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Mercury General Corporation
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Mercury General Corporation
SEC Form 8-K Press Release — First Quarter 2026 Results
May 5, 2026
Three Months Ended March 31, 2026
SEC EDGAR
Mercury General holds quarterly earnings conference calls, but FMP does not carry transcripts for MCY. This press release is the best available public record for Q1 2026.
CONSOLIDATED HIGHLIGHTS
Three Months Ended March 31,
2026 2025 Change $ Change %
Net premiums earned $1,452,413 $1,283,069 $169,344 13.2%
Net premiums written $1,532,103 $1,314,381 $217,722 16.6%
Direct premiums written $1,573,879 $1,383,614 $190,265 13.7%
Net realized investment gains (losses),
net of tax ($3,589) $18,424 ($22,013) NM
Net income $190,421 ($108,327) $298,748 NM
Net income per diluted share $3.44 ($1.96) $5.40 NM
Operating income (loss) $194,010 ($126,751) $320,761 NM
Operating income (loss) per diluted share $3.50 ($2.29) $5.79 NM
Catastrophe losses net of reinsurance $93,000 $447,000 ($354,000) (79.2%)
Combined ratio 89.3% 119.2% — (29.9) pts
Operating income (loss) is net income (loss) excluding realized investment gains and losses, net of tax.
The majority of 2026 catastrophe losses resulted from adverse development on the Palisades and Eaton wildfires in California and severe storms in Texas and Oklahoma. The majority of 2025 catastrophe losses resulted from the Palisades and Eaton wildfires in California and severe storms in Texas and Oklahoma.
The Company experienced favorable development of approximately $47 million on prior accident years' loss and loss adjustment expense reserves for the three months ended March 31, 2026. The favorable development was primarily attributable to lower than estimated losses and loss adjustment expenses in the automobile and homeowners lines of insurance business. The Company experienced favorable development of approximately $51 million on prior accident years' loss and loss adjustment expense reserves for the three months ended March 31, 2025.
INVESTMENT RESULTS
Three Months Ended March 31,
2026 2025
Average invested assets at cost $6,643,376 $5,652,382
Net investment income
Before income taxes $85,636 $81,479
After income taxes $72,283 $67,851
Average annual yield on investments
Before income taxes 4.3% 4.8%
After income taxes 3.6% 4.0%
Net investment income includes interest income earned on cash of approximately $11.1 million and $13.1 million ($8.8 million and $10.3 million after tax) for the three months ended March 31, 2026 and 2025, respectively. Higher net investment income before and after income taxes for the three months ended March 31, 2026 compared to the corresponding period in 2025 resulted from higher average invested assets, partially offset by a lower average yield. The lower average yield was primarily due to the reinvestment of maturing securities at lower current market rates combined with a lower average yield on cash due to the lower short-term interest rate environment compared to the prior year.
The Board of Directors declared a quarterly dividend of $0.3175 per share.
UPDATED INFORMATION REGARDING THE PALISADES AND EATON WILDFIRES
The Company recorded net catastrophe losses and loss adjustment expenses before taxes from the Palisades and Eaton wildfires of approximately $43 million in its consolidated statements of operations for the three months ended March 31, 2026, bringing total net wildfire losses since inception to approximately $423 million.
Components of net losses from the Palisades and Eaton wildfires as of March 31, 2026:
Gross losses and loss adjustment expenses $2,260,000
Reinsurance recovered and recoverable ($1,293,500)
Net catastrophe losses and LAE on Eaton and Palisades fires before FAIR Plan $374,500
Company's share of FAIR Plan losses and LAE $74,000
Recoupable portion of FAIR Plan losses and LAE ($25,000)
Net FAIR Plan losses and LAE $49,000
Net losses and LAE on Eaton and Palisades fires $423,500
The Company is actively pursuing subrogation against Southern California Edison on the Eaton fire. The Company recorded approximately $544 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 also has access to the California Wildfire Fund.
In June 2025, the Company sold its subrogation rights on the Palisades fire to a third party for approximately $48 million, all of which had been received as of March 31, 2026.
As of March 31, 2026, the Company has paid out approximately $1,559 million for losses and loss adjustment expenses related to the Palisades and Eaton wildfires. The Company has received 100% of the reinsurance recoverable amounts billed to its reinsurers through March 31, 2026.
SUMMARY OF OPERATING RESULTS
Net premiums earned $1,452,413
Net investment income $85,636
Net realized investment gains (losses) ($4,543)
Other $7,236
Total revenues $1,540,742
Losses and loss adjustment expenses $973,102
Policy acquisition costs $262,505
Other operating expenses $60,261
Interest $7,045
Total expenses $1,302,913
Income before income taxes $237,829
Income tax expense $47,408
Net income $190,421
Diluted average shares outstanding 55,389
Loss ratio 67.0%
Expense ratio 22.2%
Combined ratio 89.3%
CONDENSED BALANCE SHEET (as of March 31, 2026)
Total investments $6,632,000
Cash $1,276,000
Total receivables $936,000
Total assets $9,647,000
Loss and LAE reserves $3,632,000
Unearned premiums $2,334,000
Shareholders' equity $2,432,000
Book value per share $43.91
Personal Auto PIF 1,057
Homeowners PIF 906
Commercial Auto PIF 35
Total PIF 2,308