Mercury General Corporation Provides Additional Information Regarding Recent Wildfires in Southern California and Its Reinsurance Program
Mercury General (MCY) has provided an update on the Southern California Wildfires (Palisades and Eaton fires) and its reinsurance coverage. The company has already disbursed $80 million to policyholders for living expenses and housing contents, with dwelling claims being paid at Coverage A limit for verified total losses.
The company's catastrophe reinsurance treaty allows combining events within a 150-mile radius as a single occurrence. However, the Property Claims Service has designated Palisades and Eaton as separate events. Under a two-event scenario, Mercury could access reinsurance limits of up to $1,290 million for the first event and $1,238 million for the second event, with retentions of $150 million each plus up to $101 million in reinstatement premium.
Mercury General (MCY) ha fornito un aggiornamento sugli incendi del sud della California (incendi di Palisades ed Eaton) e sulla sua copertura di riassicurazione. L'azienda ha già erogato 80 milioni di dollari ai contraenti per spese di soggiorno e contenuti abitativi, con i sinistri per abitazioni che vengono pagati fino al limite della Copertura A per le perdite totali verificate.
Il trattato di riassicurazione per catastrofi dell'azienda consente di combinare eventi all'interno di un raggio di 150 miglia come un'unica occorrenza. Tuttavia, il Servizio di Reclami per Proprietà ha designato Palisades ed Eaton come eventi separati. In uno scenario a due eventi, Mercury potrebbe accedere ai limiti di riassicurazione fino a 1.290 milioni di dollari per il primo evento e 1.238 milioni di dollari per il secondo evento, con una ritenzione di 150 milioni di dollari ciascuno oltre a un massimo di 101 milioni di dollari in premio di reintegrazione.
Mercury General (MCY) ha proporcionado una actualización sobre los incendios forestales en el sur de California (incendios de Palisades y Eaton) y su cobertura de reaseguro. La compañía ya ha desembolsado 80 millones de dólares a asegurados para gastos de vida y contenido del hogar, con los reclamos de vivienda pagados hasta el límite de Cobertura A por pérdidas totales verificadas.
El tratado de reaseguro por catástrofes de la compañía permite combinar eventos dentro de un radio de 150 millas como una sola ocurrencia. Sin embargo, el Servicio de Reclamos de Propiedades ha designado a Palisades y Eaton como eventos separados. En un escenario de dos eventos, Mercury podría acceder a límites de reaseguro de hasta 1.290 millones de dólares para el primer evento y 1.238 millones de dólares para el segundo evento, con retenciones de 150 millones de dólares cada una más hasta 101 millones de dólares en prima de reinstalación.
머큐리 제너럴 (MCY)는 남부 캘리포니아의 산불(팔리세이드 및 이턴 화재) 및 재보험 보장에 대한 업데이트를 제공하였습니다. 이 회사는 이미 생활비와 주거 내용물에 대해 8천만 달러를 보험가입자에게 지급하였으며, 주택 손해는 실질적인 총 손실에 대해 보장 A 한도까지 지급되고 있습니다.
회사의 재해 재보험 계약은 반경 150마일 내의 이벤트를 단일 발생으로 결합하는 것을 허용합니다. 그러나 재산 청구 서비스는 팔리세이드와 이턴을 별개의 이벤트로 지정했습니다. 두 개의 이벤트 시나리오 하에서, 머큐리는 첫 번째 이벤트에 대해 12억 9천만 달러의 재보험 한도와 두 번째 이벤트에 대해 12억 2천 3백만 달러의 한도를 이용할 수 있으며, 각 1억 5천만 달러의 보유금과 최대 1억 1천만 달러의 재설정 프리미엄을 추가로 포함합니다.
Mercury General (MCY) a fourni une mise à jour sur les incendies de forêt du sud de la Californie (incendies de Palisades et d'Eaton) et sa couverture de réassurance. L'entreprise a déjà déboursé 80 millions de dollars pour les assurés pour les frais de subsistance et le contenu des logements, avec des demandes de remboursement pour habitation payées jusqu'à la limite de Couverture A pour les pertes totales vérifiées.
Le traité de réassurance catastrophique de la société permet de combiner des événements dans un rayon de 150 miles comme une seule occurrence. Cependant, le Service des Réclamations Immobiliaires a désigné Palisades et Eaton comme des événements distincts. Dans un scénario à deux événements, Mercury pourrait accéder à des limites de réassurance allant jusqu'à 1 290 millions de dollars pour le premier événement et 1 238 millions de dollars pour le deuxième événement, avec des retenues de 150 millions de dollars chacune, plus jusqu'à 101 millions de dollars en prime de rétablissement.
Mercury General (MCY) hat ein Update zu den Waldbränden in Südkalifornien (Palisades- und Eaton-Brände) und seiner Rückversicherungsschutz gegeben. Das Unternehmen hat bereits 80 Millionen Dollar an Versicherungsnehmer für Lebenshaltungskosten und Wohninhalte ausgezahlt, wobei Wohnungsansprüche bis zum Deckungsgrenzbetrag A für nachgewiesene Gesamtschäden bezahlt werden.
Der Rückversicherungsvertrag für Katastrophen des Unternehmens ermöglicht es, Ereignisse innerhalb eines 150-Meilen-Radius als eine einzige Erscheinung zu kombinieren. Das Dienstleistungszentrum für Grundstücksansprüche hat Palisades und Eaton jedoch als separate Ereignisse eingestuft. Im Rahmen eines Szenarios mit zwei Ereignissen könnte Mercury Rückversicherungslimits von bis zu 1.290 Millionen Dollar für das erste Ereignis und 1.238 Millionen Dollar für das zweite Ereignis mit einer Selbstbehalt von 150 Millionen Dollar sowie bis zu 101 Millionen Dollar für die Beitragsneugestaltung in Anspruch nehmen.
- Company has sufficient liquidity to meet increased payment levels
- Access to substantial reinsurance coverage: up to $1,290M for first event and $1,238M for second event
- Efficient catastrophe loss response team mobilized
- Potential total retention and reinstatement premiums of $401M
- Additional co-participation up to $52M for losses exceeding $650M on second event
- $80M already paid out in claims with more expected
Insights
The Mercury General 's wildfire claims update reveals a substantial financial impact, with
The dual-event classification strategy could prove important for Mercury's financial protection. However, this approach would require
For investors, this represents a significant near-term earnings impact, but the reinsurance structure provides a clear ceiling to potential losses. The company's statement about sufficient liquidity is reassuring, though the potential need for additional reinsurance coverage through June 2025 could impact future earnings.
The geographical proximity clause in Mercury's reinsurance treaty (150-mile radius) creates an interesting strategic decision point. The PCS designation of separate events provides Mercury flexibility in how to structure their claims, potentially maximizing their reinsurance benefits. The aerial imaging approach for loss assessment indicates an efficient claims processing strategy that should accelerate settlement timelines.
The mention of subrogation potential suggests possible recovery opportunities, which could partially offset losses - a critical factor in the decision to treat these as separate events. The immediate focus on paying Coverage A limits for total losses demonstrates strong claims management practices while potentially reducing long-term claims handling costs.
The stub period reinsurance consideration through June 2025 is particularly noteworthy given California's increasingly extended fire seasons. This proactive risk management approach could prove vital if additional catastrophic events occur before the current contract expires.
Most of the affected areas are closed due to ongoing hazardous conditions. The Company has received many claims and is using aerial images to assist in determining whether properties are total losses. Claims continue to be reported, and Mercury has mobilized our catastrophe loss team, assisting our customers with their claims and replacement housing. As of the date of this press release, Mercury has already paid
The Company's catastrophe reinsurance treaty allows for the combining of events that occur within a 150-mile radius as a single occurrence. Additionally, if each individual event is classified as its own catastrophic event by the Property Claims Service ("PCS"), a unit of the Insurance Services Office, each event can be considered a separate occurrence. In the case of the Palisades and Eaton wildfires, the PCS has designated each as a separate event.
The Company has not yet determined if it will consider the Wildfires as two separate events. As more information becomes available to the Company, including regarding any subrogation potential, the Company will evaluate whether it will consider the Wildfires as two separate events. Under a two-event scenario, the Company may elect to use reinsurance limits of up to
The Company may seek to acquire additional reinsurance if reinstated limits are used by the second event, for the stub period ending on June 30, 2025, the expiration date of the current contract.
About Mercury General Corporation
Mercury General Corporation (NYSE: MCY) and its subsidiaries are a multiple line insurance organization offering predominantly personal automobile and homeowners insurance through a network of independent producers and direct-to-consumer sales in many states. For more information, visit the Company's website at www.mercuryinsurance.com.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Certain statements contained in this report are forward-looking statements based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors, including but not limited to the following risks and uncertainties: changes in the demand for the Company's insurance products, inflation and general economic conditions, including general market risks associated with the Company's investment portfolio; the accuracy and adequacy of the Company's pricing methodologies; catastrophes in the markets served by the Company; uncertainties related to estimates, assumptions and projections generally; the possibility that actual loss experience may vary adversely from the actuarial estimates made to determine the Company's loss reserves in general; the Company's ability to obtain and the timing of the approval of premium rate changes for insurance policies issued in the states where it operates; legislation adverse to the automobile insurance industry or business generally that may be enacted in the states where the Company operates; the Company's success in managing its business in non-
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SOURCE Mercury General Corporation
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