Mercury General Corporation's stock is experiencing a decline today, primarily due to the financial impact of the recent Southern California wildfires, known as the Palisades and Eaton fires. The company has already paid $80 million to policyholders for living expenses and housing contents, with further claims expected. Mercury is still evaluating whether to treat the wildfires as two separate events under its reinsurance program, which could significantly affect its financial exposure. The uncertainty surrounding the classification of these events and the potential financial implications are weighing on investor sentiment.
Additionally, Moody's has downgraded Mercury's ratings, citing the company's significant exposure to natural catastrophes in California. The downgrade reflects concerns over Mercury's ability to manage increasing environmental risks and the uncertainty of its ultimate losses from the wildfires. This downgrade has likely contributed to the negative market reaction.
Mercury General's stock is currently trading at $48.19, down 7.45% from its previous close of $52.07, and has dropped 8.44% from its opening price of $52.63.