Mercury Posts $3.78 Million Net Loss for Third Quarter

Mercury General Corp. has announced a $3.78 million net loss for the year’s third quarter, with officials blaming investment losses and a dip in operating income.

The result was a marked loss for the car insurance company, which reported a $96.8 million profit for the same period in 2010. Net income for the first nine months of this year was $111.7 million, compared to $175.8 million reported for January through September last year.

Net realized investment losses for the quarter were $43.5 million, as compared with gains of $56.2 million for the third quarter of 2010. And operating income weighed in at $39.7 million, down from $40.7 million for the prior year.

The overall losses come despite some gains, including in net premiums written, which rose from $654 million for last year’s third quarter to $662 million this year. But total revenues fell to nearly $616 million from about $767 million last year.

Mercury’s combined ratio for the third quarter—a measure of profitability that compares performance by multiple companies—was 98.3 percent, down from 98 percent last year.

The company said the ratio was affected by $11 million in accident losses from prior years. Much of that total was the result of re-estimates of bodily injury losses involving California auto insurance policies, which saw greater claim severity and more claims that were reported late than had been anticipated.

Mercury also suffered $4 million in pretax losses in the third quarter due to Hurricane Irene, according to a news release.

This week’s announcement puts Mercury in the company of several major insurers that have recently announced major losses.

Earlier this week, Allstate Insurance reported a 55 percent drop in third-quarter profits compared to last year, with losses blamed on Hurricane Irene and other catastrophes costing the company $691 million more than the $386 million inflicted for the same period in 2010.

Progressive announced last month that its third-quarter 2011 profits were down 42 percent compared to 2010, also due to major losses from natural disasters. And MetLife Auto & Home estimated after-tax catastrophe losses for the quarter as high as $100 million, more than twice the $38 million predicted for the period.

About Matthew Morisset
Matthew Morisset is a proud alumnus of the University of Redlands, where he obtained a degree in English Literature. Utilizing his passion for analysis and writing, Matthew looks for important trends in the auto insurance industry and their implications for consumers and the market as a whole.

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