount
certified to be sufficient to pay in full the principal, any premium and
interest on the relevant debt securities when due. Section 9.1 of the indentures
prohibits Ohio Casualty from consolidating with or merging into a third party or
selling, other than for cash, or leasing all or substantially all of its assets
to a third party unless the conditions described above under the caption
"Covenants Applicable to the Debt Securities -- Consolidation, Merger and Sale
of Assets" are satisfied. Section 3.5 of the indentures requires Ohio Casualty
to preserve and keep in full force and effect its existence and its charter and
statutory rights and those of its subsidiaries, unless the Board of Directors of
Ohio Casualty determines that the loss of these rights would not be materially
disadvantageous to the holders of debt securities or unless the transaction
resulting in the loss of such rights would otherwise be permitted under section
9.1 of the indentures or any other section of Article IX of the indentures.
As a condition to any discharge and defeasance or covenant discharge and
defeasance, Ohio Casualty must provide the trustee an opinion of counsel to the
effect that the holders of the affected debt securities will not recognize
income, gain or loss for federal income tax purposes as a result of the
discharge and defeasance and will be taxed by the federal government on the same
amounts, in the same manner, and at the same times as if such discharge and
defeasance had not occurred. This opinion of counsel, in the case of discharge
and defeasance of any and all obligations with
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respect to any debt securities, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable federal income tax law
occurring after the date of the relevant indenture.
Ohio Casualty may exercise its discharge and defeasance option notwithstanding
any prior covenant discharge and defeasance upon the affected debt securities.
If Ohio Casualty exercises its discharge and defeasance option, payment of the
affected debt securities may not be accelerated because of an event of default.
If it exercises its covenant discharge and defeasance option, payment of the
affected debt securities may not be accelerated by reason of a default or an
event of default with respect to the covenants which have been discharged and
defeased. If, however, acceleration of the indebtedness under the debt
securities occurs by reason of another event of default, the value of the money
and government obligations in the defeasance trust on the date of acceleration
could be less than the principal and interest then due on the affected
securities because the required defeasance deposit is based upon scheduled cash
flow rather than market value which will vary depending upon interest rates and
other factors.
MODIFICATION OF THE INDENTURES
Section 8.1 of both the senior and subordinated debt indentures provides that
Ohio Casualty and the trustee may enter into supplemental indentures without the
consent of the holders of debt securities to:
- secure any debt securities;
- evidence a successor corporation's assumption of Ohio Casualty's
obligations under the indentures and the debt securities;
- add covenants that protect holders of debt securities;
- cure any ambiguity or inconsistency in the indenture, provided that
such correction does not adversely affect the holders of the affected
debt securities;
- establish forms or terms for debt securities of any series; and
- evidence a successor trustee's acceptance of appointment.
Section 8.2 of the senior and subordinated debt indentures also permits Ohio
Casualty and the trustee, with the consent of the holders of at least a majority
in aggregate principal amount of outstanding affected debt securities of all
series issued under the relevant indenture, voting as one class, to change, in
any manner, the relevant indenture and the rights of the holders of debt
securities issued under that indenture. However, the consent of each holder of
an affected debt security is required for changes that:
- extend the stated maturity of, or reduce the principal of any debt
security;
- reduce the rate or extend the time of payment of interest;
- reduce any amount payable upon redemption;
- change the currency in which the principal, any premium or interest is
payable;
- reduce the amount of any original issue discount debt security that is
payable upon acceleration or provable in bankruptcy;
- alter specified provisions of the relevant indenture relating to
issued debt securities not denominated in U.S. dollars;
- impair the right to institute suit for the enforcement of any payment
on any debt security when due; or
- reduce the percentage of the outstanding debt securities of any series
required to approve changes to the indenture.
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The subordinated debt indenture may not be amended to alter the
subordination of any outstanding subordinated debt securities without
the consent of each holder of then outstanding senior indebtedness that would be
adversely affected by the amendment.
SUBORDINATION UNDER THE SUBORDINATED DEBT INDENTURE
Article XIII of the subordinated debt indenture provides that payment of the
principal, any premium and interest on debt securities issued under the
subordinated debt indenture will be subordinate and junior in right of payment,
to the extent and in the manner set forth in that indenture, to all senior
indebtedness of Ohio Casualty. Section 1.1 of the subordinated debt indenture
defines senior indebtedness as the principal, any premium and interest on all
indebtedness of Ohio Casualty, whether incurred prior to or after the date of
the indenture:
- for money borrowed by it;
- for obligations of others that it directly or indirectly either
assumes or guarantees;
- in respect of letters of credit and acceptances issued or made by
banks in favor of Ohio Casualty; or
- issued or assumed as all or part of the consideration for the
acquisition of property, however acquired, or indebtedness secured by
property included in property, plant and equipment accounts of Ohio
Casualty at the time of acquisition, if Ohio Casualty is directly
liable for the payment of such debt.
Senior indebtedness also includes all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to the indebtedness
listed above.
Senior indebtedness does not include:
- any indebtedness of Ohio Casualty which, by its terms or the terms of
the instrument creating or evidencing it, has a subordinate or
equivalent right to payment with the subordinated debt securities; or
- any of the indebtedness of Ohio Casualty to one of its subsidiaries.
The subordinated debt indenture does not limit the amount of senior indebtedness
that Ohio Casualty can incur.
The holders of all senior indebtedness will be entitled to receive payment of
the full amount due on that indebtedness before the holders of any subordinated
debt securities or coupons relating to those subordinated debt securities
receive any payment on account of such subordinated debt securities or coupons,
in the event:
- of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceedings in respect of Ohio
Casualty or its property; or
- that debt securities of any series are declared due and payable before
their expressed maturity because of an event of default other than an
insolvency, bankruptcy, receivership, liquidation, reorganization or
other similar proceeding in respect of Ohio Casualty or its property.
Ohio Casualty may not make any payment of the principal or interest on the
subordinated debt securities or coupons during a continued default in payment of
any senior indebtedness or if any event of default exists under the terms of any
senior indebtedness.
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GOVERNING LAW
The indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York, except to the extent that
the Trust Indenture Act of 1939 is applicable, in which case the Trust Indenture
Act will govern.
THE INDENTURE TRUSTEE
The Chase Manhattan Bank, an affiliate of the indenture trustee, is one of a
number of banks with which Ohio Casualty and its subsidiaries maintain ordinary
banking relationships. Ohio Casualty and The Chase Manhattan Bank are parties to
a Credit Agreement dated October 27, 1997, as amended, pursuant to which various
lenders have agreed to make loans to Ohio Casualty in an aggregate principal
amount not exceeding $300,000,000 at any one time outstanding to finance
operations and for other general corporate purposes. The Chase Manhattan Bank
acts as administrative agent for such lenders under the Credit Agreement. Ohio
Casualty may use the net proceeds from the sale of debt securities to retire all
or a portion of the indebtedness under the Credit Agreement with The Chase
Manhattan Bank.
PLAN OF DISTRIBUTION
Ohio Casualty may sell the debt securities offered under this prospectus through
underwriters or agents or directly to purchasers.
SALE THROUGH UNDERWRITERS
If Ohio Casualty uses any underwriters in the sale of debt securities, it will
enter into an underwriting agreement with the underwriters. Ohio Casualty will
identify any underwriter and the underwriter's compensation, including any
underwriting discount, in the applicable prospectus supplement. The prospectus
supplement also will describe other terms of the offering, including any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which the offered securities may be listed.
The distribution of debt securities under this prospectus may occur from time to
time in one or more transactions at a fixed price or prices which may change, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
SALE THROUGH DEALERS
If Ohio Casualty uses dealers in the sale of debt securities, it will sell the
debt securities to the dealers who may then resell those debt securities to the
public at varying prices determined by the dealers at the time of resale. Ohio
Casualty will include in the prospectus supplement the names of the dealers and
the terms of the transaction.
DIRECT SALES AND SALES THROUGH AGENTS
Ohio Casualty may sell the debt securities through agents it designates from
time to time. In the prospectus supplement, Ohio Casualty will name any agent
involved in the offer or sale of the offered debt securities, and it will
describe any commissions payable by it to the agent. Ohio Casualty also may sell
the debt securities directly. In the case of direct sale by Ohio Casualty, Ohio
Casualty would not involve any underwriters in the sale.
DELAYED DELIVERY CONTRACTS
If Ohio Casualty so indicates in the prospectus supplement, it may authorize
agents, underwriters or dealers to solicit offers from institutions to purchase
debt securities from it at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those conditions
described in the
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prospectus supplement. The prospectus supplement will describe the commission
payable for solicitation of those contracts.
INDEMNIFICATION
Ohio Casualty may have agreements with the agents, underwriters and dealers to
indemnify them against civil liabilities, including liabilities under the
Securities Act of 1933 or to contribute with respect to payments which agents,
underwriters or dealers may be required to make as a result of those civil
liabilities.
UNDERWRITING DISCOUNTS AND COMMISSIONS, LISTING OF DEBT SECURITIES AND
TRANSACTIONS WITH OHIO CASUALTY
Underwriters, dealers and agents participating in a sale of debt securities may
be deemed underwriters as defined in the Securities Act of 1933, and any
discounts and commissions received by them and any profit realized by them on
resale of the debt securities may be deemed underwriting discounts and
commissions under the Securities Act of 1933.
Unless Ohio Casualty indicates differently in a prospectus supplement, it will
not list the debt securities on any securities exchange. If it sells a security
offered under this prospectus to an underwriter for public offering and sale,
the underwriter may make a market for that security but is not obligated to do
so. Therefore, Ohio Casualty cannot provide any certainty concerning the
liquidity of any security offered under this prospectus.
Agents, dealers and underwriters and their affiliates may be customers of,
engage in transactions with, or perform services for Ohio Casualty or any of its
subsidiary companies in the ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement, Vorys,
Sater, Seymour and Pease LLP, legal counsel to Ohio Casualty, will pass upon the
validity of the debt securities of Ohio Casualty. As of January 8, 1999, members
of Vorys, Sater, Seymour and Pease LLP and attorneys employed by Vorys, Sater,
Seymour and Pease LLP, together with members of their immediate families,
beneficially owned 32,573 common shares of Ohio Casualty.
EXPERTS
The consolidated balance sheets as of December 31, 1998, 1997 and 1996 and the
consolidated statements of income, retained earnings and cash flows for each of
the three years in the period ended December 31, 1998 of Ohio Casualty,
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the special-purpose
financial statements of the Commercial Lines Business of American Financial
Corporation included in Ohio Casualty's Current Report on Form 8-K/A dated March
26, 1999, as set forth in their report, which is incorporated by reference in
this prospectus. These special-purpose financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
MATTERS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITIES ACT OF 1974
ERISA, or the Employee Retirement Income Securities Act of 1974, as amended,
imposes restrictions on employee benefit plans that are subject to ERISA and on
fiduciaries of those employee benefit plans. In accordance with ERISA's general
fiduciary requirements, a fiduciary of any employee benefit plan that is subject
to ERISA, who is considering the purchase of debt securities on behalf of that
plan, should determine whether its purchase is permitted under the
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<PAGE> 24
governing plan documents and is prudent and appropriate for the plan in view of
its overall investment policy and the composition and diversification of its
portfolio.
Other provisions of ERISA, as well as Section 4975 of the Internal Revenue Code
of 1986, as amended, prohibit certain transactions between an employee benefit
plan that is subject to ERISA and persons who are either "parties in interest"
within the meaning of ERISA or "disqualified persons" within the meaning of
Section 4975 of the Internal Revenue Code. A fiduciary considering the purchase
of debt securities should consider whether the purchase might constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Internal
Revenue Code.
Ohio Casualty and its affiliates may fall within the definition of a "party in
interest" or a "disqualified person" with respect to some plans that are subject
to ERISA. The purchase of debt securities by a plan that is subject to ERISA and
which Ohio Casualty or an affiliate is a "party in interest" or a "disqualified
person" may constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Internal Revenue Code, unless the debt securities are
acquired in accordance with an applicable exemption. Any pension or other
employee benefit plan proposing to acquire any debt securities should consult
with its legal counsel.
WHERE YOU CAN FIND MORE INFORMATION
Ohio Casualty has filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act of 1933 to register
the securities offered by this prospectus. This prospectus does not contain all
the information set forth in the registration statement and the exhibits to the
registration statement.
Ohio Casualty files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You can read and
copy any materials filed with the Securities and Exchange Commission at its
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. In addition, the
Securities and Exchange Commission maintains an internet site that contains
reports, proxy statements and other information regarding Ohio Casualty which
you may access at http://www.sec.gov.
The rules and regulations of the Securities and Exchange Commission allow Ohio
Casualty to incorporate information about Ohio Casualty and its financial
condition into this prospectus by reference. This means that Ohio Casualty can
disclose important information to you by referring you to other documents that
it has filed with the Securities and Exchange Commission and that information it
files later with the Securities and Exchange Commission will automatically
update and supersede this information. The information incorporated by reference
is considered to be a part of this prospectus.
Ohio Casualty has incorporated by reference into this prospectus the following
documents filed by it with the Securities and Exchange Commission.
- Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999 (File No. 0-5544).
- Annual Report on Form 10-K for the fiscal year ended December 31, 1998
(File No. 0-5544);
- Current Report on Form 8-K, dated December 15, 1998 (File No. 0-5544);
- Current Report on Form 8-K/A dated February 16, 1999 (File No.
0-5544);
- Current Report on Form 8-K/A (Amendment No. 2), dated March 26, 1999
(File No. 0-5544);
- Current Report on Form 8-K, dated February 16, 1999 (File No. 0-5544);
and
- Current Report on Form 8-K/A, dated March 26, 1999 (File No. 0-5544).
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<PAGE> 25
Ohio Casualty also incorporates by reference any periodic reports and proxy
statements that it may file with the Securities and Exchange Commission between
the date of this prospectus and the termination of this offering. Examples of
periodic reports that Ohio Casualty may file include annual reports on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
You can obtain any of these documents, excluding any exhibits to the documents,
unless the exhibit is specifically incorporated by reference in this prospectus,
without charge, by writing or phoning Ohio Casualty at the following address and
phone number:
Ohio Casualty Corporation
136 North Third Street
Hamilton, Ohio 45025
(513) 867-3000
Attn: Barry S. Porter, CFO
For further information with respect to Ohio Casualty and the securities offered
by this prospectus, you should refer to the registration statement, including
exhibits to the registration statement, and the documents incorporated in this
prospectus by reference.
FORWARD LOOKING STATEMENTS
In this document, Ohio Casualty has made forward-looking statements regarding
events and circumstances that are subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of Ohio Casualty. Also, words such as
"believes," "expects," "anticipates" or similar expressions are forward-looking
statements. Investors should note that many factors, some of which are discussed
in this document, could affect the future financial results of Ohio Casualty and
could cause those results to differ materially from those expressed in this
document. Among others, these factors include the "Risk Factors" beginning on
page 3.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the
Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 83,400
Printing and engraving...................................... 75,000
Legal fees and expenses..................................... 75,000
Fees of accountants......................................... 50,000
Fees of trustees............................................ 6,000
Rating agency fees.......................................... 200,000
Miscellaneous............................................... 25,000
--------
Total............................................. $514,400
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Division (E) of Section 1701.13 of the Ohio Revised Code and Article V of Ohio
Casualty's Code of Regulations relate to indemnification of Ohio Casualty's
directors and officers against liabilities arising in connection with the
performance of their respective duties.
Division (E) of Section 1701.13 of the Ohio Revised Code provides as follows:
(E)(1) A corporation may indemnify or agree to indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, other than an action by or in the right
of the corporation, by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee,
member, manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, or a partnership,
joint venture, trust, or other enterprise, against expenses, including
attorney's fees, judgments, fines, and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, if he had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit, or proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was
unlawful.
(2) A corporation may indemnify or agree to indemnify any person who was or
is a party, or is threatened to be made a party, to any threatened,
pending, or completed action or suit by or in the right of the corporation
to procure a judgment in its favor, by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed to be in or not
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opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that, the court of common pleas
or the court in which such action or suit was brought determines, upon
application, that, despite the adjudication of liability, but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court of common pleas or
such other court shall deem proper;
(b) Any action or suit in which the only liability asserted against a
director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, member,
manager, or agent has been successful on the merits or otherwise in defense
of any action, suit, or proceeding referred to in division (E)(1) or (2) of
this section, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the action, suit, or
proceeding.
(4) Any indemnification under division (E)(1) or (2) of this section,
unless ordered by a court, shall be made by the corporation only as
authorized in the specific case, upon a determination that indemnification
of the director, trustee, officer, employee, member, manager, or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in division (E)(1) or (2) of this section. Such
determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or threatened
with the action, suit, or proceeding referred to in division (E)(1) or (2)
of this section;
(b) If the quorum described in division (E)(4)(a) of this section is not
obtainable or if a majority vote of a quorum of disinterested directors so
directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been
retained by or who has performed services for the corporation or any
person to be indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the action, suit,
or proceeding referred to in division (E)(1) or (2) of this section was
brought.
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or
brought the action or suit by or in the right of the corporation under
division (E)(2) of this section, and, within ten days after receipt of such
notification, such person shall have the right to petition the court of
common pleas or the court in which such action or suit was brought to
review the reasonableness of such determination.
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in division (E)(1) or
(2) of this section, the articles or the regulations of a corporation
state, by specific reference to this division, that the provisions of this
division do not apply to the corporation and unless the only liability
asserted against a director in an action, suit, or proceeding referred to
in division (E)(1) or (2) of this section is pursuant to section 1701.95 of
the Revised Code, expenses, including attorney's fees, incurred by a
director in defending the action, suit, or proceeding shall be paid by the
corporation as they are incurred, in
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advance of the final disposition of the action, suit, or proceeding, upon
receipt of an undertaking by or on behalf of the director in which he
agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing evidence in
a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless disregard for the
best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the action,
suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director, trustee,
officer, employee, member, manager, or agent in defending any action, suit,
or proceeding referred to in division (E)(1) or (2) of this section, may be
paid by the corporation as they are incurred, in advance of the final
disposition of the action, suit, or proceeding, as authorized by the
directors in the specific case, upon receipt of an undertaking by or on
behalf of the director, trustee, officer, employee, member, manager, or
agent to repay such amount, if it ultimately is determined that he is not
entitled to be indemnified by the corporation.
(6) The indemnification authorized by this section shall not be exclusive
of, and shall be in addition to, any other rights granted to those seeking
indemnification under the articles, the regulations, any agreement, a vote
of shareholders or disinterested directors, or otherwise, both as to action
in their official capacities and as to action in another capacity while
holding their offices or positions, and shall continue as to a person who
has ceased to be a director, trustee, officer, employee, member, manager,
or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish similar
protection, including, but not limited to, trust funds, letters of credit,
or self-insurance, on behalf of or for any person who is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee,
member, manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, or a partnership,
joint venture, trust, or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under this section. Insurance may be
purchased from or maintained with a person in which the corporation has a
financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of
expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to divisions (E)(5), (6), and (7)
of this section. Divisions (E)(1) and (2) of this section do not create any
obligation to repay or return payments made by the corporation pursuant to
division (E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" includes all
constituent entities in a consolidation or merger and the new or surviving
corporation, so that any person who is or was a director, officer,
employee, trustee, member, manager, or agent of such a constituent entity,
or is or was serving at the request of such constituent entity as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited
liability company, or a partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this section with
respect to the new or surviving corporation as he would if he had served
the new or surviving corporation in the same capacity.
Article V of Ohio Casualty's Code of Regulations provides as follows:
SECTION 1. MANDATORY INDEMNIFICATION. The corporation shall indemnify (A)
any officer or director of the corporation and (B) any person (including an
officer or director of the corporation) who has served or is serving at the
request of the corporation as a director, trustee or officer of
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another corporation (domestic or foreign, nonprofit or for profit),
partnership, joint venture, trust or other enterprise who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (including, without limitation, any action threatened or
instituted by or in the right of the corporation) by reason of the fact
that he is or was a director, trustee, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee or agent of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust, or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and with
respect to any criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful. A person claiming indemnification under
this Section 1 shall be presumed in respect of any act or omission giving
rise to such claim for indemnification, to have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal matter, to
have had no reasonable cause to believe his conduct was unlawful, and the
termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.
SECTION 2. COURT-APPROVED INDEMNIFICATION. Anything contained in the
Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify (i) any officer or director of the
corporation, or (ii) any person (including an officer or director of the
corporation) who has served or is serving at the request of the
corporation as a director, trustee or officer of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise who was a party to any completed action
or suit instituted by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or
agent of another corporation (domestic or foreign, nonprofit or for
profit), partnership, joint venture, trust or other enterprise, in respect
of any claim, issue or matter asserted in such action or suit as to which
he shall have been adjudged to be liable for gross negligence or
misconduct (other than negligence) in the performance of his duty to the
corporation unless and only to the extent that the Court of Common Pleas
of Butler County, Ohio or the court in which such action or suit was
brought shall determine upon application that despite such adjudication of
liability, and in view of all the circumstances of the case, he is fairly
and reasonably entitled to such indemnity as such Court of Common Pleas or
such other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid indemnification as
is determined by a court to be proper as contemplated by this Section 2.
SECTION 3. INDEMNIFICATION FOR EXPENSES. Anything contained in the
Regulations or elsewhere to the contrary notwithstanding, to the extent
that an officer or director of the corporation or any person (including an
officer or director of the corporation) who has served or is serving at the
request of the corporation as a director, trustee or officer of another
corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Section 1, or in defense of any claim, issue, or matter therein, he shall
be promptly indemnified by the corporation against expenses (including,
without limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) actually and reasonably incurred by him in connection
therewith.
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SECTION 4. DETERMINATION REQUIRED. Any indemnification required under
Section 1 and not precluded under Section 2 shall be made by the
corporation only upon a determination that such indemnification is proper
in the circumstances because the person has met the applicable standard of
conduct set forth in Section 1. Such determination may be made only (A) by
a majority vote of a quorum consisting of directors of the corporation who
were not and are not parties to, or threatened with, any such action, suit
or proceeding or (B) if such a quorum is not obtainable or if a majority of
a quorum of disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has
performed services for the corporation, or any person to be indemnified,
within the past five years or (C) by the shareholders or (D) by the Court
of Common Pleas of Butler County, Ohio or (if the corporation is a party
thereto) the court in which such action, suit or proceeding was brought, if
any; any such determination may be made by a court under subparagraph (D)
of this Section at any time (including, without limitation, any time
before, during or after the time when any such determination may be
requested of, be under consideration by or have been denied or disregarded
by the disinterested directors under subparagraph (A) or by independent
legal counsel under subparagraph (B) or by the shareholders under
subparagraph (C) of this Section); and no failure for any reason to make
any such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under subparagraph (A) or by
independent legal counsel under subparagraph (B) or by shareholders under
subparagraph (C) of this Section shall be evidence in rebuttal of the
presumption recited in Section 1. Any determination made by the
disinterested directors under subparagraph (A) of this Section or by
independent legal counsel under subparagraph (B) of this Section to make
indemnification in respect of any claim, issue or matter asserted in an
action or suit threatened or brought by or in the right of the corporation
shall be promptly communicated to the person who threatened or brought such
action or suit, and within ten (10) days after receipt of such notification
such person shall have the right to petition the Court of Common Pleas of
Butler County, Ohio or the court in which such action or suit was brought,
if any, to review the reasonableness of such determination.
SECTION 5. ADVANCES FOR EXPENSES. Expenses (including, without limitation,
attorneys fees, filing fees, court reporters' fees and transcript costs)
incurred in defending any action, suit or proceeding referred to in Section
1 shall be paid by the corporation in advance of the final disposition of
such action, suit or proceeding to or on behalf of the officer, director or
other person entitled to indemnity under Section 1 promptly as such
expenses are incurred by him, but only if such officer, director or other
person shall first agree, in writing, to repay all amounts so paid in
respect of any claim, issue or other matter asserted in such action, suit
or proceeding in defense of which he shall not have been successful on the
merits or otherwise:
(A) unless it shall ultimately be determined as provided in Section 4 that
he is not entitled to be indemnified by the corporation as provided under
Section 1; or
(B) if, in respect of any claim, issue or other matter asserted by or in
the right of the corporation in such action or suit, he shall have been
adjudged to be liable for gross negligence or misconduct (other than
negligence) in the performance of his duty to the corporation, unless and
only to the extent that the Court of Common Pleas of Butler County, Ohio
or the court in which such action or suit was brought shall determine upon
application that, despite such adjudication of liability, and in view of
all the circumstances, he is fairly and reasonably entitled to all or part
of such indemnification.
SECTION 6. ARTICLE V NOT EXCLUSIVE. The indemnification provided by this
Article V shall not be deemed exclusive of any other rights to which any
person seeking indemnification may be entitled under the Articles or the
Regulations or any agreement, vote of shareholders of the corporation or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who
II-5
<PAGE> 31
has ceased to be an officer or director of the corporation and shall inure
to the benefit of the heirs, executors, and administrators of such a
person.
SECTION 7. INSURANCE. The corporation may purchase and maintain insurance
on behalf of any person who is or was a director, trustee, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, trustee, officer, employee, or agent of
another corporation (domestic or foreign, nonprofit or for profit),
partnership, joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would
have the obligation or the power to indemnify him against such liability
under the provisions of this Article V.
SECTION 8. CERTAIN DEFINITIONS. For purposes of this Article V, and as
examples and not by way of limitation:
(A) A person claiming indemnification under this Article V shall be deemed
to have been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1, or in defense of any
claim, issue or other matter therein, if such action, suit or proceeding
shall be terminated as to such person, with or without prejudice, without
the entry of a judgment or order against him, without a conviction of him,
without the imposition of a fine upon him, and without his payment or
agreement to pay any amount in settlement thereof (whether or not any such
termination is based upon a judicial or other determination of lack of
merit of the claims made against him or otherwise results in a vindication
of him); and
(B) References to an "other enterprise" shall include employee benefit
plans; references to a "fine" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes
duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interest of the corporation" within the
meaning of that term as used in this Article V.
SECTION 9. VENUE. Any action, suit or proceeding to determine a claim for
indemnification under this Article V may be maintained by the person
claiming such indemnification, or by the corporation, in the Court of
Common Pleas of Butler County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction
over its or his person by the Court of Common Pleas of Butler County, Ohio
in any such action, suit or proceeding.
Ohio Casualty has in force and effect a policy insuring the directors and
officers of Ohio Casualty against losses which they or any of them shall
become legally obligated to pay for any reason of any actual or alleged
error or misstatement or misleading statement or act or omission or neglect
or breach of duty by the directors and officers in the discharge of their
duties, individually or collectively, or any matter claimed against them
solely by reason of their being directors or officers, such coverage being
limited by the specific terms and provisions of the insurance policy.
II-6
<PAGE> 32
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
1.1+ Form of Underwriting Agreement.
4.1 Articles of Incorporation, as amended (incorporated by
reference to Exhibits 4(a), 4(b), 4(c), 4(d) and 4(e) of
Ohio Casualty's Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on December 15,
1998).
4.2 Code of Regulations, as amended (incorporated by reference
to Exhibit 4(f) of Ohio Casualty's Current Report on Form
8-K, as filed with the Securities and Exchange Commission on
December 15, 1998).
4.3 Form of Senior Indenture to be entered into between Ohio
Casualty and Chase Manhattan Trust Company, National
Association (the 'Indenture Trustee') (incorporated by
reference to Exhibit 4.3 of Ohio Casualty's Pre-Effective
Amendment No. 2 to Registration Statement on Form S-3, as
filed with the Securities and Exchange Commission on May 11,
1999, Registration No. 333-70761).
4.4 Form of Supplemental Indenture to Senior Indenture providing
for the issuance of senior notes (incorporated by reference
to Exhibit 4.4 of Ohio Casualty's Pre-Effective Amendment
No. 2 to Registration Statement on Form S-3, as filed with
the Securities and Exchange Commission on May 11, 1999,
Registration No. 333-70761).
4.5 Form of Senior Debt Security (included in Exhibit 4.4).
4.6 Form of Subordinated Indenture to be entered into between
Ohio Casualty and the Indenture Trustee (incorporated by
reference to Exhibit 4.6 of Ohio Casualty's Pre-Effective
Amendment No. 2 to Registration Statement on Form S-3, as
filed with the Securities and Exchange Commission on May 11,
1999, Registration No. 333-70761).
4.7+ Form of Supplemental Indenture to Subordinated Indenture
providing for the issuance of subordinated notes.
4.8+ Form of Subordinated Debt Security (included in Exhibit
4.7).
5.1 Opinion of Vorys, Sater, Seymour and Pease LLP (incorporated
by reference to Exhibit 5.1 of Ohio Casualty's Registration
Statement on Form S-3, as filed with the Securities and
Exchange Commission on January 19, 1999, Registration No.
333-70761).
12.1 Statement re: Computation of consolidated ratio of earnings
to fixed charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Vorys, Sater, Seymour and Pease LLP (included in
Exhibit 5.1 of Ohio Casualty's Registration Statement on
Form S-3, as filed with the Securities and Exchange
Commission on January 19, 1999, Registration No. 333-70761).
23.3 Consent of Ernst & Young LLP.
24.1 Powers of Attorney for Ohio Casualty.
25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of the Indenture Trustee, under the Senior
Indenture (incorporated by reference to Exhibit 25.1 of Ohio
Casualty's Registration Statement on Form S-3, as filed with
the Securities and Exchange Commission on January 19, 1999,
Registration No. 333-70761).
25.2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of the Indenture Trustee, under the
Subordinated Indenture (incorporated by reference to Exhibit
25.2 of Ohio Casualty's Registration Statement on Form S-3,
as filed with the Securities and Exchange Commission on
January 19, 1999, Registration No. 333-70761).
</TABLE>
II-7
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
99.1 Credit Agreement by and between Ohio Casualty, various
lenders and The Chase Manhattan Bank (as administrative
agent for the lenders), dated as of October 27, 1997
(incorporated by reference to Exhibit 10c of Quarterly
Report on Form 10-Q, as filed with the Securities and
Exchange Commission on November 14, 1997).
99.2 Amendment to Credit Agreement by and between Ohio Casualty,
various lenders and The Chase Manhattan Bank (as
administrative agent for the lenders), dated as of August
11, 1998 (incorporated by reference to Exhibit 99.2 of Ohio
Casualty's Registration Statement on Form S-3, as filed with
the Securities and Exchange Commission on January 19, 1999,
Registration No. 333-70761).
</TABLE>
- ---------------
+ To be filed under subsequent Form 8-K.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Securities and Exchange Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be
II-8
<PAGE> 34
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(i) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-9
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Ohio Casualty
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hamilton, State of Ohio, on June 1, 1999.
Ohio Casualty Corporation
By: /s/ LAUREN N. PATCH
------------------------------------
Lauren N. Patch, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ LAUREN N. PATCH President and Chief Executive
- --------------------------------------------- Officer, Director
Lauren N. Patch June 1, 1999
* /s/ JOSEPH L. MARCUM Chairman of the Board, Director
- ---------------------------------------------
Joseph L. Marcum June 1, 1999
* /s/ WILLIAM L. WOODALL Vice Chairman of the Board,
- --------------------------------------------- Director
William L. Woodall June 1, 1999
* /s/ BARRY S. PORTER Chief Financial Officer and
- --------------------------------------------- Treasurer
Barry S. Porter June 1, 1999
* /s/ ARTHUR J. BENNERT Director
- ---------------------------------------------
Arthur J. Bennert June 1, 1999
* /s/ JACK E. BROWN Director
- ---------------------------------------------
Jack E. Brown June 1, 1999
* /s/ CATHERINE E. DOLAN Director
- ---------------------------------------------
Catherine E. Dolan June 1, 1999
* /s/ WAYNE R. EMBRY Director
- ---------------------------------------------
Wayne R. Embry June 1, 1999
* /s/ VADEN FITTON Director
- ---------------------------------------------
Vaden Fitton June 1, 1999
* /s/ STEPHEN S. MARCUM Director
- ---------------------------------------------
Stephen S. Marcum June 1, 1999
* /s/ STANLEY N. PONTIUS Director
- ---------------------------------------------
Stanley N. Pontius June 1, 1999
* /s/ HOWARD L. SLONEKER III Director
- ---------------------------------------------
Howard L. Sloneker III June 1, 1999
</TABLE>
- ---------------
* Pursuant to Power of Attorney
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
1.1+ Form of Underwriting Agreement.
4.1 Articles of Incorporation, as amended (incorporated by
reference to Exhibits 4(a), 4(b), 4(c), 4(d) and 4(e) of
Ohio Casualty Corporation's ('Ohio Casualty') Current Report
on Form 8-K, as filed with the Securities and Exchange
Commission on December 15, 1998).
4.2 Code of Regulations, as amended (incorporated by reference
to Exhibit 4(f) of Ohio Casualty's Current Report on Form
8-K, as filed with the Securities and Exchange Commission on
December 15, 1998).
4.3 Form of Senior Indenture to be entered into between Ohio
Casualty and Chase Manhattan Trust Company, National
Association (the 'Indenture Trustee') (incorporated by
reference to Exhibit 4.3 of Ohio Casualty's Pre-Effective
Amendment No. 2 to Registration Statement on Form S-3, as
filed with the Securities and Exchange Commission on May 11,
1999, Registration No. 333-70761).
4.4 Form of Supplemental Indenture to Senior Indenture providing
for the issuance of senior notes (incorporated by reference
to Exhibit 4.4 of Ohio Casualty's Pre-Effective Amendment
No. 2 to Registration Statement on Form S-3, as filed with
the Securities and Exchange Commission on May 11, 1999,
Registration No. 333-70761).
4.5 Form of Senior Debt Security (included in Exhibit 4.4).
4.6 Form of Subordinated Indenture to be entered into between
Ohio Casualty and the Indenture Trustee (incorporated by
reference to Exhibit 4.6 of Ohio Casualty's Pre-Effective
Amendment No. 2 to Registration Statement on Form S-3, as
filed with the Securities and Exchange Commission on May 11,
1999, Registration No. 333-70761).
4.7+ Form of Supplemental Indenture to Subordinated Indenture
providing for the issuance of subordinated notes.
4.8+ Form of Subordinated Debt Security (included in Exhibit
4.7).
5.1 Opinion of Vorys, Sater, Seymour and Pease LLP (incorporated
by reference to Exhibit 5.1 of Ohio Casualty's Registration
Statement on Form S-3, as filed with the Securities and
Exchange Commission on January 19, 1999, Registration No.
333-70761).
12.1 Statement re: Computation of consolidated ratio of earnings
to fixed charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Vorys, Sater, Seymour and Pease LLP (included in
Exhibit 5.1 of Ohio Casualty's Registration Statement on
Form S-3, as filed with the Securities and Exchange
Commission on January 19, 1999, Registration No. 333-70761).
23.3 Consent of Ernst & Young LLP.
24.1 Powers of Attorney for Ohio Casualty.
25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of the Indenture Trustee, under the Senior
Indenture (incorporated by reference to Exhibit 25.1 of Ohio
Casualty's Registration Statement on Form S-3, as filed with
the Securities and Exchange Commission on January 19, 1999,
Registration No. 333-70761).
25.2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of the Indenture Trustee, under the
Subordinated Indenture (incorporated by reference to Exhibit
25.2 of Ohio Casualty's Registration Statement on Form S-3,
as filed with the Securities and Exchange Commission on
January 19, 1999, Registration No. 333-70761).
99.1 Credit Agreement by and between Ohio Casualty, various
lenders and The Chase Manhattan Bank (as administrative
agent for the lenders), dated as of October 27, 1997
(incorporated by reference to Exhibit 10c of Quarterly
Report on Form 10-Q, as filed with the Securities and
Exchange Commission on November 14, 1997).
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
99.2 Amendment to Credit Agreement by and between Ohio Casualty,
various lenders and The Chase Manhattan Bank (as
administrative agent for the lenders), dated as of August
11, 1998 (incorporated by reference to Exhibit 99.2 of Ohio
Casualty's Registration Statement on Form S-3, as filed with
the Securities and Exchange Commission on January 19, 1999,
Registration No. 333-70761).
</TABLE>
- ---------------
+ To be filed under subsequent Form 8-K.
<PAGE> 1
EXHIBIT 12.1
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
Earnings to fixed charges =
(Income from continuing operations before income tax + fixed charges) / fixed
charges
Fixed charges represent interest expense on debt, the portion of rents
representative of the interest factor and amortization of debt expense,
respectively.
(dollar amounts in 000's)
Quarter Ended March 31, 1999
= ($14,782+3,552 +1,275+78) / ($3,552+1,275+78)
= 4.01
Year Ended December 31,
1998 = ($103,000+3,547+4,022+340)/($3,547 + 4,022 +340)
= 14.02
1997 = ($173,457+3,147+4,148+412)/($3,147 + 4,148 +412)
= 23.51
1996 = ($115,038+3,769+4,184+224)/($3,769+4,184+224)
= 15.07
1995 = ($120,177+4,474+4,032+191)/($4,474+4,032+191)
= 14.82
1994 = ($109,326+4,102+4,306+606)/($4,102+4,306+606)
= 13.13
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement (Form No. 333-70761) on Form S-3 of our report dated February 4, 1999
relating to the consolidated financial statements, which appears in the 1998
Annual Report to Shareholders, which is incorporated by reference in Ohio
Casualty Corporation's Annual Report on Form 10-K for the year ended December
31, 1998. We also consent to the incorporation by reference of our report dated
February 4, 1999 relating to the financial statement schedules, which appears in
such Annual Report on Form 10-K. We also consent to the references to us under
the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 1, 1999
<PAGE> 1
Exhibit 23.3
Consent of Ernst & Young LLP, Independent Auditors
We consent to reference to our firm under the caption "Experts" and to the
incorporation by reference in Pre-Effective Amendment No. 3 to the Registration
Statement (Form S-3 No. 333-70761) and related Prospectus of Ohio Casualty
Corporation for the registration of $300 million of debt securities of our
report dated January 22, 1999, with respect to the special-purpose financial
statements of the Commercial Lines Business of American Financial Corporation
included in Ohio Casualty Corporation's Current Report (Form 8-K/A) dated March
26, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Cincinnati, Ohio
May 28, 1999
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Lauren N. Patch
----------------------------------
Lauren N. Patch, President and
Chief Executive Officer, Director
<PAGE> 2
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry s.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Joseph L. Marcum
-----------------------------------------
Joseph L. Marcum, Chairman of the Board,
Director
<PAGE> 3
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ William L. Woodall
-----------------------------------
William L. Woodall, Vice Chairman
of the Board and Director
<PAGE> 4
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Barry S. Porter
-----------------------------------------
Barry S. Porter, Chief Financial Officer
and Treasurer
<PAGE> 5
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Arthur J. Bennert
------------------------------
Arthur J. Bennert, Director
<PAGE> 6
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Jack E. Brown
---------------------------
Jack E. Brown, Director
<PAGE> 7
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Catherine E. Dolan
-----------------------------
Catherine E. Dolan, Director
<PAGE> 8
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Wayne R. Embry
--------------------------
Wayne R. Embry, Director
<PAGE> 9
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Vaden Fitton
-------------------------
Vaden Fitton, Director
<PAGE> 10
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Stephen S. Marcum
----------------------------
Stephen S. Marcum, Director
<PAGE> 11
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Stanley N. Pontius
----------------------------
Stanley N. Pontius, Director
<PAGE> 12
POWER OF ATTORNEY
The undersigned director and/or officer of Ohio Casualty Corporation
(the "Company"), does hereby constitute and appoint Lauren N. Patch and Barry S.
Porter, and each of them severally, my true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in my
name and on my behalf in my capacity as such director and/or officer of the
Company and to execute any and all instruments for me and in my name in such
capacity, which said attorneys or agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of a Registration Statement
on Form S-3 relating to the offering from time to time of an indeterminate
number or amount of debt securities of the Company, including specifically, but
without limitation, power and authority to sign for me in my name in such
capacity as a director and/or officer for the Company, such Registration
Statement and any and all amendments (including post-effective amendments) to
such Registration Statement; and I do hereby ratify and confirm all that said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name as of the 19th day
of January, 1999.
/s/ Howard L. Sloneker III
--------------------------------
Howard L. Sloneker III, Director
