UNITED STATES 		 SECURITIES AND EXCHANGE COMMISSION 			 WASHINGTON, D.C. 20549 				 FORM 10-K 				ANNUAL REPORT 		 Pursuant to Section 13 or 15(d) of 		 the Securities Exchange Act of 1934 		 For the Fiscal Year Ended December 31, 1999 			Commission File Number - 1-6026 			 THE MIDLAND COMPANY 			 Incorporated in Ohio 		I.R.S. Employer Identification No. 31-0742526 			 7000 Midland Boulevard 			 Amelia, Ohio 45102-2607 			 Tel. (513) 943-7100 Securities registered pursuant to Section 12(b) of the Act: 	Common stock - no par value. - NASDAQ Securities registered pursuant to Section 12(g) of the Act: None. 	Indicate by check mark whether the registrant (1) has filed all other reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. 	Yes __X_ No_____ 	Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] 	The aggregate market value of the voting common stock held by nonaffiliates, which includes shares held by executive officers and directors, of the registrant as of March 20, 2000 was $203,208,000. 	Number of shares of common stock outstanding as of March 20, 2000 - 9,451,517. 		 Documents Incorporated by Reference 	Annual Report to Shareholders for the year ended December 31, 1999 is incorporated by reference into Parts I, II and IV. 	Registrant's Proxy Statement dated March 17, 2000 is incorporated by reference into Parts III and IV. 			 THE MIDLAND COMPANY 				 FORM 10-K 			 DECEMBER 31, 1999 Certain statements contained in this report that are not historical facts constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created by that Act. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Any forward-looking statement speaks only as of the date made. The Midland Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they are made. Statements concerning expected financial performance, on-going business strategies and possible future action which The Midland Company intends to pursue to achieve strategic objectives constitute forward-looking information. Implementation of these strategies and the achievement of such financial performance are each subject to numerous conditions, uncertainties and risk factors. Factors which might cause deviations from the forward looking statements include, without limitations, the following: 1) adverse weather conditions, fluctuations in the investment markets, changes in the retail marketplace, or fluctuations in interest rates; 2) changes in the laws or regulations affecting the operations of the Company or any of its subsidiaries; 3) changes in the business tactics or strategies of the Company or any of its subsidiaries; 4) acquisition(s) of assets or of new or complementary operations, or divestiture of any segment of the existing operations of the Company or any of its subsidiaries and 5) changing market forces or litigation which necessitate, in management's judgment, changes in plans, strategy or tactics of the Company or its subsidiaries or fluctuations in interest rates, any one of which might materially affect the operations of the Company and/or its subsidiaries. 				 PART I ITEM 1. Business. 	Incorporated by reference from the inside cover and pages 2 through 17 	and 37 and 38 (Note 17) of the Registrant's 1999 Annual Report to 	Shareholders. The number of persons employed by the Registrant was 	approximately 980 at December 31, 1999. 	Property and Casualty Loss Reserves 	The Company's consolidated financial statements include the estimated 	liability (reserves) for unpaid losses and loss adjustment expenses 	(LAE) of its property and casualty insurance subsidiaries. The 	liability is presented net of amounts recoverable from salvage and 	subrogation and includes amounts recoverable from reinsurance for which 	receivables are recognized. 	The Company establishes reserves for losses that have been reported to 	the Company and certain legal expenses on the "case basis" method. The 	Company estimates claims incurred but not reported ("IBNR") and other 	adjustment expenses using statistical procedures. The Company accrues 	salvage and subrogation recoveries using the "case basis" method for 	large claims and statistical procedures for smaller claims. 	The Company's objective is to set reserves that are adequate; that is, 	the amounts originally recorded as reserves should at least equal the 	amounts ultimately expected to be required to settle losses. The 	Company's reserves aggregate its best estimates of the total ultimate 	cost of claims that have been incurred but have not yet been paid. The 	estimates are based on past claims experience and reflect current claims 	trends as well as social, legal and economic conditions, including 	inflation. The reserves are not discounted. 	The Company reviews its loss and loss adjustment expense reserve 	development on a regular basis to determine whether the reserving 	assumptions and methods are appropriate. Reserves initially determined 	are compared to the amounts ultimately paid. The Company regularly 	makes statistical estimates of the projected amounts necessary to settle 	outstanding claims, compares these estimates to the recorded reserves 	and adjusts the reserves as necessary. The adjustments are reflected in 	current operations. 	The principle reason for differences between the loss and LAE liability 	reported in the accompanying consolidated financial statements in 	accordance with generally accepted accounting principles ("GAAP") and 	that reported in the annual statements filed with state insurance 	departments in accordance with statutory accounting practices ("SAP") 	relates to the reporting of reinsurance recoverables as receivables for 	GAAP purposes and as a reduction in reserves for SAP purposes. 	The following table provides an analysis of changes in loss and LAE 	reserves for 1999, 1998 and 1997 (net of reinsurance amounts) for the 	Company. Based on the information available during and at the end of 	1999 and 1998, operations were credited $10,178,000 in 1999 and 	$2,120,000 in 1998, respectively, as a result of a decrease in the 	estimated amounts needed to settle prior years' claims. Based on 	information available during and at the end of 1997, operations were 	charged $5,230,000 in 1997 as a result of increases in such estimates. 	Such reserve adjustments, which affected reported results of current 	operations during each of the years, resulted from developed losses from 	prior years being different than were anticipated when the liability for 	losses and loss adjustment expense were originally estimated. These 	development trends have been considered in establishing the current year 	liabilities. Changes in Loss and LAE Reserves: 						 (amounts in 000's) 					 1999 1998 1997 					 ----------------------------------- 	Balance at January 1 $108,697 $108,334 $ 88,992 	 Less reinsurance recoverables 20,430 26,433 24,208 					 ----------------------------------- 	Net balance at January 1 88,267 81,901 64,784 					 ----------------------------------- 	Incurred related to: 	 Current year 211,066 208,811 163,035 	 Prior years (10,178) (2,120) 5,230 					 ----------------------------------- 	Total incurred 200,888 206,691 168,265 					 ----------------------------------- 	Paid related to: 	 Current year 159,045 157,530 113,841 	 Prior years 40,785 42,795 37,307 					 ----------------------------------- 	Total paid 199,830 200,325 151,148 					 ----------------------------------- 	Net balance at 	 December 31 89,325 88,267 81,901 	 Plus reinsurance recoverables 24,114 20,430 26,433 					 ----------------------------------- 	Balance at December 31 $113,439 $108,697 $108,334 					 =================================== 	Analysis of Loss and LAE Reserve Development 	The next table presents the development of the estimated liability for 	the ten years prior to 1999. The top line of the table illustrates the 	estimated liability for unpaid losses and LAE recorded at the balance 	sheet date at the end of each of the indicated years. This liability 	represents the estimated amount of losses and LAE for claims arising in 	all prior years that were unpaid at the balance sheet date, including 	losses that had been incurred but not yet reported to the Company. 	The upper portion of the table shows the re-estimated amount of the 	previously recorded liability based on experience as of the end of each 	succeeding year. The estimate was increased or decreased as more 	information became known about the frequency and severity of claims for 	individual years. Conditions and trends that have affected development 	of the liability in the past may not necessarily occur in the future. 	Accordingly, it may not be appropriate to extrapolate future 	redundancies or deficiencies based on this table. 	The table shows the cumulative redundancy (deficiency) developed with 	respect to the previously recorded liability for all years as of the 	end of 1999. For example, the Company's 1992 reserve of $20,405,000 has 	been re-estimated as of year-end 1999 to be $16,441,000, indicating a 	redundancy of $3,964,000. 	The lower section of the table shows the cumulative amount paid with 	respect to the previously recorded liability as of the end of each 	succeeding year. For example, as of December 31, 1999, the Company had 	paid $16,435,000 of the currently estimated $16,441,000 of losses and 	LAE that had been incurred as of the end of 1992; thus an estimated 	$6,000 of losses incurred as of the end of 1992 remain unpaid as of the 	current financial statement date. 	In using this information, it should be noted that this table does not 	present accident or policy year development data which readers may be 	more accustomed to analyzing. Each amount in each column includes 	amounts applicable to the year over the column and all prior years. For 	example, the amounts included in the 1993 column include amounts related 	to 1993 and all prior years. 	The Company's reserve development is unfavorable for 1995 and 1996 due 	to the Company's expansion into certain areas of commercial lines 	insurance. However, reserve development is favorable for 1997 and 1998 	due to a reduction in the aforementioned commercial lines business 	combined with an overall strengthening of reserves. 			 Analysis of Loss and Loss Adjustment Expense Development 						 (Amounts in 000's) Year Ended December 31 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 		 ------------------------------------------------------------------------------------------------- 		 Reserve for Unpaid Losses, Net of Reinsurance $15,732 $16,570 $19,089 $20,405 $27,744 $37,481 $47,712 $64,784 $81,901 $88,267 $89,325 Net Reserve Re-estimated as of: One Year Later 15,167 15,492 17,160 18,425 25,668 30,134 51,483 70,014 79,781 78,089 Two Years Later 15,043 14,859 15,699 18,451 22,686 32,074 53,467 67,310 77,148 Three Years Later 14,397 13,841 15,202 16,871 21,154 31,880 52,418 66,442 Four Years Later 13,773 13,929 14,497 16,616 20,966 31,734 51,688 Five Years Later 13,758 13,663 14,393 16,505 20,688 31,155 Six Years Later 13,754 13,598 14,373 16,445 20,629 Seven Years Later 13,722 13,589 14,361 16,441 Eight Years Later 13,741 13,579 14,354 Nine Years Later 13,732 13,576 Ten Years Later 13,727 Net Cumulative Redundancy (Deficiency) $ 2,005 $ 2,994 $ 4,735 $ 3,964 $ 7,115 $ 6,326 $(3,976) $(1,658) $ 4,753 $10,178 		 ========================================================================================= Net Cumulative Amount of Reserve Paid Through: One Year Later $11,210 $11,117 $10,937 $11,730 $ 9,684 $19,040 $31,471 $37,307 $42,795 $40,785 Two Years Later 12,902 12,488 12,685 14,397 18,445 26,471 41,785 51,461 57,677 Three Years Later 13,355 12,965 13,588 15,923 19,930 29,237 47,434 58,716 Four Years Later 13,465 13,208 14,171 16,312 20,427 30,425 49,596 Five Years Later 13,595 13,471 14,307 16,381 20,558 30,770 Six Years Later 13,689 13,530 14,331 16,420 20,598 Seven Years Later 13,704 13,550 14,356 16,435 Eight Years Later 13,703 13,574 14,354 Nine Years Later 13,727 13,576 Ten Years Later 13,727 Net Reserve - December 31 $20,405 $27,744 $37,481 $47,712 $64,784 $ 81,901 $ 88,267 $ 89,325 Reinsurance Recoverables 2,780 6,220 14,597 13,785 24,208 26,433 20,430 24,114 						 ---------------------------------------------------------------------- Gross Reserve-December 31 $23,185 $33,964 $52,078 $61,497 $88,992 $108,334 $108,697 $113,439 						 ====================================================================== Net Re-estimated Reserve $16,441 $20,629 $31,155 $51,668 $66,442 $ 77,148 $ 78,089 Re-estimated Reinsurance 2,240 4,625 12,133 14,928 24,828 24,899 18,074 						 ------------------------------------------------------------- Gross Re-estimated Reserve $18,681 $25,254 $43,288 $66,596 $91,270 $102,047 $ 96,163 						 ============================================================= Gross Cumulative Redundancy (Deficiency) $ 4,504 $ 8,710 $ 8,790 $(5,099) $(2,278) $ 6,287 $ 12,534 						 ============================================================= 	Reinsurance 	The Company reinsures certain levels of risk with other insurance 	companies and cedes varying portions of its written premiums to such 	reinsurers. In addition, the Company pays a percentage of earned 	premiums to reinsurers in return for coverage against catastrophic 	losses. To the Company's knowledge, none of its reinsurers are 	experiencing financial difficulties. Furthermore, the Company monitors 	concentrations of credit risk arising from similar geographic regions, 	activities or economic characteristics of the reinsurers to minimize 	its exposure to significant losses from reinsurer insolvencies. The 	composition of its reinsurers has not changed significantly in recent 	years. The Company has not experienced any uncollectible reinsurance 	amounts or coverage disputes with its reinsurers in over ten years. For 	1999, the Company decided to cede less business to it reinsurers than in 	prior years. This was significantly accomplished by a change in a quota 	share reinsurance contract for manufacturing housing insurance. The 	related terms were changed, applicable with business written in 1999, 	from 12.5% of written premium with a maximum of $25 million to 8.0% with 	the same maximum. At year end, the Company terminated the quota share 	reinsurance agreement. 	Significant Customer 	As indicated in Note 17 to the Company's 1999 consolidated financial 	statements, in 1999 and 1998, respectively, revenues (including amounts 	that are ultimately ceded to reinsurers) from one customer amounted to 	$64,621,000 and $61,865,000. That customer is Conseco Inc. which merged 	with Greentree Financial Corporation during 1999. ITEM 2. Properties. 	The Company owns its 275,000 square foot principal offices located in 	Amelia, Ohio. The Company's insurance subsidiaries lease office space 	in Montgomery, Alabama, St. Louis, Missouri, Auburn Hills, Michigan and 	Grand Rapids, Michigan. The Company's transportation subsidiaries lease 	offices in Metairie, Louisiana. ITEM 3. Legal Proceedings. 	Reference is made to Item 3 of the December 31, 1995 Registrant's Form 	10-K concerning criminal litigation against M/G Transport Services, Inc. 	(M/G), a subsidiary of Registrant. On April 22, 1999, a three judge 	panel of the Sixth Circuit Court of Appeals issued an opinion reversing 	the earlier ruling of the trial court that dismissed six of the eight 	counts against M/G and several counts against individual defendants 	formerly employed by M/G. All of the verdicts against M/G on the six 	counts that had been dismissed by the trial court were reinstated by 	the Court of Appeals. On January 20, 2000, M/G was sentenced to a fine 	of $150,000 and two years probation concerning the 6 reinstated counts. 	The January 20, 2000 sentencing concluded the case against M/G. 	Registrant had established and maintained adequate accruals relating to 	the fines connected with the M/G litigation and such fines did not have 	a material adverse effect on the financial condition or the results of 	Registrant's operations. ITEM 4. Submission of Matters to a Vote of Security Holders. 	None during the fourth quarter. 				 PART II ITEM 5. Market for the Registrant's Common Stock and Related Security Holder 	Matters. Incorporated by reference to pages 37 (Note 16) and 40 of the 	Registrant's 1999 Annual Report to Shareholders. The number of holders 	of the Company's common stock at December 31, 1999 was approximately 	1,530. The Company's common stock is registered on the NASDAQ (MLAN). ITEM 6. Selected Financial Data. 	Incorporated by reference to pages 18 and 19 of the Registrant's 1999 	Annual Report to Shareholders. ITEM 7. Management's Discussion and Analysis of Financial Condition and Results 	of Operations. 	Incorporated by reference to pages 20 through 25 of the Registrant's 	1999 Annual Report to Shareholders. 			 PART II (Continued) ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 	 Incorporated by reference to page 24 of the Registrant's 1999 Annual 	 Report to Shareholders. ITEM 8. Financial Statements and Supplementary Data. 	 Incorporated by reference to pages 26 through 40 of the Registrant's 	 1999 Annual Report to Shareholders. ITEM 9. Changes In and Disagreements with Accountants on Accounting and 	 Financial Disclosures. 	 None. 				 PART III ITEM 10. Directors and Executive Officers of the Registrant. 	 Incorporated by reference to the Registrant's Proxy Statement dated 	 March 17, 2000. 	 Executive Officers of the Company - 	 J. P. Hayden, Jr. - Age 70 - Chairman of the Executive Committee of 					the Board 	 Michael J. Conaton - Age 66 - Vice Chairman of the Company and Vice 					Chairman of the Board 	 J. P. Hayden III - Age 47 - Chairman of the Board and Chief Operating 					Officer 	 John W. Hayden - Age 42 - President, Chief Executive Officer and a 					Director 	 John I. Von Lehman - Age 47 - Executive Vice President, Chief Financial 					Officer, Secretary and a Director 	 Paul T. Brizzolara - Age 42 - Senior Vice President and Chief Legal 					Officer 	 W. Todd Gray - Age 32 - Treasurer 	 The officers listed above have served in the positions indicated for 	 the past five years (except as noted below or in the Company's proxy 	 statement). 	 During 1998, Paul T. Brizzolara was elected Senior Vice President and 	 Chief Legal Officer of The Midland Company. Mr. Brizzolara was 	 previously the Company's Assistant Vice President, Assistant Chief 	 Counsel and Assistant Secretary of The Midland Company and will 	 continue as Assistant Secretary in his new position. 	 Also in 1998, (i) J.P. Hayden III was elected Chairman and Chief 	 Operating Officer of the Company, (ii) John W. Hayden was elected 	 President and Chief Executive Officer, (iii) J.P. Hayden, Jr. was 	 elected Chairman of the Executive Committee of the Board and (iv) 	 Michael J. Conaton was elected Vice Chairman of the Company and Vice 	 Chairman of the Board. 	 During 1997, W. Todd Gray was elected Treasurer. Mr. Gray joined 	 Midland in 1994 and served as Internal Audit Manager and, more 	 recently, Assistant Treasurer. Prior to that he was employed by a 	 national accounting firm. 	 During 1996, J. P. Hayden III and John W. Hayden (formerly Vice 	 Presidents) were elected Senior Executive Vice Presidents. Also in 	 1996, John I. Von Lehman (formerly Vice President, Treasurer and Chief 	 Financial Officer) was elected Executive Vice President and Chief 	 Financial Officer. 	 J. P. Hayden III and John W. Hayden are brothers and are sons of 	 J.P. Hayden, Jr. 			 PART III (Continued) ITEM 11. Executive Compensation. 	 Incorporated by reference to the Registrant's Proxy Statement dated 	 March 17, 2000. ITEM 12. Security Ownership of Certain Beneficial Owners and Management. 	 Incorporated by reference to the Registrant's Proxy Statement dated 	 March 17, 2000. ITEM 13. Certain Relationships and Related Transactions. 	 Incorporated by reference to the Registrant's Proxy Statement dated 	 March 17, 2000. 				 PART IV ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 	 (a) 1. Financial Statements. 		 Incorporated by reference in Part II of this report: 			Independent Auditors' Report. 			Consolidated Balance Sheets, December 31, 1999 and 1998. 			Consolidated Statements of Income for the Years Ended 			 December 31, 1999, 1998 and 1997. 			Consolidated Statements of Changes in Shareholders' 			 Equity for the Years Ended December 31, 1999, 1998 			 and 1997. 			Consolidated Statements of Cash Flows for the Years 			 Ended December 31, 1999, 1998 and 1997. 			Notes to Consolidated Financial Statements. 	(a) 2. Financial Statement Schedules. 		 Included in Part IV of this report: 									 Page 									 ---- 		 Independent Auditors' Consent and Report on Schedules. 12 		 Schedule I - Summary of Investments - Other Than 			Investments in Related Parties - December 31, 1999 13 		 Schedule II - Condensed Financial Information of 			Registrant 14-18 		 Schedule III - Supplementary Insurance Information 			for the Years Ended December 31, 1999, 1998 and 			1997 19 		 Schedule IV - Reinsurance for the Years Ended 			December 31, 1999, 1998 and 1997 20 		 Schedule V - Valuation and Qualifying Accounts for the 			Years Ended December 31, 1999, 1998 and 1997 21 		 Schedule VI - Supplemental Information Concerning 			Property-Casualty Insurance Operations for the 			Years Ended December 31, 1999, 1998 and 1997 22 		 All other schedules for which provision is made in the 		 applicable accounting regulations of the Securities and 		 Exchange Commission have been omitted because such schedules 		 are not required under the related instructions, are 		 inapplicable or the information is included in the financial 		 statements or notes thereto. 			 PART IV (Continued) 									 Page 									 ---- 	 (a) 3. Exhibits. 		 3. Articles of Incorporation and Code of Regulations - 			Filed as Exhibits 3(i) and 3(ii) to the Registrant's 			Form 10-Q for the quarter ended June 30, 1998 and 			incorporated herein by reference. 		 10. The Midland Company 1992 Employee Incentive Stock Plan 			and The Midland Company Stock Option Plan for 			Non-Employee Directors and The Midland Company 1972 			Stock Options Plan-Incorporated by reference to 			Registrant's Statement 33-48511 on Form S-8. 		 13. Annual Report to security holders - Incorporated by 			reference to the Registrant's 1999 Annual Report to 			Shareholders. 		 21. Subsidiaries of the Registrant. 23 		 22. Published Report Regarding Matters Submitted to Vote 			of Security Holders - Incorporated by Reference to 			the Registrant's Proxy Statement dated March 17, 			2000. 		 23. Independent Auditors' Consent - Included in Consent 			and Report on Schedules referred to under Item 			14(a)2 above. 		 27. Financial Data Schedule 	 (b) Reports on Form 8-K - None during 1999. 				 SIGNATURES 	Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 						 THE MIDLAND COMPANY Signature Title Date S/ J. P. Hayden, III Chairman of the Board and March 20, 2000 - -------------------------- Chief Operating Officer (J. P. Hayden, III) S/ John W. Hayden President and March 20, 2000 - -------------------------- Chief Executive Officer (John W. Hayden) S/ John I. Von Lehman Executive Vice President, March 20, 2000 - -------------------------- Chief Financial and (John I. Von Lehman) Accounting Officer 				 and Secretary 				 SIGNATURES 	Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 						 THE MIDLAND COMPANY Signature Title Date S/ George R. Baker Director March 20, 2000 - -------------------------- (George R. Baker) S/ James E. Bushman Director and Member March 20, 2000 - -------------------------- of Audit Committee (James E. Bushman) S/ James H. Carey Director and Member March 20, 2000 - -------------------------- of Audit Committee (James H. Carey) S/ Michael J. Conaton Vice Chairman March 20, 2000 - -------------------------- (Michael J. Conaton) S/ Jerry A. Grundhofer Director March 20, 2000 - -------------------------- (Jerry A. Grundhofer) S/ J. P. Hayden, Jr. Chairman of the Executive March 20, 2000 - -------------------------- Committee of the Board (J. P. Hayden, Jr.) S/ J. P. Hayden, III Chairman and March 20, 2000 - -------------------------- Chief Operating Officer (J. P. Hayden, III) S/ John W. Hayden President and March 20, 2000 - -------------------------- Chief Executive Officer (John W. Hayden) S/ Robert W. Hayden Director March 20, 2000 - -------------------------- (Robert W. Hayden) S/ William T. Hayden Director March 20, 2000 - -------------------------- (William T. Hayden) S/ William J. Keating Director March 20, 2000 - -------------------------- (William J. Keating) S/ John R. LaBar Director March 20, 2000 - -------------------------- (John R. LaBar) S/ David B. O'Maley Director March 20, 2000 - -------------------------- (David B. O'Maley) S/ John M. O'Mara Director and Member March 20, 2000 - -------------------------- of Audit Committee (John M. O'Mara) S/ Glenn E. Schembechler Director and Member March 20, 2000 - -------------------------- and Member Committee (Glenn E. Schembechler) S/ John I. Von Lehman Executive Vice President, March 20, 2000 - -------------------------- Chief Financial and (John I. Von Lehman) Accounting Officer, 				 Secretary and Director INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES - ----------------------------------------------------- To the Shareholders of The Midland Company: We consent to the incorporation by reference in Registration Statements No. 33-64821 on Form S-3 and No. 33-48511 on Form S-8 of The Midland Company of our report dated February 10, 2000, incorporated by reference in this Annual Report on Form 10-K, and our report (appearing below) on the financial statement schedules of The Midland Company for the year ended December 31, 1999. Our audits of the consolidated financial statements referred to in our aforementioned report also included the financial statement schedules of The Midland Company and its subsidiaries, listed in Item 14(a)2. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. /S/ Deloitte & Touche LLP - ------------------------- Deloitte & Touche LLP Cincinnati, Ohio March 20, 2000 				 THE MIDLAND COMPANY AND SUBSIDIARIES 				 Schedule I - Summary of Investments 				Other than Investments in Related Parties 					 December 31, 1999 	 Column A Column B Column C Column D - ----------------------------------------------------------------------------------------------------------- 												Amount at 											 Which Shown 											 in the Balance Type of Investment Cost Value Sheet - ----------------------------------------------------------------------------------------------------------- 							 Fixed maturity securities, available-for-sale: Bonds: United States Government and government agencies and authorities $ 91,020,000 $ 90,006,000 $ 90,006,000 States, municipalities and political subdivisions 171,926,000 168,415,000 168,415,000 Mortgage-backed securities 55,269,000 54,092,000 54,092,000 Foreign governments 3,633,000 3,526,000 3,526,000 Public utilities 8,832,000 8,373,000 8,373,000 All other corporate bonds 104,173,000 101,721,000 101,721,000 							--------------------------------------------------- 	Total 434,853,000 426,133,000 426,133,000 							--------------------------------------------------- Equity securities, available-for-sale: Common stocks: Public utilities 732,000 818,000 818,000 Banks, trusts and insurance companies 8,629,000 60,682,000 60,682,000 Industrial, miscellaneous and all other 34,126,000 66,795,000 66,795,000 Nonredeemable preferred stocks 2,483,000 2,362,000 2,362,000 							--------------------------------------------------- 	Total 45,970,000 130,657,000 130,657,000 							--------------------------------------------------- Accrued interest and dividends 6,740,000 XXXXXXX 6,740,000 							--------------------------------------------------- Mortgage loans on real estate 8,655,000 XXXXXXX 8,655,000 							--------------------------------------------------- Short-term investments 38,674,000 XXXXXXX 38,674,000 							--------------------------------------------------- 	Total Investments $534,892,000 XXXXXXX $610,859,000 							=================================================== 						 13 		 THE MIDLAND COMPANY (Parent Only) 	 Schedule II - Condensed Financial Information of Registrant 		 Condensed Balance Sheet Information 			 December 31, 1999 and 1998 ASSETS 1999 1998 					 ------------- ------------- Cash $ 148,000 $ 96,000 					 ------------- ------------- Marketable Securities Available for Sale (at market value): Debt Securities (cost, $122,000 in 1999 and $497,000 in 1998) 122,000 497,000 Equity (cost, $342,000 in 1999 and $341,000 in 1998) 2,696,000 3,937,000 					 ------------- ------------- Total 2,818,000 4,434,000 					 ------------- ------------- Receivables - Net 11,042,000 8,932,000 					 ------------- ------------- Intercompany Receivables 9,637,000 -- 					 ------------- ------------- Property, Plant and Equipment (at cost): 37,315,000 37,314,000 Less Accumulated Depreciation 7,289,000 5,439,000 					 ------------- ------------- Net 30,026,000 31,875,000 					 ------------- ------------- Other Assets 5,558,000 13,562,000 					 ------------- ------------- Investments in Subsidiaries (at equity) 250,179,000 247,569,000 					 ------------- ------------- Total Assets $309,408,000 $306,468,000 					 ============= ============= 				 14 		 THE MIDLAND COMPANY (Parent Only) 	 Schedule II - Condensed Financial Information of Registrant 		 Condensed Balance Sheet Information 			 December 31, 1999 and 1998 LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998 					 ------------- ------------- Notes Payable Within One Year: Banks (including current portion of long-term debt) $ 21,297,000 $ 16,710,000 Commercial Paper 5,550,000 6,522,000 					 ------------- ------------- Total 26,847,000 23,232,000 					 ------------- ------------- Other Payables and Accruals 6,634,000 4,664,000 					 ------------- ------------- Intercompany Payables -- 3,469,000 					 ------------- ------------- Long - Term Debt 17,925,000 26,271,000 					 ------------- ------------- Shareholders' Equity: Common Stock - No Par (issued and outstanding: 9,516,000 shares at December 31, 1999 and 9,352,000 shares at December 31, 1998 after deducting treasury stock of 1,412,000 shares and 1,576,000 shares, respectively) 911,000 911,000 Additional Paid - in Capital 18,583,000 15,947,000 Retained Earnings 207,005,000 178,398,000 Accumulated Other Comprehensive Income 49,388,000 70,507,000 Treasury Stock (at cost) (15,786,000) (15,293,000) Unvested Restricted Stock Awards (2,099,000) (1,638,000) 					 ------------- ------------- Total 258,002,000 248,832,000 					 ------------- ------------- Total Liabilities and Shareholders' Equity $309,408,000 $306,468,000 					 ============= ============= 				 15 		 THE MIDLAND COMPANY (Parent Only) 	 Schedule II - Condensed Financial Information of Registrant 		 Condensed Statements of Income Information 	 For the Years Ended December 31, 1999, 1998 and 1997 					 1999 1998 1997 				 ------------- ------------- ------------- Revenues: Dividends from Subsidiaries $ 9,000,000 $ 3,000,000 $ 8,900,000 All Other Income, Primarily Charges to Subsidiaries 6,359,000 6,934,000 7,746,000 				 ------------- ------------- ------------- Total Revenues 15,359,000 9,934,000 16,646,000 				 ------------- ------------- ------------- Expenses: Interest Expense 3,391,000 3,971,000 4,775,000 Depreciation and Amortization 3,973,000 2,701,000 6,195,000 All Other Expenses 1,786,000 2,303,000 833,000 				 ------------- ------------- ------------- Total Expenses 9,150,000 8,975,000 11,803,000 				 ------------- ------------- ------------- Income Before Federal Income Tax 6,209,000 959,000 4,843,000 Provision (Credit) for Federal Income Tax (1,023,000) (1,023,000) (1,599,000) 				 ------------- ------------- ------------- Income Before Change in Undistributed Income of Subsidiaries 7,232,000 1,982,000 6,442,000 Change in Undistributed Income of Subsidiaries: From Continuing Operations 23,947,000 24,950,000 17,925,000 From Discontinued Operations - - (6,817,000) 				 ------------- ------------- ------------- Net Income $ 31,179,000 $ 26,932,000 $ 17,550,000 				 ============= ============= ============= 						16 		 THE MIDLAND COMPANY (Parent Only) 	 Schedule II - Condensed Financial Information of Registrant 		Condensed Statements of Cash Flows Information 	 For the Years Ended December 31, 1999, 1998 and 1997 					 1999 1998 1997 				 ------------- ------------- ------------- Cash Flows from Operating Activities: Net income $ 31,179,000 $ 26,932,000 $ 17,550,000 Loss from discontinued operations - - 6,817,000 				 ------------- ------------- ------------- Income from continuing operations 31,179,000 26,932,000 24,367,000 Adjustments to reconcile net income to net cash provided by operating activities: Increase in undistributed income of subsidiaries (23,947,000) (24,950,000) (17,925,000) Decrease (increase) in other assets 8,004,000 (1,142,000) (1,286,000) Depreciation and amortization 3,973,000 2,701,000 6,195,000 Increase in other payables and accruals 2,422,000 153,000 1,575,000 Decrease (increase) in receivables (1,170,000) (1,922,000) 134,000 Other - net 19,000 251,000 36,000 				 ------------- ------------- ------------- Net Cash Provided by 	 Operating Activities 20,480,000 2,023,000 13,096,000 				 ------------- ------------- ------------- Cash Flows from Investing Activities: Change in investments (excluding unrealized appreciation/ depreciation) 373,000 1,943,000 (1,991,000) Capital contributions to subsidiaries - - (12,326,000) Acquisition of property, plant and equipment (279,000) (1,657,000) (2,617,000) Sale of property, plant and equipment and other real estate - net 214,000 5,969,000 535,000 				 ------------- ------------- ------------- Net Cash Provided by (Used in) 	 Investing Activities 308,000 6,255,000 (16,399,000) 				 ------------- ------------- ------------- Cash Flows from Financing Activities: Net change in intercompany accounts (12,080,000) 2,968,000 7,323,000 Increase (decrease) in long - term debt (8,760,000) (1,458,000) 948,000 Increase (decrease) in short - term borrowings 4,028,000 (8,269,000) (2,909,000) Purchase of treasury stock (3,709,000) (1,271,000) (17,000) Dividends paid (2,515,000) (1,746,000) (2,677,000) Issuance of treasury stock 2,300,000 1,358,000 604,000 				 ------------- ------------- ------------- Net Cash Provided by (Used in) 	 Financing Activities (20,736,000) (8,418,000) 3,272,000 				 ------------- ------------- ------------- Net Increase (Decrease) in Cash 52,000 (140,000) (31,000) Cash at Beginning of Year 96,000 236,000 267,000 				 ------------- ------------- ------------- Cash at End of Year $ 148,000 $ 96,000 $ 236,000 				 ============= ============= ============= 				 17 		 THE MIDLAND COMPANY (Parent Only) 	 Schedule II - Condensed Financial Information of Registrant 		 Notes to Condensed Financial Information 		For the Years Ended December 31, 1999 and 1998 The accompanying condensed financial information should be read in conjunction with the consolidated financial statements and notes included in the Registrant's 1999 Annual Report to Shareholders. Total debt of the Registrant (parent only) consists of the following: 						 DECEMBER 31, 						1999 1998 					 ------------ ------------ Short - Term Bank Borrowings $20,000,000 $15,000,000 Commercial Paper 5,550,000 6,522,000 Mortgage Notes: 7.10% - Due January 1, 2001 642,000 1,227,000 6.83% - Due December 20, 2005 18,580,000 19,195,000 5.40% - Due December 1, 2003 - 7,559,000 					 ------------ ------------ 	Total Debt $44,772,000 $49,503,000 					 ============ ============ See Notes 7 and 8 to the consolidated financial statements included in the 1999 Annual Report to Shareholders for further information on the Company's outstanding debt at December 31, 1999. The amount of debt that becomes due during each of the next five years is as follows: 2000 - $1,297,000; 2001 - $706,000; 2002 - $756,000; 2003 - $810,000; 2004 - $865,000. 				 18 				 THE MIDLAND COMPANY AND SUBSIDIARIES 				Schedule III - Supplementary Insurance Information 			 For the Years Ended December 31, 1999, 1998 and 1997 						(Amounts in 000's) Column A Column B Column C Column D Column E Column F Column G 					 Future 					 Policy 			 Deferred Benefits, Other Policy 			 Policy Losses, Claims and Net 			 Acquisition Claims and Unearned Benefits Premium Investment 			 Cost Loss Expenses Premiums Payable Revenue Income (1) 			 ---------------------------------------------------------------------------------------- 			 1999 Manufactured Housing $ 67,336 $ 8,170 $ 241,407 $283,332 $ 15,526 Other Insurance 17,832 125,543 71,431 117,659 10,631 Unallocated Amounts 19 Inter-segment Elimination (884) 			 ---------------------------------------------------------------------------------------- Total $ 85,168 $ 133,713 $ 312,838 $ - $400,991 $ 25,292 			 ======================================================================================== 1998 Manufactured Housing $ 48,260 $ 48,939 $ 209,171 $258,638 $ 14,875 Other Insurance 15,702 76,557 45,944 116,840 9,923 Unallocated Amounts 34 Inter-segment Elimination (924) 			 ---------------------------------------------------------------------------------------- Total $ 63,962 $ 125,496 $ 255,115 $ - $375,478 $ 23,908 			 ======================================================================================== 1997 Manufactured Housing $ 43,366 $ 42,430 $ 195,793 $219,394 $ 13,935 Other Insurance 12,224 77,704 44,547 91,765 8,359 Unallocated Amounts 24 Inter-segment Elimination (986) 			 ---------------------------------------------------------------------------------------- Total $ 55,590 $ 120,134 $ 240,340 $ - $311,159 $ 21,332 			 ======================================================================================== 			 Column H Column I Column J Column K 			 Benefits, Amortization of 			 Claims, Losses Deferred Policy Other 			 and Settlement Acquisition Operating Premiums 			 Expenses Costs Expenses (1) Written 			 ------------------------------------------------ --------- 			 1999 Manufactured Housing $ 133,436 $ 82,302 $ 40,610 $306,446 Other Insurance 70,929 31,910 25,931 137,049 (2) Unallocated Amounts Inter-segment Elimination 			 ------------------------------------------------ --------- Total $ 204,365 $ 114,212 $ 66,541 $443,495 			 ================================================ ========= 1998 Manufactured Housing $ 137,483 $ 71,288 $ 31,005 $283,020 Other Insurance 72,532 31,881 23,304 110,987 (2) Unallocated Amounts Inter-segment Elimination 			 ------------------------------------------------ --------- Total $ 210,015 $ 103,169 $ 54,309 $394,007 			 ================================================ ========= 1997 Manufactured Housing $ 100,919 $ 64,265 $ 27,763 $247,704 Other Insurance 70,244 15,253 21,355 97,745 (2) Unallocated Amounts Inter-segment Elimination 			 ------------------------------------------------ --------- Total $ 171,163 $ 79,518 $ 49,118 $345,449 			 ================================================ ========= Notes to Schedule III: - ---------------------- (1) Net investment income is allocated to insurance segments based upon a combination of 	premium cash flow and equity data. Other operating expenses include expenses 	directly related to the segments and expenses allocated to the segments based on 	historical usage factors. (2) Includes other property and casualty insurance and accident and health insurance 	($3,632, $2,237 and $2,738 for 1999, 1998 and 1997, respectively). 							 19 					 THE MIDLAND COMPANY AND SUBSIDIARIES 					 Schedule IV - Reinsurance 				 For the Years Ended December 31, 1999, 1998 and 1997 Column A Column B Column C Column D Column E Column F 						 Ceded to Assumed Percentage of 				 Gross Other from Other Net Amount Assumed 				 Amount Companies Companies Amount to Net 				 ----------------------------------------------------------------------------------- 				 1999 - ---- Life Insurance in Force $507,134,000 $233,506,000 $23,359,000 $296,987,000 7.9% 				 =================================================================================== Insurance Premiums and Other Considerations: Life and Health Insurance $ 14,315,000 $ 6,346,000 $ 333,000 $ 8,302,000 4.0% Property & Liability Insurance 409,506,000 55,620,000 38,803,000 392,689,000 9.9% 				 ----------------------------------------------------------------------------------- Total Premiums $423,821,000 $ 61,966,000 $39,136,000 $400,991,000 9.8% 				 =================================================================================== 1998 - ---- Life Insurance in Force $416,892,000 $167,412,000 $ 1,895,000 $251,375,000 0.8% 				 =================================================================================== Insurance Premiums and Other Considerations: Life and Health Insurance $ 10,374,000 $ 4,058,000 $ 111,000 $ 6,427,000 1.7% Property & Liability Insurance 394,166,000 60,573,000 35,458,000 369,051,000 9.6% 				 ----------------------------------------------------------------------------------- Total Premiums $404,540,000 $ 64,631,000 $35,569,000 $375,478,000 9.5% 				 =================================================================================== 1997 - ---- Life Insurance in Force $371,298,000 $170,668,000 $200,630,000 0.0% 				 =================================================================================== Insurance Premiums and Other Considerations: Life and Health Insurance $ 9,761,000 $ 4,371,000 $ 214,000 $ 5,604,000 3.8% Property & Liability Insurance 375,967,000 98,406,000 27,994,000 305,555,000 9.2% 				 ----------------------------------------------------------------------------------- Total Premiums $385,728,000 $102,777,000 $28,208,000 $311,159,000 9.1% 				 =================================================================================== 							 20 		 THE MIDLAND COMPANY AND SUBSIDIARIES 		Schedule V - Valuation and Qualifying Accounts 	 For the Years Ended December 31, 1999, 1998 and 1997 					 ADDITIONS 						CHARGED 			 BALANCE AT (CREDITED) TO BALANCE 			 BEGINNING COSTS AND DEDUCTIONS AT END DESCRIPTION OF PERIOD EXPENSES (ADDITIONS) OF PERIOD - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1999: Allowance For Losses $753,000 $192,000 $138,000 (1) $807,000 YEAR ENDED DECEMBER 31, 1998: Allowance For Losses $753,000 $176,000 $176,000 (1) $753,000 YEAR ENDED DECEMBER 31, 1997: Allowance For Losses $799,000 $184,000 $230,000 (1) $753,000 NOTES: (1) Accounts written off are net of recoveries. 				 21 THE MIDLAND COMPANY AND SUBSIDIARIES Schedule VI - Supplemental Information Concerning Property-Casualty Insurance Operations For the Years Ended December 31, 1999, 1998 and 1997 (Amounts in 000's) Column A Column B Column C Column D Column E Column F Column G 				 Reserves for 			 Deferred Unpaid Claims Discount, Affiliation Policy and Claim if any, Net with Acquisition Adjustment Deducted in Unearned Earned Investment Registrant Costs Expenses Column C Premiums Premiums Income - ------------------------------------------------------------------------------------------------------------ 			 Consolidated Property-Casualty Subsidiaries 1999 $ 76,031 $ 128,467 $ - $ 281,442 $ 392,689 $ 23,746 			=========== =========== ========== =========== ========== ============ 1998 $ 59,736 $ 121,154 $ - $ 236,171 $ 369,051 $ 22,468 			=========== =========== ========== =========== ========== ============ 1997 $ 52,198 $ 116,898 $ - $ 222,530 $ 305,555 $ 20,018 			=========== =========== ========== =========== ========== ============ 				 Column H Column I Column J Column K 				 Claims and 				 Claim 				 Adjustment 				 Expenses Amortization 				 Incurred of Deferred Paid Claims 				 Related to Policy and Claim 			 Current Prior Acquisition Adjustment Premiums 			 Year Years Costs Expenses Written - --------------------------------------------------------------------------------------------- 			 Consolidated Property-Casualty Subsidiaries 1999 $ 211,066 $ (10,178) $ 108,689 $ 199,830 $ 439,863 			=========== ========== =========== =========== =========== 1998 $ 208,811 $ (2,120) $ 100,190 $ 200,325 $ 391,770 			=========== ========== =========== =========== =========== 1997 $ 163,035 $ 5,230 $ 77,100 $ 151,148 $ 342,711 			=========== ========== =========== =========== =========== Note: Certain amounts above will not agree with Schedule III because other insurance amounts in Schedule III include life and accident and health insurance. 							 22