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Condensed Financial Information of Registrant
 12 Months Ended
Dec. 31, 2021
Condensed Financial Information Disclosure [Abstract]  
Condensed Financial Information of Registrant
 December 31,
 20212020
 (Amounts in thousands)
ASSETS
Investments, at fair value:
Equity securities (cost $69,371; $75,099)
$111,399 $110,596 
Short-term investments (cost $20,441; $4,269)
20,441 4,269 
Investment in subsidiaries2,332,717 2,285,417 
Total investments2,464,557 2,400,282 
Cash53,738 24,652 
Accrued investment income16 20 
Amounts receivable from affiliates457 250 
Current income taxes20,738 — 
Income tax receivable from affiliates14,202 5,862 
Other assets771 221 
Total assets$2,554,479 $2,431,287 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable$372,931 $372,532 
Amounts payable to affiliates— 30 
Income tax payable to affiliates25,626 2,724 
Current income taxes— 10,074 
Deferred income taxes10,811 8,470 
Other liabilities4,830 4,860 
Total liabilities414,198 398,690 
Commitments and contingencies
Shareholders’ equity:
Common stock98,943 98,970 
Retained earnings2,041,338 1,933,627 
Total shareholders’ equity2,140,281 2,032,597 
Total liabilities and shareholders’ equity$2,554,479 $2,431,287 
 
SCHEDULE II, Continued

MERCURY GENERAL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
 Year Ended December 31,
 202120202019
 (Amounts in thousands)
Revenues:
Net investment income$2,560 $3,323 $3,735 
Net realized investment gains26,523 9,575 31,682 
Other— — 5 
Total revenues29,083 12,898 35,422 
Expenses:
Other operating expenses2,627 3,054 2,592 
Interest17,088 17,035 17,036 
Total expenses19,715 20,089 19,628 
Income (loss) before income taxes and equity in net income of subsidiaries9,368 (7,191)15,794 
Income tax expense4,930 600 2,816 
Income (loss) before equity in net income of subsidiaries4,438 (7,791)12,978 
Equity in net income of subsidiaries243,499 382,398 307,109 
Net income$247,937 $374,607 $320,087 
SCHEDULE II, Continued

MERCURY GENERAL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
 Year Ended December 31,
 202120202019
 (Amounts in thousands)
Cash flows from operating activities:
Net cash used in operating activities$(36,662)$(17,339)$(5,392)
Cash flows from investing activities:
Capital contribution to subsidiaries— (30,000)(125)
Capital distribution from subsidiaries— — 30,069 
Distributions received from special purpose entities5,199 12,129 5,153 
Dividends received from subsidiaries191,000 121,000 114,431 
Equity securities available for sale in nature
Purchases(13,151)(54,571)(39,966)
Sales38,092 67,965 74,663 
(Increase) decrease in short-term investments(16,172)25,088 (25,213)
Other, net791 254 376 
Net cash provided by investing activities205,759 141,865 159,388 
Cash flows from financing activities:
Dividends paid to shareholders(140,226)(139,640)(139,071)
Proceeds from stock options exercised215 — 701 
Net cash used in financing activities(140,011)(139,640)(138,370)
Net increase (decrease) in cash29,086 (15,114)15,626 
Cash:
Beginning of year24,652 39,766 24,140 
End of year$53,738 $24,652 $39,766 
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid $16,590 $16,586 $16,586 
Income taxes paid (refunded), net $18,841 $(20,552)$(12,391)
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, 2021, 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, 2021 and 2020. 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 $5.2 million, $12.1 million, and $5.2 million in 2021, 2020, and 2019, respectively, from these special purpose entities.
Dividends received from Subsidiaries

Dividends of $191,000,000, $121,000,000 and $114,431,433 were received by Mercury General from its 100% owned insurance subsidiaries in 2021, 2020 and 2019, respectively, and are recorded as a reduction to investment in subsidiaries.
Capitalization of Insurance Subsidiaries

Mercury General made capital contributions to its insurance subsidiaries of $0, $30,000,000 and $125,000 in 2021, 2020 and 2019, respectively. In addition, Mercury General received a capital distribution from its insurance subsidiaries of $0, $0 and $30,068,567 in 2021, 2020 and 2019, respectively.
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%.
Commitments and Contingencies

On March 29, 2017, Mercury General 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, among other things, extended the maturity date of the loan that was the subject of the 2017 Credit Agreement to March 31, 2026, added U.S. Bank as an additional lender, and increased the aggregate commitments by all the lenders to $75 million from $50 million under the 2017 Credit Agreement. The interest rates on borrowings under the credit facility are based on the Company's debt to total capital ratio and range from LIBOR plus 112.5 basis points when the ratio is under 20% to LIBOR 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 14.9% at December 31, 2021, resulting in a 12.5 basis point commitment fee on the $75 million undrawn portion of the credit facility. As of February 15, 2022, there have been no borrowings under this facility.
Federal Income Taxes

The Company files a consolidated federal income tax return for the following entities:
 
Mercury Casualty CompanyMercury County Mutual Insurance Company
Mercury Insurance CompanyMercury Insurance Company of Florida
California Automobile Insurance CompanyMercury Indemnity Company of America
California General Underwriters Insurance Company, Inc.Mercury Select Management Company, Inc.
Mercury Insurance Company of IllinoisMercury Insurance Services LLC
Mercury Insurance Company of GeorgiaAIS Management LLC
Mercury Indemnity Company of GeorgiaAuto Insurance Specialists LLC
Mercury National Insurance Company ("MNIC")(1)
PoliSeek AIS Insurance Solutions, Inc.
American Mercury Insurance CompanyAnimas Funding LLC
American Mercury Lloyds Insurance CompanyFannette Funding LLC
Orion Indemnity Company ("OIC")(2)
Mercury Plus Insurance Services LLC
__________ 
(1)MNIC was dissolved in December 2021.
(2)OIC was formerly known as Workmen’s Auto Insurance Company (“WAIC”). The name change became effective in August 2021.

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.