Net operating income was $1.03 per share (diluted) for the quarter, compared with $1.14 (diluted) per share for fourth-quarter 2000. Net capital gains dipped to $401 million from $533 million in fourth-quarter 2000. Revenues were down 2.5 percent for the quarter.

While saying that Midland was disappointed by the short-term results, John W. Hayden, president and chief executive officer of the Cincinnati-based company, added that actions taken in 2001 are paving the way for a return to the long-term profitability.

Mr. Hayden stressed "the validity of our diversification strategy." As an example, he pointed to Midland's ability to offset "the challenges in today's manufactured housing marketplace" by increasing results in other product lines.

Midland also said that the commercial liability programs of wholly owned subsidiary American Modern Insurance Group had produced after-tax losses for the fourth quarter 2001 of 5 cents per share (diluted), compared with 14 cents per share (diluted) in the same period the prior year.

Midland indicated that "higher-than-normal" fire losses had reduced Modern Insurance's net operating income in the fourth quarter by 23 cents per share compared with 19 cents in fourth-quarter 2000.

Combined ratio for Midland's property and casualty companies in the fourth quarter of 2001 was 96.2 percent, including 2.7 percentage points due to catastrophes, versus 93.3 percent, including 2.6 points in catastrophe losses, in fourth-quarter 2000.

Mr. Hayden declared that "fourth quarter performance was healthy relative to overall industry performance, but was impacted by non-catastrophe weather-related losses and unfavorable comparison to the very strong fourth quarter in 2000."

He also pointed out that "the impact of commercial liability losses on profitability declined significantly in the fourth quarter, adding just 0.9 points to the combined ratio compared with 2.2 points a year ago."

He said that Midland expects its profitability to improve in 2002 due to the group's exit in third-quarter 2001 from the commercial liability business.

Net pre-tax investment income for the fourth quarter fell 1.6 percent. Midland attributed this to lower reinvestment rates of return in the fixed income markets.

Mr. Hayden indicated that Midland is looking at rate increases "across the board," in nearly all product lines and lines of distribution.

"On average in the manufactured housing arena we're looking at 9 percent or 10 percent rate increases," Mr. Hayden indicated. He said that other increases will vary by product line.