California-based Mercury General Corporation reported that premiums written were $504.6 million in the fourth quarter, a 34.5 percent increase over 2001 and $1,865.0 million for the entire year, a 29.3 percent increase over 2001.
“We had targeted to be at an annual premium run-rate of $2 billion at the end of the first quarter 2003. We are pleased to have achieved our target one quarter ahead of schedule,” George Joseph, Mercury General Corporation’s chairman and CEO, commented.
Net operating earnings in the fourth quarter of 2002 were $31.5 million, or $0.58 per share, compared with $22.5 million, or $0.41 per share in 2001. The Company defines net operating earnings, a non GAAP financial measure, as net income determined on a GAAP basis less net realized investment gains and losses. Net income was $17.3 million, or $0.32 per share (diluted) in the fourth quarter 2002 compared with $22.1 million, or $0.41 per share (diluted) in the same period for 2001. For the entire year 2002, net income and net operating earnings were $66.1 million ($1.21 diluted per share), and $111.9 million ($2.05 diluted per share), respectively, which compares to net income and net operating earnings in the same period for 2001 of $105.3 million ($1.94 diluted per share) and $101.1 million ($1.86 diluted per share), respectively.
During the fourth quarter, the Company recorded net realized losses on investments of $14.2 million, net of tax or $0.26 per share (diluted). Included in the net realized losses are $14.0 million, net of taxes, for charges related to assets classified as available for sale that were considered to be other-than-temporarily impaired. The vast majority of these securities were equity positions within the energy sector.
The combined ratio (GAAP basis) was 97.6 percent in the fourth quarter and 98.8 percent for the entire year compared to 101.2 percent and 99.6 percent for the respective periods in 2001.
In California, the company’s personal auto lines posted a combined ratio (statutory basis) of 98.1 percent for the fourth quarter compared to 100.7 percent for the respective period in 2001 and 97.8 percent for the year compared to 98.0 percent for the respective period in 2001. The company has implemented and is continuing to seek rate increases to offset the effects of loss cost inflation and improve the combined ratio.
The company implemented California personal automobile rate increases on March 1, 2002 of 6.9 percent for Mercury Casualty Company (“MCC”) and California Automobile Insurance Company (“Cal Auto”) and 4.1 percent for Mercury Insurance Company (“MIC”) and on Nov. 1, 2002 of 6.9 percent for MCC and Cal Auto and 3.2 percent for MIC. The company has filed for additional rate increases of 6.9 percent in MCC and Cal Auto and 4.6 percent in MIC which are currently pending California Department of Insurance approval.
The California homeowners’ line posted a combined ratio (statutory basis) of 92.1 percent for the fourth quarter compared to 106.6 percent for the respective period in 2001 and 101.3 percent for the year compared to 105.6 percent for the respective period in 2001. The company has benefited from favorable frequency this year. Additionally, the company implemented 6.9 percent rate increases in 2002 on both May 15, 2002 and Dec. 15, 2002. The company expects first quarter 2003 frequency to be up due to windstorms occurring during the first part of Jan. 2003.
Was this article valuable?
Here are more articles you may enjoy.