Mercury General(US:MCY)2019-07-30 19:22Financial Performance - Net income for the six months ended June 30, 2019, was $219,117, significantly up from $17,573 in the same period of 2018, marking a growth of 1145.5%[15]. - Net income for the three months ended June 30, 2019, was $83.3 million, up from $60.2 million in 2018, marking an increase of 38.3%[135]. - Net premiums earned for Q2 2019 were $888,776, an increase of 6.6% compared to $833,959 in Q2 2018[15]. - For the six months ended June 30, 2019, net premiums earned totaled $1,759.0 million, up from $1,642.0 million in 2018, reflecting a year-over-year increase of 7.1%[137]. - The underwriting gain for the three months ended June 30, 2019, was $15.2 million, a decrease from $26.0 million in the same period of 2018[135]. - Pre-tax income for the three months ended June 30, 2019, was $101.6 million, compared to $73.2 million in the same period of 2018, indicating a significant increase of 38.8%[135]. - The effective income tax rate for the six months ended June 30, 2019, was 18.5%, down from 29.7% for the same period in 2018, influenced by tax-exempt investment income of approximately $42 million[171]. Revenue and Premiums - Total revenues for Q2 2019 reached $979,487, a 10.6% increase from $885,391 in Q2 2018[15]. - Direct premiums written for the three months ended June 30, 2019, were $946.1 million, an increase from $886.6 million in the same period of 2018, representing a growth of 6.7%[137]. - Net premiums earned for the three months ended June 30, 2019, were $888.8 million, an increase from $834.0 million in the same period of 2018, representing a growth of 6.5%[135]. - For the six months ended June 30, 2019, total direct premiums written amounted to $1,868,171,000, with California contributing $1,611,256,000, representing 86.2% of the total[146]. Assets and Liabilities - Total assets increased to $5,716,518, up from $5,433,729, representing a growth of 5.2%[13]. - Total liabilities rose to $3,948,556 from $3,816,045, an increase of 3.5%[13]. - The Company’s investments as of June 30, 2019, totaled $4.165 billion, an increase from $3.768 billion as of December 31, 2018, representing a 10.5% growth[44]. - The fair value of the Company's total assets at fair value was $4,170,637 thousand as of June 30, 2019, with $890,200 thousand classified as Level 1, $3,212,543 thousand as Level 2, and $1,206 thousand as Level 3[78]. Investment Gains - The company reported net realized investment gains of $53,329 in Q2 2019, compared to gains of $14,290 in Q2 2018, representing a growth of 273.5%[15]. - The total realized investment gains for the three months ended June 30, 2019, were $53.33 million, significantly higher than $14.29 million in the same period in 2018[187]. - Net realized investment gains from total return swaps for the three months ended June 30, 2019, were $515,000, compared to a loss of $320,000 in the same period of 2018[98]. Losses and Reserves - Losses and loss adjustment expenses for the three months ended June 30, 2019, were $656.6 million, compared to $605.5 million in the same period of 2018, reflecting an increase of 8.5%[135]. - The loss ratio for the three months ended June 30, 2019, was 73.9%, compared to 72.6% for the same period in 2018, affected by unfavorable development of approximately $9 million on prior accident years' loss reserves[181]. - The Company recorded loss reserves of approximately $1.78 billion, including $771.9 million of incurred but not reported loss reserves[161]. - The net reserves at June 30, 2019, were $1,676,807,000, compared to $1,503,094,000 in the previous year[121]. Operating Activities - Cash provided by operating activities for the six months ended June 30, 2019, was $265,623, compared to $184,075 in 2018, an increase of 44.3%[21]. - The company has $602.5 million in combined cash and short-term investments as of June 30, 2019, along with $50 million available on a revolving credit facility[208]. Catastrophe Losses - For the six months ended June 30, 2019, the Company recorded catastrophe losses net of reinsurance of approximately $14 million, compared to $11 million for the same period in 2018[122]. - Gross catastrophe losses for the first half of 2019 totaled approximately $17 million, primarily due to winter storms in California and tornadoes in the Midwest, with no reinsurance benefits utilized[122]. Debt and Liabilities - As of June 30, 2019, the Company's total debt was approximately $371.9 million, with a debt to total capital ratio of 17.5%[124]. - The Company accrued approximately $3 million in the second quarter of 2019 for estimated statutory interest related to ongoing legal proceedings[128]. - The Company has recorded a total of approximately $31.9 million in other liabilities as of June 30, 2019, related to a penalty refund from the California DOI[128]. Operational Efficiency - The expense ratio decreased to 24.6% in the first half of 2019 from 24.9% in 2018, indicating improved operational efficiency[198]. - The combined ratio for the three months ended June 30, 2019, was 98.3%, indicating profitable underwriting results as it is below 100%[183].