Los Angeles, CA…Mercury General Corporation (NYSE: MCY), a major California automobile insurer with operations in a number of other states, reported today that net income was $42.1 million, or $0.77 per share (diluted), in the first quarter 2003 compared with $29.0 million, or $0.53 per share (diluted), in the same period for 2002. Net operating earnings in the first quarter of 2003 were $42.6 million, or $0.78 per share, compared with $28.8 million, or $0.53 per share in 2002. The Company defines net operating earnings, a non GAAP financial measure, as net income excluding net realized investment gains and losses, net of tax. Management believes that net operating earnings better reflects the Company's core business results since its investment policy emphasizes maximization of after-tax yields and not achieving realized gains. Company-wide premiums written were $538.8 million in the first quarter 2003, a 27.8% increase over first quarter 2002 premiums written of $421.5 million. California premiums written were $452.9 million in the quarter, an increase of 25.8% over 2002. The increased premiums were driven by both policy count growth and recent rate increases. The loss ratio (GAAP basis) was 68.2% in the quarter compared with 71.9% in the same period for 2002. The lower loss ratio is largely attributed to recent rate increases and improved loss frequency in the Company's automobile lines of business. Loss frequencies can be affected by many factors including seasonal travel, weather and fluctuations in gasoline prices.

     The expense ratio (GAAP basis) was 26.2% in the quarter compared with 26.6% in the same period for 2002.

     The Company received approval from the California Department of Insurance to increase its personal automobile rates by 6.9% in Mercury Casualty Company and California Automobile Insurance Company and 3.8% in Mercury Insurance Company. The Company plans to implement these rate increases in June 2003.

     Net investment income in the first quarter of 2003 of $26.9 million decreased by 8.7% from $29.5 million in the same period for 2002. After taxes, per share (diluted) investment income was $0.44 in the quarter, compared with $0.47 in the first quarter of 2002. The after-tax yield was 4.33% on average investments of $2.21 billion (fixed maturities and equities at cost) for the quarter. This compares with 5.23% in the first quarter of 2002. The Board of Directors declared a second quarter dividend of $0.33 per share, representing a 10% increase over the quarterly dividend amount paid in 2002. The dividend is to be paid on June 30, 2003 to shareholders of record on June 15, 2003. The Company's book value per share at March 31, 2003 was $20.84.