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) - October 27, 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
Attached as Exhibits 99(i) and 99(ii) are copies of the Registrant's press
releases which are incorporated herein by reference.
Item 7(c) Exhibits.
99(i). Press release dated October 27, 1997 announcing third quarter results.
99(ii) Press release dated November 4, 1997 announcing declaration of January
1998 dividend.
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<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: November 4, 1997 /s/ R. Kevin Price
R. Kevin Price
Senior Vice President
and Corporate Secretary
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Exhibit 99(i)
Contact:
James C. Rowan, Jr
(860) 722-5180
HSB GROUP, INC. REPORTS GAINS IN THIRD QUARTER RESULTS
HARTFORD, CT, October 27, 1997 - HSB Group, Inc. (NYSE-HSB), the parent of The
Hartford Steam Boiler Inspection and Insurance Company, today reported net
income of 76 cents per common share, an increase of 31 percent compared to 58
cents per share in the third quarter of 1996.
Income per share from third quarter continuing operations, excluding realized
gains, was 70 cents, an increase of 37 percent from 51 cents last year. As
announced earlier, HSB Group's interest in Radian International LLC is reported
as a "discontinued operation." HSB Group has determined it will put its interest
in the venture to The Dow Chemical Company for approximately $145 million on or
about Jan. 1, 1998.
HSB Group's net earned insurance premiums grew 6.6 percent in the third quarter
of 1997 from the same period a year ago. "We continue to see excellent growth in
our commercial client company business," said HSB Group President and Chief
Executive Officer Gordon W. Kreh. "The combined ratio - the sum of our losses
and expenses as a percentage of our insurance revenue - was 92.0 percent, down
from 96.3 percent in the third quarter of 1996. The expense ratio for the
quarter declined to 47.4 percent."
The year-to-date insurance operating gain was up 129 percent over last year.
HSB engineering services revenues increased 10.8 percent. The engineering
services margin of 6.3 percent reflects investment of operating funds in the
long-term future of the business. Investment income, net of related interest
expense, was $9.1 million, compared to $7.6 million in the previous year.
During the third quarter of 1997, HSB Group repurchased 645,000 shares of HSB
common stock under a two million share repurchase authorization. Through the
first nine months of 1997, the company had repurchased approximately one million
shares of common stock.
HSB Group is the parent of The Hartford Steam Boiler Inspection and Insurance
Company, which has specialized in loss prevention and loss control engineering
since 1866 and is the largest provider of equipment breakdown insurance in the
world.
HSB GROUP, INC.
In millions, except per share amounts
SUMMARY OF OPERATIONS
Quarter Year-to-Date
Ended Sept. 30 Percent Sept. 30 Percent
1997 1996** Change 1997 1996** Change
---- ------ ------ ---- ----- ------
Gross earned premium $151.6 $143.1 5.9% $456.6 $414.5 10.1%
Reinsurance 30.3 29.3 95.7 79.4
---- ------ ---- -----
Net earned premium 121.3 113.8 6.6% 360.9 335.1
Claims and adjustment
expenses 54.1 54.5 157.0 155.4
Policy acquisition
expenses 23.5 21.4 67.5 63.9
Underwriting and
inspection expenses 34.2 34.2 105.5 102.3
---- ------ ---- -----
Insurance operating
gain $ 9.5 $ 3.7 $ 30.9 $ 13.5
---- ------ ---- -----
Loss ratio 44.6% 47.9% 43.5% 46.4%
Expense ratio* 47.4% 48.4% 47.8% 49.1%
Combined ratio* 92.0% 96.3% 91.3% 95.5%
Net eng. services rev. $ 15.5 $ 14.0 10.8% $ 45.2 $ 40.8 10.8%
Net eng. services exp. 14.5 12.4 42.3 36.0
----- ------ ---- -----
Engineering services
operating gain $ 1.0 $ 1.6 $ 2.9 $ 4.8
----- ------ ---- -----
Engineering services
net operating margin
6.3% 11.4% 6.5% 11.8%
Investment income,
net of related
interest expense $ 9.1 $ 7.6 19.6% $ 25.8 $ 23.5 5.0%
Realized investment gains 2.3 2.5 6.2 8.5
----- ------ ---- -----
Income from investment
operations $ 11.4 $ 10.1 $ 32.0 $ 32.0
Interest expense 0.4 - 0.9 0.4
----- ------ ---- -----
Income from continuing
operations before income
taxes and distributions
on capital securities
$ 21.5 $ 15.4 $ 64.9 $ 49.9
Income taxes 5.3 3.5 16.5 11.7
Distribution on capital
securities of subsidiary
trust, net of tax 1.0 - 1.0 -
----- ----- ---- -----
Income from continuing
operations $ 15.2 $ 11.9 $ 47.4 $ 38.2
Discontinued operations:
Income from operations
of Radian
International LLC - (0.3) - 3.8
----- ----- ----- -----
Net income $ 15.2 $ 11.6 $ 47.4 $ 42.0
===== ===== ===== =====
Income from continuing
operations per
common share $ 0.76 $ 0.59 28.8% $ 2.35 $ 1.88 25.0%
Net income
per common share $ 0.76 $ 0.58 31.0% $ 2.35 $ 2.07 13.5%
Dividends declared
per common share $ 0.60 $ 0.57 $ 1.74 $ 1.71
Average common shares
outstanding and
common stock equivalents 19.9 20.1 20.1 20.2
* 1997 and 1996 excludes goodwill amortization related to EIG. 1996
excludes minority interest related to EIG.
** Restated for the effects of discontinued operations.
HSB GROUP, INC.
In millions, except per share amounts
SUMMARY OF FINANCIAL POSITION
Sept. 30 Dec. 31 Percent
1997 1996 Change
-------- ---------- --------
Assets
Cash and short-term investments $ 139.9 $ 102.4
Fixed maturities, at fair value 247.6 235.8
Equity securities, at fair value 325.8 262.7
---------- ----------
Cash and invested assets 713.3 600.9
Insurance premiums receivable 126.8 106.4
Engineering services receivable 12.9 11.7
Fixed assets 28.4 31.7
Investment in Radian 85.0 79.7
Reinsurance assets 146.4 162.9
Other assets 143.9 123.0
---------- ----------
Total assets $ 1,256.7 $ 1,116.3 12.6%
========== ==========
Liabilities
Unearned premiums $ 295.8 $ 270.6
Claims and adjustment expenses 278.8 302.9
Total borrowings 43.1 28.3
Other liabilities 189.6 148.9
---------- ----------
Total liabilities 807.3 750.7
Convertible redeemable preferred stock
Series B 20.0 20.0
Company Obligated Mandatorily
Redeemable Capital Securities of
Subsidiary Trust Holding Solely
Junior Subordinated Deferrable
Interest Debentures of the Company 108.9 -
Shareholders' equity 320.5 345.6
---------- ----------
Total $ 1,256.7 $ 1,116.3
========== ==========
Common shareholders' equity
per share $ 16.73 $ 17.25 (3.0%)
Based on common shares outstanding of 19.2 20.0
Exhibit 99(ii)
CONTACT:
James C. Rowan, Jr.
(860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP DECLARES DIVIDEND
HARTFORD, CT, November 4, 1997 -- The Board of Directors of HSB Group, Inc.
(NYSE-HSB) today declared a regular quarterly dividend of 60 cents per share,
payable January 28, 1998, to shareholders of record at the close of business
January 9, 1998. This will mark the 127th consecutive year in which the company
has paid a dividend.
