Mercury Insurance 2015 Annual Report Download - page 37

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25
financial, regulatory or tax constraints, and by the terms of the Company’s debt instruments. In addition, there can be no assurance
that the Company will continue to pay dividends even if the necessary financial and regulatory conditions are met and if sufficient
cash is available for distribution.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Company owns the following buildings which are mostly occupied by the Company’s employees. Space not occupied
by the Company may be leased to independent third party tenants.
Location Purpose
Size in
square feet
Percent occupied by
the Company at
December 31, 2015
Brea, CA Home office and I.T. facilities (2 buildings) 236,000 100%
Folsom, CA Administrative and Data Center 88,000 100%
Los Angeles, CA Executive offices 41,000 95%
Rancho Cucamonga, CA Administrative 127,000 100%
Clearwater, FL Administrative 157,000 62%
Oklahoma City, OK Administrative 100,000 25%
The Company leases additional office space for operations. Office location is not crucial to the Company’s operations, and
the Company anticipates no difficulty in extending these leases or obtaining comparable office space. For future expansion, the
Company owns 6.3-acre and 5.9-acre parcels of land in Brea and Rancho Cucamonga, California, respectively.
The Company’s properties are well maintained, adequately meet its needs, and are being utilized for their intended purposes.
Item 3. Legal Proceedings
The Company is, from time to time, named as a defendant in various lawsuits or regulatory actions incidental to its insurance
business. The majority of lawsuits brought against the Company relate to insurance claims that arise in the normal course of
business and are reserved for through the reserving process. For a discussion of the Company’s reserving methods, see "Overview-
C. Critical Accounting Policies and Estimates" in "Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations" and Note 1. Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements
in "Item 8. Financial Statements and Supplementary Data."
The Company also establishes reserves for non-insurance claims related lawsuits, regulatory actions, and other contingencies
when the Company believes a loss is probable and is able to estimate its potential exposure. For loss contingencies believed to be
reasonably possible, the Company also discloses the nature of the loss contingency and an estimate of the possible loss, range of
loss, or a statement that such an estimate cannot be made. While actual losses may differ from the amounts recorded and the
ultimate outcome of the Company’s pending actions is generally not yet determinable, the Company does not believe that the
ultimate resolution of currently pending legal or regulatory proceedings, either individually or in the aggregate, will have a material
adverse effect on its financial condition, results of operations, or cash flows.
In all cases, the Company vigorously defends itself unless a reasonable settlement appears appropriate. For a discussion of
legal matters, see "Overview—B. Regulatory and Legal Matters" in "Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations" and Note 17. Commitments and Contingencies, of the Notes to Consolidated Financial
Statements in "Item 8. Financial Statements and Supplementary Data," which is incorporated herein by reference.
There are no environmental proceedings arising under federal, state, or local laws or regulations to be discussed.
Item 4. Mine Safety Disclosure
Not applicable.