The Midland Company Reports 2ndQ Gains

The Midland Company, a provider of specialty insurance products and services based in Cincinnati, reported gains in revenue and earnings for the second quarter 2002.

The company said net operating income (net income excluding capital gains/ losses) for the second quarter ended June 30, 2002, increased 48 percent on a per-share basis. Net operating income reached a record $6.6 million, or 37 cents per share (diluted, post-split), compared with $4.5 million, or 25 cents per share (diluted, post-split), in 2001. Net income (including capital gains/losses) for the second quarter was $5.9 million, or 33 cents per share (diluted, post-split), compared with $6.1 million, or 34 cents per share (diluted, post-split), last year. Revenue was $155.8 million compared with $143.9 million in last year’s second quarter.

American Modern Insurance Group, Midland’s wholly owned insurance subsidiary, is a leader in specialty insurance products and services such as manufactured housing, site-built homes, motorcycles, watercraft, snowmobiles, recreational vehicles and credit life and related products. American Modern’s products and services are offered through diverse distribution channels.

American Modern’s total property and casualty gross written premiums grew 3.2 percent for the quarter to $160.4 million, even though manufactured housing gross written premium declined 15.7 percent to $78.2 million. The decrease in manufactured housing premium is primarily the result of corrective underwriting actions taken in the past 12 months. Gross written premium in all other specialty lines—such as motorcycle, site-built dwelling, mortgage fire, recreational vehicle and collector automobile products—collectively grew 31.3 percent to $82.2 million.

The company indicated that it expects sales of new manufactured housing to continue at a slower-than-average pace during the remainder of 2002 but asserted that it remains well positioned in the manufactured housing market.

Midland also has filed with the Securities and Exchange Commission a registration statement relating to the proposed public offering of 2,450,000 shares of its common stock (post-split). Of the shares to be offered, 2,000,000 are to be sold by the company. The remaining 450,000 shares are to be sold by selling shareholders.

The managing underwriters for the offering will be McDonald Investments Inc., Cochran, Caronia & Co. and SunTrust Robinson Humphrey. The company will grant the underwriters an option to purchase an additional 300,000 shares to cover over-allotments, if any. Upon completion of the offering, and assuming the over-allotment is fully exercised, the company will have approximately 20 million shares outstanding (post-split). On June 17, 2002, the company announced a two-for-one stock split for holders of record on July 8, 2002. The stock split was effective July 17, 2002.

The proceeds of the offering will be used to increase capital and surplus to fund future growth of the company’s insurance subsidiaries, to repay a portion of current debt and for other general corporate purposes. The company will not receive any proceeds from the sale of the common stock offered by the selling shareholders.

The selling shareholder group is comprised of members of the company’s founding families, who are not executive officers of the company, and a retired executive. Following the offering, members of the founding families along with the retired executive will have beneficial interest in approximately 51.8 percent of the outstanding shares compared with approximately 60.3 percent today.

Topics Manufacturing