DALLAS, Nov. 13 /PRNewswire-FirstCall/ -- GAINSCO, INC. (NYSE
Alternext: GAN) today announced net loss for the third quarter 2008
of $4.4 million, or $0.18 per common share, basic and diluted. This
compares to third quarter 2007 net loss of $4.3 million, or $0.17
per common share, basic and diluted. Net loss for the nine months
ended September 30, 2008 was $3.3 million, or $0.13 per common
share, basic and diluted. This compares to net loss of $7.6 million
for the nine months ended September 30, 2007, or $0.30 per common
share, basic and diluted. In the third quarter of 2008, the Company
recorded net realized losses of approximately $5.7 million ($0.24
per diluted common share), of which approximately $5.0 million
related to write downs for other-than-temporary declines in fair
value of various investments. The realized losses included
approximately $4.8 million from securities backed by or related to
the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation and Washington Mutual, Inc., as previously
disclosed. For the nine months ended September 30, 2008, the
Company recorded net realized losses of approximately $5.7 million
($0.23 per diluted common share). For each of the quarter and nine
months ended September 30, 2007, the Company did not record
material net realized gains or losses. Gross premiums written
increased approximately 2% and decreased approximately 6% during
the third quarter and nine months ended September 30, 2008,
respectively, from gross premiums written in the comparable 2007
periods. Gross premiums written by geographic region for the
quarters and nine months ended September 30, 2008 and 2007, were as
follows: Quarter ended Nine months ended (dollars in millions)
September 30, September 30, 2008 2007 2008 2007 (unaudited)
Regions: Southeast (Florida, South Carolina) $29.0 26.3 81.4 81.1
South Central (Texas) 11.1 11.0 34.2 37.4 Southwest (Arizona,
Nevada, New Mexico) 7.1 8.5 22.0 26.5 West (California) 0.5 0.8 1.8
2.9 Total $47.7 46.6 139.4 147.9 Under accounting principles
generally accepted in the United States ("GAAP"), ratios for the
quarters and nine months ended September 30, 2008 and 2007, were as
follows: Quarter ended Nine months ended September 30, September
30, 2008 2007 2008 2007 Total Company: C & CAE Ratio (1) 73.4%
80.4% 73.4% 79.9% Expense Ratio (2)(3) 24.5% 27.1% 25.5% 25.2%
Combined Ratio (2) 97.9% 107.5% 98.9% 105.1% Nonstandard Personal
Auto: C & CAE Ratio (1) 73.3% 80.5% 74.3% 81.5% (1) C & CAE
is an abbreviation for Claims and claims adjustment expenses,
stated as a percentage of net premiums earned. (2) The Expense
Ratio and Combined Ratio do not reflect expenses of the holding
company, which include interest expense on the note payable and
subordinated debentures. (3) Commissions, change in deferred
acquisition costs, underwriting expenses and operating expenses
(insurance subsidiaries only) are offset by agency revenues and are
stated as a percentage of net premiums earned. The Company
continues to adjust and settle claims associated with its runoff
lines. For the third quarter of 2008, the Company's runoff lines
recorded unfavorable development for the settlement of claims
occurring in prior accident years of $0.1 million. During the third
quarter 2007, the Company's runoff lines recorded favorable
development for claims occurring in prior accident years of $0.1
million. For the nine months ended September 30, 2008 and 2007, the
runoff lines recorded favorable development for claims occurring in
prior accident years of $1.2 million and $2.3 million,
respectively. As regards the Company's nonstandard personal auto
business during the third quarter 2008, the Company recorded
unfavorable development for claims occurring in prior accident
years of $0.8 million. During the third quarter 2007, the Company
recorded unfavorable development for claims occurring in prior
accident years for nonstandard personal auto of $2.4 million. For
the first nine months of 2008 and 2007, the Company recorded
unfavorable development for claims occurring in prior accident
years for nonstandard personal auto of $4.7 million and $10.5
million, respectively. As of September 30, 2008, the Company had
$69.6 million in net unpaid claims and claims adjustment expenses
("C&CAE") (Unpaid C&CAE of $72.6 million less Ceded unpaid
C&CAE of $3.0 million), compared to net unpaid C&CAE at
June 30, 2008 of $68.7 million (Unpaid C&CAE of $72.9 million
less Ceded unpaid C&CAE of $4.2 million). These amounts include
net unpaid C&CAE in respect of the Company's runoff lines of
$7.6 million at September 30, 2008, and $8.3 million at June 30,
2008. As of September 30, 2008, the outstanding inventory of runoff
claims was 38, compared to 48 at June 30, 2008. As of September 30,
2008, the Company's Shareholders' equity was $56.3 million,
Subordinated debentures were $43.0 million and Note payable was
$1.6 million. These compare to Shareholders' equity of $62.7
million, Subordinated debentures of $43.0 million and Note payable
of $1.7 million at June 30, 2008. GAINSCO, INC. is a Dallas,
Texas-based holding company. The Company's nonstandard personal
auto insurance products are distributed through independent retail
agents in Florida and South Carolina (Southeast Region), Texas
(South Central Region) and Arizona, Nevada and New Mexico
(Southwest Region), and through an independent managing general
agency in California (West Region). Its insurance company
subsidiary is MGA Insurance Company, Inc. Some of the statements
made in this release may be forward-looking statements.
Forward-looking statements relate to future events or future
financial performance and may involve known or unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements
reflect current views but are based on assumptions and are subject
to risks, uncertainties and other variables which should be
considered when making an investment decision, including (a)
operational risks and other challenges associated with growth into
new and unfamiliar markets and states, (b) adverse market
conditions, including heightened competition, (c) factors
considered by A.M. Best in the rating of our insurance subsidiary,
and the acceptability of our current rating, or a future rating, to
agents and customers, (d) the Company's ability to adjust and
settle the remaining claims associated with its runoff business on
terms consistent with its estimates and reserves, (e) the adoption
or amendment of legislation, uncertainties in the outcome of
litigation and adverse trends in litigation and regulation, (f)
inherent uncertainty arising from the use of estimates and
assumptions in decisions about pricing and reserves, (g) the
effects on claims levels or business operations resulting from
natural disasters and other adverse weather conditions, (h) the
availability of reinsurance and the Company's ability to collect
reinsurance recoverables, (i) uncertainties and disruptions in
credit and securities markets, and the availability and cost of
capital, which may be required in order to implement the Company's
strategies, and (j) limitations on the Company's ability to use net
operating loss carryforwards. Please refer to the Company's recent
SEC filings, including the Annual Report on Form 10-K for the year
ended December 31, 2007, for more information regarding factors
that could affect the Company's results. Forward-looking statements
are relevant only as of the dates made, and the Company undertakes
no obligation to update any forward-looking statement to reflect
new information, events or circumstances after the date on which
the statement is made. All written or oral forward-looking
statements that are made by or are attributable to the Company are
expressly qualified in their entirety by this cautionary notice.
Actual results may differ significantly from the results discussed
in these forward-looking statements. [The GAINSCO, INC. and
Subsidiaries unaudited Condensed Consolidated Statements of
Operations and Other Information for the quarters and nine months
ended September 30, 2008 and 2007, follow.] GAINSCO, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share data) Quarter ended Nine months ended
September 30, September 30, 2008 2007 2008 2007 (unaudited)
(unaudited) Net premiums earned $44,070 46,904 $131,987 149,337 Net
investment income 1,991 2,278 5,920 6,994 Net realized (losses)
gains (5,716) - (5,677) 32 Agency revenues 3,077 3,038 9,255 9,752
Other income (expense), net 5 (2) 39 (12) Total revenues 43,427
52,218 141,524 166,103 Claims & CAE incurred 32,370 37,695
96,835 119,374 Policy acquisition costs 7,040 8,455 22,071 27,192
Underwriting and operating expenses 7,634 8,067 23,466 22,604
Interest expense, net 739 1,036 2,408 3,077 Loss before Federal
income taxes (4,356) (3,035) (3,256) (6,144) Federal income tax
expense 68 1,247 34 1,424 Net loss $(4,424) (4,282) $(3,290)
(7,568) Loss per common share: Basic $(0.18) (0.17) $(0.13) (0.30)
Diluted $(0.18) (0.17) $(0.13) (0.30) GAINSCO, INC. AND
SUBSIDIARIES OTHER INFORMATION (In thousands, except per share
data) Quarter ended Nine months ended September 30, September 30,
2008 2007 2008 2007 Gross premiums written $47,664 46,625 $139,391
147,923 GAAP RATIOS: C & CAE Ratio (1) 73.4% 80.4% 73.4% 79.9%
Expense Ratio (2)(3) 24.5% 27.1% 25.5% 25.2% Combined Ratio (2)
97.9% 107.5% 98.9% 105.1% (1) C & CAE is an abbreviation for
Claims and claims adjustment expenses, stated as a percentage of
net premiums earned. (2) The Expense Ratio and Combined Ratio do
not reflect expenses of the holding company, which include interest
expense on the note payable and subordinated debentures. (3)
Commissions, change in deferred acquisition costs, underwriting
expenses and operating expenses (insurance subsidiaries only) are
offset by agency revenues and are stated as a percentage of net
premiums earned. DATASOURCE: GAINSCO, INC. CONTACT: Scott A. Marek,
Asst. Vice President-IR, +1-972-629-4493, or Richard M. Buxton,
Senior Vice President, +1-972-629-4408, both of GAINSCO, INC., Web
site: http://www.gainsco.com/
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