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EMC Insurance expects net loss of up to 37 cents per share in FY'18

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EMC Insurance expects net loss of up to 37 cents per share in FY'18

EMC Insurance Group Inc. is anticipating a net loss in the range of 33 cents to 37 cents per share for full year 2018.

Included in the estimate is a pretax decline of approximately $1.34 per share in unrealized investment gains on the company's equity investments, attributable to the decline that occurred in the equity markets in December, and approximately 58 cents per share of pretax realized investment losses.

EMC Insurance expects to report non-GAAP operating income in the range of $1.07 to $1.11 per share, and a GAAP combined ratio of approximately 104%.

That is lower than previous guidance, which anticipated non-GAAP operating income in the range of $1.30 to $1.50 per share, and a GAAP combined ratio of 102.6%. The company expects about 9.4 percentage points of catastrophe and storm losses in the 2018 GAAP combined ratio, up from previous guidance of 7.7 percentage points, as a result of a record amount of catastrophe and storm losses incurred by the reinsurance segment in the fourth quarter of 2018.

EMC Insurance expects a fourth-quarter 2018 GAAP combined ratio of about 92.3% in the property and casualty insurance segment and about 134.6% in the reinsurance segment. For the full year, the P&C GAAP combined ratio is expected to be approximately 103.3%, and the reinsurance segment is likely to report a GAAP combined ratio of approximately 106.2%.

Catastrophe and storm losses are expected to total approximately $18.5 million, or 68 cents per share after tax, in the fourth quarter of 2018, all attributable to the reinsurance segment. This amount includes approximately $6.3 million and $2.5 million, respectively, from the Camp and Woolsey wildfires in California, $3.0 million from Hurricane Michael and $2.5 million from Typhoon Jebi.

The P&C insurance segment incurred approximately $2.1 million of catastrophe and storm losses in the fourth quarter of 2018. However, as the retention amounts under both semiannual aggregate excess of loss treaties were filled during the third quarter, all catastrophe and storm losses incurred during the fourth quarter were ceded to Employers Mutual.