DALLAS, Nov. 13 /PRNewswire-FirstCall/ -- GAINSCO, INC. (NYSE Amex:
GAN) today announced net income for the third quarter 2009 of $0.2
million, or $0.04 per common share, basic and diluted. This
compares to a third quarter 2008 net loss of $4.4 million, or $0.91
per common share, basic and diluted. Net income for the nine months
ended September 30, 2009 was $3.8 million, or $0.80 per common
share, basic and diluted. This compares to a net loss of $3.3
million for the nine months ended September 30, 2008, or $0.67 per
common share, basic and diluted. Gross premiums written decreased
approximately 4% during the third quarter of 2009 and increased
approximately 3% during the nine months ended September 30, 2009,
from gross premiums written in the comparable 2008 periods. Gross
premiums written by geographic region for the quarters and nine
months ended September 30, 2009 and 2008, were as follows: Quarter
ended Nine months ended (dollars in millions) September 30
September 30 ------------ ------------ 2009 2008 2009 2008 ----
---- ---- ---- (unaudited) ----------- Regions: Southeast (Florida,
Georgia, South Carolina) $26.0 29.0 87.0 81.4 South Central (Texas)
12.8 11.1 34.0 34.2 Southwest (Arizona, Nevada, New Mexico) 6.6 7.1
21.7 22.0 West (California) 0.3 0.5 1.2 1.8 --- --- --- --- Total
$45.7 47.7 143.9 139.4 ===== ==== ===== ===== Under accounting
principles generally accepted in the United States (GAAP), ratios
for the quarters and nine months ended September 30, 2009 and 2008,
were as follows: Quarter ended Nine months ended September 30
September 30 -------------- -------------- 2009 2008 2009 2008 ----
---- ---- ---- Total Company: C & CAE Ratio (1) 75.8 % 73.4 %
73.3 % 73.4 % Expense Ratio (2)(3) 26.2 % 24.5 % 25.6 % 25.5 %
------ ------ ------ ------ Combined Ratio (2) 102.0 % 97.9 % 98.9
% 98.9 % ======= ====== ====== ====== Nonstandard Personal Auto: C
& CAE Ratio (1) 77.8 % 73.3 % 75.2 % 74.3 % ====== ======
====== ====== (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 subsidiary 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 2009, the Company's runoff
lines recorded favorable development for the settlement of claims
occurring in prior accident years of $0.9 million. During the third
quarter of 2008, the Company recorded unfavorable development for
claims occurring in prior accident years for the Company's runoff
lines of $0.1 million. For the nine months ended September 30, 2009
and 2008, the runoff lines recorded favorable development for
claims occurring in prior accident years of $2.4 million and $1.2
million, respectively. As regards the Company's nonstandard
personal auto business during the third quarter of 2009, the
Company recorded favorable development for claims occurring in
prior accident years of $0.4 million. During the third quarter of
2008, the Company recorded unfavorable development for claims
occurring in prior accident years for nonstandard personal auto of
$0.8 million. For the first nine months of 2009, the Company
recorded favorable development for claims occurring in prior
accident years for nonstandard personal auto of $3.8 million. For
the first nine months of 2008, the Company recorded unfavorable
development for claims occurring in prior accident years for
nonstandard personal auto of $4.7 million. As of September 30,
2009, the Company had $75.0 million in net unpaid claims and claims
adjustment expenses ("C&CAE") (Unpaid C&CAE of $78.0
million less Ceded unpaid C&CAE of $3.0 million), compared to
net unpaid C&CAE at June 30, 2009 of $74.3 million (Unpaid
C&CAE of $76.6 million less Ceded unpaid C&CAE of $2.3
million). These amounts include net unpaid C&CAE in respect of
the Company's runoff lines of $3.0 million at September 30, 2009,
and $4.9 million at June 30, 2009. As of September 30, 2009, the
Company's Shareholders' equity was $64.3 million, Subordinated
debentures were $43.0 million and Note payable was $0.9 million.
These compare to Shareholders' equity of $62.0 million,
Subordinated debentures of $43.0 million and Note payable of $0.9
million at June 30, 2009. 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, Georgia 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)
current and future economic conditions and uncertainties and
disruptions in financial markets that may materially and adversely
affect our business, operations, capital and liquidity, (b) the
unpredictability of governmental actions affecting financial
institutions, other financial firms and rating agencies, (c)
operational risks and other challenges associated with growth into
new and unfamiliar markets and states, (d) adverse market
conditions, including heightened competition, (e) 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, (f) the Company's ability to adjust and
settle the remaining claims associated with its runoff business on
terms consistent with its estimates and reserves, (g) the adoption
or amendment of legislation or regulations, uncertainties in the
outcome of litigation and adverse trends in litigation, (h)
inherent uncertainty arising from the use of estimates and
assumptions in decisions about pricing and reserves, (i) the
effects on claims levels or business operations resulting from
natural disasters and other adverse weather conditions, (j) the
availability of reinsurance and the Company's ability to collect
reinsurance recoverables, (k) the availability and cost of capital,
which may be required in order to implement the Company's
strategies, and (l) limitations on the Company's ability to use net
operating loss carryforwards. Please refer to the Company's recent
SEC filings and the Annual Report on Form 10-K for the year ended
December 31, 2008, 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, 2009 and 2008, follow.) GAINSCO, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands,
except per share data) Quarter Nine months ended ended September
30, September 30, ------------- ------------- 2009 2008 2009 2008
---- ---- ---- ---- Net premiums earned $47,363 44,070 $141,503
131,987 Net investment income 1,704 1,991 5,059 5,920 Realized
investment (losses) gains, net: Other-than-temporary impairment
losses (120) (5,027) (2,675) (5,027) Other-than-temporary
impairment losses transferred to Other comprehensive loss - - 2,361
- Other realized investment gains (losses), net 811 (689) 1,514
(650) --- ---- ----- ---- Total realized investment gains (losses),
net 691 (5,716) 1,200 (5,677) --- ------ ----- ------ Agency
revenues 3,430 3,077 10,014 9,255 Other (expense) income, net (3) 5
(26) 39 --- --- --- --- Total revenues 53,185 43,427 157,750
141,524 Claims & CAE incurred 35,921 32,370 103,733 96,835
Policy acquisition costs 7,709 7,040 23,278 22,071 Underwriting and
operating expenses 8,879 7,634 25,197 23,466 Interest expense, net
487 739 1,631 2,408 --- --- ----- ----- Income (loss) before
Federal income taxes 189 (4,356) 3,911 (3,256) Federal income taxes
20 68 83 34 --- --- --- --- Net income (loss) $169 (4,424) $3,828
(3,290) ==== ====== ====== ====== Earnings (loss) per common share:
Basic $0.04 (0.91) $0.80 (0.67) ===== ===== ===== ===== Diluted
$0.04 (0.91) $0.80 (0.67) ===== ===== ===== ===== GAINSCO, INC. AND
SUBSIDIARIES OTHER INFORMATION ($ in thousands) Quarter Nine months
ended ended September 30, September 30, ------------- -------------
2009 2008 2009 2008 ---- ---- ---- ---- Gross premiums written
$45,738 47,664 $143,890 139,391 ======= ====== ======== =======
GAAP RATIOS: C & CAE Ratio (1) 75.8% 73.4% 73.3% 73.4% Expense
Ratio (2)(3) 26.2% 24.5% 25.6% 25.5% ---- ---- ---- ---- Combined
Ratio (2) 102.0% 97.9% 98.9% 98.9% ===== ==== ==== ==== (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 subsidiary 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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