(BestWire Services Via Thomson Dialog NewsEdge)
On Jan. 1, George Joseph, Mercury General Corp.'s founder, chairman and chief executive officer, turns over the title of CEO to Gabriel Tirador, company president and chief operation officer since 2001. Joseph, who has headed the company since launching it in 1961, remains as chairman. Following is a transcript of an interview with Joseph by Rick Cornejo, managing editor of BestWeek. An audio version of this interview was released on Nov. 21 at http://www.bestdayaudio.com.

BESTWEEK: Im Rick Cornejo with todays BestDay Audio Spotlight. Joining me is George Joseph, chairman of Mercury General Insurance Company. Mr. Joseph, thank you for joining me.

MR. JOSEPH: Thank you, Rick.

BESTWEEK: Recently you announced that you would be stepping down as CEO but staying on as chairman of Mercury General and we just wanted to talk to you. What prompted this decision at this time?

MR. JOSEPH: Well, of course, Rick, I was 85 years in September and this is a publicly held company. There comes a time when a change has to be made. Theres nothing wrong with my health and my energy. But Ive been working with Mr. Tirador for a number of years and training him for that job and I felt it was the appropriate time to make the change because hes fully capable of carrying out the functions. In fact, he really has been carrying out the CEO functions for the last two or three years. So my interest in the company is undiminished and Ill be here every day. But its time for the title to pass to a younger person.

BESTWEEK: In your continuing role as chairman what are some of the some of the duties that youll be continuing to do?

MR. JOSEPH: Well, I will continue to monitor the new results of the company, not only in California but in the various states and the big projects that are underway now. And if the opportunity presents itself, an acquisition that seems to make sense comes along, I certainly would be very much involved in that. Ill also be involved in governmental relations with the legislature in California. Ill take more interest in our portfolio, Mercurys portfolio, which is well in excess of $3 billion now and whatever new projects come along.

BESTWEEK: What are some of the opportunities and/or challenges that you see in the next few years for Mercury?

MR. JOSEPH: Well, Mercurys biggest challenge now I believe is to redo its point of sales software. That is the method by which we communicate with our agents and how they transmit information to us and us to them. We want to make that quicker and easier than it is now, and that project has been underway for some time. It probably has another 18 months to go. We believe once its finished itll make it easier for us to enter other states and to offer our agents other lines. Long-range, the company wants to continue to paperless. Weve made small steps in that direction. The company also wants to expand in two or three of the states that weve entered in a very small way and weve stopped further advancement because we didnt feel that our software was in good shape to do that. We also want to enter many of the states that were not in at all. We want to integrate some of the functions between the Mercury companies in California and our wholly owned subsidiary in Oklahoma and we want to continue to develop more products for the agents here in California.

BESTWEEK: OK. Since you founded Mercury General Im sure the auto insurance market has changed a bit. What are your thoughts on the current market conditions and what kind of trends might be seen in the next few years?

MR. JOSEPH: Well, certainly the current market conditions for the private passenger auto line are very competitive, I would say from my perspective the most competitive that Ive seen in my 50 years in the business. This business is cyclical as Im sure you know and I would expect that within 18 months to two years, we will see change in the direction of the private-passenger auto market. Id look for it to be less competitive at that time. I would expect that some of the newcomers will find that the enticing profit margins of the last two or three years are not permanent and there may be some change in their operations.

BESTWEEK: Also, recently we had Election Day and a new insurance commissioner was elected in California. Any thoughts on how this might change the market situation there in that state?

MR. JOSEPH: I dont think were going to see much change in the market itself. I would expect that the new commissioners method of dealing with the industry may be somewhat different than his predecessor. But I dont really see significant change because of that election. Its difficult to determine in advance how a regulator would regulate the market but I certainly have confidence in the newly elected commissioner and I think hes a very capable person and I look forward to his administration.

BESTWEEK: Any final thoughts that youd like to leave us with?

MR. JOSEPH: I dont think so, Rick, except to say that I think those of us in this business are very fortunate to be part of it. I think its an exciting, interesting business. You dont really know when you come in the office every day what youre going to face thats new and I think its a business that will reward those companies who are able to innovate and continue to offer good service and who are politically active, as a number of us are. Those are basically my thoughts, Rick.

BESTWEEK: Excellent. Well thank you for talking with us.

MR. JOSEPH: All right, Rick.

BESTWEEK: That was George Joseph, chairman of Mercury General and Im Rick Cornejo with todays BestDay Audio Spotlight.

(By Rick Cornejo, associate editor, BestWeek: rick.cornejo@ambest.com)

Copyright 2006 A.M. Best Company, Inc.

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