Welcome to Infinity’s 2005 annual report and our third anniversary as a public company. We have accomplished so much every year since we went public in 2003. And 2005 was no exception. I am very pleased about our accomplishments in 2005 and excited about our prospects for the future.

2005—A Remarkable Year
Infinity had an exceptionally strong performance in 2005:

	Actual		Goal
GAAP return on equity	18.1%		12%+
Gross written premium growth rate	5.2%		0%–5%
GAAP combined ratio	88.6%		Low 90s
Growth in book value per share	14.1%		10%

We generated strong results in spite of a very competitive marketplace that included pricing pressures, sizeable increases in advertising spending and aggressive agency incentives as companies sought to maintain, let alone grow, market share. And despite a fiercely competitive marketplace, in California, our largest and most profitable state, we managed to grow our business by over 5%.

This strong performance validates our strategy of being the “experts” in selective markets where we aim to drive core growth—the urban and Hispanic communities. But beyond strategy and a sound business model, our success in 2005 is a tribute to the hard work, dedication, and passion of our 2,100 employees. It is to them that we dedicate this year’s annual report. Their unwavering drive for excellence will lead our way in the future.

A Passion for Excellence
The groundwork for continued growth and profitability has been laid through Infinity’s strong capital position and well-defined success strategy—one having all the necessary elements of product innovation, brand development, distribution penetration and quality service. There is one more ingredient for success, however, that cannot be undervalued—an engaged and committed group of employees who are as passionate as I am about achieving and surpassing goals.

I know that the word “passion” has probably been overused by companies to describe their employees. We see it in mission statements and on websites of many fine organizations. At Infinity, passion is energy, generated by employees who share a common belief system; one that embraces a strong work ethic, a sense of community service and, most of all, good character. When people share these core values, it is only natural that they commit themselves wholeheartedly to Infinity’s “business” imperatives of exceeding customer expectations, offering unparalleled support to our agents and business partners, and producing consistent, solid returns for our shareholders. And when you combine these beliefs with a steely discipline to never be complacent and to never accept anything less than the best, it makes for a workplace that is fulfilling and rewarding for all. That is what excites me about the future of this company. We are building an organization on shared values that will drive our people to achieve extraordinary results.

We are also a company dedicated to exceptional performance. We challenge ourselves to explore new ways to become the provider of choice of insurance services in our focus markets. This means having a better understanding of the needs of our customers and agents. Contrary to how our industry has traditionally viewed the marketplace, customers are not a homogeneous group with the same lifestyle and auto insurance needs. Choice and convenience are important to them. We understand that and have responded by giving them options with three different product offerings. In 2005, we backed up these products with initiatives to provide “hassle-free” service to our customers and agents. We are pleased with our progress, but we can and will improve.

Our passion extends to making certain that we keep our operational costs as low as possible. Our view is simple—if we lower our costs, we lower the price of our products for our customers. This is a culture that is not developed overnight and although we’ve made considerable progress, we can do better.

Delivering quality and convenient products and services, offering unique and valuable support to our agents, and maintaining a low expense structure brings us full circle to the importance of having exceptional employees. At Infinity, this begins with recruiting wisely and continually investing in employee development through training and education. At the same time, while insisting on accountability, we encourage innovation, recognize accomplishments and reward exceptional performance. The result for the organization is a work environment that fosters a strong spirit of teamwork and sense of community, which in turn contributes to a high level of professional achievement and personal satisfaction. The result for our shareholders can be found in our financials.

With a strong foundation on which to leverage our culture, our skills and our talents for the future, I am confident our employees will rise to the challenge of an increasingly competitive marketplace and be triumphant.

I want to thank all of our people for their efforts. And I want to thank you, our shareholders, for your continued support.

James R. Gober
Chairman, President & Chief Executive Officer