Mercury General Corp. (MCY, Financial) filed Quarterly Report for the period ended 2010-03-31.
Mercury General Corp. has a market cap of $2.51 billion; its shares were traded at around $45.83 with a P/E ratio of 14.3 and P/S ratio of 0.8. The dividend yield of Mercury General Corp. stocks is 5.1%.MCY is in the portfolios of Robert Rodriguez of FPA Capital, First Pacific Advisors of First Pacific Advisors, LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Chuck Royce of Royce& Associates, Richard Aster Jr of Meridian Fund, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
The Company is supporting the Continuous Coverage Auto Insurance Discount Act (Proposition 17), a California ballot initiative which will be on the June 2010 ballot. If passed, Proposition 17 will provide 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. While the company strongly believes this will be beneficial for the insurance consumer, there are consumer activist groups both supporting and opposing the initiative. The Company made financial contributions of $3.75 million, $0, and $3.5 million during April 2010, the first quarter of 2010, and 2009, respectively, related to this initiative. The Company expects to continue supporting the initiative with financial contributions.
At March 31, 2010, the Company recorded its point estimate of approximately $1,022.7 million in losses and loss adjustment expenses liabilities which include approximately $316.9 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 March 31, 2010 and estimated future payments for reopened
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. 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 three months ended March 31, 2010, the Company reported favorable development of approximately $20 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 $2.51 billion; its shares were traded at around $45.83 with a P/E ratio of 14.3 and P/S ratio of 0.8. The dividend yield of Mercury General Corp. stocks is 5.1%.MCY is in the portfolios of Robert Rodriguez of FPA Capital, First Pacific Advisors of First Pacific Advisors, LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Chuck Royce of Royce& Associates, Richard Aster Jr of Meridian Fund, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
The Companys operating results and growth have allowed it to consistently generate positive cash flow from operations, which was approximately $32.9 million and $50.9 million for the three months ended March 31, 2010 and 2009, respectively. Cash flow from operations has been used to pay shareholder dividends and to purchase and develop information technology.The Company is supporting the Continuous Coverage Auto Insurance Discount Act (Proposition 17), a California ballot initiative which will be on the June 2010 ballot. If passed, Proposition 17 will provide 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. While the company strongly believes this will be beneficial for the insurance consumer, there are consumer activist groups both supporting and opposing the initiative. The Company made financial contributions of $3.75 million, $0, and $3.5 million during April 2010, the first quarter of 2010, and 2009, respectively, related to this initiative. The Company expects to continue supporting the initiative with financial contributions.
At March 31, 2010, the Company recorded its point estimate of approximately $1,022.7 million in losses and loss adjustment expenses liabilities which include approximately $316.9 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 March 31, 2010 and estimated future payments for reopened
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. 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 three months ended March 31, 2010, the Company reported favorable development of approximately $20 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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