Infinity Property and Casualty does have its limits, but it goes farther than most to cover high-risk drivers. The insurer primarily provides personal nonstandard auto policies -- Infinity is a leading writer of policies for high-risk drivers in the US. The company also offers standard and preferred personal auto, commercial small fleet, and classic collector auto insurance. Licensed in all 50 states, the company currently focuses its business on targeted urban areas of a handful of states. Personal non-standard auto insurance accounts for more than 90% of its premiums; California accounts for about half of that business. Infinity distributes its products through more than 12,900 independent agents.
Infinity has its sights set on expanding its business in the urban areas of large states (specifically California, Florida, Texas, Georgia, Pennsylvania, Arizona, Nevada, and Illinois). The company has increased advertising spending and agency incentives, including commissions, to stimulate growth in these areas. It is, however, also happily maintaining its presence in less densely populated states with plenty of bad drivers such as Colorado, Alabama, South Carolina, Tennessee, and Connecticut.
Infinity is pursuing a strategy for growth that it hopes will help it to overcome the soft insurance market of the past several years and deliver shareholder value. It is depending on meeting customers' lifestyle and budget needs by providing flexible product offerings and pricing options. For example, the company offers products with buy-up/buydown options and introduced its new DriverClub service with free membership for roadside assistance. The company is also committed to building relations with its agents and brokers by investing in agency productivity, lead generation, and training.
Factors that contributed to strong premium growth (11%) for Infinity in fiscal 2011 included improvements in agency incentives, the addition of policies with broader coverage into its business mix, decreases in rates in some states, and competitor rate increases in some states. As a result, revenues for the year increased by about 10%. Net income, however, decreased by 54%. The decline in net earnings was mainly due to unfavorable development related to accident year 2010 resulting from increases in severities on personal injury protection in Florida.
By the end of fiscal 2011 Infinity had repurchased $403 million, or about 46%, of the shares issued since its 2003 IPO. The company had also increased dividends by 309% for a total compound annual return to shareholders (dividends and capital appreciation) of 16% for that same time period.
Before its IPO Infinity was owned by property/casualty giant American Financial Group (AFG). AFG transferred the personal insurance business of its property/casualty subsidiary, Great American Financial Resources, to Infinity, but that business is now in runoff, with no new policies being written. – less
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