Mercury Insurance 2008 Annual Report Download - page 37

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Item 6. Selected Financial Data
2008 2007 2006 2005 2004
Income Data:
Earned premiums 2,808,839$ 2,993,877$ 2,997,023$ 2,847,733$ 2,528,636$
Net investment income 151,280 158,911 151,099 122,582 109,681
Net realized investment (losses) gains (550,520) 20,808 15,436 16,160 25,065
Other 4,597 5,154 5,185 5,438 4,775
Total revenues 2,414,196 3,178,750 3,168,743 2,991,913 2,668,157
Losses and loss adjustment expenses 2,060,409 2,036,644 2,021,646 1,862,936 1,582,254
Policy acquisition costs 624,854 659,671 648,945 618,915 562,553
Other operating expenses 174,828 158,810 176,563 150,201 111,285
Interest 4,966 8,589 9,180 7,222 4,222
Total expenses 2,865,057 2,863,714 2,856,334 2,639,274 2,260,314
(Loss) Income before income taxes (450,861) 315,036 312,409 352,639 407,843
Income tax (benefit) expense (208,742) 77,204 97,592 99,380 121,635
Net (loss) income (242,119)$ 237,832$ 214,817$ 253,259$ 286,208$
Per Share Data:
Basic earnings per share (4.42)$ 4.35$ 3.93$ 4.64$ 5.25$
Diluted earnings per share (4.42)$ 4.34$ 3.92$ 4.63$ 5.24$
Dividends paid 2.32$ 2.08$ 1.92$ 1.72$ 1.48$
2008 2007 2006 2005 2004
Balance Sheet Data:
Total investments 2,933,820$ 3,588,675$ 3,499,738$ 3,242,712$ 2,921,042$
Total assets 3,950,195$ 4,414,496$ 4,301,062$ 4,050,868$ 3,622,949$
Losses and loss adjustment expenses 1,133,508$ 1,103,915$ 1,088,822$ 1,022,603$ 900,744$
Unearned premiums 879,651$ 938,370$ 950,344$ 902,567$ 799,679$
Notes payable 158,625$ 138,562$ 141,554$ 143,540$ 137,024$
Shareholders' equity 1,494,051$ 1,861,998$ 1,724,130$ 1,607,837$ 1,459,548$
Book value per share 27.28$ 34.02$ 31.54$ 29.44$ 26.77$
(Amounts in thousands, except per share data)
Year Ended December 31,
(Amounts in thousands, except per share data)
December 31,
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The operating results of property and casualty insurance companies are subject to significant quarter-to-quarter and year-
to-year fluctuations due to the effect of competition on pricing, the frequency and severity of losses, natural disasters on losses,
general economic conditions, the general regulatory environment in those states in which an insurer operates, state regulation of
premium rates and other factors such as changes in tax laws.
The Company is headquartered in Los Angeles, California and operates primarily as a personal automobile insurer
selling policies through a network of independent agents and brokers in thirteen states. The Company also offers homeowners
insurance, mechanical breakdown insurance, commercial and dwelling fire insurance, umbrella insurance, commercial automobile
and commercial property insurance. Private passenger automobile lines of insurance accounted for approximately 83.7% of the
$2.8 billion of the Company’s direct premiums written in 2008. Approximately 79.9% of the private passenger automobile
premiums were written in California. The Company operates primarily in the state of California, the only state in which it
operated prior to 1990. The Company has since expanded its operations into the following states: Georgia and Illinois (1990),
Oklahoma and Texas (1996), Florida (1998), Virginia and New York (2001), New Jersey (2003), and Arizona, Pennsylvania,
Michigan and Nevada (2004).
This overview discusses some of the relevant factors that management considers in evaluating the Company’s
performance, prospects and risks. It is not all-inclusive and is meant to be read in conjunction with the entirety of management’s
discussion and analysis, the Company’s consolidated financial statements and notes thereto and all other items contained within
this Annual Report on Form 10-K.