Mercury General's 2025 Financial Recovery After Wildfires
Mercury General’s 2025 Financial Performance Highlighted by Recovery After Wildfires
Mercury General, based in Los Angeles, reported significant financial gains in the fourth quarter of 2025, with net income rising to $202.5 million. This marks a notable increase from $101.1 million during the same period the previous year and reflects the company’s recovery from California wildfires that heavily impacted its first-quarter performance.
Quarterly Financial Growth and Premium Earnings
For the fourth quarter, the insurer announced a diluted earnings per share of $3.66, comparing favorably to the $1.82 reported in Q4 of 2024. Over the full year, Mercury General's net income reached $541.1 million, translating to $9.77 per diluted share, marking an increase from $467.9 million or $8.45 per diluted share in 2024.
Net premiums earned during the final quarter were reported at $1.4 billion, an improvement from $1.3 billion in the corresponding period the previous year. Throughout 2025, Mercury General achieved total net premiums earned of $5.5 billion, demonstrating growth over the $5.1 billion reported in 2024.
Impact of Wildfires and Risk Management
The Palisades and Eaton wildfires in January 2025 significantly affected the company’s first-quarter results, leading to catastrophe losses, net of reinsurance, amounting to $447 million. These events brought the combined ratio to 119.2%. By mid-year, wildfire-related losses net of reinsurance were documented at $359 million, reducing to $29 million in the third quarter.
Over the year, the firm experienced catastrophe losses, net of reinsurance, totaling $508 million, mainly from California wildfires and storms. However, these losses were offset by $586 million from wildfire subrogation. Mercury General reached the limit of its catastrophe reinsurance for the treaty year ending June 30, 2025, mandating full reinstatement through a $101 million reinstatement premium payment.
Regulatory Developments and Industry Trends
In regulatory news, the California Department of Insurance approved a 6.9% rate increase for Mercury General’s homeowners insurance line in December 2025, scheduled to take effect in July 2026 for over 650,000 homeowners. This adjustment is in line with rates approved for other industry players like CSAA, which also received a 6.9% increase for approximately 481,800 policies.
Research from Insurify suggests that homeowner insurance premiums in California will rise by 21% in 2025, with the average premium projected to reach $2,930, compared to $2,424 in the previous year. The California homeowners insurance segment accounted for around 15% of Mercury General’s total net premiums earned during 2025.
Investor and Shareholder Information
Mercury General's board has declared a quarterly dividend of $0.3175 per share, to be distributed on March 26 to shareholders listed on March 12. CEO Gabe Tirador highlighted the firm’s resilience, managing over 2,900 wildfire-related claims and disbursing more than $1.4 billion to date, showcasing effective risk management and strategic response to environmental impacts.