Mercury General Corporation Announces First Quarter Results
Mercury General Corporation (NYSE: MCY), a major California automobile insurer with operations in a number of other states, reported today that net operating earnings in the first quarter of 2002 were $28.8 million, or $0.53 per share (diluted), compared with $21.9 million, or $0.40 per share (diluted) in 2001. Net operating earnings are defined as net income excluding net realized investment gains and losses. Per share net income (diluted) was $0.53 for the first quarter 2002 compared with $0.45 in 2001.
Company-wide premiums written were $421.5 million in the quarter, a 22.8% increase over 2001. California premiums written were $360.0 million in the quarter, an 18.6% increase over 2001. The increased premiums were driven by both policy count growth and recent rate increases.
The loss ratio (GAAP basis) was 71.9% in the quarter compared to 74.2 % in 2001. The lower loss ratio benefited from improved loss frequency that was likely the result of relatively mild weather in the quarter. Loss frequencies can be affected by many factors including seasonal travel, weather and fluctuations in gasoline prices.
The expense ratio (GAAP basis) was 26.6% in the quarter compared to 26.8% in 2001.
Investment income increased by 5.3% to $29.5 million for the quarter. After taxes, per share (diluted) investment income was $0.47 in the quarter, compared with $0.45 in 2001. The after-tax yield was 5.23% on average investments of $1.95 billion (fixed maturities and equities at cost) for the quarter. This compares to 5.52% in the first quarter of 2001.
A 6.9% rate increase on the California homeowner's line of business was approved and will go into effect for business written or renewed on or after May 15, 2002. The Company has also filed and is awaiting approval for an additional 6.9% California homeowner's rate increase. The Company has filed for a 5% rate increase for California private passenger automobile insurance in Mercury Insurance Company, which in 2001 represented approximately 55% of company-wide premiums and a 6.9% rate increase in California private passenger automobile insurance in Mercury Casualty Company and California Automobile Insurance Company, which in 2001 represented approximately 24% of company-wide premiums written.
The Board of Directors declared a second quarter dividend of $0.30 per share, representing a 13.2% increase over the quarterly dividend amount paid in 2001. The dividend is to be paid on June 27, 2002 to shareholders of record on June 14, 2002. The Company's book value per share at March 31, 2001 was $19.72 per share.
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 possibility actual loss experience may vary adversely from the actuarial estimates made to determine the Company's loss reserves; legislation adverse to the automobile insurance industry or business generally may be enacted in California or other states; the presence of competitors with greater financial resources and the impact of competitive pricing 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, 2002 2001 Net Premiums Written $421,501 $343,212 Net Premiums Earned 386,637 323,772 Paid Losses and Loss Adjustment Expenses 259,636 244,068 Incurred Losses 278,101 240,217 Net Investment Income 29,504 28,019 Net Operating Income (a) 28,799 21,858 Capital Gains, net of tax 155 2,850 Net Income $28,954 $24,708 Basic Average Shares Outstanding 54,265,041 54,154,216 Diluted Average Shares Outstanding 54,462,002 54,350,923 Basic Per Share Data Earnings Per Share $0.53 $0.46 Diluted Per Share Data Net Operating Income $0.53 $0.40 Capital Gains, net of tax $0.00 $0.05 Earnings Per Share $0.53 $0.45 Operating Ratios--GAAP Basis (b) Loss Ratio 71.9% 74.2% Expense Ratio 26.6% 26.8% Combined Ratio 98.5% 101.0% (a) Net Income, excluding capital gains, net of tax (b) Generally Accepted Accounting Principles
SOURCE: Mercury General Corporation
Contact: Theodore Stalick, VP/CFO of Mercury General Corporation,
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