On this page of StockholderLetter.com we present the latest annual shareholder letter from MERCURY GENERAL CORP — ticker symbol MCY. Reading current and past MCY letters to shareholders can bring important insights into the investment thesis.

 •  3/31/2025 Letter Continued (Full PDF)
 •  3/28/2023 MCY Stockholder Letter
 •  3/25/2024 MCY Stockholder Letter
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MCY Shareholder/Stockholder Letter Transcript:

Mercury General Corporation I 2024 Annual Report
Our Purpose
We help our customers prepare for and
overcome life's unexpected challenges.

Our Promise
    Every claim we receive at Mercury is an opportunity to fulfill a promise. That promise is that
we will be there for our policyholders in their time of need. When we have catastrophic events
like the recent wildfires, it is a reminder how important it is to keep that promise. I would like to
thank all of our team members involved in the wildfire response for their tireless efforts on
behalf of our insureds and Mercury.   
Randy Petro
VP, Chief Claims Officer
Cover photo:
Photo here:
ALTADENA, CALIFORNIA: Two individuals embrace
as they inspect a family member's property that was
destroyed by the Eaton Fire.
PACIFIC PALISADES, CA: An American
flag flies above the remains of a home
which burned in the Palisades Fire.

Letter to Shareholders
Before we review our 2024 results, we will discuss the impact of the January 2025 Southern
California wildfires that destroyed much of Pacific Palisades and Altadena (the Palisades and
Eaton wildfires, respectively, and collectively, the Wildfires). The combination of extreme winds
and critically dry vegetation created the conditions for these massive firestorms. The Wildfires
have had a devastating impact on communities and individuals as over 17,000 structures were
destroyed, 29 lives were lost, and tens of thousands of people no longer had homes to come home
to. In times like these, our role as insurance professionals is even more critical. Our purpose is
to help our customers prepare for and overcome life   s unexpected challenges. We are so proud
of our customer facing team members, especially our claims team, who are delivering on our
purpose by demonstrating an unwavering commitment to helping our fellow Californians who
have entrusted us with their protection. Our thoughts are with all those affected by the Wildfires.
We believe the financial impact from the Wildfires will
be a 2025 earnings event and not a capital event. This is
primarily due to our reinsurance coverage, our option to
classify the Wildfires as one or two events for reinsurance
purposes, the potential for subrogation and our favorable
core underlying results, which exclude catastrophe losses.
We estimate our pre-tax gross catastrophe losses from
the Wildfires before our share of FAIR PLAN losses to
be in the range of $1.6 billion to $2.0 billion, and our net
pre-tax catastrophe losses from the Wildfires, which is
after reinsurance and estimated subrogation but before
FAIR PLAN losses, to be $155 million to $325 million. And
although there is some uncertainty regarding our share of
Wildfire losses from the FAIR PLAN, we believe our share
of Wildfire losses from the FAIR PLAN is manageable
based on early loss numbers provided by the FAIR PLAN.
We also estimate reinsurance reinstatement premium
to be $80 million to $101 million and will be pro-rated
between the first and second quarter of 2025. However,
as we discuss below, we expect favorable core underlying
earnings to continue into 2025 which will help offset the
financial impact from the Wildfires.
We monitor and manage our catastrophe exposure from
California wildfires and other catastrophes by limiting our
concentration in certain areas of a state, utilizing tools
to better underwrite individual properties, and utilizing
reinsurance. In 2024 we increased our catastrophe
reinsurance coverage. The total reinsurance limit
purchased increased from $1,111 million in the prior period
to $1,290 million for the July 2024 through June 2025
period. Total annual premiums on the new reinsurance
program are approximately $105 million. When we renew
our reinsurance treaty in July 2025, we expect to increase
the limits we purchase, but also anticipate our reinsurance
rates and current retention of $150 million to increase.
Customer testimonial
about spotlighted
team member :
Elisa Hoggatt
Prop Claims Spec Field II
    A key part of my positive experience
has been working with you, Elisa.
I hope that, after all the hours we   ve
spent going over my claim, you
remain on it. This is especially true
for a single, working parent like me
who already had too much on his
plate before our house burned down.
Thanks, as always, for considering
my family   s needs!   
Our future view of wildfire risk will factor in the Wildfires
and related updates to catastrophe models, availability
and pricing of reinsurance, ability to obtain rates in a timely
and sufficient manner to support writing homeowners
business, risk acceptability for individual risks, risk
tolerance for concentrations of risk and our exposure
to the FAIR PLAN. We will learn from these Wildfires
and make the necessary adjustments. The California
Insurance Commissioner   s Sustainable Insurance
Strategy, which among other things, allows the use
of catastrophe models and the cost of reinsurance in
pricing is a good step towards improving the California
homeowners market.
Annual Report
1

Combined Ratio vs. Industry
90.5%
88.3%
93.1%
96.0%
98.7%
93.1%
104.6%
104.6%
103.0%
103.0%
111
111.7%
.7%
110.3%
110.3%
100.7%
100.7%
96.0%
90.5%
98.7%
Mercury General
U.S. Industry
(In percent)
88.3%
Turning to our 2024 results, 2024 was a year for the
record books. Our 2024 after-tax operating income of
$7.19 per share, compared to $.30 per share in 2023, was
the highest in the Company   s history. The improvement
in operating earnings was due to a reduction in the
combined ratio from 105.4% in 2023 to 96.0% in 2024,
and an increase in after-tax investment income of $35.2
million, from $200.2 million in 2023 to $235.4 million in
2024. Better results in our personal lines of business was
the primary reason for the improvement in the combined
ratio. Our commercial lines of business results were
about the same as in 2023 but remain unsatisfactory. We
have more work to do in our commercial lines of business.
PASADENA, CA: A 'We Will Rebuild' message is posted in front of a home
destroyed in the Eaton Fire.
2
Mercury General Corporation
20
20
21
21
22
22
23
23
24
24*
* Industry data for 2024 is a published estimate.
Source for Industry Data: A.M. Best Company, for Private Passenger
Automobile line of all Property and Casualty insurance companies.
C
   ombined Ratio for Mercury General: for Private Passenger
Automobile line of business only for comparison with the industry ratio.
Operating Leverage
2.7
22
23
24
2.1
2.7
20
2.7
(Net Premiums Written/Policyholders    Surplus as ratio)
2.0
Rate increases and other actions more than offset
moderating inflation and helped drive down our combined
ratio in both our Private Passenger Automobile and
Homeowners line of business. Our Private Passenger
Automobile combined ratio was 93.1% in 2024 compared
to 103% in 2023. Frequency was relatively flat from 2023
and severity increased in the mid-single digits. Although
we expect our Private Passenger Automobile combined
ratio to increase over time towards our 96% combined
ratio target, we nevertheless anticipate we will post a
very favorable combined ratio in 2025. Similarly, our
Homeowners line of business improved significantly
as we posted a combined ratio of 94.5% compared
to 108% in 2023 despite the fact we had record high
Homeowners catastrophe losses of $212 million in
2024. Undoubtedly, our Homeowners results are going
to deteriorate significantly in 2025 due to the Wildfires.
However, we expect to continue to post favorable core
Homeowners underlying combined ratios, which exclude
catastrophe losses, in 2025. Our core Homeowners
underlying combined ratio was 76.1% in 2024. In addition,
we recently received approval for a 12% rate increase
in our California Homeowners line of business that will
help offset an expected increase in reinsurance costs.
California Homeowners represents approximately 70%
of our Companywide Homeowners premiums earned.
21

Customer testimonial
about spotlighted
team member :
LaSonya McElroy
Prop Claims Examiner II
     LaSonya, I know 14 clients and a coworker who are all dealing with this wildfire loss and
despite the challenges I   ve faced, I know I   m much further along than all of them   and they
all have different insurers. I   ve received the advanced payment, and now you   re telling me
there   s a dwelling payment in the works. It   s a lot to take in, but I just want you to know that
my wife and I hear and see all the hard work you   re putting in, and we truly appreciate it.   
PACIFIC PALISADES, CA: An aerial view
shows homes destroyed in the Palisades Fire.
Annual Report
3



 3/31/2025 Letter Continued (Full PDF)