-----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, NBs9u9LWpKXdTfMyHuALCBv94nap2eYZSQtli/DT1kFLxLhGzugohKPA2+bheDNP OJ2u2g+VOcavVVRlNfB0QA== 0001034588-99-000023.txt : 19991028 0001034588-99-000023.hdr.sgml : 19991028 ACCESSION NUMBER: 0001034588-99-000023 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991027 ITEM INFORMATION: FILED AS OF DATE: 19991027 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: 99735241 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) - October 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 October 25, 1999, HSB Group, Inc. (the "Company") issued a press release reporting its third 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 October 25, 1999 announcing third 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: /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 THIRD QUARTER RESULTS HARTFORD, Conn., October 25, 1999 -- HSB Group, Inc. (NYSE-HSB) today reported that third quarter net income per share on a fully diluted basis was 64 cents. This compares to 72 cents per share in the third quarter of 1998. The quarter's results were impacted by $10 million in losses from weather-related events domestically and the Taiwan earthquake. HSB Group's gross earned insurance premiums declined 5.6 percent from the third quarter last year reflecting the company's refusal to write large risk business that does not provide sufficient opportunity to earn an underwriting profit. The company's commercial reinsurance business continues to grow at double-digit rates. HSB's insurance operations remained profitable for the quarter, despite the weather and earthquake-related losses. The combined ratio -- the sum of losses and expenses as a percentage of insurance revenue -- was 97.7 percent for the quarter, up from 88.9 percent in the third quarter of 1998. The year-to-date combined ratio is 91.5 percent. HSB's Engineering Services net revenues increased 20.9 percent over the third quarter of 1998. The margin was 3.6 percent, reflecting investments in the growth of the business. Year-to-date, the Engineering Services margin is 6.6 percent. Investment income, net of related interest expense, was $16.5 million compared to $15.5 million in the third quarter of 1998. Realized gains were $13.5 million for the third quarter of 1999. "Overall, we remain positive about the prospects for our business. There are clear indications of selective improvements in the insurance pricing environment. Our engineering services businesses continue to grow and our investment portfolio continues to perform well," said Gordon W. Kreh, chairman, president and chief executive officer. 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. Summary of Operations In millions, except per share amounts
Quarter Year-To-Date Ended September 30 Percent September 30 Percent 1999 1998 Change 1999 1998 Change - --------------------------------------------- ----------- ------------ ---------- ------------ ----------- ----------- Gross earned premiums $200.6 $212.5 -5.6% $616.3 $567.9 8.5% Ceded premiums 107.9 113.0 333.4 278.6 ------- ------- -------- ------- Insurance premiums $ 92.7 $ 99.5 $282.9 $289.3 Claims and adjustment expenses 44.5 44.2 120.7 129.1 Policy acquisition expenses 21.6 17.9 65.5 45.3 Underwriting and inspection expenses 24.4 26.4 72.6 83.5 ------- ------- -------- ------- Insurance operating gain $ 2.2 $ 11.0 $ 24.1 $ 31.4 ------- ------- -------- ------- Loss ratio* 48.1% 44.4% 42.7% 44.6% Expense ratio* 49.6% 44.5% 48.8% 44.6% Combined ratio* 97.7% 88.9% 91.5% 89.2% Engineering services revenues $ 30.6 $ 25.3 20.9% $ 86.0 $ 67.7 27.0% Engineering services expenses 29.5 23.4 80.3 62.1 ------- ------- -------- ------- Engineering services operating gain $ 1.1 $ 1.9 $ 5.7 $ 5.6 ------- ------- -------- ------- Engineering services operating margin* 3.6% 7.4% 6.6% 8.3% Investment income, net of related interest expense $ 16.5 $ 15.5 6.5% $ 48.8 $ 46.6 4.7% Realized investment gains 13.5 7.9 30.8 18.4 ------- ------- -------- ------- Income from investment operations $ 30.0 $ 23.4 $ 79.6 $ 65.0 Interest expense 0.6 0.2 1.6 0.5 Gain on sale of IRI - - - 39.0 Income from continuing operations before income taxes and distributions on capital securities $ 32.7 $ 36.1 $107.8 $140.5 Income taxes 9.3 9.3 31.6 41.1 Distribution on capital securities of subsidiary trusts, net of tax 4.6 4.6 13.6 13.8 ------- ------- -------- ------- Income from continuing operations $ 18.8 $ 22.2 $ 62.6 $ 85.6 Discontinued operations: After tax gain on disposal of Radian International LLC, net of deferred loss - - - 30.3 ------- ------- -------- ------- Net income $ 18.8 $ 22.2 $ 62.6 $115.9 ------- ------- -------- ------- Earnings per common share-assuming dilution: Income from continuing operations $ 0.64 $ 0.72 $ 2.10 $ 2.71 ** Net income $ 0.64 $ 0.72 $ 2.10 $ 3.57 *** Dividends declared per common share $ 0.44 $ 0.42 $ 1.28 $ 1.22 Average common shares outstanding and common stock equivalents 34.7 35.3 34.6 35.3 - --------------------------------------------- ------- ------- -------- -------
* Computation excludes rounding ** Includes $0.71 from Gain on sale of IRI *** Includes $0.71 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 September 30, 1999 December 31, 1998 - -------------------------------------------------------------------------------- Assets Cash and short-term investments $ 91.0 $ 80.6 Fixed maturities, at fair value 525.3 577.1 Equity securities, at fair value 409.8 437.1 ------------------------------------ Cash and invested assets 1,026.1 1,094.8 Reinsurance assets 826.3 630.4 Insurance premiums receivable 133.6 146.7 Engineering services receivable 35.0 26.1 Fixed assets 56.6 54.9 Other assets 211.4 191.1 ------------------------------------ Total assets $2,289.0 $2,144.0 ------------------------------------ Liabilities Unearned insurance premiums and ceding $ 440.9 $ 477.9 commissions Claims and adjustment expenses 760.7 550.3 Total borrowings 69.5 46.1 Other liabilities 212.9 241.5 ------------------------------------ Total liabilities 1,484.0 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 109.0 108.9 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 396.0 419.3 ------------------------------- Total $2,289.0 $2,144.0 ------------------------------- Shareholders' equity per common share 13.63 $ 14.53 Based on common shares outstanding of 29.1 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 $ 20.15 $ 20.77 Based on pro forma common shares outstanding 34.5 34.6 - -------------------------------------------------------------------------------- -# # #- -----END PRIVACY-ENHANCED MESSAGE-----