Mercury Insurance 2013 Annual Report Download - page 6

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Our 2013 operating earnings were $2.18 cents per share compared to
$1.34 cents per share in 2012, a 62.7% improvement. Premiums written for
the year increased by 2.9%.
Premiums Written
(in millions)
3,500
3,000
2,000
1,500
1,000
0
94 95 96 97 98 99 00 01 02 03
2,500
500
04 05 06 07 08 09 10 11 12 13
Over the past few years our operating results
have not provided the returns we expect to
deliver and have historically provided to our
shareholders. Although our 2013 operating results
improved dramatically over 2012, we still have
much work to do to achieve an acceptable return
on shareholders’ equity. Many factors have made it
dicult to achieve higher returns these past few years,
including our diculty in obtaining approval of rate
increases in California, our largest market, a lower
interest rate environment and our operating results
outside of California. However, 2013 was a step in
the right direction.
Our 2013 operating earnings were $2.18 cents per
share compared to $1.34 cents per share in 2012,
a 62.7% improvement. Premiums written for the
year increased by 2.9%. The improvement in our
operating earnings was largely the result of improved
profitability in states outside of California due to rate,
underwriting and other operational actions taken
over the past few years, fewer catastrophe losses,
and less adverse development on prior period loss
reserves. For the full year, we recorded approximately
$3 million of adverse reserve development compared
to approximately $42 million in 2012.
Diculties in obtaining regulatory approval for rate
increases in California have had a negative impact on
our results. Consequently, for the past two years we
posted a combined ratio over 100% in our California
private passenger automobile line of business.
However, we recently have made significant progress
in obtaining rate approvals in California. In July 2013,
we implemented a 6.9% rate increase on our California
non-standard private passenger automobile business
Letter to Shareholders
4MERCURY GENERAL CORPORATION