Question

Review the selected materials provided from (recently acquired) Infinity Property & Casualty Corporation’s 2017 10-K filing as well as the P&C Aggregate Industry Results and use that information to answer the following questions: a. If Infinity P&C had achieved the same investment yield as the broader P&C industry in 2017, keeping all else equal (same expenses & average tax rate), what would Infinity’s Earnings Per Share have been? d. Infinity P&C specializes in underwriting liability risks for the private passenger auto sector. The combined ratio for this sector was 105.5% for 2017. How much pricing flexibility does Infinity have relative to their insurance sector? In other words, by what % could Infinity lower their insurance premiums earned and still achieve their sector’s combined ratio? e. We said in class that the average policyholder surplus (i.e. shareholders’ equity) ratio in the P&C insurance industry was 36.20%. How does Infinity’s equity ratio compare? Using the risks of P&C insurers we discussed in class, state whether you think Infinity’s relatively higher/lower equity ratio is justified. Answer the following questions.

          Review the selected materials provided from (recently acquired) Infinity Property & Casualty Corporation’s 2017 10-K filing as well as the P&C Aggregate Industry Results and use that information to answer the following questions:

a. If Infinity P&C had achieved the same investment yield as the broader P&C industry in 2017, keeping all else equal (same expenses & average tax rate), what would Infinity’s Earnings Per Share have been?

d. Infinity P&C specializes in underwriting liability risks for the private passenger auto sector. The combined ratio for this sector was 105.5% for 2017. How much pricing flexibility does Infinity have relative to their insurance sector? In other words, by what % could Infinity lower their insurance premiums earned and still achieve their sector’s combined ratio?

e. We said in class that the average policyholder surplus (i.e. shareholders’ equity) ratio in the P&C insurance industry was 36.20%. How does Infinity’s equity ratio compare? Using the risks of P&C insurers we discussed in class, state whether you think Infinity’s relatively higher/lower equity ratio is justified. Answer the following questions.

Added by Belen P.

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