Exhibit 99
Infinity Property and Casualty Announces Third Quarter Earnings Per Share of
$1.10
BIRMINGHAM, Ala., Oct. 26 /PRNewswire-FirstCall/ -- Infinity Property and
Casualty Corporation (Nasdaq: IPCC), a national provider of personal
automobile insurance with an emphasis on nonstandard auto insurance, today
reported that net earnings for the third quarter of 2004 were $23.0 million or
$1.10 per share, on a fully diluted basis, compared to net earnings of
$15.0 million or $0.72 per share for the third quarter of 2003. For the first
nine months of 2004, net earnings were $64.7 million or $3.10 per share, as
compared with $38.8 million or $1.89 per share for the same period in 2003.
Operating earnings, a non-GAAP measure, were $21.1 million or $1.01 per
share for the third quarter of 2004 compared to $14.5 million or $0.70 per
share for the third quarter of 2003. For the first nine months of 2004,
operating earnings were $60.9 million or $2.92 per share, as compared with
$37.9 million or $1.84 per share for the same period in 2003. Operating
earnings is defined at the end of this release and reconciled to net earnings,
the most comparable GAAP measure.
Underwriting income, a non-GAAP measure, was $22.0 million and
$65.5 million in the third quarter and first nine months of 2004,
respectively. By comparison, $13.8 million and $36.3 million of underwriting
income was earned in the third quarter and first nine months of 2003,
respectively. Infinity produced a GAAP combined ratio in the third quarter of
90.0%, compared to 92.0% in the third quarter of 2003. For the first nine
months of 2004, the GAAP combined ratio was 89.9% compared to the 92.8% in the
first nine months of 2003. Underwriting income is defined at the end of this
release and reconciled to net earnings, the most comparable GAAP measure.
Catastrophe losses in the third quarter of 2004 were $1.9 million
including $2.2 million from the four hurricanes and a $0.3 million release of
excess reserves on catastrophes from prior periods. Catastrophe losses for the
third quarter of 2003 were $0.4 million.
Net written premiums for the quarter ended September 30, 2004 were
$222.1 million compared with $226.6 million for the same period in 2003. Net
written premiums for the first nine months of 2004 were $682.9 million, a 9.7%
increase over the $622.8 million in net premiums for the first nine months of
2003. The increase in net written premiums in the first nine months of 2004
compared to the first nine months of 2003 is largely attributable to the
reduction in the auto physical damage ceded premiums from 90% in the first six
months of 2003 to 10% in the first six months of 2004. Excluding the auto
physical damage quota share, net premiums written in the third quarter and
first nine months of 2004 were $229.6 million and $699.9 million, respectively
compared to $236.5 million and $799.0 million for the same periods in 2003.
Gross written premiums in Infinity's five franchise states of California,
Connecticut, Florida, Georgia and Pennsylvania, which accounted for 82% of
gross written premiums in the third quarter of 2004, grew 3.6% to
$189.7 million from $183.2 million in the third quarter of 2003. Premiums in
the franchise states for the first nine months of 2004 were $577.2 million
compared to premiums of $567.3 million for the first nine months of 2003.
2004 Earnings Guidance
As a result of strong third quarter results and the outlook for the fourth
quarter, Infinity is increasing its 2004 operating earnings guidance to a
range of $3.80 to $3.90 from a range of $3.45 to $3.65.
Forward-Looking Statements
This press release contains certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements in this press release not dealing with historical results are
forward-looking and are based on estimates, assumptions and projections.
Statements which include the words "believes," "expects," "may," "should,"
"intends," "plans," "anticipates," "estimates," or the negative version of
these 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 Infinity's expectations concerning
market and other conditions, future premiums, revenues, earnings and
investment activities, expected losses and rate changes.
Actual results could differ materially from those expected by Infinity
depending on certain risks and uncertainties including but not limited to
changes in economic conditions and financial markets (including interest
rates), the adequacy or accuracy of Infinity's pricing methodologies, the
presence of competitors with greater financial resources and the impact of
competitive pricing, the ability to obtain timely approval for requested rate
changes, judicial and regulatory developments adverse to 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 and acts of war and terrorist activities. Infinity
undertakes no obligation to publicly update or revise any of the forward-
looking statements. For more detailed discussion of some of the foregoing
risks and uncertainties, see Infinity's filings with the Securities and
Exchange Commission.
Conference Call
The Company will hold a conference call to discuss 2004 third quarter
results at 11:00 a.m. (ET) today, October 26. There are two alternative
communication modes available to listen to the call. Telephone access will be
available by dialing 1-866-761-0749 and providing the confirmation code
81913596. 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 Tuesday,
November 2, 2004. To listen to the replay, dial 1-888-286-8010 and provide the
confirmation code 45010071. 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 Quarter For the Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Income:
Earned Premiums $220.5 $172.8 $649.6 $504.2
Investment Income (1) 16.1 14.2 49.2 41.9
Realized Gains 2.8 0.8 5.9 1.3
Other (2) 1.1 2.2 4.4 4.0
240.5 190.0 709.1 551.3
Expenses:
Loss, Loss Adjustment and
Underwriting Expenses 198.6 159.0 584.1 467.9
Interest Expense 2.9 2.0 8.0 4.4
Other (3) 7.8 6.8 23.1 20.6
209.3 167.9 615.3 492.9
Income before Taxes 31.2 22.1 93.8 58.4
Income Taxes 8.3 7.2 29.1 19.7
Net Earnings (4) $23.0 $15.0 $64.7 $38.8
Net Earnings per Share -
Basic $1.12 $0.73 $3.15 $1.90
Weighted Average Shares -
Basic 20.567 20.348 20.555 20.347
Net Earnings per Share -
Diluted $1.10 $0.72 $3.10 $1.89
Weighted Average Shares -
Diluted 20.841 20.645 20.855 20.556
*columns may not foot due to rounding
Notes:
(1) Investment income for the three months and nine months ended
September 30, 2004 increased primarily due to a reduction in interest
paid under the auto physical damage quota share, as well as an
increase in the average invested assets balance.
(2) Other income for the nine months ended September 30, 2004 includes a
$1.1 million pre-tax gain from the sale of a building in Dallas, TX.
(3) Other expenses for the three months ended September 30, 2004 increased
$1.0 million from the same period in 2003 as a result of higher than
average extra-contractual charges in the third quarter of 2004.
Other expense for the nine months ended September 30, 2004 includes a
$3.4 million pre-tax loss from the write-off of unamortized debt issue
costs as well as a $0.7 million pre-tax loss resulting from the
sublease of excess office space.
(4) Income taxes for the three and nine months ended September 30, 2004
include a $2.1 million tax benefit from the utilization of net
operating loss carryforwards and Alternative Minimum Tax credits
originating in years prior to 2003.
Infinity Property and Casualty Corporation
Condensed Balance Sheet
(in millions, except book value per share)
For the Period
September 30, June 30,
2004 2004
Assets:
Cash and invested assets (1) $1,444.7 $1,398.8
Other assets 513.7 506.9
Total assets $1,958.4 $1,905.7
Liabilities and Shareholders' Equity
Unpaid losses and loss adjustment expenses $671.6 $680.0
Unearned Premium 388.5 387.7
Long-term debt 199.3 199.3
Other Liabilities (2) 180.9 157.3
Total Liabilities 1,440.3 1,424.3
Total shareholders' equity (3) 518.1 481.4
Total liabilities
and shareholders' equity $1,958.4 $1,905.7
Shares Outstanding 20.568 20.565
Book Value per Share $25.19 $23.41
*columns may not foot due to rounding
Notes:
(1) The increase in cash and invested assets from June 2004 is primarily
from changes in the market value of the fixed income portfolio as well
as positive cash flow from operations.
(2) A payable for securities purchased of $7.1 contributed to the increase
in other liabilities from June 2004.
(3) An increase in unrealized gains of $15.0 million resulting from
changes in the market value of the fixed income portfolio combined
with net earnings of $23.0 million resulted in the increase in
shareholders' equity.
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 Quarter For the Nine Months
Ended September 30, Ended September 30,
(in millions, except EPS) 2004 2003 2004 2003
Premiums Earned $220.5 $172.8 $649.6 $504.2
Loss, Loss Adjustment and
Underwriting Expenses 198.6 159.0 584.1 467.9
Underwriting Income 22.0 13.8 65.5 36.3
Investment Income 16.1 14.2 49.2 41.9
Other Income 1.1 2.2 4.4 4.0
Interest Expense on Debt (2.9) (2.0) (8.0) (4.4)
Other Expense (7.8) (6.8) (23.1) (20.6)
Pre-Tax Operating Income 28.4 21.4 88.0 57.1
Income Tax Expense 7.3 6.9 27.0 19.2
Operating Earnings, after-tax 21.1 14.5 60.9 37.9
Realized Gains 2.8 0.8 5.9 1.3
Income Tax Expense 1.0 0.3 2.0 0.4
1.8 0.5 3.8 0.8
Net Earnings $23.0 $15.0 $64.7 $38.8
Operating Earnings per Share -
diluted $1.01 $0.70 $2.92 $1.84
Net Realized Gains 0.09 0.02 0.18 0.05
Net Earnings Per Share -
diluted $1.10 $0.72 $3.10 $1.89
*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- 10/26/2004
/CONTACT: Roger Smith, Chief Financial Officer of Infinity Property and
Casualty Corporation, +1-205-803-8188/
/Web site: http://www.ipacc.com /
(IPCC)
CO: Infinity Property and Casualty Corporation
ST: Alabama
IN: INS
SU: ERN ERP CCA MAV