Midland Net Down, Earnings Way Up

Net operating income for the first quarter was $9.5 million, or $1.07 per share–a record for the Cincinnati-based company. The comparable figure in first quarter 2001 was $9 million, or 99 cents per share.

Midland also reported that direct and assumed premiums for American Modern Insurance Group, Midland's wholly owned insurance subsidiary, grew 3.8 percent for the quarter to $130.3 million, with premiums for the group's biggest segment, manufactured housing, falling off 8 percent to $70.3 million.

Compensating for the decline in manufactured housing premiums, direct and assumed written premium in all other property-casualty lines–such as motor sports, recreational vehicle, watercraft, collector auto and site-built dwelling products–collectively grew 22.1 percent to $60 million, Midland reported.

John W. Hayden, president and chief executive officer, announced that the quarter's results showed the value of a strategy over the past several years to concentrate on adding balance to Midland's product mix and distribution channels- creating "a stronger and more diversified company."

He also shared hopeful signs that the manufactured housing market is on the mend, noting that year-over-year industry shipments increased in both January and February.

Midland also reported that American Modern's first quarter combined ratio was 96.4 percent, compared with 97 percent in first quarter 2001. The non-catastrophe combined ratio was 93.9 percent for the quarter, compared with 92.2 percent during the same period in 2001.

The company noted that run-off results from American Modern's discontinued commercial liability line were better than expected, adding a small after-tax profit in the first three months of 2002 compared with a small loss in the first quarter of 2001.

In September 2001, American Modern announced that it was going to stop offering commercial liability coverages for manufactured housing parks and dealers.

While double-digit top-line growth remains the company's objective, Mr. Hayden said management anticipates 2002 p-c premium and investment income both will grow at only a low single-digit pace. He noted the elimination of the commercial liability business, ongoing challenges in the manufactured housing market, and the discontinuation in 2001 of certain multi-year term policies would have a short-term dampening effect on top-line growth.

Emphasizing the diverse products and distribution channels of the insurance operations, Mr. Hayden noted that American Modern's recently established an alliance with London-based excess and surplus lines broker, Bell & Clements to provide E&S coverages throughout the United States.