Infinity Property and Casualty Corporation (IPCC)

IPCC 
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Infinity Property and Casualty Corp (IPCC)

Q1 2009 Earnings Call

April 30, 2009 11:00 AM ET

Executives

Amy Jordan - Vice President of Investor Relations

James R. Gober - Chairman, President and Chief Executive Officer

Roger Smith - Chief Financial Officer, Executive Vice President and Treasurer

Presentation

Operator

Good day, ladies sand gentlemen. And welcome to the Infinity Property and Casualty Corporation First Quarter Earnings Conference Call. My name is Mary and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder this call is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Ms. Amy Jordan, Assistant Vice President of Investor Relations. Please proceed.

Amy Jordan

Thank you. Good morning and thank you for joining us for Infinity's first quarter earnings conference call. The live event link on our website does contain a slide presentation for this morning's call, if you would like to follow along.

We also have an Excel Spreadsheet on our website under the quarterly reports tab that provides more detailed quarterly financial data and page 10 of this report does contain the definition and reconciliation of any non-GAAP items we discuss this morning.

Certain statements made during this call maybe deemed to be forward-looking statements that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in this call not dealing with historical results or current facts are forward-looking and are based on estimates, assumptions and projections.

Statements that include the words; believes, seeks, expects, may, should, intend, likely, targets, plans, anticipates, estimates or the negative version of those words and similar statements of a future or forward-looking nature identify forward-looking statements.

Examples of such forward-looking statements includes statements relating to expectations concerning market conditions, premium, growth, earnings, investment performance, expected losses, rate changes and loss experience.

Actual results could differ materially from those expected by Infinity, depending on changes in the economic conditions and financial markets including interest rate, the adequacy or accuracy of Infinity's pricing methodologies, actions of competitors, the approval of requested form and rate changes, judicial and regulatory developments affecting the automobile insurance industry, the outcome of pending litigation against Infinity, weather conditions including the severity and frequency of storms, hurricanes, snowfalls, hail and winter conditions and changes in driving patterns and loss trends.

Infinity undertakes no obligation to publicly update or revise any of the forward-looking statements. For a more detailed discussion of some of the risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, please see Infinity's filings with the SEC.

And with that let me turn the presentation over to Jim Gober, our Chairman, President and CEO.

James R. Gober

Good morning everyone. Welcome to our conference call and webcast for the first quarter of 2009. Roger Smith, our CFO is also with us this morning and as usual we'll open the lines for questions after our comments.

Let's start off with the highlights on slide three. Operating EPS for the quarter were $1.19 up from the $0.92 we reported for the same period last year and better than expected. Underwriting income climbed about $3.3 million pre-tax for the quarter, as a result of reserve redundancy releases from prior accident years.

Reserve releases in the first quarter of '09 were $9.8 million pre-tax or about $0.45 per share. If you exclude this adjustment, our 2009 accident year-to-date combined ratio is running about 97%, which is up about 100 basis points from the entire 2008 accident year, but about the same as that reported for the first quarter of '08.

We attribute this increase in the first quarter combined ratio to seasonality of our business for our policyholders must deal with winter weather and fewer daylight driving hours. We have seen this seasonal uptick and the combined ratio before in previous years, whereas in the second and third quarters a loss ratio typically settles that down.

Continuing on, our net income per share was $0.76 for the quarter as compared to $0.86 in the first quarter of last year. The big difference between operating and net EPS was the losses from other than temporary impairments on investments.

During the first quarter of '09 we booked capital loses of $6.1 million or about $0.43 per share which included $7.5 million of OTTI charges. Roger will give you details on these charges and the overall investment portfolio a little later.

Regarding capital management actions, we repurchased 293,900 shares for an average price of $35.37 during the quarter. Those purchases represent about 2.1% of the outstanding shares at the beginning of this year.

We also have approximately $31 million of repurchase authority remaining under our current program which expires at the end of this year. And we plan to continue to use this authority to repurchase shares opportunistically throughout the remainder of '09.

As for our capital strength, our position remains very strong. In fact Fitch in February and Standard & Poor's just last week both affirmed our financial strength ratings of A and our debt ratings of BBB. In this economic environment, that is quite an accomplishment and it speaks to our prudent management to capital approach rather than capital management.

Read the rest of this transcript for free on seekingalpha.com