-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GqybOnxMVQy1QfvcwQj386MXuLfdR3uw2LMZCAEgMQeh19vV5x2yFoSN+nDeXLQc fQg6yaPxA1vSJhgP1lefuA== 0000356130-04-000018.txt : 20040224 0000356130-04-000018.hdr.sgml : 20040224 20040224135922 ACCESSION NUMBER: 0000356130-04-000018 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031231 ITEM INFORMATION: FILED AS OF DATE: 20040224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMC INSURANCE GROUP INC CENTRAL INDEX KEY: 0000356130 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 426234555 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10956 FILM NUMBER: 04624333 BUSINESS ADDRESS: STREET 1: 717 MULBERRY ST CITY: DES MOINES STATE: IA ZIP: 50309 BUSINESS PHONE: 5152802902 MAIL ADDRESS: STREET 1: 717 MULBERRY STREET CITY: DES MOINES STATE: IA ZIP: 50309 8-K 1 press4thqtr.txt FORM 8K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 24,2004 ---------------- EMC INSURANCE GROUP INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Iowa 0-10956 42-623455 - ------------------------------- ------------ -------------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation) File Number) Identification No.) 717 Mulberry Street, Des Moines, Iowa 50309 - --------------------------------------- ---------- (Address of principal executive office) (Zip Code) (515) 280-2902 ---------------------------------------------------- (Registrant's telephone number, including area code) Item 12. Results of Operation and Financial Condition On February 24, 2004, EMC Insurance Group Inc. issued a press release reporting its earnings for the fourth quarter and year ended December 31, 2003. The press release also announced the declaration of a dividend of $0.15 per share of common stock payable March 12, 2004 to shareholders of record as of March 5, 2004. The press release is furnished as Exhibit 99.1. The information contained in this Current Report shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EMC INSURANCE GROUP INC. Registrant /s/ Bruce G. Kelley ------------------------- Bruce G. Kelley President & Chief Executive Officer /s/ Mark E. Reese ------------------------- Mark E. Reese, Vice President & Chief Financial Officer February 24, 2004 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ------------------------------------------------------ 99.1 Press release dated February 24, 2004 of EMC Insurance Group Inc. (furnished pursuant to Item 12 hereof) EX-99 3 exhibit99.txt EXHIBIT 99.1 PRESS RELEASE EXHIBIT 99.1 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, 2002(1). 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. (1) 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, 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. Summary of Consolidated Financial Data (UNAUDITED) Three Months Ended Year Ended December 31, December 31, ----------------------- ------------------------- 2003 2002 2003 2002 ----------- ----------- ------------ ------------ Premiums earned ............$84,052,937 $80,205,777 $330,622,810 $297,043,033 Net investment income ...... 7,454,599 8,238,848 29,702,461 32,778,133 Other income ............... 233,919 297,960 862,070 865,819 ----------- ----------- ------------ ------------ Total revenues ............. 91,741,455 88,742,585 361,187,341 330,686,985 Losses and expenses ........ 84,803,762 83,093,128 334,374,743 305,635,748 ----------- ----------- ------------ ------------ Operating income before income tax expense ..... 6,937,693 5,649,457 26,812,598 25,051,237 Income tax expense ......... 1,599,713 1,316,879 7,223,779 6,896,018 ----------- ----------- ------------ ------------ Operating income after income tax expense ....... 5,337,980 4,332,578 19,588,819 18,155,219 ----------- ----------- ------------ ------------ Realized investment gains (losses) ................. 1,158,721 1,282,173 1,169,698 (3,159,201) Income tax expense (benefit) 405,552 448,761 409,394 (1,105,720) ----------- ----------- ------------ ------------ Net realized investment gains (losses) ......... 753,169 833,412 760,304 (2,053,481) ----------- ----------- ------------ ------------ Net income .............$ 6,091,149 $ 5,165,990 $ 20,349,123 $ 16,101,738 =========== =========== ============ ============ Operating income per share - - basic and diluted ........$ 0.46 $ 0.38 $ 1.71 $ 1.60 =========== =========== ============ ============ Net income per share - - basic and diluted ........$ 0.53 $ 0.45 $ 1.78 $ 1.42 =========== =========== ============ ============ Dividend per share .........$ 0.15 $ 0.15 $ 0.60 $ 0.60 =========== =========== ============ ============ Average number of shares outstanding - - basic and diluted ........ 11,495,768 11,396,073 11,453,324 11,375,779 =========== =========== ============ ============ 2003 2002 ------------------------------ Book Value Per Share .............. $15.75 $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 policyholders-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 Consolidated Balance Sheets December 31, December 31, 2003 2002 ASSETS ------------- ------------ Investments: Fixed maturities: Securities held-to-maturity, at amortized cost (fair value $21,167,655 and $61,639,037) ... $ 19,423,013 $ 55,033,675 Securities available-for-sale, at fair value (amortized cost $382,326,388 and $459,844,928) .............................. 405,758,798 485,855,966 Fixed maturity securities on loan: Securities held-to-maturity, at amortized cost (fair value $32,686,769 and $0) ............ 30,422,335 - Securities available-for-sale, at fair value (amortized cost $117,184,150 and $0) ....... 118,026,960 - Equity securities available-for-sale, at fair value (cost $38,998,075 and $38,444,030) ..... 49,008,498 34,596,985 Other long-term investments, at cost ........... 4,758,019 3,057,000 Short-term investments, at cost ................ 63,568,064 29,650,230 ------------ ------------ Total investments ..................... 690,965,687 608,193,856 Balances resulting from related party transactions with Employers Mutual: Reinsurance receivables ...................... 15,861,754 11,582,136 Prepaid reinsurance premiums ................. 3,297,228 2,442,899 Intangible asset, defined benefit retirement plan ............................ 1,016,492 1,411,716 Other assets ................................. 1,857,284 1,331,816 Cash ............................................. (14,069,102) (119,097) Accrued investment income ........................ 7,821,652 9,179,555 Accounts receivable (net of allowance for uncollectible accounts of $0 and $7,297) ....... 379,423 772,944 Income taxes recoverable ......................... - 213,504 Deferred policy acquisition costs ................ 26,737,784 24,926,861 Deferred income taxes ............................ 10,345,429 13,986,172 Goodwill, at cost less accumulated amortization of $2,616,234 and $2,616,234 ................... 941,586 941,586 Securities lending collateral .................... 154,556,758 - ------------ ------------ Total assets .......................... $899,711,975 $674,863,948 ============ ============ LIABILITIES Balances resulting from related party transactions with Employers Mutual: Losses and settlement expenses ............... $367,923,881 $331,226,753 Unearned premiums ............................ 124,832,607 115,746,814 Other policyholders' funds ................... 1,390,594 1,035,622 Surplus notes payable ........................ 36,000,000 36,000,000 Indebtedness to related party ................ 2,175,118 3,304,539 Employee retirement plans .................... 9,965,600 10,014,349 Other liabilities ............................ 19,336,366 19,767,507 Income taxes payable ............................. 2,780,500 - Securities lending obligation .................... 154,556,758 - ------------ ------------ Total liabilities ......................... 718,961,424 517,095,584 ------------ ------------ STOCKHOLDERS' EQUITY Common stock, $1 par value, authorized 20,000,000 shares; issued and outstanding, 11,501,065 shares in 2003 and 11,399,050 shares in 2002 ... 11,501,065 11,399,050 Additional paid-in capital ....................... 69,113,228 67,270,591 Accumulated other comprehensive income ........... 22,285,668 14,218,330 Retained earnings ................................ 77,850,590 64,880,393 ------------ ------------ Total stockholders' equity ................ 180,750,551 157,768,364 ------------ ------------ Total liabilities and stockholders' equity $899,711,975 $674,863,948 ============ ============ WRITTEN PREMIUMS* 2003 2002 ----------- ----------- Property & Casualty Insurance: Three Months ended: March 31,.....................$ 60,022,622 $ 54,843,250 June 30, ..................... 65,126,418 62,295,162 September 30, ................ 73,490,595 70,786,649 December 31, ................. 50,952,040 49,708,541 ------------ ------------ Year to date: ..................$249,591,675 $237,633,602 ============ ============ Reinsurance: Three Months ended: March 31,.....................$ 23,301,452 $ 17,296,985 June 30, ..................... 22,160,253 17,683,733 September 30, ................ 22,159,616 18,301,894 December 31, ................. 22,436,452 22,920,666 ----------- ------------ Year to date: ..................$ 90,057,773 $ 76,203,278 ============ ============ Total: Three Months ended: March 31,.....................$ 83,324,074 $ 72,140,235 June 30, ..................... 87,286,671 79,978,895 September 30, ................ 95,650,211 89,088,543 December 31, ................. 73,388,492 72,629,207 ------------ ------------ Year to date: ..................$339,649,448 $313,836,880 ============ ============ * 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. Segment Information Property Year Ended and Casualty Parent December 31, 2003 Insurance Reinsurance Company Consolidated - ----------------- ------------ ------------ ------------ ------------ Premiums earned ......... $241,237,313 $ 89,385,497 $ - $330,622,810 Losses and expenses ..... 248,731,016 82,669,141 - 331,400,157 ------------ ------------ ------------ ------------ Underwriting (loss) gain (7,493,703) 6,716,356 - (777,347) Net investment income ... 20,724,017 8,948,076 30,368 29,702,461 Other income ............ 862,070 - - 862,070 Interest expense ........ 919,362 400,904 - 1,320,266 Other expenses .......... 1,044,757 - 609,563 1,654,320 ------------ ------------ ------------ ------------ Operating income (loss) before income tax expense (benefit) ... 12,128,265 15,263,528 (579,195) 26,812,598 Realized investment gains (losses) ............. 1,312,252 (142,554) - 1,169,698 ------------ ------------ ------------ ------------ Income (loss) before income tax expense (benefit) ........... $ 13,440,517 $ 15,120,974 $ (579,195)$ 27,982,296 ============ ============ ============ ============ Property Year Ended and Casualty Parent December 31, 2002 Insurance Reinsurance Company Consolidated - ----------------- ------------ ------------ ------------ ------------ Premiums earned ......... $225,013,076 $ 72,029,957 $ - $297,043,033 Losses and expenses ..... 228,634,732 74,056,266 - 302,690,998 ------------ ------------ ------------ ------------ Underwriting loss ....... (3,621,656) (2,026,309) - (5,647,965) 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) ... 18,546,827 6,827,255 (322,845) 25,051,237 Realized investment (losses) gains ........ (2,154,246) (1,010,268) 5,313 (3,159,201) ------------ ------------ ------------ ------------ Income (loss) before income tax expense (benefit) ........... $ 16,392,581 $ 5,816,987 $ (317,532)$ 21,892,036 ============ ============ ============ ============ -----END PRIVACY-ENHANCED MESSAGE-----