Mercer Insurance Group, Inc. Announces 2007 Earnings

Market Wire, February, 2008

                   Consolidated Statements of Income
            (in thousands, except per share and share data)

                                                        Quarter Ended
                                                        December 31,
                                                     2007         2006
                                                  (unaudited)  (unaudited)

Net premiums earned                               $    40,308  $    35,501
Investment income,
 net of investment expenses                             3,461        3,013
Realized investment (losses) gains                       (243)          51
Other revenue                                             435          430
  Total revenue                                        43,961       38,995

Losses and loss adjustment expenses                    25,788       23,178
Amortization of deferred policy
 acquisition costs                                     10,934        8,507
Other expenses                                          2,998        3,034
Interest expense                                          304          299
  Total expenses                                       40,024       35,018

Income before income taxes                              3,937        3,977
Income taxes                                            1,057        1,081

Net income                                        $     2,880  $     2,896

Net income per common share:
  Basic                                           $      0.46  $      0.48
  Diluted                                         $      0.45  $      0.46

Weighted average number of
 shares outstanding:
  Basic                                             6,198,741    6,070,914
  Diluted                                           6,374,106    6,303,406

     Supplementary Financial Data

Net written premiums                              $    36,549  $    30,053

Book value per common share                       $     21.48  $     19.06

GAAP combined ratio                                      98.5%        97.8%





                    Consolidated Statements of Income
              (in thousands, except per share and share data)

                                                         Year Ended
                                                        December 31,
                                                      2007          2006
                                                  (unaudited)

Net premiums earned                               $   146,675  $   137,673
Investment income,
 net of investment expenses                            13,053       10,070
Realized investment gains                                  24          151
Other revenue                                           1,929        2,035
  Total revenue                                       161,681      149,929

Losses and loss adjustment expenses                    91,186       87,697
Amortization of deferred policy
 acquisition costs                                     38,763       32,694
Other expenses                                         10,528       13,242
Interest expense                                        1,215        1,212
  Total expenses                                      141,692      134,845

Income before income taxes                             19,989       15,084
Income taxes                                            5,754        4,449

Net income                                        $    14,235  $    10,635

Net income per common share:
  Basic                                           $      2.32  $      1.77
  Diluted                                         $      2.25  $      1.71

Weighted average number of
 shares outstanding:
  Basic                                             6,144,075    6,022,880
  Diluted                                           6,325,348    6,222,009

    Supplementary Financial Data

Net written premiums                              $   159,666  $   145,791

GAAP combined ratio                                      95.8%        97.0%



                        Consolidated Balance Sheet
                   (in thousands, except share amounts)


                                                  December 31, December 31,
                                                      2007         2006
                                                  (unaudited)

ASSETS
Investments, at fair value:
  Fixed income securities, available-for sale     $   324,238  $   273,454
  Equity securities, at fair value                     17,930       16,522
  Short-term investments, at cost,
   which approximates fair value                            -        7,692
       Total investments                              342,168      297,668
Cash and cash equivalents                              21,580       17,618
Premiums receivable                                    36,339       38,030
Reinsurance receivable                                 83,844       87,987
Prepaid reinsurance premiums                            9,486       16,383
Deferred policy acquisition costs                      20,528       16,708
Accrued investment income                               3,582        3,204
Property and equipment, net                            13,056       11,936
Deferred income taxes                                   7,670        7,775
Goodwill                                                5,416        5,625
Other assets                                            2,766        4,033
Total assets                                      $   546,435  $   506,967

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Losses and loss adjustment expenses             $   274,399  $   250,455
  Unearned premiums                                    88,024       81,930
  Accounts payable and accrued expenses                14,622       13,442
  Other reinsurance balances                           14,734       24,588
  Trust preferred securities                           15,559       15,542
  Advances under line of credit                         3,000        3,000
  Other liabilities                                     2,691        2,171
       Total liabilities                          $   413,029  $   391,128

Stockholders' Equity:
  Preferred Stock, no par value, authorized
   5,000,000 shares, no shares issued and
   outstanding                                              -            -
  Common stock, no par value,
   authorized 15,000,000 shares, issued
   7,075,333 and 7,064,233 shares,
   outstanding 6,717,693 and 6,582,232 shares               -            -
  Additional paid-in capital                      $    70,394  $    68,473
  Accumulated other comprehensive income                4,896        2,815
  Retained earnings                                    67,613       54,629
  Unearned ESOP shares                                 (3,131)      (3,757)
  Treasury Stock, 505,814 and 503,513 shares           (6,366)      (6,321)
       Total stockholders' equity                     133,406      115,839
Total liabilities and stockholders' equity        $   546,435  $   506,967






                          Supplemental Schedule
Consolidated municipal Fixed Income Securities holdings by Credit Rating
    (based on underlying credit ratings with no credit enhancement)
                            December 31, 2007


At December 31,     Rating of
 2007:               credit-
                    enhanced
                    municipal          Rating of
                   fixed income        municipal          Total municipal
                    securities        fixed income         fixed income
                     without           securities           securities
                     regard to          without          portfolio without
                   their credit          credit          regard to credit
                   enhancement        enhancement           enhancement

 S&P ratings or
Equivalent where
 not available      Market Value  %    Market Value  %    Market Value  %

AAA                $   9,224,676   9% $  22,415,583  55% $  31,640,259  22%
AA                 $  21,846,653  21% $   6,044,517  15% $  27,891,170  19%
AA                 $  29,771,747  29% $  11,345,439  28% $  41,117,186  29%
AA-                $  21,471,737  21% $   1,049,310   3% $  22,521,047  16%
A                  $   8,732,336   8%                    $   8,732,336   6%
A                  $   7,993,685   8%                    $   7,993,685   6%
A-                 $   3,049,195   3%                    $   3,049,195   2%
BBB-               $   1,080,970   1%                    $   1,080,970   1%
Total              $ 103,170,999 100% $  40,854,849 100% $ 144,025,848 100%
Average Rating            AA                AAA-                AA