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<SEC-DOCUMENT>0001275287-06-004172.txt : 20060807
<SEC-HEADER>0001275287-06-004172.hdr.sgml : 20060807
<ACCEPTANCE-DATETIME>20060807115146
ACCESSION NUMBER:		0001275287-06-004172
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20060807
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060807
DATE AS OF CHANGE:		20060807

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MERCURY GENERAL CORP
		CENTRAL INDEX KEY:			0000064996
		STANDARD INDUSTRIAL CLASSIFICATION:	FIRE, MARINE & CASUALTY INSURANCE [6331]
		IRS NUMBER:				952211612
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12257
		FILM NUMBER:		061007917

	BUSINESS ADDRESS:	
		STREET 1:		4484 WILSHIRE BLVD
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90010
		BUSINESS PHONE:		2139371060

	MAIL ADDRESS:	
		STREET 1:		4484 WILSHIRE BLVD
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90010
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>mg6725.txt
<DESCRIPTION>FORM 8-K
<TEXT>
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 8-K

                                   ----------

                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

        Date of Report (Date of earliest event reported): August 7, 2006

                           MERCURY GENERAL CORPORATION
               (Exact Name of Registrant as Specified in Charter)

              California                 001-12257           95-221-1612
    -------------------------------     ------------     -------------------
    (State or Other Jurisdiction of     (Commission       (I.R.S. Employer
            Incorporation)              File Number)     Identification No.)

                             4484 Wilshire Boulevard
                          Los Angeles, California 90010
                    (Address of Principal Executive Offices)

                                   ----------

                                 (323) 937-1060
              (Registrant's telephone number, including area code)

                                   ----------

                                 Not applicable
          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ]  Written communications pursuant to Rule 425 under the Securities
     Act (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 425 under the Exchange
     Act (17 CFR 240.14.a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))

================================================================================

<PAGE>

ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

            The following information is furnished pursuant to Item 2.02,
"Results of Operations and Financial Condition," and shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise subject to the liabilities of that section.

            On August 7, 2006, Mercury General Corporation issued a press
release announcing its financial results for the second quarter ended June 30,
2006. A copy of the press release is attached hereto as Exhibit 99.1.

            The information contained in this Current Report, including the
exhibit, shall not be incorporated by reference into any filing of Mercury
General Corporation, whether made before or after the date hereof, regardless of
any general incorporation language in such filing.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

            (d)      Exhibits.

                     99.1     Press Release, dated August 7, 2006, issued by
                              Mercury General Corporation, furnished pursuant to
                              Item 2.02 of Form 8-K.

                                      -2-
<PAGE>

                                   SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.

Date:  August 7, 2006                              MERCURY GENERAL CORPORATION


                                                   By:   /s/ THEODORE STALICK
                                                         -----------------------
                                                   Name: Theodore Stalick
                                                   Its:  Chief Financial Officer

                                      -3-
<PAGE>

                                  EXHIBIT INDEX

Exhibit 99.1.  Press Release, dated August 7, 2006, issued by Mercury General
               Corporation.

                                      -4-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>mg6725ex991.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
                                                                    Exhibit 99.1

          MERCURY GENERAL CORPORATION ANNOUNCES SECOND QUARTER RESULTS

    LOS ANGELES, Aug. 7 /PRNewswire-FirstCall/ -- Mercury General Corporation
(NYSE: MCY) reported today net income of $37.8 million ($0.69 per share-diluted)
in the second quarter 2006 compared with $73.6 million ($1.35 per share-diluted)
for the same period in 2005. For the first six months of 2006, net income was
$96.5 million ($1.76 per share-diluted) compared to net income of $134.0 million
($2.45 per share-diluted) for the same period in 2005. Included in net income
are net realized investment gains, net of tax, of $2.8 million ($0.05 per
share-diluted) in the second quarter of 2006 compared with net realized
investment gains, net of tax, of $2.3 million ($0.04 per share-diluted) for the
same period in 2005, and net realized investment gains, net of tax, of $6.9
million ($0.13 per share-diluted) for the first six months of 2006 compared to
net realized investment gains, net of tax, of $5.0 million ($0.09 per
share-diluted) for the same period in 2005.

    Company-wide net premiums written were $753.8 million in the second quarter
2006, a 3.3% increase over second quarter 2005 net premiums written of $729.9
million, and were approximately $1.5 billion for the first six months of 2006, a
4.7% increase over the same period in 2005. California net premiums written were
$552.1 million in the second quarter of 2006, an increase of 5.0% over the same
period in 2005, and were approximately $1.1 billion for the first six months of
2006, a 6.3% increase over the same period in 2005. Non-California net premiums
written were $201.7 million in the second quarter of 2006, a 1.1% decrease over
the same period in 2005, and were $409.8 million for the first six months of
2006, an increase of 0.5% over the same period in 2005.

    The Company's combined ratio (GAAP basis) was 98.6% in the second quarter
and 95.3% for the first six months of 2006 compared with 90.1% and 91.3% for the
same periods in 2005. For the states outside of California, the Company
experienced adverse development for the six months ended June 30, 2006 of
approximately $30 million on prior accident years loss reserves. The loss
development primarily relates to additional reserves established for large
individual losses in Florida and additional reserves established for personal
injury protection and bodily injury losses in New Jersey. As a result of these
developments, the Company also increased the implied severity for the 2006
accident year for Florida and New Jersey business. The Company experienced
positive development on prior accident years loss reserves of approximately $15
million for the six months ended June 30, 2006 on its California business.

    The Company continues to focus on an initiative embarked in 2005 to
standardize its policies and procedures nationwide in all of its functional
areas. The Company has made significant changes to its Florida and New Jersey
operations and believes these and future changes will have a positive impact on
its operations.

    Net investment income of $36.2 million (after tax $30.0 million) in the
second quarter of 2006 increased by 18.0% over the same period in 2005. The
after-tax yield on investment income was 3.7% on average assets of $3.3 billion
(fixed maturities and equities at cost) for the quarter. This compares with an
after tax yield on investment income of 3.6% on average investments of $3.0
billion (fixed maturities and equities at cost) for the same period in 2005.

    The Board of Directors declared a second quarter dividend of $0.48 per
share, representing an 11.6% increase over the quarterly dividend amount paid in
2005. The dividend is to be paid on September 28, 2006 to shareholders of record
on September 15, 2006. The Company's book value per share at June 30, 2006 was
$29.87.

<PAGE>

    Mercury General Corporation and its subsidiaries are a multiple line
insurance organization offering predominantly personal automobile and homeowners
insurance through a network of independent producers in many states. For more
information, visit the Company's website at www.mercuryinsurance.com. The
Company will be hosting a conference call and webcast today at 10:00 A.M.
Pacific time where management will discuss results and address questions. The
teleconference and webcast can be accessed by calling (877) 807-1888 (USA),
(706) 679-3827 (International) or by visiting www.mercuryinsurance.com. A replay
of the call will be available beginning at 1:30 P.M. Pacific time and running
through August 15, 2006. The replay telephone numbers are (800) 642-1687 (USA)
or (706) 645-9291 (International). The conference ID# is 3218288. The replay
will also be available on the Company's website shortly following the call.

    The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. The statements contained in this
press release are forward-looking statements based on the Company's current
expectations and beliefs concerning future developments and their potential
effects on the Company. There can be no assurance that future developments
affecting the Company will be those anticipated by the Company. Actual results
may differ from those projected in the forward-looking statements. These
forward-looking statements involve significant risks and uncertainties (some of
which are beyond the control of the Company) and are subject to change based
upon various factors, including but not limited to the following risks and
uncertainties: changes in the demand for the Company's insurance products,
inflation and in general economic conditions; the accuracy and adequacy of the
Company's pricing methodologies; adverse weather conditions or natural disasters
in the markets served by the Company; market risks associated with the Company's
investment portfolio; uncertainties related to estimates, assumptions and
projections generally; the possibility that actual loss experience may vary
adversely from the actuarial estimates made to determine the Company's loss
reserves in general; the Company's ability to obtain and the timing of
regulatory approval for requested rate changes; legislation adverse to the
automobile insurance industry or business generally that may be enacted in
California or other states; the Company's success in expanding its business in
states outside of California; the presence of competitors with greater financial
resources and the impact of competitive pricing; changes in driving patterns and
loss trends; acts of war and terrorist activities; court decisions and trends in
litigation and health care and auto repair costs and marketing efforts; and
various legal, regulatory and litigation risks. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as the result of new information, future events or otherwise. For a more
detailed discussion of some of the foregoing risks and uncertainties, see the
Company's filings with the Securities and Exchange Commission.

    Mercury General Corporation

    Information Regarding Non-GAAP Measures

    The Company has presented information within this document containing
operating measures which in management's opinion provide investors with useful,
industry specific information to help them evaluate, and perform meaningful
comparisons of, the Company's performance, but that may not be presented in
accordance with Generally Accepted Accounting Principles ("GAAP"). These
measures are not intended to replace, and should be read in conjunction with,
the GAAP financial results. The Company has reconciled these measures with the
most directly comparable GAAP measure in the supplemental schedule entitled,
"Summary of Operating Results."

    Net premiums written represents the premiums charged on policies issued
during a fiscal period. Net premiums earned, the most directly comparable GAAP
measure, represents the portion of premiums written that is recognized as income
in the financial statements for the periods presented and earned on a pro-rata
basis over the term of the policies. Net premiums written is meant as
supplemental information and is not intended to replace Net premiums earned. It
should be read in conjunction with the GAAP financial results.

<PAGE>

    Paid losses and loss adjustment expenses is the portion of Incurred losses
and loss adjustment expenses, the most directly comparable GAAP measure,
excluding the effects of changes in the loss reserve accounts. Paid losses and
loss adjustment expenses is meant as supplemental information and is not
intended to replace Incurred losses and loss adjustment expenses. It should be
read in conjunction with the GAAP financial results.

                  Mercury General Corporation and Subsidiaries
                          Summary of Operating Results
                   (000's) except per-share amounts and ratios
                                   (unaudited)

<TABLE>
<CAPTION>
                             Quarter Ended June 30,      Six Months Ended June 30,
                          ---------------------------   ---------------------------
                              2006            2005          2006           2005
                          ------------   ------------   ------------   ------------
<S>                       <C>            <C>            <C>            <C>
Net premiums written      $    753,826   $    729,875   $  1,527,846   $  1,459,705
Net premiums earned            753,350        707,261      1,490,030      1,391,975
Paid losses and loss
 adjustment expenses           486,508        422,055        965,848        846,727
Incurred losses and
 loss adjustment
 expenses                      534,316        442,764      1,009,496        891,010
Net investment income           36,242         30,701         75,645         59,486
Net realized investment
 gains, net of tax               2,751          2,304          6,946          5,045
Net income                $     37,812   $     73,602   $     96,458   $    134,026

Basic average shares
 outstanding                    54,648         54,548         54,636         54,542

Diluted average shares
 outstanding                    54,761         54,699         54,765         54,708

Basic Per Share Data
Net income                $       0.69   $       1.35   $       1.77   $       2.46
Net realized investment
 gains, net of tax        $       0.05   $       0.04   $       0.13   $       0.09

Diluted Per Share Data
Net income                $       0.69   $       1.35   $       1.76   $       2.45
Net realized investment
 gains, net of tax        $       0.05   $       0.04   $       0.13   $       0.09

Operating Ratios
 -- GAAP(a) Basis
Loss ratio                        70.9%          62.6%          67.8%          64.0%
Expense ratio                     27.7%          27.5%          27.5%          27.3%
Combined ratio                    98.6%          90.1%          95.3%          91.3%

Reconciliations of
 Operating Measures to
 Comparable GAAP(a)
 Measures

Net premiums written      $    753,826   $    729,875   $  1,527,846   $  1,459,705
Increase in unearned
 premiums                         (476)       (22,614)       (37,816)       (67,730)
Net premiums earned       $    753,350   $    707,261   $  1,490,030   $  1,391,975

Paid losses and loss
 adjustment expenses      $    486,508   $    422,055   $    965,848   $    846,727
Increase in net losses
 and loss adjustment
 expense reserves               47,808         20,709         43,648         44,283
Incurred losses and
 loss adjustment
 expenses                 $    534,316   $    442,764   $  1,009,496   $    891,010
</TABLE>

(a)  Generally Accepted Accounting Principles

<PAGE>

                  Mercury General Corporation and Subsidiaries
                         Other Supplemental Information
                              (000's) except ratios
                                   (unaudited)

<TABLE>
<CAPTION>
                             Quarter Ended June 30,      Six Months Ended June 30,
                          ---------------------------   ---------------------------
                              2006           2005           2006           2005
                          ------------   ------------   ------------   ------------
<S>                       <C>            <C>            <C>            <C>
Total California
 Operations (1)
Net Premiums Written      $    552,144   $    525,910   $  1,118,051   $  1,051,990
Net Premiums Earned            552,209        517,345      1,091,467      1,022,661

Loss Ratio                        63.6%          61.5%          63.6%          63.6%
Expense Ratio                     26.9%          25.6%          26.7%          25.7%
Combined Ratio                    90.5%          87.1%          90.3%          89.3%

Non-California
 Operations (2)
Net Premiums Written      $    201,682   $    203,965   $    409,795   $    407,715
Net Premiums Earned            201,141        189,916        398,563        369,314

Loss Ratio                        91.1%          65.7%          79.0%          65.1%
Expense Ratio                     29.9%          32.7%          29.7%          32.0%
Combined Ratio                   121.0%          98.4%         108.7%          97.1%
</TABLE>

                                                     At June 30,
                                            ---------------------------
Policies-in-force (000's)                       2006           2005
- ----------------------------------------    ------------   ------------
California Personal Auto                           1,138          1,093
California Commercial Auto                            21             21
Non-California Personal Auto                         364            368
California Homeowners                                253            228
Florida Homeowners                                    14             15

Notes:
     All ratios are calculated on GAAP basis.
(1)  Includes homeowners, auto, commercial property and other immaterial
     California business lines
(2)  Includes all states except California

<PAGE>

                  Mercury General Corporation and Subsidiaries
                 Condensed Balance Sheets and Other Information
                        (000's) except per-share amounts
                                   (unaudited)

                                            June 30, 2006   December 31, 2005
                                            -------------   -----------------
Investments -- available for sale
  Fixed maturities at market (amortized
   cost $2,757,242 in 2006 and
   $2,593,745 in 2005)                      $   2,772,752   $       2,645,555
  Equity securities at market (cost
   $239,232 in 2006 and $225,310 in 2005)         294,036             276,108
  Short-term cash investments, at cost,
   which approximates market                      309,531             321,049
     Total investments                          3,376,319           3,242,712
Net receivables                                   400,445             390,234
Deferred policy acquisition costs                 207,684             197,943
Other assets                                      196,013             210,662
   Total assets                             $   4,180,461   $       4,041,551

Loss and loss adjustment expenses           $   1,058,171   $       1,022,603
Unearned premiums                                 940,289             902,567
Other liabilities                                 409,920             365,004
Notes payable                                     138,744             143,540
Shareholders' equity                            1,633,337           1,607,837
   Total liabilities and shareholders'
    equity                                  $   4,180,461   $       4,041,551

Common stock -- shares outstanding                 54,678              54,605
Book value per share                        $       29.87   $           29.44
Statutory surplus                           $  1.5billion   $     1.5 billion
Portfolio duration                              3.2 years           2.9 years

SOURCE  Mercury General Corporation
    -0-                             08/07/2006
    /CONTACT:  Theodore Stalick, VP/CFO of Mercury General Corporation,
+1-323-937-1060/
    /Web site:  http://www.mercuryinsurance.com/
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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