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National Interstate Corporation Reports 2013 First Quarter Results

Stocks in this article: NATL

  • Gross premiums written up 17%
  • Net income per share of $.41

RICHFIELD, Ohio, April 30, 2013 (GLOBE NEWSWIRE) -- National Interstate Corporation (Nasdaq:NATL) today reported 2013 first quarter gross premiums written of $151.9 million and net income of $8.0 million or $.41 per share. Gross premiums written increased 17% compared to the 2012 first quarter reflecting growth in the alternative risk transfer (ART) and transportation components. Net income for the 2013 first quarter decreased 18% as both underwriting profits and net investment income trailed the 2012 first quarter.


The table below shows the Company's net income per share determined in accordance with U.S. generally accepted accounting principles (GAAP), reconciled between after-tax earnings from operations and realized gains from investments, both of which are non-GAAP financial measures. Net after-tax earnings from operations include underwriting income and net investment income.

  Three Months Ended March 31,
  2013 2012
  (In thousands, except per share data)
Net after-tax earnings from operations $  7,012 $ 8,614
After-tax net realized gains from investments  1,005  1,132
 Net income $ 8,017 $   9,746
Net after-tax earnings from operations per share, diluted $ 0.36 $ 0.44
After-tax net realized gains from investments per share, diluted  0.05   0.06
 Net income per share, diluted $ 0.41 $ 0.50

Underwriting Results:

  Three Months Ended March 31,
  2013 2012
Losses and loss adjustment expense ratio 76.1% 73.1%
Underwriting expense ratio 21.7% 23.3%
Combined ratio 97.8% 96.4%

Claims: The loss and loss adjustment expense (LAE) ratio for the 2013 first quarter of 76.1% was 3.0 percentage points higher than 2012 first quarter and flat compared to the fourth quarter of 2012. The Company had improvement in a few of its traditionally well-performing products including Hawaii and Alaska and recreational vehicle but continued to experience elevated claims costs in several of its ART products. In addition, development from prior year claims added 1.9 percentage points to the 2013 first quarter loss and LAE ratio which was slightly higher than the prior year claims development of 1.8 percentage points incurred in the 2012 first quarter.

The Company's loss and LAE ratio has drifted up over the past several years primarily as a result of the soft commercial insurance market which contributed to rates that did not keep up with loss cost inflation. The Company's loss and LAE ratio as measured on an accident year basis has been elevated based on its historical results but very consistent since 2010. The market conditions have gradually improved over the past several quarters and the Company is currently averaging high single digit and in some products double digit rate increases on policies written.

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