SOURCE: Mercer Insurance Group, Inc.

April 29, 2010 16:10 ET

Mercer Insurance Group Announces 1st Quarter 2010 Earnings and Increased Dividend

PENNINGTON, NJ--(Marketwire - April 29, 2010) - Mercer Insurance Group, Inc. (NASDAQ: MIGP) reported its operating results today for the quarter ended March 31, 2010.


-- Net income of $0.54 per diluted share versus $0.46 per diluted share in
   the prior year's quarter,
-- Operating income of $0.49 per diluted share versus $0.51 per diluted
   share in the prior year's quarter,
-- A GAAP combined ratio of 98.1% versus 98.4% in the prior year's quarter,
-- Book value per share of $26.20,
-- Increase in quarterly shareholder dividend to $0.10 per share, a 33%

Andrew R. Speaker, President and CEO, noted, "We are pleased, under the circumstances, that our operating income is comparable to last year's quarter, despite having incurred winter storm losses during the quarter. In recent years we have managed our east coast book to minimize our catastrophic weather exposures, and, noting that our winter storm losses are proportionately less than some of our competitors, we are pleased with the result of our efforts to manage these exposures."

Speaker continued, "We are also pleased to report that the Board of Directors has authorized an increase in our quarterly dividend to $0.10 per share. While we carefully balance our capital levels to support our current business, future opportunities and our credit ratings, we also seek to provide a good return for our shareholders."

Speaker concluded, "Underwriting discipline is the touchstone of our Company's culture, and we will continue to demonstrate that discipline in every aspect of our business. We are confident that this will best position the Company to achieve profitable results, increase book value and leave us positioned well for changing market and economic conditions. Our book value has grown to $26.20 per share, and we will continue our strong focus on steady growth in this book value."

Financial Summary (in thousands, except per share data)

                                                     Three Months Ended
                                                         March  31,
                                                     2010            2009
                                                    ------          ------
Total revenue                               $       39,169  $       39,192
Net premiums written                                32,000          31,856
Net premiums earned                                 34,735          35,582
Net investment income                                3,506           3,603
Net realized gains (losses) on investments             472            (481)
Net income                                           3,472           2,891

Earnings per share - Basic                  $         0.55  $         0.47
Earnings per share - Diluted                $         0.54  $         0.46

Combined ratio                                        98.1%           98.4%
Book value per share                        $        26.20  $        22.93

Reconciliation of non-GAAP financial

Net income                                 $        3,472  $        2,891
Net realized gains (losses) on
 investments, net of tax                              312            (317)
Net operating income                                3,160           3,208

Operating earnings per share - Basic       $         0.50  $         0.52
Operating earnings per share - Diluted     $         0.49  $         0.51

In the quarter ended March 31, 2010, the Company reported GAAP net income under U.S. generally accepted accounting principles (GAAP) of $3.5 million, or $0.54 per diluted share. This result compares to net income of $2.9 million, or $0.46 per diluted share, for the same quarter of the previous year. Although current year net income was not burdened by the number of fire and property losses reflected in net income of the first quarter of 2009, first quarter 2010 net income was adversely affected by losses related to winter storms in March in the after tax amount of $800,000, or $0.12 per diluted share. These 2010 property losses are largely those associated with catastrophe number 96, which was the northeaster storm which struck the mid-Atlantic region in mid-March. Included in the current year's net income are net realized gains of $472,000, as compared to net realized losses of $481,000 for the quarter ended March 31, 2009. These net realized gains include $8,000 in other than temporary impairments in the current year, and $535,000 of such impairments in net realized losses in the first quarter of 2009. Operating income for the quarter ended March 31, 2010, was consistent with that of the prior year at $3.2 million.

The Board of Directors of Mercer Insurance Group, Inc. has approved an increased dividend of $0.10 per share, to be paid on June 28, 2010 to shareholders of record on June 11, 2010.

Operating income and operating earnings per share are non-GAAP financial measures that we present because we believe they enhance an investor's understanding of Mercer's core operating performance. Operating income and operating earnings per share consist of net earnings adjusted for after-tax net realized investment gains and losses.

Mercer Insurance Group, Inc. offers commercial and personal lines of insurance to businesses and individuals principally in seven states through its insurance subsidiaries: Mercer Insurance Company, Mercer Insurance Company of New Jersey, Inc., Financial Pacific Insurance Company and Franklin Insurance Company. Mercer Insurance Group trades under the symbol "MIGP" and has an "A" (Excellent) rating from A.M. Best Company, Inc.

Certain of the statements in this press release (other than statements of historical facts) are forward-looking statements. Such forward-looking statements include estimates and assumptions related to economic, competitive and legislative developments. These forward-looking statements are subject to change and uncertainty that are, in many instances, beyond the Company's control and have been made based upon management's expectations and beliefs concerning future developments and their potential effect on Mercer Insurance Group, Inc. There can be no assurance that future developments will be in accordance with management's expectations so that the effect of future developments on Mercer Insurance Group, Inc. will be those anticipated by management. Actual financial results including premium growth and underwriting results could differ materially from those anticipated by Mercer Insurance Group, Inc. depending on the outcome of certain factors, which may include changes in property and casualty loss trends and reserves; catastrophe losses; the insurance product pricing environment; changes in applicable law; government regulation and changes therein that may impede the ability to charge adequate rates; changes in accounting principles; performance of the financial markets; fluctuations in interest rates; availability and price of reinsurance; and the status of the labor markets in which the company operates.

                    Consolidated Statements of Income
              (in thousands, except per share and share data)

                                                          Quarter Ended
                                                            March 31,
                                                        2010         2009
                                                  (unaudited)   (unaudited)

Net premiums earned                                   $  34,735  $  35,582
Investment income,
 net of investment expenses                               3,506      3,603
Realized investment gains (losses)                          472       (481)
Other revenue                                               456        488
  Total revenue                                          39,169     39,192

Losses and loss adjustment expenses                      21,913     22,199
Amortization of deferred policy
 acquisition costs                                        9,385      9,905
Other expenses                                            2,764      2,891
Interest expense                                            351        352
  Total expenses                                         34,413     35,347

Income before income taxes                                4,756      3,845
Income taxes                                              1,284        954

Net income                                            $   3,472  $   2,891

Net income per common share:
  Basic                                               $    0.55  $    0.47
  Diluted                                             $    0.54  $    0.46

Weighted average number of
 shares outstanding:
  Basic                                               6,259,228  6,180,227
  Diluted                                             6,413,489  6,233,044

    Supplementary Financial Data

Net written premiums                                  $  32,000  $  31,856

Book value per common share                           $   26.20  $   22.93

GAAP combined ratio                                        98.1%      98.4%

                        Consolidated Balance Sheet
                   (in thousands, except share amounts)

                                                   March 31,  December 31,
                                                        2010       2009
Investments, at fair value:
   Fixed income securities, available-for sale     $ 384,044  $ 365,464
   Equity securities, at fair value                   10,229      9,484
           Total investments                         394,273    374,948
Cash and cash equivalents                             26,742     39,927
Premiums receivable                                   36,966     36,405
Reinsurance receivable                                77,002     79,599
Prepaid reinsurance premiums                           5,959      5,871
Deferred policy acquisition costs                     18,261     18,876
Accrued investment income                              3,821      4,287
Property and equipment, net                           21,141     21,516
Deferred income taxes                                  5,052      4,941
Goodwill                                               5,416      5,416
Other assets                                           4,215      3,568
Total assets                                       $ 598,848  $ 595,354

   Losses and loss adjustment expenses             $ 311,414  $ 311,348
   Unearned premiums                                  73,955     76,601
   Accounts payable and accrued expenses               9,753     12,150
   Other reinsurance balances                         16,296     12,386
   Trust preferred securities                         15,597     15,592
   Advances under line of credit                       3,000      3,000
   Other liabilities                                   4,632      4,069
          Total liabilities                        $ 434,647  $ 435,146

Stockholders' Equity:
   Preferred Stock, no par value, authorized               -          -
     5,000,000 shares, no shares issued and
   Common stock, no par value,                             -          -
    authorized 15,000,000 shares, issued
    7,074,333 shares, outstanding
    6,898,936 and 6,883,498 shares
   Additional paid-in capital                      $  72,289  $  72,139
   Accumulated other comprehensive income             12,906     12,220
   Retained earnings                                  89,104     86,101
   Unearned ESOP shares                               (1,724)    (1,878)
   Treasury Stock, 632,076 shares                     (8,374)    (8,374)
          Total stockholders' equity                 164,201    160,208
Total liabilities and stockholders' equity         $ 598,848  $ 595,354

Contact Information

  • Company Contacts:

    Andrew R. Speaker
    President & CEO
    Mercer Insurance Group, Inc.
    (609) 737-0426

    David B. Merclean
    Senior Vice President & CFO
    Mercer Insurance Group, Inc.
    (609) 737-0426