Mercury General (MCY) investor relations material

Executive summary

• Net income for Q1 2026 was $190.4 million, reversing a net loss of $108.3 million in Q1 2025, driven by higher premiums and lower catastrophe losses.

• Net premiums earned increased 13.2% year-over-year to $1.45 billion, with net premiums written up 17.9% to $1.55 billion, reflecting rate increases and policy growth, especially in California.

• Combined ratio improved to 89.3% from 119.2% in Q1 2025, indicating a return to profitable underwriting.

• Operating income was $194.0 million, compared to an operating loss of $126.8 million a year ago.

• The Board declared a quarterly dividend of $0.3175 per share, payable June 25, 2026.

Financial highlights

• Net investment income increased to $85.6 million from $81.5 million, though net realized investment losses were $4.5 million versus gains of $23.3 million in Q1 2025.

• Book value per share rose to $46.76 from $43.64 at year-end 2025.

• Basic and diluted EPS were $3.44, compared to $(1.96) in Q1 2025.

• Cash flow from operations was $325.6 million, up from negative $68.7 million in Q1 2025, driven by higher premium collections and lower loss payments.

• Total assets reached $9.87 billion, with shareholders’ equity at $2.59 billion as of March 31, 2026.

Outlook and guidance

• California homeowners rate increases approved in 2025 and 2026 are expected to further support premium growth and profitability.

• New regulatory changes in California allow catastrophe modeling and reinsurance costs in ratemaking, effective July 2026.

• Management notes significant risks including catastrophe exposure, regulatory changes, and competitive pressures.

• The company expects continued improvement in underwriting results, barring significant catastrophe events.

• Forward-looking statements caution that actual results may differ due to market, economic, and operational uncertainties.