LOS
ANGELES, Jan. 20, 2025 /PRNewswire/ --
Mercury General Corporation (the "Company" or "Mercury") is
providing more information about the recent Southern California
Wildfires, known as the Palisades and Eaton fires (collectively,
the "Wildfires"), and the Company's reinsurance
program.
Most of the affected areas are closed due to ongoing hazardous
conditions. The Company has received many claims and is using
aerial images to assist in determining whether properties are total
losses. Claims continue to be reported, and Mercury has mobilized
our catastrophe loss team, assisting our customers with their
claims and replacement housing. As of the date of this press
release, Mercury has already paid $80
million to policyholders primarily for living expenses and
housing contents, and has started to pay out dwelling claims at the
Coverage A limit for verified total losses. The Company has
sufficient liquidity to meet the increased levels of payments.
The Company's catastrophe reinsurance treaty allows for the
combining of events that occur within a 150-mile radius as a single
occurrence. Additionally, if each individual event is classified as
its own catastrophic event by the Property Claims Service ("PCS"),
a unit of the Insurance Services Office, each event can be
considered a separate occurrence. In the case of the Palisades and
Eaton wildfires, the PCS has designated each as a separate
event.
The Company has not yet determined if it will consider the
Wildfires as two separate events. As more information becomes
available to the Company, including regarding any subrogation
potential, the Company will evaluate whether it will consider the
Wildfires as two separate events. Under a two-event scenario, the
Company may elect to use reinsurance limits of up to $1,290 million for the first event and reinstated
limits up to $1,238 million for the
second event. In this scenario, the Company would be responsible
for the first and second event retentions of $150 million each, and up to a $101 million reinstatement premium for total
retention and reinstatement premiums of $401
million. In addition, the Company would have
co-participation up to $52 million
for losses in excess of $650 million
on the second event.
The Company may seek to acquire additional reinsurance if
reinstated limits are used by the second event, for the stub period
ending on June 30, 2025, the
expiration date of the current contract.
About Mercury General Corporation
Mercury General Corporation (NYSE: MCY) 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 methodologies;
catastrophes in the markets served by the Company; uncertainties
related to estimates, assumptions and projections generally; the
possibility that actual loss experience may vary adversely from the
actuarial estimates made to determine the Company's
loss reserves in general; the Company's ability to
obtain and the timing of the approval of premium rate changes for
insurance policies issued in the states where it operates;
legislation adverse to the automobile insurance industry or
business generally that may be enacted in the states where the
Company operates; the Company's success in managing
its business in non-California
states; the presence of competitors with greater financial
resources and the impact of competitive pricing and marketing
efforts; the Company's ability to successfully allocate the
resources used in the states with reduced or exited operations to
its operations in other states; changes in driving patterns and
loss trends; acts of war and terrorist activities; pandemics,
epidemics, widespread health emergencies, or outbreaks of
infectious diseases; court decisions and trends in litigation and
health care and auto repair costs; and legal, cybersecurity,
regulatory and litigation risks. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as the result of new information, future events
or otherwise. For a more detailed discussion of some of the
foregoing risks and uncertainties, see the Company's
Annual Report on Form 10-K filed with the United States Securities
and Exchange Commission on February 13,
2024.
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SOURCE Mercury General Corporation