AM Best revised its outlooks to negative from stable for Mercury General Corporation and its subsidiaries on February 21, 2025, while affirming the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings.
The negative outlook reflects uncertainty regarding Mercury's net ultimate losses and future reinsurance structure and costs stemming from the California wildfires that began on January 7, 2025. Gross catastrophe losses are estimated at $1.6 billion to $2.0 billion before reinsurance and subrogation.
Mercury's reinsurance program provides $1.29 billion in catastrophe limits per occurrence with a $150 million retention and a $101 million reinstatement premium. AM Best expects Mercury's capital position to withstand the wildfire impact, but the negative outlook will remain until the ultimate net losses and future costs are certain.
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