The Midland Co. Anticipates Record Q1

Ohio-based The Midland Company, a provider of specialty insurance products and services, indicated that it anticipates record results for its first quarter ended March 31, 2004.

Based on preliminary data, the company believes that net income per share will be in the range of 85 to 90 cents, including
approximately 15 cents in realized capital gains. That would compare with the prior record of 56 cents in last year’s first quarter, which included 7 cents in realized capital losses. (All per share amounts are on an after-tax diluted basis.)

John Hayden, president and CEO, noted, “We’re anticipating net income before realized capital gains and losses in the range
of 70 to 75 cents, which would put us in the range of 15 percent ahead of the prior record of 63 cents (comparable basis) that we reported in last year’s first quarter. The company believes this measure of net income before realized capital gains and losses provides a better measure of the ongoing performance of the company’s core insurance operations.

“In addition to record earnings, the company experienced near double-digit percentage growth in property and casualty direct and assumed written premiums, in line with our previously announced expectations. The growth in the premium volume includes growth in our core manufactured housing and site built lines. As anticipated, we experienced a decrease in the premiums from our motorcycle lines as we implemented corrective underwriting and rate actions.”

Hayden said that the first quarter combined ratio – losses and expenses as a percent of earned premium – is expected to be in the range of 94 to 95 percent, compared with 96.2 percent in last year’s first quarter. A combined ratio under 100 indicates that an insurance company has generated profits from its underwriting activities.

“We continue to be pleased by the strong underwriting results in our manufactured housing line of business. We are also encouraged by the improved underwriting results in several of our other specialty lines such as motorcycle, site built dwelling and recreational vehicle,” Hayden continued.

“We remain confident in our 2004 outlook that we discussed in February. Our full-year target of 96 to 98 percent for the property and casualty combined ratio allows for the traditional second and third quarter up tick in claims due to weather patterns and seasonal products. This would translate to an earnings per share, exclusive of capital gains and losses, of $2.00 to $2.20 per share. At the same time, we expect to approach double- digit premium growth with rate increases and continued growth in most of our specialty insurance product lines.

“We are committed to maintaining American Modern’s position as one of the best specialty property and casualty insurance companies in the country. While weather and other unpredictable events can impact our short-term performance, we believe that our disciplined approach to underwriting and maintaining rate adequacy positions us to achieve our long- term financial objectives.”