Exhibit 99
INFINITY PROPERTY AND CASUALTY REPORTS 14.1% INCREASE IN BOOK VALUE AND 19.9%
INCREASE IN OPERATING EARNINGS
BIRMINGHAM, Ala., Feb. 9 /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 for the
fourth quarter of 2005:
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------------------- -------------------------------------
(in millions, except per share % %
amounts and ratios) 2005 2004 Change 2005 2004 Change
- ------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Gross written
premiums $ 221.5 $ 233.0 (4.9)% $ 988.7 $ 940.2 5.2%
Revenues $ 256.3 $ 242.7 5.6% $ 1,053.3 $ 951.8 10.7%
Net earnings $ 32.0 $ 31.7 0.9% $ 106.3 $ 96.4 10.3%
Net earnings per
diluted share $ 1.53 $ 1.52 0.7% $ 5.09 $ 4.62 10.2%
Operating
earnings (1) $ 31.5 $ 26.3 19.9% $ 84.4 $ 87.2 (3.1)%
Operating earnings
per diluted
share (1) $ 1.51 $ 1.26 19.8% $ 4.04 $ 4.18 (3.3)%
Underwriting
income (1) $ 43.3 $ 29.2 48.1% $ 109.6 $ 94.7 15.8%
Combined ratio 81.9% 86.9% (5.0)pts 88.6% 89.1% (0.5)pts
Book value per
share $ 30.34 $ 26.60 14.1% $ 30.34 $ 26.60 14.1%
Return on equity 21.0% 23.8% (2.8)pts 18.1% 19.2% (1.1)pts
Operating income
return on equity (1) 20.7% 19.7% 1.0 pts 14.4% 17.4% (3.0)pts
Debt to total capital 24.1% 26.7% (2.6)pts 24.1% 26.7% (2.6)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.
In Infinity's 17 focus states, personal auto gross written premiums
increased 8.0% for the twelve months ended December 31, 2005, but declined 4.5%
in the fourth quarter of 2005. Personal auto policies-in-force in the 17 focus
states increased 5.7% since December 31, 2004. Personal auto premiums in
California, Infinity's largest state, were up 2.0% and 5.6% compared to the
fourth quarter and twelve months ended December 31, 2004. Personal auto policy
counts in California were up 3.1% compared to that at year-end 2004.
Revenues for the three months and twelve months ended December 31, 2005,
increased primarily due to an increase in earned premiums of 7.2% and 10.2%,
respectively. Realized gains from sales of securities of $22.3 million also
contributed to revenue growth for the twelve months ended December 31, 2005.
2006 Earnings Guidance
Infinity's initial guidance for 2006, based on fully diluted operating
earnings, is $3.20 - $3.60.
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 conditions,
premium growth, earnings, investment performance, expected losses, rate changes
and loss experience.
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 actions of our
competitors, the time to receive approval for the rollout of new programs and
requested 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) and changes in driving
patterns and loss trends. 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 2005 fourth quarter
results at 11:00 a.m. (ET) today, February 9. There are two alternative
communication modes available to listen to the call. Telephone access will be
available by dialing 1-866-578-5771 and providing the confirmation code
73542119. 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 12:00 p.m. (ET), and will run until 8:00 p.m. on Thursday,
February 16, 2006. To listen to the replay, dial 1-888-286-8010 and provide the
confirmation code 70024452. 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 Three Months For the Twelve Months
Ended December 31, Ended December 31,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues:
Earned premiums $ 238.8 $ 222.7 $ 961.5 $ 872.3
Net investment income 16.6 16.5 65.5 65.7
Realized gains (1) 0.0 1.0 22.3 6.9
Other income (2) 0.9 2.5 4.0 6.9
Total revenues 256.3 242.7 1,053.3 951.8
Expenses:
Loss and loss adjustment
expenses (3) 143.9 153.6 644.8 603.3
Commissions and other
underwriting expenses 51.6 39.9 207.1 174.3
Interest expense on debt 2.8 2.8 11.1 10.7
Corporate general and
administrative expenses 1.6 1.7 6.6 6.4
Loss on retirement of
long-term debt -- -- -- 3.4
Other expenses (4) 8.8 9.2 34.9 24.1
Total expenses 208.6 207.1 904.5 822.3
Income before taxes 47.7 35.6 148.8 129.5
Income taxes (5) 15.7 4.0 42.5 33.1
Net earnings $ 32.0 $ 31.7 $ 106.3 $ 96.4
Net earnings per share - basic $ 1.55 $ 1.54 $ 5.15 $ 4.69
Weighted average shares - basic 20.644 20.574 20.640 20.560
Net earnings per share - diluted $ 1.53 $ 1.52 $ 5.09 $ 4.62
Weighted average shares - diluted 20.907 20.872 20.892 20.859
Note: Columns may not foot due to rounding
Notes:
(1) Realized gains for the twelve months ended December 31, 2005, include
$20.3 million of taxable gains from securities sold to utilize a portion
of the available tax loss carry-forward.
(2) Other income for the fourth quarter and twelve months ended December 31,
2004, includes $1.1 million pre-tax non-recurring management fee income.
Other income for the twelve months ended December 31, 2004 also includes
a $1.1 million pre-tax gain from the sale of real estate.
(3) Loss and loss adjustment expenses for the three months and twelve months
ended December 31, 2005, includes $13.9 million and $32.8 million,
respectively, of favorable development on prior accident period loss and
loss adjustment expense reserves. Loss and loss adjustment expenses for
the three months and twelve months ended December 31, 2004, includes
$7.6 million and $14.5 million, respectively, of favorable development
on prior accident period loss and loss adjustment expense reserves.
(4) Other expenses for the twelve months ended December 31, 2005, include a
$2.6 million pre-tax loss from subleased space. The increase in other
expenses for the twelve months ended December 31, 2005 is also
attributable to higher than average premium receivables charged off in
the second, third and fourth quarters of 2005 from more liberal credit
terms in several states and higher corporate litigation expenses in the
first quarter of 2005.
Other expenses for the twelve months ended December 31, 2004, include a
$0.7 million pre-tax loss related from subleased space.
(5) Income taxes for the twelve months ended December 31, 2005, include a
$7.4 million tax benefit from the utilization of net capital loss
carry-forwards.
Income taxes for the three months and twelve months ended December 31,
2004, include a $4.8 million tax benefit from the utilization of net
capital loss carry-forwards as well as a $3.5 million reduction in
valuation reserves and tax reserves. Income taxes for the twelve months
ended December 31, 2004, also include a $2.1 million tax benefit from
the utilization of 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 Ended
-----------------------------
December 31, September 30,
2005 2005
------------ -------------
Assets:
Investments:
Fixed maturities (1) $ 1,323.0 $ 1,299.0
Equity securities 59.7 56.0
Total investments 1,382.8 1,355.0
Cash and cash equivalents (1) 64.9 87.9
Accrued investment income 16.8 14.7
Agents' balances and premiums receivable 289.9 295.2
Prepaid reinsurance premiums 9.0 11.0
Amounts recoverable from reinsurers 18.9 22.4
Deferred policy acquisition costs 70.4 76.1
Current and deferred income taxes 29.5 26.5
Prepaid expenses, deferred charges
and other assets 14.3 21.8
Goodwill 75.3 75.3
Total assets $ 1,971.7 $ 1,985.9
Liabilities and Shareholders' Equity:
Unpaid losses and loss adjustment expenses $ 624.6 $ 640.4
Unearned premium 402.2 423.0
Amounts payable to reinsurers 3.3 4.5
Long-term debt 199.4 199.4
Commissions payable 28.3 29.6
Accounts payable, accrued expenses and
other liabilities 87.4 100.0
Total liabilities 1,345.1 1,396.9
Shareholders' Equity
Common stock 20.7 20.7
Additional paid-in capital 331.5 331.2
Treasury stock (1.1) (1.1)
Retained earnings (2) 279.2 237.3
Unearned compensation (restricted stock) (0.0) (0.1)
Unrealized gains (losses), net (3.6) 1.0
Total shareholders' equity 626.6 589.0
Total liabilities and
shareholders' equity $ 1,971.7 $ 1,985.9
Shares outstanding 20.649 20.641
Book value per share $ 30.34 $ 28.54
Note: Columns may not foot due to rounding
Notes:
(1) Cash received from sales of securities in the second quarter continued
to be reinvested in longer term securities during the fourth quarter
resulting in the decline in cash and short-term investments.
(2) Net income of $32.0 million, a correction of an immaterial error of
$11.1 million less shareholder dividends of $1.2 million resulted in the
increase in retained earnings from September 2005.
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 For the Twelve Months
Ended December 31, Ended December 31,
------------------------ ------------------------
(in millions, except EPS) 2005 2004 2005 2004
- -------------------------- ---------- ---------- ---------- ----------
Earned premiums $ 238.8 $ 222.7 $ 961.5 $ 872.3
Loss and loss adjustment
expenses (143.9) (153.6) (644.8) (603.3)
Commissions and other
underwriting expenses (51.6) (39.9) (207.1) (174.3)
Underwriting income 43.3 29.2 109.6 94.7
Net investment income 16.6 16.5 65.5 65.7
Other income 0.9 2.5 4.0 6.9
Interest expense on debt (2.8) (2.8) (11.1) (10.7)
Corporate general and
administrative expenses (1.6) (1.7) (6.6) (6.4)
Loss on retirement of
long-term debt -- -- -- (3.4)
Other expenses (8.8) (9.2) (34.9) (24.1)
Pre-tax operating income 47.7 34.6 126.5 122.6
Income tax expense 16.2 8.4 42.1 35.4
Operating earnings,
after-tax 31.5 26.3 84.4 87.2
Realized gains 0.0 1.0 22.3 6.9
Income tax expense -- (0.4) (7.8) (2.4)
Utilization of capital
loss carry-forward 0.5 4.8 7.4 4.8
Realized gains
(after-tax) 0.5 5.4 21.9 9.2
Net earnings $ 32.0 $ 31.7 $ 106.3 $ 96.4
Operating earnings per
share - diluted $ 1.51 $ 1.26 $ 4.04 $ 4.18
Net realized gains -- 0.03 0.70 0.21
Utilization of capital
loss carry-forward 0.02 0.23 0.35 0.23
Net earnings per
share - diluted $ 1.53 $ 1.52 $ 5.09 $ 4.62
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- 02/09/2006
/CONTACT: Amy Starling, AVP, Investor Relations of Infinity Property and
Casualty Corporation, +1-205-803-8186/
/First Call Analyst: /
/FCMN Contact: amy.starling@ipacc.com /
/Web site: http://www.ipacc.com/