BIRMINGHAM, Ala., July 24 /PRNewswire-FirstCall/ -- Infinity Property and
Casualty Corporation (Nasdaq: IPCC), a national provider of personal
automobile insurance, today reported results for the three and six months
ended June 30, 2008:
Three Months Ended Six Months Ended
June 30, June 30,
(in millions, % %
except per 2008 2007 Change 2008 2007 Change
share amounts
and ratios)
Gross written
premiums $227.5 $255.6 (11.0%) $481.0 $560.4 (14.2%)
Revenues $247.9 $280.4 (11.6%) $497.1 $555.3 (10.5%)
Net earnings $12.1 $14.3 (15.2%) $26.1 $36.1 (27.5%)
Net earnings
per diluted share $0.74 $0.73 1.4 % $1.60 $1.83 (12.6%)
Operating
earnings (1) $14.2 $17.1 (16.7%) $29.3 $37.8 (22.6%)
Operating earnings
per diluted
share (1) $0.87 $0.87 - $1.79 $1.92 (6.8%)
Underwriting
income (1) $10.5 $12.2 (13.9%) $23.5 $31.4 (25.1%)
Combined ratio 95.5 % 95.4 % 0.1 pts 95.0 % 94.0 % 1.0 pts
Return on equity 8.0 % 8.4 % (0.4) pts 8.7 % 10.7 % (2.0) pts
Operating income
return on
equity (1) 9.3 % 10.0 % (0.7) pts 9.7 % 11.2 % (1.5) pts
Book value per share $37.70 $35.17 7.2 %
Debt to total capital 24.8 % 22.6 % 2.2 pts
(1) Measures used in this release that are not based on generally accepted
accounting principles ('non-GAAP') are defined at the end of this
release and reconciled to the most comparable GAAP measure.
Gross written premiums declined 11.0% and 14.2% during the second quarter
and first six months of 2008, respectively, as compared with the same periods
in 2007 primarily from a decline in gross written premiums in California,
Connecticut, Florida and Georgia. Partially offsetting premium declines in
these states was premium growth in Illinois, Nevada, and Texas.
Earnings and underwriting income for the three and six months ended June
30, 2008, included $6.3 million, pre-tax, ($0.25 per diluted share after-tax)
and $12.2 million, pre-tax ($0.49 per diluted share after-tax), respectively,
of favorable development on prior accident period loss and loss adjustment
expense reserves compared with $6.1 million, pre-tax ($0.20 per diluted share
after-tax) and $7.2 million, pre-tax ($0.24 per diluted share after-tax) of
favorable development for the three and six months ended June 30, 2007,
respectively.
2008 Earnings Guidance
As a result of a decrease in earned premiums and underwriting margins
Infinity is adjusting its operating earnings guidance to $2.85 - $3.15 per
diluted share down from $3.05 - $3.35 per diluted share.
Share Repurchase Program
During the second quarter of 2008, Infinity repurchased 144,800 shares at
an average price, excluding commissions, of $42.54. Since the end of the
second quarter, Infinity has repurchased an additional 531,700 shares at an
average price, excluding commissions, of $43.01.
As of July 23, Infinity had $25.7 million of authority remaining under its
existing repurchase program. Effective as of today, July 24, 2008, Infinity's
Board of Directors has increased this authority by $74.3 million to $100
million and extended the date to execute this program to December 31, 2009
from December 31, 2008.
Forward-Looking Statements
This press release contains certain statements that may be deemed to be
'forward-looking statements' that anticipate results based on our estimates,
assumptions and plans that are subject to uncertainty. These statements are
made subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. All statements in this press release not
dealing with historical results or current facts are forward-looking and are
based on estimates, assumptions, and projections. Statements that include the
words 'believes,' 'seeks,' 'expects,' 'may,' 'should,' 'intends,' 'likely,'
'targets,' 'plans,' 'anticipates,' 'estimates' or the negative version of
those words and similar statements of a future or forward-looking nature
identify forward-looking statements. Examples of such forward-looking
statements include statements relating to expectations concerning market
conditions, premiums, growth, earnings, investment performance, expected
losses, rate changes and loss experience.
Actual results could differ materially from those expected by Infinity
depending on: changes in economic conditions and financial markets (including
interest rates), the adequacy or accuracy of Infinity's pricing methodologies,
actions of competitors, the approval of requested form and rate changes,
judicial and regulatory developments affecting the automobile insurance
industry, the outcome of pending litigation against Infinity, weather
conditions (including the severity and frequency of storms, hurricanes,
snowfalls, hail and winter conditions), changes in driving patterns and loss
trends. Infinity undertakes no obligation to publicly update or revise any of
the forward-looking statements. For a more detailed discussion of some of the
foregoing risks and uncertainties which could cause actual results to differ
from those contained in the forward-looking statements, see Infinity's filings
with the Securities and Exchange Commission.
Conference Call
The Company will hold a conference call to discuss second quarter 2008 at
11:00 a.m. (ET) today, July 24. There are two alternative communication
modes available to listen to the call. Telephone access will be available by
dialing 1-888-713-4217 and providing the confirmation code 22698131. Please
dial 5 to 10 minutes prior to the scheduled start time. A replay of the call
will also be available one hour following the completion of the call, at
around 1:00 p.m. (ET), and will run until 8:00 p.m. on Thursday, July 31,
2008. To listen to the replay, dial 1-888-286-8010 and provide the
confirmation code 80140767. The conference call will also be broadcast live
over the Internet. To listen to the call via the Internet, go to Infinity's
website, http://www.ipacc.com, click on Investor Relations and follow the
instructions at the webcast link. The archived webcast will be available on
Infinity's website approximately one hour following the completion of the call
and will be available for one year.
Infinity Property and Casualty Corporation
Statement of Earnings
(in millions, except EPS)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Earned premiums $233.4 $264.9 $468.4 $520.8
Net investment income 14.8 17.1 30.1 34.0
Realized gains (losses) on
investments (1.8) (3.0) (3.2) (1.2)
Other income 1.5 1.4 1.6 1.7
Total revenues 247.9 280.4 497.1 555.3
Costs and Expenses:
Loss and loss adjustment
expenses (1) 165.9 190.5 335.4 367.9
Commissions and other
underwriting expenses 57.0 62.2 109.5 121.5
Interest expense 2.8 2.8 5.5 5.5
Corporate general and
administrative expenses 1.9 2.1 3.8 4.1
Restructuring charge 0.1 (0.1) 0.4 (0.3)
Other expenses 1.3 0.3 2.8 1.0
Total costs and expenses 228.9 257.8 457.4 499.7
Earnings before income taxes 18.9 22.6 39.7 55.6
Provision for income taxes 6.8 8.3 13.5 19.5
Net earnings $12.1 $14.3 $26.1 $36.1
Earnings per common share:
Basic $0.75 $0.74 $1.62 $1.85
Diluted $0.74 $0.73 $1.60 $1.83
Average number of common shares:
Basic 16.1 19.4 16.1 19.5
Diluted 16.4 19.6 16.4 19.7
Cash dividends per common share $0.11 $0.09 $0.22 $0.18
Note: Columns may not foot due to rounding
Notes:
(1) Loss and loss adjustment expenses for the three and six months ended
June 30, 2008, include $6.3 million and $12.2 million, pre-tax, of
favorable development on prior accident period loss and loss
adjustment expense reserves, respectively.
Loss and loss adjustment expenses for the three and six months ended
June 30, 2007, include $6.1 million and $7.2 million, pre-tax, of
favorable development on prior accident period loss and loss
adjustment expense reserves, respectively.
Infinity Property and Casualty Corporation
Condensed Balance Sheet
(in millions, except book value per share)
For the Period Ended
June 30, March 31,
2008 2008
Assets:
Investments:
Fixed maturities, at fair
value $1,207.9 $1,238.3
Equity securities, at fair
value 44.4 45.2
Total investments 1,252.3 1,283.5
Cash and cash equivalents 36.6 38.5
Accrued investment income 12.9 12.1
Agents' balances and premiums
receivable 335.0 342.7
Prepaid reinsurance premiums 1.8 2.0
Recoverables from reinsurers 25.6 30.2
Deferred policy acquisition costs 78.0 79.2
Current and deferred income taxes 40.6 25.7
Receivable for securities sold - 45.8
Prepaid expenses, deferred charges
and other assets 38.2 35.3
Goodwill 75.3 75.3
Total assets $1,896.2 $1,970.4
Liabilities and Shareholders' Equity:
Liabilities:
Unpaid losses and loss adjustment
expenses $581.1 $591.2
Unearned premiums 421.3 428.4
Payable to reinsurers 0.3 0.3
Long-term debt 199.5 199.5
Commissions payable 26.2 27.7
Payable for securities purchased 8.7 63.1
Accounts payable, accrued expenses
and other liabilities 53.0 47.6
Total liabilities 1,290.2 1,357.8
Shareholders' Equity:
Common stock 21.0 21.0
Additional paid-in capital 341.0 340.6
Retained earnings (1) 449.2 438.9
Other comprehensive income (loss) (4.1) 7.0
Treasury stock, at cost (2) (201.1) (194.9)
Total shareholders' equity 606.1 612.5
Total liabilities and
shareholders' equity $1,896.2 $1,970.4
Shares outstanding 16.075 16.205
Book value per share $37.70 $37.80
Note: Columns may not foot due to rounding
Notes:
(1) The change in retained earnings from March 2008 is a result of net
income of $12.1 million less shareholder dividends of $1.8 million.
(2) Infinity repurchased 144,800 common shares during the second quarter
of 2008 at an average per share price, excluding commissions, of
$42.54.
Definitions of Non-GAAP Financial and Operating Measures
Operating earnings are defined as net earnings, before realized gains and
losses and the cumulative effect of a change in accounting principle, after
tax. Infinity reports this non-GAAP measure because realized gains and losses
can be volatile and because it is a measure used often by investors in
evaluating insurance companies. Net earnings are the most comparable GAAP
measure.
Underwriting income measures the insurer's profit on insurance sales after
all losses and expenses have been paid. It is calculated by deducting loss
and loss adjustment expenses and underwriting expenses from premiums earned.
Infinity reports this non-GAAP measure to show profitability before inclusion
of investment income or taxes and because it is a measure used often by
investors in evaluating insurance companies. Net earnings are the most
comparable GAAP measure.
Below is a schedule that reconciles operating earnings and underwriting
income, both non-GAAP measures, to net earnings:
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(in millions, except EPS) 2008 2007 2008 2007
Earned premiums $233.4 $264.9 $468.4 $520.8
Loss and loss adjustment expenses (165.9) (190.5) (335.4) (367.9)
Commissions and other
underwriting expenses (57.0) (62.2) (109.5) (121.5)
Underwriting income 10.5 12.2 23.5 31.4
Net investment income 14.8 17.1 30.1 34.0
Other income 1.5 1.4 1.6 1.7
Interest expense (2.8) (2.8) (5.5) (5.5)
Corporate general and
administrative expenses (1.9) (2.1) (3.8) (4.1)
Restructuring charge (0.1) 0.1 (0.4) 0.3
Other expenses (1.3) (0.3) (2.8) (1.0)
Pre-tax operating earnings 20.7 25.6 42.8 56.8
Provision for income taxes (6.5) (8.5) (13.6) (19.0)
Operating earnings, after-tax 14.2 17.1 29.3 37.8
Realized gains (losses) on
investments, pre-tax (1.8) (3.0) (3.2) (1.2)
Provision for income taxes 0.6 1.0 1.1 0.4
Increase in provision for tax
valuation allowance (0.9) (0.8) (1.1) (0.9)
Realized gains (losses)
on investments, net
of tax (2.1) (2.7) (3.1) (1.7)
Net earnings $12.1 $14.3 $26.1 $36.1
Operating earnings per share -
diluted $0.87 $0.87 $1.79 $1.92
Realized gains (losses) on
investments, net of tax (0.07) (0.10) (0.12) (0.04)
Increase in provision for tax
valuation allowance (0.06) (0.04) (0.07) (0.05)
Net earnings per share - diluted $0.74 $0.73 $1.60 $1.83
Note: Columns may not foot due to rounding
Infinity also makes available an investor supplement on our website. To
access the supplemental financial information, go to www.ipacc.com and click
on 'Investor Relations' followed by 'Quarterly Reports.'
SOURCE Infinity Property and Casualty Corporation
