Fitch Affirms Infinity P/C’s Ratings

Fitch Ratings announced that it has affirmed its ‘BBB long-term issuer rating and the rating assigned to its senior note issue of Infinity Property & Casualty Corporation. Fitch also assigned an “A” rating to Infinity’s operating companies, and confirmed a stable outlook.

“The ratings are based on Infinity’s favorable recent underwriting performance, adequate balance sheet quality, adequate capitalization at the operating company level and sufficient loss reserving levels,” said Fitch. “During 2003, Infinity converted from being a wholly owned subsidiary of American Financial Group, Inc. (AFG) to a stand alone operation through two stock offerings,” it noted.

“Infinity is focused predominantly on the personal automobile insurance sector, particularly non-standard auto insurance,” the bulletin continued. “As of March 31, 2004, Infinity had total capital of $688.6 million. The corporation’s debt-to-total capital ratio is 31.2 percent including FASB 115 adjustments. Although this level of financial leverage is in the upper range for this rating category, Fitch expects that Infinity’s financial leverage will decline to more acceptable levels in 2004 through retained earnings growth. Fitch anticipates that the company will maintain adequate interest coverage levels going forward to support debt servicing requirements.

“Infinity continues to report favorable earnings results in 2004. Net income was $16.9 million for the first quarter of 2004, compared with $11.5 million during the first quarter of 2003. The underwriting combined ratio, on a GAAP basis, for the first quarter of 2004, was 91.3 percent compared with 94.1 percent in the first three months of 2003 and 92.5 percent for the full year of 2003. These results reflect improvement in the personal auto insurance pricing environment and shifts in geographic business mix. Infinity reported earned premiums of $210.3 million during first quarter of 2004 as compared to $165.5 million during the same time period of 2003.

“Infinity’s personal lines insurance operations utilize an extensive independent agency sales force of approximately 14,000 agents principally focused in fifteen states. Infinity has total assets of $1.9 billion and total shareholder equity of $489.3 million as of March 31, 2004.”