Dallas-based GAINSCO INC. reported net income for the first quarter 2003 of $0.1 million. After including effect for the accretion of the discount on the redeemable preferred stock of $0.7 million and the accrual of dividends on the redeemable preferred stock of $0.2 million, net loss applicable to common shareholders was $0.8 million, or $0.04 per common share, basic and diluted.
The quarter’s results compare favorably with the first quarter 2002, when the company recorded a net loss was $4.2 million. After including effect for the accretion of the discount on the redeemable preferred stock of $0.6 million and the accrual of dividends on the redeemable preferred stock of $0.2 million, net loss applicable to common shareholders for the first quarter 2002 was $5.0 million, or $0.24 per common share, basic and diluted.
“This past quarter, the company continued to pursue its strategic repositioning initiatives to complete the previously announced exit from the commercial lines business; rebuild the profitability and associated value of the personal lines business; and explore future long-term business opportunities,” said Glenn W. Anderson, GAINSCO’s president and chief executive officer.
“With respect to our exit from the commercial lines business, our year- long effort to non-renew all in-force policies is virtually complete. At March 31, 2003, only 218 commercial lines policies remained in force, and we expect these to be non-renewed as they expire throughout the year. Concurrently, we continued to settle and reduce our inventory of commercial lines claims. At March 31, 2003, there were 850 claims associated with our overall runoff book outstanding, compared to 1,062 at December 31, 2002 and 1,634 at March 31, 2002.
“Our personal automobile business produced a profit for the quarter. We remain cautiously optimistic with regard to the overall trend of our personal auto business, and we continue to undertake actions intended to enhance its profit potential and future strategic direction,” said Anderson.
The company’s capital base at March 31 was approximately $42.4 million. Combined statutory policyholders’ surplus at the end of the first quarter 2003 was $38.2 million and compares to combined statutory policyholders’ surplus at December 31, 2002 of $41.7 million.
The difference primarily relates to a dividend paid during the first quarter 2003 from General Agents Insurance Company of America Inc. to GAINSCO INC. of approximately $3.9 million. The combined statutory policyholders’ surplus at the end of the first quarter 2003 does not include approximately $2.1 million of after-tax, unrealized capital gains that existed in the statutory bond portfolios.
The combined ratio under generally accepted accounting principles (GAAP) for the first quarter of 2003 was 120.9 percent, compared to a combined ratio of 123.9 percent for the 2002 first quarter. The GAAP claims and claims adjustment expenses ratio for the 2003 first quarter was 86.1 percent, compared with 86.4 percent for the first quarter of 2002.
Was this article valuable?
Here are more articles you may enjoy.