RICHFIELD, Ohio, March 21 /PRNewswire-FirstCall/ -- National
Interstate Corporation (NASDAQ:NATL) today reported net income for
the fourth quarter ended December 31, 2005 of $7.9 million ($.41
per share diluted), compared to $6.7 million ($.42 per share
diluted) for the fourth quarter of 2004. The 19.1% increase in net
income for the fourth quarter of 2005 reflects a 22.4% increase in
earned premium and a 45.6% increase in net investment income,
offset by a 1.1 percentage point increase in the GAAP combined
ratio. Net income for the full year of 2005 increased by $7.5
million to $30.3 million ($1.60 per share diluted), compared to
$22.8 million ($1.47 per share diluted) for the same period of
2004. The per share comparisons for both periods are impacted by
approximately 23.0% more shares outstanding in 2005 from the
Initial Public Offering that was completed in February 2005. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050114/NILOGO) The GAAP
combined ratio was 83.2% for the fourth quarter of 2005, compared
to 82.1% for the same period in 2004. The loss and loss adjustment
expense ratio of 58.6% for the fourth quarter of 2005 was 2.3
percentage points higher than the same period last year and
consistent with our expectations. The underwriting expense ratio
was 24.7% for the fourth quarter of 2005, compared to 25.8% for the
fourth quarter of 2004. The decrease in the underwriting expense
ratio is a result of several factors including (i) the Company
continuing to monitor and control fixed expenses as the Company's
business grows, (ii) increased risk retention across several
product lines that contributes to a decrease in the expense ratio
as the additional retained written premium is earned, and (iii)
lower expenses related to charges we receive from states for
guarantee funds and other fees. The GAAP combined ratio for the
full year of 2005 of 82.6% decreased 0.9 percentage points compared
to 83.5% for the same period of 2004. This combined ratio decrease
reflects a 2.7 percentage point decline in the expense ratio for
the same reasons noted above for the fourth quarter and a 1.8
percentage point increase in the loss and loss adjustment ratio
caused by slightly higher accident year 2005 losses which were
offset by $5.2 million of favorable development of prior year
reserves. "We are very satisfied with the results from both the
fourth quarter and full year of 2005 and the successful completion
of our first year as a public company. Our people took advantage of
the available opportunities to grow profitability and these efforts
led to another record year for sales and profits," stated Alan
Spachman, Chairman and President of National Interstate
Corporation. About National Interstate Corporation National
Interstate Corporation (NASDAQ:NATL), founded in 1989, is a
specialty property and casualty insurance company with a niche
orientation and focus on the transportation industry. National
Interstate differentiates itself within its markets by offering
insurance products and services designed to meet the unique needs
of targeted insurance buyers that we believe are underserved by the
insurance industry. Our products include property and casualty
insurance for transportation companies, captive insurance programs
for commercial risks that we refer to as our alternative risk
transfer component, specialty personal lines consisting of
primarily recreational vehicle coverage, and transportation and
general commercial insurance in Hawaii and Alaska. We offer our
insurance products through multiple distribution channels including
independent agents and brokers, affiliated agencies and agent
Internet initiatives. Our insurance subsidiaries are rated "A"
(Excellent) by A.M. Best Co. National Interstate is an
independently operated subsidiary of Great American Insurance
Company, a property-casualty subsidiary of American Financial
Group, Inc. (NYSE:AFGNASDAQ:AFG). The Company is headquartered in
Richfield, Ohio, which is located in northeastern Ohio between
Cleveland and Akron. Forward Looking Statements This document,
including any information incorporated by reference, contains
"forward-looking statements" (within the meaning of Private
Securities Litigation Reform Act of 1995). All statements, trend
analyses and other information contained in this press release
relative to markets for our products and trends in our operations
or financial results, as well as other statements including words
such as "may," "target," "anticipate," "believe," "plan,"
"estimate," "expect," "intend," "project," and other similar
expressions, constitute forward-looking statements. We made these
statements based on our plans and current analyses of our business
and the insurance industry as a whole. We caution that these
statements may and often do vary from actual results and the
differences between these statements and actual results can be
material. Actual results may differ from those expressed or implied
by the forward-looking statements. Factors that could contribute to
these differences include, among other things: general economic
conditions and other factors, including prevailing interest rate
levels and stock and credit market performance which may affect
(among other things) our ability to sell our products, our ability
to access capital resources and the costs associated with such
access to capital and the market value of our investments; customer
response to new products and marketing initiatives; tax law
changes; increasing competition in the sale of our insurance
products and services and the retention of existing customers;
changes in legal environment; regulatory changes or actions,
including those relating to regulation of the sale, underwriting
and pricing of insurance products and services and capital
requirements; levels of natural catastrophes, terrorist events,
incidents of war and other major losses; adequacy of insurance
reserves; and availability of reinsurance and ability of reinsurers
to pay their obligations. The forward-looking statements herein are
made only as of the date of this report. The Company assumes no
obligation to publicly update any forward- looking statements.
Contact: Tanya Inama 877-837-0339 NATIONAL INTERSTATE CORPORATION
SELECTED FINANCIAL DATA (in thousands, except per share data) Three
months ended Year ended December 31, December 31, 2005 2004 2005
2004 Operating Data: Gross premiums written $37,338 $32,269
$270,036 $224,984 Net premiums written $33,153 $26,101 $211,106
$166,419 Premiums earned 51,931 42,422 194,397 156,908 Net
investment income 3,542 2,433 12,527 8,613 Net realized gains (206)
379 278 1,661 Other income 500 527 1,974 1,967 Total revenues
55,767 45,761 209,176 169,149 Losses and loss adjustment expenses
30,408 23,876 117,449 92,008 Commissions and other underwriting
expense 10,434 9,846 35,741 34,201 Other operating and general
expenses 2,870 1,619 9,428 6,888 Interest expense 358 551 1,421
1,610 Total expenses 44,070 35,892 164,039 134,707 Income before
income taxes 11,697 9,869 45,137 34,442 Provision for income taxes
3,775 3,216 14,857 11,674 Net income $7,922 $6,653 $30,280 $22,768
Per Share Data: Earnings per common share, basic (e) $0.42 $0.43
$1.62 $1.50 Earnings per common share, assuming dilution (e) $0.41
$0.42 $1.60 $1.47 Book value per common share, basic (at period
end) 7.32 4.69 7.32 4.69 Weighted average number of common shares
outstanding, basic 19,041 15,530 18,737 15,171 Weighted average
number of common shares outstanding, diluted 19,244 15,686 18,975
15,480 Common shares outstanding at period end 19,055 15,530 19,055
15,530 Cash dividend per common share $0.04 NA $0.08 NA GAAP
Ratios: Losses and loss adjustment expense ratio 58.6% 56.3% 60.4%
58.6% Underwriting expense ratio 24.7% 25.8% 22.2% 24.9% Combined
ratio 83.2% 82.1% 82.6% 83.5% Return on equity (b) 23.2% 38.2%
28.5% 37.2% Average shareholders' equity $136,380 $69,639 $106,161
$61,235 At December 31, At December 31, 2005 2004 Balance Sheet
Data (GAAP): Cash and investments $320,220 $238,951 Reinsurance
recoverable 77,834 63,128 Total assets 523,003 401,236 Unpaid
losses and loss adjustment expenses 223,207 171,031 Long-term debt
(a) 16,297 32,547 Total shareholders' equity $139,533 $72,789
Statutory Data: (c) Policyholder Surplus (Statutory) (d) $122,825
$92,124 (a) Long-term debt at December 31, 2004 includes a $15
million loan from Great American Insurance Company that was paid in
full in February 2005. (b) The ratio of net income to the average
of shareholders' equity at the beginning and at the end of the
period. (c) While financial data is reported in accordance with
accounting principles generally accepted in the United States, or
GAAP, for shareholder and other investment purposes, it is reported
on a statutory basis for insurance regulatory purposes. Certain
statutory expenses differ from amounts reported under GAAP.
Specifically, under GAAP, premium taxes and other variable costs
incurred in connection with writing new and renewal business are
capitalized and amortized on a pro rata basis over the period in
which the related premiums are earned. On a statutory basis, these
items are expensed as incurred. In addition, certain other
expenses, such as those related to the expensing or amortization of
computer software, are accounted for differently for statutory
purposes than the treatment accorded under GAAP. (d) The statutory
policyholder surplus of National Interstate Insurance Company,
which includes the statutory policyholder surplus of its
subsidiary, National Interstate Insurance Company of Hawaii. (e)
Earnings per share are computed independently for each quarter and
the full year based upon respective average shares outstanding.
Therefore, the sum of the quarterly earnings per share amounts may
not equal the annual amounts reported.
http://www.newscom.com/cgi-bin/prnh/20050114/NILOGO
http://photoarchive.ap.org/ DATASOURCE: National Interstate
Corporation CONTACT: Tanya Inama of National Interstate
Corporation, +1-877-837-0339, or Web site:
http://www.nationalinterstate.com/
Copyright
