Mercury General Corporation Announces Third Quarter Results and Declares Quarterly Dividend
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 ...
