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EMC Insurance posts second-quarter loss


Citing above-average catastrophe losses, Des Moines-based EMC Insurance Group Inc. today reported an operating loss of 14 cents per share for the second quarter, compared with an operating loss of $1.08 per share for the second quarter of 2011.

Catastrophe losses totaled $24.85 million in the second quarter of 2012, compared with $41.07 million a year earlier. Those losses overshadowed the positive effect of rate increases implemented in the first half of the year, said Bruce Kelley, EMC’s president and CEO, in a release. 

“We continue to believe that the persistent level of above-average catastrophe losses is an aberration attributed to an active weather cycle, and does not reflect a permanent change in weather patterns,” he said. “Future operating results should benefit from the rate level increases we are implementing now.”

Investment income decreased 2.8 percent to $11.15 million in the second quarter of 2012, from $11.47 million in the year-earlier quarter. 

“Investment income continues to decline as a result of the low interest rate environment that has persisted for the past several years,” Kelley said. “We are actively pursuing ways to minimize the decline in investment income without increasing overall risk, such as the implementation of our new equity strategy, which emphasizes dividend income. Those efforts have been successful, and we are currently projecting that the year-to-year decline in investment income will be less than 2 percent by the end of the year.”

The net loss for the quarter, including realized investment gains and losses, totaled $2.58 million, or 20 cents per share, compared with a net loss of $12.9 million, or $1 per share, for the second quarter of 2011. 

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