Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Mercury General Corporation Announces Third Quarter Results and Increases Quarterly Dividend



  Mercury General Corporation Announces Third Quarter Results and Increases
                              Quarterly Dividend

PR Newswire

LOS ANGELES, Oct. 29, 2012

LOS ANGELES, Oct. 29, 2012 /PRNewswire/ -- Mercury General Corporation (NYSE:
MCY) reported today for the third quarter of 2012:

 

Consolidated Highlights
            Three Months Ended      Change             Nine Months Ended September Change
            September 30,                              30,
            2012        2011        $          %       2012          2011          $           %
(000's
except
per-share
amounts and
ratios)
Net
premiums    $ 684,880   $ 662,279   $ 22,601   3.4     $ 1,996,800   $ 1,956,790   $ 40,010    2.0
written (1)
Net income  $ 66,201    $ (3,782)   $ 69,983   NM      $ 134,293     $ 111,695     $ 22,598    20.2
(loss)
Net income
(loss) per  $ 1.21      $ (0.07)    $ 1.28     NM      $ 2.45        $ 2.04        $ 0.41      20.1
diluted
share (2)
Operating   $ 33,862    $ 39,715    $ (5,853)  (14.7)  $ 83,167      $ 121,097     $ (37,930)  (31.3)
income (1)
Operating
income per  $ 0.62      $ 0.72      $ (0.10)   (13.9)  $ 1.51        $ 2.21        $ (0.70)    (31.7)
diluted
share (1)
Catastrophe $ 1,000     $ 4,000     $ (3,000)  (75.0)  $ 9,000       $ 8,000       $ 1,000     12.5
losses (3)
Combined    99.1      % 98.3      % —          0.8     100.4       % 98.2        % —           2.2 pts
ratio (4)                                      pts
NM = Not
meaningful

(1) These measures are not based on U.S. generally accepted accounting
principles ("GAAP") and are defined and reconciled to the most directly
comparable GAAP measures in "Information Regarding Non-GAAP Measures."

(2) The dilutive impact of incremental shares is excluded from loss positions
in accordance with GAAP.

(3) 2012 catastrophe losses were primarily the result of wind and hail storms
in the Midwest region in the second quarter; 2011 catastrophe losses were
mainly the result of Hurricane Irene in the third quarter. The amounts are
rounded to the nearest million.

(4) The Company experienced unfavorable development of approximately $4
million and $1 million on prior accident years' losses and loss adjustment
expenses reserves for the three months ended September 30, 2012 and 2011,
respectively, and approximately $33 million and $11 million on prior accident
years' losses and loss adjustment expenses reserves for the nine months ended
September 30, 2012 and 2011, respectively. The year-to-date unfavorable
development in 2012 is largely the result of re-estimates of California bodily
injury losses which have experienced higher average severities and more late
reported claims (claim count development) than estimated at December 31, 2011.

 

Investment Results
                 Three Months Ended September 30,  Nine Months Ended September
                                                   30,
                 2012             2011             2012          2011
(000's except
average annual
yield)
Average invested
assets at cost   $  3,007,634     $  2,997,332     $ 2,998,270   $ 3,012,375
^(1)
Net investment
income:
Before income    $  33,410        $  35,526        $ 96,569      $ 106,631
taxes
After income     $  28,881        $  31,389        $ 84,909      $ 94,483
taxes
Average annual
yield on
investments -    3.8           %  4.2           %  3.8         % 4.2         %
after income
taxes

(1) Fixed maturities and short-term bonds at amortized cost and equities and
other short-term investments at cost. Average invested assets at cost is based
on the monthly amortized cost of the invested assets for each respective
period.

Mercury CEO and President Gabe Tirador commented on the quarterly results:

"We are pleased to report 3.4% quarterly net written premium growth, which
represents our seventh consecutive quarter of net written premium growth and
our highest growth rate during that period. California new business private
passenger automobile policy sales increased year over year in the quarter by
20%. The Company is currently profitable in a number of states and has been
actively addressing profitability through a combination of rate and
underwriting changes and cost management initiatives. In California, our
largest state, the Company implemented an approximately 4% rate increase for
its personal automobile insurance line of business effective for new and
renewal policies beginning October 26, 2012." 

The Board of Directors declared a quarterly dividend of $0.6125 per share,
representing an increase over the quarterly dividend amount paid in 2011. The
dividend will be paid on December 27, 2012 to shareholders of record on
December 13, 2012.

Mercury General Corporation and its subsidiaries are a multiple line insurance
organization offering predominantly personal automobile and homeowners
insurance through a network of independent producers in many states. For more
information, visit the Company's website at www.mercuryinsurance.com. The
Company will be hosting a conference call and webcast today at 10:00 A.M.
Pacific time where management will discuss results and address questions. The
teleconference and webcast can be accessed by calling (877) 807-1888 (USA),
(706) 679-3827 (International) or by visiting www.mercuryinsurance.com. A
replay of the call will be available beginning at 1:30 P.M. Pacific time and
running through November 5, 2012. The replay telephone numbers are (855)
859-2056 (USA) or (404) 537-3406 (International). The conference ID# is
39710486. The replay will also be available on the Company's website shortly
following the call.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. The statements contained in this press
release are forward-looking statements based on the Company's current
expectations and beliefs concerning future developments and their potential
effects on the Company. There can be no assurance that future developments
affecting the Company will be those anticipated by the Company. Actual results
may differ from those projected in the forward-looking statements. These
forward-looking statements involve significant risks and uncertainties (some
of which are beyond the control of the Company) and are subject to change
based upon various factors, including but not limited to the following risks
and uncertainties: changes in the demand for the Company's insurance products,
inflation and general economic conditions, including the impact of current
economic conditions on the Company's market and investment portfolio; the
accuracy and adequacy of the Company's pricing methodologies; adverse weather
conditions or natural disasters in the markets served by the Company; general
market risks associated with the Company's investment portfolio; uncertainties
related to estimates, assumptions and projections generally; the possibility
that actual loss experience may vary adversely from the actuarial estimates
made to determine the Company's loss reserves in general; the Company's
ability to obtain and the timing of the approval of premium rate changes for
insurance policies issued in states where the Company operates; legislation
adverse to the automobile insurance industry or business generally that may be
enacted in the states where the Company operates; the Company's success in
managing its business in states outside of California; the presence of
competitors with greater financial resources and the impact of competitive
pricing and marketing efforts; changes in driving patterns and loss trends;
acts of war and terrorist activities; court decisions and trends in litigation
and health care and auto repair costs and marketing efforts; and legal,
regulatory and litigation risks. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as the
result of new information, future events or otherwise. For a more detailed
discussion of some of the foregoing risks and uncertainties, see the Company's
filings with the Securities and Exchange Commission.

 

MERCURY GENERAL CORPORATION AND SUBSIDIARIES

SUMMARY OF OPERATING RESULTS

(000's except per-share amounts and ratios)

(unaudited)
                 Three Months Ended September  Nine Months Ended September 30,
                 30,
                 2012             2011         2012              2011
Net premiums     $  684,880       $ 662,279    $  1,996,800      $ 1,956,790
written
Revenues:
Net premium      $  646,084       $ 643,626    $  1,919,143      $ 1,924,444
earned
Net investment   33,410           35,526       96,569            106,631
income
Net realized
investment gains 49,752           (66,919)     78,656            (14,465)
(losses)
Other            2,532            3,508        7,790             11,221
Total revenues   $  731,778       $ 615,741    $  2,102,158      $ 2,027,831
Expenses:
Losses and loss
adjustment       467,929          458,530      1,415,096         1,356,329
expenses
Policy
acquisition      121,906          121,016      357,062           365,649
costs
Other operating  50,225           53,027       154,353           166,797
expenses
Interest         388              1,286        1,176             4,650
Total expenses   $  640,448       $ 633,859    $  1,927,687      $ 1,893,425
Income (loss)
before income    91,330           (18,118)     174,471           134,406
taxes
Income tax
expense          25,129           (14,336)     40,178            22,711
(benefit)
    Net income   $  66,201        $ (3,782)    $  134,293        $ 111,695
(loss)
Basic average
shares           54,911           54,826       54,895            54,818
outstanding
Diluted average
shares           54,925           54,826       54,918            54,835
outstanding ^
(a)
Basic Per Share
Data
Net income       $  1.21          $ (0.07)     $  2.45           $ 2.04
(loss)
Net realized
investment gains $  0.59          $ (0.79)     $  0.93           $ (0.17)
(losses), net of
tax
Diluted Per
Share Data ^(a)
Net income       $  1.21          $ (0.07)     $  2.45           $ 2.04
(loss)
Net realized
investment gains $  0.59          $ (0.79)     $  0.93           $ (0.17)
(losses), net of
tax
Operating
Ratios-GAAP
Basis
Loss ratio       72.4        %    71.2      %  73.7          %   70.5        %
Expense ratio    26.6        %    27.0      %  26.6          %   27.7        %
Combined ratio ^ 99.1        %    98.3      %  100.4         %   98.2        %
(b)
Reconciliations of Operating Measures to Comparable GAAP
Measures
Net premiums     $  684,880       $ 662,279    $  1,996,800      $ 1,956,790
written
Change in
unearned         (38,796)         (18,653)     (77,657)          (32,346)
premiums
Net premiums     $  646,084       $ 643,626    $  1,919,143      $ 1,924,444
earned
Paid losses and
loss adjustment  $  467,719       $ 459,902    $  1,421,078      $ 1,411,666
expenses
Change in net
loss and loss    210              (1,372)      (5,982)           (55,337)
adjustment
expense reserves
Incurred losses
and loss         $  467,929       $ 458,530    $  1,415,096      $ 1,356,329
adjustment
expenses

(a) The dilutive impact of incremental shares is excluded from loss position
in accordance with GAAP.

(b) Combined ratios for the three months ended September 30, 2012 and 2011 and
the nine months ended September 30, 2012 do not sum due to rounding.

 

MERCURY GENERAL CORPORATION AND SUBSIDIARIES

CONDENSED BALANCE SHEETS AND OTHER INFORMATION

(000's except per-share amounts and ratios)
                                         September 30, 2012  December 31, 2011
                                         (unaudited)
ASSETS
Investments, at fair value:
Fixed maturities trading (amortized cost $   2,468,717       $   2,445,589
$2,318,100; $2,345,620)
Equity securities trading (cost          470,813             380,388
$458,690; $388,417)
Short-term investments (cost $221,163;   221,083             236,444
$236,433)
Total investments                        3,160,613           3,062,421
Cash                                     188,174             211,393
Receivables:
Premiums                                 346,317             288,799
Accrued investment income                33,348              32,541
Other                                    12,102              11,320
Total receivables                        391,767             332,660
Deferred policy acquisition costs        186,313             171,430
Fixed assets, net                        165,169             177,760
Current income taxes                     12,726              —
Deferred income taxes                    —                   6,511
Goodwill                                 42,850              42,850
Other intangible assets, net             49,105              53,749
Other assets                             14,193              11,232
Total assets                             $   4,210,910       $   4,070,006
LIABILITIES AND SHAREHOLDERS' EQUITY
Losses and loss adjustment expenses      $   978,420         $   985,279
Unearned premiums                        921,276             843,427
Notes payable                            140,000             140,000
Accounts payable and accrued expenses    100,180             94,743
Current income taxes                     —                   67
Deferred income taxes                    17,014              —
Other liabilities                        160,187             149,007
Shareholders' equity                     1,893,833           1,857,483
Total liabilities and shareholders'      $   4,210,910       $   4,070,006
equity
OTHER INFORMATION
Common stock shares outstanding          54,911              54,856
Book value per share                     $   34.49           $   33.86
Estimated statutory surplus              $1.5 billion        $1.5 billion
Estimated premiums written to surplus    1.8                 1.7
ratio
Debt to total capital ratio              6.9             %   7.0            %
Portfolio duration (including all        3.3 years           3.3 years
short-term instruments)^(a)
Policies-in-force (company-wide
"PIF")^(a)
Personal Auto PIF                        1,251               1,236
Homeowners PIF                           431                 394

(a)   Unaudited.    

Information Regarding Non-GAAP Measures

The Company has presented information within this document containing
operating measures which in management's opinion provide investors with
useful, industry specific information to help them evaluate, and perform
meaningful comparisons of, the Company's performance, but that may not be
presented in accordance with GAAP. These measures are not intended to replace,
and should be read in conjunction with, the GAAP financial results.

Operating income is net income excluding realized investment gains and losses,
net of tax. Net income is the GAAP measure that is most directly comparable to
operating income. Operating income is used by management along with the other
components of net income to assess the Company's performance. Management uses
operating income as an important measure to evaluate the results of the
Company's insurance business. Management believes that operating income
provides investors with a valuable measure of the Company's ongoing
performance as it reveals trends in the Company's insurance business that may
be obscured by the net effect of realized capital gains and losses. Realized
capital gains and losses may vary significantly between periods and are
generally driven by external economic developments such as capital market
conditions. Accordingly, operating income highlights the results from ongoing
operations and the underlying profitability of the Company's core insurance
business. Operating income, which is provided as supplemental information and
should not be considered as a substitute for net income, does not reflect the
overall profitability of our business. It should be read in conjunction with
the GAAP financial results. The Company has reconciled operating income with
the most directly comparable GAAP measure in the table below.

           Three Months Ended September 30,        Nine Months Ended September 30,
           Total                Per diluted share  Total                 Per diluted
                                                                         share
           2012      2011       2012    2011 ^(b)  2012       2011       2012    2011
                                                                         ^(a)    ^(b)
(000's
except
per-share
amounts)
Operating  $ 33,862  $ 39,715   $ 0.62  $ 0.72     $ 83,167   $ 121,097  $ 1.51  $ 2.21
income
Net
realized
investment 32,339    (43,497)   0.59    (0.79)     51,126     (9,402)    0.93    (0.17)
gains
(losses),
net of tax
Net income $ 66,201  $ (3,782)  $ 1.21  $ (0.07)   $ 134,293  $ 111,695  $ 2.45  $ 2.04
(loss)

(a) Net income per diluted share does not sum due to rounding.

(b) The dilutive impact of incremental shares is excluded from loss positions
in accordance with GAAP.         

Net premiums written represents the premiums charged on policies issued during
a fiscal period. Net premiums earned, the most directly comparable GAAP
measure, represents the portion of premiums written that have been recognized
as income in the financial statements for the periods presented as earned on a
pro-rata basis over the term of the policies. Net premiums written are meant
as supplemental information and are not intended to replace net premiums
earned. Such information should be read in conjunction with the GAAP financial
results. The Company has reconciled net premiums written with the most
directly comparable GAAP measure in the supplemental schedule entitled,
"Summary of Operating Results."

Paid losses and loss adjustment expenses is the portion of incurred losses and
loss adjustment expenses, the most directly comparable GAAP measure, excluding
the effects of changes in the loss reserve accounts. Paid losses and loss
adjustment expenses is provided as supplemental information and is not
intended to replace incurred losses and loss adjustment expenses. It should be
read in conjunction with the GAAP financial results. The Company has
reconciled paid losses and loss adjustment expenses with the most directly
comparable GAAP measure in the supplemental schedule entitled, "Summary of
Operating Results."

Combined ratio-accident period basis is computed as the difference between two
GAAP operating ratios: the combined ratio and the effect of prior accident
periods' loss development. The most directly comparable GAAP measure is the
combined ratio. The Company believes that this ratio is useful to investors
and it is used by management to reveal the trends in the Company's results of
operations that may be obscured by development on prior accident periods' loss
reserves. Combined ratio-accident period basis is meant as supplemental
information and is not intended to replace combined ratio. It should be read
in conjunction with the GAAP financial results. The Company has reconciled
combined ratio-accident period basis with the most directly comparable GAAP
measure in the table below.

                                             Nine Months Ended September 30,
                                             2012                   2011
Combined ratio-accident period basis         98.7       %           97.6     %
Effect of estimated prior periods' loss      1.7        %           0.6      %
development
Combined ratio                               100.4      %           98.2     %

SOURCE Mercury General Corporation

Website: http://www.mercuryinsurance.com
Contact: Theodore Stalick, VP/CFO, +1-323-937-1060
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement