National Interstate Corp. (NATL, Financial) filed Quarterly Report for the period ended 2010-06-30.
National Interstate Corp. has a market cap of $427.2 million; its shares were traded at around $21.98 with a P/E ratio of 12.2 and P/S ratio of 1.4. The dividend yield of National Interstate Corp. stocks is 1.4%.
During the second quarter of 2009, income tax expense was positively impacted by a reduction of $0.5 million ($0.02 per share diluted) in the valuation allowance on deferred tax assets related to net realized losses on investments, primarily impairment charges. Valuation allowance reductions of $0.8 million ($0.04 per share diluted) and $0.6 million ($0.03 per share diluted) were recorded for the six months ended June 30, 2010 and 2009, respectively. All reductions to the deferred tax valuation allowance were due to both available tax strategies and the future realizability of previously impaired securities. Subsequent to March 31, 2010, we no longer have a valuation allowance against any deferred tax assets.
We had after-tax net realized gains from investments of $1.1 million ($0.06 per share diluted) and $1.7 million ($0.09 per share diluted) for the second quarter and first six months of 2010, respectively, compared to $0.7 million ($0.04 per share diluted) reported for both comparative periods in 2009. Included in the after-tax net realized gains for the second quarter and first six months of 2010 are net realized gains associated with security sales to generate funds for the Vanliner acquisition of $1.3 million and $1.6 million, respectively. Partially offsetting these gains were other-than-temporary impairment charges of $0.1 million for both the quarter and six months ended June 30, 2010. Net realized gains from the sales of securities of $1.2 million and $1.4 million for the three and six months ended June 30, 2009, respectively, were partially offset by other-than-temporary impairment adjustments of $0.6 million and $1.2 million, respectively.
As part of our captive programs, we have analyzed, on a quarterly basis, captive members loss performance on a policy year basis to determine if there would be a premium assessment to participants or if there would be a return of premium to participants as a result of less-than-expected losses. Assessment premium and return of premium are recorded as adjustments to premiums written (assessments increase premiums written; returns of premium reduce premiums written). For the second quarter of 2010 and 2009, we recorded a $1.2 million return of premium and a $0.4 million premium assessment, respectively. For the first half of 2010 and 2009, we recorded a return of premium of $0.3 million and $1.5 million, respectively.
Our premiums earned decreased $0.4 million, or 0.6%, to $69.2 million during the three months ended June 30, 2010 compared to $69.6 million for the same period in 2009. This slight decrease is primarily attributable to the transportation and Hawaii and Alaska components which, compared to 2009, decreased $0.7 million and $0.5 million, respectively. Such decreases are primarily attributed to reductions in gross premiums written in these components during 2009, which is directly related to the effect the 2008-2009 economic downturn had on our customers, as well as the effects of managements risk selection and pricing adequacy initiatives which were enacted beginning in late 2008 and continued into 2009. These decreases were partially offset by an increase of $0.5 million, or 3.3%, in the specialty personal lines component, due to the continued premium growth in our commercial vehicle product. Our Other component, which is comprised primarily of premium from assigned risk plans from states in which our insurance company subsidiaries operate and over which we have no control, increased $0.2 million, or 12.5%, during the second quarter of 2010 compared to the same period in 2009.
Our premiums earned increased $0.3 million, or 0.2%, to $139.4 million during the six months ended June 30, 2010 compared to $139.1 million for the same period in 2009. This increase is primarily attributable to the alternative risk transfer component, which grew $3.4 million, or 4.9%, over 2009 mainly due to the new captive programs introduced throughout 2009. Our specialty personal lines component increased $0.8 million, or 2.9%, resulting from the growth in our commercial vehicle product experienced throughout 2009 and into 2010. These increases were partially offset by decreases in the transportation and Hawaii and Alaska components of $2.6 million and $1.2 million, respectively, resulting from reductions in gross premiums written in
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National Interstate Corp. has a market cap of $427.2 million; its shares were traded at around $21.98 with a P/E ratio of 12.2 and P/S ratio of 1.4. The dividend yield of National Interstate Corp. stocks is 1.4%.
Highlight of Business Operations:
Our net income from operations for the three and six months ended June 30, 2010 was $6.5 million ($0.33 per share diluted) and $15.7 million ($0.81 per share diluted), respectively, compared to $10.9 million ($0.57 per share diluted) and $23.5 million ($1.21 per share diluted) for the same periods in 2009. The loss and LAE ratios for the second quarter and first half of 2010 were 66.5% and 63.9%, respectively, which are several percentage points higher than our historical ratios. In contrast, the favorable claims activity levels experienced throughout the first half of 2009 resulted in loss and LAE ratios of 56.6% for both the second quarter and first six months of 2009, both of which were several percentage points better than our historical ratios. It is not unusual for our business to experience quarterly loss and LAE fluctuations given our niche orientation and policy loss limits for certain commercial coverages. While we have initiated underwriting and pricing actions for products in our specialty personal lines component, the elevated loss and LAE ratio for the six months ended June 30, 2010 is consistent with our expectations and appears to be primarily due to the timing of claims activity. The underwriting expense ratios of 25.6% and 25.4% for the second quarter and first six months of 2010, respectively, were in line with managements expectations. Included in the increase for the first half of 2010 are costs associated with the Vanliner acquisition which contributed 0.6 percentage points to the underwriting expense ratio.During the second quarter of 2009, income tax expense was positively impacted by a reduction of $0.5 million ($0.02 per share diluted) in the valuation allowance on deferred tax assets related to net realized losses on investments, primarily impairment charges. Valuation allowance reductions of $0.8 million ($0.04 per share diluted) and $0.6 million ($0.03 per share diluted) were recorded for the six months ended June 30, 2010 and 2009, respectively. All reductions to the deferred tax valuation allowance were due to both available tax strategies and the future realizability of previously impaired securities. Subsequent to March 31, 2010, we no longer have a valuation allowance against any deferred tax assets.
We had after-tax net realized gains from investments of $1.1 million ($0.06 per share diluted) and $1.7 million ($0.09 per share diluted) for the second quarter and first six months of 2010, respectively, compared to $0.7 million ($0.04 per share diluted) reported for both comparative periods in 2009. Included in the after-tax net realized gains for the second quarter and first six months of 2010 are net realized gains associated with security sales to generate funds for the Vanliner acquisition of $1.3 million and $1.6 million, respectively. Partially offsetting these gains were other-than-temporary impairment charges of $0.1 million for both the quarter and six months ended June 30, 2010. Net realized gains from the sales of securities of $1.2 million and $1.4 million for the three and six months ended June 30, 2009, respectively, were partially offset by other-than-temporary impairment adjustments of $0.6 million and $1.2 million, respectively.
As part of our captive programs, we have analyzed, on a quarterly basis, captive members loss performance on a policy year basis to determine if there would be a premium assessment to participants or if there would be a return of premium to participants as a result of less-than-expected losses. Assessment premium and return of premium are recorded as adjustments to premiums written (assessments increase premiums written; returns of premium reduce premiums written). For the second quarter of 2010 and 2009, we recorded a $1.2 million return of premium and a $0.4 million premium assessment, respectively. For the first half of 2010 and 2009, we recorded a return of premium of $0.3 million and $1.5 million, respectively.
Our premiums earned decreased $0.4 million, or 0.6%, to $69.2 million during the three months ended June 30, 2010 compared to $69.6 million for the same period in 2009. This slight decrease is primarily attributable to the transportation and Hawaii and Alaska components which, compared to 2009, decreased $0.7 million and $0.5 million, respectively. Such decreases are primarily attributed to reductions in gross premiums written in these components during 2009, which is directly related to the effect the 2008-2009 economic downturn had on our customers, as well as the effects of managements risk selection and pricing adequacy initiatives which were enacted beginning in late 2008 and continued into 2009. These decreases were partially offset by an increase of $0.5 million, or 3.3%, in the specialty personal lines component, due to the continued premium growth in our commercial vehicle product. Our Other component, which is comprised primarily of premium from assigned risk plans from states in which our insurance company subsidiaries operate and over which we have no control, increased $0.2 million, or 12.5%, during the second quarter of 2010 compared to the same period in 2009.
Our premiums earned increased $0.3 million, or 0.2%, to $139.4 million during the six months ended June 30, 2010 compared to $139.1 million for the same period in 2009. This increase is primarily attributable to the alternative risk transfer component, which grew $3.4 million, or 4.9%, over 2009 mainly due to the new captive programs introduced throughout 2009. Our specialty personal lines component increased $0.8 million, or 2.9%, resulting from the growth in our commercial vehicle product experienced throughout 2009 and into 2010. These increases were partially offset by decreases in the transportation and Hawaii and Alaska components of $2.6 million and $1.2 million, respectively, resulting from reductions in gross premiums written in
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