BUZZ-Mercury General soars after Q4 profit tops expectations

Shares of Los Angeles-based insurer Mercury General MCY.N jump 20.7% to $60.43 premarket

MCY late Tuesday reported Q4 operating income of $2.78/shr, blowing past Wall Street expectations of $1.12/shr, according to estimates compiled by LSEG

Q4 net premiums written jumped 16.1% to $1.31 billion, beating expectations of $1.24 billion

MCY's Q4 combined ratio improved to 91.4% from 98.6% a year earlier

A ratio below 100% means the insurer earned more in premiums than it paid out in claims

Raymond James says Q4 results reflect some of the strongest underlying results in over the last 10 years

Meanwhile, MCY forecast net catastrophe losses from the devastating Los Angeles wildfires to be between $155 million and $325 million

Brokerage expects MCY to benefit from a potential change in the pricing environment for California homeowners' insurance market over the next 18 months

MCY stock down 24.7% YTD