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Mercury General Corporation Announces Fourth Quarter Results
PRNewswire
LOS ANGELES

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 fourth quarter of 2001 were $22.5 million, or $0.41 per share (diluted), compared with $25.3 million, or $0.46 (diluted) per share in 2000. For the full year, net operating earnings were $101.1 million, or $1.86 per share (diluted), compared with $106.8 million, or $1.97 per share (diluted) in 2000. Net operating earnings are defined as net income excluding net realized investment gains and losses. Per share net income (diluted) was $0.41 for the fourth quarter and $1.94 for the full year, compared with $0.48 and $2.02 respectively, in 2000.

Company-wide premiums written were $375.2 million in the fourth quarter and $1,442.9 million for the full year, an 18.6% and 13.4% respective increase over 2000. California premiums written were $325.1 million in the fourth quarter and $1,262.6 million for the full year, a 15.6% and 11.9% respective increase over 2000. The increased premiums were largely driven by strong policy count growth.

The loss ratio (GAAP basis) was 75.2% in the fourth quarter and 73.2% for the full year, compared to 74.7% and 72.2%, respectively, in 2000.

Loss frequencies for the California automobile lines of coverage in the fourth quarter of 2001 increased sequentially over those experienced in the third quarter of 2001. For the entire year 2001, California private passenger automobile bodily injury loss frequencies decreased and material damage coverage frequencies remained relatively unchanged as compared to 2000. On a quarterly basis, loss frequencies can be affected by many factors including seasonal travel, weather and fluctuations in gasoline prices.

The expense ratio (GAAP basis) was 26.0% in the fourth quarter and 26.4% for the full year, compared to 24.9% and 26.3%, respectively, in 2000. The expense ratio for the fourth quarter 2000 was favorably impacted by reductions in agent bonus accruals and the initial set-up of deferred policy acquisition costs for the Company's Florida business.

Investment income increased by 5.6% to $29.5 million for the quarter and by 7.6% to $114.5 million for the full year. After taxes, per share (diluted) investment income was $0.47 in the fourth quarter, compared with $0.45 in the fourth quarter of 2000, at an effective tax rate of 14.1% and 12.3%, respectively, and $1.82 for the full year 2001 compared to $1.75 for the full year 2000, at an effective tax rate of 13.6% and 10.6%, respectively. The after-tax yield was 5.32% on average investments of $1.9 billion (fixed maturities and equities at cost) for the fourth quarter and 5.41% on average investments of $1.8 billion for the entire year. This compares to 5.58% for the fourth quarter 2000 and 5.56% for the entire year 2000.

The Company received approval from the California Department of Insurance for rate increases on its private passenger automobile book of business. A 4.1% rate increase for Mercury Insurance Company, which represents approximately 55% of Companywide premiums written, and a 6.9% combined rate increase for Mercury Casualty Company and California Automobile Insurance Company, which represents approximately 24% of Companywide premiums written, will go into effect for all new and renewal California business as of March 1, 2002. The Company plans to make additional filings for rate increases in California as well as other states.

The Board of Directors declared a first 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 March 28, 2002 to shareholders of record on March 15, 2002. The Company's book value per share at December 31, 2001 was $19.72.

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 December 31,
                                                    2001           2000
  Net Premiums Written                            $375,211       $316,336
  Net Premiums Earned                              366,722        317,309
  Paid Losses and Loss Adjustment Expenses         251,648        222,646
  Incurred Losses                                  275,862        237,172
  Net Investment Income                             29,508         27,930
  Net Operating Income (A)                          22,478         25,251
  Capital Gains (Losses), net of tax                  (367)           754
  Net Income                                       $22,111        $26,005

  Basic Average Shares Outstanding              54,223,894     54,102,494

  Diluted Average Shares Outstanding            54,438,139     54,423,212

  Basic Per Share Data
  Earnings Per Share                                 $0.41          $0.48

  Diluted Per Share Data ©
  Net Operating Income                               $0.41          $0.46
  Capital Gains (Losses), net of tax                ($0.01)         $0.01
  Earnings Per Share                                 $0.41          $0.48

  Operating Ratios -- GAAP Basis (B)
  Loss Ratio                                         75.2%          74.7%
  Expense Ratio                                      26.0%          24.9%
  Combined Ratio                                    101.2%          99.6%

                                           Twelve Months Ended December 31,
                                                   2001           2000
  Net Premiums Written                          $1,442,886     $1,272,447
  Net Premiums Earned                            1,380,561      1,249,259
  Paid Losses and Loss Adjustment Expenses         957,650        856,778
  Incurred Losses                                1,010,439        901,781
  Net Investment Income                            114,511        106,466
  Net Operating Income (A)                         101,106        106,802
  Capital Gains, net of tax                          4,233          2,564
  Net Income                                      $105,339       $109,366

  Basic Average Shares Outstanding              54,182,021     54,099,815

  Diluted Average Shares Outstanding            54,382,108     54,257,848

  Basic Per Share Data
  Earnings Per Share                                 $1.94          $2.02

  Diluted Per Share Data ©
  Net Operating Income                               $1.86          $1.97
  Capital Gains, net of tax                          $0.08          $0.05
  Earnings Per Share                                 $1.94          $2.02

  Operating Ratios -- GAAP Basis (B) ©
  Loss Ratio                                         73.2%          72.2%
  Expense Ratio                                      26.4%          26.3%
  Combined Ratio                                     99.6%          98.5%

   (A) Net Income, excluding realized capital gains and losses, net of tax.
   (B) Generally Accepted Accounting Principles
   © Some numbers may not sum due to rounding

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SOURCE: Mercury General Corporation

Contact: Theodore Stalick, VP/CFO of Mercury General Corporation,
+1-323-937-1060

Website: http://www.mercuryinsurance.com/

Company News On-Call: http://www.prnewswire.com/comp/554587.html


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