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 fourth quarter of $19.5 million or $0.94 per share, on a fully diluted basis, compared to net earnings of $13.6 million or $0.67 per share on a pro forma basis for the fourth quarter of 2002.
For the year ended Dec. 31, 2003, net earnings were $58.2 million or $2.83 per share, as compared with $39.9 million, or $1.96 per share on a pro forma basis for the same period in 2002. Pro forma earnings for the fourth quarter and the 12 months ended Dec. 31, 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 in February 2003 (“Assumed Agency Business”).
Net earnings for the fourth quarter and 12 months ended Dec. 31, 2003 include a gain of $0.25 per diluted share related to the commutation of various arrangements with American Financial Group. Offsetting this gain is a loss of $0.10 per diluted share resulting from the sublease of excess space in the Alpharetta, Georgia office.
Operating earnings, a non-GAAP measure, were $19.7 million or $0.95 per share for the fourth quarter of 2003 compared to $13.8 million or $0.68 per share on a pro forma basis for the fourth quarter of 2002. For the 12 months ended Dec. 31, 2003, operating earnings were $57.6 million or $2.79 per share, as compared with $44.3 million or $2.18 per share on a pro forma basis for the same period in 2002.
Underwriting income, a non-GAAP measure, was $16.6 million and $52.9 million in the fourth quarter and 12 months ended Dec. 31, 2003, respectively. By comparison, $15.2 million and $29.1 million of underwriting income was earned in the fourth quarter and 12 months ended Dec. 31, 2002, respectively. Infinity produced a GAAP combined ratio in the fourth quarter of 91.5 percent, compared to 91.1 percent in the fourth quarter of 2002. For the 12 months ended Dec. 31, 2003, the GAAP combined ratio of 92.5 percent represents a 3.7 point improvement over that in the same period of 2002.
Net written premiums for the quarter and 12 months ended Dec. 31, 2003 were $194.9 million and $817.6 million compared with $145.7 million and $687.3 million for the same periods in 2002. The increase in net written premiums in the fourth quarter of 2003 compared to the fourth quarter of 2002 is largely attributable to the reduction in the auto physical damage ceded premiums from 90 percent in previous periods to 20 percent in the third quarter of 2003.
Excluding the auto physical damage quota share, net premiums written in the fourth quarter of 2003 were $210.4 million, a 5.4 percent decrease compared to the fourth quarter of 2002. Net premiums written for the twelve months ended Dec. 31, 2003, excluding both the auto physical damage quota share and $48.0 million of unearned premium related to the Assumed Agency Business transferred on Jan. 1, 2003, decreased 9.5 percent compared to the 12 months ended Dec. 31, 2002.
“We are pleased to finish our first year as a public company with another strong quarter,” stated James Gober, Infinity’s president, CEO & chairman. “Operating and underwriting results continued to improve in the fourth quarter and we were able to exceed our 12 percent ROE target for the year.”
Franchise states results
Gross written premiums in Infinity’s five franchise states of California, Florida, Connecticut, Pennsylvania, and Georgia, which accounted for 76 percent of its gross written premiums for 2003, were $168.5 million in the fourth quarter of 2003 compared with $152.9 million the same period in 2002. Gross written premiums for the franchise states were $735.8 million for the 12 months ended Dec. 31, 2003, up 5.5 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.
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