Mercury Insurance 2010 Annual Report Download - page 39

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Companies to make distributions to the Company, which may be restricted by financial, regulatory or
tax constraints, and by the terms of the Company’s debt instruments. In addition, there can be no assurance that
the Company will continue to pay dividends even if the necessary financial and regulatory conditions are met and
if sufficient cash is available for distribution.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Company owns the following buildings which are mostly occupied by the Company’s employees.
Space not occupied by the Company is leased to independent third party tenants. In addition, the Company owns
a 4.2 acre parcel of land in Brea, California for future expansion. The Company leases all of its other office space
for operations. Office location is not crucial to the Company’s operations, and the Company anticipates no
difficulty in extending these leases or obtaining comparable office space. The Company’s properties are well
maintained, adequately meet its needs, and are being utilized for their intended purposes.
Location Purpose
Size in
square feet
Percent occupied by
the Company at
December 31, 2010
Brea, CA ................ Home office and I.T. facilities (2 buildings) 236,000 100%
Folsom, CA .............. Administrative and Data Center 88,000 100%
Los Angeles, CA .......... Executive offices 41,000 95%
Rancho Cucamonga, CA .... Administrative 127,000 100%
St. Petersburg, FL ......... Administrative 157,000 74%
Oklahoma, OK ........... Administrative 100,000 77%
Item 3. Legal Proceedings
The Company is, from time to time, named as a defendant in various lawsuits incidental to its insurance
business. In most of these actions, plaintiffs assert claims for punitive damages, which are not insurable under
judicial decisions. The Company has established reserves for lawsuits in which the Company can estimate
potential exposure and that the likelihood that the court will rule against the Company is probable. Additionally,
from time to time, regulators may take actions to challenge the Company’s business practices. The Company
vigorously defends actions, unless a reasonable settlement appears appropriate. An unfavorable ruling against the
Company in the actions currently pending may have a material impact on the Company’s results of operations in
the period of such ruling; however, none is expected to be material to the Company’s financial condition. For a
discussion of legal matters, see “Overview—B. Regulatory and Legal Matters” in “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and Note 17 of Notes to
Consolidated Financial Statements, which is incorporated herein by reference.
There are no environmental proceedings arising under federal, state, or local laws or regulations to be
discussed.
Item 4. Removed and Reserved
29