LANCASTER, Pa., Aug. 7 PA-Eastern-Ins.-Hold.
LANCASTER, Pa., Aug. 7 /PRNewswire-FirstCall/ -- Eastern Insurance
Holdings, Inc. (Nasdaq: EIHI) ("EIHI," the "Company") announced today that it
has executed a definitive agreement to acquire Employers Security Holding
Company and subsidiaries ("Employers") in a transaction valued at
approximately $14.9 million, including the assumption of $2.9 million in debt.
Employers' wholly owned subsidiary is Employers Security Insurance Company, an
Indianapolis, Indiana-based mono-line workers' compensation insurance company.
Employers is domiciled in Indiana and also holds licenses in Illinois and
Missouri. The acquisition will expand EIHI's workers' compensation insurance
operations into Indiana and ultimately other select mid-west states and
furthers EIHI's strategic vision of being a specialty underwriter of workers'
compensation insurance products in niche markets.
"The acquisition of Employers is financially attractive to our
shareholders and is expected to be immediately accretive to our earnings and
return on equity," said Bruce M. Eckert, Chief Executive Officer of EIHI.
Eckert continued, "Employers is an excellent strategic and cultural fit and
can be expected to enhance and diversify EIHI's market profile through the
expansion of its workers' compensation insurance products to mid-west
territories that have favorable workers' compensation operating environments.
Both EIHI and Employers have similar business philosophies including
maintaining a strong balance sheet, individual account underwriting,
developing and maintaining excellent agency relationships, aggressively
closing claims and providing proactive risk management services to insureds.
These mutually common business philosophies and consistent core fundamental
values will provide the foundation to further strengthen our franchise value
and profitably grow our workers' compensation insurance segment."
Transaction Terms:
The total transaction value is approximately $14.9 million, including the
assumption of $2.9 million in debt, which represents a multiple to total
capitalization of 1.59. The total estimated transaction value is subject to
certain true-up adjustments for changes in shareholders' equity from June 30,
2008 to the calendar month immediately preceding the closing of the
transaction. The cash purchase price component of approximately $12.0 million
will be financed through the utilization of cash from EIHI's operating
subsidiaries. The merger agreement has been approved by the Board of
Directors of both companies.
Approvals and Timing:
Completion of the transaction is subject to various conditions, including
the receipt of required regulatory approvals and the approval of Employers'
approximately 28 shareholders. The transaction is expected to close late in
the third quarter of 2008.
Conference Call:
EIHI will host a conference call for analysts and investors on Friday,
August 8, 2008 immediately following its regularly scheduled second quarter
2008 earnings call at 10:00 a.m. (Eastern Time) to discuss the details of this
announcement. The conference call will be available via a live webcast
accessed through the Investor Relations section of
http://www.easterninsuranceholdings.com. The dial-in numbers for the
conference call are as follows:
Live Call
800-860-2442 (Domestic)
412-858-4600 (International)
A replay of the conference call will be available through August 15, 2008,
at 877-344-7529 (domestic) and 412-317-0088 (international). The replay
passcode for the conference call is 421353. An online archive of the webcast
will be available on the Investor Relations section of
http://www.easterninsuranceholdings.com. An accompanying presentation will be
available for download at http://www.easterninsuranceholdings.com at
approximately 4:30 p.m. (Eastern Time) on August 7, 2008.
About Eastern Insurance Holdings, Inc.
EIHI operates through its subsidiaries a domestic casualty insurance group
specializing in workers' compensation, a domestic life and health insurance
company, an offshore specialty reinsurance company and a third-party claims
administration company.
EIHI is located at 25 Race Avenue in Lancaster, Pennsylvania. The
company's Web address is http://www.easterninsuranceholdings.com.
About Employers Security Holding Company
Employers Security Holding Company is the parent company of Employers
Security Insurance Company, a casualty insurance carrier that underwrites and
issues workers' compensation insurance policies for employers in Indiana and
Missouri.
Employers Security Insurance Company is located at 8425 Woodfield Crossing
Blvd, Suite 125, in Indianapolis, Indiana. The company's Web address is
http://www.esic.com.
Some of the statements contained in this press release are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expect," "plan," "intend," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," the negative of these terms or other terminology.
Forward-looking statements are based on the opinions and estimates of
management at the time the statements are made and are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those anticipated in the forward-looking statements. Factors that could
affect the Company's actual results include, among others, the fact that our
loss reserves are based on estimates and may be inadequate to cover our actual
losses; the uncertain effects of emerging claim and coverage issues on our
business; the geographic concentration of our business; an inability to obtain
or collect on our reinsurance protection; a downgrade in the A.M. Best rating
of our insurance subsidiaries; the impact of extensive regulation of the
insurance industry and legislative and regulatory changes, a failure to
realize our investment objectives; the effects of intense competition; the
loss of one or more principal employees; the inability to acquire additional
capital on favorable terms; a failure of independent insurance brokers to
adequately market our products; and the effects of acts of terrorism or war.
More information about these and other factors that potentially could affect
our financial results is included in our Form S-1 Registration Statement,
filed with the U.S. Securities and Exchange Commission and in our other public
filings with the U.S. Securities and Exchange Commission. Readers are
cautioned not to place undue reliance upon these forward-looking statements,
which speak only as of the date of this release. The Company undertakes no
obligation to update any forward-looking statements.
SOURCE Eastern Insurance Holdings, Inc.
