We Believe MCY’s Loss Estimate Is Highly Misleading and Management is Playing a Dangerous Game of Pretend and Extend

In our view, MCY’s earnings PR is highly misleading and raises more questions than it answers. We think MCY is hiding risk as MCY is an outlier from each of their four peers that have reported in the last two weeks in almost every key aspect:
• MCY is reporting far lower losses per average PIF than their peers. Less than 50% in many cases.
• MCY is the only carrier to exclude FAIR assessments from their gross losses, even though the first assessment was made yesterday.
• MCY is the only carrier including subrogation benefits in their net loss numbers, even though it will take years for these benefits to develop, if ever.
o This subrogation benefit is key to the net loss figures MCY provides, without it, none of the numbers provided add up!
• MCY is the only carrier that has not figured out whether it will treat this as 1 or 2 events.
• Unlike its peers, MCY has not disclosed the number of claims filed, and admits that it is using historical estimates, instead of the granular data they have, to estimate losses.