Item 2.05. Costs Associated with Exit or Disposal Activities

On January 22, 2013, Mercury General Corporation (the "Company") took action to consolidate its claims and underwriting operations located outside of California into hub locations in Florida, New Jersey and Texas. The consolidation is intended to improve long-term profitability and to position the Company for future growth outside of California. The Company expects a net workforce reduction of approximately 135 employees, representing less than 3% of the total workforce. The Company expects to record a charge, in the first quarter of 2013, of approximately $8 million to $13 million for employee termination, employee severance and office closure costs, all of which will result in future cash expenditures. The total annualized pre-tax cost savings that are expected to result from the consolidation is estimated to be approximately $13 million.

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