EMC Insurance Group Inc. Reports 2006 Second Quarter Results.DES MOINES, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, -- 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 ): -- Second Quarter 2006 -- Net Income Per Share -- $0.86 -- Net 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. Per Share -- $0.76 -- GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Combined Ratio - 96.3% EMC Insurance Group Inc. (Nasdaq:EMCI) today reported record second quarter operating income of $0.76 per share ($10,392,000) for the second quarter ended June June: see month. 30, 2006 compared to operating income of $0.34 per share ($4,619,000) for the second quarter of 2005(1). For the six month period ended June 30, 2006, operating income was $28,457,000 ($2.08 per share) as compared to $14,648,000 ($1.08 per share) for the same period in 2005. Net income, including realized investment gains/losses, was $11,815,000 ($0.86 per share) for the second quarter of 2006 compared to $5,161,000 ($0.38 per share) for the second quarter of 2005. For the six month period ended June 30, 2006, net income was $31,078,000 ($2.27 per share) as compared to $15,663,000 ($1.15 per share) for the same period in 2005. "We are pleased to report another 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 quarter," 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
Premiums earned decreased 5.7 percent to $98,218,000 for the second quarter of 2006 from $104,202,000 for the same period in 2005. For the six month period ended June 30, 2006 premiums earned decreased 5.7 percent to $193,710,000 from $205,496,000 for the same period in 2005. The majority of these decreases are attributed to the 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. segment and are associated with Employers Mutual Casualty Company's previously announced reduced participation in the Mutual Reinsurance Bureau (MRB MRB Malaysian Rubber Board MRB Material Review Board MRB Maintenance Review Board (Commercial Aircraft Industry and FAA) MRB Medical Review Board MRB Mortgage Revenue Bonds (secondary mortgage financial instrument) ) pool and the previously announced changes to the quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). agreement with Employers Mutual. The property and casualty insurance segment also experienced a slight decline in premiums earned in the second quarter of 2006 as well as for the six month period ended June 30, 2006. On an overall basis, rate competition continued to increase moderately in the property and casualty insurance marketplace during the second quarter of 2006 and management expects market conditions to remain competitive for the remainder of the year. Consequently, the Company's overall rate level is expected to decline moderately during 2006. Investment income increased 11.4 percent to $11,368,000 for the second quarter of 2006 from $10,201,000 for the same period in 2005. For the six month period ended June 30, 2006, investment income increased 21.0 percent to $23,147,000 from $19,132,000 for the same period in 2005. These increases are primarily attributed to the fact that all of the cash received from Employers Mutual in the first quarter of 2005 in connection with the change in pool participation has been fully invested. As noted in the Company's July July: see month. 20, 2006 press release, the Company experienced $7,680,000 ($4,992,000 or $0.36 per share after tax) of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. development on prior years' direct case loss reserves stemming stemming - stemmer from final settlements of claims in the second quarter of 2006. For the first six months of 2006, the Company experienced $18,930,000 ($12,304,000 or $0.90 per share after tax) of favorable development on prior years' direct case loss reserves stemming from final settlements of claims. However, in the financial information contained in this earnings release the Company is reporting $14,518,000 and $18,814,000 of favorable development on prior years' reserves in the property and casualty insurance segment for the second quarter and first six months of 2006, respectively. The reported amounts of favorable development reflect an adjustment in the factors utilized to allocate To reserve a resource such as memory or disk. See memory allocation. the property and casualty insurance segment's incurred but not reported Incurred but not reported (IBNR) is a term in common use in general insurance. When a policy of general insurance is written it will typically cover a 12 month period from inception of the policy. (IBNR IBNR Incurred But Not Reported IBNR Interesting But Not Relevant ) reserve by accident year. This adjustment was initially implemented in the first quarter of 2006, and was again utilized in the second quarter of 2006, to better match the expected development of claims that occurred in prior accident years with the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the IBNR reserve to those prior accident years. It is important to note that the adjustment in IBNR factors did not have any impact on the net income amounts reported for 2006. The only impact of this adjustment is that a greater amount of the June 30, 2006 IBNR reserve (but less than the March 31, 2006 amount) was allocated to prior accident years, and a corresponding smaller amount was allocated to the current accident year. The Company's GAAP combined ratio was 96.3 percent in the second quarter of 2006 compared to 103.9 percent in the second quarter of 2005. For the six months ended June 30, 2006, the Company's GAAP combined ratio was 90.3 percent compared to 99.3 percent for the same period in 2005. At June 30, 2006, 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: assets totaled $1.1 billion, including $.9 billion in the investment portfolio; stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $278.6 million; and net book value of the Company's stock was $20.29 per share, an increase of 5.7 percent from $19.20 per share at December December: see month. 31, 2005. The Company will host an earnings call in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with today's release. The teleconference will begin at 11:00 a.m. eastern daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). time, July 26, 2006. Dial-in information for the call is toll-free 1-800-295-3991; passcode 17959632. The event will be archived and available for digital replay through August 2, 2006. The replay access information is toll-free 1-888-286-8010; passcode 26181634. A webcast of the teleconference will be presented by Thomson Financial Thomson Financial A major provider of information, analytical tools, and consulting services to the financial community. The firm, a division of Thomson Corporation, is best known to investors for its First Call segment, which publishes consensus earnings and can be accessed at http://my.ccbn.com or from the Company's investor relations Investor relations The process by which the corporation communicates with its investors. page at www.emcinsurance.com. The archived webcast will be available for one year. A transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the teleconference will also be available on the Company's website shortly after the completion of the teleconference. 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 based on premium volume. 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 beliefs, assumptions and expectations of the Company's future performance, taking into account all information currently available to management. These beliefs, assumptions and expectations can change as the result of many possible events or factors, not all of which are known to management. If a change occurs, the Company's business, financial condition, liquidity, results of operations, plans and objectives may vary materially from those expressed in the forward-looking statements. 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; the adequacy of loss and settlement expense reserves; state and federal legislation and regulations; changes in our industry, interest rates or the performance of financial markets and the general economy; rating agency actions and other risks and uncertainties inherent to the Company's business. When we use the words "believe", "expect", "anticipate", "estimate", or similar expressions, we intend to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. (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 Consolidated Statements of Income 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.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Property and
Quarter Ended Casualty Parent
June 30, 2006 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
---------
Premiums earned... $79,895,345 $18,322,576 $- $98,217,921
Investment income,
net.............. 8,428,243 2,875,891 64,293 11,368,427
Other income...... 207,499 16,834 - 224,333
------------- ------------ --------- -------------
88,531,087 21,215,301 64,293 109,810,681
------------- ------------ --------- -------------
Losses and expenses:
--------------------
Losses and
settlement
expenses......... 46,965,551 13,146,247 - 60,111,798
Dividends to
policyholders.... 1,739,425 - - 1,739,425
Amortization of
deferred policy
acquisition costs 18,347,577 4,146,844 - 22,494,421
Other underwriting
expenses......... 10,208,438 32,160 - 10,240,598
Interest expense.. 193,125 84,975 - 278,100
Other expenses.... 466,678 (2,015) 164,053 628,716
------------- ------------ --------- -------------
77,920,794 17,408,211 164,053 95,493,058
------------- ------------ --------- -------------
Operating income
(loss) before
income taxes... 10,610,293 3,807,090 (99,760) 14,317,623
------------- ------------ --------- -------------
Realized investment
gains.............. 1,852,727 335,167 - 2,187,894
------------- ------------ --------- -------------
Income (loss)
before income
taxes.......... 12,463,020 4,142,257 (99,760) 16,505,517
------------- ------------ --------- -------------
Income tax expense
(benefit):
------------------
Current........... 4,474,488 1,087,270 (34,916) 5,526,842
Deferred.......... (842,031) 6,180 - (835,851)
------------- ------------ --------- -------------
3,632,457 1,093,450 (34,916) 4,690,991
------------- ------------ --------- -------------
Net income
(loss)......... $8,830,563 $3,048,807 $(64,844) $11,814,526
============= ============ ========= =============
Average shares
outstanding........ 13,718,236
Per Share Data:
---------------
Net income (loss)
per share - basic
and diluted...... $0.64 $0.22 $- $0.86
Decrease in
provision for
insured events of
prior years
(after tax)...... $0.69 $0.08 $- $0.77
Catastrophe and
storm losses
(after tax)...... $(0.23) $- $- $(0.23)
Dividends per
share............ $0.16
Other Information of
Interest:
--------------------
Written Premium... $82,028,290 $16,573,437 $- $98,601,727
Decrease in
provision for
insured events of
prior years......$(14,517,808) $(1,823,364) $- $(16,341,172)
Catastrophe and
storm losses..... $4,758,386 $3,229 $- $4,761,615
GAAP Combined Ratio:
--------------------
Loss ratio........ 58.8% 71.7% - 61.2%
Expense ratio..... 37.9% 22.9% - 35.1%
------------- ------------ --------- -------------
96.7% 94.6% - 96.3%
============= ============ ========= =============
Property and
Quarter Ended Casualty Parent
June 30, 2005 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
---------
Premiums earned...$81,177,327 $23,024,882 $- $104,202,209
Investment income,
net.............. 7,488,089 2,665,174 47,274 10,200,537
Other income...... 147,574 - - 147,574
------------ ------------ ---------- -------------
88,812,990 25,690,056 47,274 114,550,320
------------ ------------ ---------- -------------
Losses and expenses:
--------------------
Losses and
settlement
expenses......... 59,118,497 14,425,179 - 73,543,676
Dividends to
policyholders.... 791,213 - - 791,213
Amortization of
deferred policy
acquisition costs 18,480,589 5,240,661 - 23,721,250
Other underwriting
expenses......... 8,522,304 1,669,381 - 10,191,685
Interest expense.. 193,125 84,975 - 278,100
Other expenses.... 247,520 - 260,870 508,390
------------ ------------ ---------- -------------
87,353,248 21,420,196 260,870 109,034,314
------------ ------------ ---------- -------------
Operating income
(loss) before
income taxes... 1,459,742 4,269,860 (213,596) 5,516,006
------------ ------------ ---------- -------------
Realized investment
gains.............. 811,547 21,690 - 833,237
------------ ------------ ---------- -------------
Income (loss)
before income
taxes.......... 2,271,289 4,291,550 (213,596) 6,349,243
------------ ------------ ---------- -------------
Income tax expense
(benefit):
------------------
Current........... 661,538 1,220,664 (74,758) 1,807,444
Deferred.......... (550,715) (68,144) - (618,859)
------------ ------------ ---------- -------------
110,823 1,152,520 (74,758) 1,188,585
------------ ------------ ---------- -------------
Net income
(loss)......... $2,160,466 $3,139,030 $(138,838) $5,160,658
============ ============ ========== =============
Average shares
outstanding........ 13,602,194
Per Share Data:
---------------
Net income (loss)
per share - basic
and diluted...... $0.16 $0.23 $(0.01) $0.38
(Increase)
decrease in
provision for
insured events of
prior years
(after tax)...... $(0.12) $0.02 $- $(0.10)
Catastrophe and
storm losses
(after tax)...... $(0.28) $(0.01) $- $(0.29)
Dividends per
share............ $0.15
Other Information of
Interest:
--------------------
Written Premium...$84,353,598 $21,773,088 $- $106,126,686
Increase
(decrease) in
provision for
insured events of
prior years...... $2,490,160 $(439,415) $- $2,050,745
Catastrophe and
storm losses..... $5,776,404 $204,086 $- $5,980,490
GAAP Combined Ratio:
--------------------
Loss ratio........ 72.8% 62.7% - 70.6%
Expense ratio..... 34.3% 30.0% - 33.3%
------------ ------------ ---------- -------------
107.1% 92.7% - 103.9%
============ ============ ========== =============
Property and
Six Months Ended Casualty Parent
June 30, 2006 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
---------
Premiums earned..$157,638,116 $36,072,003 $- $193,710,119
Investment
income, net..... 17,092,187 5,945,722 108,964 23,146,873
Other income..... 316,059 16,834 - 332,893
------------- ------------ ---------- -------------
175,046,362 42,034,559 108,964 217,189,885
------------- ------------ ---------- -------------
Losses and
expenses:
----------
Losses and
settlement
expenses........ 82,605,473 25,924,354 - 108,529,827
Dividends to
policyholders... 2,731,143 - - 2,731,143
Amortization of
deferred policy
acquisition
costs........... 36,694,468 7,297,082 - 43,991,550
Other
underwriting
expenses........ 18,812,043 859,152 - 19,671,195
Interest expense. 386,250 169,950 - 556,200
Other expenses... 726,585 - 351,868 1,078,453
------------- ------------ ---------- -------------
141,955,962 34,250,538 351,868 176,558,368
------------- ------------ ---------- -------------
Operating
income (loss)
before income
taxes......... 33,090,400 7,784,021 (242,904) 40,631,517
------------- ------------ ---------- -------------
Realized investment
gains............. 3,383,768 649,001 - 4,032,769
------------- ------------ ---------- -------------
Income (loss)
before income
taxes......... 36,474,168 8,433,022 (242,904) 44,664,286
------------- ------------ ---------- -------------
Income tax expense
(benefit):
-------------------
Current.......... 12,462,626 2,485,237 (85,016) 14,862,847
Deferred......... (1,034,017) (242,929) - (1,276,946)
------------- ------------ ---------- -------------
11,428,609 2,242,308 (85,016) 13,585,901
------------- ------------ ---------- -------------
Net income
(loss)........ $25,045,559 $6,190,714 $(157,888) $31,078,385
============= ============ ========== =============
Average shares
outstanding....... 13,690,586
Per Share Data:
---------------
Net income (loss)
per share -
basic and
diluted......... $1.83 $0.45 $(0.01) $2.27
Decrease in
provision for
insured events
of prior years
(after tax)..... $0.89 $0.12 $- $1.01
Catastrophe and
storm losses
(after tax)..... $(0.32) $(0.01) $- $(0.33)
Dividends per
share........... $0.32
Book value per
share........... $20.29
Effective tax rate. 30.4%
Net income as a
percent of beg. SH
equity............ 23.7%
Other Information
of Interest:
-----------------
Written Premium..$156,707,889 $30,023,351 $- $186,731,240
Decrease in
provision for
insured events
of prior years..$(18,813,828) $(2,562,390) $- $(21,376,218)
Catastrophe and
storm losses.... $6,697,724 $203,999 $- $6,901,723
GAAP Combined
Ratio:
-------------
Loss ratio....... 52.4% 71.9% - 56.0%
Expense ratio.... 36.9% 22.6% - 34.3%
------------- ------------ ---------- -------------
89.3% 94.5% - 90.3%
============= ============ ========== =============
Property and
Six Months Ended Casualty Parent
June 30, 2005 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
---------
Premiums earned..$160,895,599 $44,600,680 $- $205,496,279
Investment
income, net..... 13,829,570 5,160,451 142,226 19,132,247
Other income..... 243,670 - - 243,670
------------- ------------ ---------- -------------
174,968,839 49,761,131 142,226 224,872,196
------------- ------------ ---------- -------------
Losses and
expenses:
----------
Losses and
settlement
expenses........ 106,249,408 30,137,276 - 136,386,684
Dividends to
policyholders... 2,342,072 - - 2,342,072
Amortization of
deferred policy
acquisition
costs........... 36,695,579 9,512,382 - 46,207,961
Other
underwriting
expenses........ 16,139,342 2,952,419 - 19,091,761
Interest expense. 386,250 169,950 - 556,200
Other expenses... 418,849 - 495,671 914,520
------------- ------------ ---------- -------------
162,231,500 42,772,027 495,671 205,499,198
------------- ------------ ---------- -------------
Operating
income (loss)
before income
taxes......... 12,737,339 6,989,104 (353,445) 19,372,998
------------- ------------ ---------- -------------
Realized investment
gains (losses).... 1,678,661 (116,982) - 1,561,679
------------- ------------ ---------- -------------
Income (loss)
before income
taxes......... 14,416,000 6,872,122 (353,445) 20,934,677
------------- ------------ ---------- -------------
Income tax expense
(benefit):
-------------------
Current.......... 6,087,704 1,341,972 (143,839) 7,285,837
Deferred......... (2,406,737) 373,337 18,986 (2,014,414)
------------- ------------ ---------- -------------
3,680,967 1,715,309 (124,853) 5,271,423
------------- ------------ ---------- -------------
Net income
(loss)........ $10,735,033 $5,156,813 $(228,592) $15,663,254
============= ============ ========== =============
Average shares
outstanding....... 13,593,652
Per Share Data:
---------------
Net income (loss)
per share -
basic and
diluted......... $0.79 $0.38 $(0.02) $1.15
(Increase)
decrease in
provision for
insured events
of prior years
(after tax)..... $0.19 $(0.01) $- $0.18
Catastrophe and
storm losses
(after tax)..... $(0.36) $(0.05) $- $(0.41)
Dividends per
share........... $0.30
Book value per
share........... $17.88
Effective tax rate. 25.2%
Net income as a
percent of beg. SH
equity............ 13.7%
Other Information
of Interest:
-----------------
Written Premium..$190,206,730 $43,007,591 $- $233,214,321
Increase
(decrease) in
provision for
insured events
of prior years.. $(4,102,933) $267,355 $- $(3,835,578)
Catastrophe and
storm losses.... $7,540,121 $1,065,671 $- $8,605,792
GAAP Combined
Ratio:
-------------
Loss ratio....... 66.0% 67.6% - 66.4%
Expense ratio.... 34.3% 27.9% - 32.9%
------------- ------------ ---------- -------------
100.3% 95.5% - 99.3%
============= ============ ========== =============
The Company had total cash and invested assets with a carrying value
of $932.1 million and $950.1 million as of June 30, 2006 and
December 31, 2005, respectively. The following table summarizes the
Company's cash and invested assets as of the dates indicated:
June 30, 2006
------------------------------------------
Percent of
Amortized Fair Total at Carrying
($ in thousands) Cost Value Fair Value Value
---------- ---------- ---------- ---------
Fixed maturity securities
held-to-maturity........... $19,706 $19,821 2.1% $19,706
Fixed maturity securities
available-for-sale......... 765,699 761,348 81.7% 761,348
Equity securities available-
for-sale................... 70,704 96,373 10.4% 96,373
Cash........................ 264 264 - 264
Short-term investments...... 51,551 51,551 5.5% 51,551
Other long-term investments. 2,902 2,902 0.3% 2,902
---------- ---------- ---------- ---------
$910,826 $932,259 100.0% $932,144
========== ========== ========== =========
December 31, 2005
------------------------------------------
Percent of
Amortized Fair Total at Carrying
($ in thousands) Cost Value Fair Value Value
---------- ---------- ---------- ---------
Fixed maturity securities
held-to-maturity........... $19,794 $20,179 2.1% $19,794
Fixed maturity securities
available-for-sale......... 782,767 795,056 83.6% 795,056
Equity securities available-
for-sale................... 66,116 93,343 9.8% 93,343
Cash........................ 333 333 - 333
Short-term investments...... 37,346 37,346 4.0% 37,346
Other long-term investments. 4,270 4,270 0.5% 4,270
---------- ---------- ---------- ---------
$910,626 $950,527 100.0% $950,142
========== ========== ========== =========
The amortized cost and estimated fair values of fixed maturity and
equity securities at June 30, 2006 were as follows:
Held-to-Maturity
------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
($ in thousands) Cost Gains Losses Value
---------- ---------- ---------- ---------
U.S. treasury securities and
obligations of U.S.
government corporations and
agencies................... $18,998 $73 $1 $19,070
Mortgage-backed securities.. 708 43 - 751
---------- ---------- ---------- ---------
Total securities held-
to-maturity............ $19,706 $116 $1 $19,821
========== ========== ========== =========
Available-for-Sale
------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
($ in thousands) Cost Gains Losses Value
---------- ---------- ---------- ---------
U.S. treasury securities and
obligations of U.S.
government corporations and
agencies................... $375,923 $6 $11,264 $364,665
Obligations of states and
political subdivisions..... 251,341 5,758 791 256,308
Mortgage-backed securities.. 19,013 802 193 19,622
Public utility securities... 6,004 207 - 6,211
Debt securities issued by
foreign governments........ 6,975 68 109 6,934
Corporate securities........ 106,443 2,541 1,376 107,608
---------- ---------- ---------- ---------
Total fixed maturity
securities............. 765,699 9,382 13,733 761,348
---------- ---------- ---------- ---------
Common stocks............... 67,204 27,943 2,244 92,903
Non-redeemable preferred
stocks..................... 3,500 - 30 3,470
---------- ---------- ---------- ---------
Total equity securities. 70,704 27,943 2,274 96,373
---------- ---------- ---------- ---------
Total securities
available-for-sale..... $836,403 $37,325 $16,007 $857,721
========== ========== ========== =========
CONSOLIDATED BALANCE SHEETS - UNAUDITED June 30, December 31,
2006 2005
--------------- ---------------
ASSETS
------
Investments:
Fixed maturities:
Securities held-to-maturity, at
amortized cost (fair value
$8,917,452 and $18,287,704)....... $8,804,993 $17,927,478
Securities available-for-sale, at
fair value (amortized cost
$736,752,143 and $740,845,145).... 733,000,761 753,399,943
Fixed maturity securities on loan:
Securities held-to-maturity, at
amortized cost (fair value
$10,903,406 and $1,891,504)....... 10,901,088 1,866,928
Securities available-for-sale, at
fair value (amortized cost
$28,946,474 and $41,922,225)...... 28,347,643 41,656,150
Equity securities available-for-sale,
at fair value (cost $70,703,689 and
$66,115,755)........................ 96,373,067 93,343,172
Other long-term investments, at cost. 2,901,957 4,269,566
Short-term investments, at cost...... 51,551,412 37,345,456
--------------- ---------------
Total investments................ 931,880,921 949,808,693
Balances resulting from related party
transactions with Employers Mutual:
Reinsurance receivables............ 40,705,138 46,372,087
Prepaid reinsurance premiums....... 4,685,637 4,846,084
Deferred policy acquisition costs.. 32,653,655 34,106,217
Defined benefit retirement plan,
prepaid asset..................... 4,469,184 5,633,370
Other assets....................... 4,126,629 2,281,025
Indebtedness of related party...... 1,552,476 -
Cash................................... 264,020 333,048
Accrued investment income.............. 11,076,191 10,933,046
Accounts receivable (net of allowance
for uncollectible accounts of $0 and
$0)................................... 656,555 211,595
Deferred income taxes.................. 21,155,257 13,509,369
Goodwill, at cost less accumulated
amortization of $2,616,234 and
$2,616,234............................ 941,586 941,586
Securities lending collateral.......... 40,641,563 44,705,501
--------------- ---------------
Total assets.....................$1,094,808,812 $1,113,681,621
=============== ===============
LIABILITIES
-----------
Balances resulting from related party
transactions with Employers Mutual:
Losses and settlement expenses..... $540,318,572 $544,051,061
Unearned premiums.................. 154,206,368 160,693,288
Other policyholders' funds......... 5,803,510 5,359,116
Surplus notes payable.............. 36,000,000 36,000,000
Indebtedness to related party...... - 19,899,329
Employee retirement plans.......... 14,547,105 13,681,388
Other liabilities.................. 20,793,260 21,764,259
Income taxes payable................... 3,922,353 5,644,516
Securities lending obligation.......... 40,641,563 44,705,501
--------------- ---------------
Total liabilities................ 816,232,731 851,798,458
--------------- ---------------
STOCKHOLDERS' EQUITY
--------------------
Common stock, $1 par value, authorized
20,000,000 shares; issued and
outstanding, 13,727,542 shares in 2006
and 13,642,705 shares in 2005......... 13,727,542 13,642,705
Additional paid-in capital............. 106,543,454 104,800,407
Accumulated other comprehensive income. 13,642,005 25,470,039
Retained earnings...................... 144,663,080 117,970,012
--------------- ---------------
Total stockholders' equity....... 278,576,081 261,883,163
--------------- ---------------
Total liabilities and
stockholders' equity............$1,094,808,812 $1,113,681,621
=============== ===============
NET WRITTEN PREMIUMS
Three Months Ended Six Months Ended
June 30, 2006 June 30, 2006
------------------------- -------------------------
Percent of Percent of
Increase/ Increase/
Percent of (Decrease) in Percent of (Decrease) in
Net Written Net Written Net Written Net Written
Premiums Premiums Premiums Premiums
----------- ------------- ----------- -------------
Property and
Casualty Insurance
(1)
Commercial Lines:
-------------------
Automobile..... 19.6% (0.9)% 19.3% (2.1)%
Liability...... 18.8% 2.8% 18.7% 2.9%
Property....... 15.7% (3.3)% 15.3% (2.4)%
Workers'
Compensation.. 14.1% (5.3)% 14.7% (2.0)%
Other.......... 2.5% 18.3% 2.2% 16.6%
----------- -----------
Total........ 70.7% (0.9)% 70.2% (0.4)%
Personal Lines:
-----------------
Automobile..... 6.4% (15.8)% 6.6% (16.4)%
Property....... 5.9% (8.5)% 5.4% (8.2)%
Liability...... 0.2% 1.1% 0.2% 1.7%
----------- -----------
Total........ 12.5% (12.3)% 12.2% (12.7)%
Reinsurance (2).... 16.8% (23.9)% 17.6% (22.2)%
----------- -----------
Total........ 100.0% 100.0%
=========== ===========
(1) Excludes $29,630,612 portfolio adjustment related to the January
1, 2005 change in the Company's aggregate participation in the
pooling arrangement.
(2) Excludes $3,440,024 negative portfolio adjustment related to the
January 1, 2006 reduced participation in the MRB pool.
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