United Fire completes merger with Mercer

CEDAR RAPIDS - United Fire & Casualty Co. on Monday completed its $191 million merger with Mercer Insurance Group of Pennington, N.J.

Cedar Rapids-based United Fire and Mercer on Nov. 29 announced plans to merge in a cash-for-stock transaction. Under the terms of the merger agreement, Mercer Insurance stockholders will receive $28.25 per share in cash.

United Fire financed the merger with $100 million in available cash and $125 million from existing lines of credit and a loan from the Federal Home Loan Bank of Des Moines with a fixed interest rate of 3.6 percent for 20 years. United Fire anticipates the acquisition will contribute to its net income and return on equity no later than 2012.

There is no overlap between the agency networks of United Fire and Mercer, as Mercer primarily markets in six Western and mid-Atlantic states in which United Fire has no appointed property and casualty agencies.

United Fire will market through over 1,000 independent agencies, diversifying exposure to weather and other catastrophe risks across its geographic markets. With the completion of the acquisition, Randy Ramlo, United Fire president and chief executive officer, said the combined company will be able to build on common conservative underwriting and investment cultures.

“The completion of this transaction marks an important milestone for United Fire,” Ramlo said. “Today, we significantly expanded our resources to better serve our policyholders and agents by offering additional products and services. With Mercer Insurance, we know that our shared focus on underwriting profitability will achieve the continued strong, consistent results our United Fire stockholders expect.”