EMC Insurance Group Inc. Reports Record 2006 Results and Announces 2007 Guidance.

DES MOINES, Iowa -- EMC Insurance Group Inc. (Nasdaq:EMCI):

Fourth Quarter 2006

Net Income Per Share -- $0.84

Net Operating Income Per Share -- $0.78

GAAP Combined Ratio - 96.3 percent

Year Ended December 31, 2006

Net Income Per Share -- $3.91

Net Operating Income Per Share -- $3.70

GAAP Combined Ratio - 92.9 percent

EMC Insurance Group Inc. (Nasdaq:EMCI) today reported fourth quarter operating income of $0.78 per share for the quarter ended December 31, 2006, compared to $1.34 per share for the fourth quarter of 20051. Operating income for the year ended December 31, 2006 was a record $3.70 per share, compared to $2.98 per share for the same period in 2005.

Net income, including realized investment gains/losses, was $11,494,000 ($0.84 per share) for the fourth quarter of 2006 compared to $19,017,000 ($1.40 per share) for the fourth quarter of 2005. Net income for the year ended December 31, 2006 was a record $53,547,000 ($3.91 per share) compared to $43,009,000 ($3.16 per share) for the same period in 2005.

"2006 was another outstanding year for EMC Insurance Group Inc.," stated President and CEO Bruce G. Kelley. "We had a string of three consecutive record quarters and the fourth quarter was the second best fourth quarter in our history. The result was another record-setting year."

Premiums earned decreased 3.7 percent to $102,756,000 for the three months ended December 31, 2006 from $106,714,000 for the same period in 2005. For the year ended December 31, 2006, premiums earned decreased 5.8 percent to $391,615,000 from $415,625,000 for the same period in 2005. These decreases are primarily attributed to the reinsurance segment and reflect Employers Mutual's reduced participation in the Mutual Reinsurance Bureau (MRB) pool and the revised terms of the quota share agreement; however, the property and casualty insurance segment also experienced a small decline for the year. As previously announced, MRB now has five participating members rather than three, which significantly decreased the reinsurance segment's premium volume. On an overall basis, premium rate competition increased moderately in the property and casualty insurance marketplace during 2006, resulting in an approximate 3.7 percent reduction in premium rate levels. Market conditions are expected to remain competitive in 2007, which will likely result in further rate reductions.

Investment income increased 8.3 percent to $11,904,000 for the fourth quarter and 14.7 percent to $46,692,000 for the year ended December 31, 2006 from $10,991,000 and $40,696,000 for the same periods in 2005. These increases are primarily attributed to the fact that the $107,801,000 of cash received from Employers Mutual Casualty Company in the first quarter of 2005 in connection with the change in the pool participation was fully invested throughout 2006. The Company also benefited from a slightly higher rate of return on its fixed maturity securities.

The Company experienced $3,438,000 ($0.16 per share after tax) of favorable development on prior years' reserves during the fourth quarter of 2006 compared to $6,460,000 ($0.31 per share after tax) in the fourth quarter of 2005. For the year ended December 31, 2006, the Company had favorable development on prior years' reserves of $41,916,000 ($1.99 per share after tax) compared to $15,408,000 ($0.74 per share after tax) for the same period in 2005. While the amount of favorable development experienced in 2006 was unusually large, it is important to note that, on a net basis, much of the favorable development can be attributed to the final settlement of closed claims. It is also important to note that current actuarial analysis supports the conclusion that newly reported claims continue to be reserved at a high level of adequacy.

"Carried loss and settlement expense reserves are toward the high end of the range of actuarial indications at December 31, 2006. This is similar to our position at year-end 2005," stated President and CEO Bruce G. Kelley. "Even so, because so much of the favorable development experienced in 2006 was derived from closed claims, we would not expect to experience the same extent of favorable development during 2007."

Catastrophe and storm losses were $1,700,000 ($0.08 per share after tax) in the fourth quarter of 2006 compared to $1,374,000 ($0.07 per share after tax) in the fourth quarter of 2005. For the year ended December 31, 2006, catastrophe and storm losses totaled $14,635,000 ($0.69 per share after tax) compared to $24,382,000 ($1.16 per share after tax) for the same period in 2005.

The Company's GAAP combined ratio was 96.3 percent in the fourth quarter of 2006 compared to 84.7 percent in the fourth quarter of 2005. For the year ended December 31, 2006, the GAAP combined ratio was 92.9 percent compared to 95.7 percent for the same period in 2005.

At December 31, 2006, consolidated assets increased 8.3 percent and totaled $1.2 billion, including $1.0 billion in the investment portfolio; stockholders' equity increased 17.7 percent to $308.3 million; and net book value of the Company's stock was $22.44 per share, an increase of 16.9 percent from $19.20 per share at December 31, 2005.

The Company's management expects 2007 operating income to be within a range of $2.25 per share and $2.50 per share. This estimate is based on a projected GAAP combined ratio of 100.6 percent and management's expectations of increased rate competition for good business in the property and casualty insurance segment.

The Company will hold an earnings teleconference call at 2:30 p.m. eastern standard time on February 22, 2007 to allow securities analysts, shareholders and other interested parties the opportunity to hear management discuss the Company's quarterly and year-end 2006 results, as well as its expectations for 2007. Dial-in information for the call is toll-free 1-866-203-2528; passcode 80244022. The event will be archived and available for digital replay through March 1, 2007. The replay access information is toll-free 1-888-286-8010; passcode 96604845.

Members of the news media, investors and the general public are invited to access a live webcast of the conference call via the Company's investor relations page at www.emcinsurance.com or at www.thomsonone.com. The webcast will be archived and available for replay until February 21, 2008. 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 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. Management intends to identify forward-looking statements when using the words "believe", "expect", "anticipate", "estimate", or similar expressions. You should not place undue reliance on these forward-looking statements.

a 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, the Company has 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.

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