RICHFIELD, Ohio - Gains from investments boosted net income at National Interstate Corp. during the quarter ended June 30.

The second-largest insurer of over-the-road buses said it earned $7 million during the three months ended June 30, an 8.5 percent increase from the $6.4 million earned a year ago.

On a per-share basis, National Interstate earned 36 cents during the most recent quarter, compared to 42 cents per share for the second quarter of 2004.

The lower per-share earnings this year reflect the increased number of shares outstanding resulting from the public stock offering the company completed in February.

Most of the second-quarter earnings gain came from an increase in net investment income of $1.1 million.

Net income for the first six months of 2005 increased by $2.7 million to $14.1 million, or 75 cents a share, compared to $11.4 million, or 74 cents a share for the same period of 2004. All per-share figures are fully diluted.

National Interstate's board of directors approved a 4-cents-per-share dividend that will be payable Sept. 15, to shareholders who owned the stock on Aug. 22.

National Interstate noted that its (GAAP) combined ratio was 84.1 percent for the second quarter of this year, up from 81.4 percent for the same period last year. Slight variances in both loss and loss-adjustment expenses and underwriting expenses contributed to the 2.7-point increase this year. The combined ratio for the first six months of 2005 was virtually unchanged, 82.4 percent, from the same six months last year.

Alan Spachman, chairman and president of National Interstate, said: "We remain satisfied with our year-to-date performance, which is in line with our expectations. We have been successful in growing our business and maintaining pricing discipline in a softening commercial insurance environment. We appreciate the loyalty and support our company and products continue to receive from the customers we serve."

Spachman noted that that the company transition to public company had encountered some rocks in the road, including deficiencies in internal controls and procedures. Adjustments were recorded in the second quarter but Spachman said they were not material to the 2005 interim results.

He indicated the company would improve its procedures.