Mercury Insurance 2014 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2014 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 114

  • 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
  • 112
  • 113
  • 114


LQFRPH RI DQ DSSURSULDWH FKDUDFWHU DQG LQ D VXIILFLHQW DPRXQW WR XWLOL]H WKHVH WD[ EHQHILWV LQ WKH IXWXUH $Q\ GHWHUPLQDWLRQ WKDW WKH
&RPSDQ\ ZRXOG QRW EH DEOH WR UHDOL]H DOO RU D SRUWLRQ RI LWV GHIHUUHG WD[ DVVHWV LQ WKH IXWXUH ZRXOG UHVXOW LQ D FKDUJH WR HDUQLQJV
LQ WKH SHULRG LQ ZKLFK WKH GHWHUPLQDWLRQ LV PDGH 7KLV FKDUJH FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH &RPSDQ\µV UHVXOWV RI
RSHUDWLRQV DQG ILQDQFLDO FRQGLWLRQ ,Q DGGLWLRQ WKH DVVXPSWLRQV XVHG WR PDNH WKLV GHWHUPLQDWLRQ DUH VXEMHFW WR FKDQJH IURP SHULRG
WRSHULRG EDVHG RQ FKDQJHV LQ WD[ ODZV RU YDULDQFHV EHWZHHQ WKH &RPSDQ\µV SURMHFWHG RSHUDWLQJ SHUIRUPDQFH DQG DFWXDO UHVXOWV
$V D UHVXOW VLJQLILFDQW PDQDJHPHQW MXGJPHQW LV UHTXLUHG LQ DVVHVVLQJ WKH SRVVLEOH QHHG IRU D GHIHUUHG WD[ DVVHW YDOXDWLRQ DOORZDQFH
)RU WKHVH UHDVRQV DQG EHFDXVH FKDQJHV LQ WKHVH DVVXPSWLRQV DQG HVWLPDWHV FDQ PDWHULDOO\ DIIHFW WKH &RPSDQ\µV UHVXOWV RI RSHUDWLRQV
DQG ILQDQFLDO FRQGLWLRQ PDQDJHPHQW KDV LQFOXGHG WKH DVVHVVPHQW RI D GHIHUUHG WD[ DVVHW YDOXDWLRQ DOORZDQFH DV D FULWLFDO DFFRXQWLQJ
HVWLPDWH
7KH FDUU\LQJ YDOXH RI WKH &RPSDQ\µV JRRGZLOO DQG RWKHU LQWDQJLEOH DVVHWV FRXOG EH VXEMHFW WR DQ LPSDLUPHQW ZULWHGRZQ
$W 'HFHPEHU  WKH &RPSDQ\µV FRQVROLGDWHG EDODQFH VKHHWV UHIOHFWHG DSSUR[LPDWHO\  PLOOLRQ RI JRRGZLOO DQG
 PLOOLRQ RI RWKHU LQWDQJLEOH DVVHWV 7KH &RPSDQ\ HYDOXDWHV ZKHWKHU HYHQWV RU FLUFXPVWDQFHV KDYH RFFXUUHG WKDW VXJJHVW WKDW
WKH IDLU YDOXHV RI LWV LQWDQJLEOH DVVHWV DUH EHORZ WKHLU UHVSHFWLYH FDUU\LQJ YDOXHV 7KH GHWHUPLQDWLRQ WKDW WKH IDLU YDOXH RI WKH
&RPSDQ\µV LQWDQJLEOH DVVHWV LV OHVV WKDQ LWV FDUU\LQJ YDOXH PD\ UHVXOW LQ DQ LPSDLUPHQW ZULWHGRZQ 7KH LPSDLUPHQW ZULWHGRZQ
ZRXOG EH UHIOHFWHG DV H[SHQVH DQG FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH &RPSDQ\µV UHVXOWV RI RSHUDWLRQV GXULQJ WKH SHULRG
LQ ZKLFK LW UHFRJQL]HV WKH H[SHQVH ,Q WKH IXWXUH WKH &RPSDQ\ PD\ LQFXU LPSDLUPHQW FKDUJHV UHODWHG WR WKH JRRGZLOO DQG RWKHU
LQWDQJLEOH DVVHWV DOUHDG\ UHFRUGHG RU DULVLQJ RXW RI IXWXUH DFTXLVLWLRQV
7KH &RPSDQ\ UHOLHV RQ LWV LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV WR PDQDJH PDQ\ DVSHFWV RI LWV EXVLQHVV DQG DQ\ IDLOXUH RI
WKHVH V\VWHPV WR IXQFWLRQ SURSHUO\ RU DQ\ LQWHUUXSWLRQ LQ WKHLU RSHUDWLRQ FRXOG UHVXOW LQ D PDWHULDO DGYHUVH HIIHFW RQ WKH
&RPSDQ\µV EXVLQHVV ILQDQFLDO FRQGLWLRQ DQG UHVXOWV RI RSHUDWLRQV
7KH &RPSDQ\ GHSHQGV RQ WKH DFFXUDF\ UHOLDELOLW\ DQG SURSHU IXQFWLRQLQJ RI LWV LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV 7KH
&RPSDQ\ UHOLHV RQ WKHVH LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV WR HIIHFWLYHO\ PDQDJH PDQ\ DVSHFWV RI LWV EXVLQHVV LQFOXGLQJ
XQGHUZULWLQJ SROLF\ DFTXLVLWLRQ FODLPV SURFHVVLQJ DQG KDQGOLQJ DFFRXQWLQJ UHVHUYLQJ DQG DFWXDULDO SURFHVVHV DQG SROLFLHV DQG
WR PDLQWDLQ LWV SROLF\KROGHU GDWD 7KH &RPSDQ\ LV GHYHORSLQJ DQG GHSOR\LQJ QHZ LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV WKDW DUH GHVLJQHG
WR PDQDJH PDQ\ RI WKHVH IXQFWLRQV DFURVV DOO RI WKH VWDWHV LQ ZKLFK LW RSHUDWHV DQG DOO RI WKH OLQHV RI LQVXUDQFH LW RIIHUV 6HH
²2YHUYLHZ±7HFKQRORJ\³ LQ ²,WHP  0DQDJHPHQWµV 'LVFXVVLRQ DQG $QDO\VLV RI )LQDQFLDO &RQGLWLRQ DQG 5HVXOWV RI
2SHUDWLRQV³ 7KH IDLOXUH RI KDUGZDUH RU VRIWZDUH WKDW VXSSRUWV WKH &RPSDQ\µV LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV WKH ORVV RI GDWD
FRQWDLQHG LQ WKH V\VWHPV RU DQ\ GHOD\ RU IDLOXUH LQ WKH IXOO GHSOR\PHQW RI WKH &RPSDQ\µV QHZ LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV
FRXOG GLVUXSW LWV EXVLQHVV DQG FRXOG UHVXOW LQ GHFUHDVHG SUHPLXPV LQFUHDVHG RYHUKHDG FRVWV DQG LQDFFXUDWH UHSRUWLQJ DOO RI ZKLFK
FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH &RPSDQ\µV EXVLQHVV ILQDQFLDO FRQGLWLRQ DQG UHVXOWV RI RSHUDWLRQV
,Q DGGLWLRQ GHVSLWH V\VWHP UHGXQGDQF\ WKH LPSOHPHQWDWLRQ RI VHFXULW\ PHDVXUHV DQG WKH H[LVWHQFH RI D GLVDVWHU UHFRYHU\
SODQ IRU WKH &RPSDQ\µV LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV WKHVH V\VWHPV DUH YXOQHUDEOH WR GDPDJH RU LQWHUUXSWLRQ IURP
HDUWKTXDNH ILUH IORRG DQG RWKHU QDWXUDO GLVDVWHUV
WHUURULVW DWWDFNV DQG DWWDFNV E\ FRPSXWHU YLUXVHV RU KDFNHUV
SRZHU ORVV
XQDXWKRUL]HG DFFHVV DQG
FRPSXWHU V\VWHPV ,QWHUQHW WHOHFRPPXQLFDWLRQV RU GDWD QHWZRUN IDLOXUH
,W LV SRVVLEOH WKDW D V\VWHP IDLOXUH DFFLGHQW RU VHFXULW\ EUHDFK FRXOG UHVXOW LQ D PDWHULDO GLVUXSWLRQ WR WKH &RPSDQ\µV
EXVLQHVV ,Q DGGLWLRQ VXEVWDQWLDO FRVWV PD\ EH LQFXUUHG WR UHPHG\ WKH GDPDJHV FDXVHG E\ WKHVH GLVUXSWLRQV )ROORZLQJ
LPSOHPHQWDWLRQ RI LQIRUPDWLRQ WHFKQRORJ\ V\VWHPV WKH &RPSDQ\ PD\ IURP WLPH WR WLPH LQVWDOO QHZ RU XSJUDGHG EXVLQHVV
PDQDJHPHQW V\VWHPV 7R WKH H[WHQW WKDW D FULWLFDO V\VWHP IDLOV RU LV QRW SURSHUO\ LPSOHPHQWHG DQG WKH IDLOXUH FDQQRW EH FRUUHFWHG
LQ D WLPHO\ PDQQHU WKH &RPSDQ\ PD\ H[SHULHQFH GLVUXSWLRQV WR WKH EXVLQHVV WKDW FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH
&RPSDQ\µV UHVXOWV RI RSHUDWLRQV
&\EHU VHFXULW\ ULVNV DQG WKH IDLOXUH WR PDLQWDLQ WKH FRQILGHQWLDOLW\ LQWHJULW\ DQG DYDLODELOLW\ RI LQWHUQDO RU SROLF\KROGHU
V\VWHPV DQG GDWD FRXOG UHVXOW LQ GDPDJHV WR WKH &RPSDQ\µV UHSXWDWLRQ DQGRU VXEMHFW LW WR H[SHQVHV ILQHV RU ODZVXLWV
7KH &RPSDQ\ FROOHFWV DQG UHWDLQV ODUJH YROXPHV RI LQWHUQDO DQG SROLF\KROGHU GDWD LQFOXGLQJ SHUVRQDOO\ LGHQWLILDEOH
LQIRUPDWLRQ IRU EXVLQHVV SXUSRVHV LQFOXGLQJ XQGHUZULWLQJ FODLPV DQG ELOOLQJ SXUSRVHV DQG UHOLHV XSRQ WKH YDULRXV LQIRUPDWLRQ
WHFKQRORJ\ V\VWHPV WKDW HQWHU SURFHVV VXPPDUL]H DQG UHSRUW VXFK GDWD 7KH &RPSDQ\ DOVR PDLQWDLQV SHUVRQDOO\ LGHQWLILDEOH
LQIRUPDWLRQ DERXW LWV HPSOR\HHV 7KH FRQILGHQWLDOLW\ DQG SURWHFWLRQ RI WKH &RPSDQ\µV SROLF\KROGHU HPSOR\HH DQG &RPSDQ\ GDWD