Q4 2025 Quarterly Earnings Release

Mercury General Corporation

February 17, 2026

Three Months Ended December 31, 2025

PRNewswire / Mercury General Corporation

Mercury General holds quarterly earnings conference calls, but FMP does not carry transcripts for MCY from mid-2020 through late 2024. This press release is the best available public record for Q4 2025.

CONSOLIDATED HIGHLIGHTS

Three Months Ended December 31,

2025 2024 Change $ Change %

Net premiums earned $1,445,404 $1,352,101 $93,303 6.9%

Net premiums written $1,427,731 $1,314,933 $112,798 8.6%

Direct premiums written $1,490,371 $1,346,718 $143,653 10.7%

Net realized investment gains (losses),

net of tax $92 ($52,823) $52,915 NM

Net income $202,547 $101,068 $101,479 100.4%

Net income per diluted share $3.66 $1.82 $1.84 101.1%

Operating income $202,455 $153,891 $48,564 31.6%

Operating income per diluted share $3.66 $2.78 $0.88 31.7%

Catastrophe losses net of reinsurance $19,000 $41,000 ($22,000) (53.7%)

Combined ratio 88.6% 91.4% — (2.8) pts

Twelve Months Ended December 31,

2025 2024 Change $ Change %

Net premiums earned $5,505,613 $5,075,456 $430,157 8.5%

Net premiums written $5,721,778 $5,378,310 $343,468 6.4%

Net income $541,094 $467,953 $73,141 15.6%

Net income per diluted share $9.77 $8.45 $1.32 15.6%

Operating income $437,313 $397,903 $39,410 9.9%

Operating income per diluted share $7.90 $7.19 $0.71 9.9%

Catastrophe losses net of reinsurance $508,000 $277,000 $231,000 83.4%

Combined ratio 96.3% 96.0% — 0.3 pts

Operating income (loss) is net income (loss) excluding realized investment gains and losses, net of tax.

Both net premiums earned and net premiums written for the twelve months ended December 31, 2025 include $101 million of increased ceded premiums due to the reinstatement premiums paid and recorded in the first half of 2025 to reinstate the fully exhausted reinsurance coverage layers of the Company's catastrophe reinsurance treaty ending June 30, 2025 following the Palisades and Eaton wildfires in January 2025.

The majority of 2025 catastrophe losses resulted from the Palisades and Eaton wildfires in California and severe storms in Texas, Oklahoma and California.

The Company experienced favorable development of approximately $18 million and unfavorable development of approximately $8 million on prior accident years' loss and loss adjustment expense reserves for the three months ended December 31, 2025 and 2024, respectively, and favorable development of approximately $92 million and unfavorable development of approximately $25 million for the twelve months ended December 31, 2025 and 2024, respectively. The year-to-date favorable development in 2025 was primarily attributable to lower than estimated losses and loss adjustment expenses in the automobile and homeowners lines of insurance business, including favorable development on the prior years' catastrophe losses.

MANAGEMENT COMMENTARY

Gabe Tirador, the Company's CEO, commented on the 2025 results: "We are proud of our team's accomplishments in 2025. The Palisades and Eaton wildfires were the most significant catastrophes in Mercury's history, driving our first quarter combined ratio to 119.2%, but our business in subsequent quarters performed strongly ending with an 88.6% combined ratio in the fourth quarter and 96.3% for the full year. And our team demonstrated exceptional resilience and commitment to our policyholders, managing more than 2,900 wildfire claims and paying over $1.4 billion to date."

The California Department of Insurance approved a 6.9% rate increase on the Company's California homeowners line of insurance business in December 2025. This rate increase is expected to become effective in July 2026. The California homeowners line of insurance business represented approximately 15% of the Company's total net premiums earned in 2025.

The Board of Directors declared a quarterly dividend of $0.3175 per share.

INVESTMENT RESULTS

Three Months Ended Twelve Months Ended

December 31, December 31,

2025 2024 2025 2024

Average invested assets at cost $6,367,236 $6,023,948 $5,968,575 $5,683,973

Net investment income

Before income taxes $84,493 $73,262 $328,701 $279,989

After income taxes $71,598 $61,491 $276,214 $235,419

Average annual yield on investments

After income taxes 3.9% 3.7% 4.0% 3.8%

Net investment income includes interest income earned on cash of $12.3 million and $6.9 million ($9.7 million and $5.4 million after tax) for the three months ended December 31, 2025 and 2024, respectively, and $50.7 million and $25.5 million ($40.1 million and $20.2 million after tax) for the twelve months ended December 31, 2025 and 2024, respectively. Higher net investment income resulted largely from higher average invested assets and cash combined with higher average yield, primarily due to the maturity and replacement of lower yielding investments purchased when market interest rates were lower with higher yielding investments.

UPDATED INFORMATION REGARDING THE PALISADES AND EATON WILDFIRES

The Company recorded net catastrophe losses and LAE before taxes from the Palisades and Eaton wildfires of approximately $380 million in its consolidated statement of operations for the year ended December 31, 2025.

Components of net losses from the Palisades and Eaton wildfires as of December 31, 2025:

Gross losses and loss adjustment expenses $2,191,752

Reinsurance recovered and recoverable ($1,293,500)

Net catastrophe losses and LAE on Eaton and Palisades fires before FAIR Plan $312,720

Company's share of FAIR Plan losses and LAE $92,717

Recoupable portion of FAIR Plan losses and LAE ($25,000)

Net FAIR Plan losses and LAE $67,717

Net losses and LAE on Eaton and Palisades fires $380,437

The Company is actively pursuing subrogation against Southern California Edison on the Eaton fire. The Company recorded approximately $538 million in estimated subrogation recoveries, or approximately 55% of its estimated ultimate losses on the Eaton fire. SCE has disclosed that it is probable that SCE will incur material losses from the Eaton fire and entered into a negotiated agreement without litigation with one insurance company to pay 52% of the losses incurred. SCE has access to the California Wildfire Fund, and SCE has stated that the administrator of the Fund has confirmed that the Eaton fire is a covered wildfire for purposes of accessing the Fund.

In June 2025, the Company sold its subrogation rights on the Palisades fire to a third party for approximately $48 million, with $31 million received as of December 31, 2025.

As of December 31, 2025, the Company has paid out approximately $1,478 million for losses and LAE related to the Palisades and Eaton wildfires. The Company has received 100% of the reinsurance recoverable amounts billed to its reinsurers through December 31, 2025.

SUMMARY OF OPERATING RESULTS

Net premiums earned $1,445,404

Net investment income $84,493

Net realized investment gains (losses) $117

Other $5,765

Total revenues $1,535,779

Losses and loss adjustment expenses $919,435

Policy acquisition costs $250,174

Other operating expenses $110,231

Interest $7,060

Total expenses $1,286,900

Income before income taxes $248,879

Income tax expense $46,332

Net income $202,547

Diluted average shares outstanding 55,389

Loss ratio 63.6%

Expense ratio 24.9%

Combined ratio 88.6%

CONDENSED BALANCE SHEET (as of December 31, 2025)

Total investments $6,580,030

Cash $1,315,574

Total receivables $905,066

Total assets $9,560,669

Loss and LAE reserves $3,633,338

Unearned premiums $2,255,935

Shareholders' equity $2,417,275

Book value per share $43.64

Statutory surplus $2.39 billion

Net premiums written to surplus ratio 2.39

Debt to total capital ratio 19.2%

Portfolio duration 4.4 years

Personal Auto PIF 1,044

Homeowners PIF 883

Commercial Auto PIF 34