{ "docId": "019dd923-622c-750b-8b9a-97be8c491a06", "docSlug": "f6c49e173cdf", "documentTitle": "Mercury General Corporation (MCY)", "authorId": "60_Wolfpack_Research", "authorName": "Wolfpack Research", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2025-01-29 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 14, "pageCount": 18, "prevPage": 13, "nextPage": 15, "slideType": "appendix_disclosure", "function": "appendix", "density": "balanced", "nDataPoints": 0, "notes": "The page contains a dense list of numbered references, including links to external documents, regulatory filings, and data sources.", "elementsJson": [ "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-97be8c491a06/14", "deckHref": "/decks/019dd923-622c-750b-8b9a-97be8c491a06", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-97be8c491a06.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-97be8c491a06#slide-14", "components": [ { "bbox": { "h": 0.02, "w": 0.083, "x": 0.783, "y": 0.925 }, "kind": "paragraph", "text": "Page 14 of 18", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3d59ae0e-4598-4632-8fbb-447d68198645", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.825, "w": 0.764, "x": 0.118, "y": 0.108 }, "kind": "paragraph", "text": "1 Cal Fire Updates On Eaton Fire and Palisades Fire\n2 MCY 8-K\n3 MCY 8-K states the company's reinsurance treaty allows for the combining of events that occur within a 150-mile radius as a single occurrence.\n4 Insurance Services Office\n5 MCY 10-Q, Q3 2024, p. 26. Based on direct premiums written for the nine months ended September 30, 2024.\n6 Per Zillow, the average California home value is ~$773k. Assigning a 75% dwelling value as we did elsewhere in our report, that yields a replacement value of ~$580k. Given 30% of MCY's direct written premium for homeowner's is written outside California, we used the average U.S home value reported by Zillow of $357k and assessed dwelling value at 75%. Taking a weighted average of these values based off direct premium written (California 70%, non-California 30%), we estimate the average replacement cost for MCY is $487k.\n7 The average California home value is $773,262 per Zillow.\n8 Homeowners underwriting guidelines available here. The landlord underwriting guideline is available through SERFF tracking number: MERY-134235497\n9 The statutory language is available here, although it looks as if it were only codified in 2025, prior to this the California Department of Insurance had made identical rules. This online article in the Advocate does a nice job breaking down the particulars of the rules and its history.\n10 Zip code 90272\n11 Insurance Information Institute\n12 SERFF Tracking #: WSUN-133844493\n13 Insurance Information Institute\n14 MCY Press Release\n15 CBS News. Another article published after the fire indicates that State Farm had only nonrenewed 30 percent of these policies prior to the fire, meaning that ~500 homes. State Farm is trying to appear magnanimous, but California's moratorium on non-renewals in CA is the likely reason why they are allowing these people to renew.\n16 Reinsurance News and Fitch Ratings\n17 Appendix A\n18 California Department of Insurance\n19 CAIC Rate Filing\n20 LA County Eaton Fire and LA County Palisades Fire\n21 Screenshot taken from LA County site, 1/25/25\n22 Screenshot taken from LA County site, 1/25/25\n23 Data retrieved from LA County's ArcGIS maps on 1/20/25\n24 We used a reverse geocoding API to approximate addresses of each home which LA County has inspected.\n25 Data retrieved from LA County's ArcGIS maps on 1/20/25\n26 It is important to note that New York Drive (which you can see in the video) appears to be the southern boundary of 91001.\n27 SERFF Tracking #: MERY-134235497\n28 Our estimates are based on data retrieved from LA County's ArcGIS maps on 1/20/25 covering their damage assessment of single-story and multi-story single family residences.\n29 CalMatters estimates that structure value is 59% of LA property values. We adjusted dwelling value upwards to 75% to account for the endorsement which expands Coverage A plus inflationary construction costs.\n30 Most homeowner policies provide ALE coverage at 20-30% of dwelling coverage.\n31 Hippo personal property coverage\n32 CAIC Landlord SERFF Filing\n33 Nationwide\n34 Our estimates are based on data retrieved from LA County's ArcGIS maps on 1/20/25 covering their damage assessment of single-story and multi-story multifamily structures.\n35 Artemis.bm\n36 Data retrieved from LA County's ArcGIS Palisades Fire map on 1/20/25\n37 SF Chronicle\n38 FAIR Plan 91001 Residential PIF Count as of 9/30/24\n39 Insurance Business\n40 Landlord policies are included in our loss estimate.\n41 MCY 8-K", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "85da8b52-70ae-4e76-94e5-7d3dc785af29", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [ { "to": 18, "from": 1, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "cd27e204-1caa-4b42-9d62-a73b957c0229", "evidence": "The document highlights the potential consequences of not addressing the losses, including financial instability and potential bankruptcy", "position": 1, "objective": "To emphasize the consequences of not addressing the losses", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.7, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }