Mercury General's stock surged 5.33% in the intraday session on Thursday, outperforming the broader market. The insurer's shares rallied after it reported robust earnings for the fourth quarter of 2024 and unveiled plans to aggressively pursue subrogation from utility companies for their potential role in causing recent California wildfires.
The company reported operating income of $2.78 per share for the fourth quarter, surging more than double year-over-year and significantly exceeding analysts' expectations. The strong performance was driven by improved net premiums, higher net investment income, and better underwriting profitability, with the combined ratio improving by 720 basis points to 91.4%.
Additionally, Mercury General's management expressed confidence in recovering a substantial portion of its California wildfire exposure through subrogation from utility companies. The company's CFO, Ted Stalick, stated that Mercury General believes it could recover up to 70% of its wildfire losses from utilities, citing strong evidence that suggests utility equipment caused the Eaton Fire, one of the major wildfires in late 2024.
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