EX-99.1 3 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

Mercury General Corporation

4484 Wilshire Boulevard · Los Angeles, California 90010 · (323) 937-1060

 

Press Release

 

FOR MORE INFORMATION, CONTACT:

Theodore Stalick, VP/CFO

(323) 937-1060

www.mercuryinsurance.com

 

FOR RELEASE MONDAY, APRIL 28, 2003

 

Mercury General Corporation Announces First Quarter Results

 

Los Angeles, California . . . Mercury General Corporation (NYSE: MCY), a major California automobile insurer with operations in a number of other states, reported today that net income was $42.1 million, or $0.77 per share (diluted), in the first quarter 2003 compared with $29.0 million, or $0.53 per share (diluted), in the same period for 2002. Net operating earnings in the first quarter of 2003 were $42.6 million, or $0.78 per share, compared with $28.8 million, or $0.53 per share in 2002. The Company defines net operating earnings, a non GAAP financial measure, as net income excluding net realized investment gains and losses, net of tax. Management believes that net operating earnings better reflects the Company’s core business results since its investment policy emphasizes maximization of after-tax yields and not achieving realized gains.

 

Company-wide premiums written were $538.8 million in the first quarter 2003, a 27.8% increase over first quarter 2002 premiums written of $421.5 million. California premiums written were $452.9 million in the quarter, an increase of 25.8% over 2002. The increased premiums were driven by both policy count growth and recent rate increases.

 

The loss ratio (GAAP basis) was 68.2% in the quarter compared with 71.9% in the same period for 2002. The lower loss ratio is largely attributed to recent rate increases and improved loss frequency in the Company’s automobile lines of business. Loss frequencies can be affected by many factors including seasonal travel, weather and fluctuations in gasoline prices.

 

The expense ratio (GAAP basis) was 26.2% in the quarter compared with 26.6% in the same period for 2002.

 

The Company received approval from the California Department of Insurance to increase its personal automobile rates by 6.9% in Mercury Casualty Company and California Automobile Insurance Company and 3.8% in Mercury Insurance Company. The Company plans to implement these rate increases in June 2003.

 

Net investment income in the first quarter of 2003 of $26.9 million decreased by 8.7% from $29.5 million in the same period for 2002. After taxes, per share (diluted) investment income was

 

 

$0.44 in the quarter, compared with $0.47 in the first quarter of 2002. The after-tax yield was 4.33% on average investments of $2.21 billion (fixed maturities and equities at cost) for the quarter. This compares with 5.23% in the first quarter of 2002.

 

The Board of Directors declared a second quarter dividend of $0.33 per share, representing a 10% increase over the quarterly dividend amount paid in 2002. The dividend is to be paid on June 30, 2003 to shareholders of record on June 15, 2003. The Company’s book value per share at March 31, 2003 was $20.84.

 

 

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. The statements contained in this press release are forward-looking statements based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors, including but not limited to the following risks and uncertainties: changes in the demand for the Company’s insurance products, and in general economic conditions; the accuracy and adequacy of the Company’s pricing methodologies; market risks associated with the Company’s investment portfolio; uncertainties related to estimates, assumptions and projections generally; the possibility actual loss experience may vary adversely from the actuarial estimates made to determine the Company’s loss reserves; inflation and changes in economic conditions; the Company’s ability to obtain and the timing of regulatory approval for requested rate changes; legislation adverse to the automobile insurance industry or business generally that may be enacted in California or other states; the presence of competitors with greater financial resources and the impact of competitive pricing; changes in driving patterns and loss trends; acts of war and terrorist activities; court decisions and trends in litigation and health care and auto repair costs and marketing efforts; and various legal, regulatory and litigation risks. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For a more detailed discussion of some of the foregoing risks and uncertainties, see the Company’s filings with the Securities and Exchange Commission.

MERCURY GENERAL CORPORATION

 

SUMMARY OF OPERATING RESULTS (000)

   

Quarter Ended March 31,

  
   

2003

     

2002

  

Net Premiums Written

  

$

538,750

 

   

$

421,501

 

Net Premiums Earned

  

 

500,666

 

   

 

386,637

 

Paid Losses and Loss Adjustment Expenses

  

 

320,599

 

   

 

259,636

 

Incurred Losses and Loss Adjustment Expenses

  

 

341,546

 

   

 

278,101

 

Net Investment Income

  

 

26,926

 

   

 

29,504

 

Net Realized Investment (Losses) or Gains (a)

  

 

(493

)

   

 

155

 

Net Income

  

$

42,108

 

   

$

28,954

 

   
  

Net Operating Earnings

  

$

42,601

 

   

$

28,799

 

   
  

Basic Average Shares Outstanding

  

 

54,378,897

 

   

 

54,265,041

 

                  

Diluted Average Shares Outstanding

  

 

54,489,585

 

   

 

54,462,002

 

                  

Basic Per Share Data

                 

Earnings Per Share

  

$

0.77

 

   

$

0.53

 

   
  

Diluted Per Share Data

                 

Net Operating Earnings

  

$

0.78

 

   

$

0.53

 

Net Realized Investment (Losses) or Gains (a)

  

$

(0.01

)

   

$

0.00

 

   
  

Earnings Per Share

  

$

0.77

 

   

$

0.53

 

   
  

Operating Ratios—GAAP Basis (b)

                 

Loss Ratio

  

 

68.2

%

   

 

71.9

%

Expense Ratio

  

 

26.2

%

   

 

26.6

%

   
  

Combined Ratio

  

 

94.4

%

   

 

98.5

%

   
  

Reconciliations of Operating Measures to Comparable GAAP (b) Measures

                 
                  

Net Premiums Written

  

$

538,750

 

   

$

421,501

 

Increase in Unearned Premiums

  

 

(38,084

)

   

 

(34,864

)

   
  

Net Premiums Earned

  

$

500,666

 

   

$

386,637

 

   
  

Paid Losses and Loss Adjustment Expenses

  

$

320,599

 

   

$

259,636

 

Increase in net losses and loss adjustment expense reserves

  

 

20,947

 

   

 

18,465

 

   
  

Incurred Losses and Loss Adjustment Expenses

  

$

341,546

 

   

$

278,101

 

   
  

Net Operating Earnings

  

$

42,601

 

   

$

28,799

 

Net Realized Investment (Losses) or Gains (a)

  

 

(493

)

   

 

155

 

   
  

Net Income, GAAP basis (b)

  

$

42,108

 

   

$

28,954

 

   
  

 

(a)    Net Realized Investment (Losses) or Gains is net of taxes.
(b)   Generally Accepted Accounting Principles
(c)    Some numbers may not sum due to rounding

 

 

3

MERCURY GENERAL CORPORATION

 

Other Supplemental Information

 

    

Three months ending March 31, 2003

   

Three months ending March 31, 2002

    

Net Premiums

   

Loss

     

Expense

     

Combined

   

Net Premiums

   

Loss

     

Expense

     

Combined

    

Written

   

Ratio

     

Ratio

     

Ratio

   

Written

   

Ratio

     

Ratio

     

Ratio

    

(000’s)

                      

(000’s)

                   

California

   

$

452,946

   

70.0%

     

25.6%

     

95.6%

   

$

359,957

   

71.9%

     

25.6%

     

  97.5%

Georgia

   

$

4,727

   

68.1%

     

31.5%

     

99.6%

   

$

3,727

   

64.1%

     

31.6%

     

  95.7%

Illinois

   

$

4,597

   

53.8%

     

27.2%

     

81.0%

   

$

3,256

   

57.4%

     

28.2%

     

  85.6%

Florida

   

$

33,518

   

58.7%

     

25.9%

     

84.6%

   

$

21,837

   

76.4%

     

28.3%

     

104.7%

Texas (Concord operations)

   

$

15,363

   

58.6%

     

31.1%

     

89.7%

   

$

9,229

   

69.6%

     

34.0%

     

103.6%

New York

   

$

2,516

   

79.7%

     

32.4%

     

112.1%

   

$

800

   

80.9%

     

48.3%

     

129.2%

Virginia

   

$

1,873

   

76.4%

     

39.0%

     

115.4%

   

$

551

   

77.7%

     

54.9%

     

132.6%

American Mercury operations

   

$

23,210

   

53.6%

     

33.4%

     

87.0%

   

$

22,144

   

73.4%

     

37.3%

     

110.7%

    
                     
                  

Total Company

   

$

538,750

   

68.2%

     

26.2%

     

94.4%

   

$

421,501

   

71.9%

     

26.6%

     

  98.5%

    
  
    
    
  
  
    
    

 

Policies-in-force at March 31, 2003

 

    

amounts in

    

(000’s)

California Personal Auto (excluding Cal Auto)

   

 

897

Personal Auto written through Cal Auto

   

 

84

California Commercial Auto

   

 

19

California Homeowners

   

 

163

Florida Auto

   

 

71

Virginia Personal Auto

   

 

4

New York Personal Auto

   

 

5

Georgia Personal Auto

   

 

13

Illinois Personal Auto

   

 

12

Texas (Concord Operations)

   

 

26

Florida Homeowners

   

 

7

    

Total shareholders’ equity at year-end

   

$

1.1Billion

    

 

4