PAULA Financial announced net income for the third quarter of 2002 of $0.02 per share compared to $0.20 per share for the 2001 period. For the nine months ended Sept. 30, 2002, the Company had net income of $0.06 per share compared to $0.27 per share for the 2001 period.
As previously reported, the Company’s underwriting operation, PAULA Insurance Company (“PICO”) is being liquidated, but is included in the 2001 comparative results. For the nine months ended Sept. 30, 2001, PICO contributed $0.20 per share to the Company’s consolidated net income of $0.27 per share and finished the 2001 year all in with a negative contribution to earnings of ($6.88). Operating results by segment for the nine months ended Sept. 30, 2002 and 2001 are included in the attachments to this press release. All 2002 current year revenue is generated by agency commissions and service fees. The Company has no risk revenue exposure and has no plans to re-enter the risk underwriting business at this time.
Total revenue for the first nine months of 2002 was $14.3 million compared to $46.9 million for the 2001 period. Total pre-tax income for the first nine months of 2002 was $645,000 compared to $2,209,000 in 2001. Weighted average shares outstanding assuming dilution were 6.1 million in the 2002 period compared to 5.6 million for the 2001 period (the result of a shareholder approved restricted stock program implemented in the second quarter of 2001).
Pan American Underwriters, the Company’s agency subsidiary, continued its pattern of profitability in the first nine months of 2002. Jeff Snider, chairman and CEO, observed, “Our California operation represents 93 percent of total agency revenues. Top line sales are up 15 percent in California through nine months. In the third quarter we completed some very solid producer recruiting efforts that will add to top line revenue momentum going forward. We have materially improved our position in the crop insurance sector in California and Florida starting in the third quarter. Sales in core product segments such as workers’ compensation and group health continue to meet expectation. Cash flows have improved steadily throughout 2002 making it possible to fulfill our bank debt repayment schedule. We will end the 2002 year with $2.7 million owed on a line of credit that at one time was fully utilized at $15.0 million. Repaying the bank debt is one of our priorities. We have no plans to soon be back in the underwriting business–we are going to cease being a borrower at the earliest possible moment as well.”
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