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Harleysville Approves Proposed Merger with Nationwide

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Harleysville Mutual Insurance Company and Harleysville Group Inc., Harleysville, Pa. (NASDAQ:HGIC), announced that their policyholders and shareholders, respectively, have voted to approve the adoption of the proposed merger with Nationwide Mutual Insurance Company.

At a special meeting of Harleysville Mutual policyholders, 14.1% of eligible votes were cast by policyholders as of the record date of March 1, and 87.4% of the votes were cast in favor of the adoption of the merger agreement. At a special meeting of Harleysville Group shareholders, 89.9% of eligible votes were cast by shareholders as of the record date of Feb. 29, and 99.8% of the votes were cast in favor of the adoption of the merger agreement.

The Pennsylvania Insurance Department already approved the merger. In addition, Nationwide Mutual policyholders have voted in favor of the merger. Regulatory approval is still required in certain other states. The transaction is expected to close sometime in the second quarter.

Under the terms of the merger agreement, Harleysville Mutual policyholders will become policyholders and members of Nationwide Mutual, and Nationwide will acquire all of the publicly held shares of common stock of Harleysville Group for $60 per share in cash.

In other industry news:

MetLife Inc., New York, N.Y. (NYSE: MET), reported first quarter 2012 operating earnings of $1.5 billion, or $1.37 per share, up 11% over the first quarter of 2011. Premiums, fees and other revenues of $11.6 billion, up 7% over the first quarter of 2011, reflect strong growth in all three geographic regions – the Americas, Asia, and Europe, the Middle East and Africa. Net investment income of $5.1 billion, up 6% over the first quarter of 2011, driven by solid recurring income; variable investment income was within the plan range for the quarter.

Metlife reported a first quarter 2012 net loss of $174 million, or $0.16 per share, which was driven by derivative net losses of $1.3 billion, after tax, that were largely due to increases in interest rates and MetLife’s lower credit spreads during the quarter.

MetLife uses derivatives in connection with its broader portfolio management strategy to hedge a number of risks, including changes in interest rates and fluctuations in foreign currencies. Movement in interest rates, foreign currencies and MetLife’s credit spreads – which impact the valuation of certain insurance liabilities – can generate derivative gains or losses. Derivative gains or losses related to MetLife’s credit spreads do not have an economic impact on the company.

Principal Financial Group Inc., Des Moines, Iowa (NYSE: PFG), reported operating earnings of $213.0 million for first quarter 2012, compared to $219.8 million for first quarter 2011. Operating earnings per diluted share were $0.70 for first quarter 2012, compared to $0.68 for first quarter 2011. The company reported net income available to common stockholders of $201.5 million, or $0.66 per diluted share for first quarter 2012, compared to $182.0 million, or $0.56 per diluted share for first quarter 2011. This reflects net realized capital losses of $10.0 million, which includes:

  • $18.7 million of net losses related to sales and permanent impairments of fixed maturity securities, including $14.3 million of losses on commercial mortgage backed securities;
  • $2.8 million of losses on commercial mortgage whole loans.

Operating revenues for first quarter 2012 were $2,107.4 million compared to $2,047.5 million for the same period last year.

The company also noted Strong sales in its three key U.S. Retirement and Investor Services Accumulation products in the first quarter, with $3.2 billion for Full Service Accumulation, a record $3.7 billion for Principal Funds and $587 million for Individual Annuities.

Hastings Mutual Insurance Company, Hastings, Mich., announced the retirement of CEO and President Bill Wallace. Wallace will retire after a 37-year career in the insurance industry – 14 of which as CEO of Hastings Mutual. He also served as chairman of the board of directors.

During Wallace’s time as CEO, Hastings Mutual’s surplus grew 180%, from $116.8 million to $327.6 million with an annual average growth of 14%. The company’s total assets have grown more than 100% from $339.3 million to $679.2 million and Direct Written Premium has grown 90% from $179.7 million to $342 million. In 2010, Wallace led Hastings Mutual into Iowa, the sixth state in the company’s Midwest territory.

Wallace will be succeeded by Joseph J. Babiak Jr., who is serving as the chief operations officer until Wallace’s official retirement on July 27. During the past three years, Babiak has served as the senior vice president of Insurance Operations in preparation for this planned succession. He joined Hastings Mutual as chief financial officer in 2001 and has more than 30 years of industry experience.

The Independent Insurance Agents & Brokers of America bestowed three awards at the annual Big “I” Legislative Conference & Convention in this month.

Clay Jackson of BB&T Insurance Services in Nashville, Tenn. is the 2011 recipient of the Sidney O. Smith Award for outstanding service to his peers and the national association in the field of government affairs. Forrest “Brick” Schnobrich received the 2011 Barney Burns Award for his relentless work ethic. The New Hampshire Association of Insurance Agents earned the 2011 Herndon Award in recognition of the state association whose legislative achievements the previous year on behalf of IIABA and its members have been deemed most outstanding.

Prudential Retirement, Newark, N.J., a business unit of Prudential Financial Inc. (NYSE: PRU), has been selected by four new plan sponsor clients to help place their employees on a path to and through retirement.

The new clients include Dallas, Texas-based Clampitt Paper; Fort Worth, Texas-based luxury travel agency Virtuoso; Staunton, Va.-based Fisher Auto Parts; and Houston, Texas-based bulk transportation and logistics provider, Trimac Transportation. Together, the new clients have just over $73 million in retirement plans.


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