Friday, October 22, 2004

Local insurers feel effects of hurricanes on earnings

By James McNair and Cliff Peale
Enquirer staff writers

Payouts to insurance policyholders who suffered hurricane damage in August and September led to a 44 percent drop in third-quarter net income at Midland Co.

The Amelia-based company reported $192.9 million in revenue Thursday, a 4.7 percent increase, for the three months ending Sept. 30. But its net income fell to $2.4 million from $4.3 million.

Midland said it paid $18.7 million for catastrophic-coverage claims during the quarter, including $17.8 million for hurricanes Charley, Frances, Ivan and Jeanne.

Midland specializes in insuring such property as manufactured homes, boats and recreational vehicles. Its stock price closed Thursday at $27.05, down 9 cents.

In other insurance-company earnings news:

Cincinnati Financial

Hefty payouts to hurricane and storm victims also put a dent in the earnings of Cincinnati Financial Corp. of Fairfield.

The company said catastrophe-related payouts came to $86 million before taxes during the third quarter, compared to $41 million in the same period last year. Because the company's reinsurance policies cover the bulk of those expenses, the effect on net income was less pronounced than for Midland. Third-quarter net income fell 13.5 percent to $90 million. Revenue, meanwhile, rose 14 percent to $2.7 billion.

Cincinnati Financial shares closed at $38.87, down 25 cents.

American Financial Group

The sale of its stake in Provident Financial Group Inc. added $134 million to American Financial Group's third-quarter earnings, the company said Thursday. The company said it earned $172 million, or $2.30 per share.

During the same period last year, AFG earned $41.6 million, or 59 cents per share.

Losses of about 30 cents per share from the hurricanes in Florida drove AFG's core earnings from insurance operations down to $39.7 million, or 53 cents per share, from last year's $50.8 million, or 72 cents per share. But for the first nine months, core earnings jumped 36.1 percent to $148.8 million, or $2 per share, from $109.3 million, or $1.56 per share.

AFG said it expects core earnings of $2.70 to $2.85 per share this year and $3.15 to $3.40 per share in 2005.

Shares in AFG closed at $28.23, up 28 cents.

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