EMC Insurance Group Inc. has raised its guidance for full year 2016.
The company expects to report net income per share in the range of $2.18 to $2.23 for 2016. Non-GAAP operating income per share is now projected to be in the range of $2.05 to $2.10, compared with the previous guidance of $1.55 to $1.75.
The company's GAAP combined ratio for the year is expected to be about 97.7%, compared with the previous guidance of 99.6%.
EMC Insurance attributed the increase in guidance to the property and casualty insurance segment, which is expected to report a GAAP combined ratio of about 92.2% for the fourth quarter of 2016. The improvement in the GAAP combined ratio is primarily due to favorable development on prior years' reserves and a low amount of catastrophe and storm losses, the company said in a statement.
The favorable development on prior years' reserves is based on 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 company attributed the low amount of catastrophe and storm losses to the new semiannual aggregate catastrophe excess of loss inter-company reinsurance program between the company's property and casualty subsidiaries and Employers Mutual Casualty Co., which capped losses at $512,000 in the fourth quarter of 2016.
The reinsurance segment's GAAP combined ratio is estimated to be about 89.8% for the fourth quarter of 2016.