INFINITY PROPERTY AND CASUALTY CORPORATION |
(Exact name of registrant as specified in its charter) |
Ohio | 000-50167 | 03-0483872 | ||
(State or other jurisdiction of incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
3700 Colonnade Parkway, Suite 600, Birmingham, Alabama 35243 |
(Address of principal executive offices) (Zip Code) |
(205) 870-4000 |
(Registrant’s telephone number, including area code) |
(Former name or former address, if changed since last report.) |
INFINITY PROPERTY AND CASUALTY CORPORATION | ||||
Date: | February 27, 2014 | By: __/s/ Samuel J. Simon________ | ||
Name: Samuel J. Simon | ||||
Title: Executive Vice President, General Counsel and Assistant Secretary | ||||
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||||
(in millions, except per share amounts and ratios) | 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||
Gross written premium (1) | $313.2 | $293.7 | 6.6 | % | $1,339.8 | $1,254.9 | 6.8 | % | ||||||||||
Revenues | $338.3 | $342.5 | (1.2 | %) | $1,344.8 | $1,249.6 | 7.6 | % | ||||||||||
Net earnings | $9.4 | $7.9 | 18.3 | % | $32.6 | $24.3 | 34.2 | % | ||||||||||
Net earnings per diluted share | $0.81 | $0.67 | 20.9 | % | $2.80 | $2.04 | 37.3 | % | ||||||||||
Operating earnings (loss) (1) | $8.1 | ($3.6) | NM | $28.5 | $9.3 | 206.3 | % | |||||||||||
Operating earnings (loss) per diluted share (1) | $0.70 | ($0.31) | NM | $2.45 | $0.78 | 214.1 | % | |||||||||||
Underwriting income (loss) (1) | $6.1 | ($10.4) | (158.8 | %) | $26.7 | ($8.0) | (432.4 | %) | ||||||||||
Combined ratio | 98.1 | % | 103.4 | % | (5.2) pts | 98.0 | % | 100.7 | % | (2.7) pts | ||||||||
Return on equity(2) | 5.7 | % | 4.8 | % | 0.9 pts | 5.0 | % | 3.7 | % | 1.3 pts | ||||||||
Operating earnings return on equity (1)(2) | 5.0 | % | (2.2 | )% | 7.2 pts | 4.3 | % | 1.4 | % | 2.9 pts | ||||||||
Book value per share | $57.09 | $56.55 | 1.0 | % | ||||||||||||||
Debt to total capital | 29.5 | % | 29.5 | % | — | |||||||||||||
Debt to tangible capital (1) | 32.1 | % | 32.1 | % | — |
(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. |
(2) | Annualized |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
(unaudited) | (unaudited) | (audited) | (audited) | ||||||||
Revenues: | |||||||||||
Earned premium | $325.6 | $311.4 | $1,302.5 | $1,184.1 | |||||||
Net investment income(1) | 10.4 | 9.2 | 35.5 | 37.6 | |||||||
Net realized gains on investments(2) | 2.0 | 21.4 | 6.0 | 24.1 | |||||||
Gain on sale of subsidiaries | — | — | — | 2.9 | |||||||
Other income | 0.3 | 0.6 | 0.7 | 1.0 | |||||||
Total revenues | 338.3 | 342.5 | 1,344.8 | 1,249.6 | |||||||
Costs and Expenses: | |||||||||||
Losses and loss adjustment expenses (3) | 254.6 | 258.3 | 1,017.2 | 942.3 | |||||||
Commissions and other underwriting expenses | 64.9 | 63.5 | 258.6 | 249.9 | |||||||
Interest expense | 3.5 | 4.3 | 13.9 | 12.9 | |||||||
Corporate general and administrative expenses | 1.9 | 1.6 | 7.9 | 7.4 | |||||||
Loss on redemption of long-term debt | — | 13.6 | — | 13.6 | |||||||
Other expenses | 0.3 | 0.6 | 2.1 | 1.5 | |||||||
Total costs and expenses | 325.1 | 341.9 | 1,299.7 | 1,227.5 | |||||||
Earnings before income taxes | 13.2 | 0.7 | 45.1 | 22.1 | |||||||
Provision for income taxes | 3.8 | (7.3 | ) | 12.4 | (2.2 | ) | |||||
Net Earnings | $9.4 | $7.9 | $32.6 | $24.3 | |||||||
Net Earnings per Common Share: | |||||||||||
Basic | $0.82 | $0.68 | $2.85 | $2.09 | |||||||
Diluted | $0.81 | $0.67 | $2.80 | $2.04 | |||||||
Average Number of Common Shares: | |||||||||||
Basic | 11.4 | 11.6 | 11.5 | 11.7 | |||||||
Diluted | 11.6 | 11.8 | 11.7 | 11.9 | |||||||
Cash Dividends per Common Share | $0.30 | $0.225 | $1.20 | $0.90 | |||||||
Notes: | |||||||||||
(1) Included in net investment income during the three and twelve months ended December 31, 2013 is a one-time adjustment of $1.7 million related to a change in estimate on prepayment speeds for mortgage-backed securities. | |||||||||||
(2) Net realized gains before impairment losses | $2.2 | $21.5 | $7.5 | $25.4 | |||||||
Total other-than-temporary impairment (“OTTI”) losses | (1.7 | ) | (0.2) | (3.8 | ) | (1.4 | ) | ||||
Non-credit portion in other comprehensive income | 1.4 | 0.0 | 2.3 | 0.0 | |||||||
OTTI losses reclassified from other comprehensive income | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
Net impairment losses recognized in earnings | (0.3 | ) | (0.1 | ) | (1.5 | ) | (1.4 | ) | |||
Total net realized gains on investments | $2.0 | $21.4 | $6.0 | $24.1 |
December 31, | December 31, | ||||
2013 | 2012 | ||||
(audited) | (audited) | ||||
Assets: | |||||
Investments: | |||||
Fixed maturities, at fair value | $1,354.3 | $1,321.8 | |||
Equity securities, at fair value | 91.1 | 73.1 | |||
Short-term investments, at fair value | 2.6 | — | |||
Total investments | 1,448.0 | 1,394.9 | |||
Cash and cash equivalents | 134.2 | 165.2 | |||
Accrued investment income | 12.8 | 11.9 | |||
Agents’ balances and premium receivable | 451.3 | 427.2 | |||
Property and equipment (net of depreciation) | 48.1 | 39.3 | |||
Prepaid reinsurance premium | 3.1 | 2.6 | |||
Recoverables from reinsurers | 14.5 | 14.4 | |||
Deferred policy acquisition costs | 88.3 | 88.3 | |||
Current and deferred income taxes | 28.6 | 25.8 | |||
Receivable for securities sold | 2.8 | 48.5 | |||
Other assets | 10.2 | 10.2 | |||
Goodwill | 75.3 | 75.3 | |||
Total assets | $2,317.3 | $2,303.6 | |||
Liabilities and Shareholders’ Equity: | |||||
Liabilities: | |||||
Unpaid losses and loss adjustment expenses | $646.6 | $572.9 | |||
Unearned premium | 566.0 | 538.1 | |||
Payable to reinsurers | 0.0 | 0.1 | |||
Long-term debt | 275.0 | 275.0 | |||
Commissions payable | 19.1 | 18.1 | |||
Payable for securities purchased | 39.9 | 132.4 | |||
Other liabilities | 113.9 | 110.7 | |||
Total liabilities | 1,660.5 | 1,647.4 | |||
Shareholders’ Equity: | |||||
Common stock | 21.7 | 21.5 | |||
Additional paid-in capital | 368.9 | 361.8 | |||
Retained earnings (1) | 685.0 | 666.2 | |||
Accumulated other comprehensive income, net of tax | 16.6 | 29.9 | |||
Treasury stock, at cost (2) | (435.5 | ) | (423.2 | ) | |
Total shareholders’ equity | 656.8 | 656.2 | |||
Total liabilities and shareholders’ equity | $2,317.3 | $2,303.6 | |||
Shares outstanding | 11.5 | 11.6 | |||
Book value per share | $57.09 | $56.55 |
(1) | The change in retained earnings from December 31, 2012 is a result of net income of $32.6 million less shareholder dividends of $13.8 million. |
(2) | Infinity repurchased 16,000 common shares during the fourth quarter of 2013 at an average per share price, excluding commissions, of $68.52. Infinity repurchased 181,900 common shares during the twelve months ended December 31, 2013 at an average price, excluding commissions, of $58.84. |
Twelve months ended December 31, | |||||||
2013 | 2012 | ||||||
Operating Activities: | |||||||
Net earnings | $32.6 | $24.3 | |||||
Adjustments: | |||||||
Depreciation | 9.0 | 8.6 | |||||
Amortization | 18.9 | 9.1 | |||||
Net realized losses (gains) on investments | (6.0 | ) | (24.1 | ) | |||
Loss on redemption of debt | 0.0 | 13.6 | |||||
(Gain) loss on disposal of property and equipment | (0.1 | ) | 0.1 | ||||
Gain on sale of subsidiary | 0.0 | (2.9 | ) | ||||
Share-based compensation expense | 4.0 | 3.2 | |||||
Excess tax benefits from share-based payment arrangements | (0.6 | ) | (0.9 | ) | |||
Non-cash activity related to rabbi trust | 0.1 | 0.1 | |||||
Decrease (increase) in accrued investment income | (0.8 | ) | (1.2 | ) | |||
Decrease (increase) in agents’ balances and premium receivable | (24.2 | ) | (44.5 | ) | |||
Decrease (increase) in reinsurance receivables | (0.6 | ) | (0.2 | ) | |||
Decrease (increase) in deferred policy acquisition costs | 0.0 | (8.2 | ) | ||||
Decrease (increase) in other assets | 4.6 | (15.9 | ) | ||||
Increase (decrease) in unpaid losses and loss adjustment expenses | 73.7 | 77.5 | |||||
Increase (decrease) in unearned premium | 27.9 | 63.6 | |||||
Increase (decrease) in payable to reinsurers | (0.1 | ) | 0.1 | ||||
Increase (decrease) in other liabilities | 4.9 | 36.1 | |||||
Net cash provided by operating activities | 143.3 | 138.4 | |||||
Investing Activities: | |||||||
Purchases of fixed maturities | (774.6 | ) | (699.8 | ) | |||
Purchases of equity securities | (11.1 | ) | (69.0 | ) | |||
Purchases of short-term investments | (5.8 | ) | 0.0 | ||||
Purchases of property and equipment | (17.8 | ) | (9.2 | ) | |||
Maturities and redemptions of fixed maturities | 193.4 | 182.3 | |||||
Proceeds from sale of subsidiary companies | 0.0 | 9.1 | |||||
Proceeds from sale of fixed maturities | 454.6 | 452.1 | |||||
Proceeds from sale of equity securities | 7.2 | 39.5 | |||||
Proceeds from sale of short-term investments | 3.2 | 0.0 | |||||
Proceeds from sale of property and equipment | 0.2 | 0.0 | |||||
Net cash used in investing activities | (150.7 | ) | (95.0 | ) | |||
Financing Activities: | |||||||
Proceeds from stock options exercised and employee stock purchases, including tax benefit | 3.2 | 2.9 | |||||
Excess tax benefits from share-based payment arrangements | 0.6 | 0.9 | |||||
Proceeds from issuance of bonds | 0.0 | 273.2 | |||||
Redemption of long-term debt | 0.0 | (208.1 | ) | ||||
Principal payments under capital lease obligation | (0.9 | ) | (0.7 | ) | |||
Acquisition of treasury stock | (12.6 | ) | (19.6 | ) | |||
Dividends paid to shareholders | (13.8 | ) | (10.5 | ) | |||
Net cash (used in) provided by financing activities | (23.5 | ) | 38.0 | ||||
Net (decrease) increase in cash and cash equivalents | (31.0 | ) | 81.4 | ||||
Cash and cash equivalents at beginning of period | 165.2 | 83.8 | |||||
Cash and cash equivalents at end of period | $134.2 | $165.2 | |||||
Note: Columns may not foot due to rounding |
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
(in millions, except EPS) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Earned premium | $325.6 | $311.4 | $1,302.5 | $1,184.1 | ||||||||||||
Losses and loss adjustment expenses | (254.6 | ) | (258.3 | ) | (1,017.2 | ) | (942.3 | ) | ||||||||
Commissions and other underwriting expenses | (64.9 | ) | (63.5 | ) | (258.6 | ) | (249.9 | ) | ||||||||
Underwriting income (loss) | 6.1 | (10.4 | ) | 26.7 | (8.0 | ) | ||||||||||
Net investment income | 10.4 | 9.2 | 35.5 | 37.6 | ||||||||||||
Other income | 0.3 | 0.6 | 0.7 | 1.0 | ||||||||||||
Interest expense | (3.5 | ) | (4.3 | ) | (13.9 | ) | (12.9 | ) | ||||||||
Corporate general and administrative expenses | (1.9 | ) | (1.6 | ) | (7.9 | ) | (7.4 | ) | ||||||||
Other expenses | (0.3 | ) | (0.6 | ) | (2.1 | ) | (1.5 | ) | ||||||||
Pre-tax operating earnings (loss) | 11.2 | (7.1 | ) | 39.1 | 8.7 | |||||||||||
Provision for income taxes | (3.1 | ) | 3.5 | (10.5 | ) | 0.6 | ||||||||||
Operating earnings (loss), after-tax | 8.1 | (3.6 | ) | 28.5 | 9.3 | |||||||||||
Realized gains on investments, pre-tax | 2.0 | 21.4 | 6.0 | 24.1 | ||||||||||||
Realized gain on sale of subsidiary, pre-tax | — | — | — | 2.9 | ||||||||||||
Loss on redemption of debt | — | (13.6 | ) | — | (13.6 | ) | ||||||||||
Provision for income taxes on capital gains | (0.7 | ) | (2.8 | ) | (2.1 | ) | (4.8 | ) | ||||||||
Prior period tax adjustment on capital gains | — | — | 0.2 | — | ||||||||||||
Decr (Incr) in provision for tax valuation allowance | — | 6.5 | — | 6.4 | ||||||||||||
Realized gains (losses on investments, net of tax) | 1.3 | 11.5 | 4.1 | 15.0 | ||||||||||||
Net earnings | $9.4 | $7.9 | $32.6 | $24.3 | ||||||||||||
Operating earnings per diluted share | $0.70 | ($0.31 | ) | $2.45 | $0.78 | |||||||||||
Realized gains on investments and sale of subsidiary, net of tax | 0.11 | 1.18 | 0.33 | 1.46 | ||||||||||||
Loss on redemption of debt, net of tax | 0.00 | (0.75 | ) | 0.00 | (0.74 | ) | ||||||||||
Prior period tax adjustment on capital gains | 0.00 | 0.00 | 0.02 | 0.00 | ||||||||||||
Decrease in provision for tax valuation allowance | 0.00 | 0.55 | 0.00 | 0.54 | ||||||||||||
Net earnings per diluted share | $0.81 | $0.67 | $2.80 | $2.04 | ||||||||||||
Note: Columns may not foot due to rounding. |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||
(in millions) | 2013 | 2012 | 2013 | 2012 | |||||||
Gross written premium | $313.2 | $293.7 | $1,339.8 | $1,254.9 | |||||||
Ceded reinsurance | (2.5 | ) | (2.0 | ) | (9.9 | ) | (7.7 | ) | |||
Net written premium | 310.7 | 291.7 | 1,329.9 | 1,247.2 | |||||||
Change in unearned premium | 14.9 | 19.7 | (27.4 | ) | (63.1 | ) | |||||
Earned premium | $325.6 | $311.4 | $1,302.5 | $1,184.1 | |||||||
Note: Columns may not foot due to rounding. |
(in millions) | December 31, 2013 | December 31, 2012 | |
Tangible capital | $856.5 | $856.0 | |
Goodwill | 75.3 | 75.3 | |
Total capital | $931.8 | $931.2 | |
Note: Columns may not foot due to rounding. |