Des Moines, Iowa-based carrier EMC Insurance Group Inc. reported operating income of 49 cents per share for the third quarter ended Sept. 30, 2003, compared to 46 cents per share for the third quarter of 2002.
Operating income for the nine months ended Sept. 30, 2003, was $1.25 per share compared to $1.21 per share for the same period in 2002.
Net income, including realized investment gains and losses, was $6.3 million (56 cents per share) for the third quarter of 2003 compared to $4.3 million (38 cents per share) for the third quarter of 2002. Net income for the nine-month period ended Sept. 30, 2003, totaled $14.2 million ($1.25 per share) compared to $10.9 million (96 cents per share) for the same period in 2002.
Results for the third quarter of 2003 were driven by unusually good loss experience in the reinsurance segment, which benefited from a significant decline in reported losses and favorable development on prior year reserves, the company said in a statement. This improvement in the operating results of the reinsurance segment more than offset a continued high level of storm losses and the previously reported reserve strengthening that occurred in the property and casualty insurance segment during the third quarter.
As a result of the high level of storm losses experienced in the third quarter, storm losses for the first nine months of 2003 are greater than those experienced during the storm-plagued first nine months of 2001; however, the impact of these losses is not as severe because premium rate levels are much more adequate now than they were in 2001.
Premiums earned increased 12.3 percent to $84 million for the three months ended Sept. 30, 2003, from $74.9 million for the same period in 2002. For the nine-month period ended Sept. 30, 2003, premiums earned increased 13.7 percent to $246.5 million from $216.8 million for the same period in 2002.
Old Republic primarily attributed to rate increases implemented during the last two years in the property/casualty insurance business as well as significant growth and improved pricing in the assumed reinsurance business. The market for property and casualty insurance remained firm during the third quarter of 2003 and this trend is expected to continue into 2004.
The company said it has been able to implement moderate rate increases during the first nine months of 2003 and additional rate increases are anticipated for the remainder of the year. These increases will be targeted to specific accounts, territories and lines of business where rates remain inadequate.
“We experienced our most profitable third quarter ever and are on track to surpass our 2002 full year results, despite a continued high level of storm losses and some necessary reserve strengthening,” stated President and CEO Bruce G. Kelley.
“Implementation of our long-term strategic plan has resulted in an improved book of business that is more properly priced. We enjoyed the strong performance of our reinsurance segment this quarter and are well positioned for substantially improved results from our property and casualty insurance segment in the future.”
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