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 26, 2015 | 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) | 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||
Gross written premium (1) | $302.5 | $313.2 | (3.4 | %) | $1,360.9 | $1,339.8 | 1.6 | % | ||||||||||
Revenues | $366.0 | $362.3 | 1.0 | % | $1,461.7 | $1,443.2 | 1.3 | % | ||||||||||
Net earnings | $21.4 | $9.4 | 127.9 | % | $57.2 | $32.6 | 75.3 | % | ||||||||||
Net earnings per diluted share | $1.85 | $0.81 | 128.4 | % | $4.95 | $2.80 | 76.8 | % | ||||||||||
Operating earnings (1) | $20.8 | $8.1 | 157.4 | % | $54.4 | $28.5 | 90.9 | % | ||||||||||
Operating earnings per diluted share (1) | $1.81 | $0.70 | 158.6 | % | $4.71 | $2.45 | 92.2 | % | ||||||||||
Underwriting income (1) | $27.2 | $6.1 | 343.4 | % | $65.0 | $26.7 | 143.8 | % | ||||||||||
Combined ratio | 91.8 | % | 98.1 | % | (6.3) pts | 95.1 | % | 98.0 | % | (2.9) pts | ||||||||
Return on equity (2) | 12.4 | % | 5.7 | % | 6.6 pts | 8.4 | % | 5.0 | % | 3.5 pts | ||||||||
Operating earnings return on equity (1)(2) | 12.1 | % | 5.0 | % | 7.1 pts | 8.0 | % | 4.3 | % | 3.7 pts | ||||||||
Book value per share | $60.75 | $57.09 | 6.4 | % | ||||||||||||||
Debt to total capital | 28.3 | % | 29.5 | % | (1.2) pts | |||||||||||||
Debt to tangible capital (1) | 30.6 | % | 32.1 | % | (1.5) pts |
(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, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
(unaudited) | (unaudited) | (audited) | (audited) | ||||||||
Revenues: | |||||||||||
Earned premium | $332.3 | $325.6 | $1,325.9 | $1,302.5 | |||||||
Installment and other fee income | 23.8 | 24.0 | 95.2 | 98.4 | |||||||
Net investment income (1) | 9.0 | 10.4 | 35.6 | 35.5 | |||||||
Net realized gains on investments (2) | 0.8 | 2.0 | 4.3 | 6.0 | |||||||
Other income | 0.2 | 0.3 | 0.6 | 0.7 | |||||||
Total revenues | 366.0 | 362.3 | 1,461.7 | 1,443.2 | |||||||
Costs and Expenses: | |||||||||||
Losses and loss adjustment expenses (3) | 242.5 | 254.6 | 1,001.6 | 1,017.2 | |||||||
Commissions and other underwriting expenses | 86.3 | 88.9 | 354.6 | 357.1 | |||||||
Interest expense | 3.4 | 3.5 | 13.8 | 13.9 | |||||||
Corporate general and administrative expenses | 1.7 | 1.9 | 7.7 | 7.9 | |||||||
Other expenses | 0.4 | 0.3 | 0.9 | 2.1 | |||||||
Total costs and expenses | 334.4 | 349.1 | 1,378.6 | 1,398.2 | |||||||
Earnings before income taxes | 31.6 | 13.2 | 83.1 | 45.1 | |||||||
Provision for income taxes | 10.3 | 3.8 | 25.9 | 12.4 | |||||||
Net Earnings | $21.4 | $9.4 | $57.2 | $32.6 | |||||||
Net Earnings per Common Share: | |||||||||||
Basic | $1.87 | $0.82 | $5.00 | $2.85 | |||||||
Diluted | $1.85 | $0.81 | $4.95 | $2.80 | |||||||
Average Number of Common Shares: | |||||||||||
Basic | 11.4 | 11.4 | 11.4 | 11.5 | |||||||
Diluted | 11.5 | 11.6 | 11.6 | 11.7 | |||||||
Cash Dividends per Common Share | $0.36 | $0.30 | $1.44 | $1.20 | |||||||
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 | $0.9 | $2.2 | $4.4 | $7.5 | |||||||
Total other-than-temporary impairment (“OTTI”) losses | (0.1 | ) | (1.7) | (1.0 | ) | (3.8 | ) | ||||
Non-credit portion in other comprehensive income | — | 1.4 | 0.9 | 2.3 | |||||||
OTTI losses reclassified from other comprehensive income | — | (0.0 | ) | (0.0 | ) | (0.0 | ) | ||||
Net impairment losses recognized in earnings | (0.1 | ) | (0.3 | ) | (0.2 | ) | (1.5 | ) | |||
Total net realized gains on investments | $0.8 | $2.0 | $4.3 | $6.0 |
December 31, | September 30, | December 31, | ||||||
2014 | 2014 | 2013 | ||||||
(audited) | (unaudited) | (audited) | ||||||
Assets: | ||||||||
Investments: | ||||||||
Fixed maturities, at fair value | $1,431.8 | $1,429.7 | $1,354.3 | |||||
Equity securities, at fair value | 94.4 | 90.6 | 91.1 | |||||
Short-term investments, at fair value | 0.8 | 0.8 | 2.6 | |||||
Total investments | 1,527.1 | 1,521.2 | 1,448.0 | |||||
Cash and cash equivalents | 84.5 | 94.7 | 134.2 | |||||
Accrued investment income | 13.0 | 12.2 | 12.8 | |||||
Agents’ balances and premium receivable | 483.6 | 507.8 | 451.3 | |||||
Property and equipment (net of depreciation) | 55.9 | 56.1 | 48.1 | |||||
Prepaid reinsurance premium | 4.8 | 5.2 | 3.1 | |||||
Recoverables from reinsurers | 14.5 | 14.0 | 14.5 | |||||
Deferred policy acquisition costs | 90.4 | 95.4 | 88.3 | |||||
Current and deferred income taxes | 20.0 | 22.0 | 28.6 | |||||
Receivable for securities sold | 4.5 | 1.9 | 2.8 | |||||
Other assets | 11.1 | 11.9 | 10.2 | |||||
Goodwill | 75.3 | 75.3 | 75.3 | |||||
Total assets | $2,384.8 | $2,417.5 | $2,317.3 | |||||
Liabilities and Shareholders’ Equity: | ||||||||
Liabilities: | ||||||||
Unpaid losses and loss adjustment expenses | $668.2 | $673.2 | $646.6 | |||||
Unearned premium | 589.3 | 622.3 | 566.0 | |||||
Long-term debt | 275.0 | 275.0 | 275.0 | |||||
Commissions payable | 18.7 | 18.6 | 19.1 | |||||
Payable for securities purchased | 17.2 | 24.7 | 39.9 | |||||
Other liabilities | 118.9 | 122.4 | 113.9 | |||||
Total liabilities | 1,687.2 | 1,736.1 | 1,660.5 | |||||
Shareholders’ Equity: | ||||||||
Common stock | 21.7 | 21.7 | 21.7 | |||||
Additional paid-in capital | 372.4 | 372.2 | 368.9 | |||||
Retained earnings (1) | 725.7 | 708.4 | 685.0 | |||||
Accumulated other comprehensive income, net of tax | 23.5 | 23.3 | 16.6 | |||||
Treasury stock, at cost (2) | (445.6 | ) | (444.2 | ) | (435.5 | ) | ||
Total shareholders’ equity | 697.7 | 681.5 | 656.8 | |||||
Total liabilities and shareholders’ equity | $2,384.8 | $2,417.5 | $2,317.3 | |||||
Shares outstanding | 11.5 | 11.5 | 11.5 | |||||
Book value per share | $60.75 | $59.25 | $57.09 |
(1) | The change in retained earnings from September 30, 2014 is a result of net income of $21.4 million less shareholder dividends of $4.1 million. The change in retained earnings from December 31, 2013 is a result of net income of $57.2 million less shareholder dividends of $16.6 million. |
(2) | Infinity repurchased 19,300 common shares during the fourth quarter of 2014 at an average per share price, excluding commissions, of $71.77. Infinity repurchased 85,600 common shares during the twelve months ended December 31, 2014 at an average price, excluding commissions, of $69.07. |
Three months ended December 31, | |||||||
2014 | 2013 | ||||||
(unaudited) | (unaudited) | ||||||
Operating Activities: | |||||||
Net earnings | $21.4 | $9.4 | |||||
Adjustments: | |||||||
Depreciation | 2.8 | 2.7 | |||||
Amortization | 5.2 | 3.9 | |||||
Net realized gains on investments | (0.8 | ) | (2.0 | ) | |||
Loss on disposal of property and equipment | 0.0 | 0.0 | |||||
Share-based compensation expense | 0.2 | 1.0 | |||||
Excess tax benefits from share-based payment arrangements | 0.1 | (0.2 | ) | ||||
Activity related to rabbi trust | 0.0 | 0.1 | |||||
Change in accrued investment income | (0.8 | ) | (0.7 | ) | |||
Change in agents’ balances and premium receivable | 24.1 | 10.0 | |||||
Change in reinsurance receivables | (0.2 | ) | (0.3 | ) | |||
Change in deferred policy acquisition costs | 4.9 | 3.0 | |||||
Change in other assets | 2.4 | 2.4 | |||||
Change in unpaid losses and loss adjustment expenses | (5.0 | ) | 13.7 | ||||
Change in unearned premium | (33.0 | ) | (14.9 | ) | |||
Change in other liabilities | (3.1 | ) | (6.5 | ) | |||
Net cash provided by operating activities | 18.3 | 21.5 | |||||
Investing Activities: | |||||||
Purchases of fixed maturities | (119.6 | ) | (136.1 | ) | |||
Purchases of equity securities | (4.0 | ) | (9.0 | ) | |||
Purchases of short-term investments | — | (1.6 | ) | ||||
Purchases of property and equipment | (2.6 | ) | (2.7 | ) | |||
Maturities and redemptions of fixed maturities | 43.1 | 44.0 | |||||
Proceeds from sale of fixed maturities | 60.6 | 130.8 | |||||
Proceeds from sale of short-term investments | — | 3.1 | |||||
Net cash (used in) provided by investing activities | (22.5 | ) | 28.5 | ||||
Financing Activities: | |||||||
Proceeds from stock options exercised and employee stock purchases | 0.1 | 1.7 | |||||
Excess tax benefits from share-based payment arrangements | (0.1 | ) | 0.2 | ||||
Principal payments under capital lease obligation | (0.4 | ) | (0.3 | ) | |||
Acquisition of treasury stock | (1.4 | ) | (1.2 | ) | |||
Dividends paid to shareholders | (4.1 | ) | (3.4 | ) | |||
Net cash used in financing activities | (5.9 | ) | (3.1 | ) | |||
Net (decrease) increase in cash and cash equivalents | (10.1 | ) | 47.0 | ||||
Cash and cash equivalents at beginning of period | 94.7 | 87.3 | |||||
Cash and cash equivalents at end of period | $84.5 | $134.2 | |||||
Note: Columns may not foot due to rounding |
Twelve months ended December 31, | |||||||
2014 | 2013 | ||||||
(audited) | (audited) | ||||||
Operating Activities: | |||||||
Net earnings | $57.2 | $32.6 | |||||
Adjustments: | |||||||
Depreciation | 10.8 | 9.0 | |||||
Amortization | 22.0 | 18.9 | |||||
Net realized gains on investments | (4.3 | ) | (6.0 | ) | |||
Gain on disposal of property and equipment | (0.0 | ) | (0.1 | ) | |||
Share-based compensation expense | 2.6 | 4.0 | |||||
Excess tax benefits from share-based payment arrangements | (0.1 | ) | (0.6 | ) | |||
Activity related to rabbi trust | 0.0 | 0.1 | |||||
Change in accrued investment income | (0.2 | ) | (0.8 | ) | |||
Change in agents’ balances and premium receivable | (32.3 | ) | (24.2 | ) | |||
Change in reinsurance receivables | (1.7 | ) | (0.6 | ) | |||
Change in deferred policy acquisition costs | (2.2 | ) | (0.0 | ) | |||
Change in other assets | 4.3 | 4.6 | |||||
Change in unpaid losses and loss adjustment expenses | 21.6 | 73.7 | |||||
Change in unearned premium | 23.3 | 27.9 | |||||
Change in other liabilities | 5.1 | 4.7 | |||||
Net cash provided by operating activities | 106.0 | 143.3 | |||||
Investing Activities: | |||||||
Purchases of fixed maturities | (516.5 | ) | (774.6 | ) | |||
Purchases of equity securities | (6.6 | ) | (11.1 | ) | |||
Purchases of short-term investments | (7.9 | ) | (5.8 | ) | |||
Purchases of property and equipment | (18.6 | ) | (17.8 | ) | |||
Maturities and redemptions of fixed maturities | 167.0 | 193.4 | |||||
Maturities and redemptions of short-term investments | 2.8 | 0.0 | |||||
Proceeds from sale of fixed maturities | 238.9 | 454.6 | |||||
Proceeds from sale of equity securities | 5.0 | 7.2 | |||||
Proceeds from sale of short-term investments | 6.9 | 3.2 | |||||
Proceeds from sale of property and equipment | 0.0 | 0.2 | |||||
Net cash used in investing activities | (129.1 | ) | (150.7 | ) | |||
Financing Activities: | |||||||
Proceeds from stock options exercised and employee stock purchases | 0.8 | 3.2 | |||||
Excess tax benefits from share-based payment arrangements | 0.1 | 0.6 | |||||
Principal payments under capital lease obligation | (0.8 | ) | (0.9 | ) | |||
Acquisition of treasury stock | (10.1 | ) | (12.6 | ) | |||
Dividends paid to shareholders | (16.6 | ) | (13.8 | ) | |||
Net cash used in financing activities | (26.6 | ) | (23.5 | ) | |||
Net decrease in cash and cash equivalents | (49.7 | ) | (31.0 | ) | |||
Cash and cash equivalents at beginning of period | 134.2 | 165.2 | |||||
Cash and cash equivalents at end of period | $84.5 | $134.2 | |||||
Note: Columns may not foot due to rounding |
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
(in millions, except EPS) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Earned premium | $332.3 | $325.6 | $1,325.9 | $1,302.5 | ||||||||||||
Losses and loss adjustment expenses | (242.5 | ) | (254.6 | ) | (1,001.6 | ) | (1,017.2 | ) | ||||||||
Commissions and other underwriting expenses | (86.3 | ) | (88.9 | ) | (354.6 | ) | (357.1 | ) | ||||||||
Installment and other fee income | 23.8 | 24.0 | 95.2 | 98.4 | ||||||||||||
Underwriting income | 27.2 | 6.1 | 65.0 | 26.7 | ||||||||||||
Net investment income | 9.0 | 10.4 | 35.6 | 35.5 | ||||||||||||
Other income | 0.2 | 0.3 | 0.6 | 0.7 | ||||||||||||
Interest expense | (3.4 | ) | (3.5 | ) | (13.8 | ) | (13.9 | ) | ||||||||
Corporate general and administrative expenses | (1.7 | ) | (1.9 | ) | (7.7 | ) | (7.9 | ) | ||||||||
Other expenses | (0.4 | ) | (0.3 | ) | (0.9 | ) | (2.1 | ) | ||||||||
Pre-tax operating earnings | 30.8 | 11.2 | 78.9 | 39.1 | ||||||||||||
Provision for income taxes | (10.0 | ) | (3.1 | ) | (24.4 | ) | (10.5 | ) | ||||||||
Operating earnings, after-tax | 20.8 | 8.1 | 54.4 | 28.5 | ||||||||||||
Realized gains on investments, pre-tax | 0.8 | 2.0 | 4.3 | 6.0 | ||||||||||||
Provision for income taxes on capital gains | (0.3 | ) | (0.7 | ) | (1.5 | ) | (2.1 | ) | ||||||||
Prior period tax adjustment on capital gains | — | — | — | 0.2 | ||||||||||||
Realized gains on investments, net of tax | 0.5 | 1.3 | 2.8 | 4.1 | ||||||||||||
Net earnings | $21.4 | $9.4 | $57.2 | $32.6 | ||||||||||||
Operating earnings per diluted share | $1.81 | $0.70 | $4.71 | $2.45 | ||||||||||||
Realized gains on investments and sale of subsidiary, net of tax | 0.04 | 0.11 | 0.24 | 0.33 | ||||||||||||
Prior period tax adjustment on capital gains | — | — | — | 0.02 | ||||||||||||
Net earnings per diluted share | $1.85 | $0.81 | $4.95 | $2.80 | ||||||||||||
Note: Columns may not foot due to rounding. |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||
Gross written premium | $302.5 | $313.2 | $1,360.9 | $1,339.8 | |||||||
Ceded reinsurance | (3.3 | ) | (2.5 | ) | (13.3 | ) | (9.9 | ) | |||
Net written premium | 299.1 | 310.7 | 1,347.6 | 1,329.9 | |||||||
Change in unearned premium | 33.1 | 14.9 | (21.7 | ) | (27.4 | ) | |||||
Earned premium | $332.3 | $325.6 | $1,325.9 | $1,302.5 | |||||||
Note: Columns may not foot due to rounding. |
(in millions) | December 31, 2014 | December 31, 2013 | |
Tangible capital | $897.4 | $856.5 | |
Goodwill | 75.3 | 75.3 | |
Total capital | $972.7 | $931.8 | |
Note: Columns may not foot due to rounding. |