DALLAS, Aug. 13 /PRNewswire-FirstCall/ -- GAINSCO, INC. (NYSE Amex:
GAN) today announced net income for the second quarter 2009 of $1.6
million, or $0.34 per common share, basic and diluted. This
compares to second quarter 2008 net income of $1.0 million, or
$0.20 per common share, basic and diluted. Net income for the six
months ended June 30, 2009 was $3.7 million, or $0.76 per common
share, basic and diluted. This compares to net income of $1.1
million for the six months ended June 30, 2008, or $0.23 per common
share, basic and diluted. Gross premiums written increased
approximately 13% and 7% during the second quarter and six months
ended June 30, 2009, respectively, from gross premiums written in
the comparable 2008 periods. Gross premiums written by geographic
region for the quarters and six months ended June 30, 2009 and
2008, were as follows: Quarter ended Six months ended (dollars in
millions) June 30 June 30 --------------- --------------- 2009 2008
2009 2008 ------ ------ ------ ------ (unaudited) -----------
Regions: Southeast (Florida, Georgia, South Carolina) $26.6 22.2
61.0 52.4 South Central (Texas) 10.9 10.5 21.2 23.1 Southwest
(Arizona, Nevada, New Mexico) 7.0 6.4 15.1 14.9 West (California)
0.5 0.7 0.9 1.3 ------ ------ ------ ------ Total $45.0 39.8 98.2
91.7 ====== ====== ====== ====== Under accounting principles
generally accepted in the United States (GAAP), ratios for the
quarters and six months ended June 30, 2009 and 2008, were as
follows: Quarter ended Six months ended June 30 June 30
------------------ ------------------ 2009 2008 2009 2008 -------
------- ------- ------- Total Company: C & CAE Ratio (1) 73.6 %
71.9 % 72.0 % 73.3 % Expense Ratio (2)(3) 25.2 % 26.4 % 25.3 % 26.1
% ------- ------- ------- ------- Combined Ratio (2) 98.8 % 98.3 %
97.3 % 99.4 % ======= ======= ======= ======= Nonstandard Personal
Auto: C & CAE Ratio (1) 75.9 % 74.8 % 73.8 % 74.8 % =======
======= ======= ======= (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 second quarter of 2009,
the Company's runoff lines recorded favorable development for the
settlement of claims occurring in prior accident years of $1.1
million. During the second quarter of 2008, the Company recorded
favorable development for claims occurring in prior accident years
for the Company's runoff lines of $1.3 million. For the six months
ended June 30, 2009 and 2008, the runoff lines recorded favorable
development for claims occurring in prior accident years of $1.5
million and $1.3 million, respectively. As regards the Company's
nonstandard personal auto business during the second quarter of
2009, the Company recorded favorable development for claims
occurring in prior accident years of $1.1 million. During the
second quarter of 2008, the Company recorded unfavorable
development for claims occurring in prior accident years for
nonstandard personal auto of $2.2 million. For the first six months
of 2009, the Company recorded favorable development for claims
occurring in prior accident years for nonstandard personal auto of
$3.4 million. For the first six months of 2008, the Company
recorded unfavorable development for claims occurring in prior
accident years for nonstandard personal auto of $3.9 million. As of
June 30, 2009, the Company had $74.3 million in net unpaid claims
and claims adjustment expenses ("C&CAE") (Unpaid C&CAE of
$76.6 million less Ceded unpaid C&CAE of $2.3 million),
compared to net unpaid C&CAE at March 31, 2009 of $73.5 million
(Unpaid C&CAE of $76.4 million less Ceded unpaid C&CAE of
$2.9 million). These amounts include net unpaid C&CAE in
respect of the Company's runoff lines of $4.9 million at June 30,
2009, and $6.4 million at March 31, 2009. As of June 30, 2009, the
outstanding inventory of runoff claims was 28, compared to 30 at
March 31, 2009. As of June 30, 2009, the Company's Shareholders'
equity was $62.0 million, Subordinated debentures were $43.0
million and Note payable was $0.9 million. These compare to
Shareholders' equity of $54.7 million, Subordinated debentures of
$43.0 million and Note payable of $0.9 million at March 31, 2009.
During the second quarter of 2009, the Company completed a 1-for-5
reverse stock split of the Company's outstanding common stock, par
value $0.10 per share. The reverse stock split was effective June
8, 2009, and there were 4,785,398 common shares outstanding at June
30, 2009. Additionally, all references in this release to per
common share results have been retroactively adjusted for this
reverse stock split. 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 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 six months
ended June 30, 2009 and 2008, follow.] GAINSCO, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data) Quarter ended Six months ended June 30, June
30, --------------- --------------- 2009 2008 2009 2008 -------
------- ------- ------- Net premiums earned $48,141 44,577 $94,140
87,917 Net investment income 1,658 1,795 3,355 3,929 Realized
investment (losses) gains, net: Other-than-temporary impairment
losses (46) - (2,555) - Other-than-temporary impairment losses
transferred to Other comprehensive loss - - 2,361 - Other realized
investment gains (losses), net 784 (42) 703 39 ------- -------
------- ------- Total realized investment gains (losses), net 738
(42) 509 39 ------- ------- ------- ------- Agency revenues 3,383
3,193 6,584 6,178 Other income, net 2 8 (23) 34 ------- -------
------- ------- Total revenues 53,922 49,531 104,565 98,097 Claims
& CAE incurred 35,451 32,049 67,812 64,465 Policy acquisition
costs 7,991 7,854 15,569 15,031 Underwriting and operating expenses
8,299 7,977 16,318 15,832 Interest expense, net 550 730 1,144 1,669
------- ------- ------- ------- Income before Federal income taxes
1,631 921 3,722 1,100 Federal income taxes 19 (46) 63 (34) -------
------- ------- ------- Net income $1,612 967 $3,659 1,134 =======
======= ======= ======= Earnings per common share: * Basic $0.34
0.20 $0.76 0.23 ======= ======= ======= ======= Diluted $0.34 0.20
$0.76 0.23 ======= ======= ======= ======= * Per common share
results have been retroactively adjusted for the 1-for-5 reverse
stock split that was effective June 8, 2009. GAINSCO, INC. AND
SUBSIDIARIES OTHER INFORMATION (In thousands) Quarter ended Six
months ended June 30, June 30, --------------- --------------- 2009
2008 2009 2008 ------- ------- ------- ------- Gross premiums
written $45,001 39,761 $98,151 91,727 ======= ======= =======
======= GAAP RATIOS: C & CAE Ratio (1) 73.6% 71.9% 72.0% 73.3%
Expense Ratio (2)(3) 25.2% 26.4% 25.3% 26.1% ------- -------
------- ------- Combined Ratio (2) 98.8% 98.3% 97.3% 99.4% =======
====== ======= ====== (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. (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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