Mercury General(US:MCY)2025-11-04 21:11Financial Performance - Net income for the three months ended September 30, 2025, was $280,403 thousand, compared to $230,856 thousand for the same period in 2024, reflecting a growth of 21.5%[13] - Net premiums earned for the three months ended September 30, 2025, were $1,410,400 thousand, a 6.8% increase from $1,320,652 thousand in the same period of 2024[13] - Total revenues for the nine months ended September 30, 2025, reached $4,456,689 thousand, an increase of 8.4% from $4,109,454 thousand in 2024[13] - The underwriting gain for the three months ended September 30, 2025, was $185.1 million, compared to $87.1 million in the same period of 2024, indicating a significant increase of 112.5%[129] - Net income for the nine months ended September 30, 2025, was $338.5 million, compared to $366.9 million in 2024, resulting in a basic earnings per share of $6.11, down from $6.63[187] Assets and Liabilities - Total assets increased to $9,372,742 thousand as of September 30, 2025, up from $8,310,632 thousand at December 31, 2024, representing a growth of 12.8%[11] - Total liabilities increased to $7,140,428 thousand as of September 30, 2025, compared to $6,364,108 thousand at December 31, 2024, representing a growth of 12.2%[11] - Cash balance at the end of the period increased to $1,252,575 thousand, compared to $720,257 thousand at the beginning of the year, marking a rise of 74%[19] - Retained earnings grew to $2,132,615 thousand as of September 30, 2025, up from $1,846,825 thousand at the end of 2024, reflecting an increase of 15.5%[16] Premiums and Underwriting - Direct premiums written increased to $1,554.9 million in Q3 2025 from $1,458.9 million in Q3 2024, and for the nine months ended September 30, 2025, it rose to $4,470.5 million from $4,133.9 million in 2024[33] - For the nine months ended September 30, 2025, net premiums earned reached $4,038.1 million, up from $3,701.3 million in 2024, reflecting an increase of 9.1%[130] - The loss ratio improved to 62.6% in Q3 2025 from 69.5% in Q3 2024, primarily due to lower than estimated losses in the automobile line of insurance[163] - The combined ratio decreased to 87.0% in Q3 2025 from 93.6% in Q3 2024, indicating improved underwriting performance[163] Catastrophe and Losses - Catastrophe losses net of reinsurance for the nine months ended September 30, 2025, were approximately $489 million, compared to $236 million for the same period in 2024[108] - The company reported a net loss of approximately $22 million for the three months ended September 30, 2025, due to increased estimated net losses from the wildfires[115] - The company exhausted its catastrophe reinsurance limits of approximately $1.290 billion for the Palisades and Eaton wildfires, incurring reinstatement premiums of about $101 million[113] - The company has paid out approximately $1.404 billion for losses and loss adjustment expenses related to the Palisades and Eaton wildfires[112] Investments - The fair value of investments increased from $6,076,370 thousand on December 31, 2024, to $6,373,605 thousand on September 30, 2025, reflecting a growth of approximately 4.9%[50] - The total investment portfolio at fair value as of September 30, 2025, is $6,373,605 thousand, with fixed maturity securities and short-term investments at amortized cost[208] - The average annual yield on investments after income taxes remained stable at 4.0% for Q3 2025, compared to 3.9% in Q3 2024[170] - The Company’s investment strategy emphasizes safety of principal and consistent income generation, focusing on a well-diversified, investment-grade, fixed income portfolio[205] Regulatory and Market Conditions - A 12% rate increase for California homeowners insurance was approved by the California DOI, effective March 2025, representing about 15% of total net premiums earned[144] - The Texas market conduct examination reports issued in the first half of 2025 found no material findings against the Company[139] - The property and casualty insurance industry is highly cyclical, affecting the Company's ability to grow and retain business due to competition and economic conditions[134] Shareholder and Compensation - The Company recorded share-based compensation expense of approximately $6.1 million for the three months ended September 30, 2025, compared to $1.5 million for the same period in 2024[100] - The Company granted a total "target" award of 168,088 performance-based PSUs during the nine months ended September 30, 2025, with a maximum payout level of 150% of the target award[96]