National Interstate Corporation

Robbins Arroyo LLP: Acquisition of National Interstate Corporation (NATL) by American Financial Group, Inc. (AFG) May Not Be in Shareholders’ Best Interests

Robbins Arroyo LLP are investigating the proposed acquisition of National Interstate Corporation (NASDAQ: NATL) by American Financial Group, Inc. (NYSE: AFG). On March 7, 2016, the two companies announced a proposal pursuant to which American Financial will acquire National Interstate. Under the terms of the proposal, National Interstate shareholders will receive $30.00 in cash for each share of National Interstate common stock.

Is the Proposed Acquisition Best for National Interstate and Its Shareholders?

Robbins Arroyo LLP’s investigation focuses on whether the board of directors at National Interstate is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.

As an initial matter, the $30.00 merger consideration represents a premium of only 27.7% based on National Interstate’s average closing price for the past month. This premium is significantly below the average one month average premium of nearly 41% for comparable transactions within the past five years. In the last three years, National Interstate traded as high as $36.36 on July 18, 2013, and most recently traded above the merger consideration – at $30.40 – on November 4, 2015.

On February 23, 2016, National Interstate reported earnings results for its fourth quarter 2015. Gross premiums written increased 2% for the 2015 fourth quarter and 6% for the 2015 full year compared to the same 2014 periods. Net income per share for the 2015 full year improved to $1.05 as compared to $0.56 for the 2014 full year. In commenting on these results, National Interstate Chief Executive Officer Dave Michelson remarked, “In 2013 we recognized that increasing claims severity and competitive insurance rates were reducing our underwriting margins, particularly related to commercial auto liability. This quarter we identified the need to strengthen claims reserves for the 2012 and 2013 accident years. However, on the positive side accident years 2014 and 2015, both with combined ratios of approximately 98%, are showing the anticipated improvement. We believe that the cumulative effect of the rate increases we have obtained since 2013 and the disciplined pricing on new business are having the desired improvement on our underwriting results.”

In light of these facts, Robbins Arroyo LLP is examining National Interstate’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.

National Interstate shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.

National Interstate shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.


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