Mercury General Unveils Q2 Report

August 1, 2005

California-based Mercury General Corporation reported net income of $73.6 million ($1.35 per share-diluted) in the second quarter 2005 compared with $78.1 million ($1.43 per share-diluted) for the same period in 2004.

For the first six months of 2005, net income was $134.0 million ($2.45 per share-diluted) compared to net income of $147.0 million ($2.69 per share-diluted) for the same period in 2004. Included in net income are net realized investment gains, net of tax, of $2.3 million ($0.04 per share-diluted) in the second quarter of 2005 compared with net realized investment gains, net of tax, of $7.9 million ($0.14 per share-diluted) for the same period in 2004, and net realized investment gains, net of tax, of $5.0 million ($0.09 per share-diluted) for the first six months of 2005 compared to net realized investment gains, net of tax, of $11.6 million ($0.21 per share-diluted) for the same period in 2004.

Company-wide net premiums written were $729.9 million in the second quarter 2005, a 12.6% increase over second quarter 2004 net premiums written of $648.5 million, and were approximately $1.5 billion for the first six months of 2005, a 14.2% increase over the same period in 2004.

California net premiums written were $525.9 million in the second quarter of 2005, an increase of 5.5% over the same period in 2004, and were approximately $1.1 billion for the first six months of 2005, a 5.3% increase over the same period in 2004.

Non-California net premiums written were $204.0 million in the second quarter of 2005, a 36.2% increase over the same period in 2004, and
were $407.7 million for the first six months of 2005, an increase of 45.6% increase over the same period in 2004. Non-California net premiums written represented 27.9% of the company’s total second quarter net premiums written, up from 23.1% in the second quarter of 2004.

The company’s combined ratio (GAAP basis) was 90.1% in the second quarter and 91.3% for the first six months of 2005 compared with 88.3% and 88.7% for the same periods in 2004.

Positive development on prior accident years’ loss reserves was approximately $40 million and $25 million, respectively, for the six months ending June 30, 2005 and June 30, 2004.

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