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Condensed Financial Information of Registrant | 12 Months Ended
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Dec. 31, 2021
Condensed Financial Information Disclosure [Abstract] |
Condensed Financial Information of Registrant |
| December 31,
| 2021 |  | 2020
| (Amounts in thousands)
ASSETS |  |  |
Investments, at fair value: |  |  |
Equity securities (cost $69,371; $75,099) | $ | 111,399 |  |  | $ | 110,596 |
Short-term investments (cost $20,441; $4,269) | 20,441 |  |  | 4,269 |
Investment in subsidiaries | 2,332,717 |  |  | 2,285,417 |
Total investments | 2,464,557 |  |  | 2,400,282 |
Cash | 53,738 |  |  | 24,652 |
Accrued investment income | 16 |  |  | 20 |
Amounts receivable from affiliates | 457 |  |  | 250 |
Current income taxes | 20,738 |  |  | — |
Income tax receivable from affiliates | 14,202 |  |  | 5,862 |
Other assets | 771 |  |  | 221 |
Total assets | $ | 2,554,479 |  |  | $ | 2,431,287 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
Notes payable | $ | 372,931 |  |  | $ | 372,532 |
Amounts payable to affiliates | — |  |  | 30 |
Income tax payable to affiliates | 25,626 |  |  | 2,724 |
Current income taxes | — |  |  | 10,074 |
Deferred income taxes | 10,811 |  |  | 8,470 |
Other liabilities | 4,830 |  |  | 4,860 |
Total liabilities | 414,198 |  |  | 398,690 |
Commitments and contingencies |  |  |
Shareholders’ equity: |  |  |
Common stock | 98,943 |  |  | 98,970 |
Retained earnings | 2,041,338 |  |  | 1,933,627 |
Total shareholders’ equity | 2,140,281 |  |  | 2,032,597 |
Total liabilities and shareholders’ equity | $ | 2,554,479 |  |  | $ | 2,431,287 |
SCHEDULE II, Continued MERCURY GENERAL CORPORATION CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF OPERATIONS
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
| (Amounts in thousands)
Revenues: |  |  |  |  |
Net investment income | $ | 2,560 |  |  | $ | 3,323 |  |  | $ | 3,735 |
Net realized investment gains | 26,523 |  |  | 9,575 |  |  | 31,682 |
Other | — |  |  | — |  |  | 5 |
Total revenues | 29,083 |  |  | 12,898 |  |  | 35,422 |
Expenses: |  |  |  |  |
Other operating expenses | 2,627 |  |  | 3,054 |  |  | 2,592 |
Interest | 17,088 |  |  | 17,035 |  |  | 17,036 |
Total expenses | 19,715 |  |  | 20,089 |  |  | 19,628 |
Income (loss) before income taxes and equity in net income of subsidiaries | 9,368 |  |  | (7,191) |  |  | 15,794 |
Income tax expense | 4,930 |  |  | 600 |  |  | 2,816 |
Income (loss) before equity in net income of subsidiaries | 4,438 |  |  | (7,791) |  |  | 12,978 |
Equity in net income of subsidiaries | 243,499 |  |  | 382,398 |  |  | 307,109 |
Net income | $ | 247,937 |  |  | $ | 374,607 |  |  | $ | 320,087 |
SCHEDULE II, Continued MERCURY GENERAL CORPORATION CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF CASH FLOWS
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
| (Amounts in thousands)
Cash flows from operating activities: |  |  |  |  |
Net cash used in operating activities | $ | (36,662) |  |  | $ | (17,339) |  |  | $ | (5,392) |
Cash flows from investing activities: |  |  |  |  |
Capital contribution to subsidiaries | — |  |  | (30,000) |  |  | (125) |
Capital distribution from subsidiaries | — |  |  | — |  |  | 30,069 |
Distributions received from special purpose entities | 5,199 |  |  | 12,129 |  |  | 5,153 |
Dividends received from subsidiaries | 191,000 |  |  | 121,000 |  |  | 114,431 |
Equity securities available for sale in nature |  |  |  |  |
Purchases | (13,151) |  |  | (54,571) |  |  | (39,966) |
Sales | 38,092 |  |  | 67,965 |  |  | 74,663 |
(Increase) decrease in short-term investments | (16,172) |  |  | 25,088 |  |  | (25,213) |
Other, net | 791 |  |  | 254 |  |  | 376 |
Net cash provided by investing activities | 205,759 |  |  | 141,865 |  |  | 159,388 |
Cash flows from financing activities: |  |  |  |  |
Dividends paid to shareholders | (140,226) |  |  | (139,640) |  |  | (139,071) |
Proceeds from stock options exercised | 215 |  |  | — |  |  | 701 |
Net cash used in financing activities | (140,011) |  |  | (139,640) |  |  | (138,370) |
Net increase (decrease) in cash | 29,086 |  |  | (15,114) |  |  | 15,626 |
Cash: |  |  |  |  |
Beginning of year | 24,652 |  |  | 39,766 |  |  | 24,140 |
End of year | $ | 53,738 |  |  | $ | 24,652 |  |  | $ | 39,766 |
SUPPLEMENTAL CASH FLOW DISCLOSURE |  |  |  |  |
Interest paid | $ | 16,590 |  |  | $ | 16,586 |  |  | $ | 16,586 |
Income taxes paid (refunded), net | $ | 18,841 |  |  | $ | (20,552) |  |  | $ | (12,391) |
The accompanying condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in this report. Distributions received from Special Purpose Entities From time to time, the Company forms special purpose investment vehicles to facilitate its investment activities involving derivative instruments such as total return swaps, or limited partnerships such as private equity funds. For the three years ended December 31, 2021, the Company had two such special purpose entities: Fannette Funding LLC and Animas Funding LLC. These special purpose entities are consolidated into the Company. Creditors have no recourse against the Company in the event of default by these special purpose entities. The Company had no implied or unfunded commitments to these entities at December 31, 2021 and 2020. The Company's financial or other support provided to these entities and its loss exposure are limited to its collateral and original investment. Mercury General received distributions of $5.2 million, $12.1 million, and $5.2 million in 2021, 2020, and 2019, respectively, from these special purpose entities. Dividends received from Subsidiaries Dividends of $191,000,000, $121,000,000 and $114,431,433 were received by Mercury General from its 100% owned insurance subsidiaries in 2021, 2020 and 2019, respectively, and are recorded as a reduction to investment in subsidiaries. Capitalization of Insurance Subsidiaries Mercury General made capital contributions to its insurance subsidiaries of $0, $30,000,000 and $125,000 in 2021, 2020 and 2019, respectively. In addition, Mercury General received a capital distribution from its insurance subsidiaries of $0, $0 and $30,068,567 in 2021, 2020 and 2019, respectively. Notes Payable On March 8, 2017, Mercury General completed a public debt offering issuing $375 million of senior notes. The notes are unsecured senior obligations of Mercury General, with a 4.4% annual coupon payable on March 15 and September 15 of each year commencing September 15, 2017. These notes mature on March 15, 2027. The Company used the proceeds from the notes to pay off the total outstanding balance of $320 million under the existing loan and credit facility agreements and terminated the agreements on March 8, 2017. The remainder of the proceeds from the notes was used for general corporate purposes. Mercury General incurred debt issuance costs of approximately $3.4 million, inclusive of underwriters' fees. The notes were issued at a slight discount of 99.847% of par, resulting in the effective annualized interest rate, including debt issuance costs, of approximately 4.45%. Commitments and Contingencies On March 29, 2017, Mercury General entered into an unsecured credit agreement (the "2017 Credit Agreement") that provided for revolving loans of up to $50 million and was set to mature on March 29, 2022. On March 31, 2021, the Company entered into an amended and restated credit agreement (the "Amended and Restated Credit Agreement") that amended and restated the 2017 Credit Agreement. The Amended and Restated Credit Agreement, among other things, extended the maturity date of the loan that was the subject of the 2017 Credit Agreement to March 31, 2026, added U.S. Bank as an additional lender, and increased the aggregate commitments by all the lenders to $75 million from $50 million under the 2017 Credit Agreement. The interest rates on borrowings under the credit facility are based on the Company's debt to total capital ratio and range from LIBOR plus 112.5 basis points when the ratio is under 20% to LIBOR plus 150.0 basis points when the ratio is greater than or equal to 30%. Commitment fees for the undrawn portions of the credit facility range from 12.5 basis points when the ratio is under 20% to 22.5 basis points when the ratio is greater than or equal to 30%. The debt to total capital ratio is expressed as a percentage of (a) consolidated debt to (b) consolidated shareholders' equity plus consolidated debt. The Company's debt to total capital ratio was 14.9% at December 31, 2021, resulting in a 12.5 basis point commitment fee on the $75 million undrawn portion of the credit facility. As of February 15, 2022, there have been no borrowings under this facility. Federal Income Taxes The Company files a consolidated federal income tax return for the following entities:
Mercury Casualty Company |  | Mercury County Mutual Insurance Company
Mercury Insurance Company |  | Mercury Insurance Company of Florida
California Automobile Insurance Company |  | Mercury Indemnity Company of America
California General Underwriters Insurance Company, Inc. |  | Mercury Select Management Company, Inc.
Mercury Insurance Company of Illinois |  | Mercury Insurance Services LLC
Mercury Insurance Company of Georgia |  | AIS Management LLC
Mercury Indemnity Company of Georgia |  | Auto Insurance Specialists LLC
Mercury National Insurance Company ("MNIC")(1) |  | PoliSeek AIS Insurance Solutions, Inc.
American Mercury Insurance Company |  | Animas Funding LLC
American Mercury Lloyds Insurance Company |  | Fannette Funding LLC
Orion Indemnity Company ("OIC")(2) |  | Mercury Plus Insurance Services LLC
__________ (1)MNIC was dissolved in December 2021. (2)OIC was formerly known as Workmen’s Auto Insurance Company (“WAIC”). The name change became effective in August 2021. The method of allocation between the companies is subject to an agreement approved by the Board of Directors. Allocation is based upon separate return calculations with current credit for net losses incurred by the insurance subsidiaries to the extent it can be used in the current consolidated return.

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- Definition The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04(Schedule I)) -URI http://asc.fasb.org/extlink&oid=120391182&loc=d3e5864-122674 Reference 2: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=123454820&loc=d3e5283-111683 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 3 -Subparagraph (SX 210.12-04(a)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e24072-122690 + Details
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