- With diversified risk profile and increased scale, combined
company will market commercial and personal insurance through
approximately 1,400 independent agents in 24 states
- Transaction expected to add to United Fire earnings by
2012
- Conference call regarding transaction to be held at 9 a.m. ET/8
a.m. CT on December 1, 2010
United Fire & Casualty Company (Nasdaq:UFCS)
and Mercer Insurance Group, Inc. (Nasdaq:MIGP)
today announced that the companies have entered into a merger
agreement. Under the terms of the agreement, United Fire will
acquire all of the outstanding shares of Mercer Insurance common
stock in a transaction expected to close at the end of the first
quarter of 2011. Combined 2009 net written premiums for the two
companies were $605 million. Both United Fire and Mercer
Insurance are rated A (Excellent) by A.M. Best Co.
Mercer Insurance shareholders will receive $28.25 per share in
cash, representing an aggregate transaction value of approximately
$191 million. The price represents a premium of 49.8% to the
closing price of Mercer Insurance common stock on November 30,
2010. The transaction is subject to customary conditions,
including approval by the shareholders of Mercer Insurance and
regulatory authorities. Approval of the transaction by United Fire
shareholders is not required and there is no financing condition to
consummate the transaction. United Fire expects to finance the
transaction with a combination of available cash and bank
financing.
Randy A. Ramlo, President and Chief Executive Officer of United
Fire, said: "United Fire has been looking to enter the Mid-Atlantic
and West Coast markets for years because of the potential to
diversify our risk profile and increase the scale of our
operations. Mercer Insurance has a long track record of operating
profitably in these markets, and we are very pleased that the
company and its employees, agents and policyholders will be joining
the United Fire family. The transaction is a very attractive
financial opportunity for United Fire, and we anticipate it will
contribute to our net income and return on equity no later than
2012."
"Mercer Insurance brings a strong, consistent performance track
record, a disciplined underwriting approach and a history of
product innovations well received by agents and policyholders. We
look forward to working with the Mercer Insurance team to continue
their focus on underwriting profitability," Ramlo noted.
Andrew R. Speaker, President and Chief Executive Officer of
Mercer Insurance, stated: "We believe this is a very compelling
transaction for all of our stakeholders. Our shareholders receive a
good premium, our employees join a great organization and our
agents and policyholders will benefit from increased opportunities
and United Fire's strong capital position. I look forward to
working with Randy and his team on transitioning Mercer Insurance
to the next phase of its history."
The board of directors of Mercer Insurance unanimously approved
the merger and determined it is in the best interest of Mercer
Insurance and its shareholders. The board also resolved to
recommend that Mercer Insurance's shareholders vote to approve the
merger. Officers and directors of Mercer Insurance, who together
beneficially own approximately 13% of the outstanding shares of
Mercer Insurance common stock, have agreed to vote their shares in
favor of the merger.
Strategic and Financial Benefits of the
Transaction
The combined company is expected to be a top 50 U.S. publicly
traded property casualty writer, based on 2009 net written premiums
(approximately 91% commercial lines). The combined company
will have expanded resources to better serve policyholders and will
benefit from certain economies of scale. United Fire management
expects the transaction to benefit all stakeholders and to provide
an improved strategic position for anticipated strong financial
performance going forward, including:
Diversified Risk Profile – There is no overlap
between the two organizations' agency networks as Mercer Insurance
primarily markets in six Western and Mid-Atlantic states in which
United Fire has no appointed property casualty agencies. Following
the closing of the transaction, United Fire will market through
approximately 1,400 independent agents in 24 states, diversifying
its exposure to weather and other catastrophe risks across its
geographic markets.
Common Business Approach – Following the
completion of the transaction, the combined company will be able to
build on common conservative underwriting and investment cultures.
Both companies market through independent agents, focus on customer
service and are committed to fair claims handling. United Fire's
award-winning agent technology offers low-cost scalability for the
combined organization. Each company has well-designed commercial
lines products for policyholders in niche markets. These products
currently are marketed in the companies' respective geographies and
may be appropriate for expansion into new states.
Conference Call
United Fire will hold a conference call on Wednesday, December
1, 2010 at 9 a.m. ET/ 8 a.m. CT to comment on the broad details and
benefits of the transaction. The call will be hosted by Randy A.
Ramlo, United Fire President and Chief Executive Officer; Michael
T. Wilkins, United Fire Executive Vice President, Corporate
Administration; and Dianne Lyons, United Fire Vice President and
Chief Financial Officer.
Investors may participate by dialing (800) 352-4170 (toll free)
or (253) 237-1838 (for international callers). A webcast of the
call will be available through the Investor Relations section of
http://www.unitedfiregroup.com and the Investors section of
http://www.mercerins.com. The web replay will be available
beginning about two hours after the completion of the call on the
companies' respective websites.
Transaction Advisors
United Fire is being advised in this transaction by Keefe,
Bruyette & Woods, Inc. and the law firms of Bradley & Riley
PC and Sidley Austin LLP. Mercer is being advised by Sandler
O'Neill + Partners, L.P. and the law firm of Stevens & Lee.
About United Fire & Casualty Company
United Fire & Casualty Company markets property and casualty
insurance, life insurance and annuities through a network of
independent agents. It is licensed as a property and casualty
insurer in 43 states, plus the District of Columbia, represented by
over 800 independent agencies. Its life insurance subsidiary
is licensed in 28 states, represented by over 900 independent life
agencies. The company's complete line of products includes
commercial insurance (approximately 91% property and casualty
premiums written), surety bonds, and personal insurance. United
Fire is rated A (Excellent) by A.M. Best.
United Fire reported net written premiums of $324 million, a
GAAP combined ratio of 99.8% and net income of $38.4 million,
or $1.46 per diluted share, for the nine months ended
September 30, 2010. At September 30, 2010, book value per
share was $27.73.
About Mercer Insurance Group
Mercer Insurance Group, Inc. offers commercial and personal
lines of insurance to businesses and individuals principally in New
Jersey, Pennsylvania, Arizona, California, Nevada and Oregon
through its insurance subsidiaries: Mercer Insurance Company,
Mercer Insurance Company of New Jersey, Inc., Financial Pacific
Insurance Company and Franklin Insurance Company. A.M. Best
affirmed Mercer Insurance Group's A (Excellent) rating in June
2010, when the outlook was raised to stable.
Mercer Insurance reported net written premiums of $101 million,
a GAAP combined ratio of 97.0% and net income of $11.1 million, or
$1.73 per diluted share, for the nine months ended
September 30, 2010. At September 30, 2010, book value per
share was $28.49.
The United Fire & Casualty Company and Mercer Insurance
Group logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=8374
Forward-looking Statements
This press release includes certain forward-looking statements.
Such forward-looking statements are subject to known and unknown
risks, uncertainties and other factors that may cause the actual
results, performance or achievements of United Fire or Mercer
Insurance to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
timing and completion of the merger, the outcome of any legal
proceedings relating to the merger, the ability of United Fire to
integrate the operations of Mercer Insurance into its own
operations, the effect of the announcement on Mercer Insurance's
customer relationships, operating results, financial condition and
business generally. Such factors also include, but are not limited
to, the risks and uncertainties described in United Fire's and
Mercer Insurance's reports filed with the SEC, which are available
at http://www.sec.gov. United Fire and Mercer Insurance disclaim
any intention or obligation to update or revise any forward-
looking statements, except as required by law.
Additional Information
In connection with the proposed transaction, Mercer Insurance
Group, Inc. will file a proxy statement with the Securities and
Exchange Commission. Investors and shareholders are advised
to read the proxy statement and any other relevant documents filed
with the SEC when they become available. Those documents will
contain important information about the merger, United Fire and
Mercer Insurance.
Investors and shareholders may obtain free copies of the proxy
statement and other documents filed by Mercer Insurance (when
available), at the SEC's website at http://www.sec.gov or at the
company's website at http://www.mercerins.com. The proxy statement
and such other documents may also be obtained, when available, for
free from Mercer Insurance by directing such request to Mercer
Insurance Group, Inc., 10 North Highway 31, P.O. Box 278,
Pennington, NJ 08534.
Mercer Insurance and its directors, executive officers and other
members of its management and employees may be deemed to be
participants in the solicitation of proxies from Mercer Insurance's
shareholders in connection with the proposed merger transaction.
Information concerning the interests of those persons is set forth
in Mercer Insurance's proxy statement relating to the 2010 annual
shareholder meeting and annual report on Form 10-K for the fiscal
year ended December 31, 2009, both filed with the SEC, and will
also be set forth in the proxy statement relating to the merger
transaction when it becomes available.
CONTACT: United Fire & Casualty Company
Randy A. Ramlo, President and Chief Executive Officer
Dianne Lyons, Vice President and Chief Financial Officer
319-399-5700
Mercer Insurance Group, Inc.
Andrew R. Speaker, President and Chief Executive Officer
David B. Merclean, Senior Vice President and
Chief Financial Officer
609-737-0426
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