Mercury General Corp.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 5 May 2026: press release. Guidance figures: 1 kept. The quarter’s numbers.

Key takeaways

Net premiums written grew 17.9%: Net premiums earned rose 13.2% to $1,452,413 thousand. Net premiums written rose 17.9% to $1,550,118 thousand. Source
Net income turned positive: Net income was $190,421 thousand, or $3.44 per diluted share, against a net loss of $108,327 thousand, or $1.96 per diluted share, in the first quarter of 2025. Source
Combined ratio fell to 89.3%: The combined ratio was 89.3%, against 119.2% a year earlier, a difference of 29.9 points. Source
Catastrophe losses fell to $93 million: Catastrophe losses net of reinsurance were $93,000 thousand, against $447,000 thousand a year earlier. Source
Prior-year reserves developed favorably: Favorable development on prior accident years was about $9 million, against $51 million a year earlier. Automobile favorability was partly offset by adverse homeowners development, including on prior years’ catastrophe losses. Source
Yield fell on tax-exempt mix and rates: Yield before income taxes was 4.5%, against 4.9%. The company attributed this to tax-exempt investments with lower pre-tax yields and lower yields on floating rate investments. Source
Book value per share rose to $46.76: Book value per share was $46.76 at March 31, 2026, against $43.64 at December 31, 2025. Shareholders’ equity was $2,590,110 thousand, against $2,417,275 thousand. Source

“Management uses operating income (loss) as an important measure to evaluate the results of the Company’s insurance business.”
Mercury General Corp., press release

Guidance

Area	Period	Figure	Against last quarter
Quarterly dividend Source	payable June 25, 2026 to holders of record on June 11, 2026	$0.3175 per share	Kept

Results and growth drivers

Net premiums written grew 17.9%: Net premiums earned rose 13.2% to $1,452,413 thousand. Net premiums written rose 17.9% to $1,550,118 thousand. Source
Net income turned positive: Net income was $190,421 thousand, or $3.44 per diluted share, against a net loss of $108,327 thousand, or $1.96 per diluted share, in the first quarter of 2025. Source
Operating income turned positive: Operating income, which excludes realized investment gains and losses net of tax, was $194,010 thousand, or $3.50 per diluted share, against an operating loss of $126,751 thousand, or $2.29 per diluted share. Source

Combined ratio and catastrophe losses

Combined ratio fell to 89.3%: The combined ratio was 89.3%, against 119.2% a year earlier, a difference of 29.9 points. Source
Catastrophe losses fell to $93 million: Catastrophe losses net of reinsurance were $93,000 thousand, against $447,000 thousand a year earlier. Source
Prior-year reserves developed favorably: Favorable development on prior accident years was about $9 million, against $51 million a year earlier. Automobile favorability was partly offset by adverse homeowners development, including on prior years’ catastrophe losses. Source
Prior-period development added 0.6 points: The effect of estimated prior periods’ loss development was 0.6 points, against 4.0 points, leaving an accident-period combined ratio of 89.9%, against 123.1%. Source

“Management believes that operating income (loss) provides investors with a valuable measure of the Company’s ongoing performance”
Mercury General Corp., press release

Premium volume and reinsurance

Direct premiums written grew 8.8%: Direct premiums written were $1,572,741 thousand, against $1,445,443 thousand, up 8.8%. Source
Policies in force rose on auto and homeowners: Company-wide policies in force were 2,308, against 2,265 at December 31, 2025. Personal auto rose to 1,057 and homeowners to 906, while commercial auto was unchanged at 34. Source
All Other lines were 6.1% of premiums: All Other lines, the smaller lines of business combined, were 6.1% of company-wide direct premiums written in the quarter. Source
Year-earlier premiums carried higher ceded premiums: The first quarter of 2025 had $76 million of earned and $127 million of written premium moved to ceded reinsurance, after the catastrophe treaty was used up. Source

Losses, expenses and taxes

Loss ratio fell to 64.2%: Losses and loss adjustment expenses were $932,950 thousand, against $1,220,813 thousand, and the loss ratio was 64.2%, against 95.1%. Source
Expense ratio rose to 25.1%: Other operating expenses were $123,887 thousand, against $79,453 thousand, and policy acquisition costs were $240,502 thousand, against $228,720 thousand. The expense ratio was 25.1%, against 24.0%. Source
Income tax moved from benefit to expense: Income tax expense was $45,232 thousand, against a benefit of $33,969 thousand a year earlier, on pre-tax income of $235,653 thousand. Source

Investment income and yield

Investment income rose on larger portfolio: Net investment income before income taxes was $85,636 thousand, against $81,479 thousand, on average invested assets at cost of $6,643,376 thousand, against $5,594,499 thousand. Source
Yield fell on tax-exempt mix and rates: Yield before income taxes was 4.5%, against 4.9%. The company attributed this to tax-exempt investments with lower pre-tax yields and lower yields on floating rate investments. Source
Cash interest income eased: Interest income earned on cash was about $11.2 million, against $13.1 million, and is excluded from the yield calculation. Source

Capital and book value

Book value per share rose to $46.76: Book value per share was $46.76 at March 31, 2026, against $43.64 at December 31, 2025. Shareholders’ equity was $2,590,110 thousand, against $2,417,275 thousand. Source
Statutory surplus rose, premium leverage eased: Statutory surplus was $2.58 billion, against $2.39 billion. The net premiums written to surplus ratio was 2.31, against 2.39. Source
Debt to total capital fell: Debt to total capital was 18.2%, against 19.2% at December 31, 2025. Source

Balance sheet and reserves

Cash rose slightly: Cash was $1,350,883 thousand, against $1,315,574 thousand at December 31, 2025. Source
Loss reserves rose modestly: Loss and loss adjustment expense reserves were $3,646,201 thousand, against $3,633,338 thousand, and unearned premiums were $2,353,558 thousand, against $2,255,935 thousand. Source
Reinsurance recoverables decreased: Reinsurance recoverables were $47,771 thousand, against $109,672 thousand at December 31, 2025. Source

Figures management reported

Figure	Reported
Combined ratio Source	89.3%
Net premiums written Source	$1,550,118 thousand
Prior-year reserve development Source	favorable, about $9 million
Catastrophe losses Source	$93,000 thousand, net of reinsurance
Investment income Source	$85,636 thousand before income taxes
Book value per share Source	$46.76

Risks management discussed

Financial: Reserve development on the Palisades and Eaton wildfires added to catastrophe losses this quarter, a reserve estimate exposure. Source
External: Falling short-term market rates reduce yields on floating rate investments, which lowers the after-tax average annual yield on investments. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Theodore Stalick, SVP/CFO

For Release: May 5, 2026

Mercury General Corporation Announces First

Quarter Results and Declares Quarterly Dividend

Los Angeles, California…Mercury General Corporation (NYSE: MCY) reported today for the first quarter of 2026:

Consolidated Highlights

	Three Months Ended March 31,		Change
	2026	2025	$	%
(000’s except per-share amounts and ratios)
Net premiums earned	$1,452,413	$1,283,069	$169,344	13.2
Net premiums written (1) (2)	$1,550,118	$1,314,380	$235,738	17.9
Direct premiums written	$1,572,741	$1,445,443	$127,298	8.8
Net realized investment (losses) gains, net of tax	$(3,589)	$18,424	$(22,013)	(119.5)
Net income (loss)	$190,421	$(108,327)	$298,748	NM
Net income (loss) per diluted share	$3.44	$(1.96)	$5.4	NM
Operating income (loss)	$194,010	$(126,751)	$320,761	NM
Operating income (loss) per diluted share	$3.50	$(2.29)	$5.79	NM
Catastrophe losses net of reinsurance	$93,000	$447,000	$(354,000)	(79.2)
Combined ratio	89.3%	119.2%	-	(29.9	) pts

NM = Not Meaningful

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.”

Net premiums earned and net premiums written for the three months ended March 31, 2025 include $76 million and $127 million, respectively, of increased ceded reinsurance premiums due to the Company’s reinsurance treaty being fully used up and from the reinstatement of the Company’s catastrophe reinsurance benefits following the Palisades and Eaton wildfires in January 2025.

Net realized investment (losses) gains before tax was $(5) million and $23 million for the three months ended March 31, 2026 and 2025, 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 under GAAP.

The majority of 2026 catastrophe losses resulted from adverse reserve development on the Palisades and Eaton wildfires, and storms in California, Texas and Oklahoma. The majority of 2025 catastrophe losses resulted from the Palisades and Eaton wildfires.

The Company experienced favorable development of approximately $9 million and $51 million on prior accident years’ loss and loss adjustment expense reserves for the three months ended March 31, 2026 and 2025, respectively. The favorable development for the first quarter of 2026 was primarily attributable to lower than estimated losses in the automobile line of insurance business, partially offset by adverse development on the homeowners line of insurance business, including adverse development on the prior years’ catastrophe losses. The favorable development for the first quarter of 2025 was primarily attributable to lower than estimated losses in the automobile line of insurance business, and the homeowners line of insurance business, including favorable development on prior years’ catastrophe losses.

Investment Results

	Three Months Ended March 31,
	2026	2025
(000’s except average annual yield)
Average invested assets at cost	$6,643,376	$5,594,499
Net investment income (2) (3)
Before income taxes	$85,636	$81,479
After income taxes	$72,859	$67,850
Average annual yield on investments (2) (3)
Before income taxes	4.5%	4.9%
After income taxes	3.9%	4.1%

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 excluding cash for each period.
Net investment income includes interest income earned on cash of approximately $11.2 million and $13.1 million ($8.9 million and $10.3 million after tax) for the three months ended March 31, 2026 and 2025, respectively. Average annual yield on investments does not include interest income earned on cash.
Higher net investment income before and after income taxes for the three months ended March 31, 2026 compared to the corresponding period in 2025 resulted largely from higher average invested assets. Average annual yield on investments before income taxes for the three months ended March 31, 2026 decreased from the corresponding period in 2025, primarily due to an increase in tax-exempt investments with lower pre-tax yields, combined with lower yields on floating rate investments resulting from lower short-term market interest rates. Average annual yield on investments after income taxes for the three months ended March 31, 2026 decreased from the corresponding period in 2025, primarily due to lower yields on floating rate investments resulting from lower short-term market interest rates.

The Board of Directors declared a quarterly dividend of $0.3175 per share. The dividend will be paid on June 25, 2026 to shareholders of record on June 11, 2026.

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 and direct-to-consumer sales in many states. For more information, visit the Company’s website at www.mercuryinsurance.com.

Forward-looking statements notice

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, including subrogation recovery estimates; 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 or homeowners 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 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; effects of changing climate conditions; pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases; court decisions and trends in litigation and health care and auto repair costs; changes in global trade policies, including trade barriers or restrictions; 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 United States Securities and Exchange Commission on February 17, 2026.

MERCURY GENERAL CORPORATION AND SUBSIDIARIES

SUMMARY OF OPERATING RESULTS

(000’s except per-share amounts and ratios)

(unaudited)

	Three Months Ended March 31,
	2026	2025
Revenues:
Net premiums earned	$1,452,413	$1,283,069
Net investment income	85,636	81,479
Net realized investment (losses) gains	(4,543)	23,321
Other	6,303	6,010
Total revenues	1,539,809	1,393,879
Expenses:
Losses and loss adjustment expenses	932,950	1,220,813
Policy acquisition costs	240,502	228,720
Other operating expenses	123,887	79,453
Interest	6,817	7,189
Total expenses	1,304,156	1,536,175
Income (loss) before income taxes	235,653	(142,296)
Income tax expense (benefit)	45,232	(33,969)
Net income (loss)	$190,421	$(108,327)
Basic average shares outstanding	55,389	55,389
Diluted average shares outstanding	55,389	55,389
Basic Per Share Data
Net income (loss)	$3.44	$(1.96)
Net realized investment (losses) gains, net of tax	$(0.06)	$0.33
Diluted Per Share Data
Net income (loss)	$3.44	$(1.96)
Net realized investment (losses) gains, net of tax	$(0.06)	$0.33
Operating Ratios-GAAP Basis
Loss ratio	64.2%	95.1%
Expense ratio	25.1%	24.0%
Combined ratio	89.3%	119.2%

Combined ratio for the three months ended March 31, 2025 does not sum due to rounding.

MERCURY GENERAL CORPORATION AND SUBSIDIARIES

CONDENSED BALANCE SHEETS AND OTHER INFORMATION

(000’s except per-share amounts and ratios)

	March 31, 2026		December 31, 2025
	(unaudited)
ASSETS
Investments, at fair value:
Fixed maturity securities (amortized cost $5,534,785; $5,449,726)		$5,499,834		$5,430,251
Equity securities (cost $801,687; $728,460)		883,623		812,787
Short-term investments (cost $441,810; $336,978)		441,841		336,992
Total investments		6,825,298		6,580,030
Cash		1,350,883		1,315,574
Receivables:
Premiums		825,000		751,554
Allowance for credit losses on premiums receivable		(6,100)		(6,000)
Premiums receivable, net of allowance for credit losses		818,900		745,554
Accrued investment income		73,380		73,004
Other		86,557		86,508
Total receivables		978,837		905,066
Reinsurance recoverables (net of allowance for credit losses $2; $39)		47,771		109,672
Deferred policy acquisition costs		366,573		359,724
Fixed assets, net		150,854		146,880
Operating lease right-of-use assets		12,153		12,125
Deferred income taxes		31,821		30,637
Goodwill		42,796		42,796
Other intangible assets, net		6,613		6,827
Other assets		59,266		51,338
Total assets		$9,872,865		$9,560,669
LIABILITIES AND SHAREHOLDERS’ EQUITY
Loss and loss adjustment expense reserves		$3,646,201		$3,633,338
Unearned premiums		2,353,558		2,255,935
Notes payable		574,626		574,527
Accounts payable and accrued expenses		394,423		448,703
Operating lease liabilities		12,652		12,328
Current income taxes		77,180		30,770
Other liabilities		224,115		187,793
Shareholders’ equity		2,590,110		2,417,275
Total liabilities and shareholders’ equity		$9,872,865		$9,560,669
OTHER INFORMATION
Common stock shares outstanding		55,389		55,389
Book value per share		$46.76		$43.64
Statutory surplus	$	2.58 billion	$	2.39 billion
Net premiums written to surplus ratio		2.31		2.39
Debt to total capital ratio		18.2%		19.2%
Portfolio duration (including all short-term instruments) (a) (c)		4.4 years		4.4 years
Policies-in-force (company-wide “PIF”)
Personal Auto PIF		1,057		1,044
Homeowners PIF		906		883
Commercial Auto PIF		34		34
All Other PIF		311		304
Total PIF		2,308		2,265

Unaudited.
Debt to Debt plus Shareholders’ Equity (Debt at face value).
Modified duration reflecting anticipated early calls.
All Other PIF represents the combined PIF of all the other smaller lines of insurance business, which in aggregate accounted for only 6.1% of the total company-wide direct premiums written for the three months ended March 31, 2026.

	Three Months Ended March 31,
	2026	2025
SUPPLEMENTAL SCHEDULES
(000’s except per-share amounts and ratios) (unaudited)
Reconciliations of Comparable GAAP Measures to Operating Measures
Net premiums earned	$1,452,413	$1,283,069
Change in net unearned premiums	97,705	31,311
Net premiums written	$1,550,118	$1,314,380
Assumed premiums written	$(39,965)	$(25,733)
Ceded premiums written	$62,588	$156,796
Direct premiums written	$1,572,741	$1,445,443
Incurred losses and loss adjustment expenses	$932,950	$1,220,813
Change in net loss and loss adjustment expense reserves	(13,422)	(285,112)
Paid losses and loss adjustment expenses	$919,528	$935,701
Net income (loss)	$190,421	$(108,327)
Less: Net realized investment (losses) gains	(4,543)	23,321
Tax on net realized investment (losses) gains	(954)	4,897
Net realized investment (losses) gains, net of tax	(3,589)	18,424
Operating income (loss)	$194,010	$(126,751)
Per diluted share:
Net income (loss)	$3.44	$(1.96)
Less: Net realized investment (losses) gains, net of tax	(0.06)	0.33
Operating income (loss)	$3.50	$(2.29)
Combined ratio	89.3%	119.2%
Effect of estimated prior periods’ loss development	0.6%	4.0%
Combined ratio-accident period basis	89.9%	123.1%

See “Information Regarding GAAP and Non-GAAP Measures.”
Based on federal statutory rate of 21%.
Combined ratio-accident period basis for the three months ended March 31, 2025 does not sum due to rounding.

Information Regarding GAAP and Non-GAAP Measures

The Company has presented information within this document containing operating measures which in management’s opinion provide investors with useful, industry specific information to help them evaluate, and perform meaningful comparisons of, the Company’s performance, but that may not be presented in accordance with GAAP. These measures are not intended to replace, and should be read in conjunction with, the GAAP financial results.

Net income (loss) is the GAAP measure that is most directly comparable to operating income (loss). Operating income (loss) is net income (loss) excluding realized investment gains and losses, net of tax. Operating income (loss) is used by management along with the other components of net income (loss) to assess the Company’s performance. Management uses operating income (loss) as an important measure to evaluate the results of the Company’s insurance business. Management believes that operating income (loss) provides investors with a valuable measure of the Company’s ongoing performance as it reveals trends in the Company’s insurance business that may be obscured by the effect of net realized investment gains and losses. Realized investment gains and losses may vary significantly between periods and are generally driven by external economic developments such as capital market conditions. Accordingly, operating income (loss) highlights the results from ongoing operations and the underlying profitability of the Company’s core insurance business. Operating income (loss), which is provided as supplemental information and should not be considered as a substitute for net income (loss), does not reflect the overall profitability of the Company’s business. It should be read in conjunction with the GAAP financial results. See “Supplemental Schedules” above for a reconciliation of net income (loss) to operating income (loss).

Net premiums earned, the most directly comparable GAAP measure to net premiums written and direct premiums written, represents the portion of premiums written that is recognized as revenue in the financial statements for the periods presented and earned on a pro-rata basis over the term of the policies. Net premiums written is a statutory financial measure which represents the premiums charged on policies issued during a fiscal period net of any applicable reinsurance; direct premiums written is such a measure before any applicable reinsurance. Net premiums written and direct premiums written are designed to determine production levels and are meant as supplemental information and not intended to replace net premiums earned. Such information should be read in conjunction with the GAAP financial results. See “Supplemental Schedules” above for a reconciliation of net premiums earned to net premiums written and direct premiums written.

Incurred losses and loss adjustment expenses is the most directly comparable GAAP measure to paid losses and loss adjustment expenses. Paid losses and loss adjustment expenses excludes the effects of changes in the loss reserve accounts. Paid losses and loss adjustment expenses is provided as supplemental information and is not intended to replace incurred losses and loss adjustment expenses. It should be read in conjunction with the GAAP financial results. See “Supplemental Schedules” above for a reconciliation of incurred losses and loss adjustment expenses to paid losses and loss adjustment expenses.

Combined ratio is the most directly comparable measure to combined ratio-accident period basis. Combined ratio-accident period basis is computed as the difference between two GAAP operating ratios: the combined ratio and prior accident periods’ loss development ratio. Management believes that combined ratio-accident period basis is useful to investors and it is used to reveal the trends in the Company’s results of operations that may be obscured by development on prior accident periods’ loss reserves. Combined ratio-accident period basis is meant as supplemental information and is not intended to replace the GAAP combined ratio. It should be read in conjunction with the GAAP financial results. See “Supplemental Schedules” above for a reconciliation of GAAP combined ratio to combined ratio-accident period basis.

Contacts
4484 Wilshire Boulevard Los Angeles, California 90010 (323) 937-1060 Fax (323) 857-7125
FOR MORE INFORMATION, CONTACT:
(323) 937-1060 www.mercuryinsurance.com