Mercury Insurance 2009 Annual Report Download - page 13

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11
2009 ANNUAL REPORT
New York, Virginia, and Florida, and continues to
generate positive feedback from our agents. We have
improved the look and feel of our website to make it
more sales oriented and we plan to leverage the
Internet more effectively in the future. Further, our
efforts to focus on customer service have been
validated by a significant improvement in customer
satisfaction ratings, as monitored by our internal
system of measures.
Our investment results improved dramatically in
2009. Net realized investment gains for the current year
totaled $346.4 million, compared with net realized
investment losses of $550.5 million in 2008. The
significant year over year improvement of both our
bond and equity portfolio is a direct reflection of the
rebound in the financial markets.
Net investment income, which excludes realized
gains and losses, amounted to $130.1 million after tax
in 2009, compared with $133.7 million in 2008, driven
by a reduction in the amount of invested assets. This
was slightly offset by an after-tax yield of 4.1% in 2009
compared to 3.9% in 2008.
Because of our improved investment results, we
ended the year with a very strong capital position.
At fiscal year end, our shareholders’ equity was
$1.8 billion. Our underwriting leverage remains
conservative, with a premium to surplus ratio of 1.7
to 1. In February 2010, Mercury’s Board of Directors
increased the dividend rate by 1.7% to $0.59 per share,
a generous yield based on the recent market price of
our stock. Although we expect to continue paying
dividends to our shareholders, our directors evaluate
our dividend policy quarterly, based on our financial
results and capital position.
Lastly, the company is supporting Proposition 17,
the Continuous Coverage Auto Insurance Discount Act.
Proposition 17 is a California ballot initiative, which will
be on the June 2010 ballot. Proposition 17 will allow
insurance companies to offer new customers discounts
based on having continuous insurance coverage from
any insurance company. Currently, companies may only
offer a continuous coverage discount with existing
customers. We believe this pro-consumer bill will
increase competition and allow Mercury to better
compete for new business.
Although we, like many businesses and industries,
are still navigating the long road back, overall we are
encouraged by the progress we made this past year,
and look forward to many more positive Mercury
Moments to come.
You are invited to attend our annual shareholder
meeting on May 12, 2010.
Sincerely,
George Joseph
Chairman of the Board
Gabriel Tirador
President and Chief Executive Officer
Dividends Per Share
(in dollars)
Combined Ratio vs. Industry
(in percent) Source for industry data: A.M. Best Company
1.0
2.5
05 06 07 08 09
0
1.5
0.5
2.0
50
125
05 06 07 08 09
0
75
25
100
U.S. IndustryMercury General