RICHFIELD, Ohio - In spite of strong operational results, National Interstate Corporation expects to report sharply lower earnings for the fourth quarter of last year because of losses on investments.

For all of 2008, National Interstate Corp. anticipates reporting net income of 49 to 61 cents per share, down sharply from full-year 2007 net income of $2.25 per share.

Roughly a third of the decline in 2008 earnings is due to lower income from operations and two-thirds from losses on investments.

The parent company of leading motorcoach industry insurer, National Interstate Insurance, reported preliminary financial results for the final quarter and all of 2008 in mid-February and said it would have final numbers for the year and quarter later in the month.

The preliminary figures released by National Interstate show the company had net income from operations for the final three months of last year of 63 to 69 cents per share. That was the companys best quarterly performance of the year and compares to fourth-quarter 2007 income from operations of 59 cents per share.

For the full year, National Interstate said net income from operations will total between $1.66 and $1.72 per share, down from $2.27 per share in 2007.

Large claims, resulting from crashes occurring earlier in the year at companies insured by National Interstate, held 08 operational results in check during much of the year. Claims activity returned to "expected" levels in the fourth quarter.

Gross premiums written at National Interstate totaled $380 million in 2008, up nearly 10 percent from 2007. The 08 gain came despite a modest decline in premium income during the fourth quarter of last year.

But it was investment losses that damaged National Interstates bottom line both in the fourth quarter and for all of last year. (See Nov. 15 and Oct. 1 issues of Bus & Motorcoach News.)

Net realized losses from investments are expected to result in income impairment adjustments of roughly $10 million for the fourth quarter of 08, and $21 million for all of last year.

For the final quarter of last year, National Interstates net realized losses from investments totaled between 58 and 64 cents per share. That means the company could report a net loss for the quarter of 1 cent per share or income of as much as 11 cents a share. That compares to fourth-quarter 2007 net income of 57 cents a share.

As of Sept. 30, National Interstate had cash and invested assets valued at $544 million, versus $472 million a year earlier.