A.M. Best Affirms Ratings of EMC Insurance Companies.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of EMC Insurance Companies (EMC), its property/casualty pool members and EMC Reinsurance Company (EMC Re). In addition, A.M. Best has affirmed the ICR of "bbb-" of the group's publicly traded, downstream holding company, EMC Insurance Group Inc. (NASDAQ: EMCI). The outlook for all ratings is stable. All the above named companies are domiciled in Des Moines, IA. (See below for a detailed listing of the companies and ratings.)

The affirmation of EMC's ratings reflects its excellent risk-adjusted capitalization, significantly improved operating profitability in years 2005-2007 and the continued benefits it will derive from management's positive actions over the past several years associated with pricing and risk selection, claims management and reserving methodology. EMC's surplus has increased at a compound annual rate of 18% over the past five years, and the group maintains capitalization well in excess of levels required for its ratings.

Over the past few years, EMC has developed and implemented predictive modeling tools and premium rate monitoring systems designed to better price and select its business and quantify and track its quality over time. In addition, improvements in its claims systems and monitoring also have been implemented to ensure greater consistency of claims handling and reserving and to help manage its business through varying market conditions.

Partially offsetting these positive rating factors is the group's earnings variability in recent years (largely due to fluctuations in its prior year loss reserve development), above average expense ratio and the anticipated near-term pressures on profitability related to continued soft property/casualty market conditions and the likelihood of less favorable prior year loss reserve development than in 2007.

Management attributes much of EMC's $100 million of unfavorable reserve development in 2004 to aggressive actions taken on individual case reserves as a result of diligent and extensive claim file review and improved communication between branch offices and the home office. The aggressiveness of the 2004 reserving actions is demonstrated by $79 million of subsequent favorable development on year-end 2004 case reserves. The group's reserves appear to have stabilized in years 2005-2007 as evidenced by its reported favorable reserve development emanating largely from closed claim files. A.M. Best believes EMC's reserve position provides for a sufficient risk margin.

The affirmation of EMC Re's ratings acknowledges its strong risk-adjusted capitalization and substantially improved operating profitability over the past several years; its role and strategic importance as a focused reinsurer within the EMC group; and the continued financial and operational support of its ultimate parent, Employers Mutual Casualty Company (EMCC) (Des Moines, IA), the lead company within the EMC pool.

These factors are partially offset by EMC Re's significant dependence on EMCC and the competitive challenges associated with EMC Re's position in the broker reinsurance market, which is generally comprised of large professional reinsurers that heavily influence reinsurance pricing, terms and conditions.

The affirmation of EMC Insurance Group Inc.'s ICR recognizes the strong capitalization of its property/casualty operating subsidiaries, the support of EMCC and an absence of financial leverage since the company has no public debt outstanding.

The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for EMC Insurance Companies and its following property/casualty pool members:

* Employers Mutual Casualty Company

* EMCASCO Insurance Company

* Illinois EMASCO Insurance Company

* Dakota Fire Insurance Company

* Hamilton Mutual Insurance Company

* EMC Property and Casualty Company

* Union Insurance Company of Providence

The FSR of A- (Excellent) and ICR of "a-" have been affirmed for EMC Reinsurance Company.

The ICR of "bbb-" has been affirmed for EMC Insurance Group Inc.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.