EMC Insurance Group Inc. Reports Results for Fourth Quarter of 2002 and Declares 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. 25, 2003 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 ) 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 $0.50 per share for the fourth quarter ended December December: see month. 31, 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 $0.12 per share in the fourth quarter of 2001. Net income, including realized investment gains, was $6,511,000 ($0.57 per share) for the fourth quarter ended December 31, 2002 compared to a net loss of $1,262,000 ($0.11 per share) for the fourth quarter of 2001. Operating income for the year ended December 31, 2002 was $1.71 per share compared to an operating loss of $0.24 per share for the year ended December 31, 2001. For the twelve months ended December 31, 2002, net income, including realized investment gains/losses, was $17,446,000 ($1.53 per share) compared to a net loss of $2,106,000 ($0.19 per share) for the same period in 2001. "The dramatic improvement in the company's 2002 results produced record operating income and net income that was the second best in the company's history," said President and Chief Executive Officer 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
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. , 2002 was a year of great earnings and the excellent results flowed to our bottom line. The necessary and appropriate rate changes on previously underwritten risks were implemented. Nearly all of the premium growth came from rate increases rather than new risk exposures. A few promising new risks were carefully added to our book of business, while some existing accounts with little potential for profit were eliminated. Results in 2001 were marred mar tr.v. marred, mar·ring, mars 1. To inflict damage, especially disfiguring damage, on. 2. To impair the soundness, perfection, or integrity of; spoil. n. A disfiguring mark; a blemish. by sizeable storm losses, masking mask·ing n. 1. The concealment or the screening of one sensory process or sensation by another. 2. An opaque covering used to camouflage the metal parts of a prosthesis. the underlying improvement in pricing and the loss ratio. The full effect of the initiatives we began two years ago is now being seen and I expect that trend to continue in 2003." Premiums earned increased 12.0 percent to $297,043,000 for the twelve months ended December 31, 2002 from $265,280,000 in 2001. This increase is primarily attributed to rate increases that were implemented during the last two years in the property and casualty insurance business and 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. Premium rate levels for property and casualty insurance continued to improve during 2002 as rate increases ranging from five to eighteen percent were implemented in most lines of business. Management expects to implement additional rate increases during 2003; however, these increases will likely be targeted toward specific territories and lines of business. Management continues to work toward improving profitability through focused underwriting programs for the existing book of business, reviews of the agency force and controlled usage of discretionary rate modifications. Catastrophe and storm losses declined significantly in 2002 from the storm-plagued levels experienced in 2001. For the three months ended December 31, 2002, catastrophe and storm losses totaled $2,360,000 compared to $3,574,000 in 2001. For the twelve months ended December 31, 2002, catastrophe and storm losses totaled $8,304,000 compared to $22,947,000 in 2001. The Company's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio for the fourth quarter of 2002 was 99.9 percent compared to 114.4 percent in the fourth quarter of 2001. For the twelve months ended December 31, 2002, the GAAP combined ratio was 101.2 percent compared to 113.9 percent for the same period in 2001. Net book value of the Company's stock as of December 31, 2002 was $13.96 per share, an increase from $12.40 per share as of December 31, 2001. 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 14, 2003 to shareholders of record as of March 7, 2003. This is the 85th consecutive quarterly dividend paid. 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 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.
Financial Data
Other data: 2002 2001
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Book Value Per Share................................ $13.96 $12.40
Price to Book Value................................. 1.28x 1.38x
Common stock price:
High............................................. $23.50 $18.75
Low.............................................. $13.25 $10.19
Close............................................ $17.87 $17.15
Effective tax rate.................................. 27.2% (62.0%)
Statutory surplus as regards policyholders-insurance
subsidiaries (in thousands)........................$141,668 $128,736
Annualized Data
----------------------------------------------------
Net income (loss) as a percent of beginning
stockholders' equity............................... 12.4% (1.0%)
Average ROE......................................... 11.7% (1.5%)
P/E Multiple (price/last 4 qtrs).................... 11.7x (90.3x)
Summary of Consolidated Financial Data
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
------------ ------------ ------------- -------------
Premiums earned. $80,205,777 $72,731,765 $297,043,033 $265,279,858
Net investment
income......... 8,238,848 7,886,973 32,778,133 30,969,630
Other income.... 297,960 184,167 865,819 774,169
------------ ------------ ------------- -------------
Total revenues.. 88,742,585 80,802,905 330,686,985 297,023,657
Losses and
expenses....... 81,024,423 83,468,205 303,567,043 303,366,118
------------ ------------ ------------- -------------
Operating income
(loss) before
income tax
expense
(benefit)...... 7,718,162 (2,665,300) 27,119,942 (6,342,461)
Realized
investment
gains (losses). 1,282,173 238,265 (3,159,201) 800,582
------------ ------------ ------------- -------------
Income (loss)
before income
tax expense
(benefit)...... 9,000,335 (2,427,035) 23,960,741 (5,541,879)
Income tax
expense
(benefit)...... 2,489,687 (1,165,143) 6,514,345 (3,435,747)
------------ ------------ ------------- -------------
Net income
(loss)......... $6,510,648 $(1,261,892) $17,446,396 $(2,106,132)
============ ============ ============= =============
Operating income
(loss) per
share
- basic and
diluted....... $0.50 $(0.12) $1.71 $(0.24)
============ ============ ============= =============
Net income
(loss) per
share
- basic and
diluted....... $0.57 $(0.11) $1.53 $(0.19)
============ ============ ============= =============
Dividend per
share.......... $0.15 $0.15 $0.60 $0.60
============ ============ ============= =============
Average number
of shares
outstanding -
basic and
diluted...... 11,396,073 11,323,432 11,375,779 11,312,063
============ ============ ============= =============
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,.... 70,786,649 59,729,787 18,301,894 18,149,217
December 31,..... 49,708,541 45,988,413 22,920,666 22,171,003
Year to date:.......$237,633,602 $224,412,085 $76,203,278 $66,287,442
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,..................... 89,088,543 77,879,004
December 31,...................... 72,629,207 68,159,416
Year to date:...............................$313,836,880 $290,699,527
Consolidated Balance Sheets
December 31, December 31,
2002 2001
------------- -------------
ASSETS
------
Investments:
Fixed maturities:
Securities held-to-maturity, at amortized
cost (fair value $61,639,037 and
$35,502,755)............................ $55,033,675 $33,572,602
Securities available-for-sale, at fair
value (amortized cost $459,844,928 and
$384,410,393)........................... 485,855,966 390,214,177
Fixed maturity securities on loan:
Securities held-to-maturity, at amortized
cost (fair value $0 and $35,962,133).... - 32,505,305
Securities available-for-sale, at fair
value (amortized cost $0 and
$27,325,968)............................ - 28,436,008
Equity securities available-for-sale, at
fair value (cost $38,444,030 and
$28,686,321)............................. 34,596,985 33,322,767
Other long-term investments at fair value
(cost $3,057,500 and $0)................. 3,057,000 -
Short-term investments, at cost........... 29,650,230 17,724,458
------------- -------------
Total investments.............. 608,193,856 535,775,317
Cash....................................... (119,097) 558,073
Indebtedness of related party.............. - -
Accrued investment income.................. 9,179,555 8,659,008
Accounts receivable (net of allowance for
uncollectible accounts of $7,297 and
$573,502)................................. 772,944 1,081,024
Income taxes recoverable................... 213,504 100,614
Reinsurance receivables.................... 11,582,136 14,501,336
Deferred policy acquisition costs.......... 24,926,861 21,363,528
Deferred income taxes...................... 13,262,125 18,328,807
Goodwill, at cost less accumulated
amortization of $2,616,234 and $2,616,234. 941,586 941,586
Intangible asset, defined benefit
retirement plan........................... 1,411,716 -
Prepaid reinsurance premiums............... 2,442,899 2,275,231
Securities lending collateral.............. - 66,809,518
Other assets............................... 1,331,816 1,170,655
------------- -------------
Total assets....................$674,139,901 $671,564,697
============= =============
LIABILITIES
-----------
Losses and settlement expenses.............$329,158,048 $314,518,588
Unearned premiums.......................... 115,746,814 99,382,176
Other policyholders' funds................. 1,035,622 472,952
Surplus notes payable...................... 36,000,000 25,000,000
Indebtedness to related party.............. 3,304,539 2,684,418
Employee retirement plans.................. 10,014,349 7,538,388
Securities lending payable................. - 66,809,518
Other liabilities.......................... 19,767,507 14,701,034
------------- -------------
Total liabilities.............. 515,026,879 531,107,074
------------- -------------
STOCKHOLDERS' EQUITY
--------------------
Common stock, $1 par value, authorized
20,000,000 shares; issued and outstanding,
11,399,050 shares in 2002 and 11,329,987
shares in 2001............................ 11,399,050 11,329,987
Additional paid-in capital................. 67,270,591 66,013,203
Accumulated other comprehensive income..... 14,218,330 7,507,672
Retained earnings.......................... 66,225,051 55,606,761
------------- -------------
Total stockholders' equity..... 159,113,022 140,457,623
------------- -------------
Total liabilities and stockholders' equity.$674,139,901 $671,564,697
============= =============
Segment Information
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... 226,566,027 74,056,266 - 300,622,293
------------------------------------------------
Underwriting loss... (1,552,951) (2,026,309) - (3,579,260)
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).......... 20,615,532 6,827,255 (322,845) 27,119,942
Realized investment
(losses) gains....... (2,154,246) (1,010,268) 5,313 (3,159,201)
------------------------------------------------
Income (loss) before
income tax expense
(benefit).......... $18,461,286 $5,816,987 $(317,532) $23,960,741
================================================
Year Ended Property and
---------- Casualty Parent
December 31, 2001 Insurance Reinsurance Company Consolidated
----------------- ------------------------------------------------
Premiums earned.......$203,392,845 $61,887,013 - $265,279,858
Losses and expenses... 230,220,978 71,948,670 - 302,169,648
------------------------------------------------
Underwriting loss... (26,828,133)(10,061,657) - (36,889,790)
Net investment income. 22,457,799 8,317,505 $194,326 30,969,630
Other income.......... 695,957 78,212 - 774,169
Other expenses........ 757,783 - 438,687 1,196,470
------------------------------------------------
Operating loss
before income tax
benefit............ (4,432,160) (1,665,940) (244,361) (6,342,461)
Realized investment
gains................ 681,349 119,233 - 800,582
------------------------------------------------
Loss before income
tax benefit........ $(3,750,811)$(1,546,707)$(244,361) $(5,541,879)
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