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Executives

Leslie Loyet – Financial Relations Board

Richard Smith – President and CEO

John Marazza – EVP and CFO

Ed LaFramboise – VP, Finance

Analysts

Caroline Steers – Macquarie Capital Partners

Keith Alexander – JP Morgan Chase

Paul Newsome – Sandler O’Neill

Doug Mewhirter – RBC Capital Markets

Bob Farnam – Keefe, Bruyette & Woods

First Mercury Financial Corporation (FMR) Q2 2010 Earnings Conference Call August 3, 2010 11:00 AM ET

Operator

Greetings and welcome to the First Mercury Financial Corporation’s second quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a remainder this conference is being recorded.

It is now my pleasure to introduce your host, Ms. Leslie Loyet of the Financial Relations Board. Thank you Ms. Loyet, you may begin.

Leslie Loyet

Thank you. I’d like to thank everyone for joining us today. Yesterday, we sent out a press release outlining the results for the second quarter 2010. If anyone has not received the release, please visit the Investor Relations page on the company’s website at www.firstmercury.com to retrieve a copy. Management will provide an overview of the quarter, and then we’ll open the call up to your questions.

Please be advised that this call may involve forward-looking statements, as discussed in the August 2, 2010 press release. Risks associated with these statements can be found in the company’s latest SEC filings. Additionally, we want to remind participants that the information contained in this call is current only as of the day of this call, August 3, 2010 and the company assumes no obligation to update any statements, including forward-looking statements made during this call. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statement.

Joining us today from management of First Mercury are Richard Smith, President and Chief Executive Officer; John Marazza, Executive Vice President and Chief Financial Officer; Ed LaFramboise, Vice President of Finance; and Jim Thomas, Senior Vice President, Product Management.

At this point, I’d like to turn the call over to Richard for his open remarks. Please go ahead.

Richard Smith

Thanks Leslie. Good morning. Welcome to the First Mercury Financial Corp. second quarter earnings call. I would describe our first – second quarter performance is generally meeting expectation considering that we’re operating in a market environment that is continuing to look for some direction.

The topline continued to show modest growth for the both the quarter and six months as we emphasized underwriting restrain. Performance for the investment portfolio continued to be excellent as results achieved relative stability in a challenging market conditions, we make good – continue to make good progress on the expense front although the results were not yet showing up in the reported GAAP results.

AMC continues to produce solid results so they specially seemed to facing increasingly difficult market conditions. And we’ll be working closely with AMC management to determine appropriate steps to take. I am especially pleased with the recent announcement concerning our entering into a definitive agreement to acquire Valiant. This acquisition supports several of our strategic initiatives; those include the expansion of an eminent platform, further expansion of the managerial and professional lines and a small but well respected entree into the marine lines.

In addition, we were able to strengthen our actuarial technology staff and we expect the transaction to be immediately accretive to book value and modestly accretive to 2011 earnings. I think this transaction provides very good value for our shareholders. We continue to see the competitive environment improve slowly although that generally means less rate decrease as opposed to rate increases.

Overall rate decreases continued to be in the low single digits, although policy size, geographic location and class of business can drive significantly different results. To find the current competitive environment, I’ll discuss in more detail the results for our specialty primary casualty business part of our published primary general liability results.

In June 2010, about 19% of the renewed policies in this business had a rate decrease of 10% or more. That compares to 20% – 26% of those policies six months ago and 33% of those policies a year ago. Also in June, a little over 52% of the renewal policies had no rate change or a positive rate change. That compares to 44% six months ago and 42% a year ago.

Another measure is policy size. For the past 12-months period, the renewed policies in this segment, over a $100,000 in premium had an aggregate rate decrease of 11.8%. The policies under $100,000 in premium had an aggregate rate increase of 4.6%. The efforts of our underwriters are increasingly focused on finding those pockets of business that support more favorable pricing.

In aggregate, pricing for this segment compares to our benchmark pricing has remained virtually flat for about 24 months. Generally, terms and conditions are holding up across our different lines of business. And summing up, it feels like the market is continuing to search for a bottom rather than gathering broad based support for tone up (ph).

I was also especially pleased with the results for the property line in the quarter, a quarter that looked to be difficult for many of our peers. We continued to be very focused on achieving additional expense reductions to meet the objective of 30% or lower GAAP expense ratio. We have identified several non-staffing related initiatives in addition to the savings from our recent restructuring to reduce expenses in excess of $2 million in 2011 and I expect to find additional opportunities.

As we said in the earnings release, expenses for the Valiant acquisition will be aligned with the revenue expectation to produce an expense ratio consistent with the stated objective.

I will now turn it over to John Marazza.

John Marazza

Thanks Richard. Since everyone has had the opportunity to review the press release which went out last night, I’ll focus my comments on the financial highlights for the quarter. Our second quarter results reflected a combination of stable underwriting performance and positive investment performance.

Our second quarter 2010 calendar and accident year loss ratio was 61.3%. We had no net reserve development on prior accident year reserves during the quarter, compared to $3.6 million of favorable development in the second quarter of 2009.

Our second quarter accident year loss ratio reflects a decrease of 14.7 percentage points over the second quarter of 2009, largely due to adverse property results recorded during the second quarter of 2009. Since the implementation of new property underwriting guidelines in the third quarter of 2009, our property book of business has been performing within expectations.

Our normalized 2010 accident loss ratio increased over 2009 due to pricing trends and legal liability loss experienced partially offset by modest changes in the mix of classes of business. As discussed on our first quarter earnings call, the legal professional liability contract underwriting program has been cancelled and we anticipate the production of legal professional liability business from this program to end in August of 2010 or this month.

For the second quarter of 2010 the expense ratio was 35.2% compared to 30.9% for the second quarter of 2009. The increase in the second quarter expense ratio is primarily attributable to higher operating expenses of $1.3 million and lower profit sharing commissions of $800,000. For those of you who follow us closely, you will note that we excluded the $1.1 million of actual acquisition related transaction expenses from the calculation of our expense ratio as these expenses are unrelated to our existing underwriting operations.

Our adjusted expense of 34.3% which excludes the impact of the first quarter 2010 restructuring charge for the first half of 2010 is consistent with our expectations. As I mentioned last quarter, we anticipate beginning to recognize the benefits of the first quarter 2010 restructuring in the second half of 2010. Our investment portfolio as Richard said continues to perform well.

Our overall concern investment philosophy and prudent allocation to our alternative investments in 2008 and 2009 has been high yield securities and structured finance products contributed to a tax equivalent net total portfolio return of approximately 1.9% for the second quarter. The quality of our fixed income portfolio remains high within average credit quality of AA minus.

During the second quarter, we allocated new money from cash flow and maturities primarily to high quality conservative underwritten municipal bonds, investment grade corporate bonds and mortgage backed securities both agency and non-agency at a tax equivalent weighted average yield at 4.4%. At June 30, 2010 the effective duration on our investment portfolio was approximately 5 point years and the annualized net taxable equivalent yield is 5.3%.

Currently our new money rate expectation is a net taxable equivalent yield of 3.4%. Since there has been some discussion recently about operating account (ph) of the company’s exposure to municipal bonds, I wanted to reiterate the nature of our municipal bond portfolio.

We have taken and we’ll continue to take a conservative position regarding municipal credit exposure. Our municipal portfolio consists of high quality municipal bonds with the weighted average credit quality of AA plus and comprises approximately 29% of our total investment portfolio. The municipal portfolio contains pre-refunded municipal bonds, high quality general obligation bonds and essential service for purpose revenue bonds.

Given the pressures faced by municipal governments we have avoided securities supported by unstable, single revenue streams for smaller municipalities that lack fiscal flexibility. As of June 30, 2010 there were $30 million outstanding under our existing credit agreement which represents the full amount of lenders commitment to us. The interest rate on this borrowing is 2.34% which was 200 basis points over one month LIBOR.

As Richard mentioned, we entered into a definitive agreement to acquire Valiant primarily for tangible book values which is intended to be approx – anticipated to be approximately $55 million at closing. For those of you who have reviewed that Valiant’s publicly available statutory financial information you will note that significant investments and people and infrastructure remains as part of the startup of Valiant. After the transaction closes, Valiant’s expense structure will consist only of cost associated with the components of Valiant’s existing underwriting platforms to be retained by us.

As Richard said, as a result we expect Valiant to operate at a net GAAP expense ratio consistent with First Mercury’s overall expense ratio. We also anticipate recognizing a gain from the transaction with the corresponding increase in book value per share between $0.56 and $0.73 per share of which $0.36 and $0.46 per share would be an increase in tangible book value per share as part of the transaction closes.

That’s an overview of our quarterly results.

And I’ll now turn it over to Richard for his concluding remarks.

Richard Smith

Thanks, John. As we have discussed in past calls before, I and the other members of our management team and our Board of Directors, the large shareholders of the company. Our actions each day are driven to build shareholder value. This year we have completed a special dividend to our shareholders, reduced our staffing levels and entered into a definitive agreement to purchase Valiant, and those are just the initiatives that get a lot of public scrutiny.

More importantly each day we strive to keep the underwriting discipline, effective cost controls and investment portfolio management that will allow us to keep generating the underwriting profit and generating returns on capital that compare favorably with those of our peers.

Although we will continue to discuss with the Board, capital initiatives and other transactions that may enhance shareholder value, it’s the day-to-day manage our operations that are real focus in building the company. We have not provided guidance for 2010 however we continue to expect to achieve topline growth.

For 2011, we continue to expect to see appropriate levels of topline growth and we are now – and we now expect to deliver an ROE for 2011 between 10.5% and 11.5% assuming no additional capital initiatives. We’ve reduced the ROE guidance because of the expected book value gain from the Valiant transaction. Lower expected investment yields and continuing pressure on rates.

We will now take questions.

Question-and-Answer Session

Operator

Thank you sir. (Operator Instructions). Our first question today comes from the line of Caroline Steers with Macquarie Capital Partners. Please proceed with your question.

Caroline Steers – Macquarie Capital Partners

So you guys gave us some information on renewal rates, but I was wondering if you could just comment on some new business rates and what you’re seeing there and then just on the business that you might be walking away from right now, who right now do you feel is the most competitive in the market, is it the standard writers or some new entrants still being competitive, I’m just hoping do you got some color on that. Thanks

Richard Smith

I’ll take the second part of the question first, Caroline. This is Richard Smith. We can send you to see significant amount of pressure from the admitted writers who sit above us and some of the new entrants, non to be disclosed specifically, but I would say in the market that we’re seeing now, you heard some of the numbers, a lot of the competition is focused on the larger accounts where we really aren’t a major player. So probably from the admitted markets more across the spectrum of risk that we have and especially some of the new entrants who probably have some significant growth goals on some of the mid to larger size accounts.

As far as the first part of your question, I tried to give it that by saying we measure both the rate change on the renewal book as well the overall rate levels compared to our benchmark rates and our benchmark rates have been virtually stable for about 24-months now. So even though we’re seeing a little bit of rate decline that can be a little bit of change in class of business, some reduction, mostly our benchmark rates are based on ISO rates and so it could be reduction in the underlying ISO rates, but relatively for our overall portfolio which would include new business, relatively stable rates compared to our benchmark for 24 months.

Caroline Steers – Macquarie Capital Partners

Okay, and then just in terms of the security and the contractors, are you going to see any improvement there just given the economy sort of pretty tough.

Richard Smith

It’s still pretty tough but obviously we are seeing some pickup in some of the government initiatives that we saw, so it’s a little bit of mix bag there. We still see sort of the overall economy pretty tough but specific classes on the contractor for instance road, construction, highway construct things like that we are seeing a pickup. So I’d say the falloff we’re passed the period of falloff so the general direction is modestly up but not enough really to impact the overall book.

Caroline Steers – Macquarie Capital Partners

Okay and then just finally, just on capital, just where the stock is trading now and given the capital its being pictured the Valiant acquisition. How are you guys going to (ph) give out expense capital and share repurchase with the authorization ending in August?

Richard Smith

The best thing to say we’ll be discussing those – we’ll be discussing that with the Board in August about as I mentioned the capital, various capital initiatives on how we would view that. So you could look for something out of our August Board meeting to give a better direction.

Caroline Steers – Macquarie Capital Partners

Okay, thank you.

Operator

Thank you. (Operator Instructions) Our next question comes from the line of Keith Alexander with JP Morgan Chase Company. Please proceed with your question.

Keith Alexander – JP Morgan Chase

Hi good morning guys.

Richard Smith

Hi Keith. How you’re doing Keith?

Keith Alexander – JP Morgan Chase

Hey, I’m doing well, thanks. First up, I just thought I’d ask you about Valiant and specifically I’d like to know a bit more about how the company currently gives us reinsurance and going forward if that might change and what that would look like and then also, what could grow the net acquisition expense ratios look like at Valiant and how will that change?

Richard Smith

Let me take the first part of your question, they have reinsurance in place for most of their programs. So we are putting together reinsurance strategies today that will start with the re-insurers that they have in place than look for continuing support from those programs and some of the classes will be moved to existing First Mercury reinsurance programs and some of the classes for instance especially the professional and managerial lines we’ll use as a foundation of the existing Valiant reinsurance programs they have in place than we’ll be up to the market looking to expand those.

In terms of their gross and net, I think if you look at their statutory stuff and I think that might have some of the in front (inaudible) usual relationships there because they were deferring some CD (ph) implementations but we’re trying to think about how that looks when it becomes part of our business, it really won’t look that different than our existing relationship if you do not grow the expense ratio on that and that’s how if you’re trying to reconcile those so that’s how you should think about it.

Keith Alexander – JP Morgan Chase

Okay, that’s helpful and then following the acquisition, I mean are you guys increasing looking at acquisitions as a way to source growth or I mean are there other users for capital that you prioritize over that, I mean this is your personal view on it.

Richard Smith

This is Richard, I would say we look at those equally; this was a unique opportunity in this case to do an acquisition. So first I don’t think we find many opportunities like this where we have the chance to acquire underwriting teams that we respect a lot in addition to some infrastructure and capital that we think has an attractive pricing but if there were other opportunities, we would look at those. And as far as comparing on to other capital initiatives those were the things as I mentioned we talked to the Board about, as you could imagine we each have our own views on those and those are before we did special dividend there was substantial bidding with the Board and we would expect to do that again as we look at the second half of the year.

Keith Alexander – JP Morgan Chase

Okay, with then access to umbrella (ph) how much of the growth was sustainable, was those one time in nature and also why did the retention increase in the quarter?

John Marazza

So yes it is sustainable it isn’t one time and the reason that our retention changes because it’s subject to a different reinsurance agreement now that where our retention is different.

Keith Alexander – JP Morgan Chase

Okay and then finally or actually, let me see can you talk about how your investment portfolio may change following the Valiant acquisition and also how that might impact yield and duration?

Richard Smith

We would really anticipate any significant changes Keith, they have a really high quality short duration portfolio now and they won’t be making any changes to that between now and closing and then post closing. We would probably could – we would think about that into the same allocation between classes and duration as our existing portfolio.

Keith Alexander – JP Morgan Chase

All right, great. Thank you very much.

Richard Smith

See you.

Operator

Thank you. Our next question comes from the line of Paul Newsome with Sandler O’Neill. Please proceed with your question.

Paul Newsome – Sandler O’Neill

Good morning.

Richard Smith

Hi Paul.

Paul Newsome – Sandler O’Neill

What was your – if we could kind of make a big step back maybe a little bit review over the general cost cut efforts, relative to my expectations it’s been – the cost cuts have been sort of slower than coming or another way of saying bigger increase now I would have expected and if you look at – and I’m looking at this over a broader range, if you look at sort of ‘08, ‘09 to 2010 there has really been and really very large increase in your expense structure and I guess this is really going to be 2010, the expense structure continues to be way in and whack and then we reached the progress in 2011 or we could because I’m – we’re going to see some very small changes in the back half of the year and we’ll continue to have this sort of the returns are not very good this year obviously.

John Marazza

Paul, this is John. I’m going to start out with a big picture, then I’m going to add that, Ed can give you some more color on how to think about it quarter-by-quarter but for the big picture, a large percentage of the cost savings came from underwriting activities, so we had that incurred those costs up until literally through the first quarter and those costs are intact what you’re now amortizing. So that will begin to show up more as that deck amortizes. And then the second thing, you’re seeing is there is some seasonality in the second quarter that I think also makes you to hear that’s a savings didn’t occur and some of that seasonality relates to stock based comp and it relates to an annual stock award.

So that’s why I think if you look at the second quarter you think while what happened why this occurred and Ed, I don’t know if you have anything.

Ed LaFramboise

That’s the part (inaudible) that’s exactly right explained.

John Marazza

So in terms of what – how should we probably think about how could we be thinking about third and fourth quarter of this year?

Ed LaFramboise

Yes, so third and fourth quarter of kind of long and you’re going to start seeing the asset (ph) of the acquisition so we thought the beginning of the year we kind of expected full year to kind of be a net GAAP expense ratio we’re about 34 and in the fourth quarter as well where you see that has that get down in to like the high 32s and then in the 2011 with what Richard just brought up today and with the continued impact of first quarter expense pressure in, we should net GAAP expense ratio of around 30.

Paul Newsome – Sandler O’Neill

Even 30 is not as good as it once was.

John Marazza

And as we have said until we get some pricing improvement, we won’t see something into the 27, 28 range but that’s where it ultimately can get to because in a better pricing environment that will help our expense ratio.

Paul Newsome – Sandler O’Neill

So is the hope that you can get the expense ratio down 2011, 2012 to the point where you can creep towards the double digit ROE and then we just sort of hope for pricing power thereafter, is that basically the thesis we should be thinking about?

John Marazza

Yes, as I mentioned we’re guiding to a low double-digit ROE for next year Paul, with these three expense ratio as sort of relatively stable pricing environment that we have which produces mid 90s combined ratio. At some point in time there is going to have to be pricing relief to breakthrough that to get back into the mid to high teen of ROE.

Paul Newsome – Sandler O’Neill

I’ve got some more questions but let somebody else ask and...

Operator

Thank you. Our next question comes from the line of Doug Mewhirter with RBC Capital Markets. Please proceed with your question.

Doug Mewhirter – RBC Capital Markets

Hi good morning, just two questions, first, what was the realigned losses, was that a – since you have a I guess fund, the bond fund that you have mark-to-market, was that part of it or was it something else?

Richard Smith

That was primarily our convertible portfolio.

Doug Mewhirter – RBC Capital Markets

Okay and I guess that reflects the equity to its correlate with the equity markets?

Richard Smith

Correct.

Doug Mewhirter – RBC Capital Markets

Yes.

Richard Smith

It doesn’t move as quickly but it is correlated.

Doug Mewhirter – RBC Capital Markets

Okay and the second question I guess for Richard, is have you I don’t know bigger part of businesses maybe more in liability have you seen any trends in any kind of return premiums or writer premiums maybe trying to being less negative because of underlying economics?

Richard Smith

Yes, Doug, yes we are seeing some relief there.

Doug Mewhirter – RBC Capital Markets

I mean there are still generally more negative than positive for most of your policy orders?

Richard Smith

I don’t know I don’t have a (inaudible).

John Marazza

We remember Doug, we don’t return premium, we write a 100% minimum owned policy but all of our audits are positive and so we saw a low point last year and we are starting to see that return not back up for three or four years ago levels where robust economy, we are seeing that curve has turned and we’re starting to see the increase in the audit (ph) trends again.

Doug Mewhirter – RBC Capital Markets

Okay, thanks that’s very helpful and that’s all my questions.

Richard Smith

Thanks Doug.

Operator

Thank you. Our next question comes from the line of Bob Farnam with Keefe, Bruyette & Woods. Please proceed with your question.

Bob Farnam – Keefe, Bruyette & Woods

Hi there, thanks and good morning.

Richard Smith

Hi Bob.

Bob Farnam – Keefe, Bruyette & Woods

We talked a bit about the Valiant on the expense ratio, can you give us an idea what we might expect from Valiant’s book of business in terms of loss ratio?

Richard Smith

Consistent with the loss ratios on our existing business Bob, a couple of places, I mean the piece that’s the general casualty would be very consistent, the professional I think maybe a bit lower on the overall professional – on the professional liability but pretty consistent with what – if you know if you remember on the acquisition we were able to do due diligence than we actually picked the underwriters and the segments of business that we were interested in carrying forward with Valiant.

So we have a renewal book of business that we’ll be rolling over that and that leads us to the estimate of $50 million to $60 million of premium for next year, it will be basically reworking the renewal book on our paper and then moving forward.

Bob Farnam – Keefe, Bruyette & Woods

Okay, so just remind me – so based on Valiant’s total current book of business, how much you’re actually not taking in types of business I mean?

Richard Smith

From our plan for this we’re probably not taking about half.

John Marazza

Yes, about half.

Bob Farnam – Keefe, Bruyette & Woods

Half okay. And the second question I had was the accident year loss ratio, I know you discussed it versus last year but it seems sequentially it was down quite a bit from the fourth quarter and the first quarter, just curious is any more colors to what’s going on with the loss ratio.

Richard Smith

No that’s a good question Bob, really one item is we did have a onetime adjustment there to deductible reserves in the quarter and then the rest of its decrease relates to the mix.

Bob Farnam – Keefe, Bruyette & Woods

I’m sorry what was the first part?

Richard Smith

We had adjustment we made to our deductible reserves, (inaudible) deductibles there is a onetime adjustment that won’t recur would not like to recur and then the rest of the decrease relates to the change in the mix.

Bob Farnam – Keefe, Bruyette & Woods

And how much of an impact was that change in the deductible reserve in terms of points?

John Marazza

It was 650, I believe.

Richard Smith

As a percentage. (Inaudible)

John Marazza

1.3.

Bob Farnam – Keefe, Bruyette & Woods

1.3, okay. Very good, thanks.

Richard Smith

Thanks Bob.

Operator

Thank you. (Operator Instructions) We now have a follow-up question from Paul Newsome with Sandler O’Neill. Please proceed with your question.

Paul Newsome – Sandler O’Neill

I’d like to kind of go back to the buyback question before, my recollection is that after the special dividend the idea was that you would still have enough excess capital to essentially max out what you can buyback given the trading volume, it doesn’t seem to be the case. Could you talk about how that could either have been affected by the Valiant acquisition either because you were doing the deal or from your capital perspective? Does the Valiant essentially how use up that buyback that you would have done otherwise?

Richard Smith

The second part of the question, the Valiant transaction didn’t affect the buyback at all. When after we paid the special dividend, we were in the middle of our review period with A.M. Best and we wanted to get through the ratings period and the special dividend and so by the time that we got that work done with Best and we were out of the period when we could have done our buyback, Paul. So that’s why we said with the information that we have now we will be going back to the Board in a couple of weeks in our normal August meeting discussing where our capital is and the cap whatever capital initiatives that we think should be taking place during the second half of the year.

Paul Newsome – Sandler O’Neill

All right. Thank you.

Richard Smith

Okay. Thanks, Paul.

Operator

Thank you. Ladies and gentlemen we have no further questions at this time. So I’d like to turn the floor to Mr. Smith for closing comments.

Richard Smith

Okay, thanks for your continuing support, any additional questions you have please come back directly to us. Thanks a lot. Bye.

Operator

Ladies and gentlemen this concludes today’s teleconference and you may disconnect your lines at this time. Thank you for your participation.

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

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Source: First Mercury Financial Corporation Q2 2010 Earnings Call Transcript
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