Mercury General Corp. (MCY, Financial) filed Quarterly Report for the period ended 2010-06-30.
Mercury General Corp. has a market cap of $2.25 billion; its shares were traded at around $41.16 with a P/E ratio of 12.7 and P/S ratio of 0.7. The dividend yield of Mercury General Corp. stocks is 5.7%.MCY is in the portfolios of Robert Rodriguez of FPA Capital, First Pacific Advisors of First Pacific Advisors, LLC, First Pacific Advisors of First Pacific Advisors, LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Chuck Royce of Royce& Associates, Richard Aster Jr of Meridian Fund.
At June 30, 2010, the Company recorded its point estimate of approximately $999.8 million in losses and loss adjustment expenses liabilities which include approximately $299.4 million of incurred but not reported (IBNR) loss reserves. IBNR includes estimates, based upon past experience, of ultimate developed costs which may differ from case estimates, unreported claims which occurred on or prior to June 30, 2010 and estimated future payments for reopened claims. Management believes that the liability for losses and loss adjustment expenses is adequate to cover the ultimate net cost of losses and loss adjustment expenses incurred to date; however, since the provisions are necessarily based upon estimates, the ultimate liability may be more or less than such provision.
The Company evaluates its reserves quarterly. When management determines that the estimated ultimate claim cost requires a decrease for previously reported accident years, favorable development occurs and a reduction in losses and loss adjustment expenses is reported in the current period. Conversely, if the estimated ultimate claim cost requires an increase for previously reported accident years, unfavorable development occurs and an increase in losses and loss adjustment expenses is reported in the current period. For the six months ended June 30, 2010, the Company reported favorable development of approximately $22 million on the 2009 and prior accident years losses and loss adjustment expense reserves which at December 31, 2009 totaled approximately $1.1 billion. The favorable development in 2010 is largely the result of re-estimates of accident year 2009 California bodily injury losses which have experienced both lower average severities and fewer late reported claims (claim count development) than was originally estimated at December 31, 2009.
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Mercury General Corp. has a market cap of $2.25 billion; its shares were traded at around $41.16 with a P/E ratio of 12.7 and P/S ratio of 0.7. The dividend yield of Mercury General Corp. stocks is 5.7%.MCY is in the portfolios of Robert Rodriguez of FPA Capital, First Pacific Advisors of First Pacific Advisors, LLC, First Pacific Advisors of First Pacific Advisors, LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Chuck Royce of Royce& Associates, Richard Aster Jr of Meridian Fund.
Highlight of Business Operations:
The Company supported the Continuous Coverage Auto Insurance Discount Act (Proposition 17), a California ballot initiative which did not pass. It would have provided for a portable persistency discount, allowing insurance companies to offer new customers discounts based on having continuous insurance coverage from any insurance company. Currently, the California DOI allows insurance companies to provide persistency discounts based on continuous coverage only with existing customers. The Company made financial contributions of $12.1 million, $0, and $3.5 million in the second quarter of 2010, the first quarter of 2010, and second half of 2009, respectively, related to this initiative. Despite the non-passage of Proposition 17, the Company believes it continues to offer a competitive product in California.At June 30, 2010, the Company recorded its point estimate of approximately $999.8 million in losses and loss adjustment expenses liabilities which include approximately $299.4 million of incurred but not reported (IBNR) loss reserves. IBNR includes estimates, based upon past experience, of ultimate developed costs which may differ from case estimates, unreported claims which occurred on or prior to June 30, 2010 and estimated future payments for reopened claims. Management believes that the liability for losses and loss adjustment expenses is adequate to cover the ultimate net cost of losses and loss adjustment expenses incurred to date; however, since the provisions are necessarily based upon estimates, the ultimate liability may be more or less than such provision.
The Company evaluates its reserves quarterly. When management determines that the estimated ultimate claim cost requires a decrease for previously reported accident years, favorable development occurs and a reduction in losses and loss adjustment expenses is reported in the current period. Conversely, if the estimated ultimate claim cost requires an increase for previously reported accident years, unfavorable development occurs and an increase in losses and loss adjustment expenses is reported in the current period. For the six months ended June 30, 2010, the Company reported favorable development of approximately $22 million on the 2009 and prior accident years losses and loss adjustment expense reserves which at December 31, 2009 totaled approximately $1.1 billion. The favorable development in 2010 is largely the result of re-estimates of accident year 2009 California bodily injury losses which have experienced both lower average severities and fewer late reported claims (claim count development) than was originally estimated at December 31, 2009.
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