SecProbe.io

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Mail Stop 3-09

									November 24, 2004

Michael Schroeder
Vice President, Secretary and General Counsel
National Interstate Corporation
3250 Interstate Drive
Richfield, OH 44286-9000

Re:	National Interstate Corporation
		Registration Statement on Form S-1
	File Number 333-119270, Amendment No. 1

Dear Mr. Schroeder:

We have reviewed your filing and have the following comments.  Where
indicated, we think you should revise your document in response to
these comments.  If you disagree, we will consider your explanation as
to why our comment is inapplicable or a revision is unnecessary.
Please be as detailed as necessary in your explanation.  In some of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure.  After
reviewing this information, we may or may not raise additional
comments.

Prospectus Summary, page 1
Overview, page 1
1. Consider deleting the sentence you added in this amendment stating
the shareholders-equity-per-share compounded annual growth rate.  This
statistic in particular is not that meaningful, as you provide the
growth rate for a 15-year period, and the equity per share for the
first year was minimal.  Also, you include the information in the
Business section, along with a table disclosing equity per share at
the end of each of your 15 years of operations.
2. We note your response to our prior Comment 10.  In the second
paragraph, you state that you believe you are the second largest
underwriter of insurance for the passenger transportation industry in
the United States, behind Lancer Insurance.  In your supplemental
response, you state that this belief is based upon an informal survey
of brokers you conducted.  In the prospectus, disclose that this
belief is based upon your informal survey of brokers.
3. Please disclose the basis for the following beliefs you profess.
* that few companies write passenger transportation coverage
nationwide and very few write coverage for several of the classes of
passenger transportation insurance written by National Interstate
* we are the only insurance company offering homogeneous group captive
insurance programs and services to the passenger transportation
industry
Risk Factors, page 10
The outcome of insurance company litigation..., page 13
4. Please expand this risk factor to quantify how much of your
business was brokered by Aon during 2003 and the nine months ended
September 30, 2004.

Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 26

Overview, page 24
5. You state that you provide innovative insurance products, services
and programs not generally available in the marketplace.  Please
provide ample third-party independent support for this assertion or
delete it.  We do not believe that an insurance product service or
program is innovative because few companies offer it.
6. In the fourth paragraph, you note factors that impact your growth
and operational results.  Please provide detail regarding the trends
affecting each of the factors you mention.  For instance, discuss any
trends in the number of applications you receive, "declination ratio,"
"hit ratio," etc.

Results of Operations, page 34
7. You state that your employee related expenses grew at a slower rate
than your revenue.  Please disclose the reasons for the disparity in
growth.  Was it due to technological innovation?  Was it because your
hiring has lagged your revenue growth and that you plan to hire more
people?
Management`s Discussion and Analysis
Losses and LAE Reserves, pages 30 - 33
8. Refer to your response to comment 40.  We note in the revised
disclosure that the actuaries do not provide an actuarial range.
However the disclosure seems to indicate that the company develops
multiple point estimates and selects a reserve based on these point
estimates.  Please revise the disclosure to include a discussion of
this "range" of point estimates.  In addition the company asserts that
much of the information requested in part (d) of the previous comment
is important when determining the appropriateness of the method to
use.  Consider the need to disclose this information in the filing.
Also consider the need to update the loss reserves table on page 33
for the most recent balance sheet date presented.
9. We note that your additional disclosure in response to our comment
#41 discusses general items that may contribute to changes in reserves
but does not address the specific factors that affected the years
presented.  With the exception of (b), we reissue our comment #41 in
its entirety.  For each line of business, include the following
disclosures:

a) Identify the years to which the change in estimate relates and
disclose the amount of the related loss reserve as of the beginning of
the year that was re-estimated.  Discuss and quantify offsetting
changes in estimates that increase and decrease the loss reserve.
b) Identify the nature and timing of the change in estimate,
explicitly identifying and describing in reasonable specificity the
new events that occurred or additional information acquired since the
last reporting date that led to the change in estimate.
c) Ensure the disclosure clearly explains why recognition occurred in
the periods that it did and why recognition was not required in
earlier periods.
d) Disclose any trends such as, the number of claims incurred, average
settlement amounts, number of claims outstanding at period ends along
with average per claim outstanding, and any other trends, necessary to
understand the change in estimate. Please explain the rationale for a
change in estimate that does not correlate with trends.

Underwriting, pages 34 - 36

10. We note your response to comment #44 and your revised disclosure.
It appears that your additional disclosure focuses primarily on your
expectations.  Your disclosure still does not quantify the effect of
each individual factor.  For instance, the company attributes the
growth in premiums in the transportation business to increased
premiums on renewals and new business but does not specifically
quantify how much is related to each factor.  Please quantify the
impact of the individual factors presented.  We note that the
discussion still does not appear to encompass the entire increase on a
percentage basis based on the amounts attributed to each factor
discussed.  Please revise the discussion to include the factors for
the entire increase or decrease or explain to us why the company is
unable to quantify these amounts.

Realized Gains (Losses) on Investments, page 37

11. We note your revised disclosure.  Please provide a more detailed
description of what opportunities would typically trigger you to sell
your securities and what level of economic gain would need to be
realized in order for you to sell you securities.  Also disclose what
factors cause the company to sell securities at a loss.

Liquidity and Capital Resources, page 37

12. Please expand on your asset/liability management process in order
to provide the investor with an understanding of how you are able to
meet your liquidity needs with cash flows from premiums and investment
income without forcing the sale of investments.  Although you have not
traditionally had to rely on your investments for liquidity, include a
discussion of the impact that such sales would have should it become
necessary to sell these investments to meet your obligations in the
future.  Please discuss whether there are any significant variations
between the premiums collected (or to be collected), maturity of your
investments and the expected payment of your loss reserves.

Financial Statements
13. Please note that in this letter, we are not providing comments
regarding your interim financial information through the period ended
September 30, 2004 or the disclosure related to that financial
information contained in your November 23, 2004 amendment to the
registration statement.  We will provide comments on that disclosure
after you file your next amendment responding to these comments.

Report of Independent Registered Public Accounting Firm, page F-2
14. Please remove the "to be issued" language related to this report
as well as the report included on page II-7 prior to requesting
effectiveness.
Segment Information, page F-10
15. We note your response to our comment #90.  We note that the
president receives information at a level that is lower than what the
company provides as its segments.  Please provide to us a sample
version of what the president receives each month.  Please note that a
basic assertion is that if the CODM receives certain information, it
is because that information is used in the allocation of assets
decision, so include a discussion of why the company feels that it can
overcome this assumption based on the information included in this
sample version.  Also disclose the information required by paragraph
37 of SFAS 131.

*	*	*

As appropriate, please amend your registration statement in response
to these comments.  You may wish to provide us with marked copies of
the amendment to expedite our review.  Please furnish a cover letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information.  Detailed cover
letters greatly facilitate our review.  Please understand that we may
have additional comments after reviewing your amendment and responses
to our comments.

You may contact Whitnie Storey at (202) 942-2851 or Jim Atkinson (202)
942-2826 if you have questions regarding comments on the financial
statements and related matters.  Please contact Michael Reedich at
(202) 942-1815 or me at (202) 942-1840 with any other questions.

Sincerely,

Jeffrey Riedler
Assistant Director

cc:	Jonathan L. Freedman, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019-6092

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