Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2014

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,
	2014		2013
	(Amounts in thousands)
ASSETS
Investments, at fair value:
Equity securities (cost $189,032; $27,449)	$	182,300	$	29,737
Short-term investments (cost $9,744; $11,089)	9,744		11,089
Investment in subsidiaries	1,783,049		1,794,164
Total investments	1,975,093		1,834,990
Cash	52,326		46,332
Accrued investment income	158		16
Amounts receivable from affiliates	1,181		206
Current income taxes	239		0
Deferred income taxes	6,975		1,068
Income tax receivable from affiliates	3,482		11,573
Other assets	1,095		459
Total assets	$	2,040,549	$	1,894,644
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable	$	150,000	$	50,000
Accounts payable and accrued expenses	0		23
Amounts payable to affiliates	97		34
Income tax payable to affiliates	14,728		6,730
Current income taxes	0		12,672
Other liabilities	278		2,699
Total liabilities	165,103		72,158
Shareholders’ equity:
Common stock	88,705		81,591
Additional paid-in capital	3,804		411
Retained earnings	1,782,937		1,740,484
Total shareholders’ equity	1,875,446		1,822,486
Total liabilities and shareholders’ equity	$	2,040,549	$	1,894,644

SCHEDULE II, Continued

MERCURY GENERAL CORPORATION CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF OPERATIONS
	Year Ended December 31,
	2014			2013			2012
	(Amounts in thousands)
Revenues:
Net investment income	$	4,478		$	1,293		$	1,114
Net realized investment (losses) gains	(9,428		)	3,416			697
Total revenues	(4,950		)	4,709			1,811
Expenses:
Other operating expenses	5,971			2,924			1,688
Interest	1,746			318			0
Total expenses	7,717			3,242			1,688
(Loss) income before income taxes and equity in net income of subsidiaries	(12,667		)	1,467			123
Income tax (benefit) expense	(100		)	3,310			1,800
Loss before equity in net income of subsidiaries	(12,567		)	(1,843		)	(1,677		)
Equity in net income of subsidiaries	190,516			113,986			118,588
Net income	$	177,949		$	112,143		$	116,911

STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31,
	2014		2013		2012
	(Amounts in thousands)
Net income	$	177,949	$	112,143	$	116,911
Other comprehensive income, before tax:
Gains on hedging instrument	0		0		0
Other comprehensive income, before tax	0		0		0
Income tax expense related to gains on hedging instrument	0		0		0
Other comprehensive income, net of tax:	0		0		0
Comprehensive income	$	177,949	$	112,143	$	116,911

SCHEDULE II, Continued

MERCURY GENERAL CORPORATION CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF CASH FLOWS
	Year Ended December 31,
	2014			2013			2012
	(Amounts in thousands)
Cash flows from operating activities:
Net cash used in operating activities	$	(3,434	)	$	(843	)	$	(5,590	)
Cash flows from investing activities:
Capital contribution to controlled entities	(30,125		)	(40,125		)	(125		)
Dividends from subsidiaries	231,756			120,000			145,000
Equity securities:
Purchases	(254,572		)	(25,038		)	(14,102		)
Sales	90,422			25,798			7,308
(Decrease) increase in payable for securities, net	(2,489		)	2,489			0
Net decrease (increase) in short-term investments	1,346			36,085			(20,413		)
Other, net	2,191			895			429
Net cash provided by investing activities	38,529			120,104			118,097
Cash flows from financing activities:
Dividends paid to shareholders	(135,496		)	(134,776		)	(134,105		)
Excess tax benefit from exercise of stock options	148			202			86
Proceeds from stock options exercised	6,247			1,446			2,492
Proceeds from bank loan	100,000			50,000			0
Net cash used in financing activities	(29,101		)	(83,128		)	(131,527		)
Net increase (decrease) in cash	5,994			36,133			(19,020		)
Cash:
Beginning of year	46,332			10,199			29,219
End of year	$	52,326		$	46,332		$	10,199
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid	$	1,757		$	318		$	0
Income taxes paid (received)	$	2,112		$	(827	)	$	4,667

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 $225,000,000, $120,000,000 and $145,000,000 were received by Mercury General from its 100% owned insurance subsidiaries in 2014, 2013, and 2012, respectively, and are recorded as a reduction to investment in subsidiaries.

Capitalization of Insurance Subsidiaries

Mercury General made capital contributions to its insurance subsidiaries of $125,000 in each of 2014, 2013, and 2012.

Notes Payable

The borrowings by MCC, a subsidiary, under the $120 million credit facility and $20 million bank loan are secured by approximately $181 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 millionfive-year revolving credit facility. Effective December 3, 2014, the Company expanded the borrowing capacity from $200 million to $250 million. Total borrowings were $150 million as of December 31, 2014.

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	Fannette Funding LLC

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.