A.M. Best Affirms Ratings of the Mercury Casualty Group; Assigns Debt Rating.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 28, 2002 A.M. Best Co. has affirmed the financial strength ratings of A+ (Superior) for the Mercury Casualty Group (Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. ). Also, the financial strength ratings of A- (Excellent) of American Mercury Insurance Group Mercury Insurance Group NYSE: MCY is an American automobile and property insurance company founded by George Joseph in 1961. The company's headquarters is in Los Angeles, CA. (Oklahoma City Oklahoma City (1990 pop. 444,719), state capital, and seat of Oklahoma co., central Okla., on the North Canadian River; inc. 1890. The state's largest city, it is an important livestock market, a wholesale, distribution, industrial, and financial center, and a farm ), subsidiaries of Mercury General Corporation (NYSE NYSE See: New York Stock Exchange : MCY MCY Sunshine Coast, Queensland, Australia - Maroochydore (Airport Code) MCY Machine Cycle ), have been affirmed. The outlooks for all ratings are stable. Additionally, A.M. Best has assigned an "a" senior debt rating to Mercury General Corporation's existing debt securities and an indicative rating of "a" to senior debt under the company's $300 million shelf registration, which $175 million remains. These ratings reflect Mercury General's superior capitalization, strong operating performance and dominant market presence as California's largest independent agency auto writer. These positive rating factors are derived from Mercury General's disciplined underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. approach, conservative operating philosophy and strong relationships with independent agencies. Further, Mercury General maintains manageable catastrophe exposure and extensively leverages technology to enhance operating efficiency, renewal persistency and customer satisfaction. Mercury General maintains sustainable competitive advantages within its core personal auto segment, which includes pricing and risk classification expertise, aggressive claims management and a competitive expense structure. Mercury General benefits from considerable financial flexibility, reflective of modest financial leverage, access to capital markets and a history of consistent profitability. These strengths are modestly offset by Mercury General's geographic concentration in California that exposes it to market, regulatory and legislative risk. Since 1999, significant price competition and rising loss costs due to inflation in the California private passenger automobile insurance market have caused deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in loss experience. However, Mercury General continues to implement rate increases to improve underwriting profitability and reduce expense levels through various initiatives. Despite the recent deterioration in underwriting results, A.M. Best expects Mercury General to continue to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the industry composite. This expectation is based on Mercury General's focused underwriting approach and pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. , significant market presence and consistent track record of strong operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before . The financial strength ratings of A+ (Superior) have been affirmed for the following subsidiaries of Mercury Casualty Group: - Mercury Casualty Company - Mercury Insurance Company - California Automobile Insurance Company - Mercury Indemnity Company of Florida - Mercury Insurance Company of Florida - Mercury Indemnity Company of Georgia - Mercury Insurance Company of Georgia - Mercury Indemnity Company of Illinois - Mercury Insurance Company of Illinois - Mercury County Mutual Insurance Company The financial strength ratings of A- (Excellent) have been affirmed for the following subsidiaries of the American Mercury Insurance Group: - American Mercury Insurance Company - American Mercury Lloyds Insurance Company The following senior debt rating has been assigned: Mercury General Corporation-- - "a" to the existing debt of $125 million 7.250% senior notes, due 2011 The following indicative senior debt rating has been assigned: Mercury General Corporation-- - "a" to the $300 million shelf registration, which $175 million remains A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com |
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