Mercury General Reports $108.3 Million Net Loss in Q1 2025 Amid Catastrophic Events

Mercury General Corporation reported a significant decline in its financial performance for the first quarter of 2025, with a net loss of $108.3 million, compared to a net income of $73.5 million in the same period of 2024. This resulted in a loss per share of $1.96, down from earnings of $1.33 per share a year earlier. Total revenues increased to $1.39 billion, up from $1.27 billion, driven primarily by a 10% rise in net premiums earned, which reached $1.28 billion, compared to $1.17 billion in the prior year. However, the company faced substantial losses from recent catastrophic events, particularly the Southern California wildfires, which contributed to a loss ratio of 95.1%, significantly higher than the 77.5% reported in the previous year.

The company's total assets increased to $9.03 billion as of March 31, 2025, up from $8.31 billion at the end of 2024. This growth was primarily attributed to a rise in cash reserves, which more than doubled to $1.28 billion, and an increase in receivables. However, total liabilities also rose to $7.21 billion, up from $6.36 billion, largely due to an increase in loss and loss adjustment expense reserves, which reached $3.79 billion, compared to $3.15 billion at the end of 2024. The company’s shareholders' equity decreased to $1.82 billion from $1.95 billion, reflecting the impact of the net loss.

Operationally, Mercury General's customer base remained stable, with 55.39 million shares of common stock outstanding as of May 1, 2025. The company reported a significant increase in ceded premiums, which rose to $106.7 million from $31.1 million, reflecting higher reinsurance costs associated with the catastrophic losses from the wildfires. The company’s investment income also improved, totaling $81.5 million, up from $65 million, due to higher average yields and increased invested assets.

Looking ahead, Mercury General anticipates continued challenges due to the impact of recent catastrophic events and the associated financial implications. The company is actively pursuing subrogation claims related to the wildfires and is working to comply with regulatory changes in California that may affect its pricing and underwriting practices. The management remains cautious about the potential for further volatility in the insurance market and the broader economic environment, which could influence future performance.