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Mercury General reported second-quarter revenue of $1.7 billion, up from $1.5 billion a year earlier and above the $1.6 billion consensus. Diluted earnings per share rose to $4.76 from $3.01.
The company’s filing attributed growth in net premiums earned primarily to a California homeowners rate increase and more policies written in its California auto and homeowners businesses, partly offset by higher ceded premiums. Mercury also reported higher net investment income, largely because it held more invested assets on average.
Gross margin rose to 27.2% from 21.0%, while operating margin increased to 19.9% from 14.5%. The filing attributed a lower loss ratio, excluding catastrophes and prior-year loss development, primarily to the homeowners rate increase and fewer private passenger auto claims, partly offset by higher claim severity. Mercury reported catastrophe losses primarily from storms in Texas and Oklahoma.
Free cash flow fell to $201.6 million from $370.0 million.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.7 billion | $1.5 billion | 13.8% |
| Diluted EPS | $4.76 | $3.01 | 58.1% |
| Gross margin | 27.2% | 21.0% | 6.3 percentage points |
| Operating margin | 19.9% | 14.5% | 5.5 percentage points |
| Free cash flow | $201.6 million | $370.0 million | −45.5% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Revenue | $1.7 billion | $1.6 billion | Beat by 5.75% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
An earnings call was not available. In its filing, Mercury said its expense ratio increased from a year earlier, largely because of higher profitability-based accruals and advertising expenses, partly offset by the homeowners rate increase. The company also said higher reinsurance coverage and rates contributed to an increase in ceded premiums.
Guidance
Management’s guidance was not available. In its filing, Mercury said it intended to apply to California regulators for an increase in private passenger automobile insurance rates.