EMC Insurance Group Inc. Announces Increase in 2016 Guidance

DES MOINES, Iowa, Jan. 27 -- EMC Insurance Group, a publicly held insurance holding company, issued the following news release:

EMC Insurance Group Inc. (NASDAQ:EMCI) (the "Company"), today announced that it expects to report net income in the range of $2.18 to $2.23 per share and non-GAAP operating income1 in the range of $2.05 to $2.10 per share for the year ended December 31, 2016. The GAAP combined ratio for the year is expected to be approximately 97.7 percent. These results are significantly better than the Company's most recent guidance, which anticipated non-GAAP operating income1 in the range of $1.55 to $1.75 per share and a GAAP combined ratio of 99.6 percent.

"We exceeded our expectations for 2016," stated President and Chief Executive Officer Bruce G. Kelley. "Our strong fourth quarter capped an excellent year, especially given the softening rate environment and increasing competition for quality accounts."

The increase in guidance is primarily attributed to the property and casualty insurance segment, which is expected to report a fourth quarter GAAP combined ratio of approximately 92.2 percent that is much lower than previously anticipated. This improvement was primarily driven by favorable development on prior years' reserves and a low amount of catastrophe and storm losses. The favorable development on prior years' reserves primarily reflects moderate reductions in the ultimate loss ratios for several accident years in the workers' compensation line of business and a reduction in settlement expense reserves. The low amount of catastrophe and storm losses is attributed to the new semi-annual aggregate catastrophe excess of loss intercompany reinsurance program between the property and casualty insurance subsidiaries and Employers Mutual Casualty Company (Employers Mutual), which capped losses at $512,000 in the fourth quarter. The reinsurance segment's GAAP combined ratio is estimated to be approximately 89.8 percent for the fourth quarter.

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