EMC Notes Q3 Estimated Hurricane Losses

September 27, 2004

Iowa-based EMC Insurance Group Inc. has reported that losses associated with three of the four hurricanes that hit the southern United States during the third quarter of 2004 are estimated to total approximately $6.9 million.

The company’s reinsurance segment anticipates that losses associated with Hurricanes Charley, Frances and Ivan will be capped at $1.5 million each under the terms of the quota share agreement with Employers Mutual Casualty Company. Hurricane losses in the property and casualty segment, the majority of which are associated with damage caused by Hurricane Ivan in the Gulf States, are expected to be approximately $2.4 million. On an after-tax basis, these hurricane losses will reduce third quarter earnings by approximately $4.5 million or $0.39 per share.

Hurricane Jeanne hit the State of Florida on Sept. 25, 2004. The eye of the hurricane made landfall at the same location as Hurricane Frances, which generated an estimated $1.5 million of losses for the reinsurance segment. The company is not able to estimate losses associated with Hurricane Jeanne at this time.

During the third quarter of 2004, the company’s actuaries completed their regularly scheduled evaluation of the company’s overall loss reserves, including Incurred But Not Reported reserves, and settlement expense reserves.

Based on the results of these evaluations, the company will strengthen prior years’ reserves by approximately $588,000 during the third quarter of 2004. On an after-tax basis, this increase in reserves will reduce third quarter earnings by approximately $382,000 or $0.03 per share.

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