1
This filing is made pursuant
to Rule 424(b)(5) under
the Securities Act of
1933 in connection with
Registration No. 333-62228
PROSPECTUS SUPPLEMENT
AUGUST 2, 2001
(TO PROSPECTUS DATED JULY 20, 2001)
$125,000,000
MERCURY GENERAL CORPORATION
[MERCURY LOGO]
7.25% SENIOR NOTES DUE 2011
-------------------------
We will pay interest on the notes semi-annually at the rate of 7.25% per
year on February 15 and August 15 of each year, commencing on February 15, 2002.
The notes will be senior obligations of our company and will rank equally with
any unsecured and unsubordinated indebtedness from time to time outstanding.
We have the option to redeem all or a portion of the notes at any time at
the redemption price described in "Description of the Notes -- Optional
Redemption" on page S-4.
-------------------------
<Table>
<Caption>
PER NOTE TOTAL
-------- -----
Public offering price (1)................................... 99.723% $124,653,750
Underwriting discount....................................... .650% $ 812,500
Proceeds to us before expenses.............................. 99.073% $123,841,250
</Table>
- -------------------------
(1) Plus accrued interest from August 7, 2001, if settlement occurs after that
date.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The underwriters expect to deliver the notes in New York, New York on or
about August 7, 2001 through the book-entry facilities of The Depository Trust
Company.
-------------------------
BOOK-RUNNING MANAGER
BANC OF AMERICA SECURITIES LLC MERRILL LYNCH & CO.
2
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
PROSPECTUS SUPPLEMENT
Mercury General Corporation................................. S-1
Recent Financial Results.................................... S-2
Use of Proceeds............................................. S-2
Capitalization.............................................. S-2
Selected Consolidated Financial Information................. S-3
Description of the Notes.................................... S-4
Underwriting................................................ S-10
Legal Matters............................................... S-11
PROSPECTUS
About this Prospectus....................................... 1
Mercury General Corporation................................. 1
Forward-Looking Statements.................................. 3
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities.............................. 5
Plan of Distribution........................................ 15
Experts..................................................... 16
Legal Matters............................................... 16
Where You Can Find More Information......................... 17
</Table>
-------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF
ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT
RELY ON IT. WE WILL NOT MAKE AN OFFER TO SELL THESE DEBT SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING
PROSPECTUS IS ACCURATE AS OF THE DATES ON THEIR RESPECTIVE COVERS. OUR BUSINESS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE
THOSE DATES.
i
3
MERCURY GENERAL CORPORATION
Mercury General is an insurance holding company for a group of property and
casualty insurance companies engaged primarily in writing automobile insurance
in California, Florida, Georgia, Illinois, Oklahoma, Texas and Virginia. Founded
in 1961 by George Joseph, our President and Chief Executive Officer, we have
become a leading provider of automobile insurance in California. In 1989, we
began expanding our operations outside of California, initially in Georgia and
Illinois. Since that time, we have continued to expand our operations in Georgia
and Illinois and have begun operations in Florida, Oklahoma, Texas and Virginia
through acquisitions and internal growth.
The types of coverage offered to our automobile policyholders include
bodily injury liability, underinsured and uninsured motorist, personal injury
protection, property damage liability, comprehensive, collision and other
hazards. The insurance policies offered by our subsidiaries are sold to the
public through more than 2,000 independent insurance agents and brokers. With
approximately 771,000 private passenger automobile policies in force in
California as of December 31, 2000, Mercury General was the sixth largest
automobile insurer in California among both direct and agency insurance
companies. Approximately 85% of our total gross insurance premiums written in
2000 were derived from automobile insurance premiums written in California. Our
subsidiaries also write homeowners' insurance, mechanical breakdown insurance,
commercial and dwelling fire insurance and commercial property insurance.
In 2000, A.M. Best & Co. assigned a rating of A+ (Superior) to all of our
insurance subsidiaries other than American Mercury Insurance Company and
American Mercury Lloyds Insurance Company, which are rated A- (Excellent), and
other than Mercury County Mutual Insurance Company, which we acquired in
September 2000 and which is currently under review by A.M. Best & Co.
Our consolidated net income was $109.4 million for the year ended December
31, 2000 and $24.7 million for the three months ended March 31, 2001. As of
March 31, 2001, our total assets were $2.2 billion, including our investment
portfolio which had a market value of $1.8 billion.
Our headquarters are located at 4484 Wilshire Boulevard, Los Angeles,
California 90010. Our telephone number is (323) 937-1060. We also maintain
offices in a number of locations in California, Florida, Illinois, Georgia, New
York, Oklahoma, Texas and Virginia.
OUR STRATEGY
Our key strategies include focusing on our core automobile insurance
business, supplementing our core business with other complementary lines, and
growing our geographic presence. Elements of our strategy to achieve profitable
growth include:
- continuing to expand our core business geographically;
- maintaining strong underwriting results through strict underwriting
procedures and actuarially sound pricing;
- increasing the strength of our relationships with our independent agents
and brokers;
- developing new systems for ease of use by agents and insureds; and
- maintaining a conservative balance sheet and strong financial position.
S-1
4
RECENT FINANCIAL RESULTS
On July 30, 2001, we reported our results for the three- and six-month
periods ended June 30, 2001. Net premiums written in the quarter were $350.7
million, a 12.0% increase over 2000, and net premiums written for the first six
months were $694.0 million, a 9.2% increase over 2000. Net operating income
(consisting of net income, excluding capital gains and losses, net of taxes) for
the second quarter of 2001 was $26.5 million compared with net operating income
for the second quarter of 2000 of $25.6 million. Net operating income for the
first six months of 2001 was $48.4 million compared with $54.5 million in 2000.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the offering of
approximately $123.8 million. We intend to use a substantial portion of the net
proceeds of the offering to repay the outstanding indebtedness under our credit
facilities. Our $75,000,000 credit facility matures November 21, 2001, and as of
June 30, 2001 had $75,000,000 outstanding with a weighted average interest rate
of 6.03% for the six month period ending June 30, 2001. Our $30,000,000 credit
facility matures October 26, 2001, and as of June 30, 2001 had $27,000,000
outstanding with a weighted average interest rate of 6.09% for the six month
period ending June 30, 2001. We entered into our $30,000,000 credit facility on
October 27, 2000 to repay the outstanding indebtedness under a prior credit
facility. We intend to use any additional proceeds for general corporate
purposes, including paying debt, repurchasing common stock, investing in our
subsidiaries and for working capital, capital expenditures and acquisitions. To
the extent we do not use the net proceeds for repayment of debt immediately, we
may invest the proceeds in marketable securities.
CAPITALIZATION
The following table sets forth our unaudited consolidated capitalization as
of March 31, 2001 and as adjusted for the offering of the notes and the
application of the proceeds to the repayment of outstanding indebtedness. You
should read this table in conjunction with our unaudited consolidated financial
statements and the related notes contained in our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2001.
<Table>
<Caption>
AS OF MARCH 31, 2001
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS OF DOLLARS)
Debt:
Notes offered hereby.............................. $ -- $ 125,000
Notes payable..................................... 107,578 5,578
---------- ----------
Total debt................................ 107,578 130,578
Shareholders' equity:
Common Stock, without par value or stated value;
70,000,000 shares authorized; 54,198,623 issued
and outstanding................................ 52,209 52,209
Accumulated other comprehensive income............ 33,175 33,175
Unearned ESOP compensation........................ (1,750) (1,750)
Retained earnings................................. 962,230 962,230
---------- ----------
Total shareholders' equity................ 1,045,864 1,045,864
---------- ----------
Total capitalization...................... $1,153,442 $1,176,442
========== ==========
</Table>
S-2
5
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected consolidated financial information for each of the years in
the five-year period ended December 31, 2000 has been derived from our audited
consolidated financial statements. The selected consolidated financial
information for the three months ended March 31, 2001 and 2000 has been derived
from our unaudited consolidated financial statements, and includes, in our
opinion, all adjustments of a normal recurring nature necessary to present
fairly the financial information below. You should read the following
information in conjunction with the information set forth under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements, including the related
notes, incorporated by reference in this prospectus supplement and the
accompanying prospectus. See "Where You Can Find More Information" in the
accompanying prospectus.
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS OF DOLLARS, EXCEPT RATIOS)
SUMMARY OF OPERATIONS:
Revenues:
Net premiums earned.... $ 323,772 $ 304,655 $1,249,259 $1,188,307 $1,121,584 $1,031,280 $ 754,724
Investment income,
net.................. 28,019 25,484 106,466 99,374 96,169 86,812 70,180
Realized investment
gains (losses),
net.................. 4,384 1,482 3,944 (11,929) (3,926) 4,973 (3,173)
Realized gain from sale
of subsidiary........ -- -- -- -- 2,586 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Other.................. 1,274 1,757 6,349 4,924 5,710 4,881 3,233
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues....... 357,449 333,378 1,366,018 1,280,676 1,222,123 1,127,946 824,964
---------- ---------- ---------- ---------- ---------- ---------- ----------
Losses and expenses:
Losses and loss
adjustment
expenses............. 240,217 213,644 901,781 789,103 684,468 654,729 501,858
Policy acquisition
costs................ 71,501 67,106 268,657 267,399 252,592 224,883 160,019
Other operating
expenses............. 15,271 14,919 59,733 50,675 44,941 33,579 24,493
Interest............... 1,863 1,671 7,292 4,960 4,842 4,976 2,004
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total expenses....... 328,852 297,340 1,237,463 1,112,137 986,843 918,167 688,374
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes.................. 28,597 36,038 128,555 168,539 235,280 209,779 136,590
Income taxes............. 3,889 6,100 19,189 34,830 57,754 53,473 30,826
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............... $ 24,708 $ 29,938 $ 109,366 $ 133,709 $ 177,526 $ 156,306 $ 105,764
========== ========== ========== ========== ========== ========== ==========
Operating Income (1)..... $ 21,858 $ 28,975 $ 106,802 $ 141,463 $ 178,397 $ 153,074 $ 107,826
========== ========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA (AT
PERIOD END):
Total investments and
cash................... $1,826,731 $1,637,450 $1,800,896 $1,583,517 $1,592,532 $1,451,259 $1,171,892
Total assets............. 2,169,915 1,959,213 2,142,263 1,906,367 1,877,025 1,725,532 1,419,927
Unpaid losses and LAE.... 482,716 432,615 492,220 434,843 405,976 409,061 336,685
Unearned premiums........ 381,401 357,625 365,579 340,846 327,129 309,376 260,878
Notes payable............ 107,578 95,000 107,889 92,000 78,000 75,000 75,000
Shareholders' equity..... $1,045,864 $ 936,537 $1,032,905 $ 909,591 $ 917,375 $ 799,592 $ 641,222
OPERATING RATIOS (GAAP):
Loss ratio............... 74.2% 70.1% 72.2% 66.4% 61.0% 63.5% 66.5%
Expense ratio............ 26.8% 26.9% 26.3% 26.8% 26.6% 25.1% 24.4%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Combined ratio........... 101.0% 97.0% 98.5% 93.2% 87.6% 88.6% 90.9%
========== ========== ========== ========== ========== ========== ==========
Operating return on
average shareholders'
equity (2)............. 8.4% 12.6% 11.0% 15.5% 20.8% 21.2% 17.9%
</Table>
- ---------------
(1) Operating income excludes extraordinary items, realized investment gains
(losses), and realized gain from sale of subsidiary, in each case net of
taxes.
(2) Operating income divided by average shareholders' equity.
S-3
6
DESCRIPTION OF THE NOTES
We have summarized provisions of the notes below. This summary supplements
and, to the extent inconsistent with, replaces the description of the general
terms and provisions of the debt securities under the caption "Description of
Debt Securities" in the accompanying prospectus.
GENERAL
We will issue the notes as a separate series of securities under an
indenture between us and Bank One Trust Company, National Association, as
trustee. This indenture is described in the accompanying prospectus.
We are initially offering the notes in the principal amount of
$125,000,000. We may, without the consent of the holders, issue additional notes
and thereby increase that principal amount in the future, on the same terms and
conditions and with the same CUSIP number as the notes we offer by this
prospectus supplement.
The notes will mature on August 15, 2011 and will bear interest at a rate
of 7.25% per year. Interest on the notes will accrue from August 7, 2001, or
from the most recent interest payment date to which interest has been paid or
duly provided for. We:
- will pay interest on the notes semi-annually on February 15 and August 15
of each year, commencing on February 15, 2002;
- will pay interest to the person in whose name a note is registered at the
close of business on the February 1 or August 1 preceding the interest
payment date;
- will compute interest on the basis of a 360-day year consisting of twelve
30-day months;
- will make payments on the notes at the offices of the trustee; and
- may make payments by wire transfer for notes held in book-entry form or
by check mailed to the address of the person entitled to the payment as
it appears in the notes register.
If any interest payment date or maturity or redemption date falls on a day
that is not a business day, then the payment will be made on the next business
day without additional interest and with the same effect as if it were made on
the originally scheduled date. "Business day" means any day other than a
Saturday, Sunday or other day on which banking institutions in The City of New
York are authorized or required to close.
We will issue the notes only in fully registered form, without coupons, in
denominations of $1,000 and multiples of $1,000. The notes will not have the
benefit of any sinking fund.
OPTIONAL REDEMPTION
We may redeem the notes, in whole or in part, at our option at any time or
from time to time. The redemption price for the notes to be redeemed on any
redemption date will be equal to the greater of the following amounts:
- 100% of the principal amount of the notes being redeemed on the
redemption date; or
- the sum of the present values of the remaining scheduled payments of
principal and interest on the notes being redeemed on that redemption
date (not including any portion of any interest payments accrued to the
redemption date) discounted to the redemption date on a semi-annual basis
at the Treasury Rate (as defined below), as determined by the Reference
Treasury Dealer (as defined below), plus 25 basis points;
plus, in each case, accrued and unpaid interest on the notes to the redemption
date. Notwithstanding the foregoing, installments of interest on notes that are
due and payable on interest payment dates falling on or prior to a redemption
date will be payable on the interest payment date to the registered holders as
of the close of business on the relevant record date according to the notes and
the indenture. The redemption price will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
S-4
7
We will mail notice of any redemption at least 30 days but not more than 90
days before the redemption date to each registered holder of the notes to be
redeemed. Once notice of redemption is mailed, the notes called for redemption
will become due and payable on the redemption date and at the applicable
redemption price, plus accrued and unpaid interest to the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of the notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of the Reference Treasury Dealer
Quotations, or (B) if the trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations, or (C) if only one Reference Treasury Dealer Quotation is received,
such Reference Treasury Dealer Quotation.
"Reference Treasury Dealer" means (A) Banc of America Securities LLC (or
its affiliates which are Primary Treasury Dealers) and its successors; provided,
however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), we
will substitute therefor another Primary Treasury Dealer; and (B) any other
Primary Treasury Dealer(s) selected by us.
"Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. (New York
City time) on the third business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
On and after the redemption date, interest will cease to accrue on the
notes or any portion of the notes called for redemption (unless we default in
the payment of the redemption price and accrued interest).
RANKING
The notes will be our senior unsecured obligations and will rank equally in
right of payment with all of our other unsecured and unsubordinated
indebtedness. As of March 31, 2001, we had approximately $107.6 million of
indebtedness outstanding that would have ranked equally in right of payment with
the notes. We intend to repay approximately $102.0 million of this indebtedness
with the proceeds of the offering. Other than as described below, the indenture
does not limit the amount of indebtedness we may incur.
In addition, we conduct our operations through subsidiaries, which generate
our operating income and cash flow. As a result, distributions or advances from
our subsidiaries are a major source of funds necessary to meet our debt service
and other obligations. Contractual provisions and insurance and other laws and
regulations, as well as our subsidiaries' financial condition and operating
requirements, may limit our ability to obtain the cash required to pay our
obligations, including payments on the notes. Our direct insurance subsidiaries
may pay dividends to us during 2001 of approximately $94.0 million. The notes
will be effectively subordinated to the obligations of our subsidiaries,
including claims of our policyholders and our creditors. This means that holders
of the notes will have a junior position to the claims of policyholders and
creditors of our subsidiaries on their assets and earnings.
S-5
8
LIMITED RESTRICTIONS ON ADDITIONAL INDEBTEDNESS
Other than as described below, the indenture does not limit the amount of
indebtedness that we or our subsidiaries may incur or give holders of the debt
securities protection in the event of a sudden and significant decline in our
credit quality or a takeover, recapitalization or highly leveraged or similar
transaction involving us. Accordingly, we could in the future enter into
transactions that could increase the amount of indebtedness outstanding at that
time or otherwise affect our capital structure or credit rating. However, the
indenture does restrict our ability and our subsidiaries' ability to incur
certain secured debt.
CERTAIN RESTRICTIONS
For purposes of the lien limitation and sales of capital stock restrictions
described below and this definition, a "subsidiary" is an entity of which more
than 50% of the interests entitled to vote in the election of directors or
managers is owned by any combination of us and our subsidiaries.
Limitations of Liens on Common Stock of Designated Subsidiaries. Neither we
nor any of our subsidiaries will be permitted to create, assume, incur or permit
to exist any indebtedness secured by any lien on the common stock of any
designated subsidiary unless the notes and, if we so elect, any other
indebtedness of ours that is not subordinate to the notes and with respect to
which the governing instruments require, or pursuant to which we are otherwise
obligated to provide such security, are secured equally and ratably with this
indebtedness for at least the time period this other indebtedness is so secured.
"Designated subsidiary" means any present or future consolidated subsidiary
of ours, the consolidated shareholders' equity of which constitutes at least 10%
of our consolidated shareholders' equity. As of June 30, 2001, our designated
subsidiaries were Mercury Casualty Company and Mercury Insurance Company.
"Common stock" means, with respect to any designated subsidiary, capital
stock of any class, however designated, except capital stock that is
non-participating beyond fixed dividend and liquidation preferences and the
holders of which have either no voting rights or limited voting rights, only in
the case of certain contingencies, to elect less than a majority of the
directors of such designated subsidiary, and shall include capital stock of any
class, however designated, which are convertible into such common stock.
"Indebtedness" means, with respect to any person, for purposes of this
covenant:
- the principal of, and any premium and interest on, indebtedness of the
person for money borrowed and indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
that person is responsible or liable;
- all capitalized lease obligations of that person;
- all obligations of that person issued or assumed as the deferred purchase
price of property, assets or businesses (except that the deferred
purchase price shall not be considered indebtedness if the purchase price
thereof is payable in full within 90 days from the date on which such
indebtedness was created);
- all obligations of that person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction,
other than obligations with respect to some letters of credit securing
obligations entered into in the ordinary course of business;
- all guarantees of that person of obligations of the type referred to
above or dividends of other persons;
- all obligations of the type referred to above of third parties secured by
any lien on the common stock of our designated subsidiaries, the amount
of this obligation being deemed to be the lesser of the value of the
common stock of our designated subsidiaries or the amount of the
obligation so secured; and
- any amendments, modifications, refundings, renewals or extensions or any
indebtedness or obligation described above.
S-6
9
Limitations on Sales of Capital Stock of Designated Subsidiaries. So long
as any notes are outstanding and except in a transaction otherwise permitted by
the indenture, we will not issue, sell, transfer or dispose of capital stock of
a designated subsidiary (other than preferred stock having no voting rights of
any kind, except as required by law or in the event of non-payment of
dividends), except to ourselves, to one of our subsidiaries or director's
qualifying shares, if, after giving effect to any such transaction, we would
own, directly or indirectly, less than 80% of the shares of the designated
subsidiary. In addition, we will not permit any designated subsidiary to issue,
sell, transfer or dispose of its capital stock (other than preferred stock
having no voting rights of any kind, except as required by law or in the event
of non-payment of dividends), except to ourselves, to one of our subsidiaries or
director's qualifying shares, if, after giving effect to any such transaction,
we would own, directly or indirectly, less than 80% of the shares of the
designated subsidiary (other than preferred stock having no voting rights of any
kind, except as required by law or in the event of non-payment of dividends) and
in each case, except that any issuance, sale, transfer or other disposition
permitted by us may only be made for at least a fair market value consideration
as determined by our board of directors pursuant to a board resolution adopted
in good faith; and the foregoing shall not prohibit the issuance or disposition
of securities if required by any law or any regulation or order of any court or
governmental or insurance regulatory authority.
NOTICES
We will mail notices and communications to a holder's address as shown on
the notes register.
PAYING AGENTS AND TRANSFER AGENTS
The trustee will be the paying agent and transfer agent for the notes.
THE TRUSTEE
Bank One Trust Company, National Association is the trustee under the
indenture. We have engaged, and in the future may engage, in commercial banking
transactions with affiliates of the trustee, in the ordinary course of business.
An affiliate of the trustee is one of several lenders under our $75,000,000
credit facility. We intend to repay all of the outstanding indebtedness under
our $75,000,000 credit facility with the proceeds of the offering.
BOOK-ENTRY DELIVERY AND SETTLEMENT
We will issue the notes in the form of one or more permanent global notes
in definitive, fully registered form. The global securities will be deposited
with or on behalf of The Depository Trust Company, referred to as DTC, and
registered in the name of Cede & Co., as nominee of DTC, or will remain in the
custody of the trustee in accordance with the FAST Balance Certificate Agreement
between DTC and the trustee.
DTC has advised us that:
- DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934;
- DTC holds securities that its direct participants deposit with DTC and
facilitates the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in direct
participants' accounts, thereby eliminating the need for physical
movement of securities certificates;
- Direct participants in DTC include securities brokers and dealers, trust
companies, clearing corporations and other organizations;
- DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange LLC and the National
Association of Securities Dealers, Inc.;
S-7
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- Access to the DTC system is also available to indirect participants such
as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant,
either directly or indirectly; and
- The rules applicable to DTC and its participants are on file with the
SEC.
We have provided the following descriptions of the operations and
procedures of DTC solely as a matter of convenience. These operations and
procedures are solely within the control of DTC and are subject to change by
them from time to time. Neither we, the underwriters nor the trustee take any
responsibility for these operations or procedures, and you are urged to contact
DTC or its participants directly to discuss these matters.
We expect that under procedures established by DTC:
- Upon deposit of the global securities with DTC or its custodian, DTC will
credit on its internal system the accounts of direct participants
designated by the underwriters with portions of the principal amounts of
the global securities; and
- Ownership of the notes will be shown on, and the transfer of ownership of
the notes will be effected only through, records maintained by DTC or its
nominee, with respect to interests of direct participants, and the
records of direct and indirect participants, with respect to interests of
persons other than participants.
The laws of some jurisdictions require that purchasers of securities take
physical delivery of those securities in the form of a certificate. For that
reason, it may not be possible to transfer interests in a global security to
those persons. In addition, because DTC can act only on behalf of its
participants, who in turn act on behalf of persons who hold interests through
participants, the ability of a person having an interest in a global security to
pledge or transfer that interest to persons or entities that do not participate
in DTC's system, or otherwise to take actions in respect of that interest, may
be affected by the lack of a physical definitive security in respect of that
interest.
So long as DTC or its nominee is the registered owner of a global security,
DTC or that nominee will be considered the sole owner or holder of the notes
represented by that global security for all purposes under the indenture and
under the notes. Except as described below, owners of beneficial interests in a
global security will not be entitled to have notes represented by that global
security registered in their names, will not receive or be entitled to receive
the notes in the form of a physical certificate and will not be considered the
owners or holders of the notes under the indenture or under the notes, and may
not be entitled to give the trustee directions, instructions or approvals. For
that reason, each holder owning a beneficial interest in a global security must
rely on DTC's procedures and, if that holder is not a direct or indirect
participant in DTC, on the procedures of the DTC participant through which that
holder owns its interest, to exercise any rights of a holder of notes under the
indenture or the global security.
Neither we nor the trustee will have any responsibility or liability for
any aspect of DTC's records relating to the notes or relating to payments made
by DTC on account of the notes, or any responsibility to maintain, supervise or
review any of DTC's records relating to the notes.
We will make payments on the notes represented by the global securities to
DTC or its nominee, as the registered owner of the notes. We expect that when
DTC or its nominee receives any payment on the notes represented by a global
security, DTC will credit participants' accounts with payments in amounts
proportionate to their beneficial interests in the global security as shown in
DTC's records. We also expect that payments by DTC's participants to owners of
beneficial interests in the global security held through those participants will
be governed by standing instructions and customary practice as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. DTC's participants will be responsible for those
payments.
Payments on the notes represented by the global securities will be made in
immediately available funds. Transfers between participants in DTC will be made
in accordance with DTC rules and will be settled in immediately available funds.
S-8
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CERTIFICATED NOTES
We will issue certificated notes to each person that DTC identifies as the
beneficial owner of notes represented by the global securities upon surrender by
DTC of the global securities only if:
- DTC notifies us that it is no longer willing or able to act as a
depository for the global securities, and we have not appointed a
successor depository within 90 days of that notice;
- An event of default has occurred and is continuing; or
- We decide not to have the notes represented by a global security.
Neither we nor the trustee will be liable for any delay by DTC, its nominee
or any direct or indirect participant in identifying the beneficial owners of
the related notes. We and the trustee may conclusively rely on, and will be
protected in relying on, instructions from DTC or its nominee, including
instructions about the registration and delivery, and the respective principal
amounts, of the notes to be issued.
S-9
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UNDERWRITING
We are selling the notes to the underwriters named below under an
underwriting agreement among us and the underwriters named below. The
underwriters and the principal amount of notes each of them has severally agreed
to purchase from us are as follows:
<Table>
<Caption>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
Banc of America Securities LLC.............................. $106,250,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 18,750,000
------------
Total..................................................... $125,000,000
============
</Table>
The underwriting agreement provides that the obligations of the
underwriters are subject to conditions precedent and that when these conditions
are satisfied the underwriters will be obligated to purchase all of the notes.
The notes are a new issue of securities with no established trading market.
We do not intend to apply for listing of the notes on any national securities
exchange. We have been advised by the underwriters that they intend to make a
market in the notes, but they are not obligated to do so and may discontinue
market-making at any time without notice. We can give no assurance as to the
liquidity of, or any trading market for, the notes.
The underwriters initially propose to offer the notes to the public at the
public offering price set forth on the cover of this prospectus supplement and
to some dealers at a price that represents a concession not in excess of .400%
of the principal amount of the notes. Any underwriter may allow, and any of
these dealers may reallow, a concession not in excess of .250% of the principal
amount of the notes to some other dealers. After the initial offering of the
notes, the underwriters may, from time to time, vary the offering price and the
selling terms.
We have agreed to indemnify the several underwriters against, or contribute
to payments that the underwriters may be required to make in respect of, some
liabilities, including liabilities under the Securities Act of 1933.
We estimate that we will spend approximately $500,000 for expenses of the
offering.
In connection with the offering of the notes, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the price of the
notes. Specifically, the underwriters may overallot in connection with the
offering of the notes, creating a syndicate short position. In addition, the
underwriters may bid for, and purchase, the notes in the open market to cover
short positions or to stabilize the price of the notes. Finally, the
underwriters may reclaim selling concessions allowed for distributing the notes
in the offering, if the underwriters repurchase previously distributed notes in
transactions to cover short positions, in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain the market prices
of the notes above independent market levels. The underwriters are not required
to engage in any of these activities at any time.
In the ordinary course of their respective businesses, some of the
underwriters and/or their affiliates have engaged, and expect in the future to
engage, in investment banking, commercial banking, financial advisory and/or
general financing transactions with us, for which they have received, and may in
the future receive, customary fees and commissions for these services.
An affiliate of Banc of America Securities LLC is the lender under our
$30,000,000 credit facility, of which $27,000,000 is currently outstanding and
will be repaid with the proceeds of the offering. Because the amount to be
repaid to this affiliate will exceed 10% of the net proceeds from the sale of
the notes, this offering is being conducted in compliance with the provisions of
Rule 2710(c)(8) of the Conduct Rules of the National Association of Securities
Dealers, Inc.
S-10
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LEGAL MATTERS
Latham & Watkins, Los Angeles, California, will pass upon the validity of
the notes offered pursuant to this prospectus supplement for Mercury General.
Mayer, Brown & Platt, Chicago, Illinois, will pass upon certain legal matters
for the underwriters.
S-11
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PROSPECTUS
$300,000,000
MERCURY GENERAL CORPORATION
Debt Securities
-------------------------
We may offer and sell the debt securities from time to time in one or more
offerings. This prospectus provides you with a general description of the debt
securities we may offer.
Each time we sell debt securities, we will provide a supplement to this
prospectus that contains specific information about the offering and the terms
of the debt securities. The supplement may also add, update or change
information contained in this prospectus. You should carefully read this
prospectus and the accompanying prospectus supplement, as well as the
information we refer to under "Where You Can Find More Information," before you
invest in any of our debt securities.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE DEBT SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------------
The date of this prospectus is July 20, 2001
15
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
About this Prospectus....................................... 1
Mercury General Corporation................................. 1
Forward-Looking Statements.................................. 3
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities.............................. 5
Plan of Distribution........................................ 15
Experts..................................................... 16
Legal Matters............................................... 16
Where You Can Find More Information......................... 17
</Table>
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ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we filed
with the United States Securities and Exchange Commission. By using a shelf
registration statement, we may sell up to $300,000,000 aggregate offering price
of debt securities described in this prospectus from time to time and in one or
more offerings. This prospectus only provides you with a general description of
the debt securities that we may offer. Each time we sell debt securities, we
will provide a supplement to this prospectus that contains specific information
about the terms of the debt securities. The supplement may also add, update or
change information contained in this prospectus. Before purchasing any debt
securities, you should carefully read both this prospectus and the accompanying
prospectus supplement, together with the additional information described under
the heading "Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and in any prospectus supplement. We have not
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We will not make an offer to sell these debt securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus and the accompanying prospectus supplement is
accurate as of the dates on their respective covers. Our business, financial
condition, results of operations and prospects may have changed since those
dates.
When we refer to "we," "our" and "us" in this prospectus, we mean Mercury
General Corporation, excluding, unless the context otherwise requires or as
otherwise expressly stated, our subsidiaries. When we refer to "you" or "yours,"
we mean the offerees or holders of the applicable series of debt securities.
MERCURY GENERAL CORPORATION
Mercury General is an insurance holding company for a group of property and
casualty insurance companies engaged primarily in writing automobile insurance
in California, Florida, Georgia, Illinois, Oklahoma, Texas and Virginia. The
types of coverage offered to our automobile policyholders include bodily injury
liability, underinsured and uninsured motorist, personal injury protection,
property damage liability, comprehensive, collision and other hazards, each as
specified in the applicable policy. Our subsidiaries also write homeowners'
insurance, mechanical breakdown insurance, commercial and dwelling fire
insurance and commercial property insurance. The insurance policies offered by
our subsidiaries are sold to the public through more than 2,000 independent
insurance agents. With approximately 771,000 private passenger automobile
policies in force in California as of December 31, 2000, Mercury General was the
sixth largest automobile insurer in California among both direct and agency
insurance companies. Approximately 85% of our total gross insurance premiums
written in 2000 were derived from automobile insurance premiums written in
California.
Our operations in California are conducted through Mercury Casualty
Company, a California insurance company founded in 1961 by George Joseph, our
president, chief executive officer and chairman of our board of directors, and
two other insurance subsidiaries, Mercury Insurance Company and California
Automobile Insurance Company. In 1989, we began expanding our operations outside
of California, initially in Georgia and Illinois. Since that time, we have
continued to expand our operations in Georgia and Illinois and have begun
operations in Florida, Oklahoma, Texas and Virginia through acquisitions and
internal growth.
In 2000, A.M. Best & Co. assigned a rating of A+ (Superior) to all of our
insurance subsidiaries other than American Mercury Insurance Company and
American Mercury Lloyds Insurance Company, which are rated A- (Excellent), and
other than Mercury County Mutual Insurance Company, which we acquired in
September 2000 and which is currently under review by A.M. Best & Co.
As a holding company with no significant business operations of its own,
Mercury General relies on dividends from its insurance subsidiaries as the
principal source of funds to meet its obligations, including the payment of
principal of and any interest on its debt obligations, and to pay dividends to
its shareholders. Each of our insurance subsidiaries is subject to the
regulatory powers of the insurance
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department of its respective state of domicile. These states' insurance laws
prohibit casualty insurance companies from paying dividends or advances within
any twelve-month period, without prior regulatory approval, in excess of the
greater of:
- 10% of the insurance company's statutory earned surplus at the preceding
December 31; or
- the insurance company's net income for the calendar year preceding the
date the dividend is paid.
Under this test, Mercury General's direct insurance subsidiaries may pay
dividends to Mercury General during 2001 of approximately $94 million.
The above information is only a summary and is not comprehensive. For
additional information concerning us, you should refer to the information
described under "Where You Can Find More Information" in this prospectus.
Mercury General's principal offices are located at 4484 Wilshire Boulevard,
Los Angeles, California 90010. Our telephone number is (323) 937-1060. We also
maintain offices in a number of locations in California, Florida, Illinois,
Georgia, New York, Oklahoma, Texas and Virginia.
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FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement, and the documents
they incorporate by reference may contain statements that are not historical
fact and constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are indicated by
words or phrases such as "believe," "intend," "anticipate," "estimate," "plan,"
"project," "continuing," "ongoing," "expect," "may," "should," "management
believes," "we believe," "we intend" and other similar words or phrases. These
statements may address, among other things, our strategy for growth, business
development, regulatory approvals, market position, expenditures, financial
results and reserves. Forward-looking statements are not guarantees of
performance and are subject to important factors and events that could cause our
actual business, prospects and results of operations to differ materially from
the historical information contained in this prospectus and from those that may
be expressed or implied by the forward-looking statements. Factors that could
cause or contribute to such differences include, among others:
- the intense competition currently existing in the California automobile
insurance markets,
- our success in expanding our business in states outside of California,
- the impact of potential third party "bad-faith" legislation,
- changes in laws or regulations, third party relations and approvals, and
decisions of courts, regulators and governmental bodies, particularly in
California,
- our ability to obtain the approval of the California Insurance
Commissioner for premium rate changes for private passenger automobile
policies issued in California and similar rate approvals in other states
where we do business,
- our success in integrating and profitably operating the businesses we
have acquired,
- the level of investment yields we are able to obtain with our investments
in comparison to recent yields,
- the cyclical and general competitive nature of the property and casualty
insurance industry and general uncertainties regarding loss reserve
estimates, and
- other uncertainties, all of which are difficult to predict and many of
which are beyond our control.
These important factors are discussed in more detail under "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-K for the year ended December 31,
2000, our Quarterly Report on Form 10-Q for the three-month period ended March
31, 2001, any accompanying prospectus supplements, and other documents we have
filed with the SEC and which are incorporated by reference herein. You may
obtain copies of these documents as described under "Where You Can Find More
Information" in this prospectus.
We assume no obligation to update any forward-looking statements as a
result of new information or future events or developments, except as required
under federal securities laws. Investors are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of the date of
this prospectus or, in the case of any document we incorporate by reference, the
date of that document. Investors also should understand that it is not possible
to predict or identify all factors and should not consider the risks set forth
above to be a complete statement of all potential risks and uncertainties. If
the expectations or assumptions underlying our forward-looking statements prove
inaccurate or if risks or uncertainties arise, actual results could differ
materially from those predicted in any forward-looking statements.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the debt securities for
general corporate purposes, including repaying, redeeming or repurchasing our
existing debt or common stock, and for working capital, capital expenditures and
acquisitions. We may invest funds not required immediately in securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to fixed charges
for each of the years in the five-year period ended December 31, 2000 and for
the three months ended March 31, 2001:
<Table>
<Caption>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
2001 2000 1999 1998 1997 1996
------------ ---- ---- ---- ---- ----
Ratio of earnings to fixed charges........ 12.5 14.1 23.9 36.1 32.5 40.3
</Table>
We have computed the ratio of earnings to fixed charges by dividing
earnings before income taxes plus fixed charges by fixed charges. Fixed charges
consist of interest expense and one-third of the annual rent expense, which is a
reasonable approximation of rental expense interest.
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DESCRIPTION OF DEBT SECURITIES
The following is a general description of the terms and provisions of the
debt securities we may offer and sell by this prospectus. This summary is not
meant to be a complete description of the debt securities. This prospectus
together with any accompanying prospectus supplement will contain the material
terms and conditions for each series of debt securities. The applicable
prospectus supplement may add, update or change the terms and conditions of the
debt securities as described in this prospectus.
The debt securities will be governed by an indenture between us and Bank
One Trust Company, N.A., as trustee. The indenture gives us broad authority to
set the particular terms of each series of debt securities, including the right
to modify certain terms contained in the indenture as described below under
"Modification of Indenture." The particular terms of a series of debt securities
and the extent, if any, to which the particular terms of the issue modify the
terms of the indenture will be described in the prospectus supplement relating
to such series of debt securities.
The indenture contains the full legal text of the matters described in this
section. The following is a summary of the material provisions of the indenture,
and does not describe every aspect of the debt securities or the indenture. This
summary is subject to and qualified in its entirety by reference to all the
provisions of the indenture, including definitions of terms used in the
indenture. A copy of the indenture is attached as an exhibit to the registration
statement of which this prospectus is a part. We also include references in
parentheses to certain sections of the indenture. Whenever we refer to
particular sections or defined terms of the indenture in this prospectus or in a
prospectus supplement, these sections or defined terms are incorporated by
reference into this prospectus or into the prospectus supplement. This summary
also is subject to and qualified by reference to the description of the
particular terms of a particular series of debt securities described in the
applicable prospectus supplement or supplements.
The indenture is subject to and governed by the Trust Indenture Act of
1939, as amended, and may be supplemented or amended from time to time following
its execution.
GENERAL
We may issue an unlimited amount of debt securities under the indenture in
one or more series. We need not issue all debt securities of one series at the
same time and, unless otherwise provided in a prospectus supplement, we may
reopen a series without the consent of the holders of the debt securities of
that series for issuances of additional debt securities of that series.
The debt securities will be issued as senior debt securities. The debt
securities will be unsecured obligations and will rank equally with all of our
other unsecured and unsubordinated indebtedness.
We refer you to the applicable prospectus supplement for a description of
the following terms of each series of debt securities:
(a) the title of the debt securities;
(b) any limit upon the aggregate principal amount of the debt
securities;
(c) the person to whom interest is payable if other than the person in
whose name the debt securities is registered;
(d) the date or dates on which principal will be payable or how to
determine the dates and the right, if any, to shorten or extend the date on
which principal will be payable and the conditions to any such change;
(e) the rate or rates or method of determination of interest, the date
or dates from which interest will accrue, the dates on which interest will
be payable, which we refer to as the "interest payment dates," the manner
of determination of such interest payment dates, and any record dates for
the interest payable on the interest payment dates;
(f) whether we may extend the interest payment periods and, if so, the
terms of any extensions;
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(g) the place or places where we must make payments on the debt
securities and where any debt securities issued in registered form may be
sent for transfer or exchange;
(h) the period or periods during which, and the price or prices at
which, and the terms and conditions on which the debt securities may be
redeemed, in whole or in part, at our option;
(i) the obligation, if any, of us to redeem or purchase the debt
securities under any sinking fund, purchase fund or analogous provisions or
at the option of a holder and the details of that obligation;
(j) the denominations in which the debt securities will be issuable
(if other than denominations of $1,000 and any integral multiple thereof);
(k) any index or formula for determining the amount of principal of,
premium, if any, or interest on the debt securities, and the manner of
determining those amounts;
(l) the currency, currencies, or currency units in which the principal
of, premium, if any, or interest on any debt securities will be payable and
the manner of determining the equivalent in the currency of the United
States of America;
(m) the currency, currencies or currency units in which the principal
of, premium, if any, and interest is payable, at our option or the option
of the holders, in one or more currencies or currency units other than
those the debt securities are stated to be payable, and the terms and
conditions of the option;
(n) the amount we will pay or the manner in which such amount shall be
determined if the maturity of the debt securities is accelerated;
(o) if the principal amount payable on the maturity date will not be
determinable on any one or more dates prior to the maturity date, the
amount which will be deemed to be the principal amount as of any date for
any purpose, including the principal amount which will be due and payable
upon any maturity other than the maturity date, or the manner of
determining that amount;
(p) whether any terms of the indenture described below under
"Defeasance and Covenant Defeasance" will not apply to any of the debt
securities;
(q) whether the debt securities are to be issued, in whole or in part,
in the form of one or more global debt securities and, if so, the identity
of the depositary for the global debt securities;
(r) any addition, modification or deletion to any events of default or
covenants that apply to the debt securities; and
(s) any other terms of the debt securities of that series.
(See Section 301.)
PAYMENTS
Unless we indicate differently in a prospectus supplement, we will pay
interest on the debt securities on each interest payment date to the person in
whose name the debt securities are registered as of the close of business on the
regular record date relating to the interest payment date. However, if we
default in paying interest on a debt security, we will set a special record and
payment date and pay defaulted interest on the payment date to the registered
holder of the debt security as of the close of business on a special record
date, or we can propose to the trustee any other lawful manner of payment that
is consistent with the requirements of any debt securities exchange on which the
debt securities are listed for trading. (See Section 307.)
Unless we indicate differently in a prospectus supplement, we will pay
principal of and any premium and interest on the debt securities at stated
maturity, upon redemption or otherwise, upon presentation of the debt securities
at the office of the trustee, as the paying agent. Any other paying agent
initially designated for the debt securities of a particular series will be
named in the applicable prospectus
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supplement. We may designate additional paying agents, rescind the designations
of any paying agent or approve a change in the office through which any paying
agent acts, but we must maintain a paying agent in each place where payments on
the debt securities are payable. (See Section 1002.)
If any maturity date, redemption date or interest payment date of the debt
securities is not a business day at any place of payment, then payment of the
principal, premium, if any, and interest may be made on the next business day at
that place of payment. (See Section 113.)
FORM; TRANSFERS; EXCHANGES
The debt securities will be issued
(a) only in fully registered form;
(b) without coupons; and
(c) unless otherwise specified in a prospectus supplement, in
denominations that are even multiples of $1,000. (See Section 302.)
Unless we otherwise state in a prospectus supplement, you may have your
debt securities divided into debt securities of smaller denominations (of at
least $1,000) or combined into debt securities of larger denominations, each
containing identical terms and provisions, as long as the total principal amount
is not changed. This is called an "exchange." (See Section 305.)
Unless we otherwise state in a prospectus supplement, you may exchange or
transfer debt securities at the office of the trustee. The trustee acts as our
agent for registering debt securities in the names of holders and exchanging and
transferring debt securities. We may appoint another agent or act as our own
agent for these purposes. The entity performing the role of maintaining the list
of registered holders is called the "security registrar." It will also perform
transfers. (See Section 305.)
In our discretion, we may change the place for registration of transfer or
exchange of the debt securities and may remove and/or appoint one or more
additional security registrars. (See Sections 305 and 1002.)
Except as otherwise provided in a prospectus supplement, there will be no
service charge for any transfer or exchange of the debt securities, but you may
be required to pay a sum sufficient to cover any tax or other governmental
charge payable in connection with the transfer or exchange. We may block the
transfer or exchange of (a) debt securities during a period of 15 days prior to
giving any notice of redemption or (b) any debt security selected for
redemption, in whole or in part, except the unredeemed portion of any debt
security being redeemed in part. (See Section 305.)
GLOBAL SECURITIES
We may issue the debt securities of a series, in whole or in part, in the
form of one or more global debt securities that we will deposit with a
depositary or its nominee that we identify in the applicable prospectus
supplement. We will describe the specific terms of the depositary arrangement
covering the debt securities in the prospectus supplement relating to that
series. We anticipate that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a global security, the depositary for the global
security or its nominee will credit to accounts in its book-entry registration
and transfer system the principal amounts of the debt securities represented by
the global security. The underwriters or agents with respect to the debt
securities or we, if the debt securities are offered and sold directly by us,
will designate these accounts. Only institutions that have accounts with the
depositary or its nominee and persons who hold beneficial interests through
those participants may own beneficial interests in a global security. Ownership
of beneficial interests in a global security will be shown only on, and the
transfer of those ownership interests will be effected only through, records
maintained by the depositary, its nominee or any participants of the depositary
or its nominee, as the case may be. The laws of some states require that some
purchasers of securities take physical delivery
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of securities in definitive form. These laws may limit the market, if any, for
your beneficial interests in a global security.
As long as the depositary or its nominee is the registered owner of a
global security, the depositary or nominee will be considered the sole owner or
holder of the debt securities represented by the global security. Except as
described below, owners of beneficial interests in a global security will not be
entitled to have debt securities registered in their names and will not be
entitled to receive physical delivery of the debt securities in definitive form.
We will make all payments of principal of, any premium and interest on, and
any additional amounts with respect to, debt securities issued as global
securities to the depositary or its nominee. Neither we nor the trustee, any
paying agent or the security registrar assumes any responsibility or liability
for any aspect of the depositary's or any participant's records relating to, or
for payments made on account of, beneficial interests in a global security.
We expect that the depositary for a series of debt securities or its
nominee, upon receipt of any payment with respect to the debt securities, will
immediately credit participants' accounts with payments in an amount
proportionate to their respective beneficial interests in the principal amount
of the global security for the debt securities as shown on the records of the
depositary or its nominee. We also expect that payments by participants to
owners of beneficial interests in the global security held through participants
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered in "street
name," and will be the responsibility of the participants.
The indenture provides that if:
- the depositary notifies us that it is unwilling or unable to continue as
depositary for a series of debt securities, or if the depositary is no
longer legally qualified to serve in that capacity, and we have not
appointed a successor depositary within 90 days of written notice; or
- we determine that a series of debt securities will no longer be
represented by global securities and we execute and deliver an order to
that effect to the trustee;
then the global securities for that series may be exchanged for registered debt
securities in definitive form. The definitive debt securities will be registered
in the name or names with which the depositary instructs the trustee. (See
Section 305.)
REDEMPTION
We will set forth any terms for the redemption of debt securities in a
prospectus supplement. Unless we indicate differently in a prospectus
supplement, and except with respect to debt securities redeemable at the option
of the registered holder, debt securities will be redeemable upon notice by mail
between 30 and 60 days prior to the redemption date. If less than all of the
debt securities of any series or any tranche of a series are to be redeemed, the
trustee will select the debt securities to be redeemed. In the absence of any
provision for selection, the trustee will choose a method of random selection it
deems fair and appropriate. (See Sections 1102, 1103 and 1104.)
Debt securities will cease to bear interest on the redemption date. We will
pay the redemption price and any accrued interest once you surrender the debt
security for redemption. (See Section 1106.) If only part of a debt security is
redeemed, the trustee will deliver to you a new debt security of the same series
for the remaining portion without charge. (See Section 1107.)
We may make any redemption conditional upon the receipt by the paying
agent, on or prior to the date fixed for redemption, of money sufficient to pay
the redemption price. If the paying agent has not received the money by the date
fixed for redemption, we will not be required to redeem the debt securities.
(See Section 1104.)
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EVENTS OF DEFAULT
An "event of default" will occur with respect to the debt securities of any
series if:
(a) we do not pay any interest on any debt securities of the
applicable series within 30 days of the due date (following any deferral
allowed under the terms of the debt securities and elected by us);
(b) we do not pay any principal of or premium on any debt securities
of the applicable series on the due date;
(c) we do not make sinking fund payments on any debt securities of the
applicable series on the due date;
(d) we default in the performance or remain in breach of a covenant,
excluding default in the performance or breach of covenants solely
applicable to another series of debt securities issued under the indenture,
in the indenture or the debt securities of the applicable series for 90
days after we receive a written notice of default stating we are in default
or breach and requiring remedy of the default or breach; the notice must be
sent by either the trustee or registered holders of at least 25% in
principal amount of the outstanding debt securities of the affected series;
(e) we file for bankruptcy or other specified events in bankruptcy,
insolvency, receivership or reorganization occur; or
(f) any other event of default specified in the applicable prospectus
supplement for such series occurs.
(See Section 501.)
We will furnish the trustee with an annual statement as to our compliance
with the terms, provisions and conditions in the indenture.
No event of default with respect to a series of debt securities necessarily
constitutes an event of default with respect to the debt securities of any other
series issued under the indenture.
REMEDIES
Acceleration
If an event of default occurs and is continuing with respect to any series
of debt securities, then either the trustee or the registered holders of at
least 25% in principal amount of the outstanding debt securities of that series
may declare the principal amount of all of the debt securities of that series,
together with accrued and unpaid interest thereon, to be due and payable
immediately. (See Section 502.)
Rescission of Acceleration
After the declaration of acceleration has been made with respect to any
series of debt securities and before the trustee has obtained a judgment or
decree for payment of the money due, the registered holders of a majority in
principal amount of the outstanding debt securities of that series, by written
consent to us and the trustee, may rescind and annul such declaration and its
consequences, if:
(a) we pay or deposit with the trustee a sum sufficient to pay:
(1) all overdue interest on the debt securities of that series,
other than interest which has become due by declaration of acceleration;
(2) the principal of and any premium on the debt securities of that
series which have become due other than by declaration of acceleration
and overdue interest on these amounts;
(3) interest on overdue interest, other than interest which has
become due by declaration of acceleration, on the debt securities of
that series to the extent lawful; and
(4) all amounts due to the trustee under the indenture; and
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(b) all events of default with respect to the debt securities of that
series, other than the nonpayment of the principal and interest which has
become due solely by the declaration of acceleration, have been cured or
waived as provided in the indenture.
(See Section 502.)
For more information as to waiver of defaults, see "-- Waiver of Default
and of Compliance" below.
Control by Registered Holders; Limitations
If an event of default with respect to the debt securities of any series
occurs and is continuing, the registered holders of a majority in principal
amount of the outstanding debt securities of that series, voting as a single
class, without regard to the holders of outstanding debt securities of any other
series that may also be in default, will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee with respect to the debt securities of that series or exercising any
trust or power conferred on the trustee with respect to the debt securities of
that series; provided that
(a) the registered holders' directions do not conflict with any rule
of law or the indenture;
(b) the trustee may take any other action it deems proper which is not
inconsistent with the registered holders' direction, and
(c) the direction is not unduly prejudicial to the rights of holders
of the debt securities of that series who do not join in that action. (See
Section 512.)
In addition, the indenture provides that no registered holder of debt
securities of any series will have any right to institute any proceeding,
judicial or otherwise, with respect to the indenture or for any other remedy
thereunder unless:
(a) that registered holder has previously given the trustee written
notice of a continuing event of default;
(b) the registered holders of at least 25% in aggregate principal
amount of the outstanding debt securities of that series have made a
written request to the trustee to institute proceedings in respect of that
event of default and have offered the trustee reasonable security or
indemnity against costs, expenses and liabilities incurred in complying
with the request; and
(c) for 60 days after receipt of the notice, the trustee has failed to
institute a proceeding and no direction inconsistent with the request has
been given to the trustee during the 60-day period by the registered
holders of a majority in aggregate principal amount of outstanding debt
securities of that series. (See Section 507.)
The trustee is not required to exercise any of its rights or powers at the
request or direction of any of the holders unless the holders offer the trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in complying with the request. (See Section 603.)
However, each registered holder has an absolute and unconditional right to
receive payment when due and to bring a suit to enforce that right. (See Section
508.)
If an event of default is continuing with respect to all the series of debt
securities, the registered holders of a majority in aggregate principal amount
of the outstanding debt securities of all the series, considered as one class,
will have the right to make such direction, and not the registered holders of
the debt securities of any one of the series. (See Section 512.)
NOTICE OF DEFAULT
The trustee is required to give the registered holders of debt securities
of the affected series notice of any default under the indenture to the extent
required by the Trust Indenture Act, unless the default has been cured or
waived. (See Section 602.) The Trust Indenture Act currently permits the trustee
to
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withhold notices of default (except for certain payment defaults) if the trustee
in good faith determines the withholding of the notice to be in the interests of
the registered holders.
WAIVER OF DEFAULT AND OF COMPLIANCE
The registered holders of a majority in aggregate principal amount of the
outstanding debt securities of any series, voting as a single class, without
regard to the holders of outstanding debt securities of any other series, may
waive, on behalf of all registered holders of the debt securities of that
series, any past default under the indenture, except a default in the payment of
principal, premium or interest, or with respect to compliance with certain
provisions of the indenture that cannot be amended without the consent of the
registered holder of each outstanding debt security of that series. (See Section
513.)
Compliance with certain covenants in the indenture or otherwise provided
with respect to debt securities of any series may be waived by the registered
holders of a majority in aggregate principal amount of the debt securities of
such series. (See Section 1006.)
CONSOLIDATION, MERGER AND CONVEYANCE OF ASSETS AS AN ENTIRETY
We may not consolidate or merge with or into any other person, or convey,
transfer or lease our properties and assets substantially as an entirety to any
person and we may not permit another person to consolidate with or merge into
us, unless:
(a) the person formed by the consolidation or into which we are
merged, or the person which acquires us or which leases our property and
assets substantially as an entirety, is a person organized and existing
under the laws of the United States of America or any State of the United
States or the District of Columbia, and expressly assumes, by supplemental
indenture, the due and punctual payment of the principal, premium and
interest on all the outstanding debt securities and the performance of all
of our covenants under the indenture, as supplemented; and
(b) immediately after giving effect to the transactions, no event of
default, and no event which after notice or lapse of time or both would
become an event of default, will have occurred and be continuing. (See
Section 801.)
LIMITED RESTRICTIONS
Unless we otherwise state in the prospectus supplement, the indenture does
not limit our ability to incur debt and does not give holders of debt securities
protection in the event of a sudden and significant decline in our credit
quality or a takeover, recapitalization or highly leveraged or similar
transaction involving us. Accordingly, we could in the future enter into
transactions that could increase the amount of indebtedness outstanding at that
time or otherwise affect our capital structure or credit rating.
COVENANTS
Any covenants with respect to any particular series of debt securities will
be set forth in the applicable prospectus supplement.
MODIFICATION OF INDENTURE
Without Registered Holder Consent. Without the consent of any registered
holders of debt securities of any series, we and the trustee may enter into one
or more supplemental indentures for any of the following purposes:
(a) to evidence the succession of another person to us and the
assumption by such person of the covenants in the indenture and the debt
securities;
(b) to add one or more covenants for the benefit of the holders of all
or any series of debt securities or to surrender any right or power
conferred upon us;
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(c) to add any additional events of default for all or any series of
debt securities;
(d) to add or change any provision of the indenture to facilitate the
issuance of debt securities in bearer form, registrable or not registrable,
with or without coupon and to facilitate the issuance of debt securities in
uncertificated form;
(e) to change or eliminate any provision of the indenture or to add
any new provision to the indenture that does not adversely affect the
interests of the registered holders;
(f) to provide security for the debt securities of any series;
(g) to establish the form or terms of debt securities of any series,
as permitted by the indenture;
(h) to evidence and provide for the acceptance of appointment of a
separate or successor trustee; or
(i) to cure any ambiguity, defect or inconsistency or to make any
other changes with respect to any series of debt securities that do not
adversely affect the interests of the holders of debt securities of that
series in any material respect. (See Section 901.)
If the Trust Indenture Act is amended after the date of the indenture so as
to require changes to the indenture or so as to permit changes to, or the
elimination of, provisions which, at the date of the indenture or at any time
thereafter, were required by the Trust Indenture Act to be contained in the
indenture, the indenture will be deemed to have been amended so as to conform to
the amendment of the Trust Indenture Act or to effect the changes or elimination
required by the Trust Indenture Act, and Mercury General and the trustee may,
without the consent of any registered holders, enter into one or more
supplemental indentures to effect or evidence the same.
With Registered Holder Consent. Subject to the following sentence, we and
the trustee may, with some exceptions, amend or modify the indenture with the
consent of the registered holders of at least a majority in aggregate principal
amount of the debt securities of each series affected by the amendment or
modification. However, no amendment or modification may, without the consent of
the registered holder of each outstanding debt security affected thereby:
(a) change the stated maturity of the principal of or interest on any
debt security (other than pursuant to the terms of the debt security) or
reduce the principal amount of , interest or premium payable upon
redemption, or reduce the principal payable upon acceleration or change the
currency in which any debt security is payable, or impair the right to
bring suit to enforce any payment;
(b) reduce the percentages of registered holders whose consent is
required for any supplemental indenture or waiver; or
(c) modify certain of the applicable provisions in the indenture
relating to supplemental indentures and waivers of certain covenants and
past defaults.
A supplemental indenture which changes or eliminates any provision of the
indenture expressly included solely for the benefit of holders of debt
securities of one or more particular series will be deemed not to affect the
interests under the indenture of the holders of debt securities of any other
series.
(See Section 902.)
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise stated in a prospectus supplement, we may, upon satisfying
several conditions, cause ourselves to be:
(a) discharged from our obligations, with some exceptions, with
respect to any series of debt securities, which we refer to as
"defeasance"; and
(b) released from our obligations under specified covenants with
respect to any series of debt securities, which we refer to as "covenant
defeasance."
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One condition we must satisfy is the irrevocable deposit with the trustee,
in trust, of an amount of money and/or government obligations which, through the
scheduled payment of principal and interest on those obligations, would provide
sufficient moneys to pay the principal of and any premium and interest on those
debt securities on the maturity dates of the payments or upon redemption.
The indenture permits defeasance with respect to any series of debt
securities even if a prior covenant defeasance has occurred with respect to the
debt securities of that series. Following a defeasance, payment of the debt
securities defeased may not be accelerated because of an event of default.
Following a covenant defeasance, payment of the debt securities may not be
accelerated by reference to the specified covenants affected by the covenant
defeasance. However, if an acceleration were to occur, the realizable value at
the acceleration date of the money and government obligations in the defeasance
trust could be less than the principal and interest then due on the respective
debt securities, since the required deposit in the defeasance trust would be
based upon scheduled cash flows rather than market value, which would vary
depending upon interest rates and other factors.
Under current United States federal income tax law, the defeasance
contemplated in the preceding paragraphs would be treated as an exchange of the
relevant debt securities in which holders of the debt securities might recognize
gain or loss. In addition, the amount, timing and character of amounts that
holders would be required after the defeasance to include in income might be
different from that which would be includible in the absence of the defeasance.
Prospective investors are urged to consult their own tax advisors as to the
specific consequences of a defeasance, including the applicability and effect of
tax laws other than United States federal income tax laws.
Under current United States federal income tax laws, unless accompanied by
other changes in the terms of the debt securities, covenant defeasance generally
should not be treated as a taxable exchange.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The trustee with respect to any series of debt securities may resign at any
time by giving written notice to us. The trustee may also be removed with
respect to the debt securities of any series by act of the registered holders of
a majority in principal amount of the then outstanding debt securities of such
series, and in certain circumstances may be removed by us. No resignation or
removal of the trustee, and no appointment of a successor trustee, will become
effective until the acceptance of appointment by a successor trustee in
accordance with the requirements of the indenture. (See Section 610.)
CERTAIN TAX MATTERS
We will describe U.S. federal income tax considerations applicable to debt
securities in the applicable prospectus supplement, as appropriate.
MISCELLANEOUS PROVISIONS
The indenture provides that certain debt securities, including those for
which payment or redemption money has been deposited or set aside in trust, will
not be deemed to be "outstanding" in determining whether the registered holders
of the requisite principal amount of the outstanding debt securities have given
or taken any demand, direction, consent or other action under the indenture as
of any date, or are present at a meeting of registered holders for quorum
purposes. (See Section 101.)
We are entitled to set any day as a record date for the purpose of
determining the registered holders of outstanding debt securities of any series
entitled to give or take any demand, direction, consent or other action under
the indenture, in the manner and subject to the limitations provided in the
indenture. In certain circumstances, the trustee also is entitled to set a
record date for action by registered holders of any series of outstanding debt
securities. If a record date is set for any action to be taken by registered
holders of particular debt securities, the action may be taken only by persons
who are registered holders of the respective debt securities on the record date.
(See Section 104.)
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GOVERNING LAW
The indenture and the debt securities will be governed by and construed in
accordance with the laws of the State of New York. (See Section 112.)
INFORMATION CONCERNING THE TRUSTEE
Subject to the provisions of the Trust Indenture Act, the trustee is under
no obligation to exercise any of the powers vested in it by the indenture at the
request of any holder of the debt securities unless the holders offer the
trustee reasonable security or indemnity against the costs, expenses and
liabilities which might result. The trustee is not required to expend or risk
its own funds or otherwise incur personal financial liability in performing its
duties if the trustee reasonably believes that it is not reasonably assured of
repayment or adequate indemnity. (See Section 601).
An affiliate of the trustee may be one of the underwriters, agents or
dealers through whom we sell debt securities.
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PLAN OF DISTRIBUTION
We may sell the debt securities described in this prospectus from time to
time in one or more transactions
(a) to purchasers directly;
(b) to or through underwriters for public offering and sale by them;
(c) through agents;
(d) through dealers; or
(e) through a combination of any of the foregoing methods of sale.
We may distribute the debt securities from time to time in one or more
transactions at:
(a) a fixed price or prices, which may be changed;
(b) market prices prevailing at the time of sale;
(c) prices related to such prevailing market prices; or
(d) negotiated prices.
We will state in the applicable prospectus supplement the terms of the
offering of the debt securities, including the name or names of any
underwriters, dealers or agents, the purchase price of the debt securities and
the proceeds we will receive from the sale, any underwriting discounts and
commissions and other items constituting underwriters compensation, any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers. We may change the initial public offering price, discounts or
concessions allowed or reallowed or paid to dealers from time to time.
Direct Sales
We may sell the debt securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale of the debt securities.
To Underwriters
Underwriters will purchase the debt securities for their own account and
may re-offer and re-sell the debt securities at a fixed price or prices, which
may be changed, or from time to time at market prices, prices related to
prevailing market prices or at negotiated prices. Underwriters may be deemed to
have received compensation from us from sales of debt securities in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of debt securities for whom they may act as agent.
Underwriters may sell debt securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and may also receive commissions which may be
changed from time to time from the purchasers for whom they may act as agent.
Debt securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by managing
underwriters.
Unless otherwise provided in a prospectus supplement, the obligations of
any underwriters to purchase debt securities or any series of debt securities
will be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all such debt securities if any are purchased.
Through Agents and Dealers
We may authorize agents to solicit offers to purchase our debt securities
from time to time. We will name any agent involved in a sale of debt securities,
as well as any commissions payable by us to such
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agent, in a prospectus supplement. Unless we indicate differently in the
prospectus supplement, any agent will be acting on a reasonable efforts basis
for the period of its appointment.
We may also utilize a dealer in the sale of the debt securities being
offered pursuant to this prospectus and, in that case, we will name the dealer
and the terms of the transaction in the applicable prospectus supplement. If we
sell the debt securities to the dealer as principal, the dealer may resell them
to the public at varying prices to be determined by the dealer at the time of
resale.
General Information
Underwriters, dealers and agents who may participate in a sale of the debt
securities may be deemed to be underwriters as defined in the Securities Act,
and any discounts and commissions received by them and any profit realized by
them on resale of the debt securities may be deemed to be underwriting discounts
and commissions under the Securities Act. We may have or execute agreements with
underwriters, dealers and agents to indemnify them against certain civil
liabilities, including liabilities under the Securities Act, and to reimburse
them for certain expenses, including contributions with respect to payments
which the underwriters, dealers and agents may be required to make.
Underwriters, dealers or agents and their associates may be customers of,
engage in transactions with or perform services for us and/or our affiliates in
the ordinary course of business.
Unless we indicate differently in a prospectus supplement, we will not list
the debt securities on any securities exchange. The debt securities will be a
new issue of debt securities with no established trading market. Any
underwriters that purchase debt securities for public offering and sale may make
a market in such debt securities, but such underwriters will not be obligated to
do so and may discontinue any market making at any time without notice. We make
no assurance as to the liquidity of or the trading markets for any debt
securities.
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus from our Annual Report on Form 10-K for
the year ended December 31, 2000 have been audited by KPMG LLP, independent
auditors, as stated in their reports, which are incorporated herein by reference
and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
LEGAL MATTERS
Latham & Watkins, Los Angeles, California, will pass upon the validity of
the debt securities offered pursuant to this prospectus for Mercury General.
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WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
Mercury General files reports, proxy statements and other information with
the SEC. Information we file with the SEC can be inspected and copied at the
Public Reference Room maintained by the SEC at 450 Fifth Street, N.W. Room 1024,
Washington, D.C. 20549.
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Further information on the operation of the
SEC's Public Reference Room in Washington, D.C. can be obtained by calling the
SEC at 1-800-SEC-0330.
The SEC also maintains a web site that contains reports, proxy statements
and other information about issuers, such as us, who file electronically with
the SEC. The address of that web site is http://www.sec.gov.
Our common stock is listed on the New York Stock Exchange (NYSE: MCY), and
reports, proxy statements and other information concerning us can also be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005. Our web site address is http://www.mercuryinsurance.com.
The information on our web site, however, is not, and should not be deemed to
be, a part of this prospectus.
This prospectus is part of a registration statement that we filed with the
SEC. The full registration statement may be obtained from the SEC or us. The
indenture is filed as an exhibit to the registration statement. Statements in
this prospectus about the indenture are summaries. You should refer to the
actual document for a more complete description of the indenture and the debt
securities.
INCORPORATION BY REFERENCE
The rules of the SEC allow us to incorporate information into this
prospectus by reference, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
and later information that we file with the SEC will automatically update and
supersede that information. Specifically, this prospectus incorporates by
reference the documents listed or described below that have been previously
filed or we will file with the SEC. These documents contain important
information about us which you are encouraged to read.
- Our Annual Report on Form 10-K for the year ended December 31, 2000;
- our Quarterly Report on Form 10-Q for the three-month period ended March
31, 2001;
- our Proxy Statement filed on March 28, 2001; and
- all documents we file with the SEC pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this prospectus and before
the termination of any offering of debt securities.
You may request a free copy of any of the documents incorporated by
reference in this prospectus (other than exhibits, unless the exhibits are
specifically incorporated by reference in the documents) by writing or
telephoning at the following address or telephone number:
Mercury General Corporation
4484 Wilshire Boulevard
Los Angeles, California 90010
Attention: Gabriel Tirador
(323) 937-1060
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$125,000,000
MERCURY GENERAL CORPORATION
[MERCURY LOGO]
7.25% SENIOR NOTES DUE 2011
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PROSPECTUS SUPPLEMENT
AUGUST 2, 2001
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BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH & CO.
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