Mercury General Corporation, a Los Angeles-based multi-line insurer, has posted a net loss of $139.2 million during the first quarter of 2020, driven by COVID-19 induced volatility in the financial markets.
The result compares with a net income of $135.9 million for the same period in the previous year.
Performance was weighed down by a $251 million net realised investment loss in Q1 2020, compared with a gain of $111 million for the previous year.
The large investment loss was primarily the result of the decrease in fair value of Mercury General’s investments due to the overall market disruptions and dislocations caused by the pandemic.
However, Mercury General did report some improvement in its operating income, which increased from $48.1 million last year to $59.3 million in Q1.
Catastrophe losses in the period totalled $4 million, mostly from windstorms in California and Oklahoma, with no reinsurance benefits used for these losses.
These losses were partially offset by favourable development of approximately $2 million on prior years’ catastrophe losses.
For comparison, in Q1 2019, catastrophe losses came to $11 million, mainly from winter storms in California, with no reinsurance benefits used here either.
Additionally, Mercury General’s combined ratio improved by 1.4 points from 97.3% in Q1 2019 to 95.9% in Q1 2020.
