EMC Insurance Group Inc. Announces First Quarter Estimates, Revises 2018 Non-GAAP Operating Income Guidance* and Announces First Quarter Earnings Call and Access Information

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*Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP). See “Definition of Non-GAAP Information and Reconciliation to Comparable GAAP Measure” for additional information.

DES MOINES, Iowa, April 16, 2018 (GLOBE NEWSWIRE) -- EMC Insurance Group Inc. (Nasdaq:EMCI) (the “Company”), today announced that first quarter 2018 results were impacted by a higher than anticipated level of non-catastrophe losses in the property and casualty insurance segment. Catastrophe and storm losses are expected to total approximately $4.7 million, which is a decline of approximately 65 percent from the record amount experienced in the first quarter of 2017; however, most of this decline is expected to be offset by a significant reduction in the amount of favorable development experienced on prior years’ reserves. Management anticipates that the Company will report first quarter 2018 net income (loss) in the range of ($0.02) to $0.02 per share, non-GAAP operating income in the range of $0.18 to $0.22 per share, and that the GAAP combined ratio for the first quarter will be approximately 104.6 percent. The property and casualty insurance and reinsurance segments are expected to report first quarter GAAP combined ratios of approximately 107.4 percent and 95.5 percent, respectively.

“Persistent frigid temperatures across many parts of the country increased commercial property losses, primarily from fires and frozen pipes,” stated President and Chief Executive Officer Bruce G. Kelley.

Based on actual results for the first three months of 2018 and projections for the remainder of the year, management has revised its 2018 non-GAAP operating income guidance from the previous range of $1.40 to $1.60 per share to a range of $1.10 to $1.30 per share. This revised guidance is based on a projected GAAP combined ratio of 103.2 percent for the year, which is 2.5 percentage points higher than the ratio utilized in the previous guidance. Approximately 1.3 percentage points of the increase is attributed to the elevated level of non-catastrophe losses experienced in the first quarter, while the remaining 1.2 percentage points are attributable to the disaggregation and reclassification of the components of net periodic pension and postretirement benefit costs (income) associated with the adoption of the updated guidance contained in Compensation-Retirement Benefits Topic 715 of the Accounting Standards Codification™ (ASC) as of January 1, 2018. This reclassification did not impact net income or non-GAAP operating income; however, it did increase the acquisition expense ratio, and therefore the GAAP combined ratio, by approximately 1.2 percentage points.     

ASC Topic 715 changed the presentation of net periodic pension and postretirement benefit costs by disaggregating the components of these expenses (disclosing the service cost component separately from the other components) for income statement reporting. Prior to 2018, all of the pension and postretirement benefit costs/credits were included in other underwriting expenses. Beginning in 2018, all pension and postretirement benefit costs/credits other than the service cost component have been reclassified to other income/loss in the income statement, while the service cost component remains in other underwriting expenses.

Teleconference:Dial-in information for the call is toll-free 1-844-850-0550 (International: 1-412-317-5180).

Webcast:The teleconference is being webcast and can be accessed live and for replay on the Company’s investor relations page at . The archived audio webcast will be available for replay for approximately 90 days following the earnings call.

Transcript: A transcript of the teleconference will be available on the Company’s website soon after the completion of the teleconference.

The risks and uncertainties that may affect the actual results of the Company include, but are not limited to, the following:

Management intends to identify forward-looking statements when using the words “believe”, “expect”, “anticipate”, “estimate”, “project”, “may”, “intend”, “likely” 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.

Management’s operating income guidance is also considered a non-GAAP financial measure. For the reasons noted above, management is unable to accurately project the amount of net income that will result from realized investment gains/losses and changes in the unrealized investment gains/losses on equity investments, and therefore utilizes non-GAAP operating income in the Company’s projected annual guidance.

Management believes non-GAAP operating income is useful to investors because it illustrates the performance of the Company’s normal, ongoing insurance 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/loss.

More news and information about EMC Insurance Group Inc.

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Globe Newswire: 21:05 GMT Monday 16th April 2018

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