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Shares of Infinity Property and Casualty Corp. (IPCC - Snapshot Report) have been gaining since the property and casualty insurer posted solid second earnings results on Aug 7. Shares gained about 1.02% over the last three trading sessions, eventually closing at $67.59 yesterday.

Infinity Property and Casualty reported second-quarter 2014 operating earnings of 82 cents a share, improving 39% year over year. Results benefitted from improved underwriting profitability and favorable development on prior accident year loss and loss adjustment expense reserves.  However, earnings missed the Zacks Consensus Estimate by 5.8%.
 

 

Including net realized investment gains, Infinity Property and Casualty’s net income came in at 92 cents a share, up 44% year over year.

Operational Update

Total revenue of Infinity Property and Casualty grossed $368 million, inching up 0.6% year over year. The upside resulted from an increase in earned premium and net investment income. Also, revenues surpassed the Zacks Consensus Estimate by 7.3%.

Gross written premium of $333.7 million increased 3.4% year over year. The increase was accountable to improvements premium in California, Florida and Texas personal auto and countrywide Commercial Vehicle.

Net investment income of Infinity Property and Casualty came in at $9.1 million in the quarter, up 5.1% year over year.

Meanwhile, costs and expenses trimmed 0.8% year over year to $352.8 million owing to lower losses and loss adjustment expenses, commissions and other underwriting costs.

While underwriting income surged 43%, combined ratio improved 90 basis points year over year.

Financial Update

Infinity Property and Casualty had cash and cash equivalents of $59.1 million on Jun 30, 2014, down from $134.2 million as of Dec 31, 2013.

Long-term debt of $275 million remained in line with the 2013-end level. The debt-to-capital ratio improved 130 bps to 28.8% as on Jun 30.

Infinity Property and Casualty had $14.4 million of cash flow from operations, down 62% year over year.

Share and Debt Repurchase Program

Infinity Property and Casualty bought back 0.022 million shares in the quarter.  The company has $40.6 million of capacity left under its share and debt repurchase program, which is scheduled to expire on Dec 31, 2014.

Guidance

Infinity Property and Casualty reiterated its 2014 operating earnings guidance of $3.55 to $4.35 per share. Gross written premium is expected to increase between 2% and 4% over the prior year.  Accident year combined ratio (excluding development on prior accident period loss and loss adjustment expense reserves) is expected to lie in the range of 95.5–96.5%.

Zacks Rank

Infinity Property and Casualty presently carries a Zacks Rank #2 (Buy).

Performance of Other Property and Casualty Insurers

While ACE Limited (ACE - Analyst Report) outperformed the Zacks Consensus Estimate on solid underwriting performances coupled with improved investment results, RLI Corporation’s (RLI - Analyst Report) earnings were in line with the Zacks Consensus Estimate. However, The Travelers Companies Inc.’s (TRV - Analyst Report) earnings missed the Zacks Consensus Estimate on higher-than-expected catastrophe losses.

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