Mercury General has recorded an 18.3% increase in net income during the third quarter of 2019, helped by significantly lower catastrophe losses.
The company recorded net income of $69.3 million this quarter, compared with $58.6 million for the same period last year.
Catastrophe losses came to just $3.0 million, down from $13.0 million in 2018, with no reinsurance benefits used for losses, Mercury General said.
Looking at the first nine months of 2019, Mercury General’s net income is 278.7% higher than last year, at $288.4 million.
Again, this figure was partly helped by a much lower catastrophe bill, which totalled $17.0 million for the period, compared with $24.0 million last year.
For 2018, catastrophe losses before reinsurance totalled $26 million in Q3 and $34 million for the nine months ending September 30.
The majority of catastrophe losses last year were caused by the Carr Wildfire in Northern California, which resulted in $21 million of gross losses ($10 million of net losses after reinsurance benefits).
Net investment income for quarter declined mildly to $36.6 million, after tax, but remained increased slightly over the nine-month period to $105.6 million.
Despite this positive factors, Mercury General’s operating income declined 30.3% to $43.0 million in Q3, while its combined ratio deteriorated from 95.6% to 98.6%.
However, this performance was not reflected in the nine-month result, which saw operating income increase by 15.6% to $132.2 million, and the combined ratio improve from 98.7% to 98.1%.
Mercury General noted that it experience $1 million of favourable development on prior accident years’ loss and loss adjustment expense reserves for Q3 2019, and $6 million of unfavourable development for Q3 2018.
For the first nine months of 2019, the company saw unfavourable development of $10 million on prior accident years’ loss and loss adjustment expense reserves, and $70 million for the same period in 2018.
