Dallas-based GAINSCO, Inc. and its insurance subsidiary MGA Insurance Co. Inc. have agreed to sell their affiliate General Agents Insurance Co. of America, Inc. to Montpelier Re U.S. Holdings Ltd. for $4.75 million.
The company said it expects to record a gain on sale of approximately $4.5 million, subject to possible adjustments to the purchase price. The net proceeds are expected to be contributed to policyholders’ surplus of MGA.
In February 2002, the company announced it would stop writing new commercial lines insurance business, the majority of which had been written as excess and surplus lines by General Agents. This book of business has been in runoff since that time. General Agents, which is licensed in Oklahoma, has preserved its status as an approved or qualified excess and surplus lines insurer in 37 jurisdictions.
Upon closing, all direct obligations of General Agents will be assumed 100 percent by MGA, and MGA will also indemnify General Agents against other liabilities existing prior to closing. MGA, which will manage the continued disposition of the company’s runoff business, and the company will guarantee the obligations of MGA to General Agents.
The sale is subject to regulatory approvals of the insurance departments of Oklahoma and Texas and other customary conditions and, subject to the satisfaction of those conditions, it is expected to close during the fourth quarter.
The company said its ongoing nonstandard personal automobile business continues to be written through MGA.
GAINSCO, INC. is a Dallas, Texas-based holding company. The company’s nonstandard personal automobile insurance products are distributed through independent retail agents in Florida and South Carolina (Southeast Region), Texas (South Central Region), Arizona, New Mexico and Nevada (Southwest Region) and through an independent managing general agency in California (West Region). Its insurance company subsidiary is MGA Insurance Co., Inc.
Source: GAINSCO, Inc.
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