Infinity’s insurance subsidiaries lease approximately 680,000 square feet of office space in numerous cities throughout the United States. Most of these leases expire within 7 years. The most significant leased office spaces are located in suburban Atlanta, Birmingham (Infinity’s principal office), Cincinnati, Windsor (Connecticut) and Los Angeles.
Infinity was incorporated in the state of Ohio in September 2002 as an indirect wholly owned subsidiary of AFG. On December 31, 2002, AFG transferred to Infinity all of the outstanding common stock of the NSA Group.
Through a reinsurance transaction effective January 1, 2003, Infinity acquired the Assumed Agency Business consisting of the personal lines business written through independent agents by AFG’s principal property and casualty subsidiary, GAI. The Assumed Agency Business had net earned premiums of $107 million in 2002 consisting primarily of standard and preferred private passenger automobile insurance. The Assumed Agency Business is not included in Infinity’s historical financial statements for periods prior to 2003.
Management analyzes the adequacy of reserves using actuarial data and analytical reserve development techniques, including projections of ultimate paid losses, to determine the ultimate amounts of reserves. Historical medical, hospitalization, material repair and replacement costs, general economic trends and the legal environment are examples of major factors taken into account in developing these estimates.
the extent to which market value is less than cost basis,
Infinity recorded pretax impairment charges on securities as follows (in thousands):
Management regularly evaluates for potential impairment each security position that (i) has a market value of less than 80% of its book value or (ii) exceeds $100,000, as well as each position held for which one or more impairment charges have been recorded in the past. The process of evaluation includes assessments of each bullet point listed above. For the unrealized loss positions in the chart, the majority of the evidence that management gathered and considered indicated near term recovery, resulting in conclusions that these particular unrealized losses were more likely of a temporary nature. Should the preponderance of evidence turn negative for one or all of these positions in the future, impairment charges would likely be recorded. Since it is not possible to accurately predict if or when a specific security will become other-than-temporarily impaired, total impairment charges could be material to the results of operations in a future period. Management believes that it is not likely, however, that such impairment charges will have a significant effect on Infinity’s liquidity.
Infinity is organized as a holding company with all of its operations being conducted by its insurance subsidiaries. Accordingly, Infinity will have continuing cash needs for administrative expenses, the payment of principal and interest on borrowings, shareholder dividends, and taxes. Funds to meet these obligations will come primarily from dividends and distributions from the insurance subsidiaries.
In July 2003, Infinity secured a $200 million, seven-year amortizing term loan and added a revolving credit line of $20 million in the fourth quarter of 2003. Proceeds of $110 million were contributed to Infinity’s insurance subsidiaries to support future growth of their business and reduce their reliance on reinsurance. The remaining proceeds were used to repay a $55 million promissory note issued in connection with Infinity’s initial public offering and for general corporate purposes. The term loan was collateralized by the assets of Infinity including a pledge of stock of Infinity’s insurance subsidiaries and contained various covenants that require Infinity to meet certain minimum net worth and financial ratio standards. Principal payments of $4.5 million were made in 2003 and a required supplemental payment of $2.5 million was made in January 2004 from the proceeds of the overallotment share issuance in connection with the secondary stock offering.
Infinity’s insurance subsidiaries generate liquidity primarily by collecting and investing premiums in advance of paying claims. Infinity had positive cash flow from operations of approximately $69 million in 2003, $45 million in 2002, and $33 million in 2001.
As of December 31, 2003, Infinity Property and Casualty Corporation had $64.5 million of cash and investments, of which $11.1 million was owed to its subsidiaries.
Because Infinity obtained the $200 million term loan facility, the amount of premiums ceded under this agreement was reduced from 90% to 20% for the third and fourth quarters of 2003. Premiums ceded under this agreement for the twelve month periods ended December 31, 2003 and 2002 were $169.5 million and $296.1 million, respectively.
Summarized information for securities with unrealized gains and losses in Infinity’s balance sheet at December 31, 2003 is shown in the following table (dollars in millions). Approximately $6.8 million of “Fixed Maturities” and $3.3 million of “Equity Securities” had no unrealized gains or losses at December 31, 2003.
Infinity’s investment portfolio had gross unrealized losses of $2.3 million at December 31, 2003. There was no single industry segment concentration that accounted for more than $1 million of these losses at that date. At December 31, 2002, Infinity’s investment portfolio included $14.3 million of gross unrealized losses; $4.7 million of these losses were in securities issued by companies in the airline industry and $1.8 million was in securities issued by an electric service industry firm. No other industry segment accounted for more than $1 million of unrealized losses at December 31, 2002.
Infinity’s contractual obligations as of December 31, 2003 are (in thousands):
Not included are total reserves for losses for known and unknown claims, which totaled $709.9 million at December 31, 2003. It is not possible to reliably predict the timing of payment for these liabilities.
Market risk represents the potential economic loss arising from adverse changes in the fair value of financial instruments. Infinity’s exposures to market risk relate primarily to its investment portfolio which is exposed to interest rate risk and, to a lesser extent, equity price risk.
The fair value of Infinity’s fixed maturity portfolio is directly impacted by changes in market interest rates. Infinity’s fixed maturity portfolio is comprised of substantially all fixed rate investments with primarily short-term and intermediate-term maturities. This practice allows flexibility in reacting to fluctuations of interest rates. The portfolios of Infinity’s insurance companies are managed with an attempt to achieve an adequate risk-adjusted return while maintaining sufficient liquidity to meet policyholder obligations.
Equity price risk is the potential economic loss from adverse changes in equity security prices. Although Infinity’s investment in equity securities is only 2% of total investments, it is concentrated in a relatively limited number of positions; approximately half of the total is in three investments; two of these three are electric utilities. While this approach allows management to more closely monitor the companies and industries in which they operate, it does increase risk exposure to adverse price declines in a major position.
While losses on claims reported are generally determinable, the process of determining overall loss and LAE reserves is also highly dependent upon the use of estimates in the case of losses incurred or expected but not yet reported or developed. Actuarial procedures and projections are used to obtain “best estimates” which are then included in the overall results. These estimates are subject to changes in claim amounts and frequency and are periodically reviewed and adjusted, as additional information becomes known. In accordance with industry practices, such adjustments are reflected in current year underwriting results. As a result, the ratio of loss and LAE expenses component of the combined ratio includes development of prior year reserves in addition to provision for losses and LAE occurring in the current year.
Underwriting expenses include expenses that vary directly with premium volume (commissions and premium taxes) as well as expenses that are relatively fixed (administrative expenses). Accordingly, underwriting expenses tend to move in the same direction as premiums but at a slower rate. As a result, the underwriting expense ratio tends to decrease when premiums grow and increase when premiums decline.
The NSA Group’s net earned premiums fell $40.3 million, or 6.2%, in the twelve month period ended December 31, 2003 compared to the twelve month period ended December 31, 2002 primarily as a result of actions taken to discontinue writing inadequately priced business in certain focus states. Earned premiums excluding the effect of the Inter-Ocean reinsurance agreement declined 12% to $833 million, due primarily to a reduction in business volume partially offset by rate increases. The loss and LAE ratio improved by 2.3% points for the twelve month period ended December 31, 2003 from the same period in 2002. Excluding the effects of the Inter-Ocean reinsurance agreement, the loss and LAE ratio improved 1.7% points. The expense ratio improved by 1.9% points in 2003 compared to 2002 primarily as a result of savings from consolidation efforts taken. Excluding the effect of the Inter-Ocean agreement, the expense ratio improved 1.6% points from 22.1% in the twelve month period ended December 31, 2002 to 20.5% in the same period in 2003.
The Assumed Agency Business represents a portion of GAI’s personal lines business and is not a separate legal entity; accordingly, it does not have a separate investment portfolio and related investment income.
Net investment income decreased $4.1 million for the twelve month period ended December 31, 2003 versus the comparable 2002 period due to lower yields available for newly invested funds, and to a lesser extent due to a reallocation to tax advantaged securities, partially offset by an increase in average invested assets of 10.4%. Average invested assets increased as a result of the transfer at January 1, 2003 of $125.3 million of securities and cash in conjunction with Infinity’s assumption of insurance liabilities of the Assumed Agency Business, as well as proceeds received in July 2003 from the term loan.
Infinity owned warrants to buy the common stock of a publicly traded company in 2002. Under generally accepted accounting principles, these investments are considered derivatives and marked to market resulting in realized gains and losses. Realized gains (losses) on investments include a loss of $281,000 in 2002 to adjust the carrying value of these warrants to their market value of $883,000 at December 31, 2002.
Corporate general and administrative expenses include costs associated with the new parent company beginning in February 2003. Other expenses fell $4.4 million for the twelve month period ended December 31, 2003 from the same period in 2002 due primarily to a $5.3 million litigation settlement in 2002.
Infinity’s effective tax rate was 33.4% in 2003, 35% in 2002, and 38% in 2001. See footnote 6 to Infinity’s financial statements for an analysis of items affecting the effective tax rate.
“Selected Quarterly Financial Data” has been included in Note 9 to the Consolidated Financial Statements of Infinity Property and Casualty Corporation.
Incorporated by reference to Infinity’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 25, 2004.
Infinity Property and Casualty Corporation (“Infinity”) was formed in September 2002 as an indirect wholly-owned subsidiary of American Financial Group (“AFG”) to acquire and conduct, as a separate public company, AFG’s personal insurance business written through independent agents. At December 31, 2002, AFG transferred to Infinity all of the issued and outstanding capital stock of the following personal auto insurance subsidiaries: Atlanta Casualty Company, Infinity Insurance Company, Leader Insurance Company and Windsor Insurance Company (collectively the “NSA Group”).
At December 31, 2002, AFG beneficially owned all of Infinity’s Common Stock. In February of 2003, AFG sold 12.5 million shares (61%) of Infinity in an initial public offering. In December of 2003, AFG disposed of its remaining investment (7.9 million shares) in Infinity in a secondary public offering.
The accompanying consolidated financial statements include the accounts of Infinity and its subsidiaries as of and for the twelve month period ended December 31, 2003. Infinity’s prior period financial statements represent the combined statements of the NSA Group. Earnings per share data is not applicable because the Consolidated Statement of Operations represents the combined statements of wholly-owned subsidiaries.
The accompanying income statements include corporate general and administrative expenses for the twelve month periods ended December 31, 2003, 2002, and 2001. Infinity was a wholly owned subsidiary of AFG for the periods prior to 2003 and corporate holding company expenses were not allocated to Infinity for these periods. All appropriate expenses are included in other expenses for the twelve month periods ended December 31, 2002 and 2001. Infinity considered the guidance in Staff Accounting Bulletin 55, “Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity” (Topic 1.B) in preparing these Consolidated Financial Statements.
The acquisition of the NSA Group has been accounted for at AFG’s historical carrying amounts as transfers of net assets between entities under common control in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 141.
All fixed maturity securities are considered “available for sale” and reported at fair value with unrealized gains or losses reported as a separate component of shareholders’ equity. Premiums and discounts on mortgage-backed securities are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations. The most significant determinants of prepayments are the difference between interest rates on the underlying mortgages and current mortgage loan rates and the structure of the security. Other factors affecting prepayments include the size, type and age of underlying mortgages, the geographic location of the mortgaged properties and the credit worthiness of the borrowers. Variations from anticipated prepayments will affect the life and yield of these securities.
Gains or losses on securities are determined on the specific identification basis. When a decline in the value of a specific investment is considered to be other than temporary, a provision for impairment is charged to earnings and the cost basis of that investment is reduced.
Goodwill amortization expense was $2.2 million for the twelve month period ended December 31, 2001. The balance of accumulated amortization was approximately $37.8 million. Had no amortization expense been recorded in 2001, net earnings would have been $12.0 million for the twelve month period ended December 31, 2001. The $5 million increase in goodwill during 2003 represents goodwill associated with the Assumed Agency Business.
Insurance premiums written are earned over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on reports received from such companies and organizations. Infinity provides insurance and related services to individuals and small commercial accounts throughout the United States and offers a variety of payment plans. Infinity establishes an allowance for doubtful accounts based on prior experience, the relationship between receivables and unearned premium, on a policy basis, and an aging process of past due balances.
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. Under SFAS No. 141, business combinations initiated after June 30, 2001 are required to be accounted for using the purchase method of accounting. Under SFAS No. 142, goodwill is no longer amortized beginning January 1, 2002, but is subject to an impairment test at least annually. Infinity completed the transitional test for impairment in 2002 with no write-down required. Other operating and general expenses for Infinity includes goodwill amortization of $2.2 million in both 2001 and 2000. The carrying value of goodwill at December 31, 2002 was $70.3 million. The increase at December 31, 2003 reflects the $5.0 million of goodwill for the assumption of the personal lines agency business.
Gross gains and losses on fixed maturity investment transactions included in the Consolidated Statement of Cash Flows consisted of the following (in millions):
Infinity repaid the $55 million note due to AFG in July 2003 with proceeds from a $200 million seven year amortizing term loan. The loan proceeds of $196.3 million (net of issued costs of $3.7 million) were also used to supplement the working capital of Infinity’s insurance subsidiaries, to reduce Infinity’s reliance on reinsurance and for general corporate purposes. The term loan (prepaid in full in February 2004) accrued interest at a variable rate and at Infinity’s choice of LIBOR plus 2.5% or Prime plus 1.5%. To hedge against future adverse movements in short-term interest rates, Infinity entered into an interest rate swap for $100 million of the principal, in which the variable rate payments due for the first three years of the term were exchanged for a fixed rate of 4.89%. The covenants of the loan had required Infinity to maintain certain minimum interest and fixed charge coverage ratios, as well as minimum levels of capital and surplus; the requirements of all loan covenants were met as of December 31, 2003. The first two loan principal repayment amounts of $2,250,000 were made on September 30 and December 31, 2003. In compliance with the loan agreement, Infinity made an additional principal payment of $2.5 million, one half of the over-allotment proceeds from the secondary public offering, in January 2004. The remainder was to be repaid in quarterly installments. The following chart shows the scheduled principal repayment amounts (in thousands).
Refer to Note 14, Subsequent Events, for a discussion of the prepayment of this loan.
In January 2001, Chiquita announced a restructuring initiative that included discontinuing all interest and principal payments on its public debt. Due to the expected restructuring, Infinity recorded a fourth quarter 2000 pretax charge of $14.2 million to write down its investment in Chiquita to quoted market value at December 31, 2000. In 2001, Infinity suspended accounting for the investment under the equity method and reclassified the investment to “Equity securities”. In the third quarter of 2001, Infinity wrote down its investment in Chiquita by an additional $669,000. In March 2002, the court approved Chiquita’s plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code. Under the plan, over $700 million in principal and accrued interest related to Chiquita’s public debt was converted into common equity. As a result, Infinity received approximately 14,400 “new” shares in the reorganized company plus warrants expiring in 2009 to purchase an additional 240,000 shares at $19.23 per share. All of the common shares were sold in 2002 and the warrants were sold in September of 2003.
Certain members of the Infinity consolidated tax group were allocated the following carryforwards from AFG which were available as of December 31, 2003 (in millions):
The gross deferred tax asset has been reduced by a valuation allowance based on an analysis of the likelihood of realization. Factors considered in assessing the need for a valuation allowance include: (i) opportunities to generate taxable income from sales of appreciated assets, and (ii) the likelihood of generating larger amounts of taxable income in the future. The likelihood of realizing this asset will be reviewed periodically; any adjustments required to the valuation allowance will be made in the period in which the developments on which they are based become known.
The maximum number of shares of Infinity’s Common Stock for which options may be granted under the plan is 2,000,000 (subject to antidilution provisions). Infinity’s compensation committee administers the plan. Each member of the committee is an “outside director,” as such term is defined under Section 162(m) of the Code, and a “Non-Employee Director” as defined in Rule 16b-3(b) promulgated under the Securities Exchange Act of 1934.
Options generally expire ten years after the date of grant, though the committee can provide for a shorter term for a particular grant. Generally, subject to the discretion of the compensation committee, 20% of the shares underlying an option will become exercisable upon the first anniversary of the date of grant, and 20% become exercisable on each subsequent anniversary. Options issued to non-employee directors are immediately exercisable. Exercise prices for options granted under the plan may not be less than the fair market value on the date of grant. The compensation committee has broad discretion in determining the terms of the grant of awards under the plan, subject to the restrictions outlined above. Upon a change of control, as defined in the plan, all outstanding options will immediately vest in full and become exercisable.
The following chart describes activity for Infinity’s Stock Option Plan for the twelve month period ended December 31, 2003:
The following table illustrates the effect on net earnings (in thousands) and earnings per share had compensation cost related to stock options been determined and recognized based on “fair values” at grant dates consistent with the method prescribed by SFAS No. 123. No information is applicable for the twelve month period ended December 31, 2002 as no options had been granted. For SFAS No. 123, purposes, the “fair value” of $5.98 per option granted in 2003 was calculated using the Black-Scholes option pricing model and the following assumptions: dividend yield of 1.4%; expected volatility of 33%; risk-free interest rate of 4.0%; and expected option life of 7.5 years. There is no single reliable method to determine the actual value of options at grant date. Accordingly, the actual value of the option grants may be higher or lower than the SFAS No. 123 “fair value.”
The following are quarterly results of consolidated operations of Infinity for the two years ended December 31, 2003 (in millions).
Effective April 2001, Infinity’s insurance subsidiaries entered into a reinsurance agreement with Inter-Ocean under which Infinity agreed to cede 90% of its automobile physical damage business written through December 2002. This agreement was renewed for 2003 on terms substantially equivalent to those in effect in 2002. Under the agreement, Infinity retained all of the ceded premiums to fund ceded losses as they became due from Inter-Ocean. Interest was credited to Inter-Ocean for funds held on their behalf. Premiums ceded under this agreement were $170 million and $296 million for the twelve month periods ended December 31, 2003 and 2002, respectively. In addition, premiums ceded for the Assumed Agency Business were $22 million and $79 million for the twelve month periods ended December 31, 2003 and 2002, respectively. Interest credited, which is reported as a reduction of net investment income, was $6.3 million and $7.7 million for the same periods, respectively.
In addition, Infinity’s insurance subsidiaries assume a limited amount of other business, primarily from affiliates of AFG. The following table shows (in millions) (i) written and earned premiums included in income for reinsurance assumed, (ii) amounts deducted from written and earned premiums in connection with reinsurance ceded and (iii) reinsurance recoveries deducted from losses and loss adjustment expenses.
Insurance companies are required to file financial statements with state insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). Net earnings (loss) and policyholders’ surplus on a statutory basis were as follows (in millions):
For the twelve month period ended December 31, 2003, statutory results differed from net earnings on a GAAP basis due to (i) a realized loss from the writeoff of an investment in Penn Central U.K. Limited and its insurance subsidiary of $55 million for statutory purposes and (ii) amortization of deferred acquisition costs. For GAAP purposes, the $55 million loss from the insurance subsidiary has been recorded in the NSA Group’s prior to 2003 using the equity method of accounting.
Payments of dividends, loans and advances by Infinity companies are subject to various state laws, federal regulations and debt covenants which limit the amount of dividends, loans and advances that can be paid. Under applicable restrictions, the maximum amount of dividends payable in 2004 from Infinity’s insurance companies without seeking regulatory clearance is approximately $46 million. Additional amounts of dividends, loans and advances require regulatory approval.
Future minimum rentals, primarily related to office space, required under operating leases having initial or remaining lease terms in excess of one year at December 31, 2003 were as follows: 2004 - $19.4 million; 2005 - $15.4 million; 2006 - $12.3 million; 2007 - $9.2 million; 2008 - $8.5 million and $24.6 million thereafter.
Future aggregate minimum sublease income is $4.0 million at December 31, 2003.
Infinity is subject to litigation resulting principally from normal insurance activities. Management believes that the outcome of such matters will not have a material effect upon Infinity’s consolidated financial position.
Infinity’s investment portfolio is managed by a subsidiary of AFG. Net investment income includes investment management charges of $2.0 million in 2003, $1.8 million in 2002 and $2.0 million in 2001.
Infinity has purchased and sold securities at fair value in transactions with AFG subsidiaries; it has also transferred securities to its former parent in the form of capital distributions and received securities from its former parent as capital contributions. Such purchases, sales and transfers and related realized gains (losses) were as follows (in millions):
In December 2003, AFG sold its remaining holdings of Infinity stock (7.85 million shares), of which Infinity received none of the proceeds, through a secondary public offering. In conjunction with this transaction, in January 2004 Infinity sold 170,829 newly issued shares through an over-allotment option. Of the $4.9 million net proceeds, approximately $2.5 million was paid on the term loan as an additional principal payment. The remainder is to be used for general corporate purposes.
In February 2004, Infinity issued $200 million principal amount of Senior Notes due 2014. The notes bear interest at a fixed 5.5% coupon rate which is payable semiannually. The proceeds of the Senior Notes were used to retire the variable rate term loan which was secured in July of 2003. Unamortized debt issuance costs relating to the issuance of the variable rate term loan were written off upon the retirement of this loan, resulting in a pretax charge of $3.3 million in the first quarter of 2004. In addition, the interest rate swap, which Infinity held in conjunction with the term loan, was settled and resulted in a pretax charge of $0.3 million in the first quarter of 2004.
Great American Insurance Company (“GAI”) is an indirect wholly-owned subsidiary of American Financial Group, Inc. Through a reinsurance agreement effective January 1, 2003, GAI transferred its personal lines business written through independent agents (the “Assumed Agency Business”) to Infinity Property and Casualty Corporation (“Infinity”). Under the reinsurance agreement, GAI also transferred to Infinity assets (primarily investment securities) with a market value of approximately $125.3 million.
The net liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims are based upon (a) the accumulation of case estimates for losses reported prior to the close of the accounting period on direct business written; (b) estimates received from ceding reinsurers and insurance pools and associations; (c) estimates of unreported losses based on past experience; (d) estimates based on experience of expenses for investigating and adjusting claims and (e) the current state of the law and coverage litigation. These liabilities are subject to the impact of changes in claim amounts and frequency and other factors. Changes in estimates of the liabilities for losses and loss adjustment expenses are reflected in the Statement of Underwriting Gains and Losses in the period in which determined. In spite of the variability inherent in such estimates, management believes that the liabilities for unpaid losses and loss adjustment expenses are adequate.
Premiums are earned over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written which is applicable to the unexpired terms of policies in force.
Effective January 1, 2002, GAI entered into a reinsurance agreement with Inter-Ocean Reinsurance (Ireland) Limited, under which GAI agreed to cede 90% of its automobile physical damage business written through December 2002. This agreement has been renewed for 2003 on terms substantially equivalent to those in effect in 2002. Premiums ceded under this agreement were $78.5 million in 2002.
The following are quarterly results of operations of the Assumed Agency Business for the two years ended December 31, 2002 (in millions).
Selected Quarterly Financial Data is included in Note 9 to the Consolidated Financial Statements.
Report on Form 8-K: October 28, 2003 Third Quarter Earnings Release
Grossed up for reinsurance recoverables of $31 million, $33 million and $37 million at December 31, 2003, 2002 and 2001, respectively.
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, Infinity Property and Casualty Corporation has duly caused this Report to be signed on its behalf by the undersigned, duly authorized.
Chairman of the Board of Directors, Chief Executive Officer, and President
Regulations (incorporated by reference to Exhibit 3.2 to Infinity’s Form S-1 filed on October 9, 2002)
Indenture, dated February 17, 2004, between Infinity, as Issuer, and American Stock Transfer and Trust Company, as Trustee.
Formation and Separation Agreement between American Financial Group, Inc. and Infinity (incorporated by reference to Exhibit 10.1 to Infinity’s Form 10-K filed on March 31, 2003)
Investment Services Agreement between Infinity and American Money Management (incorporated by reference to Exhibit 10.8 to Infinity’s S-1/A filed on November 28, 2002)
License Agreement between Great American Insurance Company and Infinity (incorporated by reference to Exhibit 10.13 to Infinity’s Form 10-K filed on March 31, 2003)
Reinsurance Cover Note with Inter-Ocean Reinsurance (Ireland) Limited (incorporated by reference to Exhibit 10.15 to Infinity’s Form S-1/A filed on January 29, 2003)
Sublease between Great American Insurance Company and the Registrant for Windsor, Connecticut property (incorporated by reference to Exhibit 10.18 to the Registrant’s Form 10-K for the year ended December 31, 2002)
Sublease between Great American Insurance Company and the Registrant for Parsippany, New Jersey property (incorporated by reference to Exhibit 10.21 to the Registrant’s Form 10-K for the year ended December 31, 2002)
Sublease between Great American Insurance Company and the Registrant for property located at 49 East Fourth Street, Cincinnati, Ohio (incorporated by reference to Exhibit 10.23 to the Registrant’s Form 10-K for the year ended December 31, 2002)
Sublease between Great American Insurance Company and the Registrant for Exton, Pennsylvania property (incorporated by reference to Exhibit 10.24 to the Registrant’s Form 10-K for the year ended December 31, 2002)
Tax Allocation Agreement, dated December 31, 2003 and effective February 13, 2003 by and among Infinity and its Subsidiaries.
2002 Stock Option Plan (incorporated by reference to Exhibit 10.2 to Infinity’s Form 10-K filed on March 31, 2003).
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer