Mercury General Corporation reported its financial results for the fourth quarter and full-year 2024, reflecting an increase in net premiums earned and net investment income.
The company also provided estimates for wildfire-related catastrophe losses and updates on its reinsurance program and regulatory developments. It anticipates major losses from the catastrophe events, with the full impact to be revealed in the first quarter of 2025.
For the fourth quarter of 2024, net premiums earned reached $1.35 billion, compared to $1.14 billion in the same period in 2023. Net investment income increased to $73.3 million from $63.3 million in the prior-year quarter.
Total revenues for the quarter were $1.37 billion, largely in line with the $1.37 billion reported in Q4 2023. Net income for the quarter was $101.1 million, down from $191.4 million a year earlier.
The fourth quarter continues a trend for Mercury General, with the insurance group reporting a net income of $230.9 million in the third quarter, reversing an $8.2 million loss from the same period in 2023.
For the full year, net premiums earned rose to $5.08 billion from $4.27 billion in 2023. Net investment income grew to $280 million from $235 million. Total revenues for 2024 were $5.48 billion, compared to $4.63 billion in the previous year. Net income for the year increased to $468 million from $96.3 million in 2023.
Expanding on its previous update regarding the California wildfires, the company estimates gross catastrophe losses at between $1.6 billion and $2 billion, with net catastrophe losses before taxes expected to range from $155 million to $325 million.
These estimates account for factors such as gross loss size, potential subrogation recoveries from the Eaton Fire, and the classification of the wildfires as one or two separate events.
Approximately 55% to 60% of the total wildfire losses are attributed to the Palisades Fire, while 40% to 45% are from the Eaton Fire. The company expects its underlying first-quarter 2025 results, excluding catastrophe losses, to partially offset the net impact of these losses.
Mercury General's catastrophe reinsurance program provides up to $1.29 billion of per-occurrence coverage after exceeding a $150 million retention. Additionally, the company has up to $20 million of coverage under a property excess-of-loss treaty for claims exceeding $5 million per property.
Mercury General expects to use between $10 million and $20 million of this coverage for wildfire-related claims.
However, the company has determined that a portion of its reinsurance coverage – $6.5 million of the total $1.29 billion in available limits – does not qualify for the Eaton or Palisades fires.
Catastrophe losses, net of applicable reinsurance benefits and potential subrogation recoveries, will be recorded under losses and loss adjustment expenses for the first quarter of 2025.
If the full $1.29 billion reinsurance limit is exhausted, reinstatement premiums would total $101 million, which will be charged evenly over the first two quarters of 2025.
The California Department of Insurance approved a 12% rate increase for Mercury General's California homeowners insurance business in January 2025. This rate adjustment is scheduled to take effect in March 2025. The homeowners line represented approximately 16% of the company's total net premiums earned in 2024.
The company's board of directors has declared a quarterly dividend of $0.3175 per share, payable on March 27, 2025, to shareholders of record as of March 13, 2025.
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