I'd like to give you my thoughts, but I want to give a bit of background first. According to a table in Best Review, of the top 25 auto (commercial and personal) writers, Mercury was #5 when it came to percentage growth in 2006. Berkshire, Auto Club Enterprises, Sentry and USAA had higher growth rates, on a percentage change basis.
Industry wide, premiums grew by 0.3%, or $574 million. Mercury's premium grew by $61 million, or over 10% of the overall industry growth. If you eliminate Berkshire, with its $963 million growth, the industry had negative premium growth in 2006.
So, if you view Mercury's results in that context, you could argue that Mercury is performing very well. But I'm not going to argue that, and that's not what you asked anyway.
You asked about voids, and my answer is a bit more complex. Voids come and go. They don't exist permanently. When Mercury put over a hundred million of NJ business on the books, it was because a void existed at the time. That void is filled now. When Mercury put over two hundred million of FL business on the books, it was partly because a void existed at the time. Voids come and go. In CA, there is no real void at the moment. Voids will return, most likely. When they do, Mercury will be financially able to take advantage of these opportunities. The leadership will have the strength not to flinch when the business starts to come in.
So, I think that over time, the voids outside of California will be there, as they have sometimes been there. And, Mercury will be ready to take advantage.
Mercury experienced staggering growth in CA after Prop 103 due to the exodus of competitors such as Aetna, Ohio Casualty and Progressive (which has since returned to the state). It took advantage of a lull in competition in the mid-90s and early part of this decade when State Farm, Allstate, etc. were not advertising very heavily. (Progressive used the same lull in competition to become a major force in the auto insurance industry on a national basis.) At the time Mercury ran smart, conservative advertising campaigns that helped to grow the company and which solidified their relationship with the agents.
Yes -- there was a window of opportunity in N.J., but that window closed quickly. Mercury does not enjoy the strong relationship with its agents outside of CA as it does with CA agents, so Mercury does not get the pick of the litter in those states. In fact, in many states agents see Mercury as a difficult company with too many underwriting rules and a very weak IT unit.