Mercury Insurance 2015 Annual Report Download - page 90

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78
The increase in the provision for insured events of prior years in 2013 of approximately $3.0 million primarily resulted
from Florida claims that were re-opened from prior years due to a state supreme court ruling that was adverse to the insurance
industry.
The Company experienced estimated pre-tax catastrophe losses and loss adjustment expenses from severe weather events
of $19 million, $11 million, and $17 million in 2015, 2014, and 2013, respectively. The losses in 2015 were primarily the result
of severe storms outside of California, and rainstorm and wildfire losses in California. The losses in 2014 were primarily related
to winter freeze events on the East Coast and severe rainstorms in California. The losses in 2013 were primarily due to tornadoes
in Oklahoma and severe storms in the Midwest and the Southeast regions during the second quarter.
12. Dividends
The following table presents shareholder dividends paid:
Year Ended December 31,
2015 2014 2013
(Amounts in thousands, except per share data)
Total paid $ 136,386 $ 135,496 $ 134,776
Per share paid $ 2.4725 $ 2.4625 $ 2.4525
The Insurance Companies are subject to the financial capacity guidelines established by their domiciliary states. The payment
of dividends from statutory unassigned surplus of the Insurance Companies is restricted, subject to certain statutory limitations. For
2015, the insurance subsidiaries of the Company are permitted to pay approximately $164 million in dividends to Mercury General
without the prior approval of the DOI of domiciliary states. The above statutory regulations may have the effect of indirectly
limiting the ability of the Company to pay shareholder dividends. During 2015, 2014, and 2013, the Insurance Companies paid
the Mercury General ordinary dividends of $133 million, $225 million, and $120 million, respectively.
On February 5, 2016, the Board of Directors declared a $0.62 quarterly dividend payable on March 31, 2016 to shareholders
of record on March 17, 2016.
13. Statutory Balances and Accounting Practices
The Insurance Companies prepare their statutory-basis financial statements in conformity with accounting practices
prescribed or permitted by the insurance departments of their domiciliary states. Prescribed statutory accounting practices primarily
include those published as statements of statutory accounting principles by the National Association of Insurance Commissioners
(the "NAIC"), as well as state laws, regulations, and general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. As of December 31, 2015, there were no material permitted statutory
accounting practices utilized by the Insurance Companies.
The following table presents the statutory net income, and statutory capital and surplus of the Insurance Companies, as
reported to regulatory authorities:
Year Ended December 31,
2015 2014 2013
(Amounts in thousands)
Statutory net income(1) $ 123,984 $ 155,654 $ 235,251
Statutory capital and surplus $ 1,451,950 $ 1,438,281 $ 1,528,682
__________
(1) Statutory net income reflects differences from GAAP net income, including changes in the fair value of the investment
portfolio as a result of the application of the fair value option.
The Insurance Companies must comply with minimum capital requirements under applicable state laws and regulations.
The RBC formula is used by insurance regulators to monitor capital and surplus levels. It was designed to capture the widely
varying elements of risks undertaken by writers of different lines of insurance business having differing risk characteristics, as
well as writers of similar lines where differences in risk may be related to corporate structure, investment policies, reinsurance
arrangements, and a number of other factors. The Company periodically monitors the RBC level of each of the Insurance Companies.
As of December 31, 2015, 2014, and 2013, each of the Insurance Companies exceeded the minimum required RBC levels, as
determined by the NAIC and adopted by the state insurance regulators. None of the Insurance Companies’ RBC ratios was less