DALLAS, March 25 /PRNewswire-FirstCall/ -- GAINSCO, INC. (NYSE
Amex: GAN) today announced a net loss for the fourth quarter 2008
of $0.2 million, or $0.01 per common share, basic and diluted. This
compares to a fourth quarter 2007 net loss of $11.0 million, or
$0.44 per common share, basic and diluted. Net loss for the year
ended December 31, 2008 was $3.5 million, or $0.14 per common
share, basic and diluted. This compares to a net loss of $18.6
million for the year ended December 31, 2007, or $0.74 per common
share, basic and diluted. In the fourth quarter of 2008, the
Company recorded net realized losses of approximately $0.6 million
($0.03 per diluted common share), primarily related to securities
that were determined to have had other-than-temporary declines in
market value. For the year ended December 31, 2008, the Company
recorded net realized losses of approximately $6.3 million ($0.26
per diluted common share), of which approximately $5.7 million
related to write downs for other-than-temporary declines in fair
value of various investments. For each of the quarter and year
ended December 31, 2007, the Company recorded net realized gains of
approximately $4.6 million ($0.18 and $0.19 per diluted common
share, respectively). This amount was predominately related to a
gain on sale in the fourth quarter 2007 of an affiliated insurance
subsidiary, General Agents Insurance Company of America, Inc. Gross
premiums written increased approximately 15% and decreased
approximately 2% during the fourth quarter and twelve months ended
December 31, 2008, respectively, from gross premiums written in the
comparable 2007 periods. Gross premiums written by geographic
region for the quarters and twelve months ended December 31, 2008
and 2007, were as follows: Quarter ended Twelve months ended
(dollars in millions) December 31 December 31 2008 2007 2008 2007
---- ---- ---- ---- (unaudited) ----------- Regions: Southeast
(Florida, South Carolina) $28.7 21.1 110.1 102.2 South Central
(Texas) 7.0 8.0 41.2 45.4 Southwest (Arizona, Nevada, New Mexico)
6.4 7.2 28.4 33.7 West (California) 0.4 0.6 2.1 3.6 --- --- --- ---
Total $42.5 36.9 181.8 184.9 ==== ==== ===== ===== Under accounting
principles generally accepted in the United States ("GAAP"), ratios
for the quarters and twelve months ended December 31, 2008 and
2007, were as follows: Quarter ended Twelve months ended December
31 December 31 2008 2007 2008 2007 ---- ---- ---- ---- Total
Company: C & CAE Ratio (1) 73.3 % 87.8 % 73.3 % 81.7 % Expense
Ratio (2)(3) 26.1 % 28.6 % 25.7 % 25.9 % ------ ------ ------
------ Combined Ratio (2) 99.4 % 116.4 % 99.0 % 107.6 % ======
======= ====== ======= Nonstandard Personal Auto: C & CAE Ratio
(1) 73.7 % 87.9 % 74.2 % 82.9 % ====== ====== ====== ====== (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 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 fourth quarter of 2008, the Company's runoff lines
recorded favorable development for the settlement of claims
occurring in prior accident years of $0.2 million. During the
fourth quarter 2007, the Company's runoff lines did not need to
record any material development for claims occurring in prior
accident years. For the twelve months ended December 31, 2008 and
2007, the runoff lines recorded favorable development for claims
occurring in prior accident years of $1.4 million and $2.3 million,
respectively. As regards the Company's nonstandard personal auto
business during the fourth quarter of 2008, the Company recorded
favorable development for claims occurring in prior accident years
of $0.4 million. During the fourth quarter 2007, the Company
recorded unfavorable development for claims occurring in prior
accident years for nonstandard personal auto of $5.5 million. For
the twelve months of 2008 and 2007, the Company recorded
unfavorable development for claims occurring in prior accident
years for nonstandard personal auto of $4.4 million and $16.0
million, respectively. As of December 31, 2008, the Company had
$73.1 million in net unpaid claims and claims adjustment expenses
("C&CAE") (Unpaid C&CAE of $75.5 million less Ceded unpaid
C&CAE of $2.4 million), compared to net unpaid C&CAE at
September 30, 2008 of $69.6 million (Unpaid C&CAE of $72.6
million less Ceded unpaid C&CAE of $3.0 million). These amounts
include net unpaid C&CAE in respect of the Company's runoff
lines of $7.1 million at December 31, 2008, and $7.6 million at
September 30, 2008. As of December 31, 2008, the outstanding
inventory of runoff claims was 30, compared to 38 at September 30,
2008. As of December 31, 2008, the Company's Shareholders' equity
was $55.3 million, Subordinated debentures were $43.0 million and
Note payable was $0.9 million. These compare to Shareholders'
equity of $56.3 million, Subordinated debentures of $43.0 million
and Note payable of $1.6 million at September 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, South Carolina and,
beginning in the second quarter of 2009, Georgia (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 twelve months
ended December 31, 2008 and 2007, follow.] GAINSCO, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share data) Quarter ended Twelve months ended
December 31, December 31, ------------ ------------ 2008 2007 2008
2007 ---- ---- ---- ---- Net premiums earned $44,620 43,430
$176,606 192,767 Net investment income 1,807 2,207 7,728 9,201 Net
realized (losses) gains (636) 4,597 (6,313) 4,629 Agency revenues
3,206 3,043 12,461 12,795 Other income, net 13 19 52 7 -- -- -- -
Total revenues 49,010 53,296 190,534 219,399 Claims & CAE
incurred 32,727 38,150 129,562 157,524 Policy acquisition costs
7,619 8,460 29,690 35,652 Underwriting and operating expenses 8,032
7,870 31,498 30,474 Interest expense, net 781 1,033 3,188 4,110 ---
----- ----- ----- Loss before Federal income taxes (149) (2,217)
(3,404) (8,361) Federal income tax expense 12 8,768 46 10,192 --
----- -- ------ Net loss $(161) (10,985) $(3,450) (18,553) =====
======= ======= ======= Loss per common share: Basic $(0.01) (0.44)
$(0.14) (0.74) ====== ===== ====== ===== Diluted $(0.01) (0.44)
$(0.14) (0.74) ====== ===== ====== ===== GAINSCO, INC. AND
SUBSIDIARIES OTHER INFORMATION (In thousands, except per share
data) Quarter ended Twelve months ended December 31 December 31
----------- ----------- 2008 2007 2008 2007 ---- ---- ---- ----
Gross premiums written $42,458 36,947 $181,849 184,870 =======
====== ======== ======= GAAP RATIOS: C & CAE Ratio (1) 73.3%
87.8% 73.3% 81.7% Expense Ratio (2)(3) 26.1% 28.6% 25.7% 25.9% ----
---- ---- ---- Combined Ratio (2) 99.4% 116.4% 99.0% 107.6% ====
===== ==== ===== (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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