EMC INSURANCE GROUP INC. |
(Exact name of registrant as specified in its charter) |
Iowa | 0-10956 | 42-6234555 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
717 Mulberry Street, Des Moines, Iowa | 50309 | |
(Address of principal executive offices) | (Zip Code) |
(515) 345‑2902 |
(Registrant’s telephone number, including area code) |
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 7.01 | Regulation FD Disclosure. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description |
99 | Press release |
EMC INSURANCE GROUP INC. |
Registrant |
/s/ Mark E. Reese |
Mark E. Reese |
Senior Vice President and |
Chief Financial Officer |
Exhibit Number | Description |
99 | Press release |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Operating income | $ | 6,545,000 | $ | 8,436,000 | $ | 25,182,000 | $ | 20,026,000 | ||||||||
Net realized investment gains (losses) | 655,000 | (115,000 | ) | 2,502,000 | 4,943,000 | |||||||||||
Net income | $ | 7,200,000 | $ | 8,321,000 | $ | 27,684,000 | $ | 24,969,000 |
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||||||||||||
Property and | ||||||||||||||||
Casualty | Parent | |||||||||||||||
Quarter Ended September 30, 2013 | Insurance | Reinsurance | Company | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Premiums earned | $ | 100,085,034 | $ | 32,277,727 | $ | — | $ | 132,362,761 | ||||||||
Investment income, net | 7,676,989 | 2,869,612 | (1,826 | ) | 10,544,775 | |||||||||||
Other income | 194,732 | — | — | 194,732 | ||||||||||||
107,956,755 | 35,147,339 | (1,826 | ) | 143,102,268 | ||||||||||||
Losses and expenses: | ||||||||||||||||
Losses and settlement expenses | 65,638,170 | 22,596,518 | — | 88,234,688 | ||||||||||||
Dividends to policyholders | 4,219,696 | — | — | 4,219,696 | ||||||||||||
Amortization of deferred policy acquisition costs | 17,306,159 | 6,364,743 | — | 23,670,902 | ||||||||||||
Other underwriting expenses | 16,865,851 | 465,924 | — | 17,331,775 | ||||||||||||
Interest expense | 84,375 | — | — | 84,375 | ||||||||||||
Other expenses | 161,966 | 557,933 | 283,276 | 1,003,175 | ||||||||||||
104,276,217 | 29,985,118 | 283,276 | 134,544,611 | |||||||||||||
Operating income (loss) before income taxes | 3,680,538 | 5,162,221 | (285,102 | ) | 8,557,657 | |||||||||||
Realized investment gains | 719,522 | 287,687 | — | 1,007,209 | ||||||||||||
Income (loss) before income taxes | 4,400,060 | 5,449,908 | (285,102 | ) | 9,564,866 | |||||||||||
Income tax expense (benefit): | ||||||||||||||||
Current | 1,978,422 | 1,996,529 | (99,785 | ) | 3,875,166 | |||||||||||
Deferred | (1,142,898 | ) | (367,045 | ) | — | (1,509,943 | ) | |||||||||
835,524 | 1,629,484 | (99,785 | ) | 2,365,223 | ||||||||||||
Net income (loss) | $ | 3,564,536 | $ | 3,820,424 | $ | (185,317 | ) | $ | 7,199,643 | |||||||
Average shares outstanding | 13,131,323 | |||||||||||||||
Per Share Data: | ||||||||||||||||
Net income (loss) per share - basic and diluted | $ | 0.27 | $ | 0.29 | $ | (0.01 | ) | $ | 0.55 | |||||||
Decrease (increase) in provision for insured events of prior years (after tax) | $ | 0.11 | $ | (0.04 | ) | $ | — | $ | 0.07 | |||||||
Catastrophe and storm losses (after tax) | $ | (0.56 | ) | $ | (0.19 | ) | $ | — | $ | (0.75 | ) | |||||
Dividends per share | $ | 0.21 | ||||||||||||||
Other Information of Interest: | ||||||||||||||||
Net written premiums | $ | 122,184,667 | $ | 34,860,664 | $ | — | $ | 157,045,331 | ||||||||
Increase (decrease) in provision for insured events of prior years | $ | (2,153,365 | ) | $ | 844,609 | $ | — | $ | (1,308,756 | ) | ||||||
Catastrophe and storm losses | $ | 11,246,212 | $ | 3,819,438 | $ | — | $ | 15,065,650 | ||||||||
GAAP Combined Ratio: | ||||||||||||||||
Loss and settlement expense ratio | 65.6 | % | 70.0 | % | — | 66.7 | % | |||||||||
Acquisition expense ratio | 38.3 | % | 21.2 | % | — | 34.1 | % | |||||||||
103.9 | % | 91.2 | % | — | 100.8 | % |
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||||||||||||
Property and | ||||||||||||||||
Casualty | Parent | |||||||||||||||
Quarter Ended September 30, 2012 | Insurance | Reinsurance | Company | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Premiums earned | $ | 91,059,723 | $ | 30,485,064 | $ | — | $ | 121,544,787 | ||||||||
Investment income, net | 8,000,165 | 2,970,731 | (1,983 | ) | 10,968,913 | |||||||||||
Other income | 224,485 | 341 | — | 224,826 | ||||||||||||
99,284,373 | 33,456,136 | (1,983 | ) | 132,738,526 | ||||||||||||
Losses and expenses: | ||||||||||||||||
Losses and settlement expenses | 56,160,516 | 23,164,125 | — | 79,324,641 | ||||||||||||
Dividends to policyholders | 2,982,748 | — | — | 2,982,748 | ||||||||||||
Amortization of deferred policy acquisition costs | 15,820,777 | 6,790,425 | — | 22,611,202 | ||||||||||||
Other underwriting expenses | 14,940,177 | 821,047 | — | 15,761,224 | ||||||||||||
Interest expense | 225,000 | — | — | 225,000 | ||||||||||||
Other expenses | 211,601 | 469,379 | 226,007 | 906,987 | ||||||||||||
90,340,819 | 31,244,976 | 226,007 | 121,811,802 | |||||||||||||
Operating income (loss) before income taxes | 8,943,554 | 2,211,160 | (227,990 | ) | 10,926,724 | |||||||||||
Realized investment losses | (82,254 | ) | (94,114 | ) | — | (176,368 | ) | |||||||||
Income (loss) before income taxes | 8,861,300 | 2,117,046 | (227,990 | ) | 10,750,356 | |||||||||||
Income tax expense (benefit): | ||||||||||||||||
Current | 2,501,606 | 434,888 | (83,778 | ) | 2,852,716 | |||||||||||
Deferred | (313,489 | ) | (110,115 | ) | — | (423,604 | ) | |||||||||
2,188,117 | 324,773 | (83,778 | ) | 2,429,112 | ||||||||||||
Net income (loss) | $ | 6,673,183 | $ | 1,792,273 | $ | (144,212 | ) | $ | 8,321,244 | |||||||
Average shares outstanding | 12,889,628 | |||||||||||||||
Per Share Data: | ||||||||||||||||
Net income (loss) per share - basic and diluted | $ | 0.51 | $ | 0.14 | $ | — | $ | 0.65 | ||||||||
Decrease in provision for insured events of prior years (after tax) | $ | 0.07 | $ | 0.35 | $ | — | $ | 0.42 | ||||||||
Catastrophe and storm losses (after tax) | $ | (0.32 | ) | $ | (0.23 | ) | $ | — | $ | (0.55 | ) | |||||
Dividends per share | $ | 0.20 | ||||||||||||||
Other Information of Interest: | ||||||||||||||||
Net written premiums | $ | 111,860,251 | $ | 38,123,030 | $ | — | $ | 149,983,281 | ||||||||
Decrease in provision for insured events of prior years | $ | (1,263,327 | ) | $ | (7,065,662 | ) | $ | — | $ | (8,328,989 | ) | |||||
Catastrophe and storm losses | $ | 6,167,436 | $ | 4,656,274 | $ | — | $ | 10,823,710 | ||||||||
GAAP Combined Ratio: | ||||||||||||||||
Loss and settlement expense ratio | 61.7 | % | 76.0 | % | — | 65.3 | % | |||||||||
Acquisition expense ratio | 37.0 | % | 25.0 | % | — | 34.0 | % | |||||||||
98.7 | % | 101.0 | % | — | 99.3 | % |
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||||||||||||
Property and | ||||||||||||||||
Casualty | Parent | |||||||||||||||
Nine Months Ended September 30, 2013 | Insurance | Reinsurance | Company | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Premiums earned | $ | 290,606,939 | $ | 89,441,354 | $ | — | $ | 380,048,293 | ||||||||
Investment income, net | 23,422,804 | 8,612,316 | (7,268 | ) | 32,027,852 | |||||||||||
Other income | 592,654 | — | — | 592,654 | ||||||||||||
314,622,397 | 98,053,670 | (7,268 | ) | 412,668,799 | ||||||||||||
Losses and expenses: | ||||||||||||||||
Losses and settlement expenses | 195,686,487 | 54,090,539 | — | 249,777,026 | ||||||||||||
Dividends to policyholders | 8,746,728 | — | — | 8,746,728 | ||||||||||||
Amortization of deferred policy acquisition costs | 50,946,769 | 18,555,985 | — | 69,502,754 | ||||||||||||
Other underwriting expenses | 46,979,906 | 1,428,442 | — | 48,408,348 | ||||||||||||
Interest expense | 300,000 | — | — | 300,000 | ||||||||||||
Other expenses | 553,165 | 217,646 | 990,982 | 1,761,793 | ||||||||||||
303,213,055 | 74,292,612 | 990,982 | 378,496,649 | |||||||||||||
Operating income (loss) before income taxes | 11,409,342 | 23,761,058 | (998,250 | ) | 34,172,150 | |||||||||||
Realized investment gains | 3,068,625 | 781,710 | — | 3,850,335 | ||||||||||||
Income (loss) before income taxes | 14,477,967 | 24,542,768 | (998,250 | ) | 38,022,485 | |||||||||||
Income tax expense (benefit): | ||||||||||||||||
Current | 4,293,897 | 8,028,870 | (349,387 | ) | 11,973,380 | |||||||||||
Deferred | (1,360,221 | ) | (275,070 | ) | — | (1,635,291 | ) | |||||||||
2,933,676 | 7,753,800 | (349,387 | ) | 10,338,089 | ||||||||||||
Net income (loss) | $ | 11,544,291 | $ | 16,788,968 | $ | (648,863 | ) | $ | 27,684,396 | |||||||
Average shares outstanding | 13,044,351 | |||||||||||||||
Per Share Data: | ||||||||||||||||
Net income (loss) per share - basic and diluted | $ | 0.89 | $ | 1.29 | $ | (0.06 | ) | $ | 2.12 | |||||||
Decrease in provision for insured events of prior years (after tax) | $ | 0.20 | $ | 0.18 | $ | — | $ | 0.38 | ||||||||
Catastrophe and storm losses (after tax) | $ | (1.72 | ) | $ | (0.36 | ) | $ | — | $ | (2.08 | ) | |||||
Dividends per share | $ | 0.63 | ||||||||||||||
Book value per share | $ | 31.03 | ||||||||||||||
Effective tax rate | 27.2 | % | ||||||||||||||
Annualized net income as a percent of beg. SH equity | 9.2 | % | ||||||||||||||
Other Information of Interest: | ||||||||||||||||
Net written premiums | $ | 322,224,829 | $ | 93,064,848 | $ | — | $ | 415,289,677 | ||||||||
Decrease in provision for insured events of prior years | $ | (3,936,592 | ) | $ | (3,691,542 | ) | $ | — | $ | (7,628,134 | ) | |||||
Catastrophe and storm losses | $ | 34,600,511 | $ | 7,211,293 | $ | — | $ | 41,811,804 | ||||||||
GAAP Combined Ratio: | ||||||||||||||||
Loss and settlement expense ratio | 67.3 | % | 60.5 | % | — | 65.7 | % | |||||||||
Acquisition expense ratio | 36.7 | % | 22.3 | % | — | 33.3 | % | |||||||||
104.0 | % | 82.8 | % | — | 99.0 | % |
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||||||||||||
Property and | ||||||||||||||||
Casualty | Parent | |||||||||||||||
Nine Months Ended September 30, 2012 | Insurance | Reinsurance | Company | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Premiums earned | $ | 263,916,398 | $ | 77,658,605 | $ | — | $ | 341,575,003 | ||||||||
Investment income, net | 24,314,494 | 8,965,935 | (6,039 | ) | 33,274,390 | |||||||||||
Other income | 686,234 | 341 | — | 686,575 | ||||||||||||
288,917,126 | 86,624,881 | (6,039 | ) | 375,535,968 | ||||||||||||
Losses and expenses: | ||||||||||||||||
Losses and settlement expenses | 178,799,153 | 54,165,728 | — | 232,964,881 | ||||||||||||
Dividends to policyholders | 6,894,504 | — | — | 6,894,504 | ||||||||||||
Amortization of deferred policy acquisition costs | 46,627,282 | 15,829,309 | — | 62,456,591 | ||||||||||||
Other underwriting expenses | 43,931,413 | 1,418,119 | — | 45,349,532 | ||||||||||||
Interest expense | 675,000 | — | — | 675,000 | ||||||||||||
Other expenses | 609,041 | 96,829 | 956,376 | 1,662,246 | ||||||||||||
277,536,393 | 71,509,985 | 956,376 | 350,002,754 | |||||||||||||
Operating income (loss) before income taxes | 11,380,733 | 15,114,896 | (962,415 | ) | 25,533,214 | |||||||||||
Realized investment gains | 7,069,647 | 533,978 | — | 7,603,625 | ||||||||||||
Income (loss) before income taxes | 18,450,380 | 15,648,874 | (962,415 | ) | 33,136,839 | |||||||||||
Income tax expense (benefit): | ||||||||||||||||
Current | 5,360,406 | 3,530,622 | (340,826 | ) | 8,550,202 | |||||||||||
Deferred | (1,261,632 | ) | 879,761 | — | (381,871 | ) | ||||||||||
4,098,774 | 4,410,383 | (340,826 | ) | 8,168,331 | ||||||||||||
Net income (loss) | $ | 14,351,606 | $ | 11,238,491 | $ | (621,589 | ) | $ | 24,968,508 | |||||||
Average shares outstanding | 12,884,327 | |||||||||||||||
Per Share Data: | ||||||||||||||||
Net income (loss) per share - basic and diluted | $ | 1.11 | $ | 0.87 | $ | (0.04 | ) | $ | 1.94 | |||||||
Decrease in provision for insured events of prior years (after tax) | $ | 0.82 | $ | 0.49 | $ | — | $ | 1.31 | ||||||||
Catastrophe and storm losses (after tax) | $ | (1.59 | ) | $ | (0.70 | ) | $ | — | $ | (2.29 | ) | |||||
Dividends per share | $ | 0.60 | ||||||||||||||
Book value per share | $ | 30.46 | ||||||||||||||
Effective tax rate | 24.7 | % | ||||||||||||||
Annualized net income as a percent of beg. SH equity | 9.5 | % | ||||||||||||||
Other Information of Interest: | ||||||||||||||||
Net written premiums | $ | 294,266,246 | $ | 82,006,480 | $ | — | $ | 376,272,726 | ||||||||
Decrease in provision for insured events of prior years | $ | (16,227,480 | ) | $ | (9,763,158 | ) | $ | — | $ | (25,990,638 | ) | |||||
Catastrophe and storm losses | $ | 31,494,456 | $ | 13,879,487 | $ | — | $ | 45,373,943 | ||||||||
GAAP Combined Ratio: | ||||||||||||||||
Loss and settlement expense ratio | 67.7 | % | 69.7 | % | — | 68.2 | % | |||||||||
Acquisition expense ratio | 37.0 | % | 22.3 | % | — | 33.6 | % | |||||||||
104.7 | % | 92.0 | % | — | 101.8 | % |
CONSOLIDATED BALANCE SHEETS | ||||||||
September 30, 2013 | December 31, 2012 | |||||||
(Unaudited) | (As Audited) | |||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed maturity securities available-for-sale, at fair value (amortized cost $960,804,064 and $920,843,939) | $ | 990,480,349 | $ | 999,794,857 | ||||
Equity securities available-for-sale, at fair value (cost $118,448,584 and $111,851,963) | 165,485,789 | 140,293,825 | ||||||
Other long-term investments | 1,255,793 | 863,257 | ||||||
Short-term investments | 64,570,999 | 53,418,914 | ||||||
Total investments | 1,221,792,930 | 1,194,370,853 | ||||||
Cash | 600,852 | 330,392 | ||||||
Reinsurance receivables due from affiliate | 30,597,732 | 34,277,728 | ||||||
Prepaid reinsurance premiums due from affiliate | 9,535,847 | 5,195,892 | ||||||
Deferred policy acquisition costs (affiliated $39,871,899 and $34,425,593) | 39,892,340 | 34,425,593 | ||||||
Amounts due from affiliate to settle inter-company transaction balances | 9,477,746 | — | ||||||
Prepaid pension benefits due from affiliate | 679,538 | 1,413,104 | ||||||
Accrued investment income | 10,348,127 | 9,938,714 | ||||||
Accounts receivable | 3,013,752 | 2,390,955 | ||||||
Income taxes recoverable | — | 1,588,089 | ||||||
Deferred income taxes | 5,446,398 | — | ||||||
Goodwill | 941,586 | 941,586 | ||||||
Other assets (affiliated $5,301,600 and $5,760,369) | 5,418,414 | 5,836,200 | ||||||
Total assets | $ | 1,337,745,262 | $ | 1,290,709,106 | ||||
LIABILITIES | ||||||||
Losses and settlement expenses (affiliated $595,690,009 and $577,476,988) | $ | 604,647,885 | $ | 583,096,965 | ||||
Unearned premiums (affiliated $236,805,957 and $196,215,465) | 236,906,305 | 196,215,465 | ||||||
Other policyholders' funds (all affiliated) | 8,344,571 | 6,055,111 | ||||||
Surplus notes payable to affiliate | 25,000,000 | 25,000,000 | ||||||
Amounts due affiliate to settle inter-company transaction balances | — | 19,127,010 | ||||||
Pension and postretirement benefits payable to affiliate | 32,503,795 | 30,714,633 | ||||||
Income taxes payable | 394,886 | — | ||||||
Deferred income taxes | — | 6,352,690 | ||||||
Other liabilities (affiliated $20,271,470 and $22,794,304) | 21,952,260 | 22,938,068 | ||||||
Total liabilities | 929,749,702 | 889,499,942 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, $1 par value, authorized 20,000,000 shares; issued and outstanding, 13,148,361 shares in 2013 and 12,909,457 shares in 2012 | 13,148,361 | 12,909,457 | ||||||
Additional paid-in capital | 95,179,454 | 89,205,881 | ||||||
Accumulated other comprehensive income | 28,876,757 | 47,752,375 | ||||||
Retained earnings | 270,790,988 | 251,341,451 | ||||||
Total stockholders' equity | 407,995,560 | 401,209,164 | ||||||
Total liabilities and stockholders' equity | $ | 1,337,745,262 | $ | 1,290,709,106 |
September 30, 2013 | |||||||||||||||
Percent of | |||||||||||||||
Amortized | Fair | Total | Carrying | ||||||||||||
($ in thousands) | Cost | Value | Fair Value | Value | |||||||||||
Fixed maturity securities available-for-sale | $ | 960,804 | $ | 990,480 | 81.1 | % | $ | 990,480 | |||||||
Equity securities available-for-sale | 118,449 | 165,486 | 13.5 | % | 165,486 | ||||||||||
Cash | 601 | 601 | — | % | 601 | ||||||||||
Short-term investments | 64,571 | 64,571 | 5.3 | % | 64,571 | ||||||||||
Other long-term investments | 1,256 | 1,256 | 0.1 | % | 1,256 | ||||||||||
$ | 1,145,681 | $ | 1,222,394 | 100.0 | % | $ | 1,222,394 | ||||||||
December 31, 2012 | |||||||||||||||
Percent of | |||||||||||||||
Amortized | Fair | Total | Carrying | ||||||||||||
($ in thousands) | Cost | Value | Fair Value | Value | |||||||||||
Fixed maturity securities available-for-sale | $ | 920,844 | $ | 999,795 | 83.7 | % | $ | 999,795 | |||||||
Equity securities available-for-sale | 111,852 | 140,294 | 11.7 | % | 140,294 | ||||||||||
Cash | 330 | 330 | — | % | 330 | ||||||||||
Short-term investments | 53,419 | 53,419 | 4.5 | % | 53,419 | ||||||||||
Other long-term investments | 863 | 863 | 0.1 | % | 863 | ||||||||||
$ | 1,087,308 | $ | 1,194,701 | 100.0 | % | $ | 1,194,701 |
NET WRITTEN PREMIUMS | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, 2013 | September 30, 2013 | |||||||||||
Percent of | Percent of | |||||||||||
Percent of | Increase/(Decrease) | Percent of | Increase/(Decrease) | |||||||||
Net Written | in Net Written | Net Written | in Net Written | |||||||||
Premiums | Premiums | Premiums | Premiums | |||||||||
Property and Casualty Insurance | ||||||||||||
Commercial Lines: | ||||||||||||
Automobile | 16.1 | % | 15.4 | % | 17.2 | % | 13.5 | % | ||||
Liability | 14.7 | % | 13.5 | % | 15.4 | % | 12.6 | % | ||||
Property | 18.3 | % | 13.9 | % | 17.6 | % | 13.5 | % | ||||
Workers' compensation | 19.2 | % | 5.8 | % | 16.8 | % | 8.6 | % | ||||
Other | 1.4 | % | 2.4 | % | 1.4 | % | 0.1 | % | ||||
Total commercial lines | 69.7 | % | 11.5 | % | 68.4 | % | 11.7 | % | ||||
Personal Lines: | ||||||||||||
Automobile | 4.2 | % | (7.0 | ) | % | 4.9 | % | (5.8 | ) | % | ||
Property | 3.8 | % | (8.1 | ) | % | 4.1 | % | (4.1 | ) | % | ||
Liability | 0.1 | % | 11.5 | % | 0.2 | % | 11.7 | % | ||||
Total personal lines | 8.1 | % | (7.3 | ) | % | 9.2 | % | (4.8 | ) | % | ||
Total property and casualty insurance | 77.8 | % | 9.2 | % | 77.6 | % | 9.5 | % | ||||
Reinsurance: | ||||||||||||
Pro rata (1) (2) | 9.7 | % | (17.9 | ) | % | 8.7 | % | 25.8 | % | |||
Excess of loss (1) | 12.5 | % | 0.3 | % | 13.7 | % | 6.9 | % | ||||
Total reinsurance | 22.2 | % | (8.6 | ) | % | 22.4 | % | 13.5 | % | |||
Total | 100.0 | % | 4.7 | % | 100.0 | % | 10.4 | % |
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