Mercury General Corp. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Mercury General Corp. has filed its 2023 annual report (10-K) detailing its financial performance and operations.</b>

AI Summary

MERCURY GENERAL CORP (MCY) filed a Annual Report (10-K) with the SEC on February 13, 2024. Filed Form 10-K for the fiscal year ended December 31, 2023. Company is engaged in Fire, Marine & Casualty Insurance. Incorporated in California, with principal business address in Los Angeles. Fiscal year ends December 31st. SEC File Number: 001-12257.

Why It Matters

For investors and stakeholders tracking MERCURY GENERAL CORP, this filing contains several important signals. This filing provides a comprehensive overview of the company's financial health, operational strategies, and risk factors for the fiscal year 2023. Investors and analysts can use this report to assess the company's performance in the property and casualty insurance sector and make informed investment decisions.

Risk Assessment

Risk Level: medium — MERCURY GENERAL CORP shows moderate risk based on this filing. The company operates in the highly regulated insurance industry, which presents ongoing compliance and market risks.

Analyst Insight

Review the detailed financial statements and risk factors in the 10-K to understand Mercury General Corp.'s performance and outlook for the upcoming year.

Key Numbers

• 2023-12-31 — Fiscal Year End (Conformed Period of Report)
• 2024-02-13 — Filing Date (As of Date)
• 137 — Public Document Count (Total documents in the filing)
• 6331 — SIC Code (Standard Industrial Classification)

Key Players & Entities

• MERCURY GENERAL CORP (company) — Filer name
• MCY (company) — Ticker symbol
• 20231231 (date) — Fiscal year end
• 20240213 (date) — Filing date
• FIRE, MARINE & CASUALTY INSURANCE (industry) — Standard Industrial Classification
• CA (location) — State of incorporation
• LOS ANGELES (location) — Business address city
• 001-12257 (other) — SEC File Number

Forward-Looking Statements

• Mercury General Corp. will continue to operate primarily in the property and casualty insurance sector. (MERCURY GENERAL CORP) — high confidence, target: 2025-12-31

FAQ

Risk Factors

• Regulatory Environment [high — regulatory]: The company operates in a highly regulated industry, subject to state and federal laws and regulations that can impact operations and profitability.
• Competition [medium — market]: The property and casualty insurance market is competitive, with pricing pressures and the need to adapt to changing market conditions.
• Investment Risk [medium — financial]: The company's investment portfolio is subject to market fluctuations and interest rate risks, which can affect investment income and overall financial results.
• Catastrophe Losses [high — operational]: The company is exposed to significant losses from natural catastrophes, which can adversely affect financial results.

Key Dates

• 2023-12-31: Fiscal Year End — Marks the end of the reporting period for the 10-K.
• 2024-02-13: Filing Date — Date the 10-K was officially filed with the SEC.

Key Financial Figures

• $30 — ty held by non-affiliates multiplied by $30.27, the closing sales price on the New
• $500,000 — ssenger Automobile - bodily injury (BI) $500,000 per person; $500,000 per accident (1)
• $250,000 — Passenger Automobile - property damage $250,000 per accident (1) Commercial Automobil
• $1,000,000 — ial Automobile (combined policy limits) $1,000,000 per accident Homeowner property no max
• $5,000,000 — rty no maximum (2) Umbrella liability $5,000,000 (4) ________ (1) The majority of the
• $100,000 — e limits that are equal to or less than $100,000 per person and $300,000 per accident fo
• $300,000 — to or less than $100,000 per person and $300,000 per accident for BI and $50,000 per acc
• $50,000 — on and $300,000 per accident for BI and $50,000 per accident for property damage. (2)
• $10 million — k reinsurance treaty covering losses of $10 million in excess of $5 million, and facultativ
• $5 m — ring losses of $10 million in excess of $5 million, and facultative reinsurance cove
• $15 million — e reinsurance coverage for losses above $15 million. (3) The majority of the Company's hom
• $9 million — 023, the Company incurred approximately $9 million in net advertising expense. Underwrit
• $35.9 million — of prior years in 2023 of approximately $35.9 million primarily resulted from lower than esti
• $47.3 million — of prior years in 2022 of approximately $47.3 million primarily resulted from higher than est
• $26.1 million — of prior years in 2021 of approximately $26.1 million primarily resulted from lower than esti

Filing Documents

• mcy-20231231.htm (10-K) — 3212KB
• mcy-20231231xex1049.htm (EX-10.49) — 65KB
• mcy-20231231xex1050.htm (EX-10.50) — 46KB
• mcy-20231231xex1051.htm (EX-10.51) — 23KB
• mcy-20231231xex191.htm (EX-19.1) — 125KB
• mcy-20231231xex211.htm (EX-21.1) — 18KB
• mcy-20231231xex231.htm (EX-23.1) — 3KB
• mcy-20231231xex311.htm (EX-31.1) — 10KB
• mcy-20231231xex312.htm (EX-31.2) — 10KB
• mcy-20231231xex321.htm (EX-32.1) — 6KB
• mcy-20231231xex322.htm (EX-32.2) — 6KB
• mcy-20231231xex971.htm (EX-97.1) — 27KB
• mcy-20231231_g1.jpg (GRAPHIC) — 134KB
• 0000064996-24-000002.txt (&nbsp;) — 16663KB
• mcy-20231231.xsd (EX-101.SCH) — 78KB
• mcy-20231231_cal.xml (EX-101.CAL) — 125KB
• mcy-20231231_def.xml (EX-101.DEF) — 420KB
• mcy-20231231_lab.xml (EX-101.LAB) — 1079KB
• mcy-20231231_pre.xml (EX-101.PRE) — 786KB
• mcy-20231231_htm.xml (XML) — 3172KB

Risk Factors

Item 1A Risk Factors 14

Unresolved Staff Comments

Item 1B Unresolved Staff Comments 27

Cybersecurity

Item 1C Cybersecurity 27

Properties

Item 2 Properties 29

Legal Proceedings

Item 3 Legal Proceedings 30

Mine Safety Disclosures

Item 4 Mine Safety Disclosures 30 PART II

Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5 Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 33

Quantitative and Qualitative Disclosures about Market Risks

Item 7A Quantitative and Qualitative Disclosures about Market Risks 52

Financial Statements and Supplementary Data

Item 8 Financial Statements and Supplementary Data 54

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 96

Controls and Procedures

Item 9A Controls and Procedures 96

Other Information

Item 9B Other Information 96

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 97 PART III

Directors, Executive Officers, and Corporate Governance

Item 10 Directors, Executive Officers, and Corporate Governance 98

Executive Compensation

Item 11 Executive Compensation 98

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 98

Certain Relationships and Related Transactions, and Director Independence

Item 13 Certain Relationships and Related Transactions, and Director Independence 98

Principal Accounting Fees and Services

Item 14 Principal Accounting Fees and Services 98 PART IV

Exhibits and Financial Statement Schedules

Item 15 Exhibits and Financial Statement Schedules 99

Form 10-K Summary

Item 16 Form 10-K Summary 103

SIGNATURES

SIGNATURES 104 Financial Statement Schedules S- 1 PART I

Business

Item 1. Business General Mercury General Corporation ("Mercury General") and its subsidiaries (referred to herein collectively as the "Company") are primarily engaged in writing personal automobile insurance through 12 insurance subsidiaries (referred to herein collectively as the "Insurance Companies") in 11 states, principally California. The Company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance. The Company's insurance policies are mostly sold through independent agents who receive a commission for selling policies. The Company believes that it has thorough underwriting and claims handling processes that, together with its agent relationships, provide the Company with competitive advantages. The direct premiums written for the years ended December 31, 2023, 2022 and 2021 by state and line of insurance business were: Year Ended December 31, 2023 (Dollars in thousands) Private Passenger Automobile Homeowners Commercial Automobile Other Lines (2) Total California $ 2,317,678 $ 813,056 $ 246,253 $ 235,735 $ 3,612,722 79.3 % Texas 123,390 147,854 53,430 5,592 330,266 7.2 % Other states (1) 400,714 158,094 46,538 10,154 615,500 13.5 % Total $ 2,841,782 $ 1,119,004 $ 346,221 $ 251,481 $ 4,558,488 100.0 % 62.4 % 24.5 % 7.6 % 5.5 % 100.0 % Year Ended December 31, 2022 (Dollars in thousands) Private Passenger Automobile Homeowners Commercial Automobile Other Lines (2) Total California $ 2,142,265 $ 716,651 $ 193,809 $ 216,022 $ 3,268,747 80.8 % Texas 97,620 105,269 43,641 6,174 252,704 6.2 % Other states (1) 358,973 118,419 39,312 10,375 527,079 13.0 % Total $ 2,598,858 $ 940,339 $ 276,762 $ 232,571 $ 4,048,530 100.0 % 64.3 % 23.2 % 6.8 % 5.7 % 100.0 % Year Ended December 31, 2021 (Dollars in thousands) Private Passenger Automobile Homeowners Commercial Automobile Other Lines (2) Total California $ 2,286,017 $ 642,291 $ 181,957 $ 188,446 $ 3,298,711 84.4 % Other states

Underwriting

Underwriting The Company sets its own automobile insurance premium rates, subject to rating regulations issued by the Department of Insurance or similar governmental agency of each state in which it is licensed to operate ("DOI"). Each state has different rate approval requirements. See "Regulation—Department of Insurance Oversight." The Company offers standard, non-standard, and preferred private passenger automobile insurance in 11 states. The Company also offers homeowners insurance in 10 states, commercial automobile insurance in 4 states, and mechanical protection insurance in most states. In California, "good drivers," as defined by the California Insurance Code, accounted for approximately 87% of the Company's California voluntary private passenger automobile policies-in-force at December 31, 2023, while higher risk categories accounted for approximately 13%. The Company's private passenger automobile renewal rate in California (the rate of acceptance of offers to renew) averaged approximately 95%, 96%, and 97% in 2023, 2022, and 2021, respectively. Claims The Company conducts the majority of claims processing without the assistance of outside adjusters. The claims staff administers all claims and manages all legal and adjustment aspects of claims processing. Loss and Loss Adjustment Expense Reserves ("Loss Reserves") and Reserve Development The Company maintains loss reserves for both reported and unreported claims. Loss reserves for reported claims are estimated based upon a case-by-case evaluation of the type of claim involved and the expected development of such claims. Loss reserves for unreported claims are determined on the basis of historical information by line of insurance business. Inflation is reflected in the reserving process through analysis of cost trends and review of historical reserve settlement. The Company's ultimate liability may be greater or less than management estimates of reported loss reserves. The Company does not dis

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View this 10-K filing on SEC EDGAR