Mercury Insurance 2013 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 of the 2013 Mercury Insurance annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 111

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111

77
2013 2012 2011
Income
(Numerator)
Weighted
Shares
(Denominator)
Per-
Share
Amount
Income
(Numerator)
Weighted
Shares
(Denominator)
Per-
Share
Amount
Income
(Numerator)
Weighted
Shares
(Denominator)
Per-
Share
Amount
(Amounts and numbers in thousands, except per-share data)
Basic EPS
Income available
to common
stockholders $ 112,143 54,947 $ 2.04 $ 116,911 54,899 $ 2.13 $ 191,164 54,825 $ 3.49
Effect of dilutive
securities:
Options 0 17 0 23 0 20
Diluted EPS
Income available
to common
stockholders after
assumed
conversions $ 112,143 54,964 $ 2.04 $ 116,911 54,922 $ 2.13 $ 191,164 54,845 $ 3.49
Incremental shares of 421,000, 415,000, and 504,000 for 2013, 2012, and 2011, respectively, were excluded from the
computation of the diluted earnings per common shares due to their anti-dilutive effect. Potentially dilutive securities representing
approximately 63,000, 80,000, and 103,000 shares of common stock for 2013, 2012, and 2011, respectively, were also excluded
from the computation of diluted earnings per common share because their effect would have been anti-dilutive.
16. Commitments and Contingencies
Operating Leases
The Company is obligated under various non-cancellable lease agreements providing for office space, automobiles, and
office equipment that expire at various dates through the year 2019. For leases that contain predetermined escalations of the
minimum rentals, the Company recognizes the related rent expense on a straight-line basis and records the difference between the
recognized rental expense and amounts payable under the leases as deferred rent in other liabilities. This liability amounted to
$3.4 million and $2.2 million at December 31, 2013 and 2012, respectively. Total rent expense under these lease agreements was
$19.3 million, $17.7 million, and $18.2 million for 2013, 2012, and 2011, respectively.
The following table presents future minimum commitments for operating leases as of December 31, 2013:
Year Ending December 31, Operating Leases
(Amounts in thousands)
2014 $ 13,282
2015 11,214
2016 9,510
2017 7,345
2018 3,112
Thereafter 170
California Earthquake Authority (“CEA”)
The CEA is a quasi-governmental organization that was established to provide a market for earthquake coverage to California
homeowners. The Company places all new and renewal earthquake coverage offered with its homeowners policies directly with
the CEA. The Company receives a small fee for placing business with the CEA, which is recorded as other income in the consolidated
statements of operations. Upon the occurrence of a major seismic event, the CEA has the ability to assess participating companies
for losses. These assessments are made after CEA capital has been expended and are based upon each company’s participation
percentage multiplied by the amount of the total assessment. Based upon the most recent information provided by the CEA, the
Company’s maximum total exposure to CEA assessments at April 1, 2013, the most recent date at which information was available,
was approximately $60.4 million. There was no assessment made in 2013.
Regulatory Matters
In April 2010, the California DOI issued a Notice of Non-Compliance (“2010 NNC”) to MIC, MCC, and CAIC based on
a Report of Examination of the Rating and Underwriting Practices of these companies issued by the California DOI in February