Infinity Property and Casualty Corp. Reports Successful Q3 Numbers

Alabama-based Infinity Property and Casualty Corporation, a provider of personal automobile insurance with an emphasis on nonstandard auto insurance, reported net earnings for the third quarter of $15.0 million or $0.72 per share, on a fully diluted basis, compared to net earnings of $15.3 million or $0.75 per share on a pro forma basis for the third quarter of 2002.

For the first nine months of 2003, net earnings were $38.8 million or $1.89 per share, as compared with $26.4 million, or $1.30 per share on a pro forma basis for the same period in 2002. Pro forma earnings for the third quarter and the first nine 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 $14.5 million or $0.70 per share for the third quarter of 2003 compared to $11.7 million or $0.58 per share on a pro forma basis for the third quarter of 2002. For the first nine months of 2003, operating earnings were $37.9 million or $1.84 per share, as compared with $30.5 million or $1.50 per share on a pro forma basis for the same period in 2002.

Underwriting income, a non-GAAP measure, was $13.8 million and $36.3 million in the third quarter and first nine months of 2003, respectively. By comparison, $10.6 million and $13.8 million of underwriting income was earned in the third quarter and first nine months of 2002, respectively. Infinity produced a GAAP combined ratio in the third quarter of 92.0 percent, a 1.5 point improvement over that in the third quarter of 2002. For the first nine months of 2003, the GAAP combined ratio of 92.8 percent represents a 4.8 point improvement over that in the first nine months of 2002. Underwriting income is defined at the end of this release and reconciled to net earnings, the most comparable GAAP measure.

Net written premiums for the quarter and first nine months of 2003 were $226.6 million and $622.8 compared with $115.4 and $541.6 for the same periods in 2002. The increase in net written premiums in the third quarter of 2003 is largely attributable to reducing the auto physical damage ceded premiums from 90 percent in previous periods to 20 percent in the third quarter.

Excluding the auto physical damage quota share, net premiums written in the third quarter of 2003 were $236.5 million, a 2.3% decrease compared to the third quarter of 2002. Net premiums written for the first nine months of 2003, excluding both the auto physical damage quota share and $48.0 million of unearned premium related to the Assumed Agency Business transferred on 1/1/2003, decreased 10.5 percent compared to the first nine months of 2002.

“Results for the third quarter show continued improvement on both an operating earnings and underwriting basis,” said James Gober, Infinity’s president and CEO. “We are also pleased to show 14 percent growth in the franchise states as compared with the third quarter of 2002. This is a reflection of our previously stated goal to focus on having new, profitable programs introduced in the five franchise states.”

Franchise states results gross written premiums in Infinity’s five franchise states of California, Florida, Connecticut, Pennsylvania, and Georgia, which represent 78 percent of the total business volume, were $183.8 million in the third quarter of 2003 compared with $161.2 million the same period in 2002. Gross written premiums for the franchise states were $569.0 million for the first nine months of 2003, up 4.2 percent from that in 2002. These gross written premiums reflect gross premiums for the NSA Group and premiums gross of the auto physical damage quota share for the Assumed Agency Business.

Loss ratios for the overall business before reinsurance improved from 57.0 percent to 51.2 percent from the third quarter of 2002 to the same period in 2003, and from 60.2 percent for the first nine months of 2002 to 54.6 percent in the same period in 2003, driven substantially from the reduction of business in the non-focus states as well as the improvement in the loss ratio in the franchise states.