Infinity P/C Corp. Notes Improved Results

Alabama-based Infinity Property and Casualty Corporation reported net earnings for the second quarter of $12.3 million or $0.60 per share, on a fully diluted basis, compared to net earnings of $2.1 million or $0.10 per share on a pro forma basis for the second quarter of 2002.

For the first six months of 2003, net earnings were $23.8 million or $1.16 per share, as compared with $11.1 million, or $0.55 per share on a pro forma basis for the same period in 2002. Pro forma earnings for the second quarter and the first six months of 2002 combine the separate results for Infinity’s nonstandard auto subsidiaries (“NSA Group”) and the personal insurance business assumed by Infinity as part of the initial public offering completed earlier this year (“Assumed Agency Business”).

Operating earnings, a non-GAAP measure, were $12.1 million or $0.59 per share for the second quarter of 2003 compared to $9.5 million or $0.47 per share on a pro forma basis for the second quarter of 2002. For the first six months of 2003, operating earnings were $23.5 million or $1.14 per share, as compared with $18.7 million, or $.92 per share on a pro forma basis for the same period in 2002. Operating earnings are defined at the end of this release and reconciled to net earnings, the most comparable GAAP measure.

Underwriting income, a non-GAAP measure, was $12.9 million and $22.5 million in the second quarter and first six months of 2003, respectively. By comparison, $3.2 million of underwriting income was earned in the second quarter and first six months of 2002. Infinity produced a GAAP combined ratio in the second quarter of 92.2%, a 6.3 point improvement over that in the second quarter of 2002. For the first six months of 2003, the GAAP combined ratio of 93.2%, a 6.0 point improvement over that in the first six months of 2002. Underwriting income is defined at the end of this release and reconciled to net earnings, the most comparable GAAP measure.

Second quarter net written premiums were $169.8 million, an 18.1% decrease over the $207.4 million net written premiums in the second quarter of 2002. Including the $48.0 million of unearned premium related to the Assumed Agency Business transferred on 1/1/2003, net written premiums for the first six months of 2003 were $396.2 million, an 7.0% decrease over the $426.1 million net premiums for the first six months of 2002. Excluding the unearned premium transfer, net written premiums decreased 18.3% compared to the first six months of 2002.

“We are pleased with Infinity’s continued strong operating results this quarter,” stated James Gober, Infinity’s president and CEO. “This success is a measure of our commitment to maintain adequate rates and the aggressive steps we have taken to reduce operating expenses through the consolidation of our operations. We also continue to benefit from the favorable effects of lower claims frequencies and moderate claim severities.”

Focus States Results
Gross written premiums in Infinity’s top five focus states, which represent 76% of the total business volume, fell 2.6% to $183.1 million in the second quarter of 2003 as compared with the same period in 2002. For these top five focus states, gross written premiums for the first six months of 2003 was $372.5 million, down 3.2% from that in 2002.

Infinity is striving to expand its presence in the focus states (California, Florida, Georgia, Connecticut and Pennsylvania) and thereby increase volume while reducing its presence in states that provide an unacceptable level of profitable growth potential. Overall gross premiums written were $241.4 million for the second quarter of 2003, a 16.8% decline from gross premiums written in the second quarter of 2002. Overall gross written premiums for the six months ended June 30, 2003 were $497.3 million, a 17.0% decrease as compared with $599.4 million for the same period in 2002.

Loss ratios for the overall business before reinsurance improved from 60.2% to 55.7% from the second quarter of 2002 to the same period in 2003, and from 61.8% for the first six months of 2002 to 56.2% in the same period in 2003, driven substantially from the reduction of business in the non-focus states as well as the improvement in loss ratio in the focus states.