Iowa-based EMC Insurance Group Inc. reported operating income of $0.67 per share for the first quarter ended March 31, 2003 compared to operating income of $0.31 per share for the first quarter of 2002. Net income, including realized investment losses/gains, totaled $6,446,000 ($0.57 per share) for the first quarter of 2003 compared to $3,690,000 ($0.33 per share) for the first quarter of 2002.
Premiums earned increased 17.3 percent to $80,382,000 for the three months ended March 31, 2003 from $68,509,000 for the same period in 2002. The increase is primarily attributed to rate increases that were implemented during the last two years in the property and casualty insurance business and growth and improved pricing in the assumed reinsurance business. The company continued to implement rate increases in the property and casualty insurance business during the first three months of 2003 and additional rate increases are anticipated for the remainder of 2003. The rate increases will be targeted to specific territories and lines of business and generally will be smaller than the rate increases implemented during the past several months.
Catastrophe and storm losses increased slightly to $1,087,000 ($0.06 per share after tax) in the first quarter of 2003 compared to $883,000 ($0.05 per share after tax) for the first quarter of 2002.
“The first quarter of 2003 was our most profitable first quarter ever,” president and CEO Bruce Kelley said. “We are thrilled that improved pricing, prudent risk selection and careful claim management combined to produce these excellent results.”
Net realized investment losses totaled $1,750,000 ($0.10 per share after tax) for the first quarter of 2003. Included in this amount is $1,567,000 of investment impairment losses recognized on the company’s equity portfolio and $4,342,000 of losses stemming from the sale of American Airlines and United Airlines bonds whose carrying values were no longer supported by the collateral backing these bonds.
In addition, the company’s equity managers recognized $2,689,000 of losses on the sale of equity securities as they rebalanced the company’s equity portfolio to enhance future returns. The losses were largely offset by $6,854,000 of gains recognized on the sale of certain bond investments.
The company’s GAAP combined ratio was 94.8 percent in the first quarter of 2003 compared to 103.8 percent in the first quarter of 2002. Net book value of the company’s stock as of March 31, 2003 was $14.31 per share, an increase from $13.84 per share at Dec. 31, 2002.
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