Mercer Insurance Group, Inc. reported its operating results today for the year and quarter ended December 31, 2008.

4th Quarter highlights:
– Net income of $0.10 per diluted share versus $0.45 per diluted share in the prior year’s quarter,
– Operating income of $0.54 per diluted share versus $0.48 per diluted share in the prior year’s quarter,
– A GAAP combined ratio of 98.4% versus 98.5% in the prior year’s
quarter,
– Book value per diluted share of $22.21.

Andrew R. Speaker, President and CEO, commented, “We are pleased with the operating results for the quarter which are the strongest quarterly operating earnings per share ever recorded by the Company. The strong operating performance was partially offset by net realized capital losses, which were comprised mostly of a provision for declines in fair value of securities considered to be other than temporary, and mark-to-market adjustments for interest rate swaps on our trust preferred debt. Because the Company carries investment securities on its balance sheet at fair value, recognition of other than temporary impairments in realized losses does not otherwise change the Company’s shareholder’s equity or book value per share.”

Speaker added, “Economic conditions, particularly the effects of the downturn in residential housing as it applies to our West Coast contractors business, have negatively impacted our direct premiums written. In anticipation of the impact on future net premiums earned, the Company has taken proactive measures to reduce and control expenses, including staff reductions and elimination of other expenses as we focus on maintaining profitable operations and increasing book value.”

Speaker concluded, “We continue to maintain a strong balance sheet. Our strategy of prudently investing in securities that provide an adequate return while protecting capital has served us well during the current volatile investment market. Despite the significant decline in equity markets, the overall results for our investment portfolio were strong and helped the Company increase book value in both the quarter and the year, while many of our industry competitors saw declines in those periods.