Mercury General Corporation Announces Third Quarter Results
30 October 2000
Mercury General Corporation Announces Third Quarter Results
LOS ANGELES, Oct. 30 Mercury General Corporation
, a major California automobile insurer with operations in a number
of other states, reported today that net operating earnings in the third
quarter of 2000 were $27.0 million, or $.50 per share (diluted), compared with
$32.1 million, or $.59 per share (diluted) in 1999. For the full nine months,
net operating earnings were $81.6 million, or $1.50 per share (diluted),
compared with $106.0 million, or $1.93 per share (diluted) in 1999. Per share
net income (diluted), including net realized investment gains and losses, was
$.51 for the third quarter and $1.54 for the full nine months, compared with
$.51 and $1.84, respectively, in 1999.
Company-wide premiums written in the third quarter were $320.5 million, a
4.4% increase over 1999. California premiums written in the quarter were
$283.6 million, a 1.6% increase over 1999.
The loss ratio (GAAP basis) was 71.9% in the third quarter and 71.3% for
the full nine months, compared to 68.5% and 66.2%, respectively, in 1999. The
higher loss ratio in the quarter, as compared to the third quarter of 1999,
was largely due to an increase in recorded severity on California automobile
claims partially offset by an improvement in the Company's operations outside
of California.
The expense ratio (GAAP basis) was 26.2% in the third quarter and 26.8%
for the full nine months, compared to 26.4% and 26.9%, respectively, in 1999.
The Company had an underwriting loss of $3.2 million in the quarter from
its operations outside of California compared to an underwriting loss of
$5.0 million in the third quarter of 1999. The third quarter underwriting
loss was principally attributable to a $2.6 million loss in the Company's new
operations in Texas. The Company had better loss experience and lower
underwriting expenses at American Mercury Insurance Group and at the Company's
Florida operations.
Investment income in the quarter increased 8.2% to $26.9 million. After
taxes at an effective rate of 10.4% versus 10.2% in 1999, per share (diluted)
investment income was $.44 in the third quarter, compared with $.41 in 1999.
The after-tax yield on average investments of $1.7 billion (fixed maturities
and equities at cost) was approximately 5.56% for the quarter, compared with
5.62% for all of 1999.
Realized investment gains totaled $0.6 million in the third quarter
compared to a realized investment loss of $6.8 million in the third quarter of
1999. The large realized loss in 1999 was primarily due to a $6.0 million
write down of a permanently impaired preferred stock holding.
On October 27, 2000, the Board of Directors declared a second quarter
dividend of $.24 per share to be paid on December 28, 2000 to holders of
record on December 14, 2000. The Company's book value per share at September
30, 2000 was $18.22 per share.
SUMMARY OF OPERATING RESULTS (000)
Quarter Ended September 30,
2000 1999
Net Premiums Written $320,516 $307,062
Net Premiums Earned 315,108 300,070
Paid Losses and Loss Adjustment Expenses 209,173 188,775
Incurred Losses 226,706 205,412
Net Investment Income 26,865 24,834
Net Operating Income (a) 27,015 32,113
Capital Gains (Losses), net of tax 406 (4,417)
Net Income $27,421 $27,696
Basic Average Shares Outstanding 54,074,298 54,633,375
Diluted Average Shares Outstanding 54,223,764 54,818,300
Basic Per Share Data
Earnings Per Share $0.51 $0.51
Diluted Per Share Data (b)
Net Operating Income $0.50 $0.59
Capital Gains (Losses), net of tax $0.01 ($0.08)
Earnings Per Share $0.51 $0.51
Operating Ratios--GAAP Basis (c)
Loss Ratio 71.9% 68.5%
Expense Ratio 26.2% 26.4%
Combined Ratio 98.1% 94.9%
Nine Months Ended September 30,
2000 1999
Net Premiums Written $956,111 $907,802
Net Premiums Earned 931,950 886,522
Paid Losses and Loss Adjustment Expenses 634,132 561,857
Incurred Losses 664,609 586,523
Net Investment Income 78,536 73,942
Net Operating Income (a) 81,551 106,024
Capital Gains (Losses), net of tax 1,810 (5,323)
Net Income $83,361 $100,701
Basic Average Shares Outstanding 54,098,916 54,615,320
Diluted Average Shares Outstanding 54,230,720 54,833,838
Basic Per Share Data
Earnings Per Share $1.54 $1.84
Diluted Per Share Data (b)
Net Operating Income $1.50 $1.93
Capital Gains (Losses), net of tax $0.03 ($0.10)
Earnings Per Share $1.54 $1.84
Operating Ratios--GAAP Basis (c)
Loss Ratio 71.3% 66.2%
Expense Ratio 26.8% 26.9%
Combined Ratio 98.1% 93.1%
(a) Net Income, excluding capital gains, net of tax.
(b) Numbers may not sum due to rounding differences
(c) Generally Accepted Accounting Principles