California-based PAULA Financial has reported net income for the third quarter of 2005 of $218,000 or $0.03 per share compared to $142,000 or $0.02 per share for the 2004 period. For the nine months ended Sept. 30, 2005, the company reported net income of $1,152,000 or $0.17 per share compared to $915,000 or $0.14 per share for the 2004 period.
“Net income for the quarter was up 54% over the third quarter of 2004. Year to date income is up 26% over the comparable 2004 period,” commented Jeff Snider, chairman and CEO. “Our Pan American Underwriters (“PAU”) agency operation has earned a solid reputation over many decades for delivering profitable underwriting opportunities to specialty carriers from its agribusiness unit — one of the largest concentrations of agribusiness risk premium of its kind in the West. As carriers compete more vigorously for business in the early stages of a market which is showing signs of softening, commissions paid by specialty carriers to agents are improving. The specialization of the PAU agency has also positioned it to achieve solid new business gains in its benefits and workers’ compensation practices.
“The State Compensation Fund of California (“SCIF”) has made two announcements which will benefit PAU. SCIF is increasing commissions from a maximum of 5.5% to a maximum of 8.0%. While it is not easy to achieve the high end of the SCIF commission range, it is available. SCIF has also reinstated its profit share contracts, retroactively to January 2005, which provide for additional revenue to agencies who deliver highly profitable underwriting results on a portfolio of business.
“At this point in 2005, PAU has been advised that it is eligible to receive such a payment in 2006 based on its 2005 results year-to-date. SCIF, while it has reinstated its contingent profit share program, plans to pay qualifying agencies in two installments (one in 2006, followed by a second installment in 2007 on the 2005 results) instead of one payment as has been its practice in previous periods. Our agency continues to seek the best value proposition for its customers and there are more choices in the California marketplace for workers’ compensation than in previous years. We expect our total writings with SCIF to decline as a result, even with the reinstatement of a contingent profit share agreement. Future contingent profit share payments from SCIF, if earned, will likely be less than historical levels.”
On Nov. 10, 2005, the company’s Board of Directors declared a quarterly cash dividend in the amount of $0.015 per common share. The dividend will be paid to holders of record as of Dec. 8, 2005 and will be distributed on Dec. 28, 2005.