Mercury General has reported Q3 net income of just $1.3 million, compared with $118.9 million for the same period last year, after booking huge realized investment losses for the quarter.
Looking at the first nine months of the year, Mercury General’s net income actually improved modestly from $207.9 million to $217.5 million.
But operating income fell by 47.5% to $35.7 million for the Q3 period and by 25.1% to $172.5 million for the 9M period.
Net realized investment losses before tax were $44 million for Q3 2021 versus a gain of $64 million for the same period last year.
Mercury General’s combined ratio increased by 4.7 percentage points to 99.0% for the three-month period, and by 2.8 points to 95.8% for the nine-month period.
Catastrophe losses so far this year have cost the company approximately $91 million, with no reinsurance benefits used for these losses.
Losses have resulted primarily from the deep freeze and other extreme weather events in Texas and Oklahoma, wildfires and winter storms in California, and the impact of Hurricane Ida in New Jersey and New York.
These losses were partially offset by favorable development of approximately $6 million on prior years’ catastrophe losses.
Mercury General’s net premiums earned and written were reduced by approximately $21 million and $128 million for Q3 and 9M 2021, respectively, due to premium refunds and credits to its eligible policyholders under its program for reduced driving and business activities following the outbreak of the COVID-19 pandemic.