Mercury Insurance 2010 Annual Report Download - page 23

An insurance company is also required to notify the California DOI of any dividend after declaration, but
prior to payment. There are similar limitations imposed by other states on the Insurance Companies’ ability to
pay dividends. On December 16, 2010, the California DOI notified the Company that MCC was authorized to
pay a $270 million extraordinary dividend to Mercury General in 2011. Mercury General intends to use the
proceeds from the dividend to repay the $125 million senior notes and to fund shareholder dividends. As of
December 31, 2010, the Insurance Companies are permitted to pay, without extraordinary DOI approval, $31.9
million in dividends, of which $14.0 million would be payable from the California Companies.
The Holding Company Act also provides that the acquisition or change of “control” of a California
domiciled insurance company or of any person who controls such an insurance company cannot be consummated
without the prior approval of the California DOI. In general, a presumption of “control” arises from the
ownership of voting securities and securities that are convertible into voting securities, which in the aggregate
constitute 10% or more of the voting securities of a California insurance company or of a person that controls a
California insurance company, such as Mercury General. A person seeking to acquire “control,” directly or
indirectly, of the Company must generally file with the California DOI an application for change of control
containing certain information required by statute and published regulations and provide a copy of the
application to the Company. The Holding Company Act also effectively restricts the Company from
consummating certain reorganizations or mergers without prior regulatory approval.
Each of the Insurance Companies is subject to holding company regulations in the state in which it is
domiciled. These provisions are substantially similar to those of the Holding Company Act.
Assigned Risks
Automobile liability insurers in California are required to sell BI liability, property damage liability,
medical expense, and uninsured motorist coverage to a proportionate number (based on the insurer’s share of the
California automobile casualty insurance market) of those drivers applying for placement as “assigned
risks.” Drivers seek placement as assigned risks because their driving records or other relevant characteristics, as
defined by Proposition 103, make them difficult to insure in the voluntary market. In 2010, assigned risks
represented less than 0.1% of total automobile direct premiums written and less than 0.1% of total automobile
direct premium earned. The Company attributes the low level of assignments to the competitive voluntary
market. Many of the other states in which the Company conducts business offer programs similar to that of
California. These programs are not a significant contributor to the business written in those states.
Executive Officers of the Company
The following table presents certain information concerning the executive officers of the Company as of
February 4, 2011:
Name Age Position
George Joseph 89 Chairman of the Board
Gabriel Tirador 46 President and Chief Executive Officer
Allan Lubitz 52 Senior Vice President and Chief Information Officer
Joanna Y. Moore 55 Senior Vice President and Chief Claims Officer
John Sutton 63 Senior Vice President—Customer Service
Christopher Graves 45 Vice President and Chief Investment Officer
Robert Houlihan 54 Vice President and Chief Product Officer
Kenneth G. Kitzmiller 64 Vice President and Chief Underwriting Officer
Brandt N. Minnich 44 Vice President—Marketing
Theodore R. Stalick 47 Vice President and Chief Financial Officer
Charles Toney 49 Vice President and Chief Actuary
Judy A. Walters 64 Vice President—Corporate Affairs and Secretary
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