-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GAKTw2WFp4cz9xPEVJX07tlj/6PP2mkWDajEzGRUG8BiiYu89/CoiKsLuuUqnjuv OV32TIukp4AbRRqC9Eu9eQ== 0000068480-00-000023.txt : 20000519 0000068480-00-000023.hdr.sgml : 20000519 ACCESSION NUMBER: 0000068480-00-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000515 FILED AS OF DATE: 20000518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTOR CLUB OF AMERICA CENTRAL INDEX KEY: 0000068480 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 220747730 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00671 FILM NUMBER: 639231 BUSINESS ADDRESS: STREET 1: 95 ROUTE 17 SOUTH CITY: PARAMUS STATE: NJ ZIP: 07653 BUSINESS PHONE: 2012912000 MAIL ADDRESS: STREET 1: 95 ROUTE 17 SOUTH CITY: PARAMUS STATE: NJ ZIP: 07653-0931 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended Commission File No. - ----------------- ------------------- March 31, 2000 0-671 MOTOR CLUB OF AMERICA ------------------------------------------------------ (Exact name of registrant as specified in its charter) New Jersey 22-0747730 ------------------------ ------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 95 Route 17 South, Paramus, New Jersey 07653 - --------------------------------------- -------- (Address of principal executive offices) Zip Code Registrant's telephone number, including area code (201) 291-2000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x . No . 2,124,387 shares of Common Stock were outstanding as of May 12, 2000 MOTOR CLUB OF AMERICA FORM 10-Q MARCH 31, 2000 PART I PAGE ------- ITEM 1. FINANCIAL STATEMENTS ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II -------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
PART I FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------- MOTOR CLUB OF AMERICA AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2000 1999 ------------ ------------ ASSETS Investments $102,725,472 $ 86,981,849 Cash and cash equivalents 626,329 443,733 Premiums receivable 31,875,275 27,132,246 Reinsurance recoverable on paid & unpaid losses and loss expenses 31,383,960 21,163,574 Notes and accounts receivable 341,950 212,598 Deferred policy acquisition costs 11,403,243 10,560,763 Fixed assets - at cost, less accumulated depreciation 2,400,933 1,858,621 Prepaid reinsurance premiums 5,166,112 1,485,450 Federal income tax recoverable - 54,026 Deferred tax asset 4,282,388 4,128,766 Goodwill, less accumulated amortization 1,724,674 1,745,848 Other assets 1,806,209 1,470,744 ------------ ------------ Total Assets $193,736,545 $157,238,218 ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Losses and loss expenses $ 84,300,299 $ 70,983,383 Unearned premiums 47,875,857 38,698,028 Other liabilities 11,918,281 9,997,359 Convertible subordinated debentures 10,000,000 10,000,000 Notes payable 11,500,000 - Federal income taxes payable 374,571 - ------------ ------------ Total Liabilities 165,969,008 129,678,770 ------------ ------------ Shareholders' Equity: Common stock, par value $.50 per share: (Authorized - 10,000,000 shares; issued and outstanding - 2,124,387 (2000 and 1999) 1,062,194 1,062,194 Paid in additional capital 2,066,089 2,066,089 Accumulated other comprehensive loss (5,077,938) (5,036,515) Retained earnings 29,717,192 29,467,680 ------------ ------------ Total Shareholders' Equity 27,767,537 27,559,448 ------------ ------------ Total Liabilities and Shareholders' Equity $193,736,545 $157,238,218 ============ ============
(Financial statements should be read in conjunction with the accompanying notes)
MOTOR CLUB OF AMERICA AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended ---------------------------------- March 31, 2000 March 31, 1999 -------------- -------------- Revenues: Insurance premiums (net of premiums ceded totaling $2,350,518 (2000) and $1,818,897 (1999)) $18,259,427 $13,084,199 Net investment income 1,399,286 1,192,532 Other revenues 39,719 38,042 ----------- ----------- Total revenues 19,698,432 14,314,773 ----------- ----------- Losses and Expenses: Insurance losses and loss expenses incurred (net of reinsurance recoveries totaling $2,684,701 (2000) and $883,621 (1999)) 12,482,005 8,882,943 Amortization of deferred policy acquisition costs 5,195,884 3,832,123 Other operating expenses 1,398,042 338,639 Interest expense 323,607 52,969 Amortization of goodwill 21,174 - ----------- ----------- Total losses and expenses 19,420,712 13,106,674 ----------- ----------- Income before Federal income taxes 277,720 1,208,099 Provision for Federal income taxes 28,208 222,478 ----------- ----------- Net income $ 249,512 $ 985,621 Net Income per common share: Basic $.12 $.47 ==== ==== Diluted $.12 $.46 ==== ==== Weighted average common and potential common shares outstanding: Basic 2,124,387 2,116,429 ========= ========= Diluted 2,124,387 2,127,745 ========= =========
(Financial statements should be read in conjunction with the accompanying notes)
MOTOR CLUB OF AMERICA AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended -------------------------------- March 31, 2000 March 31, 1999 -------------- -------------- Operating activities: Net income $ 249,512 $ 985,621 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and net amortization 183,569 159,723 Changes in: Deferred policy acquisition costs 48,148 252,518 Premiums receivable 103,649 (103,652) Notes and accounts receivable (129,352) (39,446) Other assets (103,451) (118,210) Losses and loss expenses 571,802 2,122,477 Unearned premiums (1,332,501) (750,656) Federal income tax - current 10,655 28,269 Federal income tax - deferred 17,555 194,408 Other liabilities (1,743,688) (1,779,225) Reinsurance recoverable on paid and unpaid losses 2,524,726 (167,953) ----------- ----------- Prepaid reinsurance premiums 683,468 96,700 Net cash provided by operating activities $ 1,084,092 $880,574 Investing activities: Investments purchased (27,922,133) (32,510,702) Fixed assets purchased (581,917) (179,043) Acquisition of Mountain Valley, net of cash acquire (4,072,162) - Proceeds from sales and maturities of investments 20,174,716 32,569,108 ----------- ----------- Net cash used in investing activities (12,401,496) (120,637) Financing activities: Proceeds from Notes Payable 11,500,000 - ----------- ----------- Net cash provided by financing activities 11,500,000 - ----------- -------- Net increase in cash and cash equivalents 182,596 759,937 Cash and cash equivalents at beginning of period 443,733 2,773,427 ----------- ---------- Cash and cash equivalents at end of period $ 626,329 $3,533,364 =========== ========== Supplemental Disclosures of Cash Flow Information - -------------------------------------------------- Interest paid $ 213,344 $ 53,295 ============ ========== Federal income taxes paid $ - $ - ============ ==========
Non Cash Investing Activities: - ------------------------------ Invested assets and shareholders' equity decreased by $41,423 and $753,158 in 2000 and 1999, respectively, as a result of changes in market value, net of taxes, pertaining to the Registrant's application of SFAS No. 115 - Accounting for Certain Investments ---------------------------------- in Debt and Equity Securities. - ------------------------------ (Financial statements should be read in conjunction with the accompanying notes)
MOTOR CLUB OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) For the Three Months Ended ------------------------------- March 31, 2000 March 31, 1999 -------------- -------------- Net income $249,512 $985,621 Other comprehensive income: Unrealized losses on securities: Unrealized holding losses during the period (net of taxes of $33,217 and $387,990) (41,423) (753,158) -------- -------- Other comprehensive income (41,423) (753,158) -------- -------- Comprehensive income $208,089 $232,463 ======== ========
(Financial statements should be read in conjunction with the accompanying notes) MOTOR CLUB OF AMERICA AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Preparation and Presentation ------------------------------------- The accompanying condensed consolidated financial statements of Motor Club of America (the "Registrant") include its accounts and those of its subsidiary companies, Motor Club of America Insurance Company ("Motor Club"), Preserver Insurance Company ("Preserver"), North East Insurance Company ("North East"), American Colonial Insurance Company ("American Colonial") and Mountain Valley Indemnity Company ("Mountain Valley") (collectively referred to as the "Insurance Companies"), and, in the opinion of management, contain all adjustments necessary to present fairly the Registrant's consolidated financial position, results of operations and cash flows, in accordance with generally accepted accounting principles. These statements should be read in conjunction with the Summary of Significant Accounting Policies and other notes included in the Notes to Financial Statements in the Registrant's 1999 Annual Report on Form 10-K. 2. Per Share Data -------------- Basic earnings per share are computed based upon the weighted average number of common shares outstanding during each year. Diluted earnings per share are computed based upon the weighted average number of common shares outstanding including outstanding stock options and convertible subordinated debentures. 3. Federal Income Taxes --------------------- The Registrant and its subsidiaries file a consolidated Federal income tax return. In the three month periods ended March 31, 2000 and 1999, the provision for Federal income taxes resulted in effective tax rates different from the expected statutory Federal income tax rates, principally as a result of (i) certain adjustments, principally those enacted under the Tax Reform Act of 1986; (ii) utilization of Net Operating Loss ("NOL") carryforwards; and (iii) the recognition as a deferred tax asset of certain tax credit carryforwards for alternative minimum tax purposes. The Registrant has NOL carryforwards of $8,781,434 remaining, which expire beginning in 2009. The NOL carryforward includes $6,677,904 attributable to North East, which expire in 2015; under the prevailing tax laws, these losses must be offset against taxable income of North East only, are not available to offset taxable income of other operations and are subject to an annual limitation of $587,000. The Company believes it is more likely than not that it will generate future taxable income to realize the benefits of the net deferred tax asset, including those net deferred tax assets attributable to North East only. 4. Acquisition of Mountain Valley Indemnity Company ------------------------------------------------ On March 1, 2000, the Registrant completed its acquisition of Mountain Valley, formerly known as White Mountains Insurance Company, from Unitrin Inc. for $7.5 million in cash. Mountain Valley, formed in 1995, presently writes small and medium sized commercial lines business in New York and all of New England except Connecticut. Statutory surplus at December 31, 1999 was $7.3 million. Under the terms of the purchase, Mountain Valley will run- off its present 100% intercompany quota share reinsurance agreement for losses occurring prior to closing and certain other losses; thus at closing there were no net loss and loss expense reserves for claims occurring prior to closing, including those which develop subsequently. Mountain Valley assumed the unearned premium at closing (subject to certain adjustments). The acquisition has been recorded using the purchase method of accounting and based on the fair value of net assets acquired at March 1, the Registrant estimates that no goodwill exists at that date. The Registrant recorded $268,000 of acquisition related expenses, net of taxes, in its results of operations for the three months ended March 31, 2000. Please refer to Note 5 ("Related Party Transactions") for additional information on the financing of this acquisition. 5. Related Party Transactions -------------------------- In connection with the acquisition of Mountain Valley, the Registrant extended unsecured debt financing ("Notes") in the amount of $11.5 million to finance the transaction and provide additional working capital. The Notes were purchased by three of the Registrant's directors ("Ownership Group"). This debt matures in two years. The Notes bear interest at a rate of 10.605%, which is payable quarterly commencing May 28, 2000. The Registrant will be pursuing longer-term financing options to replace this debt during that period. At the Registrant's election, if acceptable financing is not identified during the two year period, the debt can be extended for up to five years utilizing successive one- year renewals, in exchange for an increased interest rate on the Notes. The Ownership Group owns 45.1% of the outstanding common stock of the Registrant at March 31, 2000. The Ownership Group also purchased $9,253,785 of the $10 million Convertible Subordinated Debentures ("Debentures") issued on September 23, 1999. Based on the Registrant's common shares outstanding as of March 31, 2000, the Ownership Group could increase its collective percentage stock ownership to 56.1%, if the Debentures are converted into the Registrant's common stock. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL - ------------------------------------------------------------ CONDITION AND RESULTS OF OPERATIONS - ------------------------------------ Overview of Business Operations - ------------------------------- The Registrant 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, which writes small commercial and homeowners insurance in New Jersey, and Mountain Valley, 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 ("Best"). American Colonial plans to commence operations in New York in the second quarter 2000, writing commercial lines in tandem with Mountain Valley. Motor Club writes personal automobile insurance ("PPA") in New Jersey and is rated B+ (Very Good) by Best. North East writes personal automobile and small commercial lines insurance in the State of Maine and is rated B (Fair) by Best. The Registrant is pursuing a strategy to: (1) increase its identification as a provider of small commercial lines insurance and has continued to expand its product line in support of this objective; and (2) expand and diversify its insurance operations outside the State of New Jersey. The Registrant believes that both of these objectives can be attained through the acquisition of other insurance companies which present opportunities to write these product lines in different geographic areas. The Registrant expects to continue to follow this strategy. Please refer to Note 4 for information on the acquisition of Mountain Valley, which was acquired on March 1, 2000. North East was acquired in September 1999. The Registrant believes that these acquisitions fully establish it as a regional commercial lines company in the New England and Mid-Atlantic regions. The Registrant anticipates continued reductions in its operating expenses, namely through the implementation of operating efficiencies which should reduce other overhead expenditures. Historically, the Insurance Companies' results of operations have been influenced by factors affecting the property and casualty insurance industry in general and the New Jersey PPA market in particular. The operating results of the U.S. property and casualty insurance industry have been subject to significant variations due to competition, weather, catastrophic events, regulation, general economic conditions, judicial trends, fluctuations in interest rates and other changes in the investment environment. Results of Operations - --------------------- The consolidated results of operations include, using the purchase method of accounting, the results of operations of North East for the three months ended March 31, 2000 and Mountain Valley from March 1, 2000, the date of acquisition. North East and Mountain Valley are collectively referred to as the "Acquired Companies". The table below details the results of operations for the Acquired Companies as included in the condensed consolidated statement of opertions for the three months ended March 31, 2000:
Total North Mountain Acquired East Valley Companies ---------- ---------- ---------- Insurance premiums $4,329,213 $1,430,946 $5,760,159 Net investment income 234,265 35,877 270,142 ---------- ---------- ----------- Total revenues 4,563,478 1,466,823 6,030,301 ---------- ---------- ----------- Losses and loss adjustment expenses incurred 3,370,606 995,112 4,365,718 Amortization of deferred policy acquisition costs and other operating expenses 1,385,412 493,116 1,878,528 ---------- --------- ----------- Total losses and expenses 4,756,018 1,488,228 6,244,246 ---------- ---------- ----------- Loss before Federal income taxes (192,540) (21,405) (213,945) Benefit for federal income taxes 65,464 26,164 91,628 ----------- ---------- ----------- Net income (loss) ($ 127,076) $ 4,759 ($ 122,317) =========== ========== ========== Loss ratio 77.9% 69.5% 75.8% Expense ratio 32.0% 34.5% 32.6% ----- ----- ----- Combined ratio 109.9% 104.0% 108.4% ===== ===== =====
In addition, the Registrant incurred $268,000, net of tax, in expenses related to the acquisition of Mountain Valley. For purposes of the following discussion, the North East and Mountain Valley results and the non-recurring acquisition expenses are excluded in order to afford comparability. The North East results are discussed separately below; the Mountain Valley results are not meaningful as of March 31 and are not discussed further. Absent these items, net income decreased $346,000 or $0.17 basic and $0.16 diluted net income per share for the three months ended March 31, 2000 as compared to the same period in 1999. The decline in earnings was primarily due to interest expense related to the Notes and Debentures issued in connection with the Acquired Companies of approximately $245,000, net of tax, and lower earnings from the PPA operations as a result of the AICRA rate rollback. The combined ratio for the three months ended March 31, 2000 was 99.8% compared to 100.2% for the same period in 1999. The reduction in earnings was offset by higher earnings from Preserver, which had very strong results in the first quarter 2000, with pre-tax profit increasing almost 9% over the same period in 1999, due to a lower combined ratio and higher revenue. Revenues - -------- INSURANCE PREMIUMS Insurance premiums declined $585,000 or 5% in the three months ended March 31, 2000 compared to the same period in 1999. Continuing decreases in Motor Club PPA premium were offset by increases in Commercial Lines business written by Preserver. The following table details the changes in insurance premiums and underlying in force policy counts for the three months ended March 31, 2000 as compared to the same period in 1999:
Change in Change in Net Policy Class of Business Premium Percent Count Percent - ------------------ -------- ------- ------ ------- Private Passenger Automobile ($954,000) (10%) 36 0% Commercial Lines 360,000 18% 501 9% Personal Property 9,000 5% (222) (2%) --------- ---- ---- -- Total ($585,000) ( 5%) 315 1% ========= ==== ==== ==
NET INVESTMENT INCOME Net investment income decreased $63,000 or 5% for the three months ended March 31, 2000 as compared to the same period in 1999. The average invested assets for the three month period ended March 31, 2000 were $75,678,000 compared to $73,718,000 for the same period in 1999. The investment portfolio (including short-term investments and excluding capital gains) yielded 5.97% for the three months ended March 31, 2000 as compared to 6.47% for the same period in 1999. Losses and Expenses - ------------------- LOSSES AND LOSS EXPENSES INCURRED Loss and loss expenses incurred decreased $767,000 or 9%, which produced the following loss ratios: Three Months Ended March 31, 2000 March 31, 1999 -------------- -------------- Motor Club 69.3% 72.0% Preserver 54.8% 56.2% ---- ---- Total 64.9% 67.9% ==== ==== Preserver has continued to produce an excellent loss ratio in the first quarter 2000, although its direct loss ratio was slightly higher than in 1999. Reinsurance recoveries in 2000 accounted for the reduction in its loss ratio compared to 1999. Motor Club's PPA loss ratio was lower compared to 1999 despite the effects of the AICRA rate rollback. This is primarily due to improved overall results in Personal Injury Protection ("PIP") (No Fault) first party medical claims; this is so, particularly compared to the third and fourth quarters of 1999. The Registrant does note that the initial results in PIP for Accident Year 2000 have been consistent (i.e., higher) with those experienced in Accident Year 1999 after the AICRA rate rollback was implemented. However, savings on losses in older Accident Years have offset current accident year experience. AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS AND OTHER OPERATING EXPENSES Expenses increased $138,000 or 3% in the three months ended March 31, 2000 as compared to the same period in 1999. This produced an expense ratio of 34.9% in 2000 as compared to 32.3% in 1999. The increase in the expense ratio is primarily due to the continuing reductions in insurance premium resulting from the AICRA rate rollback. The increase in overall expenses in primarily due to higher statutory assessments from Motor Club's PPA operations. The Registrant remains committed to reducing overhead expenses relative to premium volume. North East - ---------- North East's net loss of $127,000 is not unusual in the first quarter of the calendar year, due to increased frequency and severity of automobile claims directly resulting from winter weather. The loss ratio for the three months ended March 31, 2000 was 77.9% as compared to 83.0% in 1999. However, North East's net loss is significantly lower than its $474,000 loss in the three months ended March 31, 1999. This is primarily attributable to significantly lower expenses, particularly reinsurance costs and salaries. As a result, the expense ratio in the 2000 first quarter was 32.0% as compared to 46.4% in 1999. An additional contributing factor to the improved ratios is revenue growth of 39%, which in part is affected by the aforementioned reductions in reinsurance costs, combined with growth in all aspects of North East's insurance products. Financial Condition, Liquidity and Capital Resources - ---------------------------------------------------- The Registrant's book value increased to $13.07 per share at March 31, 2000 from $12.97 per share at December 31, 1999. The sources of the net increase were net income of $250,000 or $0.12 described previously, offset by a decrease of $0.02 (net of deferred taxes) in the market value of fixed maturity investments accounted for as available-for-sale under SFAS No. 115. Interest rates have continued to move upward, causing unrealized losses during this period in the Registrant's investment portfolio. Because the Insurance Companies' investment portfolios are composed completely of securities which are generally highly liquid and no default notices have been received on any of those securities, there are no grounds to believe that the unrealized losses incurred are other than temporary. In addition, the combination of the duration of the portfolio being sufficiently short, combined with the highly liquid nature of those securities and the Registrant's proclivity to hold bonds to maturity, the par value of bonds should be fully realized at maturity, resulting in those unrealized losses being temporary. The net unrealized loss of fixed maturity investments, net of applicable deferred taxes, and included in accumulated other comprehensive loss in the condensed consolidated balance sheet as of March 31, 2000 was $1,810,000 or $.85 per share. The Insurance Companies' need for liquidity arises primarily from the obligation to pay claims. The primary sources of liquidity are premiums received, collections from reinsurers and proceeds from investments. Reserving assumptions and payment patterns of the Insurance Companies did not materially change from the prior year and there were no unusually large retained losses resulting from claim activity. Unpaid losses are not discounted. Operating and Investing Activities - ----------------------------------- Net cash provided by operating activities were $680,000 and $881,000 in the three months ended March 31, 2000 and 1999, respectively. The increase in cash flow from operating activities in the three months ended March 31, 2000 as compared to 1999 reflects the positive results of Motor Club and Preserver. Excluding the acquisition of Mountain Valley, net cash utilized in investing activities was $2,475,000 in 2000 and $121,000 in 1999 reflecting the investment of cash provided by operating and financing activities. Financing Activities - -------------------- The Registrant paid no dividend on its common stock in 2000 or 1999. The Registrant issued $11.5 million of Promissory Notes on February 28, 2000 as described in Note 5 to Financial Statements of this Form 10-Q. The Registrant has no other material outstanding capital commitments which would require additional financing. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION - ------------------------------------------------------------- Reform Act of 1995 This Report on Form 10-Q contains statements that are not historical facts and are considered "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995), including statements concerning the expected benefits of the merger with North East and acquisition of Mountain Valley and the expected future plans related thereto. These statements can be identified by terms such as "believes", "expects", "may", "will", "should", "anticipates", the negatives thereof, or by discussions of strategy. Certain statements contained herein 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 economic, market or regulatory conditions as well as catastrophic events. Consummation of the merger with North East and acquisition of Mountain Valley and future benefits therefrom involve various risks and uncertainties, including the risk of material adverse changes in financial markets or the condition of the Company; risks associated with the Company's entry into new markets; and state regulatory and legislative actions which can affect the profitability of certain lines of business and impede the companies' ability to charge adequate rates. Accordingly, Motor Club of America's premium growth and underwriting results has been and will continue to be potentially materially affected by those factors. PART II OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- a) Exhibits None b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. MOTOR CLUB OF AMERICA s/Stephen A. Gilbert By: Stephen A. Gilbert President s/Patrick J. Haveron By: Patrick J. Haveron Executive Vice President - Chief Financial Officer and Chief Accounting Officer Dated: May 18, 2000 EX-27 2 ARTICLE 7 FOR 1ST QTR 2000
7 These schedules contain summary financial information extracted from Motor Club of America's Consolidated Balance Sheets for the period ended March 31, 2000 and the Consolidated Statements of Operations for the three months ended and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-2000 MAR-31-2000 102,484,362 0 0 93,868 147,242 0 102,725,472 626,329 31,383,960 11,403,243 193,736,545 84,300,299 47,875,857 0 0 11,500,000 0 0 1,062,194 26,705,343 193,736,545 18,259,427 1,399,286 0 39,719 12,482,005 5,195,884 1,742,823 277,720 28,208 249,512 0 0 0 249,512 .12 .12 70,983,383 19,237,070 (4,070,364) (8,440,136) 10,289,926 84,300,299 (4,070,364)
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