Mercury General Corporation provided additional information on January 20, 2025, regarding the Southern California wildfires, specifically the Palisades and Eaton fires, and its reinsurance program.
The company has already paid $80 million to policyholders, primarily for living expenses and housing contents, and has begun paying dwelling claims for verified total losses. Mercury confirmed it has sufficient liquidity to meet these increased payment demands.
The company's catastrophe reinsurance treaty allows for combining events within a 150-mile radius as a single occurrence, or treating PCS-designated events separately. The Property Claims Service (PCS) has designated the Palisades and Eaton fires as separate events.
Under a two-event scenario, Mercury may elect to use reinsurance limits of up to $1,290 million for the first event and reinstated limits up to $1,238 million for the second event. In this scenario, the company would be responsible for two $150 million retentions, up to a $101 million reinstatement premium, and co-participation up to $52 million for losses exceeding $650 million on the second event.
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