Mercury Insurance 2013 Annual Report Download - page 9

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Dividends Per Share
(in dollars)
2.50
2.40
2.30
2.20
2.00
09 10 11 12 13
2.10
increased the quarterly dividend rate to $0.6150 per
share, continuing to provide a generous dividend
yield based on the recent market price of our stock.
Our strong capital position has allowed us to pay a
dividend in recent years where the dividend payout
ratio was above 100%. We recognize we cannot, on a
long term basis, have a payout ratio over 100%; but
we also expect to improve profitability. Our Board will
continue to evaluate our dividend policy quarterly,
and consider factors such as the Company’s capital
position, earnings, tax law changes and future
prospects before a decision is made on the dividend.
We hope you will be able to attend our annual meeting
on May 14, 2014.
Sincerely,
The after-tax yield on investments of 3.6% in 2013 was
lower than the after-tax yield of 3.8% obtained in 2012.
The current low interest rate environment continues
to put downward pressure on our after-tax yield as
new money is being invested at lower yields. Our
investment base remained steady at about $3 billion
in invested assets for both 2013 and 2012. Going
forward, there will be continued downward pressure
on our after-tax yield as bonds with higher coupons
mature or are called and the reinvestment of those
proceeds will most likely be made at lower after-tax
yields. During the second half of 2013, the Company
sold a significant portion of its equity portfolio
to improve the asset risk profile in its insurance
subsidiaries and to lock in and realize gains that
resulted from the large stock market appreciation
that occurred during 2013.
We pride ourselves at having a strong balance
sheet. At year-end, our shareholders’ equity was
$1.8 billion and our underwriting leverage remains
conservative, with a premium to surplus ratio of 1.8
to 1. In November 2013, Mercury’s Board of Directors
Gabriel Tirador
President and Chief Executive Ocer
George Joseph
Chairman of the Board
7
2013 ANNUAL REPORT