Exhibit

DES MOINES, Iowa (May 9, 2019) - EMC Insurance Group Inc. (Nasdaq:EMCI) (the “Company”), today reported net income of $33.5 million ($1.55 per share) and a loss and settlement expense ratio of 62.7 percent for the first quarter ended March 31, 2019, compared to a net loss of $76,000 ($0.00 per share) and a loss and settlement expense ratio of 71.0 percent for the first quarter of 2018. Included in the net income amount reported in 2019 is a $19.8 million pre-tax increase in unrealized investment gains on the Company’s equity investments, and $2.8 million of pre-tax realized investment gains. Included in the net loss reported in 2018 is a $9.9 million pre-tax decline in unrealized gains on the Company’s equity investments, partially offset by $4.5 million of pre-tax realized investment gains.

Both segments reported improved underwriting results in the first quarter of 2019. The property and casualty insurance segment benefited from a significant increase in favorable development on prior years’ reserves compared to the relatively low amount reported in the first quarter of 2018. In addition, the underlying loss and settlement expense ratio* (which excludes the impact of catastrophe and storm losses and development on prior years’ reserves) improved from the results reported in the first quarter of 2018, which was impacted by a high level of non-catastrophe losses. The improvement in the underlying loss and settlement expense ratio is primarily due to reductions in the current accident year ultimate loss and settlement expense ratio projections in the commercial liability and commercial automobile lines of business. This was partially offset by an increase in the projection in the workers’ compensation line of business. The improvement in the reinsurance segment is attributed to an increase in premiums earned and improved loss experience.

Non-GAAP operating income, which excludes net realized investment gains and the change in net unrealized investment gains on equity investments from net income, totaled $15.6 million ($0.72 per share) for the first quarter of 2019, compared to $4.2 million ($0.19 per share) for the first quarter of 2018. The Company’s GAAP combined ratio was 95.8 percent in the first quarter of 2019, compared to 104.6 percent in the first quarter of 2018.

Kelley continued, “During 2018, Employers Mutual Casualty Company began a digital transformation project to replace its legacy systems. After nearing completion of the planning stage, a vendor product has been selected and a five-year timeline has been established. We currently estimate that the Company’s portion of the pre-tax expense will approximate $28.0 million over the next five years. We anticipate beginning implementation in the third quarter.”

Premiums earned increased 7.4 percent for the first quarter of 2019. In the property and casualty insurance segment, premiums earned increased 5.2 percent. The majority of this increase is attributed to the commercial lines of business due to an increase in retained policies and small rate level increases on renewal business. Premiums earned in the personal lines of business were down 2.8 percent in the first quarter, and this decline will increase significantly during the remainder of the year as the pace of non-renewals increases. In the reinsurance segment, premiums earned increased 14.5 percent in the first quarter. This increase stems from increases in participation on existing multi-line contracts, higher estimated premiums and the addition of new business.

Catastrophe and storm losses totaled $5.9 million ($0.22 per share after tax) in the first quarter of 2019, compared to $4.7 million ($0.17 per share after tax) in the first quarter of 2018. On a segment basis, catastrophe and storm losses for the first quarter of 2019 amounted to $5.9 million ($0.22 per share after tax) in the property and casualty insurance segment, and $19,000 ($0.00 per share after tax) in the reinsurance segment.

The Company reported $13.3 million ($0.49 per share after tax) of favorable development on prior years’ reserves during the first quarter of 2019, compared to $5.6 million ($0.21 per share after tax) in the first quarter of 2018. In the property and casualty insurance segment, favorable development totaled $9.6 million, compared to $2.1 million in 2018. The increase in favorable development occurred across all commercial lines of business and is primarily attributed to decreases in the ultimate severity estimates for several accident years. The commercial auto liability and workers’ compensation lines of business were the largest contributors to favorable development. In the reinsurance segment, favorable development totaled $3.6 million, which is comparable to the $3.4 million reported in the first quarter of 2018.

The pre-tax realized investment gains of $2.8 million and $4.5 million reported for the first quarters of 2019 and 2018, respectively, include $938,000 of pre-tax realized investment losses and $1.8 million of pre-tax realized investment gains, respectively, generated from changes in the carrying value of a limited partnership that helps protect the Company from a sudden and significant decline in the value of its equity portfolio (the equity tail-risk hedging strategy).

Based on actual results for the first three months of 2019 and updated projections for the remainder of the year, management is reaffirming its 2019 non-GAAP operating income guidance range of $1.35 to $1.55 per share. This guidance is based on a projected GAAP combined ratio of 101.4 percent for the year and now includes anticipated expenses associated with Employers Mutual Casualty Company’s (Employers Mutual’s) digital transformation project and estimated expenses to be incurred by the Company in connection with its pending going-private transaction. Nominal changes were also made to the other assumptions utilized in the projection.

EMC Insurance Group Inc. is a publicly held insurance holding company with operations in property and casualty insurance and reinsurance, which was formed in 1974 and became publicly held in 1982. The Company’s common stock trades on the Global Select Market tier of the Nasdaq Stock Market under the symbol EMCI. Additional information regarding the Company may be found at investors.emcins.com. EMCI’s parent company is Employers Mutual. EMCI and Employers Mutual, together with their subsidiary and affiliated companies, conduct operations under the trade name EMC Insurance Companies.

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 beliefs, assumptions and expectations of the Company’s future performance, taking all information currently available into account. These beliefs, assumptions and expectations can change as the result of many possible events or factors, not all of which are known to management. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, plans and objectives may vary materially from those expressed in the forward-looking statements.

Management intends to identify forward-looking statements when using the words “believe”, “expect”, “anticipate”, “estimate”, “project”, “may”, “intend”, “likely” or similar expressions. Undue reliance should not be placed on these forward-looking statements. The Company disclaims any obligation to update such statements or to announce publicly the results of any revisions that it may make to any forward-

The Company prepares its public financial statements in conformity with GAAP. Management uses certain non-GAAP financial measures for evaluating the Company’s performance. These measures are considered non-GAAP financial measures under applicable Securities and Exchange Commission (SEC) rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. The Company’s calculation of non-GAAP financial measures may differ from similar measures used by other companies, so investors should exercise caution when comparing the Company’s non-GAAP financial measures to the measures used by other companies. The following discussion includes reconciliations of the most directly comparable GAAP financial measures to the non-GAAP financial measures referenced in this report.

Non-GAAP operating income: One of the primary non-GAAP financial measures utilized by management for evaluating the Company’s performance is operating income. Non-GAAP operating income is calculated by excluding net realized investment gains/losses and the change in net unrealized investment gains/losses on equity investments from net income/loss. While realized investment gains/losses are integral to the Company’s insurance operations over the long term, the decision to realize investment gains or losses in any particular period is subject to changing market conditions and management’s discretion, and is independent of the Company’s insurance operations. Changes in unrealized investment gains/losses on equity investments are not predictable due to changing market conditions and are therefore also excluded from the calculation of non-GAAP operating income.

Management believes non-GAAP operating income is useful to investors because it illustrates the performance of the Company’s normal, ongoing insurance operations, which is important in understanding and evaluating the Company’s financial condition and results of operations. While this measure is consistent with measures utilized by investors and analysts to evaluate performance, it is not intended as a substitute for the GAAP financial measure of net income/loss.



RECONCILIATION OF NET INCOME/LOSS TO NON-GAAP OPERATING INCOME
($ in thousands)
	Three months ended March 31,
	2019			2018
Net income (loss)	$	33,531		$	(76	)
Realized investment gains	(2,814		)	(4,461		)
Change in unrealized investment gains on equity investments	(19,829		)	9,854
Income tax expense (benefit)	4,755			(1,133		)
Net realized investment gains and change in net unrealized investment gains on equity investments	(17,888		)	4,260
Non-GAAP operating income	$	15,643		$	4,184



RECONCILIATION OF NET INCOME/LOSS PER SHARE TO NON-GAAP OPERATING INCOME PER SHARE
	Three months ended March 31,
	2019			2018
Net income (loss)	$	1.55		$	(0.00	)
Realized investment gains	(0.13		)	(0.21		)
Change in unrealized investment gains on equity investments	(0.92		)	0.46
Income tax expense (benefit)	0.22			(0.06		)
Net realized investment gains and change in net unrealized investment gains on equity investments	(0.83		)	0.19
Non-GAAP operating income	$	0.72		$	0.19

Property and casualty insurance segment’s underlying loss and settlement expense ratio: The loss and settlement expense ratio is the ratio (expressed as a percentage) of losses and settlement expenses incurred to premiums earned, which management uses as a measure of underwriting profitability of the Company’s property and casualty insurance business. The underlying loss and settlement expense ratio is a non-GAAP financial measure which represents the loss and settlement expense ratio, excluding the impact of catastrophe and storm losses and development on prior years’ reserves. Management uses this ratio as an indicator of the property and casualty insurance segment’s underwriting discipline and performance for the current accident year. Management believes this ratio is useful for investors to understand the property and casualty insurance segment’s periodic earnings and variability of earnings caused by the unpredictable nature (i.e., the timing and amount) of catastrophe and storm losses and development on prior years’ reserves. While this measure is consistent with measures utilized by investors and analysts to evaluate performance, it is not intended as a substitute for the GAAP financial measure of loss and settlement expense ratio.



CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
($ in thousands, except share and per share amounts)
Quarter ended March 31, 2019	Property and Casualty Insurance			Reinsurance			Parent Company			Consolidated
Revenues:
Premiums earned	$	124,772		$	42,530		$	—		$	167,302
Investment income, net	9,138			3,608			17			12,763
Other income	1,533			2			—			1,535
	135,443			46,140			17			181,600
Losses and expenses:
Losses and settlement expenses	76,980			27,989			—			104,969
Dividends to policyholders	2,771			—			—			2,771
Amortization of deferred policy acquisition costs	20,718			9,252			—			29,970
Other underwriting expenses	21,686			906			—			22,592
Interest expense	171			—			—			171
Other expenses	311			—			1,174			1,485
	122,637			38,147			1,174			161,958
Operating income (loss) before income taxes	12,806			7,993			(1,157		)	19,642
Net realized investment gains (losses) and change in unrealized gains on equity investments	14,168			8,542			(67		)	22,643
Income (loss) before income taxes	26,974			16,535			(1,224		)	42,285
Income tax expense (benefit):
Current	2,520			1,972			(233		)	4,259
Deferred	2,924			1,595			(24		)	4,495
	5,444			3,567			(257		)	8,754
Net income (loss)	$	21,530		$	12,968		$	(967	)	$	33,531
Average shares outstanding										21,638,588
Per Share Data:
Net income per share - basic and diluted	$	0.99		$	0.60		$	(0.04	)	$	1.55
Catastrophe and storm losses (after tax)	$	0.22		$	—		$	—		$	0.22
Favorable development on prior years' reserves (after tax)	$	0.36		$	0.13		$	—		$	0.49
Dividends per share										$	0.23
Book value per share										$	28.44
Effective tax rate										20.7		%
Annualized net income as a percent of beg. SH equity										23.7		%
Other Information of Interest:
Premiums written	$	125,516		$	45,449		$	—		$	170,965
Catastrophe and storm losses	$	5,888		$	19		$	—		$	5,907
Favorable development on prior years' reserves	$	(9,643	)	$	(3,648	)	$	—		$	(13,291	)
GAAP Ratios:
Loss and settlement expense ratio	61.7		%	65.8		%	—		%	62.7		%
Acquisition expense ratio	36.2		%	23.9		%	—		%	33.1		%
Combined ratio	97.9		%	89.7		%	—		%	95.8		%



CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
($ in thousands, except share and per share amounts)
Quarter ended March 31, 2018	Property and Casualty Insurance			Reinsurance			Parent Company			Consolidated
Revenues:
Premiums earned	$	118,632		$	37,154		$	—		$	155,786
Investment income, net	8,148			3,218			5			11,371
Other income (loss)	2,051			(436		)	—			1,615
	128,831			39,936			5			168,772
Losses and expenses:
Losses and settlement expenses	83,501			27,127			—			110,628
Dividends to policyholders	2,120			—			—			2,120
Amortization of deferred policy acquisition costs	19,299			7,993			—			27,292
Other underwriting expenses	22,486			369			—			22,855
Interest expense	142			—			—			142
Other expenses	233			—			637			870
	127,781			35,489			637			163,907
Operating income (loss) before income taxes	1,050			4,447			(632		)	4,865
Net realized investment gains (losses) and change in unrealized gains on equity investments	(3,293		)	(2,100		)	—			(5,393		)
Income (loss) before income taxes	(2,243		)	2,347			(632		)	(528		)
Income tax expense (benefit):
Current	98			1,229			(121		)	1,206
Deferred	(832		)	(814		)	(12		)	(1,658		)
	(734		)	415			(133		)	(452		)
Net income (loss)	$	(1,509	)	$	1,932		$	(499	)	$	(76	)
Average shares outstanding										21,501,897
Per Share Data:
Net income (loss) per share - basic and diluted	$	(0.07	)	$	0.09		$	(0.02	)	$	—
Catastrophe and storm losses (after tax)	$	0.16		$	0.01		$	—		$	0.17
Favorable development on prior years' reserves (after tax)	$	0.08		$	0.13		$	—		$	0.21
Dividends per share										$	0.22
Book value per share										$	27.02
Effective tax rate										85.5		%
Annualized net income as a percent of beg. SH equity										(0.1		)%
Other Information of Interest:
Premiums written	$	120,269		$	37,803		$	—		$	158,072
Catastrophe and storm losses	$	4,260		$	396		$	—		$	4,656
Favorable development on prior years' reserves	$	(2,135	)	$	(3,441	)	$	—		$	(5,576	)
GAAP Ratios:
Loss and settlement expense ratio	70.4		%	73.0		%	—		%	71.0		%
Acquisition expense ratio	37.0		%	22.5		%	—		%	33.6		%
Combined ratio	107.4		%	95.5		%	—		%	104.6		%



CONSOLIDATED BALANCE SHEETS
	March 31, 2019		December 31, 2018
($ in thousands, except share and per share amounts)	(Unaudited)
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value (amortized cost $1,255,775 and $1,273,132)	$	1,291,860	$	1,282,909
Equity investments, at fair value (cost $167,632 and $160,371)	242,583		215,363
Equity investments, at alternative measurement of cost less impairments	1,200		1,200
Other long-term investments	18,099		19,316
Short-term investments	48,265		28,204
Total investments	1,602,007		1,546,992

Cash	232		337
Reinsurance receivables due from affiliate	35,767		37,361
Prepaid reinsurance premiums due from affiliate	7,530		8,789
Deferred policy acquisition costs (affiliated $47,422 and $44,440)	47,422		44,760
Amounts due from affiliate to settle inter-company transaction balances	11,905		5,154
Prepaid pension and postretirement benefits due from affiliate	17,355		17,691
Accrued investment income	11,713		10,468
Accounts receivable	1,038		1,658
Income taxes recoverable	2,465		6,697
Goodwill	942		942
Other assets (affiliated $3,678 and $4,510)	3,851		4,629
Total assets	$	1,742,227	$	1,685,478

LIABILITIES
Losses and settlement expenses (affiliated $774,644 and $771,872)	$	780,393	$	777,190
Unearned premiums (affiliated $271,127 and $267,064)	271,127		268,511
Other policyholders' funds (all affiliated)	8,326		8,807
Surplus notes payable to affiliate	25,000		25,000
Pension benefits payable to affiliate	3,738		4,070
Deferred income taxes	14,844		4,908
Other liabilities (affiliated $20,328 and $31,121)	22,465		31,210
Total liabilities	1,125,893		1,119,696

STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized 30,000,000 shares; issued and outstanding, 21,668,287 shares in 2019 and 21,615,105 shares in 2018	21,668		21,615
Additional paid-in capital	129,928		128,451
Accumulated other comprehensive income	22,090		1,620
Retained earnings	442,648		414,096
Total stockholders' equity	616,334		565,782
Total liabilities and stockholders' equity	$	1,742,227	$	1,685,478



LOSS AND SETTLEMENT EXPENSE BY LINE OF BUSINESS
	Three months ended March 31,
	2019							2018
($ in thousands)	Premiums earned		Losses and settlement expenses			Loss and settlement expense ratio		Premiums earned		Losses and settlement expenses		Loss and settlement expense ratio
Property and casualty insurance
Commercial lines:
Automobile	$	32,907	$	21,415		65.1	%	$	30,644	$	26,456	86.3	%
Property	27,671		17,428			63.0	%	26,429		18,723		70.8	%
Workers' compensation	23,543		13,735			58.3	%	24,902		12,531		50.3	%
Other liability	28,905		17,341			60.0	%	24,962		17,701		70.9	%
Other	2,506		(384		)	(15.3	)%	2,186		494		22.6	%
Total commercial lines	115,532		69,535			60.2	%	109,123		75,905		69.6	%

Personal lines	9,240		7,445			80.6	%	9,509		7,596		79.9	%
Total property and casualty insurance	$	124,772	$	76,980		61.7	%	$	118,632	$	83,501	70.4	%

Reinsurance
Pro rata reinsurance	$	13,006	$	5,914		45.5	%	$	13,073	$	4,665	35.7	%
Excess of loss reinsurance	29,524		22,075			74.8	%	24,081		22,462		93.3	%
Total reinsurance	$	42,530	$	27,989		65.8	%	$	37,154	$	27,127	73.0	%

Consolidated	$	167,302	$	104,969		62.7	%	$	155,786	$	110,628	71.0	%



PREMIUMS WRITTEN
	Three months ended March 31, 2019				Three months ended March 31, 2018
($ in thousands)	Premiums written		Percent of premiums written		Premiums written		Percent of premiums written		Change in premiums written
Property and casualty insurance
Commercial lines:
Automobile	$	35,893	21.0	%	$	32,956	20.8	%	8.9%
Property	29,965		17.5	%	26,727		16.9	%	12.1%
Workers' compensation	22,128		12.9	%	22,585		14.3	%	(2.0)%
Other liability	29,163		17.1	%	26,725		16.9	%	9.1%
Other	2,573		1.5	%	2,194		1.4	%	17.3%
Total commercial lines	119,722		70.0	%	111,187		70.3	%	7.7%

Personal lines	5,794		3.4	%	9,082		5.8	%	(36.2)%
Total property and casualty insurance	$	125,516	73.4	%	$	120,269	76.1	%	4.4%

Reinsurance
Pro rata reinsurance	$	13,881	8.1	%	$	11,689	7.4	%	18.7%
Excess of loss reinsurance	31,568		18.5	%	26,114		16.5	%	20.9%
Total reinsurance	$	45,449	26.6	%	$	37,803	23.9	%	20.2%

Consolidated	$	170,965	100.0	%	$	158,072	100.0	%	8.2%



Contacts
Investors:		Media:
Steve Walsh, 515-345-2515		Lisa Hamilton, 515-345-7589
steve.t.walsh@emcins.com		lisa.l.hamilton@emcins.com


•	catastrophic events and the occurrence of significant severe weather conditions;


•	changes in the property and casualty insurance industry, interest rates or the performance of financial markets and the general economy;


•	“other-than-temporary” investment impairment losses; and


•	other risks and uncertainties inherent to the Company’s business, including those discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K.



RECONCILIATION OF THE PROPERTY AND CASUALTY INSURANCE SEGMENT'S LOSS AND SETTLEMENT EXPENSE RATIO TO THE UNDERLYING LOSS AND SETTLEMENT EXPENSE RATIO
	Three months ended March 31,
	2019		2018
Loss and settlement expense ratio	61.7	%	70.4	%
Catastrophe and storm losses	(4.7	)%	(3.6	)%
Favorable development on prior years' reserves	7.7	%	1.8	%
Underlying loss and settlement expense ratio	64.7	%	68.6	%


•	state and federal legislation and regulations;


•	rating agency actions;