Mercury Insurance 2008 Annual Report Download - page 23

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Mr. Deep, Vice President-South East Region, joined the Company in September 2006 as State Administrator for the
South East Region and was named Vice President of the South East Region in February 2007. Prior to joining the Company, Mr.
Deep was Executive Vice President of Shelby Insurance Company from 2004 to 2006 and an Assistant Vice President of USAA
from 1994 to 2004.
Mr. Graves, Vice President and Chief Investment Officer, has been employed by the Company in the investment
department since 1986. Mr. Graves was appointed Chief Investment Officer in 1998, and named Vice President in April 2001.
Mr. Houlihan, Vice President and Chief Product Officer, joined the Company in December 2007. Prior to joining the
Company, he served as Senior Product Manager at Bristol West Insurance Group from 2005 to 2007 and Product Manager at
Progressive Insurance Company from 1999 to 2005.
Mr. Kitzmiller, Vice President-Underwriting, has been employed by the Company in the underwriting department since
1972. In 1991, he was appointed Vice President of Underwriting of Mercury General and has supervised the California
underwriting activities of the Company since early 1996.
Mr. Stalick, Vice President and Chief Financial Officer, joined the Company as Corporate Controller in 1997. In
October 2000, he was named Chief Accounting Officer, a role he held until appointed to his current position in October 2001. Mr.
Stalick is a Certified Public Accountant.
Mr. Toney, Vice President and Chief Actuary, joined the Company in 1984 as a programmer/analyst. In 1994 he earned
his Fellowship in the Casualty Actuarial Society and was appointed to his current position.
Ms. Walters, Vice President-Corporate Affairs and Secretary, has been employed by the Company since 1967, and has
served as its Secretary since 1982. Ms. Walters was named Vice President - Corporate Affairs in 1998.
Item 1A. Risk Factors
The Company’s business involves various risks and uncertainties, some of which are discussed in this section. The
information discussed below should be considered carefully with the other information contained in this Annual Report on Form
10-K and the other documents and materials filed by the Company with the SEC, as well as news releases and other information
publicly disseminated by the Company from time to time.
The risks and uncertainties described below are not the only ones facing the Company. Additional risks and
uncertainties not presently known to the Company, or that it currently believes to be immaterial, may also adversely affect the
Company’s business. Any of the following risks or uncertainties that develop into actual events could have a materially adverse
effect on the Company’s business, financial condition or results of operations.
Risks Related to the Company and its Business
The Company is a holding company that relies on regulated subsidiaries for cash to satisfy its obligations.
As a holding company, the Company maintains no operations that generate revenue to pay operating expenses,
shareholders’ dividends or principal or interest on its indebtedness. Consequently, the Company relies on the ability of its
insurance subsidiaries, and particularly its California insurance subsidiaries, to pay dividends for the Company to meet its debt
payment obligations and pay other expenses. The ability of the Company’s insurance subsidiaries to pay dividends is regulated by
state insurance laws, which limit the amount of, and in certain circumstances may prohibit the payment of, cash dividends.
Generally, these insurance regulations permit the payment of dividends only out of earned surplus in any year which, together
with other dividends or distributions made within the preceding 12 months, do not exceed the greater of 10% of statutory surplus
as of the end of the preceding year or the net income for the preceding year, with larger dividends payable only after receipt of
prior regulatory approval. The inability of the Company’s insurance subsidiaries to pay dividends in an amount sufficient to
enable the Company to meet its cash requirements at the holding company level could have a material adverse effect on the
Company’s results of operations and its ability to pay dividends to its shareholders.
If the Company’s loss reserves are inadequate, its business and financial position could be harmed.
The process of establishing property and liability loss reserves is inherently uncertain due to a number of factors,
including underwriting quality, the frequency and amount of covered losses, variations in claims settlement practices, the costs
and uncertainty of litigation, and expanding theories of liability. While the Company believes that improved actuarial techniques
and databases have assisted in estimating loss reserves, the Company’s methods may prove to be inadequate. If any of these
contingencies, many of which are beyond the Company’s control, results in loss reserves that are not sufficient to cover its actual
losses, its results of operations, liquidity and financial position may be materially adversely affected.