Auto insurer Mercury General (NYSE:MCY) continues to spin its wheels outside its core California market. Overall growth may be hard to come by going forward, but getting paid to wait for conditions to improve may not be a bad thing.

Mercury General reported first-quarter earnings on Monday that confirmed conditions outside California remain challenging. California net premiums written -- a key insurance metric --  advanced a favorable 6.2% but fell 11.1% in "non-California" states. The combined ratio worsened slightly in Cali to 91.2%, but remained firmly below the 100% that would signify an underwriting loss. This is exactly what happened outside California, as the combined ratio jumped to 104.9%.

Overall, the quarter saw a measly 1.5% increase in net premiums written. Net premiums earned and net investment income grew a bit faster, but during the earnings conference call, management bemoaned that the "competitive environment remains intense." Conditions appear especially tough in states such as New Jersey, where Mercury believes competition is as fierce as it's ever seen.

Mercury is in the process of putting the finishing touches on a new front-end sales software system, which is expected to make it easier for insurance agents to do business with the company. It plans on rolling out the system in one state by the end of this year.

We'll see whether the new sales system bring total growth above the low single digits currently projected going forward. Fortunately, Mercury increased its dividend more than 8%, and it now sports a dividend yield close to 3.7%. That's much higher than you'll find at competitors such as Progressive (NYSE:PGR) (0.2%), Allstate (NYSE:ALL) (2.4%), or Safety Insurance Group (NASDAQ:SAFT) (2.4%).

Throw in a price-to-book ratio below 2 -- close to a five-year low for Mercury -- and hanging around to wait for growth to improve might not be a bad idea.       

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Mercury General is an Income Investor  pick. Click here to learn about beating the market with quality dividend-paying companies. Safety Insurance is a Stock Advisor recommendation. 

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned. The Fool has an ironclad disclosure policy.