Mercury Insurance 2012 Annual Report Download - page 96

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75
11. Dividends
The following table presents shareholder dividends paid in total and per share:
Year Ended December 31,
2012 2011 2010
(Amounts in thousands, except per share data)
Total paid $ 134,105 $ 132,142 $ 129,863
Per share $ 2.4425 $ 2.41 $ 2.37
The Insurance Companies are subject to the financial capacity guidelines established by their domiciliary states. The payment
of dividends from statutory unassigned surplus of the Insurance Companies is restricted, subject to certain statutory limitations. For
2013, the insurance subsidiaries of the Company are permitted to pay approximately $155 million in dividends to Mercury General
without the prior approval of the DOI of domiciliary states. The above statutory regulations may have the effect of indirectly
limiting the ability of the Company to pay shareholder dividends. During 2012, 2011, and 2010, the Insurance Companies paid
the Company ordinary dividends of $145 million, $0, and $128 million, respectively, and extraordinary dividends of $0 million,
$270 million, and $0, respectively.
On February 1, 2013, the Board of Directors declared a $0.6125 quarterly dividend payable on March 28, 2013 to
shareholders of record on March 14, 2013.
12. Statutory Balances and Accounting Practices
The Insurance Companies prepare their statutory-basis financial statements in conformity with accounting practices
prescribed or permitted by the insurance departments of their domiciliary states. Prescribed statutory accounting practices primarily
include those published as statements of SAP by the NAIC, as well as state laws, regulations, and general administrative
rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. As of December 31, 2012,
there were no material permitted statutory accounting practices utilized by the Insurance Companies.
The following table presents the statutory net income and capital and surplus of the Insurance Companies, as reported to
regulatory authorities:
Year Ended December 31,
2012 2011 2010
(Amounts in thousands)
Statutory net income(1) $ 63,365 $ 223,447 $ 142,981
Statutory capital and surplus 1,440,973 1,497,609 1,322,270
__________
(1) Statutory net income excludes changes in the fair value of the investment portfolio as a result of the application of fair value
option.
The statutory capital and surplus of each of the Insurance Companies exceeded the highest level of minimum regulatory
required capital.
13. Profit Sharing Plan
The Company’s employees are eligible to become members of the Profit Sharing Plan (the “Plan”). The Company, at the
option of the Board of Directors, may make annual contributions to the Plan, and the contributions are not to exceed the greater
of the Company’s net income for the plan year or its retained earnings at that date. In addition, the annual contributions may not
exceed an amount equal to 15% of the compensation paid or accrued during the year to all participants under the Plan. No
contributions were made in the past three years.
The Plan includes an option for employees to make salary deferrals under Section 401(k) of the Internal Revenue Code. The
matching contributions, at a rate set by the Board of Directors, totaled $7.2 million, $7.2 million, and $7.0 million for 2012, 2011,
and 2010, respectively.
The Plan also includes an employee stock ownership plan that covers substantially all employees. The Board of Directors
authorized the Plan to purchase approximately $0, $0, and $1.2 million of the Company’s common stock in the open market for