Posted on 08 Feb 2011
Auto and homeowners insurer Mercury General Corp. reported a fourth-quarter loss, paying out more money to cover claims related to rainstorms in California and sinkholes in Florida.
Mercury General said it lost $23.6 million, or 43 cents per share, in the three months ended Dec. 31. A year ago the company reported net income of $34.2 million, or 62 cents per share. Revenue fell to $655.6 million from $677.3 million a year ago.
Mercury General reported a combined ratio of 109.9 percent. An insurer's combined ratio reflects the company's losses and expenses, and a ratio above 100 means that for every premium dollar Mercury General received, it paid out more than a dollar to cover claims and other expenses. The company reported a combined ratio of 98.1 percent a year ago, meaning its insurance operations were profitable in that quarter.
Shares of Mercury General fell $3.40, or 7.9 percent, to $39.54 in afternoon trading.
The company said it took about $25 million in losses related to the California storms. Its Florida homeowners business took an underwriting loss of about $19 million, about $6 million of which came from premium deficiencies. Mercury General said it is withdrawing from the Florida homeowners market, and it will provide a mandated 180-day notice of non-renewal to its Florida homeowners policyholder starting in March. It expects to withdraw from that market completely during the second half of 2012.
Mercury General currently has around 8,000 Florida homeowners policyholders.