EMC Insurance Group Inc. Reports 2011 Third Quarter Results

EMC Insurance Group Inc. Reports 2011 Third Quarter Results

Third Quarter Ended September 30, 2011
Operating Loss Per Share – $0.14
Net Loss Per Share – $0.32
Net Realized Investment Losses Per Share – $0.18
Catastrophe Losses Per Share – $1.33
Large Losses Per Share – $0.24
GAAP Combined Ratio – 114.5 percent

Nine-Month Period Ended September 30, 2011
Operating Loss Per Share – $1.21
Net Loss Per Share – $0.88
Net Realized Investment Gains Per Share – $ 0.32
Catastrophe Losses Per Share – $3.86
Large Losses Per Share – $0.65
GAAP Combined Ratio – 120.3 percent

2011 Operating Loss Guidance – ($0.55) to ($0.80) per share

EMC Insurance Group Inc. (Nasdaq:EMCI) today reported an operating loss of $0.14 per share for the third quarter ended September 30, 2011, compared to operating income of $0.49 per share for the third quarter of 2010¹. Operating loss for the nine-month period ended September 30, 2011 was $1.21 per share, compared to operating income of $1.51 for the same period in 2010.

Net loss, including realized investment gains and losses, totaled $4,144,000 ($0.32 per share) for the third quarter of 2011 compared to net income of $7,459,000 ($0.57 per share) for the third quarter of 2010. Net loss for the nine-month period ended September 30, 2011 was $11,404,000 ($0.88 per share) compared to net income of $20,635,000 ($1.58 per share) for the same period in 2010.

Catastrophe losses totaled a record $26,366,000 ($1.33 per share after tax) in the third quarter and an unprecedented $76,836,000 ($3.86 per share after tax) in the first nine months of 2011. Catastrophe losses accounted for 24.5 percentage points of the combined ratio in the third quarter, and 25.2 percentage points in the first nine months of 2011. To put this into perspective, the Company’s most recent 10-year (2001 through 2010) average for catastrophe losses during the first nine months of a year is 11.3 percentage points of the combined ratio.

“While the record catastrophe losses of 2011 have been the focus of most of our discussions this year, we have continued to develop and implement strategies that are designed to improve future operations,” stated Bruce G. Kelley, President and Chief Executive Officer. “Our extensive branch structure provides management with current market information from around the country. This information is used to adjust our product offerings and rate levels, and has helped us achieve premium growth in 2011 through rate level increases in both personal and commercial lines of business, as well as increased policy counts,” continued Kelley.

Premiums earned increased 10.4 percent to $107,416,000 for the third quarter of 2011, from $97,284,000 for the third quarter of 2010. For the nine months ended September 30, 2011, premiums earned increased 6.5 percent to $304,635,000 from $286,060,000 in 2010.

Investment income decreased 7.4 percent to $11,331,000 in the third quarter of 2011 from $12,235,000 in the third quarter of 2010. For the nine months ended September 30, 2011, investment income decreased 6.8 percent to $34,883,000 from $37,414,000 in 2010. The large declines in investment income are attributed to a persistent decline in the average coupon rate on fixed maturity securities during the past several years and an increase in short-term investments, which carry far lower yields.

The Company experienced $8,612,000 ($0.43 per share after tax) of favorable development on prior years’ reserves during the third quarter of 2011, compared to $18,821,000 ($0.94 per share after tax) in the third quarter of 2010. For the nine months ended September 30, 2011, the Company experienced $21,709,000 ($1.09 per share after tax) of favorable development compared to $46,187,000 ($2.30 per share after tax) in 2010. As in prior periods, development on closed claims is the main driver of the favorable development.

Net realized investment losses totaled $2,289,000 ($0.18 per share) for the third quarter of 2011 compared to net realized investment gains of $1,137,000 ($0.09 per share) in 2010. For the nine-month period ended September 30, 2011, net realized investment gains totaled $4,184,000 ($0.32 per share), compared to $929,000 ($0.07 per share) in 2010. During the third quarter of 2011, the Company recognized $4,912,000 ($0.25 per share after tax) of “other-than-temporary” investment impairment losses on 27 equity securities because management determined that it would likely not hold those securities until they recovered to their cost basis. This compares to $366,000 ($0.02 per share after tax) of “other-than-temporary” investment impairment losses in the third quarter of 2010. During the first nine months of 2011, “other-than-temporary” investment impairment losses totaled $5,828,000 ($0.29 per share after tax), compared to $2,295,000 ($0.11 per share after tax) in 2010. The large amount of realized investment gains for the nine months ended September 30, 2011 resulted from first quarter activity in the equity portfolio, when market prices were at elevated levels.

Large losses (which the Company defines as losses greater than $500,000 for the EMC Insurance Companies’ pool, excluding catastrophe losses) decreased to $4,664,000 ($0.24 per share after tax) in the third quarter of 2011 from $6,608,000 ($0.33 per share after tax) in the third quarter of 2010. For the nine months ended September 30, 2011, large losses decreased to $12,844,000 from $13,579,000 in 2010.

The Company’s combined ratio using U.S. generally accepted accounting principles (GAAP) was 114.5 percent in the third quarter of 2011 compared to 103.3 percent in the third quarter of 2010. For the nine months ended September 30, 2011, the GAAP combined ratio was 120.3 percent compared to 103.3 percent in 2010.

At September 30, 2011, consolidated assets totaled $1.3 billion, including $1.1 billion in the investment portfolio, and stockholders’ equity totaled $356.4 million, a decrease of 3.3 percent from December 31, 2010. Net book value of the Company’s stock decreased to $27.69 per share from $28.52 per share at December 31, 2010. Book value excluding accumulated other comprehensive income decreased to $25.21 per share from $26.63 per share at December 31, 2010.

On October 21, 2011 management announced that, based on actual results for the first nine months of the year and projections for the remainder of the year, it was projecting a 2011 operating loss in the range of ($0.55) to ($0.80) per share. This guidance is based on a projected GAAP combined ratio of 115.2 percent for the year. Management has reaffirmed that guidance.

During the third quarter of 2011, the Company completed its $25 million stock repurchase program with the acquisition of 81,500 shares of its common stock at an average cost of $18.81 per share. Since the inception of the repurchase program in March, 2008, the Company has repurchased and retired 1,078,733 shares of common stock at an average cost of $23.17 per share. As previously disclosed, on November 3, 2011 the Company’s board of directors authorized a new $15 million stock repurchase program. This program became effective immediately and does not have an expiration date. The timing and terms of the purchases are determined by management based on market conditions and are conducted in accordance with the applicable rules of the Securities and Exchange Commission. Common stock repurchased under this new program will be retired by the Company.

The Company’s parent organization, Employers Mutual Casualty Company, currently has a stock purchase program in place, with about $4.5 million of its $15 million authorization remaining. This program has been dormant and will remain so while the Company’s new repurchase program is active.

The Company will hold an earnings teleconference call at 11:00 a.m. eastern standard time on November 8, 2011 to allow securities analysts, stockholders and other interested parties the opportunity to hear management discuss the Company’s results for the quarter ended September 30, 2011, as well as its expectations for the remainder of 2011. Dial-in information for the call is toll-free 1-877-407-9205 (International: 1-201-689-8054). The event will be archived and available for digital replay through February 18, 2012. The replay access information is toll-free 1-877-660-6853 (International: 1-201-612-7415); passcodes required for playback: account number 286, conference ID number 381061.

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 8, 2012. 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. 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. Additional information regarding EMC Insurance Companies may be found at www.emcins.com.

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.

¹The Company uses a non-GAAP financial measure called “operating income (loss)” 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 GAAP financial measure of net income (loss). Therefore, the Company has provided the following reconciliation of the non-GAAP financial measure of operating income (loss) to the GAAP financial measure of net income (loss). Management also uses non-GAAP financial measures for goal setting, determining employee and senior management awards and compensation, and evaluating performance.

Reconciliation of operating income (loss) to net income (loss):

		Three Months Ended September 30,							Nine Months Ended September 30,
		2011				2010			2011				2010
Operating income (loss)		$	(1,854,991	)		$	6,321,120		$	(15,587,845	)		$	19,706,096
Net realized investment gains (losses)			(2,289,092	)			1,137,455			4,183,893				929,044
Net income (loss)		$	(4,144,083	)		$	7,458,575		$	(11,403,952	)		$	20,635,140

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
		Property and
		Casualty								Parent
Quarter Ended September 30, 2011		Insurance				Reinsurance				Company				Consolidated
Revenues:
Premiums earned		$	82,295,757			$	25,120,500			$	-			$	107,416,257
Investment income, net			8,222,036				3,109,923				(708	)			11,331,251
Other income			198,157				-				-				198,157
			90,715,950				28,230,423				(708	)			118,945,665
Losses and expenses:
Losses and settlement expenses			70,529,911				20,830,766				-				91,360,677
Dividends to policyholders			1,713,336				-				-				1,713,336
Amortization of deferred policy acquisition costs			18,339,210				4,944,972				-				23,284,182
Other underwriting expenses			6,801,615				(131,080	)			-				6,670,535
Interest expense			225,000				-				-				225,000
Other expenses			209,359				(343,920	)			310,611				176,050
			97,818,431				25,300,738				310,611				123,429,780
Operating income (loss) before income taxes			(7,102,481	)			2,929,685				(311,319	)			(4,484,115	)
Realized investment losses			(2,723,889	)			(797,792	)			-				(3,521,681	)
Income (loss) before income taxes			(9,826,370	)			2,131,893				(311,319	)			(8,005,796	)
Income tax expense (benefit):
Current			(3,690,016	)			690,454				(108,962	)			(3,108,524	)
Deferred			(527,989	)			(225,200	)			-				(753,189	)
			(4,218,005	)			465,254				(108,962	)			(3,861,713	)
Net income (loss)		$	(5,608,365	)		$	1,666,639			$	(202,357	)		$	(4,144,083	)
Average shares outstanding															12,886,163
Per Share Data:
Net income (loss) per share - basic and diluted		$	(0.44	)		$	0.14			$	(0.02	)		$	(0.32	)
Decrease in provision for insured
events of prior years (after tax)		$	0.20			$	0.23			$	-			$	0.43
Catastrophe and storm losses (after tax)		$	(0.98	)		$	(0.35	)		$	-			$	(1.33	)
Dividends per share														$	0.19
Other Information of Interest:
Net written premiums		$	102,299,680			$	25,824,071			$	-			$	128,123,751
Decrease in provision for
insured events of prior years		$	(4,096,507	)		$	(4,515,320	)		$	-			$	(8,611,827	)
Catastrophe and storm losses		$	19,342,389			$	7,023,909			$	-			$	26,366,298
GAAP Combined Ratio:
Loss ratio			85.7	%			82.9	%			-				85.1	%
Expense ratio			32.6	%			19.2	%			-				29.4	%
			118.3	%			102.1	%			-				114.5	%
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
		Property and
		Casualty								Parent
Quarter Ended September 30, 2010		Insurance				Reinsurance				Company				Consolidated
Revenues:
Premiums earned		$	76,974,312			$	20,309,925			$	-			$	97,284,237
Investment income, net			9,111,308				3,123,829				(130	)			12,235,007
Other income			229,520				-				-				229,520
			86,315,140				23,433,754				(130	)			109,748,764
Losses and expenses:
Losses and settlement expenses			56,436,921				11,135,598				-				67,572,519
Dividends to policyholders			1,905,231				-				-				1,905,231
Amortization of deferred policy acquisition costs			17,405,551				4,185,030				-				21,590,581
Other underwriting expenses			8,038,531				1,384,425				-				9,422,956
Interest expense			225,000				-				-				225,000
Other expenses			206,750				416,176				343,030				965,956
			84,217,984				17,121,229				343,030				101,682,243
Operating income (loss) before income taxes			2,097,156				6,312,525				(343,160	)			8,066,521
Realized investment gains			1,340,740				409,190				-				1,749,930
Income (loss) before income taxes			3,437,896				6,721,715				(343,160	)			9,816,451
Income tax expense (benefit):
Current			1,031				2,174,359				(120,105	)			2,055,285
Deferred			437,452				(134,861	)			-				302,591
			438,483				2,039,498				(120,105	)			2,357,876
Net income (loss)		$	2,999,413			$	4,682,217			$	(223,055	)		$	7,458,575
Average shares outstanding															12,979,372
Per Share Data:
Net income (loss) per share - basic and diluted		$	0.23			$	0.36			$	(0.02	)		$	0.57
Decrease in provision for
insured events of prior years (after tax)		$	0.57			$	0.37			$	-			$	0.94
Catastrophe and storm losses (after tax)		$	(0.78	)		$	(0.18	)		$	-			$	(0.96	)
Dividends per share														$	0.18
Other Information of Interest:
Net written premiums		$	93,017,486			$	21,340,396			$	-			$	114,357,882
Decrease in provision for
insured events of prior years		$	(11,441,187	)		$	(7,379,457	)		$	-			$	(18,820,644	)
Catastrophe and storm losses		$	15,528,494			$	3,558,586			$	-			$	19,087,080
GAAP Combined Ratio:
Loss ratio			73.3	%			54.8	%			-				69.5	%
Expense ratio			35.5	%			27.5	%			-				33.8	%
			108.8	%			82.3	%			-				103.3	%
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
		Property and
		Casualty								Parent
Nine Months Ended September 30, 2011		Insurance				Reinsurance				Company				Consolidated
Revenues:
Premiums earned		$	237,988,257			$	66,646,343			$	-			$	304,634,600
Investment income, net			25,505,564				9,377,492				(102	)			34,882,954
Other income			638,470				-				-				638,470
			264,132,291				76,023,835				(102	)			340,156,024
Losses and expenses:
Losses and settlement expenses			194,317,119				72,183,925				-				266,501,044
Dividends to policyholders			4,081,374				-				-				4,081,374
Amortization of deferred policy acquisition costs			57,202,138				13,737,988				-				70,940,126
Other underwriting expenses			24,625,002				301,969				-				24,926,971
Interest expense			675,000				-				-				675,000
Other expenses			535,800				597,928				997,747				2,131,475
			281,436,433				86,821,810				997,747				369,255,990
Operating loss before income taxes			(17,304,142	)			(10,797,975	)			(997,849	)			(29,099,966	)
Realized investment gains			4,933,135				1,503,623				-				6,436,758
Loss before income taxes			(12,371,007	)			(9,294,352	)			(997,849	)			(22,663,208	)
Income tax benefit:
Current			(6,562,434	)			(3,135,188	)			(349,247	)			(10,046,869	)
Deferred			(157,060	)			(1,055,327	)			-				(1,212,387	)
			(6,719,494	)			(4,190,515	)			(349,247	)			(11,259,256	)
Net loss		$	(5,651,513	)		$	(5,103,837	)		$	(648,602	)		$	(11,403,952	)
Average shares outstanding															12,926,670
Per Share Data:
Net loss per share - basic and diluted		$	(0.44	)		$	(0.39	)		$	(0.05	)		$	(0.88	)
Decrease in provision for insured
events of prior years (after tax)		$	0.88			$	0.21			$	-			$	1.09
Catastrophe and storm losses (after tax)		$	(2.63	)		$	(1.23	)		$	-			$	(3.86	)
Dividends per share														$	0.57
Book value per share														$	27.69
Effective tax rate															49.7	%
Annualized net loss as a percent of beg. SH equity															(4.1	)%
Other Information of Interest:
Net written premiums		$	263,833,906			$	68,280,632			$	-			$	332,114,538
Decrease in provision for
insured events of prior years		$	(17,503,593	)		$	(4,205,252	)		$	-			$	(21,708,845	)
Catastrophe and storm losses		$	52,300,068			$	24,535,503			$	-			$	76,835,571
GAAP Combined Ratio:
Loss ratio			81.6	%			108.3	%			-				87.5	%
Expense ratio			36.1	%			21.1	%			-				32.8	%
			117.7	%			129.4	%			-				120.3	%
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
		Property and
		Casualty								Parent
Nine Months Ended September 30, 2010		Insurance				Reinsurance				Company				Consolidated
Revenues:
Premiums earned		$	227,598,574			$	58,461,840			$	-			$	286,060,414
Investment income, net			27,997,409				9,422,006				(5,397	)			37,414,018
Other income			656,567				-				-				656,567
			256,252,550				67,883,846				(5,397	)			324,130,999
Losses and expenses:
Losses and settlement expenses			157,248,235				37,518,976				-				194,767,211
Dividends to policyholders			5,778,317				-				-				5,778,317
Amortization of deferred policy acquisition costs			53,680,134				12,416,847				-				66,096,981
Other underwriting expenses			26,188,986				2,733,799				-				28,922,785
Interest expense			675,000				-				-				675,000
Other expenses			633,558				(237,116	)			1,068,424				1,464,866
			244,204,230				52,432,506				1,068,424				297,705,160
Operating income (loss) before income taxes			12,048,320				15,451,340				(1,073,821	)			26,425,839
Realized investment gains			1,134,882				294,416				-				1,429,298
Income (loss) before income taxes			13,183,202				15,745,756				(1,073,821	)			27,855,137
Income tax expense (benefit):
Current			2,124,545				4,842,980				(375,837	)			6,591,688
Deferred			934,985				(306,676	)			-				628,309
			3,059,530				4,536,304				(375,837	)			7,219,997
Net income (loss)		$	10,123,672			$	11,209,452			$	(697,984	)		$	20,635,140
Average shares outstanding															13,077,450
Per Share Data:
Net income (loss) per share - basic and diluted		$	0.77			$	0.86			$	(0.05	)		$	1.58
Decrease in provision for insured
events of prior years (after tax)		$	1.55			$	0.75			$	-			$	2.30
Catastrophe and storm losses (after tax)		$	(1.58	)		$	(0.36	)		$	-			$	(1.94	)
Dividends per share														$	0.54
Book value per share														$	29.28
Effective tax rate															25.9	%
Annualized net income as a percent of beg. SH equity															8.0	%
Other Information of Interest:
Net written premiums		$	247,592,789			$	59,140,644			$	-			$	306,733,433
Decrease in provision for
insured events of prior years		$	(31,182,899	)		$	(15,003,956	)		$	-			$	(46,186,855	)
Catastrophe and storm losses		$	31,753,790			$	7,338,748			$	-			$	39,092,538
GAAP Combined Ratio:
Loss ratio			69.1	%			64.2	%			-				68.1	%
Expense ratio			37.6	%			25.9	%			-				35.2	%
			106.7	%			90.1	%			-				103.3	%

CONSOLIDATED BALANCE SHEETS - UNAUDITED
		September 30,				December 31,
		2011				2010
ASSETS
Investments:
Fixed maturities:
Securities held-to-maturity, at amortized cost
(fair value $364,994 and $389,679)		$	317,279			$	340,803
Securities available-for-sale, at fair value
(amortized cost $894,942,793 and $909,582,782)			952,756,369				941,537,026
Equity securities available-for-sale, at fair value
(cost $89,248,731 and $75,721,039)			99,327,795				101,138,982
Other long-term investments, at cost			18,352				29,827
Short-term investments, at cost			66,257,086				36,616,111
Total investments			1,118,676,881				1,079,662,749
Cash			365,574				491,994
Reinsurance receivables due from affiliate			42,556,872				30,256,586
Prepaid reinsurance premiums due from affiliate			10,400,141				9,530,426
Deferred policy acquisition costs (affiliated $44,143,760
and $37,584,448)			44,152,508				37,584,448
Prepaid pension benefits due from affiliate			4,001,151				5,125,701
Accrued investment income			10,802,976				10,925,854
Accounts receivable			1,352,056				1,716,150
Income taxes recoverable			10,618,339				2,350,864
Deferred income taxes			3,930,487				6,690,218
Goodwill			941,586				941,586
Other assets (affiliated $4,353,943 and $2,433,445)			4,530,550				2,517,922
Total assets		$	1,252,329,121			$	1,187,794,498
LIABILITIES
Losses and settlement expenses (affiliated $596,866,878
and $553,125,183)		$	601,324,726			$	556,140,956
Unearned premiums (affiliated $196,010,325 and $167,896,119)			196,053,488				167,896,119
Other policyholders' funds due to affiliate			5,859,924				8,315,751
Surplus notes payable to affiliate			25,000,000				25,000,000
Amounts due affiliate to settle inter-company transaction balances			23,350,909				18,380,813
Pension and postretirement benefits payable to affiliate			21,652,677				20,418,716
Other liabilities (affiliated $14,993,243 and $22,861,092)			22,658,051				23,001,141
Total liabilities			895,899,775				819,153,496
STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized 20,000,000
shares; issued and outstanding, 12,870,541
shares in 2011 and 12,927,678 shares in 2010			12,870,541				12,927,678
Additional paid-in capital			88,177,145				88,937,294
Accumulated other comprehensive income (loss):
Net unrealized losses on fixed maturity securities
with "other-than-temporary" impairments			-				(69,852	)
Other net unrealized gains			44,130,217				37,361,774
Unrecognized pension and postretirement benefits
(all affiliated)			(12,257,939	)			(12,796,435	)
Total accumulated other comprehensive income			31,872,278				24,495,487
Retained earnings			223,509,382				242,280,543
Total stockholders' equity			356,429,346				368,641,002
Total liabilities and stockholders' equity		$	1,252,329,121			$	1,187,794,498

INVESTMENTS

The Company had total cash and invested assets with a carrying value of $1.1 billion as of September 30, 2011 and December 31, 2010. The following table summarizes the Company's cash and invested assets of the dates indicated:

		September 30, 2011
								Percent of
		Amortized			Fair			Total			Carrying
($ in thousands)		Cost			Value			Fair Value			Value
Fixed maturity securities held-to-maturity		$	317		$	365		-			$	317
Fixed maturity securities available-for-sale			894,943			952,756		85.2	%			952,756
Equity securities available-for-sale			89,249			99,328		8.9	%			99,328
Cash			366			366		-				366
Short-term investments			66,257			66,257		5.9	%			66,257
Other long-term investments			18			18		-				18
		$	1,051,150		$	1,119,090		100.0	%		$	1,119,042
		December 31, 2010
								Percent of
		Amortized			Fair			Total			Carrying
($ in thousands)		Cost			Value			Fair Value			Value
Fixed maturity securities held-to-maturity		$	341		$	390		-			$	341
Fixed maturity securities available-for-sale			909,583			941,537		87.2	%			941,537
Equity securities available-for-sale			75,721			101,139		9.4	%			101,139
Cash			492			492		-				492
Short-term investments			36,616			36,616		3.4	%			36,616
Other long-term investments			30			30		-				30
		$	1,022,783		$	1,080,204		100.0	%		$	1,080,155

NET WRITTEN PREMIUMS
		Three Months Ended						Nine Months Ended
		September 30, 2011						September 30, 2011
					Percent of						Percent of
					Increase/						Increase/
		Percent of			(Decrease) in			Percent of			(Decrease) in
		Net Written			Net Written			Net Written			Net Written
		Premiums			Premiums			Premiums			Premiums
Property and Casualty Insurance
Commercial Lines:
Automobile		15.3	%		8.7	%		16.5	%		4.5	%
Liability		13.9	%		9.2	%		14.9	%		6.7	%
Property		17.6	%		9.8	%		17.3	%		7.2	%
Workers' Compensation		21.0	%		15.0	%		17.5	%		9.5	%
Other		1.7	%		0.7	%		1.8	%		(6.2)	%
Total Commercial Lines		69.5	%		10.7	%		68.0	%		6.6	%
Personal Lines:
Automobile		5.4	%		0.1	%		6.5	%		(3.0)	%
Property		4.8	%		11.9	%		5.1	%		21.5	%
Liability		0.1	%		9.2	%		0.1	%		5.6	%
Total Personal Lines		10.3	%		5.4	%		11.7	%		6.4	%
Total Property and Casualty Insurance		79.8	%		10.0	%		79.7	%		6.6	%
Reinsurance (1)		20.2	%		21.0	%		20.3	%		13.9	%
Total		100.0	%		12.0	%		100.0	%		8.0	%
(1) Excludes $920,597 positive portfolio adjustment related to the January 1, 2011 increased participation in the MRB pool.

EMC Insurance Group Inc.
Investors:
Anita Novak, 515-345-2515
or
Media:
Lisa Hamilton, 515-345-7589