EMC Insurance Group Inc. Reports 2015 Third Quarter and Nine Month Results and Increases Quarterly Cash Dividend

Third Quarter Ended September 30, 2015

Operating Income Per Share – $0.31
Net Income Per Share – $0.54
Net Realized Investment Gains Per Share – $0.24
Catastrophe and Storm Losses Per Share – $0.56
Large Losses Per Share – $0.32
GAAP Combined Ratio – 101.8 percent

Nine Months Ended September 30, 2015

Operating Income Per Share – $1.59
Net Income Per Share – $1.96
Net Realized Investment Gains Per Share – $0.37
Catastrophe and Storm Losses Per Share – $1.29
Large Losses Per Share – $0.68
GAAP Combined Ratio – 97.0 percent

2015 Operating Income Guidance – $1.80 to $2.00 per share

DES MOINES, Iowa, Nov. 06, 2015 (GLOBE NEWSWIRE) — EMC Insurance Group Inc. (NASDAQ:EMCI) today reported operating income of $6.3 million ($0.31 per share) for the third quarter ended September 30, 2015, compared to operating income of $2.5 million ($0.12 per share) for the third quarter of 20141. For the nine months ended September 30, 2015, the Company reported operating income of $32.8 million ($1.59 per share), compared to $11.7 million ($0.58 per share) for the same period in 2014.

Net income, including realized investment gains and losses, totaled $11.2 million ($0.54 per share) for the third quarter of 2015, compared to $2.2 million ($0.11 per share) for the third quarter of 2014. For the nine months ended September 30, 2015, the Company reported net income of $40.3 million ($1.96 per share), compared to $13.8 million ($0.69 per share) for the same period in 2014.

The Company’s GAAP combined ratio was 101.8 percent in the third quarter of 2015, compared to 107.1 percent in the third quarter of 2014. For the first nine months of 2015, the Company’s GAAP combined ratio was 97.0 percent, compared to 105.0 percent in 2014.

“Operating results for the third quarter improved in both segments, continuing the trend experienced in the first half of the year,” stated President and Chief Executive Officer Bruce G. Kelley. “Based on the good results achieved through the first nine months of the year, we now expect to achieve 2015 operating income near the high end of our guidance range.”

Based on results for the first nine months of 2015 and projections for the remainder of the year, management is reaffirming its 2015 operating income guidance in the previous range of $1.80 to $2.00 per share. This guidance is based on a projected GAAP combined ratio of 97.6 percent for the year and investment income consistent with the amount reported in 2014. The load for catastrophe and storm losses has been reduced to 8.6 points from the previous load of 9.5 points; however, the 0.9 point decline in the loss ratio attributable to this reduction was partially offset by an increase in other types of losses.

Kelley continued, “Catastrophe and storm losses are down for the year compared to our long-term average, and we expect the inter-company reinsurance programs announced earlier this week will help reduce the volatility we have historically experienced in our quarterly results due to catastrophe and storm losses.” These reinsurance programs will become effective January 1, 2016, subject to approval by regulatory authorities.

In addition, on November 4, 2015, the board of directors of the Company declared a quarterly cash dividend of $0.19 per share of common stock payable November 24, 2015 to stockholders of record as of November 17, 2015. The $0.19 per share quarterly dividend represents an 11.8 percent increase over the previous quarterly dividend of $0.17 per share, and when combined with the dividend increase implemented during the third quarter, represents a 14.0 percent increase over the previous split-adjusted dividend of $0.1667 per share.

Kelley went on to say, “This double-digit percentage increase of the dividend is a reflection of the good results achieved through the first nine months of the year, and our expectations for the fourth quarter. Our intent is to reward stockholders with an attractive return on their investment–and we have. The Company has paid a quarterly dividend since becoming publicly held in February 1982, and has never reduced its dividend. We remain confident in the strength of our balance sheet to support future dividend payments and continued profitable growth,” concluded Kelley.

In the third quarter, premiums earned increased 5.4 percent to $145.8 million, from $138.3 million in 2014. In the property and casualty insurance segment, premiums earned increased 5.4 percent, with the majority of the increase attributable to rate level increases on renewal business and growth in insured exposures and an increase in retained policies in the commercial lines of business.

In the reinsurance segment, premiums earned increased 5.5 percent, primarily due to growth in the Mutual Reinsurance Bureau underwriting association (MRB), which reported a significant increase in pro rata liability business. The increase in MRB premiums was partially offset by reduced participation in the offshore energy and liability proportional account for the 2015 contract year. It is important to note that a premium adjustment made in 2014 is inflating the percentage increase reported for the third quarter of 2015. This adjustment stemmed from a change in the premium recognition period of two large facility contracts in the pro rata property line of business that was implemented in the third quarter of 2014. For the first nine months of 2015, premiums earned increased 5.9 percent (6.6 percent in the property and casualty insurance segment and 3.5 percent in the reinsurance segment).

Catastrophe and storm losses totaled $17.8 million ($0.56 per share after tax) in the third quarter of 2015, compared to $17.5 million ($0.56 per share after tax) in the third quarter of 2014. Third quarter catastrophe and storm losses accounted for 12.2 percentage points of the combined ratio, which is below the Company’s most recent 10-year average of 14.2 percentage points for this period and consistent with the 12.6 percentage points experienced in the third quarter of 2014. For the first nine months of 2015, catastrophe and storm losses totaled $40.8 million ($1.29 per share after tax), compared to $52.8 million ($1.70 per share after tax) in 2014. On a segment basis, catastrophe and storm losses amounted to $9.9 million ($0.31 per share after tax) and $28.7 million ($0.91 per share after tax) in the property and casualty insurance segment, and $7.9 million ($0.25 per share after tax) and $12.1 million ($0.38 per share after tax) in the reinsurance segment, for the three months and nine months ended September 30, 2015, respectively.

The Company reported $2.2 million ($0.07 per share after tax) of favorable development on prior years’ reserves during the third quarter of 2015, compared to $1.7 million ($0.06 per share after tax) in the third quarter of 2014. For the first nine months of 2015, favorable development totaled $20.0 million ($0.63 per share after tax), compared to $10.9 million ($0.35 per share after tax) in 2014. Development amounts can vary significantly from quarter to quarter and year to year depending on a number of factors, including the number of claims settled and the settlement terms, and should therefore not be considered a reliable factor in assessing the adequacy of the Company’s carried reserves. The most recent actuarial analysis of the Company’s carried reserves indicates that carried reserves remain within the top quartile of the range of reasonable reserves.

Large losses (which the Company defines as losses greater than $500,000 for the EMC Insurance Companies pool, excluding catastrophe and storm losses) increased slightly to $10.3 million ($0.32 per share after tax) in the third quarter of 2015 from $9.7 million ($0.31 per share after tax) in the third quarter of 2014. For the first nine months of 2015, large losses decreased to $21.5 million ($0.68 per share after tax) from $23.8 million ($0.77 per share after tax) in 2014.

Net investment income declined 1.8 percent and 1.4 percent to $11.3 million and $33.9 million for the three and nine months ended September 30, 2015 from $11.5 million and $34.4 million for the same periods in 2014. Net investment income for the first nine months of 2014 included approximately $442,000 that resulted from the early payoff of a commercial mortgage-backed security during the first quarter of 2014 that was purchased at a significant discount to par value, which accelerated the accretion of the discount to par value and therefore increased investment income. Excluding this amount, net investment income would have been relatively flat for the first nine months of 2015 compared to the same period in 2014.

Net realized investment gains totaled $7.5 million ($0.24 per share after tax) and $11.6 million ($0.37 per share after tax) for the third quarter and first nine months of 2015, compared to net realized investment losses of $390,000 ($0.01 per share after tax) and net realized investment gains of $3.2 million ($0.10 per share after tax) for the same periods in 2014. Included in net realized investment gains reported for the third quarter and first nine months of 2015 are $7.2 million and $3.8 million, respectively, of realized investment gains attributed to increases 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). Included in the net realized investment gains/losses reported for the third quarter and first nine months of 2014 are $917,000 and $2.1 million, respectively, of net realized investment losses attributed to the decline in carrying value of this limited partnership.

At September 30, 2015, consolidated assets totaled $1.6 billion, including $1.4 billion in the investment portfolio, and stockholders’ equity totaled $519.9 million, an increase of 3.4 percent from December 31, 2014. Book value of the Company’s stock increased 1.5 percent to $25.09 per share from $24.72 per share at December 31, 2014. Book value excluding accumulated other comprehensive income increased to $22.16 per share from $20.70 per share at December 31, 2014.

The Company will hold an earnings teleconference call at noon Eastern time on November 6, 2015 to allow securities analysts, stockholders and other interested parties the opportunity to hear management discuss the Company’s results for the quarter and nine months ended September 30, 2015, as well as its expectations for the remainder of 2015. Dial-in information for the call is toll-free 1-877-407-9205 (International: 1-201-689-8054).

Members of the news media, investors and the general public are invited to access a live webcast of the conference call via the Company’s investor relations page at www.emcins.com/ir. The webcast will be archived and available for replay until February 6, 2015. A transcript of the teleconference will also be available on the Company’s website shortly after the completion of the teleconference.

About EMCI:

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 OMX Stock Market under the symbol EMCI. Additional information regarding EMC Insurance Group Inc. may be found at www.emcins.com/ir. EMCI’s parent company is Employers Mutual Casualty Company (EMCC). EMCI and EMCC, together with their subsidiary and affiliated companies, conduct operations under the trade name EMC Insurance Companies.

Cautionary Note Regarding Forward-Looking Statements:

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 into account all information currently available to management. 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.

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;
  • the adequacy of loss and settlement expense reserves;
  • state and federal legislation and regulations;
  • changes in the property and casualty insurance industry, interest rates or the performance of financial markets and the general economy;
  • rating agency actions;
  • “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.

Management intends to identify forward-looking statements when using the words “believe,” “expect,” “anticipate,” “estimate,” “project,” 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-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

¹The Company prepares its public financial statements in conformity with accounting principles generally accepted in the Unites States of America (GAAP). Operating income is a non-GAAP financial measure, calculated by excluding net realized investment gains/losses from net income. The Company’s calculation of operating income may differ from similar measures used by other companies, so investors should exercise caution when comparing the Company’s measure of operating income to the measure of other companies. Management’s projected operating income guidance is also considered a non-GAAP financial measure. 

Management believes operating income 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 GAAP financial measure of net income. Therefore, the Company has provided the following reconciliation of the non-GAAP financial measure of operating income to the GAAP financial measure of net income. Management also uses non-GAAP financial measures for goal setting, determining employee and senior management awards and compensation, and evaluating performance.

The reconciliation of operating income to net income is as follows: 

               
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2015       2014       2015       2014  
($ in thousands)              
Operating income $   6,315     $   2,482     $   32,756     $   11,748  
Net realized investment gains (losses)     4,874         (253 )       7,511         2,090  
Net income  $   11,189     $   2,229     $   40,267     $   13,838  
               

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED              
($ in thousands, except share and per share amounts)                  
    Property and               
    Casualty       Parent       
Quarter Ended September 30, 2015   Insurance   Reinsurance   Company   Consolidated  
Revenues:                  
Premiums earned   $   113,753     $   32,035     $   –     $   145,788    
Investment income, net       8,125         3,176         (2 )       11,299    
Other income       210         309         –         519    
        122,088         35,520         (2 )       157,606    
Losses and expenses:                
Losses and settlement expenses       75,976         26,709         –         102,685    
Dividends to policyholders       3,555         –         –         3,555    
Amortization of deferred policy acquisition costs       18,736         7,403         –         26,139    
Other underwriting expenses       15,587         458         –         16,045    
Interest expense        84         –         –         84    
Other expenses       196         –         479         675    
        114,134         34,570         479         149,183    
Operating income (loss) before income taxes       7,954         950         (481 )       8,423    
Realized investment gains       4,889         2,609         –         7,498    
Income (loss) before income taxes       12,843         3,559         (481 )       15,921    
Income tax expense (benefit):                
Current       2,743         507         (169 )       3,081    
Deferred       1,235         416         –         1,651    
        3,978         923         (169 )       4,732    
Net Income (loss)   $   8,865     $   2,636     $   (312 )   $   11,189    
Average shares outstanding                 20,684,890    
Per Share Data:                
Net income (loss) per share – basic and diluted      $   0.43     $   0.12     $   (0.01 )   $   0.54    
Catastrophe and storm losses (after tax)      $   0.31     $   0.25     $   –     $   0.56    
Large losses* (after tax)   $   0.32     $   –     $   –     $   0.32    
Reported (adverse) favorable development                
experienced on prior years’ reserves (after tax)    $   0.15     $   (0.08 )   $   –     $   0.07    
Dividends per share                $   0.170    
Other Information of Interest:                
Net written premiums      $   134,722     $   31,446     $   –     $   166,168    
Catastrophe and storm losses      $   9,920     $   7,844     $   –     $   17,764    
Large losses*   $   10,304     $   –     $   –     $   10,304    
Reported adverse (favorable) development                  
experienced on prior years’ reserves      $   (4,722 )   $   2,495     $   –     $   (2,227 )  
GAAP Ratios:                
Loss and settlement expense ratio     66.8 %     83.4 %       –       70.4 %  
Acquisition expense ratio     33.3 %     24.5 %       –       31.4 %  
Combined ratio     100.1 %     107.9 %       –       101.8 %  
                   
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.  

 

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED              
($ in thousands, except share and per share amounts)                  
    Property and               
    Casualty       Parent       
Quarter Ended September 30, 2014   Insurance   Reinsurance   Company   Consolidated  
Revenues:                  
Premiums earned   $   107,952     $   30,364     $   –     $   138,316    
Investment income, net       8,230         3,275         (2 )       11,503    
Other income       202         1,028         –         1,230    
        116,384         34,667         (2 )       151,049    
Losses and expenses:                
Losses and settlement expenses       78,556         28,096         –         106,652    
Dividends to policyholders       2,588         –         –         2,588    
Amortization of deferred policy acquisition costs       18,143         6,814         –         24,957    
Other underwriting expenses       13,079         828         –         13,907    
Interest expense        84         –         –         84    
Other expenses       132         –         456         588    
        112,582         35,738         456         148,776    
Operating income (loss) before income taxes       3,802         (1,071 )       (458 )       2,273    
Realized investment losses       (286 )       (104 )       –         (390 )  
Income (loss) before income taxes       3,516         (1,175 )       (458 )       1,883    
Income tax expense (benefit):                
Current       (304 )       (988 )       (160 )       (1,452 )  
Deferred       759         347         –         1,106    
        455         (641 )       (160 )       (346 )  
Net Income (loss)   $   3,061     $   (534 )   $   (298 )   $   2,229    
Average shares outstanding                 20,267,538    
Per Share Data:                
Net income (loss) per share – basic and diluted      $   0.15     $   (0.03 )   $   (0.01 )   $   0.11    
Catastrophe and storm losses (after tax)      $   0.32     $   0.24     $   –     $   0.56    
Large losses* (after tax)   $   0.31     $   –     $   –     $   0.31    
Reported favorable development                
experienced on prior years’ reserves (after tax)    $   0.02     $   0.04     $   –     $   0.06    
Dividends per share                $   0.153    
Other Information of Interest:                
Net written premiums      $   131,005     $   31,824     $   –     $   162,829    
Catastrophe and storm losses      $   10,064     $   7,415     $   –     $   17,479    
Large losses*   $   9,673     $   –     $   –     $   9,673    
Reported favorable development                  
experienced on prior years’ reserves      $   (427 )   $   (1,264 )   $   –     $   (1,691 )  
GAAP Ratios:                
Loss and settlement expense ratio     72.8 %     92.5 %       –       77.1 %  
Acquisition expense ratio     31.3 %     25.2 %       –       30.0 %  
Combined ratio     104.1 %     117.7 %       –       107.1 %  
                   
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.  

 

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED              
($ in thousands, except share and per share amounts)                  
    Property and               
    Casualty       Parent       
Nine Months Ended September 30, 2015   Insurance   Reinsurance   Company   Consolidated  
Revenues:                  
Premiums earned    $   333,212     $   95,912     $   –     $   429,124    
Investment income, net          24,301         9,654         (9 )       33,946    
Other income          582         1,040         –         1,622    
        358,095         106,606         (9 )       464,692    
Losses and expenses:                
Losses and settlement expenses          215,468         65,135         –         280,603    
Dividends to policyholders          6,492         –         –         6,492    
Amortization of deferred policy acquisition costs          56,003         22,820         –         78,823    
Other underwriting expenses          47,784         2,567         –         50,351    
Interest expense          253         –         –         253    
Other expenses        568         –         1,424         1,992    
        326,568         90,522         1,424         418,514    
Operating income (loss) before income taxes          31,527         16,084         (1,433 )       46,178    
Realized investment gains          7,866         3,689         –         11,555    
Income (loss) before income taxes          39,393         19,773         (1,433 )       57,733    
Income tax expense (benefit):                
Current        10,513         5,583         (502 )       15,594    
Deferred        1,312         560         –         1,872    
        11,825         6,143         (502 )       17,466    
Net income (loss)    $   27,568     $   13,630     $   (931 )   $   40,267    
Average shares outstanding                    20,577,493    
Per Share Data:                
Net income (loss) per share – basic and diluted      $   1.34     $   0.66     $   (0.04 )   $   1.96    
Catastrophe and storm losses (after tax)      $   0.91     $   0.38     $   –     $   1.29    
Large losses* (after tax)   $   0.68     $   –     $   –     $   0.68    
Reported favorable development experienced on                
prior years’ reserves (after tax)   $   0.45     $   0.18     $   –     $   0.63    
Dividends per share                $   0.503    
Book value per share                $   25.09    
Effective tax rate                  30.3 %  
Annualized net income as a percent of beg. SH equity                 10.7 %  
Other Information of Interest:                
Net written premiums      $   364,329     $   96,914     $   –     $   461,243    
Catastrophe and storm losses      $   28,651     $   12,104     $   –     $   40,755    
Large losses*   $   21,453     $   –     $   –     $   21,453    
Reported favorable development experienced on                  
prior years’ reserves   $   (14,177 )   $   (5,780 )   $   –     $   (19,957 )  
GAAP Ratios:                
Loss and settlement expense ratio     64.7 %     67.9 %       –       65.4 %  
Acquisition expense ratio     33.1 %     26.5 %       –       31.6 %  
Combined ratio     97.8 %     94.4 %       –       97.0 %  
                   
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.  

 

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED              
($ in thousands, except share and per share amounts)                  
    Property and               
    Casualty       Parent       
Nine Months Ended September 30, 2014   Insurance   Reinsurance   Company   Consolidated  
Revenues:                  
Premiums earned   $   312,716     $   92,632     $   –     $   405,348    
Investment income, net       24,818         9,624         (8 )       34,434    
Other income       584         1,042         –         1,626    
        338,118         103,298         (8 )       441,408    
Losses and expenses:                
Losses and settlement expenses       227,069         74,398         –         301,467    
Dividends to policyholders       6,517         –         –         6,517    
Amortization of deferred policy acquisition costs       53,895         20,795         –         74,690    
Other underwriting expenses       41,103         1,838         –         42,941    
Interest expense        253         –         –         253    
Other expenses       540         –         1,173         1,713    
        329,377         97,031         1,173         427,581    
Operating income (loss) before income taxes       8,741         6,267         (1,181 )       13,827    
Realized investment gains       2,293         922         –         3,215    
Income (loss) before income taxes       11,034         7,189         (1,181 )       17,042    
Income tax expense (benefit):                
Current       1,546         1,716         (414 )       2,848    
Deferred       315         41         –         356    
        1,861         1,757         (414 )       3,204    
Net Income (loss)   $   9,173     $   5,432     $   (767 )   $   13,838    
Average shares outstanding                 20,165,697    
Per Share Data:                
Net income (loss) per share – basic and diluted      $   0.46     $   0.27     $   (0.04 )   $   0.69    
Catastrophe and storm losses (after tax)      $   1.24     $   0.46     $   –     $   1.70    
Large losses* (after tax)   $   0.77     $   –     $   –     $   0.77    
Reported favorable development                
experienced on prior years’ reserves (after tax)    $   0.20     $   0.15     $   –     $   0.35    
Dividends per share                $   0.460    
Book value per share                $   23.93    
Effective tax rate                  18.8 %  
Annualized net income as a percent of beg. SH equity                 3.9 %  
Other Information of Interest:                
Net written premiums      $   345,982     $   91,276     $   –     $   437,258    
Catastrophe and storm losses      $   38,501     $   14,335     $   –     $   52,836    
Large losses*   $   23,782     $   –     $   –     $   23,782    
Reported favorable development                  
experienced on prior years’ reserves      $   (6,106 )   $   (4,816 )   $   –     $   (10,922 )  
GAAP Ratios:                
Loss and settlement expense ratio     72.6 %     80.3 %       –       74.4 %  
Acquisition expense ratio     32.5 %     24.4 %       –       30.6 %  
Combined ratio     105.1 %     104.7 %       –       105.0 %  
                   
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.  

 

CONSOLIDATED BALANCE SHEETS        
  September 30,   December 31,  
    2015       2014    
($ in thousands, except share and per share amounts) (Unaudited)      
ASSETS        
Investments:        
Fixed maturity securities available-for-sale, at fair value        
(amortized cost $1,139,373 and $1,080,006) $   1,177,961     $   1,127,499    
Equity securities available-for-sale, at fair value        
(cost $142,941 and $123,972)     194,305         197,036    
Other long-term investments     15,396         6,227    
Short-term investments     32,798         53,262    
Total investments     1,420,460         1,384,024    
         
Cash     570         383    
Reinsurance receivables due from affiliate     25,399         28,603    
Prepaid reinsurance premiums due from affiliate     7,638         8,865    
Deferred policy acquisition costs (affiliated $44,559 and $38,930)     44,710         39,343    
Prepaid pension and postretirement benefits due from affiliate     18,162         17,360    
Accrued investment income     11,716         10,295    
Amounts receivable under reverse repurchase agreements     16,850         –     
Accounts receivable     1,402         1,767    
Income taxes recoverable     2,657         –    
Goodwill     942         942    
Other assets (affiliated $4,611 and $4,900)     5,019         6,238    
Total assets $   1,555,525     $   1,497,820    
         
LIABILITIES        
Losses and settlement expenses (affiliated $675,247 and $650,652) $   683,930     $   661,309    
Unearned premiums (affiliated $263,096 and $230,460)     263,686         232,093    
Other policyholders’ funds (all affiliated)     8,593         10,153    
Surplus notes payable to affiliate     25,000         25,000    
Amounts due affiliate to settle inter-company transaction balances     7,347         8,559    
Pension benefits payable to affiliate     4,082         4,162    
Income taxes payable     –         3    
Deferred income taxes     19,295         28,654    
Other liabilities (affiliated $23,547 and $23,941)     23,659         25,001    
Total liabilities     1,035,592         994,934    
         
STOCKHOLDERS’ EQUITY         
Common stock, $1 par value, authorized 30,000,000        
shares; issued and outstanding, 20,720,855        
shares in 2015 and 20,344,409 shares in 2014     20,721         20,344    
Additional paid-in capital     107,426         99,891    
Accumulated other comprehensive income     60,804         81,662    
Retained earnings     330,982         300,989    
Total stockholders’ equity     519,933         502,886    
Total liabilities and stockholders’ equity $   1,555,525     $   1,497,820    

 

LOSS AND SETTLEMENT EXPENSE BY LINE OF BUSINESS                
    Three months ended September 30,
      2015       2014  
($ 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   $   27,080     $   24,555         90.7 %   $   25,000     $   21,974         87.9 %
Property       26,526         19,290         72.7 %       25,111         18,191         72.4 %
Workers’ compensation       23,777         12,098         50.9 %       22,209         11,582         52.2 %
Liability       23,449         10,726         45.7 %       22,090         18,450         83.5 %
Other       2,032         348         17.1 %       1,881         220         11.7 %
Total commercial lines       102,864         67,017         65.2 %       96,291         70,417         73.1 %
                         
Personal lines:                        
Automobile       5,717         4,717         82.5 %       6,284         4,287         68.2 %
Homeowners       5,172         4,242         82.0 %       5,377         3,852         71.6 %
Total personal lines       10,889         8,959         82.3 %       11,661         8,139         69.8 %
Total property and casualty                        
insurance   $   113,753     $   75,976         66.8 %   $   107,952     $   78,556         72.8 %
                         
Reinsurance                        
Pro rata reinsurance:                        
Multiline (primarily property)   $   1,190     $   747         62.8 %   $   700     $   957         136.8 %
Property       4,162         3,894         93.6 %       2,622         3,838         146.4 %
Liability       4,787         3,137         65.6 %       3,148         1,289         40.9 %
Marine       2,898         1,889         65.2 %       3,502         3,576         102.1 %
Total pro rata reinsurance       13,037         9,667         74.2 %       9,972         9,660         96.9 %
                         
Excess of loss reinsurance:                        
Property       16,249         13,524         83.2 %       17,248         16,108         93.4 %
Liability       2,749         3,518         128.0 %       3,144         2,328         74.1 %
Total excess of loss reinsurance       18,998         17,042         89.7 %       20,392         18,436         90.0 %
Total reinsurance   $   32,035     $   26,709         83.4 %   $   30,364     $   28,096         92.5 %
                         
Consolidated   $   145,788     $   102,685         70.4 %   $   138,316     $   106,652         77.1 %

 

LOSS AND SETTLEMENT EXPENSE BY LINE OF BUSINESS                
    Nine months ended September 30,
      2015       2014  
($ 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   $   78,698     $   61,843         78.6 %   $   71,657     $   56,864         79.4 %
Property       77,518         53,652         69.2 %       71,756         57,891         80.7 %
Workers’ compensation       69,150         39,591         57.3 %       65,172         38,131         58.5 %
Liability       68,952         34,668         50.3 %       63,600         42,957         67.5 %
Other       6,044         794         13.1 %       5,472         705         12.9 %
Total commercial lines       300,362         190,548         63.4 %       277,657         196,548         70.8 %
                         
Personal lines:                        
Automobile       17,313         12,013         69.4 %       18,999         14,473         76.2 %
Homeowners       15,537         12,907         83.1 %       16,060         16,048         99.9 %
Total personal lines       32,850         24,920         75.9 %       35,059         30,521         87.1 %
Total property and casualty                        
insurance   $   333,212     $   215,468         64.7 %   $   312,716     $   227,069         72.6 %
                         
Reinsurance                        
Pro rata reinsurance:                        
Multiline (primarily property)   $   4,584     $   1,180         25.7 %   $   5,031     $   3,570         71.0 %
Property       11,877         13,151         110.7 %       9,929         10,112         101.8 %
Liability       13,955         8,701         62.4 %       8,661         4,983         57.5 %
Marine       9,738         436         4.5 %       11,721         6,700         57.2 %
Total pro rata reinsurance       40,154         23,468         58.4 %       35,342         25,365         71.8 %
                         
Excess of loss reinsurance:                        
Property       46,425         32,041         69.0 %       48,507         47,240         97.4 %
Liability       9,333         9,626         103.1 %       8,783         1,793         20.4 %
Total excess of loss reinsurance       55,758         41,667         74.7 %       57,290         49,033         85.6 %
Total reinsurance   $   95,912     $   65,135         67.9 %   $   92,632     $   74,398         80.3 %
                         
Consolidated   $   429,124     $   280,603         65.4 %   $   405,348     $   301,467         74.4 %

 

NET WRITTEN PREMIUMS                    
  Three months ended    Three months ended       
  September 30, 2015   September 30, 2014      
      Percent of       Percent of   Change in  
  Written   net written   Written   net written   net written  
($ in thousands) premiums   premiums   premiums   premiums   premiums  
Property and casualty insurance                    
Commercial lines:                    
Automobile $   28,904         17.4 %   $   27,792         17.1 %       4.0 %  
Property     32,891         19.8 %       31,735         19.5 %       3.6 %  
Workers’ compensation     33,385         20.1 %       32,236         19.8 %       3.6 %  
Liability     26,556         16.0 %       25,072         15.4 %       5.9 %  
Other     2,213         1.3 %       2,352         1.4 %       (5.9 )%  
Total commercial lines     123,949         74.6 %       119,187         73.2 %       4.0 %  
                     
Personal lines:                    
Automobile     5,333         3.2 %       5,962         3.7 %       (10.5 )%  
Homeowners     5,440         3.3 %       5,856         3.6 %       (7.1 )%  
Total personal lines     10,773         6.5 %       11,818         7.3 %       (8.8 )%  
Total property and                     
casualty insurance $   134,722         81.1 %   $   131,005         80.5 %       2.8 %  
                     
Reinsurance                    
Pro rata reinsurance:                    
Multiline (primarily property) $   930         0.6 %   $   1,228         0.8 %       (24.3 )%  
Property     4,678         2.8 %       2,172         1.3 %       115.4 %  
Liability     5,925         3.6 %       3,351         2.1 %       76.8 %  
Marine     570         0.3 %       3,980         2.4 %       (85.7 )%  
Total pro rata reinsurance     12,103         7.3 %       10,731         6.6 %       12.8 %  
                     
Excess of loss reinsurance:                    
Property     16,614         10.0 %       17,929         11.0 %       (7.3 )%  
Liability     2,729         1.6 %       3,164         1.9 %       (13.7 )%  
Total excess of loss reinsurance     19,343         11.6 %       21,093         12.9 %       (8.3 )%  
Total reinsurance $   31,446         18.9 %   $   31,824         19.5 %       (1.2 )%  
                     
Consolidated $   166,168       100.0 %   $   162,829       100.0 %       2.1 %  
                     
                     
                     
NET WRITTEN PREMIUMS                    
  Nine months ended    Nine months ended       
  September 30, 2015   September 30, 2014      
      Percent of       Percent of   Change in  
  Written   net written   Written   net written   net written  
($ in thousands) premiums   premiums   premiums   premiums   premiums  
Property and casualty insurance                    
Commercial lines:                    
Automobile $   86,947         18.9 %   $   80,335         18.4 %       8.2 %  
Property     85,853         18.6 %       80,992         18.5 %       6.0 %  
Workers’ compensation     76,912         16.7 %       73,703         16.9 %       4.4 %  
Liability     75,765         16.4 %       70,366         16.1 %       7.7 %  
Other     6,413         1.4 %       5,907         1.3 %       8.6 %  
Total commercial lines     331,890         72.0 %       311,303         71.2 %       6.6 %  
                     
Personal lines:                    
Automobile     16,944         3.7 %       18,583         4.2 %       (8.8 )%  
Homeowners     15,495         3.3 %       16,096         3.7 %       (3.7 )%  
Total personal lines     32,439         7.0 %       34,679         7.9 %       (6.5 )%  
Total property and                     
casualty insurance $   364,329         79.0 %   $   345,982         79.1 %       5.3 %  
                     
Reinsurance                    
Pro rata reinsurance:                    
Multiline (primarily property) $   3,194         0.7 %   $   5,210         1.2 %       (38.7 )%  
Property     11,361         2.4 %       8,364         1.9 %       35.8 %  
Liability     19,271         4.2 %       9,798         2.3 %       96.7 %  
Marine     6,406         1.4 %       9,768         2.2 %       (34.4 )%  
Total pro rata reinsurance     40,232         8.7 %       33,140         7.6 %       21.4 %  
                     
Excess of loss reinsurance:                    
Property     47,356         10.3 %       49,342         11.3 %       (4.0 )%  
Liability     9,326         2.0 %       8,794         2.0 %       6.1 %  
Total excess of loss reinsurance     56,682         12.3 %       58,136         13.3 %       (2.5 )%  
Total reinsurance $   96,914         21.0 %   $   91,276         20.9 %       6.2 %  
                     
Consolidated $   461,243       100.0 %   $   437,258       100.0 %       5.5 %  

 

CONTACT: Contact:
Steve Walsh (Investors)
515-345-2515
Lisa Hamilton (Media)
515-345-7589

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