It has been about a month since the last earnings report for Mercury General (MCY). Shares have added about 10.7% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Mercury General due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Mercury General Corporation before we dive into how investors and analysts have reacted as of late.
Mercury General Q3 Earnings Top Estimates on Higher Premiums
Mercury General Corporation reported third-quarter 2025 operating income of $3.86 per share, which beat the Zacks Consensus Estimate by 79.5%. The bottom line increased 52% year over year. The quarterly results of MCY were aided by higher net premiums earned, higher average invested assets and cash, and lower catastrophe losses, as well as reduced expenses.
Operational Update of MCY
Total operating revenues in the quarter under review were $1.5 billion, which improved 6% year over year. This improvement was driven by higher net premiums earned and net investment income. Moreover, the top line beat the consensus mark by 1%. Net premiums earned climbed 6.8% year over year to $1.4 billion.
Net investment income, before income taxes, increased 15.4% year over year to $83.9 million. The growth resulted largely from higher average invested assets and cash. Total expenses of MCY declined 0.7% year over year to $1.2 billion, primarily due to lower losses and loss adjustment expenses, and interest.
Catastrophe losses net of reinsurance were $29 million, narrower than a loss of $39 million incurred in the year-ago quarter. The catastrophe losses resulted from the Palisades and Eaton wildfires in California and severe storms in Texas and Oklahoma.
The combined ratio — a measure of underwriting profitability — improved 660 bps year over year to 87. The loss ratio improved 690 bps to 62.6, while the expense ratio deteriorated 40 bps to 24.4.
Financial Update of MCY
Mercury General exited the third quarter of 2025 with total assets of $9.4 billion, which was 12.8% above the level at the end of December 2024. As of Sept. 30, 2025, MCY reported a solid cash balance of $1.2 billion, reflecting an increase of 74% from the 2024-end level. Notes payable of $574.4 million inched up 0.05% from the 2024-end level. Debt-to-total capitalization as of Sept. 30, 2025, improved 230 bps to 20.5% from the end of 2024. Shareholder equity was $2.2 billion as of Sept. 30, 2025, up 14.7% from 2024-end. As of Sept. 30, 2025, book value per share was $40.30, up 14.6% from the 2024-end.
Mercury General’s Dividend Update
The board of directors of Mercury General declared a quarterly dividend of 31.75 cents per share. The dividend will be paid on Dec. 24, 2025, to shareholders of record at the close of business as of Dec. 10, 2025.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 29.95% due to these changes.
VGM Scores
At this time, Mercury General has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Mercury General has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Mercury General belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Selective Insurance (SIGI), has gained 1.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.
Selective Insurance reported revenues of $1.35 billion in the last reported quarter, representing a year-over-year change of +9.1%. EPS of $1.75 for the same period compares with $1.40 a year ago.
For the current quarter, Selective Insurance is expected to post earnings of $2.15 per share, indicating a change of +32.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.5% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Selective Insurance. Also, the stock has a VGM Score of A.
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Mercury General Corporation (MCY): Free Stock Analysis Report Selective Insurance Group, Inc. (SIGI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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