Named after the Roman god of commerce and travel, Mercury General hopes to combine the two. The company is the parent of a group of insurers, including Mercury Casualty Company, that write automobile insurance for all risk classifications in about a dozen states. Plain old private auto insurance accounts for more than 80% of premiums written. However, Mercury General also sells commercial vehicle insurance and a bit of homeowners, mechanical breakdown, and fire insurance. The company sells its policies through more than 5,500 independent agents, mainly in California and Florida. Chairman George Joseph founded Mercury Casualty in 1961; he and his wife own just over 50% of the company.
While Mercury General has ventured from its California comfort zone, California still accounts for more than 75% of its total premiums. The company operated solely in its home state until 1990; it now underwrites auto insurance in a dozen other states as well. These include Arizona, Florida, Georgia, Illinois, Michigan, Nevada, New Jersey, New York, Oklahoma, Pennsylvania, Texas, and Virginia.
Mercury General paid $120 million to acquire AIS Management, the US car insurance business of Aon Corporation. The 2009 deal gave Mercury General ownership of AIS' operating companies, Auto Insurance Specialists and PoliSeek AIS Insurance Solutions. AIS was already Mercury General's largest independent broker, and brought with it a significant chunk of California premiums.
Like most of its property/casualty brethren, Mercury General saw its revenues drop during the credit crisis as its investment income turned mushy. However, just as it was seeing its investments recover, its net income was again sorely tested in 2010 when its reserves were heavily tapped by large homeowners claims in California (from catastrophic rainstorms) and Florida (from sinkholes). In response, the company has decided to withdraw from the Florida homeowners market.
Mercury General's revenues in 2011 increased slightly over 2010, edging even closer to $2.8 billion. The company's net income, however, increased to $191 million, representing an almost 26% increase from $152 million in 2010. The increase was due, in part, to improved investment gains. Premiums earned (more than 90% of total revenues) remained fairly flat, although premiums written increased (except in California where there was a slight decrease) by about $20 million from 2010. More products and improvements in its products together with higher average premiums per policy have driven the company's growth outside of California.
Core to its strategy for growth is managing rates to achieve the right balance between attracting customers through lower rates and remaining competitve. The company places value in its agent relationships and underwriting processes to achieve favorable margins. To encourage policy growth and broaden its customer base, Mercury General offers multi-policy discounts to those who bundle their home and car insurance together. It also employs marketing initiatives to build brand recognition and generate leads. Technology is another key aspect it uses to build the business. For example, in 2011 the company enhanced its Mercury First internet agency portal with its point of sale (POS) system to make writing new business easier. Of the $18 million in capital expenditures that year, most was spent on information technology. – less