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) - January 26, 1998
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)
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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 January 26, 1998 announcing fourth quarter results.
99(ii) Press release dated January 26, 1998 announcing declaration of April 1998
dividend.
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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: January 28, 1998 /s/ R. Kevin Price
R. Kevin Price
Senior Vice President and Corporate
Secretary
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EXHIBIT INDEX
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Exhibit
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99(i) Press release dated January 26, 1998 announcing fourth quarter results.
99(ii) Press release dated January 26, 1998 announcing declaration of April 1998
dividend.
Exhibit 99(i)
CONTACT:
James C. Rowan Jr.
(860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. REPORTS GAINS IN FOURTH QUARTER
HARTFORD, Conn., January 26, 1998 -- HSB Group, Inc. (NYSE-HSB), the parent of
The Hartford Steam Boiler Inspection and Insurance Company, today reported that
income per share from continuing operations on a fully diluted basis for the
fourth quarter of 1997 was 96 cents per share, compared to 82 cents per share
for the fourth quarter of 1996. This represents an increase of 17 percent.
HSB Group's net earned insurance premiums increased 14.9 percent over the fourth
quarter of 1996, and 9.5 percent for the year. "We saw profitable growth in all
our businesses," said Gordon W. Kreh, president and chief executive officer of
HSB Group, Inc.
The insurance combined ratio -- the sum of our losses and expenses as a
percentage of our insurance revenue -- was 93 percent for the quarter. For the
year, the combined ratio was 91.7 percent compared to 94.7 percent in 1996. The
insurance operating gain for the year was up 82.6 percent over 1996.
HSB engineering services revenues increased 7.2 percent for the quarter and 9.8
percent for the year. The 7.1 percent margin for the year reflects investment of
operating funds in the long term future of the business. The margin for the
fourth quarter was 8.7 percent, up from 6.3 percent in the third quarter.
Net investment income of $11.0 million was 24.8 percent higher than the fourth
quarter of 1996 and 20.9 percent higher than the third quarter of 1997.
HSB Group, Inc. is the parent company 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
Ended Year-to-Date
December 31 Percent December 31 Percent
1997 1996** Change 1997 1996** Change
----- ------ ------ ----- ------ ------
Gross earned premium $152.7 $142.0 7.6% $609.3 $556.5 9.5%
Reinsurance 22.3 28.5 118.1 107.9
----- ------ ----- ------
Net earned premium 130.4 113.5 14.9% 491.2 448.6 9.5%
Claims and adjustment
expenses 60.9 49.0 217.9 204.4
Policy acquisition expenses 23.3 22.1 90.7 86.0
Underwriting and inspection
expenses 37.3 34.1 142.8 136.4
----- ------ ----- ------
Insurance operating gain $ 8.9 $ 8.3 $ 39.8 $ 21.8
----- ------ ----- ------
Loss ratio 46.8% 43.2% 44.4% 45.6%
Expense ratio* 46.2% 49.0% 47.3% 49.1%
Combined ratio* 93.0% 92.2% 91.7% 94.7%
Net engineering services
revenues $ 16.0 $ 15.0 7.2% $ 61.3 $ 55.8 9.8%
Net engineering services
expenses 14.6 12.5 57.0 48.5
------ ------ ----- ------
Engineering services
operating gain $ 1.4 $ 2.5 $ 4.3 $ 7.3
------ ------ ----- ------
Engineering services
net operating margin 8.7% 16.8% 7.1% 13.2%
Investment income, net of
related interest expense $ 11.0 $ 8.8 24.8% $ 36.8 $ 32.3 14.0%
Realized investment gains 7.9 3.6 14.1 12.1
------ ------ ----- ------
Income from investment
operations $ 18.9 $ 12.4 $ 50.9 $ 44.4
Interest expense 0.4 0.2 1.3 0.6
------ ------ ----- ------
Income from continuing
operations before income
taxes and distributions on
capital securities $ 28.8 $ 23.0 $ 93.7 $ 72.9
Income taxes 8.6 6.6 25.1 18.3
Distribution on capital
securities of subsidiary
trust, net of tax 1.3 - 2.3 -
------ ------ ----- ------
Income from continuing
operations $ 18.9 $ 16.4 $ 66.3 $ 54.6
Discontinued operations:
Loss from operations of
Radian International LLC - (5.0) - (1.2)
------ ------ ----- ------
Net income $ 18.9 $ 11.4 $ 66.3 $ 53.4
====== ====== ===== ======
Earnings per common share-diluted:
Income from continuing
operations per common
share $ 0.96 $ 0.82 17.1% $ 3.29 $ 2.71 21.4%
Net income per common share $ 0.96 $ 0.57 68.4% $ 3.29 $ 2.65 24.2%
Average common shares
outstanding and common
stock equivalents 19.7 20.1 20.1 20.2
Dividends declared per
common share $ 0.60 $ 0.57 $ 2.34 $ 2.28
*1997 and 1996 excludes goodwill amortization related to EIG. 1996
excludes minority interest related to EIG.
**Restated for the effects of discontinued operations.
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HSB GROUP, INC.
In millions, except per share amounts
SUMMARY OF FINANCIAL POSITION
December 31 December 31 Percent
1997 1996 Change
----------- ----------- -------
Assets
Cash and short term investments $ 424.5 $ 102.4
Fixed maturities, at fair value 248.4 235.8
Equity securities, at fair value 323.8 262.7
----------- -----------
Cash and invested assets 996.7 600.9
Insurance premiums receivable 138.0 106.4
Engineering services receivable 12.2 11.7
Fixed assets 29.8 31.7
Investment in Radian 83.4 79.7
Reinsurance assets 124.5 162.9
Other assets 155.6 123.0
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Total assets $1,540.2 $1,116.3 38.0%
=========== ===========
Liabilities
Unearned premiums $ 290.3 $ 270.6
Claims and adjustment expenses 276.7 302.9
Total borrowings 67.4 28.3
Other liabilities 151.6 148.9
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Total liabilities 786.0 750.7
Convertible redeemable preferred stock
Series B - 20.0
Company obligated mandatorily redeemable
capital securities of subsidiary trust I
holding solely junior subordinated
deferrable interest debentures of the
Company, net of discount 108.9 -
Company obligated mandatorily redeemable
capital securities of subsidiary trust II
holding solely junior subordinated
deferrable interest debentures of the
Company 300.0 -
Shareholders' equity 345.3 345.6
----------- ----------
Total $1,540.2 $1,116.3
=========== ==========
Shareholders' equity per common share $ 17.63 $ 17.25 2.2%
Based on common shares outstanding of 19.6 20.0
Exhibit 99(ii)
CONTACT:
James C. Rowan Jr.
Office: (860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. DECLARES DIVIDEND
HARTFORD, Conn., January 26, 1998 -- The Board of Directors of HSB Group, Inc.
(NYSE-HSB) today declared a regular quarterly dividend of 60 cents per share,
payable April 30, 1998, to shareholders of record at the close of business April
10, 1998. The Hartford Steam Boiler has paid dividends continuously for 128
years, one of the longest records of the New York Stock Exchange.
