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Mercury General Corporation Message Board

  • Saurabh_Jang Saurabh_Jang Jan 30, 2000 3:01 PM Flag

    Succession Concerns?

    I have been thinking of buying shares
    Mercury General, and I have liked everything
    from a
    fundamental stand-point so far. I only
    have two

    1. Aging CEO: By all accounts, the current
    is a highly respected veteran of
    the industry.
    However he is 77 years old.
    Are his potential
    replacements going to
    be as smart as he is considered to

    2. Despite rising almost 16 times over the

    1990-1999 period, its market cap remains a
    small (for
    these times) $1B. Will such
    a small float prevent
    institutions from
    jumping in, and thereby leading to
    instrinsic value of Mercury remaining


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    • was very interesting. I agree 100% with what was
      said about internet sales. They have a clear strategy,
      which I think is very workable. There are many agents
      purchasing leads from national internet lead .coms. A
      sharing of expense between agents and MCY is very
      possible. Many agents have sites now but really can't
      justify the expense to develop hits. A cooperative
      advertising effort is not new to our business.

      what MCY management said... retention ratios on
      internet sales will be piddling; resulting in high expense
      ratios. If Mr. Joseph is right, that 15% that will buy
      through the internet, w/o an agent, are a very good 15%
      to avoid.

      Further, with the limited ability
      to ask underwriting questions over the internet,
      won't there be fertile ground for professional
      liability suits running to the companies over inadequate
      and wrong coverage, etc. IMHO trial lawyers must be
      licking their always famished chops.

      A mentor
      years ago stated, "Insurance is a simple business. It
      is all about consistency of product... proper
      handling of the money... and avoiding large errors."

      This isn't glitz and glitter. It is the basis for
      predictable returns on equity. I like what I see with MCY for

    • actually i believe growth spurts have pretty much
      always been the history of this company. i think a
      double in three years is a stretch but who knows. he was
      quite blunt about anyone today who grows quickly will
      do it at the expense of the bottom line..look at
      pgr. also i was glad to hear his skepticism regarding
      profitable underwriting over the net. i believe they will
      garner a good deal of business in the short term but if
      profitable underwriting is impossible then it wont prove to
      be a long term threat. i liked their idea of a web

    • Thanks for the info on the conference

      Looks like FL. is going well.

      I was especially
      happy to hear MR. Joseph not back off the 2 billion
      premium goal. His point about it not being that unusual
      for MCY to double premiums in 3 years was quite
      encouraging for a long term investor like myself.

    • Thanks for the info on hearing the conference
      call replay. Interesting listening. I'm a little
      concerned about the drop in actual policy count but I think
      that when the others start raising rates, we will stay
      firm and begin to gain some of that policy count

      Thanks to all the intelligent comments on this board. A
      far cry from the ALL and PGR boards.

    • >>by the way joseph had some interesting
      things to say today regarding selling insurance on the

      I would appreciate any summary of what Mr. Joseph
      had to say on the internet, the PC cycle, Geico, loss
      of policy count in CA during the 4th quarter, Texas,


    • why not listen to the call replay. the number is 800-475-6701 access code:497536

    • what did joseph say regarding selling ins. on the net?

    • i also believe pgr may eventually have a problem
      with prem/surplus. if one is close to 3/1 now then the
      surplus must grow about the same percentage as the
      premium does. therefore the roe less dividends must be
      the same percent as premium growth. since roe looks
      like low double digits right now i believe that pgr
      may have a problem as early as this year. by the way
      joseph had some interesting things to say today
      regarding selling insurance on the internet.

    • I can't speak with any authority on who
      succeed Mr. Joseph, or how savvy they may
      be. As for
      institutional buying, however, there
      are a host of
      smallcap/midcap value funds
      that ought to show interest in MCY
      once a
      sector recovery appears imminent.

      move into MCY will make you good money
      one way or
      another...its future is bright. Take
      care, Pilgrim

      • 1 Reply to progressingpilgrim
      • progressingpilgrim, thanks for your
        The stock I am using to evaluate MCY on a
        basis is PGR.

        Any idea on how I can find out
        how the
        investment portfolios of the two
        with respect to riskiness to interest rate
        exposure to specific stocks or
        sectors, etc.? Which
        company has had the
        better investment record over the
        long run?

        BTW, I currently insure my car with
        and logged on to PGR's website for a quote.
        I must
        say I was impressed by the whole
        process. It seems
        that PGR is trying to target
        even standard or
        preffered risk drivers.
        The quote was quite competitive
        with GEICO.

        MCY seems to have an interesting
        twist on
        using the web as a distribution channel.
        is essentially trying to still keep its agents
        the loop and not cut them out, like some
        companies seem to want (no matter what
        they say

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