Mercury Insurance Reports Q4 Loss of $168.3 Million

Source: Mercury Insurance
www.mercuryinsurance.com
February 9, 2009


Los Angeles-based Mercury General Corp. reported a net loss in the fourth quarter 2008 of $168.3 million, compared with net income of $44.6 million for the same period in 2007. For the year, net loss was $242.1 million, compared to net income of $237.8 million for the same period in 2007. Included in net loss are net realized investment losses, net of tax, of $141.6 million in the fourth quarter of 2008 compared with net realized investment gains, net of tax, of $6.4 million for the same period in 2007, and net realized investment losses, net of tax, of $357.8 million for the year compared to net realized investment gains, net of tax, of $13.5 million for the same period in 2007. Operating loss was $26.7 million for the fourth quarter of 2008, down 169.9 percent from the same period in 2007. For the year, operating income was $115.7 million, down 48.4 percent from the same period in 2007.

Company-wide net premiums written were $641.6 million in the fourth quarter 2008, an 8.3 percent decrease over the fourth quarter 2007 net premiums written of $699.9 million, and were approximately $2.8 billion for the year, a 7.8 percent decrease over the same period in 2007. California net premiums written were $506 million in the fourth quarter of 2008, a decrease of 7.6 percent over the same period in 2007, and were approximately $2.2 billion for the year, a 6.2 percent decrease over the same period in 2007. Non-California net premiums written were $135.6 million in the fourth quarter of 2008, a 10.8 percent decrease over the same period in 2007, and were $589 million for the year, a decrease of 13.1 percent over the same period in 2007.

The combined ratio for the three months of the fourth quarter of 2008 was 113.4 percent, compared with a combined ratio of 98.8 percent for the same period in 2007. The combined ratio for the 12 months ended Dec. 31, 2008, was 101.8 percent, compared with a ratio of 95.4 percent for the previous year.

According to the company, losses incurred during the fourth quarter 2008 were impacted by approximately $20 million of losses related to the Southern California wildfires occurring in October 2008, high loss severity inflation on the California automobile lines of business, adverse development on prior periods loss reserves and poor results from our New Jersey operations.

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