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 $49.6 million, or $0.91 per share (diluted), in the third quarter 2003 compared with $18.5 million, or $0.34 per share (diluted), in the same period for 2002. For the first nine months of 2003, net income was $135.1 million ($2.48 per share) compared to net income of $48.8 million ($0.89 per share) in the same period for 2002. The Company had net realized investment gains, net of tax, of $4.1 million ($0.07 per share) in the third quarter of 2003 compared to $0.0 million ($0.00 per share) in the third quarter 2002, and $3.5 million ($0.06 per share) for the first nine months of 2003 compared to a loss, net of tax, of $31.6 million ($0.58 per share) for the first nine months of 2002. Due to guidance from the Securities and Exchange Commission regarding the use of non-GAAP financial measures, the Company will no longer disclose net operating earnings, a measure defined by the Company as net income excluding net realized investment gains and losses, net of tax, in its earnings announcements or other public filings.

     Company-wide premiums written were $590.2 million in the third quarter 2003, a 20.1% increase over 2002, and $1.7 billion for the nine month period, a 23.3% increase over the comparable period in 2002. California premiums written were $492.0 million in the quarter, a 17.6% increase over 2002, and $1.4 billion for the nine month period, a 21.2% increase over the comparable period in 2002. The increased premiums were driven by policy count growth and rate increases.

     The Company's non-California operations produced $98.2 million in premiums with a combined ratio (GAAP basis) of 92.5% this quarter. During the third quarter, the Company commenced writing personal automobile insurance in the state of New Jersey. In 2004, the Company expects to begin writing personal automobile insurance in Arizona.

     The Company's combined ratio (GAAP basis) was 93.4% in the third quarter and 94.0% for the first nine months of 2003 compared to 102.2% and 99.3% in the respective periods of 2002.

     Net investment income decreased by 11.8% to $24.5 million in the quarter and decreased by 9.5% to $78.2 million in the first nine months of 2003 compared to the same periods in 2002. The after-tax yield was 3.8% on average investments of $2.34 billion (fixed maturities and equities at cost) for the quarter. This compares with 4.8% in the third quarter of 2002.

    In October 2003, the Southern California region was devastated by sweeping fire storms. As of October 31, 2003, approximately 2,800 homes have been reported as destroyed. The Company estimates its California homeowners market share to be approximately 2%. As of October 31, 2003, the Company has received 27 total property burn claims, 10 partial burn claims and 83 smoke damage claims.

   The Board of Directors declared a quarterly 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 December 29, 2003 to shareholders of record on December 15, 2003.

Information Regarding Non-GAAP Measures

     The Company has presented information within this document containing operating measures which in management's opinion provide investors useful industry specific information to evaluate and perform meaningful comparisons of the Company's performance but that may not be presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These measures are not intended to replace, and should be read in conjunction with, the GAAP financial results. The Company has reconciled these measures with the most directly comparable GAAP measure in the supplemental schedule entitled, "Summary of Operating Results."

     Net Premiums Written represents the premiums charged on policies issued during a fiscal period. Net Premiums Earned, the most directly comparable GAAP measure, represents the portion of premiums written that is recognized as income in the financial statements for the periods presented and earned on a pro-rata basis over the term of the policies. Net Premiums Written is meant as supplemental information and is not intended to replace Net Premiums Earned. It should be read in conjunction with the GAAP financial results.

    Paid Losses and Loss Adjustment Expenses is the portion of Incurred Losses and Loss Adjustment Expenses, the most directly comparable GAAP measure, excluding the effects of changes in the loss reserve accounts. Paid Losses and Loss Adjustment Expenses is meant as supplemental information and is not intended to replace Incurred Losses and Loss Adjustment Expenses. It should be read in conjunction with the GAAP financial results.