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1
2017 Investor
Meetings
March-April
2
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
presentation 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.
3
Table of Contents
Page/Slide Number
Who We Are 4
Key Reasons to Invest in EMCI 5
Corporate Structure 6
Benefits of Pooling Agreement 7
Benefits of Quota Share Agreement
with EMCC 8
Intercompany Reinsurance Programs 9
2016 Premiums Earned 10
Diversified Book of Business 11-12
Value of Local Market Presence 13
2016 Direct Premiums Written by Branch (CL) 14
2016 Premium Distribution by Account Size (CL) 15
Unique and Powerful Rate Compare System 16
Page/Slide Number
Commercial Rate Changes Outpace
Industry 17
Loss Cost Trend 18
GAAP Combined Ratios 19
Personal Lines Focused Accountability 20
Accelerate Commercial Auto Profitability 21
Investing in Innovation 22
Innovative Loss Control Services 23
Investment Portfolio 24
Stockholder Dividends 25
Maximizing Stockholder Value 26
Improving Valuation 27
Appendix 28-37
4
• Downstream holding company of Employers Mutual
Casualty Company (EMCC)
• Trade on NASDAQ: EMCI
• Enterprise began in 1911, IPO in 1982
• Property and Casualty Insurance Segment (77%
of premiums earned)
• 2,120 independent agency relationships
• 41 state distribution network, licensed in all 50 states and
District of Columbia
• 30% participation in EMCC pool
• Diversified premiums (91% commercial / 9% personal)
• Reinsurance Segment (23% of premiums earned)
• EMCC has assumed reinsurance business since 1950s
• 100% Quota Share Agreement with EMCC, but some
contracts written directly
• 84% of business primarily from 16 reinsurance brokers
• 16% of business from participation in MRB underwriting
association
Who We Are
5
Key Reasons to Invest in EMCI
• Dividend yield of 3.0% as of
March 1, 2017
• Access to large capital base
• Diversified, seasoned book of
business
• Regional, decentralized
operating structure
• Conservative balance sheet
• Experienced senior
management
• Focus on innovation
Source: Bloomberg
Total Stockholder Return*
22.1%
17.1%
20.8%
11.9%
8.9%
14.6%
0%
5%
10%
15%
20%
25%
1 Year 3 Year 5 Year
EMCI S&P500
*Total annual stockholder return is the percentage change in the stock price plus the amount of dividends paid, assuming dividend
reinvestment, to the stock price at the beginning of the one year, three year and five year periods ending December 31, 2016.
6
Corporate Structure
Reinsurance Segment
(100% Quota Share Agreement with EMCC)
Employers Mutual
Casualty Company
(Founded in 1911)
Public Shareholders
EMC Insurance Group Inc.
(IPO in 1982 - Follow-on offerings in 1985 and 2004)
55%* 45%*
*Ownership as of December 31, 2016
Dakota Fire
Insurance
Company
EMCASCO
Insurance
Company
Illinois
EMCASCO
Insurance Co.
EMC
Reinsurance
Company
EMC
Underwriters,
LLC
Property and Casualty
Insurance Segment
(Aggregate 30% pool participation)
7
Benefits of Pooling Agreement
• “A” (Excellent) rating with stable outlook from A.M. Best
Company
• Risks spread over a wide range of geographic locations,
lines of insurance written, rate filings, commission plans and
policy forms
• Benefits from capacity of the entire pool
• $1.6 billion in direct premiums written* in 2016
• $1.4 billion of statutory surplus as of Dec. 31, 2016
• Merger and acquisition flexibility
• Economies of scale in operations and purchase of
reinsurance
• Investment in innovation
*Premiums written is an industry metric used in statutory accounting to quantify the amount of insurance sold during a specified reporting
period. See p. 37 for additional information regarding this metric.
8
Benefits of Quota Share Agreement with EMCC
• EMCC’s surplus ($1.4 billion as of Dec. 31, 2016) and
financial strength exhibits ability to pay claims owed to
ceding companies
• Name recognition and long-standing domestic and
international relationships with EMCC
• Competitive advantage being licensed in all 50 states and
District of Columbia
• Utilize EMCC’s “A” (Excellent) rating from A.M. Best
Company (EMC Re also rated “A”)
9
Intercompany Reinsurance Programs
Overview
• Intercompany reinsurance program between EMCI’s three
insurance subsidiaries in the property and casualty
insurance segment and EMCC
• Revised intercompany reinsurance program between
EMCI’s reinsurance subsidiary (EMC Reinsurance
Company) and EMCC
Objectives
• Reduce volatility of EMCI’s quarterly results caused by
excessive catastrophe and storm losses
• Provide protection from both frequency and severity of such
losses
NOTE: The Inter-Company Committees of the boards of directors of EMCI and EMCC approved the terms of the agreements to ensure they
are fair and equitable to both parties.
10
2016 Premiums Earned
EMCI
EMC Insurance Companies premiums earned ~$1.7 billion, consists of:
• EMCI and its subsidiaries
• Employers Mutual and its subsidiaries and affiliate
EMCC, Subs. &
Affil.
$1,094.8 million
Reinsurance
Segment
$135.9 million
P&C Insurance
Segment
$456.5 million
11
Excess of
Loss
58.6%
Pro Rata
41.4%
Diversified Book of Business
Reinsurance Segment Premiums Earned
Domestic 85%
International (mainly Europe & Japan) 15%
P&C Insurance Segment
$456.5 million
Reinsurance Segment
$135.9 million
12
Reinsurance Segment
$135.9 million
P&C Insurance Segment
$456.5 million
Diversified Book of Business
Property and Casualty Insurance Segment Premiums Earned
Commercial
Auto
24.3%
Commercial
Liability
21.2%
Commercial
Property
23.0%
Workers'
Compensation
21.1%
Bonds
1.8%
Personal
Lines
8.6%
13
Value of Local Market Presence
• Decentralized Decision Making/Guided Autonomy:
• Marketing
• Underwriting
• Risk Improvement
• Claims
• Strengthens agency relationships, get to quote best
business generally resulting in superior loss ratio
• Develop products, marketing strategies and pricing
targeted to specific territories
• Individual approaches within EMC risk appetite and
framework
• Retention levels consistently stay between 80%-90%
• 86.8% at December 31, 2016
14
6.0%
4.7%
13.5%
7.2%
3.6%
4.2%
4.4%
3.8%
14.8%
4.3%
5.4%
4.3%
4.7%
5.5%
9.9%
3.7%
2016 Direct Premiums Written by Branch
Property and Casualty Insurance Segment Commercial Lines
15
31%
34%
35%
$1-$25K
$25-$100K
$100K+
2016 Premium Distribution by Account Size
• Approximately 86% of commercial accounts are under $25,000 in account
premium, but only represent 31% of commercial lines premiums written volume
• Invest more per dollar of premium in loss control services than most
competitors – available to all commercial policyholders
Property and Casualty Insurance Segment Commercial Lines
16
Unique and Powerful Rate Compare System
Rates current exposures of
commercial renewal policies at
current and prior period rates
Provides near real-time measure of
rate increase obtained by policy,
account underwriter, line of business
or branch
Able to target specific accounts
needing more or less rate when
combined with our internal analytical
models
Provides accountability for our branch
offices and underwriters, used in
performance management to achieve
desired rate level increases
Rate Compare
System
17
Commercial Rate Changes Outpace Industry
NOTE: MarketScout rate change is calculated using an average of monthly MarketScout data.
2009 2010 2011 2012 2013 2014 2015 2016
EMC -2.4% -1.8% 1.0% 6.0% 7.4% 4.5% 2.3% 0.4%
Market Scout -6.0% -4.0% -2.3% 3.8% 4.4% 1.8% -0.7% -1.9%
-8.0%
-4.0%
0.0%
4.0%
8.0%
To
ta
l R
at
e
C
ha
ng
e
18
-2.7%
6.0%
3.0%
-4%
-2%
0%
2%
4%
6%
8%
Frequency
Severity
Loss Cost Trend
Loss Cost Trend
• Provides a
measure of the
change in the
Company’s losses
• Calculated using
the change in
frequency of
normalized claim
counts and the
change in severity
of the claims
adjusted for
changes in rate
levels
Seven Major Lines of Direct Business
Compound Ultimate Annual Trend: 2012-2016*
*Excludes catastrophe and storm losses, and large losses.
19
87.9% 88.5% 91.3% 88.5% 89.6%
11.7% 9.4%
10.6%
7.8% 8.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
2012 2013 2014 2015 2016
Catastrophe and Storm Losses
GAAP Combined Ratio Excluding Catastrophe and Storm Losses
GAAP Combined Ratios
99.6% 97.9%
101.9%
96.3% 97.7%
20
Personal Lines Focused Accountability
• Centralized accountability for personal lines profitability
and growth in 2016
• Implemented new personal automobile and homeowners
products in 2016 for all active states
2016 Direct Premiums Written by State
NOTE: Premiums written
amounts represent entire PL
business for pool. EMCI is
30% participant in pool.
Premiums Written
21
Accelerate Commercial Auto Profitability
• Commercial auto represents ~24% of property and casualty
insurance segment’s commercial business
• Projected combined ratio of 110.8%* for industry in 2017
• Lower gas prices led to increase in miles driven and loss frequency,
coupled with increase in severity
• Initiatives underway to improve underwriting results relative to industry
• Implemented multi-year Accelerate Commercial Auto
Profitability project
• Goal of returning to underwriting profitability by mid-2019 – expect
incremental improvements during next 3 years
• Eight teams to complement local branch efforts, each focused on
different opportunities such as underwriting, pricing and claims
handling
• Introduce better tools to help agencies struggling with commercial
auto profitability
*Projection by Conning research
22
Investing in Innovation
Joined Global Insurance Accelerator –
a business accelerator focused on
developing and growing innovative
insurance-centric startups
Innovation Lab
Customer
Focus and
Collaboration
Cutting-Edge
Analytics
Connected/
Real-Time
Feedback
+ +
Superior Agency Relationships/Services and
Extraordinary Company Performance
23
Innovative Loss Control Services
App that allows organizations to easily
identify and report hazards that lead to slip
and fall incidents––leading cause of
unintentional injuries in U.S.
Partnered with MākuSafe, an innovative
startup that developed patent-pending
wearable technology that monitors
environmental exposures to identify risks
in industrial workplaces
Pilot program utilizing sensors and
monitoring system in schools that alerts
policyholders of real-time issues if triggered
School Sensor and
Monitoring Program
24
Treasuries/Agencies
17%
Corporate Bonds
31%
S-T
Investments/Other
3%
Equities
15%
Municipal Bonds
23%
Securitized Assets**
11%
Investment Portfolio
December 31, 2016
($ in millions)
*Investment securities purchased under reverse repurchase agreements of $20.0 million are not reflected in total investments; however, income from
these agreements is included in net investment income.
**Securitized assets include commercial mortgage-backed, residential mortgage-backed and other asset-backed securities.
• Increased market volatility = increased investment opportunities
• Fixed income continues to be fully valued
• Company specific risk is elevated, do not reach for yield
• Equity market valuation has increased
• Monitor equity allocation with tail-risk hedge to alleviate downside risk
• Hedge cost reduces equity portfolio return by 1.5–2% annually, dependent
on volatility in financial markets
Portfolio Summary
Fixed Income $ 1,199.7
Equities 213.8
Other 52.2
Total* $ 1,465.7
25
$-
$0.03
$0.06
$0.09
$0.12
$0.15
$0.18
$0.21
2012 2013 2014 2015 2016
Quarterly Cash Dividend
1Q 2Q 3Q 4Q
Stockholder Dividends
• Paid dividend quarterly
since IPO in 1982
• Dividend has never
been reduced
• Increased quarterly
dividend 10.5% in
2016, demonstrating:
• Confidence in financial
condition and long-
term outlook
• Desire to improve total
stockholder return
• Dividend yield of 3.0%
as of March 1, 2017
26
$20.72
$22.81
$24.72 $25.26
$26.07
$21.26
$23.92
$26.46 $27.69
$29.28
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
2012 2013 2014 2015 2016
Book Value Per Share Cumulative Dividends Per Share
*
* Approximately $0.88 per share of the increase in 2013 is attributable to a change in EMCC’s postretirement healthcare plan.
Maximizing Stockholder Value
27
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2012 2013 2014 2015 2016 2017
EMCI Peer Group SNL U.S. Insurance P&C
Improving Valuation
EMCI Price/Book Value
1-Year Avg. 1.04x
3-Year Avg. 0.98x
5-Year Avg. 0.93x
Note: Peer Group consists of Cincinnati Financial Corporation, Donegal Group Inc., Selective Insurance Group, Inc., State Auto
Financial Corporation and United Fire Group, Inc.
Source: SNL Financial
28
Appendix
29
Local Service Focus
Agencies Represented by Territory
z61
112
141
108
142
101
100
90
71
146
129
146
86174
286
228
• Feedback from annual agent
survey drives future product
and service enhancements
• Formal tiering program ties
compensation to performance
30
Strength in Group Programs
Direct Premiums Written
Target Market
Loss Ratio
Safety Group
Loss Ratio
Total Program
Loss Ratio
2016 42.1% 38.6% 40.4%
5-Year 50.1% 47.0% 48.6%
Target Markets
Branch and industry specific
programs such as:
• Schools
• Municipalities
• Petroleum Marketers
• Manufactured Housing
• Water Well Drillers
Safety Groups
• Similar to Target Markets, except
offer dividends for favorable loss
experience of the group
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2012 2013 2014 2015 2016
Target Market Safety Group
($
in
th
ou
sa
nd
s)
31
New Reserving Methodology
• New reserving methodology in property and casualty
insurance segment utilized beginning in third quarter of
2016––Accident year ultimate estimate approach
• Transition to new methodology did not have a material
impact on operating results
Benefits of new methodology
• Increased transparency of drivers of performance
• Better conforms to industry practices
32
2017 Intercompany Reinsurance Treaties
$20M
$15M
$24M
$12M
JANUARY 1 - JUNE 30
AGGREGATE TREATY
JULY 1 - DECEMBER 31
AGGREGATE TREATY
Retention Limit
Cost: $6.0M
Property and Casualty Insurance Segment
Catastrophe Treaties Between EMCI and EMCC
Cost: $1.4M
$10M $20M
$10M
$100M
O NE-T IME PER O CCURRENCE
TREA TY
A NNUA L A GGREGA TE TREA TY
Retention Limit
Reinsurance Segment Catastrophe Treaties
Between EMCI and EMCC
Cost: $1.7M
Cost: $3.2M
Per Occurrence
Treaty
Annual Aggregate
Treaty
Jan. 1 – June 30
Aggregate Treaty
July 1 – Dec. 31
Aggregate Treaty
20% Co-participation
• EMC Re will purchase additional reinsurance protections
(Industry Loss Warranties) in peak exposure territories –
Ceded premiums earned of approximately $3.5 million in 2016
33
Award-Winning Workplace
• No. 2 Best Companies for Leaders
(Chief Executive)
• 50 Most Trustworthy Financial
Companies (Forbes)
• No. 16 Top Workplaces in Iowa (The
Des Moines Register)
• Best Property/Casualty Company in
Des Moines (Business Record)
• Child Support Lien Network
Partnership Award
• American Heart Association’s Platinum
Level Fit-Friendly Worksite
34
Kevin J. Hovick
CPCU
Executive Vice President
& Chief Operating Officer
37 years with EMC
Experienced Executive Management Team
Scott R. Jean
FCAS, MAAA
Executive Vice President
for Finance & Analytics
25 years with EMC
Mick A. Lovell
CPCU
Executive Vice President
for Corporate Development
13 years with EMC
Bruce G. Kelley
J.D., CPCU, CLU
President, Chief Executive
Officer & Director
31 years with EMC
Jason R. Bogart
CPCU, ARM
Senior Vice President/
Branch Operations
23 years with EMC
AVERAGE YEARS
With EMC:
28
Vicki L. Freese
CPCU, ARe
President of
EMC Reinsurance Co.
39 years with EMC
35
Fixed Income Portfolio
December 31, 2016
Bond Ratings
AAA 38.5%
AA 28.8%
A 26.1%
BAA 6.3%
BA and below 0.3%
Total 100.0%
Portfolio Characteristics
Average Life: 6.4 Years
Duration: 5.2
Pre-tax Book Yield: 3.5%
21%
21%
15%
24%
19%
Fixed Income Securities
Expected Maturity
0-2 Years 2-5 Years
5-7 Years 7-10 Years
10+ Years
36
Selected Financial Results
(1) Operating income and operating income per share are non-GAAP financial measures. See p.37 for additional information regarding its calculation.
(2) Based on PLRB event occurrence numbers for the P&C insurance segment and PCS catastrophe serial numbers for the reinsurance segment.
Year Ended December 31,
($ in thousands, except per share amounts) 2016 2015 2014
Revenues $ 640,909 $ 617,573 $ 590,118
Net realized investment gains 4,074 6,153 4,349
Losses and expenses (581,776) (552,070) (553,560)
Income tax expense (17,004) (21,494) (10,915)
Net income $ 46,203 $ 50,162 $ 29,992
Net income per share $ 2.20 $ 2.43 $ 1.48
Non-GAAP operating income (1) $ 43,555 $ 46,163 $ 27,165
Non-GAAP operating income per share (1) $ 2.07 $ 2.24 $ 1.34
Loss and settlement expense ratio 65.3% 65.0% 71.3%
Acquisition expense ratio 32.4% 31.3% 30.6%
Combined ratio 97.7% 96.3% 101.9%
After-tax per share data:
Catastrophe and storm losses (2) $ (1.48) $ (1.40) $ (1.84)
Favorable development that had an impact on earnings $ 1.10 $ 1.12 $ 0.60
37
Year Ended December 31, Year Ended December 31,
2016 2015 2014 2016 2015 2014
($ in thousands) ($ per share)
Net income $ 46,203 $ 50,162 $ 29,992 $ 2.20 $ 2.43 $ 1.48
Realized investment gains 4,074 6,153 4,349 0.19 0.29 0.22
Income tax expense 1,426 2,154 1,522 0.06 0.10 0.08
Net realized investment gains 2,648 3,999 2,827 0.13 0.19 0.14
Non-GAAP operating income $ 43,555 $ 46,163 $ 27,165 $ 2.07 $ 2.24 $ 1.34
Non-GAAP Information
• Non-GAAP 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/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 non-GAAP operating income may differ from similar measures used by other companies, so
investors should exercise caution when comparing the Company’s measure of non-GAAP operating income to the measure used by other companies.
• Management believes non-GAAP 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 GAAP financial measures of net income and net income per share, to the non-GAAP financial measures of non-GAAP
operating income and non-GAAP operating income per share.
The reconciliations of net income to non-GAAP operating income, and net income per share to non-GAAP operating income per share, are as follows:
• Premiums written is an industry metric used in statutory accounting to quantify the amount of insurance sold during a specified reporting period.
Management analyzes trends in premiums written to assess business efforts, and uses it as a financial measure for goal setting and determining a
portion of employee and senior management awards and compensation. 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.
Industry Metric – Premiums Written