Motor Club of America Announces First Quarter Results
5 May 1999
Motor Club of America Announces First Quarter Results
PARAMUS, N.J., May 4 -- Motor Club of America
("Company") announced today its first quarter results for the period ended
March 31, 1999. Revenues were $14,314,773 as compared to $14,122,238 for the
same period in 1998. Net income for the three month period was $985,621 or
$.47 basic net income per share, as compared to $1,024,531 or $.49 per share
in 1998. First quarter diluted net income per share was $.46 in 1999 and
$.48 in 1998.
Archer McWhorter, Chairman of the Board of the Company stated, "The first
quarter continued the very strong results which Preserver Insurance Company
has been generating over the last several years. While the results are not
quite as strong as last year's first quarter, Preserver enjoyed an
extraordinary first quarter a year ago and this year is at a level more
typical of its recent excellent experience. Motor Club of America Insurance
Company's results were slightly better in the 1999 first quarter despite a
somewhat higher loss ratio, as our expense ratio continues to compare
favorably with prior periods. We continue to move forward with our North East
Insurance Company transaction, having made the necessary filings with the
Maine Bureau of Insurance. We are also finalizing the necessary materials to
present to our respective shareholders to approve the transaction. We hope to
close the transaction before the end of the second quarter."
Effective March 22, 1999, New Jersey automobile reforms enacted in 1998
were implemented, requiring auto insurers to reduce their personal auto rates
by 13% to 15%. Motor Club does expect that its personal automobile premium
revenue will begin to decline in the 1999 second quarter as a result of this
imposed rate reduction. Revised regulations regarding claims litigation, fee
schedules and procedures were implemented on that date as well. Motor Club
does expect that cost savings will ensue, although it continues to expect that
the reforms as implemented will have a modest net negative effect on Motor
Club's operations.
The Company had slightly higher loss ratios during the 1999 first quarter
as compared to 1998, as follows:
1999 1998
Motor Club 72.0% 69.7%
Preserver 56.2% 46.5%
Total 67.9% 64.1%
The personal automobile loss ratio for Motor Club remains in line with
expectations which consider the increased amounts of new personal automobile
written since 1995, now representing 54% of the total Motor Club book of
business. The first quarter 1998 loss ratio was historically low for
Preserver and the first quarter 1999 loss ratio represents a return to the
more typical experience for Preserver in the last several years, which remains
at excellent levels. The relative lack of winter weather losses in New Jersey
in both 1999 and 1998 have been contributing factors to the strong Preserver
loss ratio.
Motor Club of America is a property and casualty insurance holding
company. Motor Club of America Insurance Company writes personal automobile
insurance. Preserver Insurance Company writes small commercial and homeowners
insurance. Both Companies are separately rated B+ (Very Good) by A.M. Best
Company.
Additional information about Motor Club of America can be found on the
Company's Internet web site http://www.motr.com. Information about Preserver
Insurance Company can be found on its Internet web site
http://www.preserver.com.
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
contained herein 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, economic, market or regulatory conditions as well as risks
associated with Motor Club of America's entry into new markets;
diversification; catastrophic events; and state regulatory and legislative
actions which can affect the profitability of certain lines of business and
impede the Company's ability to charge adequate rates. Accordingly, Motor
Club of America's premium growth and underwriting results have been and will
continue to be potentially materially affected by these factors.
MOTOR CLUB OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three months Ended
March 31, March 31,
1999 1998
Revenues:
Insurance premiums (net of
premiums ceded totaling
$1,818,897 (1999) and
$1,578,300 (1998)) $13,084,199 $13,008,953
Net investment income 1,192,532 1,041,286
Realized gains on sales
of investments -- 25,900
Other revenues 38,042 46,099
Total revenues 4,314,771 14,122,238
Losses and Expenses:
Insurance losses and
loss expenses incurred
(net of reinsurance
recoveries totaling
$883,621 (1999) and
$889,336 (1998)) 8,882,943 8,334,324
Amortization of deferred
policy acquisition costs 3,832,123 3,790,219
Other operating expenses 391,608 564,992
Total losses and expenses 13,106,674 12,689,535
Income before Federal
income taxes 1,208,099 1,432,703
Provision for Federal
income taxes: current 28,070 29,214
deferred 194,408 378,958
Total provision for Federal
income taxes 222,478 408,172
Net income $985,621 $1,024,531
Net Income per common share:
Basic $.47 $.49
Diluted $.46 $.48
Weighted average common
and potential common
shares outstanding:
Basic 2,116,429 2,095,321
Diluted 2,127,745 2,126,233
Key Financial Statistics:
Book value per share $13.26 $11.46
Loss ratio (GAAP basis) 67.9% 64.1%
Expense ratio (GAAP basis) 32.3% 33.5%
Combined ratio (GAAP basis) 100.2% 97.6%
Net premium written $12,430,243 $12,796,123