Infinity Notes 102% Jump in Q2 Net Earnings

Alabama-based Infinity Property and Casualty Corp., a national provider of personal automobile insurance with an emphasis on nonstandard auto insurance, reported that second quarter net earnings increased 102% compared to the second quarter of 2003.

Net earnings for the second quarter of 2004 were $24.8 million or $1.19 per share, on a fully diluted basis, compared to net earnings of $12.3 million or $0.60 per share for the second quarter of 2003.
For the first six months of 2004, net earnings were $41.8 million or $2.00 per share, as compared with $23.8 million or $1.16 per share for the same period in 2003.

Operating earnings, a non-GAAP measure, were $23.9 million or $1.15 per share for the second quarter of 2004 compared to $12.1 million or $0.59 per share for the second quarter of 2003. For the first six months of 2004, operating earnings were $39.8 million or $1.91 per share, as compared with $23.5 million or $1.14 per share for the same period in 2003. Operating earnings is defined at the end of this release and reconciled to net earnings, the most comparable GAAP measure.

Underwriting income, a non-GAAP measure, was $25.4 million and
$43.5 million in the second quarter and first six months of 2004,
respectively. By comparison, $12.9 million and $22.5 million of underwriting income was earned in the second quarter and first six months of 2003, respectively. Infinity produced a GAAP combined ratio in the second quarter of 88.3%, compared to 92.2% in the second quarter of 2003. For the first six months of 2004, the GAAP combined ratio was 89.9% compared to the 93.2% in the first six months of 2003.

Net written premiums for the quarter ended June 30, 2004 were
$218.7 million compared with $169.8 million for the same period in 2003. Net written premiums for the first six months of 2004 were $460.9 million, a 16.3% increase over the $396.2 million in net premiums for the first six months of 2003.

The increase in net written premiums in the second quarter and first
six months of 2004 compared to the second quarter and first six months of 2003 is reportedly largely attributable to the reduction in the auto physical damage ceded premiums from 90% in the first six months of 2003 to 10% in the first six months of 2004.

Excluding the auto physical damage quota share, net premiums
written in the second quarter and first six months of 2004 were $226.5 million and $470.3 million, respectively compared to $249.5 million and $562.5 million for the same periods in 2003.

Gross written premiums in Infinity’s five franchise states of California,
Connecticut, Florida, Georgia and Pennsylvania, which accounted for 80% of gross written premiums in the second quarter of 2004, were $183.6 million compared with $188.6 million for the same period in 2003. Premiums in the franchise states for the first six months of 2004 were $387.5 million compared to premiums of $384.1 million for the first six months of 2003.

“We are very pleased with our continued improvement in both our
underwriting results and net earnings,” said James Gober, Infinity’s
Chairman, President and CEO. “We recognize, however, that our superior underwriting results must be accompanied by growth. While we are disappointed that this growth was not achieved in the second quarter, we are confident that the groundwork has been laid for meaningful growth in the remainder of the year with the rollout of new products in several key states, new agency appointments, intensified marketing campaigns and a variety of attractive agency incentives.”