Mobile America Corp. Makes Announcement
16 December 1998
Mobile America Corp. Makes Announcement
JACKSONVILLE, Fla.--Dec. 15, 1998--During the last several months the company has conducted discussions with various companies interested in merging with or acquiring the company.
Several of these companies indicated non-binding ranges of offers and pursued limited due diligence and open ended discussions with the company.
During the last half of 1998 stock market volatility and a reduction in earnings during the first nine months of 1998 have reduced the market price of the company's stock. In view of these conditions the company has decided to discontinue any further negotiations with these companies. The company can now concentrate its entire efforts in enhancing shareholder value through further growth and increased earnings during 1999.
It is expected that fourth quarter earnings will be disappointing as a result of reduced revenues due to competitive pressures as well as a backlog of unproduced business due to computer modification delays experienced during the latter part of the third quarter and continuing to the present.
Reviews of the company's loss reserves are being conducted at this time and may result in further reserve increases which could further affect earnings for the 1998 year. Partially offsetting these negative factors are strong performances by the company's fee for service business, the company's specialty property subsidiary and an expected continued reduction in salary and administrative expenses.
It is expected that continued improvements in the computer modification process during December and January will bring production backlogs current in the first quarter of 1999. The company has engaged Pro Nova Solutions to assist the company's internal MIS staff, and INSpire Insurance Solutions, the company's software provider, has agreed to give the company additional assistance heretofore unavailable.
While the company has been beset by substantial increased competition over the past 18 months it has done quite well in obtaining selective rate increases during 1998 which, along with loss cost controls, have improved 1998 accident year experience. Two of the company's direct competitors in the minimum requirement automobile segment are withdrawing from the market in early 1999. It is expected that other competitors of the company will either have to raise rates or withdraw from the market as well.
The company remains the market leader in Florida in its minimum requirement automobile segment and expects to be able to increase market share in 1999 as recent entrants into this market realize they are selling under cost, and as the company's long time competitors begin their computer conversions to Y2K which the company has already completed.