Mr. Hayden: Midland is a specialty property and casualty insurance company. We focus principally on short-tail personal lines property classes of business. We grew out of a vertically integrated mobile home company years ago so a large portion of our property and casualty premium is still premium relating to manufactured housing insurance. That's a little bit better than 50% of our total premium base. The remainder is made up of a number of other specialty products, including watercraft, dwelling fire, motorcycle, credit life, collateral protection products, a little bit of recreational vehicle and some collector car insurance. We do about half of our business through a more conventional agency relationship be it retail, wholesale or specialty agent. The other half of our business emanates from a point of sale or finance transaction where we do business with retailers, lenders and manufacturers of different sorts and place insurance at the time a product is built, sold or financed. Really, it's multifaceted distribution and it's a key ingredient to our success at American Modern, Midland's group of insurance subsidiaries.
TWST: What's going on in the mobile home marketplace today?
Mr. Hayden: The manufactured housing market has been pretty
challenged over the course of the past three or four years. In
1998, the market experienced its recent peak and during that
year, 380,000 new manufactured homes were shipped. The industry
probably sold too many homes in the late 1990s and, as a result,
last year sold just 180,000 new manufactured homes. As you can
see, it's been a very dramatic drop off in new home sales. That
means that our business that comes from a finance or a point of
sale transaction is substantially down from what it might have
been at its peak, which has caused us to shift our emphasis and
draw more business from the agency channels. It is this ability
to balance our distribution and shift our focus with changing
market conditions that has really served us well over time. As
for the manufactured housing point of sale, it's probably been
three years in a pretty deep slump and we suspect that 2003 will
look much the same. We are just now starting to hear the rumors
and rumblings of folks who are thinking about picking up the
pieces to move forward in the manufactured housing finance
business. So our hope is that 2004 might be brighter. Obviously
that's a little bit forward looking so consider yourself properly
disclaimed, but our sense is that 2003 on the point of sale side
of our business is going to be more of the same and then 2004
might have some brighter spots to it. The agency side of our
mobile home business is growing nicely. We've actually been
successful in converting agents' books of business into our
company over the course of the past couple of years and that's
allowed us to grow that side of the business while we were
experiencing declines in the point of sale and finance side of
our business.
Tickers included in this excerpt: MLAN
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