EMC Insurance Group Inc. Reports 2005 Third Quarter Results

Third Quarter 2005

Net Income Per Share -- $0.61

Net Operating Income Per Share -- $0.56

GAAP Combined Ratio - 100.1%

EMC Insurance Group Inc. (Nasdaq:EMCI) today reported record thirdquarter operating income of $0.56 per share for the quarter endedSeptember 30, 2005 compared to operating income of $0.10 per share forthe third quarter of 2004(1). Operating income for the nine monthsended September 30, 2005 was $1.63 per share compared to $0.92 pershare for the same period in 2004.

Net income, including realized investment gains/losses, was$8,329,000 ($0.61 per share) for the third quarter of 2005 compared to$1,858,000 ($0.16 per share) for the third quarter of 2004. Net incomefor the nine months ended September 30, 2005 was $23,992,000 ($1.76per share) compared to $13,673,000 ($1.18 per share) for the sameperiod in 2004.

"Though I am pleased to report record third quarter earnings, thisachievement is overshadowed by the death and destruction caused byHurricanes Katrina and Rita," stated President and CEO Bruce G.Kelley. "These devastating acts of nature will have a long-term, andperhaps permanent, impact on the lives of countless numbers ofAmericans and we extend our deepest sympathy to them."

Premiums earned increased 18.1 percent to $103,414,000 for thethree months ended September 30, 2005 from $87,588,000 for the sameperiod in 2004. For the nine months ended September 30, 2005, premiumsearned increased 21.1 percent to $308,911,000 from $255,031,000 forthe same period in 2004. These increases are primarily attributed tothe 6.5 percentage point increase in the Company's aggregateparticipation interest in the EMC Insurance Companies poolingarrangement that became effective January 1, 2005. As a result of thisincrease, the Company's aggregate participation in the poolingarrangement increased from 23.5 percent to 30.0 percent. The increasein premiums earned also reflects the impact of rate increases thatwere implemented in the property and casualty insurance businessduring 2004. On an overall basis, rate competition continued toincrease moderately in the property and casualty insurance marketplaceduring the first nine months of 2005; however, there have beenindications of more intense rate competition in select territories andlines of business. Market conditions are expected to remaincompetitive for the remainder of the year, but some price firming islikely in certain lines of business and regions of the country due tothe severe hurricane season.

Investment income increased 37.6 percent to $10,573,000 for thethree months and 36.1 percent to $29,705,000 for the nine months endedSeptember 30, 2005 from $7,683,000 and $21,823,000 for the sameperiods in 2004. These increases are primarily attributed toadditional interest income earned on $107,801,000 of cash receivedfrom Employers Mutual Casualty Company in the first quarter of 2005 inconnection with the change in the pooling arrangement and the$34,890,000 of net proceeds received in October 2004 from theCompany's follow-on stock offering.

The Company experienced $5,113,000 ($0.24 per share after tax) offavorable development on prior years' reserves during the thirdquarter of 2005 compared to adverse development of $2,512,000 ($0.14per share after tax) in the third quarter of 2004. For the first ninemonths of 2005, the Company had favorable development on prior years'reserves of $8,948,000 ($0.43 per share after tax) compared to adversedevelopment of $4,719,000 ($0.27 per share after tax) for the sameperiod in 2004. The adverse development for the first nine months of2004 includes $3,528,000 ($0.20 per share after tax) of bulk loss andsettlement expense reserves that were established as a result ofactuarial evaluations of the carried reserves in the property andcasualty insurance segment.

Catastrophe and storm losses increased 33.5 percent to $14,402,000($0.69 per share after tax) in the third quarter of 2005 from$10,790,000 ($0.61 per share after tax) in the third quarter of 2004.For the first nine months of 2005, catastrophe and storm lossestotaled $23,008,000 ($1.10 per share after tax) compared to$19,002,000 ($1.07 per share after tax) for the same period in 2004.Total losses attributable to Hurricanes Katrina and Rita, includingthe effect of reinsurance reinstatement premiums and relatedcommissions, amounted to $9,000,000 ($0.43 per share after tax).

The Company's GAAP combined ratio was 100.1 percent in the thirdquarter of 2005 compared to 107.6 percent in the third quarter of2004. For the first nine months of 2005, the GAAP combined ratio was99.6 percent compared to 102.8 percent for the same period in 2004.

At September 30, 2005, consolidated assets totaled $1.1 billion,including $0.9 billion in the investment portfolio; stockholders'equity was $246.1 million; and net book value of the Company's stockwas $18.07 per share, an increase of 7.3 percent from $16.84 per shareat December 31, 2004.

Management lowered its 2005 operating earnings guidance to a rangeof $1.95 per share to $2.10 per share on October 11, 2005 as a resultof the significant amount of catastrophe losses experienced during thethird quarter. Based on current information, management reaffirms thisrevised guidance.

The Company will host an earnings call on October 27, 2005. Theteleconference will begin at 10:00 a.m. eastern time. Dial-ininformation for the call is toll-free 1-800-638-4930, passcode number91828740. The event will be archived and available for digital replaythrough November 3, 2005. The replay access information is toll-free1-888-286-8010; passcode number 31183790. A webcast of theteleconference will be presented by Thomson Financial and can beaccessed at http://my.ccbn.com or from the Company's investorrelations page at www.emcinsurance.com. The archived webcast will beavailable for one year. A transcript of the teleconference will alsobe available on the Company's website shortly after the completion ofthe teleconference.

EMC Insurance Group Inc., the publicly-held insurance holdingcompany of EMC Insurance Companies, owns subsidiaries with operationsin property and casualty insurance and reinsurance. EMC InsuranceCompanies is one of the largest property and casualty entities in Iowaand among the top 60 insurance entities nationwide. For moreinformation, visit our website www.emcinsurance.com.

The Private Securities Litigation Reform Act of 1995 providesissuers the opportunity to make cautionary statements regardingforward-looking statements. Accordingly, any forward-looking statementcontained in this report is based on management's current beliefs,assumptions and expectations of the Company's future performance,taking into account all information currently available to management.These beliefs, assumptions and expectations can change as the resultof many possible events or factors, not all of which are known tomanagement. If a change occurs, the Company's business, financialcondition, liquidity, results of operations, plans and objectives mayvary materially from those expressed in the forward-lookingstatements. The risks and uncertainties that may affect the actualresults of the Company include, but are not limited to the following:catastrophic events and the occurrence of significant severe weatherconditions; the adequacy of loss and settlement expense reserves;state and federal legislation and regulations; changes in ourindustry, interest rates or the performance of financial markets andthe general economy; rating agency actions and other risks anduncertainties inherent to the Company's business. When the Companyuses the words "believe", "expect", "anticipate", "estimate", orsimilar expressions, it intends to identify forward-lookingstatements. You should not place undue reliance on theseforward-looking statements.

(1) The Company uses a non-GAAP financial measure called"operating income" that management believes is useful to investorsbecause it illustrates the performance of our normal, ongoingoperations, which is important in understanding and evaluating ourfinancial condition and results of operations. While this measure isconsistent with measures utilized by investors to evaluateperformance, it is not a substitute for the U.S. GAAP financialmeasure of net income. Therefore, the Company has provided areconciliation of this non-GAAP financial measure to the U.S. GAAPfinancial measure of net income in the Consolidated Statements ofIncome schedule contained in this release. Management also usesnon-GAAP financial measures for goal setting, determining employee andsenior management awards and compensation, and evaluating performance.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED


Property and
Quarter Ended Casualty Parent
September 30, 2005 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
--------
Premiums earned.. $79,810,370 $23,603,919 $- $103,414,289
Investment
income, net..... 7,718,777 2,806,335 48,106 10,573,218
Other income..... 150,022 - - 150,022
------------- ------------ ---------- -------------
87,679,169 26,410,254 48,106 114,137,529
------------- ------------ ---------- -------------
Losses and
expenses:
--------
Losses and
settlement
expenses........ 53,698,678 15,892,060 - 69,590,738
Dividends to
policyholders... 2,414,677 - - 2,414,677
Amortization of
deferred policy
acquisition
costs........... 17,008,632 4,540,691 - 21,549,323
Other
underwriting
expenses........ 8,067,446 1,871,146 - 9,938,592
Interest expense. 193,125 84,975 - 278,100
Other expenses... 191,483 - 148,349 339,832
------------- ------------ ---------- -------------
81,574,041 22,388,872 148,349 104,111,262
------------- ------------ ---------- -------------
Operating
income (loss)
before income
taxes......... 6,105,128 4,021,382 (100,243) 10,026,267
------------- ------------ ---------- -------------
Realized investment
gains............. 1,118,975 65,974 - 1,184,949
------------- ------------ ---------- -------------
Income (loss)
before income
taxes......... 7,224,103 4,087,356 (100,243) 11,211,216
------------- ------------ ---------- -------------
Income tax expense
(benefit):
---------
Current.......... 2,050,209 1,567,701 (34,798) 3,583,112
Deferred......... (122,216) (578,401) - (700,617)
------------- ------------ ---------- -------------
1,927,993 989,300 (34,798) 2,882,495
------------- ------------ ---------- -------------
Net income
(loss)..... $5,296,110 $3,098,056 $(65,445) $8,328,721
============= ============ ========== =============
Average shares
outstanding....... 13,609,562
Per Share Data:
--------------
Net income (loss)
per share -
basic and
diluted......... $0.39 $0.23 $(0.01) $0.61
Decrease in
provision for
insured events
of prior years
(after tax)..... $0.23 $0.01 $- $0.24
Catastrophe and
storm losses
(after tax)..... $(0.56) $(0.13) $- $(0.69)
Dividends per
share........... $0.15
Other Information
of Interest:
-----------
Written Premium.. $95,774,591 $23,892,322 $- $119,666,913
Decrease in
provision for
insured events
of prior years.. $(4,772,990) $(339,822) $- $(5,112,812)
Catastrophe and
storm losses.... $11,582,361 $2,820,052 $- $14,402,413
GAAP Combined
Ratio:
-----
Loss ratio....... 67.3% 67.3% - 67.3%
Expense ratio.... 34.4% 27.2% - 32.8%
------------- ------------ ---------- -------------
101.7% 94.5% - 100.1%
============= ============ ========== =============




Property and
Quarter Ended Casualty Parent
September 30, 2004 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
--------
Premiums earned.. $63,339,332 $24,248,659 $- $87,587,991
Investment
income, net..... 5,321,217 2,329,909 31,926 7,683,052
Other income..... 136,227 - - 136,227
------------- ------------ ---------- -------------
68,796,776 26,578,568 31,926 95,407,270
------------- ------------ ---------- -------------
Losses and
expenses:
--------
Losses and
settlement
expenses........ 51,926,670 13,764,894 - 65,691,564
Dividends to
policyholders... 1,127,104 - - 1,127,104
Amortization of
deferred policy
acquisition
costs........... 13,177,289 5,119,890 - 18,297,179
Other
underwriting
expenses........ 6,641,026 2,466,417 - 9,107,443
Interest expense. 193,125 84,975 - 278,100
Other expenses... 171,959 - 140,289 312,248
------------- ------------ ---------- -------------
73,237,173 21,436,176 140,289 94,813,638
------------- ------------ ---------- -------------
Operating
income (loss)
before income
taxes......... (4,440,397) 5,142,392 (108,363) 593,632
------------- ------------ ---------- -------------
Realized investment
gains............. 785,491 262,627 - 1,048,118
------------- ------------ ---------- -------------
Income (loss)
before income
taxes......... (3,654,906) 5,405,019 (108,363) 1,641,750
------------- ------------ ---------- -------------
Income tax expense
(benefit):
---------
Current.......... (1,681,367) 1,956,321 (35,863) 239,091
Deferred......... (45,261) (407,616) (2,924) (455,801)
------------- ------------ ---------- -------------
(1,726,628) 1,548,705 (38,787) (216,710)
------------- ------------ ---------- -------------
Net income
(loss)..... $(1,928,278) $3,856,314 $(69,576) $1,858,460
============= ============ ========== =============
Average shares
outstanding....... 11,561,870
Per Share Data:
--------------
Net income (loss)
per share -
basic and
diluted......... $(0.16) $0.33 $(0.01) $0.16
(Increase)
decrease in
provision for
insured events
of prior years
(after tax)..... $(0.34) $0.20 $- $(0.14)
Catastrophe and
storm losses
(after tax)..... $(0.28) $(0.33) $- $(0.61)
Dividends per
share........... $0.15
Other Information
of Interest:
-----------
Written Premium.. $76,232,406 $23,793,866 $- $100,026,272
Increase
(decrease) in
provision for
insured events
of prior years.. $6,017,129 $(3,504,920) $- $2,512,209
Catastrophe and
storm losses.... $4,931,161 $5,859,245 $- $10,790,406
GAAP Combined
Ratio:
-----
Loss ratio....... 82.0% 56.8% - 75.0%
Expense ratio.... 33.1% 31.3% - 32.6%
------------- ------------ ---------- -------------
115.1% 88.1% - 107.6%
============= ============ ========== =============




Property and
Nine Months Ended Casualty Parent
September 30, 2005 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
--------
Premiums earned..$240,705,969 $68,204,599 $- $308,910,568
Investment
income, net..... 21,548,347 7,966,786 190,332 29,705,465
Other income..... 393,692 - - 393,692
------------- ------------ ---------- -------------
262,648,008 76,171,385 190,332 339,009,725
------------- ------------ ---------- -------------
Losses and
expenses:
--------
Losses and
settlement
expenses........ 159,948,086 46,029,336 - 205,977,422
Dividends to
policyholders... 4,756,749 - - 4,756,749
Amortization of
deferred policy
acquisition
costs........... 53,704,211 14,053,073 - 67,757,284
Other
underwriting
expenses........ 24,206,788 4,823,565 - 29,030,353
Interest expense. 579,375 254,925 - 834,300
Other expenses... 610,332 - 644,020 1,254,352
------------- ------------ ---------- -------------
243,805,541 65,160,899 644,020 309,610,460
------------- ------------ ---------- -------------
Operating
income (loss)
before income
taxes......... 18,842,467 11,010,486 (453,688) 29,399,265
------------- ------------ ---------- -------------
Realized investment
gains (losses).... 2,797,636 (51,008) - 2,746,628
------------- ------------ ---------- -------------
Income (loss)
before income
taxes......... 21,640,103 10,959,478 (453,688) 32,145,893
------------- ------------ ---------- -------------
Income tax expense
(benefit):
---------
Current.......... 8,137,913 2,909,673 (178,637) 10,868,949
Deferred......... (2,528,953) (205,064) 18,986 (2,715,031)
------------- ------------ ---------- -------------
5,608,960 2,704,609 (159,651) 8,153,918
------------- ------------ ---------- -------------
Net income
(loss)..... $16,031,143 $8,254,869 $(294,037) $23,991,975
============= ============ ========== =============
Average shares
outstanding....... 13,598,955
Per Share Data:
--------------
Net income (loss)
per share -
basic and
diluted......... $1.17 $0.61 $(0.02) $1.76
Decrease in
provision for
insured events
of prior years
(after tax)..... $0.43 $- $- $0.43
Catastrophe and
storm losses
(after tax)..... $(0.91) $(0.19) $- $(1.10)
Dividends per
share........... $0.45
Book value per
share........... $18.07
Effective tax rate. 25.4%
Net income as a
percent of beg. SH
equity
(annualized)...... 14.0%
Other Information
of Interest:
-----------
Written Premium..$285,981,321 $66,899,913 $- $352,881,234
Decrease in
provision for
insured events
of prior years.. $(8,875,923) $(72,467) $- $(8,948,390)
Catastrophe and
storm losses.... $19,122,482 $3,885,723 $- $23,008,205
GAAP Combined
Ratio:
-----
Loss ratio....... 66.4% 67.5% - 66.7%
Expense ratio.... 34.4% 27.7% - 32.9%
------------- ------------ ---------- -------------
100.8% 95.2% - 99.6%
============= ============ ========== =============




Property and
Nine Months Ended Casualty Parent
September 30, 2004 Insurance Reinsurance Company Consolidated
----------------------------------------------------------------------
Revenues:
--------
Premiums earned..$186,908,651 $68,121,909 $- $255,030,560
Investment
income, net..... 14,841,998 6,922,873 57,821 21,822,692
Other income..... 477,818 - - 477,818
------------- ------------ ---------- -------------
202,228,467 75,044,782 57,821 277,331,070
------------- ------------ ---------- -------------
Losses and
expenses:
--------
Losses and
settlement
expenses........ 136,797,010 43,503,180 - 180,300,190
Dividends to
policyholders... 2,990,727 - - 2,990,727
Amortization of
deferred policy
acquisition
costs........... 40,371,870 14,245,132 - 54,617,002
Other
underwriting
expenses........ 20,302,061 4,080,251 - 24,382,312
Interest expense. 579,375 254,925 - 834,300
Other expenses... 580,422 - 474,781 1,055,203
------------- ------------ ---------- -------------
201,621,465 62,083,488 474,781 264,179,734
------------- ------------ ---------- -------------
Operating
income (loss)
before income
taxes......... 607,002 12,961,294 (416,960) 13,151,336
------------- ------------ ---------- -------------
Realized investment
gains............. 3,527,524 1,102,229 - 4,629,753
------------- ------------ ---------- -------------
Income (loss)
before income
taxes......... 4,134,526 14,063,523 (416,960) 17,781,089
------------- ------------ ---------- -------------
Income tax expense
(benefit):
---------
Current.......... 440,163 4,460,567 (348,901) 4,551,829
Deferred......... (306,207) (340,130) 202,106 (444,231)
------------- ------------ ---------- -------------
133,956 4,120,437 (146,795) 4,107,598
------------- ------------ ---------- -------------
Net income
(loss)..... $4,000,570 $9,943,086 $(270,165) $13,673,491
============= ============ ========== =============
Average shares
outstanding....... 11,547,544
Per Share Data:
--------------
Net income (loss)
per share -
basic and
diluted......... $0.34 $0.86 $(0.02) $1.18
(Increase)
decrease in
provision for
insured events
of prior years
(after tax)..... $(0.54) $0.28 $- $(0.26)
Catastrophe and
storm losses
(after tax)..... $(0.72) $(0.35) $- $(1.07)
Dividends per
share........... $0.45
Book value per
share........... $16.43
Effective tax rate. 23.1%
Net income as a
percent of beg. SH
equity
(annualized)...... 10.1%
Other Information
of Interest:
-----------
Written Premium..$203,376,393 $70,313,393 $- $273,689,786
Increase
(decrease) in
provision for
insured events
of prior years.. $9,706,229 $(4,986,820) $- $4,719,409
Catastrophe and
storm losses.... $12,833,109 $6,168,986 $- $19,002,095
GAAP Combined
Ratio:
-----
Loss ratio....... 73.2% 63.9% - 70.7%
Expense ratio.... 34.1% 26.9% - 32.1%
------------- ------------ ---------- -------------
107.3% 90.8% - 102.8%
============= ============ ========== =============




CONSOLIDATED BALANCE SHEETS - UNAUDITED September 30, December 31,
2005 2004
--------------- -------------
ASSETS
Investments:
Fixed maturities:
Securities held-to-maturity, at
amortized cost (fair value $17,786,192
and $16,908,726)...................... $17,275,657 $15,895,607
Securities available-for-sale, at fair
value (amortized cost $746,156,565 and
$541,401,950)......................... 762,785,981 565,000,931
Fixed maturity securities on loan:
Securities held-to-maturity, at
amortized cost (fair value $2,683,444
and $13,684,880)...................... 2,625,611 13,310,264
Securities available-for-sale, at fair
value (amortized cost $1,343,381 and
$54,389,046).......................... 1,379,635 54,653,472
Equity securities available-for-sale, at
fair value (cost $62,382,022 and
$59,589,434)........................... 87,193,363 78,692,893
Other long-term investments, at cost.... 4,340,451 5,550,093
Short-term investments, at cost......... 48,432,174 46,238,853
--------------- -------------
Total investments............ 924,032,872 779,342,113

Balances resulting from related party
transactions with Employers Mutual:
Reinsurance receivables.............. 42,154,166 26,316,358
Prepaid reinsurance premiums......... 5,556,024 3,682,676
Deferred policy acquisition costs.... 37,694,582 27,940,583
Defined benefit retirement plan,
prepaid asset....................... 1,645,822 2,684,463
Other assets......................... 2,614,694 1,877,564
Indebtedness of related party........ 28,569,359 -

Cash..................................... 242,906 61,088
Accrued investment income................ 9,869,383 8,726,292
Accounts receivable (net of allowance for
uncollectible accounts of $0 and $0).... 227,472 216,836
Income taxes recoverable................. - 3,399,485
Deferred income taxes.................... 12,740,673 9,504,193
Goodwill, at cost less accumulated
amortization of $2,616,234 and
$2,616,234.............................. 941,586 941,586
Securities lending collateral............ 4,229,328 70,122,695
--------------- -------------
Total assets..................$1,070,518,867 $934,815,932
=============== =============

LIABILITIES
Balances resulting from related party
transactions with Employers Mutual:
Losses and settlement expenses....... $556,081,348 $429,677,302
Unearned premiums.................... 177,482,037 131,589,365
Other policyholders' funds........... 3,871,503 2,825,809
Surplus notes payable................ 36,000,000 36,000,000
Indebtedness to related party........ - 6,058,848
Employee retirement plans............ 13,208,712 9,764,406
Other liabilities.................... 32,426,459 20,304,475

Income taxes payable..................... 1,101,283 -
Securities lending obligation............ 4,229,328 70,122,695
--------------- -------------
Total liabilities............ 824,400,670 706,342,900
--------------- -------------

STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized
20,000,000 shares; issued and
outstanding, 13,617,005 shares in 2005
and 13,568,945 shares in 2004........... 13,617,005 13,568,945
Additional paid-in capital............... 104,335,075 103,467,293
Accumulated other comprehensive income... 26,960,056 27,928,463
Retained earnings........................ 101,206,061 83,508,331
--------------- -------------
Total stockholders' equity... 246,118,197 228,473,032
--------------- -------------

Total liabilities and
stockholders' equity........$1,070,518,867 $934,815,932
=============== =============




The Company had total cash and invested assets with a carrying value
of $924.3 million and $779.4 million as of September 30, 2005 and
December 31,2004, respectively. The following table summarizes the
Company's cash and invested assets as of the dates indicated:

September 30, 2005
------------------------------------------
Percent of
Amortized Fair Total at Carrying
($ in thousands) Cost Value Fair Value Value
---------- ---------- ---------- ---------
Fixed maturities held-to-
maturity................... $19,901 $20,470 2.2% $19,901
Fixed maturities available-
for-sale................... 747,500 764,166 82.6% 764,166
Equity securities available-
for-sale................... 62,382 87,193 9.4% 87,193
Cash........................ 243 243 - 243
Short-term investments...... 48,432 48,432 5.3% 48,432
Other long-term investments. 4,340 4,340 0.5% 4,340
---------- ---------- ---------- ---------
$882,798 $924,844 100.0% $924,275
========== ========== ========== =========

December 31, 2004
------------------------------------------
Percent of
Amortized Fair Total at Carrying
($ in thousands) Cost Value Fair Value Value
---------- ---------- ---------- ---------
Fixed maturities held-to-
maturity................... $29,206 $30,594 3.9% $29,206
Fixed maturities available-
for-sale................... 595,791 619,654 79.4% 619,654
Equity securities available-
for-sale................... 59,589 78,693 10.1% 78,693
Cash........................ 61 61 - 61
Short-term investments...... 46,239 46,239 5.9% 46,239
Other long-term investments. 5,550 5,550 0.7% 5,550
---------- ---------- ---------- ---------
$736,436 $780,791 100.0% $779,403
========== ========== ========== =========


The amortized cost and estimated fair values of fixed maturity and
equity securities at September 30, 2005 were as follows:

Held-to-Maturity
------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
($ in thousands) Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
U.S. treasury securities and
obligations of U.S.
government corporations and
agencies................... $19,018 $499 $- $19,517
Mortgage-backed securities.. 883 70 - 953
--------- ---------- ---------- ----------
Total securities
held-to-maturity.... $19,901 $569 $- $20,470
========= ========== ========== ==========

Available-for-Sale
------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
($ in thousands) Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
U.S. treasury securities and
obligations of U.S.
government corporations and
agencies...................$297,464 $35 $2,052 $295,447
Obligations of states and
political subdivisions..... 251,065 11,033 42 262,056
Mortgage-backed securities.. 10,176 457 - 10,633
Public utilities............ 6,004 582 - 6,586
Debt securities issued by
foreign governments........ 7,078 129 - 7,207
Corporate securities........ 175,713 7,345 821 182,237
--------- ---------- ---------- ----------
Total fixed maturity
securities................. 747,500 19,581 2,915 764,166
--------- ---------- ---------- ----------

Equity securities
Common stocks............. 61,882 25,950 1,149 86,683
Non-redeemable preferred
stocks................... 500 10 - 510
--------- ---------- ---------- ----------
Total equity
securities......... 62,382 25,960 1,149 87,193
--------- ---------- ---------- ----------
Total securities
available-for-sale.$809,882 $45,541 $4,064 $851,359
========= ========== ========== ==========




NET WRITTEN PREMIUMS


Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
----------------------- --------------------------
Percent of Percent of
Increase/ Increase/
Percent of (Decrease) Percent of (Decrease)
Net in Net Net in Net
Written Written Written Written
Premiums Premiums Premiums(a) Premiums(a)
----------- ----------- ------------- ------------


Property and Casualty Insurance
Commercial Lines:
----------------
Automobile..... 16.7 % (1.9) % 17.8 % (2.4)%
Liability...... 16.6 % 2.3 % 16.8 % 3.6 %
Property....... 16.1 % 2.6 % 15.2 % 2.9 %
Workers'
Compensation.. 17.5 % (4.7) % 15.3 % (3.6)%
Other.......... 1.9 % 25.0 % 1.8 % 22.7 %
---------- -----------
Total....... 68.8 % 0.0 % 66.9 % 0.5 %

Personal Lines:
--------------
Automobile..... 5.7 % (12.9) % 6.8 % (12.1)%
Property....... 5.3 % (7.7) % 5.4 % (4.4)%
Liability...... 0.2 % 1.3 % 0.2 % 3.3 %
---------- -----------
Total........ 11.2 % (10.3) % 12.4 % (8.7)%

Reinsurance......... 20.0 % 0.4 % 20.7 % (4.9)%
---------- -----------
Total......... 100.0 % 100.0 %
========== ===========


(a) Excludes January 1, 2005 portfolio adjustment of $29,630,612
related to the change in the Company's aggregate participation in
the pooling arrangement.