Attached files
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| 8-K - EMC INSURANCE GROUP, INC 8-K 2-24-2011 - EMC INSURANCE GROUP INC | form8-k.htm |
EMC INSURANCE GROUP INC. REPORTS
2010 FOURTH QUARTER AND
YEAR-END RESULTS AND ANNOUNCES
2011 OPERATING INCOME GUIDANCE
Fourth Quarter 2010
Operating Income Per Share – $0.71
Net Income Per Share – $0.83
Catastrophe and Storm Losses Per Share – $0.15
Large Losses Per Share – $0.30
GAAP Combined Ratio – 99.6 percent
Year Ended December 31, 2010
Operating Income Per Share – $2.21
Net Income Per Share – $2.40
Catastrophe and Storm Losses Per Share – $2.10
Large Losses Per Share – $0.98
Book Value Per Share - $28.52
GAAP Combined Ratio – 102.3 percent
2011 Operating Income Guidance - $1.90 to $2.15 Per Share
DES MOINES, Iowa (February 24, 2011) - EMC Insurance Group Inc. (Nasdaq OMX/GS:EMCI) today reported operating income of $0.71 per share for the fourth quarter ended December 31, 2010, compared to operating income of $0.98 per share for the fourth quarter of 20091. Operating income for the year ended December 31, 2010 was $2.21 per share, compared to $2.55 per share in 2009.
Net income, including realized investment gains and losses, totaled $10,711,000 ($0.83 per share) for the fourth quarter of 2010 compared to $27,549,000 ($2.10 per share) for the fourth quarter of 2009. Net income for the year ended December 31, 2010 was $31,346,000 ($2.40 per share), compared to a net income of $45,371,000 ($3.44 per share) in 2009.
“Net income for 2009 includes $14,608,000 ($1.11 per share) of net realized investment gain resulting from the sale of the Company’s common stock investment in Verisk Analytics, Inc.,” stated Bruce G. Kelley, President and Chief Executive Officer. “Excluding this one-time transaction, net income for 2010 was comparable to 2009.”
“Operating results continue to meet our expectations,” continued Kelley. “Pricing remains competitive in the commercial lines of business, but we continue to see modest pricing improvements in the personal lines of business. Due to the mild 2009 and 2010 hurricane seasons and a recovery in the reinsurance industry’s capital level, premium rate levels in the reinsurance segment were generally flat in 2010,” continued Kelley. “However, premiums earned for the reinsurance segment were up 9.9 percent in 2010 due to the addition of new facility business, as well as new property business in central and eastern Europe.”
Kelley went on to say that, “for the third consecutive year, underwriting results reflect higher than normal storm losses. We have experienced similar periods of increased storm losses in the past and based on our research, do not believe this represents a permanent trend; nonetheless, we are monitoring current weather patterns closely so that our underwriting and pricing decisions reflect the most current information available.”
Premiums earned increased 4.4 percent to $103,062,000 for the fourth quarter of 2010, from $98,726,000 for the fourth quarter of 2009. Premiums earned for the year ended December 31, 2010 increased 1.3 percent to $389,122,000 from $384,011,000 in 2009.
Investment income decreased 3.4 percent to $12,075,000 in the fourth quarter of 2010 from $12,505,000 in the fourth quarter of 2009. Investment income for the year ended December 31, 2010 increased 3.6 percent to $49,489,000 from $47,759,000 in 2009, primarily due to the reinvestment of short-term holdings into Build America Bonds in the fourth quarter of 2009.
The Company experienced $4,562,000 ($0.23 per share after tax) of favorable development on prior years’ reserves during the fourth quarter of 2010, compared to $9,383,000 ($0.47 per share after tax) in the fourth quarter of 2009. For the year ended December 31, 2010, favorable development on prior years’ reserves totaled $50,749,000 ($2.53 per share after tax) compared to $48,622,000 ($2.39 per share after tax) in 2009. Included in the above amounts is $357,000 ($0.02 per share after tax) and $32,000 ($0.00 per share after tax) of favorable development on prior years’ catastrophe and storm loss reserves during the fourth quarter and year ended December 31, 2010. For comparative purposes, favorable development on prior years’ catastrophe and storm loss reserves totaled $507,000 ($0.03 per share after tax) and $3,476,000 ($0.17 per share after tax) for the same periods in 2009.
“Other-than-temporary” investment impairment losses declined to $89,000 in the fourth quarter of 2010 from $381,000 in the fourth quarter of 2009. For the year ended December 31, 2010, “other-than-temporary” investment impairment losses totaled $2,384,000, compared to $10,108,000 in 2009. The 2010 impairments included 23 equity securities and two residential mortgage-backed securities.
Catastrophe and storm losses totaled $3,051,000 ($0.15 per share after tax) in the fourth quarter of 2010 compared to $520,000 ($0.03 per share after tax) in the fourth quarter of 2009. Catastrophe and storm losses for the year ended December 31, 2010 totaled $42,144,000 ($2.10 per share after tax) compared to $31,465,000 ($1.55 per share after tax) in 2009. Catastrophe and storm losses accounted for 10.8 percentage points of the combined ratio for the year ended December 31, 2010, which is significantly higher than the 9-year average of 5.5 percentage points for the period 1999 to 2007, but lower than the record 13.5 percentage points experienced in 2008.
Large losses (which the Company defines as losses greater than $500,000 for the pool), excluding catastrophe and storm losses, increased to $6,005,000 ($0.30 per share after taxes) in the fourth quarter of 2010 from $3,980,000 ($0.20 per share after taxes) in the fourth quarter of 2009. For the year ended December 31, 2010, large losses totaled $19,634,000 ($0.98 per share after taxes), compared to $14,713,000 ($0.72 per share after taxes) in 2009.
The Company’s GAAP combined ratio was 99.6 percent in the fourth quarter of 2010 compared to 94.7 percent in the fourth quarter of 2009. For the year ended December 31, 2010, the Company’s GAAP combined ratio was 102.3 percent compared to 100.2 percent in 2009.
At December 31, 2010, consolidated assets totaled $1.2 billion, including $1.1 billion in the investment portfolio and stockholders’ equity totaled $368.6 million, an increase of 7.7 percent from December 31, 2009. Net book value of the Company’s stock was $28.52 per share, an increase of 9.2 percent from $26.11 per share at December 31, 2009. Book value excluding accumulated other comprehensive income increased to $26.63 per share from $24.89 per share at December 31, 2009.
Management is projecting that 2011 operating income will be within a range of $1.90 to $2.15 per share. This guidance is based on a projected GAAP combined ratio of 103.6 percent for the year.
During the fourth quarter of 2010 the Company repurchased 100 shares of its common stock at a cost of $21.05 per share. For the year, the Company repurchased 244,400 shares of its common stock at an average cost of $21.67 per share. Since the inception of the repurchase program in March, 2008, the Company has repurchased 980,533 shares of the Company’s common stock at a cost of approximately $23.1 million, leaving approximately $1.9 million available for the repurchase of additional shares. The timing and terms of the purchases are determined by management based on market conditions, and the transactions are conducted in accordance with the applicable rules of the SEC. Common stock purchased under this program is being retired by the Company. The Company’s parent organization, Employers Mutual Casualty Company, has a stock purchase program in place as well, with about $4.5 million of its $15 million authorization remaining. This program is currently dormant and will not be reactivated until the Company’s repurchase program is completed.
The Company will hold an earnings teleconference call at 11:00 a.m. eastern standard time on February 24, 2011 to allow securities analysts, stockholders and other interested parties the opportunity to hear management discuss the Company’s results for the year ended December 31, 2010, as well as its expectations for 2011. Dial-in information for the call is toll-free 1-877-407-9205 (International: 1-201-689-8054). The event will be archived and available for digital replay through May 24, 2011. The replay access information is toll-free 1-877-660-6853 (International: 1-201-612-7415); passcodes required for playback: account number 286, conference ID number 366793.
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 until May 24, 2011. A transcript of the teleconference will also be available on the Company’s website shortly after the completion of the teleconference.
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 OMX Stock Market under the symbol EMCI. EMCI’s parent company is Employers Mutual Casualty Company (EMCC). EMCI and EMCC, together with their subsidiary and affiliated companies, conduct operations under the trade name EMC Insurance Companies. Additional information regarding EMC Insurance Companies may be found at www.emcins.com.
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:
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catastrophic events and the occurrence of significant severe weather conditions;
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the adequacy of loss and settlement expense reserves;
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state and federal legislation and regulations;
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changes in the property and casualty insurance industry, interest rates or the performance of financial markets and the general economy;
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rating agency actions;
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“other-than-temporary” investment impairment losses; and
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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.
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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.
¹The Company uses a non-GAAP financial measure called “operating income” that management believes is useful to investors because it illustrates the performance of our normal, ongoing operations, which is important in understanding and evaluating our financial condition and results of operations. While this measure is consistent with measures utilized by investors to evaluate performance, it is not a substitute for the U.S. GAAP financial measure of net income. Therefore, the Company has provided the following reconciliation of this non-GAAP financial measure to the U.S. GAAP financial measure of net income. Management also uses non-GAAP financial measures for goal setting, determining employee and senior management awards and compensation, and evaluating performance.
Reconciliation of operating income to net income:
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Three Months Ended
December 31,
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Year ended
December 31,
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2010
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2009
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2010
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2009
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|||||||||||||
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Operating income
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$ | 9,125,505 | $ | 12,801,577 | $ | 28,831,601 | $ | 33,721,138 | ||||||||
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Net realized investment gains
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1,585,678 | 14,747,267 | 2,514,722 | 11,649,476 | ||||||||||||
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Net income
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$ | 10,711,183 | $ | 27,548,844 | $ | 31,346,323 | $ | 45,370,614 | ||||||||
CONSOLIDATED BALANCE SHEETS
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December 31,
2010
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December 31,
2009
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ASSETS
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Investments:
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Fixed maturities:
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Securities held-to-maturity, at amortized cost (fair value $389,679 and $460,877)
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$ | 340,803 | $ | 410,005 | ||||
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Securities available-for-sale, at fair value (amortized cost $909,582,782 and $858,129,177)
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941,537,026 | 884,688,114 | ||||||
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Fixed maturity securities on loan:
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||||||||
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Securities available-for-sale, at fair value (amortized cost $0 and $14,065,597)
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- | 14,492,872 | ||||||
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Equity securities available-for-sale, at fair value (cost $75,721,039 and $73,114,920)
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101,138,982 | 90,189,979 | ||||||
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Other long-term investments, at cost
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29,827 | 47,083 | ||||||
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Short-term investments, at cost
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36,616,111 | 55,390,096 | ||||||
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Total investments
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1,079,662,749 | 1,045,218,149 | ||||||
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Cash
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491,994 | 278,534 | ||||||
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Reinsurance receivables due from affiliate
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30,256,586 | 30,544,558 | ||||||
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Prepaid reinsurance premiums due from affiliate
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9,530,426 | 5,112,386 | ||||||
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Deferred policy acquisition costs (all affiliated)
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37,584,448 | 36,650,628 | ||||||
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Defined benefit retirement plan due from affiliate
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5,125,701 | - | ||||||
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Accrued investment income
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10,925,854 | 11,082,132 | ||||||
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Accounts receivable
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1,716,150 | 1,611,740 | ||||||
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Income taxes recoverable
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2,350,864 | - | ||||||
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Deferred income taxes
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6,690,218 | 15,044,357 | ||||||
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Goodwill
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941,586 | 941,586 | ||||||
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Securities lending collateral
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- | 14,941,880 | ||||||
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Other assets (affiliated $2,433,445 and $2,058,189)
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2,517,922 | 4,361,843 | ||||||
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Total assets
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$ | 1,187,794,498 | $ | 1,165,787,793 | ||||
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December 31,
2010
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December 31,
2009
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LIABILITIES
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Losses and settlement expenses (affiliated $553,125,183 and $553,787,770)
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$ | 556,140,956 | $ | 556,151,577 | ||||
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Unearned premiums due to affiliate
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167,896,119 | 159,486,096 | ||||||
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Other policyholders' funds due to affiliate
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8,315,751 | 7,918,665 | ||||||
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Surplus notes payable to affiliate
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25,000,000 | 25,000,000 | ||||||
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Amounts due affiliate to settle quarterly transaction balances
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18,380,813 | 13,488,724 | ||||||
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Employee retirement benefits payable to affiliate
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20,418,716 | 18,176,720 | ||||||
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Income taxes payable
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- | 5,488,760 | ||||||
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Securities lending obligation
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- | 14,941,880 | ||||||
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Other liabilities (affiliated $22,861,092 and $20,335,197)
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23,001,141 | 22,717,686 | ||||||
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Total liabilities
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819,153,496 | 823,370,108 | ||||||
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STOCKHOLDERS' EQUITY
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Common stock, $1 par value, authorized 20,000,000shares; issued and outstanding, 12,927,678 shares in 2010 and 13,114,481 shares in 2009
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12,927,678 | 13,114,481 | ||||||
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Additional paid-in capital
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88,937,294 | 92,804,282 | ||||||
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Accumulated other comprehensive income (loss):
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Net unrealized losses on fixed maturity securities with "other-than-temporary" impairments
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(69,852 | ) | (104,847 | ) | ||||
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Other net unrealized gains
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37,361,774 | 28,744,673 | ||||||
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Employee retirement benefits payable to affiliate
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(12,796,435 | ) | (12,587,484 | ) | ||||
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Total accumulated other comprehensive income
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24,495,487 | 16,052,342 | ||||||
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Retained earnings
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242,280,543 | 220,446,580 | ||||||
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Total stockholders' equity
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368,641,002 | 342,417,685 | ||||||
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Total liabilities and stockholders' equity
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$ | 1,187,794,498 | $ | 1,165,787,793 | ||||
CONSOLIDATED STATEMENTS OF INCOME
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Quarter Ended December 31, 2010
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Property and
Casualty Insurance |
Reinsurance
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Parent
Company |
Consolidated
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Revenues:
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Premiums earned
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$ | 78,048,084 | $ | 25,013,652 | $ | - | $ | 103,061,736 | ||||||||
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Investment income, net
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8,968,750 | 3,101,499 | 4,948 | 12,075,197 | ||||||||||||
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Other income
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126,779 | - | - | 126,779 | ||||||||||||
| 87,143,613 | 28,115,151 | 4,948 | 115,263,712 | |||||||||||||
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Losses and expenses:
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Losses and settlement expenses
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50,865,926 | 9,007,382 | - | 59,873,308 | ||||||||||||
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Dividends to policyholders
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2,235,526 | - | - | 2,235,526 | ||||||||||||
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Amortization of deferred policy acquisition costs
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20,618,178 | 5,383,060 | - | 26,001,238 | ||||||||||||
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Other underwriting expenses
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7,995,277 | 6,506,377 | - | 14,501,654 | ||||||||||||
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Interest expense
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225,000 | - | - | 225,000 | ||||||||||||
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Other expenses
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119,456 | (108,862 | ) | 265,810 | 276,404 | |||||||||||
| 82,059,363 | 20,787,957 | 265,810 | 103,113,130 | |||||||||||||
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Operating income (loss) before income taxes
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5,084,250 | 7,327,194 | (260,862 | ) | 12,150,582 | |||||||||||
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Realized investment gains
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1,943,407 | 496,098 | - | 2,439,505 | ||||||||||||
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Income (loss) before income taxes
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7,027,657 | 7,823,292 | (260,862 | ) | 14,590,087 | |||||||||||
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Income tax expense (benefit):
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Current
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(674,740 | ) | 1,465,422 | (91,302 | ) | 699,380 | ||||||||||
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Deferred
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2,277,325 | 902,199 | - | 3,179,524 | ||||||||||||
| 1,602,585 | 2,367,621 | (91,302 | ) | 3,878,904 | ||||||||||||
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Net income (loss)
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$ | 5,425,072 | $ | 5,455,671 | $ | (169,560 | ) | $ | 10,711,183 | |||||||
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Average shares outstanding
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12,920,702 | |||||||||||||||
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Per Share Data:
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Net income (loss) per share - basic and diluted
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$ | 0.42 | $ | 0.42 | $ | (0.01 | ) | $ | 0.83 | |||||||
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Decrease (increase) in provision for insured events of prior years (after tax)
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$ | (0.12 | ) | $ | 0.35 | $ | - | $ | 0.23 | |||||||
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Catastrophe and storm losses (after tax)
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$ | (0.06 | ) | $ | (0.09 | ) | $ | - | $ | (0.15 | ) | |||||
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Dividends per share
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$ | 0.19 | ||||||||||||||
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Other Information of Interest:
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Net written premiums
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$ | 63,201,500 | $ | 24,914,176 | $ | - | $ | 88,115,676 | ||||||||
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(Decrease) increase in provision for insured events of prior years
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$ | 2,456,661 | $ | (7,018,676 | ) | $ | - | $ | (4,562,015 | ) | ||||||
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Catastrophe and storm losses
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$ | 1,308,310 | $ | 1,742,867 | $ | - | $ | 3,051,177 | ||||||||
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GAAP Combined Ratio:
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Loss ratio
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65.2 | % | 36.0 | % | - | 58.1 | % | |||||||||
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Expense ratio
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39.5 | % | 47.5 | % | - | 41.5 | % | |||||||||
| 104.7 | % | 83.5 | % | - | 99.6 | % | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
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Quarter Ended December 31, 2009
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Property and
Casualty Insurance |
Reinsurance
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Parent
Company |
Consolidated
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Revenues:
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Premiums earned
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$ | 77,520,877 | $ | 21,204,653 | $ | - | $ | 98,725,530 | ||||||||
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Investment income, net
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9,345,570 | 3,163,326 | (4,253 | ) | 12,504,643 | |||||||||||
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Other income
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177,186 | 2,543 | - | 179,729 | ||||||||||||
| 87,043,633 | 24,370,522 | (4,253 | ) | 111,409,902 | ||||||||||||
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Losses and expenses:
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Losses and settlement expenses
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49,291,089 | 8,241,260 | - | 57,532,349 | ||||||||||||
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Dividends to policyholders
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1,816,687 | - | - | 1,816,687 | ||||||||||||
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Amortization of deferred policy acquisition costs
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19,928,255 | 4,085,472 | - | 24,013,727 | ||||||||||||
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Other underwriting expenses
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9,149,267 | 932,926 | - | 10,082,193 | ||||||||||||
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Interest expense
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225,000 | - | - | 225,000 | ||||||||||||
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Other expenses
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240,999 | (364,633 | ) | 315,755 | 192,121 | |||||||||||
| 80,651,297 | 12,895,025 | 315,755 | 93,862,077 | |||||||||||||
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Operating income (loss) before income taxes
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6,392,336 | 11,475,497 | (320,008 | ) | 17,547,825 | |||||||||||
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Realized investment gains
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22,641,978 | 46,126 | - | 22,688,104 | ||||||||||||
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Income (loss) before income taxes
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29,034,314 | 11,521,623 | (320,008 | ) | 40,235,929 | |||||||||||
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Income tax expense (benefit):
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Current
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7,310,872 | 2,018,308 | (112,002 | ) | 9,217,178 | |||||||||||
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Deferred
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1,818,792 | 1,651,115 | - | 3,469,907 | ||||||||||||
| 9,129,664 | 3,669,423 | (112,002 | ) | 12,687,085 | ||||||||||||
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Net income (loss)
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$ | 19,904,650 | $ | 7,852,200 | $ | (208,006 | ) | $ | 27,548,844 | |||||||
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Average shares outstanding
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13,113,534 | |||||||||||||||
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Per Share Data:
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Net income (loss) per share - basic and diluted
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$ | 1.52 | $ | 0.60 | $ | (0.02 | ) | $ | 2.10 | |||||||
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Decrease in provision for insured events of prior years (after tax)
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$ | 0.17 | $ | 0.30 | $ | - | $ | 0.47 | ||||||||
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Catastrophe and storm losses (after tax)
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$ | 0.04 | $ | (0.07 | ) | $ | - | $ | (0.03 | ) | ||||||
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Dividends per share
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$ | 0.18 | ||||||||||||||
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Other Information of Interest:
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Net written premiums
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$ | 63,193,817 | $ | 20,937,704 | $ | - | $ | 84,131,521 | ||||||||
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Decrease in provision for insured events of prior years
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$ | (3,448,955 | ) | $ | (5,934,148 | ) | $ | - | $ | (9,383,103 | ) | |||||
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Catastrophe and storm losses
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$ | (809,043 | ) | $ | 1,328,769 | $ | - | $ | 519,726 | |||||||
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GAAP Combined Ratio:
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Loss ratio
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63.6 | % | 38.9 | % | - | 58.3 | % | |||||||||
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Expense ratio
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39.8 | % | 23.6 | % | - | 36.4 | % | |||||||||
| 103.4 | % | 62.5 | % | - | 94.7 | % | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
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Year Ended December 31, 2010
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Property and
Casualty Insurance |
Reinsurance
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Parent
Company |
Consolidated
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Revenues:
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Premiums earned
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$ | 305,646,658 | $ | 83,475,492 | $ | - | $ | 389,122,150 | ||||||||
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Investment income, net
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36,966,159 | 12,523,505 | (449 | ) | 49,489,215 | |||||||||||
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Other income
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783,346 | - | - | 783,346 | ||||||||||||
| 343,396,163 | 95,998,997 | (449 | ) | 439,394,711 | ||||||||||||
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Losses and expenses:
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Losses and settlement expenses
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208,114,161 | 46,526,358 | - | 254,640,519 | ||||||||||||
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Dividends to policyholders
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8,013,843 | - | - | 8,013,843 | ||||||||||||
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Amortization of deferred policy acquisition costs
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74,298,312 | 17,799,907 | - | 92,098,219 | ||||||||||||
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Other underwriting expenses
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34,184,263 | 9,240,176 | - | 43,424,439 | ||||||||||||
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Interest expense
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900,000 | - | - | 900,000 | ||||||||||||
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Other expenses
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753,014 | (345,978 | ) | 1,334,234 | 1,741,270 | |||||||||||
| 326,263,593 | 73,220,463 | 1,334,234 | 400,818,290 | |||||||||||||
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Operating income (loss) before income taxes
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17,132,570 | 22,778,534 | (1,334,683 | ) | 38,576,421 | |||||||||||
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Realized investment gains
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3,078,289 | 790,514 | - | 3,868,803 | ||||||||||||
|
Income (loss) before income taxes
|
20,210,859 | 23,569,048 | (1,334,683 | ) | 42,445,224 | |||||||||||
|
Income tax expense (benefit):
|
||||||||||||||||
|
Current
|
1,449,805 | 6,308,402 | (467,139 | ) | 7,291,068 | |||||||||||
|
Deferred
|
3,212,310 | 595,523 | - | 3,807,833 | ||||||||||||
| 4,662,115 | 6,903,925 | (467,139 | ) | 11,098,901 | ||||||||||||
|
Net income (loss)
|
$ | 15,548,744 | $ | 16,665,123 | $ | (867,544 | ) | $ | 31,346,323 | |||||||
|
Average shares outstanding
|
13,038,263 | |||||||||||||||
|
Per Share Data:
|
||||||||||||||||
|
Net income (loss) per share - basic and diluted
|
$ | 1.19 | $ | 1.28 | $ | (0.07 | ) | $ | 2.40 | |||||||
|
Decrease in provision for insured events of prior years (after tax)
|
$ | 1.43 | $ | 1.10 | $ | - | $ | 2.53 | ||||||||
|
Catastrophe and storm losses (after tax)
|
$ | (1.65 | ) | $ | (0.45 | ) | $ | - | $ | (2.10 | ) | |||||
|
Dividends per share
|
$ | 0.73 | ||||||||||||||
|
Book value per share
|
$ | 28.52 | ||||||||||||||
|
Effective tax rate
|
26.1 | % | ||||||||||||||
|
Annualized net income as a percent of beg. SH equity
|
9.2 | % | ||||||||||||||
|
Other Information of Interest:
|
||||||||||||||||
|
Net written premiums
|
$ | 310,794,289 | $ | 84,054,820 | $ | - | $ | 394,849,109 | ||||||||
|
Decrease in provision for insured events of prior years
|
$ | (28,726,238 | ) | $ | (22,022,632 | ) | $ | - | $ | (50,748,870 | ) | |||||
|
Catastrophe and storm losses
|
$ | 33,062,100 | $ | 9,081,615 | $ | - | $ | 42,143,715 | ||||||||
|
GAAP Combined Ratio:
|
||||||||||||||||
|
Loss ratio
|
68.1 | % | 55.7 | % | - | 65.4 | % | |||||||||
|
Expense ratio
|
38.1 | % | 32.4 | % | - | 36.9 | % | |||||||||
| 106.2 | % | 88.1 | % | - | 102.3 | % | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
|
Year Ended December 31, 2009
|
Property and
Casualty Insurance |
Reinsurance
|
Parent
Company |
Consolidated
|
||||||||||||
|
Revenues:
|
||||||||||||||||
|
Premiums earned
|
$ | 308,079,036 | $ | 75,931,865 | $ | - | $ | 384,010,901 | ||||||||
|
Investment income, net
|
35,679,586 | 12,069,177 | 10,543 | 47,759,306 | ||||||||||||
|
Other income
|
752,635 | 2,543 | - | 755,178 | ||||||||||||
| 344,511,257 | 88,003,585 | 10,543 | 432,525,385 | |||||||||||||
|
Losses and expenses:
|
||||||||||||||||
|
Losses and settlement expenses
|
199,124,285 | 49,625,174 | - | 248,749,459 | ||||||||||||
|
Dividends to policyholders
|
9,090,655 | - | - | 9,090,655 | ||||||||||||
|
Amortization of deferred policy acquisition costs
|
73,409,970 | 14,582,779 | - | 87,992,749 | ||||||||||||
|
Other underwriting expenses
|
36,841,268 | 2,175,711 | - | 39,016,979 | ||||||||||||
|
Interest expense
|
900,000 | - | - | 900,000 | ||||||||||||
|
Other expenses
|
855,846 | (29,237 | ) | 1,346,388 | 2,172,997 | |||||||||||
| 320,222,024 | 66,354,427 | 1,346,388 | 387,922,839 | |||||||||||||
|
Operating income (loss) before income taxes
|
24,289,233 | 21,649,158 | (1,335,845 | ) | 44,602,546 | |||||||||||
|
Realized investment gains (losses)
|
19,581,814 | (1,659,543 | ) | - | 17,922,271 | |||||||||||
|
Income (loss) before income taxes
|
43,871,047 | 19,989,615 | (1,335,845 | ) | 62,524,817 | |||||||||||
|
Income tax expense (benefit):
|
||||||||||||||||
|
Current
|
11,296,988 | 4,886,576 | (467,545 | ) | 15,716,019 | |||||||||||
|
Deferred
|
735,709 | 702,475 | - | 1,438,184 | ||||||||||||
| 12,032,697 | 5,589,051 | (467,545 | ) | 17,154,203 | ||||||||||||
|
Net income (loss)
|
$ | 31,838,350 | $ | 14,400,564 | $ | (868,300 | ) | $ | 45,370,614 | |||||||
|
Average shares outstanding
|
13,207,105 | |||||||||||||||
|
Per Share Data:
|
||||||||||||||||
|
Net income (loss) per share - basic and diluted
|
$ | 2.41 | $ | 1.09 | $ | (0.06 | ) | $ | 3.44 | |||||||
|
Decrease in provision for insured events of prior years (after tax)
|
$ | 1.70 | $ | 0.69 | $ | - | $ | 2.39 | ||||||||
|
Catastrophe and storm losses (after tax)
|
$ | (1.37 | ) | $ | (0.18 | ) | $ | - | $ | (1.55 | ) | |||||
|
Dividends per share
|
$ | 0.72 | ||||||||||||||
|
Book value per share
|
$ | 26.11 | ||||||||||||||
|
Effective tax rate
|
27.4 | % | ||||||||||||||
|
Annualized net income as a percent of beg. SH equity
|
16.0 | % | ||||||||||||||
|
Other Information of Interest:
|
||||||||||||||||
|
Net written premiums
|
$ | 312,814,883 | $ | 75,901,429 | $ | - | $ | 388,716,312 | ||||||||
|
Decrease in provision for insured events of prior years
|
$ | (34,641,246 | ) | $ | (13,981,046 | ) | $ | - | $ | (48,622,292 | ) | |||||
|
Catastrophe and storm losses
|
$ | 27,898,729 | $ | 3,565,791 | $ | - | $ | 31,464,520 | ||||||||
|
GAAP Combined Ratio:
|
||||||||||||||||
|
Loss ratio
|
64.6 | % | 65.4 | % | - | 64.8 | % | |||||||||
|
Expense ratio
|
38.8 | % | 22.0 | % | - | 35.4 | % | |||||||||
| 103.4 | % | 87.4 | % | - | 100.2 | % | ||||||||||
INVESTMENTS
The Company had total cash and invested assets with a carrying value of $1.1 billion and $1.0 billion as of December 31, 2010 and, 2009, respectively. The following table summarizes the Company’s cash and invested assets as of the dates indicated:
|
December 31, 2010
|
||||||||||||||||
|
($ in thousands)
|
Amortized
Cost |
Fair
Value |
Percent of
Total Fair Value |
Carrying
Value |
||||||||||||
|
Fixed maturity securities held-to-maturity
|
$ | 341 | $ | 390 | - | $ | 341 | |||||||||
|
Fixed maturity securities available-for-sale
|
909,583 | 941,537 | 87.2 | % | 941,537 | |||||||||||
|
Equity securities available-for-sale
|
75,721 | 101,139 | 9.4 | % | 101,139 | |||||||||||
|
Cash
|
492 | 492 | - | 492 | ||||||||||||
|
Short-term investments
|
36,616 | 36,616 | 3.4 | % | 36,616 | |||||||||||
|
Other long-term investments
|
30 | 30 | - | 30 | ||||||||||||
| $ | 1,022,783 | $ | 1,080,204 | 100.0 | % | $ | 1,080,155 | |||||||||
|
December 31, 2009
|
||||||||||||||||
|
($ in thousands)
|
Amortized
Cost |
Fair
Value |
Percent of
Total Fair Value |
Carrying
Value |
||||||||||||
|
Fixed maturity securities held-to-maturity
|
$ | 410 | $ | 461 | 0.1 | % | $ | 410 | ||||||||
|
Fixed maturity securities available-for-sale
|
872,195 | 899,181 | 86.0 | % | 899,181 | |||||||||||
|
Equity securities available-for-sale
|
73,115 | 90,190 | 8.6 | % | 90,190 | |||||||||||
|
Cash
|
279 | 279 | - | 279 | ||||||||||||
|
Short-term investments
|
55,390 | 55,390 | 5.3 | % | 55,390 | |||||||||||
|
Other long-term investments
|
47 | 47 | - | 47 | ||||||||||||
| $ | 1,001,436 | $ | 1,045,548 | 100.0 | % | $ | 1,045,497 | |||||||||
NET WRITTEN PREMIUMS
|
Three Months Ended
December 31, 2010 |
Year Ended
December 31, 2010
|
|||||||||||||||
|
Percent of
Net Written Premiums |
Percent of I
ncrease/ (Decrease) in Net Written Premiums |
Percent of
Net Written Premiums |
Percent of
Increase/ (Decrease) in Net Written Premiums |
|||||||||||||
|
Property and Casualty Insurance
|
||||||||||||||||
|
Commercial Lines:
|
||||||||||||||||
|
Automobile
|
15.3 | % | 0.6 | % | 16.7 | % | 1.2 | % | ||||||||
|
Liability
|
13.0 | % | (1.4 | )% | 14.6 | % | (6.3 | )% | ||||||||
|
Property
|
15.3 | % | 7.4 | % | 16.9 | % | 4.8 | % | ||||||||
|
Workers' Compensation
|
13.1 | % | 0.4 | % | 16.3 | % | (3.0 | )% | ||||||||
|
Other
|
1.9 | % | (7.9 | )% | 2.0 | % | (7.1 | )% | ||||||||
|
Total Commercial Lines
|
58.6 | % | 1.5 | % | 66.5 | % | (1.0 | )% | ||||||||
|
Personal Lines:
|
||||||||||||||||
|
Automobile
|
7.5 | % | (14.5 | )% | 7.3 | % | 3.4 | % | ||||||||
|
Property
|
5.5 | % | 8.9 | % | 4.7 | % | (1.4 | )% | ||||||||
|
Liability
|
0.1 | % | (1.9 | )% | 0.1 | % | (5.6 | )% | ||||||||
|
Total Personal Lines
|
13.1 | % | (6.0 | )% | 12.1 | % | 1.4 | % | ||||||||
|
Total Property and Casualty Insurance
|
71.7 | % | - | % | 78.6 | % | (0.6 | )% | ||||||||
|
Reinsurance
|
28.3 | % | 19.0 | % | 21.4 | % | 10.7 | % | ||||||||
|
Total
|
100.0 | % | 4.7 | % | 100.0 | % | 1.6 | % | ||||||||