Mercury General (MCY) 30 Oct 172017 Q3 Earnings call transcript

Good morning, afternoon. My name is Amie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mercury General Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions]. [Operator operating may events, forward-looking trends, and affect General’s call current based which comments position. Mercury expectations, financial plans, financial future contain conference statements and on may This and results and industry Such statements cannot or to and and quantified differ activities uncertainties, materially may future discussed of be here cause today. predicted which results risks involve and which operations from those Mr. now to turn to like over would I call the Tirador. Gabriel Sir, ahead. please go

quarter conference welcome with Thank Product third Robert and you Chief Joseph, Officer; and everyone Investment would and Senior President CFO; to much. me Stalick, Vice President Vice President George room Chief Officer. I’m very to call. and CEO. I like Mr. Chairman; the Chris Tirador, Ted President Vice Houlihan, and Gabe Mercury’s In is, Graves,

questions, a regarding we few we Before make comments will quarter. the take

third to compared the the of earnings of per to increase for in operating $X.XX third XX.X% third XXXX earnings The an of per was deterioration Our were quarter $X.XX quarter XX.X% in the operating ratio from third in due XXXX. in share XXXX. quarter quarter primarily combined the share in

Our results $XX caused of by Hurricane negatively in were primarily Irma. losses, quarter Harvey and impacted by catastrophe million the

reserve we unfavorable to development. $X development. $X of million addition, XXXX, unfavorable which $X of This of the reserve In recorded million compares had quarter and third catastrophe million losses

in of was XX.X% most been ratio of in primarily trends, the advertising offset rates The million in offset to quarter due To the million $XX in impact expense losses compared quarter the third cost efficiency implemented increasing increase higher X.X% lower was development, May the was advertising loss catastrophe savings we $XX combined increase was ratio and in of have acquisition to compared quarter in XXXX. and quarter of in in the quarter XXXX. we ratio to rate reserve Automobile quarter help Net XX% effective spend. third Excluding in XX.X% a expense California, Insurance our personal cost August. rate the the in XX.X% unfavorable line to a California states. In compared The X.X% in Company decrease homeowners’ XXXX. by a third expense in third auto and increasing the

In for addition, the rate represents Insurance a are a about of pending XX% earned California of increase with Company Company about half X.X% Insurance premiums Mercury increase Insurance companywide X% Department and auto Personal Automobile Company of Automobile our rate Insurance. companywide and our California Mercury approval represent represent earned. higher and companywide quarter, premiums X.X% premiums company approximately due new California about business the to premiums rendered average earned. in premiums homeowners' quarter. in the increased applications premiums X% homeowner to Companywide Companywide private quarter. primarily X.X% passenger our increased auto policy. XX% application the submitted for in the for of Premiums

expect certainty many Lastly, with and the now will by weather. background, combined be increased fourth generally ratio there questions. predict unknown as whether higher our to of accident to rest for higher we the due loss quarter seasonal driving higher than excluding the frequency caused year be severities catastrophes factors and take to ratio hard is are brief we the our it beyond said, That that With or underlying control. currently will combined

[Operator Instructions].

the Greg James. Your line Peters with first your from Raymond Greg question of comes line open. is

for both was California trends Peppers. and around I of provide questions. not Thank taking Peters call wondering Gabe, circle for business Greg is This and more new the inside you back could if outside you California. and the color morning. Good

weighing if think results. on provide down state I outside quarter talked the I curious consolidated headwinds am an last you of about could California you some update? the of

passenger take when Yeah, auto new private California, of quite business at bit. outside you our down look a think [also] I are

that’s and us action quarter-over-quarter XX% the who rates is improve and about the done profitability. on trying have taking result to Greg of We

or If a ratio results positive XX% or outside XX% honestly, was a developments, paid It outcomes excluding we But price of was price, I of of California. we under bit outside in down positive lot XXX. at we some XXs, combined to cash are actually think growth, of and high excluding so the California of development are look paying bit our of little a the the outside XX%. you California, take respect a had with some

X.X% assets auto our California attention pay passenger I California, about private for in grew in However, up auto.

total X% is which I my remarks. assets up combined were So prepared what said in

gave what outside running the the ratio, what only was combined us California for was it California, was what you fees? And California

for or auto personal for It's everything?

I Gabe auto in XX%, only. for XX% said just think Well outside California,

booked XX.X% about XX.X% for and we homeowners. private passenger auto, for passenger about auto for California private

thanks the Okay, for color.

there of With is and would I respectively inflection What drag point, guess next am to Is outside, year, the I’ll year, chase. of trying what will get to trying helpful? cut I it any have California XX% be of and to middle outside the just -- perspective an stabilize updated it dwindle that possibly grow. I’m figure you is out next the down end to from is when if sort

more Yeah, go, the other this add at there stay think we level. out, have current are little something states assuming I that have bit count think to a leveled that

people with a been respect what’s we’ve as with well, well the or market happening rate but right rate now aggressive of the on lot going other pretty the activity as there to assumptions competitors. taking various in So is

plateau. its of I would there’s factors reached there other is still that a lot a ways say some for but to go stage, So, and I believe stage

it the am color with a would sure the Okay. I helpful? I into or in that quarter be would that I’m fourth I for sort have to yet business. your positive that applied And -- be would a trying positive expected the we deterioration would I California some -- bit commentary activity characterize have but of piece you’ve Would then be underline, little the California, growing rate or about read all may you and on the expect auto in just trend the guess not on

generally is the -- has here has here many if back want that severity California in go Well many, quarter frequency higher comment quarters standpoint. primarily the than rest years, the and for quarter frequency only -- severity speaking thing California fourth our you and from in been take of we on fourth to the higher and

typically the some prudent really higher that the California, a contributes we here feel know So have let just fourth there’s large that and to and say Thanksgiving us to holidays right market weather in we speaking California the the that being speaking that’s that you quarter some frequency folks and generally quarter for only and it fourth after we’re to was trying thing you generally that seasonality thought got severity. such

not that don’t it that that are comment. things that’s may occur, Sometimes I know, made foresee. we just we can’t why But

other Okay, then will I that’s re-queue. questions Two fair. and

appreciate company I kind And around for it happen fire changes considering color to First, your gross loss reinsurance have curious might a year your year? potential there’s perspective next just the on cost I wild this pretty losses. what am you of the a big looks like if that

of the Well losses the south then general reinsurers in the lot this -- reinsurers a east the assuming Ted, in is the and fire. from hurricanes are the storms, are

pricing of So, up depending go general on in may the reinsurers. capacity

at we we that see may are not point but -- sure. we take that and sure long-term next view not think a renewal some increases we this really are We

early really too Greg. tell It’s to now right

is sorry the am period renewal When I that one. again, forgot I

X July XX. June to

relative year-over-year it I I I if something there it let ask didn’t the perfect. Thank question, just and or -- will down basis and a be question well year-to-date going remised the is will Chris, quarter you Okay, third down you. a -- last Is I in answer. is results. yield noticed And to yield there the you lower that’s or after-tax an on on driving after-tax

have me let lot up fixed it’s brief] cash down a Yes, Greg. Actually, the end. come they allowed activity, Hi investing through less -- third much are to income on our they, where year build from X:XX:XX.X some, quarter. [so

making some in reversal a general is is and little this there there. So, rates tenure dilution more the in recent But optimistic. me treasury

been at way We least are Spreads to money and been has at back primary look really the very that's the tight putting I it. use. also problem

rates, with I'll to I'm more levels fourth optimistic the a use through quarter yields. reversal in list in that those money get at and this you present a lot better recent So, help should

[Operator Instructions].

next Your is Jacobowitz line the line from of open. with Alison question Alison, America. comes Bank your of

sustainable it wondering what thanks. Hi, was going driving lowest if up while. in was there. number we've color actually. lot you And acquisition it's I expense give that was Two what's revenue more if numbers just ratio a was down wondering in just I can forward. also, looks Other year-over-year, the and the a questions on like seen was

Hi, Alison Ted. it's

the the some So, have on on XX we for million we of sold. sale been years realized we about land had that lands, revenue, that $X.X other that the company in holding income, other [Brads] gain

So on that’s impact we've decrease had I of on said the when down we primarily to we the it that gone flow decreases X commission the ratio. question in were kind line a July acquisition commissions before, and annual And a sort there calls think adjustment the item. have in a is expense and the so commissions does lower or due do onetime The third of gradually. acquisition our through expenses quarter expenses, to on bulk long-term our but been some agent acquisition

Your of the is Greg, line next comes Greg Peters your Raymond James. line open. question from with

to of from other I I the quarter third follow is big up expenses think and on building are the on your ad first $XX you million a just The question. quarter. sort million in year said one ago. spend third up know $XX Thanks, Alison's

going whether think As for up our perspective any do XXXX, flat to you budget models? we be the have is down or on about

I in we be believe slightly now will think, up XXXX. it right

Okay, answers. perfect. Thanks for the

There over I at turn no will call the questions presenters. time. the this are further back

you we you thank forward with to us quarter. next look And today. Thank you speaking very joining much. for Well,

This concludes today's call. conference

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