-----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, CtYu/vuE/PaE5vANKpHuVJhzQI6F7sHOBKJ5YBut/UXu0BPgr2BPJOo6eB0rMDT6 wDNj/Lk7VT6WTZmCkcm19A== 0000356130-04-000029.txt : 20040429 0000356130-04-000029.hdr.sgml : 20040429 20040429140753 ACCESSION NUMBER: 0000356130-04-000029 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040331 ITEM INFORMATION: FILED AS OF DATE: 20040429 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: 04764036 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 press1stqtr.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): April 29, 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 April 29, 2004, EMC Insurance Group Inc. issued a press release reporting its earnings for the first quarter ended March 31, 2004. The press release is furnished as Exhibit 99. 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 April 29, 2004 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ------------------------------------------------------ 99 Press release dated April 29, 2004 of EMC Insurance Group Inc. (furnished pursuant to Item 12 hereof) EX-99 2 exhibit99.txt PRESS RELEASE EXHIBIT 99 ---------- EMC INSURANCE GROUP INC. REPORTS 2004 FIRST QUARTER RESULTS First Quarter 2004 Net Income Per Share -- $0.72 Net Operating Income Per Share -- $0.70 GAAP Combined Ratio -- 93.8% DES MOINES, Iowa (April 29, 2004) - EMC Insurance Group Inc. (Nasdaq/NM:EMCI) today reported record operating income of $0.70 per share for the first quarter ended March 31, 2004 compared to operating income of $0.67 per share for the first quarter of 2003(1). Net income, including realized investment gains/losses, was $8,349,000 ($0.72 per share) for the first quarter of 2004 compared to $6,446,000 ($0.57 per share) for the first quarter of 2003. "We are pleased to report another record-breaking quarter," stated President and CEO Bruce G. Kelley. "These record-breaking earnings are the result of focused underwriting initiatives and some necessary rate increases that were implemented during the last several years. Achieving an underwriting profit is always stressed, but has become even more critical in this lingering low interest rate environment." Premiums earned increased 3.8 percent to $83,458,000 for the three months ended March 31, 2004 from $80,382,000 for the same period in 2003. This increase is primarily attributed to rate increases implemented during the last several years in the property and casualty insurance business as well as moderate growth and improved pricing in the assumed reinsurance business. The market for property and casualty insurance remained firm during the first quarter of 2004 and no significant changes are anticipated in the marketplace for the remainder of the year. The Company will continue to implement rate increases in those lines of business and/or territories where such action is warranted, but the overall level of these rate increases is expected to be smaller than those implemented during 2003. Catastrophe and storm losses declined slightly to $1,015,000 ($0.06 per share after tax) in the first quarter of 2004 from $1,087,000 ($0.06 per share after tax) in the first quarter of 2003. The Company's GAAP combined ratio was 93.8 percent in the first quarter of 2004 compared to 94.8 percent in the first quarter of 2003. Net book value of the Company's stock as of March 31, 2004 was $16.58 per share, an increase of 5.5 percent from $15.72 per share at December 31, 2003. 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 March 31, ----------------------- 2004 2003 ----------- ----------- Premiums earned ............$83,458,282 $80,381,898 Net investment income ...... 7,273,977 7,846,924 Other income ............... 76,479 167,830 ----------- ----------- Total revenues ............. 90,808,738 88,396,652 Losses and expenses ........ 78,845,905 77,103,391 ----------- ----------- Operating income before income tax expense ..... 11,962,833 11,293,261 Income tax expense ......... 3,874,081 3,710,223 ----------- ----------- Operating income after income tax expense ....... 8,088,752 7,583,038 ----------- ----------- Realized investment gains (losses) ................. 400,527 (1,749,785) Income tax expense (benefit) 140,184 (612,425) ----------- ----------- Net realized investment gains (losses) ......... 260,343 (1,137,360) ----------- ----------- Net income .............$ 8,349,095 $ 6,445,678 =========== =========== Operating income per share - - basic and diluted ........$ 0.70 $ 0.67 =========== =========== Net income per share - - basic and diluted ........$ 0.72 $ 0.57 =========== =========== Dividend per share .........$ 0.15 $ 0.15 =========== =========== Average number of shares outstanding - - basic and diluted ........ 11,522,643 11,403,353 =========== =========== March 31, ------------------------------ 2004 2003 ------------------------------ Other data: (UNAUDITED) Book Value Per Share .............. $16.58 $14.31 Price to Book Value ............... 1.27x 1.32x Common stock price ................ $21.06 $18.90 Effective tax rate ................ 32.5% 32.5% Statutory surplus as regards policyholders-insurance subsidiaries (in thousands)* .... $177,458 $149,740 Annualized Data: Net income as a percent of beginning stockholders' equity .. 18.5% 16.3% Average ROE ....................... 18.0% 16.1% P/E Multiple (price/last 4 qtrs) .. 10.9x 11.4x * 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. Consolidated Balance Sheets March 31, December 31, 2004 2003 ASSETS ------------- ------------ Investments: (UNAUDITED) Fixed maturities: Securities held-to-maturity, at amortized cost (fair value $18,573,752 and $21,167,655) ... $ 16,905,734 $ 19,423,013 Securities available-for-sale, at fair value (amortized cost $383,706,346 and $382,326,388) .............................. 411,247,825 405,758,798 Fixed maturity securities on loan: Securities held-to-maturity, at amortized cost (fair value $33,458,969 and $32,686,769) ... 31,550,410 30,422,335 Securities available-for-sale, at fair value (amortized cost $121,903,692 and $117,184,150) .............................. 122,405,385 118,026,960 Equity securities available-for-sale, at fair value (cost $40,764,861 and $38,998,075) ..... 51,937,803 49,008,498 Other long-term investments, at cost ........... 5,055,044 4,758,019 Short-term investments, at cost ................ 57,484,923 63,568,064 ------------ ------------ Total investments ..................... 696,587,124 690,965,687 Balances resulting from related party transactions with Employers Mutual: Reinsurance receivables ...................... 15,868,253 15,861,754 Prepaid reinsurance premiums ................. 3,564,725 3,297,228 Intangible asset, defined benefit retirement plan ............................ 1,016,492 1,016,492 Other assets ................................. 3,518,058 1,857,284 Indebtedness of related party ................ 1,833,422 - Cash ............................................. 141,454 (14,069,102) Accrued investment income ........................ 6,919,410 7,821,652 Accounts receivable (net of allowance for uncollectible accounts of $0 and $0) ........... 197,473 379,423 Deferred policy acquisition costs ................ 26,963,725 26,737,784 Deferred income taxes ............................ 8,415,983 10,345,429 Goodwill, at cost less accumulated amortization of $2,616,234 and $2,616,234 ................... 941,586 941,586 Securities lending collateral .................... 159,765,318 154,556,758 ------------ ------------ Total assets .......................... $925,733,023 $899,711,975 ============ ============ LIABILITIES Balances resulting from related party transactions with Employers Mutual: Losses and settlement expenses ............... $371,466,276 $367,923,881 Unearned premiums ............................ 126,075,373 124,832,607 Other policyholders' funds ................... 1,359,249 1,390,594 Surplus notes payable ........................ 36,000,000 36,000,000 Indebtedness to related party ................ - 2,175,118 Employee retirement plans .................... 11,077,269 9,965,600 Other liabilities ............................ 24,516,175 19,336,366 Income taxes payable ............................. 4,036,355 2,780,500 Securities lending obligation .................... 159,765,318 154,556,758 ------------ ------------ Total liabilities ......................... 734,296,015 718,961,424 ------------ ------------ STOCKHOLDERS' EQUITY Common stock, $1 par value, authorized 20,000,000 shares; issued and outstanding, 11,548,083 shares in 2004 and 11,501,065 shares in 2003 ... 11,548,083 11,501,065 Additional paid-in capital ....................... 70,130,164 69,113,228 Accumulated other comprehensive income ........... 25,490,475 22,285,668 Retained earnings ................................ 84,268,286 77,850,590 ------------ ------------ Total stockholders' equity ................ 191,437,008 180,750,551 ------------ ------------ Total liabilities and stockholders' equity $925,733,023 $899,711,975 ============ ============ Segment Information (UNAUDITED) Property Three Months Ended and Casualty Parent March 31, 2004 Insurance Reinsurance Company Consolidated - ----------------- ------------ ------------ ------------ ------------ Premiums earned ........ $ 61,360,228 $ 22,098,054 $ - $ 83,458,282 Underwriting gain ...... 4,040,349 1,173,866 - 5,214,215 Net investment income .. 4,966,371 2,295,483 12,123 7,273,977 Other income ........... 76,479 - - 76,479 Interest expense ....... 193,125 84,975 - 278,100 Other expenses ......... 180,397 - 143,341 323,738 ------------ ------------ ------------ ------------ Operating income (loss) before income tax expense (benefit) .. 8,709,677 3,384,374 (131,218) 11,962,833 Realized investment gains ................ 289,967 110,560 - 400,527 ------------ ------------ ------------ ------------ Income (loss) before income tax expense (benefit) .......... $ 8,999,644 $ 3,494,934 $ (131,218)$ 12,363,360 ============ ============ ============ ============ Property Three Months Ended and Casualty Parent March 31, 2003 Insurance Reinsurance Company Consolidated - ----------------- ------------ ------------ ------------ ------------ Premiums earned ........ $ 59,205,804 $ 21,176,094 $ - $ 80,381,898 Underwriting gain (loss) 4,470,091 (297,070) - 4,173,021 Net investment income .. 5,550,937 2,245,755 50,232 7,846,924 Other income ........... 167,830 - - 167,830 Interest expense ....... 339,987 145,979 - 485,966 Other expenses ......... 277,184 - 131,364 408,548 ------------ ------------ ------------ ------------ Operating income (loss) before income tax expense (benefit) .. 9,571,687 1,802,706 (81,132) 11,293,261 Realized investment (losses) ............. (1,358,914) (390,871) - (1,749,785) ------------ ------------ ------------ ------------ Income (loss) before income tax expense (benefit) .......... $ 8,212,773 $ 1,411,835 $ (81,132)$ 9,543,476 ============ ============ ============ ============ WRITTEN PREMIUMS* Three months ended March 31, 2004 2003 ----------- ----------- Property and Casualty Insurance .................. $ 60,183,531 $ 60,022,622 Reinsurance .................. 24,500,287 23,301,452 ------------ ------------ Total ........................ $ 84,683,818 $ 83,324,074 ============ ============ * 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. -----END PRIVACY-ENHANCED MESSAGE-----