EMC Insurance Group Inc. Reports 2009 Third Quarter Results.

Third Quarter 2009 Operating Income Per Share - $0.24 Net Income Per Share - $0.38 Catastrophe and Storm Losses Per Share - $0.79 Large Losses Per Share - $0.40 GAAP Combined Ratio - 107.2 percent

Nine Months Ended September 30, 2009 Operating Income Per Share - $1.58 Net Income Per Share - $1.35 Catastrophe and Storm Losses Per Share - $1.52 Large Losses Per Share - $1.35 GAAP Combined Ratio - 102.1 percent Annual Operating Income Guidance Per Share - $1.80 to $2.05

DES MOINES, Iowa -- EMC Insurance Group Inc. (Nasdaq:EMCI) today reported operating income of $3,152,000 ($0.24 per share) for the third quarter ended September 30, 2009, compared to an operating loss of $295,000 ($0.02 per share) for the third quarter of 20081. For the nine-month period ended September 30, 2009, operating income was $20,920,000 ($1.58 per share) compared to $8,635,000 ($0.63 per share) for the same period in 2008.

Net income, including realized investment gains and losses, totaled $5,051,000 ($0.38 per share) for the third quarter of 2009 compared to a net loss of $9,458,000 ($0.70 per share) for the third quarter of 2008. For the nine-month period ended September 30, 2009, net income was $17,822,000 ($1.35 per share) compared to a net loss of $2,179,000 ($0.16 per share) for the same period in 2008.

"Through the first nine months of 2009, operating results were pretty much in line with our expectations," stated Bruce G. Kelley, President and Chief Executive Officer. "Premium rates, which began to stabilize somewhat during the second quarter, showed some signs of improvement during the third quarter, and storm losses, while higher than average due to active Midwest weather patterns, were significantly lower than the record amount experienced in 2008. One development, which contributed significantly to the increase in the book value of our stock during the third quarter, was the rapid recovery in the market value of our investment portfolio."

Premiums earned remained virtually flat at $96,733,000 for the three months ended September 30, 2009, compared to $96,409,000 for the same period in 2008. For the nine months ended September 30, 2009, premiums earned decreased 0.9 percent to $285,285,000 from $288,005,000 for the same period in 2008.

Investment income decreased 3.6 percent to $11,805,000 for the third quarter of 2009 from $12,251,000 for the same period in 2008. For the nine-month period ended September 30, 2009, net investment income decreased 2.6 percent to $35,255,000 from $36,191,000 for the same period in 2008. This decrease in investment income is attributed to a high level of call activity that occurred on the Company's U.S. Government Agency securities during the first half of 2009 as a result of the low interest rate environment, a decline in yield on short-term investments and the elimination of dividends on the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) preferred stocks in 2008. As of September 30, 2009, the majority of the proceeds received from the called securities had been reinvested.

"Other-than-temporary" investment impairment losses declined to $611,000 in the third quarter of 2009 from $17,075,000 for the same period in 2008. For the first nine months of 2009, "other-than-temporary" investment impairment losses totaled $9,727,000, compared to $21,672,000 for the same period in 2008.

The Company has historically reported catastrophe and storm losses net of development experienced on prior years' catastrophe and storm losses. This has not had a material impact on the reported amounts because development associated with prior years' catastrophe and storm losses has historically been relatively small. During 2009, however, the Company has experienced a larger amount of favorable development related to the record amount of catastrophe and storm losses incurred in 2008. As a result, the Company is changing its reporting of catastrophe and storms losses to include only current accident year events. Any material amount of development experienced on prior accident year catastrophe and storm losses will be reported separately. This change in reporting does not have any impact on the reported amounts of operating income or net income; it only affects the reported amounts of catastrophe and storm losses.

Catastrophe and storm losses totaled $16,032,000 ($0.79 per share after tax) in the third quarter of 2009 compared to $20,088,000 ($0.97 per share after tax) in the third quarter of 2008. For the first nine months of 2009, catastrophe and storm losses totaled $30,945,000 ($1.52 per share after tax) compared to a record $50,426,000 ($2.41 per share after tax) for the same period in 2008. Catastrophe and storm losses accounted for 10.8 percentage points of the combined ratio for the first nine months of 2009, which is substantially higher than the 8-year average (excluding the record catastrophe and storm losses of 2008) of 6.5 percentage points.

The Company experienced favorable development on prior years' catastrophe and storm losses of $833,000 ($0.04 per share after tax) for the three months ended September 30, 2009, compared to $265,000 ($0.01 per share after tax) for the same period in 2008. For the nine months ended September 30, 2009, favorable development on prior years' catastrophe and storm losses totaled $2,969,000 ($0.15 per share after tax), compared to $1,356,000 ($0.06 per share after tax) for the same period in 2008. Reserves associated with catastrophe and storms losses are event-specific and are initially established based on known exposures and estimates of loss frequency and severity. As actual loss information is reported, the Company is better able to project the ultimate cost of a loss event. Changes in the projected ultimate cost of a prior accident year loss event is reported as development, and this development has an impact on the Company's results of operations because the total amount of the Company's carried reserves has changed.

Large losses, which the Company defines as losses greater than $250,000, excluding catastrophe and storm losses, declined to $5,329,000 ($0.40 per share after taxes) in the third quarter of 2009 from $7,954,000 ($0.59 per share after taxes) in the same period in 2008. For the first nine months of 2009, large losses totaled $17,850,000 ($1.35 per share after taxes), compared to $15,973,000 ($1.17 per share after taxes) for the same period in 2008.

The Company's GAAP combined ratio was 107.2 percent in the third quarter of 2009 compared to 114.8 percent in the third quarter of 2008. For the nine-month period ended September 30, 2009, the Company's GAAP combined ratio was 102.1 percent compared to 109.3 percent for the same period in 2008.

At September 30, 2009, consolidated assets totaled $1.2 billion, including $1.0 billion in the investment portfolio; stockholders' equity increased 18.2 percent to $334.3 million; and the net book value of the Company's stock was $25.41 per share, an increase of 19.2 percent from $21.32 per share at December 31, 2008.

Based on actual results for the first nine months of 2009 and management's expectations for the remainder of the year, management is reiterating its 2009 operating income guidance of $1.80 to $2.05 per share. This guidance is based on a projected GAAP combined ratio of 103.5 percent for the year.

As of October 10, 2009, 736,133 shares of the Company's common stock have been purchased under the Company's $25 million stock repurchase program at a cost of approximately $17.9 million. The timing and terms of the purchases are determined by management based on market conditions, and the transactions are conducted in accordance with the applicable rules of the SEC. Common stock purchased under this program is being retired by the Company. The Company's parent organization, Employers Mutual Casualty Company, has a stock purchase program in place as well, with about $4.5 million of its $15 million authorization remaining. This program is currently dormant and will not be reactivated until the Company's repurchase program is completed.

The Company will hold an earnings teleconference call at 11:00 a.m. eastern daylight time on October 23, 2009 to allow securities analysts, stockholders and other interested parties the opportunity to hear management discuss the Company's results for the first nine months of 2009, as well as its expectations for the remainder of the year. Dial-in information for the call is toll-free 1-877-407-8031 (International: 1-201-689-8031). The event will be archived and available for digital replay through November 6, 2009. The replay access information is toll-free 1-877-660-6853 (International: 1-201-612-7415); passcodes required for playback: account number 286, conference ID number 334389.

Members of the news media, investors and the general public are invited to access a live webcast of the conference call via http://www.investorcalendar.com or the Company's investor relations page at www.emcins.com/ir. The webcast will be archived and available for replay until January 23, 2010. A transcript 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 of 1995 provides issuers the opportunity to make cautionary statements regarding forward-looking statements. 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 the property and casualty insurance industry, interest rates or the performance of financial markets and the general economy;

* rating agency actions;

* "other-than-temporary" investment impairment losses; and

* other risks and uncertainties inherent to the Company's business, including those discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K.

Management intends to identify forward-looking statements when using the words "believe", "expect", "anticipate", "estimate", "project" or similar expressions. Undue reliance should not be placed on these forward-looking statements.

aThe 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, the Company has provided the following reconciliation of this non-GAAP financial measure to the U.S. GAAP financial measure of net income. Management also uses non-GAAP financial measures for goal setting, determining employee and senior management awards and compensation, and evaluating performance.

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The Company had total cash and invested assets with a carrying value of $1.0 billion and $965.3 million as of September 30, 2009 and December 31, 2008, respectively. The following table summarizes the Company's cash and invested assets as of the dates indicated:

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