Press Release - July 18, 2002
EMC Insurance Group Inc. Announces a Second Quarter Security Impairment Write Down
DES MOINES, Iowa (July 18, 2002)-EMC Insurance Group Inc. (Nasdaq:EMCI) today announced that it will recognize a $3.8 million security impairment write down of MCI Communications Corporation corporate bonds in the second quarter of 2002. MCI Communications Corporation is owned by WorldCom Inc., whose corporate bonds were downgraded to junk status in May when it reported the detection of accounting irregularities. The MCI bonds are supported by the assets of MCI; however, the magnitude of the WorldCom collapse has cast doubt on the prospect of collecting the entire principal and interest payments due the company. As a result, the company has determined that the recent decline in market value of the MCI bonds is “other than temporary.” The net effect of this action will be a decline in second quarter net income of approximately $0.22 per share.
The company will release second quarter financial information on August 1, 2002.
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 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 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 and environmental claims; rate 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.
EMC Insurance Group Inc., Des Moines
Anita Novak (Investors)
515-280-2515
Lisa Hamilton (Media)
515-362-7589
717 Mulberry Street
Des Moines, IA 50309
