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Bonds News

UPDATE 1-Mercury General Q1 oper profit falls; cuts 7 pct jobs

* Q1 oper shr $0.83 vs $1.02 last year

* Cuts 360 jobs, takes $8 mln charge

* Halts employee 401(k) matching program * Q1 net premiums earned falls 8 pct

May 4 (Reuters) - Auto and home insurer Mercury General Corp MCY.N posted an 18 percent drop in first-quarter operating profit, hurt by lower net premiums earned, but beat market estimates, and said it cut 360 jobs in the quarter.

The Los Angeles-based company also said it suspended the employee 401(k) matching program to cut costs and took an $8 million charge in the first quarter related to the job-cuts.

The annualized cost savings from its cost-cut programs are expected to be more than $20 million, starting from the second quarter of 2009, it said in a statement.

Mercury General earned $96.7 million, or $1.75 a share, for the latest first quarter, compared with a net loss of $4 million, or 7 cents a share, a year earlier.

Operating profit, a measure most commonly used by insurance analysts, was 83 cents a share, down from $1.02 last year.

Analysts on average had expected a profit of 64 cents per share, excluding special items, according to Reuters Estimates.

Net premiums earned fell 8 percent to $666.1 million.

The company, which writes automobile insurance mainly in California, said combined ratio was 96.9 percent, compared with 95.4 percent in the prior-year quarter.

Combined ratio is the percentage of premiums an insurer has to pay out in claims and expenses. A lower figure means the insurer earns more money.

Shares of the company closed at $33.34 Friday on the New York Stock Exchange. They have gained about 50 percent since touching a year-low of $22.45 on March 9. (Reporting by Anurag Kotoky in Bangalore; Editing by Gopakumar Warrier)

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