Griffin Completes Mutual to Stock Conversion for Penn Millers
Penn Millers is a mutual property and casualty insurance company located in Wilkes Barre, Pennsylvania that provides agribusiness insurance in 33 states and commercial insurance in eight states. Penn Millers is the third largest agribusiness insurer in the United States. Annual direct written premiums approach $100 million on a capital base of $52 million.
Penn Millers’ competitors in the agribusiness market are experiencing performance challenges, which presented a market opportunity. In addition, Penn Millers anticipates that the insurance market, which is inherently cyclical, will “harden,” meaning that premium pricing will increase. But in order to take advantage of these market opportunities, Penn Millers needed to increase capital. Furthermore, as a mutual company, the Company had limited access to growth capital.
Penn Millers engaged Griffin to raise capital in a mutual to stock conversion. Principals of Griffin were instrumental in the passage of enabling legislation that made a mutual to stock conversion possible for the company. Griffin acted as financial advisor and best efforts underwriter in connection with the conversion. Under the plan of conversion adopted by Penn Millers, the company was required to be independently appraised and raise capital in an amount equal to the appraised value. The independent appraisal required Penn Millers to raise between $45 million and $61 million in capital. The offering was substantially over-subscribed. Griffin solicited and received orders for almost $73 million of Penn Millers common stock. Penn Millers elected to accept orders for $54.44 million, which represented a price to pro forma book value of approximately 56 percent. The transaction closed on October 16, 2009, and Penn Millers is now poised to seize growth opportunities.
For more information on this transaction, please contact Jeffrey P. Waldron, Senior Managing Director, at 610.205.6028.