Third Quarter Ended September 30, 2016Net
Income Per Share – $0.20Operating Income Per Share1 – $0.23Net
Realized Investment Losses Per Share – $0.03Catastrophe and Storm
Losses Per Share – $0.53GAAP Combined Ratio – 102.9 percent
EMC Insurance Group Inc. (NASDAQ:EMCI) (the “Company”), today
reported net income of $4.1 million ($0.20 per share) for the third
quarter ended September 30, 2016, compared to net income of $11.2
million ($0.54 per share) for the third quarter of 2015. For the
nine months ended September 30, 2016, the Company reported net
income of $24.9 million ($1.19 per share), compared to $40.3
million ($1.96 per share) for the same period in 2015.
Operating income1, which excludes realized investment gains and
losses from net income, totaled $4.9 million ($0.23 per share) for
the third quarter of 2016, compared to $6.3 million ($0.31 per
share) for the third quarter of 2015. For the nine months ended
September 30, 2016, the Company reported operating income of $25.3
million ($1.21 per share), compared to $32.8 million ($1.59 per
share) for the same period in 2015.
The Company’s GAAP combined ratio was 102.9 percent in the third
quarter of 2016, compared to 101.8 percent in the third quarter of
2015. For the first nine months of 2016, the Company’s GAAP
combined ratio was 99.8 percent, compared to 97.0 percent in
2015.
“Commercial auto and personal lines continue to depress
results,” stated President and Chief Executive Officer Bruce G.
Kelley. “We expect to see gradual improvement in the performance of
these lines during 2017 from our comprehensive Accelerate
Commercial Auto Profitability project and our nearly complete
personal lines initiative.
“The new intercompany reinsurance program in place for the
property and casualty insurance segment is working as planned.
Recoveries under the treaty covering the first half of the year
reduced the volatility of our quarterly results caused by
catastrophe and storm losses. While no recoveries have been made
under the treaty covering the second half of the year, we are near
its retention amount and therefore are expecting a minimal amount
of catastrophe and storm losses in the fourth quarter,” concluded
Kelley.
Premiums earned increased 4.4 percent and 2.9 percent for the
third quarter and first nine months of 2016. In the property and
casualty insurance segment, premiums earned increased 2.3 percent
and 1.6 percent for the third quarter and first nine months of
2016. The new semi-annual aggregate catastrophe excess of loss
intercompany reinsurance program between the Company’s three
property and casualty insurance subsidiaries and Employers Mutual
Casualty Company (Employers Mutual), the Company’s parent
organization, reduced premiums earned by $765,000 and $7.1 million
for the third quarter and first nine months of 2016. Excluding this
cost, premiums earned increased 3.0 percent and 3.7 percent. The
majority of these increases are attributed to growth in insured
exposures, an increase in new business, and small rate level
increases on renewal business.
In the reinsurance segment, premiums earned increased 11.8
percent and 7.2 percent for the third quarter and first nine months
of 2016. These increases reflect reductions in the total cost of
the revised excess of loss reinsurance program with Employers
Mutual totaling $246,000 and $2.4 million for the third quarter and
first nine months of 2016. In 2016, the total cost of the
reinsurance program includes the premiums paid to Employers Mutual,
as well as the cost of Industry Loss Warranties (ILWs) that have
been purchased from external parties to provide increased
protection in peak exposure territories. During 2015, the premium
paid to Employers Mutual (8 percent of total assumed reinsurance
premiums written) included the cost of ILWs purchased by Employers
Mutual for its benefit. Excluding the reduction in the cost of the
revised reinsurance program, premiums earned increased
approximately 11.0 percent and 4.7 percent for the third quarter
and first nine months of 2016. The increase for the third quarter
was driven by the addition of some new accounts and growth in the
pro rata line of business, partially offset by a decline in the
marine business attributed to the offshore energy and liability
proportional account.
Catastrophe and storm losses totaled $17.1 million ($0.53 per
share after tax) in the third quarter of 2016, compared to $17.8
million ($0.56 per share after tax) in the third quarter of 2015.
Catastrophe and storm losses increased $4.9 million in the property
and casualty insurance segment, but declined $5.6 million in the
reinsurance segment. The property and casualty insurance segment
recovered an additional $3.5 million of catastrophe and storm
losses from Employers Mutual during the third quarter under the
January 1 through June 30 excess of loss reinsurance treaty,
bringing the total recovery for first nine months of 2016 to $5.1
million. No recoveries were made under the July 1 through December
31 treaty; however, only $213,000 of retention remains under that
treaty, meaning catastrophe and storm losses will be capped at
$213,000 in the fourth quarter, unless the $12.0 million limit of
protection is exceeded. No recoveries have been made under the
reinsurance segment’s intercompany reinsurance program during the
first nine months of 2016. Third quarter 2016 catastrophe and storm
losses accounted for 11.1 percentage points of the combined ratio,
which was lower than expected, and well below the Company’s most
recent 10-year average of 14.3 percentage points for this period.
Catastrophe and storm losses accounted for 12.2 percentage points
of the combined ratio in the third quarter of 2015.
For the first nine months of 2016, catastrophe and storm losses
totaled $45.5 million ($1.41 per share after tax), compared to
$40.8 million ($1.29 per share after tax) in 2015. On a segment
basis, catastrophe and storm losses amounted to $14.8 million
($0.46 per share after tax) and $34.8 million ($1.08 per share
after tax) in the property and casualty insurance segment, and $2.3
million ($0.07 per share after tax) and $10.7 million ($0.33 per
share after tax) in the reinsurance segment, for the three and nine
months ended September 30, 2016, respectively.
During the third quarter of 2016, management implemented a new
reserving methodology for the determination of direct bulk reserves
in the property and casualty insurance segment. The new
methodology, which is referred to as the accident year ultimate
estimate approach, better conforms to industry practices and will
provide increased transparency of the drivers of the property and
casualty insurance segment's performance. Although the reserves
carried at September 30, 2016 were calculated under the new
reserving methodology, the explicit drivers of development on prior
years' reserves for the three and nine months ended September 30,
2016 cannot be identified because the reserves carried at December
31, 2015 were calculated under the old reserving methodology, and
the implicit accident year ultimate assumptions underlying that
methodology are not known. The explicit drivers of development on
prior years' reserves will be identifiable beginning in the first
quarter of 2017.
The implementation of the new reserving methodology did not have
a material impact on total carried reserves for the property and
casualty insurance segment at September 30, 2016; however,
approximately $5.6 million of incurred but not reported (IBNR) loss
reserves and settlement expense reserves were reallocated from
prior accident years to the current accident year in multiple lines
of business. This reduction in prior accident years' reserves is
reported as favorable development; however, this development is
"mechanical" in nature, and did not have any impact on earnings
because the total amount of carried reserves did not change as a
result of this reallocation.
During the third quarter of 2015, approximately $2.4 million of
reserves on a two-year contract were reallocated from the current
accident year to the prior accident year in the reinsurance
segment. The increase in prior accident year reserves is reported
as adverse development; however, this development is also
“mechanical” in nature and did not have any impact on earnings.
The Company reported $13.2 million ($0.41 per share after tax)
of favorable development on prior years’ reserves during the third
quarter of 2016, compared to $2.2 million ($0.07 per share after
tax) in the third quarter of 2015. For the first nine months of
2016, favorable development totaled $29.1 million ($0.90 per share
after tax), compared to $20.0 million ($0.63 per share after tax)
in 2015. Excluding the “mechanical” development amounts described
above, the implied amounts of favorable development that had an
impact on earnings would be approximately $7.6 million and $23.5
million for the third quarter and first nine months of 2016,
compared to $4.6 million and $22.3 million for the same periods in
2015.
Under the previous reserving methodology employed through the
second quarter of 2016, development amounts could 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. With the conversion to the accident year
ultimate estimate methodology as of the end of third quarter 2016,
calendar year development on prior accident years is determined
solely by changes in the prior accident years’ ultimate loss and
settlement expense ratios. In transitioning to the new
methodology, changes in the assumptions underlying the ultimate
ratios previously established for accident years 2015 and prior are
difficult to quantify as the implied ultimate ratios under the
previous methodology were based on implicit, rather than explicit,
actuarial assumptions. Therefore, comparison of 2016 third
quarter and year-to-date development amounts to the 2015
development amounts provides little meaningful information, as the
prior accident year reserve allocation method lacked explicit
frequency and severity assumptions.
Large losses are defined as reported current accident year
losses greater than $500,000 for the EMC Insurance Companies' pool,
excluding catastrophe and storm losses. Under the property and
casualty insurance segment's prior reserving methodology, large
losses had a direct impact on earnings. Under the new reserving
methodology, large losses are taken into consideration when
establishing the current accident quarter/year ultimate estimates
of losses, but there is no longer a direct relationship between
large losses and earnings. As a result, it is no longer meaningful
to report large losses separately. The amount of large losses
previously reported for the first six months of 2016 has not been
carried forward and disclosed for the nine months ended September
30, 2016, because it would not be comparable to the amount reported
for the first nine months of 2015.
Net investment income increased 1.5 percent and 5.7 percent to
$11.5 million and $35.9 million for the third quarter and first
nine months of 2016, from $11.3 million and $33.9 million for the
same periods in 2015. These increases are primarily attributed to
higher amounts of dividend income, and an increase in interest
income resulting from a higher average invested balance in fixed
maturity securities.
Net realized investment losses totaled $1.2 million ($0.03 per
share after tax) and $643,000 ($0.02 per share after tax) for the
third quarter and first nine months of 2016, compared to net
realized investment gains of $7.5 million ($0.23 per share after
tax) and $11.6 million ($0.37 per share after tax) for the same
periods in 2015. Included in net realized investment losses
reported for the third quarter and first nine months of 2016 are
$1.9 million and $5.3 million, respectively, of net realized
investment losses attributed to declines in the carrying value of a
limited partnership that helps to protect the Company from a sudden
and significant decline in the value of its equity portfolio.
Included in the net realized investment gains reported for the
third quarter and first nine months of 2015 are net realized
investment gains of $7.2 million and $3.8 million, respectively,
attributed to an increase in the carrying value of this limited
partnership that resulted from the sharp decline in the equity
markets that occurred in August of 2015.
At September 30, 2016, consolidated assets totaled $1.6 billion,
including $1.5 billion in the investment portfolio, and
stockholders’ equity totaled $562.4 million, an increase of 7.1
percent from December 31, 2015. Book value of the Company’s stock
increased 5.6 percent to $26.67 per share from $25.26 per share at
December 31, 2015, but declined 0.5 percent from June 30, 2016,
which reflects a decline in unrealized gains on the investment
portfolio. Book value excluding accumulated other comprehensive
income increased 2.9 percent to $23.09 per share from $22.45 per
share at December 31, 2015, and was relatively flat compared to
June 30, 2016.
Based on results for the first nine months of 2016 and
projections for the remainder of the year, management is
reaffirming its 2016 operating income1 guidance range of $1.55 to
$1.75 per share. The guidance is based on a projected GAAP combined
ratio of 99.6 percent for the year and investment income growth in
the low- to mid-single digits. The load for catastrophe and storm
losses has been reduced to 8.7 points from the previous expectation
of 10.2 points; however, the 1.5 point decline in the loss ratio
attributable to this reduction was offset by an increase in the
core loss ratio.
The Company will hold an earnings teleconference call at noon
Eastern time on Friday, November 4, 2016 to allow securities
analysts, stockholders and other interested parties the opportunity
to hear management discuss the Company’s results for the third
quarter and nine months ended September 30, 2016, as well as its
expectations for the remainder of 2016. Dial-in information for the
call is toll-free 1-866-652-5200 (International:
1-412-317-6060).
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 for approximately 90 days
following the earnings call. A transcript of the teleconference
will 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 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. EMCI and Employers Mutual, 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.
Definitions of Non-GAAP Information and Reconciliation
to Comparable GAAP Measures:The Company prepares its
public financial statements in conformity with accounting
principles generally accepted in the Unites States of America
(GAAP). Management uses certain non-GAAP financial measures for
goal setting, determining employee and senior management awards and
compensation, and evaluating performance.
1Operating income: Operating income is calculated by excluding
net realized investment gains/losses (defined as realized
investment gains and losses after applicable federal and state
income taxes) from net income. While realized investment gains (or
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. 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 the Company’s normal,
ongoing 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. Therefore, the Company has provided the following
reconciliations of the non-GAAP financial measure of operating
income to the GAAP financial measure of net income.
|
|
|
|
|
|
|
|
RECONCILIATION OF OPERATING INCOME TO NET
INCOME |
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Operating income |
$ |
4,904 |
|
|
$ |
6,315 |
|
|
$ |
25,329 |
|
|
$ |
32,756 |
|
Net realized investment
gains (losses) (after tax) |
|
(775 |
) |
|
|
4,874 |
|
|
|
(418 |
) |
|
|
7,511 |
|
Net income |
$ |
4,129 |
|
|
$ |
11,189 |
|
|
$ |
24,911 |
|
|
$ |
40,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF OPERATING INCOME PER SHARE TO NET INCOME
PER SHARE |
|
|
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Operating income |
$ |
0.23 |
|
|
$ |
0.31 |
|
|
$ |
1.21 |
|
|
$ |
1.59 |
|
Net realized investment
gains (losses) (after tax) |
|
(0.03 |
) |
|
|
0.23 |
|
|
|
(0.02 |
) |
|
|
0.37 |
|
Net income |
$ |
0.20 |
|
|
$ |
0.54 |
|
|
$ |
1.19 |
|
|
$ |
1.96 |
|
|
|
|
|
|
|
|
|
Statutory data is prepared in accordance with statutory
accounting principles as defined by the National Association of
Insurance Commissioners’ (NAIC) Accounting Practices and Procedures
Manual. Statutory data is publicly available, and various
organizations use it to calculate aggregate industry data, study
industry trends and compare insurance companies.
2Premiums written: Under statutory accounting principles,
property/casualty premiums written is the cost of insurance
coverage, and refers to premiums for all policies sold during a
specified reporting period. Management analyzes trends in premiums
written to assess business efforts. Premiums earned, used in both
statutory and GAAP accounting, is the recognition of the portion of
premiums written directly related to the expired portion of an
insurance policy for a given reporting period. The unexpired
portion of premiums written is referred to as unearned premiums,
and represents the portion of premiums written that would be
returned to a policyholder upon cancellation of a policy.
|
|
|
|
|
|
|
RECONCILIATION OF PREMIUMS WRITTEN TO PREMIUMS
EARNED |
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
Property and |
|
|
|
|
|
Three
months ended September 30, 2016 |
Casualty Insurance |
|
Reinsurance |
|
Consolidated |
|
Premiums
written |
$ |
138,904 |
|
|
$ |
37,339 |
|
|
$ |
176,243 |
|
|
Change in unearned
premiums |
|
(22,532 |
) |
|
|
(1,530 |
) |
|
|
(24,062 |
) |
|
Premiums earned |
$ |
116,372 |
|
|
$ |
35,809 |
|
|
$ |
152,181 |
|
|
|
|
|
|
|
|
|
|
Property and |
|
|
|
|
|
Three
months ended September 30, 2015 |
Casualty Insurance |
|
Reinsurance |
|
Consolidated |
|
Premiums
written |
$ |
134,722 |
|
|
$ |
31,446 |
|
|
$ |
166,168 |
|
|
Change in unearned
premiums |
|
(20,969 |
) |
|
|
589 |
|
|
|
(20,380 |
) |
|
Premiums earned |
$ |
113,753 |
|
|
$ |
32,035 |
|
|
$ |
145,788 |
|
|
|
|
|
|
|
|
|
|
Property and |
|
|
|
|
|
Nine
months ended September 30, 2016 |
Casualty Insurance |
|
Reinsurance |
|
Consolidated |
|
Premiums
written |
$ |
370,704 |
|
|
$ |
98,754 |
|
|
$ |
469,458 |
|
|
Change in unearned
premiums |
|
(32,115 |
) |
|
|
4,021 |
|
|
|
(28,094 |
) |
|
Premiums earned |
$ |
338,589 |
|
|
$ |
102,775 |
|
|
$ |
441,364 |
|
|
|
|
|
|
|
|
|
|
Property and |
|
|
|
|
|
Nine
months ended September 30, 2015 |
Casualty Insurance |
|
Reinsurance |
|
Consolidated |
|
Premiums
written |
$ |
364,329 |
|
|
$ |
96,914 |
|
|
$ |
461,243 |
|
|
Change in unearned
premiums |
|
(31,117 |
) |
|
|
(1,002 |
) |
|
|
(32,119 |
) |
|
Premiums earned |
$ |
333,212 |
|
|
$ |
95,912 |
|
|
$ |
429,124 |
|
|
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
|
|
|
|
|
|
($ in
thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
Property and |
|
|
|
|
|
|
|
|
Casualty |
|
|
|
Parent |
|
|
Quarter
ended September 30, 2016 |
|
Insurance |
|
Reinsurance |
|
Company |
|
Consolidated |
Revenues: |
|
|
|
|
|
|
|
|
Premiums earned |
|
$ |
116,372 |
|
|
$ |
35,809 |
|
|
$ |
- |
|
|
$ |
152,181 |
|
Investment income, net |
|
|
8,185 |
|
|
|
3,285 |
|
|
|
4 |
|
|
|
11,474 |
|
Other
income (loss) |
|
|
172 |
|
|
|
(257 |
) |
|
|
- |
|
|
|
(85 |
) |
|
|
|
124,729 |
|
|
|
38,837 |
|
|
|
4 |
|
|
|
163,570 |
|
Losses and
expenses: |
|
|
|
|
|
|
|
Losses
and settlement expenses |
|
|
81,643 |
|
|
|
26,530 |
|
|
|
- |
|
|
|
108,173 |
|
Dividends
to policyholders |
|
|
3,944 |
|
|
|
- |
|
|
|
- |
|
|
|
3,944 |
|
Amortization of deferred policy acquisition costs |
|
|
19,206 |
|
|
|
7,639 |
|
|
|
- |
|
|
|
26,845 |
|
Other
underwriting expenses |
|
|
16,690 |
|
|
|
916 |
|
|
|
- |
|
|
|
17,606 |
|
Interest
expense |
|
|
84 |
|
|
|
- |
|
|
|
- |
|
|
|
84 |
|
Other
expenses |
|
|
190 |
|
|
|
- |
|
|
|
489 |
|
|
|
679 |
|
|
|
|
121,757 |
|
|
|
35,085 |
|
|
|
489 |
|
|
|
157,331 |
|
Operating
income (loss) before income taxes |
|
|
2,972 |
|
|
|
3,752 |
|
|
|
(485 |
) |
|
|
6,239 |
|
Realized investment
losses |
|
|
(799 |
) |
|
|
(393 |
) |
|
|
- |
|
|
|
(1,192 |
) |
Income
(loss) before income taxes |
|
|
2,173 |
|
|
|
3,359 |
|
|
|
(485 |
) |
|
|
5,047 |
|
Income tax expense
(benefit): |
|
|
|
|
|
|
|
Current |
|
|
569 |
|
|
|
1,024 |
|
|
|
(145 |
) |
|
|
1,448 |
|
Deferred |
|
|
(264 |
) |
|
|
(108 |
) |
|
|
(158 |
) |
|
|
(530 |
) |
|
|
|
305 |
|
|
|
916 |
|
|
|
(303 |
) |
|
|
918 |
|
Net
income (loss) |
|
$ |
1,868 |
|
|
$ |
2,443 |
|
|
$ |
(182 |
) |
|
$ |
4,129 |
|
Average shares
outstanding |
|
|
|
|
|
|
|
21,060,665 |
|
Per Share Data: |
|
|
|
|
|
|
|
Net
income (loss) per share - basic and diluted |
|
$ |
0.09 |
|
|
$ |
0.12 |
|
|
$ |
(0.01 |
) |
|
$ |
0.20 |
|
Catastrophe and storm losses (after tax) |
|
$ |
0.46 |
|
|
$ |
0.07 |
|
|
$ |
- |
|
|
$ |
0.53 |
|
Large
losses* (after tax) |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Reported
favorable development |
|
|
|
|
|
|
|
experienced on prior years' reserves (after tax) |
|
$ |
0.39 |
|
|
$ |
0.02 |
|
|
$ |
- |
|
|
$ |
0.41 |
|
Favorable
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings (after tax) |
|
|
(0.17 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.17 |
) |
Implied
favorable development that had |
|
|
|
|
|
|
|
|
an impact
on earnings (after tax) |
|
$ |
0.22 |
|
|
$ |
0.02 |
|
|
$ |
- |
|
|
$ |
0.24 |
|
Dividends
per share |
|
|
|
|
|
|
$ |
0.190 |
|
Other Information of
Interest: |
|
|
|
|
|
|
|
Premiums
written2 |
|
$ |
138,904 |
|
|
$ |
37,339 |
|
|
$ |
- |
|
|
$ |
176,243 |
|
Catastrophe and storm losses |
|
$ |
14,787 |
|
|
$ |
2,266 |
|
|
$ |
- |
|
|
$ |
17,053 |
|
Large
losses* |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Reported
favorable development |
|
|
|
|
|
|
|
|
experienced on prior years' reserves |
|
$ |
(12,442 |
) |
|
$ |
(796 |
) |
|
$ |
- |
|
|
$ |
(13,238 |
) |
Favorable
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings |
|
|
5,592 |
|
|
|
- |
|
|
|
- |
|
|
|
5,592 |
|
Implied
favorable development that had |
|
|
|
|
|
|
|
|
an impact
on earnings |
|
$ |
(6,850 |
) |
|
$ |
(796 |
) |
|
$ |
- |
|
|
$ |
(7,646 |
) |
GAAP Ratios: |
|
|
|
|
|
|
|
Loss and
settlement expense ratio |
|
|
70.2 |
% |
|
|
74.1 |
% |
|
|
- |
|
|
|
71.1 |
% |
Acquisition expense ratio |
|
|
34.2 |
% |
|
|
23.9 |
% |
|
|
- |
|
|
|
31.8 |
% |
Combined
ratio |
|
|
104.4 |
% |
|
|
98.0 |
% |
|
|
- |
|
|
|
102.9 |
% |
* |
Large losses are defined as reported current
accident year losses greater than $500 for the EMC Insurance
Companies' pool, excluding catastrophe and storm losses. Under the
property and casualty insurance segment's prior reserving
methodology, large losses had a direct impact on earnings. Under
the new reserving methodology, large losses are taken into
consideration when establishing the current accident quarter/year
ultimate estimates of losses, but there is no longer a direct
relationship between large losses and earnings. As a result, it is
no longer meaningful to report large losses separately. |
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
|
|
|
|
|
|
($ 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
favorable (adverse) development |
|
|
|
|
|
|
|
experienced on prior years' reserves (after tax) |
$ |
0.15 |
|
|
$ |
(0.08 |
) |
|
$ |
- |
|
|
$ |
0.07 |
|
Adverse
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings (after tax) |
|
|
- |
|
|
|
0.07 |
|
|
|
- |
|
|
|
0.07 |
|
Implied
favorable (adverse) development that had |
|
|
|
|
|
|
|
|
an impact
on earnings (after tax) |
|
$ |
0.15 |
|
|
$ |
(0.01 |
) |
|
$ |
- |
|
|
$ |
0.14 |
|
Dividends
per share |
|
|
|
|
|
|
$ |
0.170 |
|
Other Information of
Interest: |
|
|
|
|
|
|
|
Premiums
written2 |
|
$ |
134,722 |
|
|
$ |
31,446 |
|
|
$ |
- |
|
|
$ |
166,168 |
|
Catastrophe and storm losses |
|
$ |
9,920 |
|
|
$ |
7,844 |
|
|
$ |
- |
|
|
$ |
17,764 |
|
Large
losses* |
|
$ |
10,304 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
10,304 |
|
Reported
(favorable) adverse development |
|
|
|
|
|
|
|
|
experienced on prior years' reserves |
|
$ |
(4,722 |
) |
|
$ |
2,495 |
|
|
$ |
- |
|
|
$ |
(2,227 |
) |
Adverse
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings |
|
|
- |
|
|
|
(2,361 |
) |
|
|
- |
|
|
|
(2,361 |
) |
Implied
(favorable) adverse development that had |
|
|
|
|
|
|
|
|
an impact
on earnings |
|
$ |
(4,722 |
) |
|
$ |
134 |
|
|
$ |
- |
|
|
$ |
(4,588 |
) |
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 reported current
accident year 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, 2016 |
|
Insurance |
|
Reinsurance |
|
Company |
|
Consolidated |
Revenues: |
|
|
|
|
|
|
|
|
Premiums
earned |
|
$ |
338,589 |
|
|
$ |
102,775 |
|
|
$ |
- |
|
|
$ |
441,364 |
|
Investment income, net |
|
|
25,524 |
|
|
|
10,350 |
|
|
|
9 |
|
|
|
35,883 |
|
Other
income (loss) |
|
|
466 |
|
|
|
(485 |
) |
|
|
- |
|
|
|
(19 |
) |
|
|
|
364,579 |
|
|
|
112,640 |
|
|
|
9 |
|
|
|
477,228 |
|
Losses and
expenses: |
|
|
|
|
|
|
|
Losses
and settlement expenses |
|
|
225,207 |
|
|
|
70,895 |
|
|
|
- |
|
|
|
296,102 |
|
Dividends
to policyholders |
|
|
11,292 |
|
|
|
- |
|
|
|
- |
|
|
|
11,292 |
|
Amortization of deferred policy acquisition costs |
|
|
58,129 |
|
|
|
22,611 |
|
|
|
- |
|
|
|
80,740 |
|
Other
underwriting expenses |
|
|
49,839 |
|
|
|
2,295 |
|
|
|
- |
|
|
|
52,134 |
|
Interest
expense |
|
|
253 |
|
|
|
- |
|
|
|
- |
|
|
|
253 |
|
Other
expenses |
|
|
558 |
|
|
|
- |
|
|
|
1,495 |
|
|
|
2,053 |
|
|
|
|
345,278 |
|
|
|
95,801 |
|
|
|
1,495 |
|
|
|
442,574 |
|
Operating
income (loss) before income taxes |
|
|
19,301 |
|
|
|
16,839 |
|
|
|
(1,486 |
) |
|
|
34,654 |
|
Realized investment
losses |
|
|
(627 |
) |
|
|
(16 |
) |
|
|
- |
|
|
|
(643 |
) |
Income
(loss) before income taxes |
|
|
18,674 |
|
|
|
16,823 |
|
|
|
(1,486 |
) |
|
|
34,011 |
|
Income tax expense
(benefit): |
|
|
|
|
|
|
|
Current |
|
|
6,425 |
|
|
|
5,601 |
|
|
|
(586 |
) |
|
|
11,440 |
|
Deferred |
|
|
(1,778 |
) |
|
|
(494 |
) |
|
|
(68 |
) |
|
|
(2,340 |
) |
|
|
|
4,647 |
|
|
|
5,107 |
|
|
|
(654 |
) |
|
|
9,100 |
|
Net
income (loss) |
|
$ |
14,027 |
|
|
$ |
11,716 |
|
|
$ |
(832 |
) |
|
$ |
24,911 |
|
Average shares
outstanding |
|
|
|
|
|
|
|
20,964,236 |
|
Per Share Data: |
|
|
|
|
|
|
|
Net
income (loss) per share - basic and diluted |
|
$ |
0.67 |
|
|
$ |
0.56 |
|
|
$ |
(0.04 |
) |
|
$ |
1.19 |
|
Catastrophe and storm losses (after tax) |
|
$ |
1.08 |
|
|
$ |
0.33 |
|
|
$ |
- |
|
|
$ |
1.41 |
|
Large
losses* (after tax) |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Reported
favorable development experienced on |
|
|
|
|
|
|
|
prior
years' reserves (after tax) |
|
$ |
0.69 |
|
|
$ |
0.21 |
|
|
$ |
- |
|
|
$ |
0.90 |
|
Favorable
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings (after tax) |
|
|
(0.17 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.17 |
) |
Implied
favorable development that had an impact |
|
|
|
|
|
|
|
|
on
earnings (after tax) |
|
$ |
0.52 |
|
|
$ |
0.21 |
|
|
$ |
- |
|
|
$ |
0.73 |
|
Dividends
per share |
|
|
|
|
|
|
$ |
0.570 |
|
Book value per share |
|
|
|
|
|
|
$ |
26.67 |
|
Effective tax rate |
|
|
|
|
|
|
|
26.8 |
% |
Annualized net income as a percent of beg. SH equity |
|
|
|
|
|
|
|
|
6.3 |
% |
Other Information of
Interest: |
|
|
|
|
|
|
|
Premiums
written2 |
|
$ |
370,704 |
|
|
$ |
98,754 |
|
|
$ |
- |
|
|
$ |
469,458 |
|
Catastrophe and storm losses |
|
$ |
34,787 |
|
|
$ |
10,747 |
|
|
$ |
- |
|
|
$ |
45,534 |
|
Large
losses* |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Reported
favorable development experienced on |
|
|
|
|
|
|
|
|
prior
years' reserves |
|
$ |
(22,229 |
) |
|
$ |
(6,880 |
) |
|
$ |
- |
|
|
$ |
(29,109 |
) |
Favorable
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings |
|
|
5,592 |
|
|
|
- |
|
|
|
- |
|
|
|
5,592 |
|
Implied
favorable development that had an impact |
|
|
|
|
|
|
|
|
on
earnings |
|
$ |
(16,637 |
) |
|
$ |
(6,880 |
) |
|
$ |
- |
|
|
$ |
(23,517 |
) |
GAAP Ratios: |
|
|
|
|
|
|
|
Loss and
settlement expense ratio |
|
|
66.5 |
% |
|
|
69.0 |
% |
|
|
- |
|
|
|
67.1 |
% |
Acquisition expense ratio |
|
|
35.2 |
% |
|
|
24.2 |
% |
|
|
- |
|
|
|
32.7 |
% |
Combined
ratio |
|
|
101.7 |
% |
|
|
93.2 |
% |
|
|
- |
|
|
|
99.8 |
% |
* |
Large losses are defined as reported current
accident year losses greater than $500 for the EMC Insurance
Companies' pool, excluding catastrophe and storm losses. Under the
property and casualty insurance segment's prior reserving
methodology, large losses had a direct impact on earnings. Under
the new reserving methodology, large losses are taken into
consideration when establishing the current accident quarter/year
ultimate estimates of losses, but there is no longer a direct
relationship between large losses and earnings. As a result, it is
no longer meaningful to report large losses separately. The amount
of large losses previously reported for the first six months of
2016 has not been carried forward and disclosed for the nine months
ended September 30, 2016, because it would not be comparable to the
amount reported for the first nine months of 2015. |
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
|
|
|
|
|
|
($ 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 |
|
Adverse
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings (after tax) |
|
|
- |
|
|
|
0.07 |
|
|
|
- |
|
|
|
0.07 |
|
Implied
favorable development that had an impact |
|
|
|
|
|
|
|
|
on
earnings (after tax) |
|
$ |
0.45 |
|
|
$ |
0.25 |
|
|
$ |
- |
|
|
$ |
0.70 |
|
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: |
|
|
|
|
|
|
|
Premiums
written2 |
|
$ |
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 |
) |
Adverse
development that had no impact |
|
|
|
|
|
|
|
|
on
earnings |
|
|
- |
|
|
|
(2,361 |
) |
|
|
- |
|
|
|
(2,361 |
) |
Implied
favorable development that had an impact |
|
|
|
|
|
|
|
|
on
earnings |
|
$ |
(14,177 |
) |
|
$ |
(8,141 |
) |
|
$ |
- |
|
|
$ |
(22,318 |
) |
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 reported current
accident year losses greater than $500 for the EMC Insurance
Companies' pool, excluding catastrophe and storm losses. |
|
|
|
|
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
September 30, |
|
December 31, |
|
|
2016 |
|
|
|
2015 |
|
($ in thousands, except
share and per share amounts) |
(Unaudited) |
|
|
ASSETS |
|
|
|
Investments: |
|
|
|
Fixed
maturity securities available-for-sale, at fair value (amortized
cost $1,184,470 and $1,130,217) |
$ |
1,237,150 |
|
|
$ |
1,161,025 |
|
Equity
securities available-for-sale, at fair value (cost $151,852 and
$144,176) |
|
219,282 |
|
|
|
206,243 |
|
Other
long-term investments |
|
9,941 |
|
|
|
9,930 |
|
Short-term investments |
|
42,611 |
|
|
|
38,599 |
|
Total
investments |
|
1,508,984 |
|
|
|
1,415,797 |
|
|
|
|
|
Cash |
|
350 |
|
|
|
224 |
|
Reinsurance receivables
due from affiliate |
|
22,590 |
|
|
|
24,236 |
|
Prepaid reinsurance
premiums due from affiliate |
|
11,588 |
|
|
|
6,563 |
|
Deferred
policy acquisition costs (affiliated $44,320 and $40,535) |
|
44,620 |
|
|
|
40,720 |
|
Prepaid
pension and postretirement benefits due from affiliate |
|
11,043 |
|
|
|
12,133 |
|
Accrued investment
income |
|
12,143 |
|
|
|
10,789 |
|
Amounts receivable
under reverse repurchase agreements |
|
16,850 |
|
|
|
16,850 |
|
Accounts
receivable |
|
2,958 |
|
|
|
804 |
|
Income taxes
recoverable |
|
- |
|
|
|
1,735 |
|
Goodwill |
|
942 |
|
|
|
942 |
|
Other assets
(affiliated $4,838 and $4,595) |
|
5,437 |
|
|
|
5,162 |
|
Total
assets |
$ |
1,637,505 |
|
|
$ |
1,535,955 |
|
|
|
|
|
LIABILITIES |
|
|
|
Losses and settlement
expenses (affiliated $695,461 and $671,169) |
$ |
700,565 |
|
|
$ |
678,774 |
|
Unearned premiums
(affiliated $271,539 and $238,637) |
|
272,900 |
|
|
|
239,435 |
|
Other policyholders'
funds (all affiliated) |
|
11,809 |
|
|
|
8,721 |
|
Surplus notes payable
to affiliate |
|
25,000 |
|
|
|
25,000 |
|
Amounts due affiliate
to settle inter-company transaction balances |
|
4,025 |
|
|
|
6,408 |
|
Pension benefits
payable to affiliate |
|
3,826 |
|
|
|
4,299 |
|
Income taxes
payable |
|
156 |
|
|
|
- |
|
Deferred income
taxes |
|
25,894 |
|
|
|
19,029 |
|
Other liabilities
(affiliated $24,659 and $28,598) |
|
30,921 |
|
|
|
29,351 |
|
Total
liabilities |
|
1,075,096 |
|
|
|
1,011,017 |
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
Common stock, $1 par
value, authorized 30,000,000 shares; issued and outstanding,
21,084,948 shares in 2016 and 20,780,439 shares in 2015 |
|
21,085 |
|
|
|
20,781 |
|
Additional paid-in
capital |
|
115,724 |
|
|
|
108,747 |
|
Accumulated other
comprehensive income |
|
75,529 |
|
|
|
58,433 |
|
Retained earnings |
|
350,071 |
|
|
|
336,977 |
|
Total
stockholders' equity |
|
562,409 |
|
|
|
524,938 |
|
Total
liabilities and stockholders' equity |
$ |
1,637,505 |
|
|
$ |
1,535,955 |
|
|
LOSS AND SETTLEMENT EXPENSE BY LINE OF
BUSINESS |
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
($ 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 |
|
$ |
28,113 |
|
|
$ |
26,274 |
|
|
|
93.5 |
% |
|
$ |
27,080 |
|
|
$ |
24,555 |
|
|
|
90.7 |
% |
|
Property |
|
|
27,471 |
|
|
|
17,227 |
|
|
|
62.7 |
% |
|
|
26,526 |
|
|
|
19,290 |
|
|
|
72.7 |
% |
|
Workers'
compensation |
|
|
24,536 |
|
|
|
13,510 |
|
|
|
55.1 |
% |
|
|
23,777 |
|
|
|
12,098 |
|
|
|
50.9 |
% |
|
Liability |
|
|
24,277 |
|
|
|
14,179 |
|
|
|
58.4 |
% |
|
|
23,449 |
|
|
|
10,726 |
|
|
|
45.7 |
% |
|
Other |
|
|
2,102 |
|
|
|
705 |
|
|
|
33.6 |
% |
|
|
2,032 |
|
|
|
348 |
|
|
|
17.1 |
% |
|
Total
commercial lines |
|
|
106,499 |
|
|
|
71,895 |
|
|
|
67.5 |
% |
|
|
102,864 |
|
|
|
67,017 |
|
|
|
65.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
lines |
|
|
9,873 |
|
|
|
9,748 |
|
|
|
98.7 |
% |
|
|
10,889 |
|
|
|
8,959 |
|
|
|
82.3 |
% |
|
Total property and casualty insurance |
|
$ |
116,372 |
|
|
$ |
81,643 |
|
|
|
70.2 |
% |
|
$ |
113,753 |
|
|
$ |
75,976 |
|
|
|
66.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro rata
reinsurance |
|
$ |
15,066 |
|
|
$ |
10,235 |
|
|
|
67.9 |
% |
|
$ |
13,037 |
|
|
$ |
9,667 |
|
|
|
74.2 |
% |
|
Excess of
loss reinsurance |
|
|
20,743 |
|
|
|
16,295 |
|
|
|
78.6 |
% |
|
|
18,998 |
|
|
|
17,042 |
|
|
|
89.7 |
% |
|
Total reinsurance |
|
$ |
35,809 |
|
|
$ |
26,530 |
|
|
|
74.1 |
% |
|
$ |
32,035 |
|
|
$ |
26,709 |
|
|
|
83.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
152,181 |
|
|
$ |
108,173 |
|
|
|
71.1 |
% |
|
$ |
145,788 |
|
|
$ |
102,685 |
|
|
|
70.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
($ 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 |
|
$ |
82,449 |
|
|
$ |
69,763 |
|
|
|
84.6 |
% |
|
$ |
78,698 |
|
|
$ |
61,843 |
|
|
|
78.6 |
% |
Property |
|
|
77,292 |
|
|
|
52,687 |
|
|
|
68.2 |
% |
|
|
77,518 |
|
|
|
53,652 |
|
|
|
69.2 |
% |
Workers'
compensation |
|
|
71,272 |
|
|
|
39,680 |
|
|
|
55.7 |
% |
|
|
69,150 |
|
|
|
39,591 |
|
|
|
57.3 |
% |
Liability |
|
|
72,086 |
|
|
|
38,045 |
|
|
|
52.8 |
% |
|
|
68,952 |
|
|
|
34,668 |
|
|
|
50.3 |
% |
Other |
|
|
6,246 |
|
|
|
648 |
|
|
|
10.4 |
% |
|
|
6,044 |
|
|
|
794 |
|
|
|
13.1 |
% |
Total
commercial lines |
|
|
309,345 |
|
|
|
200,823 |
|
|
|
64.9 |
% |
|
|
300,362 |
|
|
|
190,548 |
|
|
|
63.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
lines |
|
|
29,244 |
|
|
|
24,384 |
|
|
|
83.4 |
% |
|
|
32,850 |
|
|
|
24,920 |
|
|
|
75.9 |
% |
Total property and casualty insurance |
|
$ |
338,589 |
|
|
$ |
225,207 |
|
|
|
66.5 |
% |
|
$ |
333,212 |
|
|
$ |
215,468 |
|
|
|
64.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance |
|
|
|
|
|
|
|
|
|
|
|
|
Pro rata
reinsurance |
|
$ |
44,175 |
|
|
$ |
26,367 |
|
|
|
59.7 |
% |
|
$ |
40,154 |
|
|
$ |
23,468 |
|
|
|
58.4 |
% |
Excess of
loss reinsurance |
|
|
58,600 |
|
|
|
44,528 |
|
|
|
76.0 |
% |
|
|
55,758 |
|
|
|
41,667 |
|
|
|
74.7 |
% |
Total reinsurance |
|
$ |
102,775 |
|
|
$ |
70,895 |
|
|
|
69.0 |
% |
|
$ |
95,912 |
|
|
$ |
65,135 |
|
|
|
67.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
441,364 |
|
|
$ |
296,102 |
|
|
|
67.1 |
% |
|
$ |
429,124 |
|
|
$ |
280,603 |
|
|
|
65.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
PREMIUMS
WRITTEN2 |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Three months ended |
|
|
|
September 30, 2016 |
|
September 30, 2015 |
|
|
|
|
|
Percent of |
|
|
|
Percent of |
|
Change in |
|
Premiums |
|
premiums |
|
Premiums |
|
premiums |
|
premiums |
($ in thousands) |
written |
|
written |
|
written |
|
written |
|
written |
Property and casualty
insurance |
|
|
|
|
|
|
|
|
|
Commercial lines: |
|
|
|
|
|
|
|
|
|
Automobile |
$ |
29,649 |
|
|
|
16.8 |
% |
|
$ |
28,904 |
|
|
|
17.4 |
% |
|
|
2.6 |
% |
Property |
|
34,062 |
|
|
|
19.3 |
% |
|
|
32,891 |
|
|
|
19.8 |
% |
|
|
3.6 |
% |
Workers'
compensation |
|
35,623 |
|
|
|
20.2 |
% |
|
|
33,385 |
|
|
|
20.1 |
% |
|
|
6.7 |
% |
Liability |
|
27,060 |
|
|
|
15.4 |
% |
|
|
26,556 |
|
|
|
16.0 |
% |
|
|
1.9 |
% |
Other |
|
2,329 |
|
|
|
1.3 |
% |
|
|
2,213 |
|
|
|
1.3 |
% |
|
|
5.2 |
% |
Total
commercial lines |
|
128,723 |
|
|
|
73.0 |
% |
|
|
123,949 |
|
|
|
74.6 |
% |
|
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
Personal
lines |
|
10,181 |
|
|
|
5.8 |
% |
|
|
10,773 |
|
|
|
6.5 |
% |
|
|
(5.5 |
)% |
Total property and casualty insurance |
$ |
138,904 |
|
|
|
78.8 |
% |
|
$ |
134,722 |
|
|
|
81.1 |
% |
|
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
Reinsurance |
|
|
|
|
|
|
|
|
|
Pro rata
reinsurance |
$ |
15,115 |
|
|
|
8.6 |
% |
|
$ |
12,103 |
|
|
|
7.3 |
% |
|
|
24.9 |
% |
Excess of
loss reinsurance |
|
22,224 |
|
|
|
12.6 |
% |
|
|
19,343 |
|
|
|
11.6 |
% |
|
|
14.9 |
% |
Total reinsurance |
$ |
37,339 |
|
|
|
21.2 |
% |
|
$ |
31,446 |
|
|
|
18.9 |
% |
|
|
18.7 |
% |
|
|
|
|
|
|
|
|
|
|
Consolidated |
$ |
176,243 |
|
|
|
100.0 |
% |
|
$ |
166,168 |
|
|
|
100.0 |
% |
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended |
|
Nine months ended |
|
|
|
September 30, 2016 |
|
September 30, 2015 |
|
|
|
|
|
Percent of |
|
|
|
Percent of |
|
Change in |
|
Premiums |
|
premiums |
|
Premiums |
|
premiums |
|
premiums |
($ in thousands) |
written |
|
written |
|
written |
|
written |
|
written |
Property and casualty
insurance |
|
|
|
|
|
|
|
|
|
Commercial lines: |
|
|
|
|
|
|
|
|
|
Automobile |
$ |
89,974 |
|
|
|
19.2 |
% |
|
$ |
86,947 |
|
|
|
18.9 |
% |
|
|
3.5 |
% |
Property |
|
85,534 |
|
|
|
18.2 |
% |
|
|
85,853 |
|
|
|
18.6 |
% |
|
|
(0.4 |
)% |
Workers'
compensation |
|
80,896 |
|
|
|
17.2 |
% |
|
|
76,912 |
|
|
|
16.7 |
% |
|
|
5.2 |
% |
Liability |
|
78,456 |
|
|
|
16.7 |
% |
|
|
75,765 |
|
|
|
16.4 |
% |
|
|
3.6 |
% |
Other |
|
6,863 |
|
|
|
1.5 |
% |
|
|
6,413 |
|
|
|
1.4 |
% |
|
|
7.0 |
% |
Total
commercial lines |
|
341,723 |
|
|
|
72.8 |
% |
|
|
331,890 |
|
|
|
72.0 |
% |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
Personal
lines |
|
28,981 |
|
|
|
6.2 |
% |
|
|
32,439 |
|
|
|
7.0 |
% |
|
|
(10.7 |
)% |
Total property and casualty insurance |
$ |
370,704 |
|
|
|
79.0 |
% |
|
$ |
364,329 |
|
|
|
79.0 |
% |
|
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
Reinsurance |
|
|
|
|
|
|
|
|
|
Pro rata
reinsurance |
$ |
42,078 |
|
|
|
9.0 |
% |
|
$ |
40,232 |
|
|
|
8.7 |
% |
|
|
4.6 |
% |
Excess of
loss reinsurance |
|
56,676 |
|
|
|
12.0 |
% |
|
|
56,682 |
|
|
|
12.3 |
% |
|
|
- |
|
Total reinsurance |
$ |
98,754 |
|
|
|
21.0 |
% |
|
$ |
96,914 |
|
|
|
21.0 |
% |
|
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|
Consolidated |
$ |
469,458 |
|
|
|
100.0 |
% |
|
$ |
461,243 |
|
|
|
100.0 |
% |
|
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
Contact:
Steve Walsh (Investors)
515-345-2515
Lisa Hamilton (Media)
515-345-7589
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