Ohio-based The Midland Company is currently assessing the anticipated losses from Hurricane Katrina, which made landfall along the borders of Louisiana and Mississippi earlier this week.
“Access to some of the most affected areas has been restricted, so we can’t yet know the exact extent of the damage,” said John Hayden, Midland president and chief executive officer. “We have, however, quantified our exposures along the path of the storm and based on our modeled projections, along with our extensive experience in assessing the financial impact of such catastrophic events, we believe that our after-tax losses, considering the effect of reinsurance and other catastrophe related items, from Hurricane Katrina should be in the range of 40 to 60 cents per share. Losses of the magnitude we currently anticipate from Katrina are well contained within the structure of our catastrophe reinsurance programs. As a point of reference, Midland reported catastrophe losses of 98 cents per share in last year’s third quarter reflecting the impact of the four hurricanes that impacted Florida and the southeastern United States.” All per share amounts are on an after-tax, diluted basis.
Hayden added, “It is important to note that, exclusive of the hurricane losses, we continue to experience very strong underwriting results from our major lines of business in the third quarter as well as on a year to date basis. These favorable underwriting results allow us to remain optimistic about our full year earnings outlook. Assuming normal weather conditions for the remainder of 2005, we believe that we’re still on track to produce record levels of earnings in the range of $2.95 to $3.15 per share, assuming no realized capital gains or losses. This level of earnings would be well ahead of our prior record results of $2.49 per share, exclusive of realized capital gains, reported in 2004.”
American Modern Insurance Group, Midland’s insurance subsidiary, has mobilized 90 company claims adjusters from around the country to serve its policyholders in the affected areas. American Modern has also extended its office hours and will remain open over the Labor Day weekend so that policyholders can file claims.
“Our hearts go out to all those that have been affected by Hurricane Katrina,” Hayden added. “We are committed to delivering on our promise to our policyholders in these difficult times, and doing so in a most professional and empathic manner. We strive to bring quick resolution to our policyholders. Historically, we have settled over 85 percent of our catastrophe claims within the first 30 days.”
M/G Transport Group, Midland’s niche transportation business subsidiary, maintains operations in New Orleans. “M/G Transport is also dealing with the impact of Hurricane Katrina, which has cut-off access to our New Orleans offices and disrupted our normal shipping patterns. While it will take a while for M/G Transport to resume normal operations, we are not anticipating a significant impact on Midland as a whole,” Hayden said. M/G Transport Group accounts for approximately 5 percent of Midland’s total revenues.
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