Mercer Insurance Group Inc. (MIGP) filed Quarterly Report for the period ended 2009-09-30.
Mercer Insurance Group Inc. has a market cap of $116.62 million; its shares were traded at around $18.1 with a P/E ratio of 8.79 and P/S ratio of 0.72. The dividend yield of Mercer Insurance Group Inc. stocks is 1.66%.
Highlight of Business Operations:
In the nine and three month periods ended September 30, 2009 and 2008, we recorded pre-tax charges to earnings of $787,000 and $3.5 million, respectively, and $55,000 and $2.9 million, respectively, for write-downs of other-than-temporarily-impaired securities (OTTI). The 2009 write downs of $787,000 included eighteen securities, including a mortgage backed security ($308,000), two asset backed securities ($71,000), thirteen equity positions ($269,000), and two capital trust preferred stock securities ($139,000). All were treated as other-than-temporarily-impaired as a result of deteriorating underlying collateral issues, including increased delinquency and default rates and slower payments, as well as declining business conditions and rating agency downgrades.
The availability of reinsurance at reasonable pricing is an important part of our business. Effective, January 1, 2009, the Group increased its retention to $1 million (from a maximum retention of $850,000 in 2008) on the casualty, property and workers’ compensation lines of business. As the Group increases the net retention of the business it writes, net premiums written and earned will increase and ceded losses will decrease.
Net investment income increased $660,000 or 6.5% to $10.8 million for the first nine months of 2009 as compared to $10.2 million for the first nine months of 2008. Net investment income increased $136,000 or 3.9% to $3.6 million for the third quarter of 2009 as compared to $3.5 million in the prior year. This increase was driven by an increase in net cash and invested assets in the portfolio, funded from operating cash flow. For more information see the discussion below relating to the Investment segment.
Net realized investment gains amounted to $393,000 for the first nine months of 2009 and $472,000 in the third quarter, compared to losses of $2.9 million and $2.3 million, respectively, in the prior year. The prior period losses were primarily driven by other than temporary impairment write-downs on investment securities. For more information regarding realized investment gains and losses see the discussion below relating to the Investment segment.
Other revenue of $1.6 million for the first nine months of both 2009 and 2008, and $516,000 and $536,000 for the three months ended September 30, 2009 and 2008, respectively, primarily represents service charges recorded on insurance premium payment plans. Interest expense of $1.1 million and 1.0 million for the first nine months of 2009 and 2008, and $358,000 and $328,000 for the three months ended September 30, 2009 and 2008, respectively, represents interest charges on the trust preferred obligations of FPIG.
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