Infinity Property and Casualty Reports 11.9% Gross Written Premium Growth for the Second Quarter of 2012

Three months ended June 30,

Six months ended June 30,

(in millions, except per share amounts and ratios)

2012

2011

Change

2012

2011

Change

(as adjusted)⁽¹⁾

(as adjusted)⁽¹⁾

Gross written premium ⁽²⁾

$290.4

$259.4

11.9%

$636.3

$542.5

17.3%

Revenues

$306.0

$264.2

15.8%

$593.4

$516.5

14.9%

Net earnings

$7.0

$6.8

1.9%

$11.2

$17.1

(34.1%)

Net earnings per diluted share

$0.58

$0.54

7.4%

$0.94

$1.35

(30.4%)

Operating earnings ⁽²⁾

$5.5

$4.7

15.3%

$9.8

$11.9

(18.2%)

Operating earnings per diluted share ⁽²⁾

$0.46

$0.38

21.1%

$0.81

$0.95

(14.7%)

Underwriting income ⁽²⁾

$2.3

$0.5

404.0%

$2.6

$4.2

(39.0%)

Combined ratio

99.2%

99.8%

(0.6) pts

99.5%

99.1%

0.4%

Return on equity ⁽³⁾

4.2%

4.1%

0.1 pts

3.4%

5.2%

(1.8)%

Operating earnings return on equity ^{(2) (3)}

3.3%

2.9%

0.4 pts

2.9%

3.6%

(0.7)%

Book value per share

$56.92

$53.81

5.8%

Debt to total capital

22.6%

22.8%

(0.2) pts

Debt to tangible capital ⁽²⁾

24.8%

25.0%

(0.2) pts

(1) 2011 has been adjusted for the retrospective adoption of the accounting standards update Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts.

(2) Measures used in this release that are not based on generally accepted accounting principles ("non-GAAP") are defined at the end of this release and reconciled to the most comparable GAAP measure.

(3) Annualized

Infinity Property and Casualty Corporation

Statements of Earnings

(in millions, except EPS and dividends)

  (unaudited)

Three months ended
June 30,

Six months ended
June 30,

2012

2011

2012

2011

(as adjusted)

(as adjusted)

Revenues:

  Earned premium

$294.1

$251.6

$571.3

$490.6

  Net investment income

9.6

10.6

19.3

21.0

  Net realized gains on investments⁽¹⁾

2.2

2.0

2.4

4.9

  Other income

0.1

0.0

0.4

0.1

Total revenues

306.0

264.2

593.4

516.5

Costs and Expenses:

  Losses and loss adjustment expenses ⁽²⁾

230.9

192.5

445.7

371.4

Commissions and other underwriting expenses

60.9

58.7

123.0

114.9

  Interest expense

2.7

2.7

5.4

5.4

Corporate general and administrative expenses

2.1

2.2

4.1

3.9

  Other expenses

0.1

0.4

0.3

0.4

Total costs and expenses

296.7

256.4

578.5

496.1

Earnings before income taxes

9.3

7.8

14.8

20.4

Provision for income taxes

2.4

1.0

3.6

3.4

Net Earnings

$7.0

$6.8

$11.2

$17.1

Net Earnings per Common Share:

Basic

$0.59

$0.56

$0.96

$1.39

Diluted

$0.58

$0.54

$0.94

$1.35

Average Number of Common Shares:

Basic

11.7

12.3

11.7

12.3

Diluted

11.9

12.5

12.0

12.6

Cash Dividends per Common Share

$0.225

$0.180

$0.45

$0.36

Notes:

(1) Net realized gains before impairment losses

$2.6

$2.2

$3.5

$5.7

Total other-than-temporary impairment
         ("OTTI") losses

(0.4)

(0.1)

(1.0)

(1.7)

Non-credit portion in other comprehensive
        income

0.0

0.0

0.0

1.0

OTTI losses reclassified from other
        comprehensive income

0.0

(0.2)

0.0

(0.2)

Net impairment losses recognized in 
        earnings

(0.4)

(0.2)

(1.1)

(0.8)

Total net realized gains on investments

$2.2

$2.0

$2.4

$4.9

(2) Losses and loss adjustment expenses for the three and six months ended June 30, 2012 include $1.9 million and $1.8 million of unfavorable development on prior accident year loss and loss adjustment expense reserves, respectively.

Losses and loss adjustment expenses for the three and six months ended June 30, 2011 include $3.4 million and $23.0 thousand of unfavorable development on prior accident year loss and loss adjustment expense reserves, respectively.

Columns may not foot due to rounding.

Infinity Property and Casualty Corporation

Balance Sheets

(in millions, except book value per share)

 (unaudited)

June 30,
2012

March 31,
2012

December 31,
2011

(as adjusted)

Assets:

Investments:

Fixed maturities, at fair value

$1,238.2

$1,225.8

$1,188.0

Equity securities, at fair value

40.1

41.5

36.9

Total investments

1,278.3

1,267.4

1,224.9

Cash and cash equivalents

69.3

61.3

83.8

Accrued investment income

10.9

11.4

10.8

Agents' balances and premium receivable

427.1

435.2

382.6

Property and equipment (net of depreciation)

42.2

41.0

38.7

Prepaid reinsurance premium

2.5

2.2

2.1

Recoverable from reinsurers

14.3

15.8

14.7

Deferred policy acquisition costs

90.0

91.1

80.1

Current and deferred income taxes

9.9

7.4

10.7

Receivable for securities sold

—

0.1

1.2

Other assets

9.0

7.8

5.5

Goodwill

75.3

75.3

75.3

Total assets

$2,028.8

$2,015.9

$1,930.4

Liabilities and Shareholders' Equity:

Liabilities:

Unpaid losses and loss adjustment expenses

$530.9

$513.9

$495.4

Unearned premium

536.1

541.6

474.5

Payable to reinsurers

0.0

0.2

0.0

Long-term debt

194.9

194.8

194.8

Commissions payable

30.4

34.5

30.6

Payable for securities purchased

7.7

7.7

10.8

Other liabilities

61.8

55.2

62.4

Total liabilities

1,361.6

1,348.0

1,268.6

Shareholders' Equity:

Common stock

21.4

21.4

21.4

Additional paid-in capital

358.8

357.5

355.9

Retained earnings ⁽¹⁾

658.4

654.1

652.4

Accumulated other comprehensive income, net of tax

40.3

39.5

35.3

Treasury stock, at cost  ⁽²⁾

(411.8)

(404.5)

(403.2)

Total shareholders' equity

667.2

668.0

661.8

Total liabilities and shareholders' equity

$2,028.8

$2,015.9

$1,930.4

Shares outstanding

11.7

11.8

11.8

Book value per share

$56.92

$56.61

$56.05

Notes:

(1) The change in retained earnings from March 31, 2012 is a result of net income of $7.0 million less shareholder dividends of $2.6 million. The change in retained earnings from December 31, 2011 is a result of net income of $11.2 million less shareholder dividends of $5.3 million.

(2) Infinity repurchased 114,507 common shares during the second quarter of 2012 at an average per share price, excluding commissions, of $54.40. Infinity repurchased 137,307 common shares during the first six months of 2012 at an average per share price, excluding commissions, of $54.66.

(3) Columns may not foot due to rounding.

Three months ended June 30,

Six months ended June 30,

2012

2011

2012

2011

(in millions, except EPS)

(as adjusted)

(as adjusted)

Earned premium

$294.1

$251.6

$571.3

$490.6

Losses and loss adjustment expenses

(230.9)

(192.5)

(445.7)

(371.4)

Commissions and other underwriting expenses

(60.9)

(58.7)

(123.0)

(114.9)

Underwriting income

2.3

0.5

2.6

4.2

Net investment income

9.6

10.6

19.3

21.0

Other income

0.1

0.0

0.4

0.1

Interest expense

(2.7)

(2.7)

(5.4)

(5.4)

Corporate general and administrative expenses

(2.1)

(2.2)

(4.1)

(3.9)

Other expenses

(0.1)

(0.4)

(0.3)

(0.4)

Pre-tax operating earnings

7.2

5.9

12.4

15.6

   Provision for income taxes

(1.7)

(1.1)

(2.7)

(3.6)

Operating earnings, after-tax

5.5

4.7

9.8

11.9

Realized gains on investments, pre-tax

2.2

2.0

2.4

4.9

Provision for income taxes

(0.8)

(0.7)

(0.8)

(1.7)

Decrease (increase) in provision for tax valuation allowance

0.1

0.8

(0.1)

1.9

Realized gains on investments, net of tax

1.5

2.1

1.5

5.1

Net earnings

$7.0

$6.8

$11.2

$17.1

Operating earnings per diluted share

$0.46

$0.38

$0.81

$0.95

Realized gains on investments, net of tax

0.11

0.10

0.14

0.25

Decrease (increase) in provision for tax valuation allowance

0.01

0.06

(0.01)

0.15

Net earnings per diluted share

$0.58

$0.54

$0.94

$1.35

Note: Columns may not foot due to rounding

Three months ended June 30,

Six months ended June 30,

(in millions)

2012

2011

2012

2011

Gross written premium

$290.4

$259.4

$636.3

$542.5

Ceded reinsurance

(2.0)

(1.7)

(3.7)

(3.2)

Net written premium

288.4

257.7

632.5

539.3

Change in unearned premium

5.7

(6.1)

(61.3

(48.7)

Earned premium

$

294.1

$251.6

$571.3

$490.6

Note: Columns may not foot due to rounding

(in millions)

June 30, 2012

June 30, 2011

Tangible capital

$786.7

$778.9

Goodwill

75.3

75.3

Total capital

$862.0

$854.2

Note: Columns may not foot due to rounding