LOS
ANGELES, Oct. 29, 2024 /PRNewswire/ -- Mercury
General Corporation (NYSE: MCY) reported today for the third
quarter of 2024:
|
Consolidated
Highlights
|
|
|
Three Months
Ended
September 30,
|
|
Change
|
|
Nine Months
Ended
September 30,
|
|
Change
|
|
2024
|
|
2023
|
|
$
|
|
%
|
|
2024
|
|
2023
|
|
$
|
|
%
|
|
(000's except
per-share amounts and ratios)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
1,320,652
|
|
$
1,090,311
|
|
$
230,341
|
|
21.1
|
|
$
3,723,355
|
|
$
3,129,483
|
|
$
593,872
|
|
19.0
|
|
Net premiums written
(1)
|
$
1,422,933
|
|
$
1,206,503
|
|
$
216,430
|
|
17.9
|
|
$
4,063,377
|
|
$
3,332,049
|
|
$
731,328
|
|
21.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized investment
gains (losses), net of tax (2)
|
$
90,412
|
|
$
(71,101)
|
|
$
161,513
|
|
NM
|
|
$
122,873
|
|
$
(48,010)
|
|
$
170,883
|
|
NM
|
|
Net income (loss)
(3)
|
$
230,856
|
|
$
(8,227)
|
|
$
239,083
|
|
NM
|
|
$
366,886
|
|
$
(95,058)
|
|
$
461,944
|
|
NM
|
|
Net income (loss) per
diluted share (3)
|
$ 4.17
|
|
$ (0.15)
|
|
$ 4.32
|
|
NM
|
|
$ 6.63
|
|
$ (1.72)
|
|
$ 8.35
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
(1) (3)
|
$
140,444
|
|
$
62,874
|
|
$
77,570
|
|
123.4
|
|
$
244,013
|
|
$
(47,048)
|
|
$
291,061
|
|
NM
|
|
Operating income (loss)
per diluted share (1) (3)
|
$ 2.54
|
|
$ 1.14
|
|
$ 1.40
|
|
122.8
|
|
$ 4.41
|
|
$ (0.85)
|
|
$ 5.26
|
|
NM
|
|
Catastrophe losses net
of reinsurance (4)
|
$
39,000
|
|
$
33,000
|
|
$ 6,000
|
|
18.2
|
|
$
236,000
|
|
$
223,000
|
|
$
13,000
|
|
5.8
|
|
Combined ratio
(5)
|
93.6 %
|
|
98.6 %
|
|
—
|
|
(5.0)
pts
|
|
97.6 %
|
|
107.9 %
|
|
—
|
|
(10.3) pts
|
|
|
|
NM = Not
Meaningful
|
|
|
|
(1)
|
These measures are not
based on U.S. generally accepted accounting principles ("GAAP"),
are defined in "Information Regarding GAAP and Non-GAAP Measures"
and are reconciled to the most directly comparable GAAP measures in
"Supplemental Schedules."
|
|
(2)
|
Net realized investment
gains (losses) before tax were $114 million and $(90) million for
the three months ended September 30, 2024 and 2023, respectively,
and $156 million and $(61) million for the nine months ended
September 30, 2024 and 2023, respectively. The changes in fair
value of the Company's investments are recorded as part of net
realized investment gains or losses in its consolidated statements
of operations due to the adoption of the fair value option for its
investments as permitted under GAAP.
|
|
(3)
|
Included in net income
and operating income are approximately $20 million and $14 million
($16 million and $11 million, net of tax) of net realized gains
from the sales and held-for-sale classifications of office
buildings for the three and nine months ended September 30, 2024,
respectively, and approximately $6 million ($5 million, net of tax)
of net realized gains from the sales of office buildings for the
nine months ended September 30, 2023. These before-tax net realized
gains are included in other revenues in the Company's "Summary of
Operating Results" on page 4.
|
|
(4)
|
The majority of 2024
catastrophe losses resulted from tornadoes, hailstorms and
convective storms in Texas and Oklahoma, winter storms and
rainstorms in California, and the impact of Hurricane Helene in
Florida and Georgia. The majority of 2023 catastrophe losses
resulted from winter storms and rainstorms in California, Texas and
Oklahoma, and the impact of Hurricane Hilary in California.
The Company experienced unfavorable development of approximately $7
million and favorable development of approximately $4 million on
prior years' catastrophe losses for the nine months ended
September 30, 2024 and 2023,
respectively.
|
|
(5)
|
The Company experienced
unfavorable development of approximately $8 million and favorable
development of approximately $12 million on prior accident years'
loss and loss adjustment expense reserves for the three months
ended September 30, 2024 and 2023, respectively, and unfavorable
development of approximately $16 million and favorable development
of approximately $32 million on prior accident years' loss and loss
adjustment expense reserves for the nine months ended September 30,
2024 and 2023, respectively. The year-to-date unfavorable
development in 2024 was primarily attributable to higher than
estimated losses and loss adjustment expenses in the commercial
automobile and commercial property lines of insurance business and
catastrophe losses, partially offset by favorable development in
the private passenger automobile and homeowners lines of insurance
business. The year-to-date favorable development in 2023 was
primarily attributable to lower than estimated losses and loss
adjustment expenses in the private passenger automobile and
homeowners lines of insurance business, partially offset by
unfavorable development in the commercial property line of
insurance business.
|
|
Investment
Results
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(000's
except average annual yield)
|
|
|
|
|
|
|
|
|
Average invested assets
at cost (1)
|
$ 5,795,086
|
|
$ 5,106,049
|
|
$ 5,571,831
|
|
$ 5,060,778
|
|
Net investment income
(2) (3)
|
|
|
|
|
|
|
|
|
Before income
taxes
|
$
72,738
|
|
$
60,965
|
|
$
206,726
|
|
$
171,287
|
|
After income
taxes
|
$
61,114
|
|
$
51,958
|
|
$
173,928
|
|
$
146,571
|
|
Average annual yield on
investments (2) (3)
|
|
|
|
|
|
|
|
|
Before income
taxes
|
4.6 %
|
|
4.4 %
|
|
4.5 %
|
|
4.3 %
|
|
After income
taxes
|
3.9 %
|
|
3.8 %
|
|
3.8 %
|
|
3.7 %
|
|
|
|
(1)
|
Fixed maturities and
short-term bonds at amortized cost; equities and other short-term
investments at cost. Average invested assets at cost are based on
the monthly amortized cost of the invested assets excluding cash
for each period.
|
|
(2)
|
Net investment income
includes interest income earned on cash of approximately $6.8
million and $5.1 million ($5.3 million and $4.0 million after tax)
for the three months ended September 30, 2024 and 2023,
respectively, and approximately $18.6 million and $9.6 million
($14.7 million and $7.6 million after tax) for the nine months
ended September 30, 2024 and 2023, respectively. Average annual
yield on investments does not include interest income earned on
cash.
|
|
(3)
|
Higher net investment
income before and after income taxes for the three and nine months
ended September 30, 2024 compared to the corresponding periods in
2023 resulted largely from higher average yield combined with
higher average invested assets and cash. Average annual yield on
investments before and after income taxes for the three and nine
months ended September 30, 2024 increased compared to the
corresponding periods in 2023, primarily due to the maturity and
replacement of lower yielding investments purchased when market
interest rates were lower with higher yielding
investments.
|
On October 9, 2024, Hurricane
Milton made landfall south of Tampa,
Florida. The Company writes only automobile insurance in
Florida, which accounts for
approximately 3% of its companywide direct premiums written;
therefore, the losses from Hurricane Milton are not expected to
have a significant impact on the results of operations of the
Company. Although the current loss estimates may change in the
future, based on claims reported to date and expected to be
reported, the Company estimates that the total catastrophe losses
from Hurricane Milton will be $5
million or less, which will be recorded as losses for the
fourth quarter of 2024.
The Board of Directors declared a quarterly dividend of
$0.3175 per share. The dividend will
be paid on December 26, 2024 to
shareholders of record on December 12,
2024.
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 and direct-to-consumer sales in many states.
For more information, visit the Company's website at
www.mercuryinsurance.com.
The Private Securities Litigation Reform Act of 1995 provides
a "safe harbor" for certain forward-looking statements. Certain
statements contained in this report 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 general market risks associated with
the Company's investment portfolio; the accuracy and
adequacy of the Company's pricing methodologies;
catastrophes in the markets served by the Company; 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 the states where it 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 non-California
states; the presence of competitors with greater financial
resources and the impact of competitive pricing and marketing
efforts; the Company's ability to successfully allocate the
resources used in the states with reduced or exited operations to
its operations in other states; changes in driving patterns and
loss trends; acts of war and terrorist activities; pandemics,
epidemics, widespread health emergencies, or outbreaks of
infectious diseases; court decisions and trends in litigation and
health care and auto repair costs; and legal, cybersecurity,
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
Annual Report on Form 10-K filed with the United States Securities
and Exchange Commission on February 13, 2024.
|
MERCURY GENERAL
CORPORATION AND SUBSIDIARIES
SUMMARY OF OPERATING RESULTS
(000's except per-share
amounts and ratios)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$ 1,320,652
|
|
$ 1,090,311
|
|
$ 3,723,355
|
|
$ 3,129,483
|
|
Net investment
income
|
72,738
|
|
60,965
|
|
206,726
|
|
171,287
|
|
Net realized investment
gains (losses)
|
114,446
|
|
(90,001)
|
|
155,536
|
|
(60,772)
|
|
Other
|
22,538
|
|
3,917
|
|
23,837
|
|
15,000
|
|
Total revenues
|
1,530,374
|
|
1,065,192
|
|
4,109,454
|
|
3,254,998
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses
|
918,439
|
|
823,742
|
|
2,759,117
|
|
2,651,081
|
|
Policy acquisition
costs
|
230,293
|
|
181,569
|
|
630,016
|
|
518,813
|
|
Other operating
expenses
|
86,861
|
|
69,192
|
|
245,651
|
|
207,223
|
|
Interest
|
7,717
|
|
5,918
|
|
23,288
|
|
16,398
|
|
Total expenses
|
1,243,310
|
|
1,080,421
|
|
3,658,072
|
|
3,393,515
|
|
Income (loss) before
income taxes
|
287,064
|
|
(15,229)
|
|
451,382
|
|
(138,517)
|
|
Income tax expense
(benefit)
|
56,208
|
|
(7,002)
|
|
84,496
|
|
(43,459)
|
|
Net income (loss)
|
$
230,856
|
|
$
(8,227)
|
|
$
366,886
|
|
$
(95,058)
|
|
|
|
|
|
|
|
|
|
Basic average shares
outstanding
|
55,371
|
|
55,371
|
|
55,371
|
|
55,371
|
|
Diluted average shares
outstanding
|
55,376
|
|
55,371
|
|
55,374
|
|
55,371
|
|
|
|
|
|
|
|
|
|
Basic Per Share
Data
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
4.17
|
|
$
(0.15)
|
|
$
6.63
|
|
$
(1.72)
|
|
Net realized investment
gains (losses), net of tax
|
$
1.63
|
|
$
(1.28)
|
|
$
2.22
|
|
$
(0.87)
|
|
|
|
|
|
|
|
|
|
Diluted Per Share
Data
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
4.17
|
|
$
(0.15)
|
|
$
6.63
|
|
$
(1.72)
|
|
Net realized investment
gains (losses), net of tax
|
$
1.63
|
|
$
(1.28)
|
|
$
2.22
|
|
$
(0.87)
|
|
|
|
|
|
|
|
|
|
Operating Ratios-GAAP
Basis
|
|
|
|
|
|
|
|
|
Loss ratio
|
69.5 %
|
|
75.6 %
|
|
74.1 %
|
|
84.7 %
|
|
Expense
ratio
|
24.0 %
|
|
23.0 %
|
|
23.5 %
|
|
23.2 %
|
|
Combined ratio
(a)
|
93.6 %
|
|
98.6 %
|
|
97.6 %
|
|
107.9 %
|
|
|
|
(a)
|
Combined ratio for the
three months ended September 30, 2024 does 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,
2024
|
|
December 31,
2023
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
Investments, at fair
value:
|
|
|
|
|
Fixed maturity securities
(amortized cost $4,882,324; $4,394,983)
|
$
4,858,840
|
|
$
4,319,336
|
|
Equity securities (cost
$755,443; $654,939)
|
870,837
|
|
730,693
|
|
Short-term investments (cost
$289,616; $179,375)
|
288,704
|
|
178,491
|
|
Total investments
|
6,018,381
|
|
5,228,520
|
|
Cash
|
616,275
|
|
550,903
|
|
Receivables:
|
|
|
|
|
Premiums
|
731,379
|
|
607,025
|
|
Allowance for credit losses on premiums receivable
|
(6,100)
|
|
(5,300)
|
|
Premiums receivable, net of allowance for credit losses
|
725,279
|
|
601,725
|
|
Accrued investment
income
|
65,118
|
|
59,128
|
|
Other
|
57,862
|
|
25,603
|
|
Total receivables
|
848,259
|
|
686,456
|
|
Reinsurance
recoverables (net of allowance for credit losses $4;
$12)
|
28,019
|
|
31,947
|
|
Deferred policy
acquisition costs
|
341,406
|
|
293,844
|
|
Fixed assets,
net
|
135,919
|
|
151,183
|
|
Operating lease
right-of-use assets
|
13,947
|
|
14,406
|
|
Current income
taxes
|
—
|
|
4,081
|
|
Deferred income
taxes
|
20,905
|
|
33,013
|
|
Goodwill
|
42,796
|
|
42,796
|
|
Other intangible
assets, net
|
7,906
|
|
8,333
|
|
Other assets
|
79,135
|
|
57,915
|
|
Total assets
|
$
8,152,948
|
|
$
7,103,397
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Loss and loss
adjustment expense reserves
|
$
3,073,690
|
|
$
2,785,702
|
|
Unearned
premiums
|
2,076,910
|
|
1,735,660
|
|
Notes
payable
|
574,028
|
|
573,729
|
|
Accounts payable and
accrued expenses
|
231,519
|
|
175,219
|
|
Operating lease
liabilities
|
14,055
|
|
14,231
|
|
Current income
taxes
|
24,394
|
|
—
|
|
Other
liabilities
|
296,062
|
|
270,711
|
|
Shareholders'
equity
|
1,862,290
|
|
1,548,145
|
|
Total liabilities and shareholders' equity
|
$
8,152,948
|
|
$
7,103,397
|
|
|
|
|
|
OTHER
INFORMATION
|
|
|
|
|
Common stock shares
outstanding
|
55,371
|
|
55,371
|
|
Book value per
share
|
$
33.63
|
|
$
27.96
|
|
Statutory surplus
(a)
|
$1.88
billion
|
|
$1.67
billion
|
|
Net premiums written to
surplus ratio (a)
|
2.76
|
|
2.68
|
|
Debt to total capital
ratio (b)
|
23.6 %
|
|
27.1 %
|
|
Portfolio duration
(including all short-term instruments) (a)
(c)
|
3.0 years
|
|
3.0 years
|
|
Policies-in-force
(company-wide "PIF") (a)
|
|
|
|
|
Personal Auto PIF
|
1,016
|
|
1,032
|
|
Homeowners PIF
|
829
|
|
760
|
|
Commercial Auto
PIF
|
40
|
|
42
|
|
|
|
(a)
|
Unaudited.
|
|
(b)
|
Debt to Debt plus
Shareholders' Equity (Debt at face value).
|
|
(c)
|
Modified duration
reflecting anticipated early calls.
|
|
SUPPLEMENTAL
SCHEDULES
|
|
(000's except per-share
amounts and ratios)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Reconciliations of
Comparable GAAP Measures to Operating Measures
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
1,320,652
|
|
$
1,090,311
|
|
$
3,723,355
|
|
$
3,129,483
|
|
Change in net unearned
premiums
|
102,281
|
|
116,192
|
|
340,022
|
|
202,566
|
|
Net premiums
written
|
$
1,422,933
|
|
$
1,206,503
|
|
$
4,063,377
|
|
$
3,332,049
|
|
|
|
|
|
|
|
|
|
Incurred losses and
loss adjustment expenses
|
$
918,439
|
|
$
823,742
|
|
$
2,759,117
|
|
$
2,651,081
|
|
Change in net loss and
loss adjustment expense reserves
|
(97,365)
|
|
(4,865)
|
|
(290,003)
|
|
(137,618)
|
|
Paid losses and loss
adjustment expenses
|
$
821,074
|
|
$
818,877
|
|
$
2,469,114
|
|
$
2,513,463
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
230,856
|
|
$
(8,227)
|
|
$
366,886
|
|
$
(95,058)
|
|
Less: Net realized
investment gains (losses)
|
114,446
|
|
(90,001)
|
|
155,536
|
|
(60,772)
|
|
Tax
on net realized investment gains (losses)(b)
|
24,034
|
|
(18,900)
|
|
32,663
|
|
(12,762)
|
|
Net realized investment gains (losses), net of tax
|
90,412
|
|
(71,101)
|
|
122,873
|
|
(48,010)
|
|
Operating income
(loss)
|
$
140,444
|
|
$
62,874
|
|
$
244,013
|
|
$
(47,048)
|
|
|
|
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
4.17
|
|
$
(0.15)
|
|
$
6.63
|
|
$
(1.72)
|
|
Less: Net realized
investment gains (losses), net of tax
|
1.63
|
|
(1.28)
|
|
2.22
|
|
(0.87)
|
|
Operating income
(loss)(c)
|
$
2.54
|
|
$
1.14
|
|
$
4.41
|
|
$
(0.85)
|
|
|
|
|
|
|
|
|
|
Combined
ratio
|
|
|
|
|
97.6 %
|
|
107.9 %
|
|
Effect of estimated
prior periods' loss development
|
|
|
|
|
(0.4) %
|
|
1.0 %
|
|
Combined ratio-accident
period basis
|
|
|
|
|
97.2 %
|
|
108.9 %
|
|
|
|
(a)
|
See "Information
Regarding GAAP and Non-GAAP Measures" on page 7.
|
|
(b)
|
Based on federal
statutory rate of 21%.
|
|
(c)
|
Operating Income per
Diluted Share for the Three Months Ended September 30, 2023 Does
Not Sum Due to Rounding.
|
Information Regarding GAAP and 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.
Net income (loss) is the GAAP measure that is most
directly comparable to operating income (loss). Operating income
(loss) is net income (loss) excluding realized investment gains
and losses, net of tax. Operating income (loss) is used by
management along with the other components of net income (loss) to
assess the Company's performance. Management uses operating income
(loss) as an important measure to evaluate the results of the
Company's insurance business. Management believes that operating
income (loss) 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 effect of net
realized investment gains and losses. Realized investment gains and
losses may vary significantly between periods and are generally
driven by external economic developments such as capital market
conditions. Accordingly, operating income (loss) highlights the
results from ongoing operations and the underlying profitability of
the Company's core insurance business. Operating income (loss),
which is provided as supplemental information and should not be
considered as a substitute for net income (loss), does not reflect
the overall profitability of the Company's business. It should be
read in conjunction with the GAAP financial results. See
"Supplemental Schedules" above for a reconciliation of net income
(loss) to operating income (loss).
Net premiums earned, the most directly comparable GAAP
measure to net premiums written, represents the portion of premiums
written that is recognized as revenue in the financial statements
for the periods presented and earned on a pro-rata basis over the
term of the policies. Net premiums written is a statutory
financial measure which represents the premiums charged on policies
issued during a fiscal period less any applicable
reinsurance. Net premiums written is designed to determine
production levels and is meant as supplemental information and not
intended to replace net premiums earned. Such information should be
read in conjunction with the GAAP financial results. See
"Supplemental Schedules" above for a reconciliation of net premiums
earned to net premiums written.
Incurred losses and loss adjustment expenses is the
most directly comparable GAAP measure to paid losses and loss
adjustment expenses. Paid losses and loss adjustment
expenses excludes 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. See "Supplemental
Schedules" above for a reconciliation of incurred losses and loss
adjustment expenses to paid losses and loss adjustment
expenses.
Combined ratio is the most directly comparable
measure to combined ratio-accident period basis. Combined
ratio-accident period basis is computed as the difference
between two GAAP operating ratios: the combined ratio and prior
accident periods' loss development ratio. Management believes
that combined ratio-accident period basis is useful to investors
and it is used 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
the GAAP combined ratio. It should be read in conjunction with the
GAAP financial results. See "Supplemental Schedules" above for a
reconciliation of GAAP combined ratio to combined ratio-accident
period basis.
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SOURCE Mercury General Corporation