Mercury Insurance 2007 Annual Report Download - page 15

2007 MERCURYNOW 13
this business represents 70% of our total California auto
business. The remaining 30% of our California personal auto
business will receive a slight increase of 0.4%. Although this
deviates from our original application for a revenue neutral
rate change in our preferred business and a 4% increase in
our non-preferred business, we do believe that the additional
changes included in this application will enhance our overall
competitive position. These new rate levels are expected
to take effect in late April. In addition, this new rate level
moves us toward full compliance with the new territorial rate
regulations and, as required by the regulations, we plan on
making a filing by July of 2008 to make us fully compliant.
Ultimately, we believe, once implemented, this regulation
will increase consumer shopping as rates for urban drivers
decrease and those for non-urban drivers increase.
In April 2007, the Department of Insurance effected
a new regulation governing the approval of property and
casualty rates in California. Among other things, the new
regulation established a maximum allowable rate of return
of just below 11%, based on current interest rates. We believe
these regulations, as they currently exist, are problematic.
Several companies have challenged the regulations and we
are closely monitoring the results of the hearings.
At Mercury, we believe in using our time
wisely. We are taking full advantage of these
soft market conditions to focus on building
and strengthening our infrastructure so
that, when the time is right, we will be
positioned to capitalize on a more favorable
growth environment. We have some exciting
initiatives underway in 2008 that we believe
lay the foundation for future growth.
Our new Web-based agent interface
program – MercuryFirst – is scheduled to
launch in New York in the second quarter
of 2008. This new system is designed to
make life easier for agents who represent
Mercury. The system includes point of sale
processing for quotes, for new business and
for endorsements. It offers enhanced memo
processing, document upload capabilities,
alert functions, improved reporting and
integration with third-party data vendors for
critical underwriting information. Our goal is
to have MercuryFirst in all of our 13 states by early 2009. We
also plan to roll out our NextGen back-end system to Texas,
Georgia and Illinois this year. Speaking of
technology, I am also pleased to announce
that our Information Technology function
is now being led by our new senior vice
president and CIO, Allan Lubitz, who brings
a great deal of expertise and experience to
the position.
We also recently introduced a new
product management function, focused on
the growth and profitability of new as well as
existing products. This effort is headed up by
Robert Houlihan, our new vice president and
chief product officer. Robert brings extensive
knowledge and years of experience to this
new function. I look forward to the changes
his group will implement as we continue
our quest to offer outstanding products at
competitive prices.
Providing excellent customer service
has been a priority at Mercury since the
day we were founded. We are keeping that
tradition alive with a new companywide
Service Excellence Initiative, aimed at
elevating our standards for service at every
level of our organization. This program
involves comprehensive training for every
employee, which includes evaluating how
our current processes impact service to
customers. Our customers have come to
expect a high level of service from us and
Our customers have
come to expect a high
level of service from
us and we intend to
earn their trust,
their loyalty and
their business,
every chance we get.
LEADERSHIP
96 97 98 99 00 01 02 03 04 05 06 07
120
100
80
60
40
20
0
MGC CR Industry CR
*Industry CR is estimated in 2007
COMBINED RATIO VS. INDUSTRY
In percent