Allcity Insurance Company, an operating subsidiary of New York’s Empire Group, which is currently in runoff, reported a net loss of $3,748,000 or $0.53 per share for the year ended December 31, 2002 compared to a net loss of $18,048,000 or $2.55 per share in 2001. The “results for 2002 and 2001 included $1,408,000 and $1,870,000 of net securities gains, respectively,” said the company.
The announcement stated: “The Group only accepts business that it is obligated to accept by contract or New York insurance law; it does not engage in any other business activities except for its claims runoff operations. By the end of 2005, the Company expects that its voluntary liquidation will be substantially complete, premium revenue will be immaterial, infrastructure and overhead costs will be substantially reduced, and all that it expects to remain will be the administration and settlement of claims with long tail settlement characteristics, principally workers’ compensation and certain liability claims.
“Given the Group’s and the Company’s current financial condition, the expected costs to be incurred during the claims runoff period, and the inherent uncertainty over ultimate claim settlement values, no assurance can be given that the Company’s shareholders will be able to receive any value at the conclusion of the voluntary liquidation of its operations.”
The bulletin noted that based on both statutory accounting principles (SAP) and generally accepted accounting principle (GAAP), “the Company’s combined ratios for the year ended December 31, 2002 were 353.4% and 296.8%, respectively, compared to 304.4% and 261.7%, respectively, for the year ended December 31, 2001. The Company’s combined ratios increased in 2002 primarily due to higher expense ratios due to lower premium volume.
“Net earned premiums were $4,158,000 and $18,258,000 for the years ended December 31, 2002 and 2001, respectively. The Company’s earned premiums declined in all lines of business during 2002 as a result of actions announced (the runoff plans] during late 2000 and the first quarter of 2001,” said the announcement.
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