929186--3/15/2007--FIRST_MERCURY_FINANCIAL

related topics

{loss, insurance, financial}

{stock, price, share}

{regulation, government, change}

{personnel, key, retain}

{acquisition, growth, future}

{stock, price, operating}

{provision, law, control}

{control, financial, internal}

{condition, economic, financial}

{system, service, information}

{interest, director, officer}

{loan, real, estate}

Our actual incurred losses may be greater than our loss and loss adjustment expense reserves, which could have a material adverse effect on our financial condition or our results of operations. We bear credit risk with respect to our reinsurers, and if any reinsurer fails to pay us, or fails to pay us on a timely basis, we could experience losses. We may not be able to obtain adequate reinsurance coverage or reinsurance on acceptable terms. The failure of any of the loss limitations or exclusions we employ or changes in other claim or coverage issues could have a material adverse effect on our financial condition or our results of operations. The lack of long-term operating history and proprietary data on claims results for relatively new specialty classes may cause our future results to be less predictable. Our growth may be dependent upon our successful acquisition and retention of additional underwriting expertise. We may require additional capital in the future, which may not be available or may be available only on unfavorable terms. Our business could be adversely affected by the loss of one or more key employees. Our insurance business is concentrated in relatively few specialty classes. The loss of one or more of our top wholesale brokers could have a material adverse effect on our financial condition or our results of operations. We operate in a highly competitive environment, which makes it more difficult for us to attract and retain business. Results in the insurance industry, and specifically the E S lines insurance market, are subject to fluctuations and uncertainty which may adversely affect our ability to write policies. We are subject to extensive regulation, which may adversely affect our ability to achieve our business objectives. In addition, if we fail to comply with these regulations, we may be subject to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations. If we have insufficient risk-based capital, our ability to conduct our business could be adversely affected. If our IRIS ratios are outside the usual range, our business could be adversely affected. If we are unable to realize our investment objectives, our financial condition may be adversely affected. Our directors and executive officers own a large percentage of our common stock, which allows them to effectively control matters requiring stockholder approval. We rely on our information technology and telecommunication systems, and the failure of these systems could adversely affect our business. Our third party governmental entities risk-sharing pooling administration business is concentrated among a limited number of pools and the termination of any single contract for this business could significantly reduce the profitability of this business. Risks Related to our Common Stock The price of our shares of common stock may be volatile. Our results of operations and revenues may fluctuate as a result of many factors, including cyclical changes in the insurance industry, which may cause the price of our shares to decline. If a substantial number of our shares of common stock become available for sale and are sold in a short period of time, the market price of our shares of common stock could decline. We do not currently intend to pay cash dividends on our common stock to our stockholders and any determination to pay cash dividends in the future will be at the discretion of our board of directors. Provisions in our certificate of incorporation and bylaws and under Delaware law could prevent or delay transactions that stockholders may favor and entrench current management. Our ability to implement, for the fiscal year ended December 31, 2007, the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely and satisfactory manner could cause the price of our common stock to decline.

Full 10-K form ▸

929186--3/15/2007--FIRST_MERCURY_FINANCIAL_CORP