Mercury General Notes Q3 Results

Mercury General Corporation reported Monday net income rose to $73.0 million ($1.33 per share-diluted) in the third quarter 2005 compared with $65.1 million ($1.19 per share-diluted) for the same period in 2004.

For the first nine months of 2005, net income was $207.0 million ($3.78 per share-diluted) compared to net income of $212.1 million ($3.88 per share-diluted) for the same period in 2004. Included in net income are net realized investment gains, net of tax, of $5.0 million ($0.09 per share-diluted) in the third quarter of 2005 compared with net realized investment gains, net of tax, of $0.6 million ($0.01 per share-diluted) for the same period in 2004, and net realized investment gains, net of tax, of $10.0 million ($0.18 per share- diluted) for the first nine months of 2005 compared to net realized investment gains, net of tax, of $12.1 million ($0.22 per share-diluted) for the same period in 2004. Net income in the third quarter of 2005 included approximately $4 million ($3 million after tax benefit) of losses resulting from hurricanes compared to hurricane losses of approximately $24 million ($16 million after tax benefit) in the third quarter of 2004.

Company-wide net premiums written were $762.9 million in the third quarter 2005, a 10% increase over third quarter 2004 net premiums written of $693.7 million, and were approximately $2.2 billion for the first nine months of 2005, a 12.7% increase over the same period in 2004. California net premiums written were $545.3 million in the third quarter of 2005, an increase of 6.4% over the same period in 2004, and were approximately $1.6 billion for the first nine months of 2005, a 5.7% increase over the same period in 2004.

The Company’s combined ratio (GAAP basis) was 90.8% in the third quarter and 91.2% for the first nine months of 2005 compared with 90.8% and 89.4% for the same periods in 2004. Positive development on prior accident years’ loss reserves was approximately $45 million and $40 million for the nine months ending Sept. 30, 2005 and Sept. 30, 2004, respectively.

On October 24, 2005, Hurricane Wilma made landfall as a Category 3 storm on the southern gulf coast of Florida. Based upon preliminary estimates, the Company expects fourth quarter losses from this storm will be approximately $12 million ($8 million after tax benefit). The estimate is based on the total number of currently reported claims and the number of unreported claims anticipated as a result of the hurricane. Due to the recent occurrence of the hurricane, the Company’s estimate may change as more information becomes available.