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MERCURY GENERAL CORP. REACHES PROPOSED RATE 'ROLLBACK' AGREEMENT WITH CALIFORNIA DEPARTMENT OF INSURANCE

 MERCURY GENERAL CORP. REACHES PROPOSED RATE 'ROLLBACK' AGREEMENT
 WITH CALIFORNIA DEPARTMENT OF INSURANCE
 LOS ANGELES, May 28 /PRNewswire/ -- Mercury General Corp. (NASDAQ: MRCY), a major California automobile insurer, confirmed today that the company has reached a tentative agreement with the California Department of Insurance (DOI) to resolve its Proposition 103 rollback obligation. Under the tentative agreement reached today, the company will refund to each policyholder who was issued a Mercury policy with an inception or renewal date during the Nov. 8, 1988 to Nov. 7, 1989 rollback period an amount equal to approximately 8 percent of the premium paid by the policyholder, plus interest from May 8, 1989. Based on 1989 calendar year premiums, the rollback amount will approximate $45.8 million, including interest. The rollback does not apply to assigned risk policies, and the company had already rolled back its earthquake premiums. As part of the tentative agreement, the DOI will give final approval to all of the company's rates subsequent to the rollback period, and the company will agree not to seek DOI approval of any rate adjustments that would increase any policyholder's premium during the next 12 months other than in accordance with approved rating plans. The agreement is subject to the completion and execution of a definitive Stipulation and Consent Order and its approval in an administrative hearing in which the Mercury Insurance Companies are presently engaged.
 The tentatively agreed-upon refund of approximately $45 million before taxes is $20.3 million more than the $25.5 million potential "rollback" liability which had been accrued by the company through March 31, 1992. The approximate $20.3 million additional amount will be charged to pre-tax earnings in the second quarter of 1992. Preliminarily, it is estimated that the net impact on earnings in the second quarter will be slightly less than $1.00 per share. During the first quarter of 1992, the company had pretax income of $23,323,000 and net income of $18,221,000 ($1.34 per share).
 George Joseph, president and chief executive officer, stated that resolving the "rollback" issue removes a cloud of uncertainty which has affected the company since Proposition 103 was enacted by the California voters in 1988. Mercury is one of the most efficient and consistently profitable automobile insurers in the state, as well as being one of the most price competitive, according to the DOI's survey. "We are pleased to put this matter behind us," Joseph said. "The company can now refocus its undivided attention to serving the growing needs of the California insurance marketplace. Under the commissioner's prior approval regulations and guidelines for approving future rates, important profit incentives have been created so that efficient companies such as Mercury will be permitted to earn higher returns."
 Mercury General, through its insurance company subsidiaries, is a major specialty writer of all risk classifications of private passenger automobile insurance operating primarily in California. For the year ended Dec. 31, 1991, the company had net income of $65.5 million, $4.83 per share, and had shareholders' equity of $277.2 million at Dec. 31, 1991.
 -0- 5/28/92
 /CONTACT: Keith L. Parker, CFO of Mercury General, 213-937-1060/ CO: Mercury General Corp. ST: California IN: INS SU:


KJ -- LA038 -- 4973 05/28/92 17:34 EDT
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Publication:PR Newswire
Date:May 28, 1992
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