Cincinnati-based The Midland Company, a provider of specialty insurance products and services, today reported fourth quarter 2005 net income of $20.0 million, or $1.03 per share, including 3 cents in realized capital gains, compared with $23.6 million, or $1.22 per share, which included 14 cents in realized capital gains, in the fourth quarter of 2004. All per share amounts are presented on an after-tax, diluted basis.
Net income before realized capital gains* for the quarter was $19.4 million, or $1.00 per share. This compares to net income before realized capital gains* for the fourth quarter of 2004 of $20.9 million, or $1.08 per share. The company believes that this non-GAAP financial measure provides a clearer picture of the underlying operating activities than the GAAP measure of net income, as it removes potential issues such as timing of investment gains (or losses) and allows readers to individually assess these components of net income.
John W. Hayden, Midland’s president and chief executive officer, said, “Our fourth quarter results provide a clear indication of the fundamental strength of our business. Even after absorbing higher than normal catastrophe losses during the quarter, we were able to post an exceptional 91.2 percent property and casualty combined ratio. This compares to a combined ratio of 89.0 percent in the fourth quarter of 2004, during which we experienced more favorable weather patterns. More importantly, our combined ratio excluding catastrophe losses was over four full percentage points better than last year’s fourth quarter result. This is the truest indication of our underlying underwriting expertise and discipline.
“American Modern produced strong underwriting results in each of its major product segments. The residential property product segment, which includes manufactured housing and site-built dwelling, continues to produce strong underwriting results. The manufactured housing combined ratio for the fourth quarter was 90.9 percent while the site-built dwelling combined ratio remained solid at 92.4 percent. We continue to be very gratified with the underwriting results from our residential property products and believe these results underscore our position as a market leader in these lines.”
“We were also very pleased with the underwriting profits in our recreational casualty, financial institutions and commercial lines business segments. Our watercraft, recreational vehicle, motorcycle and excess and surplus lines all posted combined ratios below 94 percent for the quarter. Underwriting profit in each of our broad specialty product segments combined with the benefits realized from our comprehensive reinsurance program contributed to our strong fourth quarter,” Hayden explained.
Midland also announced that reported results include the impact of expensing stock options, 1 cent per share for the quarter and 6 cents per share for the full year. The company adopted accounting guidance to expense stock options in the fourth quarter 2005, and the results from prior 2005 quarters have been restated to reflect the change.
Midland’s wholly owned insurance subsidiary, American Modern Insurance Group, specializes in providing insurance products and services for specialty markets such as manufactured housing, site-built homes, motorcycles, watercraft, snowmobiles, recreational vehicles, collector cars and credit life and a variety of related financial institution credit insurance products. American Modern’s products and services are offered through diverse distribution channels.
Source: The Midland Company
Topics Profit Loss Underwriting
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