Exhibit 99.1
Pro Forma Valuation Appraisal Update Report
of
Penn Millers Mutual Holding Company
Wilkes-Barre, Pennsylvania
As of August 7, 2009
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Curtis Financial Group, LLC• One Liberty Place• 1650 Market Street, Suite 4400• Philadelphia, PA 19103
(P) 215.972.2375• (F) 215.972.2388• www.curtisfinancial.com
(P) 215.972.2375• (F) 215.972.2388• www.curtisfinancial.com
Securities sold through Curtis Securities, LLC
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August 7, 2009
Board of Directors
Penn Millers Mutual Holding Company
72 North Franklin Street
Wilkes-Barre, Pennsylvania 18773
Penn Millers Mutual Holding Company
72 North Franklin Street
Wilkes-Barre, Pennsylvania 18773
Members of the Board:
At your request, Curtis Financial Group, LLC (“Curtis”) completed and hereby provides an updated independent appraisal (the “Appraisal Update”) of the estimated consolidated pro forma market value of Penn Millers Mutual Holding Company (“PMMHC”) as of August 7, 2009, which is conducting a public offering in connection with the Plan of Conversion, as of April 22, 2009 (the “Plan” or “Offering”) transaction described below. PMHC Corp. (“PMHC”) is the wholly-owned subsidiary of PMMHC and the holding company for Penn Millers Insurance Company (“PMIC”, and together with PMHC and PMMHC, “Penn Millers” or the “Company”). Our previous Appraisal as of April 1, 2009 and appraisal update as of June 5, 2009 are incorporated herein by reference.
Because the Plan involves the conversion of PMMHC from mutual to stock form, the Plan must be approved by the Pennsylvania Insurance Commissioner pursuant to the Commissioner’s 1998 order approving the conversion transaction by which the Company’s current mutual holding company structure was created. Accordingly, and in order to ensure that this Plan is fair to members of PMMHC, the Company has discussed this Plan with senior staff at the Pennsylvania Insurance Department (“PID”), and, as a condition to the Offering, will obtain from the Insurance Commissioner an approval of the Offering or, as applicable, will obtain written confirmation from the Commissioner that such approval is not required and that the Company may proceed with the Offering. In accordance with the Plan, the estimated consolidated pro forma market value of the Company shall be determined by an independent valuation expert and shall represent the aggregate price of common stock (the “Estimated Pro Forma Market Value”). Furthermore, the pro forma market value may be expressed as a range of value and may be that value that is estimated to be necessary to attract a full subscription for the shares of common stock offered for sale in the Offering.
THE PLAN OF CONVERSION
The Board of Directors of the Company has adopted the Plan. As part of the Plan, PMMHC will convert from mutual to stock form and issue its common stock to its newly formed holding company, Penn Millers Holding Corporation, which will offer shares of its common stock (“Common Stock”) for sale in a subscription offering to the following potential subscribers: the Company’s policyholders, the Company’s employee stock ownership plan (“ESOP”), and directors, officers and employees of the Company in accordance with the terms and conditions of
Curtis Financial Group, LLC• One Liberty Place• 1650 Market Street, Suite 4400• Philadelphia, PA 19103
(P) 215.972.2375• (F) 215.972.2388• www.curtisfinancial.com
(P) 215.972.2375• (F) 215.972.2388• www.curtisfinancial.com
Securities sold through Curtis Securities, LLC
Board of Directors
Penn Millers Mutual Holding Company
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Penn Millers Mutual Holding Company
Page 2 of 4
the Plan. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale in a community offering and a syndicated community offering, if needed.
CURTIS FINANCIAL GROUP, LLC
Curtis is an investment banking firm specializing in business valuations, mergers and acquisitions, and raising private capital. The professional staff has a diverse background in investment banking, securities analysis, banking, insurance, engineering, accounting and tax. The expertise of the staff includes valuing, originating, structuring, negotiating and closing a wide variety of investment banking transactions. The background of Curtis is presented in Exhibit III. We believe that, except for the fee we will receive for our appraisal, we are independent of the Company and the other parties engaged by the Company to assist in the corporate reorganization and stock issuance process.
VALUATION METHODOLOGY
In preparing the Appraisal Update, we conducted an analysis of PMMHC that included discussions with the Company’s management. We reviewed the audited GAAP and statutory financial statements of the Company as of and for the years ended December 31, 2003 through December 31, 2008 and the quarterly periods ended March 31, 2009 and June 30, 2009. In addition, where appropriate, we considered information based on other available published sources that we believe are reliable; however, we cannot guarantee the accuracy and completeness of such information.
In preparing the Appraisal Update, we also reviewed and analyzed: (i) financial and operating information with respect to the business, operations, and prospects of the Company furnished to us by the Company; (ii) publicly available information concerning the Company that we believe to be relevant to our analysis; (iii) a comparison of the historical financial results and present financial condition of the Company with those of selected, publicly-traded insurance companies that we deemed relevant; and (iv) financial performance and market valuation data of certain publicly-traded insurance industry aggregates as provided by industry sources.
The Appraisal Update is based on the Company’s representation that the information contained in the Plan and additional evidence furnished to us by the Company and its independent auditor are truthful, accurate, and complete. We did not independently verify the financial statements and other information provided by the Company and reviewed by its independent auditor, nor did we independently value the assets or liabilities of the Company. The Appraisal Update considers the Company only as a going concern on a stand-alone basis and should not be considered as an indication of the liquidation value of the Company.
We have investigated the competitive environment within which the Company operates and have assessed the Company’s strengths and weaknesses relative to comparable companies. We have monitored material regulatory and legislative actions affecting financial institutions generally and analyzed the potential impact of such developments on the Company and the industry as a whole, to the extent we were aware of such matters. We have analyzed the potential effects of
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Board of Directors
Penn Millers Mutual Holding Company
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Penn Millers Mutual Holding Company
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the Offering on the Company’s operating characteristics and financial performance as they relate to the Estimated Pro Forma Market Value of PMMHC. We have reviewed the economy and demographic characteristics of the primary market area in which the Company currently operates. We have compared the Company’s financial performance and condition with publicly-traded insurance institutions evaluated and selected in accordance with the valuation guidelines. We have reviewed conditions in the securities markets in general and the markets for insurance companies, and insurance holding companies.
Our appraised value is predicated on a continuation of the current operating environment for PMHC, PMMHC, and for all insurance companies and their holding companies. Changes in the local and national economy, the federal and state legislative and regulatory environments for insurance companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability, and may materially impact the value of insurance stocks as a whole or the Company’s value alone. To the extent that such factors can be foreseen, they have been factored into our analysis.
VALUATION CONCLUSION
It is our opinion that, as of August 7, 2009, the Estimated Pro Forma Market Value of the aggregate common shares outstanding immediately following the Offering, was within a range (the “Valuation Range”) of $45.05 million to $60.95 million with a midpoint of $53.0 million. The Valuation Range was based upon a fifteen percent decrease from the midpoint to determine the minimum and a fifteen percent increase from the midpoint to determine the maximum. Exhibit VII shows the assumptions and calculations utilized in determining the Company’s Valuation Range.
LIMITING FACTORS AND CONSIDERATIONS
Our Appraisal Update is not intended, and must not be construed, to be a recommendation of any kind as to the advisability of purchasing shares of Common Stock. Moreover, because the Appraisal Update is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of stock in the conversion will thereafter be able to sell such shares at prices related to the foregoing Estimated Pro Forma Market Value. The Appraisal Update reflects only a valuation range as of this date for the Estimated Pro Forma Market Value of PMMHC immediately upon issuance of the stock and does not take into account any trading actively with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the Offering. Any report prepared by Curtis shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.
Curtis has made no recommendation regarding the merits of the decision to proceed or not to proceed with the Offering. The results of our Appraisal Update are but one of the many factors the Company’s Board of Directors should consider in making its decision. The Company has
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Board of Directors
Penn Millers Mutual Holding Company
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Penn Millers Mutual Holding Company
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assured Curtis that it has relied on its own counsel, accountants and other experts for legal, accounting, tax and similar professional advice.
The Valuation Range reported herein will be updated as appropriate. These updates will consider, among other factors, any developments or changes in the Company’s operating performance, financial condition, or management policies, and current conditions in the securities markets for insurance company common stocks. Should any such new developments or changes be material, in our opinion, to the Estimated Pro Forma Market Value of PMMHC, appropriate adjustments will be made to the Valuation Range. The reasons for any such adjustments will be explained in detail at that time.
Respectfully submitted, | ||||
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Curtis Financial Group, LLC | ||||
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PRO FORMA VALUATION APPRAISAL
TABLE OF CONTENTS
I. RECENT FINANCIAL PERFORMANCE | 1 | |||
Financial Condition | 1 | |||
Income and Expense Trends | 3 | |||
III. INDUSTRY UPDATE | 11 | |||
IV. COMPARISONS WITH PUBLICLY-TRADED COMPANIES | 13 | |||
Recent Financial Comparisons | 13 | |||
V. MARKET CONDITIONS AND MARKET VALUE ADJUSTMENTS | 17 | |||
Stock Price Performance and Market Conditions | 17 | |||
VI. VALUATION ANALYSIS AND CONCLUSIONS | 19 | |||
Valuation Review | 19 | |||
Valuation Analysis | 19 | |||
Valuation Conclusion | 22 |
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PRO FORMA VALUATION APPRAISAL
TABLE OF EXHIBITS
I. | Statement of General Assumptions and Limiting Conditions | |
II. | Certification | |
III. | Overview of Curtis and Qualifications of Appraisers | |
IV-1. | Balance Sheets — GAAP Basis | |
IV-2. | Income Statements — GAAP Basis | |
IV-3. | Investment Portfolio — GAAP Basis | |
V-1. | Balance Sheets — Statutory Basis | |
V-2 | Income Statements — Statutory Basis | |
VI-1. | Financial Performance Data for Public P&C Insurance Companies | |
VI-2. | Market Valuation Data for Public P&C Insurance Companies | |
VII-1. | Pro Forma Assumptions for Conversion Valuation | |
VII-2. | Pro Forma Conversion Valuation Range |
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PRO FORMA VALUATION APPRAISAL
I. RECENT FINANCIAL PERFORMANCE
Financial Condition
Table 1 presents selected data concerning the Company’s financial position as of March 31, 2009 and June 30, 2009. Exhibit IV-1 presents the Company’s balance sheet as of December 31, 2003 through December 31, 2008, as well as March 31, 2009 and June 30, 2009.
Table 1
Selected Financial Condition Data
As of March 31, 2009 and June 30, 2009
(Dollars in Thousands)
Selected Financial Condition Data
As of March 31, 2009 and June 30, 2009
(Dollars in Thousands)
6/30/2009 | 3/31/2009 | |||||||
Balance Sheet Data | ||||||||
Total assets | 228,385 | 228,415 | ||||||
Total investments and cash | 146,878 | 143,993 | ||||||
Premiums and fees receivable | 26,783 | 28,753 | ||||||
Reinsurance receivables and recoverables | 25,950 | 25,064 | ||||||
Loss and loss adjustment expense reserves | 118,025 | 116,775 | ||||||
Unearned premiums | 41,218 | 44,811 | ||||||
Total liabilities | 176,413 | 177,254 | ||||||
Total surplus | 51,972 | 51,161 | ||||||
Total surplus / assets | 22.76 | % | 22.40 | % |
Source: Penn Millers’ GAAP financial statements. |
The Company’s total assets remained flat at $228.4 million at March 31, 2009 and June 30, 2009. From March 31, 2009 to June 30, 2009, total investments increased by $6.5 million, This increase was mostly offset by a $3.6 million reduction in cash, a $2.0 million decline in premiums and fees receivable, and a $1.4 million decline in assets from discontinued operations.
The Company’s portfolio of investment securities amounted to $134.8 million at June 30, 2009 and constituted 59.0% of total assets. As of June 30, 2009, Penn Millers’ investments consisted of $26.7 million of mortgage-backed securities, and $108.0 million of other types of fixed-income securities. Exhibit IV-3 presents the Company’s investment portfolio as of December 31, 2006, December 31, 2007, December 31, 2008, and June 30, 2009. The following
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PRO FORMA VALUATION APPRAISAL
chart shows the composition of securities of Penn Millers’ investment portfolio as of June 30, 2009.
Chart 2
Penn Millers’ Investment Portfolio
As of June 30, 2009
Penn Millers’ Investment Portfolio
As of June 30, 2009
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Source: Penn Millers’ management. |
It should be noted that the Company advised that early in the third quarter of 2009, it became apparent that one corporate bond in its portfolio had suffered significant declines from which it was unlikely to recover. As a result of this new information, on July 16, 2009 the Company sold its holdings in this security, and recorded a pre-tax other-than-temporary impairment loss as of June 30, 2009 of approximately $197,000.
Total liabilities decreased from $177.3 million at March 31, 2009 to $176.4 million at June 30, 2009. The $841,000 decrease in total liabilities from March 31, 2009 to June 30, 2009 primarily reflected a $3.6 million decrease in unearned premiums, offset by a $1.3 million increase in loss and loss adjustment expense reserves and a $1.6 million increase in accounts
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PRO FORMA VALUATION APPRAISAL
payable and accrued expenses. Penn Millers borrowed debt outstanding remained flat at $3.0 million at March 31, 2009 and June 30, 2009.
The Company’s total surplus, as measured under generally accepted accounting principles (“GAAP”), increased modestly from $51.2 million at March 31, 2009 to $52.0 million at June 30, 2009, primarily as a result of an increase in accumulated unrealized investment gains from continuing operations. The Company’s ratio of total surplus to total assets increased from 22.4% at March 31, 2009 to 22.8% at June 30, 2009. As shown in the following chart, the Company’s return on average assets (“ROAA”) and return on average equity (“ROAE”) improved slightly from March to June 2009.
Chart 3
Penn Millers ROAA and ROAE
For the Years Ended December 31, 2003 through 2008, March 31, 2009 and June 30, 2009
Penn Millers ROAA and ROAE
For the Years Ended December 31, 2003 through 2008, March 31, 2009 and June 30, 2009
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Source: Curtis calculation based on Penn Millers’ GAAP financial statements. | ||
* | Note: ROAA and ROAE are calculated using net income for the trailing twelve month period and the average assets and equity book values at the ending twelve month period and corresponding prior year period. |
Income and Expense Trends
Table 2 displays the Company’s earnings results and selected operating ratios for the trailing twelve month (“TTM”) periods ended March 31, 2009 and June 30, 2009. Exhibit IV-2
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PRO FORMA VALUATION APPRAISAL
displays the Company’s annual income statements for 2003 through 2008, as well as the TTM periods ended March 31, 2009 and June 30, 2009.
Table 2
Selected Operating Performance Data
For the TTM periods ended March 31, 2009 and June 30, 2009
(Dollars in Thousands)
Selected Operating Performance Data
For the TTM periods ended March 31, 2009 and June 30, 2009
(Dollars in Thousands)
TTM ended | TTM ended | |||||||
6/30/2009 (e) | 3/31/2009 (e) | |||||||
REVENUE | ||||||||
Premiums earned | $ | 76,294 | $ | 77,327 | ||||
Investment income, net of investment expense | 5,381 | 5,298 | ||||||
Realized investment (losses) gains, net | (7,828 | ) | (7,627 | ) | ||||
Fee Income | 0 | 0 | ||||||
Commission income | 0 | 0 | ||||||
Other income | 301 | 282 | ||||||
Total revenue | 74,148 | 75,280 | ||||||
LOSSES AND EXPENSES | ||||||||
Losses and loss adjustment expenses | 54,564 | 56,343 | ||||||
Underwriting and administrative expenses (a) | 26,056 | 26,414 | ||||||
Interest expense | 253 | 213 | ||||||
Other expenses, net | 379 | 376 | ||||||
Total losses and expenses | 81,252 | 83,346 | ||||||
Income from continuing operations | (7,104 | ) | (8,066 | ) | ||||
Income taxes expense (benefit) | (1,765 | ) | (2,074 | ) | ||||
Net income (loss) from continuing operations | (5,339 | ) | (5,992 | ) | ||||
Discontinued Operations: | ||||||||
Pre-tax (loss) income on discontinued ops | (3,081 | ) | (3,104 | ) | ||||
Income tax (benefit) expense | 641 | 632 | ||||||
(Loss) income on discontinued ops | (3,722 | ) | (3,736 | ) | ||||
Net income | (9,061 | ) | (9,728 | ) | ||||
Operating Ratios | ||||||||
Loss ratio (b) | 71.5 | % | 72.9 | % | ||||
Expense ratio (c) | 34.2 | % | 34.2 | % | ||||
Combined ratio (d) | 105.7 | % | 107.0 | % |
Notes: | ||
(a) | Includes amortization of deferred policy acquisition costs. | |
(b) | Losses and loss adjustment expenses divided by premiums earned. | |
(c) | Underwriting and administrative expenses divided by premiums earned. | |
(d) | Sum of the loss ratio and the expense ratio. | |
(e) | Represents the trailing twelve month period. | |
Source: Financial reports prepared by management and reviewed by KPMG. |
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PRO FORMA VALUATION APPRAISAL
On February 2, 2009, the Company completed the sale of Eastern Insurance Group (“EIG”) to Eastern Insurance Acquisition Agency, LLC for approximately $3.4 million. Performance results of EIG have been classified as discontinued operations in Penn Millers’ historical financial statements.
Excluding revenue from discontinued operations, Penn Millers’ total revenue decreased from $75.3 million for the TTM period ended March 31, 2009 to $74.1 million for the TTM period ended June 30, 2009 due to a $1.0 million decrease in premiums earned. Including discontinued operations, Penn Millers experienced a net loss of $9.1 million for the TTM period ended June 30, 2009 as compared to net loss of $9.7 million for the TTM period ended March 31, 2009.
Underwriting and administrative expenses decreased slightly from $26.4 million for the TTM period ended March 31, 2009 to $26.0 million for the TTM period ended June 30, 2009. As a percent of earned premium revenue, the Company’s expense ratio remained flat at 34.2% for the TTM period ended March 31, 2009 and the TTM period ended June 30, 2009. The loss ratio decreased from 72.9% for the TTM period ended March 31, 2009 to 71.5% for the TTM period ended June 30, 2009, resulting in a combined ratio that decreased from 107.0% for the TTM period ended March 31, 2009 to 105.7% for the TTM period ended June 30, 2009. According to management, the decrease in loss ratio is due to a lower level of new claim activity across most lines of business. As shown in the following chart, since 2003, Penn Millers’ combined ratio has ranged from 103.7% to 107.3%.
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PRO FORMA VALUATION APPRAISAL
Chart 4
Penn Millers Combined Ratio Composition
For the Year Ended December 31, 2003 to December 31, 2008
and the TTM Periods Ended March 31, 2009 and June 30, 2009
Penn Millers Combined Ratio Composition
For the Year Ended December 31, 2003 to December 31, 2008
and the TTM Periods Ended March 31, 2009 and June 30, 2009
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Source: Penn Millers GAAP financial statements. Statutory ratios provided in Exhibit V.
The Company’s commercial lines segment remained unprofitable for the TTM period ended June 30, 2009. Net premiums earned slightly decreased from $30.8 million for the TTM period ended March 31, 2009 to $30.1 million for the TTM period ended June 30, 2009. Losses and loss adjustment expenses decreased from 77.9% of net premiums earned in the TTM period ended March 31, 2009 to 76.5% of net premiums in the TTM period ended June 30, 2009. Commercial underwriting loss totaled $4.0 million in the TTM period ended June 30, 2009.
Chart 5
Penn Millers Commercial Lines Net Premiums Earned and Loss Ratio
For the TTM Periods ended March 31, 2009 and June 30, 2009
Penn Millers Commercial Lines Net Premiums Earned and Loss Ratio
For the TTM Periods ended March 31, 2009 and June 30, 2009
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438570.gif)
Source: Penn Millers financial statements.
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PRO FORMA VALUATION APPRAISAL
The Company’s agribusiness segment was unprofitable in the TTM period ended June 30, 2009. Net premiums earned decreased from $44.9 million in TTM period ended March 31, 2009 to $44.8 million in the TTM period ended June 30, 2009. Losses and loss adjustment expenses decreased from 71.0% of net premiums earned in the TTM period ended March 31, 2009 to 70.0% of net premiums in the TTM period ended June 30, 2009. Agribusiness underwriting loss totaled $428,000 in the TTM period ended June 30, 2009.
Chart 6
Penn Millers Agribusiness Net Premiums Earned and Loss Ratio
For the TTM Periods ended March 31, 2009 and June 30, 2009
Penn Millers Agribusiness Net Premiums Earned and Loss Ratio
For the TTM Periods ended March 31, 2009 and June 30, 2009
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438571.gif)
Source: Penn Millers financial statements.
The Company exited the personal lines business in 2004. Underwriting income related to the run-off of personal lines amounted to approximately $467,000 in the TTM period ended June 30, 2009. Assumed reinsurance was profitable in the TTM period ended June 30, 2009.
Penn Millers ceded $19.3 million of gross written premiums to reinsurers for the TTM period ended June 30, 2009, an increase of approximately $2.5 million as compared to the prior TTM period.
Table 3 provides operating performance segment data for the Company for the TTM periods ended March 31, 2009 and June 30, 2009.
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PRO FORMA VALUATION APPRAISAL
Table 3
Segment Operating Performance Data
For the TTM Periods ended March 31, 2009 and June 30, 2009
(Dollars in Thousands)
Segment Operating Performance Data
For the TTM Periods ended March 31, 2009 and June 30, 2009
(Dollars in Thousands)
For the twelve month period ended June 30, 2009 | ||||||||||||||||||||||||||||||||||||
As a % of Total | ||||||||||||||||||||||||||||||||||||
Agri | Commerical | Personal | Assumed | Total | Agri | Comm | Pers | Assum | ||||||||||||||||||||||||||||
Direct premiums written | $ | 57,779 | $ | 32,938 | $ | 0 | $ | 246 | 90,963 | 63.5 | % | 36.2 | % | 0.0 | % | 0.3 | % | |||||||||||||||||||
Net premiums written | 44,992 | 26,420 | 0 | 1,360 | 72,772 | 61.8 | % | 36.3 | % | 0.0 | % | 1.9 | % | |||||||||||||||||||||||
Net premiums earned | 44,767 | 30,148 | 0 | 1,379 | 76,294 | 58.7 | % | 39.5 | % | 0.0 | % | 1.8 | % | |||||||||||||||||||||||
Losses and loss adjustment expenses | 31,359 | 23,051 | (467 | ) | 621 | 54,564 | 57.5 | % | 42.2 | % | -0.9 | % | 1.1 | % | ||||||||||||||||||||||
Other underwriting expenses | 13,836 | 11,130 | 0 | 537 | 25,503 | 54.3 | % | 43.6 | % | 0.0 | % | 2.1 | % | |||||||||||||||||||||||
Total losses and expenses | 45,195 | 34,181 | (467 | ) | 1,158 | 80,067 | 56.4 | % | 42.7 | % | -0.6 | % | 1.4 | % | ||||||||||||||||||||||
Underwriting income (loss) | (428 | ) | (4,033 | ) | 467 | 221 | (3,773 | ) | 11.3 | % | 106.9 | % | -12.4 | % | -5.9 | % |
For the twelve month period ended March 31, 2009 | ||||||||||||||||||||||||||||||||||||
As a % of Total | ||||||||||||||||||||||||||||||||||||
Agri | Commerical | Personal | Assumed | Total | Agri | Comm | Pers | Assum | ||||||||||||||||||||||||||||
Direct premiums written | $ | 59,305 | $ | 35,661 | $ | 0 | $ | 263 | 95,229 | 62.3 | % | 37.4 | % | 0.0 | % | 0.3 | % | |||||||||||||||||||
Net premiums written | 46,085 | 28,494 | 0 | 1,618 | 76,197 | 60.5 | % | 37.4 | % | 0.0 | % | 2.1 | % | |||||||||||||||||||||||
Net premiums earned | 44,879 | 30,823 | 0 | 1,625 | 77,327 | 58.0 | % | 39.9 | % | 0.0 | % | 2.1 | % | |||||||||||||||||||||||
Losses and loss adjustment expenses | 31,845 | 24,026 | (198 | ) | 673 | 56,346 | 56.5 | % | 42.6 | % | -0.4 | % | 1.2 | % | ||||||||||||||||||||||
Other underwriting expenses | 13,834 | 11,346 | 0 | 598 | 25,778 | 53.7 | % | 44.0 | % | 0.0 | % | 2.3 | % | |||||||||||||||||||||||
Total losses and expenses | 45,679 | 35,372 | (198 | ) | 1,271 | 82,124 | 55.6 | % | 43.1 | % | -0.2 | % | 1.5 | % | ||||||||||||||||||||||
Underwriting income (loss) | (800 | ) | (4,549 | ) | 198 | 354 | (4,797 | ) | 16.7 | % | 94.8 | % | -4.1 | % | -7.4 | % |
Source: Penn Millers financial statements.
Table 4 presents additional gross premium data for the Company’s agribusiness and commercial lines segments for the TTM periods ended March 31, 2009 and June 30, 2009.
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PRO FORMA VALUATION APPRAISAL
Table 4
Agribusiness and Commercial Lines Segment Gross Premium Data
For the TTM Periods ended March 31, 2009 and June 30, 2009
(Dollars in Thousands)
Agribusiness and Commercial Lines Segment Gross Premium Data
For the TTM Periods ended March 31, 2009 and June 30, 2009
(Dollars in Thousands)
Agribusiness | Commerical Lines | |||||||||||||||
TTM 6/30/09 | TTM 3/31/09 | TTM 6/30/09 | TTM 3/31/09 | |||||||||||||
Direct premiums written: | ||||||||||||||||
Fire and Allied | 18,763 | 19,235 | 4,363 | 4,837 | ||||||||||||
Inland | 2,187 | 2,238 | 282 | 275 | ||||||||||||
Workers Compensation | 8,127 | 8,290 | 6,856 | 7,373 | ||||||||||||
General Liability | 10,212 | 10,407 | 5,200 | 5,670 | ||||||||||||
Product Liability | 4,721 | 4,871 | 531 | 426 | ||||||||||||
Surety | 22 | 19 | 0 | 0 | ||||||||||||
Burglary | 169 | 168 | 26 | 61 | ||||||||||||
Boiler and Machinery | 887 | 898 | 822 | 838 | ||||||||||||
Auto | 12,690 | 13,181 | 4,771 | 5,041 | ||||||||||||
Commercial Multi-Peril | — | — | 10,057 | 11,118 | ||||||||||||
Earthquake | — | — | 31 | 22 | ||||||||||||
Total | 57,779 | 59,305 | 32,939 | 35,661 | ||||||||||||
(% of Total Premiums) | ||||||||||||||||
Direct premiums written: | ||||||||||||||||
Fire and Allied | 32.5 | % | 32.4 | % | 13.2 | % | 13.6 | % | ||||||||
Inland | 3.8 | % | 3.8 | % | 0.9 | % | 0.8 | % | ||||||||
Workers Compensation | 14.1 | % | 14.0 | % | 20.8 | % | 20.7 | % | ||||||||
General Liability | 17.7 | % | 17.5 | % | 15.8 | % | 15.9 | % | ||||||||
Product Liability | 8.2 | % | 8.2 | % | 1.6 | % | 1.2 | % | ||||||||
Surety | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Burglary | 0.3 | % | 0.3 | % | 0.1 | % | 0.2 | % | ||||||||
Boiler and Machinery | 1.5 | % | 1.5 | % | 2.5 | % | 2.3 | % | ||||||||
Auto | 22.0 | % | 22.2 | % | 14.5 | % | 14.1 | % | ||||||||
Commercial Multi-Peril | 0.0 | % | 0.0 | % | 30.5 | % | 31.2 | % | ||||||||
Earthquake | 0.0 | % | 0.0 | % | 0.1 | % | 0.1 | % | ||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Source: Penn Millers GAAP financial data.
Fire and allied direct premiums written, the largest component of the Company’s agribusiness segment, decreased by 2.5% to $18.8 million in the TTM period ended June 30, 2009. Direct commercial multi-peril direct premiums written, the largest component of the Company’s commercial lines segment, decreased by 9.5% to $10.1 million in the TTM period ended June 30, 2009 due to declining prices. The chart below shows the Company’s composition of direct premiums written, by line of business, for the TTM period ended June 30, 2009.
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PRO FORMA VALUATION APPRAISAL
Chart 7
Agribusiness and Commercial Lines Composition of Direct Premiums Written
For the TTM Period Ended June 30, 2009
Agribusiness and Commercial Lines Composition of Direct Premiums Written
For the TTM Period Ended June 30, 2009
![( PIE CHART)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438572.gif)
Source: Penn Millers financial data.
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PRO FORMA VALUATION APPRAISAL
III. INDUSTRY UPDATE
The P&C insurance industry continues to experience a soft market. According to P&C insurance data from SNL Financial as of May 22, 2009 for the first quarter of 2009, after-tax realized capital losses though near an historically high level, did exhibit marginal improvements from the loss levels in the third and fourth quarters of 2008. The number of companies reporting realized capital losses during the first quarter of 2009 outnumbered those posting gains by a count of 995 to 828. The industry’s combined ratio of 102.01% for the first quarter of 2009, was similar to the combined ratio of 102.53% for the fourth quarter of 2008. Net premiums written increased by approximately 7.9% from $98.7 billion in the fourth quarter of 2008 to $106.5 billion in the first quarter of 2009.
Table 5
Historical P&C Insurance Performance
Historical P&C Insurance Performance
P&C individual insurance entity performance
2,691 out of 2,824 estimated P&C filers
2,691 out of 2,824 estimated P&C filers
Q1’09 | Q1’08 | Q1’07 | Q4’08 | Q4’07 | Q4’06 | 2008Y | 2007Y | |||||||||||||||||||||||||
Direct premiums written ($000) | 118,455,173 | 121,804,657 | 124,068,523 | 111,594,148 | 116,741,582 | 118,218,869 | 485,991,577 | 494,306,660 | ||||||||||||||||||||||||
Net premiums written ($000) | 106,506,506 | 110,863,246 | 110,075,278 | 98,751,445 | 103,103,331 | 104,799,553 | 436,753,985 | 442,117,195 | ||||||||||||||||||||||||
Premiums earned ($000) | 105,705,550 | 108,127,697 | 108,519,714 | 107,782,211 | 110,306,568 | 110,149,769 | 438,802,790 | 439,868,969 | ||||||||||||||||||||||||
Losses & LAE ($000) | 78,817,336 | 78,364,422 | 70,482,463 | 79,487,557 | 77,200,013 | 71,449,801 | 337,270,449 | 297,370,025 | ||||||||||||||||||||||||
Underwriting expenses ($000) | 28,883,752 | 30,024,309 | 29,553,977 | 27,688,341 | 28,600,233 | 29,396,912 | 119,469,343 | 108,149,919 | ||||||||||||||||||||||||
Underwriting gain | -1,995,539 | -261,033 | 8,483,274 | 606,313 | 4,506,322 | 9,303,056 | -17,937,002 | 34,349,026 | ||||||||||||||||||||||||
Dividends to policyholders ($000) | 343,872 | 386,482 | 326,130 | 803,002 | 1,133,648 | 2,083,073 | 2,005,743 | 3,322,619 | ||||||||||||||||||||||||
Loss ratio (%) | 74.56 | % | 72.47 | % | 64.95 | % | 73.75 | % | 69.99 | % | 64.87 | % | 76.86 | % | 67.60 | % | ||||||||||||||||
Expense ratio (NPW) (%) | 27.12 | % | 27.08 | % | 26.85 | % | 28.04 | % | 27.74 | % | 28.05 | % | 27.35 | % | 24.46 | % | ||||||||||||||||
Policyholder dividend ratio (%) | 0.33 | % | 0.36 | % | 0.30 | % | 0.75 | % | 1.03 | % | 1.89 | % | 0.46 | % | 0.76 | % | ||||||||||||||||
Combined ratio (%) | 102.01 | % | 99.91 | % | 92.10 | % | 102.53 | % | 98.75 | % | 94.81 | % | 104.67 | % | 92.82 | % | ||||||||||||||||
Change in DPW (%) | -2.75 | % | -1.82 | % | -4.41 | % | -1.25 | % | -1.68 | % | 0.78 | % | ||||||||||||||||||||
Change in NPW (%) | -3.93 | % | 0.72 | % | -4.22 | % | -1.62 | % | -1.21 | % | -0.23 | % | ||||||||||||||||||||
After-tax realized capital gains ($000) | -7,919,560 | -364,638 | 1,858,954 | -10,166,651 | 1,598,324 | 1,505,369 | -19,367,269 | 8,807,110 |
Source: SNL Financial |
Fitch Ratings (“Fitch”) believes that profitability will improve moderately in 2009 but underwriting losses are anticipated to continue. Both SNL Financial and Fitch acknowledged that a primary contributor to the poor underwriting performance in the P&C sector was due to the deterioration in results for financial guarantors and mortgage insurers, which are included in the P&C industry.
Fitch’s outlook for the P&C insurance industry is negative based on economic and investment uncertainty. Key negative factors affecting the P&C industry include: pricing trends
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PRO FORMA VALUATION APPRAISAL
and recession related reductions in insurance exposure that will promote a decline in premium revenue and higher expense ratios; higher accident year loss ratios (excluding catastrophe losses); reduced prior period favorable reserve development; and low investment yields and returns. According to Fitch, market underwriting capacity has not declined to a level that will spark premium rate improvements.
National Underwriter reported in August, 2009 that insurance renewals remain soft, but some experts believe that signs indicate the market has begun to turn. Some companies are beginning to turn down high risks and are raising prices as they begin to seek underwriting profit. The ratio of policyholders’ surplus to United States gross domestic product, which measures the supply of insurance capacity relative to the demand for that capacity, suggests that the market is close to its bottom. One expert noted that he believes pricing increases will occur by the end of this year or the beginning of 2010.
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PRO FORMA VALUATION APPRAISAL
IV. COMPARISONS WITH PUBLICLY-TRADED COMPANIES
Recent Financial Comparisons
As outlined in the April 1, 2009 Appraisal, we compared PMMHC to a group of comparable companies (the “Comparable Group”). Table 5 summarizes certain key financial comparisons between PMMHC and the Comparable Group for the most recent TTM period. The selection criteria and background information of the publicly traded property and casualty (“P&C”) insurance companies comprising the Comparable Group were discussed in our April 1, 2009 Appraisal.
The financial comparisons summarized in the April 1, 2009 Appraisal remained relatively unchanged for this Appraisal Update. The Company’s total assets of $228.4 and total equity of $52.0 million remained below the Comparable Group’s total asset mean of $656.3 million and total equity mean of $203.5 million, respectively.
The Company’s ratio of total equity to total assets was 22.8% at June 30, 2009 and remained below the Comparable Group mean ratio of total equity to total assets of 32.0%. The Company’s ratio of cash and investments to total assets was 64.3% at June 30, 2009 and remained below the Comparable Group mean ratio of 70.2%.
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PRO FORMA VALUATION APPRAISAL
Table 6
Comparable Financial Condition Data
Penn Millers and the Comparable Group
As of or for the most recent TTM Period
Comparable Financial Condition Data
Penn Millers and the Comparable Group
As of or for the most recent TTM Period
Total Cash | ||||||||||||||||||||||||||||||||||||
Total Policy | and | Tangible | Total Policy | Cash and | ||||||||||||||||||||||||||||||||
Total Assets | Total Equity | Tangible | Reserves | Investments | Equity / | Equity / | Reserves / | Investments / | ||||||||||||||||||||||||||||
($ 000) | ($ 000) | Equity ( $000) | ($ 000) | ($ 000) | Assets | Assets | Equity | Assets | ||||||||||||||||||||||||||||
Penn Millers | $ | 228,385 | $ | 51,972 | $ | 51,972 | $ | 118,025 | $ | 146,878 | 22.8 | % | 22.8 | % | 2.27x | 64.3 | % | |||||||||||||||||||
Public P&C Insurance Group Mean | 12,858,005 | 3,718,911 | 3,113,906 | 6,817,464 | 8,342,222 | 31.3 | % | 28.6 | % | 2.28x | 69.9 | % | ||||||||||||||||||||||||
Public P&C Insurance Group Median | 2,952,489 | 828,897 | 766,195 | 1,687,845 | 2,194,325 | 28.6 | % | 26.0 | % | 2.02x | 71.3 | % | ||||||||||||||||||||||||
Comparable Group Mean | 656,297 | 203,549 | 191,587 | 379,975 | 456,182 | 32.0 | % | 30.1 | % | 1.94x | 70.8 | % | ||||||||||||||||||||||||
Comparable Group Median | 673,276 | 189,064 | 165,293 | 377,520 | 468,155 | 31.3 | % | 27.4 | % | 1.77x | 71.0 | % | ||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||
21st Century Holding Company | 204,676 | 76,228 | 76,228 | 114,701 | 150,471 | 37.2 | % | 37.2 | % | 1.50x | 73.5 | % | ||||||||||||||||||||||||
Baldwin & Lyons, Inc. | 765,742 | 345,853 | 345,853 | 369,849 | 543,677 | 45.2 | % | 45.2 | % | 1.07x | 71.0 | % | ||||||||||||||||||||||||
CRM Holdings, Ltd. | 452,951 | 101,677 | 98,465 | 273,506 | 340,804 | 22.4 | % | 21.7 | % | 2.69x | 75.2 | % | ||||||||||||||||||||||||
Donegal Group Inc. | 893,824 | 371,328 | 371,328 | 488,237 | 638,161 | 41.5 | % | 41.5 | % | 1.31x | 71.4 | % | ||||||||||||||||||||||||
Eastern Insurance Holdings, Inc. | 385,487 | 137,234 | 117,736 | 207,849 | 273,564 | 35.6 | % | 30.5 | % | 1.51x | 71.0 | % | ||||||||||||||||||||||||
EMC Insurance Group Inc. | 1,142,746 | 307,348 | 306,406 | 723,328 | 1,002,325 | 26.9 | % | 26.8 | % | 2.35x | 87.7 | % | ||||||||||||||||||||||||
First Mercury Financial Corporation | 1,045,694 | 286,838 | 223,154 | 578,191 | 648,738 | 27.4 | % | 21.3 | % | 2.02x | 62.0 | % | ||||||||||||||||||||||||
Hallmark Financial Services, Inc. | 551,279 | 190,555 | 121,220 | 277,022 | 368,415 | 34.6 | % | 22.0 | % | 1.45x | 66.8 | % | ||||||||||||||||||||||||
Mercer Insurance Group, Inc. | 580,809 | 148,430 | 143,014 | 385,190 | 392,632 | 25.6 | % | 24.6 | % | 2.60x | 67.6 | % | ||||||||||||||||||||||||
National Interstate Corporation | 969,243 | 243,547 | 243,547 | 584,812 | 572,988 | 25.1 | % | 25.1 | % | 2.40x | 59.1 | % | ||||||||||||||||||||||||
National Security Group, Inc. | 125,054 | 35,045 | 35,045 | 70,927 | 93,511 | 28.0 | % | 28.0 | % | 2.02x | 74.8 | % | ||||||||||||||||||||||||
NYMAGIC, INC. | 977,190 | 187,572 | 187,572 | 651,829 | 617,900 | 19.2 | % | 19.2 | % | 3.48x | 63.2 | % | ||||||||||||||||||||||||
SeaBright Insurance Holdings, Inc. | 911,125 | 341,811 | 336,425 | 498,059 | 594,029 | 37.5 | % | 36.9 | % | 1.46x | 65.2 | % | ||||||||||||||||||||||||
Unico American Corporation | 182,340 | 76,226 | 76,226 | 96,150 | 149,331 | 41.8 | % | 41.8 | % | 1.26x | 81.9 | % |
Source: Penn Millers’ GAAP financial statements; SNL Financial. |
Table 7 compares Penn Millers with the Comparable Group and Public P&C Insurance Group based on selected measures of profitability.
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Table 7
Comparable Operating Performance Data
Penn Millers and the Comparable Group
For the most recent TTM period
Comparable Operating Performance Data
Penn Millers and the Comparable Group
For the most recent TTM period
Total Revenue | Net Income | GAAP | GAAP Loss | Combined | ||||||||||||||||||||||||
($ 000) | ($ 000) | Expense Ratio | Ratio | Ratio | ROAA | ROAE | ||||||||||||||||||||||
Penn Millers | $ | 74,148 | ($5,339 | ) | 34.2 | % | 71.5 | % | 105.7 | % | -2.4 | % | -9.6 | % | ||||||||||||||
Public P&C Insurance Group Mean | 3,533,184 | 161,709 | 32.3 | % | 60.3 | % | 92.7 | % | 0.9 | % | 3.2 | % | ||||||||||||||||
Public P&C Insurance Group Median | 655,419 | 29,149 | 31.3 | % | 60.8 | % | 93.7 | % | 1.3 | % | 4.4 | % | ||||||||||||||||
Comparable Group Mean | 196,170 | 1,694 | 36.0 | % | 64.1 | % | 100.1 | % | -0.4 | % | -1.5 | % | ||||||||||||||||
Comparable Group Median | 166,200 | 7,201 | 35.0 | % | 63.3 | % | 97.7 | % | 1.4 | % | 3.9 | % | ||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||
21st Century Holding Company | 62,937 | (6,484 | ) | 47.5 | % | 63.8 | % | 111.3 | % | -3.2 | % | -8.1 | % | |||||||||||||||
Baldwin & Lyons, Inc. | 176,997 | 10,154 | 35.3 | % | 54.0 | % | 89.3 | % | 1.3 | % | 3.0 | % | ||||||||||||||||
CRM Holdings, Ltd. | 134,533 | (14,860 | ) | 51.3 | % | 80.8 | % | 132.1 | % | -3.5 | % | -13.5 | % | |||||||||||||||
Donegal Group Inc. | 378,831 | 17,222 | 31.2 | % | 72.7 | % | 103.9 | % | 1.9 | % | 4.7 | % | ||||||||||||||||
Eastern Insurance Holdings, Inc. | 129,820 | (20,512 | ) | 34.8 | % | 67.0 | % | 101.7 | % | -5.4 | % | -13.5 | % | |||||||||||||||
EMC Insurance Group Inc. | 405,255 | 3,786 | 36.4 | % | 63.1 | % | 99.5 | % | 0.3 | % | 1.3 | % | ||||||||||||||||
First Mercury Financial Corporation | 251,615 | 22,708 | 30.6 | % | 63.4 | % | 94.0 | % | 2.4 | % | 8.5 | % | ||||||||||||||||
Hallmark Financial Services, Inc. | 267,758 | 12,208 | 29.5 | % | 62.0 | % | 91.5 | % | 2.3 | % | 6.5 | % | ||||||||||||||||
Mercer Insurance Group, Inc. | 155,403 | 9,050 | 37.0 | % | 60.9 | % | 97.9 | % | 1.6 | % | 6.5 | % | ||||||||||||||||
National Interstate Corporation | 295,525 | 21,474 | 23.8 | % | 56.6 | % | 80.4 | % | 2.2 | % | 9.8 | % | ||||||||||||||||
National Security Group, Inc. | 59,538 | (4,505 | ) | 42.0 | % | 76.5 | % | 118.4 | % | -3.4 | % | -11.5 | % | |||||||||||||||
NYMAGIC, INC. | 107,837 | (52,159 | ) | 48.4 | % | 48.0 | % | 96.4 | % | -7.1 | % | -28.4 | % | |||||||||||||||
SeaBright Insurance Holdings, Inc. | 275,243 | 20,284 | 30.3 | % | 67.2 | % | 97.5 | % | 2.4 | % | 6.3 | % | ||||||||||||||||
Unico American Corporation | 45,089 | 5,352 | 26.0 | % | 61.0 | % | 87.0 | % | 2.9 | % | 7.3 | % |
Source: Penn Millers’ GAAP financial statements; SNL Financial. |
The Company was not profitable in the TTM period ended June 30, 2009. Five companies in the Comparable Group also experienced operating losses during the most recent TTM period. Penn Millers’ profitability continues to be impacted by a high combined ratio, which was 105.7%. The Comparable Group reported mean and median combined ratios of 100.1% and 97.7%, respectively.
The Company’s relatively high combined ratio was attributable primarily to its higher loss ratio. Penn Millers’ loss ratio measured 71.5% for the TTM period ended June 30, 2009, which was above the Comparable Group mean and median loss ratios of 64.1% and 63.3%. Among the Comparable Group members, CRM Holdings, Ltd., Donegal Group, Inc., and National Security Group, Inc. reported higher loss ratios at 80.8%, 72.7%, and 76.5%, respectively.
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PRO FORMA VALUATION APPRAISAL
V. MARKET CONDITIONS AND MARKET VALUE ADJUSTMENTS
Stock Price Performance and Market Conditions
Table 7 summarizes stock price and valuation ratios changes for the Comparable Group from the June 5, 2009 Appraisal Update. Nine companies experienced a price increase, and five companies experienced a price decline. The mean and median price changes among the Comparable Group were positive 6.6% and positive 4.2%, respectively. The market valuation ratios of the Comparable Group have remained relatively unchanged since June 5, 2009.
Table 8
Comparative Market Valuation Performance
As of June 5, 2009 and August 7, 2009
Comparative Market Valuation Performance
As of June 5, 2009 and August 7, 2009
8/7/2009 | 6/5/2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in | Price / | Price / | 8/7/2009 | 6/5/2009 | 8/7/2009 | 6/5/2009 | 8/7/2009 | 6/5/2009 | |||||||||||||||||||||||||||||||||||||||||||||||||
Closing | 8/7/2009 | 6/5/2009 | 8/7/2009 | 6/5/2009 | Tangible | Tangible | Price / LTM | Price / LTM | Price / LTM | Price / LTM | Price / Total | Price / Total | |||||||||||||||||||||||||||||||||||||||||||||
Price | Closing Price | Closing Price | Price / Book | Price / Book | Book | Book | EPS | EPS | Revenue | Revenue | Assets | Assets | |||||||||||||||||||||||||||||||||||||||||||||
Public P&C Insurance Group Mean | NA | NA | NA | 96.9 | % | 93.2 | % | 107.1 | % | 103.6 | % | 21.30x | 26.05x | 1.45x | 0.66x | 29.7 | % | 27.6 | % | ||||||||||||||||||||||||||||||||||||||
Public P&C Insurance Group Median | NA | NA | NA | 90.3 | % | 87.2 | % | 100.0 | % | 94.5 | % | 14.35x | 10.44x | 1.04x | 0.95x | 26.6 | % | 25.7 | % | ||||||||||||||||||||||||||||||||||||||
Comparable Group Mean | 6.6 | % | NA | NA | 76.6 | % | 75.3 | % | 82.3 | % | 81.5 | % | 21.90x | 27.78x | 0.85x | 0.82x | 24.5 | % | 23.4 | % | |||||||||||||||||||||||||||||||||||||
Comparable Group Median | 4.2 | % | NA | NA | 75.7 | % | 70.4 | % | 83.1 | % | 73.4 | % | 12.85x | 11.65x | 0.76x | 0.73x | 23.2 | % | 23.1 | % | |||||||||||||||||||||||||||||||||||||
Comparable Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21st Century Holding Company | 37.9 | % | 4.66 | 3.38 | 49.0 | % | 35.5 | % | 49.0 | % | 35.5 | % | Neg | Neg | 0.59x | 0.43x | 18.2 | % | 13.2 | % | |||||||||||||||||||||||||||||||||||||
Baldwin & Lyons, Inc. | 0.6 | % | 21.08 | 20.95 | 89.8 | % | 95.0 | % | 89.8 | % | 95.0 | % | 29.69x | 130.94x | 1.75x | 1.85x | 40.6 | % | 40.4 | % | |||||||||||||||||||||||||||||||||||||
CRM Holdings, Ltd. | -6.8 | % | 1.10 | 1.18 | 18.1 | % | 19.3 | % | 18.7 | % | 19.9 | % | Neg | Neg | 0.14x | 0.15x | 4.1 | % | 4.3 | % | |||||||||||||||||||||||||||||||||||||
Donegal Group Inc. | -0.9 | % | 15.75 | 15.89 | 108.1 | % | 110.2 | % | 108.1 | % | 110.4 | % | 23.16x | 20.91x | 1.06x | 1.07x | 44.9 | % | 45.6 | % | |||||||||||||||||||||||||||||||||||||
Eastern Insurance Holdings, Inc. | 4.9 | % | 9.90 | 9.44 | 65.0 | % | 62.5 | % | 75.8 | % | 72.8 | % | Neg | Neg | 0.69x | 0.66x | 23.1 | % | 22.2 | % | |||||||||||||||||||||||||||||||||||||
EMC Insurance Group Inc. | 6.2 | % | 23.10 | 21.75 | 99.5 | % | 100.7 | % | 99.8 | % | 101.0 | % | 74.52x | Neg | 0.75x | 0.71x | 26.8 | % | 26.1 | % | |||||||||||||||||||||||||||||||||||||
First Mercury Financial Corporation | -11.0 | % | 12.41 | 13.94 | 78.1 | % | 92.0 | % | 100.3 | % | 120.1 | % | 9.85x | 6.51x | 0.89x | 1.09x | 21.4 | % | 25.6 | % | |||||||||||||||||||||||||||||||||||||
Hallmark Financial Services, Inc. | -4.2 | % | 6.69 | 6.98 | 73.3 | % | 76.5 | % | 115.2 | % | 120.2 | % | 11.53x | 12.03x | 0.52x | 0.54x | 25.3 | % | 26.4 | % | |||||||||||||||||||||||||||||||||||||
Mercer Insurance Group, Inc. | 21.7 | % | 18.50 | 15.20 | 78.5 | % | 66.8 | % | 81.5 | % | 69.4 | % | 12.85x | 11.26x | 0.75x | 0.60x | 20.1 | % | 16.7 | % | |||||||||||||||||||||||||||||||||||||
National Interstate Corporation | 11.1 | % | 18.55 | 16.69 | 147.4 | % | 143.6 | % | 147.4 | % | 143.6 | % | 16.71x | 23.51x | 1.22x | 1.09x | 37.1 | % | 31.5 | % | |||||||||||||||||||||||||||||||||||||
National Security Group, Inc. | -1.2 | % | 8.50 | 8.60 | 59.8 | % | 60.5 | % | 59.8 | % | 60.5 | % | Neg | Neg | 0.35x | 0.36x | 16.8 | % | 17.0 | % | |||||||||||||||||||||||||||||||||||||
NYMAGIC, INC. | 25.0 | % | 18.42 | 14.74 | 84.7 | % | 74.0 | % | 84.7 | % | 74.0 | % | Neg | Neg | 1.47x | 1.23x | 16.3 | % | 13.0 | % | |||||||||||||||||||||||||||||||||||||
SeaBright Insurance Holdings, Inc. | 3.7 | % | 9.81 | 9.46 | 61.5 | % | 60.5 | % | 62.4 | % | 61.3 | % | 10.33x | 9.01x | 0.76x | 0.75x | 23.1 | % | 22.5 | % | |||||||||||||||||||||||||||||||||||||
Unico American Corporation | 4.8 | % | 8.05 | 7.68 | 59.2 | % | 56.5 | % | 59.2 | % | 56.5 | % | 8.47x | 8.09x | 1.00x | 0.96x | 24.8 | % | 23.6 | % |
Source: SNL Financial and CapitalIQ.
Table 9 summarizes the recent performance of various insurance stock indexes maintained by SNL Financial, along with selected other industry and broader market indexes. The SNL Insurance Index of all publicly-traded insurance companies increased 13.6% between June 5, 2009 and August 7, 2009. The SNL Insurance Index outperformed the broader markets indexes as reflected by the Standard & Poor’s 500, which increased 7.5% and the Russell 3000, which increased 7.7% between June 5, 2009 and August 7, 2009.
![]() | 16 |
PRO FORMA VALUATION APPRAISAL
Table 9
Selected Stock Market Index Performance
For the Period Ended August 7, 2009
Selected Stock Market Index Performance
For the Period Ended August 7, 2009
Change (%) | ||||||||||||||||||||||||
Index Value | Index Value | Since | ||||||||||||||||||||||
8/7/2009 | 6/5/2009 | 6/5/2009 | YTD | 1 Year | 3 Years | |||||||||||||||||||
SNL Insurance Indexes | ||||||||||||||||||||||||
SNL Insurance | 326.80 | 287.77 | 13.57 | 6.94 | (22.75 | ) | (36.29 | ) | ||||||||||||||||
SNL Insurance Underwriter | 322.33 | 283.17 | 13.83 | 7.81 | (23.15 | ) | (37.47 | ) | ||||||||||||||||
SNL Insurance Broker | 516.17 | 469.08 | 10.04 | (5.07 | ) | (14.73 | ) | (6.95 | ) | |||||||||||||||
S&P Insurance | 157.77 | 138.28 | 14.09 | 6.53 | (38.25 | ) | (53.64 | ) | ||||||||||||||||
SNL Sector Indexes | ||||||||||||||||||||||||
SNL Insurance Multiline | 89.71 | 88.20 | 1.71 | (2.59 | ) | (67.78 | ) | (82.44 | ) | |||||||||||||||
SNL Insurance L&H | 421.40 | 358.42 | 17.57 | 12.72 | (29.80 | ) | (34.33 | ) | ||||||||||||||||
SNL Insurance P&C | 340.66 | 299.74 | 13.65 | 4.14 | (6.61 | ) | (2.07 | ) | ||||||||||||||||
SNL Reinsurance | 443.80 | 379.44 | 16.96 | 9.84 | (27.95 | ) | (48.80 | ) | ||||||||||||||||
SNL Managed Care | 452.33 | 432.64 | 4.55 | 8.72 | (19.77 | ) | (38.35 | ) | ||||||||||||||||
SNL Title Insurer | 528.62 | 425.66 | 24.19 | (6.83 | ) | 18.73 | (47.93 | ) | ||||||||||||||||
SNL Mortgage & Finl Guaranty | 52.46 | 45.50 | 15.30 | 60.33 | (14.97 | ) | (90.25 | ) | ||||||||||||||||
SNL Asset Size Indexes | ||||||||||||||||||||||||
SNL Insurance < $250M | 349.06 | 323.83 | 7.79 | 17.49 | (18.87 | ) | (39.80 | ) | ||||||||||||||||
SNL Insurance $250M-$500M | 329.59 | 285.08 | 15.62 | 8.81 | (23.54 | ) | (40.70 | ) | ||||||||||||||||
SNL Insurance $500M-$1B | 329.19 | 317.42 | 3.71 | 1.47 | (7.04 | ) | (20.53 | ) | ||||||||||||||||
SNL Insurance $1B-$2.5B | 574.97 | 561.29 | 2.44 | (4.91 | ) | (14.09 | ) | (12.07 | ) | |||||||||||||||
SNL Insurance $2.5B-$10B | 409.22 | 368.06 | 11.18 | 1.57 | (8.01 | ) | (27.40 | ) | ||||||||||||||||
SNL Insurance > $10B | 309.51 | 272.55 | 13.56 | 8.17 | (25.90 | ) | (39.75 | ) | ||||||||||||||||
SNL Insurance > $1B | 334.97 | 296.65 | 12.92 | 6.95 | (23.87 | ) | (38.05 | ) | ||||||||||||||||
SNL Insurance < $1B | 384.11 | 363.09 | 5.79 | 4.64 | (11.06 | ) | (25.48 | ) | ||||||||||||||||
SNL Market Cap Indexes | ||||||||||||||||||||||||
SNL Micro Cap Insurance | 180.33 | 176.53 | 2.15 | 8.64 | (32.73 | ) | (48.07 | ) | ||||||||||||||||
SNL Small Cap Insurance | 390.73 | 358.86 | 8.88 | (6.63 | ) | (16.17 | ) | (33.17 | ) | |||||||||||||||
SNL Mid Cap Insurance | 213.53 | 199.72 | 6.92 | (2.40 | ) | (27.14 | ) | (46.89 | ) | |||||||||||||||
SNL Large Cap Insurance | 305.06 | 233.30 | 30.75 | 25.21 | (13.79 | ) | (28.92 | ) | ||||||||||||||||
Broad Market Indexes | ||||||||||||||||||||||||
S&P 500 | 1,010.48 | 940.09 | 7.49 | 11.87 | (20.19 | ) | (20.79 | ) | ||||||||||||||||
SNL All Financial Institutions | 409.26 | 347.62 | 17.73 | 14.27 | (24.12 | ) | (48.61 | ) | ||||||||||||||||
Russell 1000 | 1,063.95 | 987.61 | 7.73 | 13.47 | (20.04 | ) | (20.05 | ) | ||||||||||||||||
Russell 2000 | 1,422.56 | 1,318.08 | 7.93 | 14.61 | (19.77 | ) | (17.77 | ) | ||||||||||||||||
Russell 3000 | 1,086.08 | 1,008.03 | 7.74 | 13.56 | (20.01 | ) | (19.88 | ) |
![]() | 17 |
PRO FORMA VALUATION APPRAISAL
VI. VALUATION ANALYSIS AND CONCLUSIONS
Valuation Review
In the April 1, 2009 Appraisal and June 5, 2009 Appraisal Update, the Company’s Estimated Pro Forma Market Value was discounted on a P/B basis relative to the trading market valuations of the Comparable Group. The Company’s Estimated Pro Forma Market Value was adjusted for earnings prospects, liquidity of issue and new issue discounts.
The Comparable Group’s market valuation ratios have remained relatively unchanged since the June 5, 2009 Appraisal Update. The median P/B ratio of the Comparable Group increased from 70.4% at June 5, 2009 to 75.7% at August 7, 2009 and the mean P/B ratio of the Comparable Group increased from 75.3% at June 5, 2009 to 76.6% at August 7, 2009. The P/B ratio continues to be the primary valuation metric generally accepted for financial services companies in the current investment climate. Penn Millers’ relatively low returns on equity and assets and negative profitability during the TTM period ended June 30, 2009 render the P/E ratio not applicable. The P/A ratio was again considered to confirm that our Valuation Range for PMMHC was within reason.
Valuation Analysis
As noted in our April 1, 2009 Appraisal, a discount of approximately 25% to 35% based on the P/B ratio was deemed appropriate for determining the Company’s Estimated Pro Forma Market Value relative to the Comparable Group’s market valuation ratios. The Company is valued at a pro-forma P/B ratio of 50.5% at the minimum, 55.0% at the midpoint, and 59.0% at the maximum as shown in Table 10.
![]() | 18 |
PRO FORMA VALUATION APPRAISAL
Table 10
Penn Millers Comparative Valuation Ratios
Based on the Estimated Pro Forma Market Valuation Range
(Dollars in Thousands)
Penn Millers Comparative Valuation Ratios
Based on the Estimated Pro Forma Market Valuation Range
(Dollars in Thousands)
Estimated Pro Forma Market Valuation Range | ||||||||||||
Minimum | Midpoint | Maximum | ||||||||||
August 7, 2009 Appraisal | ||||||||||||
Financial Data as of June 30, 2009 | ||||||||||||
Gross Proceeds | $ | 45,050 | $ | 53,000 | $ | 60,950 | ||||||
Price / Book Value | 50.5 | % | 55.0 | % | 59.0 | % | ||||||
Price / Tangible Book Value | 50.5 | % | 55.0 | % | 59.0 | % | ||||||
Price / Total Assets | 17.0 | % | 19.4 | % | 21.8 | % | ||||||
Price / LTM EPS | neg | neg | neg | |||||||||
June 5, 2009 Appraisal | ||||||||||||
Financial Data as of March 31, 2009 | ||||||||||||
Gross Proceeds | $ | 45,050 | $ | 53,000 | $ | 60,950 | ||||||
Price / Book Value | 50.9 | % | 55.5 | % | 59.4 | % | ||||||
Price / Tangible Book Value | 50.9 | % | 55.5 | % | 59.4 | % | ||||||
Price / Total Assets | 17.0 | % | 19.4 | % | 21.8 | % | ||||||
Price / LTM EPS | neg | neg | neg |
Source: Curtis Financial Group.
Table 11 displays the market valuation ratios of the Comparable Group as of August 7, 2009 and pro forma ratios for the Company.
![]() | 19 |
PRO FORMA VALUATION APPRAISAL
Table 11
Comparative Market Valuation Analysis
As of August 7, 2009
Comparative Market Valuation Analysis
As of August 7, 2009
Total | ||||||||||||||||||||||||||||||||||||
Market | Price / | Price / | Price / | Price / | Current | |||||||||||||||||||||||||||||||
Closing | Value | Price / | Tangible | LTM | LTM | Total | Equity / | Dividend | ||||||||||||||||||||||||||||
Price | ($000’s) | Book | Book | EPS | Revenue | Assets | Assets | Yield | ||||||||||||||||||||||||||||
Penn Millers | ||||||||||||||||||||||||||||||||||||
Pro Forma Valuation Minimum | $ | 10.00 | $ | 45,050 | 50.5 | % | 50.5 | % | Neg | 0.60x | 17.0 | % | 33.6 | % | 0.0 | % | ||||||||||||||||||||
Pro Forma Valuation Midpoint | 10.00 | 53,000 | 55.0 | % | 55.0 | % | Neg | 0.70x | 19.4 | % | 35.3 | % | 0.0 | % | ||||||||||||||||||||||
Pro Forma Valuation Maximum | 10.00 | 60,950 | 59.0 | % | 59.0 | % | Neg | 0.80x | 21.8 | % | 36.9 | % | 0.0 | % | ||||||||||||||||||||||
Comparable Group Mean | NA | $ | 174,147 | 76.6 | % | 82.3 | % | 21.90x | 0.85x | 24.5 | % | 32.0 | % | 4.6 | % | |||||||||||||||||||||
Comparable Group Median | NA | 149,256 | 75.7 | % | 83.1 | % | 12.85x | 0.76x | 23.2 | % | 31.3 | % | 2.8 | % | ||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||
21st Century Holding Company | 4.66 | 37,345 | 49.0 | % | 49.0 | % | Neg | 0.59x | 18.2 | % | 37.2 | % | 15.6 | % | ||||||||||||||||||||||
Baldwin & Lyons, Inc. | 21.08 | 311,288 | 90.0 | % | 90.0 | % | 29.69x | 1.76x | 40.7 | % | 45.2 | % | 5.5 | % | ||||||||||||||||||||||
CRM Holdings, Ltd. | 1.10 | 18,280 | 18.0 | % | 18.6 | % | Neg | 0.14x | 4.0 | % | 22.4 | % | NA | |||||||||||||||||||||||
Donegal Group Inc. | 15.75 | 401,238 | 108.1 | % | 108.1 | % | 23.16x | 1.06x | 44.9 | % | 41.5 | % | 2.5 | % | ||||||||||||||||||||||
Eastern Insurance Holdings, Inc. | 9.90 | 89,946 | 65.5 | % | 76.4 | % | Neg | 0.69x | 23.3 | % | 35.6 | % | 3.5 | % | ||||||||||||||||||||||
EMC Insurance Group Inc. | 23.10 | 305,750 | 99.5 | % | 99.8 | % | 74.52x | 0.75x | 26.8 | % | 26.9 | % | 2.8 | % | ||||||||||||||||||||||
First Mercury Financial Corporation | 12.41 | 223,907 | 78.1 | % | 100.3 | % | 9.85x | 0.89x | 21.4 | % | 27.4 | % | NA | |||||||||||||||||||||||
Hallmark Financial Services, Inc. | 6.69 | 139,640 | 73.3 | % | 115.2 | % | 11.53x | 0.52x | 25.3 | % | 34.6 | % | NA | |||||||||||||||||||||||
Mercer Insurance Group, Inc. | 18.50 | 116,521 | 78.5 | % | 81.5 | % | 12.85x | 0.75x | 20.1 | % | 25.6 | % | 2.4 | % | ||||||||||||||||||||||
National Interstate Corporation | 18.55 | 359,109 | 147.4 | % | 147.4 | % | 16.71x | 1.22x | 37.1 | % | 25.1 | % | 1.3 | % | ||||||||||||||||||||||
National Security Group, Inc. | 8.50 | 20,966 | 59.8 | % | 59.8 | % | Neg | 0.35x | 16.8 | % | 28.0 | % | 6.6 | % | ||||||||||||||||||||||
NYMAGIC, INC. | 18.42 | 158,873 | 84.7 | % | 84.7 | % | Neg | 1.47x | 16.3 | % | 19.2 | % | 1.7 | % | ||||||||||||||||||||||
SeaBright Insurance Holdings, Inc. | 9.81 | 210,058 | 61.5 | % | 62.4 | % | 10.33x | 0.76x | 23.1 | % | 37.5 | % | NA | |||||||||||||||||||||||
Unico American Corporation | 8.05 | 45,137 | 59.2 | % | 59.2 | % | 8.47x | 1.00x | 24.8 | % | 41.8 | % | NA |
Source: Penn Millers, SNL Financial and Capital IQ. |
The Company’s pro forma P/B valuation ratios reflect discounts to the Comparable Group’s mean ratio of 76.6% measuring 23.0% at the valuation maximum, 28.2% at the valuation midpoint, and 34.1% at the valuation minimum. The Company’s P/B valuation ratios reflect a discount to the Comparable Group’s 75.7% median of 22.1% at the valuation maximum, 27.3% at the valuation midpoint, and 33.3% at the valuation minimum. In our opinion, these levels of discounts are appropriate to reflect the adjustments for earnings prospects, the new issue discount, and liquidity of the issue discussed in the previous Appraisal as of April 1, 2009 and Appraisal Update as of June 5, 2009.
Based on the P/A ratio, the Company’s midpoint valuation of $53.0 million reflects a P/A ratio of 19.4%, ranging from 17.0% at the minimum to 21.8% at the maximum. The Company’s P/A valuation ratio at the midpoint is below the Comparable Group’s corresponding mean and
![]() | 20 |
PRO FORMA VALUATION APPRAISAL
median P/A ratios of 24.5% and 23.2%, respectively, but considered within a reasonable range from the mean and median of the Comparable Group.
Valuation Conclusion
It is our opinion that, as of August 7, 2009, the Estimated Pro Forma Market Value of the shares to be issued immediately following the Offering was within a range (the “Valuation Range”) of $45.05 million to $60.95 million with a midpoint of $53.0 million. The Valuation Range was based upon a 15% decrease from the midpoint to determine the minimum and a 15% increase from the midpoint to establish the maximum. Exhibit VII shows the assumptions and calculations utilized in determining the Company’s Valuation Range.
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EXHIBIT I
STATEMENT OF GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This report is subject to the following general assumptions and limiting conditions.
1. | No investigation has been made of, and no responsibility is assumed for, the legal description of the property being valued or legal matters, including title or encumbrances. Title to the property is assumed to be good and marketable unless otherwise stated. The property is assumed to be free and clear of any liens, easements or encumbrances unless otherwise stated. | |
2. | Information furnished by others, upon which all or portions of this analysis is based, is believed to be reliable, but has not been verified except as set forth in this report. No warranty is given as to the accuracy of such information. | |
3. | This report has been made only for the purpose stated and shall not be used for any other purpose. | |
4. | Except as specified in our engagement letter, neither Curtis nor any individual signing or associated with this report shall be required by reason of this report to give further consultation, provide testimony, or appear in court or other legal proceeding. | |
5. | No responsibility is taken for changes in market conditions and no obligation is assumed to revise this report to reflect events or conditions which occur subsequent to the date hereof. | |
6. | The date to which the opinions expressed in this report apply is set forth in the letter of transmittal. Our opinion is based on the purchasing power of the United States dollar as of that date. | |
7. | It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can readily be obtained or renewed. | |
8. | Full compliance with all applicable federal, state and local zoning, use, environmental and similar laws and regulations is assumed, unless otherwise stated. | |
9. | Competent management is assumed. | |
10. | The opinion is predicated on the financial structure prevailing as of the date of this report. |
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EXHIBIT II
CERTIFICATION
We certify that, to the best of our knowledge and belief:
• | the facts and data reported by the reviewer and used in the review process are true and correct; | ||
• | the analyses, opinions, and conclusions in this report are limited only by the assumptions and limiting conditions stated in this review report, and are our personal, impartial and unbiased professional analyses, opinions and conclusions; | ||
• | we have no present or prospective interest in the property that is the subject of this review report, and we have no personal interest or bias with respect to the parties involved; | ||
• | our engagement in this assignment was not contingent upon developing or reporting predetermined results; | ||
• | our compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report; | ||
• | We have made a personal visit to the headquarters of Penn Millers. |
![]() | ||||
Anthony A. Latini, Jr. | ||||
![]() | ||||
Paul M. Yeakel, Jr. | ||||
![]() | ||||
Laura E. Anastasio | ||||
August 7, 2009
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Exhibit III
Overview of Curtis
With offices in Philadelphia and Pittsburgh, PA, Curtis Financial Group, LLC (“Curtis”) is a leading investment banking and corporate finance advisory firm serving middle-market clients since 1994. Our expertise and experience with financial services industry clients is reflected in our consistently high national rankings by SNL Financial LC. The Curtis team offers clients the benefit of more than 125 years of collective experience, having served: public and private middle-market companies operating in a diverse group of industries in the United States and globally; and entrepreneurs, families, corporations, private equity and venture capital investors. All securities are sold through Curtis Securities, LLC, a FINRA (www.finra.org) registered broker-dealer.
Background of Appraisers
Anthony A. Latini, Jr., CFA
Managing Director
Managing Director
Mr. Latini has over 20 years of experience providing corporate finance and investment banking services to middle market and large corporate clients. Mr. Latini focuses on merger and acquisition advisory services and capital raising for clients in a wide variety of industries including manufacturing, distribution, and financial services. He has been involved with seven mutual to stock conversions. Prior to joining Curtis, Mr. Latini was a Director in the Financial Services Group at Berwind Financial L.P. and has also held positions at Evans & Company, Inc., and CoreStates Financial Corporation. Mr. Latini received his B.S. from the Wharton School at the University of Pennsylvania and is a Chartered Financial Analyst (CFA).
Paul M. Yeakel, Jr.
Vice President
Vice President
Mr. Yeakel has more than eight years of investment banking and real estate financing experience, having successfully completed projects in industries including telecommunications, flat panel displays, accounts receivable management, healthcare, software, energy and real estate. Prior to joining Curtis Financial Group, Mr. Yeakel co-founded Lighthouse Development Partners, LLC, a real estate development firm, and spent four years working in a corporate development role for CD Ventures and Gatehouse Ventures, both private investment firms located in Berwyn, PA. Additionally, Mr. Yeakel worked for Corning Incorporated as an internal corporate strategy consultant. Mr. Yeakel graduated from Carnegie Mellon’s Graduate School of Industrial Administration with a M.B.A. and earned a B.A. in English from The College of Wooster.
Laura E. Anastasio
Senior Associate
Senior Associate
Ms. Anastasio joined Curtis Financial Group in 2005 after two years with Ernst & Young, LLP. As part of the Transaction Advisory Services Group, Ms. Anastasio completed valuation assignments involving both businesses and sale leaseback transactions. She has experience working in a variety of industries ranging from consumer products to computer technology, and has been involved with three mutual to stock conversions. Ms. Anastasio holds a B.S. in Industrial Engineering from Lehigh University. She is also a member of the American Society of Appraisers.
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Exhibit IV-1
Penn Millers Mutual Holding Company
Historical Balance Sheets — GAAP Basis
(Dollars in Thousands)
Penn Millers Mutual Holding Company
Historical Balance Sheets — GAAP Basis
(Dollars in Thousands)
6/30/2009 | 3/31/2009 | 12/31/2008 | 12/31/2007 | 12/31/2006 | 12/31/2005 | 12/31/2004 | 12/31/2003 | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed securities | 134,783 | 128,298 | 121,914 | 112,769 | 99,906 | 94,549 | 92,752 | 87,123 | ||||||||||||||||||||||||
Equity securities | — | — | — | 13,409 | 13,697 | 12,328 | 12,819 | 11,266 | ||||||||||||||||||||||||
Total investments | 134,783 | 128,298 | 121,914 | 126,178 | 113,603 | 106,877 | 105,571 | 98,389 | ||||||||||||||||||||||||
Cash and cash equivalents (cash overdraft) | 12,095 | 15,695 | 11,959 | 10,134 | 13,052 | 10,021 | 11,431 | 14,387 | ||||||||||||||||||||||||
Premiums and fees receivable | 26,783 | 28,753 | 31,080 | 32,489 | 30,465 | 26,910 | 29,256 | 24,056 | ||||||||||||||||||||||||
Reinsurance receivables and recoverables | 25,950 | 25,064 | 20,637 | 15,640 | 18,886 | 22,923 | 18,053 | 22,222 | ||||||||||||||||||||||||
Deferred acquisition costs | 9,862 | 10,522 | 10,601 | 11,014 | 10,381 | 9,646 | 10,352 | 9,243 | ||||||||||||||||||||||||
Prepaid reinsurance premiums | 3,769 | 4,170 | 4,342 | 4,234 | 4,119 | 3,645 | 3,731 | 3,209 | ||||||||||||||||||||||||
Accrued investment income | 1,565 | 1,391 | 1,431 | 1,499 | 1,439 | 1,302 | 1,225 | 1,236 | ||||||||||||||||||||||||
PP&E, less accumulated depreciation | 3,958 | 4,071 | 4,231 | 4,401 | 4,228 | 4,255 | 5,020 | 5,583 | ||||||||||||||||||||||||
Income taxes receivable | 738 | 1,294 | 1,508 | 1,056 | — | 894 | — | |||||||||||||||||||||||||
Deferred income taxes | 3,240 | 3,656 | 4,728 | 1,872 | 1,439 | 1,429 | — | — | ||||||||||||||||||||||||
Other | 5,642 | 4,058 | 4,879 | 3,972 | 2,812 | 2,557 | 2,144 | 1,845 | ||||||||||||||||||||||||
Assets from discontinued operations | — | 1,443 | 3,214 | 7,124 | 7,344 | 7,438 | 5,237 | 5,285 | ||||||||||||||||||||||||
Total assets | 228,385 | 228,415 | 220,524 | 219,613 | 207,768 | 197,897 | 192,020 | 185,455 | ||||||||||||||||||||||||
LIABILITIES AND SURPLUS | ||||||||||||||||||||||||||||||||
Loss and loss adjustment expense reserves | 118,025 | 116,775 | 108,065 | 95,956 | 89,405 | 83,849 | 73,287 | 69,463 | ||||||||||||||||||||||||
Unearned premiums | 41,218 | 44,811 | 45,322 | 46,595 | 43,294 | 39,984 | 42,798 | 38,090 | ||||||||||||||||||||||||
Accounts due reinsurers | — | — | — | — | — | — | 2,597 | 4,973 | ||||||||||||||||||||||||
Accounts payable and accrued expenses | 14,211 | 12,631 | 13,353 | 12,874 | 10,394 | 9,603 | 7,991 | 7,226 | ||||||||||||||||||||||||
Deferred income taxes payable | — | — | — | — | — | — | 673 | 1,344 | ||||||||||||||||||||||||
Income taxes payable | — | — | — | — | 256 | 1 | 22 | 161 | ||||||||||||||||||||||||
Long-term debt | 2,959 | 3,037 | 2,382 | 1,745 | 2,307 | 4,400 | 3,064 | 3,059 | ||||||||||||||||||||||||
Liabilities from discontinued operations | — | — | 647 | 1,042 | 1,582 | 2,291 | 1,682 | 1,864 | ||||||||||||||||||||||||
Total liabilities | 176,413 | 177,254 | 169,769 | 158,212 | 147,238 | 140,128 | 132,114 | 126,180 | ||||||||||||||||||||||||
Unassigned surplus | 51,730 | 51,945 | 51,914 | 59,293 | 58,207 | 56,127 | 55,837 | 54,439 | ||||||||||||||||||||||||
Accumulated other comprehensive income, net | 242 | (784 | ) | (1,159 | ) | 2,108 | 2,323 | 1,642 | 4,069 | 4,836 | ||||||||||||||||||||||
Total surplus | 51,972 | 51,161 | 50,755 | 61,401 | 60,530 | 57,769 | 59,906 | 59,275 | ||||||||||||||||||||||||
Total liabilities and surplus | 228,385 | 228,415 | 220,524 | 219,613 | 207,768 | 197,897 | 192,020 | 185,455 | ||||||||||||||||||||||||
Performance and Capital Ratios | ||||||||||||||||||||||||||||||||
Return on average assets | -2.37 | % | -2.66 | % | -2.03 | % | 0.68 | % | 0.94 | % | 0.12 | % | 0.64 | % | 1.00 | % | ||||||||||||||||
Return on average surplus | -9.61 | % | -10.57 | % | -7.95 | % | 2.38 | % | 3.23 | % | 0.41 | % | 2.03 | % | 3.12 | % | ||||||||||||||||
Surplus to total assets | 22.76 | % | 22.40 | % | 23.02 | % | 27.96 | % | 29.13 | % | 29.19 | % | 31.20 | % | 31.96 | % |
Notes:
Source: Financial reports prepared by management and reviewed by KPMG.
![(CURTIS FINANCIAL LOGO)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438565.gif)
Exhibit IV-2
Penn Millers Mutual Holding Company
Historical Income Statements — GAAP Basis
(Dollars in Thousands)
Penn Millers Mutual Holding Company
Historical Income Statements — GAAP Basis
(Dollars in Thousands)
TTM ended | TTM ended | |||||||||||||||||||||||||||||||
6/30/2009 (e) | 3/31/2009 (e) | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||
Premiums earned | $ | 76,294 | $ | 77,327 | $ | 78,737 | $ | 70,970 | $ | 64,645 | $ | 64,723 | $ | 63,090 | $ | 56,065 | ||||||||||||||||
Investment income, net of investment expense | 5,381 | 5,298 | 5,335 | 5,324 | 4,677 | 4,444 | 4,278 | 4,058 | ||||||||||||||||||||||||
Realized investment (losses) gains, net | (7,828 | ) | (7,627 | ) | (5,819 | ) | (702 | ) | 349 | 424 | 936 | 833 | ||||||||||||||||||||
Other income | 301 | 282 | 411 | 508 | 345 | 277 | 301 | 371 | ||||||||||||||||||||||||
Total revenue | 74,148 | 75,280 | 78,664 | 76,100 | 70,016 | 69,868 | 68,605 | 61,327 | ||||||||||||||||||||||||
LOSSES AND EXPENSES | ||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 54,564 | 56,343 | 57,390 | 49,783 | 43,766 | 40,242 | 42,910 | 35,822 | ||||||||||||||||||||||||
Underwriting and administrative expenses (a) | 26,056 | 26,414 | 26,562 | 24,163 | 23,296 | 29,221 | 24,359 | 22,911 | ||||||||||||||||||||||||
Interest expense | 253 | 213 | 184 | 125 | 222 | 195 | 51 | 56 | ||||||||||||||||||||||||
Other expenses, net | 379 | 376 | 365 | 184 | 314 | 266 | 82 | 101 | ||||||||||||||||||||||||
Total losses and expenses | 81,252 | 83,346 | 84,501 | 74,255 | 67,598 | 69,924 | 67,402 | 58,890 | ||||||||||||||||||||||||
Income from continuing operations | (7,104 | ) | (8,066 | ) | (5,837 | ) | 1,845 | 2,418 | (56 | ) | 1,203 | 2,437 | ||||||||||||||||||||
Income taxes expense (benefit) | (1,765 | ) | (2,074 | ) | (1,378 | ) | 396 | 506 | (296 | ) | (4 | ) | 587 | |||||||||||||||||||
Net income (loss) from continuing operations | (5,339 | ) | (5,992 | ) | (4,459 | ) | 1,449 | 1,912 | 240 | 1,207 | 1,850 | |||||||||||||||||||||
Discontinued Operations: | ||||||||||||||||||||||||||||||||
Pre-tax (loss) income on discontinued ops | (3,081 | ) | (3,104 | ) | (3,090 | ) | (489 | ) | 292 | 385 | 240 | 340 | ||||||||||||||||||||
Income tax (benefit) expense | 641 | 632 | (170 | ) | (126 | ) | 124 | 151 | 63 | 143 | ||||||||||||||||||||||
(Loss) income on discontinued ops | (3,722 | ) | (3,736 | ) | (2,920 | ) | (363 | ) | 168 | 234 | 177 | 197 | ||||||||||||||||||||
Net income | (9,061 | ) | (9,728 | ) | (7,379 | ) | 1,086 | 2,080 | 474 | 1,384 | 2,047 | |||||||||||||||||||||
Operating Ratios | ||||||||||||||||||||||||||||||||
Loss ratio (b) | 71.5 | % | 72.9 | % | 72.9 | % | 70.1 | % | 67.7 | % | 62.2 | % | 68.0 | % | 63.9 | % | ||||||||||||||||
Expense ratio (c) | 34.2 | % | 34.2 | % | 33.7 | % | 34.0 | % | 36.0 | % | 45.1 | % | 38.6 | % | 40.9 | % | ||||||||||||||||
Combined ratio (d) | 105.7 | % | 107.0 | % | 106.6 | % | 104.2 | % | 103.7 | % | 107.3 | % | 106.6 | % | 104.8 | % |
Notes: | ||
(a) | Includes amortization of deferred policy acquisition costs. | |
(b) | Losses and loss adjustment expenses divided by premiums earned. | |
(c) | Underwriting and administrative expenses divided by premiums earned. | |
(d) | Sum of the loss ratio and the expense ratio. | |
(e) | Represents the trailing twelve month period. | |
Source: Financial reports prepared by management and reviewed by KPMG. Statutory financials provided in Exhibit V. |
![(CURTIS FINANCIAL LOGO)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438565.gif)
Exhibit IV-3
Penn Millers Mutual Holding Company
Investment Portfolio
(Dollars in Thousands)
Penn Millers Mutual Holding Company
Investment Portfolio
(Dollars in Thousands)
6/30/2009 | 12/31/2008 | 12/31/2007 | 12/31/2006 | |||||||||||||||||||||||||||||
Amortized | Estimated | Amortized | Estimated | Amortized | Estimated | Amortized | Estimated | |||||||||||||||||||||||||
Cost | Fair Value | Cost | Fair Value | Cost | Fair Value | Cost | Fair Value | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Fixed Securities: | ||||||||||||||||||||||||||||||||
U.S. government and agencies | 24,796 | 25,744 | 23,459 | 25,399 | 26,360 | 26,984 | 27,509 | 27,461 | ||||||||||||||||||||||||
State and political subdivisions | 31,654 | 33,163 | 31,775 | 32,957 | 30,321 | 31,134 | 26,538 | 27,047 | ||||||||||||||||||||||||
Mortgage backed | 26,423 | 26,745 | 25,374 | 25,305 | 20,636 | 20,724 | 11,618 | 11,488 | ||||||||||||||||||||||||
Corporate | 48,524 | 49,131 | 39,930 | 38,253 | 33,656 | 33,927 | 33,964 | 33,910 | ||||||||||||||||||||||||
Total fixed securities | 131,397 | 134,783 | 120,538 | 121,914 | 110,973 | 112,769 | 99,629 | 99,906 | ||||||||||||||||||||||||
Equity | — | — | — | — | 10,525 | 13,409 | 10,476 | 13,697 | ||||||||||||||||||||||||
Total investment securities | 131,397 | 134,783 | 120,538 | 121,914 | 121,498 | 126,178 | 110,105 | 113,603 |
Notes:
Source: Financial reports prepared by management and reviewed by KPMG.
![(CURTIS FINANCIAL LOGO)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438565.gif)
Exhibit V-1
Penn Millers Mutual Holding Company (b)
Historical Balance Sheets — Statutory Basis (a)
(Dollars in Thousands)
Penn Millers Mutual Holding Company (b)
Historical Balance Sheets — Statutory Basis (a)
(Dollars in Thousands)
12/31/2008 | 12/31/2007 | 12/31/2006 | 12/31/2005 | 12/31/2004 | 12/31/2003 | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||
Bonds | 120,538 | 110,972 | 99,628 | 93,879 | 89,641 | 82,441 | ||||||||||||||||||
Stocks | 1 | 13,411 | 13,697 | 12,329 | 12,819 | 11,267 | ||||||||||||||||||
Real estate | 2,694 | 2,788 | 2,909 | 1,199 | 1,204 | 1,076 | ||||||||||||||||||
Receivables for securities | 91 | — | — | — | — | |||||||||||||||||||
Total investments | 123,233 | 127,262 | 116,234 | 107,407 | 103,664 | 94,784 | ||||||||||||||||||
Cash and cash equivalents (cash overdraft) | 11,695 | 10,034 | 12,911 | 9,459 | 10,996 | 14,365 | ||||||||||||||||||
Premiums and considerations | 31,950 | 32,416 | 30,396 | 26,730 | 29,076 | 23,919 | ||||||||||||||||||
Reinsurance receivables | 3,074 | 917 | 1,120 | 1,114 | 838 | 1,036 | ||||||||||||||||||
Accrued investment income | 1,431 | 1,499 | 1,439 | 1,302 | 1,225 | 1,236 | ||||||||||||||||||
Other receivables | 1,160 | 1,723 | 1,524 | 1,682 | 1,490 | 926 | ||||||||||||||||||
PP&E | 642 | 857 | 508 | 152 | 194 | 295 | ||||||||||||||||||
Income taxes receivable | 1,406 | 646 | — | 10 | 13 | — | ||||||||||||||||||
Deferred income taxes | 5,190 | 4,893 | 4,242 | 4,071 | 3,820 | 3,747 | ||||||||||||||||||
Receivable from parent | 186 | 557 | 219 | 361 | 204 | 250 | ||||||||||||||||||
Aggregate write-ins for other than invested assets | 2,973 | 3,011 | 1,960 | 1,761 | 981 | 517 | ||||||||||||||||||
Total assets | 182,941 | 183,815 | 170,553 | 154,049 | 152,501 | 141,075 | ||||||||||||||||||
LIABILITIES AND SURPLUS | ||||||||||||||||||||||||
Loss and loss adjustment expense reserves | 85,439 | 77,222 | 69,317 | 61,033 | 55,805 | 48,072 | ||||||||||||||||||
Unearned premiums | 41,061 | 42,499 | 39,221 | 36,348 | 39,102 | 35,122 | ||||||||||||||||||
Accounts due reinsurers and provisions | 5 | 22 | 276 | 227 | 100 | 287 | ||||||||||||||||||
Commissions payable, contingent commissions | 1,488 | 2,515 | 2,581 | 2,292 | 2,867 | 2,154 | ||||||||||||||||||
Other expenses | 6,411 | 6,532 | 6,110 | 6,124 | 5,480 | 5,361 | ||||||||||||||||||
Ceded reinsurance premiums payable | 2,024 | 3,686 | 1,275 | 614 | 2,482 | 2,782 | ||||||||||||||||||
Funds held by company under reinsurance treaties | 2,616 | — | 677 | 73 | 114 | 2,191 | ||||||||||||||||||
Amounts withheld or retained by company | 55 | 47 | 67 | 78 | 68 | 130 | ||||||||||||||||||
Payable for securities | — | 414 | 472 | — | — | — | ||||||||||||||||||
Aggregate write ins for liabilities | — | — | — | — | 811 | 273 | ||||||||||||||||||
Payable to parent | 15 | 83 | 32 | 44 | 227 | 371 | ||||||||||||||||||
Total liabilities | 139,115 | 133,020 | 120,028 | 106,833 | 107,056 | 96,743 | ||||||||||||||||||
Aggregate write-ins for special surplus funds | 2,250 | 2,250 | 2,250 | 2,250 | 2,250 | 2,250 | ||||||||||||||||||
Common capital stock | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | ||||||||||||||||||
Gross paid in and contributed surplus | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | ||||||||||||||||||
Unassigned surplus | 30,576 | 38,545 | 38,275 | 34,966 | 33,195 | 32,082 | ||||||||||||||||||
Total surplus | 42,826 | 50,795 | 50,525 | 47,216 | 45,445 | 44,332 | ||||||||||||||||||
Total liabilities and surplus | 181,941 | 183,815 | 170,553 | 154,049 | 152,501 | 141,075 | ||||||||||||||||||
Performance and Capital Ratios | ||||||||||||||||||||||||
Return on assets | -2.43 | % | 0.50 | % | 0.85 | % | 2.07 | % | 0.43 | % | 0.43 | % | ||||||||||||
Return on surplus | -9.53 | % | 1.73 | % | 2.81 | % | 6.84 | % | 1.41 | % | 1.37 | % | ||||||||||||
Surplus to total assets | 23.41 | % | 27.63 | % | 29.62 | % | 30.65 | % | 29.80 | % | 31.42 | % |
Notes:
(a) | Statutory financials do not include the effects of discontinued operations. | |
(b) | Statutory financial statements represent the results of operations of PMHC. |
Source: Statutory prepared financial statements.
![]() |
Exhibit V-2
Penn Millers Mutual Holding Company (e)
Historical Income Statements — Statutory Basis (d)
(Dollars in Thousands)
Penn Millers Mutual Holding Company (e)
Historical Income Statements — Statutory Basis (d)
(Dollars in Thousands)
2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
REVENUE | ||||||||||||||||||||||||
Premiums earned | 78,737 | $ | 70,970 | $ | 64,645 | $ | 64,723 | $ | 63,090 | $ | 56,065 | |||||||||||||
Investment income, net of investment expense | 5,085 | 5,104 | 4,370 | 4,131 | 4,052 | 4,097 | ||||||||||||||||||
Realized investment (losses) gains, net | (5,778 | ) | (431 | ) | 232 | 262 | 937 | 833 | ||||||||||||||||
Total revenue | 78,044 | 75,643 | 69,247 | 69,116 | 68,079 | 60,995 | ||||||||||||||||||
LOSSES AND EXPENSES | ||||||||||||||||||||||||
Losses and loss adjustment expenses | 57,391 | 49,774 | 43,770 | 40,242 | 42,910 | 35,822 | ||||||||||||||||||
Underwriting and administrative expenses | 25,256 | 24,059 | 23,525 | 24,427 | 24,407 | 23,407 | ||||||||||||||||||
Other expenses, net | 39 | (318 | ) | (31 | ) | (114 | ) | (219 | ) | (212 | ) | |||||||||||||
Total losses and expenses | 82,686 | 73,515 | 67,264 | 64,555 | 67,098 | 59,017 | ||||||||||||||||||
Income from continuing operations | (4,642 | ) | 2,128 | 1,983 | 4,561 | 981 | 1,978 | |||||||||||||||||
Income taxes expense (benefit) | (181 | ) | 1,250 | 609 | 1,390 | 347 | 1,369 | |||||||||||||||||
Net income (loss) | (4,461 | ) | 878 | 1,374 | 3,171 | 634 | 609 | |||||||||||||||||
Operating Ratios | ||||||||||||||||||||||||
Loss ratio (a) | 72.9 | % | 70.1 | % | 67.7 | % | 62.2 | % | 68.0 | % | 63.9 | % | ||||||||||||
Expense ratio (b) | 32.1 | % | 33.9 | % | 36.4 | % | 37.7 | % | 38.7 | % | 41.7 | % | ||||||||||||
Combined ratio (c) | 105.0 | % | 104.0 | % | 104.1 | % | 99.9 | % | 106.7 | % | 105.6 | % |
Notes:
(a) | Losses and loss adjustment expenses divided by net premiums earned. | |
(b) | Underwriting expenses divided by net premiums earned. | |
(c) | Sum of the loss ratio and the expense ratio. | |
(d) | Statutory financials do not include the effects of discontinued operations. | |
(e) | Statutory financial statements represent the results of operations of PMHC. |
Source: Statutory prepared financial statements.
![]() |
Exhibit VI-1 (Continued)
Penn Millers Mutual Holding Company
Financial Performance Data for Publicly Traded Property and Casualty Companies
Penn Millers Mutual Holding Company
Financial Performance Data for Publicly Traded Property and Casualty Companies
Cash and | Cash and | Policy | Tangible | Net Prem | GAAP | GAAP | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Assets | Total Policy | Total Equity | Tangible Equity | Total Policy | Investments | Investments / | Reserves / | Total Equity | Equity / | Writ/ Avg | GAAP Loss | Expense | Combined | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Name | Ticker | ($000) | Reserves ($000) | ($000) | ($000) | Revenue ($000) | ($000) | Assets | Equity | / Assets | Assets | Equity (x) | Ratio (%) | Ratio (%) | Ratio (%) | ROAA (%) | ROAE (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||
21st Century Holding Company | TCHC | 204,676 | 114,701 | 76,228 | 76,228 | 60,429 | 150,471 | 0.74 | 1.50 | 0.37 | 0.37 | 0.68 | 63.81 | 47.50 | 111.31 | -3.17 | -8.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||
ACE Limited | ACE | 75,655,000 | 47,291,000 | 16,561,000 | 12,805,000 | 13,295,000 | 44,197,000 | 0.58 | 2.86 | 0.22 | 0.17 | 0.86 | 58.90 | 28.70 | 87.60 | 1.58 | 7.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Affirmative Insurance Holdings, Inc. | AFFM | 811,112 | 327,695 | 231,944 | 51,207 | 355,658 | 356,534 | 0.44 | 1.41 | 0.29 | 0.06 | 1.63 | 74.70 | �� | 24.00 | 98.70 | 0.92 | 3.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Alleghany Corporation | Y | 6,012,686 | 3,164,484 | 2,551,029 | 2,400,723 | 921,215 | 4,112,254 | 0.68 | 1.24 | 0.42 | 0.40 | 0.32 | 51.70 | 30.90 | 82.60 | 1.47 | 3.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Allied World Assurance Company Holdings, Ltd | AWH | 8,892,255 | 5,598,837 | 2,491,860 | 2,152,983 | 1,167,805 | 6,710,099 | 0.75 | 2.25 | 0.28 | 0.24 | 0.51 | 45.80 | 29.50 | 75.30 | 2.15 | 7.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Allstate Corporation | ALL | 133,091,000 | 95,860,000 | 15,098,000 | 14,224,000 | 28,545,000 | 97,125,000 | 0.73 | 6.35 | 0.11 | 0.11 | 1.76 | 74.00 | 24.40 | 98.40 | -1.41 | -13.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||
American Financial Group, Inc. | AFG | 25,842,100 | 20,189,900 | 2,678,800 | 2,396,900 | 3,237,200 | 17,949,000 | 0.69 | 7.54 | 0.10 | 0.09 | 1.02 | 46.20 | 35.80 | 82.00 | 0.87 | 8.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||
American Physicians Capital, Inc. | ACAP | 972,209 | 686,173 | 240,209 | 240,209 | 118,889 | 811,594 | 0.83 | 2.86 | 0.25 | 0.25 | 0.45 | 49.80 | 25.10 | 74.90 | 4.33 | 17.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||
American Physicians Service Group, Inc. | AMPH | 288,848 | 126,792 | 144,246 | 141,978 | 65,415 | 242,601 | 0.84 | 0.88 | 0.50 | 0.49 | 0.50 | 38.81 | 17.47 | 56.28 | 6.76 | 14.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||
American Safety Insurance Holdings, Ltd. | ASI | 1,086,901 | 714,595 | 223,150 | 213,454 | 174,549 | 733,395 | 0.67 | 3.20 | 0.21 | 0.20 | 0.82 | 59.40 | 39.70 | 99.10 | 0.01 | -0.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||
AMERISAFE, Inc. | AMSF | 1,157,196 | 730,190 | 278,273 | 278,273 | 278,843 | 809,089 | 0.70 | 2.62 | 0.24 | 0.24 | 1.08 | 64.30 | 21.70 | 86.00 | 3.90 | 17.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||
AmTrust Financial Services, Inc. | AFSI | 3,183,530 | 1,825,488 | 476,853 | 374,131 | 494,965 | 1,410,833 | 0.44 | 3.83 | 0.15 | 0.12 | 1.42 | 56.30 | 23.40 | 79.70 | 2.72 | 20.95 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Arch Capital Group Ltd. | ACGL | 16,641,935 | 9,442,023 | 4,029,968 | 3,603,333 | 2,831,367 | 11,643,601 | 0.70 | 2.34 | 0.24 | 0.22 | 0.78 | 57.10 | 29.90 | 87.00 | 1.27 | 5.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Argo Group International Holdings, Ltd. | AGII | 6,919,700 | 4,056,900 | 1,459,200 | 1,208,000 | 1,362,100 | 4,103,800 | 0.59 | 2.78 | 0.21 | 0.17 | 0.99 | 60.97 | 35.05 | 96.02 | 0.80 | 3.76 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Aspen Insurance Holdings Limited | AHL | 8,022,100 | 4,304,700 | 2,972,500 | 2,964,300 | 1,788,700 | 6,002,600 | 0.75 | 1.45 | 0.37 | 0.37 | 0.65 | 55.40 | 30.60 | 86.00 | 1.30 | 3.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||
AXIS Capital Holdings Limited | AXS | 15,378,885 | 9,232,919 | 4,909,119 | 4,814,061 | 2,720,385 | 11,055,319 | 0.72 | 1.88 | 0.32 | 0.31 | 0.59 | 55.80 | 27.60 | 83.40 | 1.29 | 4.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Baldwin & Lyons, Inc. | BWINB | 765,742 | 369,849 | 345,853 | 345,853 | 175,515 | 543,677 | 0.71 | 1.07 | 0.45 | 0.45 | NA | 54.00 | 35.30 | 89.30 | 1.28 | 3.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Berkshire Hathaway Inc. | BRK.A | 275,646,000 | 71,596,000 | 118,837,000 | 84,915,000 | 27,753,000 | 136,838,000 | 0.50 | 0.60 | 0.43 | 0.31 | NA | 74.80 | 22.04 | 96.84 | 1.15 | 2.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Chubb Corporation | CB | 48,572,000 | 28,435,000 | 14,504,000 | 14,037,000 | 11,520,000 | 40,297,000 | 0.83 | 1.96 | 0.30 | 0.29 | 0.83 | 56.37 | 32.24 | 89.39 | 2.97 | 11.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cincinnati Financial Corporation | CINF | 13,522,000 | 7,412,000 | 4,144,000 | 4,144,000 | 3,095,610 | 9,962,000 | 0.74 | 1.79 | 0.31 | 0.31 | 0.74 | 79.40 | 32.70 | 112.10 | 3.09 | 9.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||
CNA Surety Corporation | SUR | 1,610,950 | 685,832 | 828,677 | 689,892 | 427,424 | 1,203,988 | 0.75 | 0.83 | 0.51 | 0.43 | 0.55 | 29.30 | 53.30 | 82.60 | 6.82 | 14.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||
CRM Holdings, Ltd. | CRMH | 452,951 | 273,506 | 101,677 | 98,465 | 110,733 | 340,804 | 0.75 | 2.69 | 0.22 | 0.22 | 1.04 | 80.80 | 51.30 | 132.10 | -3.45 | -13.46 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Donegal Group Inc. | DGICA | 893,824 | 488,237 | 371,328 | 367,428 | 353,129 | 638,161 | 0.71 | 1.31 | 0.42 | 0.41 | 0.97 | 72.70 | 31.20 | 103.90 | 1.94 | 4.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Eastern Insurance Holdings, Inc. | EIHI | 385,487 | 207,849 | 137,234 | 117,736 | 136,542 | 273,564 | 0.71 | 1.51 | 0.36 | 0.31 | 0.88 | 66.95 | 34.77 | 101.72 | -5.35 | -13.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||
EMC Insurance Group Inc. | EMCI | 1,142,746 | 723,328 | 307,348 | 306,406 | 386,275 | 1,002,325 | 0.88 | 2.35 | 0.27 | 0.27 | 1.29 | 63.10 | 36.40 | 99.50 | 0.34 | 1.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Employers Holdings, Inc. | EIG | 3,764,778 | 2,655,209 | 459,942 | 406,392 | 364,651 | 2,273,650 | 0.60 | 5.77 | 0.12 | 0.11 | 0.86 | 53.00 | 46.80 | 99.80 | 2.85 | 23.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Endurance Specialty Holdings Ltd. | ENH | 8,079,345 | 4,476,916 | 2,475,597 | 2,279,724 | 1,753,852 | 5,733,830 | 0.71 | 1.81 | 0.31 | 0.28 | 0.75 | 60.40 | 30.40 | 90.80 | 1.88 | 6.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Enstar Group Limited | ESGR | 4,371,009 | 2,797,827 | 860,581 | 839,359 | 0 | 3,477,957 | 0.80 | 3.25 | 0.20 | 0.19 | 0.00 | NA | NA | NA | 2.05 | 14.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Erie Indemnity Company | ERIE | 2,635,728 | 1,422,448 | 829,116 | 829,116 | 207,605 | 1,024,356 | 0.39 | 1.72 | 0.31 | 0.31 | NA | 75.20 | 28.70 | 103.90 | 1.58 | 4.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Everest Re Group, Ltd. | RE | 17,326,935 | 10,240,069 | 5,545,415 | 5,545,415 | 3,729,431 | 14,207,305 | 0.82 | 1.85 | 0.32 | 0.32 | 0.72 | 60.20 | 28.60 | 88.80 | 0.77 | 2.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Fairfax Financial Holdings Limited | FFH | 27,020,900 | 16,838,000 | 5,613,200 | 5,297,700 | 4,496,000 | 19,489,900 | 0.72 | 3.00 | 0.21 | 0.20 | 0.89 | 70.14 | 28.36 | 98.50 | 3.82 | 21.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||
First Acceptance Corporation | FAC | 447,662 | 161,513 | 226,661 | 82,219 | 239,924 | 215,102 | 0.48 | 0.71 | 0.51 | 0.18 | NA | 70.10 | 23.90 | 94.00 | -1.20 | -2.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||
First Mercury Financial Corporation | FMR | 1,045,694 | 578,191 | 286,838 | 223,154 | 207,640 | 648,738 | 0.62 | 2.02 | 0.27 | 0.21 | 0.79 | 63.40 | 30.60 | 94.00 | 2.38 | 8.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Flagstone Reinsurance Holdings Limited | FSR | 2,654,398 | 976,171 | 1,306,557 | 1,253,166 | 736,955 | 1,822,043 | 0.69 | 0.75 | 0.49 | 0.47 | 0.65 | 37.30 | 37.00 | 74.30 | -5.92 | -11.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||
FPIC Insurance Group, Inc. | FPIC | 977,332 | 639,534 | 267,438 | 256,605 | 161,794 | 710,581 | 0.73 | 2.39 | 0.27 | 0.26 | 0.57 | 59.10 | 25.10 | 84.20 | 2.84 | 10.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||
GAINSCO, INC. | GAN | 246,972 | 131,732 | 54,741 | 54,132 | 179,266 | 175,854 | 0.71 | 2.41 | 0.22 | 0.22 | 3.11 | 70.40 | 25.30 | 95.70 | -0.65 | -2.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Greenlight Capital Re, Ltd. | GLRE | 1,312,716 | 245,454 | 614,546 | 614,546 | 158,315 | 1,135,430 | 0.86 | 0.40 | 0.47 | 0.47 | 0.37 | 56.30 | 40.40 | 96.70 | -2.53 | -5.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Hallmark Financial Services, Inc. | HALL | 551,279 | 277,022 | 190,555 | 121,220 | 236,185 | 368,415 | 0.67 | 1.45 | 0.35 | 0.22 | 1.29 | 62.00 | 29.50 | 91.50 | 2.26 | 6.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Hanover Insurance Group, Inc. | THG | 7,747,700 | 4,396,400 | 2,221,100 | 2,051,100 | 2,509,900 | 4,819,800 | 0.62 | 1.98 | 0.29 | 0.26 | 1.25 | 65.10 | 33.70 | 98.80 | 0.72 | 3.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Harleysville Group Inc. | HGIC | 3,203,625 | 2,266,835 | 692,056 | 668,656 | 892,119 | 2,539,439 | 0.79 | 3.28 | 0.22 | 0.21 | 1.30 | 65.96 | 34.81 | 100.77 | 1.46 | 6.89 | |||||||||||||||||||||||||||||||||||||||||||||||||||
HCC Insurance Holdings, Inc. | HCC | 8,876,261 | 4,691,848 | 2,809,465 | 1,961,673 | 2,011,984 | 5,469,185 | 0.62 | 1.67 | 0.32 | 0.22 | 0.77 | 60.50 | 25.00 | 85.50 | 3.60 | 11.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Hilltop Holdings Inc. | HTH | 1,044,775 | 101,698 | 791,201 | 753,659 | 114,177 | 915,693 | 0.88 | 0.13 | 0.76 | 0.72 | 0.14 | 48.50 | 38.00 | 86.50 | -1.33 | -1.81 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Horace Mann Educators Corporation | HMN | 5,828,171 | 3,795,925 | 561,839 | 514,443 | 658,285 | 4,231,133 | 0.73 | 6.76 | 0.10 | 0.09 | 2.02 | 73.90 | 25.30 | 99.20 | 0.42 | 5.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Infinity Property and Casualty Corporation | IPCC | 1,753,151 | 920,958 | 560,212 | 484,937 | 882,420 | 1,200,139 | 0.68 | 1.64 | 0.32 | 0.28 | 1.55 | 70.52 | 21.63 | 92.15 | 1.17 | 3.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||
IPC Holdings, Ltd. | IPCR | 2,612,668 | 569,119 | 2,014,218 | 2,014,218 | 407,681 | 2,308,496 | 0.88 | 0.28 | 0.77 | 0.77 | 0.24 | 15.70 | 33.50 | 49.20 | 5.53 | 7.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Kingsway Financial Services Inc. | KFS | 3,098,788 | 2,299,905 | 370,547 | 308,069 | 1,376,335 | 2,369,038 | 0.76 | 6.21 | 0.12 | 0.10 | 1.83 | 86.70 | 34.00 | 120.70 | -11.08 | -63.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Markel Corporation | MKL | 9,711,499 | 6,335,786 | 2,352,425 | 2,010,751 | 1,930,520 | 7,317,021 | 0.75 | 2.69 | 0.24 | 0.21 | 0.80 | 59.13 | 38.16 | 97.29 | -1.30 | -5.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Meadowbrook Insurance Group, Inc. | MIG | 1,878,089 | 1,193,297 | 477,442 | 358,350 | 482,846 | 1,142,511 | 0.61 | 2.50 | 0.25 | 0.19 | 1.16 | 58.70 | 31.50 | 90.20 | 2.13 | 8.66 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Mercer Insurance Group, Inc. | MIGP | 580,809 | 385,190 | 148,430 | 143,014 | 145,390 | 392,632 | 0.68 | 2.60 | 0.26 | 0.25 | 1.02 | 60.90 | 37.00 | 97.90 | 1.59 | 6.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Mercury General Corporation | MCY | 4,141,871 | 1,932,709 | 1,642,546 | 1,529,467 | 2,701,993 | 3,172,892 | 0.77 | 1.18 | 0.40 | 0.37 | 1.63 | 67.20 | 29.30 | 96.50 | -2.38 | -6.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Montpelier Re Holdings Ltd. | MRH | 3,144,100 | 1,083,400 | 1,597,000 | 1,432,500 | 543,800 | 2,597,600 | 0.83 | 0.68 | 0.51 | 0.46 | 0.41 | 28.90 | 38.70 | 67.60 | 0.71 | 1.48 |
![(CHRTIS FINANCIAL LOGO)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438565.gif)
Exhibit VI-1 (Continued)
Penn Millers Mutual Holding Company
Financial Performance Data for Publicly Traded Property and Casualty Companies
Penn Millers Mutual Holding Company
Financial Performance Data for Publicly Traded Property and Casualty Companies
Tangible | Total | Cash and | Cash and | Policy | Total | Tangible | Net Prem | GAAP | GAAP | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Asset | Total Policy | Total Equity | Equity | Policy | Investments | Investments | Reserves / | Equity | Equity / | Writ/ Avg | GAAP Loss | Expense | Combined | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Name | Ticker | ($000) | Reserves ($000) | ($000) | ($000) | Revenue ($000) | ($000) | / Assets | Equity | / Assets | Assets | Equity (x) | Ratio (%) | Ratio (%) | Ratio (%) | ROAA (%) | ROAE (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||
National Interstate Corporation | NATL | 969,243 | 584,812 | 243,547 | 243,547 | 290,380 | 572,988 | 0.59 | 2.40 | 0.25 | 0.25 | 1.29 | 56.60 | 23.80 | 80.40 | 2.15 | 9.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||
National Security Group, Inc. | NSEC | 125,054 | 70,927 | 35,045 | 35,045 | 54,898 | 93,511 | 0.75 | 2.02 | 0.28 | 0.28 | NA | 76.47 | 41.98 | 118.44 | -3.36 | -11.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Navigators Group, Inc. | NAVG | 3,403,633 | 2,374,350 | 712,454 | 705,922 | 653,182 | 1,951,428 | 0.57 | 3.33 | 0.21 | 0.21 | 0.99 | 60.80 | 32.00 | 92.80 | 1.22 | 5.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||
NYMAGIC, INC. | NYM | 977,190 | 651,829 | 187,572 | 187,572 | 158,247 | 617,900 | 0.63 | 3.48 | 0.19 | 0.19 | 0.87 | 48.01 | 48.39 | 96.40 | -7.14 | -28.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Odyssey Re Holdings Corp. | ORH | 10,150,029 | 6,096,231 | 3,138,352 | 3,138,352 | 1,999,887 | 8,090,058 | 0.80 | 1.94 | 0.31 | 0.31 | 0.70 | 67.30 | 29.20 | 96.50 | 3.58 | 12.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Old Republic International Corporation | ORI | 13,718,600 | 8,869,000 | 3,753,100 | 3,753,100 | 3,225,000 | 9,277,200 | 0.68 | 2.36 | 0.27 | 0.27 | NA | 81.30 | 41.00 | 122.30 | -1.84 | -6.42 | |||||||||||||||||||||||||||||||||||||||||||||||||||
OneBeacon Insurance Group, Ltd. | OB | 7,494,400 | 5,136,600 | 1,305,400 | 1,305,400 | 1,937,900 | 3,821,100 | 0.51 | 3.93 | 0.17 | 0.17 | 1.52 | 57.60 | 35.80 | 93.40 | -2.74 | -16.95 | |||||||||||||||||||||||||||||||||||||||||||||||||||
PartnerRe Ltd. | PRE | 16,974,071 | 10,714,780 | 4,767,678 | 4,338,159 | 3,755,311 | 12,070,176 | 0.71 | 2.25 | 0.28 | 0.26 | 0.88 | 54.80 | 30.50 | 85.30 | 3.38 | 13.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Platinum Underwriters Holdings, Ltd. | PTP | 4,968,138 | 2,585,087 | 1,952,704 | 1,952,704 | 1,035,177 | 4,399,258 | 0.89 | 1.32 | 0.39 | 0.39 | 0.53 | 56.00 | 22.50 | 78.50 | 4.08 | 10.95 | |||||||||||||||||||||||||||||||||||||||||||||||||||
PMA Capital Corporation | PMACA | 2,525,231 | 1,518,619 | 368,998 | 338,833 | 413,580 | 806,945 | 0.32 | 4.12 | 0.15 | 0.13 | 1.17 | 70.45 | 43.01 | 113.46 | 0.22 | 1.58 | |||||||||||||||||||||||||||||||||||||||||||||||||||
ProAssurance Corporation | PRA | 4,598,409 | 2,752,983 | 1,527,671 | 1,398,036 | 454,568 | 3,784,506 | 0.82 | 1.80 | 0.33 | 0.30 | 0.32 | 58.80 | 22.70 | 81.50 | 4.15 | 12.89 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Progressive Corporation | PGR | 19,087,600 | 10,578,500 | 4,925,000 | 4,925,000 | 13,678,200 | 13,611,300 | 0.71 | 2.15 | 0.26 | 0.26 | 3.10 | 70.10 | 21.00 | 91.10 | -0.23 | -0.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||
RenaissanceRe Holdings Ltd. | RNR | 8,805,437 | 3,007,377 | 4,104,164 | 4,033,321 | 1,382,902 | 6,385,938 | 0.73 | 0.73 | 0.47 | 0.46 | 0.37 | 22.50 | 26.90 | 49.40 | 2.20 | 4.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||
RLI Corp. | RLI | 2,482,685 | 1,508,800 | 763,602 | 737,388 | 508,678 | 1,800,089 | 0.73 | 1.98 | 0.31 | 0.30 | 0.68 | 44.30 | 39.40 | 83.70 | 1.87 | 6.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Safety Insurance Group, Inc. | SAFT | 1,417,938 | 751,793 | 601,689 | 601,689 | 545,462 | 1,061,367 | 0.75 | 1.25 | 0.42 | 0.42 | 0.87 | 67.20 | 30.20 | 97.40 | 3.97 | 9.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||
SeaBright Insurance Holdings, Inc. | SBX | 911,125 | 498,059 | 341,811 | 336,425 | 254,270 | 594,029 | 0.65 | 1.46 | 0.38 | 0.37 | 0.83 | 67.20 | 30.30 | 97.50 | 2.39 | 6.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Selective Insurance Group, Inc. | SIGI | 5,030,875 | 3,545,857 | 946,375 | 916,738 | 1,461,312 | 3,631,093 | 0.72 | 3.75 | 0.19 | 0.18 | 1.54 | 68.00 | 31.60 | 99.60 | -0.05 | -0.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Specialty Underwriters’ Alliance, Inc. | SUAI | 462,500 | 297,700 | 140,700 | 130,000 | 143,695 | 266,400 | 0.58 | 2.12 | 0.30 | 0.28 | 1.06 | 62.80 | 43.65 | 106.45 | 0.49 | 1.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||
State Auto Financial Corporation | STFC | 2,501,600 | 1,383,100 | 780,300 | 778,300 | 1,144,300 | 2,115,000 | 0.85 | 1.77 | 0.31 | 0.31 | 1.52 | 77.80 | 33.40 | 111.20 | -1.33 | -4.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tower Group, Inc. | TWGP | 2,576,254 | 1,356,288 | 847,299 | 571,929 | 573,548 | 1,581,576 | 0.61 | 1.60 | 0.33 | 0.22 | 1.31 | 52.80 | 32.70 | 85.50 | 4.37 | 17.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Transatlantic Holdings, Inc. | TRH | 14,084,507 | 9,731,716 | 3,549,291 | 3,549,291 | 4,032,304 | 11,298,456 | 0.80 | 2.74 | 0.25 | 0.25 | 1.27 | 67.50 | 26.80 | 94.30 | 0.60 | 2.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Travelers Companies, Inc. | TRV | 111,326,000 | 72,008,000 | 26,920,000 | 22,919,000 | 21,536,000 | 73,725,000 | 0.66 | 2.67 | 0.24 | 0.21 | 0.84 | 60.50 | 31.40 | 91.90 | 2.17 | 9.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unico American Corporation | UNAM | 182,340 | 96,150 | 76,226 | 76,226 | 32,643 | 149,331 | 0.82 | 1.26 | 0.42 | 0.42 | NA | 61.00 | 26.00 | 87.00 | 2.88 | 7.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||
United America Indemnity, Ltd. | INDM | 2,505,401 | 1,550,201 | 763,362 | 754,090 | 322,050 | 1,678,754 | 0.67 | 2.03 | 0.30 | 0.30 | 0.44 | 59.90 | 39.70 | 99.60 | -4.63 | -16.81 | |||||||||||||||||||||||||||||||||||||||||||||||||||
United Fire & Casualty Company | UFCS | 2,806,189 | 2,074,826 | 653,183 | 652,663 | 495,150 | 2,355,893 | 0.84 | 3.18 | 0.23 | 0.23 | 0.73 | 77.10 | 30.70 | 107.80 | -1.24 | -5.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Universal Insurance Holdings, Inc. | UVE | 621,498 | 365,086 | 109,260 | 109,260 | 150,079 | 333,474 | 0.54 | 3.34 | 0.18 | 0.18 | 1.64 | 54.10 | NA | NA | 6.67 | 38.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Validus Holdings, Ltd. | VR | 5,008,450 | 2,168,073 | 2,151,969 | 2,006,440 | 1,302,316 | 3,530,566 | 0.70 | 1.01 | 0.43 | 0.40 | 0.66 | 39.70 | 33.80 | 73.50 | 3.12 | 7.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||
W.R. Berkley Corporation | WRB | 16,656,495 | 11,099,715 | 3,295,699 | 3,187,707 | 4,020,940 | 12,855,598 | 0.77 | 3.37 | 0.20 | 0.19 | 1.23 | 62.60 | 32.00 | 94.60 | 0.55 | 2.88 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Wesco Financial Corporation | WSC | 2,718,686 | 403,777 | 2,117,734 | 1,839,939 | 290,881 | 1,786,949 | 0.66 | 0.19 | 0.78 | 0.68 | 0.15 | 60.92 | 29.28 | 90.20 | 2.62 | 3.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||
White Mountains Insurance Group, Ltd. | WTM | 15,551,000 | 8,704,200 | 3,851,400 | 3,789,100 | 3,668,900 | 9,535,200 | 0.61 | 2.26 | 0.25 | 0.24 | 0.99 | 59.24 | 33.49 | 92.73 | -1.38 | -6.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Zenith National Insurance Corp. | ZNT | 2,507,708 | 1,276,498 | 1,049,916 | 1,028,931 | 528,533 | 2,009,704 | 0.80 | 1.22 | 0.42 | 0.41 | 0.50 | 72.20 | 45.20 | 117.40 | 1.15 | 2.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Group Aggregate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Overall P&C Insurance Group Mean | 12,858,005 | 6,817,464 | 3,718,911 | 3,113,906 | 2,421,404 | 8,342,222 | 0.70 | 2.28 | 0.31 | 0.29 | 0.97 | 60.31 | 32.30 | 92.70 | 0.91 | 3.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Overall P&C Insurance Group Median | 2,952,489 | 1,687,845 | 828,897 | 766,195 | 544,631 | 2,194,325 | 0.71 | 2.02 | 0.29 | 0.26 | 0.86 | 60.80 | 31.30 | 93.70 | 1.29 | 4.45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Mean > $1.2 Bil. Total Assets | 18,193,881 | 9,639,118 | 5,252,511 | 4,392,122 | 3,402,992 | 11,791,322 | 0.70 | 2.42 | 0.31 | 0.28 | 0.94 | 59.58 | 32.08 | 91.67 | 1.01 | 3.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Median > $1.2 Bil. Total Assets | 5,828,171 | 3,164,484 | 2,014,218 | 1,952,704 | 1,362,100 | 4,103,800 | 0.72 | 1.98 | 0.30 | 0.26 | 0.84 | 60.30 | 31.45 | 92.44 | 1.29 | 4.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Mean < $1.2 Bil. Total Assets | 692,207 | 384,094 | 222,301 | 199,573 | 183,383 | 478,275 | 0.69 | 1.97 | 0.33 | 0.29 | 1.05 | 61.96 | 32.83 | 95.12 | 0.70 | 2.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Median < $1.2 Bil. Total Assets | 765,742 | 365,086 | 223,150 | 143,014 | 161,794 | 392,632 | 0.71 | 2.02 | 0.28 | 0.25 | 0.97 | 62.80 | 30.90 | 96.05 | 1.28 | 3.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Mean > $500 m Total Revenue | 14,404,930 | 7,637,688 | 4,163,807 | 3,486,688 | 2,705,912 | 9,344,584 | 0.70 | 2.36 | 0.31 | 0.28 | 0.95 | 59.64 | 32.01 | 91.73 | 1.12 | 3.95 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Mean > $500 m Total Revenue | 3,403,633 | 2,266,835 | 1,049,916 | 1,028,931 | 736,955 | 2,539,439 | 0.71 | 2.03 | 0.28 | 0.26 | 0.86 | 60.30 | 31.20 | 92.73 | 1.46 | 4.91 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Mean < $500 m Total Revenue | 310,721 | 164,541 | 110,306 | 90,225 | 113,727 | 211,960 | 0.71 | 1.68 | 0.35 | 0.31 | 1.21 | 65.68 | 34.65 | 100.33 | (0.78 | ) | (3.19 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
P&C Group Median < $500 m Total Revenue | 288,848 | 131,732 | 101,677 | 82,219 | 110,733 | 215,102 | 0.74 | 1.51 | 0.36 | 0.28 | 0.96 | 66.95 | 34.77 | 101.72 | (1.20 | ) | (2.68 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Source: SNL Financial.
![(CHRTIS FINANCIAL LOGO)](https://capedge.com/proxy/S-1A/0000950123-09-037100/w74385a4w7438565.gif)
Exhibit VI-2
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies
Total Diluted | (a) | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Price / | Price / | (a) | Current | One-Year | |||||||||||||||||||||||||||||||||||||||||
Outstand. | Total Market | Price / Book | Tangible | Operating | Price / LTM | Price / LTM | Price / Total | Dividend | Price Change | |||||||||||||||||||||||||||||||||||||
Company Name | Closing price | (000’S) | value (000’s) | (%) | Book (%) | EPS (x) | EPS (x) | Revenue (x) | Assets (%) | Yield (%) | (%) | |||||||||||||||||||||||||||||||||||
21st Century Holding Company | TCHC | 4.66 | 8,014 | 37,345 | 48.99 | 48.99 | Neg | Neg | 0.59 | 18.25 | 15.55 | (25.80 | ) | |||||||||||||||||||||||||||||||||
ACE Limited | ACE | 50.54 | 337,508 | 17,057,669 | 103.00 | 133.21 | 6.81 | 14.48 | 1.24 | 22.55 | 2.04 | (6.60 | ) | |||||||||||||||||||||||||||||||||
Affirmative Insurance Holdings, Inc. | AFFM | 3.95 | 15,415 | 60,889 | 26.25 | 118.91 | 32.92 | Neg | 0.13 | 7.51 | 2.53 | (40.78 | ) | |||||||||||||||||||||||||||||||||
Alleghany Corporation | Y | 272.36 | 9,208 | 2,507,997 | 98.31 | 104.47 | 23.50 | NA | 2.87 | 41.71 | NA | (11.80 | ) | |||||||||||||||||||||||||||||||||
Allied World Assurance Company Holdings, Ltd | AWH | 42.56 | 51,258 | 2,181,536 | 87.55 | 101.33 | 4.69 | 10.06 | 1.82 | 24.53 | 1.77 | 9.55 | ||||||||||||||||||||||||||||||||||
Allstate Corporation | ALL | 27.79 | 540,600 | 15,023,274 | 99.51 | 105.62 | 13.92 | Neg | 0.50 | 11.29 | 5.01 | (40.48 | ) | |||||||||||||||||||||||||||||||||
American Financial Group, Inc. | AFG | 25.17 | 116,500 | 2,932,305 | 109.46 | 122.34 | 6.04 | 10.19 | 0.67 | 11.35 | 2.19 | (13.65 | ) | |||||||||||||||||||||||||||||||||
American Physicians Capital, Inc. | ACAP | 32.74 | 11,275 | 369,144 | 153.68 | 153.68 | 8.42 | 9.09 | 2.42 | 37.97 | 0.83 | (1.88 | ) | |||||||||||||||||||||||||||||||||
American Physicians Service Group, Inc. | AMPH | 21.90 | 7,007 | 153,453 | 106.38 | 108.08 | 6.54 | 8.11 | 2.00 | 53.13 | 1.39 | 10.05 | ||||||||||||||||||||||||||||||||||
American Safety Insurance Holdings, Ltd. | ASI | 15.92 | 10,524 | 167,534 | 75.08 | 78.49 | 530.67 | Neg | 0.87 | 15.41 | NA | (2.69 | ) | |||||||||||||||||||||||||||||||||
AMERISAFE, Inc. | AMSF | 17.10 | 19,242 | 329,040 | 118.24 | 118.24 | 5.86 | 7.99 | 1.13 | 28.43 | NA | (5.05 | ) | |||||||||||||||||||||||||||||||||
AmTrust Financial Services, Inc. | AFSI | 11.72 | 59,735 | 700,094 | 146.82 | 187.13 | 5.25 | 8.31 | 1.11 | 21.99 | 1.72 | (17.58 | ) | |||||||||||||||||||||||||||||||||
Arch Capital Group Ltd. | ACGL | 62.70 | 62,626 | 3,926,670 | 97.44 | 108.97 | 8.15 | 23.14 | 1.36 | 23.60 | NA | (10.25 | ) | |||||||||||||||||||||||||||||||||
Argo Group International Holdings, Ltd. | AGII | 35.62 | 30,795 | 1,096,907 | 75.17 | 90.80 | 10.87 | 21.20 | 0.74 | 15.85 | NA | (2.17 | ) | |||||||||||||||||||||||||||||||||
Aspen Insurance Holdings Limited | AHL | 24.15 | 85,646 | 2,068,354 | 69.58 | 69.78 | 13.45 | 20.82 | 1.09 | 25.78 | 2.47 | (8.76 | ) | |||||||||||||||||||||||||||||||||
AXIS Capital Holdings Limited | AXS | 28.72 | 149,861 | 4,304,008 | 87.67 | 89.40 | 12.64 | 30.88 | 1.59 | 27.99 | 2.75 | (14.32 | ) | |||||||||||||||||||||||||||||||||
Baldwin & Lyons, Inc. | BWINB | 21.08 | 14,733 | 310,572 | 89.80 | 89.80 | 13.43 | 29.69 | 1.75 | 40.56 | 5.50 | 1.79 | ||||||||||||||||||||||||||||||||||
Berkshire Hathaway Inc. | BRK.A | 108,100.00 | 1,552 | 167,740,932 | 141.15 | 197.54 | 18.80 | 57.17 | 1.60 | 60.85 | NA | (6.61 | ) | |||||||||||||||||||||||||||||||||
Chubb Corporation | CB | 48.15 | 357,400 | 17,208,810 | 118.65 | 122.60 | 8.81 | 11.07 | 1.37 | 35.43 | 2.59 | (1.59 | ) | |||||||||||||||||||||||||||||||||
Cincinnati Financial Corporation | CINF | 24.63 | 162,556 | 4,003,762 | 96.62 | 96.62 | 20.25 | 9.51 | 1.01 | 29.61 | 5.37 | (12.72 | ) | |||||||||||||||||||||||||||||||||
CNA Surety Corporation | SUR | 16.81 | 44,412 | 746,566 | 90.09 | 108.21 | 6.95 | 6.98 | 1.57 | 46.34 | NA | 20.59 | ||||||||||||||||||||||||||||||||||
CRM Holdings, Ltd. | CRMH | 1.10 | 16,775 | 18,453 | 18.15 | 18.74 | Neg | Neg | 0.14 | 4.07 | NA | (69.44 | ) | |||||||||||||||||||||||||||||||||
Donegal Group Inc. | DGICA | 15.75 | 25,475 | 401,238 | 108.06 | 109.20 | 21.44 | 23.16 | 1.06 | 44.89 | 2.50 | (8.16 | ) | |||||||||||||||||||||||||||||||||
Eastern Insurance Holdings, Inc. | EIHI | 9.90 | 9,009 | 89,189 | 64.99 | 75.75 | Neg | Neg | 0.69 | 23.14 | 3.49 | (34.09 | ) | |||||||||||||||||||||||||||||||||
EMC Insurance Group Inc. | EMCI | 23.10 | 13,236 | 305,750 | 99.48 | 99.79 | 13.28 | 74.52 | 0.75 | 26.76 | 2.81 | (7.08 | ) | |||||||||||||||||||||||||||||||||
Employers Holdings, Inc. | EIG | 14.88 | 46,506 | 692,005 | 150.45 | 170.28 | 7.19 | 8.00 | 1.59 | 18.38 | 1.45 | (14.97 | ) | |||||||||||||||||||||||||||||||||
Endurance Specialty Holdings Ltd. | ENH | 32.21 | 58,895 | 1,897,008 | 76.63 | 83.21 | 9.32 | 15.19 | 1.03 | 23.48 | 3.28 | (2.28 | ) | |||||||||||||||||||||||||||||||||
Enstar Group Limited | ESGR | 59.52 | 13,788 | 820,635 | 95.36 | 97.77 | 9.43 | 10.16 | 13.87 | 18.77 | NA | (48.23 | ) | |||||||||||||||||||||||||||||||||
Erie Indemnity Company | ERIE | 37.79 | 57,363 | 2,167,751 | 261.45 | 261.45 | 19.12 | 53.23 | 2.05 | 82.24 | 4.78 | (19.25 | ) | |||||||||||||||||||||||||||||||||
Everest Re Group, Ltd. | RE | 83.09 | 61,265 | 5,090,509 | 91.80 | 91.80 | 9.18 | 39.01 | 1.38 | 29.38 | 2.52 | (0.41 | ) | |||||||||||||||||||||||||||||||||
Fairfax Financial Holdings Limited | FFH | 335.75 | 17,564 | 5,897,150 | 105.06 | 111.32 | 4.22 | 5.90 | 0.80 | 21.82 | 1.60 | 33.10 | ||||||||||||||||||||||||||||||||||
First Acceptance Corporation | FAC | 2.48 | 48,865 | 121,185 | 53.47 | 147.39 | Neg | Neg | 0.43 | 27.07 | NA | (35.08 | ) | |||||||||||||||||||||||||||||||||
First Mercury Financial Corporation | FMR | 12.41 | 18,042 | 223,907 | 78.06 | 100.34 | 7.99 | 9.85 | 0.89 | 21.41 | NA | — | ||||||||||||||||||||||||||||||||||
Flagstone Reinsurance Holdings Limited | FSR | 11.10 | 85,163 | 945,309 | 72.35 | 75.43 | Neg | Neg | 1.70 | 35.61 | 1.64 | (10.27 | ) | |||||||||||||||||||||||||||||||||
FPIC Insurance Group, Inc. | FPIC | 34.40 | 7,533 | 259,135 | 96.90 | 100.99 | 7.10 | 9.56 | 1.45 | 26.51 | NA | (33.85 | ) | |||||||||||||||||||||||||||||||||
GAINSCO, INC. | GAN | 14.37 | 4,741 | 68,127 | 124.45 | 125.85 | 24.32 | Neg | 0.35 | 27.58 | NA | NA | ||||||||||||||||||||||||||||||||||
Greenlight Capital Re, Ltd. | GLRE | 18.79 | 36,690 | 689,400 | 112.18 | 112.18 | Neg | Neg | 5.51 | 52.52 | NA | (12.40 | ) | |||||||||||||||||||||||||||||||||
Hallmark Financial Services, Inc. | HALL | 6.69 | 20,873 | 139,640 | 73.28 | 115.20 | 6.88 | 11.53 | 0.52 | 25.33 | NA | (31.66 | ) | |||||||||||||||||||||||||||||||||
Hanover Insurance Group, Inc. | THG | 40.01 | 51,400 | 2,056,514 | 92.59 | 100.26 | 15.43 | 33.34 | 0.76 | 26.54 | 1.05 | (10.33 | ) | |||||||||||||||||||||||||||||||||
Harleysville Group Inc. | HGIC | 31.31 | 28,116 | 880,319 | 127.20 | 131.65 | 10.26 | 19.09 | 0.92 | 27.48 | 3.46 | (14.85 | ) | |||||||||||||||||||||||||||||||||
HCC Insurance Holdings, Inc. | HCC | 26.30 | 112,520 | 2,959,276 | 105.33 | 150.85 | 9.14 | 9.81 | 1.29 | 33.34 | 1.87 | 4.91 | ||||||||||||||||||||||||||||||||||
Hilltop Holdings Inc. | HTH | 12.45 | 56,495 | 703,363 | 88.90 | 93.33 | Neg | Neg | 6.12 | 67.32 | NA | 19.14 | ||||||||||||||||||||||||||||||||||
Horace Mann Educators Corporation | HMN | 11.58 | 40,532 | 469,361 | 83.54 | 91.24 | 9.09 | 19.97 | 0.55 | 8.05 | 2.29 | (21.49) |
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Exhibit VI-2 (Continued)
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies
Total Diluted | (a) | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Price / | Price / | (a) | Current | One-Year | |||||||||||||||||||||||||||||||||||||||||
Outstand. | Total Market | Price / Book | Tangible | Operating | Price / LTM | Price / LTM | Price / Total | Dividend | Price Change | |||||||||||||||||||||||||||||||||||||
Company Name | Closing price | (000’S) | value (000’s) | (%) | Book (%) | EPS (x) | EPS (x) | Revenue (x) | Assets (%) | Yield (%) | (%) | |||||||||||||||||||||||||||||||||||
Infinity Property and Casualty Corporation | IPCC | 41.54 | 13,828 | 574,415 | 102.54 | 118.45 | 7.66 | 28.26 | 0.65 | 32.76 | 0.94 | (9.30 | ) | |||||||||||||||||||||||||||||||||
IPC Holdings, Ltd. | IPCR | 30.60 | 55,991 | 1,713,323 | 85.06 | 85.06 | 8.24 | 14.43 | 4.00 | 65.58 | 2.94 | (4.58 | ) | |||||||||||||||||||||||||||||||||
Kingsway Financial Services Inc. | KFS | 3.48 | 55,091 | 191,717 | 51.74 | 62.23 | Neg | Neg | 0.14 | 6.19 | 4.37 | (58.12 | ) | |||||||||||||||||||||||||||||||||
Markel Corporation | MKL | 309.46 | 9,825 | 3,040,445 | 129.25 | 151.21 | 18.19 | Neg | 1.74 | 31.31 | NA | (16.36 | ) | |||||||||||||||||||||||||||||||||
Meadowbrook Insurance Group, Inc. | MIG | 7.48 | 57,517 | 430,225 | 90.11 | 120.06 | 8.36 | 11.33 | 0.77 | 22.91 | 1.24 | 5.35 | ||||||||||||||||||||||||||||||||||
Mercer Insurance Group, Inc. | MIGP | 18.50 | 6,298 | 116,521 | 78.50 | 81.48 | 8.76 | 12.85 | 0.75 | 20.06 | 2.37 | NA | ||||||||||||||||||||||||||||||||||
Mercury General Corporation | MCY | 36.52 | 55,320 | 2,020,281 | 123.00 | 132.09 | 19.04 | Neg | 0.80 | 48.78 | 5.04 | (28.34 | ) | |||||||||||||||||||||||||||||||||
Montpelier Re Holdings Ltd. | MRH | 15.90 | 86,400 | 1,373,760 | 86.02 | 95.90 | 11.62 | 99.38 | 2.61 | 43.69 | 1.79 | (1.30 | ) | |||||||||||||||||||||||||||||||||
National Interstate Corporation | NATL | 18.55 | 19,359 | 359,109 | 147.45 | 147.45 | 8.82 | 16.71 | 1.22 | 37.05 | 1.34 | 8.42 | ||||||||||||||||||||||||||||||||||
National Security Group, Inc. | NSEC | 8.50 | 2,467 | 20,966 | 59.83 | 59.83 | Neg | Neg | 0.35 | 16.77 | 6.57 | (41.58 | ) | |||||||||||||||||||||||||||||||||
Navigators Group, Inc. | NAVG | 50.32 | 16,993 | 855,088 | 120.02 | 121.13 | 11.64 | 18.30 | 1.26 | 25.12 | NA | 2.26 | ||||||||||||||||||||||||||||||||||
NYMAGIC, INC. | NYM | 18.42 | 8,625 | 158,874 | 84.70 | 84.70 | Neg | Neg | 1.47 | 16.26 | 1.68 | (3.46 | ) | |||||||||||||||||||||||||||||||||
Odyssey Re Holdings Corp. | ORH | 46.52 | 59,298 | 2,758,531 | 87.90 | 87.90 | 17.04 | 8.02 | 1.08 | 27.18 | 0.58 | 25.90 | ||||||||||||||||||||||||||||||||||
Old Republic International Corporation | ORI | 11.51 | 235,563 | 2,711,327 | 72.24 | 72.24 | Neg | Neg | 0.76 | 19.76 | 5.70 | 6.57 | ||||||||||||||||||||||||||||||||||
OneBeacon Insurance Group, Ltd. | OB | 12.96 | 95,100 | 1,232,496 | 94.42 | 94.42 | 7.78 | Neg | 0.82 | 16.45 | 8.05 | (32.50 | ) | |||||||||||||||||||||||||||||||||
PartnerRe Ltd. | PRE | 69.62 | 57,469 | 4,000,992 | 83.92 | 92.23 | 7.84 | 7.79 | 0.91 | 23.57 | 2.58 | (1.96 | ) | |||||||||||||||||||||||||||||||||
Platinum Underwriters Holdings, Ltd. | PTP | 34.24 | 51,594 | 1,766,579 | 90.47 | 90.47 | 8.60 | 9.33 | 1.41 | 35.56 | 0.89 | (4.76 | ) | |||||||||||||||||||||||||||||||||
PMA Capital Corporation | PMACA | 5.41 | 32,231 | 174,372 | 47.26 | 51.46 | 7.98 | 30.06 | 0.34 | 6.91 | NA | (43.82 | ) | |||||||||||||||||||||||||||||||||
ProAssurance Corporation | PRA | 51.82 | 33,186 | 1,719,699 | 112.57 | 123.01 | 8.29 | 9.63 | 3.07 | 37.40 | NA | (3.95 | ) | |||||||||||||||||||||||||||||||||
Progressive Corporation | PGR | 16.37 | 674,600 | 11,043,202 | 224.23 | 224.23 | 11.69 | Neg | 0.87 | 57.86 | NA | (16.78 | ) | |||||||||||||||||||||||||||||||||
RenaissanceRe Holdings Ltd. | RNR | 50.58 | 61,322 | 3,101,651 | 75.57 | 76.90 | 13.28 | 42.50 | 2.39 | 35.22 | 1.78 | (1.60 | ) | |||||||||||||||||||||||||||||||||
RLI Corp. | RLI | 51.64 | 21,721 | 1,121,672 | 146.89 | 152.11 | 10.81 | 23.80 | 2.25 | 45.18 | 1.70 | (8.86 | ) | |||||||||||||||||||||||||||||||||
Safety Insurance Group, Inc. | SAFT | 32.87 | 15,648 | 514,362 | 85.49 | 85.49 | 8.83 | 9.21 | 0.85 | 36.28 | 4.20 | (24.37 | ) | |||||||||||||||||||||||||||||||||
SeaBright Insurance Holdings, Inc. | SBX | 9.81 | 21,413 | 210,058 | 61.45 | 62.44 | 7.11 | 10.33 | 0.76 | 23.05 | NA | (14.25 | ) | |||||||||||||||||||||||||||||||||
Selective Insurance Group, Inc. | SIGI | 16.55 | 53,234 | 881,023 | 93.09 | 96.10 | 16.09 | Neg | 0.57 | 17.51 | 2.27 | (29.81 | ) | |||||||||||||||||||||||||||||||||
Specialty Underwriters’ Alliance, Inc. | SUAI | 6.53 | 15,917 | 103,938 | 73.87 | 79.95 | 13.89 | 50.23 | 0.68 | 22.47 | NA | 29.05 | ||||||||||||||||||||||||||||||||||
State Auto Financial Corporation | STFC | 17.38 | 39,600 | 688,248 | 88.20 | 88.43 | Neg | Neg | 0.58 | 27.51 | 2.00 | (42.03 | ) | |||||||||||||||||||||||||||||||||
Tower Group, Inc. | TWGP | 23.81 | 40,606 | 966,837 | 114.11 | 169.05 | 10.14 | 8.88 | 1.33 | 37.53 | 0.71 | 17.87 | ||||||||||||||||||||||||||||||||||
Transatlantic Holdings, Inc. | TRH | 44.67 | 66,803 | 2,984,090 | 84.08 | 84.08 | 8.10 | 35.45 | 0.74 | 21.19 | 1.90 | (24.10 | ) | |||||||||||||||||||||||||||||||||
Travelers Companies, Inc. | TRV | 47.46 | 579,800 | 27,517,308 | 102.22 | 120.06 | 9.83 | 11.60 | 1.15 | 24.72 | 2.65 | 6.92 | ||||||||||||||||||||||||||||||||||
Unico American Corporation | UNAM | 8.05 | 5,607 | 45,137 | 59.21 | 59.21 | 8.43 | 8.47 | 1.00 | 24.75 | NA | NA | ||||||||||||||||||||||||||||||||||
United America Indemnity, Ltd. | INDM | 6.47 | 50,863 | 329,085 | 43.11 | 43.64 | 32.20 | Neg | 0.96 | 13.14 | NA | (53.32 | ) | |||||||||||||||||||||||||||||||||
United Fire & Casualty Company | UFCS | 17.47 | 26,592 | 464,558 | 71.12 | 71.18 | Neg | Neg | 0.81 | 16.55 | 1.93 | (39.15 | ) | |||||||||||||||||||||||||||||||||
Universal Insurance Holdings, Inc. | UVE | 5.08 | 40,530 | 205,891 | 188.44 | 188.44 | 4.79 | 5.84 | 1.10 | 33.13 | 32.92 | 33.68 | ||||||||||||||||||||||||||||||||||
Validus Holdings, Ltd. | VR | 24.40 | 78,942 | 1,926,187 | 89.51 | 96.00 | 9.39 | 14.35 | 1.40 | 38.46 | 3.63 | 5.72 | ||||||||||||||||||||||||||||||||||
W.R. Berkley Corporation | WRB | 23.48 | 166,226 | 3,902,986 | 118.43 | 122.44 | 8.96 | 44.30 | 0.92 | 23.43 | 0.87 | (0.04 | ) | |||||||||||||||||||||||||||||||||
Wesco Financial Corporation | WSC | 309.00 | 7,120 | 2,200,021 | 103.89 | 119.57 | 23.70 | 30.26 | 2.59 | 80.92 | 0.53 | (16.26 | ) | |||||||||||||||||||||||||||||||||
White Mountains Insurance Group, Ltd. | WTM | 287.90 | 8,857 | 2,549,930 | 66.21 | 67.30 | Neg | Neg | 0.81 | 16.40 | 0.39 | (35.07 | ) | |||||||||||||||||||||||||||||||||
Zenith National Insurance Corp. | ZNT | 24.84 | 37,342 | 927,575 | 88.35 | 90.15 | 23.62 | 31.85 | 1.52 | 36.99 | 6.64 | (31.89 | ) |
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Exhibit VI-2 (Continued)
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies
Total Diluted | (a) | ||||||||||||||||||||||||||||||||||||||||||
Shares | Price / | Price / | (a) | Current | One-Year | ||||||||||||||||||||||||||||||||||||||
Outstand. | Total Market | Price / Book | Tangible | Operating | Price / LTM | Price / LTM | Price / Total | Dividend | Price Change | ||||||||||||||||||||||||||||||||||
Company Name | Closing price | (000’S) | value (000’s) | (%) | Book (%) | EPS (x) | EPS (x) | Revenue (x) | Assets (%) | Yield (%) | (%) | ||||||||||||||||||||||||||||||||
Group Aggregate | |||||||||||||||||||||||||||||||||||||||||||
Overall P&C Insurance Group Mean | 4,350,300 | 96.87 | 107.15 | 19.44 | 21.30 | 1.45 | 29.72 | 3.42 | (11.94 | ) | |||||||||||||||||||||||||||||||||
Overall P&C Insurance Group Median | 880,671 | 90.29 | 100.02 | 9.25 | 14.35 | 1.04 | 26.53 | 2.29 | (9.30 | ) | |||||||||||||||||||||||||||||||||
P&C Group Mean > $1.2 Bil. Total Assets | 6,170,984 | 101.16 | 110.88 | 11.83 | 22.05 | 1.58 | 30.68 | 2.62 | (12.11 | ) | |||||||||||||||||||||||||||||||||
P&C Group Median > $1.2 Bil. Total Assets | 1,926,187 | 93.09 | 100.26 | 9.41 | 14.84 | 1.11 | 27.18 | 2.12 | (10.27 | ) | |||||||||||||||||||||||||||||||||
P&C Group Mean < $1.2 Bil. Total Assets | 199,138 | 87.10 | 98.65 | 40.59 | 19.20 | 1.14 | 27.56 | 6.11 | (11.49 | ) | |||||||||||||||||||||||||||||||||
P&C Group Median < $1.2 Bil. Total Assets | 158,874 | 78.50 | 99.79 | 8.59 | 10.33 | 0.87 | 25.33 | 2.53 | (6.07 | ) | |||||||||||||||||||||||||||||||||
P&C Group Mean > $500 m Total Revenue | 7,702,236 | 99.01 | 108.39 | 11.66 | 23.25 | 1.18 | 28.75 | 2.72 | (10.07 | ) | |||||||||||||||||||||||||||||||||
P&C Group Mean > $500 m Total Revenue | 2,344,766 | 92.84 | 96.36 | 10.14 | 18.69 | 1.05 | 27.33 | 2.27 | (9.08 | ) | |||||||||||||||||||||||||||||||||
P&C Group Mean < $500 m Total Revenue | 469,110 | 94.40 | 105.72 | 29.91 | 18.81 | 1.76 | 30.86 | 4.70 | (14.29 | ) | |||||||||||||||||||||||||||||||||
P&C Group Median < $500 m Total Revenue | 282,443 | 89.35 | 100.66 | 8.42 | 10.33 | 1.03 | 25.04 | 2.44 | (12.40 | ) |
Source: SNL Financial and market data provided by CapitalIQ.
(a) | Price / Operating EPS and Price / EPS is reported as “Neg” if the company has negative earnings. | |
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Exhibit VII-1
Penn Millers Mutual Holding Company
Pro Forma Assumptions for Conversion Valuation
Penn Millers Mutual Holding Company
Pro Forma Assumptions for Conversion Valuation
B-1 | The initial offering price is $10.00 per share and the number of shares offered is calculated by dividing the estimated pro forma market value by the offering price. | |
B-2 | Conversion and offering expenses are estimated at $2.570 million plus commission and fees of 1.5% of the total gross proceeds in the subscription and community offerings. Also assumes that no shares are sold in a syndicated community offering. | |
B-3 | It is assumed that 10% of the shares offered for sale, less one share, will be acquired by the employee stock ownership plan (“ESOP”). Pro forma adjustments have been made to earnings and equity to reflect the impact of the ESOP. Under generally accepted accounting principles, the aggregate purchase price of shares of common stock to be purchased by the ESOP in the offering represents unearned compensation and is reflected as a reduction in capital. It is further assumed that the ESOP purchase is funded by a loan from PMHC. No reinvestment is assumed on proceeds used to fund the ESOP. The amount of this borrowing has been reflected as a reduction from gross proceeds to determine the estimated net funds available for reinvestment. The ESOP expense reflects recognition of expense based upon shares committed to be allocated under the ESOP. For purposes of this calculation, the average market value was assumed to be equal to the initial offering price of $10.00. | |
B-4 | The net investable proceeds is fully invested at the beginning of the applicable period. The net investable proceeds are invested to yield a return of 3.52%, which represents the estimated yield on the 10 year U.S. Treasury bond at the end of July 2009. The effective income tax rate was assumed to be 35.0%, resulting in an after-tax yield of 2.26%. | |
B-5 | The net increase in earnings excludes after-tax ESOP amortization over 10 years. | |
B-6 | No effect has been given in the pro forma equity calculation for the assumed earnings on the net proceeds. | |
B-7 | For the earnings per share (“EPS”) calcluations, pro forma per share amounts have been computed by dividing pro forma amounts by the total outstanding number of shares of stock, adjusted to give effect to the purchase of ESOP shares in accordance with Statement of Position (“SOP”) 93-6. Under SOP 93-6, the weighted average of the ESOP shares that have not been committed for release are subtracted from total shares outstanding when calculated EPS. | |
B-8 | For the book value calcluations, pro forma per share amounts have been computed by dividing pro forma amounts by the total outstanding number of shares of stock. | |
B-9 | The additional shares that Penn Millers expects to issue after the Conversion in conjunction with the grant of options or restricted stock awards under the stock-based incentive plan have not been considered in our analysis. |
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Exhibit VII-2
Penn Millers Mutual Holding Company
Pro Forma Conversion Valuation Range
(Dollars in Thousands, except per share data)
Penn Millers Mutual Holding Company
Pro Forma Conversion Valuation Range
(Dollars in Thousands, except per share data)
Minimum | Midpoint | Maximum | ||||||||||
Total implied shares offered | 4,505,000 | 5,300,000 | 6,095,000 | |||||||||
Offering price (b-1) | $ | 10.00 | $ | 10.00 | $ | 10.00 | ||||||
Implied gross proceeds: | $ | 45,050 | $ | 53,000 | $ | 60,950 | ||||||
Less: estimated expenses (b-2) | (3,246 | ) | (3,365 | ) | (3,484 | ) | ||||||
Implied net offering proceeds | 41,804 | 49,635 | 57,466 | |||||||||
Less: ESOP purchase (b-3) | (4,505 | ) | (5,299 | ) | (6,094 | ) | ||||||
Net investable proceeds (b-4) | $ | 37,300 | $ | 44,336 | $ | 51,371 | ||||||
Net income: | ||||||||||||
LTM ended 6/30/2009 (a) | (5,339 | ) | (5,339 | ) | (5,339 | ) | ||||||
Pro forma income on net proceeds (b-4) | 853 | 1,014 | 1,175 | |||||||||
Pro forma ESOP adjustment (b-5) | (293 | ) | (344 | ) | (396 | ) | ||||||
Pro forma net income | (4,778 | ) | (4,669 | ) | (4,560 | ) | ||||||
Pro forma earnings per share (b-8) | (1.18 | ) | (0.98 | ) | (0.83 | ) | ||||||
Total Revenue: | ||||||||||||
LTM ended 6/30/2009 (a) | 74,148 | 74,148 | 74,148 | |||||||||
Pro forma revenue on net proceeds, pre-tax | 1,313 | 1,561 | 1,808 | |||||||||
Pro forma total revenue | 75,461 | 75,709 | 75,956 | |||||||||
Total Equity: | ||||||||||||
Total equity at 6/30/2009 | 51,972 | 51,972 | 51,972 | |||||||||
Net offering proceeds | 41,804 | 49,635 | 57,466 | |||||||||
Less: ESOP purchase | (4,505 | ) | (5,299 | ) | (6,094 | ) | ||||||
Pro forma total equity (b-6) | 89,272 | 96,308 | 103,343 | |||||||||
Pro forma book value per share (b-7) | 19.82 | 18.17 | 16.96 | |||||||||
Tangible Equity: | ||||||||||||
Total tangible equity at 6/30/2009 | 51,972 | 51,972 | 51,972 | |||||||||
Net offering proceeds | 41,804 | 49,635 | 57,466 | |||||||||
Less: ESOP purchase | (4,505 | ) | (5,299 | ) | (6,094 | ) | ||||||
Pro forma tangible equity | 89,272 | 96,308 | 103,343 | |||||||||
Pro forma tangible book value per share (b-7) | 19.82 | 18.17 | 16.96 | |||||||||
Total Assets: | ||||||||||||
Total assets at 6/30/2009 | 228,385 | 228,385 | 228,385 | |||||||||
Net offering proceeds | 41,804 | 49,635 | 57,466 | |||||||||
Less: ESOP purchase | (4,505 | ) | (5,299 | ) | (6,094 | ) | ||||||
Pro forma total assets | 265,685 | 272,721 | 279,756 | |||||||||
Pro Forma Ratios: | ||||||||||||
Price / LTM EPS | -8.49 | x | -10.22 | x | -12.03 | x | ||||||
Price / LTM Revenue | 0.60 | x | 0.70 | x | 0.80 | x | ||||||
Price / Book Value | 50.46 | % | 55.03 | % | 58.98 | % | ||||||
Price / Tangible Book Value | 50.46 | % | 55.03 | % | 58.98 | % | ||||||
Price / Total Assets | 16.96 | % | 19.43 | % | 21.79 | % | ||||||
Total Equity / Assets | 33.60 | % | 35.31 | % | 36.94 | % | ||||||
Tangible Equity / Assets | 33.60 | % | 35.31 | % | 36.94 | % |
Notes: | ||
(a) | Excludes income from discontinued operations. | |
(b) | See Exhibit VII-1 for explanation of assumptions. |
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