Exhibit 99(i)
CONTACT:
James C. Rowan Jr.
Office: (860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. REPORTS GAINS IN FIRST QUARTER
HARTFORD, Conn., April 20, 1999 -- HSB Group, Inc. (NYSE-HSB) today reported
first quarter income per share from continuing operations of $.71 cents, a 20
percent increase over first quarter 1998 which, on a comparable basis, was $.59.
(Including the one-time gain from the sales of the company's interests in
Industrial Risk Insurers (IRI) and Radian International LLC, net income per
share for the first quarter of 1998 was $2.17.)
HSB Group's gross earned insurance premiums grew 16.3 percent. The combined
ratio -- the sum of losses and expenses as a percentage of insurance revenue --
was 87.7 percent compared to 89.2 percent last year.
Net engineering services revenues increased 40.4 percent over the first quarter
of 1998. The margin was 8.4 percent.
Income from investment operations was $22.8 million compared to $18.4 million in
the first quarter of 1998. Realized gains were $.14 per share.
Shareholders' equity declined modestly since December 31, 1998 primarily as a
result of the repurchase of shares.
"We enter 1999 well positioned to continue building increased value for
shareholders," said Gordon W. Kreh, chairman, president and chief executive
officer.
HSB Group, Inc. is a global provider of insurance products and engineering
management consulting services. HSB Group is the parent company of The Hartford
Steam Boiler Inspection and Insurance Company, founded in 1866 to provide loss
prevention service and insurance to businesses, industries and institutions. For
more information about HSB, visit its website at www.hsb.com.
Summary of Operations
In millions, except per share amounts
Quarter
Ended March 31 Percent
1999 1998 Change
- ----------------------------------------------------- ------------- -------------- ------------
Gross earned premium $ 208.9 $ 179.7 16.3%
Ceded premiums 112.4 80.3
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Insurance premium 96.5 99.4
Claims and adjustment expenses 38.3 44.6
Policy acquisition expenses 22.6 14.6
Underwriting and inspection expenses 24.0 29.7
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Insurance operating gain $ 11.6 $ 10.5
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Loss ratio 39.7% 44.9%
Expense ratio 48.0% 44.3%
Combined ratio 87.7% 89.2%
Engineering services revenues $ 27.6 $ 19.7 40.4%
Engineering services expenses 25.2 17.9
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Engineering services operating gain $ 2.4 $ 1.8
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Engineering services operating margin 8.4% 8.9%
Investment income, net of related interest expense $ 15.7 $ 15.2 3.6%
Realized investment gains 7.1 3.2
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Income from investment operations $ 22.8 $ 18.4
Interest expense 0.4 0.1
Gain on sale of IRI - 39.0
Income from continuing operations before income
taxes and distributions on capital securities $ 36.4 $ 69.6
Income taxes 10.9 22.5
Distribution on capital securities of subsidiary
trusts, net of tax 4.5 4.5
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Income from continuing operations $ 21.0 $ 42.6
Discontinued operations:
After tax gain on disposal of Radian International
LLC, net of deferred loss - 30.3
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Net income $ 21.0 $ 72.9
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Earnings per share-assuming dilution:
Income from continuing operations $ 0.71 $ 1.31*
Net income $ 0.71 $ 2.17**
Dividends declared per common share $ 0.42 $ 0.40
Average common shares outstanding and common stock
equivalents 34.5 35.2
*Includes $0.72 from Gain on sale of IRI.
**Includes $0.72 from Gain on sale of IRI and $0.86 from Gain on sale of Radian.
Summary of Financial Position
In millions, except per share amounts
March 31, 1999 December 31, Percent
1998 Change
--------------------------------------------
Assets
Cash and short-term investments $ 94.2 $ 80.6
Fixed maturities, at fair value 559.1 577.1
Equity securities, at fair value 426.8 437.1
----------------- --------------- ----------
Cash and invested assets 1,080.1 1,094.8
Reinsurance assets 637.3 630.4
Insurance premiums receivable 109.7 146.7
Engineering services receivable 32.6 26.1
Fixed assets 54.7 54.9
Other assets 198.6 191.1
----------------- --------------- ----------
Total asset $ 2,113.0 $ 2,144.0 -1.4%
----------------- --------------- ----------
Liabilities
Unearned insurance premiums and ceding commissions $ 454.6 $ 477.9
Claims and adjustment expenses 558.0 550.3
Total borrowings 51.3 46.1
Other liabilities 226.0 241.5
----------------- --------------- ----------
Total liabilities 1,289.9 1,315.8
Company obligated mandatorily redeemable capital
securities of subsidiary Trust I holding solely
junior subordinated deferrable
interest debentures of the Company,
net of unamortized discount 108.9 108.9
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 414.2 419.3
----------------- --------------- ----------
Total $ 2,113.0 $ 2,144.0
----------------- --------------- ----------
Shareholders' equity per common share $ 14.28 $ 14.53 -1.7%
Based on common shares outstanding of 29.0 28.9
Pro forma shareholders' equity per common share
assuming conversion of Trust II capital securities
and net exercise of in the money HSB stock options $ 20.65 $ 20.77
Based on pro forma common shares outstanding 34.6 34.6
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