Mercury General is a leading property and casualty insurer with a large market share in California. Its competitive advantage is its low expense ratios for overhead and underwriting losses. Mercury�s combined ratio (an industry standard ratio that includes underwriting expenses, losses and general and administrative expenses) has averaged 8.5 percentage points better than the industry for the last ten years. As a result of its expansion outside the state of California, this endeavor has required a substantial capital investment to reach critical mass. Furthermore, it is rolling out a new back-end accounting system as well as a new front-end internet system. These added costs, as well as potential execution risks, have created, we believe, a buying opportunity.