Mercer Insurance Group, Inc. (NASDAQ: MIGP) reported today its
operating results for the nine months and quarter ended September
30, 2009.
3rd Quarter highlights:
-- Net income of $0.56 per diluted share versus $0.28 per diluted share
in the prior year's quarter,
-- Operating income of $0.51 per diluted share, which was the same as the
prior year's quarter,
-- A GAAP combined ratio of 98.2% versus 97.9% in the prior year's
quarter,
-- Book value per share of $25.49.
Andrew R. Speaker, President and CEO, commented, "We are happy
to have generated an operating profit that is consistent with third
quarter earnings in past years. In an environment in which we are
challenged by both a slow economy and continued competitive
insurance pricing, it is pleasing to see that our disciplined
underwriting has lead to profitable operations."
Speaker noted, "We are also delighted that our strategy of
maintaining a prudent investment portfolio while also seeking a
fair return has continued to protect and enhance our capital
position. Our conservatively positioned portfolio, along with our
disciplined underwriting performance, has helped increase book
value per share to its highest ever level."
"We expect the challenging conditions from the economy and
competitive pricing to persist. We will maintain our underwriting
and investment discipline, continue to exercise careful expense
management and work on building out the new products we've
introduced in the past few years. This focus should help us to
continue to generate operating profits while protecting our
shareholders' capital."
Financial Summary (in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
(unaudited) (unaudited)
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Total revenue $ 39,274 $ 39,593 $ 117,996 $ 124,374
Net premiums written 33,355 37,575 105,537 115,863
Net premiums earned 34,681 37,869 105,215 115,590
Net investment income 3,605 3,469 10,833 10,173
Net realized gains (losses) on
investments 472 (2,281) 393 (2,944)
Net income, after tax 3,554 1,780 10,195 7,605
Earnings per share - Basic $ 0.57 $ 0.29 $ 1.64 $ 1.22
Earnings per share - Diluted $ 0.56 $ 0.28 $ 1.61 $ 1.19
Combined ratio 98.2% 97.9% 98.0% 98.0%
Book value per share $ 25.49 $ 21.39
Reconciliation of non-GAAP
financial measures:
Net income $ 3,554 $ 1,780 $ 10,195 $ 7,605
Net realized gains (losses) on
investments, net of tax (311) 1,482 (260) 1,913
Net operating income 3,243 3,262 9,935 9,518
Operating earnings per share -
Basic $ 0.52 $ 0.52 $ 1.60 $ 1.53
Operating earnings per share -
Diluted $ 0.51 $ 0.51 $ 1.57 $ 1.49
In the quarter ended September 30, 2009, the Company reported
GAAP net income under U.S. generally accepted accounting principles
(GAAP) of $3.6 million, or $0.56 per diluted share. This result
compares to net income of $1.8 million, or $0.28 per diluted share,
for the same quarter in the previous year. Operating income of
$3.24 million approximated the $3.26 million reported in the prior
year's quarter.
In the nine months ended September 30, 2009, the Company
reported GAAP net income of $10.2 million, or $1.61 per diluted
share. This result compares to net income of $7.6 million, or $1.19
per diluted share, for the same period in the previous year.
Operating income increased to $9.9 million from $9.5 million in the
prior year.
The Company also announced that its Board of Directors has
approved a dividend of $0.075 per share, to be paid on December 28,
2009 to shareholders of record on December 11, 2009.
Operating income and operating income 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 income 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
September 30,
2009 2008
(unaudited) (unaudited)
Net premiums earned $ 34,681 $ 37,869
Investment income,
net of investment expenses 3,605 3,469
Realized investment gains (losses) 472 (2,281)
Other revenue 516 536
Total revenue 39,274 39,593
Losses and loss adjustment expenses 21,683 22,819
Amortization of deferred policy
acquisition costs 9,499 10,460
Other expenses 2,869 3,776
Interest expense 358 328
Total expenses 34,409 37,383
Income before income taxes 4,865 2,210
Income taxes 1,311 430
Net income $ 3,554 $ 1,780
Net income per common share:
Basic $ 0.57 $ 0.29
Diluted $ 0.56 $ 0.28
Weighted average number of
shares outstanding:
Basic 6,225,483 6,237,804
Diluted 6,389,729 6,382,413
Supplementary Financial Data
Net written premiums $ 33,355 $ 37,575
Book value per common share $ 25.49 $ 21.39
GAAP combined ratio 98.2% 97.9%
Consolidated Statements of Income
(in thousands, except per share and share data)
Nine Months Ended
September 30,
2009 2008
(unaudited) (unaudited)
Net premiums earned $ 105,215 $ 115,590
Investment income,
net of investment expenses 10,833 10,173
Realized investment gains (losses) 393 (2,944)
Other revenue 1,555 1,555
Total revenue 117,996 124,374
Losses and loss adjustment expenses 64,643 71,564
Amortization of deferred policy
acquisition costs 29,002 31,163
Other expenses 9,438 10,618
Interest expense 1,066 961
Total expenses 104,149 114,306
Income before income taxes 13,847 10,068
Income taxes 3,652 2,463
Net income $ 10,195 $ 7,605
Net income per common share:
Basic $ 1.64 $ 1.22
Diluted $ 1.61 $ 1.19
Weighted average number of
shares outstanding:
Basic 6,200,840 6,230,476
Diluted 6,321,065 6,382,740
Supplementary Financial Data
Net written premiums $ 105,537 $ 115,863
GAAP combined ratio 98.0% 98.0%
Consolidated Balance Sheet
(in thousands, except share amounts)
September 30,
2009 December 31,
(unaudited) 2008
ASSETS
Investments, at fair value:
Fixed income securities, available-for sale $ 368,429 $ 334,087
Equity securities, at fair value 8,887 10,203
Total investments 377,316 344,290
Cash and cash equivalents 31,702 37,043
Premiums receivable 38,131 34,165
Reinsurance receivable 80,404 86,443
Prepaid reinsurance premiums 5,829 7,096
Deferred policy acquisition costs 19,416 20,193
Accrued investment income 3,721 3,901
Property and equipment, net 20,184 16,144
Deferred income taxes 4,181 9,814
Goodwill 5,416 5,416
Other assets 8,544 4,481
Total assets $ 594,844 $ 568,986
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Losses and loss adjustment expenses $ 308,846 $ 304,000
Unearned premiums 79,463 80,408
Accounts payable and accrued expenses 11,657 13,283
Other reinsurance balances 13,495 11,509
Trust preferred securities 15,588 15,576
Advances under line of credit 3,000 3,000
Other liabilities 3,908 3,940
Total liabilities $ 435,957 $ 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
6,865,050 and 6,801,095 shares - -
Additional paid-in capital $ 71,979 $ 71,369
Accumulated other comprehensive income 14,374 2,494
Retained earnings 82,939 74,138
Unearned ESOP shares (2,036) (2,505)
Treasury Stock, 631,761 and 621,773 shares (8,369) (8,226)
Total stockholders' equity 158,887 137,270
Total liabilities and stockholders' equity $ 594,844 $ 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
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