Pennsylvania | 001-34496 | 80-0482459 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
72 North Franklin Street, P.O. Box P Wilkes-Barre, Pennsylvania |
18773 |
|
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
þ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Important Information for Investors and Shareholders
In connection with the previously announced proposed merger between the Company and ACE American Insurance Company (the “Merger”), the Company has filed a proxy statement with the Securities and Exchange Commission (the “SEC”). INVESTORS AND SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER.
Investors and shareholders may obtain free copies of the proxy statement and other documents filed by the Company at the SEC’s web site at http://www.sec.gov or at the Company’s web site at http://www.pennmillers.com. The proxy statement and such other documents may also be obtained at no cost from the Company by directing such request to Penn Millers Holding Corporation, 72 North Franklin Street, P.O. Box P, Wilkes-Barre, Pennsylvania 18773-0016, or by telephone at (800) 233-8347.
The Company 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 the Company’s shareholders in connection with the proposed Merger. Information concerning the interests of those persons is set forth in the Company’s proxy statement relating to the special meeting of shareholders.
Item 9.01 | Financial Statements and Exhibits. |
99.1 | Press Release of Penn Millers Holding Corporation, dated November 10, 2011 |
PENN MILLERS HOLDING CORPORATION |
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Dated: November 10, 2011 | By: | /s/ Michael O. Banks | ||
Michael O. Banks | ||||
Executive Vice President and Chief Financial Officer |
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Exhibit | ||||
Number | Description | |||
99.1 | Press Release of Penn Millers Holding Corporation, dated November 10, 2011 |
| Total consolidated revenues for the third quarter of 2011 were $19.2 million, flat compared to $19.2 million for the same quarter in 2010. For the nine month period, total consolidated revenues were $56.8 million in 2011, compared to $57.8 million in 2010. |
| Net premiums written for the third quarter of 2011 were $1.1 million higher than the third quarter of 2010. Penn Millers Agribusiness segment had increases in 2011 net premiums written of $2.5 million in the third quarter, which was offset by declines in the Commercial Business segment of $1.4 million. Net premiums written for the nine month period of 2011 were $0.1 million lower than the nine month period of 2010. The Agribusiness segment had increases in 2011 net premiums written of $3.6 million, or 10.6%, which was more than offset by declines in the Commercial Business segment. The declines in both the three and nine month periods in the Commercial Business segment were due to the financial underwriting and pricing actions being taken on the Solutions product. | ||
| Realized gains were $0.5 million lower in the 2011 third quarter compared to 2010. In the third quarter of 2010, the Company sold investments and recognized $0.6 million of pre-tax capital gains in order to recapture some of the tax benefits on capital losses taken in 2008. |
| Penn Millers combined ratio for the third quarter of 2011 was 120.3%, compared to 114.4% for the third quarter of 2010. On a year to date basis, the Companys combined ratio was 119.4% in 2011 and 119.3% in 2010. |
| Penn Millers was adversely impacted by catastrophe losses in the third quarter of 2011 that accounted for approximately 19 loss ratio points of its 86.0% third quarter loss ratio. Hurricane Irene contributed approximately $2.4 million, or 13.3 loss ratio points, to the total catastrophe losses, with the remainder mostly attributable to various flooding, hail and wind events in the Midwest. In addition to the third quarter catastrophe losses, other weather-related losses were $3.5 million, or approximately 20 loss ratio points. These weather losses were mostly concentrated in five large claims over a diverse geographic area. | ||
| Excluding the catastrophe and other weather-related losses reported for 2011 and 2010, the nine month combined ratio of the Companys Agribusiness segment improved by nearly 9 points compared to 2010. Excluding the catastrophe and other weather-related losses reported for 2011 and 2010, the nine month period combined ratio for the Commercial Business segment decreased from 121.1% in 2010 to 102.5% in 2011. | ||
| The loss ratios for both the quarter and year to date periods were positively impacted by net favorable loss development on prior accident year reserves of $3.6 million and $7.9 million, respectively. |
| In the third quarter of 2010, Penn Millers recorded a tax valuation allowance against its net deferred tax assets, which was the primary cause of the $2.7 million of income tax expense for that quarter. | ||
| Book value per share decreased by $1.21 per share compared to December 31, 2010, and was $19.64 per share at September 30, 2011. | ||
| Shareholders equity decreased from $93.0 million at December 31, 2010 to $89.1 million at September 30, 2011, primarily as a result of the net loss for the year to date period. |
Important Information for Investors and Shareholders
In connection with the previously announced proposed merger between the Company and ACE American Insurance Company (the “Merger”), the Company has filed a proxy statement with the Securities and Exchange Commission (the “SEC”). INVESTORS AND SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER.
Investors and shareholders may obtain free copies of the proxy statement and other documents filed by the Company at the SEC’s web site at http://www.sec.gov or at the Company’s web site at http://www.pennmillers.com. The proxy statement and such other documents may also be obtained at no cost from the Company by directing such request to Penn Millers Holding Corporation, 72 North Franklin Street, P.O. Box P, Wilkes-Barre, Pennsylvania 18773-0016, or by telephone at (800) 233-8347.
The Company 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 the Company’s shareholders in connection with the proposed Merger. Information concerning the interests of those persons is set forth in the Company’s proxy statement relating to the special meeting of shareholders.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
U.S. GAAP ratios: |
||||||||||||||||
Loss and loss adjustment expense ratio |
86.0 | % | 79.9 | % | 82.6 | % | 84.4 | % | ||||||||
Underwriting expense ratio |
34.3 | % | 34.5 | % | 36.8 | % | 34.9 | % | ||||||||
Combined ratio |
120.3 | % | 114.4 | % | 119.4 | % | 119.3 | % | ||||||||
Return on average shareholders equity (1) |
-11.9 | % | -12.7 | % | -7.7 | % | -6.4 | % | ||||||||
Basic net loss per common share |
$ | (0.62 | ) | $ | (0.71 | ) | $ | (1.18 | ) | $ | (1.02 | ) | ||||
Diluted net loss per common share |
$ | (0.62 | ) | $ | (0.71 | ) | $ | (1.18 | ) | $ | (1.02 | ) | ||||
Net book value per share |
$ | 19.64 | $ | 21.11 |
(1) | Return on average shareholders equity is annualized. |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Assets |
||||||||
Investments: |
||||||||
Fixed maturities: |
||||||||
Available for sale, at fair value (amortized cost $158,711 in
2011 and $158,193 in 2010) |
$ | 164,419 | 162,771 | |||||
Equity Securities: |
||||||||
Available for sale, at fair value (cost $10,949 in 2011
and $10,885 in 2010) |
10,285 | 10,874 | ||||||
Cash and cash equivalents |
5,450 | 6,510 | ||||||
Premiums and fees receivable |
28,152 | 28,394 | ||||||
Reinsurance receivables and recoverables |
28,153 | 24,912 | ||||||
Deferred policy acquisition costs |
9,348 | 9,735 | ||||||
Prepaid reinsurance premiums |
4,043 | 4,320 | ||||||
Accrued investment income |
1,503 | 1,621 | ||||||
Property and equipment, net of accumulated depreciation |
3,021 | 3,323 | ||||||
Income taxes receivable |
7 | 1,253 | ||||||
Other |
953 | 1,008 | ||||||
Total assets |
$ | 255,334 | 254,721 | |||||
Liabilities and Shareholders Equity |
||||||||
Liabilities: |
||||||||
Losses and loss adjustment expense reserves |
$ | 117,059 | 109,973 | |||||
Unearned premiums |
42,042 | 42,807 | ||||||
Accounts payable and accrued expenses |
7,096 | 8,913 | ||||||
Total liabilities |
166,197 | 161,693 | ||||||
Shareholders equity: |
||||||||
Preferred stock, no par value, authorized 1,000,000; no shares
issued or outstanding |
| | ||||||
Common stock, $0.01 par value, authorized 10,000,000; issued
2011, 5,444,022 and 2010, 5,444,022; outstanding 2011,
4,537,915 shares and 2010, 4,462,131 shares |
54 | 54 | ||||||
Additional paid-in capital |
51,378 | 51,068 | ||||||
Accumulated other comprehensive income |
2,410 | 2,054 | ||||||
Retained earnings |
45,670 | 50,993 | ||||||
Unearned ESOP, 436,499 and 476,999 shares |
(4,365 | ) | (4,770 | ) | ||||
Treasury stock, at cost, 469,608 and 504,892 shares |
(6,010 | ) | (6,371 | ) | ||||
Total shareholders equity |
89,137 | 93,028 | ||||||
Total liabilities and shareholders equity |
$ | 255,334 | 254,721 | |||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Premiums earned |
$ | 17,721 | 17,184 | |||||
Investment income, net of investment expense |
1,373 | 1,339 | ||||||
Realized investment gains, net: |
||||||||
Total other-than-temporary impairment losses |
| | ||||||
Portion of loss recognized in other
comprehensive income |
| | ||||||
Other realized investment gains, net |
92 | 639 | ||||||
Total realized investment gains, net |
92 | 639 | ||||||
Other income |
30 | 56 | ||||||
Total revenues |
19,216 | 19,218 | ||||||
Losses and expenses: |
||||||||
Losses and loss adjustment expenses |
15,245 | 13,733 | ||||||
Amortization of deferred policy acquisition costs |
4,948 | 5,103 | ||||||
Underwriting and administrative expenses |
1,136 | 826 | ||||||
Merger expenses |
822 | | ||||||
Interest (income) expense |
(47 | ) | 6 | |||||
Other expense, net |
18 | 38 | ||||||
Total losses and expenses |
22,122 | 19,706 | ||||||
Loss before income taxes |
(2,906 | ) | (488 | ) | ||||
Income tax (benefit) expense |
(89 | ) | 2,676 | |||||
Net loss |
$ | (2,817 | ) | (3,164 | ) | |||
Earnings per share: |
||||||||
Basic net loss per common share |
$ | (0.62 | ) | (0.71 | ) | |||
Diluted net loss per common share |
$ | (0.62 | ) | (0.71 | ) | |||
2011 | 2010 | |||||||
Revenues: |
||||||||
Premiums earned |
$ | 51,443 | 50,919 | |||||
Investment income, net of investment expense |
4,218 | 4,363 | ||||||
Realized investment gains, net: |
||||||||
Total other-than-temporary impairment losses |
| | ||||||
Portion of loss recognized in other
comprehensive income |
| | ||||||
Other realized investment gains, net |
944 | 2,305 | ||||||
Total realized investment gains, net |
944 | 2,305 | ||||||
Other income |
186 | 236 | ||||||
Total revenues |
56,791 | 57,823 | ||||||
Losses and expenses: |
||||||||
Losses and loss adjustment expenses |
42,508 | 42,990 | ||||||
Amortization of deferred policy acquisition costs |
14,688 | 15,139 | ||||||
Underwriting and administrative expenses |
4,255 | 2,657 | ||||||
Merger expenses |
952 | | ||||||
Interest (income) expense |
(31 | ) | 6 | |||||
Other expense, net |
72 | 108 | ||||||
Total losses and expenses |
62,444 | 60,900 | ||||||
Loss before income taxes |
(5,653 | ) | (3,077 | ) | ||||
Income tax (benefit) expense |
(330 | ) | 1,604 | |||||
Net loss |
$ | (5,323 | ) | (4,681 | ) | |||
Earnings per share: |
||||||||
Basic net loss per common share |
$ | (1.18 | ) | (1.02 | ) | |||
Diluted net loss per common share |
$ | (1.18 | ) | (1.02 | ) | |||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Operating loss from operations |
$ | (2,878 | ) | (3,585 | ) | $ | (5,946 | ) | (6,202 | ) | ||||||
Net realized investment
gains, net of income taxes |
61 | 421 | 623 | 1,521 | ||||||||||||
Net loss |
$ | (2,817 | ) | (3,164 | ) | $ | (5,323 | ) | (4,681 | ) | ||||||