#United States #Los Angeles #California Wildfires #Mercury General #NYSE MCY

Mercury General Corporation Reports Fourth Quarter and Fiscal 2024 Results

Mercury General Corporation (NYSE: MCY), a leading provider of personal automobile and homeowners insurance, recently announced its results for the fourth quarter and fiscal year 2024. The company experienced robust growth in net premiums earned, which reached approximately $1.35 billion for the last quarter of 2024, marking an impressive 18.1% increase compared to the same period in 2023. This upward trend was mirrored over the twelve-month period, with total net premiums earned hitting $5.08 billion, a notable rise of 18.7% year-over-year.

One of the standout highlights from the report was the significant growth in net premiums written, which amounted to $1.31 billion for the fourth quarter, up 16.1% from $1.13 billion a year earlier. Throughout 2024, net premiums written reached $5.38 billion, reflecting a growth of 20.5% compared to the previous year. This growth was attributed to an expanding customer base and a rise in policyholder trust amid increasing demand for reliable insurance coverage.

However, the company also faced challenges, particularly related to catastrophe losses caused by extreme weather events. In January 2025, Mercury incurred substantial losses from wildfires in Southern California that resulted in estimated gross catastrophe losses between $1.6 billion and $2.0 billion. Of these, the projected net losses are expected to range from $155 million to $325 million, reflecting the immediate impact of disasters on financial performance. The report highlighted that approximately 55% to 60% of these losses were attributed to the Palisades fire, with the remaining 40% to 45% linked to the Eaton fire.

Despite these challenges, the company reported a net income of $101 million for the fourth quarter, a decrease of 47.2% from $191 million in Q4 2023. However, the year-to-date net income saw a remarkable jump to nearly $468 million, up 385.8% compared to 2023. Notably, the operating income for Q4 also showed a substantial increase, rising to $153.9 million, representing a 142% gain from the prior year.

Besides growth in premiums and income, the company declared a quarterly dividend of $0.3175 per share, demonstrating its commitment to returning value to shareholders. The dividend will be paid on March 27, 2025, to those on the record as of March 13, 2025.

An important factor influencing Mercury’s financial outlook is its catastrophe reinsurance program, which covers losses exceeding $150 million. As the wildfires posed significant claims, the company is actively engaging in subrogation efforts stemming from losses related to utility companies. This strategic approach aims to mitigate the financial repercussions effectively.

In light of the devastating impact of the recent wildfires, Fitch Ratings and Moody's placed the company’s ratings under negative outlook, citing concerns regarding future reinsurance costs and the overall health of the California homeowners insurance market. However, the company has reassured stakeholders that its cash and short-term investments total over $1 billion, providing ample liquidity to manage heightened claims from the wildfire damages.

Looking forward, Mercury General remains committed to assessing its exposure to wildfire risk and adapting its strategies accordingly. A conference call is scheduled for February 12, 2025, to further discuss these disastrous events, the company's financial results, and its future direction.

In summary, while Mercury General Corporation faced noteworthy challenges due to the disastrous wildfires in Southern California, its significant growth in net premiums and resilience in financial performance underscore the company's potential for continued success in the competitive insurance landscape.