Infinity Property and Casualty Reports 17.2% Growth in Gross Written Premium
BIRMINGHAM, Ala., May 2 /PRNewswire-FirstCall/ -- Infinity Property and
Casualty Corporation (Nasdaq: IPCC), a national provider of personal
automobile insurance, today reported results for the three months ending March
31, 2007:
For the Three Months Ended March 31,
(in millions,
except per share 2007 2006 %Change
amounts and ratios)
Gross written premiums $304.8 $260.1 17.2%
Revenues $274.9 $251.7 9.2%
Net earnings $21.8 $29.1 (25.1%)
Net earnings per diluted $1.10 $1.39 (20.9%)
share
Operating earnings (1) $20.8 $28.9 (28.0%)
Operating earnings per $1.05 $1.38 (23.9%)
diluted share (1)
Underwriting income (1) $19.2 $31.4 (38.9%)
Combined ratio 92.5% 86.6% 5.9 pts
Return on equity 13.0% 18.3% (5.3) pts
Operating income return on 12.4% 18.2% (5.8) pts
equity (1)
Book value per share $34.87 $31.16 11.9%
Debt to total capital 22.7% 23.6% (0.9) 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 for the three months ended March 31, 2007, grew
17.2% compared with the same period of 2006 primarily as a result of growth in
California, Arizona and Texas. Personal auto gross written premiums in
Infinity's 20 targeted urban zones, which include Los Angeles, Houston,
Philadelphia, Phoenix and other metropolitan areas across the nation, grew
27.6% compared with the same period of 2006.
Earnings and underwriting income for the three months ended March 31,
2006, included $19.0 million, pre-tax, ($0.59 per diluted share after-tax) of
favorable development on prior accident period loss and loss adjustment
expense reserves compared with $1.1 million, pre-tax ($0.03 per diluted share
after-tax) of favorable development for the three months ended March 31, 2007.
Excluding favorable development, underwriting income and the combined ratio
for the first quarter of 2007 were $18.1 million and 92.9%, respectively,
compared with $12.4 million and 94.7%, respectively, for the first quarter of
2006.
2007 Earnings Guidance
Given the better than projected underwriting results in the first quarter,
Infinity is increasing its operating earnings guidance to $3.35 - $3.75 per
diluted share from $3.20 - $3.60.
Share Repurchase Program
Infinity repurchased 187,794 common shares during the first quarter of
2007 at an average per share price, excluding commissions, of $47.83.
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 2007 first quarter
results at 9:00 a.m. (ET) today, May 2. There are two alternative
communication modes available to listen to the call. Telephone access will be
available by dialing 1-800-291-9234 and providing the confirmation code
58074184. Please dial in 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 11:00 a.m. (ET), and will run until 8:00 p.m. on
Wednesday, May 9, 2007. To listen to the replay, dial 1-888-286-8010 and
provide the confirmation code 99068176. 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 and dividends)
For the Three Months
Ended March 31,
2007 2006
Revenues:
Earned premiums $256.0 $234.0
Net investment income 16.9 16.9
Realized gains on investments 1.8 0.1
Other income 0.3 0.7
Total revenues 274.9 251.7
Costs and Expenses:
Loss and loss adjustment expenses (1) 177.4 148.9
Commissions and other underwriting expenses 59.3 53.7
Interest expense 2.8 2.8
Corporate general and administrative expenses 1.9 1.9
Restructuring charge (0.2) --
Other expenses 0.6 0.7
Total costs and expenses 241.9 208.0
Earnings before income taxes 33.0 43.7
Provision for income taxes 11.2 14.6
Net earnings $21.8 $29.1
Earnings per common share:
Basic $1.11 $1.41
Diluted $1.10 $1.39
Average number of common shares:
Basic 19.516 20.675
Diluted 19.714 20.928
Cash dividends per common share $0.090 $0.075
Note: Columns may not foot due to rounding
Notes:
(1) Loss and loss adjustment expenses for the three months ended March 31,
2007, include $1.1 million of favorable development on prior accident
period loss and loss adjustment expense reserves.
Loss and loss adjustment expenses for the three months ended March 31,
2006, include $19.0 million of favorable development on prior accident
period loss and loss adjustment expense reserves.
Infinity Property and Casualty Corporation
Condensed Balance Sheet
(in millions, except book value per share)
For the Period Ended
March 31, December 31,
2007 2006
Assets:
Investments:
Fixed maturities, at fair value $1,239.5 $1,250.2
Equity securities, at fair value 48.1 55.5
Total investments 1,287.6 1,305.7
Cash and cash equivalents 142.4 109.2
Accrued investment income 14.9 16.1
Agents' balances and premiums receivable 383.6 343.1
Prepaid reinsurance premiums 3.0 4.3
Recoverables from reinsurers 30.6 31.8
Deferred policy acquisition costs 85.8 76.8
Current and deferred income taxes 23.8 34.6
Prepaid expenses, deferred
charges and other assets 18.2 17.5
Goodwill 75.3 75.3
Total assets $2,065.1 $2,014.4
Liabilities and Shareholders' Equity:
Liabilities:
Unpaid losses and loss adjustment expenses $596.2 $596.0
Unearned premiums 477.4 431.0
Payable to reinsurers 0.3 0.6
Long-term debt 199.4 199.4
Commissions payable 33.5 30.1
Accounts payable, accrued
expenses and other liabilities 80.0 92.6
Total liabilities 1,386.8 1,349.8
Shareholders' Equity:
Common stock 20.9 20.8
Additional paid-in capital 336.6 335.7
Retained earnings (1) 381.7 361.7
Other comprehensive income (1.5) (3.2)
Treasury stock, at cost (2) (59.4) (50.4)
Total shareholders' equity 678.3 664.6
Total liabilities and
shareholders' equity $2,065.1 $2,014.4
Shares outstanding 19.452 19.617
Book value per share $34.87 $33.88
Note: Columns may not foot due to rounding
Notes:
(1) Net income of $21.8 million less shareholder dividends of $1.8 million
resulted in the increase in retained earnings from December 2006.
(2) Infinity repurchased 187,794 common shares during the first quarter of
2007 at an average per share price, excluding commissions, of $47.83.
Definitions of Non-GAAP Financial and Operating Measures
Operating earnings are defined as net income, 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
Ended March 31,
(in millions, except EPS) 2007 2006
Earned premiums $256.0 $234.0
Loss and loss adjustment expenses (177.4) (148.9)
Commissions and other underwriting expenses (59.3) (53.7)
Underwriting income 19.2 31.4
Net investment income 16.9 16.9
Other income 0.3 0.7
Interest expense (2.8) (2.8)
Corporate general and (1.9) (1.9)
administrative expenses
Restructuring charge 0.2 --
Other expenses (0.6) (0.7)
Pre-tax operating earnings 31.2 43.6
Provision for income taxes (10.5) (14.7)
Operating earnings, after-tax 20.8 28.9
Realized gains (losses) on
investments, pre-tax 1.8 0.1
Provision for income taxes (0.6) (0.0)
Utilization of capital loss
carry-forward -- 0.1
Increase in provision for tax
valuation allowance (0.1) --
Realized gains on
investments, after-tax 1.0 0.2
Net earnings $21.8 $29.1
Operating earnings per share -- diluted $1.05 $1.38
Net realized gains on investments 0.06 0.01
Utilization of capital loss -- 0.00
carry-forward
Increase in provision for tax
valuation allowance (0.01) --
Net earnings per share - diluted $1.10 $1.39
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
-0- 05/02/2007
/CONTACT: Amy Starling, AVP, Investor Relations, of Infinity, +1-205-803-8186/
/Web site: http://www.ipacc.com /
(IPCC)