EX-99.2 4 h68221exv99w2.htm EX-99.2 exv99w2
Exhibit 99.2
Item 6.   Selected Financial Data
 
The selected consolidated financial data set forth below has been derived from the Consolidated Financial Statements. All information contained herein should be read in conjunction with the Consolidated Financial Statements, the related Notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Report.
As discussed in Note 1 to the Consolidated Financial Statements, we adopted FSP APB 14-1 and FSP EITF 03-6-1 on January 1, 2009. The selected consolidated financial data set forth below has been adjusted for the retrospective application of these new accounting standards.
 
                                           
    Years Ended December 31,
    2008(3)     2007(3)     2006(3)       2005(4)     2004 (4)  
    (In thousands, except per share data)
Statement of earnings data (as adjusted):
                                         
                                           
Revenue
                                         
                                           
Net earned premium
  $ 2,007,774     $ 1,985,086     $ 1,709,189       $ 1,369,988     $ 1,010,692  
                                           
Fee and commission income
    125,201       140,092       137,131         132,628       183,802  
                                           
Net investment income
    164,751       206,462       152,804         98,851       64,885  
                                           
Net realized investment gain (loss)
    (27,941 )     13,188       (841 )       1,448       5,822  
                                           
Other operating income
    9,638       43,545       77,012         39,773       19,406  
                                           
                                           
Total revenue
    2,279,423       2,388,373       2,075,295         1,642,688       1,284,607  
                                           
                                           
Expense
                                         
                                           
Loss and loss adjustment expense, net
    1,211,873       1,183,947       1,011,856         919,697       645,230  
                                           
Policy acquisition costs, net
    381,441       366,610       319,885         261,708       222,323  
                                           
Other operating expense
    233,509       241,642       222,324         180,990       168,045  
                                           
Interest expense
    20,362       16,270       18,128         14,126       11,965  
                                           
                                           
Total expense
    1,847,185       1,808,469       1,572,193         1,376,521       1,047,563  
                                           
                                           
Earnings from continuing operations before income tax expense
    432,238       579,904       503,102         266,167       237,044  
                                           
Income tax expense on continuing operations
    130,118       188,351       165,191         81,921       80,684  
                                           
                                           
Earnings from continuing operations
    302,120       391,553       337,911         184,246       156,360  
                                           
Earnings from discontinued operations, net of income taxes(1)
                        2,760       4,004  
                                           
                                           
Net earnings
  $ 302,120     $ 391,553     $ 337,911       $ 187,006     $ 160,364  
                                           
                                           
Basic earnings per share data:
                                         
                                           
Earnings from continuing operations
  $ 2.63     $ 3.47     $ 3.04       $ 1.74     $ 1.61  
                                           
Earnings from discontinued operations(1)
                        0.03       0.04  
                                           
                                           
Net earnings
  $ 2.63     $ 3.47     $ 3.04       $ 1.77     $ 1.65  
                                           
                                           
Weighted average shares outstanding
  114,848       112,873     111,309       105,463       97,257  
                                           
                                           
Diluted earnings per share data:
                                         
                                           
Earnings from continuing operations
  $ 2.61     $ 3.35     $ 2.89       $ 1.68     $ 1.58  
                                           
Earnings from discontinued operations(1)
                        0.03       0.04  
                                           
                                           
Net earnings
  $ 2.61     $ 3.35     $ 2.89       $ 1.71     $ 1.62  
                                           
                                           
                                           
Weighted average shares outstanding
  115,463       116,997     116,736       109,437       98,826  
                                           
                                           
Cash dividends declared, per share
  $ 0.470     $ 0.420     $ 0.375       $ 0.282     $ 0.213  
                                           



 

 
                                             
    December 31,
    2008(3)     2007(3)     2006(4)     2005(4)   2004(4)
    (In thousands, except per share data)
Balance sheet data (as adjusted):
                                           
Total investments
  $ 4,804,283     $ 4,672,277     $ 3,927,995       $ 3,257,428     $ 2,468,491    
Premium, claims and other receivables
    770,823       763,401       864,705         884,654       891,360    
Reinsurance recoverables
    1,054,950       956,665       1,169,934         1,361,983       1,104,026    
Ceded unearned premium
    234,375       244,684       226,125         239,416       311,973    
Goodwill
    858,849       776,046       742,677         532,947       444,031    
Total assets
    8,332,000       8,074,520       7,626,025         7,022,231       5,891,649    
 
                                           
Loss and loss adjustment expense payable
    3,415,230       3,227,080       3,097,051         2,813,720       2,089,199    
Unearned premium
    977,426       943,946       920,350         807,109       741,706    
Premium and claims payable
    405,287       497,974       646,224         753,859       766,765    
Notes payable
    343,649       319,471       297,574         291,394       286,582    
Shareholders’ equity
    2,640,023       2,443,695       2,050,009         1,702,015       1,341,274    
Book value per share(2)
  $ 23.27     $ 21.24     $ 18.35       $ 15.36     $ 13.14    
 
 
(1) Discontinued operations in 2005 and 2004 represent gains from a contractual earnout related to the 2003 sale of our retail brokerage operation, HCC Employee Benefits, Inc.
 
(2) Book value per share is calculated by dividing outstanding shares into total shareholders’ equity.
 
(3) See Note 1 to the Consolidated Financial Statements for changes in line items due to the adoption of FSP APB 14-1 and FSP EITF 03-6-1 on January 1, 2009.
 
(4) The following line items were affected by the adoption of FSP APB 14-1 and FSP EITF 03-6-1 on January 1, 2009:
                         
    Twelve months ended December 31, 2005  
    As originally              
    reported     As adjusted     Change  
 
                       
Interest expense
  $ 7,684     $ 14,126     $ 6,442  
Earnings before income tax expense
    272,609       266,167       (6,442 )
Income tax expense
    84,177       81,921       (2,256 )
Earnings from continuing operations
    188,432       184,246       (4,186 )
Net earnings
    191,192       187,006       (4,186 )
Basic earnings per share from continuing operations
  $ 1.78     $ 1.74     $ (0.04 )
Basic earnings per share
    1.81       1.77       (0.04 )
Diluted earnings per share from continuing operations
    1.72       1.68       (0.04 )
Diluted earnings per share
    1.75       1.71       (0.04 )
                         
    Twelve months ended December 31, 2004  
    As originally              
    reported     As adjusted     Change  
 
                       
Interest expense
  $ 8,374     $ 11,965     $ 3,591  
Earnings before income tax expense
    240,635       237,044       (3,591 )
Income tax expense
    81,940       80,684       (1,256 )
Earnings from continuing operations
    158,695       156,360       (2,335 )
Net earnings
    162,699       160,364       (2,335 )
Basic earnings per share from continuing operations
  $ 1.63     $ 1.61     $ (0.02 )
Basic earnings per share
    1.67       1.65       (0.02 )
Diluted earnings per share from continuing operations
    1.61       1.58       (0.03 )
Diluted earnings per share
    1.65       1.62       (0.03 )
                         
    December 31, 2006  
    As originally              
    reported     As adjusted     Change  
 
                       
Total assets (debt issuance costs and deferred tax asset)
  $ 7,630,132     $ 7,626,025     $ (4,107 )
Notes payable
    308,887       297,574       (11,313 )
Shareholders’ equity
    2,042,803       2,050,009       7,206  
Book value per share
  $ 18.28     $ 18.35     $ 0.07  
                         
    December 31, 2005  
    As originally              
    reported     As adjusted     Change  
 
                       
Total assets (debt issuance costs and deferred tax asset)
  $ 7,028,800     $ 7,022,231     $ (6,569 )
Notes payable
    309,543       291,394       (18,149 )
Shareholders’ equity
    1,690,435       1,702,015       11,580  
Book value per share
  $ 15.26     $ 15.36     $ 0.10  
                         
    December 31, 2004  
    As originally              
    reported     As adjusted     Change  
 
                       
Total assets (debt issuance costs and deferred tax asset)
  $ 5,900,568     $ 5,891,649     $ (8,919 )
Notes payable
    311,277       286,582       (24,695 )
Shareholders’ equity
    1,325,498       1,341,264       15,766  
Book value per share
  $ 12.99     $ 13.14     $ 0.15