LOS ANGELES, May 2 /PRNewswire-FirstCall/ -- Mercury General Corporation
(NYSE: MCY) reported today net income of $60.4 million, or $1.10 per share
(diluted), in the first quarter 2005 compared with $68.8 million, or $1.26 per
share (diluted), in the same period for 2004. Included in net income are net
realized investment gains, net of tax, of $2.7 million, or $0.05 per share
(diluted), in the first quarter of 2005 compared with net realized investment
gains, net of tax, of $3.7 million, or $0.07 per share (diluted), for the same
period in 2004.
Company-wide net premiums written were $729.8 million in the first quarter
2005, a 15.8% increase over first quarter 2004 net premiums written of
$630.3 million. California net premiums written were $526.1 million in the
quarter, an increase of 5.2% over 2004. Non-California net premiums written
were $203.8 million in the quarter, a 56.5% increase over 2004.
Non-California net premiums written represented 27.9% of the Company's total
first quarter net premiums written, up from 20.7% in the first quarter of
2004.
The Company's combined ratio (GAAP basis) was 92.6% in the first quarter
of 2005 compared with 89.1% in the same period for 2004. During the first
quarter of 2005, the loss ratio was negatively impacted by increased loss
frequency, particularly in the homeowners line of business, caused by near
record rainfall in the state of California. Positive development on prior
period loss reserves was approximately $20 million and $15 million,
respectively, for the periods ending March 31, 2005 and March 31, 2004.
Net investment income of $28.8 million (after tax $25.0 million) in the
first quarter of 2005 increased by 12% over the same period in 2004. The
after-tax yield on investment income was 3.4% on average assets of
$2.9 billion (fixed maturities and equities at cost) for the quarter. This
compares with an after tax yield on investment income of 3.7% on average
investments of $2.5 billion (fixed maturities and equities at cost) for the
same period in 2004.
The Board of Directors declared a second quarter dividend of $0.43 per
share, representing a 16% increase over the quarterly dividend amount paid in
2004. The dividend is to be paid on June 30, 2005 to shareholders of record
on June 15, 2005. The Company's book value per share at March 31, 2005 was
$27.21.
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
http://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
http://www.mercuryinsurance.com. A replay of the call will be available beginning at
1:30 P.M. Pacific time and running through May 9, 2005. The replay telephone
numbers are (800) 642-1687 (USA) or (706) 645-9291 (International). The
conference ID# is 5582558. 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, and in general economic conditions; the accuracy and
adequacy of the Company's pricing methodologies; adverse weather conditions in
the markets serviced by the Company; 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; inflation and changes in economic
conditions; the Company's ability to obtain and the timing of regulatory
approval for requested rate changes; legislation adverse to the automobile
insurance industry or business generally that may be enacted in California or
other states; the Company's success in expanding its business in states
outside of California; the presence of competitors with greater financial
resources and the impact of competitive pricing; 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 various 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
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 Generally Accepted Accounting Principles
("GAAP"). These measures are not intended to replace, and should be read in
conjunction with, the GAAP financial results. The Company has reconciled
these measures with the most directly comparable GAAP measure in the
supplemental schedule entitled, "Summary of Operating Results."
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 is recognized as
income 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 meant
as supplemental information and is not intended to replace Net premiums
earned. It should be read in conjunction with the GAAP financial 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 meant 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.
Mercury General Corporation and Subsidiaries
Summary of Operating Results
(000's) except per-share amounts
(unaudited)
Quarter Ended March 31,
2005 2004
Net premiums written $729,830 $630,283
Net premiums earned 684,714 591,937
Paid losses and loss adjustment expenses 424,672 362,906
Incurred losses and loss adjustment expenses 448,246 371,996
Net investment income 28,785 25,728
Net realized investment gains, net of tax 2,740 3,688
Net income $60,424 $68,816
Basic average shares outstanding 54,535 54,430
Diluted average shares outstanding 54,717 54,607
Basic Per Share Data
Net income $1.11 $1.26
Net realized investment gains, net of tax $0.05 $0.07
Diluted Per Share Data
Net income $1.10 $1.26
Net realized investment gains, net of tax $0.05 $0.07
Operating Ratios--GAAP (a) Basis
Loss ratio 65.5% 62.8%
Expense ratio 27.1% 26.3%
Combined ratio 92.6% 89.1%
Reconciliations of Operating Measures to
Comparable GAAP (a) Measures
Net premiums written $729,830 $630,283
Increase in unearned premiums (45,116) (38,346)
Net premiums earned $684,714 $591,937
Paid losses and loss adjustment expenses $424,672 $362,906
Increase in net losses and loss adjustment
expense reserves 23,574 9,090
Incurred losses and loss adjustment expenses $448,246 $371,996
(a) Generally Accepted Accounting Principles
Mercury General Corporation and Subsidiaries
Other Supplemental Information
(000's) except ratios
(unaudited)
Quarter ending, March 31,
2005 2004
Total California Operations (1)
Net Premiums Written $526,079 $500,098
Net Premiums Earned 505,316 484,782
Loss Ratio 65.8% 63.5%
Expense Ratio 25.6% 25.7%
Combined Ratio 91.4% 89.2%
California Automobile lines
Net Premiums Written $480,644 $461,993
Net Premiums Earned 460,569 447,796
Loss Ratio 65.1% 64.7%
Expense Ratio 25.6% 25.6%
Combined Ratio 90.7% 90.3%
California Homeowners line
Net Premiums Written $37,223 $32,026
Net Premiums Earned 37,336 31,468
Loss Ratio 73.4% 47.4%
Expense Ratio 24.9% 25.8%
Combined Ratio 98.3% 73.2%
Non-California Operations (2)
Net Premiums Written $203,751 $130,185
Net Premiums Earned 179,398 107,155
Loss Ratio 64.4% 60.0%
Expense Ratio 31.4% 28.8%
Combined Ratio 95.8% 88.8%
At At
Policies-in-force (000's) March 31, 2005 March 31, 2004
California Personal Auto 1,081 1,041
California Commercial Auto 21 21
Non-California Personal Auto 353 216
California Homeowners 221 196
Florida Homeowners 16 11
All ratios are calculated on GAAP basis.
(1) Total California operations includes homeowners, auto, commercial
property and other immaterial California business lines
(2) Includes all states except California
Mercury General Corporation and Subsidiaries
Condensed Balance Sheet and Other Information
(000's) except per-share amounts
March 31, 2005 December 31, 2004
(unaudited)
Investments - available for sale
Fixed maturities at market
(amortized cost $2,269,598 in 2005
and $2,164,955 in 2004) $2,327,639 $2,245,311
Equity securities at market
(cost $210,938 in 2005 and
$210,553 in 2004) 256,768 254,362
Short-term cash investments, at cost,
which approximates market 456,164 421,369
Total investments 3,040,571 2,921,042
Net receivables 360,859 367,662
Deferred policy acquisition costs 183,429 174,840
Other assets 171,290 146,199
Total assets $3,756,149 $3,609,743
Loss and loss adjustment expenses $919,872 $900,744
Unearned premiums 844,828 799,679
Other liabilities 371,279 325,029
Notes payable 136,001 124,743
Shareholders' equity 1,484,169 1,459,548
Total liabilities and
shareholders' equity $3,756,149 $3,609,743
Common stock - shares outstanding 54,541 54,515
Book value per share $27.21 $26.77
Statutory surplus $1.39 billion $1.36 billion
Portfolio duration 3.0 years 3.2 years
SOURCE Mercury General Corporation
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Related links:
http://www.mercuryinsurance.com
CONTACT:
Theodore Stalick, VP/CFO of Mercury General
Corporation, +1-323-937-1060
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