What is National Interstate Probability of Financial Distress (%)?
Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, National Interstate's Probability of Financial Distress (%) is 0.00%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison of National Interstate's Probability of Financial Distress (%)
For the Insurance - Property & Casualty subindustry, National Interstate's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
National Interstate's Probability of Financial Distress (%) Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, National Interstate's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where National Interstate's Probability of Financial Distress (%) falls into.
National Interstate Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | 0.00 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.00% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For insurance companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
National Interstate (National Interstate) Business Description
Traded in Other Exchanges
N/A
Address
National Interstate Corp was founded in 1989. The Company, together with its subsidiaries operates as an insurance holding company group that underwrites and sells traditional and alternative property and casualty insurance products to the passenger transportation, trucking and moving and storage industries, general commercial insurance to small businesses in Hawaii and Alaska and personal insurance to owners of recreational vehicles throughout the United States. It is a specialty property and casualty insurance company with a niche orientation and a focus on the transportation industry. It offers over 40 product lines in the specialty property and casualty insurance market, which it groups into four general business components, alternative risk transfer, transportation, specialty personal lines and Hawaii and Alaska based on the class of business, insureds' risk participation or geographic location. Alternative risk transfer underwrites, markets and distributes truck transportation, passenger transportation and moving and storage ART insurance products, also known as captives. Transportation underwrites commercial auto liability, general liability, physical damage, workers' compensation and motor truck cargo and related coverages for truck and passenger operators. Specialty personal lines offer coverage for campsite liability, vehicle replacement coverage and coverage for trailers, golf carts and campsite storage facilities. The Company offers its products through multiple distribution channels including independent agents and brokers, program administrators, affiliated agencies and agent internet initiatives. The Company competes with Lancer Insurance Company, RLI Corporation, Great West Casualty Company, Northland Insurance Company, Sentry Insurance, Progressive Corporation and National General Insurance, Liberty Mutual Insurance Company, First Insurance, Dongbu Insurance Company, DTRIC Insurance Company, Zurich Insurance Company, American International Group, Inc., Travelers Company, Inc.
Executives
| Norman L Rosenthal |
director |
C/O ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143 |
| David W Michelson |
director |
111 CONGRESSIONAL BLVD., SUITE 500, CARMEL IN 46032 |
| Joseph E Consolino |
director |
3250 INTERSTATE DRIVE, RICHFIELD OH 44286 |
| Keith A Jensen |
director |
|
| Elliott Theodore H Jr |
director |
ION GEOPHYSICAL CORPORATION 2101 CITYWEST, BLDG 3, SUITE 400 HOUSTON TX 77042 |
| Vito C Peraino |
director |
301 EAST FOURTH STREET, CINCINNATI OH 45202 |
| American Financial Group Inc |
10 percent owner |
GREAT AMERICAN INSURANCE GROUP TOWER, 301 E. 4TH STREET, CINCINNATI OH 45202 |
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