EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: Patrick J. Haveron, CPA
Executive Vice President - Chief Executive Officer
Motor Club of America
95 Route 17 South
Paramus, NJ 07653
201-291-2112
E-mail: phaveron@motr.com
MOTOR CLUB ANNOUNCES NET INCOME FOR FOURTH QUARTER
AND 2000, RESTATEMENT OF 1999 AND 1998 RESULTS
PARAMUS, NEW JERSEY, April 17, 2001 - 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.
# # # # # SEE STATEMENT OF OPERATIONS ATTACHED # # # # # #
# # # # THIS NEWS RELEASE IS ALSO AVAILABLE AT 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, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 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 (loss) before federal
income 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
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