EX-99.2 3 y30247exv99w2.txt UNAUDITED FINANCIAL INFORMATION . . . EXHIBIT 99.2 Consolidated Financial Summary (Amounts in thousands, except per share data)
Fourth Quarter Full Year ----------------------- ----------------------- 2006 2005 2006 2005 ---------- ---------- ---------- ---------- Revenues: Net premiums written $1,113,571 $1,150,267 $4,818,993 $4,604,574 Change in unearned premiums 52,137 47,648 (126,371) (143,639) ---------- ---------- ---------- ---------- Premiums earned 1,165,708 1,197,915 4,692,622 4,460,935 Net investment income 163,827 113,280 586,175 403,962 Service fees 24,630 26,672 104,812 110,697 Realized investment gains 5,912 3,324 9,648 17,209 Other income 366 2,699 1,574 4,036 ---------- ---------- ---------- ---------- Total revenues 1,360,443 1,343,890 5,394,831 4,996,839 ---------- ---------- ---------- ---------- Expenses: Losses and loss expenses 689,249 723,088 2,864,498 2,781,802 Other operating expenses 366,275 358,207 1,449,166 1,358,574 Interest expense 22,488 24,952 92,522 85,926 ---------- ---------- ---------- ---------- Total expenses 1,078,012 1,106,247 4,406,186 4,226,302 ---------- ---------- ---------- ---------- Income before income taxes and minority interest 282,431 237,643 988,645 770,537 Income tax expense (83,147) (69,157) (286,398) (222,521) Minority interest (1,228) (1,062) (2,729) (3,124) ---------- ---------- ---------- ---------- Net income $ 198,056 $ 167,424 $ 699,518 $ 544,892 ========== ========== ========== ========== Net income per share: (1) Basic $ 1.03 $ 0.88 $ 3.65 $ 2.86 ========== ========== ========== ========== Diluted $ 0.98 $ 0.83 $ 3.46 $ 2.72 ========== ========== ========== ========== Average shares outstanding: (1) Basic 191,745 191,183 191,809 190,533 Diluted 201,557 201,453 201,961 200,426
(1) Per share amounts reflect the 3-for-2 common stock split effected on April 4, 2006. Operating Results by Segment (Amounts in thousands, except ratios (1))
Fourth Quarter Full Year ------------------- ----------------------- 2006 2005 2006 2005 -------- -------- ---------- ---------- Specialty: (2)(3) Gross premiums written $467,560 $515,734 $1,918,521 $1,932,821 Net premiums written 438,139 485,834 1,814,479 1,827,865 Premiums earned 444,597 477,991 1,752,507 1,682,193 Pre-tax income 140,389 97,918 479,105 345,896 Loss ratio 56.4% 62.1% 59.1% 62.4% Expense ratio 24.6% 25.2% 25.0% 25.1% GAAP combined ratio 81.0% 87.3% 84.1% 87.5% Regional: (2) Gross premiums written $328,811 $322,920 $1,415,311 $1,384,574 Net premiums written 291,597 286,318 1,235,302 1,196,487 Premiums earned 308,074 302,588 1,205,912 1,173,174 Pre-tax income 51,796 59,302 201,417 216,495 Loss ratio 60.3% 54.7% 59.7% 55.8% Expense ratio 30.5% 30.9% 30.6% 30.6% GAAP combined ratio 90.8% 85.6% 90.3% 86.4% Alternative Markets: (3) Gross premiums written $140,715 $158,157 $ 747,680 $ 781,411 Net premiums written 119,569 141,844 651,255 669,774 Premiums earned 167,157 181,178 658,805 663,478 Pre-tax income 73,081 80,903 291,416 238,462 Loss ratio 55.7% 51.4% 53.5% 59.4% Expense ratio 21.4% 18.4% 22.1% 20.1% GAAP combined ratio 77.1% 69.8% 75.6% 79.5% Reinsurance: (2) Gross premiums written $201,717 $180,559 $ 940,797 $ 770,781 Net premiums written 192,840 167,206 892,769 719,540 Premiums earned 192,834 187,934 859,411 754,097 Pre-tax income 40,137 24,283 135,424 63,606 Loss ratio 66.8% 70.9% 72.0% 74.1% Expense ratio 31.6% 30.1% 27.8% 30.1% GAAP combined ratio 98.4% 101.0% 99.8% 104.2% International: Gross premiums written $ 79,739 $ 78,597 $ 254,605 $ 218,396 Net premiums written 71,426 69,065 225,188 190,908 Premiums earned 53,046 48,224 215,987 187,993 Pre-tax income 12,676 5,274 34,447 20,890 Loss ratio 57.3% 71.6% 64.2% 66.5% Expense ratio 32.3% 28.1% 32.0% 29.6% GAAP combined ratio 89.6% 99.7% 96.2% 96.1%
(Continued) Operating Results by Segment (continued) (Amounts in thousands, except ratios (1))
Fourth Quarter Full Year ----------------------- ----------------------- 2006 2005 2006 2005 ---------- ---------- ---------- ---------- Corporate and Eliminations: Realized investment gains $ 5,912 $ 3,324 $ 9,648 $ 17,209 Interest and other, net (41,560) (33,361) (162,812) (132,021) Pre-tax loss (35,648) (30,037) (153,164) (114,812) Total: Gross premiums written $1,218,542 $1,255,967 $5,276,914 $5,087,983 Net premiums written 1,113,571 1,150,267 4,818,993 4,604,574 Premiums earned 1,165,708 1,197,915 4,692,622 4,460,935 Pre-tax income 282,431 237,643 988,645 770,537 Loss ratio 59.1% 60.4% 61.0% 62.4% Expense ratio 27.4% 26.6% 27.0% 26.9% GAAP combined ratio 86.5% 87.0% 88.0% 89.3%
(1) Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a percentage of premiums earned. Underwriting expenses do not include expenses related to insurance services or unallocated corporate expenses. For the international segment, the loss and expense ratios do not include life insurance business. GAAP combined ratio is the sum of the loss ratio and the expense ratio. (2) Fourth quarter weather-related losses were $8 million in 2006 (all in the regional segment) compared with $26 million in 2005 ($5 million for regional, $8 million for specialty and $13 million for reinsurance). Full year weather-related losses were $39 million in 2006 (all in the regional segment) compared with $99 million in 2005 ($35 million for regional, $16 million for specialty and $48 million for reinsurance). (3) In 2005, the Company developed sufficient information to begin reporting earned but unbilled audit premiums. For specialty, net premiums written included estimated earned but unbilled audit premiums of $1 million and $18 million in the fourth quarter and full year of 2006, respectively, compared with $45 million in the fourth quarter and full year of 2005. For alternative markets, net premiums written included estimated earned but unbilled audit premiums of $2 million and $4 million in the fourth quarter and full year of 2006, respectively, compared with $12 million in the fourth quarter and full year of 2005. Selected Balance Sheet Information (Amounts in thousands, except per share data)
December 31, December 31, 2006 2005 ------------ ------------ Total investments (1) $12,012,298 $10,378,250 Total assets 15,656,489 13,896,287 Reserves for losses and loss expenses 7,784,269 6,711,760 Senior notes and other debt 869,187 967,818 Junior subordinated debentures 241,953 450,634 Stockholders' equity (2) 3,335,159 2,567,077 Shares outstanding 192,772 191,265 Stockholders' equity per share 17.30 13.42
(1) Total investments include cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases. (2) Stockholders' equity includes after-tax unrealized gains from investments and currency translation adjustments of $126 million and $25 million as of December 31, 2006 and December 31, 2005, respectively.