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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-K

[x] Annual Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2000
-----------------

[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from to
---------- ----------

Commission File Number 0-5544

OHIO CASUALTY CORPORATION
(Exact name of registrant as specified in its charter)

OHIO
(State or other jurisdiction of incorporation or organization)

31-0783294
(I.R.S. Employer Identification No.)

9450 SEWARD ROAD, FAIRFIELD, OHIO
(Address of principal executive offices)

45014
(Zip Code)

(513) 603-2400
(Registrant's telephone number)

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common Shares, Par Value $.125 Each
(Title of Class)

Common Share Purchase Rights
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

Yes X No
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].

The aggregate market value as of March 1, 2001 of the voting stock
held by non-affiliates of the registrant was $481,068,239.

On March 1, 2001 there were 60,072,619 shares outstanding.

Page 1 of 130
INDEX TO EXHIBITS ON PAGES 46-47
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DOCUMENTS INCORPORATED BY REFERENCE



Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 2000, are incorporated by reference into Parts I
and II of this Annual Report on Form 10-K.

Portions of the Registrant's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held on April 18, 2001, are incorporated by
reference into Part III of this Annual Report on Form 10-K.




2


PART I

ITEM 1. BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS

Ohio Casualty Corporation (the Corporation) was incorporated under the
laws of Ohio in August, 1969. The Corporation operates primarily as a
holding company and is principally engaged, through its direct and
indirect subsidiaries, in the business of property and casualty insurance
and insurance premium finance.

The Corporation conducts property and casualty insurance business through
The Ohio Casualty Insurance Company ("Ohio Casualty"), an Ohio corporation
organized in 1919, and Ohio Casualty's five operating property and
casualty insurance subsidiaries: West American Insurance Company ("West
American"), an Indiana corporation (originally incorporated under the laws
of the state of California) acquired in 1945; Ohio Security Insurance
Company ("Ohio Security"), an Ohio corporation acquired in 1962; American
Fire and Casualty Company ("American Fire"), an Ohio corporation
(originally incorporated under the laws of the state of Florida) acquired
in 1969; Avomark Insurance Company ("Avomark"), an Indiana corporation
formed in 1996 and Ohio Casualty of New Jersey, Inc. ("OCNJ"), an Ohio
corporation formed in 1998. This group of six property-casualty
companies that make up the Ohio Casualty Group (the Group) presently
underwrites most forms of property and casualty insurance. The
Corporation conducts its premium finance business through Ocasco Budget,
Inc. ("Ocasco"), an Ohio corporation (originally incorporated under the
laws of the state of California) organized in 1960. Ocasco is a direct
subsidiary of Ohio Casualty.

On December 1, 1998, Ohio Casualty acquired substantially all of the
Commercial Lines Division of Great American Insurance Company ("GAI"), an
insurance subsidiary of American Financial Group, Inc. As part of the
transaction, the Group assumed responsibility for 650 employees of GAI's
Commercial Lines Division, as well as relationships with 1,700 agents.
The major lines of business included in the sale were workers'
compensation, commercial multi-peril, umbrella, general liability and
commercial auto. Four commercial operations as well as all California
business and all pre-1987 environmental claims were excluded from the
transaction.

Under the GAI asset purchase agreement, the Group assumed $645.8 million
of commercial lines insurance liabilities, $62.6 million in other
liabilities and acquired $287.9 million of investments, $1.5 million in
cash and $119.1 million in other assets. This resulted in an assumption
by the Group of a net statutory-basis liability of $300.0 million in
addition to the Corporation's issuance of warrants to purchase 6 million
shares (as adjusted for 1999 stock dividend) of Ohio Casualty Corporation
common stock at a price of $22.505 per share. In addition, if the
annualized production from the transferred agents at the end of eighteen
months equaled or exceeded the production in the twelve months prior to
closing, GAI would receive an additional $40.0 million. This bonus
payment graded downward as production decreased. In the second quarter of
2000, the Corporation estimated the payment due to be approximately $27.5
million. This amount was added to the agent relationship intangible asset
for the acquisition and is being amortized over the remaining amortization
period. As of December 31, 2000, Ohio Casualty has paid $27.1 million of
the payment due, while the remaining amount is in final negotiation.
Additional information related to the accounting treatment of the
acquisition as well as proforma results are set forth in Note 14,
Acquisition of Commercial Lines Business, in the Notes to the Consolidated
Financial Statements on page 38 of the Annual Report to Shareholders for
the fiscal year ended December 31, 2000.

3


ITEM 1. CONTINUED

During 1995, the Corporation's life insurance operations conducted through
The Ohio Life Insurance Company ("Ohio Life") subsidiary were
discontinued. On October 2, 1995, the Corporation signed the final
documents to reinsure the existing blocks of business and enter a
marketing agreement with Great Southern Life Insurance Company. The
existing blocks of business were reinsured through a 100% coinsurance
treaty with Employer's Reassurance Corporation. During the fourth quarter
of 1997, Great Southern Life Insurance Company replaced Ohio Life as the
primary insurer for approximately 76% of the life insurance policies
subject to the 1995 agreement. At December 31, 1998, Great Southern had
assumed 95% of the life insurance policies subject to the 1995 agreement.
As a result of this assumption, the Corporation recognized an additional
amount of unamortized ceding commission of $1.1 million before tax during
1998. During 1999, Great Southern Life Insurance Company replaced
Employers' Reassurance Corporation on the 100% coinsurance treaty, and the
Corporation recognized the remaining $1.1 million in unamortized ceding
commission. On December 31, 1999, the Corporation completed the sale of
the Ohio Life shell, thereby transferring all remaining assets and
liabilities, as well as reinsurance treaty obligations, to the buyer. The
after-tax gain on this sale totaled $6.2 million, or $.11 per share. Net
income from discontinued operations amounted to $4.3 million or $.07 per
share in 1999 and $1.9 million or $.03 per share in 1998. Additional
information related to the discontinued life insurance operations is
included in Note 20, Discontinued Operations, in the Notes to the
Consolidated Financial Statements on pages 39 and 40 of the Annual Report
to Shareholders for the fiscal year ended December 31, 2000.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The revenues, operating profit and combined ratios of each industry
segment for the three years ended December 31, 2000 are set forth in Note
13, Segment Information, in the Notes to the Consolidated Financial
Statements on pages 36, 37 and 38 of the Annual Report to Shareholders for
the fiscal year ended December 31, 2000.


4


ITEM 1. CONTINUED

PREMIUMS

The following table shows the total net premiums written (gross premiums
less premiums ceded pursuant to reinsurance treaties) by line of business
by the Group (property and casualty premiums), Ocasco (premium finance
revenues), and Ohio Life (discontinued operations revenues) for the periods
indicated.


Net Premiums Written
By Line of Business
(in thousands)

2000 1999 1998 1997 1996
---------------------------------------------------------------

Auto liability $ 382,452 $ 437,856 $ 403,179 $ 384,358 $ 386,121
Auto physical damage 262,275 281,054 257,170 219,870 208,541
Homeowners
multiple peril 173,222 181,905 180,697 168,168 166,457
Workers' compensation 185,800 191,688 100,150 97,176 115,398
Commercial
multiple peril 234,507 229,999 157,103 141,931 132,808
Other liability 151,275 150,879 95,144 96,610 101,688
All other lines 115,821 113,285 105,668 98,708 97,059
---------- ---------- ---------- ---------- ----------
Property and casualty
premiums $1,505,352 $1,586,666 $1,299,111 $1,206,821 $1,208,072
========== ========== ========== ========== ==========
Premium finance
revenues $ 480 $ 804 $ 1,170 $ 1,511 $ 1,981
========== ========== ========== ========== ==========
Discontinued operations
revenues $ 0 $ 0 $ 0 $ 6 $ 215
========== ========== ========== ========== ==========


Property and casualty net premiums decreased $81.3 million in 2000. The net
premium decrease related to conservative underwriting philosophies
that led to the non-renewal of certain business and cancellation of Managing
General Agents, the effects of annualization of New Jersey private passenger
automobile policies, and premium cessions on certain experience rated
reinsurance contracts covering casualty losses exceeding $1.0 million. The
1999 increase in premium volume reflects a full year assumption from GAI
versus one month in 1998.

(c) NARRATIVE DESCRIPTION OF BUSINESS

The Group is represented on a commission basis by approximately 6,599
independent insurance agents. In most cases, these agents also represent
other unaffiliated companies which may compete with the Group. The six
claim and eight underwriting and service offices operated by the Group
assist these independent agents in producing and servicing the Group's
business.

5


ITEM 1. CONTINUED

The following table shows consolidated direct premiums written for the
Group's ten largest states:


Ten Largest States
Direct Premiums Written
From Continuing Operations
(in thousands)

Percent Percent Percent
2000 of Total 1999 of Total 1998 of Total
---- -------- ---- -------- ---- --------

New Jersey $221,965 15.6 New Jersey $230,652 17.4 New Jersey $219,518 17.0
Ohio 153,057 10.8 Ohio 153,146 11.5 Ohio 147,285 11.4
Kentucky 132,631 9.3 Kentucky 125,438 9.5 Kentucky 120,309 9.3
Pennsylvania 91,979 6.5 Pennsylvania 87,986 6.6 Pennsylvania 96,932 7.5
Illinois 81,747 5.8 Illinois 77,035 5.8 Illinois 73,794 5.7
Indiana 75,340 5.3 Indiana 74,073 5.6 Indiana 65,681 5.1
North Carolina 54,710 3.9 North Carolina 39,345 3.0 Maryland 41,526 3.2
Maryland 45,496 3.2 Maryland 38,851 2.9 Texas 40,537 3.1
Texas 45,386 3.2 Texas 37,894 2.9 North Carolina 37,856 2.9
Michigan 39,347 2.8 Oklahoma 33,995 2.6 Florida 32,649 2.5
-------- ---- -------- ---- -------- ----
$941,658 66.4 $898,415 67.8 $876,087 67.7
======== ==== ======== ==== ======== ====


INVESTMENT OPERATIONS

Each of the companies in the Group must comply with the insurance laws of
its domiciliary state and of the other states in which it is licensed for
business. Among other things, these laws prescribe the kind, quality and
concentration of investments which may be made by insurance companies. In
general, these laws permit investments, within specified limits and
subject to certain qualifications, in federal, state and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages and real estate.

The distribution of invested assets of the Group is determined by a number
of factors, including insurance law requirements, the Corporation's
liquidity needs, tax position, and general market conditions. In
addition, our business mix and liability payout patterns are considered.
Adjustments are made to the asset allocation from time to time. During
1999, the Group reallocated its investment portfolio to adjust its asset
mix. The Group completed the reallocation by selling approximately $200
million in equity securities, resulting in approximately $145 million of
before-tax realized gains in 1999. The funds previously held in equity
securities were reallocated to investment grade securities. The
Corporation has also reallocated its tax exempt bond portfolio. Tax
exempt bonds decreased to 3.2% of the fixed income portfolio at year-end
2000 versus 19.4% and 34.8% for December 31, 1999 and 1998, respectively.
The funds previously held in tax exempt bonds have been reallocated to
investment grade taxable bonds. Due to recent poor operating results, the
Corporation has reduced its holdings of tax-exempt securities during 2000
and 1999 in order to maximize after-tax income. Assets relating to property
and casualty operations are invested to maximize after-tax returns with
appropriate diversification of risk. The Group's current liquidity needs
are expected to be met by scheduled bond maturities, dividend payments,
interest payments, and cash balances.

6


ITEM 1. CONTINUED

The following table sets forth the carrying values and other data of the
consolidated invested assets of the Corporation as of the end of the years
indicated:



Distribution of Invested Assets
(in millions)

2000
Average % of % of % of
Rating 2000 Total 1999 Total 1998 Total
------- -------- ----- -------- ----- -------- -----


U.S. government AAA $ 55.6 1.7 $ 65.1 2.0 $ 79.8 2.2
Tax exempt bonds
and notes AA+ 79.3 2.3 461.4 14.5 839.6 23.3
Debt securities
issued by foreign
governments N/A 0.0 0.0 0.0 0.0 3.6 0.1
Corporate securities A- 1,254.9 37.7 1,066.1 33.5 1,117.5 31.0
Mortgage backed
securities
U.S. government AAA 25.8 0.8 46.5 1.5 6.3 0.2
Other AA+ 1,098.1 33.0 737.9 23.2 369.1 10.2
-------- ----- -------- ----- -------- -----
Total bonds A+ 2,513.7 75.5 2,377.0 74.7 2,415.9 67.0

Common stocks 754.8 22.7 698.0 22.0 919.8 25.5
Preferred stocks 0.1 0.0 0.1 0.0 5.1 0.2
-------- ----- -------- ----- -------- -----
Total stocks 754.9 22.7 698.1 22.0 924.9 25.7

Short-term 59.7 1.8 104.4 3.3 262.9 7.3
-------- ----- -------- ----- -------- -----
Total investments $3,328.3 100.0 $3,179.5 100.0 $3,603.7 100.0
======== ===== ======== ===== ======== =====
Total market value
of investments $3,328.3 $3,179.5 $3,603.7
======== ======== ========
Total cost and
amortized cost
of investments $2,698.8 $2,674.1 $2,815.8
======== ======== ========


The consolidated fixed income portfolio (identified as "Total bonds" in
the foregoing table) of the Corporation had a weighted average rating of
"A+". The average maturity, using estimated maturity on the mortgage
backed securities and stated maturity on the remaining fixed income
portfolio, was 6.77 years as of December 31, 2000.

Investments in below investment grade securities (Standard and Poor's
rating below BBB-) and unrated securities are summarized as follows:



(in millions) 2000 1999 1998
---- ---- ----

Below investment grade securities:
Carrying value $104.6 $175.2 $207.3
Amortized cost 120.1 187.1 208.8

Unrated securities:
Carrying value $255.5 $303.2 $281.8
Amortized cost 257.3 310.0 264.8


7



ITEM 1. CONTINUED

Utilizing ratings provided by other agencies, such as the NAIC, the
Corporation categorizes additional unrated securities into below
investment grade ratings. The following summarizes the additional unrated
securities that are rated in the below investment grade category by other
rating agencies:



(in millions) 2000 1999 1998
---- ---- ----

Below investment grade securities at
carrying value $104.6 $175.2 $207.3

Other rating agencies categorizing
unrated securities as below
investment grade 22.8 38.7 7.7
------ ------ ------

Below investment grade securities at
carrying value $127.4 $213.9 $215.0


The securities in the Corporation's below investment grade portfolio have
been issued by 51 corporate borrowers in approximately 36 industries. At
December 31, 2000, the market value of the Corporation's five largest
investments in below investment grade securities totaled $33.1 million,
and had an approximate amortized cost of $33.2 million. None of these
holdings market value individually exceeded $8.7 million.

At December 31, 2000, the Group's fixed income portfolio totaled $2.5
billion which consisted of 95.0% investment grade securities and 5.0%
below investment grade and/or unrated securities.

Investments in below investment grade securities have greater risks than
investments in investment grade securities. The risk of default by
borrowers which issue securities rated below investment grade is
significantly greater because these securities are generally unsecured and
often subordinated to other debt and these borrowers are often highly
leveraged and are more sensitive to adverse economic conditions such as a
recession or a sharp increase in interest rates. Investment grade
securities are also subject to significant adverse risks including the
risks of re-leveraging and changes in control of the issuer. In most
instances, investors are unprotected with respect to such risks, the
effects of which can be substantial.

Yield (based on cost of investments) for the taxable fixed income
portfolio was 7.6% and 7.8% at December 31, 2000 and 1999, respectively.
Below investment grade securities were yielding 10.1% and 10.0% at December
31, 2000 and 1999, respectively, while investment grade securities were
yielding 7.4% in 2000 and 7.5% in 1999. Yield for tax exempt securities
was 5.4% and 5.5% at December 31, 2000 and 1999, respectively; however,
this yield is not directly comparable to taxable yield due to the
complexity of federal taxation of insurance companies.

The Corporation remains committed to a diversified common stock portfolio.
As of December 31, 2000, the portfolio consisted of 60 separate issues,
diversified across 43 different industries; and the largest single
position was 15.62% of the portfolio. The portfolio strategy with respect
to common stocks has been to invest in companies whose stocks have below
average valuations, yet above average growth prospects.

8


ITEM 1. CONTINUED

Investment income is affected by the amount of new investable funds and
investable funds arising from maturities, prepayments, calls and exchanges
as well as the timing of receipt of such funds. In addition, other
factors such as interest rates at time of investment and the maturity,
income tax status, credit status and other risks associated with new
investments are reflected in investment income. Future changes in the
distribution of investments and the factors described above could affect
overall investment income in the future; however, the amount of any
increase or decrease cannot be predicted. Further details regarding
investment distribution and investment income are described in Note 2,
Investments, in the Notes to Consolidated Financial Statements on pages 30
and 31 of the Annual Report to Shareholders for the fiscal year ended
December 31, 2000.

Purchases of taxable fixed income securities in 2000 were as follows:
$956.0 million of investment grade securities, $40.3 million of high yield
securities and $134.2 million of unrated securities. Purchases of tax-
exempt and equity securities in 2000 totaled $.9 million and $80.4
million, respectively.

Disposals (including maturities, calls, exchanges and scheduled
prepayments) of taxable fixed income securities in 2000 were as follows:
$439.6 million of investment grade securities, $100.7 million of high
yield securities and $186.4 million of unrated securities. Dispositions
of tax-exempt and equity securities in 2000 totaled $321.6 million and
$65.0 million, respectively.

Consolidated before-tax net realized investment losses in 2000 totaled
$2.4 million, $.04 per share. Included in this amount are approximately
$10.9 million in writedowns of the carrying values of certain securities
the Corporation determined had an other than temporary decline in value.

SHARE REPURCHASES

Since 1990, the Board of Directors of Ohio Casualty Corporation has
authorized the purchase of as many as 13,800,000 (as adjusted for stock
splits) shares of its common stock through open market or privately
negotiated transactions. Although the Corporation did not repurchase any
shares of its common stock in 2000, the Corporation did repurchase
2,478,000 shares for $46.1 million in 1999 and 4,725,800 shares for $100.0
million in 1998. This brings the remaining repurchase authorization to
1,649,824 shares as of December 31, 2000.

LIABILITIES FOR UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES

Liabilities for loss and loss adjustment expenses are established for the
estimated ultimate costs of settling claims for insured events, both
reported claims and incurred but not reported claims, based on information
known as of the evaluation date. As more information becomes available
and claims are settled, the estimated liabilities are adjusted upward or
downward with the effect of increasing or decreasing net income at the
time of adjustments. Such estimated liabilities include direct costs of
the loss under terms of insurance policies as well as legal fees and
general expenses of administering the claims adjustment process. The
liabilities for claims incurred in accident years 1999, 1998 and 1997 were
adjusted in the subsequent year as shown below:

9



ITEM 1. CONTINUED

Accident Year Loss and Loss Adjustment Expense Liabilities
Subsequent Year Adjustment
(in millions)

1999 1998 1997
---- ---- ----
Property $(13) $ 0 $12
Auto (10) 21 24
Workers' compensation
and other liability (40) 12 5
----- ---- ----
Total reduction (increase) $(63) $33 $41
===== ==== ====

The effect of catastrophes on the Group's results cannot be accurately
predicted. As such, severe weather patterns could have a material adverse
impact on the Group's results. In 2000, 1999 and 1998 there were 24, 27
and 37 catastrophes, respectively. The largest catastrophe in each of
these years was $7.1 million, $17.9 million and $7.3 million in incurred
losses. Additional catastrophes with over $1.0 million in incurred losses
numbered 9, 7 and 14 in 2000, 1999 and 1998, respectively. For additional
discussion of catastrophe losses, refer to Note 9, Losses and Loss
Reserves, in the Notes to the Consolidated Financial Statements on pages
35 and 36 of the Annual Report to Shareholders for the fiscal year ended
December 31, 2000.

In the normal course of business, the Group is involved in disputes and
litigation regarding terms of insurance contracts and the amount of
liability under such contracts arising from insured events. The
liabilities for loss and loss adjustment expenses include estimates of the
amounts for which the Group may be liable upon settlement or other
conclusion of such litigation.

Because of the inherent future uncertainties in estimating ultimate costs
of settling claims, actual loss and loss adjustment expenses may deviate
substantially from the amounts recorded in the Corporation's consolidated
financial statements. Furthermore, the timing, frequency and extent of
adjustments to the estimated liabilities cannot be accurately predicted
since conditions and events which established historical loss and loss
adjustment expense development and which serve as the basis for estimating
ultimate claims cost may not occur in the future in exactly the same
manner, if at all.

The anticipated effect of inflation is implicitly considered when
estimating the liability for losses and loss adjustment expenses based on
historical loss development trends adjusted for anticipated changes in
underwriting standards, policy provisions and general economic trends.

The following tables present an analysis of losses and loss adjustment
expenses and related liabilities for the periods indicated. The
accounting policies used to estimate liabilities for losses and loss
adjustment expenses are described in Note 1H, Accounting Policies and Note
9, Losses and Loss Reserves, in the Notes to Consolidated Financial
Statements on pages 29, 35 and 36 of the Annual Report to Shareholders for
the fiscal year ended December 31, 2000.

10


ITEM 1. CONTINUED




Reconciliation of Liabilities for Losses and Loss Adjustment Expense
(in thousands)

2000 1999 1998
---- ---- ----

Net liabilities, beginning of year $1,823,329 $1,865,643 $1,421,804
Addition related to acquisition 0 0 483,938
Provision for current accident year
claims 1,237,319 1,176,072 989,114
Increase (decrease) in provisions
for prior accident year claims 56,846 (418) (66,119)
---------- ----------- -----------
1,294,165 1,175,654 922,995
Payments for claims occurring during:
Current accident year 596,114 600,942 513,292
Prior accident years 614,049 617,026 449,802
---------- ----------- -----------
1,210,163 1,217,968 963,094

Net liabilities, end of year 1,907,331 1,823,329 1,865,643
Reinsurance recoverable 96,188 85,126 91,296
---------- ----------- -----------
Gross liabilities, end of year $2,003,519 $1,908,455 $1,956,939
========== =========== ===========



11



ITEM 1. CONTINUED

Analysis of Development of Loss and Loss Adjustment Expense Liabilities
(In thousands)



Year Ended December 31 1990 1991 1992 1993 1994 1995
- ---------------------- ---- ---- ---- ---- ---- ----

Net liability as originally
estimated: $1,484,937 $1,566,738 $1,673,868 $1,693,551 $1,606,487 $1,557,065

Life Operations Liability 952 599 663 656 961 3,934

P&C Operations Liability $1,483,985 $1,566,139 $1,673,205 $1,692,895 $1,605,526 $1,553,131

Net cumulative payments as of:
One year later 506,246 526,973 561,133 533,634 510,219 486,168
Two years later 783,948 822,634 869,620 833,399 803,273 772,670
Three years later 955,666 1,007,189 1,060,433 1,017,893 997,027 944,294
Four years later 1,063,507 1,123,591 1,176,831 1,147,266 1,106,361 1,080,373
Five years later 1,131,012 1,201,317 1,264,900 1,218,916 1,203,717 1,151,001
Six years later 1,182,110 1,266,605 1,316,756 1,288,148 1,257,334
Seven years later 1,235,315 1,302,313 1,369,889 1,331,291
Eight years later 1,262,187 1,342,839 1,405,107
Nine years later 1,294,439 1,370,913
Ten years later 1,315,891

Gross cumulative payments as of:
One year later 515,793 556,691 586,869 547,377 522,811 500,150
Two years later 804,771 867,483 904,911 859,142 827,232 798,078
Three years later 985,339 1,056,173 1,107,980 1,051,915 1,030,701 988,674
Four years later 1,098,746 1,182,598 1,231,386 1,190,466 1,158,798 1,123,163
Five years later 1,173,204 1,266,170 1,328,478 1,278,602 1,254,475 1,200,600
Six years later 1,228,265 1,339,559 1,394,890 1,347,025 1,314,586
Seven years later 1,289,919 1,387,821 1,446,560 1,396,505
Eight years later 1,328,267 1,428,103 1,487,891
Nine years later 1,360,764 1,461,989
Ten years later 1,387,957






Year Ended December 31 1996 1997 1998 1999 2000
- ---------------------- ---- ---- ---- ---- ----

Net liability as originally
estimated: $1,486,622 $1,421,804 $1,865,643 $1,823,329 $1,907,331

Life Operations Liability 3,722 100 98 0 0

P&C Operations Liability $1,482,900 $1,421,704 $1,865,545 $1,823,329 $1,907,331

Net cumulative payments as of:
One year later 483,574 449,802 640,209 614,049
Two years later 747,374 751,179 999,069
Three years later 950,138 919,272
Four years later 1,058,300
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Ten years later

Gross cumulative payments as of:
One year later 498,274 469,933 654,204 636,530
Two years later 781,853 775,371 1,022,220
Three years later 983,440 950,445
Four years later 1,098,738
Five years later
Six years later
Seven years later
Eight years later



12

ITEM 1. CONTINUED

Analysis of Development of Loss and Loss Adjustment Expense Liabilities
(continued)
(In thousands)



Year Ended December 31 1990 1991 1992 1993 1994 1995
- ---------------------- ---- ---- ---- ---- ---- ----

Net liability re-estimated
as of:
One year later 1,403,172 1,515,129 1,601,406 1,539,178 1,500,528 1,474,795
Two years later 1,407,197 1,500,890 1,555,452 1,510,943 1,501,530 1,441,081
Three years later 1,388,381 1,467,256 1,524,054 1,515,114 1,486,455 1,445,738
Four years later 1,368,529 1,449,789 1,559,492 1,525,493 1,507,331 1,478,787
Five years later 1,366,676 1,498,881 1,561,763 1,551,024 1,546,849 1,497,573
Six years later 1,423,277 1,499,009 1,588,063 1,587,885 1,566,276
Seven years later 1,420,105 1,526,136 1,627,385 1,609,600
Eight years later 1,444,589 1,558,571 1,649,372
Nine years later 1,472,173 1,577,553
Ten years later 1,491,007

Decrease (increase) in
original estimates: $ (7,022) $ (11,414) $ 23,833 $ 83,295 $ 39,251 $ 55,558

Net liability as originally
estimated: $1,483,985 $1,566,139 $1,673,205 $1,692,895 $1,605,526 $1,553,131

Reinsurance recoverable on
unpaid losses and LAE 72,514 98,456 80,114 75,738 65,336 71,066

Gross liability as originally
estimated: $1,557,451 $1,665,194 $1,753,982 $1,769,289 $1,671,823 $1,631,184

Life Operations Liability 952 599 663 656 961 6,987

P&C Operations Liability $1,556,499 $1,664,595 $1,753,319 $1,768,633 $1,670,862 $1,624,197

One year later 1,490,093 1,609,793 1,693,958 1,611,032 1,574,177 1,546,001
Two years later 1,483,617 1,603,891 1,645,634 1,591,328 1,579,932 1,515,032
Three years later 1,471,469 1,567,801 1,623,559 1,601,354 1,565,580 1,561,675
Four years later 1,449,670 1,558,508 1,664,239 1,612,300 1,630,314 1,585,459
Five years later 1,456,168 1,612,537 1,666,556 1,680,806 1,657,037 1,608,296
Six years later 1,517,411 1,612,012 1,722,897 1,704,863 1,680,592
Seven years later 1,513,884 1,666,562 1,758,687 1,731,007
Eight years later 1,565,037 1,695,786 1,784,615
Nine years later 1,589,300 1,718,840
Ten years later 1,612,550

Decrease (increase) in
original estimates: (56,051) (54,245) (31,296) 37,626 (9,730) 15,901





Year Ended December 31 1996 1997 1998 1999 2000
- ---------------------- ---- ---- ---- ---- ----

Net liability re-estimated
as of:
One year later 1,427,992 1,355,586 1,888,387 1,880,174
Two years later 1,403,059 1,386,401 1,885,236
Three years later 1,439,008 1,400,662
Four years later 1,456,890
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Ten years later

Decrease (increase) in
original estimates: $ 26,010 $ 21,043 $ (19,691) $ (56,846)

Net liability as originally
estimated: $1,482,900 $1,421,704 $1,865,545 $1,823,329 $1,907,331

Reinsurance recoverable on
unpaid losses and LAE 64,695 59,952 80,215 85,126 96,188

Gross liability as originally
estimated: $1,556,670 $1,483,807 $1,956,939 $1,908,455 $2,003,519

Life Operations Liability 9,075 2,150 11,081 0 0

P&C Operations Liability $1,547,595 $1,481,657 $1,945,759 $1,908,455 $2,003,519

One year later 1,496,100 1,447,044 1,972,890 1,981,093
Two years later 1,507,365 1,477,874 1,975,657
Three years later 1,537,356 1,495,816
Four years later 1,559,519
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Ten years later

Decrease (increase) in
original estimates: (11,924) (14,159) (29,898) (72,638)


13



ITEM 1. CONTINUED

REINSURANCE

In order to preserve capital and shareholder value, the Group purchases
reinsurance to protect against large or catastrophic losses.

The Property Per Risk treaty covers the Group in the event that an insured
sustains a property loss in excess of $1.0 million in a single insured
event. This property reinsurance covers up to $29.0 million in losses in
excess of the $1.0 million retention level for a single event. The Casualty
Per Occurrence treaty covers the Group in the event an insured sustains a
liability loss in excess of $1.0 million in a single insured event. Workers'
compensation, umbrella and other casualty reinsurance cover losses up to
$99.0 million, $49.0 million and $23.0 million, respectively, in excess of
the $1.0 million retention level for a single event.

The Catastrophe Reinsurance treaty protects the Group against an
accumulation of losses arising from one defined catastrophic occurrence or
series of events. This treaty provides $150.0 million of coverage in
excess of the Group's $25.0 million retention level. In 2000, a portion of
the catastrophe program was again renewed with a multi-year placement.
The multi-year placements provide continuity, maintain rates, and each
reinsurer's overall share of the program. Over the last 20 years, there
were two events that triggered coverage under our catastrophe reinsurance
treaty. Losses and loss adjustment expenses from the Oakland Fires in
1991 and Hurricane Andrew in 1992 totaled $35.6 million and $29.8 million,
respectively. Both of these losses exceeded the prior retention amount of
$13.0 million. The Group recovered $33.9 million from reinsurers as a
result of these events. Reinsurance limits are designed to cover exposure
to a catastrophic event expected to occur once every 250 years.

The Group also carries various treaties from the GAI acquisition for
certain programs such as auto liability, liquor liability and jewelers'
workers' compensation and selected programs such as Deep South Workers'
Compensation and Oregon School District as well as facultative reinsurance
contracts protecting certain individual risks or locations.

Reinsurance contracts do not relieve the Group of its obligation to
policyholders. The collectibility of reinsurance is subject to the
solvency of the reinsurers. The Group monitors the financial health and
claims settlement performance of its reinsurers, since reinsurance
protection is an important component in the financial plan. Annually,
financial statements are reviewed and various ratios calculated to
identify reinsurers who have ceased to meet our high standards of
financial strength. If any reinsurers fail these tests, they are removed
from the program at renewal. Currently, all domestic reinsurers have an
A.M. Best rating of "A-" or better and the financial condition of all
international reinsurers meets the Group's high standards. Additionally,
the Group utilizes a large base of reinsurers to mitigate its
concentration risk. In 2000, 1999 and 1998 no reinsurer accounted for
more than 10% of total ceded premiums. As a result of the Group's
controls over reinsurance, uncollectible amounts have not been
significant.

COMPETITION

More than 2,400 property and casualty insurance companies compete in the
United States of America and no one company or company group has a market
share greater than approximately 12.0%. According to A.M. Best, the Group
ranked as the thirty-sixth largest property and casualty insurance group in
the United States of America based on net insurance premiums written in 1999,
the latest year for which statistics are available. The Group competes with
other companies on the basis of service, price and coverage. Competition
in the property and casualty industry is intense.

14


ITEM 1. CONTINUED

STATE INSURANCE REGULATION

General. The Corporation and the members of the Group are subject to
regulation under the insurance statutes, including the holding company
statutes, of various states. Ohio Casualty, American Fire, Ohio Security
and OCNJ are all domiciled in Ohio. West American and Avomark are
domiciled in Indiana. Collectively, the Group is authorized to transact
the business of insurance in the District of Columbia and all states. The
Group is subject to examination of their affairs by the insurance
departments of the jurisdictions in which they are licensed.

State laws also require prior notice or regulatory agency approval of
changes in control of an insurer or its holding company and of certain
material intercorporate transfers of assets within the holding company
structure. Under applicable provisions of the Indiana insurance statutes
("Indiana Insurance Law") and the Ohio insurance statutes (the "Ohio
Insurance Law"), a person would not be permitted to acquire direct or
indirect control of the Corporation or any of the Group's companies
domiciled in such state, unless such person had obtained prior approval of
the Indiana Insurance Commissioner and the Ohio Superintendent of
Insurance, respectively, for such acquisition. For the purposes of the
Indiana Insurance Law and the Ohio Insurance Law, any person acquiring
more than 10% of the voting securities of a company is presumed to have
acquired "control" of such company.

Proposition 103 was passed in the state of California in 1988 in an
attempt to legislate premium rates for that state. The proposition
required premium rate rollbacks for 1989 California policyholders while
allowing for a "fair" return for insurance companies.

In 1998, the Administrative Law Judge issued a proposed ruling with a
rollback liability of $24.4 million plus interest. The Group established
a contingent liability for the Proposition 103 rollback of $24.4 million
plus simple interest at 10% from May 8, 1989. This brought the total
reserve to $52.3 million at September 30, 2000. On October 25, 2000, the
Group announced a settlement agreement for California Proposition 103 that
was approved by the Commissioner of Insurance of the state of California.
Under the terms of the settlement, the members of the Group will pay $17.5
million in refund premiums to eligible 1989 California policyholders. The
Corporation expects the payments to be made in the first half of 2001.
With this development, the total reserve was decreased to $17.5 million as
of September 30, 2000. When the refund payments occur, the remaining
$17.5 million liability will be extinguished. This decrease in the
reserve resulted in an increase in operating income and net income for the
third quarter 2000, and had no effect on the combined ratio reported.

To date, the Group has paid approximately $5.7 million in legal costs
related to the withdrawal and Proposition 103.

The state of New Jersey, the Group's largest state with 14.9% of total net
premiums written during 2000, has historically been a profitable state for
the Group. In recent years, however, the legislative environment in that
state has become more difficult. Due to legislative rules and regulations
designed to make automobile insurance less expensive and more easily
obtainable for New Jersey residents, our results have been adversely
impacted. New Jersey passed the Fair Automobile Insurance Reform Act,
which was an eight year assessment that began in 1990 and ended in 1997.
In order to meet the state imposed assessment obligations under the Fair
Automobile Insurance Reform Act the Group incurred expenses of $3.3 million
in 1997 and $3.6 million in 1996. The Group's future obligations related
to this act are minimal as only true-up payments are remaining, and any
future true-ups are anticipated to be immaterial to the Group's results of
operations, financial position and liquidity in future years.

15


ITEM 1. CONTINUED

The Unsatisfied Claim and Judgment Fund is another assessment made by the
state of New Jersey. This assessment is based upon estimated future
direct premium written in that state. The Group paid $3.3 million in
2000, $3.4 million in 1999 and $3.2 million in 1998. The Group
anticipates the future assessments to be between $3.0 and $4.0 million
dollars annually. The Group anticipates future assessments will not
materially affect the Group's results of operations, financial position or
liquidity.

The New Jersey State Senate passed an auto insurance reform bill effective
March 22, 1999 that mandated a 15% rate reduction for personal auto
policies based on legal reform intended to provide a reduction in medical
expense benefits, limitations on lawsuits and enhanced fraud prevention.
All new policies written on or after March 22, 1999 and all renewal
policies written on or after April 27, 1999 reflect the 15% rate
reduction. The mandatory rate rollback in New Jersey impacted a portion
of 1999 profitability and a full year of 2000 profitability.

In 1999, the state of New Jersey began to require insurance companies to
write a portion of their personal auto premiums in Urban Enterprise Zones
(UEZ). These zones are urban areas frequently having high loss ratios.
The Group is required to write one policy in UEZ for every seven policies
written outside UEZ. The Group is assigned premiums if it does not write
the required quota. In 2000, the Group wrote $6.5 million in UEZ
premiums, with $4.9 million in additional assigned premiums in 2000,
compared with $5.7 million in UEZ premiums, and $6.7 million in additional
assigned premiums in 1999. The 2000 loss ratio on UEZ premiums was 146.3%
and the loss ratio on the assigned business was 198.5%, compared with a
1999 UEZ loss ratio of 132.1% and a loss ratio on assigned business of
142.9%.

National Association of Insurance Commissioners. The National Association
of Insurance Commissioners (the "NAIC") annually calculates a number of
financial ratios to assist state insurance regulators in monitoring the
financial condition of insurance companies. A "usual range" of results
for each ratio is used as a benchmark. Departure from the usual range on
four or more of the ratios could lead to inquiries from individual state
insurance commissioners as to certain aspects of a company's business.
For the last five years, no company in the Group, other than Avomark, has
had four or more ratios departing from the usual range. In 1998, Avomark
had four ratios outside of the usual range due to the initial start-up of
Avomark in 1997 and Avomark joining the Group's reinsurance pooling
agreement in 1998.

The NAIC has developed a "Risk-Based Capital" model for property and
casualty insurers. The model is used to establish standards, which relate
insurance company statutory surplus to risks of operations and assist
regulators in determining solvency requirements. The model is based on
four risk factors in two categories: asset risk, consisting of investment
risk and credit risk; and underwriting risk, composed of loss reserves and
premiums written risks. As of December 31, 2000, all insurance companies
in the Group are in excess of levels that would require regulatory action.

The Corporation is dependent on dividend payments from its insurance
subsidiaries in order to meet operating expenses, debt obligations, and
to pay dividends. Insurance regulatory authorities impose various
restrictions and prior approval requirements on the payment of dividends
by insurance companies and holding companies. This regulation allows
dividends to equal the greater of 10% of policyholders' surplus or net
income determined as of the preceding year end without prior approval
of the Insurance Department. At the end of 2000, $81.2 million of
policyholders' surplus is not subject to restrictions or prior dividend
approval.

The ratio of premiums written to statutory surplus is one of the
measures used by insurance regulators to gauge the financial strength of
an insurance company and indicates the ability of the

16


ITEM 1. CONTINUED

Group to grow by writing additional business. The Group's 2000 ratio is
1.9 to 1. The ratio of 1.9 to 1 has increased from 1.8 to 1 and 1.4 to 1
in 1999 and 1998, respectively, due to a decline in the statutory surplus
component of the ratio. The Corporation believes the statutory surplus
level is adequate to support current business volume.

In 1998, the NAIC adopted the Codification of Statutory Accounting
Principles guidance, which will replace the current Accounting Practices
and Procedures manual as the NAIC's primary guidance on statutory
accounting. The Codification provides guidance for areas where statutory
accounting has been silent and changes current statutory accounting in some
areas. All states have adopted the Codification guidance, effective January
1, 2001. The cumulative effect of changes in accounting principles adopted
to conform to the Codification guidance will be reported as an adjustment to
statutory policyholders' surplus as of January 1, 2001. The Group had
originally estimated the adoption of Codification to reduce statutory
policyholders' surplus by approximately $46 million. As of March 30, 2001,
the Group revised the original estimate to be approximately $22 million.

EMPLOYEES

At December 31, 2000, Ohio Casualty had approximately 3,470 employees of
which approximately 1,448 were located in the Fairfield and Hamilton, Ohio
offices.

CHANGE IN ACCOUNTING METHOD

During the first quarter of 1999, the Corporation adopted Statement of
Position 97-3 "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments". This statement provides guidance on
accounting for insurance related assessments and required disclosure
information. In accordance with SOP 97-3, the Corporation has accrued a
total liability for insurance assessments of $2.3 million net of tax, as
of January 1, 1999. This was recorded as a change in accounting method.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) 133 "Accounting for
Derivative Instruments and Hedging Activities". This statement
standardizes the accounting for derivative instruments by requiring those
items to be recognized as assets or liabilities with changes in fair value
reported in earnings or other comprehensive income in the current period.
In June 1999, the FASB issued SFAS 137, which deferred the effective date
of adoption of SFAS 133 for fiscal quarters of fiscal years beginning
after June 15, 2000 (January 1, 2001 for the Corporation). The
Corporation has evaluated the impact and concluded that the adoption of
SFAS 133 should have an immaterial impact on the financial results upon
implementation.

ITEM 2. PROPERTIES

The Corporation owns and leases office space in various parts of the
country. The principal office buildings consist of facilities owned in
Fairfield and Hamilton, Ohio.

17


ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings against the Corporation or
its subsidiaries other than litigation arising in connection with
settlement of insurance claims as described on page 10, and the settlement
of California Proposition 103 in Note 18, California Proposition 103, in
the Notes to Consolidated Financial Statements on page 39 of the Annual
Report to Shareholders for the fiscal year ended December 31, 2000.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

There were no matters submitted during the fourth quarter of the fiscal
year covered by this report to a vote of Shareholders through the
solicitation of proxies or otherwise.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following information is related to executive officers who are not
separately reported in the Corporation's Proxy Statement:



Position with Company and/or
Principal Occupation or Employment
Name Age During Last Five Years
- ---- ------- ----------------------------------

Elizabeth M. Riczko 34 Senior Vice President and Treasurer of Ohio
Casualty Corporation, The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Avomark Insurance Company, Ocasco
Budget, Inc., Ohio Casualty of New Jersey,
Inc., Ohio Security Insurance Company, West
American Insurance Company since September
2000; prior thereto, Senior Vice President
of The Ohio Casualty Insurance Company,
American Fire and Casualty Company, Avomark
Insurance Company, Ocasco Budget, Inc., Ohio
Casualty of New Jersey, Inc., Ohio Security
Insurance Company, West American Insurance
Company since February 2000; prior thereto,
Senior Vice President of The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Ohio Security Insurance Company,
West American Insurance Company since December
1998; prior thereto, Vice President of The
Ohio Casualty Insurance Company, American Fire
and Casualty Company, Ohio Security
Insurance Company and West American Insurance
Company since May 1996; prior thereto,
Assistant Secretary of The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Ohio Security Insurance Company and
West American Insurance Company.


18


ITEM 4. CONTINUED



Position with Company and/or
Principal Occupation or Employment
Name Age During Last Five Years
- ---- ------- ----------------------------------

Debra K. Crane 43 Senior Vice President and General Counsel of
Ohio Casualty Corporation, The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Avomark Insurance Company, Ocasco
Budget, Inc., Ohio Casualty of New Jersey,
Inc., Ohio Security Insurance Company, West
American Insurance Company since April 2000;
prior thereto, Vice President of The Ohio
Casualty Insurance Company, American Fire and
Casualty Company, Avomark Insurance Company,
Ocasco Budget, Inc., Ohio Casualty of New
Jersey, Inc., Ohio Security Insurance Company,
West American Insurance Company since May 1999;
prior thereto, Assistant Treasurer of The Ohio
Casualty Insurance Company, American Fire and
Casualty Company, Avomark Insurance Company,
Ocasco Budget, Inc., Ohio Security Insurance
Company, West American Insurance Company since
February 1996; prior thereto, Tax Manager.

Ralph G. Goode 55 Senior Vice President of The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Avomark Insurance Company, Ohio
Security Insurance Company and West American
Insurance Company since December 1998; prior
thereto, Vice President of The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Ohio Security Insurance Company and
West American Insurance Company.

Richard B. Kelly 46 Senior Vice President of The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Avomark Insurance Company, Ohio
Security Insurance Company, West American
Insurance Company since February 2000; prior
thereto, Vice President of The Ohio Casualty
Insurance Company, American Fire and Casualty
Company, Avomark Insurance Company, Ohio
Security Insurance Company, West American
Insurance Company since November 1996; prior
thereto, Assistant Vice President of The Ohio
Casualty Insurance Company, American Fire and
Casualty Company, Ohio Security Insurance Company,
West American Insurance Company.



PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

(a) The Corporation's common shares, par value $.125 per share, are traded
on the Nasdaq Stock Market under the symbol OCAS. On March 31,
2001, the Corporation's common shares were held by 6,027 shareholders
of record.

19

ITEM 5. CONTINUED

(b) The following table shows the high and low sales prices for the
Corporation's common shares for each quarterly period within the
Corporation's last three most recent fiscal years:

High/Low Market Price Per Share
(in dollars, adjusted for 1999 stock dividend)
Quarter 1st 2nd 3rd 4th
2000 High 17 7/8 17 1/8 10 9/16 10 1/4
Low 11 1/16 10 15/16 6 11/32 6 1/2

1999 High 21 11/16 20 1/32 18 9/16 17
Low 19 1/32 17 13/16 15 1/16 15 1/16

1998 High 24 11/16 25 9/16 23 15/16 21 1/16
Low 21 1/16 22 18 1/2 17 1/16

(c) The following table shows the cash dividends paid by the Corporation to
the holders of its common shares for the three most recent fiscal
years of the Corporation. The Corporation's Board of Directors
discontinued the Corporation's regular quarterly dividend in February,
2001.

Quarterly Cash Dividends Per Share
Quarter 1st 2nd 3rd 4th
2000 $.23 $.12 $.12 $.12
1999 $.23 $.23 $.23 $.23
1998 $.22 $.22 $.22 $.22

A description of statutory restrictions on the ability of the
Corporation's insurance company subsidiaries to transfer funds to the
Corporation in the form of cash dividends and distributions, which may
limit the ability of the Corporation to pay dividends to its
shareholders, may be found in Note 16, Statutory Accounting
Information, in the Notes to the Consolidated Financial Statements on
pages 38 and 39 of the Corporation's Annual Report to Shareholders for
fiscal year ended December 31, 2000, which description is incorporated
herein by reference.

(d) On December 12, 2000, the Corporation granted to Dan R. Carmichael,
its Chief Executive Officer and President, an option to purchase
400,000 common shares at an exercise price of $9.75 per share. The
stock option will vest over a period of three years from the date of
grant and has a term of 10 years. The stock option was granted
without registration under the Securities Act of 1933 pursuant to the
exemptions contained in Sections 4(2) and 4(6) of that Act. Exercise
of the stock option is subject to the Corporation registering the
underlying common shares under the Securities Act of 1933 or the
availability of an exemption from registration. The stock option was
granted pursuant to an Employment Agreement between the Corporation
and Mr. Carmichael, which provides for two additional stock option
grants of 400,000 shares each on December 12, 2001 and December 12,
2002 so long as Mr. Carmichael is an employee of the Corporation on
those dates.


ITEM 6. SELECTED FINANCIAL DATA

See pages 12 and 13 of the Annual Report to Shareholders for the fiscal
year ended December 31, 2000.

20


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

The year 1999 ended with the Corporation experiencing deterioration in
certain lines of business, price inadequacies, and rising underwriting
expenses. The Corporation responded in 2000 with a plan to aggressively
manage expenses, implement price increases, and cancel or non-renew its
most unprofitable business.

RESULTS OF OPERATIONS

For the year 2000, the Corporation reported a net operating loss of
$77.7 million or $1.29 per share, compared with operating income of $1.4
million or $.02 per share in 1999 and $73.6 million or $1.12 per share in
1998. Contributing to the 2000 net loss were the adverse effects of
write-offs to the agent relationships intangible asset relating to the
1998 acquisition of the Great American Insurance Companies (GAI)
Commercial Lines Division, the impact of inadequate pricing, and premium
cessions on experience rated reinsurance contracts. Positively impacting
2000 results was the settlement of the California Proposition 103
liability.

In the first quarter of 2000, the Group made the strategic decision to
discontinue its relationship with Managing General Agents. The decision
was made to help give the Group better control of its underwriting and
pricing practices. The Managing General Agents accounted for
approximately $48 million in annual commercial lines premium written, of
which $29 million was in the workers' compensation line of business. This
business, which was acquired in the GAI commercial lines purchase in 1998,
is being non-renewed as permitted by law and contractual agreements. The
result of the decision was a write-off of $42.2 million of the agent
relationships intangible asset, specifically relating to the Managing
General Agents, which was recorded on the balance sheet in connection with
the GAI purchase. The asset was also written off in 2000 by $3.8 million
as a result of additional agent cancellations for a total write-off of
$46.0 million for the year.

The 2000 operating loss was also impacted negatively by $23.2 million
for ceded premiums on certain experience rated reinsurance contracts
covering losses exceeding $1.0 million. The 1999 operating income was
impacted by $13.0 million for similar premium cessions. These premium
cessions reflect changes in estimated loss experience, and have resulted
in the maximum premium cessions under these contracts for business
written through Year 2000.

The consolidated net loss for 2000 was $79.2 million or $1.32 per
share, compared with net income of $114.1 million or $1.87 per share in
1999, and $84.9 million or $1.29 per share in 1998. After-tax realized
gains (losses) were $(1.5) million in 2000, $104.5 million in 1999, and
$9.4 million in 1998. Contributing to the 1999 gain were investment gains
from a reallocation of the Group's investment portfolio during the second
quarter of 1999. The Corporation completed the reallocation by selling
approximately $200 million in equity securities, resulting in after-tax
realized gains of approximately $94 million.

Statutory net premiums written decreased $81.5 million in 2000 to
$1.51 billion. Net premiums written totaled $1.59 billion in 1999 and
$1.30 billion in 1998. The net premiums written decrease in 2000 can be
attributed to a more conservative underwriting philosophy that led to the
non-renewal of certain business, the effects of annualization of New Jersey
private passenger automobile policies, and the premium cessions on experience
rated reinsurance contracts mentioned previously. In order to improve
underwriting results, the Corporation took action in 2000 to cancel its most
unprofitable agents and policies. These actions, along with the

21


ITEM 7. CONTINUED

cancellation of the Managing General Agents, represent annual net premiums
written of over $150 million. The full impact of these actions should be
realized in 2001. The increase in premiums from 1998 to 1999 was due to the
GAI acquisition adding almost $262.2 million to 1999 net premiums over 1998.

The combined ratio increased 6.4 points to 119.2% in 2000, compared
with 112.8% in 1999 and 107.2% in 1998. The poor 2000 combined ratio was
driven by increases in the loss and loss expense ratios. The calendar year
2000 loss ratio was 72.8% compared with 66.9% in 1999 and 63.7% in 1998. The
2000 loss ratio was impacted by adverse development in the workers'
compensation and general liability lines of business for 1999 and prior
accident years. The workers' compensation line of business added 6.8 points
to the overall loss ratio. Deterioration in the private passenger automobile
results driven in part by the mandatory 15% rollback of rates for New Jersey
also affected the 2000 loss ratio results. Finally, inadequate pricing and a
10% increase in claims severity for workers' compensation business also
contributed to the increased 2000 loss ratio. In order to resolve pricing
inadequacies, the Group began implementing price increases across all
commercial lines and some personal lines in 2000. The average price increase
was approximately 9.8% on the Group's commercial lines book of business. The
effects of these increases should be realized in 2001 as premiums are earned.

The 2000 accident year loss ratio, which measures losses and claims
arising from insured events during the year was 69.3%, 3.5 points lower
than the calendar year result, which includes loss payments made during
the current year and changes in the provision for future loss payments.
The difference is concentrated in the general liability and workers'
compensation lines.

At year-end 2000, the Group reallocated its carried bulk reserves to
comply with Statement of Statutory Accounting Principles No. 55 under
Statutory Accounting Codification, which requires that companies carry
their best estimate of loss reserves for each line of business, while
previous requirements focused on the overall results. The reallocation,
while not affecting the overall calendar year combined ratio, had a
material impact on the reported combined ratios for several lines of
business.

Underwriting expenses, as a percentage of net premiums written,
decreased by .4 points in 2000 to 34.8%, compared with 35.2% in 1999 and
34.4% in 1998. As mentioned earlier, the Corporation took steps in 2000
to aggressively manage expenses. The savings focused on reductions to
salaries and related expenses, advertising, and professional contractor
fees. These expense reduction efforts were expected to result in
annualized expense savings of approximately $30 million. Due to the
timing of severance payments and the run-off of contractual commitments,
the Corporation estimated half of the reported amount would be realized in
2000. The Corporation exceeded its expense savings estimates for 2000 by
realizing almost $26.0 million in expense reductions. The increase in
1999 over 1998 was primarily due to expenses related to restructuring and
integration efforts, which added approximately 1.2 points to the
underwriting expense ratio.

ACQUISITIONS

As described in more detail in Note 14, the Group purchased substantially
all of the Commercial Lines Division of Great American Insurance Companies
(GAI) on December 1, 1998. The acquisition has been treated as a purchase
for accounting purposes. The revenues and results reported include the
activity of the GAI division from the December 1, 1998 acquisition date
forward.

22


ITEM 7. CONTINUED

LINE OF BUSINESS DISCUSSION

Workers' Compensation

Continued deterioration in the workers' compensation line of business
in 2000 led to disappointing results for the line in general as well as
affecting the Group's overall results for the year. Including the year-
end reserve reallocation mentioned in the results of operation section,
the workers' compensation line of business added 6.8 points to the overall
loss ratio.

Workers' compensation combined ratio increased 48.1 points in 2000 to
165.6%, compared with 117.5% and 109.6% for 1999 and 1998, respectively.
Excluding the 2000 year-end reserve reallocation, the combined ratio was
156.0%. The loss ratio was the main component driving the high combined
ratio. Due to rising medical costs causing an increase in claims severity
and the effects of the year-end reserve reallocation, the 2000 loss ratio
swelled to 118.8% compared with 71.9% and 69.1% in 1999 and 1998,
respectively. The Group was able to achieve an average renewal price
increase for the workers' compensation line of business of 12.4% for 2000.

In response to the deterioration of results, the Group is non-renewing
its most unprofitable segment of workers' compensation policies, which
amount to approximately $50 million in annual premium volume. This
business has a loss ratio approximately 10 points higher than the total
workers' compensation line of business and is referred to as unsupported
workers' compensation as it is the only product in the customer's account.
As mentioned in the results of operations section, the Group has also
taken action to discontinue its relationship with Managing General Agents.
These Managing General Agents accounted for $29.0 million in annual
workers' compensation premium volume. The non-renewal of unsupported
workers' compensation impacted premiums written by an estimated $13
million in 2000, with the remaining business to be non-renewed in 2001.
The cancellation of Managing General Agents impacted premiums written by
an estimated $16 million in 2000, with the remaining $13 million to effect
2001 results. These non-renewals and cancellations contributed to a 3.1%
or $5.9 million decrease in 2000 workers' compensation net premiums
written, which totaled $185.8 million. Net premiums written for 1999 and
1998 totaled $191.7 million and $100.2 million, respectively. The business
acquired from GAI contributed to the increase in 1999 from 1998.

Private Passenger Auto - Agency

Net premiums written decreased $71.2 million or 13.5% to $455.3
million in 2000, compared with $526.5 million in 1999 and $515.4 million
in 1998. 1999 net premiums written were positively impacted by the
conversion to twelve-month policies in New Jersey, from the standard six-
month policy issued. Additionally, the state mandated rate rollback
effective in early 1999 reduced premium volume for a portion of 1999 and
for a full year in 2000. New Jersey's private passenger auto net premiums
written represent approximately 21% of the Group's total private passenger
auto book of business. The combined ratio increased to 110.4% in 2000
from 106.3% in 1999 and 103.4% in 1998. An 8% increase in claims severity
in 2000 contributed to the increase in the overall combined ratio. See
discussion of New Jersey regulatory developments in Item 1, page 16.

23


ITEM 7. CONTINUED

Private Passenger Auto - Direct

The Group began direct marketing of personal auto coverage in January
1998. In 2000, the Corporation first restructured its Avomark operations
with an internet-only strategy, and later discontinued the private
passenger auto-direct line of business in the fourth quarter. As part of
this restructuring, the Company completed an asset purchase agreement for
the sale of the Avomark Call Center. Under this agreement, the buyer
purchased certain assets used in the call center operation and entered
into a new lease on the call center property, thereby replacing the
Company as lessee. The line was discontinued in order to focus on the
independent agency system as the distribution channel for the Group. As a
result of the restructuring, 2000 net premiums written dropped from $17.1
million in 1999 to $10.7 million in 2000. The Group wrote $6.3 million of
net premiums in 1998. Combined ratios were 167.9%, 208.4%, and 169.7% for
2000, 1999, and 1998, respectively.

Although the Corporation discontinued the Avomark line, the
Corporation remains committed to developing Internet capabilities that
focus on increased service support for agents and their customers, and our
policyholders.

Commercial Auto

Net premiums written increased $3.2 million or 1.8% in 2000 to $178.7
million, compared with $175.5 million in 1999 and $139.1 million in 1998.
The 2000 increase was driven by renewal price increases, averaging 9.2% on
the commercial auto line of business. The increase in premiums between
1998 and 1999 was largely due to the GAI acquisition.

The 2000 combined ratio increased to 121.5%, compared with 117.1% in
1999 and 105.4% in 1998. 2000 was hindered by increased severity and
large losses combined with inadequate pricing.

Commercial Multi-Peril, Fire & Inland Marine (CMP)

Net premiums written from the CMP segment have increased for five
consecutive years. Net premiums written increased $7.3 million or 2.4% to
$312.5 million in 2000, compared to $305.2 million in 1999 and $225.7
million in 1998. The implementation of renewal price increases
contributed to the 2000 premium increase. Acquired business from GAI
contributed $80.3 million to the 1999 increase when compared to 1998. The
combined ratio decreased to 111.5% in 2000 from 126.0% in 1999 and 113.5%
in 1998. In 2000, the Group was able to implement renewal price increases
in the CMP segment. Although the renewal price increases climbed each
quarter of the year, the full effects will not be realized until 2001.

Catastrophe losses added 4.6 points to the combined ratio in 2000, 7.8
points in 1999 and 4.9 points in 1998.

General Liability

Net premiums written decreased $1.8 million or 2.2% in 2000 to $80.7
million, compared with $82.5 million in 1999 and $76.4 million in 1998.
The 2000 decrease reflected the Group's focus on fundamental underwriting
strategies.

24


ITEM 7. CONTINUED

The combined ratio increased 11.3 points in 2000 due to adverse
development for 1999 and prior accident years to 126.9%, compared with
115.6% in 1999 and 114.0% in 1998. This line continues to be subject to
inadequate pricing arising from intense competition. While profitable
premium growth remains very difficult to achieve, the Group is focusing
efforts on underwriting integrity.

Umbrella

Net premiums written increased $2.2 million or 3.2% in 2000 to $70.6
million, compared with $68.4 million in 1999 and $18.7 million in 1998.
The 2000 increase was primarily generated by renewal price increases
implemented in 2000. The increase between 1998 and 1999 was due to the
GAI acquisition adding $48.7 million in premiums. The acquisition brought
excess coverages that were new to the Group allowing for increased limits,
broadened classes and improved coverage forms.

The 2000 combined ratio was 80.3%, compared with 47.3% in 1999 and
48.8% in 1998. Although the combined ratio increased, the results are
still below the industry average.

Homeowners

Net premiums written fell 4.8% in 2000 to $173.2 million from $181.9
million in 1999 and $180.7 million in 1998. Over the past two years, the
Group has placed emphasis on selective underwriting and the homeowners
Insurance-To-Value program. The program addresses underinsured homeowner
properties and emphasizes adequate replacement cost values. Upon renewal,
homeowner's accounts are subject to a replacement cost valuation and
appropriate premium increases are implemented. The Insurance-To-Value
program has contributed to the Group implementing an average price
increase of more than 10% during the year 2000.

The 2000 combined ratio decreased 4.5 points to 119.6%. This compares
with a combined ratio of 124.1% in 1999 and 118.4% in 1998. Combined
ratios are heavily impacted by catastrophe losses which added 10.3 points
to the combined ratio in 2000, 12.6 points in 1999 and 15.2 points in
1998.

Fidelity & Surety

Net premiums written decreased $.2 million or .6% in 2000 to $37.9
million, compared with $38.1 million in 1999 and $37.0 million in 1998.

The combined ratio decreased to 71.5% in 2000 from 77.0% in 1999 and
81.4% in 1998. The Group's combined ratio remains below the historical
industry average of 86.8%.

25


ITEM 7. CONTINUED




Combined Ratios 2000 1999 1998 1997 1996
==============================================================================

Private Passenger Auto - Agency 110.4% 106.3% 103.4% 105.4% 110.0%
Private Passenger Auto - Direct 167.9% 208.4% 169.7% N/A N/A
Commercial Multiple Peril, Fire
and Inland Marine 111.5% 126.0% 113.5% 107.7% 115.0%
General Liability 126.9% 115.6% 114.0% 113.0% 89.1%
Umbrella 80.3% 47.3% 48.8% 58.4% 35.9%
Workers' Compensation 165.6% 117.5% 109.6% 93.0% 94.3%
Commercial Auto 121.5% 117.1% 105.4% 112.9% 105.3%
Homeowners 119.6% 124.1% 118.4% 111.2% 135.9%
Fidelity and Surety 71.5% 77.0% 81.4% 76.5% 73.4%
- ------------------------------------------------------------------------------
Total 119.2% 112.8% 107.2% 105.3% 109.5%
==============================================================================



CATASTROPHE LOSSES

Catastrophe losses in 2000 totaled $36.2 million, compared with $52.2
million in 1999 and $44.6 million in 1998. There were 24 separate
catastrophes in 2000, compared with 27 catastrophes in 1999 and 37 in
1998. Catastrophe losses added 2.4 points to the combined ratio in 2000,
compared with 3.4 points in 1999 and 3.6 points in 1998. The 1999
catastrophes included tornadoes in the greater Cincinnati and Oklahoma
City areas as well as damage from Hurricane Floyd.

Catastrophe Losses
(in millions)

2000 $36
1999 $52
1998 $45
1997 $21
1996 $62

STATUTORY SURPLUS

Statutory surplus, a traditional insurance industry measure of
strength and underwriting capacity, was $812.1 million at December 31,
2000, compared with $899.8 million at December 31, 1999 and $1,027.1
million at December 31, 1998. The decrease in the 2000 surplus was due
primarily to poor underwriting results, dividend payments, and the
statutory treatment of the final installment payment for the acquisition
of the Commercial Lines Division of GAI. The decrease in 1999 resulted
from dividends, poor underwriting results and taxes on realized gains.



LIQUIDITY AND FINANCIAL STRENGTH

Net cash generated from operations was $99.6 million in 2000, compared with
cash used of $137.7 million in 1999 and cash generated of $24.6 million in
1998. The change in 2000 is due in part to payment received in 2000 as
part of the commutation of a reinsurance treaty in the fourth quarter of
1999, a refund of prior year taxes paid, a reduction in paid losses and
paid loss

26


ITEM 7. CONTINUED

adjustment expenses, and a reduction in paid underwriting expenses as a
result of the expense management efforts. The decrease in 1999, compared
with 1998, primarily resulted from lower operating income. Investing
activities used net cash of $103.5 million in 2000, compared with net cash
produced of $108.1 million in 1999 and $93.5 million in 1998. Total cash
used for financing activities was $56.0 million in 2000, compared with $125.5
million in 1999 and total cash produced of $66.9 million in 1998. Cash used
from financing decreased in 2000 as a result of the reduction in shareholder
dividends and the Corporation's decision not to repurchase any of its
treasury shares. Overall, total cash used in 2000 was $59.9 million,
compared with $155.0 million in 1999 and cash generated of $184.9 million
in 1998.

Shareholder dividend payments were $35.4 million in 2000, compared
with $56.0 million in 1999 and $57.9 million in 1998. The decrease in
2000 was a result of the Corporation's decision to reduce quarterly
dividend payments beginning in the second quarter to $.12 per share in
order to strengthen the financial position of the Corporation. On
February 8, 2001, the Corporation eliminated its current quarterly
dividend in order to further strengthen the Corporation's financial
position.

Cash flow has also been impacted by our share repurchase program.
Although the Corporation did not repurchase any shares of its common stock
in 2000, the Corporation did repurchase 2,478,000 shares for $46.1 million
in 1999 and 4,725,800 shares for $100.2 million in 1998. The Corporation
is currently authorized to repurchase 1,649,824 additional shares of its
common stock to be held as treasury shares for stock options or other
general corporate purposes. Since the beginning of 1987, 31.7 million
shares have been repurchased at an average cost of $14.10 per share. In
the future, shares will be repurchased when doing so makes economic sense
for the Corporation and its shareholders.

In order to evaluate corporate performance, the Corporation calculates
a five-year average return on equity. Net income and unrealized gains and
losses on investments are included in the calculation to derive a total
return. A five-year average is used to correspond to the Corporation's
planning horizon and emphasizes long-term returns, not intermediate
fluctuations. The five-year average return on equity was 6.2%, 12.0% and
14.3% for 2000, 1999 and 1998, respectively.

The Corporation is dependent on dividend payments from its insurance
subsidiaries in order to meet operating expenses, debt obligations, and to
pay dividends. Insurance regulatory authorities impose various
restrictions and prior approval requirements on the payment of dividends
by insurance companies and holding companies. As of December 31, 2000,
approximately $81.2 million of retained earnings were not subject to
regulatory restriction or prior dividend approval requirements.

As of December 31, 2000, the Corporation had $220.8 million of outstanding
notes payable. Of the $220.8 million, $5.8 million is related to a low
interest loan outstanding with the state of Ohio used in conjunction with
the home office purchase. The remaining $215.0 million is related to a
1997 credit facility that provided a $300.0 million revolving line of credit
to the Corporation. The agreement expires in October 2002, with any
outstanding loan balance due at that time. The credit facility agreement
contains financial covenants and provisions customary for such arrangements.
The most restrictive covenants include a maximum permissible consolidated
funded debt that cannot exceed 30% of consolidated tangible net worth
(as defined in the agreement) and a minimum statutory surplus of $750.0
million. The Corporation continues to review its financial covenants in the
credit agreement in light of its operating losses. As of

27


ITEM 7. CONTINUED

December 31, 2000, the Corporation was in compliance with these covenants.
However, further deterioration of operating results, reductions in the equity
portfolio valuation, or other changes in statutory surplus, including the
effects of adopting new statutory accounting principles (such as
Codification), may lead to covenant violations which could ultimately result
in default.

The Corporation is evaluating its capital requirements and is exploring
ways to restructure and/or reduce its debt and strengthen its financial
position. The Corporation has taken steps to strengthen its financial
position by aggressively managing expenses and first reducing quarterly
dividends to shareholders and later eliminating the current quarterly
dividend in the first quarter of 2001. The Corporation may be required
to obtain additional external funding, either in the form of debt or
equity funding, to support its insurance operations in the future. While
the Corporation believes that it should be able to obtain such external
funding, if needed, the availability of such funding cannot be assured
nor can the cost of such funding be evaluated at this time.

Regularly the Group's financial strength is reviewed by independent
rating agencies. These agencies may upgrade, downgrade, or affirm their
previous rating of the Group. During 2000, A. M. Best and Standard and
Poor's (S&P) Rating Services downgraded the Group's financial strength
ratings. The Group's A.M. Best rating moved from "A+" (superior) to "A"
(excellent) and the S&P rating moved from "A+" to "BBB+". A. M. Best
cited earnings deterioration, increased operating leverage, and
significant management changes as reasons for the rating change. S&P
focused on poor underwriting results, earnings volatility due to
catastrophe losses, and an aggressive investment strategy. A. M. Best and
S&P both recognized the Group's strong capitalization and expense
reduction efforts as positive attributes. Moody's Investors Service
affirmed the Group's "A2" rating based on capitalization and expense
reduction measures. All three rating agencies recognized the shift in
management focus to improve underwriting.

RESTRUCTURING

In December 1998, the Group initiated a restructuring and reorganization
plan. Under the plan, the Group consolidated many of its branch locations
for underwriting and claims throughout 1999. Personal lines business
centers were reduced from five to three locations. Commercial underwriting
branches were reduced from 17 to eight locations and claims branches were
reduced from 38 to six locations. Workforce reductions related to the
restructuring plan, originally estimated to be 250 positions, have amounted
to approximately 170 positions. The plan was estimated to generate $14
million in annual pre-tax savings upon full implementation in late 1999.
The actual savings in 2000 were approximately $9 million.

Restructuring charges recorded in 1998 were made up of expenses associated
with abandoned lease space totaling $10.0 million or $.15 per share
before-tax and $6.5 million or $.10 per share after-tax. The Group released
$2.2 million and $2.9 million of the liability due to payments under leases
in 2000 and 1999, respectively, and $2.4 million in 1999 for changes in
assumptions used to establish the initial reserve.

DISCONTINUED OPERATIONS

During 1995, the Corporation's life operations were discontinued. In order
to exit the life operations the Company executed an agreement in 1995 to
reinsure the existing blocks of business through a 100% coinsurance
arrangement.

28


ITEM 7. CONTINUED

Since The Ohio Life Insurance Company was contractually replaced as
the primary insurer, the Corporation recognized unamortized ceding
commission of $1.1 million before tax in 1999 and $1.1 million in 1998.

On December 31, 1999, the Company sold 100% of The Ohio Life Insurance
Company stock, thereby transferring all remaining assets and liabilities
to the buyer. The after-tax gain on this sale totaled $6.2 million or
$.11 per share.

Net income from discontinued operations amounted to $4.3 million or
$.07 per share in 1999, compared with $1.9 million or $.03 per share in
1998.

LOSS AND LOSS ADJUSTMENT EXPENSES

The Group's largest liabilities are reserves for losses and loss
adjustment expenses. Loss and loss adjustment expense reserves are
established for all incurred claims and are carried on an undiscounted
basis before any credits for reinsurance recoverable. These reserves
amounted to $2.0 billion at December 31, 2000, $1.9 billion at December
31, 1999 and $2.0 billion at December 31, 1998.

In recent years, environmental liability claims have expanded greatly
in the insurance industry. The Group has a substantially different mix of
business than the industry. We have historically written small commercial
accounts, and have not attracted significant manufacturing liability
coverage. As a result, our environmental liability claims are
substantially below the industry average. Our liability business
reflected our current mix of approximately 66% contractors, 16%
building/premises, 12% mercantile and only 6% manufacturers. Within the
manufacturing category, we have concentrated on the light manufacturers,
which further limits our exposure to environmental claims.

Estimated asbestos and environmental reserves are composed of case
reserves, incurred but not reported reserves and reserves for loss
adjustment expense. For 2000, 1999 and 1998, respectively, those reserves
were $40.4 million, $41.1 million and $41.9 million. Asbestos reserves
were $13.5 million, $9.6 million and $10.4 million and environmental
reserves were $26.9 million, $31.5 million and $31.5 million for those
respective years. These loss estimates are based on currently available
information. However, given the expansion of coverage and liability by
the courts and legislatures, there is some uncertainty as to the ultimate
liability. The Group changed its pollution exclusion policy language
between 1985 and 1987 to effectively eliminate these coverages.


CALIFORNIA PROCEEDINGS

Proposition 103 was passed in the state of California in 1988 in an
attempt to legislate premium rates for that state. The proposition
required premium rate rollbacks for 1989 California policyholders while
allowing for a "fair" return for insurance companies.

In 1998, the Administrative Law Judge issued a proposed ruling with a
rollback liability of $24.4 million plus interest. The Group established
a contingent liability for the Proposition 103 rollback of $24.4 million
plus simple interest at 10% from May 8, 1989. This brought the total
reserve to $52.3 million at September 30, 2000. On October 25, 2000, the
Group announced a settlement agreement for California Proposition 103 that
was approved by the Commissioner of Insurance of the state of California.
Under the terms of the settlement, the members of the group will pay

29


ITEM 7. CONTINUED

$17.5 million in refund premiums to eligible 1989 California policyholders.
The Corporation expects the payments to be made in the first half of 2001.
With this development, the total reserve was decreased to $17.5 million as
of September 30, 2000. When the refund payments occur, the remaining
$17.5 million liability will be extinguished. This decrease in the
reserve resulted in an increase in operating income and net income for the
third quarter 2000, but had no effect on the combined ratio reported.

To date, the Group has paid approximately $5.7 million in legal costs
related to the California withdrawal and Proposition 103.

INVESTMENTS

Consolidated pre-tax investment income from continuing operations increased
11.3% to $205.1 million in 2000, compared with $184.3 million in 1999 and
$169.0 million in 1998. The increase in investment income can be attributed
to the second quarter 1999 reallocation in the investment portfolio from
equity securities to investment grade securities. Also contributing to the
increase has been the reallocation of investments from tax exempt municipal
bonds to taxable bonds. After-tax investment income totaled $140.3 million
in 2000, compared with $138.0 million in 1999 and $125.8 million in 1998.
Pre-tax and after-tax investment income comparisons are impacted by
investments in municipal bonds, which provide tax-free investment income.

At year-end 2000, consolidated investments had a carrying value of
$3.3 billion. The excess of market value over cost was $629.4 million,
compared with $505.4 million at year-end 1999 and $787.9 million at year-
end 1998. The 2000 increase was due to market growth in both the fixed
income and equity portfolios, while the 1999 decrease in unrealized gains
was largely attributable to the Group's reallocation of its investment
portfolio mentioned in the results of operations section. The 1999
reallocation resulted in $145.0 million of unrealized gains being
recognized. Consolidated after-tax realized investment gains (losses)
from continuing operations amounted to $(1.5) million in 2000, compared
with $104.5 million in 1999 and $9.4 million in 1998. The 2000 realized
loss was impacted by approximately $10.9 million due to the write-down of
securities for other than temporary declines in market value. The 1999
portfolio reallocation led to the large realized gain in 1999.

The Corporation's fixed income portfolio has an intermediate duration
and a laddered maturity structure. The Corporation does not try to time
markets, instead, always choosing to remain fully invested.

Tax exempt bonds decreased to 3.2% of the fixed income portfolio at
year-end 2000 versus 19.4% and 34.8% for December 31, 1999 and 1998,
respectively. The funds previously held in tax exempt bonds have been
reallocated to investment grade taxable bonds. Due to recent poor
operating results, the Corporation has reduced its holdings during 2000
and 1999 in order to maximize after-tax income.

As of December 31, 2000, the Corporation held $1,124.0 million in
mortgage-backed securities, compared with $784.3 million and $375.4
million at December 31, 1999 and 1998, respectively. The 2000 and 1999
increases are attributable to a redistribution of investments previously
held in tax exempt bonds and the 1999 reallocation mentioned above. The
majority of mortgage-backed security holdings are less volatile planned
amortization class, sequential structures and agency pass-through
securities. Of this portfolio, $13.1 million, $19.3 million and $9.6
million were invested in more volatile bond classes (e.g. interest-only,
super-floaters, inverses) in 2000, 1999 and 1998, respectively.

30


ITEM 7. CONTINUED

At year-end 2000, consolidated equity investments had a market value
of $754.9 million. Equity investments have decreased as a percentage of
the consolidated portfolio from 25.7% in 1998 to 22.7% at year-end 2000.
This decrease is attributable to the 1999 reallocation of the Group's
investment portfolio.

The Corporation is adopting Statement of Financial Accounting Standards
(SFAS) No. 133 effective January 1, 2001, and has concluded that the
adoption should have an immaterial impact on the financial results upon
implementation.

SAFE HARBOR FOR FORWARD LOOKING STATEMENTS

Ohio Casualty Corporation publishes forward-looking statements relating to
such matters as anticipated financial performance, business prospects and
plans, regulatory developments and similar matters. The statements
contained in this report that are not historical information, are forward-
looking statements. The Private Securities Litigation Reform Act of 1995
provides a safe harbor under The Securities Act of 1933 and The Securities
Exchange Act of 1934 for forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of the Corporation's business, include the following: changes in
property and casualty reserves; catastrophe losses; premium and investment
growth; product pricing environment; availability of credit; changes in
government regulation; performance of financial markets, fluctuations in
interest rates; availability and pricing of reinsurance; litigation and
administrative proceedings; Year 2000 issues; ability of Ohio Casualty to
integrate and retain the business acquired from the Great American
Insurance Company, and general economic and market conditions.


NEW ACCOUNTING STANDARDS

See discussion of new accounting standards in Note 21, New Accounting
Standards, in the Notes to the Consolidated Financial Statements on page 40
of the Annual Report to Shareholders for the fiscal year ended December 31,
2000.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK DISCLOSURES FOR FINANCIAL INSTRUMENTS

Market risk is the risk of loss resulting from adverse changes in
interest rates and market prices. In addition to market risk, the
Corporation is exposed to other risks such as credit, reinvestment and
liquidity risk. Credit risk refers to the financial risk that an
obligation will not be paid and a loss will result. Reinvestment risk is
the risk that interest rates will fall causing interim cash flows to earn
less than the original investment. Liquidity risk describes the ease with
which an investment can readily be sold without substantially affecting
the asset's price. The sensitivity analysis below summarizes only the
exposure to market risk.

The Corporation strives to produce competitive returns by investing in
a diverse portfolio of high-quality companies. All investments are held
as "available-for-sale", as defined by SFAS No. 115.

Interest Rate Risk - The Corporation has exposure to losses resulting
from potential volatility in interest rates. The Corporation attempts to
mitigate its exposure to interest rate risk through

31


ITEM 7A. CONTINUED

active portfolio management and periodic reviews of asset and liability
positions. Estimates of cash flows and the impact of interest rate
fluctuations relating to the Corporation's investment portfolio are modeled
semi-annually and reviewed regularly.

Equity Price Risk - Equity price risk can be separated into two
elements. The first, systematic risk, is the portion of a portfolio or
individual security's price movement attributed to stock market movement
as a whole. The second element, nonsystematic risk, is the portion of
price movement unique to the individual portfolio or security. This risk
can be further divided between industry characteristics and the individual
issuer. The Corporation attempts to manage nonsystematic risk by
monitoring a portfolio that is diversified across industries.

The following tables illustrate the hypothetical effect of an increase
in interest rates of 100 basis points (1%) and a 10% decrease in equity
values at December 31, 2000, 1999 and 1998, respectively. The changes
selected above reflect the Corporation's view of shifts in rates and
values that are quite possible over a one-year period. These rates should
not be considered a prediction of future events by the Corporation. This
analysis is not intended to provide a precise forecast of the effect of
changes in interest rates and equity prices on the Corporation's income,
cash flow or shareholders' equity. In addition, the analysis does not
take into account any actions the Corporation may take to reduce its
exposure in response to market fluctuations.



Estimated Adjusted Market Value
December 31, 2000 Fair Value as indicated above
- -----------------------------------------------------------------------------

Interest Rate Risk:
Fixed maturities $2,514 $2,419
Short-term investments 60 60
Equity Price Risk:
Equity securities 755 679
- -----------------------------------------------------------------------------
Totals $3,329 $3,158
=============================================================================





Estimated Adjusted Market Value
December 31, 1999 Fair Value as indicated above
- -----------------------------------------------------------------------------

Interest Rate Risk:
Fixed maturities $2,377 $2,272
Short-term
investments 104 104
Equity Price Risk:
Equity securities 698 628
- -----------------------------------------------------------------------------
Totals $3,179 $3,004
=============================================================================





Estimated Adjusted Market Value
December 31, 1998 Fair Value as indicated above
- -----------------------------------------------------------------------------

Interest Rate Risk:
Fixed maturities $2,416 $2,312
Short-term
investments 263 263
Equity Price Risk:
Equity securities 925 832
- -----------------------------------------------------------------------------
Totals $3,604 $3,407
=============================================================================


32


ITEM 7A. CONTINUED

In addition to the above scheduled investments, the Corporation has a
revolving line of credit. An increase in interest rates of one hundred basis
points would result in additional annual interest expense of $2.2 million.

Certain assumptions are inherent in the above analysis. The Corporation
assumes an instantaneous and parallel shift in interest rates and equity
prices at December 31, 2000, 1999 and 1998 and that the composition of its
investment portfolio remains relatively constant. Also, the Corporation
assumes a change in interest rates is reflected uniformly across all
financial instruments. The adjusted market values are estimated using
discounted cash flow analysis and duration modeling.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements and Schedules.
(See Index to Financial Statements attached hereto.)


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

PricewaterhouseCoopers LLP served as independent public accountants of the
Corporation for the fiscal year ended December 31, 2000. The Corporation
informed PricewaterhouseCoopers LLP on February 9, 2001, that it would be
dismissed as the Corporation's independent public accountant effective upon
completion of the audit for the fiscal year ended December 31, 2000. The
decision to change accountants was recommended by the Audit Committee and
approved by the Corporation's Board of Directors.

The reports of PricewaterhouseCoopers LLP on the Corporation's consolidated
financial statements for the past two fiscal years did not contain an
adverse opinion or a disclaimer of opinion, nor was any such report qualified
or modified as to uncertainty, audit scope, or accounting principles.
Further, during the Corporation's two fiscal years ended December 31, 2000
and through March 30, 2001, there were no disagreements between
PricewaterhouseCoopers LLP and the Corporation regarding any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure which, if not resolved to the satisfaction of
PricewaterhouseCoopers LLP, would have caused it to make reference thereto
in its report on the financial statements for such years.

On February 9, 2001, the Board of Directors approved the engagement of
Ernst & Young LLP as its independent public accountant for the fiscal year
ending December 31, 2001. During the Corporation's two most recent fiscal
years ended December 31, 2000, and through March 30, 2001, the Corporation
did not consult with Ernst & Young LLP as to either the application of
accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the
Corporation's financial statements and the Corporation did not consult with
Ernst & Young LLP as to any matter that was either the subject of a
disagreement or reportable event.

33


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated by reference herein from those portions of the Corporation's
Proxy Statement for the Annual Meeting of Shareholders of the Corporation
for 2001 under the headings "Election of Directors," and "Other
Directorships" and "Section 16(a) Beneficial Ownership Reporting Compliance."


ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from those portions of the Corporation's Proxy
Statement for the Annual Meeting of Shareholders of the Corporation for
2001 under the headings "Executive Compensation," "Employment Agreements,"
"Change in Control Agreements," and "Directors' Fees and Other Compensation."


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated by reference from those portions of the Corporation's Proxy
Statement for the Annual Meeting of Shareholders of the Corporation for
2001 under the headings "Principal Shareholders," and "Shareholdings of
Directors, Executive Officers and Nominees for Election as Director."


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K

(a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES REQUIRED
TO BE FILED BY ITEM 8 OF THIS FORM AND REGULATION S-X

(1) The following statements are incorporated by reference to
the Annual Report to Shareholders for registrant's fiscal year
ended December 31, 2000:

Page Number
in Annual Report
----------------
Consolidated Balance Sheet at December 31, 2000,
1999, 1998 25

Statement of Consolidated Income & Comprehensive
Income for the years ended December 31, 2000, 1999
and 1998 26

Statement of Consolidated Shareholders' Equity for
the years ended December 31, 2000, 1999 and 1998 27

34


ITEM 14. CONTINUED

Page Number
in Annual Report
----------------

Statement of Consolidated Cash Flows for the years
ended December 31, 2000, 1999 and 1998 28

Notes to Consolidated Financial Statements 29-40

Report of Independent Accountants 40


Page Number
in this Report
--------------

(2) The following financial statement schedules
are included herein:

Schedule I - Consolidated Summary of
Investments Other Than Investments in
Related Parties at December 31, 2000 38

Schedule II - Condensed Financial Information
of Registrant for the years ended December 31,
2000, 1999 and 1998 39

Schedule III - Consolidated Supplementary
Insurance Information for the years ended
December 31, 2000, 1999 and 1998 40-42

Schedule IV - Consolidated Reinsurance for
the years ended December 31, 2000, 1999 and 1998 43

Schedule V - Valuation and Qualifying Accounts
for the years ended December 31, 2000, 1999
and 1998 44

Schedule VI - Consolidated Supplemental
Information Concerning Property and Casualty
Insurance Operations for the years ended
December 31, 2000, 1999 and 1998 45

(b) REPORTS ON FORM 8-K OR 8-K/A SINCE OCTOBER 1, 2000.

On November 11, 2000, the Corporation filed Form 8-K announcing
the appointment of Dan R. Carmichael, CPCU, as President and Chief
Executive Officer, replacing William L. Woodall, CPCU.

On February 15, 2001, the Corporation filed Form 8-K announcing the
appointment of Ernst & Young LLP as its independent public accountants,
replacing PricewaterhouseCoopers LLP.

On March 1, 2001, the Corporation filed Form 8-K announcing the
appointment of Ernst & Young LLP as the independent public accounts for
The Ohio Casualty Insurance Company Employee Savings Plan, replacing
PricewaterhouseCoopers LLP.

(c) EXHIBITS. (SEE INDEX TO EXHIBITS ATTACHED HERETO.)


35


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

OHIO CASUALTY CORPORATION
(Registrant)


March 30, 2001 By: /s/ Dan R. Carmichael
--------------------------
Dan R. Carmichael
President
Chief Executive Officer
Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


March 30, 2001 /s/ William L. Woodall
---------------------------------------------------------
William L. Woodall, Chairman of the Board

March 30, 2001 /s/ Dan R. Carmichael
---------------------------------------------------------
Dan R. Carmichael, President, Chief Executive Officer and
Director

March 30, 2001 /s/ Terrence J. Baehr
---------------------------------------------------------
Terrence J. Baehr, Director

March 30, 2001 /s/ Arthur J. Bennert
---------------------------------------------------------
Arthur J. Bennert, Director

March 30, 2001 /s/ Jack E. Brown
---------------------------------------------------------
Jack E. Brown, Director

March 30, 2001 /s/ Catherine E. Dolan
---------------------------------------------------------
Catherine E. Dolan, Director

March 30, 2001 /s/ Wayne R, Embry
---------------------------------------------------------
Wayne R. Embry, Director

March 30, 2001 /s/ Vaden Fitton
---------------------------------------------------------
Vaden Fitton, Director

March 30, 2001 /s/ Stephen S. Marcum
---------------------------------------------------------
Stephen S. Marcum, Director

March 30, 2001 /s/ Stanley N. Pontius
---------------------------------------------------------
Stanley N. Pontius, Director

March 30, 2001 /s/ Howard L. Sloneker III
---------------------------------------------------------
Howard L. Sloneker III, Director

March 30, 2001 /s/ Elizabeth M. Riczko
---------------------------------------------------------
Elizabeth M. Riczko, Sr. Vice President and Treasurer

36



REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES


To the Board of Directors and Shareholders
Of Ohio Casualty Corporation:

Our audits of the consolidated financial statements referred to in our
report dated February 16, 2001 appearing in the 2000 Annual Report to
Shareholders of Ohio Casualty Corporation (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the financial statement schedules
listed in Item 14(a)(2) of this Form 10-K. In our opinion, these financial
statement schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.


/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Cincinnati, Ohio
February 16, 2001



37

Schedule I
Ohio Casualty Corporation and Subsidiaries
Consolidated Summary of Investments
Other than Investments in Related Parties
(In thousands)


December 31, 2000
Amount
shown
in balance
Type of investment Cost Value sheet
- ------------------ ---- ----- ----------

Fixed maturities
Bonds:
United States govt. and
govt. agencies with auth. $ 54,290 $ 55,608 $ 55,608
States, municipalities and
political subdivisions 78,049 79,243 79,243
Corporate securities 1,233,418 1,254,851 1,254,851
Mortgage-backed securities:
U.S. government guaranteed 25,764 25,827 25,827
Other 1,078,854 1,098,125 1,098,125
---------- ---------- ----------
Total fixed maturities 2,470,375 2,513,654 2,513,654

Equity securities:
Common stocks:
Banks, trust and insurance
companies 35,538 261,940 261,940
Industrial, miscellaneous and
all other 133,160 492,895 492,895

Preferred stocks:
Non-redeemable 81 84 84
Convertible 0 0 0
---------- ---------- ----------
Total equity securities 168,779 754,919 754,919

Short-term investments 59,679 59,679 59,679
---------- ---------- ----------
Total investments $2,698,833 $3,328,252 $3,328,252
========== ========== ==========

38



Schedule II

Ohio Casualty Corporation
Condensed Financial Information of Registrant
(In thousands)


2000 1999 1998
---- ---- ----

Condensed Balance Sheet:
Investment in wholly-owned
subsidiaries, at equity $1,284,097 $1,314,399 $1,482,064

Investment in bonds/stocks 20,233 52,581 76,687

Cash and other assets 35,456 32,145 31,066
----------- ----------- -----------
Total assets 1,339,786 1,399,125 1,589,817

Notes payable 220,798 241,446 265,000
Other liabilities 2,397 6,692 3,836
----------- ----------- -----------
Total liabilities 223,195 248,138 268,836

Shareholders' equity $1,116,591 $1,150,987 $1,320,981
=========== =========== ===========
Condensed Statement of Income:
Dividends from subsidiaries $ 59,571 $ 112,122 $ 119,988

Equity in subsidiaries (128,681) 8,955 (33,929)

Operating (expenses) (10,139) (6,936) (1,132)
----------- ----------- -----------
Net income (loss) $ (79,249) $ 114,141 $ 84,927
=========== =========== ===========
Condensed Statement of Cash Flows:
Cash flows from operations
Net distributed income $ 49,432 $ 105,186 $ 118,856

Other (16,255) (8,609) (2,562)
----------- ----------- -----------
Net cash from operations 33,177 96,577 116,294

Investing
Purchase of bonds/stocks (46,937) (11,987) (200,740)
Sales of bonds/stocks 69,525 42,148 14,440
----------- ----------- -----------
Net cash from investing 22,588 30,161 (186,300)

Financing
Notes payable:
Borrowings 0 16,500 230,000
Repayments (20,648) (40,054) (5,000)

Exercise of stock options 67 211 1

Purchase of treasury stock 0 (46,087) (100,212)

Dividends paid to shareholders (35,446) (56,027) (57,886)
----------- ----------- -----------
Net cash from financing (56,027) (125,457) 66,903

Net change in cash (262) 1,281 (3,103)

Cash, beginning of year 9,835 8,554 11,657
----------- ----------- -----------
Cash, end of year $ 9,573 $ 9,835 $ 8,554
=========== =========== ===========


39



Schedule III
Ohio Casualty Corporation and Subsidiaries
Consolidated Supplementary Insurance Information
(In thousands)
December 31, 2000



Deferred Future policy
policy benefits Net
acquisition losses and Unearned Premium investment
costs loss expenses premiums revenue income
----------- ------------- -------- ------- ----------

Segment
- -------
Property and
casualty insurance:
Underwriting
Commerical auto $ 25,218 $ 192,508 $ 88,165 $ 178,622 $
Private Passenger Auto-Agency 28,306 377,277 146,952 461,553
Private Passenger Auto-Direct 731 10,129 5,535 13,615
Workers' compensation 15,957 699,168 82,541 197,814
Gen. liability, A&H 14,120 12,899 39,447 82,720
Umbrella 9,118 293,593 48,198 68,986
Homeowners 25,435 66,786 95,856 176,249
CMP, fire and allied lines,
inland marine 47,298 341,283 161,207 315,655
Fidelity, surety, burglary 8,888 9,876 28,512 37,733
Miscellaneous Income 483
Investment 202,002
--------- ---------- --------- ---------- ---------
Total property and
casualty insurance 175,071 2,003,519 696,413 1,533,430 202,002

Premium finance 100 568 167

Corporation 2,893
--------- ---------- --------- ---------- ---------
Total $ 175,071 $2,003,519 $ 696,513 $1,533,998 $ 205,062
========= ========== ========= ========== =========




Benefits, Amortization
losses and of deferred General
loss acquisition operating Premiums
expenses costs expenses written
---------- ------------ --------- --------

Segment
- -------
Property and
casualty insurance:
Underwriting
Commerical auto $ 151,017 $ 36,894 $ 25,012 $ 178,727
Private Passenger Auto-Agency 391,475 100,631 10,356 455,289
Private Passenger Auto-Direct 16,023 3,720 2,994 10,711
Workers' compensation 265,627 35,061 36,717 185,800
Gen. liability, A&H 66,352 30,202 6,550 80,663
Umbrella 31,962 15,219 10,965 70,612
Homeowners 145,884 53,733 9,049 173,222
CMP, fire and allied lines,
inland marine 222,547 98,551 47,819 312,470
Fidelity, surety, burglary 3,278 20,504 8,087 37,858
Miscellaneous Income
Investment
---------- --------- --------- ----------
Total property and
casualty insurance 1,294,165 394,515 157,549 1,505,352

Premium finance 857 480

Corporation 19,285
---------- --------- --------- ----------
Total $1,294,165 $ 394,515 $ 177,691 $1,505,832
========== ========= ========= ==========


1. Net investment income has been allocated to principal business segments
on the basis of separately identifiable assets.
2. The principal portion of general operating expenses has been directly
attributed to business segment classifications incurring such expenses
with the remainder allocated based on premium revenue.

40


Schedule III
Ohio Casualty Corporation and Subsidiaries
Consolidated Supplementary Insurance Information
(In thousands)
December 31, 1999



Deferred Future policy
policy benefits Net
acquisition losses and Unearned Premium investment
costs loss expenses premiums revenue income
----------- ------------- -------- ------- ----------

Segment
- -------
Property and
casualty insurance:
Underwriting
Commerical auto $ 12,672 $ 186,221 $ 88,559 $ 171,676 $
Private Passenger Auto-Agency 35,934 399,860 153,282 512,731
Private Passenger Auto-Direct 2,063 10,108 8,383 13,096
Workers' compensation 16,459 609,438 99,603 195,773
Gen. liability, A&H 14,745 214,921 42,816 71,562
Umbrella 6,732 67,668 39,229 70,453
Homeowners 28,213 64,193 98,221 183,047
CMP, fire and allied lines,
inland marine 49,568 343,676 166,833 298,766
Fidelity, surety, burglary 11,359 12,370 28,319 36,890
Miscellaneous Income 69
Addition due to acquisition
Investment 181,131
--------- ---------- --------- ---------- ---------
Total property and
casualty insurance 177,745 1,908,455 725,245 1,554,063 181,131

Life ins.(discontinued operations) 1,765 827

Premium finance 154 903 113

Corporation 3,043
--------- ---------- --------- ---------- ---------
Total $ 177,745 $1,908,455 $ 725,399 $1,556,731 $ 185,114
========= ========== ========= ========== =========




Benefits, Amortization
losses and of deferred General
loss acquisition operating Premiums
expenses costs expenses written
---------- ------------ --------- --------

Segment
- -------
Property and
casualty insurance:
Underwriting
Commerical auto $ 136,792 $ 37,224 $ 13,893 $ 175,482
Private Passenger Auto-Agency 403,643 108,539 35,280 526,284
Private Passenger Auto-Direct 19,073 3,072 7,716 17,145
Workers' compensation 156,273 29,261 26,629 191,688
Gen. liability, A&H 53,321 29,066 6,213 82,489
Umbrella 460 12,840 12,074 68,392
Homeowners 160,311 47,470 17,503 181,905
CMP, fire and allied lines,
inland marine 242,806 84,283 35,868 305,181
Fidelity, surety, burglary 2,975 18,836 5,477 38,100
Miscellaneous Income
Addition due to acquisition 31,402
Investment
---------- --------- --------- ----------
Total property and
casualty insurance 1,175,654 401,993 160,653 1,586,666

Life ins.(discontinued operations) (731) 174

Premium finance 1,277 804

Corporation 23,614
---------- --------- --------- ----------
Total $1,175,654 $ 401,262 $ 185,718 $1,587,470
========== ========= ========= ==========


1. Net investment income has been allocated to principal business segments
on the basis of separately identifiable assets.
2. The principal portion of general operating expenses has been directly
attributed to business segment classifications incurring such expenses
with the remainder allocated based on policy counts.

41


Schedule III
Ohio Casualty Corporation and Subsidiaries
Consolidated Supplementary Insurance Information
(In thousands)
December 31, 1998



Deferred Future policy
policy benefits Net
acquisition losses and Unearned Premium investment
costs loss expenses premiums revenue income
----------- ------------- -------- ------- ----------

Segment
- -------
Property and
casualty insurance:
Underwriting
Commerical auto $ 9,890 $ 189,817 $ 83,448 $ 139,114 $
Private Passenger Auto-Agency 34,700 417,316 139,195 498,225
Private Passenger Auto-Direct 862 1,254 4,348 2,002
Workers' compensation 7,627 591,527 95,839 100,336
Gen. liability, A&H 12,008 259,017 52,984 78,061
Umbrella 2,946 61,152 12,509 18,474
Homeowners 28,379 63,230 98,807 177,419
CMP, fire and allied lines,
inland marine 38,542 348,013 154,233 217,236
Fidelity, surety, burglary 11,342 14,532 27,019 36,403
Miscellaneous Income 334
Investment 164,812
Addition due to acquisition 31,402
Retro reinsurance assumed
from acquisition
--------- ---------- --------- ---------- ---------
Total property and
casualty insurance 177,698 1,945,858 668,382 1,267,604 164,812

Life ins.(discontinued operations) (1,092) 36,599 3,709 2,288

Premium finance 168 1,219 94

Corporation 4,118
--------- ---------- --------- ---------- ---------
Total $ 176,606 $1,982,457 $ 668,550 $1,272,532 $ 171,312
========= ========== ========= ========== =========




Benefits, Amortization
losses and of deferred General
loss acquisition operating Premiums
expenses costs expenses written
---------- ------------ --------- --------

Segment
- -------
Property and
casualty insurance:
Underwriting
Commerical auto $ 97,077 $ 26,833 $ 18,309 $ 139,087
Private Passenger Auto-Agency 393,879 100,122 11,684 514,915
Private Passenger Auto-Direct 2,433 439 146 6,347
Workers' compensation 77,632 18,060 11,912 100,150
Gen. liability, A&H 46,013 27,202 11,766 76,427
Umbrella 1,895 6,673 2,887 18,717
Homeowners 145,500 46,448 17,497 180,697
CMP, fire and allied lines,
inland marine 153,575 67,125 25,541 225,749
Fidelity, surety, burglary 5,662 17,646 6,124 37,021
Miscellaneous Income
Investment
Addition due to acquisition 5,968
Retro reinsurance assumed
from acquisition 137,636
---------- --------- --------- ----------
Total property and
casualty insurance 923,666 316,516 104,866 1,436,746

Life ins.(discontinued operations) (1) 2,524 456

Premium finance 1,529 1,170

Corporation 6,075
---------- --------- --------- ----------
Total $ 923,665 $ 319,040 $ 112,926 $1,437,916
========== ========= ========= ==========


1. Net investment income has been allocated to principal business segments
on the basis of separately identifiable assets.
2. The principal portion of general operating expenses has been directly
attributed to business segment classifications incurring such expenses
with the remainder allocated based on premium volume.

42



Schedule IV

Ohio Casualty Corporation and Subsidiaries
Consolidated Reinsurance
(In thousands)
December, 2000, 1999 and 1998


Percent of
amount
Ceded to Assumed assumed
Gross other from other Net to net
amount companies companies amount amount
------ --------- ---------- ------ ----------

Year Ended December 31, 2000

Premiums
Property and casualty insurance $1,418,835 $ 121,583 $ 208,100 $1,505,352 13.8%
Accident and health insurance 178 178 0 0 0.0%
---------- ---------- ---------- ----------
Total premiums 1,419,013 121,761 208,100 1,505,352 13.8%

Premium finance charges 480
----------
Total premiums and finance charges written 1,505,832
Change in unearned premiums and finance charges 27,682
Retro reinsurance assumed from acquisition 0
----------
Total premiums and finance charges earned 1,533,514
Miscellaneous income 484
----------
Total premiums & finance charges earned - continuing operations $1,533,998
==========
Year Ended December 31, 1999
Life insurance in force $ 279 $ 279 $ 0 $ 0 0.0%

Premiums
Property and casualty insurance $1,325,243 $ 106,852 $ 368,275 $1,586,666 23.2%
Life insurance (Discontinued
operations) 1,694 1,694 0 0 0.0%
Accident and health insurance 198 198 0 0 0.0%
---------- ---------- ---------- ----------
Total premiums 1,327,135 108,744 368,275 1,586,666 23.2%

Premium finance charges 804
Life insurance - FAS 97 adjustment 0
----------
Total premiums and finance charges written 1,587,470
Change in unearned premiums and finance charges (29,911)
Retro reinsurance assumed from acquisition 0
----------
Total premiums and finance charges earned 1,557,559
Miscellaneous income (2,593)
Discontinued operations - life insurance 0
----------
Total premiums & finance charges earned - continuing operations $1,554,966
==========
Year Ended December 31, 1998
Life insurance in force $ 329 $ 329 $ 0 $ 0 0.0%

Premiums
Property and casualty insurance $1,289,837 $ 79,268 $ 226,177 $1,436,746 15.7%
Life insurance (Discontinued
operations) 3,187 3,187 0 0 0.0%
Accident and health insurance 567 567 0 0 0.0%
---------- ---------- ---------- ----------
Total premiums 1,293,591 83,022 226,177 1,436,746 15.7%

Premium finance charges 1,170
Life insurance - FAS 97 adjustment 0
----------
Total premiums and finance charges written 1,437,916
Change in unearned premiums and finance charges (31,790)
Retro reinsurance assumed from acquisition (137,636)
----------
Total premiums and finance charges earned 1,268,490
Miscellaneous income 334
Discontinued operations - life insurance 0
----------
Total premiums & finance charges earned - continuing operations $1,268,824
==========

43



Schedule V

Ohio Casualty Corporation and Subsidiaries
Valuation and Qualifying Accounts
(In thousands)



Balance at Addition Balance at
beginning Charged to due to end of
of period expenses Acquisition Deductions period

Year ended December 31, 2000
Reserve for bad debt 9,338 1,362 0 0 10,700


Year ended December 31, 1999
Reserve for bad debt 8,739 599 0 0 9,338


Year ended December 31, 1998
Reserve for bad debt 4,200 100 4,439 0 8,739


44


Schedule VI
Ohio Casualty Corporation and Subsidiaries
Consolidated Supplemental Information Concerning
Property and Casualty Insurance Operations
(In thousands)



Reserves for
Deferred unpaid claims
policy and claim Discount Net
Affiliation with acquisition adjustment of Unearned Earned investment
registrant costs expenses reserves premiums premiums income
----------- ------------- -------- -------- -------- ----------

Property and casualty
subsidiaries


Year ended December 31,
2000 $ 175,071 $2,003,519 $ 0 $ 696,413 $1,533,430 $ 202,002
========= ========== ======== ========== ========== =========

Year ended December 31,
1999 $ 177,745 $1,908,455 $ 0 $ 725,245 $1,554,063 $ 181,131
========= ========== ======== ========== ========== =========


Year ended December 31,
1998 $ 177,698 $1,945,858 $ 0 $ 668,382 $1,267,604 $ 164,812
========= ========== ======== ========== ========== =========






Claims and claim Amortization Paid
adjustment expenses of deferred claims
incurred related to policy and claim
-------------------
Affiliation with Current Prior acquisition adjustment Premiums
registrant year years costs expenses written
------- ----- ----------- ---------- --------

Property and casualty
subsidiaries


Year ended December 31,
2000 $1,237,319 $ 56,846 $ 394,515 $1,210,163 $1,505,352
========== ======== ========= ========== ==========

Year ended December 31,
1999 $1,176,072 $ (418) $ 401,993 $1,217,948 $1,586,666
========== ======== ========= ========== ==========


Year ended December 31,
1998 $ 989,115 $(66,119) $ 316,516 $ 963,094 $1,436,746
========== ======== ========= ========== ==========


45




FORM 10-K
OHIO CASUALTY CORPORATION
INDEX TO EXHIBITS
Page
Number
------
Exhibit 10 Employment Agreement with Dan R. Carmichael dated
December 12, 2000 48-68

Exhibit 13 Annual Report to Shareholders for the Registrant's
fiscal year ended December 31, 2000 69-112

Exhibit 16 Letter regarding change in Independent Public Accountant
dated March 30, 2001 from PricewaterhouseCoopers LLP to
the Securities and Exchange Commission 113-114

Exhibit 21 Subsidiaries of the Registrant 115

Exhibit 23 Consent of Independent Accountants to incorporation
of their opinion by reference in Registration Statement
on Forms S-3 and Form S-8 116

Exhibit 28 Information from Reports Furnished to State Insurance
Regulation Authorities 117-130

Exhibits incorporated by reference:

Exhibit 2 Asset Purchase Agreement between Ohio Casualty
Corporation and Great American Insurance Company,
filed as Exhibit 2 to the Registrant's SEC Form 10-Q
on November 13, 1998

Exhibit 3 Articles of Incorporation, as amended, filed as
Exhibits 4(a), 4(b), 4(c), 4(d), 4(e) and 4(f) to the
Registrant's SEC Form S-8 (333-42942) on August 3,
2000

Exhibit 3a Code of Regulations, as amended, filed as Exhibits
4(g), 4(h) and 4(i) to the Registrant's SEC Form S-8
(333-42942) on August 3, 2000

Exhibit 4 Amended and Restated Rights Agreement between the
Registrant and First Chicago Trust Company of New York
as Rights Agent, filed as Exhibits 4(j) to the
Registrant's SEC Form S-8 (333-42942) on August 3,
2000

Exhibit 4a Certificate of Adjustment by the Registrant, filed as
Exhibit 4(k) to the Registrant's SEC Form S-8 (333-42942)
on August 3, 2000

Exhibit 10a Ohio Casualty Corporation 1993 Stock Incentive Program,
filed as Exhibit 10d to the Registrant's SEC Form 10-Q
on May 31, 1993

Exhibit 10a1 Ohio Casualty Corporation amended 1993 Stock Incentive
Program, filed as Exhibit 10.a1 to the Registant's SEC
Form 10-Q on May 14, 1997


46


FORM 10-K
OHIO CASUALTY CORPORATION
INDEX TO EXHIBITS, CONTINUED

Page
Number
------
Exhibit 10b Coinsurance Life, Annuity and Disability Income
Reinsurance Agreement between Employer's Reassurance
Corporation and The Ohio Life Insurance Company dated
as of October 2, 1995, filed as Exhibit 10b to the
Registrant's SEC Form 10-K on March 26, 1996

Exhibit 10c Credit Agreement dated October 27, 1997 with Chase
Manhattan Bank, N.A. as agent, filed as Exhibit 10c
to the Registrant's SEC Form 10-Q on November 13,
1997

Exhibit 10c1 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, filed as Exhibit 99.2
of the Registrant's SEC Form S-3 (333-70761) on
January 19, 1999

Exhibit 10d Employment Agreement with William L. Woodall dated
February 17, 2000, filed as Exhibit 10.1 to the
Registrant's SEC Form 10-Q on November 14, 2000

Exhibit 10e Agreement with Howard L. Sloneker III, as Amended,
dated July 24, 2000, filed as Exhibit 10.2 to the
Registrant's SEC Form 10-Q on November 14, 2000

Exhibit 10f Information regarding Omitted Exhibits (Schedule to
Exhibit 10.2) dated July 24, 2000, filed as Exhibit
10.3 to the Registrant's SEC Form 10-Q on November 14,
2000

Exhibit 10g Stock Option Agreement for Directors' year 2000 grant,
filed as Exhibit 10.1 to the Registrant's SEC Form 10-Q
on May 15, 2000

Exhibit 10h Stock Option Agreement for Chief Executive Officer
year 2000 grant, filed as Exhibit 10.2 to the
Registrant's SEC Form 10-Q on May 15, 2000

Exhibit 22 Proxy Statement of the Corporation for the Annual Meeting
of Shareholders for 2001, filed with the Securities and
Exchange Commission on March 14, 2001


47