Mercury General Corporation Reports Fourth Quarter
Results
LOS ANGELES, Feb. 5 Mercury General Corporation
, a major California automobile insurer with operations in a number
of other states, reported today that net operating earnings for the fourth
quarter ended December 31, 2000 was $25.3 million, or $.46 per share
(diluted), compared with $35.4 million, or $.65 per share (diluted) in 1999.
For the year 2000, net operating earnings were $106.8 million, or
$1.97 per share (diluted), compared with $141.5 million or $2.58 per share
(diluted) in 1999. Including realized capital gains and losses, per share net
income (diluted) in 2000 was $.48 in the fourth quarter and $2.02 for the full
year, compared with $.60 and $2.44, respectively, in 1999.
Company wide premiums written in the quarter were $316.3 million, a
6.0% increase over 1999. California premiums written in the quarter were
$281.2 million, a 3.9% increase over 1999. For the year 2000, Company wide
premiums written were $1,272.4 million, an increase of 5.5% over 1999.
The Company experienced an increase in California private passenger
automobile new business submissions during the quarter, as compared to the
third quarter of 2000, particularly in its California Automobile Insurance
Company subsidiary, which writes non-standard private passenger automobile
insurance. This trend continued during January 2001.
The loss ratio (GAAP basis) was 74.7% in the fourth quarter and
72.2% for the year ended 2000, compared to 67.1% and 66.4%, respectively, in
1999. The higher loss ratio in the fourth quarter of 2000, as compared to the
fourth quarter of 1999, was largely due to increased severity recorded on
California automobile claims.
The expense ratio (GAAP basis) was 24.9% in the fourth quarter and
26.3% for the year ended 2000, compared to 26.3% and 26.8%, respectively, in
1999. The decrease in the expense ratio in the fourth quarter was largely
attributable to a reduction in the accrual for contingent commissions and
employee bonuses and the initial set up of deferred policy acquisition costs
for the Company's Florida business, partially offset by an increase in
expenses from the Company's new operation in Texas.
Investment income in the quarter increased 9.8% to $27.9 million. For the
year ended December 31, 2000, investment income was $106.5 million, a year to
year increase of 7.1%. After taxes, per share (diluted) investment income was
$1.75 for the year 2000, compared with $1.63 in 1999. The after tax yield on
average investments of $1.7 billion (fixed maturities and equities at cost)
was 5.58% in the fourth quarter and 5.56% for the year 2000, compared with
5.63% for the fourth quarter and 5.62% for the year 1999.
Realized gains totaled $1.2 million for the fourth quarter and
$3.9 million for the year 2000. In 1999, the Company had realized losses of
$3.7 million for the quarter and $11.9 million for the year.
On January 26, 2001, the Board of Directors declared a first quarter
dividend of $.265 or $1.06 annually, a 10.4% increase over the rate paid in
2000. The increased dividend will be paid on March 29, 2001 to shareholders
of record on March 15, 2001. Since dividends were instituted in the first
quarter of 1986, Mercury General's dividend has increased at least once each
year with the overall compound rate of increase over fifteen years averaging
22%. The Company's book value per share at December 31, 2000 was
$19.08 per share.
According to a recent study released by the California Department of
Insurance (CDI), the combined results for the Company's California
subsidiaries included in the study, tied the Company for best among the
largest seven automobile insurers in California when measured by consumer
complaints. The Company's California subsidiaries had 1,325,783 earned cars
in 1999 and only 24 justified complaints, a ratio of 1.8 for every
100,000 cars. The Company had no justified complaints on its homeowners
business. Mr. George Joseph, Chairman & Chief Executive Officer of Mercury
General Corporation, said, "the favorable rankings are a testament of the
Company's commitment to provide superior policyholder service, which in turn
translates to fewer complaints and higher retention rates."
MERCURY GENERAL CORPORATION
SUMMARY OF OPERATING RESULTS (000)
Quarter Ended December 31,
2000 1999
Net Premiums Written $316,336 $298,369
Net Premiums Earned 317,309 301,785
Paid Losses and Loss Adjustment Expenses 222,646 194,262
Incurred Losses 237,172 202,580
Net Investment Income 27,930 25,432
Net Operating Income (a) 25,251 35,439
Capital Gains (Losses), net of tax 754 (2,431)
Net Income $26,005 $33,008
Basic Average Shares Outstanding 54,102,494 54,538,177
Diluted Average Shares Outstanding 54,423,212 54,711,007
Basic Per Share Data
Earnings Per Share $0.48 $0.61
Diluted Per Share Data (b)
Net Operating Income $0.46 $0.65
Capital Gains (Losses), net of tax $0.01 ($0.04)
Earnings Per Share $0.48 $0.60
Operating Ratios--GAAP Basis (c)
Loss Ratio 74.7% 67.1%
Expense Ratio 24.9% 26.3%
Combined Ratio 99.6% 93.4%
Year Ended December 31,
2000 1999
Net Premiums Written $1,272,447 $1,206,171
Net Premiums Earned 1,249,259 1,188,307
Paid Losses and Loss Adjustment Expenses 856,778 756,119
Incurred Losses 901,781 789,103
Net Investment Income 106,466 99,374
Net Operating Income (a) 106,802 141,463
Capital Gains (Losses), net of tax 2,564 (7,754)
Net Income $109,366 $133,709
Basic Average Shares Outstanding 54,099,815 54,595,876
Diluted Average Shares Outstanding 54,257,848 54,814,842
Basic Per Share Data
Earnings Per Share $2.02 $2.45
Diluted Per Share Data (b)
Net Operating Income $1.97 $2.58
Capital Gains (Losses), net of tax $0.05 ($0.14)
Earnings Per Share $2.02 $2.44
Operating Ratios--GAAP Basis (c)
Loss Ratio 72.2% 66.4%
Expense Ratio 26.3% 26.8%
Combined Ratio 98.5% 93.2%
(a) Net Income, excluding capital gains, net of tax
(b) Numbers may not sum due to rounding differences
(c) Generally Accepted Accounting Principles
