Landmark American Insurance Co. has entered the ranks of the top 10 surplus lines insurers even though the transfer of one book of business to an admitted affiliate and hurricane-related losses have pounded the company's annual results in recent years.

Despite Landmark's results in 2005, the insurer's parent group continues to be profitable and Landmark's results have rebounded during the first half of 2006, according to David E. Leonard, executive vp and chief strategic officer of Landmark and its immediate parent company, RSUI Indemnity Inc., both based in Atlanta. The two insurers form RSUI Group Inc., a subsidiary of New York-based Alleghany Corp.

Landmark ranks as the nation's eighth-largest surplus lines insurer, based on nearly $699.7 million of nonadmitted premiums written in 2005, a 7.2% decrease from 2004.

Gross premiums written last year dropped a commensurate 6.9% to more than $701 million.

But about half of the reduction in Landmark's gross and nonadmitted premiums did not translate into a loss of business for the insurance group, Mr. Leonard said.

Among the business Landmark writes is directors and officers liability insurance on a nonadmitted basis, which accounted for about 11.6% of the insurer's $390.9 million of gross written premium in 2003--the year it was acquired by Alleghany.

But after regulators authorized RSUI Indemnity to write D&O coverage on an admitted basis, a majority of Landmark's D&O business was moved there last year. As a result, Landmark's D&O book of business fell to $16.8 million of gross written premiums in 2005 from nearly $45 million a year earlier.

Landmark began writing much of its D&O book of business in 2003 because the ratings of its former parent company, Royal & SunAlliance Insurance Group P.L.C. of London, dropped after Alleghany purchased Landmark and other affiliates.

Before the ratings downgrade, RSUI Indemnity had arranged to use Royal's admitted paper to write the D&O business until RSUI Indemnity's own admitted paper was approved by regulators. But RSUI Indemnity risked losing the business if it had continued using the downgraded Royal paper, so the business was moved to Landmark, Mr. Leonard said.

Landmark last year also reported its second consecutive net earnings loss. But the $629,082 loss was a major improvement over 2004's loss of $5.8 million.

In both years, the losses were attributable to hurricane damage claims, according to Mr. Leonard.

He noted, however, that Landmark is 90% reinsured by RSUI Indemnity, which has been profitable every year but two--2001 and 2005--since its founding in 1988.

Despite the rough year for Landmark, its policyholder surplus at year-end 2005 more than doubled to $114.6 million from $56.6 million at year-end 2004. But that was due to a $50 million capital infusion by RSUI Indemnity, according to rating agency A.M. Best Co. Inc. of Oldwick, N.J.

For the first half of 2006, Landmark has reported improved results compared with the same period last year. Its gross written premiums grew 24.9% to nearly $422.5 million, and nonadmitted premiums grew 23.8% to $418.2 million. Net earnings for the first half this year more than doubled to nearly $9 million.

While Landmark reported a net loss in 2005, it reported a profit for the first half of the year.

Gross premiums for primary and excess property business for the first half this year rose 34% to nearly $251.2 million compared with the same period last year. Property is Landmark's largest book of business, accounting for 54.5%, of its gross written premium last year.

While Landmark's capacity for wind perils is 25% to 50% of its pre-Katrina levels, rates are two to five times higher, Mr. Leonard said.

Modified catastrophe modeling has spurred that change, Mr. Leonard said. Landmark's property catastrophe exposure in wind-prone areas of the United States rose dramatically under revised catastrophe modeling, which dramatically reduced the availability of reinsurance while driving up reinsurance rates, he said. That led to a substantial reduction in the amount of wind perils the insurer could accept.

Landmark also writes primary general liability, professional liability, umbrella and excess, excess and lead excess, and umbrella-only coverage.

Managing general agents are a new source of business for Landmark. The insurer has given its pen to nine MGAs and expects to sign up several more shortly, according to Mr. Leonard.

MGAs produced more than $320,000 of business for Landmark during the second half of 2005. During the first half of 2006, MGAs produced $6.9 million of gross premiums.