Mercer Insurance Group Inc. and Financial Pacific Insurance Group Inc. jointly announced that they have signed a plan of merger for Mercer to acquire all the outstanding stock of Financial Pacific for approximately $40.4 million in cash. The transaction will be effected through a merger of a wholly owned subsidiary of Mercer into Financial Pacific. Consummation of the transaction between Mercer and Financial Pacific is subject to regulatory approval.
For Mercer, the acquisition is consistent with its long-term objectives of strategically developing its commercial lines segment and of product and geographic diversification, according to Andrew Speaker, president and CEO. “We are pleased to partner with Financial Pacific as it allows us to sharpen our focus on commercial business and expands our geographic spread. Financial Pacific is a successful specialty writer of attractive commercial lines, which is consistent with our strategy to grow in selected areas of the commercial lines market. The acquisition also helps in our efforts to achieve geographic diversification as Financial Pacific currently focuses on four western states and will provide us with licenses to write business in another fifteen states outside our respective focus areas.”
Robert Kingsley, president of Financial Pacific, views the acquisition as a “great opportunity” for the policyholders, agents and employees of Financial Pacific. “This transaction with Mercer aligns us with a well capitalized partner which will enhance our position as a leading commercial lines property/casualty insurer in the West. Mercer is rated “A” (Excellent) by A.M. Best and has a track record of strong underwriting performance. We are very excited about the opportunities this acquisition brings for all Financial Pacific stakeholders,” Kinglsey stated.
For the year ended Dec. 31, 2004, Financial Pacific reported audited stockholders’ equity of $35.4 million, operating income of $4.6 million and net income of $5.9 million, computed under accounting principles generally accepted in the United States of America (GAAP). In 2004, Financial Pacific generated approximately $107 million of direct premiums primarily in California, Nevada, Oregon and Arizona through approximately 300 independent agents.
Financial Pacific will operate as a separate subsidiary of Mercer and will be included in Mercer’s commercial lines segment for financial reporting purposes. The transaction is expected to be completed during the summer of 2005.
Financial Pacific Insurance Group Inc., located in Rocklin, Calif., was formed in 1987 and writes commercial business in a number of states in the Western region of the United States.
Mercer Insurance Group Inc. is a holding company, which through its insurance subsidiaries, offers commercial and personal lines products to businesses and individuals in Pennsylvania and New Jersey.
Sandler O’Neill & Partners, L.P. acted as Mercer’s financial advisors and Stevens & Lee acted as Mercer’s counsel in connection with the merger. Keefe Bruyette & Woods advised Financial Pacific and Bingham McCutchen acted as its counsel.