Mercury General Corporation, a provider of auto and homeowners insurance, reported robust underwriting growth in the fourth quarter of 2024, reflecting continued premium expansion and improved profitability.
The company achieved strong growth, with net premiums earned rising to $1.35 billion in Q4 2024, a 18% increase from $1.14 billion in the same period in 2023.
For the full year, net premiums earned reached $5.08 billion, up from $4.27 billion in 2023, supported by rate adjustments and higher policy retention.
Net premiums written for the quarter totalled $1.31 billion, up from $1.13 billion in Q4 2023. Full-year net premiums written surged to $5.38 billion from $4.46 billion.
Mercury’s combined ratio improved significantly to 91.4% in Q4 2024, compared to 98.6% in the prior-year quarter. For the full year, the combined ratio stood at 96.0%, a notable improvement from 105.4% in 2023, reflecting disciplined underwriting and lower loss trends outside of catastrophe events.
Catastrophe losses, net of reinsurance, increased significantly in 2024. For the fourth quarter, these losses rose by $25 million, totalling $41 million, compared to $16 million in the same period of 2023, marking a 156.3% increase. For the entirety of 2024, catastrophe losses were $277 million, up $38 million from $239 million in 2023, reflecting a 15.9% rise.
The company explained that “The majority of 2024 catastrophe losses resulted from tornadoes, hailstorms and convective storms in Texas and Oklahoma, winter storms, rainstorms and wildfires in California, and the impact of Hurricane Helene in Florida and Georgia.”
In 2024, the company faced unfavourable development of around $8 million in loss and loss adjustment expense reserves for prior accident years during the fourth quarter, contrasting with a favourable development of approximately $4 million in the same period of 2023. For the full year, unfavourable development amounted to about $25 million in 2024, while 2023 saw a more favourable development of roughly $36 million.
The company’s personal auto policies-in-force remained stable at 1.02 million, while homeowners policies grew from 760,000 in 2023 to 852,000 in 2024. Higher rates and disciplined underwriting contributed to improved loss ratios across key lines of business.
Net investment income increased to $73.3 million in Q4 2024 from $63.3 million in Q4 2023, reflecting higher interest rates and portfolio growth. Full-year investment income reached $280 million, compared to $235 million in 2023. However, net realised investment losses of $66.9 million in the quarter weighed on overall profitability.
As a result of all of the above, the firm’s net income for the quarter fell to $101 million from $191 million in Q4 2023, driven by the higher cat load and investment losses. However, for the full year 2024, net income rose to $468 million from $96 million in 2023.
The company absorbed significant catastrophe losses from the January 2025 California wildfires. Net losses before taxes were estimated between $155 million and $325 million, with most losses stemming from the Palisades and Eaton fires. Mercury’s reinsurance programme will mitigate a portion of these losses, but the company is monitoring potential FAIR plan assessments.
Overall, Mercury General delivered strong underwriting performances, improved profitability, and continued premium expansion despite headwinds from catastrophe losses. The company remains well-positioned with a solid capital base and disciplined underwriting strategy heading into 2025.
