EMC Insurance Group Inc. Reports 2002 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. 1, 2002 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/NM:EMCI EMCI Envirofacts Master Chemical Integrator EMCI External Memory Control Interface ) today reported 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 $0.45 per share for the second quarter ended June June: see month. 30, 2002 compared to 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 of 2001. Net income, including realized investment gains/losses, totaled $2,945,000 ($0.26 per share) for the second quarter of 2002 compared to a net loss of $2,846,000 ($0.25 per share) for the second quarter of 2001. As previously reported, net income for the second quarter of 2002 reflects an "other than temporary" security impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. write down of the Company's investment in MCI Communications This article is about MCI before it merged with WorldCom. For other uses, see MCI. MCI Communications was an American telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T monopoly of American telephony and Corporation corporate bonds totaling $3,821,000. This write down resulted in a realized loss Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. of $0.22 per share. Total realized losses for the second quarter of 2002 amounted to $3,372,000, or $0.19 per share. Operating income for the six months ended June 30, 2002 was $0.76 per share compared to an operating loss of $0.10 per share for the same period in 2001. Net income, including realized investment gains/losses, totaled $6,635,000 ($0.58 per share) compared to a net loss of $781,000 ($0.07 per share) for the same period in 2001. "The improved operating results the Company is experiencing reflect previous rate increases, disciplined 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. , and a significant decrease in the impact of storm and large losses," said President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. Kelley Kelley may refer to any of the following: People
Catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). and storm losses amounted to $0.22 per share in the second quarter of 2002 compared to $0.68 per share in the second quarter of 2001. For the first six months of 2002, catastrophe and storm losses totaled $0.28 per share compared to $0.73 per share for the same period of 2001. The Company's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio was 101.5 percent in the second quarter of 2002 compared to 119.9 percent in the second quarter of 2001. For the first six months of 2002, the GAAP combined ratio was 102.6 percent compared to 114.4 percent for the first six months of 2001. Net book value of the Company's stock as of June 30, 2002 was $12.74 per share, an increase from $12.40 per share at December December: see month. 31, 2001. EMC Insurance Group Inc., the publicly-held insurance holding company of EMC Insurance Companies, owns subsidiaries with operations in property and casualty insurance and 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. . EMC Insurance Companies is one of the largest property and casualty groups in Iowa and among the top 60 insurance groups nationwide. For more information, visit our website www.emcinsurance.com. 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; rate agency actions and other risks and uncertainties inherent to the Company's business.
Summary of Consolidated Financial Data
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
---------------------------------------------------------
Premiums
earned...... $ 73,348,688 $ 63,315,356 $ 141,858,080 $ 123,409,237
Net
investment
income...... 8,346,315 7,781,702 16,605,026 15,149,897
Other income. 260,163 196,102 377,275 441,956
---------------------------------------------------------
Total
revenues.... 81,955,166 71,293,160 158,840,381 139,001,090
Losses and
expenses.... 75,064,484 76,333,584 146,751,295 141,950,763
---------------------------------------------------------
Operating
income
(loss)
before
income tax
expense
(benefit)... 6,890,682 (5,040,424) 12,089,086 (2,949,673)
Realized
investment
(losses)
gains....... (3,372,379) 14,662 (3,100,460) 601,738
---------------------------------------------------------
Income
(loss)
before
income
tax
expense
(benefit)... 3,518,303 (5,025,762) 8,988,626 (2,347,935)
Income tax
expense
(benefit)... 573,617 (2,179,897) 2,354,063 (1,567,223)
---------------------------------------------------------
Net income
(loss)...... $ 2,944,686 $ (2,845,865) $ 6,634,563 $ (780,712)
=========================================================
Operating
income
(loss) per
share.......
- basic and
diluted.... $ 0.45 $ (0.25) $ 0.76 $ (0.10)
=========================================================
Net income
(loss) per
share
- basic and
diluted.... $ 0.26 $ (0.25) $ 0.58 $ (0.07)
=========================================================
Dividend per
share....... $ 0.15 $ 0.15 $ 0.30 $ 0.30
=========================================================
Average
number
of
shares
outstanding
- basic
and
diluted... 11,374,729 11,309,536 11,357,957 11,304,055
=========================================================
Property &
casualty
insurance Reinsurance
Written premiums 2002 2001 2002 2001
----------------------------------------------------------------------
Three months
ended:
March 31,...... $ 54,843,250 $ 63,641,476 $ 17,296,985 $ 12,135,124
June 30,....... 62,295,162 55,052,409 17,683,733 13,832,098
September 30,.. - - - -
December 31,... - - - -
------------------------------------------------------
Year to date:...$ 117,138,412 $ 118,693,885 $ 34,980,718 $ 25,967,222
======================================================
Total
Written premiums 2002 2001
----------------------------------------------------------------------
Three months ended:
March 31,................................ $ 72,140,235 $ 75,776,600
June 30,................................. 79,978,895 68,884,507
September 30,............................ - 0
December 31,............................. - 0
----------------------------
Year to date:.............................$ 152,119,130 $ 144,661,107
============================
CONSOLIDATED BALANCE SHEETS consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm.
June 30, December 31,
2002 2001
------------- -------------
ASSETS (Unaudited)
-------------------------------------------
Investments:
Fixed maturities:
Securities held-to-maturity, at amortized
cost
(fair value $29,166,513 and $35,502,755)... $27,165,985 $33,572,602
Securities available-for-sale, at fair
value
(amortized cost $387,761,595 and
$384,410,393)............................. 397,356,547 390,214,177
Fixed maturity securities on loan:
Securities held-to-maturity, at amortized
cost
(fair value $37,056,801 and $35,962,133)... 33,453,528 32,505,305
Securities available-for-sale, at fair
value
(amortized cost $23,922,880 and
$27,325,968).............................. 24,489,880 28,436,008
Equity securities available-for-sale, at
fair value
(cost $38,601,739 and $28,686,321)........ 40,301,948 33,322,767
Other long-term investments................ 2,200,229 -
Short-term investments, at cost............ 31,488,569 17,724,458
------------- -------------
Total investments.............. 556,456,686 535,775,317
Cash........................................ 112,552 558,073
Indebtedness of related party............... 6,833,387 -
Accrued investment income................... 9,061,224 8,659,008
Accounts receivable (net of allowance for
uncollectible accounts
of $0 and $573,502)...................... 982,327 1,081,024
Income taxes recoverable.................... - 100,614
Deferred policy acquisition costs........... 23,514,675 21,363,528
Deferred income taxes....................... 19,013,189 18,328,807
Intangible assets, including goodwill, at
cost less
accumulated amortization of $2,616,234
and $2,616,234.......................... 941,586 941,586
Reinsurance receivables..................... 11,430,840 14,501,336
Prepaid reinsurance premiums................ 3,108,326 2,275,231
Securities lending collateral............... 63,691,867 66,809,518
Other assets................................ 2,028,444 1,170,655
------------- -------------
Total assets.....................$697,175,103 $671,564,697
============= =============
LIABILITIES
-------------------------------------------
Losses and settlement expenses..............$320,706,875 $314,518,588
Unearned premiums........................... 109,993,212 99,382,176
Other policyholders' funds.................. 1,086,608 472,952
Income taxes payable........................ 456,983 -
Indebtedness to related party............... - 2,684,418
Postretirement benefits..................... 7,281,409 6,967,484
Securities lending payable.................. 63,691,867 66,809,518
Other liabilities........................... 12,898,544 15,271,938
Surplus notes payable....................... 36,000,000 25,000,000
------------- -------------
Total liabilities............... 552,115,498 531,107,074
------------- -------------
STOCKHOLDERS' EQUITY
-------------------------------------------
Common stock, $1 par value, authorized
20,000,000 shares; issued and outstanding,
11,389,529 shares in 2002 and 11,329,987
shares in 2001............................. 11,389,529 11,329,987
Additional paid-in capital.................. 67,128,602 66,013,203
Accumulated other comprehensive income...... 7,710,404 7,507,672
Retained earnings........................... 58,831,070 55,606,761
------------- -------------
Total stockholders' equity...... 145,059,605 140,457,623
------------- -------------
Total liabilities and stockholders' equity..$697,175,103 $671,564,697
============= =============
June 30,
(UNAUDITED)
Other data: 2002 2001
--------------------------------------------------------
Book Value Per Share........ $12.74 $12.77
Price to Book Value......... 1.18x 1.19x
Common stock price:
High........................ $23.50 $15.85
Low......................... $15.00 $11.72
Close $15.05 $15.26
Effective tax rate.......... 26.2% (80.6%)
Statutory surplus as regards
policyholders-insurance
subsidiaries (in
thousands).............. $139,929 $111,780
Annualized Data
----------------------------
Net income (loss) as a percent
of beginning stockholders'
equity...................... 9.5% (1.05%)
Average ROE................. 9.3% (1.07%)
P/E Multiple (price/last 4 32.0x (763.0x)
qtrs)......................
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