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 LOS ANGELES, Nov. 8 /PRNewswire/ -- Mercury General Corp. (NASDAQ: MRCY), a major California automobile insurer, reported today that net income for the nine months ended Sept. 30, 1993, was $72.1 million, or $2.64 per share, compared with $58.5 million, or $2.15 per share, in the corresponding 1992 period. Results a year ago reflect the final pre-tax charge of $18.6 million, equal to $.45 per share after taxes, for the May 1992 settlement of the company's Proposition 103 rate refund obligation. Realized capital gains contributed $.11 per share to both 1993 and 1992 results. Per share results are based on 27.4 million average shares outstanding in 1993 and 27.2 million average shares in 1992.
 In the third quarter alone, net income was $24.2 million, or $.88 per share, compared with $25.8 million, or $.95 per share, in 1992. Realized capital gains contributed $.03 to third quarter per share results in 1993 and $.02 per share in 1992.
 Net premiums written in the third quarter were $126.4 million, an 8.9 percent increase over 1992 and a 7.8 percent increase over the prior quarter. The premium volume gains for the period are the best achieved for several years, reflecting a continued high renewal rate and some pick-up in new business in large part related to the growing contribution of the former Ohio Casualty, Aetna and Reliance agents appointed over the last 12 to 18 months. Mercury's agency force over that period has been enlarged by over 30 percent.
 Underwriting results continue to be excellent. The combined ratio (GAAP basis) was 86.6 percent in the third quarter and 86.3 percent year-to-date. A year ago, the combined ratio was 81.3 percent in the third quarter and 85.5 percent for the full nine months. The exceptional loss experience in the third quarter a year ago, with the loss ratio for that period of 56.0 percent being more than 4 points lower than the 1992 year as a whole and more than 10 points lower than the corresponding quarter in 1991, reflected a number of favorable factors, including significant positive loss reserve development. The loss ratio in the most recent quarter was 60.2 percent, up slightly from the second quarter, but 1.6 points below the year-to-date ratio at June 30, 1993. Accident frequency appears to have increased slightly in recent months, but severity trends (average loss) continue to be favorable.
 Overall underwriting results in the third quarter were impacted by approximately 1.2 points, reflecting principally an increased provision for record ($4.2 million) agents' bonuses announced in the third quarter, the impact of which is reflected entirely in the underwriting expense ratio. The expense ratio in the quarter was 26.4 percent, compared with 25.3 percent a year ago and 24.4 percent year-to-date at June 30, 1993. The year-to-date ratio was 25.1 percent in 1993 and 23.9 percent in 1992.
 Mercury's losses arising from the recent devastating wildfires in Southern California were minimal, totaling less than $100,000, chiefly burned vehicles.
 Investment income in the third quarter was $13.8 million, which, after an effective tax rate of 11.1 percent, was equal to $.45 per share, compared with after-tax investment income of $.41 per share a year ago, after an effective tax rate of 12.5 percent, and $.44 per share in the preceding quarter when the effective tax rate was 10.8 percent. Average invested assets in the third quarter (all fixed maturities at cost) were $688.3 million, a year-to-year increase of 5.5 percent. The after-tax investment return for the quarter and full nine months, based on amortized cost, was 7.14 percent for both periods in 1993.
 On Nov. 3, 1993, the company withdrew its rate revision application on file with the California Department of Insurance (DOI) in order to avoid the substantial delays and expenses of protracted hearings resulting from the intervention of a consumer interest group known as Utility Consumers Action Network (UCAN). The company plans to submit a new filing within the next few days which will retain most of the main features of the withdrawn application: namely, strengthening the company's competitive position by providing for substantial cuts in full coverage rates for new applicants and modifying certain discounts now being offered to longer term customers with good driving records. The new filing, unlike the withdrawn application, will contain no increases on individual lines in excess of 7 percent.
 The DOI is required by law to complete its review of the new rates within 60 days of receipt of the filing, with the rates at that time deemed approved unless a hearing is ordered. Since no portion of the new rates to be filed will constitute an increase of more than 7 percent, the Insurance Commissioner, under the terms of the Insurance Code as amended by Proposition 103, is not required to grant approval for any intervenor's application.
 The new application will be supported by substantially the same experience data contained in the withdrawn filing. Since the DOI's review of the earlier filing elicited no objections, the company hopes to gain approval of the new rates within the 60-day deemer period, and in time to implement such rates before the end of the first quarter in 1994.
 On Nov. 5, 1993, the board of directors declared a regular quarterly dividend of $.15 per share for shareholders of record on Dec. 15, 1993, payable on Dec. 29, 1993.
 Summary of Operating Results
 Nine Months Ended
 Sept. 30,
 1993 1992
 Net premiums written $362,180 $345,731
 Net premiums earned 351,254 342,190
 Net investment income 40,812 39,988
 Settlement of rate refund --- 18,621
 Net operating income(a) 69,091 55,469
 Capital gains, net of tax 3,034 3,004
 Net income $72,125 $58,473
 Average shares
 outstanding(b) 27,353,228 27,222,323
 Per share data
 Net operating income, before
 Proposition 103 refund $2.53 $2.49
 Settlement of rate refund --- ($0.45)
 Capital gains, net of tax $0.11 $0.11
 Earnings per share $2.64 $2.15
 Operating ratios --
 GAAP Basis(c)
 Loss ratio 61.2 pct 61.6 pct(d)
 Expense ratio 25.1 pct 23.9 pct
 Combined ratio 86.3 pct 85.5 pct(d)
 Quarter Ended
 Sept. 30,
 1993 1992
 Net premiums written $126,431 $116,091
 Net premiums earned 120,019 113,572
 Net investment income 13,818 12,753
 Settlement of rate refund --- ---
 Net operating income(a) 23,501 25,320
 Capital gains, net of tax 719 510
 Net income $24,220 $25,830
 Average shares
 outstanding(b) 27,379,874 27,251,957
 Per share data
 Net operating income, before
 Proposition 103 refund $0.85 $0.93
 Settlement of rate refund --- ---
 Capital gains, net of tax $0.03 $0.02
 Earnings per share $0.88 $0.95
 Operating ratios --
 GAAP Basis(c)
 Loss ratio 60.2 pct 56.0 pct(d)
 Expense ratio 26.4 pct 25.3 pct
 Combined ratio 86.6 pct 81.3 pct(d)
 (a) Net income, excluding capital gains, net of tax
 (b) Adjusted for 2-for-1 stock split effective in September 1992.
 (c) Generally Accepted Accounting Principles
 (d) Excludes impact of rate refund.
 -0- 11/8/93
 /CONTACT: Keith L. Parker, CFO of Mercury General, 213-937-1060/

CO: Mercury General Corp. ST: California IN: INS SU: ERN DIV

JL-LM -- LA020 -- 1629 11/08/93 09:20 EST
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Publication:PR Newswire
Date:Nov 8, 1993

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