Exhibit 99(i)
CONTACT:
James C. Rowan Jr.
Office: (860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. REPORTS FIRST QUARTER RESULTS
HARTFORD, Conn., April 18, 2000 -- HSB Group, Inc. (NYSE-HSB) today reported
that first quarter net income per share on a fully diluted basis was $.68 cents
compared to $.35 cents in the fourth quarter of 1999 and $.71 in the first
quarter of 1999. Operating income per share, which excludes realized gains, was
$.43 cents and compares to $.13 in the fourth quarter and $.57 in the first
quarter of last year.
The combined ratio was 93.3 percent reflecting the company's disciplined
approach to underwriting. Net earned premiums declined 5.4 percent as a result
of the company's decision to reduce its risk-bearing position in Industrial Risk
Insurers. HSB continued to experience solid growth in its domestic commercial
breakdown business. The change-over to Year 2000 did not result in any
substantive increase in claim activity.
Net Engineering Services revenues for the first quarter increased 34 percent
over the first quarter of 1999. The engineering services margin was 8 percent
compared to a loss in the fourth quarter of 1999. The margin in the first
quarter of last year was 8.4 percent.
Income from investment operations was $28.2 million compared to $22.8 million in
the first quarter of 1999. Realized gains for the quarter were $.25 cents per
share and reflect the strong performance of the equity portfolio and the
company's decision to somewhat reduce its exposure to common stocks.
The company bought back approximately 280,000 shares or about 1 percent of its
shares outstanding during the first quarter.
"The results for the first quarter were in line with expectations and represent
significant improvement over the fourth quarter," said Richard Booth, chairman,
president and chief executive officer. "Our Engineering Services and Commercial
equipment breakdown insurance businesses had strong performance during the
quarter. In addition, our equity portfolio continued to provide solid returns.
We will continue to focus on initiatives which will add to our operating
earnings performance in the future."
HSB Group, Inc. (NYSE-HSB), the parent company of The Hartford Steam Boiler
Inspection and Insurance Company, is a global provider of specialty insurance
products, engineering services, and management consulting. The Hartford Steam
Boiler Inspection and Insurance Company was founded in 1866 to provide loss
prevention service and insurance to businesses, industries and institutions. For
more information about HSB, visit its web site at www.hsb.com.
This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, that are management's
estimates, assumptions and projections and are not guarantees of future
performance. Forward-looking statements involve known and unknown risks and
uncertainties. These and other important factors, including those mentioned in
various Securities and Exchange Commission filings made periodically by the
company, may cause the company's actual results and performance to differ
materially. Investors and prospective investors should read this news release in
conjunction with the company's most recent Form 10-K, Form 10-Q and other
documents filed with the Securities and Exchange Commission.
Summary of Operations
In millions, except per share amounts
Quarter
Ended March 31, Percent
2000 1999 Change
- -------------------------------------------------------------------------------
Gross earned premiums..........................$ 182.1 $ 208.9
Ceded premiums................................. 90.8 112.4
--------------------
Insurance premiums..........................$ 91.3 $ 96.5 -5.4%
Claims and adjustment expenses................. 38.8 38.3
Policy acquisition expenses.................... 19.8 22.6
Underwriting and inspection expenses........... 26.6 24.0
--------------------
Insurance operating gain....................$ 6.1 $ 11.6
--------------------
Loss ratio*............................... 42.4% 39.7%
Expense ratio*............................ 50.9% 48.0%
Combined ratio*........................... 93.3% 87.7%
Engineering services revenues..................$ 37.0 $ 27.6 34.1%
Engineering services expenses.................. 34.0 25.2
--------------------
Engineering services operating gain.........$ 3.0 $ 2.4
--------------------
Engineering services operating
margin*.................................. 8.0% 8.4%
Investment income, net of related
interest expense.............................$ 14.9 $ 15.7 -5.1%
Realized investment gains...................... 13.3 7.1
--------------------
Income from investment operations...........$ 28.2 $ 22.8
Interest expense............................... 0.6 0.4
Income before income taxes and
distributions on capital securities.........$ 36.7 $ 36.4
Income taxes................................... 12.2 10.9
Distribution on capital securities of
subsidiary trusts, net of tax................ 4.7 4.5
--------------------
Net income.....................................$ 19.8 $ 21.0
====================
Net income per common share-assuming
dilution.....................................$ 0.68 $ 0.71
Dividends declared per common share............$ 0.44 $ 0.42
Average common shares outstanding and
common stock equivalents..................... 34.4 34.5
- ------------------------------------------------------------------------------
*Computation excludes rounding
Summary of Financial Position
In millions, except per share amounts
March 31, 2000 December 31, 1999
- --------------------------------------------------------------------------------
Assets
Cash and short-term investments................$ 118.1 $ 126.5
Fixed maturities, at fair value................ 488.6 489.8
Equity securities, at fair value............... 364.5 381.8
------------------------------
Cash and invested assets..................... 971.2 998.1
Reinsurance assets............................. 713.8 850.3
Insurance premiums receivable.................. 58.2 104.4
Engineering services receivable................ 39.5 39.1
Fixed assets................................... 55.6 58.2
Other assets................................... 208.7 213.1
------------------------------
Total assets.................................$ 2,047.0 $ 2,263.2
==============================
Liabilities
Unearned insurance premiums and ceding
commissions..................................$ 324.5 $ 420.1
Claims and adjustment expenses................. 735.5 782.3
Total borrowings............................... 49.6 66.6
Other liabilities.............................. 155.2 208.7
------------------------------
Total liabilities............................ 1,264.8 1,477.7
Company obligated mandatorily redeemable
capital securities of subsidiary
Trust I holding solely junior subordinated
deferrable interest debentures of
the Company, net of unamortized discount....... 109.0 109.0
Company obligated mandatorily redeemable
convertible capital securities of
subsidiary Trust II holding solely junior
subordinated deferrable interest
debentures of the Company...................... 300.0 300.0
Shareholders' equity.............................. 373.2 376.5
------------------------------
Total..........................................$ 2,047.0 $ 2,263.2
==============================
Shareholders' equity per common share*............$ 12.92 $ 12.95
Based on common shares outstanding of............. 28.9 29.1
Pro forma shareholders' equity per common
share assuming conversion of
Trust II capital securities and net
exercise of in the money HSB stock options*.....$ 19.70 $ 19.61
Based on pro forma common shares outstanding...... 34.2 34.5
- --------------------------------------------------------------------------------
*Computation excludes rounding