Mercury Insurance 2011 Annual Report Download - page 88

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MERCURY GENERAL CORPORATION AND SUBSIDIARIES
NOTES STATEMENTS TO CONSOLIDATED FINANCIAL
1. Summary of Significant Accounting Policies
General
Mercury General Corporation and its subsidiaries (referred to herein collectively as the “Company”) are
engaged primarily in writing personal automobile insurance through 13 Insurance Companies in a number of
states, principally California. The Company also writes homeowners, commercial automobile and property,
mechanical breakdown, fire, and umbrella insurance. The private passenger automobile lines of insurance
exceeded 81% of the Company’s direct premiums written in 2011, 2010, and 2009, with approximately 77%,
77%, and 79% of the private passenger automobile premiums written in California during 2011, 2010, and 2009,
respectively. Premiums written represents the premiums charged on policies issued during a fiscal period, which
is a statutory measure designed to determine production levels.
Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Mercury General Corporation and its wholly
owned subsidiaries. The subsidiaries are as follows:
Insurance Companies
Mercury Casualty Company Mercury National Insurance Company
Mercury Insurance Company American Mercury Insurance Company
California Automobile Insurance Company American Mercury Lloyds Insurance Company(1)
California General Underwriters Insurance Company, Inc. Mercury County Mutual Insurance Company(2)
Mercury Insurance Company of Illinois Mercury Insurance Company of Florida
Mercury Insurance Company of Georgia Mercury Indemnity Company of America
Mercury Indemnity Company of Georgia
Non-Insurance Companies
Mercury Select Management Company, Inc. Mercury Group, Inc.
American Mercury MGA, Inc. AIS Management LLC
Concord Insurance Services, Inc. Auto Insurance Specialists LLC
Mercury Insurance Services LLC PoliSeek AIS Insurance Solutions, Inc.
(1) American Mercury Lloyds Insurance Company is not owned but is controlled by the Company through its
attorney-in-fact, Mercury Select Management Company, Inc.
(2) Mercury County Mutual Insurance Company is not owned but is controlled by the Company through a
management contract.
The consolidated financial statements have been prepared in conformity with GAAP, which differ in some
respects from those filed in reports to insurance regulatory authorities. All intercompany transactions have been
eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the
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