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Hartford Steam Boiler Reports Fourth Quarter Results
HARTFORD, CT, January 22, 1996 -- The Hartford Steam Boiler Inspection and Insurance Company (NYSE-HSB) today reported that net income increased 23 percent in the fourth quarter of 1995 compared to the fourth quarter of 1994, increasing from 66 cents per share to 81 cents per share. Income, excluding realized investment gains, increased 22 percent from 64 cents to 78 cents compared to the fourth quarter of 1994.
In his letter to shareholders, President and Chief Executive Officer Gordon W. Kreh said, "This quarter's 78 cents per share continues our trend of increasing quarterly earnings. Income for the year, excluding realized investment gains, was up 26 percent increasing from $2.35 to $2.96."
Kreh said the combined ratio for the quarter of 91.4 percent compares to 91.6 percent for the fourth quarter of 1994. Insurance premiums increased 17 percent from those reported for the fourth quarter of 1994.
"Engineering services revenue for the quarter grew 3 percent from the same period a year ago and was down 6 percent from the third quarter of 1995 due to a temporary slowdown in government business at Radian," Kreh said. "For the year the operating margin was 8.9 percent."
Kreh said, that due to an increase in investable funds, net investment income of $7.8 million was 10 percent higher than the fourth quarter of 1994.
"By the end of January," Kreh said, "the joint venture combining Radian Corporation, Hartford Steam Boiler's subsidiary, and DEI, a subsidiary of The Dow Chemical Company, is expected to begin operations." Plans for the new company, Radian LLC, were initially announced October 23 (1995). Hartford Steam Boiler will have a 40 percent ownership interest in Radian LLC.
The Hartford Steam Boiler Inspection and Insurance Company Consolidated Statements of Operations (In millions, except per share amounts.) Quarter Year-to-date Ended Dec. 31** December 31** 1995 1994 1995 1994 Insurance premiums $ 99.1 $ 84.9 $ 389.1 $336.6 Claims and adjustment expenses 40.0 32.2 154.9 143.2 Policy acquisition expenses 19.7 17.2 78.1 64.7 Underwriting and inspection exp. 31.4 28.3 121.9 105.1 Charge for Proposition 103 _ _ _ 2.9 Insurance operating gain $ 8.0 $ 7.2 $ 34.2 $ 20.7 Loss ratio 40.4% 38.0% 39.8% 42.5% Expense ratio* 51.0% 53.6% 50.9% 50.5% Combined ratio* 91.4% 91.6% 90.7% 93.0% Net engineering servcs revenues $ 61.8 $ 60.1 $ 252.1 $232.1 Net engineering servcs expenses 56.6 55.0 229.5 213.9 Eng. servcs opertng gain $ 5.2 $ 5.1 $ 22.6 $ 18.2 Engineering services net operating margin 8.5% 8.5% 8.9% 7.9% Investment income, net of related interest expense $7.8 $ 7.1 $ 28.2 $26.2 Realized investment gains 0.3 0.6 2.8 8.7 Income from investment opertns $8.1 $ 7.7 $ 31.0 $34.9 Interest expense 0.3 0.4 1.5 1.6 Equity in operations of insurance association _ 0.2 _ 1.4 Income before taxes $ 21.0 $ 19.8 $ 86.3 $73.6 Income taxes 4.4 6.4 23.7 21.7 Net income $ 16.6 $ 13.4 $ 62.6 $51.9 Net income per share $ 0.81 $ 0.66 $ 3.07 $ 2.54 Dividends declared per share $ 0.57 $ 0.55 $ 2.24 $ 2.16 Average shares outstanding 20.4 20.5 20.4 20.5 Shareholders' equity per share $16.81 $14.67 Net written premiums $108.6 $91.6 $ 408.3 $340.3 Effective tax rate invtmnt income 13.9% 23.9% 14.0% 17.9% * Excludes minority interest and goodwill amortization related to EIG and charge for Proposition 103. ** 1995 results include EIG on a 100% consolidated basis. 1994 results include only 50% of EIG's results recorded as Equity in operations of insurance association.