The Mercury General Corporation (NYSE: MCY) reported today that its first-quarter net income was $66.46 million down 9.4 percent from $73.35 million a year ago during the same time. Mercury General attributes the drop to a $10 million pre-tax restructuring charge the it incurred as part of its efforts to consolidate its operations outside of California into regional hubs in Florida, New Jersey and Texas. The company expects annual savings of $12 million to come from this effort.
Net premiums written are $690.5 million, up 4.9 percent from the $658.29 written this time a year ago. This makes 1Q 2013 the company’s ninth consecutive quarter for premium growth. Premium growth is being driven by personal auto business in California and homeowners business in numerous states.
Overall results were helped by a $3 million improvement in loss history, mainly in Florida and New Jersey. However, this was more than offset by a $6 million worsening of losses elsewhere. As such, the company’s combined ratio for 1Q rose slightly to 97.9 percent from 97.6 percent this time a year ago.
When asked on the earnings call what the company was doing to get its loss ratio in California down to 95.0 percent, Mercury CEO and President Gabe Tirador said, “To get to 95, we need to get rate relief in California.”
Overall loss costs for 1Q 2013 compared favorably to those from 4Q 2012, as those latter costs included costs from Superstorm Sandy. Cat losses for 1Q were $1 million.
The Board of Directors declared a quarterly dividend of $0.6125 per share. The dividend will be paid on June 27, 2013 to shareholders of record on June 13, 2013.
For a full report on Mercury’s 1Q results, click here.
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