GAINSCO Reports 3rd Quarter 2008 Results

DALLAS, Nov. 13  /PRNewswire-FirstCall/ -- GAINSCO, INC. (NYSE Alternext: GAN) today announced net loss for the third quarter 2008 of $4.4 million, or $0.18 per common share, basic and diluted.  This compares to third quarter 2007 net loss of $4.3 million, or $0.17 per common share, basic and diluted.  Net loss for the nine months ended September 30, 2008 was $3.3 million, or $0.13 per common share, basic and diluted.  This compares to net loss of $7.6 million for the nine months ended September 30, 2007, or $0.30 per common share, basic and diluted.

In the third quarter of 2008, the Company recorded net realized losses of approximately $5.7 million ($0.24 per diluted common share), of which approximately $5.0 million related to write downs for other-than-temporary declines in fair value of various investments.  The realized losses included approximately $4.8 million from securities backed by or related to the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and Washington Mutual, Inc., as previously disclosed.  For the nine months ended September 30, 2008, the Company recorded net realized losses of approximately $5.7 million ($0.23 per diluted common share).  For each of the quarter and nine months ended September 30, 2007, the Company did not record material net realized gains or losses.

Gross premiums written increased approximately 2% and decreased approximately 6% during the third quarter and nine months ended September 30, 2008, respectively, from gross premiums written in the comparable 2007 periods.  Gross premiums written by geographic region for the quarters and nine months ended September 30, 2008 and 2007, were as follows:

                                 Quarter ended           Nine months ended
  (dollars in millions)           September 30,             September 30,
                               2008         2007         2008         2007
                                               (unaudited)
  Regions:
    Southeast
     (Florida,
      South Carolina)          $29.0        26.3         81.4         81.1
    South Central
     (Texas)                    11.1        11.0         34.2         37.4
    Southwest
     (Arizona,
      Nevada, New Mexico)        7.1         8.5         22.0         26.5
    West (California)            0.5         0.8          1.8          2.9
        Total                  $47.7        46.6        139.4        147.9





Under accounting principles generally accepted in the United States ("GAAP"), ratios for the quarters and nine months ended September 30, 2008 and 2007, were as follows:

                                 Quarter ended           Nine months ended
                                  September 30,            September 30,
                                2008       2007          2008        2007

  Total Company:
    C & CAE Ratio (1)           73.4%      80.4%         73.4%       79.9%
    Expense Ratio (2)(3)        24.5%      27.1%         25.5%       25.2%
    Combined Ratio (2)          97.9%     107.5%         98.9%      105.1%

  Nonstandard Personal Auto:
    C & CAE Ratio (1)           73.3%      80.5%         74.3%       81.5%

  (1)  C & CAE is an abbreviation for Claims and claims adjustment expenses,
       stated as a percentage of net premiums earned.

  (2)  The Expense Ratio and Combined Ratio do not reflect expenses of the
       holding company, which include interest expense on the note payable
       and subordinated debentures.

  (3)  Commissions, change in deferred acquisition costs, underwriting
       expenses and operating expenses (insurance subsidiaries only) are
       offset by agency revenues and are stated as a percentage of net
       premiums earned.





The Company continues to adjust and settle claims associated with its runoff lines.  For the third quarter of 2008, the Company's runoff lines recorded unfavorable development for the settlement of claims occurring in prior accident years of $0.1 million.  During the third quarter 2007, the Company's runoff lines recorded favorable development for claims occurring in prior accident years of $0.1 million.  For the nine months ended September 30, 2008 and 2007, the runoff lines recorded favorable development for claims occurring in prior accident years of $1.2 million and $2.3 million, respectively.

As regards the Company's nonstandard personal auto business during the third quarter 2008, the Company recorded unfavorable development for claims occurring in prior accident years of $0.8 million.  During the third quarter 2007, the Company recorded unfavorable development for claims occurring in prior accident years for nonstandard personal auto of $2.4 million.  For the first nine months of 2008 and 2007, the Company recorded unfavorable development for claims occurring in prior accident years for nonstandard personal auto of $4.7 million and $10.5 million, respectively.

As of September 30, 2008, the Company had $69.6 million in net unpaid claims and claims adjustment expenses ("C&CAE") (Unpaid C&CAE of $72.6 million less Ceded unpaid C&CAE of $3.0 million), compared to net unpaid C&CAE at June 30, 2008 of $68.7 million (Unpaid C&CAE of $72.9 million less Ceded unpaid C&CAE of $4.2 million).  These amounts include net unpaid C&CAE in respect of the Company's runoff lines of $7.6 million at September 30, 2008, and $8.3 million at June 30, 2008.  As of September 30, 2008, the outstanding inventory of runoff claims was 38, compared to 48 at June 30, 2008.

As of September 30, 2008, the Company's Shareholders' equity was $56.3 million, Subordinated debentures were $43.0 million and Note payable was $1.6 million.  These compare to Shareholders' equity of $62.7 million, Subordinated debentures of $43.0 million and Note payable of $1.7 million at June 30, 2008.

GAINSCO, INC. is a Dallas, Texas-based holding company.  The Company's nonstandard personal auto insurance products are distributed through independent retail agents in Florida and South Carolina (Southeast Region), Texas (South Central Region) and Arizona, Nevada and New Mexico (Southwest Region), and through an independent managing general agency in California (West Region).  Its insurance company subsidiary is MGA Insurance Company, Inc.

Some of the statements made in this release may be forward-looking statements.  Forward-looking statements relate to future events or future financial performance and may involve known or unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

These forward-looking statements reflect current views but are based on assumptions and are subject to risks, uncertainties and other variables which should be considered when making an investment decision, including (a) operational risks and other challenges associated with growth into new and unfamiliar markets and states, (b) adverse market conditions, including heightened competition, (c) factors considered by A.M. Best in the rating of our insurance subsidiary, and the acceptability of our current rating, or a future rating, to agents and customers, (d) the Company's ability to adjust and settle the remaining claims associated with its runoff business on terms consistent with its estimates and reserves, (e) the adoption or amendment of legislation, uncertainties in the outcome of litigation and adverse trends in litigation and regulation, (f) inherent uncertainty arising from the use of estimates and assumptions in decisions about pricing and reserves, (g) the effects on claims levels or business operations resulting from natural disasters and other adverse weather conditions, (h) the availability of reinsurance and the Company's ability to collect reinsurance recoverables, (i) uncertainties and disruptions in credit and securities markets, and the availability and cost of capital, which may be required in order to implement the Company's strategies, and (j) limitations on the Company's ability to use net operating loss carryforwards.  Please refer to the Company's recent SEC filings, including the Annual Report on Form 10-K for the year ended December 31, 2007, for more information regarding factors that could affect the Company's results.

Forward-looking statements are relevant only as of the dates made, and the Company undertakes no obligation to update any forward-looking statement to reflect new information, events or circumstances after the date on which the statement is made.  All written or oral forward-looking statements that are made by or are attributable to the Company are expressly qualified in their entirety by this cautionary notice.  Actual results may differ significantly from the results discussed in these forward-looking statements.

[The GAINSCO, INC. and Subsidiaries unaudited Condensed Consolidated Statements of Operations and Other Information for the quarters and nine months ended September 30, 2008 and 2007, follow.]

                        GAINSCO, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)


                                       Quarter ended     Nine months ended
                                       September 30,       September 30,
                                      2008       2007     2008       2007
                                        (unaudited)         (unaudited)
  Net premiums earned                $44,070    46,904  $131,987    149,337
  Net investment income                1,991     2,278     5,920      6,994
  Net realized (losses) gains         (5,716)       -     (5,677)        32
  Agency revenues                      3,077     3,038     9,255      9,752
  Other income (expense), net              5        (2)       39        (12)
  Total revenues                      43,427    52,218   141,524    166,103
  Claims & CAE incurred               32,370    37,695    96,835    119,374
  Policy acquisition costs             7,040     8,455    22,071     27,192
  Underwriting and operating expenses  7,634     8,067    23,466     22,604
  Interest expense, net                  739     1,036     2,408      3,077

    Loss before Federal income taxes  (4,356)   (3,035)   (3,256)    (6,144)
  Federal income tax expense              68     1,247        34      1,424
     Net loss                        $(4,424)   (4,282)  $(3,290)    (7,568)

  Loss per common share:

  Basic                               $(0.18)    (0.17)   $(0.13)     (0.30)
  Diluted                             $(0.18)    (0.17)   $(0.13)     (0.30)



                      GAINSCO, INC. AND SUBSIDIARIES
                            OTHER INFORMATION
                  (In thousands, except per share data)


                                       Quarter ended     Nine months ended
                                       September 30,       September 30,
                                      2008       2007     2008       2007
  Gross premiums written             $47,664    46,625  $139,391    147,923

  GAAP RATIOS:
    C & CAE Ratio (1)                  73.4%     80.4%     73.4%      79.9%
    Expense Ratio (2)(3)               24.5%     27.1%     25.5%      25.2%
    Combined Ratio (2)                 97.9%    107.5%     98.9%     105.1%



  (1)  C & CAE is an abbreviation for Claims and claims adjustment
       expenses, stated as a percentage of net premiums earned.

  (2)  The Expense Ratio and Combined Ratio do not reflect expenses of
       the holding company, which include interest expense on the note
       payable and subordinated debentures.

  (3)  Commissions, change in deferred acquisition costs, underwriting
       expenses and operating expenses (insurance subsidiaries only) are
       offset by agency revenues and are stated as a percentage of net
       premiums earned.


DATASOURCE: GAINSCO, INC.



CONTACT:  Scott A. Marek, Asst. Vice President-IR, [phone], or

Richard M. Buxton, Senior Vice President, [phone], both of GAINSCO,

INC., 



Web site:  http://www.gainsco.com/ 

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