KBW Lowers Price Target On First Mercury Financial After Acquisition

Following First Mercury Financial's FMR 3Q10 operating loss on weaker-than-expected underwriting results and commissions and fee income, KBW is lowering '10 and '11 EPS estimates. With the announced acquisition of FMR by Fairfax Financial, KBW is raising FMR's target price to $16.50 and lowering our rating to Market Perform. The risks to achieving our price target for FMR include demand for insurance products, interest rate fluctuations and catastrophic loss activity. FMR closed Friday at $16.29