RICHFIELD, Ohio -- National Interstate Corporation has reported sharply higher net income for the second quarter and first half of this year despite a dip in premium income.

The parent company of National Interstate Insurance said it earned $12.1 million, or 63 cents per diluted share, during the second three months of 09, compared to net income of $4.37 million, or 23 cents per diluted share, during the second quarter of last year. Thats a 174 percent per-share increase.

Net income increased to $24.8 million, or $1.28 per share, during the first six months of this year, versus earnings of $13.94 million, or 72 cents per share, during the first half of last year. Per-share earnings were up 78 percent.

A pair of factors combined to heavily influence the strong 09 earnings performance: National Interstate tightened its underwriting, and the number of large claims declined as a result of its customers having a reduced number of major accidents and -- because of the economic slowdown -- its customers having fewer vehicles on the road.

National Interstates loss and loss adjustment expense ratio for both the second quarter and first six months of this year was 56.6 percent, a significant improvement over 2008.

Gross premiums written of $92.8 million during the second quarter of this year and $210.2 million during the first half of 09 were 8.6 percent and 10.5 percent below the same periods last year, respectively.

The only segment of National Interstates business to see an increase in gross premiums written during the second quarter was its alternative-risk transfer, or captive, insurance program.

A week after National Interstate released its earnings, it announced it had signed three new customers for its large account rental captive program, bringing the total to seven.

The large account captive program is for fleet operators that have annual insurance premiums of between $2 million and $11 million.

"Despite continued soft market conditions and a challenging economic environment, we have been able to grow our innovative (large account rental captive) program," said Dave Michelson, National Interstate president and chief executive.

Net investment income at National Interstate decreased for both the second quarter and first six months of 2009, reflecting lower yields primarily on cash, cash equivalents and short-term investments, as well as a greater allocation to high-quality investments to better weather the current financial crisis, the company said.

"We are pleased with the 2009 second-quarter operating results which are consistent with our expectations," said Michelson. "In consideration of the difficult economic conditions and the continued overly aggressive pricing from competition in the commercial insurance markets, we are maintaining long-term focus on our disciplined underwriting practices.

"This approach has adversely affected top-line growth in the short term, but helped ensure increased and sustainable profitability. Also, we have been impacted by our current customers insuring fewer vehicles as indicated by our overall in-force policy count which is down less than our gross premiums written shortfall.

"We have experienced most of our recent growth in (alternative risk transfer) and the addition of four new programs in the first half of 2009 confirms the growth potential for this component," Michelson added.