The Cincinnati-based Midland Company announced that it has reevaluated the projected impact of losses from Hurricane Lili on its October underwriting results for its American Modern Insurance Group subsidiary. It now expects them to impact fourth-quarter results by 35 to 40 cents per share (diluted), up from the preliminary estimate of 25 to 30 cents per share.
The company indicated, however, that, excluding the impact of Hurricane Lili, its underwriting results were more favorable than originally projected, and added that it expects that “losses from recent tornado activity would be in the normal range of expected catastrophe losses for a fourth quarter period.”
The earlier estimate, announced October 17 in conjunction with the company’s third quarter operating results, “was based on loss data available at the time,” said Midland. “The higher estimate reflects more complete data for the storms. However, stronger-than-expected underwriting results excluding Lili mitigated the impact of the increase.”
“American Modern continues to benefit from tightened underwriting standards and rate increases,” stated John W. Hayden, president and CEO. “Excluding the impact of catastrophes, our underwriting results for October were approximately 10 cents per share better than our original projection and that trend has continued in the first 12 days of November. The favorable variance was driven largely by the steadily improving fire loss ratio on our manufactured housing product line. This ratio dropped to 21.1 percent in October from 27.2 percent in October 2001, a tangible sign that we are moving in the right direction.”
Hayden expressed concern over the storms and tornadoes that struck the Southeast and Midwest over the weekend, and indicated that Midland has “mobilized our staff of field claims adjusters in the affected areas and are providing assistance to our policyholders as best we can.”
He estimated that the financial impact on American Modern would be “in the range of 6 to 9 cents per share after-tax, within our normal range for catastrophe losses in a fourth quarter.”
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