As the Susquehanna River rose toward a feared 41-foot, levee-top surge in Wilkes-Barre, Pa., and the National Guard prepared to move into the riverside city early yesterday, one of its few nationally-known, publicly-traded businesses, farm insurer Penn Millers Holding Corp., announced it was selling itself to giant Swiss-based insurer Ace Ltd., which has its main U.S. operations in Philadelphia.
Did Tropical Storm Lee flooding, which caused President Obama to declare Pennsylvania a disaster area, push Penn Millers out of a business it's been in since 1887?
I couldn't reach company officials by phone; their office on Franklin Street near the center of town was closed all morning, according to the answering system. But there are signs this year's big rains did play a role:
On Aug. 12, Penn Millers told investors in a report to the Securities and Exchange Commission that is is "subject to concentration of risk with respect to geographic concentration." While it does business in 41 states, Pennsylvania and New Jersey account for a disproportionate shares; problems there would pose "special" problems.
On Aug. 15, Penn Millers announced a "review of strategic alternatives," including a possible sale. Boss Douglas A. Gaudet said he had to act cause of low insurance prices, his company's small size - and "increased catastrophic storm activity."
Twelve days later, Hurricane Irene swamped Penn Millers' home markets. Yesterday Tropical Storm Lee raised the river again. A final hosing.
Ace spokesman Steven Wasdick said it's "too early to tell" what the deal will mean for more than 100 Penn Millers employees, since the transaction won't close for months. NEW: Ace has acquired a string of niche insurers, and often left their organizations intact, as it has built one of the largest US property-casualty business groups since buying Philadelphia's 200-year-old INA group in 1998.
Shareholders, including company managers and other insiders and Boston investment fund Castine Capital Management and other institutional investors, got a boost: Ace agreed to take out Penn Millers for $107 million, or $20.50 a share, more than 25% above its previous closing and the highest price the stock has fetched since it went public in 2009 (corrected).