Fort Worth, Texas-based nonstandard property and casualty insurer, GAINSCO Inc., said it plans to stop writing commercial lines of business due to unprofitable results and increasing claims. On a related note, GAINSCO expects to report losses for both the fourth quarter and the year ending Dec. 31, 2001. Results will be released Feb. 27. The company will include an increase of $16.9 million in provision for ultimate claim liabilities in its fourth quarter losses, as well as a $2.6 million provision for potentially un-collectible receivables. GAINSCO decided to discontinue writing commercial lines business after concluding that “the volatility, unpredictability and adversity of claims development of our commercial lines business” is threatening its capital. It plans to use any available excess commercial lines capital for the pursuit of more profitable opportunities. The company’s commercial lines business generated about $70 million in gross premiums written for 2001. GAINSCO intends to stop writing new and renewal commercial policies as soon as possible, depending on state laws and contracts, but will continue its personal lines insurance operations in Florida, which generated about $40 million in gross premiums for 2001. The company notified its bank that as a result of its 2001 losses, it will be in breach of two covenants under terms of its existing credit agreement. Proposals regarding the breach have been exchanged, but the matter has yet to be resolved. GAINSCO’s primary insurance subsidiaries are General Agents Insurance Company of America Inc., MGA Insurance Company Inc., GAINSCO County Mutual Insurance Company, and Midwest Casualty Insurance Company.
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