Mercury Insurance 2009 Annual Report Download - page 51

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statements
Certain statements in this Annual Report on Form 10-K or in other materials the Company has filed or will
file with the SEC (as well as information included in oral statements or other written statements made or to be
made by the Company) contain or may contain “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements may address, among other things, the Company’s strategy for
growth, business development, regulatory approvals, market position, expenditures, financial results, and
reserves. Forward-looking statements are not guarantees of performance and are subject to important factors and
events that could cause the Company’s actual business, prospects and results of operations to differ materially
from the historical information contained in this Form 10-K and from those that may be expressed or implied by
the forward-looking statements contained in this Form 10-K and in other reports or public statements made by
the Company.
Factors that could cause or contribute to such differences include, among others: the competition currently
existing in the California automobile insurance markets; the cyclical and general competitive nature of the
property and casualty insurance industry and general uncertainties regarding loss reserve or other estimates, the
accuracy and adequacy of the Company’s pricing methodologies; the achievement of the synergies and revenue
growth from the acquisition of AIS; the Company’s success in managing its business in states outside of
California; the impact of potential third party “bad-faith” legislation, changes in laws or regulations, tax position
challenges by the California Franchise Tax Board (“FTB”), and decisions of courts, regulators and governmental
bodies, particularly in California; the Company’s ability to obtain and the timing of the approval of premium rate
changes for insurance policies issued in states where the Company operates; the investment yields the Company
is able to obtain with its investments in comparison to recent yields and the general market risk associated with
the Company’s investment portfolio; uncertainties related to assumptions and projections generally, inflation and
changes in economic conditions; changes in driving patterns and loss trends; acts of war and terrorist activities;
court decisions, trends in litigation, and health care and auto repair costs; adverse weather conditions or natural
disasters in the markets served by the Company; the stability of the Company’s information technology systems
and the ability of the Company to execute on its information technology initiatives; the Company’s ability to
realize current deferred tax assets or to hold certain securities with current loss positions to recovery or maturity;
and other uncertainties, all of which are difficult to predict and many of which are beyond the Company’s
control. GAAP prescribes when a Company may reserve for particular risks including litigation
exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve
is established for a major contingency. Reported results may therefore appear to be volatile in certain periods.
From time to time, forward-looking statements are also included in the Company’s quarterly reports on
Form 10-Q and current reports on Form 8-K, in press releases, in presentations, on its web site, and in other
materials released to the public. The Company undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information or future events or otherwise. Investors are cautioned not to
place undue reliance on any forward-looking statements, which speak only as of the date of this Form 10-K or, in
the case of any document incorporated by reference, any other report filed with the SEC or any other public
statement made by us, the date of the document, report or statement. Investors should also understand that it is
not possible to predict or identify all factors and should not consider the risks set forth above to be a complete
statement of all potential risks and uncertainties. If the expectations or assumptions underlying the Company’s
forward-looking statements prove inaccurate or if risks or uncertainties arise, actual results could differ
materially from those predicted in any forward-looking statements. The factors identified above are believed to
be some, but not all, of the important factors that could cause actual events and results to be significantly
different from those that may be expressed or implied in any forward-looking statements.
33