Infinity Property and Casualty Reports Improved Earnings per Share and Strong Gross Written Premium Growth in the Second Quarter of 2013

Three months ended June 30,

Six months ended June 30,

(in millions, except per share amounts and ratios)

2012

Change

2013

2012

Change

Gross written premium ⁽¹⁾

$322.7

$290.4

11.1%

$698.1

$636.3

9.7%

Revenues

$340.7

$306.0

11.3%

$671.5

$593.4

13.2%

Net earnings

$7.4

$7.0

6.5%

$16.1

$11.2

42.9%

Net earnings per diluted share

$0.64

$0.58

10.3%

$1.37

$0.94

45.7%

Operating earnings ⁽¹⁾

$6.9

$5.5

26.1%

$13.1

$9.8

33.8%

Operating earnings per diluted share ⁽¹⁾

$0.59

$0.46

28.3%

$1.12

$0.81

38.3%

Underwriting income ⁽¹⁾

$7.2

$2.3

204.5%

$13.0

$2.6

404.0%

Combined ratio

97.8%

99.2%

(1.4) pts

98.0%

99.5%

(1.5 pts)

Return on equity ⁽²⁾

4.6%

4.2%

0.4 pts

5.0%

3.4%

1.6 pts

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

4.3%

3.3%

1.0 pts

4.0%

2.9%

1.1 pts

Book value per share

$55.56

$56.92

Debt to total capital

30.1%

22.6%

7.5 pts

Debt to tangible capital ⁽¹⁾

32.8%

24.8%

8.0 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)

(unaudited)

Three months ended June 30,

Six months ended June 30,

2013

2012

2013

2012

Revenues:

Earned premium

$331.2

$294.1

$649.8

$571.3

Net investment income

8.6

9.6

17.0

19.3

Net realized gains on investments⁽¹⁾

0.8

2.2

4.6

2.4

Other income

0.1

0.1

0.1

0.4

Total revenues

340.7

306.0

671.5

593.4

Costs and Expenses:

Losses and loss adjustment expenses ⁽²⁾

257.1

230.9

507.4

445.7

Commissions and other underwriting expenses

67.0

60.9

129.4

123.0

Interest expense

3.5

2.7

7.0

5.4

Corporate general and administrative expenses

2.3

2.1

4.1

4.1

Other expenses

0.7

0.1

1.4

0.3

Total costs and expenses

330.6

296.7

649.3

578.5

Earnings before income taxes

10.1

9.3

22.2

14.8

Provision for income taxes

2.7

2.4

6.2

3.6

Net Earnings

$7.4

$7.0

$16.1

$11.2

Net Earnings per Common Share:

Basic

$0.65

$0.59

$1.40

$0.96

Diluted

$0.64

$0.58

$1.37

$0.94

Average Number of Common Shares:

Basic

11.4

11.7

11.5

11.7

Diluted

11.6

11.9

11.7

12.0

Cash Dividends per Common Share

$0.300

$0.225

$0.600

$0.450

Notes:

(1) Net realized gains before impairment losses

$1.1

$2.6

$5.0

$3.5

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

(0.5)

(0.4)

(0.6)

(1.0)

Non-credit portion in other comprehensive income

0.2

0.0

0.2

0.0

OTTI losses reclassified from other comprehensive income

0.0

0.0

0.0

0.0

Net impairment losses recognized in earnings

(0.3)

(0.4)

(0.4)

(1.1)

Total net realized gains on investments

$0.8

$2.2

$4.6

$2.4

(2)

Losses and loss adjustment expenses for the three months ended June 30, 2013 and June 30, 2012 include $1.4 million and $1.9 million of unfavorable development on prior accident year loss and loss adjustment expense reserves, respectively. Losses and loss adjustment expenses for the six months ended June 30, 2013 and June 30, 2012 include $1.3 million and $1.8 million 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)

June 30,
2013

March 31,
2013

December 31,

 2012

(unaudited)

(unaudited)

Assets:

Investments:

   Fixed maturities, at fair value

$1,323.3

$1,327.6

$1,321.8

   Equity securities, at fair value

70.1

73.8

73.1

   Short-term investments, at fair value

3.6

0.0

0.0

       Total investments

1,397.0

1,401.4

1,394.9

Cash and cash equivalents

115.9

133.6

165.2

Accrued investment income

12.8

11.8

11.9

Agents' balances and premium receivable

456.4

466.1

427.2

Property and equipment (net of depreciation)

44.5

39.0

39.3

Prepaid reinsurance premium

3.5

3.3

2.6

Recoverable from reinsurers

14.6

15.1

14.4

Deferred policy acquisition costs

92.3

96.1

88.3

Current and deferred income taxes

30.9

22.8

25.8

Receivable for securities sold

5.4

2.8

48.5

Other assets

11.8

11.8

10.2

Goodwill

75.3

75.3

75.3

      Total assets

$2,260.4

$2,279.2

$2,303.6

Liabilities and Shareholders' Equity:

Liabilities:

  Unpaid losses and loss adjustment expenses

$612.0

$596.8

$572.9

  Unearned premium

581.8

592.7

538.1

  Payable to reinsurers

0.0

0.0

0.1

  Long-term debt

275.0

275.0

275.0

  Commissions payable

30.8

36.4

18.1

  Payable for securities purchased

24.3

30.9

132.4

  Other liabilities

97.8

89.4

110.7

      Total liabilities

1,621.8

1,621.2

1,647.4

Shareholders' Equity:

  Common stock

21.6

21.6

21.5

  Additional paid-in capital

364.6

363.0

361.8

  Retained earnings ⁽¹⁾

675.3

671.4

666.2

  Accumulated other comprehensive income, net of tax

9.2

29.1

29.9

  Treasury stock, at cost ⁽²⁾

(432.0)

(427.1)

(423.2)

      Total shareholders' equity

638.7

658.0

656.2

      Total liabilities and shareholders' equity

$2,260.4

$2,279.2

$2,303.6

Shares outstanding

11.5

11.6

11.6

Book value per share

$55.56

$56.94

$56.55

Notes:

(1)

The change in retained earnings from March 31, 2013 is a result of net income of $7.4 million less shareholder dividends of $3.5 million. The change in retained earnings from December 31, 2012 is a result of net income of $16.1 million less shareholder dividends of $6.9 million.

(2)

Infinity repurchased 79,500 common shares during the second quarter of 2013 at an average per share price, excluding commissions, of $56.95. Infinity repurchased 146,900 common shares during the first six months of 2013 at an average per share price, excluding commissions, of $57.16.

Columns may not foot due to rounding.

Three months ended

June 30,

Six months ended

June 30,

2013

2013

2012

(in millions, except EPS)

Earned premium

$331.2

$294.1

$649.8

$571.3

Losses and loss adjustment expenses

(257.1)

(230.9)

(507.4)

(445.7)

Commissions and other underwriting expenses

(67.0)

(60.9)

(129.4)

(123.0)

Underwriting income

7.2

2.3

13.0

2.6

Net investment income

8.6

9.6

17.0

19.3

Other income

0.1

0.1

0.1

0.4

Interest expense

(3.5)

(2.7)

(7.0)

(5.4)

Corporate general and administrative expenses

(2.3)

(2.1)

(4.1)

(4.1)

Other expenses

(0.7)

(0.1)

(1.4)

(0.3)

Pre-tax operating earnings

9.3

7.2

17.6

12.4

Provision for income taxes

(2.4)

(1.7)

(4.5)

(2.7)

Operating earnings, after-tax

6.9

5.5

13.1

9.8

Realized gains on investments, pre-tax

0.8

2.2

4.6

2.4

Provision for income taxes

(0.3)

(0.8)

(1.6)

(0.8)

Decrease (increase) in provision for tax valuation allowance

0.0

0.1

0.0

(0.1)

Realized gains on investments, net of tax

0.5

1.5

3.0

1.5

Net earnings

$7.4

$7.0

$16.1

$11.2

Operating earnings per diluted share

$0.59

$0.46

$1.12

$0.81

Realized gains on investments and sale of subsidiary, net of tax

0.05

0.11

0.25

0.14

Decrease (increase) in provision for tax valuation allowance

0.00

0.01

0.00

(0.01)

Net earnings per diluted share

$0.64

$0.58

$1.37

$0.94

Note: Columns may not foot due to rounding

Three months ended June 30,

Six months ended June 30,

(in millions)

2013

2012

2013

2012

Gross written premium

$322.7

$290.4

$698.1

$636.3

Ceded reinsurance

(2.5)

(2.0)

(4.9)

(3.7)

Net written premium

320.2

288.4

693.1

632.5

Change in unearned premium

11.0

5.7

(43.3)

(61.3)

Earned premium

$331.2

$294.1

$649.8

$571.3

Note: Columns may not foot due to rounding

(in millions)

June 30, 2013

June 30, 2012

Tangible capital

$838.4

$786.7

Goodwill

75.3

75.3

Total capital

$913.7

$862.0

Note: Columns may not foot due to rounding