EMC to exit ~$180mn assumed reinsurance business

EMC Insurance Companies is shuttering its assumed reinsurance business at the end of the year, with the company currently considering options for the management and/or run-off of the platform’s existing business.

AM Best A rated EMC Re represents about $180mn, equal to some 10 percent, of Des Moines, Iowa-based EMC’s total annual premiums.

EMC was formed in 1911 to write workers’ compensation protection in Iowa. The company has since evolved into a P&C and life insurer that writes coverage across the US.

EMC Re was established in 1981. The platform, which since 2020 has been led by president and chief operating officer Mondale Smith, writes property and casualty reinsurance on an excess-of-loss (XoL) and pro rata basis.

In 2021, EMC Re’s earned premium was $208.1mn, while the platform had a surplus of $231.4mn.

Four-fifths of its written premium supported domestic clients in 2021, and of that 31 percent came from facilities, while 23 percent was for multiline XoL business.

Of the 20 percent of written premium that supported international cedants, half of it was for property catastrophe business.

As EMC president and CEO Scott Jean explained, the strategic decision to exit assumed reinsurance will see the business instead focus on its core insurance products which are distributed through independent agents, including commercial property/casualty lines and bonds, and life insurance written through affiliate EMC National Life Company.

In its marketing materials, EMC Re describes itself as a market for local, regional, national and international ceding company clients, as well as a quoting market for US multiline XoL, property per risk XoL and casualty XoL.

“While an extremely difficult decision, EMC felt this move was necessary to position the company for the future and the achievement of its strategic plans and goals,” Jean stated.

“This transition impacts approximately 65 team members, located across the US, who will receive severance packages and comprehensive career/placement services,” said Jean.

In total, EMC has approximately 2,200 staff across the US, of which over 1,100 are based in Iowa.

“All impacted team members have been notified. This will be a gradual workforce reduction over time, beginning Jan 3 and continuing through 2023,” Jean said.

The executive added that impacted team members will have the opportunity to interview for other EMC positions.