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: | May 8, 2014 | By: __/s/ Samuel J. Simon________ | ||
Name: Samuel J. Simon | ||||
Title: Executive Vice President, General Counsel and Assistant Secretary | ||||
Three months ended March 31, | |||||||||
(in millions, except per share amounts and ratios) | 2014 | 2013 | Change | ||||||
Gross written premium (1) | $377.2 | $375.3 | 0.5 | % | |||||
Revenues | $361.6 | $356.1 | 1.5 | % | |||||
Net earnings | $10.3 | $8.7 | 19.2 | % | |||||
Net earnings per diluted share | $0.89 | $0.74 | 20.3 | % | |||||
Operating earnings (1) | $9.9 | $6.2 | 60.4 | % | |||||
Operating earnings per diluted share (1) | $0.86 | $0.53 | 62.3 | % | |||||
Underwriting income (1) | $10.3 | $5.8 | 77.0 | % | |||||
Combined ratio | 96.8 | % | 98.2 | % | (1.4 | ) pts | |||
Return on equity (2) | 6.2 | % | 5.3 | % | 0.9 | pts | |||
Operating earnings return on equity (1) (2) | 6.0 | % | 3.8 | % | 2.2 | pts | |||
Book value per share | $58.00 | $56.94 | 1.9 | % | |||||
Debt to total capital | 29.2 | % | 29.5 | % | (0.3 | ) pt | |||
Debt to tangible capital (1) | 31.7 | % | 32.1 | % | (0.4 | ) pt |
(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 March 31, | |||||
2014 | 2013 | ||||
(unaudited) | (unaudited) | ||||
Revenues: | |||||
Earned premium | $327.7 | $318.6 | |||
Installment and other fee income | 24.3 | 25.3 | |||
Net investment income | 8.8 | 8.3 | |||
Net realized gains on investments(1) | 0.6 | 3.8 | |||
Other income | 0.2 | 0.1 | |||
Total revenues | 361.6 | 356.1 | |||
Costs and Expenses: | |||||
Losses and loss adjustment expenses (2) | 253.7 | 250.4 | |||
Commissions and other underwriting expenses | 88.0 | 87.7 | |||
Interest expense | 3.5 | 3.5 | |||
Corporate general and administrative expenses | 1.5 | 1.7 | |||
Other expenses | 0.3 | 0.7 | |||
Total costs and expenses | 347.0 | 344.0 | |||
Earnings before income taxes | 14.6 | 12.1 | |||
Provision for income taxes | 4.3 | 3.4 | |||
Net Earnings | $10.3 | $8.7 | |||
Net Earnings per Common Share: | |||||
Basic | $0.90 | $0.75 | |||
Diluted | $0.89 | $0.74 | |||
Average Number of Common Shares: | |||||
Basic | 11.4 | 11.5 | |||
Diluted | 11.6 | 11.8 | |||
Cash Dividends per Common Share | $0.36 | $0.30 |
(1) Net realized gains before impairment losses | $0.7 | $3.9 | |||
Total other-than-temporary impairment (“OTTI”) losses | (0.9 | ) | (0.1 | ) | |
Non-credit portion in other comprehensive income | 0.9 | — | |||
OTTI losses reclassified from other comprehensive income | (0.0 | ) | — | ||
Net impairment losses recognized in earnings | (0.0 | ) | (0.1 | ) | |
Total net realized gains on investments | $0.6 | $3.8 |
(2) | Losses and loss adjustment expenses for the three months ended March 31, 2014 and March 31, 2013 include $3.1 million and $0.1 million of favorable development on prior accident year loss and loss adjustment expense reserves, respectively. |
March 31, 2014 | December 31, 2013 | ||||
(unaudited) | |||||
Assets: | |||||
Investments: | |||||
Fixed maturities, at fair value | $1,410.0 | $1,354.3 | |||
Equity securities, at fair value | 94.2 | 91.1 | |||
Short-term investments, at fair value | 1.4 | 2.6 | |||
Total investments | 1,505.7 | 1,448.0 | |||
Cash and cash equivalents | 84.9 | 134.2 | |||
Accrued investment income | 12.4 | 12.8 | |||
Agents’ balances and premium receivable | 493.0 | 451.3 | |||
Property and equipment (net of depreciation) | 50.8 | 48.1 | |||
Prepaid reinsurance premium | 4.2 | 3.1 | |||
Recoverable from reinsurers | 14.6 | 14.5 | |||
Deferred policy acquisition costs | 94.7 | 88.3 | |||
Current and deferred income taxes | 21.6 | 28.6 | |||
Receivable for securities sold | 0.2 | 2.8 | |||
Other assets | 12.2 | 10.2 | |||
Goodwill | 75.3 | 75.3 | |||
Total assets | $2,369.5 | $2,317.3 | |||
Liabilities and Shareholders’ Equity: | |||||
Liabilities: | |||||
Unpaid losses and loss adjustment expenses | $662.9 | $646.6 | |||
Unearned premium | 613.0 | 566.0 | |||
Payable to reinsurers | — | 0.0 | |||
Long-term debt | 275.0 | 275.0 | |||
Commissions payable | 18.3 | 19.1 | |||
Payable for securities purchased | 13.6 | 39.9 | |||
Other liabilities | 120.2 | 113.9 | |||
Total liabilities | 1,703.1 | 1,660.5 | |||
Shareholders’ Equity: | |||||
Common stock | 21.7 | 21.7 | |||
Additional paid-in capital | 369.3 | 368.9 | |||
Retained earnings (1) | 691.2 | 685.0 | |||
Accumulated other comprehensive income, net of tax | 21.7 | 16.6 | |||
Treasury stock, at cost (2) | (437.5 | ) | (435.5 | ) | |
Total shareholders’ equity | 666.5 | 656.8 | |||
Total liabilities and shareholders’ equity | $2,369.5 | $2,317.3 | |||
Shares outstanding | 11.5 | 11.5 | |||
Book value per share | $58.00 | $57.09 |
(1) | The change in retained earnings from December 31, 2013 is a result of net income of $10.3 million less shareholder dividends of $4.1 million. |
(2) | Infinity repurchased 24,200 common shares during the first three months of 2014 at an average per share price, excluding commissions, of $72.20. |
Three months ended March 31, | |||||
2014 | 2013 | ||||
(unaudited) | (unaudited) | ||||
Operating Activities: | |||||
Net earnings | $10.3 | $8.7 | |||
Adjustments: | |||||
Depreciation | 2.5 | 2.0 | |||
Amortization | 5.8 | 4.6 | |||
Net realized gains on investments | (0.6 | ) | (3.8 | ) | |
(Gain) loss on disposal of property and equipment | (0.0 | ) | 0.0 | ||
Share-based compensation expense | (0.2 | ) | 0.6 | ||
Excess tax benefits from share-based payment arrangements | (0.1 | ) | (0.1 | ) | |
Activity related to rabbi trust | 0.0 | 0.0 | |||
Decrease (increase) in accrued investment income | 0.4 | 0.1 | |||
Decrease (increase) in agents’ balances and premium receivable | (41.7 | ) | (39.0 | ) | |
Decrease (increase) in reinsurance receivables | (1.1 | ) | (1.3 | ) | |
Decrease (increase) in deferred policy acquisition costs | (6.4 | ) | (7.8 | ) | |
Decrease (increase) in other assets | 2.6 | 1.8 | |||
Increase (decrease) in unpaid losses and loss adjustment expenses | 16.3 | 23.9 | |||
Increase (decrease) in unearned premium | 47.0 | 54.5 | |||
Increase (decrease) in payable to reinsurers | (0.0 | ) | (0.1 | ) | |
Increase (decrease) in other liabilities | 5.6 | (2.7 | ) | ||
Net cash provided by operating activities | 40.3 | 41.5 | |||
Investing Activities: | |||||
Purchases of fixed maturities | (183.5 | ) | (306.4 | ) | |
Purchases of equity securities | (2.6 | ) | — | ||
Purchases of short-term investments | (0.2 | ) | — | ||
Purchases of property and equipment | (5.2 | ) | (1.8 | ) | |
Maturities and redemptions of fixed maturities | 41.2 | 46.2 | |||
Maturities and redemptions of short-term investments | 1.4 | — | |||
Proceeds from sale of fixed maturities | 65.0 | 192.7 | |||
Proceeds from sale of equity securities | — | 3.5 | |||
Proceeds from sale of property and equipment | 0.0 | — | |||
Net cash used in investing activities | (84.0 | ) | (65.8 | ) | |
Financing Activities: | |||||
Proceeds from stock options exercised and employee stock purchases | 0.5 | 0.5 | |||
Excess tax benefits from share-based payment arrangements | 0.1 | 0.1 | |||
Principal payments under capital lease obligation | (0.1 | ) | (0.3 | ) | |
Acquisition of treasury stock | (2.0 | ) | (4.0 | ) | |
Dividends paid to shareholders | (4.1 | ) | (3.5 | ) | |
Net cash used in financing activities | (5.7 | ) | (7.2 | ) | |
Net decrease in cash and cash equivalents | (49.3 | ) | (31.5 | ) | |
Cash and cash equivalents at beginning of period | 134.2 | 165.2 | |||
Cash and cash equivalents at end of period | $84.9 | $133.6 |
Three months ended March 31, | ||||||
2014 | 2013 | |||||
(in millions, except EPS) | ||||||
Earned premium | $327.7 | $318.6 | ||||
Losses and loss adjustment expenses | (253.7 | ) | (250.4 | ) | ||
Commissions and other underwriting expenses | (88.0 | ) | (87.7 | ) | ||
Installment and other fee income | 24.3 | 25.3 | ||||
Underwriting income | 10.3 | 5.8 | ||||
Net investment income | 8.8 | 8.3 | ||||
Other income | 0.2 | 0.1 | ||||
Interest expense | (3.5 | ) | (3.5 | ) | ||
Corporate general and administrative expenses | (1.5 | ) | (1.7 | ) | ||
Other expenses | (0.3 | ) | (0.7 | ) | ||
Pre-tax operating earnings | 14.0 | 8.3 | ||||
Provision for income taxes | (4.1 | ) | (2.1 | ) | ||
Operating earnings, after-tax | 9.9 | 6.2 | ||||
Realized gains on investments, pre-tax | 0.6 | 3.8 | ||||
Provision for income taxes on capital gains | (0.2 | ) | (1.3 | ) | ||
Realized gains on investments, net of tax | 0.4 | 2.5 | ||||
Net earnings | $10.3 | $8.7 | ||||
Operating earnings per diluted share | $0.86 | $0.53 | ||||
Realized gains on investments, net of tax | 0.03 | 0.21 | ||||
Net earnings per diluted share | $0.89 | $0.74 | ||||
Note: Columns may not foot due to rounding |
Three months ended March 31, | |||||
(in millions) | 2014 | 2013 | |||
Gross written premium | $377.2 | $375.3 | |||
Ceded reinsurance | (2.9 | ) | (2.4 | ) | |
Net written premium | 374.2 | 373.0 | |||
Change in unearned premium | (46.6 | ) | (54.4 | ) | |
Earned premium | $327.7 | $318.6 | |||
Note: Columns may not foot due to rounding |
(in millions) | March 31, 2014 | March 31, 2013 | |
Tangible capital | $866.2 | $857.7 | |
Goodwill | 75.3 | 75.3 | |
Total capital | $941.5 | $933.0 | |
Note: Columns may not foot due to rounding |