The Highlands Insurance Group reported a net loss of $276.9 million ($21.07 per share) for the fourth quarter of 2001, compared with a net loss of $115.1 million ($8.70 per share) in the fourth quarter of 2000.
The results for the fourth quarter of 2001 “reflect loss reserve strengthening for the Company’s commercial multiple peril, commercial automobile, general liability and workers’ compensation lines of business, mainly for business written in 2000 and 2001,” stated the bulletin. It also strengthened reserves for asbestos and environmental claims.
Full year figures reveal a net loss for 2001 of $341.9 million ($25.89 per share) compared with a net loss of $106.6 million ($8.06 per share) for 2000. The group stated that, “As of December 31, 2001, the Company’s stockholders’ deficit was $163.3 million.”
Highlands’ headquarters are in Lawrenceville New Jersey, but it operates several units in other states, notably its largest subsidiary, Highlands Insurance Co. in Texas and its second largest subsidiary, Northwestern National Casualty Co. in Wisconsin. Both companies have been placed under the supervision of the insurance departments in those states, after having suffered large losses, and are no longer writing new business.
The Group’s announcement explained that its primary source of funds consisted of dividends from its subsidiaries. “As a result of the losses incurred by the Company’s insurance subsidiaries and orders issued by state regulators, no further dividends from the insurance subsidiaries are likely to be paid to the holding company. As a result, the Company has retained counsel for the holding company to examine a reorganization of the holding company. Such a reorganization would be expected to have no direct effect on the insurance subsidiaries.”
In addition the Group stated that it “has been in default under its Senior Credit Agreement for noncompliance with certain financial ratios since December 31, 2001. The Company’s loans under the Senior Credit Agreement totaling $47,500,000 are due and payable on April 30, 2002. The Company does not have sufficient funds to satisfy that obligation. Representatives of the Company and the senior lenders have been in discussions regarding the notes.”|”highlands, group, reports, $277, million, q4, loss,, plans, reorganization
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