EMC Insurance Group Inc
) reported first-quarter 2014 operating net earnings of 73 cents a
share, missing the Zacks Consensus Estimate as well as the year-ago
earnings by about 25%.
Including net realized investment gains of 6 cents a share, net
income of EMC Insurance came in at 79 cents per share, down 28.2%
year over year.
The quarter experienced increased losses in the property and
casualty insurance segment due to unusually cold temperatures that
persisted across much of the country during January and February.
Nonetheless, higher rates mitigated the adverse impact of winter
Shares of this property and casualty insurer lost 0.33% in the last
trading session, primarily due to a bearish sentiment induced by a
soft quarter along with guidance cut.
Revenues of EMC Insurance totaled approximately $145.1 million, up
10.6% year over year. The increase was mainly attributable to
higher premiums earned in both the Reinsurance (up 14.5% year over
year) and Property and Casualty Insurance (up 9.2% year over year)
Higher premiums at Property and Casualty reflected rate level
increases on renewal business, growth in insured exposures and an
increase in retained policies. Reinsurance premium improvement came
on the back of a large increase in a pro rata casualty account that
was first written in 2013 and an increase in pro rata property
business due to an upward revision of total expected ultimate
premiums from all accounts, as well as the addition of some new
Net investment income improved 13.5% attributable to a higher
average invested balance in fixed maturity securities and an
increase in dividend income.
Meanwhile, total losses and expenses of EMC Insurance grossed $129
million during the quarter, reflecting an increase of 16% year over
year due to higher losses and settlement expenses and amortization
of deferred policy acquisition costs.
The combined ratio during the quarter deteriorated 440 basis points
to 98.2%. Catastrophe and storm losses came in at 36 cents per
share, higher than 27 cents in the year-ago quarter.
As on March 31, 2014, EMC Insurance's total investment portfolio
improved to $1.27 billion from $1.26 billion at the end of 2013.
Cash balance more than doubled to $568 million at quarter end from
the 2013-end level.
Total shareholder equity stood at $476.6 million at March 31, 2014,
up from nearly $455.2 million on Dec 31, 2013.
2014 Guidance Lowered
EMC Insurance lowered 2014 operating net earnings expectation to
$2.65-$2.90 per share from $3.00-$3.25 guided previously. The
guidance reflects combined ratio of 98.3%.
Zacks Rank & Other Stocks
EMC Insurance presently carries a Zacks Rank #3 (Hold). Some other
property and casualty insurers such as
W.R. Berkley Corporation
AmTrust Financial Services Inc
Allied World Assurance Company Holdings, AG
) outperformed their respective Zacks Consensus Estimate in the
first quarter of 2014. These are also better-ranked stocks each
with a Zacks Rank #1 (Strong Buy).
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AMTRUST FIN SVC (AFSI): Free Stock Analysis
ALLIED WORLD AS (AWH): Free Stock Analysis
EMC INSURANCE (EMCI): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
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