Motor Club Announces First Quarter Results;
Additional Information on Take-All-Comers Relief
Application in New Jersey Private Passenger Automobile
PARAMUS, N.J., May 17 Motor Club of America
("the Company"), which plans to change its name to Preserver Group, Inc. later
this year, today reported its results for the first quarter 2001. Book value
increased 3.5% to $14.62 per share at March 31, 2001. The Company has
reserved a new stock symbol, "PRES," with the Nasdaq Stock Market to occur
concurrent with the name change.
Continuing strong premium growth in Commercial Lines by Preserver and
Mountain Valley reduced New Jersey private passenger automobile business to
42% of consolidated revenues, the lowest in the Company's history. This
percentage should continue to decline in the remainder of 2001 and beyond.
For the three months ended March 31, 2001, revenues were $23,601,168 as
compared to $19,698,432 for the same period in 2000. Net loss for the first
quarter 2001 was $186,000 or $.09 per share, as compared to net income
(restated) of $181,456 or $.09 per share for the same period in 2000.
Archer McWhorter, Chairman of the Board of the Company, stated, "The
principal contributor to our small first quarter loss was the loss from the
New Jersey private passenger auto business. Preserver continued to produce
good earnings and excellent Commercial Lines growth. Due to winter weather,
North East's small operating loss was a customary first quarter and comparable
to that in 2000. Mountain Valley turned a profit for the quarter, reflecting
the continued progress we are making in expanding that business and reducing
its expenses. Both Preserver and Mountain Valley are poised to take advantage
of opportunities emerging in Commercial Lines."
The Company also reported that the New Jersey Department of Banking and
Insurance ("NJ DOBI") had denied the Company's Motor Club of America Insurance
Company ("Motor Club") unit's April 30 application for relief from
take-all-comers personal automobile insurance laws in that State. Motor Club
will be requesting reconsideration of the decision, based on what it views as
an incomplete evaluation of the facts and circumstances regarding its
application by the NJ DOBI, including Motor Club's first quarter results.
As previously announced, the premium to surplus ratio for Motor Club was
3.18 to 1 at December 31, 2000. This ratio increased to 3.45 to 1 for the
twelve months ended March 31, 2001, the result of increased writings and poor
results of operations in the 2001 first quarter. The Motor Club unit is
separately capitalized from the Preserver Insurance Group and writes only New
Jersey private passenger automobile business, the only subsidiary of the
Company to write such business.
Motor Club of America owns and operates five regionally focused property
and casualty insurance companies, including companies that specialize in small
and mid-sized commercial insurance through the Preserver Insurance Group.
The Preserver Insurance Group consists of Preserver Insurance Company,
which writes small commercial and homeowners insurance presently in New
Jersey, and Mountain Valley Indemnity Company, which writes small and
mid-sized commercial insurance presently in New England and New York. The
Preserver Insurance Group is rated B++ (Very Good) by A.M. Best Company.
American Colonial Insurance Company plans to commence operations in New York
in 2001, writing commercial lines in tandem with Mountain Valley.
Motor Club of America Insurance Company writes personal automobile
insurance in New Jersey and is rated B+ (Very Good) by Best. North East
Insurance Company writes personal automobile and small commercial lines
insurance in the State of Maine and is rated B (Fair) by Best.
Forward-Looking Statement Disclaimer. This press release contains
statements that are not historical facts and are considered "forward-looking
statements" (as defined in the Private Securities Litigation Reform Act of
1995), which can be identified by terms such as "believes," "expects," "may,"
"will," "should," "anticipates," the negatives thereof, or by discussions of
strategy. Certain statements are forward-looking statements that involve
risks, uncertainties, opinions and predictions, and no assurance can be given
that the future results will be achieved since events or results may differ
materially as a result of risks facing the Company. These include, but are
not limited to, the cyclical nature of the property casualty insurance
industry, the impact of competition, product demand and pricing, claims
development and the process of estimating reserves, the level of the Company's
retentions, catastrophe and storm losses, legislative and regulatory
developments, changes in the ratings assigned to the Company by rating
agencies, investment results, availability of reinsurance, availability of
dividends from our insurance company subsidiaries, investing substantial
amounts in our information systems and technology, the ability of our
reinsurers to pay reinsurance recoverables owed to us, our entry into new
markets, our acquisition of North East Insurance Company on September 24,
1999, our acquisition of Mountain Valley Indemnity Company on March 1, 2000,
our successful integration of these acquisitions, potential future tax
liabilities related to an insolvent subsidiary and state regulatory and
legislative actions which can affect the profitability of certain lines of
business and impede our ability to charge adequate rates, and other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.
SEE STATEMENT OF OPERATIONS ATTACHED
THIS NEWS RELEASE IS ALSO AVAILABLE AT HTTP://WWW.MOTR.COM
MOTOR CLUB OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31, March 31,
2001 2000
(Restated)
Revenues:
Insurance premiums (net of
premiums ceded totaling
$3,486,168 (2001) and
$2,350,518 (2000)) $21,922,214 $18,259,427
Net investment income 1,655,436 1,399,286
Other revenues 23,518 39,719
Total revenues 23,601,168 19,698,432
Losses and Expenses:
Insurance losses and
loss expenses incurred
(net of reinsurance recoveries
totaling $4,698,411 (2001) and
$2,684,701 (2000)) 16,474,380 12,482,005
Acquisition costs and
other operating expenses 6,875,491 6,239,829
Merger-related expenses -- 354,097
Interest expense 515,894 323,607
Amortization of goodwill 21,174 21,174
Total losses and expenses 23,886,939 19,420,712
Income (loss) before Federal
income taxes (285,771) 277,720
Provision (benefit) for Federal
Income taxes (99,536) 96,264
Net income (loss) $(186,235) $181,456
Net income (loss) per common shares:
Basic $(.09) $.09
Diluted $(.09) $.09
Weighted average common and potential
common shares outstanding:
Basic 2,124,387 2,124,387
Diluted 2,124,387 2,124,387
Key Financial Statistics:
Book value per share $14.62 $12.73
Loss ratio (GAAP basis) 75.1% 68.4%
Expense ratio (GAAP basis) 31.4% 36.1%
Combined ratio (GAAP basis) 106.5% 104.5%
Net premium written $25,214,664 $17,621,390
MAKE YOUR OPINION COUNT -- Click Here
http://tbutton.prnewswire.com/prn/11690X76450056
