A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Mercury Casualty Group (Mercury) (Los Angeles, CA) and its members. Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and ICRs of “a-” of American Mercury Insurance Group (AMI) (Oklahoma City, OK) and its members. Concurrently, A.M. Best has affirmed the ICR of “a-” of Mercury and AMI’s parent, Mercury General Corporation (Los Angeles, CA) (NYSE: MCY). The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

Mercury’s ratings reflect its solid risk-adjusted capital position, consistently favorable operating performance and the competitive advantage within its core personal auto segment. Mercury’s capitalization is supported by strong operating returns through profitable underwriting performance and consistent investment income. This is somewhat offset by Mercury’s sizeable shareholder dividends in recent years, which has constrained surplus growth.

Mercury’s competitive advantage in its core personal auto segment is derived through pricing and risk classification expertise, strong independent agency relationships and aggressive claims management practices. Mercury also benefits from the financial flexibility of Mercury General Corporation due to its modest financial leverage and access to capital markets.

AMI’s ratings recognize its adequate level of risk-adjusted capital, improved catastrophe risk management and the demonstrated history of financial support provided by its parent. These positive rating factors are offset by AMI’s elevated underwriting leverage, its relatively high expense structure and continued exposure to catastrophe losses in its operating region.

The FSR of A+ (Superior) and ICRs of “aa-” have been affirmed for Mercury Casualty Group and its following members:
  • Mercury Casualty Company
  • Mercury Insurance Company
  • California Automobile Insurance Company
  • Mercury Indemnity Company of Georgia
  • Mercury Insurance Company of Georgia
  • Mercury Insurance Company of Illinois
  • Mercury National Insurance Company
  • Mercury Insurance Company of Florida
  • Mercury Indemnity Company of America

The FSR of A- (Excellent) and ICRs of “a-” have been affirmed for American Mercury Insurance Group and its following members:
  • American Mercury Insurance Company
  • American Mercury Lloyds Insurance Company
  • Mercury County Mutual Insurance Company

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition , which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Rating Members of Insurance Groups”; “Understanding BCAR for Property/Casualty Insurers”; “Equity Credit for Hybrid Securities”; and “A.M. Best Ratings & the Treatment of Debt.”; “Catastrophe Analysis in A.M. Best Ratings”; “Natural Catastrophe Stress Test Methodology”; and “Catastrophe Risk Management Incorporated Within the Rating Analysis.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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