Thursday, EMC Insurance Group Inc. (EMCI), a provider of property and casualty insurance and reinsurance products, slashed its operating income guidance for calendar 2008, hurt by losses associated with Hurricanes Gustav and Ike.
The Des Moines, Iowa-based EMC said it expects losses associated with Hurricanes Gustav and Ike to be in the range of $8.2 million to $9.0 million, or $0.39 to $.43 per share after tax. The company recorded similar losses of $0.46 per share after tax, for the second quarter of 2007.
The company expects losses associated with Hurricane Gustav to range from about $2.8 million to $3.2 million or $0.13 to $0.15 per share after tax.
The losses associated with Hurricane Ike are expected to range from approximately $5.4 million to $5.8 million or $0.26 to $0.28 per share after tax.
The company said that unlike Hurricane Gustav, Hurricane Ike generated significant losses in both the property and casualty insurance segment and the reinsurance segment. However, losses in the reinsurance segment would be capped at the $2.0 million occurrence limit.
Accordingly, the company lowered its calendar year 2008 earnings guidance, and now expects operating income in the range of $0.65 per share to $0.95 per share, is based on a projected GAAP combined ratio of 109.1%. Previously, the company projected operating income for the calendar year 2008 of $1.20 per share to $1.45 per share, based on a GAAP combined ratio of 106.8%.
The company also said that the revised guidance reflects a reduction of $2.3 million or $0.11 per share after tax, in projected investment income for 2008 due to the Federal government's elimination of the dividend on the company's investment in Fannie Mae and Freddie Mac preferred stock.
EMCI closed Thursday's regular trading session at $29.85, up $0.46 or 1.57%.
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