MCY - Earnings call transcript Q4 2019 | Mercury General Corporation

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Operator

Good morning. My name is Nicole and I will be your conference operator today. At this time, I would like to welcome everyone to the Mercury General Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions] [Operator

operating may events forward-looking trends, here materially and and affect and General's operations call current based which of uncertainties comments positions. results may Mercury expectations, financial those cause predicted from today. plans, financial future and which contain cannot conference involve differ or statements and discussed on may Such be This statements and quantified, risks which results to and activities industry future

turn to Sir, like now call over Tirador. would I Gabriel Mr. the please to ahead. go

Gabriel Tirador

President I President you very Gabe President Vice like Thank and In is Stalick, Vice to everyone Product and Mercury's Chief and and Vice Joseph, President quarter much. the and Chief I'm CFO; would call. Jeff George Chris to with Officer. Graves, me Ted Mr. welcome Schroeder, conference room Investment Officer; CEO. fourth Chairman; Tirador, Senior

a regarding questions, we comments the will few make quarter. Before we take

operating compared tax a of benefit operating the Our income. XXXX. tax related of from reversal earnings quarter in of an Act. in per Included was from was tax XXXX state quarter related in fourth to of in The federal and related tax a fourth unrecognized $X.XX previously primarily fourth an $X.XX increase per recognition improvement the of adjustments an to benefits an IRS California sequestration tax fourth tax Tax income the Included a a per a operating benefits, franchise the were results, share in per previously quarter to share in ratio after accruals $X.XX increase the to quarter tax earnings rule the reduction share to a XXXX and loss combined reduction due benefit share was audit. in $X.XX unrecognized in of investment XXXX results

the quarter to combined XXX.X% million development reserve XXX.X% quarter to due XXXX. ratio to XXXX. of in $X was in million in adverse fourth was quarter of combined of compared The the The $XX in quarter fourth reserve the fourth improvement primarily ratio the positive of XXXX the compared in development

In in of million the than in million catastrophe $XX the lower XXXX. the of addition, quarter losses of catastrophe quarter fourth losses $XX were

of impact the year premiums month ended was earned, seated the period catastrophe XX.X% period XXXX, losses, Excluding development XX and XX.X% XXXX. XX.X% XX, and month and for accident compared combined reserve the prior for XX the quarter ended December quarter reinstatement the XX.X% in and to XX, ratio December

ratio in increases fourth combined the XX.X% in and of redundancies compared private quarter quarter quarter combined Partially to of combined accident the the the California taken an severity. year due was and of to prior increase increases from in reserve year reserve development $XX and adverse primarily in XXXX. auto $XX The XXXX ratio reserve of development offsetting during to million XXXX, rate in rate improvement auto million passenger the to favorable approximately prior action compared quarter was private in the in frequency fourth passenger California was of XXX.X% Our the ratio fourth XXXX. improvement

by auto passenger fourth coverage frequency the the two these of for the quarter recently Insurance compared private pending to of as represent from filed the primarily quarter compared about quarter XXXX. and the of approval California with X% severity Department the bodily to California as fourth increased and by XXXX, direct premiums X% increase increase insurance increased of quarter Collectively, in rate A California in auto automobile injury the X% Company. for earned. thirds personal was rate auto Insurance personal companywide Mercury X% companies

were Department homeowner's quarter a to was in in XXX% approved XXXX. the California million and implemented our losses in in the fourth XXXX. X.XX% fourth California California increase XXX% quarter was of $XX Insurance quarter in by of homeowner's ratio our August rate wildfires combined line XXXX. homeowners in compared of quarter $XX Catastrophe the A XXXX, of was in primarily to California the Our million fourth compared from line

In our the California of approval of X.XX% represent homeowner's premiums in California with a increase line addition, pending about rate earned. premiums Insurance. Department is XX% companywide direct homeowners California

Those quarter For approximately include fourth no XXX% auto year fourth the compared compared development premium states of $XXX in premium to reserve homeowner of a outside and XXXX the personal XXXX. XXX% of in $X of ratio results earned prior of fourth earned California on lines $XXX to on of million in million we unfavorable million posted quarter of combined development quarter approximately the of XXXX. a

outside Our lines XXXX, states of personal in California XX% in combined year compared year to was XXX% date to for ratio XXXX. accident

severity XXXX. private increase were in states passenger in the the Increases ratio in primary the several combined for auto in in reason

increasing We been to have results. rates many our states auto California private improve in outside of passenger

an with experience been Advantage we all, have one of Mercury our the end deployed loss to segmentation improved of named increased has in Mercury Advantage. introduced has production where has Mercury by scheduled but the it XXXX. Advantage is to released states also product be the have of date, states updated favorable. been outside California We and to

primarily higher was an XXXX homeowners increase profitability to higher related was fourth policies acquisition an double expense due X% compared results to accruals in slightly quarter in written. reinsurance increase expense premiums of excluding lower in underlying premiums an Premiums written, ratio offset in partially to underwriting and The outside the grew in average total of policy costs. due by written reinstatement California per XX.X% ratio primarily in premium quarter Our on quarter, fourth favorable the in homeowner's XXXX. saw with digit and XX.X% The basis. results growth the

questions. With that will brief background, take now we

Operator

Raymond [Operator the of James. Instructions] The first with question will come line Greg Peters from

Greg Peters

Good call. questions results. Thanks on for couple of morning. you the your for A

year Do deteriorating that for a auto it was First that about ratio I combined the appear, you you ratio million? about And or objective to of do over results outside listening you combined be with down able of California. in of timeframe have all, California mind home interest year $XXX commentary home. when a an of your basis seems auto outside have a with to on to below might be and get

Gabriel Tirador

Well, Greg, good its question.

As homeowner's 'XX. our an in for personal we're auto in outside XXXX results think year of I accident the as mentioned earlier and we our I 'XX example in posted what in California. is And XX.X was XX.X XX.X

rate outside So of for into in What severity XX 'XX just we actually our really of our rate. that a were that increases decent results was built kind was California. offset increases any saw in year

higher by example had much other severity. saw with some driven Texas as Florida. Florida So, also severity some PIP increased expected we much an issues - in And in state, than increases large

XX. action. some unexpected, in severity respect developments are We in So we pretty were we to I XXXX that we with but much taking had think, didn't there anticipate,

mentioned we rate. taking remarks I our prepared have As in

that out which to in of what is is we've be the for XXXX. addition going segmented better to In introduced, a product the stage rolling much believe we rest that most of

Greg Peters

that framework And both rate file-and-use guess Texas I a on? so Is it regulatory and is approval Florida Florida, or some need correct? prior you homeowners of state to relates more of

Gabriel Tirador

write we Florida. don't Well, homeowners in

and file use. So you Florida, can in

Greg Peters

And same with Texas correct?

Gabriel Tirador

Yes.

Greg Peters

Is because able take the very theoretically, that go you fair shouldn’t So long after should to be this fix a you're a restore rate need the pretty, assumption? profitability. to

Gabriel Tirador

it a while you bit in. earn mean, because Well, six takes have policies a takes month little little it to I and

results. earlier. So in. improved in file with we to would see generally that there's that And in should that But XXXX, speaking, offset rate I statement. increases some mentioned we [enough] rate did back earning severity I If as [ph] agree for the we

Greg Peters

you Right. for Thank the color.

might higher. one in you retention you as guess in was us XXXX, by a property change And think reinsurance relates about was basis? per a changed given event, a should catastrophe especially surprises know, it preview we how XXXX? it to the was the think of your experience like, event year well, your structure can give your a how fires, last exposure how You you And had and reinsurance I per your losses, surprise, catastrophes change on wasn't but

Gabriel Tirador

that. answer Ted have I'll Sure,

Ted Stalick

goes July that were reinsured current X June worst So, we're season. that treaty which no treaty. behind so the on There to the hit from of fire the XX losses

when come next So go we're expecting this pretty the up we renewal. July for rational be to pricing

of a what more lot reinsurance. the those renewal market, currently in start as at retention then renewal, or As and we limits available spring on updated limits once know market. our the PML to in the depend the in lot will look again, and we'll analysis similar the marketing our pricing the capacity changing that we a retention also probably And finish have. the go expect get far to and of and the tolerances now, as risk But we

Greg Peters

so over treaty losses related reinsured season But there current far. on far you the reinsurance this largely fire that no but fire correct? is Obviously were said to so with year,

Ted Stalick

That's correct.

none million the of fires XX to large retention Our was were into get that. and enough

Greg Peters

Okay, for just the answers. great. would business. guess the I Thank be And final on you question then those California

compares where cycle etcetera. the of X% these just view that You rate show be increases, rate your you have you loss do about rate getting sort in trend? you think the cost to of you exceeds rate are how loss right up trend you know, that results. guess now to X.X%, seeing you about I feel talk line Do your results? it like filed Do not feels How in when should your relative but a we're improvement bottom

Gabriel Tirador

that I Cal I where two for be And results, in that about And we private and that with pretty a last Well, ratio mentioned California indications good and auto of we the rate think we these we was look Auto. that every do quarter. about lot right rate a prior When XX%. we year. increases call now in quarter, not feel latest for MIC applied pending, combined are entire our a the would take both booked in was there earned XX% at you passenger

better basis; level XX%. earned an on than the it's So

we're hopefully with actually now. get where So that will feel in we addition, rate in pretty good filings right approved these at XXXX

Greg Peters

homeowners What combined your When California? for business the you do XXXX will in you portion think the of at ratio like look look results? the only

Gabriel Tirador

XX, was do or what expect? much it we How in

Greg Peters

It's California? historical a just numbers, homeowners

Gabriel Tirador

was XXX% combined. It

Greg Peters

XXXX? did that with compare how And

Gabriel Tirador

XXXX, XXX. the accident XXX a was year calendar was and XXXX like year the for

Greg Peters

the correct? gave year, the calendar XXX that is you And

Gabriel Tirador

Yes.

Greg Peters

Okay. Thank for very answers. much you your

Operator

this Instructions] We questions show [Operator further no at audio time.

Gabriel Tirador

Okay.

thank to talk this we'll have everyone like you Thank you I'd for a quarter. call and quarter. much. to short us again very joining next We

Operator

your and ask This you disconnect you today's conference does Thank conclude participation please your call. for line. that

Mercury General (MCY) 10 Feb 202019 Q4 Earnings call transcript