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Mercury General Corporation Announces 2nd Quarter Results And Management Changes

31 July 2000

Mercury General Corporation Announces 2nd Quarter Results And Management Changes

    LOS ANGELES, Calif. - Mercury General Corporation , a major California 
automobile insurer, with operations in a number of other states, reported today 
that net operating earnings for the second quarter of 2000 were $25.6 million, 
or $.47 per share (diluted), compared with $33.9 million, or $.62 per share 
(diluted) in 1999.  For the full six months, net operating earnings were $54.5 
million, or $1.01 per share (diluted), compared with $73.9 million, or $1.35 per 
share (diluted) in 1999.  Per share net income (diluted), including net realized 
investment gains and losses, was $.48 for the second quarter and $1.03 for the 
full six months, compared with $.60 and $1.33, respectively, in 1999.

    Company wide premiums written in the quarter were $313.3 million, a 4.9%
increase over 1999.  California premiums written in the quarter were
$278.5 million, a 2.7% increase over 1999.

    The loss ratio (GAAP basis) was 71.8% in the quarter compared to 67.0% in
1999.  During the second quarter, the Company recorded approximately
$3 million, or 1.0 point, of adverse loss reserve development on prior
accident years primarily relating to the Company's California automobile
bodily injury line.  In addition, as compared to the first quarter of 2000,
the Company recorded an increase in its California bodily injury severity
estimates for the 2000 accident year.  The loss ratio for California business
was 69.8% in the quarter compared to 65.3% in 1999.

    The expense ratio (GAAP basis) was 27.2% in the quarter compared to 27.1%
in 1999.

    The Company's underwriting results were adversely affected during the
quarter from its operations outside of California.  The Company had an
underwriting loss of $10.1 million in the quarter from its operations outside
of California compared to an underwriting loss of $5.5 million in the second
quarter of 1999.  The increased underwriting loss was primarily related to
poor loss experience in Florida, Illinois and in the Company's new Texas
operations.  In addition, operating expenses from the Company's new Texas
operations and increased advertising expenses in Florida, Georgia and Illinois
contributed to the increased underwriting loss.

    Investment income in the quarter increased 4.2% to $26.2 million.  After
taxes, per share (diluted) investment income was $.43 per share compared with
$.41 in 1999.  The after tax yield on average investments of $1.7 billion
(fixed maturities and equities at cost) was 5.59% for the quarter compared
with 5.62% obtained for the year ended 1999.

    The Company also announced that Michael Curtius, President and Chief
Operating Officer, has decided to reduce his role with the Company, effective
October 1, 2000.  Mr. Curtius will become an executive consultant to the
Company in an exclusive capacity, and will take a more active role in
strategic planning matters relating to systems and market growth.  He will
remain a member of the Board of Directors.  George Joseph, Chief Executive
Officer, will assume the position of President and Chief Operating Officer.
Gabriel Tirador, Vice President and Chief Financial Officer, will assume a
greater managerial role in operational matters.

    On July 28, 2000, the Board of Directors declared a second quarter
dividend of $.24 per share to be paid on September 28, 2000 to holders of
record on September 14, 2000.  The Company's book value per share at
June 30, 2000 was $17.57 per share.

    The Company has signed a definitive agreement with Employers Reinsurance
Corporation to purchase the authority and right to manage and control Elm
County Mutual Insurance Company (Elm).  Elm is a county mutual insurance
company in the state of Texas.  The transaction is subject to regulatory
approval and is expected to close within the next 60 days.

    
                           MERCURY GENERAL CORPORATION
                        SUMMARY OF OPERATING RESULTS (000)

                                                     Quarter Ended June 30,
                                                      2000           1999
    Net Premiums Written                            $313,301       $298,790
    Net Premiums Earned                              312,187        295,934
    Paid Losses and Loss Adjustment Exp.             210,596        189,294
    Incurred Losses                                  224,259        198,266
    Net Investment Income                             26,187         25,120
    Net Operating Income (a)                          25,562         33,905
    Capital Gains (Losses), net of tax                   440           (944)
    Net Income                                       $26,002        $32,961

    Basic Average Shares Outstanding              54,062,288     54,616,785
    Diluted Average Shares Outstanding            54,205,423     54,834,457

    Basic Per Share Data
    Earnings Per Share                                 $0.48          $0.60

    Diluted Per Share Data (b)
    Net Operating Income                               $0.47          $0.62
    Capital Gains (Losses), net of tax                 $0.01         ($0.02)
    Earnings Per Share                                 $0.48          $0.60

    Operating Ratios -- GAAP Basis (c)
    Loss Ratio                                         71.8%          67.0%
    Expense Ratio                                      27.2%          27.1%
    Combined Ratio                                     99.0%          94.1%


                                                   Six Months Ended June 30,
                                                      2000           1999
    Net Premiums Written                            $635,595       $600,740
    Net Premiums Earned                              616,842        586,452
    Paid Losses and Loss Adjustment Exp.             424,959        373,082
    Incurred Losses                                  437,903        381,111
    Net Investment Income                             51,671         49,108
    Net Operating Income (a)                          54,537         73,911
    Capital Gains (Losses), net of tax                 1,403           (906)
    Net Income                                       $55,940        $73,005

    Basic Average Shares Outstanding              54,111,360     54,606,143
    Diluted Average Shares Outstanding            54,234,333     54,836,366

    Basic Per Share Data
    Earnings Per Share                                 $1.03          $1.34

    Diluted Per Share Data (b)
    Net Operating Income                               $1.01          $1.35
    Capital Gains (Losses), net of tax                 $0.03         ($0.02)
    Earnings Per Share                                 $1.03          $1.33

    Operating Ratios -- GAAP Basis (c)
    Loss Ratio                                         71.0%          65.0%
    Expense Ratio                                      27.1%          27.2%
    Combined Ratio                                     98.1%          92.2%

    (a)  Net Income, excluding capital gains, net of tax.
    (b)  Numbers may not sum due to rounding differences
    (c)  Generally Accepted Accounting Principles