SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - July 28, 1997
HSB GROUP, INC.
(Exact name of registrant as specified in its charter)
Connecticut 001-13135 06-1475343
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
One State Street, Hartford, Connecticut 06102-5024
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (860-722-1866)
<PAGE>
Item 5. Other Events
On July 28, 1997, HSB Group Inc. (the Company) issued a press release announcing
second quarter results and an increase in the share repurchase authorization and
the October dividend. Included herewith as Exhibit 99 is the Company's press
release related to this announcement and such information is incorporated herein
by reference.
Item 7. Exhibits.
99. The Company's press release dated July 28, 1997.
-2-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HSB GROUP, INC.
Dated: July 28, 1997 /s/ R. Kevin Price
R. Kevin Price
Senior Vice President and Corporate
Secretary
-3-
Exhibit 99
CONTACT:
James C. Rowan, Jr.
(860) 722-5180
FOR IMMEDIATE RELEASE
- ---------------------
HSB GROUP, INC. REPORTS SECOND QUARTER RESULTS AND
INCREASES SHARE REPURCHASE AUTHORIZATION AND OCTOBER DIVIDEND
HARTFORD, CT, July 28, 1997 -- HSB Group, Inc. (NYSE-HSB), the parent of The
Hartford Steam Boiler Inspection and Insurance Company, today reported that net
income per common share for the second quarter of 1997 was 80 cents compared to
66 cents for the second quarter of 1996, an increase of 21.2 percent. The
company also reported that the Board of Directors, at its meeting earlier today,
increased the share repurchase authorization from one million to two million
shares, and voted to increase the regular quarterly dividend from 57 cents to 60
cents, effective with the October 1997 payment.
"There was no contribution to after-tax income from our investment in Radian
International LLC," President and Chief Executive Officer Gordon W. Kreh said.
"We have determined that, given Radian's results and near-term prospects, we
will put our interest in the venture to The Dow Chemical Company for
approximately $145 million on or about January 1, 1998."
The company reported that income per share for the quarter from continuing
operations, excluding realized gains, was 71 cents compared to 43 cents last
year, an increase of 65 percent. Gross earned premiums grew 8.4 percent compared
to the second quarter of 1996. "We continued to see excellent growth in our
client company business," Kreh said. "Market conditions affecting our special
risks business continued to require disciplined underwriting. The combined ratio
- - the sum of our losses and expenses as a percentage of our insurance revenue -
was 91.8 percent. The expense ratio for the quarter declined to 47.9 percent."
The company also reported that, during the quarter, it repurchased 340,000
shares of HSB common stock under a previously existing one million share
repurchase authorization and that the Board increased the share repurchase
authorization to a total of two million shares at its meeting earlier today.
"The Board's vote at the same meeting to increase the dividend from 57 cents to
60 cents is based on the company's results and expectations for the future,"
President Kreh said. This will be the 32nd consecutive year that shareholders of
the company have received a higher dividend payment and the 126th consecutive
year in which the company has paid a dividend.
The declared amount of 60 cents will be payable October 30 to shareholders of
record October 10.
<PAGE>
HSB GROUP, INC.
In millions, except per share amounts
SUMMARY OF OPERATIONS
Quarter Year-to-Date
Ended June 30 June 30
1997 1996** 1997 1996**
---- ---- ---- ----
Gross earned premium $ 149.2 $ 137.7 $ 305.0 $ 271.4
Reinsurance 32.0 24.8 65.5 50.1
----- ----- ----- -----
Net earned premium 117.2 112.9 239.5 221.3
Claims and adjustment expenses 51.4 56.0 102.9 100.9
Policy acquisition expenses 20.4 21.9 43.9 42.5
Underwriting and inspection expenses 36.0 34.4 71.3 68.1
----- ----- ----- -----
Insurance operating gain $ 9.4 $ 0.6 $ 21.4 $ 9.8
----- ----- ----- -----
Loss ratio 43.9% 49.5% 43.0% 45.6%
Expense ratio* 47.9% 49.5% 47.9% 49.5%
Combined ratio* 91.8% 99.0% 90.9% 95.1%
Net engineering services revenues $ 15.0 $ 14.1 $ 29.7 $ 26.8
Net engineering services expenses 14.1 12.3 27.7 23.6
----- ----- ----- -----
Engineering services
operating gain $ 0.9 $ 1.8 $ 2.0 $ 3.2
----- ----- ----- -----
Engineering services net
operating margin 6.1% 12.6% 6.6% 12.0%
Investment income, net of related
interest expense $ 8.8 $ 7.9 $ 16.7 $ 15.9
Realized investment gains 3.4 5.1 4.0 6.0
----- ----- ----- -----
Income from investment operations $ 12.2 $ 13.0 $ 20.7 $ 21.9
Interest expense 0.4 0.1 0.6 0.3
----- ----- ----- -----
Income from continuing operations
before income taxes 22.1 15.3 43.5 34.6
Income taxes 5.7 3.3 11.3 8.2
Income from continuing operations 16.4 12.0 32.2 26.4
Discontinued operations:
Income from operations of
Radian International LLC - 1.4 - 4.0
----- ----- ----- -----
Net income $ 16.4 $ 13.4 $ 32.2 $ 30.4
===== ===== ===== =====
Income from continuing operations
per common share $ 0.80 $ 0.59 $ 1.58 $ 1.29
Net income per common share $ 0.80 $ 0.66 $ 1.58 $ 1.49
Dividends declared per common share $ 0.57 $ 0.57 $ 1.14 $ 1.14
Average common shares outstanding
and common stock equivalents 20.5 20.3 20.5 20.3
* 1997 and 1996 excludes goodwill amortization related to EIG. 1996
excludes minority interest related to EIG.
** Restated for the effects of discontinued operations.
SUMMARY OF FINANCIAL POSITION
June 30 December 31
1997 1996
--------- ----------
Assets
Cash and short-term investments $ 103.2 $ 102.4
Fixed maturities, at fair value 261.0 235.8
Equity securities, at fair value 273.3 262.7
--------- ----------
Cash and invested assets 637.5 600.9
Insurance premiums receivable 133.7 106.4
Engineering services receivable 11.9 11.7
Fixed assets 30.7 31.7
Investment in Radian 83.0 79.7
Reinsurance assets 147.6 162.9
Other assets 136.8 123.0
--------- ----------
Total assets $ 1,181.2 $ 1,116.3
========= ==========
June 30 December 31
1997 1996
--------- ----------
Liabilities
Unearned premiums $ 295.6 $ 270.6
Claims and adjustment expenses 282.3 302.9
Total borrowings 51.5 28.3
Other liabilities 182.3 148.9
--------- ----------
Total liabilities 811.7 750.7
Convertible redeemable
preferred stock-series B 20.0 20.0
Shareholder's equity 349.5 345.6
Total $ 1,181.2 $ 1,116.3
========= ==========
Common shareholders' equity per share $ 17.71 $ 17.25
Based on common shares outstanding of 19.7 20.0
