Press Release - February 24, 2004
EMC INSURANCE GROUP INC. REPORTS 2003 FOURTH QUARTER RESULTS AND DECLARES 89TH CONSECUTIVE QUARTERLY DIVIDEND
- Fourth Quarter 2003
- Net Income Per Share -- $0.53
- Net Operating Income Per Share -- $0.46
- GAAP Combined Ratio -- 100.1
- Year Ended December 31, 2003
- Net Income Per Share -- $1.78
- Net Operating Income Per Share -- $1.71
- GAAP Combined Ratio – 100.2
DES MOINES, Iowa (February 24, 2004) - EMC Insurance Group Inc. (Nasdaq/NM:EMCI) today reported operating income of $0.46 per share for the fourth quarter ended December 31, 2003 compared to $0.38 for the fourth quarter ended December 31, 20021. Operating income for the year ended December 31, 2003 was $1.71 per share compared to $1.60 for the same period in 2002.
Net income, including realized investment gains/losses, was $6,091,000 ($0.53 per share) for the fourth quarter ended December 31, 2003 compared to $5,166,000 ($0.45 per share) for the fourth quarter ended December 31, 2002. Net income for the year ended December 31, 2003 totaled $20,349,000 ($1.78 per share) compared to $16,102,000 ($1.42 per share) for the same period in 2002.
“I am pleased to announce record-breaking financial results for the year ended December 31, 2003,” stated President and CEO Bruce G. Kelley. “Despite an unusually high level of catastrophe and storm losses that was second only to the record amount reported in storm-plagued 2001 and some necessary reserve strengthening, EMC Insurance Group Inc. posted its most profitable year since its debut as a public company in 1982. Over the last several years we have been diligent in our efforts to improve both premium rate adequacy and the quality of the risks we insure. Those efforts have been successful and we are now experiencing the financial benefits of those initiatives.”
Premiums earned increased 4.8 percent to $84,053,000 for the three months ended December 31, 2003 from $80,206,000 for the same period in 2002. For the twelve month period ended December 31, 2003, premiums earned increased 11.3 percent to $330,623,000 from $297,043,000 for the same period in 2002. These increases are primarily attributed to rate increases implemented during the last two years in the property and casualty insurance business as well as significant growth and improved pricing in the assumed reinsurance business. The market for property and casualty insurance remained firm during the fourth quarter of 2003 and no significant changes are forecasted for 2004. The Company will continue to implement rate increases in those lines of business and/or territories where such action is warranted; however, the overall level of these rate increases is expected to be smaller than those implemented during 2003.
Catastrophe and storm losses amounted to $811,000 ($0.05 per share after tax) in the fourth quarter of 2003 compared to $2,360,000 ($0.13 per share after tax) in the fourth quarter of 2002. For the year ended December 31, 2003, catastrophe and storm losses totaled $20,942,000 ($1.19 per share after tax) compared to $8,304,000 ($0.47 per share after tax) for the same period in 2002. Approximately $3,900,000 ($0.22 per share after tax) of the catastrophe and storm losses for 2003 is attributable to Hurricane Isabel.
The Company’s GAAP combined ratio was 100.1 percent in the fourth quarter of 2003 compared to 102.4 percent in the fourth quarter of 2002. For the year ended December 31, 2003, the GAAP combined ratio was 100.2 percent compared to 101.9 percent for the year ended December 31, 2002.
Net book value of the Company’s stock as of December 31, 2003 was $15.72 per share, an increase of 13.6 percent from $13.84 per share at December 31, 2002.
The Board of Directors of EMC Insurance Group Inc. has declared a quarterly dividend of $0.15 per share of common stock payable March 12, 2004 to shareholders of record as of March 5, 2004. This is the eighty-ninth consecutive quarterly dividend paid since EMC Insurance Group Inc. became a publicly held company in February 1982.
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. 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.
ąThe 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 Summary of Consolidated Financial Data 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.
|
2003 |
2002 |
|
| Book Value Per Share................ | $15.72 | $13.84 |
| Price to Book Value................... | 1.35X | 1.29X |
| Common Stock Price: | ||
| High........................ | $22.10 | $23.50 |
| Low......................... | $15.50 | $13.25 |
| Close...................... | $21.14 | $17.87 |
| Effective tax rate.............................. | 27.3% | 26.4% |
| Statutory surplus as regards policyholder-insurance subsidiaries (in thousands) * | $170,233 | $140,324 |
| Net income as a percent of beginning stockholders’ equity.......................................................... | 12.9% | 11.5% |
| Average ROE.................. | 12.0% | 10.8% |
| P/E Multiple (price/last 4 qtrs)............... | 11.9X | 12.6X |
* Statutory data rather than GAAP. However, this data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual. Consequently, no reconciliation to GAAP is required by the SEC’s Regulation G.
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
