Mercury General Corporation Announces First Quarter Results and Declares Quarterly Dividend - 30.04.24 - News

LOS ANGELES, April 30, 2024

Consolidated Highlights

Three Months Ended March 31,

Change

2024

2023

$

ARIVA.DE Börsen-Geflüster

Kurse

Mercury General

56,38 $

-2,74%

%

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

Net premiums earned

$ 1,166,679

$ 1,004,704

$ 161,975

16.1

Net premiums written ⁽¹⁾

$ 1,284,984

$ 1,010,202

$ 274,782

27.2

Net realized investment gains, net of tax ⁽²⁾

$ 30,172

$ 38,716

$ (8,544)

(22.1)

Net income (loss)

$ 73,462

$ (45,288)

$ 118,750

NM

Net income (loss) per diluted share

$ 1.33

$ (0.82)

$ 2.15

NM

Operating income (loss) ⁽¹⁾

$ 43,290

$ (84,004)

$ 127,294

NM

Operating income (loss) per diluted share ⁽¹⁾

$ 0.78

$ (1.52)

$ 2.3

NM

Catastrophe losses net of reinsurance ⁽³⁾

$ 72,000

$ 98,000

$ (26,000)

(26.5)

Combined ratio ⁽⁴⁾

100.9 %

115.8 %

—

(14.9) 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 before tax were $38 million and $49 million for the three months ended March 31, 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)	The majority of 2024 catastrophe losses resulted from winter storms and rainstorms in California and convective storms in Texas and Oklahoma. The majority of 2023 catastrophe losses resulted from winter storms and rainstorms in California, Texas and Oklahoma.
(4)	The Company experienced favorable development of approximately $6 million and $15 million on prior accident years' loss and loss adjustment expense reserves for the three months ended March 31, 2024 and 2023, respectively. The favorable development for the first quarter of 2024 was primarily attributable to lower than estimated loss adjustment expenses in the private passenger automobile line of insurance business, partially offset by unfavorable development on prior years' catastrophe losses. The favorable development for the first quarter of 2023 was primarily attributable to lower than estimated losses and loss adjustment expenses in the homeowners line of insurance business.

Investment Results

	Three Months Ended March 31,
	2024	2023
(000's except average annual yield)
Average invested assets at cost ⁽¹⁾	$ 5,358,848	$ 5,022,572
Net investment income ^{(2) (3)}
Before income taxes	$ 65,018	$ 51,973
After income taxes	$ 54,880	$ 44,795
Average annual yield on investments ^{(2) (3)}
Before income taxes	4.4 %	4.0 %
After income taxes	3.8 %	3.5 %

(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 approximately $5.6 million and $1.7 million of interest income earned on cash (approximately $4.5 million and $1.4 million after tax) for the three months ended March 31, 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 months ended March 31, 2024 compared to the corresponding period 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 months ended March 31, 2024 increased compared to the corresponding period in 2023, primarily due to the maturity and replacement of lower yielding investments purchased when market interest rates were lower with higher yielding investments, as a result of increasing overall market interest rates, as well as higher yields on investments based on floating interest rates.

The Company continues to implement rate and non-rate actions to improve underwriting results. However, rate increases take time to earn in. In January 2024, the California Department of Insurance ("DOI") approved rate increases of 22.5% and 3.8% on the private passenger automobile line of insurance business for the Company's insurance subsidiaries, Mercury Insurance Company ("MIC") and California Automobile Insurance Company ("CAIC"), respectively. These rate increases became effective in February 2024. The private passenger automobile line of insurance business of MIC and CAIC represented approximately 47% and 6%, respectively, of the Company's total net premiums earned for the three months ended March 31, 2024. In addition, in March 2024, the California DOI approved a 6.99% rate increase on the California homeowners line of insurance business. This rate increase is expected to become effective in May 2024. The California homeowners line of insurance business represented approximately 16% of the Company's total net premiums earned for the three months ended March 31, 2024.

The Board of Directors declared a quarterly dividend of $0.3175 per share. The dividend will be paid on June 27, 2024 to shareholders of record on June 13, 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)

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