Mercury General Corporation, a California-based automobile insurer with operations in a number of other states, reported that net income was $42.1 million, or $0.77 per share (diluted), in the first quarter 2003 compared with $29.0 million, or $0.53 per share (diluted), in the same period for 2002. Net operating earnings in the first quarter of 2003 were $42.6 million, or $0.78 per share, compared with $28.8 million, or $0.53 per share in 2002.
Company-wide premiums written were $538.8 million in the first quarter 2003, a 27.8 percent increase over first quarter 2002 premiums written of $421.5 million. California premiums written were $452.9 million in the quarter, an increase of 25.8 percent over 2002. The increased premiums were driven by both policy count growth and recent rate increases.
The loss ratio (GAAP basis) was 68.2 percent in the quarter compared with 71.9 percent in the same period for 2002. The lower loss ratio is largely attributed to recent rate increases and improved loss frequency in the company’s automobile lines of business.
The expense ratio (GAAP basis) was 26.2 percent in the quarter compared with 26.6 percent in the same period for 2002.
The company received approval from the California Department of Insurance to increase its personal automobile rates by 6.9 percent in Mercury Casualty Company and California Automobile Insurance Company and 3.8 percent in Mercury Insurance Company. The company plans to implement these rate increases in June 2003.
Net investment income in the first quarter of 2003 of $26.9 million decreased by 8.7 percent from $29.5 million in the same period for 2002. After taxes, per share (diluted) investment income was $0.44 in the quarter, compared with $0.47 in the first quarter of 2002. The after-tax yield was 4.33 percent on average investments of $2.21 billion (fixed maturities and equities at cost) for the quarter. This compares with 5.23 percent in the first quarter of 2002.
The Board of Directors declared a second quarter dividend of $0.33 per share, representing a 10 percent increase over the quarterly dividend amount paid in 2002. The dividend is to be paid on June 30, 2003 to shareholders of record on June 15, 2003. The company’s book value per share at March 31, 2003 was $20.84.
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