Mercury General Jumps on Barron’s Feature

Shares of Mercury General (MCY) are soaring today after the insurance company was featured in Barron’s.

Mercury’s shares, now around $46, look appealing. Most notable is the company’s lofty dividend of $2.53 a share, which results in a 5.4% yield. The stock trades for 1.3 times book value and about 13 times projected 2021 earnings of $3.43 a share.

This year’s estimated profits of $4.68 a share are inflated by the reduced driving activity that has come as a result of the pandemic, leading to fewer accidents and better underwriting results. The company is the No. 6 auto insurer in the Golden State with an 8% share of the private-passenger market, according to AM Best.

I have one small quibble in that Barron’s could have gone into more detail on CEO George Joseph’s remarkable life. He’s a perfect example of the great American success story. He’s the son of Lebanese immigrants. Joseph grew up in West Virginia where his father worked as a coalminer.

During World War II, Joseph served as a navigator on a B-17, and he flew 50 missions. After the war, he went to Harvard on the GI Bill. He finished in three years. After that, he founded Mercury General and today he’s a billionaire. I’m happy to say that George Joseph is still with us at the age of 99.

George Joseph founded Mercury General in 1961. The company has raised its dividend every year for the last 34 years. Check out this long-term chart. Mercury General is in black while the S&P 500 is in blue.

Posted by on December 14th, 2020 at 3:06 pm


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