Well, you wouldn't call an insurance company LOSSCO, would you? Through its MGA Insurance subsidiary, GAINSCO sells personal nonstandard auto insurance under the GAINSCO Auto Insurance brand. The company does a majority of its business in Florida but has laid the groundwork for sales growth in other states in the southwestern and southeastern US. Its products are sold through some 4,800 independent agencies. GAINSCO aims its marketing efforts at Hispanics, its core customer market, and most of the company's customer service staff is bilingual. Officers of GAINSCO own a majority of the company.
In 2011 GAINSCO voluntarily delisted its shares from the NYSE after a decline in stock volume. The move allowed the company to simplify its operating expenses by eliminating costs related to SEC reporting requirements.
GAINSCO's non-standard auto insurance is the more expensive, less tightly regulated coverage that folks with less-than-stellar driving records must buy. Tough economic times (such as the recent recession) are frequently marked by an uptick in fraudulent insurance claims. To rein in claims expense ratios, in 2010 the company clamped down hard on insurance fraud and potential fraud, particularly in Florida.
Despite its efforts, GAINSCO's MGA Insurance subsidiary saw a decrease in insurance premiums in 2010 and 2011 compared to previous years (though 2011 premiums of $173 million were higher than the $159 million in premiums written in 2010). MGA Insurance also reported an increase in net income in 2011 to some $7.3 million, up from $5.4 million in 2010. These results follow efforts by GAINSCO to focus on its most profitable business segments and agency relationships, as well as to raise rates to improve profitability.
The company has been focused on increasing its operations in markets outside of Florida, and on improving the profitability of those businesses once they are established. GAINSCO's main markets include Florida, Texas, Arizona, South Carolina, New Mexico, and Georgia; it also has operations in Oklahoma, California (through an affiliate), and Nevada. Such expansion efforts reduce the impact of high claims losses from any one market.
In 2002 GAINSCO exited all of its commercial lines of business, including auto, garage, liability, property, and specialty lines such as lawyers and educators insurance. Some of those lines are still held by the company, but are operated in run-off, meaning they are maintained for the life of the policy. The company then sold off its General Agents Insurance Company of America subsidiary in 2007. It was purchased by an arm of Montpelier Re Holdings.
A handful of GAINSCO executives and directors collectively own about two thirds of the company, including chairman Robert Stallings, vice chairman James Reis controls, and director John Goff (through private equity firm Goff Moore Strategic Partners). Stallings is also owner of Stallings Racing, a Daytona prototype series racing team that GAINSCO sponsors. – less