Mercury General Corp. announced its first quarter results, noting it had a net loss of $4 million in the first quarter of 2008, compared with net income of $60.5 million for the same period in 2007. Included in net (loss)/income are net realized investment losses, net of tax, of $59.9 million in the first quarter of 2008 compared with net realized investment losses, net of tax, of $0.7 million for the same period in 2007. Operating income for the first quarter of 2008 was $55.9 million, down 8.5 percent from the prior year quarter.
Net realized investment losses, net of tax, in the first quarter 2008 of $59.9 million include losses, net of tax, of $60.6 million due to changes in the fair value of fixed maturity and equity securities measured at fair value pursuant to SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” that the company adopted on Jan. 1, 2008. As a result of this adoption, changes in unrealized gains and losses that previously were recorded as changes to accumulated other comprehensive income in shareholders’ equity on the balance sheet are now recorded as realized gains and losses on the income statement, the company said. The primary causes of these losses in fair value were a large decline in the overall stock markets and a decline in municipal bond prices.
Company-wide net premiums written were $729.3 million in the first quarter 2008, a 7.2 percent decrease over the first quarter 2007 net premiums written of $785.9 million. California net premiums written were $575.6 million in the first quarter of 2008, a decrease of 4.2 percent over the same period in 2007. Non-California net premiums written were $153.7 million in the first quarter of 2008, a 16.9 percent decrease over the same period in 2007.
The company’s combined ratio (GAAP basis) was 95.4 percent in the first quarter of 2008 compared with 94.5 percent for the same period in 2007. Loss development on prior accident years’ loss reserves was approximately $5 million adverse from California operations and $10 million positive from operations outside of California in the first quarter of 2008 and approximately $14 million adverse from California operations and $1 million positive from operations outside of California in the first quarter of 2007.
Mercury General Corp. 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 www.mercuryinsurance.com/.
Source: Mercury General
Topics California Profit Loss
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