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Mercury General Corporation Announces Second Quarter Results and Declares Quarterly Dividend LOS ANGELES , Aug. 3 , 2021 / PRNewswire / -- Mercury General Corporation ( NYSE : MCY ) reported today for the second quarter of 2021 : Exhibit 99.1 Three Months Ended June 30 , 2021 2020 Consolidated Highlights Change $ % Six Months Ended June 30 , 2021 2020 Change $ % ( 000's except per - share amounts and ratios ) Net premiums earned ( 2 ) $ 926,820 $ 811,898 $ 114,922 14.2 $ Net premiums written ( 1 ) ( 2 ) $ 957,342 $ 818,912 $ 138,430 16.9 $ 1,842,741 1,907,724 $ $ 1,734,471 1,773,127 $ 108,270 6.2 $ 134,597 7.6 Net realized investment gains ( losses ) , net of tax ( 3 ) $ 46,456 $ 125,157 $ ( 78,701 ) ( 62.9 ) $ 79,392 $ ( 73,386 ) $ 152,778 NM Net income $ 109,181 $ 228,211 $ ( 119,030 ) ( 52.2 ) $ 216,176 $ 89,007 $ 127,169 142.9 Net income per diluted share $ 1.97 $ 4.12 $ ( 2.15 ) ( 52.2 ) $ 3.90 $ 1.61 $ 2.29 142.2 Operating income ( 1 ) $ 62.725 $ 103,054 $ ( 40,329 ) ( 39.1 ) $ 136,784 $ 162,393 $ ( 25,609 ) ( 15.8 ) Operating income per diluted share ( 1 ) $ 1.13 $ 1.86 $ ( 0.73 ) ( 39.2 ) $ 2.47 $ 2.93 $ ( 0.46 ) ( 15.7 ) Catastrophe losses net of reinsurance ( 4 ) Combined ratio ( 5 ) $ 25,000 $ 12,000 $ 13,000 108.3 $ 60,000 $ 14,000 $ 46,000 328.6 94.9 % 88.2 % 6.7 pts 94.2 % 92.3 % 1.9 pts NM = not meaningful ( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) These measures are not based on U.S. generally accepted accounting principles ( " GAAP " ) , are defined in " Information Regarding GAAP and Non - GAAP Measures " and are reconciled to the most directly comparable GAAP measures in " Supplemental Schedules . " The Company's net premiums earned and net premiums written for the three and six months ended June 30 , 2020 were each reduced by approximately $ 106 million due to premium refunds and credits to its eligible policyholders under the " Mercury Giveback " program for reduced driving and business activities following the outbreak of the COVID - 19 pandemic . Excluding premium refunds and credits in the second quarter of 2020 , net premiums earned and net premiums written increased 1.0 % and 3.5 % , respectively , for the three months ended June 30 , 2021 from the corresponding period in 2020 , and 0.1 % and 1.5 % , respectively , for the six months ended June 30 , 2021 from the corresponding period in 2020 . Net realized investment gains ( losses ) before tax were $ 59 million and $ 158 million for the three months ended June 30 , 2021 and 2020 , respectively , and $ 100 million and $ ( 93 ) million for the six months ended June 30 , 2021 and 2020 , respectively . The changes in fair value of the Company's investments are recorded as part of net realized investment gains or losses in its consolidated statements of operations due to the adoption of the fair value option for its investments as permitted under GAAP . Catastrophe losses due to the events that occurred during the six months ended June 30 , 2021 totaled approximately $ 64 million , with no reinsurance benefits used for these losses , resulting primarily from the deep freeze and other extreme weather events in Texas and Oklahoma and winter storms in California . These losses were partially offset by favorable development of approximately $ 4 million on prior years ' catastrophe losses . Catastrophe losses due to the events that occurred during the six months ended June 30 , 2020 totaled approximately $ 18 million , with no reinsurance benefits used for these losses , resulting primarily from extreme weather events outside of California and windstorms in California . These losses were partially offset by favorable development of approximately $ 4 million on prior years ' catastrophe losses . The Company experienced favorable development of approximately million and unfavorable development of approximately 2 million on prior accident years ' loss and loss adjustment expense reserves for the three months ended June 30 , 2021 and 2020 , respectively , and favorable development of approximately $ 15 million and unfavorable development of approximately $ 27 million on prior accident years ' loss and loss adjustment expense reserves for the six months ended June 30 , 2021 and 2020 , respectively . The year - to - date favorable development in 2021 was primarily attributable to lower than estimated losses and loss adjustment expenses in the commercial property and private passenger automobile lines of insurance business , partially offset by unfavorable development in the commercial automobile line of insurance business . The year - to - date unfavorable development in 2020 was primarily attributable to higher than estimated losses and loss adjustment expenses in the commercial automobile , homeowners and Florida private passenger automobile lines of insurance business . ( 000's except average annual yield ) Average invested assets at cost ( 1 ) Investment Results Three Months Ended June 30 , 2021 2020 Six Months Ended June 30 , 2021 2020 $ 4,657,097 $ 4,220,468 $ 4,590,386 $ 4,218,721 Net investment income ( 2 ) Before income taxes $ After income taxes $ 30,953 27,676 $ $ 34,166 30,435 $ $ Average annual yield on investments - after income taxes ( 2 ) 2.4 % 2.9 % 63,232 56,460 2.5 % $ 68,661 $ 60,968 2.9 % ( 1 ) ( 2 ) Fixed maturities and short - term bonds at amortized cost ; equities and other short - term investments at cost . Average invested assets at cost are based on the monthly amortized cost of the invested assets for each period . Lower net investment income before and after income taxes for the three and six months ended June 30 , 2021 compared to the corresponding periods in 2020 resulted largely from a lower average yield on investments , partially offset by higher average invested assets . Average annual yield on investments after income taxes for the three and six months ended June 30 , 2021 decreased compared to the corresponding periods in 2020 , primarily due to the maturity and replacement of higher yielding investments purchased when market interest rates were higher with lower yielding investments , as a result of decreasing market interest rates . The Board of Directors declared a quarterly dividend of $ 0.6325 per share . The dividend will be paid on September 30 , 2021 to shareholders of record on September 16 , 2021 . Mercury General Corporation 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 the Company's website at www.mercuryinsurance.com . The Private Securities Litigation Reform Act of 1995 provides a " safe harbor " for certain forward - looking statements . Certain statements contained in this report are forward - looking statements based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company . There can be no assurance that future developments affecting the Company will be those anticipated by the Company . Actual results may differ from those projected in the forward - looking statements . These forward - looking statements involve significant risks and uncertainties ( some of which are beyond the control of the Company ) and are subject to change based upon various factors , including but not limited to the following risks and uncertainties : changes in the demand for the Company's insurance products , inflation and general economic conditions , including general market risks associated with the Company's investment portfolio ; the accuracy and adequacy of the Company's pricing methodologies ; catastrophes in the markets served by the Company ; uncertainties related to estimates , assumptions and projections generally ; the possibility that actual loss experience may vary adversely from the actuarial estimates made to determine the Company's loss reserves in general ; the Company's ability to obtain and the timing of the approval of premium rate changes for insurance policies issued in the states where it operates ; legislation adverse to the automobile insurance industry or business generally that may be enacted in the states where the Company operates ; the Company's success in managing its business in non - California states ; the presence of competitors with greater financial resources and the impact of competitive pricing and marketing efforts ; the Company's ability to successfully manage its claims organization outside of California ; the Company's ability to successfully allocate the resources used in the states with reduced or exited operations to its operations in other states ; changes in driving patterns and loss trends ; acts of war and terrorist activities ; pandemics , epidemics , widespread health emergencies , or outbreaks of infectious diseases ; court decisions and trends in litigation and health care and auto repair costs ; and legal , cybersecurity , regulatory and litigation risks . The Company undertakes no obligation to publicly update or revise any forward - looking statements , whether as the result of new information , future events or otherwise . For a more detailed discussion of some of the foregoing risks and uncertainties , see the Company's Annual Report on Form 10 - K filed with the Securities and Exchange Commission on February 16 , 2021 . MERCURY GENERAL CORPORATION AND SUBSIDIARIES SUMMARY OF OPERATING RESULTS ( 000's except per - share amounts and ratios ) ( unaudited ) Three Months Ended June 30 , 2021 2020 Six Months Ended June 30 , 2021 2020 Revenues : Net premiums earned Net investment income Net realized investment gains ( losses ) Other Total revenues $ 926,820 30,953 $ 58,805 811,898 34,166 158,426 $ 1,842,741 $ 1,734,471 63,232 100,496 2,197 1,018,775 1,353 1,005,843 5,402 2,011,871 1,714,153 68,661 ( 92,894 ) 3,915 Expenses : Losses and loss adjustment expenses 657,228 495,300 1,283,572 Policy acquisition costs 150,984 149,706 315,414 1,146,970 306,240 Other operating expenses 70,927 71,103 136,485 147,660 Interest 4,235 4,268 8,577 8,523 Total expenses 883,374 720,377 Income before income taxes 135,401 285,466 1,744,048 267,823 1.609.393 104,760 Income tax expense 26,220 57,255 Net income 109,181 228,211 $ 51,647 216,176 15,753 $ 89,007 Basic average shares outstanding 55,371 55,358 Diluted average shares outstanding 55,376 55,358 55,366 55,375 55,358 55,358