SCHEDULE II

MERCURY GENERAL CORPORATION

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS


	December 31,
	2011		2010
	(Amounts in thousands)
ASSETS
Investments, at fair value:
Equity securities trading (cost $24,885; $18,285)	$	20,282	$	16,518
Short-term investments (cost $26,817; $5,366)		26,817		5,366
Investment in subsidiaries		1,787,047		1,591,638

Total investments		1,834,146		1,613,522
Cash		29,219		41,606
Accrued investment income		17		13
Amounts receivable from affiliates		200		189
Current income taxes		22		25,759
Deferred income taxes		1,654		—
Income tax receivable from affiliates		12,833		3,630
Dividend receivable from affiliates		—		270,000
Other assets		—		4,745

Total assets	$	1,878,091	$	1,959,464

LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable	$	—	$	129,210
Accounts payable and accrued expenses		48		43
Income tax payable to affiliates		20,288		34,464
Deferred income taxes		—		193
Other liabilities		272		739

Total liabilities		20,608		164,649

Shareholders' equity:
Common stock		76,634		74,188
Additional paid in capital		538		78
Accumulated other comprehensive loss		—		(740	)
Retained earnings		1,780,311		1,721,289

Total shareholders' equity		1,857,483		1,794,815

Total liabilities and shareholders' equity	$	1,878,091	$	1,959,464

MERCURY GENERAL CORPORATION

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF OPERATIONS


	Year Ended December 31,
	2011			2010			2009
	(Amounts in thousands)
Revenues:
Net investment income	$	1,411		$	951		$	1,127
Net realized investment (losses) gains		(1,866	)		1,420			6,373

Total revenues		(455	)		2,371			7,500

Expenses:
Other operating expenses		2,267			12,945			2,565
Interest		1,341			2,180			2,245

Total expenses		3,608			15,125			4,810

(Loss) income before income taxes and equity in net income of subsidiaries		(4,063	)		(12,754	)		2,690
Income tax (benefit) expense		(684	)		(3,507	)		4,400

Loss before equity in net income of subsidiaries		(3,379	)		(9,247	)		(1,710	)
Equity in net income of subsidiaries		194,543			161,445			404,782

Net income	$	191,164		$	152,198		$	403,072

MERCURY GENERAL CORPORATION

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2011			2010			2009
	(Amounts in thousands)
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(312	)	$	(4,441	)	$	19,094
Cash flows from investing activities:
Dividends from subsidiaries		270,000			128,000			110,000
Fixed maturities:
Calls or maturities		—			265			320
Equity securities:
Purchases		(50,056	)		(836	)		(8,021	)
Sales		43,520			2,070			6,486
Calls		—			895			—
Net decrease in payable for securities		—			—			(1,719	)
Net (increase) decrease in short-term investments		(21,451	)		(583	)		47,274
Other, net		1,047			(110	)		(3,260	)

Net cash provided by investing activities		243,060			129,701			151,080
Cash flows from financing activities:
Dividends paid to shareholders		(132,142	)		(129,863	)		(127,617	)
Excess tax benefit from exercise of stock options		56			132			5
Payment to retire senior notes		(125,000	)		—			—
Proceeds from stock options exercised		1,951			733			393

Net cash used in financing activities		(255,135	)		(128,998	)		(127,219	)
Net (decrease) increase in cash		(12,387	)		(3,738	)		42,955
Cash:
Beginning of year		41,606			45,344			2,389

End of year	$	29,219		$	41,606		$	45,344

MERCURY GENERAL CORPORATION

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTES TO CONDENSED FINANCIAL INFORMATION

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 $270,000,000, $128,000,000, and $110,000,000 were received by the Company from its wholly-owned subsidiaries in 2011, 2010, and 2009, 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, $125,000, and $0 in 2011, 2010, and 2009, respectively.

Guarantees

The borrowings by MCC, a subsidiary, under the $120 million credit facility and $20 million bank loan are secured by approximately $182 million of municipal bonds owned by MCC, at fair value, held as collateral. The total borrowings of $140 million are guaranteed by the Company.

Federal Income Taxes

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


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

The method of allocation between the companies is subject to 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.