New York, February 18, 2026, 10:18 (EST) — Regular session.
Mercury General Corp (MCY) dropped roughly 6% Wednesday, with the insurer’s shares sliding $5.64 to $90.55 as of late morning. The decline followed its fourth-quarter report and fresh disclosures on losses tied to major Southern California wildfires. On the session, the stock ranged from $100.61 to $89.86, after ending Tuesday at $96.19.
The report drops as California personal-lines insurers face a tricky period—one rough catastrophe season can erase months of pricing progress. Traders are sizing up the losses, the recovery speed, and bracing for what comes next on rates.
The combined ratio usually steals the spotlight—it’s the key number showing claims and expenses as a percentage of premiums. A figure under 100 signals an underwriting profit. Over 100? The insurer’s shelling out more than it collects, even before factoring in investment income.
Mercury reported late Tuesday that net income for the fourth quarter jumped to $202.5 million, or $3.66 a share, with net premiums earned up 6.9% to $1.45 billion. The combined ratio landed at 88.6%, better than last year’s 91.4%; for 2025, that figure stood at 96.3%. Across the full year, net income reached $541.1 million on $5.51 billion in net premiums earned. Catastrophe losses after reinsurance totaled $508 million, most of that stemming from the Palisades and Eaton wildfires along with intense storms, according to the company. (SEC)
Reinsurance, the layer insurers purchase to limit their own losses, gets pricier and trickier to replace after major disasters. That’s a big reason shares in these names often move on small details and the calendar, not just headline earnings.
Gabe Tirador, chief executive, described the Palisades and Eaton fires as “the most significant catastrophes in Mercury’s history.” The company has processed more than 2,900 claims and paid out upwards of $1.4 billion to date. Gross losses and costs related to the fires are roughly $2.19 billion, Mercury noted, but after factoring in reinsurance and recovery expectations, net losses drop to about $380 million for 2025. Estimated subrogation recoveries on the Eaton fire came in at $538 million. Southern California Edison, according to Mercury, hasn’t acknowledged responsibility for the blaze. Looking ahead, the insurer anticipates a 6.9% hike in homeowners rates starting July 2026. (PR Newswire)
Mercury topped analyst expectations on both earnings and revenue—$2.53 per share and $1.36 billion, per Investing.com. Still, shares dropped, with investors zeroing in on catastrophe losses rather than the earnings surprise. (Investing)
There’s a chance recoveries show up late, or fall short, forcing Mercury to shoulder a bigger chunk of wildfire costs than it’s planning for. A tougher fire season—or higher reinsurance rates—could squeeze underwriting results, even with premiums on the upswing.
Mercury’s board signed off on a quarterly dividend of $0.3175 per share, set for payment March 26 to shareholders recorded as of March 12. Ahead of those dates, investors are eyeing updates on the Eaton recovery and claims payments. (Nasdaq)
