LOS ANGELES, Aug. 3 /PRNewswire-FirstCall/ -- Mercury General Corporation (NYSE: MCY) reported today for the second quarter of 2009:
Consolidated Highlights
Three Months Ended
June 30, Change
------
2009 2008 $ %
---- ---- --- ---
(000's except per-share
amounts and ratios)
Net premiums written (1) $637,405 $684,177 $(46,772) (6.8)
Net income $114,447 $70,726 $43,721 61.8
Net income per diluted
share $2.07 $1.29 $0.78 60.5
Operating income (1) $47,336 $47,004 $332 0.7
Operating income per
diluted share (1) $0.86 $0.86 $- -
Positive (adverse)
development on
prior periods' loss
reserves (2) $31,000 $(9,000) $40,000 -
Severance related
expenses (2) $- $- $- -
Expense related to
amortization
of AIS deferred policy
acquisition costs (2) (3) $3,000 NA NA NA
Combined ratio 96.1% 97.0% (0.9) pts -
Combined ratio-accident
period basis (1) 100.8% 95.8% 5.0 pts -
Six Months Ended
June 30, Change
------
2009 2008 $ %
---- ---- --- ---
(000's except per-share
amounts and ratios)
Net premiums written (1) $1,308,297 $1,413,443 $(105,146) (7.4)
Net income $211,100 $66,765 $144,335 216.2
Net income per diluted
share $3.83 $1.22 $2.61 213.9
Operating income (1) $93,335 $102,932 $(9,597) (9.3)
Operating income per
diluted share (1) $1.69 $1.88 $(0.19) (10.1)
Positive (adverse)
development on
prior periods' loss
reserves (2) $38,000 $(17,000) $55,000 -
Severance related
expenses (2) $8,000 $- $8,000 -
Expense related to
amortization of AIS
deferred policy
acquisition costs (2) (3) $15,000 NA NA NA
Combined ratio 96.5% 96.2% 0.3 pts -
Combined ratio-accident
period basis (1) 99.4% 95.1% 4.3 pts -
(1) These measures are not based on U.S. generally accepted accounting
principles ("GAAP") and are defined and reconciled to the most
directly comparable GAAP measures in "Information Regarding Non-
GAAP Measures."
(2) The amounts are estimated and rounded to the nearest million.
(3) Represents the net expense related to Auto Insurance Specialists,
LLC ("AIS") deferred commissions at December 31, 2008 amortized in
2009 partially offset by deferred costs related to policy sales made
by AIS in 2009. The Company expects no material impact after the
second quarter of 2009.
(NA) Not applicable
Net income in the second quarter 2009 was $114.4 million ($2.07 per share-diluted) compared with net income of $70.7 million ($1.29 per share-diluted) for the same period in 2008. For the first six months of 2009, net income was $211.1 million ($3.83 per share-diluted) compared with net income of $66.8 million ($1.22 per share-diluted) for the same period in 2008. Included in net income are net realized investment gains, net of tax, of $67.1 million ($1.21 per share-diluted) in the second quarter of 2009 compared with net realized investment gains, net of tax, of $23.7 million ($0.43 per share-diluted) for the same period in 2008, and net realized investment gains, net of tax, of $117.8 million ($2.14 per share-diluted) for the first six months of 2009 compared with net realized investment losses, net of tax, of $36.2 million ($0.66 per share) for the same period in 2008. Operating income was $47.3 million ($0.86 per share-diluted) for the second quarter of 2009, a 0.7% increase over the same period in 2008, and $93.3 million ($1.69 per share-diluted) for the first six months of 2009, a 9.3% decrease over the same period in 2008.
As a result of the adoption of SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"), changes in unrealized gains and losses on all investments that prior to such adoption were recorded as changes to accumulated other comprehensive income on the balance sheet are now recorded as realized gains and losses on the statement of operations. Net realized investment gains, net of tax, of $67.1 million for the second quarter of 2009 and $117.8 million for the first six months of 2009 include gains, net of tax, of $80.4 million and $139.3 million, respectively, in accordance with SFAS No. 159. Partially offsetting the gains were $15.9 million and $24.6 million in losses, net of tax, from the sale of securities during the second quarter and during the first six months of 2009, respectively.
Company-wide net premiums written were $637.4 million in the second quarter of 2009, a 6.8% decrease over the second quarter 2008 net premiums written of $684.2 million, and were approximately $1.3 billion for the first six months of 2009, a 7.4% decrease over the same period in 2008.
Net investment income of $36.2 million (after tax $32.6 million) in the second quarter of 2009 decreased by 7.1% over the same period in 2008. The after-tax yield on investment income was 4.1% on average investments of $3.2 billion (fixed maturities, equities and short-term investments at cost) for the second quarter. This compares with an after-tax yield on investment income of 4.0% on average investments of $3.5 billion (fixed maturities, equities and short-term investments at cost) for the same period in 2008. Net investment income for the first six months of 2009 was $74.1 million (after tax $66.0 million), a decrease of 5.3% over the same period in 2008. The after-tax yield on investment income was 4.1% on average assets of $3.2 billion (fixed maturities, equities and short-term investments at cost) for the first six months of 2009. This compares with an after-tax yield on investment income of 4.0% on average investments of $3.5 billion (fixed maturities, equities and short-term investments at cost) for the same period in 2008.
The Board of Directors declared a quarterly dividend of $0.58 per share. The dividend is to be paid on September 30, 2009 to shareholders of record on September 16, 2009.
Mercury General Corporation and its subsidiaries are a multiple line insurance organization offering predominantly personal automobile and homeowners insurance through a network of independent producers in many states. For more information, visit the Company's website at www.mercuryinsurance.com. The Company will be hosting a conference call and webcast today at 10:00 A.M. Pacific time where management will discuss results and address questions. The teleconference and webcast can be accessed by calling (877) 807-1888 (USA), (706) 679-3827 (International) or by visiting www.mercuryinsurance.com. A replay of the call will be available beginning at 1:30 P.M. Pacific time and running through August 9, 2009.
