Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2013

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Registrant

MERCURY GENERAL CORPORATION CONDENSED FINANCIAL INFORMATION OF REGISTRANT BALANCE SHEETS
	December 31,
	2013		2012
	(Amounts in thousands)
ASSETS
Investments, at fair value:
Equity securities (cost $27,449; $31,178)	$	29,737	$	27,127
Short-term investments (cost $11,089; $47,174)	11,089		47,174
Investment in subsidiaries	1,794,164		1,760,760
Total investments	1,834,990		1,835,061
Cash	46,332		10,199
Accrued investment income	16		4
Amounts receivable from affiliates	206		200
Current income taxes	0		6,333
Deferred income taxes	1,068		729
Income tax receivable from affiliates	11,573		6,182
Other assets	459		0
Total assets	$	1,894,644	$	1,858,708
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable	$	50,000	$	0
Accounts payable and accrued expenses	23		47
Amounts payable to affiliates	34		95
Income tax payable to affiliates	6,730		16,069
Current income taxes	12,672		0
Other liabilities	2,699		0
Total liabilities	72,158		16,211
Shareholders’ equity:
Common stock	81,591		79,380
Additional paid-in capital	411		0
Retained earnings	1,740,484		1,763,117
Total shareholders’ equity	1,822,486		1,842,497
Total liabilities and shareholders’ equity	$	1,894,644	$	1,858,708

SCHEDULE II, Continued

MERCURY GENERAL CORPORATION CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF OPERATIONS
	Year Ended December 31,
	2013			2012			2011
	(Amounts in thousands)
Revenues:
Net investment income	$	1,293		$	1,114		$	1,411
Net realized investment gains (losses)	3,416			697			(1,866		)
Total revenues	4,709			1,811			(455		)
Expenses:
Other operating expenses	2,924			1,688			2,267
Interest	318			0			1,341
Total expenses	3,242			1,688			3,608
Income (loss) before income taxes and equity in net income of subsidiaries	1,467			123			(4,063		)
Income tax expense (benefit)	3,310			1,800			(684		)
Loss before equity in net income of subsidiaries	(1,843		)	(1,677		)	(3,379		)
Equity in net income of subsidiaries	113,986			118,588			194,543
Net income	$	112,143		$	116,911		$	191,164

STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31,
	2013		2012		2011
	(Amounts in thousands)
Net income	$	112,143	$	116,911	$	191,164
Other comprehensive income, before tax:
Gains on hedging instrument	0		0		1,139
Other comprehensive income, before tax	0		0		1,139
Income tax expense related to gains on hedging instrument	0		0		399
Other comprehensive income, net of tax:	0		0		740
Comprehensive income	$	112,143	$	116,911	$	191,904

SCHEDULE II, Continued

MERCURY GENERAL CORPORATION CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF CASH FLOWS
	Year Ended December 31,
	2013			2012			2011
	(Amounts in thousands)
Cash flows from operating activities:
Net cash used in operating activities	$	(843	)	$	(5,590	)	$	(312	)
Cash flows from investing activities:
Capital contribution to controlled entities	(40,000		)	0			0
Dividends from subsidiaries	120,000			145,000			270,000
Equity securities:
Purchases	(25,038		)	(14,102		)	(50,056		)
Sales	25,798			7,308			43,520
Increase in payable for securities, net	2,489			0			0
Net decrease (increase) in short-term investments	36,085			(20,413		)	(21,451		)
Other, net	770			304			1,047
Net cash provided by investing activities	120,104			118,097			243,060
Cash flows from financing activities:
Dividends paid to shareholders	(134,776		)	(134,105		)	(132,142		)
Excess tax benefit from exercise of stock options	202			86			56
Payment to retire senior notes	0			0			(125,000		)
Proceeds from stock options exercised	1,446			2,492			1,951
Proceeds from bank loan	50,000			0			0
Net cash used in financing activities	(83,128		)	(131,527		)	(255,135		)
Net increase (decrease) in cash	36,133			(19,020		)	(12,387		)
Cash:
Beginning of year	10,199			29,219			41,606
End of year	$	46,332		$	10,199		$	29,219
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid	$	318		$	0		$	1,932
Income taxes (received) paid	$	(827	)	$	4,667		$	(1,252	)

The accompanying condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in this report.

Dividends

Dividends of $120,000,000, $145,000,000 and $270,000,000 were received by Mercury General from its 100% owned subsidiaries in 2013, 2012, and 2011, respectively, and are recorded as a reduction to investment in subsidiaries.

Capitalization of Subsidiaries

Mercury General made capital contributions to its insurance subsidiaries of $125,000 in each of 2013, 2012, and 2011.

Notes Payable

The borrowings by MCC, a subsidiary, under the $120 million credit facility and $20 million bank loan are secured by approximately $177 million of municipal bonds owned by MCC, at fair value, held as collateral. The total borrowings of $140 million are guaranteed by the Company.

On July 2, 2013, Mercury General entered into an unsecured $200 million five-year revolving credit facility. Total borrowings were $50 million as of December 31, 2013.

Federal Income Taxes

The Company files a consolidated federal income tax return with the following entities:

Mercury Casualty Company	Mercury County Mutual Insurance Company
Mercury Insurance Company	Mercury Insurance Company of Florida
California Automobile Insurance Company	Mercury Indemnity Company of America
California General Underwriters Insurance Company, Inc.	Mercury Select Management Company, Inc.
Mercury Insurance Company of Illinois	Mercury Insurance Services LLC
Mercury Insurance Company of Georgia	AIS Management LLC
Mercury Indemnity Company of Georgia	Auto Insurance Specialists LLC
Mercury National Insurance Company	PoliSeek AIS Insurance Solutions, Inc.
American Mercury Insurance Company	Animas Funding LLC
American Mercury Lloyds Insurance Company

The method of allocation between the companies is subject to an agreement approved by the Board of Directors. Allocation is based upon separate return calculations with current credit for net losses incurred by the insurance subsidiaries to the extent it can be used in the current consolidated return.