BIRMINGHAM, Ala., Feb. 5 /PRNewswire-FirstCall/ -- Infinity Property and
Casualty Corporation (Nasdaq: IPCC), a national provider of personal
automobile insurance, today reported results for the three and twelve months
ended December 31, 2008:
Three Months Ended Twelve Months Ended
December 31, December 31,
(in millions, % %
except per share 2008 2007 Change 2008 2007 Change
amounts and ratios)
Gross written premiums $193.0 $221.5 (12.8%) $896.9 $1,019.0 (12.0%)
Revenues $200.1 $267.1 (25.1%) $930.9 $1,098.2 (15.2%)
Net earnings (loss) ($11.3) $18.8 (159.9%) $19.3 $71.9 (73.2%)
Net earnings (loss) per
diluted share ($0.77) $1.14 (167.5%) $1.23 $3.87 (68.2%)
Operating earnings (1) $25.8 $19.1 35.3% $71.1 $75.6 (5.9%)
Operating earnings per
diluted share (1) $1.78 $1.16 53.4% $4.53 $4.06 11.6%
Underwriting income (1) $30.4 $18.1 68.1% $69.0 $66.8 3.3%
Combined ratio 86.4% 92.8% (6.4)pts 92.5% 93.5% (1.0)pts
Return on equity (8.3%) 12.7% (21.0)pts 3.4% 11.4% (8.0)pts
Operating earnings
return on equity (1) 19.1% 12.9% 6.2 pts 12.6% 11.9% 0.7 pts
Book value per share $37.14 $37.11 0.1%
Debt to total capital 27.5% 24.9% 2.6 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.
Better than expected underwriting results were more than offset by
other-than-temporary impairment charges on securities resulting in a net loss
for the fourth quarter of 2008. Notwithstanding the other-than-temporary
impairment charges, Infinity's capital position remains strong.
Gross written premiums declined 12.8% and 12.0% during the three and
twelve months ended December 31 2008, respectively, as compared with the same
periods in 2007 primarily from a decline in gross written premiums in
California, Florida and Georgia. Partially offsetting premium declines in
these states was premium growth in Illinois, Nevada, and Texas as well as the
Commercial Vehicle program.
Earnings and underwriting income for the three and twelve months ended
December 31, 2008, included $15.9 million, pre-tax ($0.71 per diluted share
after-tax) and $29.4 million, pre-tax ($1.22 per diluted share after-tax),
respectively, of favorable development on prior accident year loss and loss
adjustment expense reserves compared with $0.9 million, pre-tax ($0.04 per
diluted share after-tax) and $13.5 million, pre-tax ($0.47 per diluted share
after-tax) of favorable development for the three and twelve months ended
December 31, 2007, respectively.
During the three months ended December 31, 2008, Infinity recorded $40.3
million, pretax, ($2.78 per diluted share after-tax) of other-than-temporary
impairments on investments, of which $12.3 million were previously recorded as
unrealized losses. During the three months ended December 31, 2007, Infinity
recorded other-than-temporary impairments of $1.4 million, pre-tax, ($0.09 per
diluted share after-tax). For the twelve months ended December 31, 2008 and
2007, other-than-temporary impairments recorded were $61.8 million, pre-tax,
($3.94 per diluted share after-tax) and $4.0 million, pre-tax, ($0.22 per
diluted share after-tax), respectively.
In determining other-than-temporary impairment charges, Infinity considers
the magnitude and length of time a security has been impaired, as well as, the
ability and intent to hold the security until its market value fully recovers.
The primary influence of the other-than-temporary charges recorded during the
fourth quarter was the length and depth of the current bear market for fixed
income and equity securities.
Below is a summary of the other-than-temporary impairment charges recorded
during the fourth quarter of 2008 by sector (in millions):
4th Quarter
2008
Impairment
Mortgage-backed, collateralized mortgage obligations
and asset-backed securities:
Commercial mortgage-backed securities $1.4
Collateralized mortgage obligations:
Planned amortization class 4.9
Sequentials 0.9
Whole loans 0.3
Scheduled 0.7
Accretion directed 0.1
Total collateralized mortgage obligations 7.0
Asset-backed securities secured by:
Equipment leases 3.4
Home equity loans 0.4
Total asset-backed securities 3.8
Total mortgage-backed, collateralized mortgage
obligations and asset-backed securities 12.3
Corporates:
Investment grade 3.2
Non-investment grade 6.2
Total corporates 9.4
Total fixed maturities 21.7
Equity securities 18.6
Total investment portfolio $40.3
Note: Columns may not foot due to rounding
Below is a summary of the unrealized gain (loss) position, pre-tax, as of
December 31, 2008 (in millions):
Book Fair
Value Gains Losses Value
U.S. government and agencies:
U.S. government $159.0 $9.2 $ - $168.3
Government sponsored agencies 33.2 1.7 - 34.9
Total U.S.
