By James McNair
and Mike Boyer
The Cincinnati Enquirer

Ohio Casualty Corp. reported a big increase in first-quarter profits Tuesday, due in part to savings from cutting more than 400 jobs.

Excluding a $10 million decline in investment gains from a year ago, the Fairfield-based insurance company more than doubled its net income to $16.8 million in the three-month period ended March 31. Revenue from premiums and finance charges rose 3.4 percent to $361.1 million.

In other local first-quarter reports out Tuesday, Roto-Rooter Inc. and Alderwoods Group reported losses.

Ohio Casualty announced the first-quarter results after the stock market closed. Its shares ended the day at $19.22, down 47 cents.

In February, the company announced the immediate layoff of 260 workers and said it would lay off as many as 250 more in the second quarter. In fact, it laid off 322 workers in the first quarter and another 62 in April.

When the layoffs are complete, 400 to 500 positions will have been eliminated, or up to 19 percent of Ohio Casualty's work force on Dec. 31.

Ohio Casualty said the staff reductions would lower the company's 2004 operating costs by $5.5 million, net of severance costs, which reduced first-quarter earnings by $5.6 million.The company projects savings of $19.7 million in 2005.

Ohio Casualty hired the consulting firm Alexander Proudfoot to develop a "process re-engineering" program to cut costs, consolidate functions, improve productivity and invest in technology. As a result, the company's first-quarter statutory combined ratio of 100.7 percent was its best since 1996.

The ratio, a standard measure for the performance of insurance companies, shows the percentage of premium dollars used to pay insurance losses and other expenses. The lower the percentage, the better. Ohio Casualty reported a 108.8 percent ratio in the first quarter of 2003.

On a net basis, Ohio Casualty posted profit of $19.2 million during the quarter, compared with $19.9 million in 2003.

In other earnings news:

Roto-Rooter Inc.

Cincinnati's Roto-Rooter Inc. reported a first-quarter loss of $7.1 million, or 65 cents a share, after including costs from acquisition of Vitas Healthcare Corp., the leading hospice care provider.

Excluding those one-time items, earnings were 46 cents a share, compared with an analyst estimate of 39 cents. A year ago, Roto-Rooter reported net income of $3.56 million, or 36 cents a share.

Roto-Rooter's shares closed Tuesday at $50.85, up $2.05 or 4 percent.

Revenues including Miami-based Vitas rose to $131 million from $77.6 million a year ago.

The first quarter was "perhaps the most dynamic in the history of the company,'' CEO Kevin McNamara said, "We have . . . re-engineered the entire . . . structureof the company.''

Besides the $335 million acquisition of Vitas in February, Roto-Rooter also restructured its debt and made a 2-million-share private stock placement.

The three months ended March 31 included a number of unusual items relating to the Vitas acquisition, including required accruals of $5.9 million, or 54 cents a share after tax, for payouts under Vitas' long-term incentive plan for executives.

It also included an after-tax charge of $2.2 million, or 20 cents a share, for early extinguishment of debt, and other charges that reduced equity earnings in Vitas by $4.6 million, or 42 cents a share.

The plumbing and drain cleaning business reported a loss of $1.8 million on higher revenues of $69 million in the first quarter.

Alderwoods Group

Alderwoods Group, the second-biggest operator of funeral homes and cemeteries nationally, reported a 28 percent drop in first-quarter earnings Tuesday -- $4.8 million, vs. $6.7 million.

The Cincinnati-based company said revenue rose 7 percent to $179.2 million during the quarter, although the number of funeral services it conducted fell 0.9 percent. Alderwoods continued to post big losses from discontinued operations, absorbing a $6.5 million after-tax loss on funeral homes, cemeteries and other assets it is trying to sell.

E-mail jmcnair@enquirer.com or mboyer@enquirer.com