Mercury General reported its financial results for the second quarter of 2025, showing higher net income and improved underwriting performance despite ongoing impacts from major wildfire events earlier in the year.
For the three months ended June 30, Mercury recorded net premiums earned of $1.37 billion, up 10.6% from $1.24 billion in the same period in 2024. Net premiums written grew 9.2% year-over-year to $1.48 billion. The company also reported net realized investment gains of $18.5 million, a significant increase from $2.3 million in the prior-year quarter.
Net income rose to $166.5 million, compared with Q1’s $62.6 million, in the second quarter of 2024. Operating income was $147.9 million, more than doubling from $60.3 million, a year earlier. The combined ratio improved to 92.5% from 98.9% in the prior-year period.
For the first six months of 2025, net premiums earned reached $2.65 billion, up 10.3% year-over-year, while net premiums written grew 5.9% to $2.8 billion. However, net income for the period declined 57.3% to $58.1 million compared to $136 million in the first half of 2024.
Operating income for the six months fell sharply to $21.2 million from $103.6 million in the prior-year period. The combined ratio for the half-year stood at 105.4%, compared with 99.9% in 2024.
Catastrophe losses, net of reinsurance, totaled $13 million in the second quarter, down significantly from $125 million in the same period last year. For the first half of 2025, catastrophe losses reached $460 million, up from $197 million in 2024, reflecting the significant impact of early-year wildfire events.
Mercury confirmed earlier this year that wildfire losses from the Palisades and Eaton events earlier this year had surpassed its $150 million reinsurance retention. The company’s $1.29 billion per-event reinsurance coverage was activated, and a reinstatement premium of $101 million was recorded to secure ongoing protection.
Mercury also provided updated information on losses from the wildfire events. The company reported net catastrophe losses and loss adjustment expenses of approximately $359 million related to these events for the first six months of the year.
Gross losses and loss adjustment expenses from the fires were estimated at $2.15 billion. Recoveries included $528 million in subrogation from the Eaton fire, $46.5 million in subrogation from the Palisades fire, and $1.29 billion in reinsurance recoverables.
After accounting for the company's share of California Fair Plan losses of $99 million and a recoupable portion of $25 million, Mercury’s net wildfire-related losses for the six months ended June 30, 2025, totaled $359 million, down from $414 million reported as of March 31, 2025.
In a move to bolster future catastrophe protection, Mercury sponsored a $100 million catastrophe bond through Luca Re Ltd. in Bermuda. The bond provides multi-year coverage for wildfire and earthquake losses, attaching at $1.6 billion and exhausting at $1.75 billion.
Mercury has also indicated plans to continue writing homeowners business in wildfire-prone California regions. The insurer is investing in updated climate science models and mitigation-focused underwriting strategies to serve high-risk communities.
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