Mercury General posts 3Q profit on investment gain

LOS ANGELES (AP) — Auto and home insurer Mercury General Corp. on Monday posted a third-quarter profit in contrast to a year-ago loss, reflecting better investment performance and lower claims paid this year.

Net income came in at $157.7 million, or $2.85 per share, compared with a net loss of $140.5 million, or $2.57 per share, for the same period in 2008.

The results include $2.01 per share of net realized investment gains for the 2009 period, compared with net realized investment losses of $3.29 per share last year. Investment figures reflect, in part, a change in accounting methods during the quarter.

On an operating basis, the company earned $46.3 million, or 84 cents per share.

Analysts polled by Thomson Reuters, on average, expected profit of 66 cents per share. Analysts typically exclude one-time items in their estimates.

Net premiums written were $662.8 million in the third quarter of 2009, up 5 percent from $695.1 million in the 2008 third quarter.

The company's combined ratio was 96.4 percent in the third quarter, compared with 102 percent in 2008.

Combined ratio reflects an insurance company's losses and expenses. A ratio above 100 means that for every premium dollar taken in, more than a dollar went to cover claims and other expenses. A figure below 100 means the company made a profit on its insurance operations.

Mercury General paid out $460.6 million claims in the 2008 third quarter, compared with $483.1 million last year.

In midday trading, Mercury General shares added 44 cents to $36.90.