Exhibit 99 CONTACT: James C. Rowan, Jr. (860) 722-5180 FOR IMMEDIATE RELEASE - --------------------- HSB GROUP, INC. REPORTS SECOND QUARTER RESULTS AND INCREASES SHARE REPURCHASE AUTHORIZATION AND OCTOBER DIVIDEND HARTFORD, CT, July 28, 1997 -- HSB Group, Inc. (NYSE-HSB), the parent of The Hartford Steam Boiler Inspection and Insurance Company, today reported that net income per common share for the second quarter of 1997 was 80 cents compared to 66 cents for the second quarter of 1996, an increase of 21.2 percent. The company also reported that the Board of Directors, at its meeting earlier today, increased the share repurchase authorization from one million to two million shares, and voted to increase the regular quarterly dividend from 57 cents to 60 cents, effective with the October 1997 payment. "There was no contribution to after-tax income from our investment in Radian International LLC," President and Chief Executive Officer Gordon W. Kreh said. "We have determined that, given Radian's results and near-term prospects, we will put our interest in the venture to The Dow Chemical Company for approximately $145 million on or about January 1, 1998." The company reported that income per share for the quarter from continuing operations, excluding realized gains, was 71 cents compared to 43 cents last year, an increase of 65 percent. Gross earned premiums grew 8.4 percent compared to the second quarter of 1996. "We continued to see excellent growth in our client company business," Kreh said. "Market conditions affecting our special risks business continued to require disciplined underwriting. The combined ratio - - the sum of our losses and expenses as a percentage of our insurance revenue - was 91.8 percent. The expense ratio for the quarter declined to 47.9 percent." The company also reported that, during the quarter, it repurchased 340,000 shares of HSB common stock under a previously existing one million share repurchase authorization and that the Board increased the share repurchase authorization to a total of two million shares at its meeting earlier today. "The Board's vote at the same meeting to increase the dividend from 57 cents to 60 cents is based on the company's results and expectations for the future," President Kreh said. This will be the 32nd consecutive year that shareholders of the company have received a higher dividend payment and the 126th consecutive year in which the company has paid a dividend. The declared amount of 60 cents will be payable October 30 to shareholders of record October 10. HSB GROUP, INC. In millions, except per share amounts SUMMARY OF OPERATIONS Quarter Year-to-Date Ended June 30 June 30 1997 1996** 1997 1996** ---- ---- ---- ---- Gross earned premium $ 149.2 $ 137.7 $ 305.0 $ 271.4 Reinsurance 32.0 24.8 65.5 50.1 ----- ----- ----- ----- Net earned premium 117.2 112.9 239.5 221.3 Claims and adjustment expenses 51.4 56.0 102.9 100.9 Policy acquisition expenses 20.4 21.9 43.9 42.5 Underwriting and inspection expenses 36.0 34.4 71.3 68.1 ----- ----- ----- ----- Insurance operating gain $ 9.4 $ 0.6 $ 21.4 $ 9.8 ----- ----- ----- ----- Loss ratio 43.9% 49.5% 43.0% 45.6% Expense ratio* 47.9% 49.5% 47.9% 49.5% Combined ratio* 91.8% 99.0% 90.9% 95.1% Net engineering services revenues $ 15.0 $ 14.1 $ 29.7 $ 26.8 Net engineering services expenses 14.1 12.3 27.7 23.6 ----- ----- ----- ----- Engineering services operating gain $ 0.9 $ 1.8 $ 2.0 $ 3.2 ----- ----- ----- ----- Engineering services net operating margin 6.1% 12.6% 6.6% 12.0% Investment income, net of related interest expense $ 8.8 $ 7.9 $ 16.7 $ 15.9 Realized investment gains 3.4 5.1 4.0 6.0 ----- ----- ----- ----- Income from investment operations $ 12.2 $ 13.0 $ 20.7 $ 21.9 Interest expense 0.4 0.1 0.6 0.3 ----- ----- ----- ----- Income from continuing operations before income taxes 22.1 15.3 43.5 34.6 Income taxes 5.7 3.3 11.3 8.2 Income from continuing operations 16.4 12.0 32.2 26.4 Discontinued operations: Income from operations of Radian International LLC - 1.4 - 4.0 ----- ----- ----- ----- Net income $ 16.4 $ 13.4 $ 32.2 $ 30.4 ===== ===== ===== ===== Income from continuing operations per common share $ 0.80 $ 0.59 $ 1.58 $ 1.29 Net income per common share $ 0.80 $ 0.66 $ 1.58 $ 1.49 Dividends declared per common share $ 0.57 $ 0.57 $ 1.14 $ 1.14 Average common shares outstanding and common stock equivalents 20.5 20.3 20.5 20.3 * 1997 and 1996 excludes goodwill amortization related to EIG. 1996 excludes minority interest related to EIG. ** Restated for the effects of discontinued operations. SUMMARY OF FINANCIAL POSITION June 30 December 31 1997 1996 --------- ---------- Assets Cash and short-term investments $ 103.2 $ 102.4 Fixed maturities, at fair value 261.0 235.8 Equity securities, at fair value 273.3 262.7 --------- ---------- Cash and invested assets 637.5 600.9 Insurance premiums receivable 133.7 106.4 Engineering services receivable 11.9 11.7 Fixed assets 30.7 31.7 Investment in Radian 83.0 79.7 Reinsurance assets 147.6 162.9 Other assets 136.8 123.0 --------- ---------- Total assets $ 1,181.2 $ 1,116.3 ========= ========== June 30 December 31 1997 1996 --------- ---------- Liabilities Unearned premiums $ 295.6 $ 270.6 Claims and adjustment expenses 282.3 302.9 Total borrowings 51.5 28.3 Other liabilities 182.3 148.9 --------- ---------- Total liabilities 811.7 750.7 Convertible redeemable preferred stock-series B 20.0 20.0 Shareholder's equity 349.5 345.6 Total $ 1,181.2 $ 1,116.3 ========= ========== Common shareholders' equity per share $ 17.71 $ 17.25 Based on common shares outstanding of 19.7 20.0