Mercury General(MCY)2025-02-11 21:07Financial Performance - Net premiums earned for Q4 2024 were 1,144,895 in Q4 2023[3] - Net income for Q4 2024 was 191,394 in Q4 2023[3] - Total revenues for the twelve months ended December 31, 2024, reached 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 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 239,000 in 2023[3] - Estimated gross catastrophe losses from the January 2025 wildfires range from 2.0 billion, with net losses estimated between 325 million[9] - The company has paid out 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 7,103,397 a year earlier, marking a growth of 17.0%[30] - The statutory surplus rose to 1.67 billion in the previous year, an increase of 21.8%[30] - The loss and loss adjustment expense reserves increased to 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]