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2nd Quarter highlights:
-- Net income of $0.60 per diluted share versus $0.51 per diluted share
in the prior year's quarter,
-- Operating income of $0.55 per diluted share versus $0.49 per diluted
share in the prior year's quarter,
-- A GAAP combined ratio of 97.4% versus 98.2% in the prior year's
quarter,
-- Book value per diluted share of $23.87.
Andrew R. Speaker, President and CEO, in commenting on the results, said, "We are extremely pleased with our operating results for the quarter, which were at an all-time high. These results reflect our disciplined underwriting approach and were enhanced by aggressive expense management and reinsurance changes implemented over the past few years."
Speaker noted, "Despite challenges to direct premium writings as a result of the continued slow economic environment, we have had some success with new products we've introduced into our various states. These product introductions have helped offset some of the loss in writings that have occurred as exposures are reduced by the extended recession."
Speaker concluded, "Our capital position grew again during the quarter as our strong investment portfolio performed well. While we recorded a small provision for declines in fair value of securities considered to be other than temporary during the quarter, overall both our fixed income and equity portfolios showed good appreciation in value. Our balance sheet remains strong and we are well positioned from a risk selection standpoint."
Financial Summary (in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
---------------- ----------------
2009 2008 2009 2008
------ ------ ------ ------
Total revenue $ 39,530 $ 42,708 $ 78,722 $ 84,781
Net premiums written 40,326 43,749 72,182 78,288
Net premiums earned 34,952 38,644 70,534 77,721
Net investment income 3,625 3,343 7,228 6,704
Net realized gains (losses) on
investments 402 157 (79) (663)
Net income 3,750 3,233 6,641 5,825
Earnings per share - Basic $ 0.61 $ 0.52 $ 1.07 $ 0.94
Earnings per share - Diluted $ 0.60 $ 0.51 $ 1.06 $ 0.91
Combined ratio 97.4% 98.2% 97.9% 98.2%
Book value per share $ 23.87 $ 21.78
Reconciliation of non-GAAP financial measures:
Net income $ 3,750 $ 3,233 $ 6,641 $ 5,825
Net realized gains (losses) on
investments, net of tax 266 102 (52) (431)
Net operating income 3,484 3,131 6,693 6,256
Operating earnings per share -
Basic $ 0.56 $ 0.50 $ 1.08 $ 1.00
Operating earnings per share -
Diluted $ 0.55 $ 0.49 $ 1.07 $ 0.98
In the quarter ended June 30, 2009, the Company reported GAAP net income under U.S. generally accepted accounting principles (GAAP) of $3.8 million, or $0.60 per diluted share. This result compares to net income of $3.2 million, or $0.51 per diluted share, for the same quarter in the previous year. Operating earnings increased to $3.5 million from the $3.1 million reported in the prior year's quarter.
In the six months ended June 30, 2009, the Company reported GAAP net income of $6.6 million, or $1.06 per diluted share. This result compares to net income of $5.8 million, or $0.91 per diluted share, for the same period in the previous year. Operating earnings increased to $6.7 million from $6.3 million in the prior year.
The Board of Directors of Mercer Insurance Group, Inc. has approved a dividend of $0.075 per share, to be paid on September 28, 2009 to shareholders of record on September 11, 2009.
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.
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
June 30,
2009 2008
(unaudited) (unaudited)
Net premiums earned $ 34,952 $ 38,644
Investment income,
net of investment expenses 3,625 3,343
Realized investment gains 402 157
Other revenue 551 564
Total revenue 39,530 42,708
Losses and loss adjustment expenses 20,761 23,975
Amortization of deferred policy
acquisition costs 9,598 10,341
Other expenses 3,678 3,647
Interest expense 356 337
Total expenses 34,393 38,300
Income before income taxes 5,137 4,408
Income taxes 1,387 1,175
Net income $ 3,750 $ 3,233
Net income per common share:
Basic $ 0.61 $ 0.52
Diluted $ 0.60 $ 0.51
Weighted average number of
shares outstanding:
Basic 6,196,311 6,233,796
Diluted 6,298,438 6,387,750
Supplementary Financial Data
Net written premiums $ 40,326 $ 43,749
Book value per common share $ 23.87 $ 21.78
GAAP combined ratio 97.4% 98.2%
Consolidated Statements of Income
(in thousands, except per share and share data)
Six Months Ended
June 30,
2009 2008
(unaudited) (unaudited)
Net premiums earned $ 70,534 $ 77,721
Investment income,
net of investment expenses 7,228 6,704
Realized investment losses (79) (663)
Other revenue 1,039 1,019
Total revenue 78,722 84,781
Losses and loss adjustment expenses 42,960 48,745
Amortization of deferred policy
acquisition costs 19,503 20,703
Other expenses 6,569 6,842
Interest expense 708 633
Total expenses 69,740 76,923
Income before income taxes 8,982 7,858
Income taxes 2,341 2,033
Net income $ 6,641 $ 5,825
Net income per common share:
Basic $ 1.07 $ 0.94
Diluted $ 1.06 $ 0.91
Weighted average number of
shares outstanding:
Basic 6,188,313 6,226,772
Diluted 6,262,612 6,382,926
Supplementary Financial Data
Net written premiums $ 72,182 $ 78,288
GAAP combined ratio 97.9% 98.2%
Consolidated Balance Sheet
(in thousands, except share amounts)
June 30, December 31,
2009 2008
(unaudited)
ASSETS
Investments, at fair value:
Fixed income securities, available-for sale $ 360,391 $ 334,087
Equity securities, at fair value 8,988 10,203
Total investments 369,379 344,290
Cash and cash equivalents 23,253 37,043
Premiums receivable 39,634 34,165
Reinsurance receivable 79,860 86,443
Prepaid reinsurance premiums 6,188 7,096
Deferred policy acquisition costs 19,586 20,193
Accrued investment income 4,315 3,901
Property and equipment, net 19,543 16,144
Deferred income taxes 8,684 9,814
Goodwill 5,416 5,416
Other assets 4,951 4,481
Total assets $ 580,809 $ 568,986
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Losses and loss adjustment expenses $ 304,041 $ 304,000
Unearned premiums 81,149 80,408
Accounts payable and accrued expenses 10,594 13,283
Other reinsurance balances 13,413 11,509
Trust preferred securities 15,584 15,576
Advances under line of credit 3,000 3,000
Other liabilities 4,598 3,940
Total liabilities $ 432,379 $ 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
6,849,268 and 6,801,095 shares
Additional paid-in capital $ 71,777 $ 71,369
Accumulated other comprehensive income 7,367 2,494
Retained earnings 79,850 74,138
Unearned ESOP shares (2,195) (2,505)
Treasury Stock, 631,761 and 621,773 shares (8,369) (8,226)
Total stockholders' equity 148,430 137,270
Total liabilities and stockholders' equity $ 580,809 $ 568,986
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
SOURCE: Mercer Insurance Group, Inc.
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