The Midland Company Notes $12-$13 Million Pre-Tax Storm Losses

The Midland Company, a Cincinnati-based provider of specialty insurance products and services, announced a preliminary catastrophe loss estimate of approximately $12 to $13 million (pre-tax) from the series of storms and tornadoes that hit the midwestern, south central and southeastern states during the period of May 2-11.

“Our thoughts are with those who have suffered losses,” John Hayden, president and chief executive officer of The Midland Company, remarked. “While we can’t erase the damage, we can make certain that our policyholders receive the help they need – quickly and compassionately. American Modern Insurance Group, our insurance subsidiary, consistently settles more than 85 percent of all property claims within 30 days – and most within seven days of being reported.”

Hayden added, “Since April 1, 2003, the company presently estimates that it has incurred weather-related catastrophe losses of approximately $18.0 million (pre-tax) which, in addition to the May storms, includes approximately $5.2 million (pre-tax) in losses from storms occurring in the first two weeks of April. Assuming a normal level of catastrophe losses for the remainder of the second quarter, management projects that total second quarter catastrophe losses could approach $21 million (pre-tax), or 76 cents per share (diluted after-tax). This compares to a normalized historic average of second quarter catastrophe losses of approximately $10 million (pre-tax) or 36 cents per share (diluted after-tax).”

“Weather is certainly taking its toll on our second quarter results,” Hayden said. “As we have commented in the past, the second and third quarters have historically been prone to a higher incidence of weather-related losses as well as a higher level of losses from seasonal insurance products such as motorcycle and watercraft coverages. Given the level of catastrophe losses that we’ve experienced in the second quarter and assuming normalized weather throughout the remainder of the year, we forecast our full-year property and casualty combined ratio – losses and expenses as a percent of earned premium – to be less than 100 percent but possibly higher than the targeted range of 96 to 98 percent that we have previously discussed.”

In the second quarter of 2002, the company reported net income of $5.9 million, or 33 cents per share (diluted), including $0.7 million (after- tax), or 4 cents per share (diluted after-tax) of realized capital losses. Catastrophe losses in last year’s second quarter totaled $8.2 million (pre- tax), or 30 cents per share (diluted after-tax).