Net earnings from operations is a non-GAAP financial measure which sets aside items that are generally not considered to be a part of ongoing operations such as realized gains or losses on investments. We believe this non-GAAP measure to be a useful tool for analysts and investors in analyzing ongoing operating trends. As such it will be discussed for various financial periods during this call. A reconciliation of net earnings from net earnings from operations from net income is included in our earnings release.Mr. Dave Michelson will now provide comments on our financial results. David Michelson Good morning and thank you for joining today’s conference call. The last several months have been every exciting for our company. We experienced our first notable top-line growth in several quarters with an increase in gross premium written but 10% for the 2010 second quarter and we have had very encouraging initial month since completing Vanliner acquisition which was effect in July 1st. Our 2010 second quarter earnings were solid just slightly below expectations. We recorded net income for 2010 second quarter of $0.39 per share bringing our year-to-date net income to $18.2 million or $0.94 per share. Both our trailing last year but only slightly behind what we thought would be at the half way point of 2010. We experienced combined ratios throughout 2009 in the 180s. We knew that this was not sustainable given the low single-digit rate decreases which occurred in our commercial businesses in each of the past several years. In our view all of you achieved in combined ratios in the mid to up 80s is a realistic and acceptable outcome. Our combined ratio for the first half of 2010 of 89.3% is within that acceptable range. However the combined ratio of 92.1% for the 2010 second quarter was higher than we would have like to see reflecting claims cost that were several percentage points higher than we have experienced in previous years.
We often cautions that our formally loss and loss adjustment expense ratios are subject to fluctuations due to the policy loss limits on many of the commotion policies that we write. In addition there is less predictability in our quarter-to-quarter results given our nitch product focus. We closely monitor our 30 plus products and have not identified any over writing reasons to explain our elevated 2010 second quarter loss ratio. As we have done in the past we react timely if any actionable items related to our claims cost are identified.Products in our Personal Lines component have contributed some what to the higher second quarter losses. Earlier in the year we initiate underwriting actions and taken rating release for products in this component which will take a couple of quarters to fully impact results. Expenses and investment income the other components of net income are in acceptable rangers. We continue to keep our expense in line as indicated by the 25.4% underwriting expense ratio for the first six months of 2010. We are also pleased with Vanliner acquisition has not contributed significantly to our expenses. Excluding the Vanliner related cost our underwriting expense ratio was 24.8% for both 2010 second quarter and the first six months. Recurring investment income was flat compared to last year. However including realized investments gains we are nearly 15% ahead of the first six months of 2009. This is an excellent result given the continued low interest rate environment and the liquidity that was required for the Vanliner acquisition. In anticipation of the Vanliner closing we schedule redemptions to occur during the 2010 second quarter and so securities which generated the proceeds for the purchase. The quality and tax equivalent yield of the portfolio was maintained and the portfolios unrealized gain position improved during the second quarter. Read the rest of this transcript for free on seekingalpha.com