Consolidated Highlights
Three Months Ended March 31,
Change
2026
2025
$
%
(000's except per-share amounts and ratios)
Net premiums earned (2)
$ 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)
$ 1,572,741
$ 1,445,443
$ 127,298
8.8
Net realized investment (losses) gains, net of tax (3)
$ (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) (1)
$ 194,010
$ (126,751)
$ 320,761
NM
Operating income (loss) per diluted share (1)
$ 3.50
$ (2.29)
$ 5.79
NM
Catastrophe losses net of reinsurance (4)
$ 93,000
$ 447,000
$ (354,000)
(79.2)
Combined ratio (5)
89.3 %
119.2 %
—
(29.9) pts
NM = Not Meaningful
(1)
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."
(2)
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.
(3)
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.
(4)
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.
(5)
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 (1)
$ 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 %
(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.
(2)
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.
(3)
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.
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 ...
