Mercury General CorporationMCY

Morningstar Rating

Stock Research and Analysis

by Drew Woodbury

Mercury General's core strength--which it has developed and perfected during the course of nearly 50 years of operation--is providing low-cost personal auto insurance, primarily within the state of California. Mercury's ability to consistently beat Read more

Bulls Say

Mercury has built a reputation with its agent network and customers, allowing it to maintain much higher retention rates than its peers.

Most of Mercury's realized losses during 2008 were caused by other-than-temporary impairments. These securities may rebound in price, and returns should improve.

The company's cost-based focus will appeal to cost-conscious consumers during a recession, allowing Mercury to gain some market share. Read more

Bears Say

Personal auto insurance is essentially a commodity product, and customers often shop exclusively on price.

Mercury's expansion into new markets has not gone as planned. The company hasn't been able to maintain the same profitability it enjoys in California in new states, such as New Jersey and Florida.

Auto insurance is closely watched by state regulators. Mercury must file with each state's department of insurance if it wishes to increase its prices.

Mercury has a large exposure to municipal bonds in its investment portfolio. Downgrades or distress of certain municipalities might cause the company to realize large losses or write down these securities. Read more

Strategy

Mercury's goal is to provide quality service and low-cost personal auto insurance to its customers. The company seeks to use its core skills learned from its operations in its home state of California Read more

Management

We believe stewardship of Mercury is excellent. Longtime CEO and founder George Joseph currently serves as the chairman of the board while Gabe Tirador has served as CEO since 2007. We like that these roles are separated because we feel it allows the Read more

Profile

Founded in 1961, Mercury General is an insurance holding company operating in the property and casualty market, where it focuses on low-cost auto insurance for individuals, Read more

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