Motor Club of America Announces Q2 and Six Month Results
15 August 2000
PARAMUS, N.J. - Motor Club of America announced its second quarter and six month results for the period ended June 30, 2000. Revenues for the three months ended June 30, 2000 were $22,453,506 as compared to $14,417,053 for the same period in 1999. Net income for the three month period ended June 30, 2000 was $639,511, or $.30 basic and $.28 diluted net income per share, as compared to $1,011,433 or $.48 basic and diluted net income per share in 1999. Revenues for the six months ended June 30, 2000 were $42,151,938 as compared to $28,731,826 for the same period in 1999. Net income for the six month period ended June 30, 2000 was $889,023, or $.42 basic and diluted net income per share, as compared to $1,997,054 or $.94 basic and diluted net income per share in 1999. The Company acquired North East Insurance Company ("North East") and Mountain Valley Indemnity Company ("Mountain Valley") on September 24, 1999 and March 1, 2000, respectively. The six month 2000 results includes non-recurring expenses related to the Mountain Valley acquisition of $267,804 or $.13 basic net income per share, net of taxes. Absent these non-recurring charges, net income for the six months ended June 30, 2000 was $1,156,827 or $.55 basic net income per share. Because North East and Mountain Valley were acquired on September 24, 1999 and March 1, 2000, respectively, comparability of revenues and net income on a year-to-year and quarter-to quarter basis in 2000 are affected. To aid comparability, North East and Mountain Valley's separate revenues and net income for the three and six months ended June 30, 2000 were as follows: Three Months Ended Six Months Ended June 30, 2000 June 30, 2000 Company Revenues Net Income Revenues Net Income North East $4,835,221 $136,854 $9,398,699 $9,778 Mountain Valley 4,043,131 65,229 5,509,954 69,988 Total $8,878,352 $202,083 $14,908,653 $79,766 Archer McWhorter, Chairman of the Board of the Company, said, "Preserver Insurance Company continued to display impressive revenue growth and earnings strength, with Commercial Lines premium growing nearly 17% in 2000. Personal auto results in New Jersey, although better than the second half of 1999, have not shown meaningful progress. It is noteworthy however, that year to date revenues from New Jersey personal auto were only 45% of consolidated revenues, the lowest in the Company's history, and this percentage should continue to decline." Motor Club of America owns and operates five regionally focused property and casualty insurance companies, including companies that specialize in small and mid-sized insurance through the Preserver Insurance Group. The Preserver Insurance Group consists of Preserver Insurance Company, which writes small commercial and homeowners insurance in New Jersey, and Mountain Valley Indemnity Company, which writes small and mid-sized commercial insurance 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 the third quarter 2000, 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. 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, 2000 1999 2000 1999 Revenues: Insurance premiums (net of premiums ceded totaling $9,340,353, $3,667,516, $6,989,835 and $1,848,619) $39,067,248 $26,266,691 $20,807,821 $13,182,492 Net investment income 2,977,990 2,384,857 1,578,704 1,192,325 Realized gains on sales of investments 4,524 5,378 4,524 5,378 Other revenues 102,176 74,900 62,457 36,858 Total revenues 42,151,938 28,731,826 22,453,506 14,417,053 Losses and Expenses: Insurance losses and loss expenses incurred (net of reinsurance recoveries totaling $8,142,651, $1,842,816, $5,457,950 and $959,195) 26,095,143 17,540,281 13,613,138 8,657,338 Amortization of deferred policy acquisition costs 11,116,776 7,889,322 5,920,892 4,057,199 Other operating expenses 2,786,293 743,718 1,388,251 405,049 Interest expense 841,010 106,796 517,403 53,857 Amortization of goodwill 42,348 -- 21,174 -- Total losses and expenses 40,881,570 26,280,117 21,460,858 13,173,443 Income before Federal income taxes 1,270,368 2,451,709 992,648 1,243,610 Provision for Federal income taxes: current 21,979 55,858 7,269 27,788 deferred 359,366 398,797 345,868 204,389 Total provision for Federal income taxes 381,345 454,655 353,137 232,177 Net income $889,023 $1,997,054 $639,511 $1,011,433 Net income per common share: Basic $0.42 $0.95 $0.30 $0.48 Diluted $0.42 $0.94 $0.28 $0.48 Weighted average common and potential common shares outstanding: Basic 2,124,387 2,116,429 2,124,387 2,116,429 Diluted 2,124,387 2,123,899 2,769,965 2,120,053 Net premiums written 39,313,965 24,447,398 21,692,575 12,017,155 GAAP loss ratio 66.8% 66.8% 65.4% 65.7% GAAP expense ratio 35.6% 32.9% 35.1% 33.8% GAAP combined ratio 102.4% 99.6% 100.6% 99.5% Book value $13.37 $13.14