Motor Club of America Announces Second Quarter and Six Month Results
13 August 1999
Motor Club of America Announces Second Quarter and Six Month Results
PARAMUS, N.J., Aug. 12 -- Motor Club of America
("Company") announced today its second quarter and six month
results for the period ended June 30, 1999.
For the three months ended June 30, 1999, net income was $1,011,433 or
$.48 basic and diluted net income per share as compared to $1,134,939 or
$.54 basic and diluted net income per share for the same period in 1998.
Revenues for the three month period were $14,417,053 as compared to
$14,196,905 in 1998.
For the six months ended June 30, 1999, net income was $1,997,054 or
$.95 basic net income per share as compared to $2,159,470 or $1.03 basic net
income per share for the same period in 1998. Diluted net income per share
was $.94 in 1999 and $1.02 in 1998. Revenues for the six month period were
$28,731,826, as compared to $28,319,143 in 1998.
Archer McWhorter, Chairman of the Board of Motor Club, stated, "The rate
rollback on premiums imposed by the New Jersey auto reform legislation
affected both revenues and earnings during the second quarter and was in line
with our expectations. Despite this, we were pleased to see Preserver
Insurance Company continue to display good revenue and earnings growth for
both the three and six months ended June 30. Preserver earnings increased by
77% and 10% for the three and six months ended June 30, 1999 as compared to
the same periods in 1998, respectively. Preserver also generated 65% and 71%
of our pretax income for the second quarter and year to date. Combined with
the pending North East transaction, we look forward to continuing to build our
profitable commercial lines operations."
The Company reported that its acquisition of North East Insurance Company
("North East") had received the approvals of the Maine Bureau
of Insurance and both companies' shareholders, it still requires the approval
of the New York Department of Insurance. The Company intends to close the
transaction immediately after the New York approval is received.
Net premiums written decreased $1,242,000 or 9% in the second quarter 1999
as compared to the same period in 1998, and $1,608,000 or 6% for the six
months ended June 30, 1999 as compared to 1998, due to the New Jersey auto
rate rollback. Preserver continues to experience positive premium growth
during 1999, with net premium written up $156,000 or 3% over 1998, with almost
all of the increase emanating from its commercial lines programs. Preserver's
direct premiums written have increased $631,000 or 9% in 1999 as compared to
1998. Net premiums written and earned will continue to feel the effects of
the New Jersey auto rate rollback in the succeeding quarters.
Compared to 1998, the Company had slightly lower loss ratios during the
second quarter 1999, although year to date loss ratios were generally stable:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Motor Club 68.8% 66.9% 70.4% 68.3%
Preserver 56.8% 64.8% 56.5% 55.8%
Total 65.7% 66.4% 66.8% 65.2%
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. The Preserver loss ratio reflects the generally positive
trends which Preserver has experienced in recent years.
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. The 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.
This press release contains statement 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 Six Months Ended For the Three Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Revenues:
Insurance premiums (net
of premiums ceded
totaling $3,667,516,
$3,373,178, $1,848,619
and $1,794,878) $26,266,691 $26,122,699 $13,182,492 $13,113,746
Net investment
income 2,384,857 2,077,842 1,192,325 1,036,556
Realized gains on
sales of investments 5,378 28,341 5,378 2,441
Other revenues 74,900 90,261 36,858 44,162
Total revenues 28,731,826 28,319,143 14,417,053 14,196,905
Losses and Expenses:
Insurance losses and
loss expenses incurred
(net of reinsurance
recoveries totaling
$1,842,816, $1,156,632,
$922,816 and
$267,296) 17,540,281 17,040,737 8,657,338 8,706,413
Amortization of
deferred policy
acquisition costs 7,889,322 7,250,570 4,057,199 3,460,351
Other operating
expenses 850,514 1,027,834 458,906 462,842
Total losses and
expenses 26,280,117 25,319,141 13,173,443 12,629,606
Income before
Federal income taxes2,451,709 3,000,002 1,243,610 1,567,299
Provision for Federal
income taxes:
current 55,858 61,337 27,788 32,123
deferred 398,797 779,195 204,389 400,237
Total provision for
Federal income taxes 454,655 840,532 232,177 432,360
Net income $1,997,054 $2,159,470 $1,011,433 $1,134,939
Net income per
common share:
Basic $.95 $1.03 $.48 $.54
Diluted $.94 $1.02 $.48 $.54
Weighted average common
and potential common
shares outstanding:
Basic 2,116,429 2,100,000 2,116,429 2,106,393
Diluted 2,123,899 2,112,604 2,120,053 2,110,913
Key Financial
Statistics:
Book value per share $13.14 $12.01 -- --
Loss ration
(GAAP basis) 66.8% 65.2% 65.7% 66.4%
Expense ratio
(GAAP basis) 33.3% 31.7% 34.3% 29.9%
Combined ratio
(GAAP basis) 100.1% 96.9% 100.0% 96.3%
Net premium
written $24,447,398 $26,169,424 $12,017,157 $13,373,301