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
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
Mercer Insurance (NASDAQ:MIGP)
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