Exhibit 99.1
Mercury General Corporation Announces Fourth Quarter Results
LOS ANGELES, Feb. 9 /PRNewswire-FirstCall/ -- Mercury General Corporation
(NYSE: MCY) reported today that net income was $49.2 million ($0.90 per share
- - diluted) in the fourth quarter of 2003 compared to $17.3 million ($0.32 per
share - diluted) in the same period in 2002. Included in net income are net
realized investment gains, net of tax, of $3.8 million ($0.07 per share) in
the fourth quarter of 2003 compared to net realized investment losses, net of
tax benefit, of $14.2 million ($0.26 per share) for the same period in 2002.
Net income in the fourth quarter of 2003 also includes approximately
$16 million ($10.2 million after tax benefit or $0.19 per share) in losses
resulting from the October 2003 Southern California fire storms.
For the year, net income was $184.3 million ($3.38 per share - diluted) in
2003 compared to net income of $66.1 million ($1.21 per share - diluted) in
2002. Net realized investment gains, net of tax, was $7.3 million ($0.13 per
share) in 2003 compared to net realized investment losses, net of tax benefit,
of $45.8 million ($0.84 per share) in 2002.
Company-wide premiums written were $591.4 million in the fourth quarter of
2003, a 17.2% increase over 2002, and $2.3 billion for the year, a 21.6%
increase over 2002. California premiums written were $481.7 million in the
fourth quarter of 2003, a 12.6% increase over 2002, and $1.9 billion for the
year, an 18.8% increase over 2002. Non-California premiums written were
$109.7 million in the fourth quarter of 2003, a 43.2% increase over 2002 and
$382.6 million for the year, a 37.7% increase over 2002. Non-California
premiums made up 18.5% of fourth quarter premiums, up from 15.2% for the same
period in 2002.
The Company's combined ratio (GAAP basis) was 94.1% in the fourth quarter
of 2003 and 94.0% for the entire year compared to 97.6% and 98.8% for the
respective periods of 2002. The Southern California fire storms negatively
impacted the combined ratio by 2.7% for the fourth quarter of 2003 and 0.7%
for the entire year of 2003.
Net investment income of $26.3 million for the fourth quarter decreased by
$0.4 million over the corresponding period in 2002. The after-tax yield was
3.9% on average investments of $2.42 billion (fixed maturities and equities at
cost) for the quarter. This compares with 4.4% in the fourth quarter of 2002.
Net investment income for 2003 was $104.5 million compared to $113.1 million
for 2002.
Mercury General Corporation and its subsidiaries are a multiple line
insurance organization offering predominantly personal automobile and
homeowners insurance through a network of independent agents and brokers in
many states. For more information, visit our website at
www.mercuryinsurance.com. The Company will be hosting a conference call and
webcast today at 10:00 a.m. pacific time where management will discuss results
and address questions. The teleconference can be accessed by calling
1 (877) 807-1888 or by visiting
www.mercuryinsurance.com/corporate/calendarofevents.asp. A replay of the call
will be available beginning at 1:30 p.m. pacific time and running through
February 16, 2004. The replay telephone numbers are 1 (800) 642-1687 (USA) or
1 (706) 645-9291 (International). The conference ID# is 4885467. The replay
will also be available on our website shortly following the call.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. The statements contained in
this press release are forward-looking statements based on the Company's
current expectations and beliefs concerning future developments and their
potential effects on the Company. There can be no assurance that future
developments affecting the Company will be those anticipated by the Company.
Actual results may differ from those projected in the forward-looking
statements. These forward-looking statements involve significant risks and
uncertainties (some of which are beyond the control of the Company) and are
subject to change based upon various factors, including but not limited to the
following risks and uncertainties: changes in the demand for the Company's
insurance products, and in general economic conditions; the accuracy and
adequacy of the Company's pricing methodologies; market risks associated with
the Company's investment portfolio; uncertainties related to estimates,
assumptions and projections generally; the possibility actual loss experience
may vary adversely from the actuarial estimates made to determine the
Company's loss reserves; inflation and changes in economic conditions; the
Company's ability to obtain and the timing of regulatory approval for
requested rate changes; legislation adverse to the automobile insurance
industry or business generally that may be enacted in California or other
states; the presence of competitors with greater financial resources and the
impact of competitive pricing; changes in driving patterns and loss trends;
acts of war and terrorist activities; court decisions and trends in litigation
and health care and auto repair costs and marketing efforts; and various
legal, regulatory and litigation risks. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as the
result of new information, future events or otherwise. For a more detailed
discussion of some of the foregoing risks and uncertainties, see the Company's
filings with the Securities and Exchange Commission.
Mercury General Corporation
Information Regarding Non-GAAP Measures
The Company has presented information within this document containing
operating measures which in management's opinion provide investors useful
industry specific information to evaluate and perform meaningful comparisons
of the Company's performance but that may not be presented in accordance with
Generally Accepted Accounting Principles ("GAAP"). These measures are not
intended to replace, and should be read in conjunction with, the GAAP
financial results. The Company has reconciled these measures with the most
directly comparable GAAP measure in the supplemental schedule entitled,
"Summary of Operating Results."
Net Premiums Written represents the premiums charged on policies issued
during a fiscal period. Net Premiums Earned, the most directly comparable
GAAP measure, represents the portion of premiums written that is recognized as
income in the financial statements for the periods presented and earned on a
pro-rata basis over the term of the policies. Net Premiums Written is meant
as supplemental information and is not intended to replace Net Premiums
Earned. It should be read in conjunction with the GAAP financial results.
Paid Losses and Loss Adjustment Expenses is the portion of Incurred Losses
and Loss Adjustment Expenses, the most directly comparable GAAP measure,
excluding the effects of changes in the loss reserve accounts. Paid Losses
and Loss Adjustment Expenses is meant as supplemental information and is not
intended to replace Incurred Losses and Loss Adjustment Expenses. It should
be read in conjunction with the GAAP financial results.
Mercury General Corporation and Subsidiaries
Summary of Operating Results
(000's) except per-share amounts
(unaudited)
Quarter Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Net premiums written $591,401 $504,597 $2,268,778 $1,865,046
Net premiums earned 572,671 481,277 2,145,047 1,741,527
Paid losses and loss
adjustment expenses 347,453 300,001 1,330,784 1,119,946
Incurred losses and loss
adjustment expenses 385,330 344,528 1,452,051 1,268,243
Net investment income 26,348 26,732 104,520 113,083
Net realized investment gains
(losses), net of tax 3,817 (14,163) 7,285 (45,768)
Net income $49,226 $17,330 $184,321 $66,105
Basic average shares
outstanding 54,418 54,350 54,402 54,314
Diluted average shares
outstanding 54,586 54,487 54,547 54,502
Basic Per Share Data
Net income $0.90 $0.32 $3.39 $1.22
Net realized investment gains
(losses), net of tax $0.07 ($0.26) $0.13 ($0.84)
Incurred losses from Southern
California Fire Storms, net
of tax benefit ($0.19) N/A $(0.19) N/A
Diluted Per Share Data
Net income $0.90 $0.32 $3.38 $1.21
Net realized investment gains
(losses), net of tax $0.07 ($0.26) $0.13 ($0.84)
Incurred losses from Southern
California Fire Storms, net
of tax benefit ($0.19) N/A $(0.19) N/A
Operating Ratios--GAAP
Basis (a)
Loss ratio 67.3% 71.6% 67.7% 72.8%
Expense ratio 26.8% 26.0% 26.3% 26.0%
Combined ratio 94.1% 97.6% 94.0% 98.8%
Impact of Southern California
Fire Storms on loss ratio 2.7% N/A 0.7% N/A
Reconciliations of Operating
Measures to Comparable
GAAP (a) Measures
Net premiums written $591,401 $504,597 $2,268,778 $1,865,046
Increase in unearned premiums (18,730) (23,320) (123,731) (123,519)
Net premiums earned $572,671 $481,277 $2,145,047 $1,741,527
Paid losses and loss
adjustment expenses $347,453 $300,001 $1,330,784 $1,119,946
Increase in net losses and
loss adjustment expense
reserves 37,877 44,527 121,267 148,297
Incurred losses and loss
adjustment expenses $385,330 $344,528 $1,452,051 $1,268,243
(a) Generally Accepted Accounting Principles
N/A - Not applicable
Mercury General Corporation and Subsidiaries
Other Supplemental Information
(000's) except ratios
(unaudited)
Quarter ending, Twelve months ending,
December 31, December 31,
2003 2002 2003 2002
Total California
Operations (1)
Net Premiums Written $481,744 $428,018 $1,886,217 $1,587,165
Net Premiums Earned 477,291 407,759 1,804,960 1,489,144
Loss Ratio 68.8% 72.6% 68.9% 73.1%
Expense Ratio 25.5% 25.2% 25.4% 25.1%
Combined Ratio (3) 94.3% 97.8% 94.3% 98.3%
California Automobile lines
Net Premiums Written $442,636 $398,493 $1,738,462 $1,477,750
Net Premiums Earned 440,791 380,959 1,674,801 1,397,446
Loss Ratio 67.9% 73.4% 69.0% 73.1%
Expense Ratio 25.7% 24.9% 25.3% 24.8%
Combined Ratio 93.6% 98.3% 94.3% 97.9%
California Homeowners line
Net Premiums Written $32,407 $24,345 $122,897 $90,570
Net Premiums Earned 30,328 22,399 108,141 75,830
Loss Ratio 84.0% 66.2% 67.9% 75.0%
Expense Ratio 24.4% 26.4% 25.1% 27.3%
Combined Ratio 108.4% 92.6% 93.0% 102.3%
Non-California Operations (2)
Net Premiums Written $109,657 $76,579 $382,561 $277,881
Net Premiums Earned 95,381 73,518 340,087 252,383
Loss Ratio 59.7% 66.0% 61.5% 71.0%
Expense Ratio 33.5% 30.5% 30.9% 31.3%
Combined Ratio 93.2% 96.5% 92.4% 102.3%
At At
Policies-in-force (000's) December 31, 2003 September 30, 2003
California Personal Auto 1,026 1,018
California Commercial Auto 20 19
Non-California Personal Auto 184 169
California Homeowners 187 178
Florida Homeowners 10 9
At At
December 31, 2002 September 30, 2002
California Personal Auto 952 916
California Commercial Auto 18 18
Non-California Personal Auto 150 144
California Homeowners 154 145
Florida Homeowners 6 6
All ratios are calculated on GAAP basis.
(1) Total California operations includes homeowners, auto, commercial
property and other immaterial California business lines
(2) Includes all states except California
(3) Some numbers may not sum due to rounding
Mercury General Corporation and Subsidiaries
Condensed Balance Sheet and Other Information
(000's) except per-share amounts
December 31, 2003 December 31, 2002
Investments - available for sale
Fixed maturities at market
(amortized cost $1,856,083 in 2003
and $1,565,760 in 2002) $1,945,309 $1,632,871
Equity securities at market (cost
$223,113 in 2003 and $233,297 in
2002) 264,393 230,981
Short-term cash investments, at
cost, which approximates market 329,812 286,806
Total investments 2,539,514 2,150,658
Net receivables 299,094 259,445
Deferred policy acquisition costs 132,059 107,485
Other assets 149,099 127,708
Total assets $3,119,766 $2,645,296
Loss and loss adjustment expenses $797,927 $679,271
Unearned premiums 663,004 545,485
Other liabilities 278,617 192,895
Notes payable 124,715 128,859
Shareholders' equity 1,255,503 1,098,786
Total liabilities and shareholders'
equity $3,119,766 $2,645,296
Common stock - shares outstanding 54,424 54,362
Book value per share $23.07 $20.21
Statutory surplus $1,169,427 $1,014,935
Portfolio duration 3.8 years 4.4 years
SOURCE Mercury General Corporation
-0- 02/09/2004
/CONTACT: Theodore Stalick, VP/CFO of Mercury General Corporation,
+1-323-937-1060/
/Web site: http://www.mercuryinsurance.com/corporate/calendarofevents.asp
http://www.mercuryinsurance.com /
(MCY)
CO: Mercury General Corporation
ST: California
IN: FIN INS
SU: ERN