Motor Club Announces Net Income for Fourth Quarter And 2000, Restatement of 1999 and 1998 Results

Apr 17, 2001, 01:00 ET from Motor Club of America

    PARAMUS, N.J., April 17 /PRNewswire/ --
 Motor Club of America (Nasdaq:   MOTR) ("the Company") today reported its net
 income for the fourth quarter and year ended December 31, 2000. The Company
 also reported that it would restate its 1999 and 1998 net income as a result
 of a review of the previously reported complex tax item related to a
 subsidiary that was rendered insolvent in 1992, but is still required to
 continue to be included in consolidated Federal tax returns. The Company's
 financial statement audit for the year ended December 31, 2000 is now
 complete.
     The restatement had no impact on the operations, cash flow or surplus of
 the Company's active insurance subsidiaries or on consolidated income before
 Federal income taxes. Book value at December 31, 2000 was $14.12 per share.
     Net income for the fourth quarter ended December 31, 2000 was $422,368 or
 $.20 per share, compared to a restated net loss for the fourth quarter 1999 of
 $1,351,177 or $.64 per share. Net income for the year ended December 31, 2000
 was $1,959,919 or $.92 per share, compared to restated 1999 net income of
 $91,336 or $.04 per share. The restated net income for the fourth quarter and
 year ended December 31, 1998 was $911,070 or $.43 per share and $3,778,384 or
 $1.79 basic net income per share and $1.78 diluted net income per share,
 respectively.
     The tax item and related adjustments, including adjustments for
 recognition of a deferred tax asset relating to the Company's minimum pension
 liability are discussed in detail in the Company's Form 10-K filing made with
 the Securities and Exchange Commission today. The Company has also restated
 its quarterly net income amounts for 2000 and 1999 in that filing. The Company
 will also be making the necessary filings to amend the applicable Annual
 Reports on Form 10-K with the SEC for the effects of this restatement of
 taxes.
     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.
 
     This news release is also available at http://www.motr.com.
 
                             MOTOR CLUB OF AMERICA
                                AND SUBSIDIARIES
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                             For the Year Ended      For the Three Months Ended
 
                         December 31   December 31   December 31    December 31
                            2000          1999           2000          1999
                                       (Restated)                   (Restated)
       Revenues:
 
     Insurance premiums (net of
      premiums ceded totaling
      $13,161,053, $8,358,946,
      $3,964,219 and
      $3,059,232        $83,467,481   $55,807,330  $21,484,198   $16,164,091
     Net investment
      income              6,412,884     5,080,939    1,738,997     1,480,212
     Realized gains on sales
      of investments         82,949        36,040       74,686        30,675
     Other revenues         163,833       143,410       31,833        33,831
     Total revenues      90,127,147    61,067,719   23,329,714    17,708,809
 
     Losses and Expenses:
 
     Insurance losses and
      loss expenses incurred
      (net of reinsurance recoveries
      totaling $11,428,275 $1,544,026,
      $414,184 and
      ($1,288,516))      55,708,052    40,631,053   14,521,072    12,217,750
     Amortization of deferred
      policy acquisition
      costs and other
      operating
      expenses           29,113,541    19,065,229    7,640,921     6,709,721
     Amortization of
      goodwill               84,695        21,174       21,173        21,174
     Merger expenses        354,097       800,000           --            --
 
     Interest expense     1,867,085       448,117      500,109       271,259
     Total losses and
      expenses           87,127,470    60,965,573   22,683,275    19,219,904
     Income before Federal
      income (loss) taxes 2,999,677       102,146      646,439   (1,511,095)
 
     Benefit (provision) for
     Federal income
      taxes             (1,039,758)      (10,810)    (224,071)       159,918
     Net income (loss)   $1,959,919       $91,336     $422,368  ($1,351,177)
 
     Net income (loss) per common share:
     Basic                    $ .92         $ .04        $ .20        $(.64)
     Diluted                  $ .91         $ .04        $ .20        $(.64)
 
     Weighted average common and potential common shares outstanding:
 
     Basic                2,124,387     2,117,912    2,124,387     2,122,311
     Diluted              2,770,075     2,121,697    2,769,965     2,122,311
 
     Key Financial Statistics:
 
     Book value per share    $14.12        $12.67
 
     Loss ratio
      (GAAP basis)            66.7%         72.8%        67.6%         75.6%
     Expense ratio
      (GAAP basis)            35.3%         36.4%        35.6%         43.3%
     Combined ratio
      (GAAP basis)           102.0%        109.2%       103.2%        118.9%
 
     Net premium
      written           $89,204,441   $54,508,215  $26,420,680   $17,607,251
 
 

SOURCE Motor Club of America
    PARAMUS, N.J., April 17 /PRNewswire/ --
 Motor Club of America (Nasdaq:   MOTR) ("the Company") today reported its net
 income for the fourth quarter and year ended December 31, 2000. The Company
 also reported that it would restate its 1999 and 1998 net income as a result
 of a review of the previously reported complex tax item related to a
 subsidiary that was rendered insolvent in 1992, but is still required to
 continue to be included in consolidated Federal tax returns. The Company's
 financial statement audit for the year ended December 31, 2000 is now
 complete.
     The restatement had no impact on the operations, cash flow or surplus of
 the Company's active insurance subsidiaries or on consolidated income before
 Federal income taxes. Book value at December 31, 2000 was $14.12 per share.
     Net income for the fourth quarter ended December 31, 2000 was $422,368 or
 $.20 per share, compared to a restated net loss for the fourth quarter 1999 of
 $1,351,177 or $.64 per share. Net income for the year ended December 31, 2000
 was $1,959,919 or $.92 per share, compared to restated 1999 net income of
 $91,336 or $.04 per share. The restated net income for the fourth quarter and
 year ended December 31, 1998 was $911,070 or $.43 per share and $3,778,384 or
 $1.79 basic net income per share and $1.78 diluted net income per share,
 respectively.
     The tax item and related adjustments, including adjustments for
 recognition of a deferred tax asset relating to the Company's minimum pension
 liability are discussed in detail in the Company's Form 10-K filing made with
 the Securities and Exchange Commission today. The Company has also restated
 its quarterly net income amounts for 2000 and 1999 in that filing. The Company
 will also be making the necessary filings to amend the applicable Annual
 Reports on Form 10-K with the SEC for the effects of this restatement of
 taxes.
     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.
 
     This news release is also available at http://www.motr.com.
 
                             MOTOR CLUB OF AMERICA
                                AND SUBSIDIARIES
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                             For the Year Ended      For the Three Months Ended
 
                         December 31   December 31   December 31    December 31
                            2000          1999           2000          1999
                                       (Restated)                   (Restated)
       Revenues:
 
     Insurance premiums (net of
      premiums ceded totaling
      $13,161,053, $8,358,946,
      $3,964,219 and
      $3,059,232        $83,467,481   $55,807,330  $21,484,198   $16,164,091
     Net investment
      income              6,412,884     5,080,939    1,738,997     1,480,212
     Realized gains on sales
      of investments         82,949        36,040       74,686        30,675
     Other revenues         163,833       143,410       31,833        33,831
     Total revenues      90,127,147    61,067,719   23,329,714    17,708,809
 
     Losses and Expenses:
 
     Insurance losses and
      loss expenses incurred
      (net of reinsurance recoveries
      totaling $11,428,275 $1,544,026,
      $414,184 and
      ($1,288,516))      55,708,052    40,631,053   14,521,072    12,217,750
     Amortization of deferred
      policy acquisition
      costs and other
      operating
      expenses           29,113,541    19,065,229    7,640,921     6,709,721
     Amortization of
      goodwill               84,695        21,174       21,173        21,174
     Merger expenses        354,097       800,000           --            --
 
     Interest expense     1,867,085       448,117      500,109       271,259
     Total losses and
      expenses           87,127,470    60,965,573   22,683,275    19,219,904
     Income before Federal
      income (loss) taxes 2,999,677       102,146      646,439   (1,511,095)
 
     Benefit (provision) for
     Federal income
      taxes             (1,039,758)      (10,810)    (224,071)       159,918
     Net income (loss)   $1,959,919       $91,336     $422,368  ($1,351,177)
 
     Net income (loss) per common share:
     Basic                    $ .92         $ .04        $ .20        $(.64)
     Diluted                  $ .91         $ .04        $ .20        $(.64)
 
     Weighted average common and potential common shares outstanding:
 
     Basic                2,124,387     2,117,912    2,124,387     2,122,311
     Diluted              2,770,075     2,121,697    2,769,965     2,122,311
 
     Key Financial Statistics:
 
     Book value per share    $14.12        $12.67
 
     Loss ratio
      (GAAP basis)            66.7%         72.8%        67.6%         75.6%
     Expense ratio
      (GAAP basis)            35.3%         36.4%        35.6%         43.3%
     Combined ratio
      (GAAP basis)           102.0%        109.2%       103.2%        118.9%
 
     Net premium
      written           $89,204,441   $54,508,215  $26,420,680   $17,607,251
 
 SOURCE  Motor Club of America