Los Angeles-based Mercury General Corp. has reported net income in the first quarter 2011 was $58.2 million, compared with net income of $61.2 million for the same period in 2010. Included in net income are net realized investment gains, net of tax, of $18.6 million in the first quarter of 2011 compared with net realized investment gains, net of tax, of $14.3 million for the same period in 2010. Operating income was $39.6 million for the first quarter of 2011 compared with operating income of $46.9 million for the same period in 2010.
Net premiums written were $658.2 million in the first quarter of 2011, a 0.9 percent increase compared to the first quarter 2010 net premiums written of $652.5 million. Net realized investment gains, net of tax, of $18.6 million for the first quarter of 2011 include gains, net of tax, of $13.6 million from the application of the fair value option. Gains, net of tax, from the sale of securities were $5.1 million during the first quarter.
The company’s combined ratio was 98.2 percent in the first quarter of 2011 compared with 96.3 percent for the same periods in 2010. The company said the loss ratio was affected by unfavorable development of approximately $1 million, and favorable development of approximately $20 million on prior accident years’ losses and loss adjustment expenses reserves for the three months ended March 31, 2011 and 2010, respectively.
Net investment income of $35.1 million in the first quarter of 2011 decreased by 2.2 percent compared to the same period in 2010. The investment income after-tax yield was 4.1 percent on average investments (fixed maturities at amortized cost, equities and short-term investments at cost) of $3 billion for the first quarter 2011. This compares with an investment income after-tax yield of 4.1 percent on average investments of $3.1 billion for the same period in 2010.
The Board of Directors declared a quarterly dividend of $0.60 per share. The dividend is to be paid on June 30, 2011 to shareholders of record on June 16, 2011.
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. The company will be hosting a conference call and Webcast today at 10 a.m. PST where management will discuss results and address questions. The teleconference and Webcast can be accessed by calling 877-807-1888 or 706-679-3827 (International). A replay of the call will be available beginning at 1:30 p.m. PST and running through May 9, 2011. The replay telephone numbers are 800-642-1687 or 706-645-9291 (International). The conference ID# is 59611991. The replay will also be available on the company’s Web site shortly following the call.
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