Mercury Reports Higher Third-Quarter Profits, Auto Policy Sales

A mix of lower losses from catastrophes and growth in revenue and sales of auto policies in California contributed to Mercury General Corporation’s financial turnaround during the third quarter this year.

On Monday, Mercury reported its quarterly finances, which saw the insurer’s profits reverse from losing nearly $3.8 million during the third quarter in 2011 to gaining $66.2 million during the same period this year.

The insurance carrier has also reported higher profits in the first nine months of this year compared with 2011, with about $134.3 million in profits so far this year compared with $111.7 during the same period last year.

President Gabe Tirador highlighted auto policy sales in California, the largest state where the insurance provider does business. During the third quarter this year, Mercury increased auto policy sales in the Golden State by 20 percent compared with 2011.

Tirador said that the company has shown profits in several states through “a combination of rate and underwriting changes and cost management initiatives.”

In California, a 4 percent average rate increase for personal auto policyholders kicked in last week.

Overall, the insurance carrier wrote about $22.6 million (or 3.4 percent) more in net premiums for the quarter compared with the same quarter in 2011, signifying the seventh straight quarter of growth in net written premiums.

For the year, Mercury has written 2 percent more in premiums compared with the same period in 2011.

Disaster-related losses dipped by 75 percent for the quarter and fell from $4 million during the third quarter last year, due chiefly to damage wrought by Hurricane Irene, to $1 million in the third quarter this year. Most of this year’s catastrophe losses stemmed from “wind and hailstorms in the Midwest region in the second quarter,” including Ohio and Colorado.

However, the insurance carrier has incurred higher catastrophe losses so far for the year as a whole compared with last year. Mercury reported $9 million in losses so far this year, compared to $8 million during the same period in 2011.

Also, the insurance company’s incomes from investments are lagging for this quarter as well as for the entire year, with almost $28.9 million reported after taxes this quarter, compared to $31.4 million reported during the third quarter in 2011. So far this year, the insurer has reported $84.9 million in investment income compared with $94.5 million during the same period last year.

Still, total revenues bolstered Mercury’s overall finances, jumping 19 percent from $615.7 million last year to $731.8 million this year. Year-to-date revenue also increased, from $2.03 billion through three quarters last year to $2.10 billion so far this year.

Travelers, Progressive Also Reported Favorable Third Quarter

In addition to Mercury, the third quarter this year has also proved kind to the finances of other auto coverage carriers.

Travelers had a “very strong third quarter,” CEO Jay S. Fishman told investors during a conference call last week, adding that he was “very pleased” with results that included a 159 percent jump in profits.

Like Mercury, Travelers saw a drop in catastrophe losses compared with the same quarter last year.

Progressive’s third-quarter finances also rebounded, increasing 83 percent compared with the same period in 2011.

The insurance company’s good fortune was largely due to a huge swing in investment returns, which gained almost $172 million during the third quarter in 2012 after losing $52.6 million during the same period last year.

However, much of this year’s investment returns stemmed from a liquidation of $580 million in stocks this month.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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