EMC Insurance Group Inc. Reports 2001 Second Quarter Results.Business Editors DES MOINES Des Moines, city, United States Des Moines (dĭ moin`), city (1990 pop. 193,187), state capital and seat of Polk co., S central Iowa, at the junction of the Des Moines and Raccoon rivers; inc. , Iowa--(BUSINESS WIRE)--Aug. 2, 2001 EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. Insurance Group Inc. (Nasdaq:EMCI EMCI Envirofacts Master Chemical Integrator EMCI External Memory Control Interface ) today reported an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $0.25 per share for the second quarter ended June June: see month. 30, 2001 compared to operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $0.01 per share for the second quarter of 2000. Net loss, including realized investment gains, totaled $2,846,000 ($0.25 per share) for the second quarter of 2001 compared to net income of $196,000 ($0.02 per share) for the second quarter of 2000. For the first six months of 2001, operating loss amounted to $0.10 per share compared to operating income of $0.14 per share for the same period in 2000. Net loss for the first six months of 2001 totaled $781,000 ($0.07 per share) compared to net income of $1,813,000 ($0.16 per share) for the same period in 2000. Operating results for the second quarter of 2001 were severely impacted by a series of intense storms that battered bat·ter 1 v. bat·tered, bat·ter·ing, bat·ters v.tr. 1. To hit heavily and repeatedly with violent blows. 2. To subject to repeated beatings or physical abuse. 3. the Midwestern and Southern United States The Southern United States—commonly referred to as the American South, Dixie, or simply the South—constitutes a large distinctive region in the southeastern and south-central United States. in April, May and June. These storms, which produced a near record-breaking amount of losses for the insurance industry, generated catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). and storm losses totaling $0.68 per share for the Company in the second quarter of 2001 compared to $0.27 per share for the same period in 2000. For the first six months of 2001, catastrophe and storm losses amounted to $0.73 per share compared to $0.32 per share for the same period in 2000. Premiums earned increased 14.8% for the second quarter of 2001 and 13.7% for the first six months of 2001. These increases are attributable to rate increases that were implemented during the last two years, an increase in the exposure base of the commercial lines of business and significant growth in the assumed reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. business. Premium rate levels for property and casualty insurance continued to improve during the second quarter of 2001 as progressively larger rate increases, ranging from moderate single-digit to large double-digit, were implemented in most lines of business. This trend of increasing rate levels is expected to continue through 2001, but it will take time for premium rates to return to adequate levels. The improvement that has been achieved in premium rate adequacy will have a positive impact on future operating results, but the unpredictable nature of catastrophe and storm losses will remain. Management continues to work toward improving profitability through re-underwriting programs for both the existing book of business and the agency force and by controlling the usage of discretionary rate credits. The Company's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio was 119.9% in the second quarter of 2001 compared to 114.0% in the second quarter of 2000. For the first six months of 2001, the GAAP combined ratio was 114.4% compared to 112.0% for the first six months of 2000. Net book value of the Company's stock as of June 30, 2001 was $12.77 per share, a decrease from $13.14 per share as of December 31, 2000. A.M. Best announced on July 10, 2001 that their rating of the EMC Insurance Companies, which includes the Company's property and casualty insurance subsidiaries, was changed from "A" (Excellent) to "A -" (Excellent). This rating action reflects A.M. Best's perception of the EMC Insurance Companies underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance and operating losses over the past three years. Despite this rating action, A.M. Best stated that the EMC Insurance Companies' Excellent rating reflects its strong capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , conservative operating strategies and local-market presence. Management does not believe that the new rating will have a material impact on the Company's operations. EMC Insurance Group Inc. is a publicly held insurance holding company headquartered in Des Moines, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, . It owns subsidiaries in property and casualty insurance and reinsurance. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides issuers the opportunity to make cautionary statements regarding forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Accordingly, any forward-looking statement contained in this report is based on management's current expectations and actual results of the Company may differ materially from such expectations. The risks and uncertainties that may affect the actual results of the Company include but are not limited to the following: catastrophic events and the occurrence of significant severe weather conditions; state and federal legislation and regulations; rate competition; changes in interest rates and the performance of financial markets; the adequacy of loss and settlement expense reserves, including asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. and environmental claims; rating agency actions and other risks and uncertainties inherent in the Company's business.
Summary of Consolidated Financial Data
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
----------- ----------- ------------ ------------
Premiums earned $63,315,356 $55,132,431 $123,409,237 $108,559,766
Net investment
income 7,781,702 7,232,300 15,149,897 14,179,727
Other income 196,102 387,476 441,956 992,966
----------- ----------- ------------ ------------
Total revenues 71,293,160 62,752,207 139,001,090 123,732,459
Losses and
expenses 76,333,584 63,211,037 141,950,763 122,352,000
----------- ----------- ------------ ------------
Operating (loss)
income before
income tax (5,040,424) (458,830) (2,949,673) 1,380,459
Realized invest-
ment gains 14,662 164,868 601,738 329,253
----------- ----------- ------------ ------------
(Loss) income
before income
tax benefit (5,025,762) (293,962) (2,347,935) 1,709,712
Income tax
benefit (2,179,897) (489,810) (1,567,223) (103,306)
----------- ----------- ------------ ------------
Net (loss)
income $(2,845,865) $195,848 $(780,712) $1,813,018
=========== =========== ============ ============
Operating (loss)
income per share
- basic and
diluted $(0.25) $0.01 $(0.10) $0.14
=========== =========== ============ ============
Net (loss) income
per share -
basic and
diluted $(0.25) $0.02 $(0.07) $0.16
=========== =========== ============ ============
Dividend per
share $0.15 $0.15 $0.30 $0.30
=========== =========== ============ ============
Average number of
shares
outstanding -
basic and
diluted 11,309,536 11,288,104 11,304,055 11,277,462
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