Make a Checklist to Review with Your Tax Preparer LOS ANGELES, April 3, 2025 /PRNewswire/ -- One of the most difficult parts of preparing your taxes is gathering all of the paperwork. If you own your home, that task is multiplied and even more important; one overlooked deduction can cost you thousands. With April 15 just around the corner, Mercury Insurance is providing a checklist so you are prepared when you sit down to do taxes or review with your CPA. Most of us are accustomed to deducting our mortgage ...

Mercury's New Umbrella Insurance Better Protects Georgians' Personal Wealth Against Bodily Injury Claims LOS ANGELES, March 31, 2025 /PRNewswire/ -- Multi-vehicle crashes, dog bites or a delivery person being injured on your property are some of the unexpected events that are putting Georgians' personal financial health at risk. In fact, bodily injury payouts continue to climb year over year since the pandemic started, with the average amount for a liability claim increasing by 35%, according to Mercury Ins ...

Core Insights - The percentage of uninsured motorists in the U.S. has increased from 11% in 2019 to 14% in 2022, equating to approximately 1 in 7 drivers being uninsured [2] - The financial strain on insurance companies due to uninsured drivers leads to increased costs, which are ultimately passed on to insured drivers [3][4] - Policyholders collectively paid $16 billion for uninsured and underinsured motorist coverage in recent years, highlighting the significant financial impact on the insurance industry [3] Industry Impact - The rise in uninsured drivers raises the risk for insurance companies, potentially leading to higher claims payouts for accidents involving these motorists [6] - To mitigate increased risks, insurance companies are likely to raise premiums for all insured drivers, regardless of their individual driving records [6] - Frequent claims against uninsured drivers can lead to higher premiums for everyone, even in states where uninsured motorist coverage is mandated [6] Company Insights - Mercury Insurance emphasizes the importance of auto insurance as a safety net for drivers, passengers, and others on the road [5] - The company suggests that consumers can take advantage of discounts and strategies to reduce insurance costs, especially in light of affordability concerns [5] - Mercury Insurance has a strong presence in multiple states and has received high ratings for customer service and competitive rates [8]

Company Overview - Mercury General (MCY) shares have increased by approximately 0.2% since the last earnings report, outperforming the S&P 500 [1] - The most recent earnings report indicates a need to analyze the catalysts affecting the stock's performance [1] Earnings Estimates - Fresh estimates for Mercury General have trended downward over the past month, with the consensus estimate shifting by -433.33% [2] VGM Scores - Mercury General has a strong Growth Score of A, but a low Momentum Score of F; it also holds an A grade for value, placing it in the top quintile for this investment strategy [3] Outlook - The overall trend of estimate revisions for Mercury General indicates a downward shift, resulting in a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [4] Industry Performance - Mercury General is part of the Zacks Insurance - Property and Casualty industry, where The Hartford Insurance Group (HIG) has seen a gain of 4.1% over the past month [5] - The Hartford Insurance Group reported revenues of $4.79 billion for the last quarter, reflecting a year-over-year increase of 11.1%, with EPS of $2.94 compared to $3.06 a year ago [6] - The Hartford is expected to post earnings of $2.34 per share for the current quarter, with a Zacks Consensus Estimate change of -3.6% over the last 30 days [6] - The Hartford also holds a Zacks Rank of 3 (Hold) and has a VGM Score of C [7]

Group 1 - The stock of Mercury General (MCY) is experiencing significant attention due to high implied volatility in the options market, particularly the Mar 21, 2025 $80.00 Put option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Mercury General's stock price [2] - Currently, Mercury General holds a Zacks Rank 3 (Hold) in the Insurance-Property and Casualty industry, which is in the top 27% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, no analysts have increased their earnings estimates for Mercury General's current quarter, while one analyst has revised their estimate downwards, leading to a consensus estimate drop from $1.60 per share to a loss of $4.00 [3] - The high implied volatility may indicate a potential trading opportunity, as options traders often seek to sell premium on options with high implied volatility, hoping the stock does not move as much as expected at expiration [4]

Financial Data and Key Metrics Changes - The fourth quarter after-tax operating income reached $98 million, the highest in the company's history [9] - The combined ratio improved to 91.4% for the quarter and 96% for the full year 2024, driven by rate increases and moderating inflation [9] - Catastrophe losses for the quarter were $41 million, contributing 3 points to the combined ratio for the full year [10] - Investment income after tax increased to $61.5 million in Q4 2024, up 15% year-over-year [11] - Net premiums written grew 16% to $1.3 billion in the quarter and 20.5% to $5.4 billion for the full year 2024 [11] Business Line Data and Key Metrics Changes - The personal auto and homeowners business, which represents 88% of earned premium, showed favorable results with a core underlying combined ratio of 92.1% for personal auto and 76.1% for homeowners in 2024 [13] - The increase in net premiums was primarily due to higher average premiums per policy resulting from rate increases [11] Market Data and Key Metrics Changes - The company anticipates that investment income for 2025 will be near 2024 levels, indicating stability in investment performance [13] - The company expects gross catastrophe losses from the January wildfires to be in the range of $1.6 billion to $2 billion, with a significant portion of losses expected to be recoverable through subrogation [14][92] Company Strategy and Development Direction - The company aims to grow its auto and homeowners business prudently while monitoring its capital position and premium to surplus ratio [37] - Management emphasized the importance of core underlying earnings in rebuilding capital lost from wildfires [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core underlying business's ability to deliver good results in 2025, despite the impact of recent wildfires [12] - The California Department of Insurance's recent actions are seen as supportive of insurers taking appropriate rate actions following the wildfires [53] Other Important Information - The company has over $1 billion in cash on hand, earning 4.35% [22] - The company has paid $800 million to insureds primarily for dwelling limits and has billed $1 billion to reinsurers, receiving $531 million to date [22] Q&A Session Summary Question: What might the fair plan total loss look like? - Management stated they do not have an indication of the total fair plan loss at this time [34] Question: How does the company view its premiums to capital ratio? - Management expects the ratio to be in the high twos to low threes and believes core underlying earnings will help drive it down [37] Question: What are the trends in auto frequency and severity? - Frequencies in auto are showing a small decline for property damage and collision, while severity is in low to mid-single digits for property damage and mid-teens for bodily injury [46] Question: Can you provide more details on the claims received? - Approximately 2,700 claims have been reported, with about 650 homeowners policies totaling [65] Question: How is the estimate of $1.6 billion to $2 billion derived? - The estimate is based on total insured values and historical payout percentages from previous wildfire events [73][92] Question: What discussions have been had with reinsurers regarding event classification? - Management indicated there has been no pushback from reinsurers regarding the classification of events [80]

Group 1: Earnings Performance - Mercury General reported quarterly earnings of $2.78 per share, significantly exceeding the Zacks Consensus Estimate of $0.64 per share, representing an earnings surprise of 334.38% [1] - The company achieved revenues of $1.43 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.32% and showing an increase from $1.21 billion year-over-year [2] - Over the last four quarters, Mercury General has consistently surpassed consensus EPS estimates [2] Group 2: Stock Performance and Outlook - Mercury General shares have declined approximately 23.8% since the beginning of the year, contrasting with the S&P 500's gain of 3.1% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.75 on revenues of $1.39 billion, while for the current fiscal year, it is $3.45 on revenues of $5.79 billion [7] - The estimate revisions trend for Mercury General is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Insurance - Property and Casualty industry, to which Mercury General belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Premiums and Insurance Products - Direct premiums written for 2024 totaled $5,500.8 million, with California accounting for 80.5% of the total[14]. - Private passenger automobile insurance represented 61.7% of total premiums written in 2024, while homeowners insurance accounted for 24.9%[14]. - The renewal rate for private passenger automobile policies in California averaged approximately 99% in 2024[35]. - Approximately 83% of the Company's direct automobile insurance premiums were generated in California[107]. - Private passenger automobile lines accounted for approximately 62% of the $5.5 billion in direct premiums written in 2024, with 84% of these premiums written in California[210]. Financial Performance - The net premiums written increased to $5,378,310 thousand in 2024, compared to $4,464,199 thousand in 2023, representing a growth of approximately 20.5%[50]. - The company's net income for the year ended December 31, 2024, was $468.0 million, or $8.45 per diluted share, compared to $96.3 million, or $1.74 per diluted share, for the same period in 2023[212]. - The total incurred losses and loss adjustment expenses for 2024 amounted to $3,684,511 thousand, compared to $3,517,853 thousand in 2023, indicating an increase of approximately 4.7%[39]. - The combined ratio for the company-wide insurance operations improved to 96.1% in 2024 from 105.8% in 2023, indicating better underwriting performance[48]. - The loss ratio for company-wide operations decreased to 72.6% in 2024 from 82.3% in 2023, showing improved loss management[48]. Reserves and Losses - The company maintains loss reserves for both reported and unreported claims, reflecting inflation through analysis of cost trends[37]. - The net reserves at December 31, 2024, increased to $3,123,386 thousand from $2,753,554 thousand in 2023, reflecting a significant rise in loss reserves[39]. - Catastrophe losses net of reinsurance were approximately $277 million in 2024, up from $239 million in 2023, primarily due to severe weather events[43]. - The provision for insured events of prior years increased by approximately $24.8 million in 2024, primarily due to higher than estimated losses in commercial lines[40]. - The company experienced a favorable reserve development of approximately $8 million on prior years' catastrophe losses in 2023, contrasting with unfavorable developments in 2024[44]. Investments - The investment portfolio's total value was $6,061,318 thousand in 2024, up from $5,229,297 thousand in 2023, indicating a growth in investment assets[54]. - Average invested assets at cost increased to $5,683,973 thousand in 2024 from $5,096,428 thousand in 2023, representing an increase of 11.5%[55]. - Net investment income after income taxes rose to $235,419 thousand in 2024, up from $200,209 thousand in 2023, reflecting a growth of 17.6%[55]. - The average annual yield on investments after income taxes improved to 3.8% in 2024 from 3.7% in 2023[55]. - Net realized investment gains after income taxes were $70,050 thousand in 2024, compared to $79,801 thousand in 2023, indicating a decrease of 9.0%[55]. Regulatory and Compliance - The Company is subject to risk-based capital standards, and failure to meet these requirements could lead to regulatory actions[109]. - The Company filed its most recent Own Risk and Solvency Assessment (ORSA) Summary Report with the California DOI in November 2024, with no material impact on consolidated financial statements[78]. - The Holding Company Act restricts the Company from certain transactions without prior regulatory approval, including extraordinary dividends exceeding 10% of statutory surplus[85]. - The Company is subject to regulatory approval for insurance rates in several states, including California, which can limit its ability to operate profitably[112]. - The use of credit scoring in underwriting is under scrutiny, and any restrictions could negatively impact future profitability[115]. Operational and Market Conditions - The company had approximately 4,200 employees as of December 31, 2024, focusing on attracting and retaining talent[23]. - The automobile insurance market was characterized as hard in 2024, with increased rates reflecting high inflation and loss severity[59]. - The Company operates in 11 states, primarily focusing on personal automobile insurance, which is subject to significant market fluctuations[209]. - The Company has a diverse executive team with extensive experience in the property and casualty insurance industry, including the Chairman who has over 60 years of experience[87]. - The Company intends to continue expanding its operations, which may require increased expenditures funded from cash flows from operations, potentially impacting future profitability[131]. Risks and Challenges - The Company is subject to various risks, including economic downturns and regulatory changes, which could adversely affect its financial condition and results of operations[105]. - The Company faces significant risks from catastrophic events, which can lead to substantial volatility in financial results and cash outflows due to claims[129]. - Changes in market interest rates can adversely impact the Company's investment portfolio, particularly its fixed income securities, affecting overall financial results[119]. - The adequacy of the Company's loss reserves is uncertain, and any inadequacy could materially affect its financial condition and results of operations[126]. - The company faces substantial litigation risks, which could result in significant penalties and legal expenses, adversely affecting its financial condition[151]. Cybersecurity and IT Risks - Cybersecurity risks are increasing, with potential incidents that could disrupt business and compromise sensitive data, leading to reputational damage and financial liabilities[156]. - The Company has implemented a comprehensive cybersecurity risk management program integrated into its overall enterprise risk management framework[176]. - The Board of Directors oversees cybersecurity risks and is regularly updated on the Company's cybersecurity risk assessment results and incidents[179]. - The company relies heavily on its IT systems for business operations, and any failure could lead to material adverse effects on its financial condition and results of operations[154]. - The Company has not identified any material adverse effects from past cybersecurity incidents on its operations or financial condition[178]. Shareholder and Dividend Information - The Company was the eighth largest writer of private passenger automobile insurance in California and the sixteenth largest in the United States as of 2023[58]. - The Company is permitted to pay $252 million in dividends to Mercury General in 2025, of which $228 million may be paid by the California Companies[84]. - The closing price of the Company's common stock on February 6, 2025, was $51.06, with approximately 137 holders of record[194][195]. - The company has consistently paid cash dividends since its public offering in 1985, but reduced the dividend per share in 2022 for the first time due to challenging business conditions[164]. - Future equity or debt financing may affect the market price of the company's common stock and could lead to dilution for current shareholders[162].

Financial Performance - Net premiums earned for Q4 2024 were $1,352,101, an increase of 18.1% from $1,144,895 in Q4 2023[3] - Net income for Q4 2024 was $101,068, a decrease of 47.2% compared to $191,394 in Q4 2023[3] - Total revenues for the twelve months ended December 31, 2024, reached $5,475,633, compared to $4,629,631 for the previous year, indicating a year-over-year increase of 18.3%[27] - Operating income for the twelve months ended December 31, 2024, was $397,903, compared to $16,535 in the previous year, reflecting a significant increase in operational efficiency[32] Underwriting Performance - The combined ratio improved to 91.4% in Q4 2024 from 98.6% in Q4 2023, a decrease of 7.2 percentage points[3] - The combined ratio for the three months ended December 31, 2024, improved to 91.4% from 98.6% in the same period of 2023, indicating better underwriting performance[27] Catastrophe Losses - Catastrophe losses net of reinsurance for 2024 were $277,000, an increase of 15.9% from $239,000 in 2023[3] - Estimated gross catastrophe losses from the January 2025 wildfires range from $1.6 billion to $2.0 billion, with net losses estimated between $155 million and $325 million[9] - The company has paid out $800 million related to the wildfires as of February 7, 2025, with $500 million collected from reinsurers[18] Investment Performance - The average annual yield on investments after income taxes was 3.7% for Q4 2024, down from 3.8% in Q4 2023[7] Regulatory and Market Conditions - The California Department of Insurance approved a 12% rate increase for homeowners insurance, effective March 2025, representing approximately 16% of total net premiums earned in 2024[8] - Fitch and Moody's placed the company's ratings under negative outlook due to uncertainties around future reinsurance costs and the overall California homeowners insurance market[20] - The company is reassessing its view of California wildfire risk, considering recent events and updates to catastrophe models[21] Balance Sheet Strength - The company's total assets increased to $8,310,632 as of December 31, 2024, up from $7,103,397 a year earlier, marking a growth of 17.0%[30] - The statutory surplus rose to $2.03 billion as of December 31, 2024, compared to $1.67 billion in the previous year, an increase of 21.8%[30] - The loss and loss adjustment expense reserves increased to $3,152,031 as of December 31, 2024, from $2,785,702 a year earlier, reflecting a rise of 13.2%[30] - The debt to total capital ratio improved to 22.8% as of December 31, 2024, down from 27.1% in the previous year, indicating a stronger capital position[30] Policy Metrics - The number of personal auto policies in force decreased slightly to 1,019 as of December 31, 2024, from 1,032 a year earlier, showing a decline of 1.3%[30] Definitions and Financial Measures - Net premiums earned represent the portion of premiums written recognized as revenue, earned on a pro-rata basis over the term of the policies[36] - Net premiums written is a statutory financial measure indicating premiums charged on policies issued during a fiscal period, less applicable reinsurance[36] - Incurred losses and loss adjustment expenses are the most directly comparable GAAP measure to paid losses and loss adjustment expenses, which exclude changes in loss reserve accounts[37] - The combined ratio-accident period basis is computed as the difference between the combined ratio and prior accident periods' loss development ratio, providing insights into operational trends[38]

Core Insights - As winter approaches, drivers are advised to winterize their vehicles to ensure safety and prevent costly repairs [1][2] - Mercury Insurance emphasizes the importance of taking preventive measures to prepare vehicles for winter conditions [2] Company Overview - Mercury Insurance, headquartered in Los Angeles, offers multiple lines of insurance including personal auto, homeowners, and renters insurance across various states [3][4] - The company has been providing value through competitive rates and excellent customer service since 1962, employing nearly 4,100 staff and working with over 6,500 independent agents [4] Winter Maintenance Tips - Check the battery to ensure it is fully charged and inspect for corrosion, replacing old batteries before winter [5] - Inspect tires for sufficient tread and proper inflation, considering winter tires in snowy areas [5] - Top off fluids, including winter-grade windshield washer fluid, engine oil, coolant, and brake fluid [5] - Test brakes to ensure they are functioning properly for icy conditions [5] - Replace wiper blades and ensure defrosters and heaters are operational for visibility [5] - Check all vehicle lights to ensure they are working, replacing any burnt-out bulbs [5] - Prepare a winter emergency kit with essentials like a flashlight, jumper cables, blankets, and non-perishable snacks [5]