8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 29, 2010

Mercer Insurance Group, Inc.
(Exact name of registrant as specified in its charter)

Pennsylvania	000-25425	23-2934601
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

10 North Highway 31, Pennington, New Jersey	08534
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (609) 737-0426

Not Applicable

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o 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.

On April 29, 2010, Mercer Insurance Group, Inc. (the “Company”) issued a press release (the “Press Release”) containing financial information regarding its financial condition and results of operations at, and for the three months ended, March 31, 2010. The Press Release is attached hereto as Exhibit 99.1.

The information in this Item 2.02 and the Press Release is being furnished pursuant to Item 2.02 of this Form 8-K and shall not be deemed “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 8.01 Other Events.

The Company also announced in the Press Release that it approved a cash dividend of $0.10 per share to be paid on June 28, 2010 to shareholders of record on June 11, 2010.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1 Press Release dated April 29, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MERCER INSURANCE GROUP, INC.
Dated: April 29, 2010	By:	/s/ David Merclean
		David Merclean
		Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release dated April 29, 2010

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Company Contacts:

Andrew R. Speaker	David B. Merclean
President & CEO	Senior Vice President & CFO
Mercer Insurance Group, Inc.	Mercer Insurance Group, Inc.
(609) 737-0426	(609) 737-0426

Mercer Insurance Group announces 1st Quarter 2010 Earnings and increased dividend

Pennington, New Jersey, April 29, 2010 — Mercer Insurance Group, Inc. (Nasdaq: MIGP) reported its operating results today for the quarter ended March 31, 2010.

Highlights:

• Net income of $0.54 per diluted share versus $0.46 per diluted share in the prior year’s quarter,

• Operating income of $0.49 per diluted share versus $0.51 per diluted share in the prior year’s quarter,

• A GAAP combined ratio of 98.1% versus 98.4% in the prior year’s quarter,

• Book value per share of $26.20,

• Increase in quarterly shareholder dividend to $0.10 per share, a 33% increase.

Andrew R. Speaker, President and CEO, noted “We are pleased, under the circumstances, that our operating income is comparable to last year’s quarter, despite having incurred winter storm losses during the quarter. In recent years we have managed our east coast book to minimize our catastrophic weather exposures, and, noting that our winter storm losses are proportionately less than some of our competitors, we are pleased with the result of our efforts to manage these exposures.”

Speaker continued, “We are also pleased to report that the Board of Directors has authorized an increase in our quarterly dividend to $0.10 per share. While we carefully balance our capital levels to support our current business, future opportunities and our credit ratings, we also seek to provide a good return for our shareholders.”

Speaker concluded, “Underwriting discipline is the touchstone of our Company’s culture, and we will continue to demonstrate that discipline in every aspect of our business. We are confident that this will best position the Company to achieve profitable results, increase book value and leave us positioned well for changing market and economic conditions. Our book value has grown to $26.20 per share, and we will continue our strong focus on steady growth in this book value.”

Financial Summary (in thousands, except per share data)

	Three Months Ended
	March 31,
	(unaudited)
	2010			2009
Total revenue	$	39,169		$	39,192
Net premiums written		32,000			31,856
Net premiums earned		34,735			35,582
Net investment income		3,506			3,603
Net realized gains (losses) on investments		472			(481	)
Net income		3,472			2,891
Earnings per share — Basic	$	0.55		$	0.47
Earnings per share — Diluted	$	0.54		$	0.46
Combined ratio		98.1	%		98.4	%
Book value per share	$	26.20		$	22.93
Reconciliation of non-GAAP financial measures:
Net income	$	3,472		$	2,891
Net realized gains (losses) on investments, net of tax		312			(317	)
Net operating income		3,160			3,208
Operating earnings per share — Basic	$	0.50		$	0.52
Operating earnings per share — Diluted	$	0.49		$	0.51

In the quarter ended March 31, 2010, the Company reported GAAP net income under U.S. generally accepted accounting principles (GAAP) of $3.5 million, or $0.54 per diluted share. This result compares to net income of $2.9 million, or $0.46 per diluted share, for the same quarter of the previous year. Although current year net income was not burdened by the number of fire and property losses reflected in net income of the first quarter of 2009, first quarter 2010 net income was adversely affected by losses related to winter storms in March in the after tax amount of $800,000, or $0.12 per diluted share. These 2010 property losses are largely those associated with catastrophe number 96, which was the northeaster storm which struck the mid-Atlantic region in mid-March. Included in the current year’s net income are net realized gains of $472,000, as compared to net realized losses of $481,000 for the quarter ended March 31, 2009. These net realized gains include $8,000 in other than temporary impairments in the current year, and $535,000 of such impairments in net realized losses in the first quarter of 2009. Operating income for the quarter ended March 31, 2010, was consistent with that of the prior year at $3.2 million.

The Board of Directors of Mercer Insurance Group, Inc. has approved an increased dividend of $0.10 per share, to be paid on June 28, 2010 to shareholders of record on June 11, 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 Mercer’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. Mercer Insurance Group trades under the symbol “MIGP” and has an “A” (Excellent) rating from A.M. Best Company, Inc.

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 Mercer Insurance Group, Inc. There can be no assurance that future developments will be in accordance with management’s expectations so that the effect of future developments on Mercer Insurance Group, Inc. will be those anticipated by management. Actual financial results including premium growth and underwriting results could differ materially from those anticipated by Mercer Insurance Group, Inc. 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
	March 31,
	2010			2009
	(unaudited)			(unaudited)
Net premiums earned	$	34,735		$	35,582
Investment income, net of investment expenses		3,506			3,603
Realized investment gains (losses)		472			(481	)
Other revenue		456			488
Total revenue		39,169			39,192
Losses and loss adjustment expenses		21,913			22,199
Amortization of deferred policy acquisition costs		9,385			9,905
Other expenses		2,764			2,891
Interest expense		351			352
Total expenses		34,413			35,347
Income before income taxes		4,756			3,845
Income taxes		1,284			954
Net income	$	3,472		$	2,891
Net income per common share:
Basic	$	0.55		$	0.47
Diluted	$	0.54		$	0.46
Weighted average number of shares outstanding:
Basic		6,259,228			6,180,227
Diluted		6,413,489			6,233,044
Supplementary Financial Data
Net written premiums	$	32,000		$	31,856
Book value per common share	$	26.20		$	22.93
GAAP combined ratio		98.1	%		98.4	%

Consolidated Balance Sheet
(in thousands, except share amounts)

	March 31, 2010			December 31, 2009
	(unaudited)
ASSETS
Investments, at fair value:
Fixed income securities, available-for sale	$	384,044		$	365,464
Equity securities, at fair value		10,229			9,484
Total investments		394,273			374,948
Cash and cash equivalents		26,742			39,927
Premiums receivable		36,966			36,405
Reinsurance receivable		77,002			79,599
Prepaid reinsurance premiums		5,959			5,871
Deferred policy acquisition costs		18,261			18,876
Accrued investment income		3,821			4,287
Property and equipment, net		21,141			21,516
Deferred income taxes		5,052			4,941
Goodwill		5,416			5,416
Other assets		4,215			3,568
Total assets	$	598,848		$	595,354
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Losses and loss adjustment expenses	$	311,414		$	311,348
Unearned premiums		73,955			76,601
Accounts payable and accrued expenses		9,753			12,150
Other reinsurance balances		16,296			12,386
Trust preferred securities		15,597			15,592
Advances under line of credit		3,000			3,000
Other liabilities		4,632			4,069
Total liabilities	$	434,647		$	435,146
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 6,898,936 and 6,883,498 shares		—			—
Additional paid-in capital	$	72,289		$	72,139
Accumulated other comprehensive income		12,906			12,220
Retained earnings		89,104			86,101
Unearned ESOP shares		(1,724	)		(1,878	)
Treasury Stock, 632,076 shares		(8,374	)		(8,374	)
Total stockholders’ equity		164,201			160,208
Total liabilities and stockholders’ equity	$	598,848		$	595,354