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Condensed Financial Information of Registrant
 12 Months Ended
Dec. 31, 2022
Condensed Financial Information Disclosure [Abstract]  
Condensed Financial Information of Registrant
 December 31,
 20222021
 (Amounts in thousands)
ASSETS
Investments, at fair value:
Fixed maturity securities (amortized cost $10,908; $0)
$10,907 $— 
Equity securities (cost $35,041; $69,371)
51,416 111,399 
Short-term investments (cost $27,057; $20,441)
27,059 20,441 
Investment in subsidiaries1,833,372 2,332,717 
Total investments1,922,754 2,464,557 
Cash6,218 53,738 
Accrued investment income149 16 
Amounts receivable from affiliates516 457 
Current income taxes55,777 20,738 
Deferred income taxes1,072 — 
Income tax receivable from affiliates12,865 14,202 
Other assets1,493 771 
Total assets$2,000,844 $2,554,479 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable$398,330 $372,931 
Amounts payable to affiliates90 0 
Income tax payable to affiliates75,079 25,626 
Deferred income taxes— 10,811 
Other liabilities5,214 4,830 
Total liabilities478,713 414,198 
Commitments and contingencies
Shareholders’ equity:
Common stock98,947 98,943 
Retained earnings1,423,184 2,041,338 
Total shareholders’ equity1,522,131 2,140,281 
Total liabilities and shareholders’ equity$2,000,844 $2,554,479 
 
SCHEDULE II, Continued

MERCURY GENERAL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
 Year Ended December 31,
 202220212020
 (Amounts in thousands)
Revenues:
Net investment income$2,696 $2,560 $3,323 
Net realized investment (losses) gains(12,969)26,523 9,575 
Total revenues(10,273)29,083 12,898 
Expenses:
Other operating expenses2,446 2,627 3,054 
Interest17,178 17,088 17,035 
Total expenses19,624 19,715 20,089 
(Loss) income before income taxes and equity in net (loss) income of subsidiaries(29,897)9,368 (7,191)
Income tax (benefit) expense(10,234)4,930 600 
(Loss) income before equity in net (loss) income of subsidiaries(19,663)4,438 (7,791)
Equity in net (loss) income of subsidiaries(493,009)243,499 382,398 
Net (loss) income$(512,672)$247,937 $374,607 
SCHEDULE II, Continued

MERCURY GENERAL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
 Year Ended December 31,
 202220212020
 (Amounts in thousands)
Cash flows from operating activities:
Net cash provided by (used in) operating activities$225 $(36,662)$(17,339)
Cash flows from investing activities:
Capital contribution to subsidiaries— — (30,000)
Capital distribution from subsidiaries3,431 — — 
Distributions received from special purpose entities2,904 5,199 12,129 
Dividends received from subsidiaries— 191,000 121,000 
Fixed maturity securities available for sale in nature
Purchases(11,905)— — 
Sales1,000 — — 
Equity securities available for sale in nature
Purchases(5,307)(13,151)(54,571)
Sales48,215 38,092 67,965 
(Increase) decrease in short-term investments(6,268)(16,172)25,088 
Other, net667 791 254 
Net cash provided by investing activities32,737 205,759 141,865 
Cash flows from financing activities:
Dividends paid to shareholders(105,482)(140,226)(139,640)
Proceeds from stock options exercised— 215 — 
Proceeds from bank loan25,000 — — 
Net cash used in financing activities(80,482)(140,011)(139,640)
Net (decrease) increase in cash(47,520)29,086 (15,114)
Cash:
Beginning of year53,738 24,652 39,766 
End of year$6,218 $53,738 $24,652 
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid $16,611 $16,590 $16,586 
Income taxes (refunded) paid, net $(14,102)$18,841 $(20,552)
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, 2022, 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, 2022 and 2021. 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 $2.9 million, $5.2 million, and $12.1 million in 2022, 2021, and 2020, respectively, from these special purpose entities.
Dividends received from Subsidiaries

Dividends of $0, $191,000,000 and $121,000,000 were received by Mercury General from its 100% owned insurance subsidiaries in 2022, 2021 and 2020, respectively, and were recorded as a reduction to investment in subsidiaries.
Capitalization of Insurance Subsidiaries

Mercury General made capital contributions to its insurance subsidiaries of $0, $0 and $30,000,000 in 2022, 2021 and 2020, respectively. In addition, Mercury General received a capital distribution from its insurance subsidiaries of $3,431,433, $0, and $0 in 2022, 2021 and 2020, respectively. The capital distribution for 2022 was related to the dissolution of an insurance subsidiary, MICFL, in November 2022, pursuant to which Mercury General received the complete return of its invested capital.
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%.

On March 29, 2017, the Company 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 increased the aggregate commitments by all the lenders to $75 million from $50 million under the 2017 Credit Agreement and extended the maturity date of the loan that was the subject of the 2017 Credit Agreement to March 31, 2026. On November 18, 2022, the Company entered into the First Amendment to Amended and Restated Credit Agreement (the "First Amendment"). The First Amendment extended the maturity date of the loan to November 16, 2026 from March 31, 2026 with possible further extension if certain conditions are met, increased the aggregate commitments by all the lenders to $200 million from $75 million, and replaced the LIBOR with the term SOFR. The interest rates on borrowings under the credit facility are based on the Company's debt to total capital ratio and range from Term SOFR plus 112.5 basis points when the ratio is under 20% to Term SOFR 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 20.8% at December 31, 2022, resulting in a 15.0 basis point commitment fee on the $175 million undrawn portion of the credit facility. As of February 14, 2023, a total of $25 million was drawn down under this facility on a three-month revolving basis at an annual interest rate of approximately 5.68%.
Federal Income Taxes

The Company files a consolidated federal income tax return for the following entities:
 
Mercury Casualty Company
Mercury Insurance Company of Florida ("MICFL")(1)
Mercury Insurance CompanyMercury Indemnity Company of America
California Automobile Insurance CompanyMercury Select Management Company, Inc.
California General Underwriters Insurance Company, Inc.Mercury Insurance Services LLC
Mercury Insurance Company of IllinoisAIS Management LLC
Mercury Insurance Company of GeorgiaAuto Insurance Specialists LLC
Mercury Indemnity Company of GeorgiaPoliSeek AIS Insurance Solutions, Inc.
American Mercury Insurance CompanyAnimas Funding LLC
American Mercury Lloyds Insurance CompanyFannette Funding LLC
Orion Indemnity CompanyMercury Plus Insurance Services LLC
Mercury County Mutual Insurance Company
__________ 
(1)MICFL was dissolved in November 2022.

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.