Mercury Insurance 2009 Annual Report Download - page 69

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3.4% and 4.1%, respectively, of total fixed maturity securities. At December 31, 2008, fixed maturity holdings,
excluding preferred shares, rated below investment grade and non-rated bonds totaled $52.3 million and $27.5
million, respectively at fair value, and represented approximately 2.1% and 1.1%, respectively, of total fixed
maturity securities.
The following table presents the credit quality ratings of the Company’s fixed maturity portfolio by security
type at December 31, 2009 at fair value. Credit quality ratings are based on the average of ratings assigned by
nationally recognized securities rating organizations. Credit ratings for the Company’s fixed maturity portfolio
were down slightly as compared to the prior year, with 69% of fixed maturity securities at fair value experiencing
no change in their overall rating. Approximately 26% experienced downgrades during the period, offset by
approximately 5% in credit upgrades. The majority of the downgrades were due to continued downgrading of the
monoline insurance carried on much of the municipal holdings. The majority of the downgrades was slight and
still within the investment grade portfolio, although $27 million, at fair value, was downgraded to below
investment grade.
December 31, 2009
AAA AA(2) A(2) BBB(2) Non-Rated/Other Total
(Amounts in thousands)
U.S. government bonds and agencies:
Treasuries ..................... $ 6,735 $ — $ — $ — $ — $ 6,735
Government Agency ............ 3,245 — — — — 3,245
Total ..................... 9,980 — — — — 9,980
100.0% 100.0%
Municipal securities:
Insured(1) ..................... 12,672 523,471 737,302 61,693 55,519 1,390,657
Uninsured ..................... 253,791 334,560 236,369 169,703 55,986 1,050,409
Total ..................... 266,463 858,031 973,671 231,396 111,505 2,441,066
10.9% 35.1% 39.9% 9.5% 4.6% 100.0%
Mortgage-backed securities:
Agencies ...................... 83,987 — — — — 83,987
Non-agencies:
Prime .................... 7,187 1,536 434 548 6,755 16,460
Alt-A .................... 1,976 3,106 5,104 — 3,775 13,961
Total ..................... 93,150 4,642 5,538 548 10,530 114,408
81.4% 4.1% 4.8% 0.5% 9.2% 100.0%
Corporate securities:
Communications ............... — — — 6,516 — 6,516
Consumer—cyclical ............. — — — — 118 118
Energy ....................... — — — 6,207 9,663 15,870
Basic materials ................. — — — 3,983 — 3,983
Financial ...................... 4,567 21,971 6,647 5,744 20,829 59,758
Utilities ....................... — — — 3,615 1,774 5,389
Total ..................... 4,567 21,971 6,647 26,065 32,384 91,634
5.0% 24.0% 7.3% 28.4% 35.3% 100.0%
Collateralized debt obligations:
Corporate ..................... — — — — 47,473 47,473
Total ..................... — — — — 47,473 47,473
100.0% 100.0%
Total ..................... $374,160 $884,644 $985,856 $258,009 $201,892 $2,704,561
13.8% 32.7% 36.5% 9.5% 7.5% 100.0%
(1) Insured municipal bonds based on underlying ratings: AAA: $13,485, AA: $360,891, A: $726,853, BBB: $113,637,
Non-rated/Other: $175,792
(2) Intermediate ratings are offered at each level (e.g., AA includes AA+, AA and AA-).
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