Mercury General Corporation (NYSE: MCY) reported today net income of $78.1 million, or $1.43 per share (diluted), in the second quarter 2004 compared with $43.4 million, or $0.80 per share (diluted), in the same period for 2003. For the first six months of 2004, net income was $147.0 million ($2.69 per share-diluted) compared to net income of $85.5 million ($1.57 per share-diluted) in the same period for 2003. Included in net income are net realized gains, net of tax, of $7.9 million ($0.14 per share-diluted) in the second quarter 2004 compared to net realized losses, net of tax benefit, of $0.1 million ($0.00 per share-diluted) for the second quarter 2003, and net realized gains, net of tax, of $11.6 million ($0.21 per share-diluted) for the first six months of 2004 compared to net realized losses, net of tax benefit, of $0.6 million ($0.01 per share-diluted) for the same period in 2003.
Company-wide net premiums written were $648.5 million in the second quarter 2004, an 18.2% increase over second quarter 2003 net premiums written of $548.5 million, and were $1,278.7 million for the first six months of 2004, a 17.6% increase over the same period in 2003. California net premiums written were $498.7 million in the quarter, an increase of approximately 8.5% over 2003, and were $998.8 million for the first six months of 2004, a 9.5% increase over the same period in 2003. Non-California net premiums written were $149.8 million in the quarter, a 68.5% increase over 2003, and were $279.9 million for the first six months of 2004, a 60.3% increase over the same period in 2003. Non-California net premiums written represented approximately 23.1% of the Company’s total second quarter net premiums written, up from 16.2% in the second quarter of 2003.
The Company’s combined ratio (GAAP basis) was 88.3% in the second quarter and 88.7% for the first six months of 2004 compared with 94.3% for both the second quarter and the six month period in 2003. Rate increases taken during 2003 and positive development of approximately $25 million for the six month period ended June 30, 2004 on the 2003 and prior accident year loss reserves contributed to the improvement in the combined ratio.
Net investment income of $26.2 million (after tax $23.2 million) in the second quarter of 2004 decreased by 1.9% compared to the same period in 2003. The after-tax yield on investment income was 3.6% on average assets of $2.6 billion (fixed maturities and equities at cost) for the quarter. This compares with an after tax yield on investment income of 4.2% on average investments of $2.3 billion (fixed maturities and equities at cost) for the same period in 2003.
In June 2004, the Company began writing private passenger automobile insurance in Pennsylvania, marking the eleventh state in which the Company writes automobile insurance.
On July 30, 2004, the Board of Directors declared a quarterly dividend of $0.37 per share for the second quarter, representing a 12% increase over the quarterly dividend amount paid in 2003. The dividend is to be paid on September 30, 2004 to shareholders of record on September 15, 2004. The Company’s book value per share at June 30, 2004 was $24.29.
Mercury General Corporation and its subsidiaries are a multiple line insurance organization offering predominantly personal automobile and homeowners insurance through a network of independent agents and brokers in many states. For more information, visit our website at www.mercuryinsurance.com. A replay of the
conference call will be available beginning at 1:30 P.M. Pacific time and running through August 9, 2004. The replay telephone numbers are (800) 642-1687 (USA) or (706) 645-9291 (International). The conference ID# is 8698528. The replay will also be available on the Company’s website shortly following the call.
