Calif.-based Mercury General Corporation reported that net income was $49.6 million, or $0.91 per share (diluted), in the third quarter 2003 compared with $18.5 million, or $0.34 per share (diluted), in the same period for 2002.
For the first nine months of 2003, net income was $135.1 million ($2.48 per share) compared to net income of $48.8 million ($0.89 per share) in the same period for 2002. The company had net realized investment gains, net of tax, of $4.1 million ($0.07 per share) in the third quarter of 2003 compared to $0.0 million ($0.00 per share) in the third quarter 2002, and $3.5 million ($0.06 per share) for the first nine months of 2003 compared to a loss, net of tax, of $31.6 million ($0.58 per share) for the first nine months of 2002.
Company-wide premiums written were $590.2 million in the third quarter 2003, a 20.1 percent increase over 2002, and $1.7 billion for the nine month period, a 23.3 percent increase over the comparable period in 2002. California premiums written were $492.0 million in the quarter, a 17.6 percent increase over 2002, and $1.4 billion for the nine month period, a 21.2 percent increase over the comparable period in 2002. The increased premiums were driven by policy count growth and rate increases.
The company’s non-California operations produced $98.2 million in premiums with a combined ratio (GAAP basis) of 92.5 percent this quarter. During the third quarter, the company commenced writing personal automobile insurance in the state of New Jersey. In 2004, the company expects to begin writing personal automobile insurance in Arizona.
The company’s combined ratio (GAAP basis) was 93.4 percent in the third quarter and 94.0 percent for the first nine months of 2003 compared to 102.2 percent and 99.3 percent in the respective periods of 2002.
Net investment income decreased by 11.8 percent to $24.5 million in the quarter and decreased by 9.5 percent to $78.2 million in the first nine months of 2003 compared to the same periods in 2002. The after-tax yield was 3.8 percent on average investments of $2.34 billion (fixed maturities and equities at cost) for the quarter. This compares with 4.8 percent in the third quarter of 2002.
In Oct. 2003, the Southern California region was devastated by sweeping fire storms.
As of Oct. 31, 2003, approximately 2,800 homes have been reported as destroyed. The company estimates its California homeowners market share to be approximately 2 percent. As of Oct. 31, 2003, the company has received 27 total property burn claims, 10 partial burn claims and 83 smoke damage claims.
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