SOURCE: Mercer Insurance Group, Inc.

February 25, 2010 16:10 ET

Mercer Insurance Group, Inc. Announces Fourth Quarter and 2009 Earnings

PENNINGTON, NJ--(Marketwire - February 25, 2010) - Mercer Insurance Group, Inc. (NASDAQ: MIGP) reported its operating results today for the year and quarter ended December 31, 2009.

    4th Quarter highlights:

--  Net income of $0.57 per diluted share versus $0.10 per diluted share
    in the prior year's quarter,
--  Operating income of $0.54 per diluted share, which was the same as
    the prior year's quarter,
--  A GAAP combined ratio of 96.5% versus 98.4% in the prior year's
    quarter,
--  Book value per diluted share of $25.63 at December 31, 2009, as
    compared to $22.21 for the previous year.

Andrew R. Speaker, President and CEO, noted, "We are pleased that our disciplined underwriting and aggressive expense management resulted in earnings for 2009 being among our strongest ever, despite the difficulty of a recessionary economy. We thank our employees and agents, our partners in the business, for helping us achieve these results and a 2009 combined ratio of 97.6%."

Speaker commented further, "Our investment portfolio performed well in 2009, with a significant recovery of value, which attests to the overall quality of the portfolio. In addition, we were able in 2009 to trim the portfolio of some assets that we thought may encounter difficulty, such as commercial mortgage backed securities. Our financial position is strong, with shareholders equity growing by 17% in 2009, and an ending book value of $25.63 per share."

"The new products and technological advances we have introduced are gaining traction, and helping to reduce the impact of the difficult economy on our book as insureds' exposures are reduced in the continuing weak business environment. The combination of all these items has positioned us well to compete in an environment we expect will continue to be challenging."


Financial Summary (in thousands, except per share data)

                                 Three Months Ended    Twelve Months Ended
                                    December 31,          December 31,
                                     (unaudited)           (unaudited)
                                --------------------- --------------------
                                  2009       2008       2009       2008
                                ---------- ---------  ---------- ---------
Total revenue                   $   39,315 $  37,088  $  157,312 $ 161,462
Net premiums written                32,293    31,488     137,830   147,352
Net premiums earned                 35,198    36,987     140,413   152,577
Net investment income                3,365     3,763      14,198    13,936
Net realized gains (losses) on
 investments                           228    (4,128)        621    (7,072)
Net income                           3,626       629      13,821     8,234

Earnings per share - Basic      $     0.58 $    0.10  $     2.23 $    1.32
Earnings per share - Diluted    $     0.57 $    0.10  $     2.18 $    1.30

Combined ratio                        96.5      98.4%       97.6      98.1%
Book value per share                                  $    25.63 $   22.21

Reconciliation of non-GAAP
 financial measures:

Net income                      $    3,626 $     629  $   13,821 $   8,234
Net realized gains (losses) on
 investments, net of tax               150    (2,724)        410    (4,667)
Net operating income                 3,476     3,353      13,411    12,901

Operating earnings per share -
 Basic                          $     0.56 $    0.54  $     2.16 $    2.08
Operating earnings per share -
 Diluted                        $     0.54 $    0.54  $     2.11 $    2.03

For the quarter ended December 31, 2009, the Company reported GAAP net income under U.S. generally accepted accounting principles (GAAP) of $3.6 million, or $0.57 per diluted share. This compares to net income of $629,000, or $0.10 per diluted share, for the same quarter in the previous year. Operating income of $3.48 million represented an increase of 4% over the operating income of $3.35 million reported in the prior year's quarter.

For the year ended December 31, 2009, the Company reported GAAP net income of $13.8 million, or $2.18 per diluted share. This compares to net income of $8.2 million, or $1.30 per diluted share, for the same period in the previous year. Operating income increased 4% to $13.4 million from $12.9 million in the prior year.

The Company's Board of Directors has approved a dividend of $0.075 per share, to be paid on March 29, 2010 to shareholders of record on March 12, 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 the Company'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.

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 the Company. There can be no assurance that future developments will be in accordance with management's expectations so that the effect of future developments on the Company will be those anticipated by management. Actual financial results including premium growth and underwriting results could differ materially from those anticipated by the Company 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
                                                          December 31,
                                                         2009       2008
                                                     (unaudited)(unaudited)

Net premiums earned                                   $  35,198  $  36,987
Investment income,
 net of investment expenses                               3,365      3,763
Realized investment gains (losses)                          228     (4,128)
Other revenue                                               524        466
  Total revenue                                          39,315     37,088

Losses and loss adjustment expenses                      21,499     23,655
Amortization of deferred policy
 acquisition costs                                        9,803     10,521
Other expenses                                            2,652      2,233
Interest expense                                            356        357
  Total expenses                                         34,310     36,766

Income before income taxes                                5,005        322
Income taxes                                              1,379       (307)

Net income                                            $   3,626  $     629

Net income per common share:
  Basic                                               $    0.58  $    0.10
  Diluted                                             $    0.57  $    0.10

Weighted average number of
 shares outstanding:
  Basic                                               6,243,618  6,176,851
  Diluted                                             6,402,686  6,212,856

    Supplementary Financial Data

Net written premiums                                  $  32,293  $  31,488

Book value per common share                           $   25.63  $   22.21

GAAP combined ratio                                        96.5%      98.4%






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

                                                           Year Ended
                                                          December 31,
                                                        2009        2008
                                                     (unaudited)


Net premiums earned                                   $ 140,413  $ 152,577
Investment income,
 net of investment expenses                              14,198     13,936
Realized investment (losses) gains                          621     (7,072)
Other revenue                                             2,080      2,021
  Total revenue                                         157,312    161,462

Losses and loss adjustment expenses                      86,142     95,219
Amortization of deferred policy
 acquisition costs                                       38,805     41,684
Other expenses                                           12,090     12,851
Interest expense                                          1,423      1,318
  Total expenses                                        138,460    151,072

Income before income taxes                               18,852     10,390
Income taxes                                              5,031      2,156

Net income                                            $  13,821  $   8,234

Net income per common share:
  Basic                                               $    2.23  $    1.32
  Diluted                                             $    2.18  $    1.30

Weighted average number of
 shares outstanding:
  Basic                                               6,211,623  6,217,092
  Diluted                                             6,345,164  6,343,522

    Supplementary Financial Data

Net written premiums                                  $ 137,830  $ 147,352

GAAP combined ratio                                        97.6%      98.1%





                        Consolidated Balance Sheet
                   (in thousands, except share amounts)


                                                December 31,   December 31,
                                                    2009           2008
                                                 (unaudited)

ASSETS
Investments, at fair value:
  Fixed income securities, available-for sale   $    365,464  $    334,087
  Equity securities, at fair value                     9,484        10,203
    Total investments                                374,948       344,290
Cash and cash equivalents                             39,927        37,043
Premiums receivable                                   36,405        34,165
Reinsurance receivable                                79,599        86,443
Prepaid reinsurance premiums                           5,871         7,096
Deferred policy acquisition costs                     18,876        20,193
Accrued investment income                              4,287         3,901
Property and equipment, net                           21,516        16,144
Deferred income taxes                                  4,941         9,814
Goodwill                                               5,416         5,416
Other assets                                           3,568         4,481
Total assets                                    $    595,354  $    568,986

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Losses and loss adjustment expenses           $    311,348  $    304,000
  Unearned premiums                                   76,601        80,408
  Accounts payable and accrued expenses               12,150        13,283
  Other reinsurance balances                          12,386        11,509
  Trust preferred securities                          15,592        15,576
  Advances under line of credit                        3,000         3,000
  Other liabilities                                    4,069         3,940
    Total liabilities                           $    435,146  $    431,716

Stockholders' Equity:
  Preferred Stock, no par value, authorized                -             -
   5,000,000 shares, no shares issued and
   outstanding
  Common stock, no par value,                              -             -
   authorized 15,000,000 shares, issued
   7,074,333 shares, outstanding
   6,883,498 and 6,801,095 shares
  Additional paid-in capital                    $     72,139  $     71,369
  Accumulated other comprehensive income              12,220         2,494
  Retained earnings                                   86,101        74,138
  Unearned ESOP shares                                (1,878)       (2,505)
  Treasury Stock, 632,076 and 621,773 shares          (8,374)       (8,226)
    Total stockholders' equity                       160,208       137,270
Total liabilities and stockholders' equity      $    595,354  $    568,986

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