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MERCURY GENERAL CORP. REPORTS THIRD QUARTER RESULTS

 MERCURY GENERAL CORP. REPORTS THIRD QUARTER RESULTS
 LOS ANGELES, Nov. 9 /PRNewswire/ -- Mercury General Corp.,


(NASDAQ-NMS: MRCY) a major California automobile insurer, reported today that net income for the nine months ended Sept. 30, 1992, was $58.5 million, or $2.15 per share, compared with $48.8 million, or $1.80 per share, in the corresponding 1991 period. Realized capital gains contributed $.11 per share to 1992 results and $.03 per share in 1991. Per share results are based on 27.2 million average shares outstanding, adjusted for a 2-for-1 stock split effective in September 1992.
 In the third quarter alone, net income was $25.8 million, or $.95 per share, compared with $17.3 million, or $.64 per share, in 1991. Realized capital gains contributed $.02 to third quarter per share results in 1992 and $.01 per share in 1991.
 Results for the most recent quarter represent the first reporting period since the first quarter of 1989 that earnings were unaffected by provisions for potential Proposition 103 rate rollback refunds. During the quarter, the company disbursed one-time rollback refunds of $43.1 million, including interest, pursuant to the May 28, 1992, settlement agreement reached with the California Department of Insurance (DOI). The DOI had sought a rollback amount in excess of $70.0 million. The DOI, as part of the agreement, granted final approval of all rates charged subsequent to the end of the one-year rollback period, Nov. 7, 1989, including rates being charged currently. With the mailing of all refund checks in July and August, the company's Proposition 103 refund liability has been completely extinguished.
 Results for the full nine months include an $18.6 million charge reflecting the final settlement of the rollback liability in the second quarter. Excluding the rollback provisions in both years, the year-to-year improvement in per share net operating income, excluding capital gains, was 38 percent for the first nine months and 46 percent in the third quarter.
 Underwriting results in the third quarter continue to be outstanding. The combined ratio of losses and expenses to premiums earned (GAAP basis) was 81.3 percent, compared with 92.2 percent in the 1991 third quarter. The loss ratio of 56.0 percent represented year-to-year improvement of 10.4 points, reflecting continued favorable frequency and severity experience in California. Loss reserve development trends continue to be favorable, adding to the year-to-year improvement. A sharply reduced exposure to unprofitable assigned risk business also contributed to the improvement as did a muted inflationary environment and reduced driving associated with the relatively weak California economy. Underwriting expenses remained under excellent control, with the expense ratio in the quarter declining to 25.3 percent from 25.8 percent in the third quarter of 1991. For the full nine months, the expense ratio was 23.9 percent in 1992 and 24.3 percent in 1991 while the combined underwriting ratio was 85.5 percent, compared with 93.6 percent in 1991.
 Premiums written in the third quarter and first nine months declined by 3.0 percent and 2.5 percent, respectively. Although the renewal rate continues to exceed 90 percent, new business and total premium volume have undergone some erosion since the first quarter of 1991, when the company's rating factor plan, developed in compliance with DOI regulations, became effective. Under the DOI approved classification plan, rates for certain classes of drivers, particularly young adult single males and females, were increased, in some cases significantly; for such classifications, the company is not as competitive as it had been previously. New business is also being adversely affected by the economic slowdown in California.
 Premium volume in coming months should be aided by recently approved rate adjustments in California, which have improved the company's competitive position, and the licensing of some 70 former Ohio Casualty agents as a result of that company withdrawing from the California market.
 Investment income was $12.8 million in the third quarter and $40.0 million for the full nine months, compared with $13.5 million and $40.0 million, respectively, in 1992. Investment income in the third quarter was adversely affected by the disbursement of the $43.1 million in refund checks and the relatively high average balances built up in low-yielding money-market securities to accommodate the refund, as well as generally lower longer-term interest rates. The average after-tax yield for the first nine months of 1992 was 7.13 percent, compared with 7.30 percent in 1991, equal, on an annualized per share basis, to $1.71 and $1.68, respectively.
 The board of directors declared a regular quarterly dividend of $.125 per share payable on Dec. 30, 1992, to shareholders of record on Dec. 15, 1992.
 MERCURY GENERAL CORP.
 Summary of Operating Results
 (000)
 Nine Months Ended Quarter Ended
 Sept. 30, Sept. 30,
 1992 1991 1992 1991
 Net premiums
 written $345,731 $354,468 $116,091 $119,686
 Net premiums
 earned 342,190 356,952 113,572 117,904
 Net investment
 income 39,988 40,019 12,753 13,469
 Impact of rate
 refund, pre-tax 18,646 1,602 --- 536
 Net operating
 income(a) 55,469 48,019 25,320 16,987
 Capital gains,
 net of tax 3,004 822 510 313
 Net income $58,473 $48,841 $25,830 $17,300
 Average shares
 outstanding 27,222,323 27,116,082 27,251,957 27,189,278
 Per share data
 Net operating
 income(a) $2.04 $1.77 $0.93 $0.63
 Capital gains,
 net of tax $0.11 $0.03 $0.02 $0.01
 Earnings per share $2.15 $1.80 $0.95 $0.64
 Operating ratios --
 GAAP basis(b)
 Loss ratio (pct.) 61.6 69.3 56.0 66.4
 Expense ratio (pct.) 23.9 24.3 25.3 25.8
 Combined ratio(c)
 (pct.) 85.5 93.6 81.3 92.2
 (a) Net income excluding realized gains net of tax.
 (b) Generally Accepted Accounting Principles
 (c) Excludes provision for rate refund.
 -0- 11/9/92
 /CONTACT: Keith L. Parker, CFO of Mercury General, 213-937-1060/
 (MRCY) CO: Mercury General Corp. ST: California IN: INS SU: ERN


JB-JL -- LA008 -- 8564 11/09/92 09:28 EST
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Date:Nov 9, 1992
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