Gainsco Reports Lower Net Income for Q1 2006

Dallas-based Gainsco Inc., a provider of nonstandard personal automobile insurance products, reported net income for the first quarter 2006 of $0.7 million. For the first quarter 2005, net income was $1.1 million.

Net loss available to common shareholders for the first quarter 2006 was $1.1 million, or $0.05 per common share, basic and diluted, after the accretion of the discount (including approximately $1.4 million of accretion on redeemable preferred stock fully redeemed during the first quarter 2006) and the dividend on redeemable preferred stock. Net loss available to common shareholders for the first quarter 2005, after the accretion of the discount and the dividend on redeemable preferred stock, was $0.2 million, or $0.01 per common share, basic and diluted.

Nationally, the company had $55.2 million in gross premiums written during the three months ended March 31, 2006, compared with $23.8 million in the same period in 2005.

“Our Company continued this quarter to focus on important franchise building initiatives to create a competitively distinctive and successful franchise in the nonstandard personal automobile insurance industry. While these initiatives enabled us to significantly grow our customer base and premium writings during the quarter, and we were able to favorably settle some claims from our discontinued commercial business, our net income was modest due to the impact of higher loss ratios associated with new business growth and the cost of our business development initiatives,” said Glenn W. Anderson, president and chief executive officer. “Prospectively, as we manage through the challenges of a competitive marketplace, we are seeking to improve our margins through various measures, including the implementation of targeted rate increases in our book of business.”

Source: Gainsco Inc.