Infinity Property and Casualty Reports Improved Earnings per Share in the First Quarter of 2015

Three months ended March 31,

(in millions, except per share amounts and ratios)

2015

2014

Change

Gross written premium ⁽¹⁾

$390.6

$377.2

3.6%

Revenues

$367.0

$361.6

1.5%

Net earnings

$11.2

$10.3

8.0%

Net earnings per diluted share

$0.97

$0.89

9.0%

Operating earnings ⁽¹⁾

$10.4

$9.9

4.9%

Operating earnings per diluted share ⁽¹⁾

$0.90

$0.86

4.7%

Underwriting income ⁽¹⁾

$12.2

$10.3

17.9%

Combined ratio

96.3%

96.8%

(0.5) pt

Return on equity ⁽²⁾

6.4%

6.2%

0.2pt

Operating earnings return on equity ^{(1) (2)}

5.9%

6.0%

(0.1) pt

Book value per share

$61.73

$58.00

6.4%

Debt to total capital

28.0%

29.2%

(1.2) pts

Debt to tangible capital ⁽¹⁾

30.3%

31.7%

(1.4) pts

(1) 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.

(2) Annualized

Infinity Property and Casualty Corporation

Statements of Earnings

(in millions, except EPS and dividends)

Three months ended
March 31,

2015

Revenues:

Earned premium

$332.1

$327.7

Installment and other fee income

24.6

24.3

Net investment income

8.7

8.8

Net realized gains on investments ⁽¹⁾

1.2

0.6

Other income

0.4

0.2

Total revenues

367.0

361.6

Costs and Expenses:

  Losses and loss adjustment expenses ⁽²⁾

255.6

253.7

  Commissions and other underwriting expenses

88.8

88.0

  Interest expense

3.5

3.5

  Corporate general and administrative expenses

1.9

1.5

  Other expenses

0.9

0.3

Total costs and expenses

350.7

347.0

Earnings before income taxes

16.2

14.6

Provision for income taxes

5.1

4.3

Net Earnings

$11.2

$10.3

Net Earnings per Common Share:

Basic

$0.98

$0.90

Diluted

$0.97

$0.89

Average Number of Common Shares:

Basic

11.4

11.4

Diluted

11.6

11.6

$0.43

$0.36

Notes:

(1) Net realized gains before impairment losses

$1.6

$0.7

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

(0.4)

(0.9)

Non-credit portion in other comprehensive income

—

0.9

OTTI losses reclassified from other comprehensive income

—

(0.0)

Net impairment losses recognized in earnings

(0.4)

(0.0)

Total net realized gains on investments

$1.2

$0.6

(2) Losses and loss adjustment expenses for the three months ended March 31, 2015 include $2.1 million of favorable development,
while the three months ended March 31, 2014 include $3.1 million of favorable development on prior accident year loss and loss
adjustment expense reserves.

 Columns may not foot due to rounding.

Infinity Property and Casualty Corporation

Balance Sheets

(in millions, except book value per share)

March 31,
 2015

December 31,
  2014

(unaudited)

Assets:

Investments:

Fixed maturities, at fair value

$1,433.0

$1,431.8

Equity securities, at fair value

94.5

94.4

Short-term investments, at fair value

1.8

0.8

Total investments

1,529.3

1,527.1

Cash and cash equivalents

96.4

84.5

Accrued investment income

12.0

13.0

Agents' balances and premium receivable

530.0

483.6

Property and equipment (net of depreciation)

54.9

55.9

Prepaid reinsurance premium

5.4

4.8

Recoverable from reinsurers

14.7

14.5

Deferred policy acquisition costs

98.2

90.4

Current and deferred income taxes

13.1

20.0

Receivable for securities sold

3.6

4.5

Other assets

13.7

11.1

Goodwill

75.3

75.3

Total assets

$2,446.7

$2,384.8

Liabilities and Shareholders' Equity:

Liabilities:

Unpaid losses and loss adjustment expenses

$675.8

$668.2

Unearned premium

644.4

589.3

Long-term debt

275.0

275.0

Commissions payable

19.3

18.7

Payable for securities purchased

9.4

17.2

Other liabilities

115.5

118.9

Total liabilities

1,739.4

1,687.2

Shareholders' Equity:

Common stock

21.8

21.7

Additional paid-in capital

373.1

372.4

Retained earnings ⁽¹⁾

731.9

725.7

Accumulated other comprehensive income, net of tax

28.2

23.5

Treasury stock, at cost ⁽²⁾

(447.6)

(445.6)

Total shareholders' equity

707.3

697.7

Total liabilities and shareholders' equity

$2,446.7

$2,384.8

Shares outstanding

11.5

11.5

$61.73

$60.75

Notes:

(2) Infinity repurchased 25,800 common shares during the first quarter of 2015 at an average per share price, excluding commissions, of $77.46.

Columns may not foot due to rounding.

Infinity Property and Casualty Corporation

Statements of Cash Flows

(in millions)

Three months ended
March 31,

2015

2014

(unaudited)

(unaudited)

Operating Activities:

Net earnings

$11.2

$10.3

Adjustments:

Depreciation

3.0

2.5

Amortization

5.9

5.8

Net realized gains on investments

(1.2)

(0.6)

Loss (gain) on disposal of property and equipment

0.1

(0.0)

Share-based compensation expense

0.7

(0.2)

Excess tax benefits from share-based payment arrangements

—

(0.1)

Activity related to rabbi trust

0.0

0.0

Change in accrued investment income

0.9

0.4

Change in agents' balances and premium receivable

(46.3)

(41.7)

Change in reinsurance receivables

(0.8)

(1.1)

Change in deferred policy acquisition costs

(7.7)

(6.4)

Change in other assets

1.7

2.6

Change in unpaid losses and loss adjustment expenses

7.6

16.3

Change in unearned premium

55.2

47.0

Change in other liabilities

(2.8)

5.6

Net cash provided by operating activities

27.5

40.3

Investing Activities:

Purchases of fixed maturities

(150.2)

(183.5)

Purchases of equity securities

(2.0)

(2.6)

Purchases of short-term investments

(1.0)

(0.2)

Purchases of property and equipment

(2.1)

(5.2)

Maturities and redemptions of fixed maturities

46.7

41.2

Maturities and redemptions of short-term investments

—

1.4

Proceeds from sale of fixed maturities

95.4

65.0

Proceeds from sale of equity securities

4.5

—

Proceeds from sale of property and equipment

—

0.0

Net cash used in investing activities

(8.7)

Financing Activities:

Proceeds from stock options exercised and employee stock purchases

0.1

0.5

Excess tax benefits from share-based payment arrangements

—

0.1

Principal payments under capital lease obligation

(0.1)

(0.1)

Acquisition of treasury stock

(1.9)

(2.0)

Dividends paid to shareholders

(4.9)

(4.1)

Net cash used in financing activities

(5.7)

Net increase (decrease) in cash and cash equivalents

11.9

(49.3)

Cash and cash equivalents at beginning of period

84.5

134.2

Cash and cash equivalents at end of period

$96.4

$84.9

Three months ended
March 31,

2015

2014

(in millions, except EPS)

Earned premium

$332.1

$327.7

Losses and loss adjustment expenses

(255.6)

(253.7)

Commissions and other underwriting expenses

(88.8)

(88.0)

Installment and other fee income

24.6

24.3

Underwriting income

12.2

10.3

Net investment income

8.7

8.8

Other income

0.4

0.2

Interest expense

(3.5)

(3.5)

Corporate general and administrative expenses

(1.9)

(1.5)

Other expenses

(0.9)

(0.3)

Pre-tax operating earnings

15.1

14.0

   Provision for income taxes

(4.7)

(4.1)

Operating earnings, after-tax

10.4

9.9

Realized gains on investments, pre-tax

1.2

0.6

Provision for income taxes on capital gains

(0.4)

(0.2)

Realized gains on investments, net of tax

0.8

0.4

Net earnings

$11.2

$10.3

Operating earnings per diluted share

$0.90

$0.86

Realized gains on investments, net of tax

0.07

0.03

Net earnings per diluted share

$0.97

$0.89

Note: Columns may not foot due to rounding

Three months ended
March 31,

(in millions)

2015

2014

Gross written premium

$390.6

$377.2

Ceded reinsurance

(3.6)

(2.9)

Net written premium

387.1

374.2

Change in unearned premium

(55.0)

(46.6)

Earned premium

$332.1

$327.7

Note: Columns may not foot due to rounding

(in millions)

March 31,
2015

March 31,
2014

Tangible capital

$907.1

$866.2

Goodwill

75.3

75.3

Total capital

$982.3

$941.5

Note: Columns may not foot due to rounding