EMC Drops High-Risk Private Auto Insurance Line

NU Online News Service, Jan. 26, 1:42 p.m.EST?EMC Insurance Group Inc. said it will stop writingnonstandard risk auto insurance business offered through its Farmand City Insurance Company unit because this line of business isnot seen as part of the company's "core competency."[@@]

The Des Moines, Iowa-based insurer plans to institute nonrenewalprocedures on all existing policies in this business. Effectivedates for these actions will be determined by the requirements ofthe six states in which EMC conducts business and the terms ofindividual policies, the company said.

EMC Chief Executive Bruce Kelley observed that Farm and CityInsurance Company is not a significant player in the nonstandardrisk auto insurance marketplace and that this unit has struggledwith increasing competition from both the standard and thenonstandard markets.

"Management has determined that this line of business does notrepresent a core competency of our insurance business," Mr. Kelleysaid, "and therefore could not justify the substantial amount ofresources that would be required to improve its operatingperformance."

EMC said discontinuing this line of business won't have amaterial impact on operations of EMC Insurance Group Inc. In 2003,the Farm and City Insurance Company unit produced about $9.8million of direct premium.

EMC--through its EMCASCO Insurance, Illinois EMCASCO and DakotaFire Insurance--offers a number of p-c lines, including auto,property, liability and workers' compensation. Its EMC Underwritersoffers excess and surplus lines of insurance. Additionally, thecompany sells p-c treaty reinsurance through EMC Reinsurance.