EMC Insurance Group Inc. Reports 2003 Fourth Quarter Results and Declares 89th Consecutive Quarterly Dividend.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)--Feb. 24, 2004 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 ): Fourth Quarter 2003 Net Income Per Share -- $0.53 Net Operating Income Per Share -- $0.46 GAAP Combined Ratio -- 100.1 Year Ended December 31, 2003 Net Income Per Share -- $1.78 Net Operating Income Per Share -- $1.71 GAAP Combined Ratio -- 100.2 EMC Insurance Group Inc. (Nasdaq:EMCI) 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 $0.46 per share for the fourth quarter ended December December: see month. 31, 2003 compared to $0.38 for the fourth quarter ended December 31, 2002(1). Operating income for the year ended December 31, 2003 was $1.71 per share compared to $1.60 for the same period in 2002. Net income, including realized investment gains/losses, was $6,091,000 ($0.53 per share) for the fourth quarter ended December 31, 2003 compared to $5,166,000 ($0.45 per share) for the fourth quarter ended December 31, 2002. Net income for the year ended December 31, 2003 totaled $20,349,000 ($1.78 per share) compared to $16,102,000 ($1.42 per share) for the same period in 2002. "I am pleased to announce record-breaking Adj. 1. record-breaking - surpassing any previously established record; "a record-breaking high jump"; "record-breaking crowds" best - (superlative of `good') having the most positive qualities; "the best film of the year"; "the best solution"; "the best time for financial results for the year ended December 31, 2003," stated 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. G. Kelley Kelley may refer to any of the following: People
adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d in our efforts to improve both premium rate adequacy and the quality of the risks we insure Insure can mean:
Premiums earned increased 4.8 percent to $84,053,000 for the three months ended December 31, 2003 from $80,206,000 for the same period in 2002. For the twelve month period ended December 31, 2003, premiums earned increased 11.3 percent to $330,623,000 from $297,043,000 for the same period in 2002. These increases are primarily attributed to rate increases implemented during the last two years in the property and casualty insurance business as well as significant growth and improved pricing 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. The market for property and casualty insurance remained firm during the fourth quarter of 2003 and no significant changes are forecast for 2004. The Company will continue to implement rate increases in those lines of business and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. territories where such action is warranted; however, the overall level of these rate increases is expected to be smaller than those implemented during 2003. Catastrophe and storm losses amounted to $811,000 ($0.05 per share after tax) in the fourth quarter of 2003 compared to $2,360,000 ($0.13 per share after tax) in the fourth quarter of 2002. For the year ended December 31, 2003, catastrophe and storm losses totaled $20,942,000 ($1.19 per share after tax) compared to $8,304,000 ($0.47 per share after tax) for the same period in 2002. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3,900,000 ($0.22 per share after tax) of the catastrophe and storm losses for 2003 is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Hurricane Isabel This article is about the 2003 hurricane; there was also a Tropical Storm Isabel during the 1985 Atlantic hurricane season Hurricane Isabel was the costliest and deadliest hurricane in the 2003 Atlantic hurricane season. . The Company's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio was 100.1 percent in the fourth quarter of 2003 compared to 102.4 percent in the fourth quarter of 2002. For the year ended December 31, 2003, the GAAP combined ratio was 100.2 percent compared to 101.9 percent for the year ended December 31, 2002. Net book value of the Company's stock as of December 31, 2003 was $15.72 per share, an increase of 13.6 percent from $13.84 per share at December 31, 2002. The Board of Directors of EMC Insurance Group Inc. has declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a quarterly dividend of $0.15 per share of common stock payable March 12, 2004 to shareholders of record as of March 5, 2004. This is the eighty-ninth consecutive quarterly dividend paid since EMC Insurance Group Inc. became a publicly held company in February February: see month. 1982. 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. EMC Insurance Companies is one of the largest property and casualty entities in Iowa and among the top 60 insurance entities 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. (1) The Company uses a non-GAAP financial measure called "operating income" that management believes is useful to investors because it illustrates the performance of our normal, ongoing operations, which is important in understanding and evaluating our financial condition and results of operations. While this measure is consistent with measures utilized by investors to evaluate performance, it is not a substitute for the U.S. GAAP financial measure of net income. Therefore, we have provided a reconciliation of this non-GAAP financial measure to the U.S. GAAP financial measure of net income in the Summary of Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Financial Data schedule contained in this release. Management also uses non-GAAP financial measures for goal setting, determining employee and senior management awards and compensation, and evaluating performance.
Summary of Consolidated Financial Data
Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
------------ ------------ ------------- -------------
Premiums earned..$84,052,937 $80,205,777 $330,622,810 $297,043,033
Net investment
income.......... 7,454,599 8,238,848 29,702,461 32,778,133
Other income..... 233,919 297,960 862,070 865,819
------------ ------------ ------------- -------------
Total revenues... 91,741,455 88,742,585 361,187,341 330,686,985
Losses and
expenses........ 84,803,762 83,093,128 334,374,743 305,635,748
------------ ------------ ------------- -------------
Operating income
before income
tax expense..... 6,937,693 5,649,457 26,812,598 25,051,237
Income tax
expense......... 1,599,713 1,316,879 7,223,779 6,896,018
------------ ------------ ------------- -------------
Operating income
after income tax
expense......... 5,337,980 4,332,578 19,588,819 18,155,219
------------ ------------ ------------- -------------
Realized
investment gains
(losses)........ 1,158,721 1,282,173 1,169,698 (3,159,201)
Income tax
expense
(benefit)....... 405,552 448,761 409,394 (1,105,720)
------------ ------------ ------------- -------------
Net realized
investment gains
(losses)........ 753,169 833,412 760,304 (2,053,481)
------------ ------------ ------------- -------------
Net income....... $6,091,149 $5,165,990 $20,349,123 $16,101,738
============ ============ ============= =============
Operating income
per share -
basic and
diluted......... $0.46 $0.38 $1.71 $1.60
============ ============ ============= =============
Net income per
share - basic
and diluted..... $0.53 $0.45 $1.78 $1.42
============ ============ ============= =============
Dividend per
share........... $0.15 $0.15 $0.60 $0.60
============ ============ ============= =============
Average number of
shares
outstanding -
basic and
diluted......... 11,495,768 11,396,073 11,453,324 11,375,779
============ ============ ============= =============
2003 2002
---- ----
Book Value Per Share............................... $15.72 $13.84
Price to Book Value................................ 1.35X 1.29X
Common Stock Price:
High....................... $22.10 $23.50
Low........................ $15.50 $13.25
Close...................... $21.14 $17.87
Effective tax rate................................. 27.3% 26.4%
Statutory surplus as regards policyholder-insurance
subsidiaries (in thousands) (a).................. $170,233 $140,324
Net income as a percent of beginning stockholders'
equity............................................ 12.9% 11.5%
Average ROE........................................ 12.0% 10.8%
P/E Multiple (price/last 4 qtrs)................... 11.9X 12.6X
Consolidated Balance Sheets
December 31, December 31,
2003 2002
------------- -------------
ASSETS
------
Investments:
Fixed maturities:
Securities held-to-maturity, at
amortized cost (fair value $21,167,655
and $61,639,037)...................... $19,423,013 $55,033,675
Securities available-for-sale, at fair
value (amortized cost $382,326,388 and
$459,844,928)......................... 405,758,798 485,855,966
Fixed maturity securities on loan:
Securities held-to-maturity, at
amortized cost (fair value $32,686,769
and $0)............................... 30,422,335 -
Securities available-for-sale, at fair
value (amortized cost $117,184,150
and $0)............................... 118,026,960 -
Equity securities available-for-sale, at
fair value (cost $38,998,075 and
$38,444,030)............................ 49,008,498 34,596,985
Other long-term investments, at cost..... 4,758,019 3,057,000
Short-term investments, at cost.......... 63,568,064 29,650,230
------------- -------------
Total investments.............. 690,965,687 608,193,856
Balances resulting from related party
transactions with Employers Mutual:
Reinsurance receivables.................. 15,861,754 11,582,136
Prepaid reinsurance premiums............. 3,297,228 2,442,899
Intangible asset, defined benefit
retirement plan......................... 1,016,492 1,411,716
Other assets............................. 1,857,284 1,331,816
Cash....................................... (14,069,102) (119,097)
Accrued investment income.................. 7,821,652 9,179,555
Accounts receivable (net of allowance for
uncollectible accounts of $0 and $7,297).. 379,423 772,944
Income taxes recoverable................... - 213,504
Deferred policy acquisition costs.......... 26,737,784 24,926,861
Deferred income taxes...................... 10,345,429 13,986,172
Goodwill, at cost less accumulated
amortization of $2,616,234 and $2,616,234 941,586 941,586
Securities lending collateral.............. 154,556,758 -
------------- -------------
Total assets....................$899,711,975 $674,863,948
============= =============
LIABILITIES
-----------
Balances resulting from related party
transactions with Employers Mutual:
Losses and settlement expenses...........$367,923,881 $331,226,753
Unearned premiums........................ 124,832,607 115,746,814
Other policyholders' funds............... 1,390,594 1,035,622
Surplus notes payable.................... 36,000,000 36,000,000
Indebtedness to related party............ 2,175,118 3,304,539
Employee retirement plans................ 9,965,600 10,014,349
Other liabilities........................ 19,336,366 19,767,507
Income taxes payable....................... 2,780,500 -
Securities lending obligation.............. 154,556,758 -
------------- -------------
Total liabilities.............. 718,961,424 517,095,584
------------- -------------
STOCKHOLDERS' EQUITY
--------------------
Common stock, $1 par value, authorized
20,000,000 shares; issued and outstanding,
11,501,065 shares in 2003 and 11,399,050
shares in 2002............................ 11,501,065 11,399,050
Additional paid-in capital................. 69,113,228 67,270,591
Accumulated other comprehensive income..... 22,285,668 14,218,330
Retained earnings.......................... 77,850,590 64,880,393
------------- -------------
Total stockholders' equity..... 180,750,551 157,768,364
------------- -------------
Total liabilities and stockholders' equity $899,711,975 $674,863,948
============= =============
Property & Casualty
Insurance Reinsurance
Written premiums(a) 2003 2002 2003 2002
----------------------------------------------------------------------
Three months ended:
March 31,........ $60,022,622 $54,843,250 $23,301,452 $17,296,985
June 30,......... 65,126,418 62,295,162 22,160,253 17,683,733
September 30,.... 73,490,595 70,786,649 22,159,616 18,301,894
December 31,..... 50,952,040 49,708,541 22,436,452 22,920,666
--------------------------------------------------
Year to date:.......$249,591,675 $237,633,602 $90,057,773 $76,203,278
==================================================
Total
Written premiums(a) 2003 2002
----------------------------------------------
Three months ended:
March 31,........ $83,324,074 $72,140,235
June 30,......... 87,286,671 79,978,895
September 30,.... 95,650,211 89,088,543
December 31,..... 73,388,492 72,629,207
--------------------------
Year to date:.......$339,649,448 $313,836,880
==========================
(a) Statutory data rather than GAAP. However, this data is prepared in
accordance with statutory accounting rules as defined by the National
Association of Insurance Commissioners' Accounting Practices and
Procedures Manual. Consequently, no reconciliation to GAAP is required
by the SEC's Regulation G.
Segment Information
Year Ended Property and
---------- Casualty Parent
December 31, 2003 Insurance Reinsurance Company Consolidated
----------------- ------------------------------------------------
Premiums earned.......$241,237,313 $89,385,497 - $330,622,810
Losses and expenses... 248,731,016 82,669,141 - 331,400,157
------------------------------------------------
Underwriting (loss)
gain............... (7,493,703) 6,716,356 - (777,347)
Net investment income 20,724,017 8,948,076 $30,368 29,702,461
Other income.......... 862,070 - - 862,070
Interest expense...... 919,362 400,904 - 1,320,266
Other expenses........ 1,044,757 - 609,563 1,654,320
------------------------------------------------
Operating income
(loss) before
income tax expense
(benefit).......... 12,128,265 15,263,528 (579,195) 26,812,598
Realized investment
gains (losses)....... 1,312,252 (142,554) - 1,169,698
------------------------------------------------
Income (loss) before
income tax expense
(benefit).......... $13,440,517 $15,120,974 $(579,195) $27,982,296
================================================
Year Ended Property and
---------- Casualty Parent
December 31, 2002 Insurance Reinsurance Company Consolidated
----------------- ------------------------------------------------
Premiums earned.......$225,013,076 $72,029,957 - $297,043,033
Losses and expenses... 228,634,732 74,056,266 - 302,690,998
------------------------------------------------
Underwriting loss... (3,621,656) (2,026,309) - (5,647,965)
Net investment income 23,517,163 9,147,127 $113,843 32,778,133
Other income.......... 865,819 - - 865,819
Interest expense...... 1,345,153 293,563 - 1,638,716
Other expenses........ 869,346 - 436,688 1,306,034
------------------------------------------------
Operating income
(loss) before
income tax expense
(benefit).......... 18,546,827 6,827,255 (322,845) 25,051,237
Realized investment
(losses) gains....... (2,154,246) (1,010,268) 5,313 (3,159,201)
------------------------------------------------
Income (loss) before
income tax expense
(benefit).......... $16,392,581 $5,816,987 $(317,532) $21,892,036
================================================
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