Mercury General Corp (MCY)

tuckerboreo (97.53) Submitted: 11/8/2009 5:26:51 PM : Start Price: $36.72 MCY Score: -0.79

MCY has been unfairly punished by all insurance companies being bid down. But it is a consistent high performer with good profitability. With its 6.4% dividend payout and a shift to higher quality names, Mercury General will outperform in my estimation.

dpdoor (59.86) Submitted: 8/24/2009 8:47:10 PM : Start Price: $36.99 MCY Score: +7.82

Mercury insurance worked hard to undercut other insurance companies and get a large percentage of California’s insurance business. Like many publicly held companies their stocks did very well while they were growing. It seems the growth is over. Like most companies when the growth stops investors have little reason to invest. They have one teaser that may tempt investors and that is their dividend. Their dividend is higher then most companies and everyone likes dividends, it’s like free money. For a small investment of only $35,000 you can get a dividend of $2,300 per year. If their stock price goes up then at least on paper you make money on the stock. Sounds good, as long as the stock does not loose value. If the stock goes down 7% then you have lost more then the dividend gave you.
What would hurt worse is if their stocks were to go down and they reduce or eliminate the dividend. Currently their dividend is equal to their earnings. They are making as much as they are giving away, that is very generous for a company to do. That is also hard to sustain, if they make any less money then they would have to give away more then they make. Even a charity does not give out more then they bring in.
We assume stocks will recover but why did an insurance company stock drop in the onset of recession. The policies were already in place the claims can take months or years to come due. Their stock was already dropping from a lack of growth. Then they lost 500 million in bad investments. Now their stock is up some because they made money on their investments. Although their operation is costing them more while sales are declining.
From this point it’s a matter of how lucky they get in their investments. As far as their business profit goes simple math tells you old policies in one of the highest unemployment areas of the country is not a good formula. The last report shows that their expenses went up even though their sales went down. This seems like they are servicing more claims. All those years of building a huge list of policy holders is now turning into a huge list of claims.

NEWSMONKEY (< 20) Submitted: 3/9/2009 11:12:29 AM : Start Price: $21.70 MCY Score: -6.26

Those who are hoping for a recovery will be disappointed. Sell early sell often

lovesaves (96.29) Submitted: 3/11/2008 6:25:55 PM : Start Price: $40.49 MCY Score: -4.13

Found this company under the insurance tag. Sell all property insurance and casualty stocks, or see your portfolio bcome a casualty! Warren Buffett is negative on the sector and that's good enough for me. Financial sector s--t has to work iits way through the whole goose.

rufianno (95.64) Submitted: 8/22/2007 6:26:59 PM : Start Price: $48.30 MCY Score: -2.71

buy and hold

NetscribeInsuran (< 20) Submitted: 3/1/2007 8:33:38 AM : Start Price: $45.85 MCY Score: +3.85

Headquartered in Los Angeles, Mercury General Corporation (MCY) and its subsidiaries are engaged primarily in writing automobile insurance principally in California and other thirteen states. With more than 4,900 independent agents and brokers, the company offers a variety of products for homeowners but private passenger automobile lines of insurance stands as its principal business, accounting for approximately 84% of the $3 billion of the total direct premiums written in 2006.

For 2006, Mercury General Corporation's revenues increased 5% to $3 billion due to increased earned premium. But conversely, its net income decreased 15% to $214.8 million due to higher paid losses and loss adjustment expenses, increase in policy acquisition costs and increased loss reserves in Florida. The combined ratio of the company in 2006 was 95% compared to 92.4% for the 2005, which was primarily due to higher loss ratio.

Competitive marketplaces, safer cars, aggressive fraud-fighting and innovative underwriting are joining forces in 2007 to drive down the price of an essential financial product like automobile insurance as well as homeowner’s insurance in California and other parts of the county. This will reduce the premium collection per policy for the company and therefore it is expected that premium growth in California will slow down. Reflecting an already competitive environment, decreasing rates for both auto and homeowners and deteriorating underwriting results will impact the profitability of the company adversely.

Company has stopped providing a breakdown between California's auto and homeowners results, but based upon the slow growth described by many auto-only underwriters in California, it is believed that homeowners business is the primary driver of Mercury's recent premium growth in the state. As a result, Mercury's growth is expected to decelerate as its major competitors' rate decreases take effect on account of declining premium growth in California as well as other city operations in 2007. Thus in the near future the company does not seem to be a good bet.

gecko10x (54.54) Submitted: 2/15/2007 2:17:25 PM : Start Price: $47.07 MCY Score: -2.17

undervalued

ISPYVALUE (83.25) Submitted: 2/5/2007 1:57:07 PM : Start Price: $46.04 MCY Score: -1.09

This insurance company has posted solid growth while steadily increasing its dividend. The dividend is still only 30% of free cash flow which shows they are still focused on growing. Free cash flow is significant in relation to income.

GBOURSE (96.58) Submitted: 1/31/2007 2:39:46 PM : Start Price: $45.17 MCY Score: -0.13

Price & RSI

neuroberks (< 20) Submitted: 12/13/2006 11:30:48 AM : Start Price: $45.80 MCY Score: -1.87

Strong farnchise in California market, which will grow more as uninsured drivres will be forced to get insurance. Change of control might be possible as Joseph, who holds 30% of stock, retired.