AM Best announced on February 24 that it has revised the outlook for Mercury General Corporation and its subsidiaries to stable from negative and reaffirmed the Financial Strength Rating of A (Excellent). The agency also reaffirmed the Long‑Term Issuer Credit Ratings of “a” (Excellent) for Mercury Casualty Group and “bbb” (Good) for the parent company and its $375 million senior unsecured notes.
The upgrade follows Mercury’s strong balance sheet, a rebound in underwriting profitability, and a robust enterprise risk‑management framework. In the fourth quarter of 2025, the company reported net income of $202.5 million, a 100% increase from $101.1 million a year earlier, and a combined ratio of 88.6% versus 91.4% in Q4 2024. Full‑year 2025 results showed net income of $541.1 million, up 15.6% from $470.5 million in 2024, and a combined ratio of 96.3% compared with 96.0% the previous year.
Despite net catastrophe losses of $380 million in 2025—primarily from the Palisades and Eaton wildfires—Mercury’s reinsurance program and subrogation recoveries helped keep the net loss manageable. The company’s liquidity and capital positions remain solid, with a Tier 1 capital ratio above 12% and a liquidity coverage ratio comfortably above regulatory thresholds.
The rating action reflects AM Best’s assessment that Mercury’s underwriting performance has returned to a neutral business profile and that its capital structure can absorb future catastrophe events. The stable outlook signals lower borrowing costs and a stronger credit profile for the insurer, which is particularly important in the highly regulated California insurance market where capital adequacy is closely monitored.
Management noted that the company’s focus on core personal auto and homeowners lines, combined with disciplined pricing and cost control, has driven the improved combined ratio and earnings growth. The rating upgrade is expected to reinforce investor confidence and support the company’s ongoing strategy to expand its California franchise while maintaining prudent risk management practices.
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