Exhibit 99(i)
CONTACT:
James C. Rowan Jr.
Office: (860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. REPORTS SECOND QUARTER RESULTS
HARTFORD, Conn., July 24, 2000 -- HSB Group, Inc. (NYSE-HSB) today reported that
second quarter operating income per share, which excludes realized gains, on a
fully diluted basis was $.49 compared to $.43 in the first quarter of 2000 and
$.57 in the second quarter of 1999. Net income per share, which includes
realized gains, was $.67 in the second quarter compared to $.68 in the first
quarter of this year and $.76 in the second quarter of 1999.
The combined ratio was 91.1 percent which compares to 93.3 percent in the first
quarter and 89.1 percent in the second quarter of last year. Aggregate net
earned premiums rose 6.2 percent for the quarter, but were even with 1999 on a
year-to-date basis, primarily due to the company's decision to reduce its
risk-bearing position in Industrial Risk Insurers. HSB continued to experience
double-digit growth year-to-date in its domestic commercial breakdown business
reflecting both additional business and pricing increases.
Engineering Services revenues for the second quarter increased 44.6 percent over
the second quarter of 1999 and on a year-to-date basis were 39.4 percent ahead
of last year. The Engineering Services margin was 6.6 percent for the quarter;
the year-to-date margin was 7.3 percent compared to 8.3 percent a year ago. The
reduced margin reflects continuing investment in Integrated Process Technologies
(IPT) which manages facility services for large, geographically dispersed
organizations.
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Income from investment operations was $25.8 million compared to $26.8 million in
the second quarter of 1999. Performance of the investment portfolio during the
quarter was excellent.
"Earnings for the second quarter were generally in line with our objectives and
showed good improvement over the first quarter results," said Richard Booth,
chairman, president and chief executive officer. "We are making solid
improvement on a variety of profit improvement initiatives as we work to
position our company for long-term earnings growth."
HSB Group, Inc. (NYSE-HSB), the parent company of The Hartford Steam Boiler
Inspection and Insurance Company, is a global provider of specialty insurance
products, engineering services, and management consulting. The Hartford Steam
Boiler Inspection and Insurance Company was founded in 1866 to provide loss
prevention service and insurance to businesses, industries and institutions. For
more information about HSB, visit its web site at www.hsb.com.
This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, that are management's
estimates, assumptions and projections and are not guarantees of future
performance. Forward-looking statements involve known and unknown risks and
uncertainties. These and other important factors, including those mentioned in
various Securities and Exchange Commission filings made periodically by the
company, may cause the company's actual results and performance to differ
materially. Investors and prospective investors should read this news release in
conjunction with the company's most recent Form 10-K, Form 10-Q and other
documents filed with the Securities and Exchange Commission.
<PAGE>
Summary of Operations
In millions, except per share amounts
<TABLE>
<CAPTION>
Quarter Percent Year-To-Date Percent
Ended June 30, Change Ended June 30, Change
2000 1999 2000 1999
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<S> <C> <C> <C> <C> <C> <C>
Gross earned premiums $ 176.4 $ 206.8 -14.7% $ 358.5 $ 415.7 -13.8%
Ceded premiums 77.0 113.1 167.8 225.5
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Insurance premiums $ 99.4 $ 93.7 $ 190.7 $ 190.2
Claims and adjustment expenses 38.1 37.9 76.9 76.2
Policy acquisition expenses 21.7 21.3 41.5 43.9
Underwriting and inspection expenses 30.8 24.2 57.4 48.2
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Insurance operating gain $ 8.8 $ 10.3 $ 14.9 $ 21.9
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Loss ratio* 38.3% 40.5% 40.3% 40.1%
Expense ratio* 52.8% 48.6% 51.9% 48.4%
Combined ratio* 91.1% 89.1% 92.2% 88.5%
Engineering services revenues $ 40.2 $ 27.8 44.6% $ 77.2 $ 55.4 39.4%
Engineering services expenses 37.6 25.6 71.6 50.8
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Engineering services operating gain $ 2.6 $ 2.2 $ 5.6 $ 4.6
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Engineering services operating margin* 6.6% 8.2% 7.3% 8.3%
Investment income, net of related interest expense $ 15.6 $ 16.6 -6.0% $ 30.5 $ 32.3 -5.6%
Realized investment gains 10.2 10.2 23.5 17.3
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Income from investment operations $ 25.8 $ 26.8 $ 54.0 $ 49.6
Interest expense 0.5 0.6 1.1 1.0
Income before income taxes and distributions
on capital securities of subsidiary trusts $ 36.7 $ 38.7 $ 73.4 $ 75.1
Income taxes 12.3 11.4 24.5 22.3
Distribution on capital securities of subsidiary
trusts, net of tax 4.7 4.5 9.4 9.0
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Net income $ 19.7 $ 22.8 $ 39.5 $ 43.8
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Net Income per common share-assuming dilution $ 0.67 $ 0.76 $ 1.35 $ 1.46
Dividends declared per common share $ 0.44 $ 0.42 $ 0.88 $ 0.84
Average common shares outstanding and common stock
equivalents 34.1 34.8 34.3 34.6
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* Computation excludes rounding
</TABLE>
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<TABLE>
<CAPTION>
Summary of Financial Position
In millions, except per share amounts
June 30, 2000 December 31, 1999
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<S> <C> <C>
Assets
Cash and short-term investments $ 107.1 $ 126.5
Fixed maturities, at fair value 471.8 489.8
Equity securities, at fair value 384.5 381.8
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Cash and invested assets 963.4 998.1
Reinsurance assets 605.2 850.3
Insurance premiums receivable 70.6 104.4
Engineering services receivable 45.8 39.1
Fixed assets 55.5 58.2
Other assets 212.7 213.1
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Total assets $ 1,953.2 $ 2,263.2
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Liabilities
Unearned insurance premiums and ceding commissions $ 272.2 $ 420.1
Claims and adjustment expenses 674.4 782.3
Total borrowings 30.8 66.6
Other liabilities 186.5 208.7
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Total liabilities 1,163.9 1,477.7
Company obligated mandatorily redeemable
capital securities of subsidiary Trust I
holding solely junior subordinated deferrable
interest debentures of the Company,
net of unamortized discount 107.0 109.0
Company obligated mandatorily redeemable
convertible capital securities of subsidiary
Trust II holding solely junior subordinated
deferrable interest debentures of the
Company 300.0 300.0
Shareholders' equity 382.3 376.5
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Total $ 1,953.2 $ 2,263.2
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Shareholders' equity per common share* $ 13.28 $ 12.95
Based on common shares outstanding of 28.8 29.1
Pro forma shareholders' equity per common
share assuming conversion of Trust II
capital securities and net exercise of
"in the money" HSB stock options* $ 19.98 $ 19.61
Based on pro forma common shares outstanding of 34.2 34.5
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*Computation excludes rounding
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