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Mercury General Corporation Message Board

  • alston73 alston73 Mar 3, 2002 9:48 PM Flag

    Mercury's Future Outside CA

    Anybody have an inkling as to what Mercury's plans are outside of California? I really like this company, but before I buy the stock I'm pretty interested in how they're expanding and what their plans are.

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    • Mercury has had an active policy of developping its business in several states, with most effort being applied to FL, TX, VA although they have historic business in IL and GA. I think they are also putting a small toe in the water in NY. But CA remains 90%+ of its business...

      In the most recent CC George Joseph and his team spoke at some length about progress in FL and TX which should begin to make real contributions later this year and in '03.

      The most exciting thing about MCY right now is how they are growing their top line (both same store and new customers) because they have been able to do so with limited costs (I gather that Yr 1 & 2 are generally not very profitable on new policies).

      With the rate action in CA, and a cyclical upswing that probably has 2-3 years in it, you could see '04 earnings of $4.00 which would put the stock at $65-80 by Q4 '03. Also you get a nice div which GJ increases CONSISTENTLY. He also is VERY careful about dilution; look at the shares o/s numbers for the last 10 years.

      Although this is not going to make you rich, you can buy MCY at these levels and put it away, knowing that you could very well make 50-75% over the next 18-24 months. If you believe Warren Buffet about overall market returns, then this should be a nice one.

      Of course, MANY things can go wrong and Caveat Emptor.

      P.S. I should disclose an indirect ownership interest of 12,500 shares bought in the low 30s in the last 12-15 months...

    • The current hardening of the personal auto insurance creates a great opening for Mercury to find its way into new states.

 
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