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) - April 18, 2000
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 April 18, 2000, HSB Group, Inc. (the "Company") issued three press releases
announcing its first quarter earnings, declaring a dividend of 44 cents per
share, and reporting on its Annual Meeting. Included herewith as Exhibits 99(i),
99(ii), and 99(iii) are the Company's press releases related to these
announcements and such information is incorporated herein by reference.
Item 7. Exhibits.
99(i) Press release dated April 18, 2000 announcing first quarter results.
99(ii) Press release dated April 18, 2000 announcing the declaration of a
dividend.
99(iii)Press release dated April 18, 2000 reporting on the Company's Annual
Meeting.
<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: April 18, 2000 /s/ R. Kevin Price
R. Kevin Price
Senior Vice President
and Corporate Secretary
Exhibit 99(i)
CONTACT:
James C. Rowan Jr.
Office: (860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. REPORTS FIRST QUARTER RESULTS
HARTFORD, Conn., April 18, 2000 -- HSB Group, Inc. (NYSE-HSB) today reported
that first quarter net income per share on a fully diluted basis was $.68 cents
compared to $.35 cents in the fourth quarter of 1999 and $.71 in the first
quarter of 1999. Operating income per share, which excludes realized gains, was
$.43 cents and compares to $.13 in the fourth quarter and $.57 in the first
quarter of last year.
The combined ratio was 93.3 percent reflecting the company's disciplined
approach to underwriting. Net earned premiums declined 5.4 percent as a result
of the company's decision to reduce its risk-bearing position in Industrial Risk
Insurers. HSB continued to experience solid growth in its domestic commercial
breakdown business. The change-over to Year 2000 did not result in any
substantive increase in claim activity.
Net Engineering Services revenues for the first quarter increased 34 percent
over the first quarter of 1999. The engineering services margin was 8 percent
compared to a loss in the fourth quarter of 1999. The margin in the first
quarter of last year was 8.4 percent.
Income from investment operations was $28.2 million compared to $22.8 million in
the first quarter of 1999. Realized gains for the quarter were $.25 cents per
share and reflect the strong performance of the equity portfolio and the
company's decision to somewhat reduce its exposure to common stocks.
The company bought back approximately 280,000 shares or about 1 percent of its
shares outstanding during the first quarter.
"The results for the first quarter were in line with expectations and represent
significant improvement over the fourth quarter," said Richard Booth, chairman,
president and chief executive officer. "Our Engineering Services and Commercial
equipment breakdown insurance businesses had strong performance during the
quarter. In addition, our equity portfolio continued to provide solid returns.
We will continue to focus on initiatives which will add to our operating
earnings performance in the future."
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
Quarter
Ended March 31, Percent
2000 1999 Change
- -------------------------------------------------------------------------------
Gross earned premiums..........................$ 182.1 $ 208.9
Ceded premiums................................. 90.8 112.4
--------------------
Insurance premiums..........................$ 91.3 $ 96.5 -5.4%
Claims and adjustment expenses................. 38.8 38.3
Policy acquisition expenses.................... 19.8 22.6
Underwriting and inspection expenses........... 26.6 24.0
--------------------
Insurance operating gain....................$ 6.1 $ 11.6
--------------------
Loss ratio*............................... 42.4% 39.7%
Expense ratio*............................ 50.9% 48.0%
Combined ratio*........................... 93.3% 87.7%
Engineering services revenues..................$ 37.0 $ 27.6 34.1%
Engineering services expenses.................. 34.0 25.2
--------------------
Engineering services operating gain.........$ 3.0 $ 2.4
--------------------
Engineering services operating
margin*.................................. 8.0% 8.4%
Investment income, net of related
interest expense.............................$ 14.9 $ 15.7 -5.1%
Realized investment gains...................... 13.3 7.1
--------------------
Income from investment operations...........$ 28.2 $ 22.8
Interest expense............................... 0.6 0.4
Income before income taxes and
distributions on capital securities.........$ 36.7 $ 36.4
Income taxes................................... 12.2 10.9
Distribution on capital securities of
subsidiary trusts, net of tax................ 4.7 4.5
--------------------
Net income.....................................$ 19.8 $ 21.0
====================
Net income per common share-assuming
dilution.....................................$ 0.68 $ 0.71
Dividends declared per common share............$ 0.44 $ 0.42
Average common shares outstanding and
common stock equivalents..................... 34.4 34.5
- ------------------------------------------------------------------------------
*Computation excludes rounding
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Summary of Financial Position
In millions, except per share amounts
March 31, 2000 December 31, 1999
- --------------------------------------------------------------------------------
Assets
Cash and short-term investments................$ 118.1 $ 126.5
Fixed maturities, at fair value................ 488.6 489.8
Equity securities, at fair value............... 364.5 381.8
------------------------------
Cash and invested assets..................... 971.2 998.1
Reinsurance assets............................. 713.8 850.3
Insurance premiums receivable.................. 58.2 104.4
Engineering services receivable................ 39.5 39.1
Fixed assets................................... 55.6 58.2
Other assets................................... 208.7 213.1
------------------------------
Total assets.................................$ 2,047.0 $ 2,263.2
==============================
Liabilities
Unearned insurance premiums and ceding
commissions..................................$ 324.5 $ 420.1
Claims and adjustment expenses................. 735.5 782.3
Total borrowings............................... 49.6 66.6
Other liabilities.............................. 155.2 208.7
------------------------------
Total liabilities............................ 1,264.8 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....... 109.0 109.0
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.............................. 373.2 376.5
------------------------------
Total..........................................$ 2,047.0 $ 2,263.2
==============================
Shareholders' equity per common share*............$ 12.92 $ 12.95
Based on common shares outstanding of............. 28.9 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*.....$ 19.70 $ 19.61
Based on pro forma common shares outstanding...... 34.2 34.5
- --------------------------------------------------------------------------------
*Computation excludes rounding
Exhibit 99(ii)
CONTACT:
James C. Rowan Jr.
Office: (860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. DECLARES DIVIDEND
HARTFORD, Conn., April 18, 2000 -- The Board of Directors of HSB Group, Inc.
(NYSE-HSB) today declared the regular quarterly dividend of 44 cents per share.
The dividend will be payable on July 27, 2000 to shareholders of record at the
close of business on July 10, 2000. This marks the 130th consecutive year in
which Hartford Steam Boiler has paid a dividend, one of the longest records of
the New York Stock Exchange.
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Exhibit 99(iii)
CONTACT:
James C. Rowan Jr.
Office: (860) 722-5180
FOR IMMEDIATE RELEASE
HSB GROUP, INC. HOLDS ANNUAL MEETING
HARTFORD, Conn., April 18, 2000 -- HSB Group, Inc. (NYSE-HSB) held its 135th
annual meeting today at the company's headquarters.
Chairman, President and Chief Executive Officer Richard H. Booth discussed the
company's performance in 1999, results for the first quarter of 2000 and
strategies to grow the company's operating earnings and shareholder value.
The primary strategy for the company's commercial insurance business is
continued growth through reinsurance arrangements with other insurers, HSB calls
"client companies." By using this approach, HSB efficiently leverages the
significant customer base of its client companies to increase market penetration
for its equipment breakdown products.
In engineering services, the company is taking steps to build on the improved
profitability that was achieved during the first quarter while continuing to
invest in "new economy" growth businesses, such as Integrated Process
Technologies that capitalize on the trend in industry toward outsourcing
management of equipment and facilities. HSB is also seeking growth through
value-added contracts, such as its recent agreement with Enron Energy Services.
Under this arrangement, HSB receives licensing fees and payments for services in
support of Enron's asset management service business. "The engineering
capabilities we have developed are attractive to other companies. We aspire to
effect other agreements that utilize HSB's intellectual capital with additional
customers this year," said Mr. Booth.
In addition, HSB has embarked on a company-wide profit improvement process. The
purpose of this program is to increase earnings over time through a combination
of revenue growth, improved loss control, and the elimination of unnecessary
costs.
In closing, Mr. Booth said: "In the future, I see HSB as an architect of new
ideas and business solutions to help our customers meet the challenges and
opportunities of the `new economy.'"
During the business portion of the meeting, shareholders elected three directors
for three-year terms: William B. Ellis, senior fellow, Yale University School of
Forestry and Environmental Studies; E. James Ferland, chairman, president and
chief executive officer, Public Service Enterprise Group Inc.; and Henrietta
Holsman Fore, chairman and chief executive officer, Holsman International.
Shareholders also appointed independent public accountants.
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.
# # #
