Mercury Insurance 2010 Annual Report Download - page 43

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statements
Certain statements in this Annual Report on Form 10-K or in other materials the Company has filed or will
file with the SEC (as well as information included in oral statements or other written statements made or to be
made by the Company) contain or may contain “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements may address, among other things, the Company’s strategy for
growth, business development, regulatory approvals, market position, expenditures, financial results, and
reserves. Forward-looking statements are not guarantees of performance and are subject to important factors and
events that could cause the Company’s actual business, prospects and results of operations to differ materially
from the historical information contained in this Annual Report on Form 10-K and from those that may be
expressed or implied by the forward-looking statements contained in this Annual Report on Form 10-K and in
other reports or public statements made by the Company.
Factors that could cause or contribute to such differences include, among others: the competition currently
existing in the automobile insurance markets in California and the other states in which the Company operates;
the cyclical and general competitive nature of the property and casualty insurance industry and general
uncertainties regarding loss reserve or other estimates, the accuracy and adequacy of the Company’s pricing
methodologies; the Company’s success in managing its business in states outside of California; the impact of
potential third party “bad-faith” legislation, changes in laws, regulations or new interpretation of existing laws
and regulations, tax position challenges by the California Franchise Tax Board (“FTB”), and decisions of courts,
regulators and governmental bodies, particularly in California; the Company’s ability to obtain and the timing of
the approval of premium rate changes for insurance policies issued in states where the Company operates; the
Company’s reliance on independent agents and brokers to market and distribute its policies; the investment
yields the Company is able to obtain with its investments in comparison to recent yields and the market risks
associated with the Company’s investment portfolio; uncertainties related to assumptions and projections
generally, inflation and changes in economic conditions; changes in driving patterns and loss trends; acts of war
and terrorist activities; court decisions, trends in litigation, and health care and auto repair costs; adverse weather
conditions or natural disasters in the markets served by the Company; the stability of the Company’s information
technology systems and the ability of the Company to execute on its information technology initiatives; the
Company’s ability to realize current deferred tax assets or to hold certain securities with current loss positions to
recovery or maturity; and other uncertainties, all of which are difficult to predict and many of which are beyond
the Company’s control. GAAP prescribes when a Company may reserve for particular risks including litigation
exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve
is established for a major contingency. Reported results may therefore appear to be volatile in certain periods.
From time to time, forward-looking statements are also included in the Company’s quarterly reports on
Form 10-Q and current reports on Form 8-K, in press releases, in presentations, on its web site, and in other
materials released to the public. The Company undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information or future events or otherwise. Investors are cautioned not to
place undue reliance on any forward-looking statements, which speak only as of the date of this Annual Report
on Form 10-K or, in the case of any document incorporated by reference, any other report filed with the SEC or
any other public statement made by the Company, the date of the document, report or statement. Investors should
also understand that it is not possible to predict or identify all factors and should not consider the risks set forth
above to be a complete statement of all potential risks and uncertainties. If the expectations or assumptions
underlying the Company’s forward-looking statements prove inaccurate or if risks or uncertainties arise, actual
results could differ materially from those predicted in any forward-looking statements. The factors identified
above are believed to be some, but not all, of the important factors that could cause actual events and results to be
significantly different from those that may be expressed or implied in any forward-looking statements.
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