Gainsco Finishes Private Passenger Book Buy

Gainsco, Inc. says it has completed its acquisition of Tri-State, Ltd., a privately-owned insurance operation specializing primarily in underwriting, servicing and claims handling of nonstandard private passenger automobile insurance in Minnesota, North Dakota and South Dakota.

"We are truly pleased with this acquisition and the role it will play in the planned geographic expansion of our nonstandard private passenger automobile business from our base established last year with the acquisition of the Lalande Group in Miami, Florida," said Glenn Anderson, Gainsco's president and chief executive officer. "Tri-State is a profitable niche distributor and insurer primarily in the nonstandard private passenger automobile business in the upper Midwest, and is very capably led by its president and founder, Herb Hill," Anderson said.

"Following the completion of this transaction, Tri-State will serve as a regional marketing hub from which we expect to expand into additional targeted states. Simultaneously, we plan to integrate all processing of Tri-State business with Lalande's underwriting and claims systems to maximize service and cost efficiency. As part of this process, it is anticipated that Tri- State's agents will be converted onto Lalande's developing internet-based, real-time, policy quoting and issuance system this year," Anderson said.

The purchase price consideration paid from existing internal funds at closing was $6.0 million. Additional payments of up to approximately $5.5 million in cash over the next several years will be made based on conversion of business to Gainsco, meeting specific profitability targets, and Tri-State's 1999 year-end book value. The acquisition is expected to be minimally accretive to earnings in 2000, which will be the transition period to a totally integrated business line.