Des Moines-based EMC Insurance Group Inc. lowered its earnings outlook for the year after reporting that its third-quarter net income fell 39 percent from the year-ago period.

Net income was $6.7 million, or 49 cents per share, for the quarter ended Sept. 30, down from nearly $11 million, or 80 cents per share, a year ago. Operating income was $6.9 million compared with a record $11.6 million a year ago.

Premiums earned increased 1.8 percent to $97 million as new business offset a loss from declining premium rates and unrenewed business. The company expects its overall rate level to decline in the fourth quarter as a result of market competition. Catastrophic and storm losses increased to $7.2 million from $6 million as a result of a tornado in Greensburg, Kan., that cost the company $6.2 million.

As of Sept. 30, the company’s consolidated assets totaled $1.3 billion.

The company expects to increase its case loss reserves in the fourth quarter after a review from its actuarial department. As a result, it has lowered its 2007 earnings guidance to a range of $2.70 to $2.90 of operating earnings per share from a previous range of $2.95 to $3.15 per share.