-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H5t5jz8cMA6bNcblGn9moNl29Iiah1WvCc38vDG9E5AUfzpEk6ZlcSI37M+FEyWX 9p1XtYn/Pnf9jt/yJ1L+EQ== 0001034588-99-000001.txt : 19990126 0001034588-99-000001.hdr.sgml : 19990126 ACCESSION NUMBER: 0001034588-99-000001 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990125 ITEM INFORMATION: FILED AS OF DATE: 19990125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HSB GROUP INC CENTRAL INDEX KEY: 0001034588 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 061475343 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13135 FILM NUMBER: 99512103 BUSINESS ADDRESS: STREET 1: ONE STATE ST STREET 2: P O BOX 5024 CITY: HARTFORD STATE: CT ZIP: 06102-5024 BUSINESS PHONE: 8607221866 MAIL ADDRESS: STREET 1: ONE STATE ST STREET 2: PO BOX 5024 CITY: HARTFORD STATE: CT ZIP: 06102 8-K 1 8-K FILING SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) - January 25, 1999 HSB Group, Inc. (Exact name of registrant as specified in its charter) Connecticut 001-13135 06-1475343 (State or other (Commission (IRS Employer jurisdiction of incorporation) File Number) Identification No.) One State Street, Hartford, Connecticut 06102-5024 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code - (860-722-1866) Item 5. Other Events On January 25, 1999, HSB Group, Inc. (the "Company") issued a press release reporting its fourth quarter earnings. Included herewith as Exhibit 99 is the Company's press release related to this announcement and such information is incorporated herein by reference. Item 7. Exhibits. 99. Press release dated January 25, 1999 announcing fourth quarter results. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HSB Group, Inc. Dated: January 25, 1999 /s/ R. Kevin Price R. Kevin Price Senior Vice President and Corporate Secretary EX-99 2 PRESS RELEASE Exhibit 99 CONTACT: James C. Rowan Jr. Office: (860) 722-5180 FOR IMMEDIATE RELEASE HSB GROUP, INC. REPORTS GAINS IN FOURTH QUARTER HARTFORD, Conn., January 25, 1999 -- HSB Group, Inc. (NYSE-HSB) today reported that the fourth quarter income per share on a diluted basis from continuing operations, exclusive of post-closing adjustments related to the Industrial Risk Insurers (IRI) sale, was 67 cents, compared to 64 cents in the fourth quarter of 1997. HSB Group's gross earned insurance premiums grew 33 percent for the quarter and 26 percent for the year. The combined ratio -- the sum of losses and expenses as a percentage of insurance revenue -- was 90.5 percent down from 93.0 percent in the fourth quarter of last year. The year-to-date combined ratio was 89.4 percent, down from 91.7 percent last year. The year-to-date expense ratio was 45.2 percent, down from 47.3 percent in 1997. Net engineering services revenues increased 61 percent over the fourth quarter of 1997, reflecting revenue from new businesses and acquisitions as well as organic growth. The operating gain for the fourth quarter increased 21 percent. -more- Income from investment operations was $24.6 million compared to $18.9 million in the fourth quarter of 1997. Net investment income was $17.6 million compared to $11 million in the fourth quarter of 1997. Realized gains were $25.4 million for the year. "We enter 1999 with significant financial strength and 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. -more- Summary of Operations In millions, except per share amounts
Quarter Year-To-Date Ended December 31 Percent December 31 Percent 1998 1997 Change 1998 1997 Change ---- ---- ------- ---- ---- ------- Gross earned premium.................................... $ 202.6 $ 152.7 32.6% $ 770.5 $ 609.3 26.4% Reinsurance............................................. 95.8 22.3 374.4 118.1 ---- ---- ----- ----- Net earned premium................................... 106.8 130.4 396.1 491.2 Claims and adjustment expenses.......................... 45.8 60.9 174.9 217.9 Policy acquisition expenses............................. 21.0 23.3 66.3 90.7 Underwriting and inspection expenses.................... 30.2 37.3 113.7 142.8 ---- ---- ----- ----- Insurance operating gain............................. $ 9.8 $ 8.9 $ 41.2 $ 39.8 ------- ------- ------- ------- Loss ratio......................................... 42.9% 46.8% 44.2% 44.4% Expense ratio*..................................... 47.6% 46.2% 45.2% 47.3% Combined ratio*.................................... 90.5% 93.0% 89.4% 91.7% Engineering services revenues........................... $ 25.8 $ 16.0 61.1% $ 93.5 $ 61.3 52.6% Engineering services expenses........................... 24.1 14.6 86.2 57.0 ---- ---- ---- ---- Engineering services operating gain.................. $ 1.7 $ 1.4 $ 7.3 $ 4.3 ------- ------- ------- ------- Engineering services operating margin.............. 7.7% 8.7% 7.8% 7.1% Investment income, net of related interest expense...... $ 17.6 $ 11.0 60.2% $ 64.2 $ 36.8 73.9% Realized investment gains............................... 7.0 7.9 25.4 14.1 --- --- ---- ---- Income from investment operations.................... $ 24.6 $ 18.9 $ 89.6 $ 50.9 Interest expense........................................ 0.3 0.4 0.8 1.3 Gain (loss) on sale of IRI.............................. (2.4) _ 36.6 _ Income from continuing operations before income taxes and distributions on capital securities.............. $ 33.4 $ 28.8 $ 173.9 $ 93.7 Income taxes............................................ 10.3 8.6 51.4 25.1 Distribution on capital securities of subsidiary trusts, net of tax........................................... 4.6 1.3 18.4 2.3 --- --- ---- --- Income from continuing operations....................... $ 18.5 $ 18.9 $ 104.1 $ 66.3 Discontinued operations: After tax gain on disposal of Radian International LLC, net of deferred loss of $6.6 million.................. - - 30.3 - ------- ------- ---- ------- Net income.............................................. $ 18.5 $ 18.9 $ 134.4 $ 66.3 ======= ======= ======= ======= Earnings per share-assuming dilution: Income from continuing operations.................... $ 0.63 $ 0.64 (1.6%) $ 3.35 $ 2.20 52.3% Net income........................................... $ 0.63 $ 0.64 (1.6%) $ 4.21 $ 2.20 91.4% Dividends declared per common share..................... $ 0.42 $ 0.40 $ 1.64 $ 1.56 Average common shares outstanding and common stock equivalents.......................................... 34.8 29.6 35.2 30.2
*Excludes goodwill amortization related to EIG. -more- Summary of Financial Position In millions, except per share amounts
Percent December 31, 1998 December 31, 1997 Change ----------------- ----------------- ------- Assets Cash and short-term investments........................ $ 80.6 $ 424.5 Fixed maturities, at fair value........................ 577.1 248.4 Equity securities, at fair value....................... 437.1 323.8 ----- ----- Cash and invested assets............................ 1,094.8 996.7 Reinsurance assets..................................... 630.4 124.5 Insurance premiums receivable.......................... 146.7 138.0 Engineering services receivable........................ 26.1 12.2 Fixed assets........................................... 54.9 36.4 Investment in Radian................................... - 83.4 Other assets........................................... 191.1 146.0 ----- ----- Total assets........................................ $ 2,144.0 $ 1,537.2 39.5% ========= ========= Liabilities Unearned insurance premiums and ceding commissions..... $ 477.9 $ 287.3 Claims and adjustment expenses......................... 550.3 276.7 Total borrowings....................................... 46.1 67.5 Other liabilities...................................... 241.5 151.5 ----- ----- Total liabilities................................... 1,315.8 783.0 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...................................... 419.3 345.3 ----- ----- Total.................................................. $ 2,144.0 $ 1,537.2 ========= ========= Shareholders' equity per common share..................... $ 14.53 $ 11.75 23.7% Based on common shares outstanding of..................... 28.9 29.4 Proforma shareholders' equity per common share assuming conversion of Trust II capital securities and net exercise of in the money HSB stock options..... $ 20.77 $ 18.46 Based on pro forma common shares outstanding.............. 34.6 35.0
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