Mercury General posted net income of $202.5 million for the fourth quarter of 2025, doubling from $101.1 million a year earlier, as the insurer recovered from catastrophic California wildfires that devastated its first-quarter results and exhausted reinsurance limits.
The Los Angeles-based carrier reported diluted earnings per share of $3.66 for the quarter, compared to $1.82 in Q4 2024. For the full year 2025, Mercury General recorded net income of $541.1 million, or $9.77 per diluted share, against $467.9 million, or $8.45 per diluted share, in 2024.
Net premiums earned reached $1.4 billion in the fourth quarter, up from $1.3 billion in the prior-year period. Full-year net premiums earned totaled $5.5 billion, compared to $5.1 billion in 2024.
The January 2025 Palisades and Eaton wildfires drove catastrophe losses net of reinsurance to $447 million in the first quarter, pushing the combined ratio to 119.2%. By the second quarter, net wildfire-related losses for the six months ended June 30 totaled $359 million. Third-quarter catastrophe losses fell to $29 million.
For the full year, catastrophe losses net of reinsurance totaled $508 million from California wildfires and severe storms, partly offset by roughly $586 million of wildfire subrogation. The company exhausted catastrophe reinsurance limits for the treaty year ended June 30, 2025, triggering a full reinstatement with payment of $101 million of reinstatement premiums.
The insurer's combined ratio improved to 88.6% in Q4 2025 from 91.4% a year earlier. For the full year, the combined ratio increased slightly to 96.3% from 96.0% in 2024.
"The Palisades and Eaton wildfires were the most significant catastrophes in Mercury's history," Gabe Tirador, chief executive officer, said in a statement. He noted the company managed more than 2,900 wildfire claims and paid over $1.4 billion to date.
The California Department of Insurance approved a 6.9% rate increase on the company's California homeowners line in December 2025, matching the identical increase granted to CSAA for nearly 481,800 homeowners.
Mercury's rate increase is expected to become effective in July 2026 for more than 650,000 homeowners.
The approvals follow larger increases across California's homeowners market. State Farm received emergency approval for a 17% homeowners rate increase effective June 2025, while Allstate secured a 34% increase in 2024.
Researchers at Insurify estimate homeowner insurance premiums in California will rise 21% throughout 2025, reaching an average annual premium of $2,930 compared to $2,424 in 2024.
The California homeowners line represented approximately 15% of the company's total net premiums earned in 2025.
Mercury General's board declared a quarterly dividend of $0.3175 per share, payable March 26 to shareholders of record on March 12.
