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61
MERCURY GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
General
Mercury General Corporation ("Mercury General") and its subsidiaries (referred to herein collectively as the "Company")
are primarily engaged in writing personal automobile insurance through 14 Insurance Companies in 13 states, principally California.
The Company also writes homeowners, commercial automobile, commercial property, mechanical breakdown, fire, and umbrella
insurance. The private passenger automobile line of insurance business was more than 77% of the Company’s direct premiums
written in 2015, 2014, and 2013, of which approximately 83%, 83%, and 81% of the private passenger automobile premiums were
written in California during 2015, 2014, and 2013, respectively. Premiums written represents the premiums charged on policies
issued during a fiscal period, which is a statutory measure designed to determine production levels.
Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Mercury General Corporation and its subsidiaries:
Insurance Companies
Mercury Casualty Company ("MCC") Mercury National Insurance Company
Mercury Insurance Company ("MIC") American Mercury Insurance Company
California Automobile Insurance Company ("CAIC") American Mercury Lloyds Insurance Company(1)
California General Underwriters Insurance Company, Inc. Mercury County Mutual Insurance Company(2)
Mercury Insurance Company of Illinois Mercury Insurance Company of Florida
Mercury Insurance Company of Georgia Mercury Indemnity Company of America
Mercury Indemnity Company of Georgia Workmen's Auto Insurance Company ("WAIC")(5)
Non-Insurance Companies
Mercury Select Management Company, Inc. AIS Management LLC
Mercury Insurance Services LLC Auto Insurance Specialists LLC
Animas Funding LLC ("AFL")(3) PoliSeek AIS Insurance Solutions, Inc.
Fannette Funding LLC ("FFL")(4)
__________
(1) American Mercury Lloyds Insurance Company is not owned but is controlled by the Company through its attorney-in-fact,
Mercury Select Management Company, Inc.
(2) Mercury County Mutual Insurance Company is not owned but is controlled by the Company through a management contract.
(3) Special purpose investment vehicle formed in 2013.
(4) Special purpose investment vehicle formed in 2014.
(5) California domiciled insurance company acquired in 2015. See Note 20. Acquisition.
The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles
("GAAP"), which differ in some respects from those filed in reports to insurance regulatory authorities. All intercompany
transactions and balances have been eliminated.
Certain reclassifications have been made in the 2014 consolidated financial statements to conform to the classifications in
2015.
The Company did not have other comprehensive income (loss) in 2015, 2014 and 2013.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reporting period. These estimates require the Company