Mercury General Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net premiums earned were $1,545.4 million for the three months ended September 30, 2026, a 9.6% increase from $1,410.4 million in the prior year period; for the nine months ended September 30, 2026, net premiums earned were $4,495.5 million, a 10.7% increase from $4,060.2 million.
• Net premiums written were $1,636.1 million for the three months ended September 30, 2026, a 9.2% increase from $1,498.9 million; for the nine months ended September 30, 2026, net premiums written were $4,745.3 million, a 10.5% increase from $4,294.0 million.
• Direct premiums written were $1,697.6 million for the three months ended September 30, 2026, an 8.7% increase from $1,561.7 million; for the nine months ended September 30, 2026, direct premiums written were $4,893.9 million, an 8.9% increase from $4,492.2 million.
• Net loss was $13.7 million ($0.25 per diluted share) for the three months ended September 30, 2026, compared to net income of $280.4 million ($5.06 per diluted share) in the prior year period; for the nine months ended September 30, 2026, net income was $440.2 million ($7.95 per diluted share), a 30.0% increase from $338.5 million ($6.11 per diluted share).
• Operating income was $193.3 million ($3.49 per diluted share) for the three months ended September 30, 2026, a 9.6% decrease from $213.7 million ($3.86 per diluted share); for the nine months ended September 30, 2026, operating income was $582.4 million ($10.52 per diluted share), a 148.0% increase from $234.9 million ($4.24 per diluted share).
• Net realized investment losses, net of tax, were $206.9 million for the three months ended September 30, 2026, compared to net realized investment gains of $66.7 million in the prior year period; for the nine months ended September 30, 2026, net realized investment losses were $142.2 million, compared to gains of $103.7 million.
• Catastrophe losses net of reinsurance were $23.0 million for the three months ended September 30, 2026, a 20.7% decrease from $29.0 million; for the nine months ended September 30, 2026, catastrophe losses were $191.0 million, a 60.9% decrease from $489.0 million.
• The combined ratio was 90.2% for the three months ended September 30, 2026, compared to 87.0% in the prior year period; for the nine months ended September 30, 2026, the combined ratio was 89.8%, a 9.2 percentage point improvement from 99.0%.
• Loss ratio was 65.8% for the three months ended September 30, 2026, compared to 62.6% in the prior year period; for the nine months ended September 30, 2026, the loss ratio was 65.0%, compared to 75.0%.
• Expense ratio was 24.4% for the three months ended September 30, 2026, matching the prior year period; for the nine months ended September 30, 2026, the expense ratio was 24.8%, compared to 24.1%.
• Net investment income before income taxes was $93.3 million for the three months ended September 30, 2026, a 11.2% increase from $84.0 million; for the nine months ended September 30, 2026, net investment income was $268.7 million, a 10.0% increase from $244.2 million.
• Average invested assets at cost were $7,227.7 million for the three months ended September 30, 2026, compared to $6,135.8 million; for the nine months ended September 30, 2026, average invested assets were $6,924.4 million, compared to $5,840.8 million.
• Average annual yield on investments before income taxes was 4.5% for the three months ended September 30, 2026, down from 4.6%; for the nine months ended September 30, 2026, the yield was 4.5%, down from 4.7%.
• Loss and loss adjustment expense reserves were $3,754.6 million as of September 30, 2026, compared to $3,633.3 million as of December 31, 2025.
• Unearned premiums were $2,506.0 million as of September 30, 2026, compared to $2,255.9 million as of December 31, 2025.
• Notes payable were $569.0 million as of September 30, 2026, compared to $574.5 million as of December 31, 2025.
• Shareholders' equity was $2,804.8 million as of September 30, 2026, compared to $2,417.3 million as of December 31, 2025.
• Book value per share was $50.64 as of September 30, 2026, compared to $43.64 as of December 31, 2025.
• Statutory surplus was $2.88 billion as of September 30, 2026, compared to $2.39 billion as of December 31, 2025.
• Debt to total capital ratio was 17.0% as of September 30, 2026, compared to 19.2% as of December 31, 2025.
• Portfolio duration was 6.2 years as of September 30, 2026, compared to 4.4 years as of December 31, 2025.
• Net premiums written to surplus ratio was 2.14 as of September 30, 2026, compared to 2.39 as of December 31, 2025.
• Policies-in-force (PIF) increased to 2,414,000 as of September 30, 2026, from 2,265,000 as of December 31, 2025; Personal Auto PIF was 1,085,000, Homeowners PIF was 968,000, Commercial Auto PIF was 35,000, and All Other PIF was 326,000.
• Favorable development on prior accident years' loss and loss adjustment expense reserves was approximately $58 million for the three months ended September 30, 2026, compared to $27 million; for the nine months ended September 30, 2026, favorable development was approximately $102 million, compared to $74 million.

Guidance and Future Outlook:

• No forward guidance, future growth projections, or long-term goals were explicitly stated in the press release.

Business Segments and Product Lines:

• The company operates as a multiple line insurance organization offering predominantly personal automobile and homeowners insurance through independent producers and direct-to-consumer sales.
• Year-to-date favorable development in 2026 was primarily attributable to lower than estimated losses and loss adjustment expenses in the automobile line of insurance business, partially offset by adverse development on the homeowners line of insurance business primarily related to the Palisades and Eaton wildfires.
• Year-to-date favorable development in 2025 was primarily attributable to lower than estimated losses and loss adjustment expenses in the automobile and homeowners lines of insurance business.
• "All Other" lines of insurance business, which include smaller lines, accounted for 6.3% of total company-wide direct premiums written for the nine months ended September 30, 2026.

Market and Competitive Landscape:

• The majority of 2026 catastrophe losses resulted from storms in Oklahoma and Texas and adverse reserve development on the Palisades and Eaton wildfires.
• The majority of 2025 catastrophe losses resulted from the Palisades and Eaton wildfires in California and storms in Texas and Oklahoma.
• Net realized investment losses for the three and nine months ended September 30, 2026, resulted largely from decreases in the fair value of the Company's investments during the third quarter of 2026, primarily caused by large increases in overall market interest rates.
• Higher net investment income for the three and nine months ended September 30, 2026, resulted largely from higher average invested assets, partially offset by decreases in average annual yield on investments and interest income earned on cash.
• Average annual yield on investments decreased in 2026 compared to 2025, primarily due to an increase in tax-exempt investments with lower pre-tax yields combined with lower yields on floating rate investments resulting from lower short-term market interest rates, partially offset by higher yields on long-term investments.

Risks and Challenges:

• Forward-looking statements involve significant risks including changes in demand for insurance products, inflation, general economic conditions, and market risks associated with the investment portfolio.
• Risks include the accuracy of pricing methodologies, catastrophes in markets served, uncertainties related to actuarial estimates and loss reserve development, and the ability to obtain premium rate changes.
• Risks include adverse legislation, competition with greater financial resources, success in managing non-California operations, and the ability to allocate resources from exited states.
• Risks include changes in driving patterns, loss trends, acts of war, terrorist activities, climate conditions, pandemics, court decisions, litigation trends, and healthcare/auto repair costs.
• Risks include changes in global trade policies, legal, cybersecurity, regulatory, and litigation risks.

Management Commentary and Tone:

• No direct management quotes or commentary were included in the press release text provided.

Analyst Questions and Answers:

• No analyst questions and answers section was included in the press release text provided.

Other Key Points:

• The Board of Directors declared a quarterly dividend of $0.3175 per share.
• The dividend will be paid on December 31, 2026, to shareholders of record on December 17, 2026.
• Net premiums earned and net premiums written for the nine months ended September 30, 2025, included $101 million of increased ceded premiums due to reinstatement premiums paid to reinstate fully exhausted reinsurance coverage layers following the Palisades and Eaton wildfires in January 2025.
• The Company adopted the fair value option under GAAP, causing changes in the fair value of investments to be recorded as part of net realized investment gains or losses.
• The combined ratio for the nine months ended September 30, 2025, does not sum due to rounding.