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HARTFORD, CT, April 16, 1996 -- At the annual meeting of shareholders of The Hartford Steam Boiler Inspection and Insurance Company (NYSE-HSB), held today at the company's headquarters, President and Chief Executive Officer Gordon W. Kreh discussed results for 1995 and the outlook for 1996 and beyond.
Also at the meeting, shareholders voted to re-elect four directors and to appoint independent public accountants. A shareholder proposal to eliminate the classified structure of the board was not adopted.
Commenting on last year, President Kreh said, "By all measures, 1995 was a very successful year." Earnings per share were $3.07 in 1995 compared to $2.54 in 1994, an increase of 20.9 percent, and total revenues were $672.2 million in 1995 compared to $603.6 million in 1994, an increase of 11.4 percent. In 1995, insurance operations produced a combined ratio of 90.7 percent compared to 93.0 percent in 1994. Kreh said, "Due to our loss prevention efforts, our combined ratio was far better than the industry average, which was 107.2 percent in 1995."
Kreh said that net engineering services revenues were $252.1 million in 1995, an increase of 8.6 percent over the previous year, while the net margin improved from 7.9 percent to 8.9 percent - the highest since 1984. "This was achieved through growth at Radian and improved margins at HSB Reliability Technologies (the company's reliability improvement consulting and services firm)," Kreh said.
Shareholders' equity increased 14.6 percent, from $14.67 per share at December 31, 1994 to $16.81 per share at December 31, 1995.
"While we can take pride in our financial results, we also have made great strides in addressing our strategic goals and expanding our strategic alliances," Kreh said. Earlier this year Hartford Steam Boiler and The Dow Chemical Company formed a new company, Radian International LLC, to provide environmental, information technology and strategic chemical management services to industries and government worldwide. And in October 1995, Hartford Steam Boiler increased its participation in Industrial Risk Insurers (IRI) from 0.5 percent to 14 percent. "We expect to take a leading role in helping IRI provide property insurance and loss prevention services more effectively and more profitably," Kreh said.
Looking ahead President Kreh said, "Our focus is the customer, because Hartford Steam Boiler is in business to create value for our customer. We believe that we can better serve our customer by increasing our understanding of our business environment and the nature of risk." A consistent marketing planning process is being instituted organization-wide to help accomplish the first goal, he said. "At the same time, we have established a new unit that is increasing our understanding of risk in all forms, particularly the frequency and severity of loss to equipment." He said that these initiatives will help the company better serve its customers - and in particular its domestic reinsured client companies and the global market outside of the United States and Canada, areas with the greatest future growth potential.
"We are keenly aware that our mission is to help our customers avoid losses," Kreh said. "We are an engineering services firm. That is how we began in 1866 and that is what has always distinguished us from other companies that provide insurance. The concept that underlies our business is that our customers would rather prevent losses than be paid for them."
In summary, President Kreh said, "We believe we have in place a solid strategic plan for increasing our shareholders' value. Our potential for growth is strong."
Re-elected for three year terms on the company's board of directors were Joel B. Alvord, chairman of Fleet Financial Group; Richard G. Dooley, a consultant to Massachusetts Mutual Life Insurance Company; Gordon W. Kreh, president and chief executive officer of Hartford Steam Boiler; and Lois D. Rice, a guest scholar at the Brookings Institution.