RICHFIELD, Ohio -- National Interstate Corporation has reported sharply higher net income for the first quarter of this year in spite of a double-digit decline in premium income resulting from motorcoach operators insuring fewer vehicles and rates remaining soft.

The parent company of leading motorcoach industry insurer, National Interstate Insurance, said its earned $12.6 million, or 65 cents per diluted share, during the first three months of this year, compared to net income of $9.5 million, or 49 cents per diluted share, for the same quarter of last year.

The record 2009 first-period earnings primarily reflect more favorable claims results and flat expenses. The companys loss ratio was five percentage points better in this years first quarter compared to last year.

Net investment income was slightly lower in this years first quarter, reflecting todays generally lower yields.

Gross premiums written during the first quarter of this year were $117.4 million, down 11.9 percent from the $133.3 million reported for the first quarter of 2008.

The revenue slide occurred in three of National Interstates business units.

The alternative risk transfer component produced less premium income "due to a combination of fewer insured vehicles, reflecting the current economic conditions and rate decreases reflecting favorable claims for these customers," said National Interstate.

The companys "transportation" and Hawaii and Alaska units also saw decreases in premiums because of the impact of the current U.S. economic downturn on the company's commercial customers, "primarily through lack of growth relative to vehicle counts and the effects of pricing and risk selection initiatives specific to a few of the products, including smaller charter operations that were put in place in the third quarter of 2008."

At the same time, the companys specialty personal lines saw a 5 percent increase in gross premiums during the first quarter.

"We are extremely pleased with the 2009 first-quarter operating profits," said National Interstate President and CEO Dave Michelson. "Our underwriting approach is to price our products to achieve an underwriting profit even if we forgo volume in the short run as a result."

The National Interstate board approved a seven cents per share dividend, payable June 12, to shareholders of record May 29.

The book value of National Interstate shares increased to $11.65 at the end of the first quarter, compared to $11.20 a year earlier.