"There is no doubt that our reforms are making New Jersey an attractive place to do business again," the governor said in a statement.

"Mercury is a sure sign that the market is improving, and that we are getting closer to our goal of giving consumers the choices they deserve," Ms. Bakke said.

Under the plan announced today, the Los Angeles-based company will hire 50 independent agents to begin selling policies and to offer those policies to drivers not renewed by State Farm Indemnity. The company is committing $100 million to doing business in the state, the governor's office noted.

The state said that under its plan, over the next 14 months, 50,000 State Farm policyholders will have the option of joining Mercury General or another carrier.

State Farm, at one time the state's largest automobile insurer, was planning to leave due to heavy losses. Under a plan worked out with the department to help stem the losses and bring the New Jersey unit back to profitability, the state is allowing the company to non-renew 4,000 drivers a month. However, the plan is no guarantee that the company will not decide to eventually leave the state.

The governor's office said that 20 insurers have left New Jersey in the past 10 years.

"Today's announcement confirms that New Jersey is indeed removing the barriers to competition that have plagued our state for decades," said John K. Tiene, president of the Insurance Council of New Jersey. "The recent reform is a well-balanced foundation on which we are building a new, vibrant, competitive automobile insurance market."

Richard Stokes, Trenton, N.J.-based assistant regional manager for the Alliance of American Insurers said Mercury General's entry into the state showed the reforms that both the industry and state officials worked hard to create are working.

"With the reforms, we think more companies will follow Mercury's lead and take a chance on New Jersey," he said.

Professional Insurance Agents of New Jersey President John D'Agostino Jr., welcomed Mercury General to the state, adding, "We welcome efforts to restore competition to the market for the ultimate benefit of consumers and hope this will encourage further regulatory reform, stabilization and competition in the industry."

In also welcoming Mercury General, Jeanne Heisler, Independent Insurance Agents of New Jersey representative to the Coalition for Auto Insurance Competition, said, "Mercury's willingness to invest in New Jersey's automobile insurance market is a clear sign that the legislation will work to eliminate the automobile insurance availability crisis and create a competitive marketplace in the future for the benefit of N.J. drivers."

In an interview with National Underwriter (see NU, Aug. 4, page 4), the company's Chairman and Chief Executive Officer, George Joseph, said he saw the state as a big challenge, but also a big opportunity for the company with reported annual premium of $2 billion that is now located in nine states.

"New Jersey is a state with a lot of automobiles and that is our business," he said.