Business Moves

EIG Mutual Holding Co.

Nevada Insurance Commissioner of Insurance Alice A. Molasky-Arman announced that EIG Mutual Holding Co., a Nevada domestic insurer specializing in workers’ compensation, has completed its demutualization. The demutualization culminated on Jan. 31, 2007, with the initial public offering of Employers Holdings Inc. (NYSE: EIG) and sale of 26,750,000 shares at $17. In addition to the 26.7 million shares sold, the underwriters exercised the over-allotment option, which resulted in the issuance of an additional 4 million shares, bringing the total issued to 30.7 million.

Molasky-Arman said, “Employers is the first Nevada domestic mutual organization that has converted to a publicly traded company, making it an historical and monumental moment in Nevada’s history. I am pleased with the outcome of EIG’s IPO. This is very good news for Nevada and its employers who have a stake in this company.”

Approximately $463 million in cash will be distributed to eligible members by mid-March, unless the time period for distribution is extended with the Commissioner’s approval. Also, 22.7 million shares of EIG common stock will be issued to eligible members who did not elect to receive cash on the initial public offering date, worth an estimated $450 million. The total market value of EIG now exceeds $1 billion, based on the close on Friday, Feb. 2, 2007.

On Jan. 13, 2007, EIG held a special stockholders meeting, where it received the necessary votes from its policyholders on the proposed conversion. Commissioner Molasky-Arman subsequently issued her Final Order in the proceeding, which was among the final steps of the process to enable EIG Mutual Holding Co. to convert to a stock holding company.

Hayward Tilton & Rolapp Insurance Associates, Earl Insurance Corp.

Hayward Tilton & Rolapp Insurance Associates Inc. has acquired Orange, Calif.-based Earl Insurance Corp. Earl Insurance is a regional insurance agency specializing in large construction equipment.

“Earl Insurance Corp. is a great match for us and will enable us greater range in the construction and contractors market” said Roger Rolapp, CEO of Hayward Tilton & Rolapp. HT&R is a full-service independent insurance agency with offices in Anaheim, Pasadena and Palm Desert, Calif., Kennewick, Wash., Valparaiso, Ind., and Greenville, S.C.

Mercury General

Los Angeles-based Mercury General Corp. has announced its fourth quarter and 2006 earnings, posting net income of $50.1 million ($0.91 per diluted share) in the fourth quarter 2006 compared with $46.2 million ($0.84 per diluted share) for the same period in 2005. For the year, net income was $214.8 million ($3.92 per diluted share) compared with net income of $253.3 million ($4.63 per diluted share) for the year 2005.

Included in net income are net realized investment gains, net of tax, of $1.3 million ($0.02 per diluted share) in the fourth quarter of 2006 compared with net realized investment gains, net of tax, of $0.5 million ($0.01 per diluted share) for the same period in 2005, and net realized investment gains, net of tax, of $10.0 million ($0.18 per diluted share) for the entire 2006 year compared with net realized investment gains, net of tax, of $10.5 million ($0.19 per diluted share) for 2005.

Company-wide net premiums written were $740.7 million in the fourth quarter 2006. According to the company, that is a 1.7 percent increase over fourth quarter 2005 net premiums written of $728 million. Net premiums were approximately $3 billion for the year, a 3.2 percent increase over net premiums for the same period in 2005.

California net premiums written were $558.5 million in the fourth quarter of 2006, an increase of 5.5 percent over the same period in 2005, and were approximately $2.2 billion for the year, a 5.8 percent increase over the same period in 2005. Non-California net premiums written were $182.2 million in the fourth quarter of 2006, an 8.2 percent decrease over the same period in 2005, and were $795 million for the year, a decrease of 3.5 percent over the same period in 2005.

The company’s combined ratio (GAAP basis) was 96.5 percent in the fourth quarter and 95 percent for the year compared with 96 percent and 92.4 percent for the same periods in 2005. Catastrophe losses did not impact the financial results during the fourth quarter of 2006 as compared to the fourth quarter 2005, when losses caused by Hurricane Wilma increased the loss ratio by 3.3 points.

Loss development on prior accident years’ loss reserves was approximately $20 million adverse in 2006 and $45 million positive for the year ended Dec. 31, 2005. For business produced in California, positive development on prior accident years’ loss reserves was approximately $15 million in 2006 and $40 million for the year ended Dec. 31, 2005. For business produced outside of California, development on prior accident years’ loss reserves was approximately $35 million adverse in 2006, and $5 million positive for the year ended Dec. 31, 2005.

Net investment income of $38.6 million (after tax $33.9 million) in the fourth quarter of 2006 increased by 19.7 percent over the fourth quarter net investment income in 2005. The after-tax yield on investment income was 4 percent on average assets of $3.4 billion (fixed maturities and equities at cost) for the quarter in 2006. This compares with an after-tax yield on investment income of 3.4 percent on average investments of $3.3 billion (fixed maturities and equities at cost) for the same period in 2005.

For more information, visit www.
mercuryinsurance.com. The company hosted a conference call and webcast discussing its results earlier in February, and a replay of the call can be heard on the company Web site.

Professional Program Insurance Brokerage

Professional Program Insurance Brokerage based in Novato, Calif., announced it is changing its agency structure to a wholesaler. The company will no longer accept applications client direct for its proprietary tanning and beauty, tattoo and body piercing, permanent makeup, laser and medispa programs.

Agents will now receive a 10 percent commission, the company said. In the past, higher commissions were only available if a policy was packaged with property.

Increased commissions became effective for all risks bound with a Feb. 1, 2007, date or later.

For information about the change, e-mail Jennifer Schoenthal at Jennifer@
medispa-ins.com.