Gainsco and its insurance subsidiary, MGA Insurance Company have completed the previously announced sale of an affiliated insurance subsidiary, General Agents Insurance Company of America, to Montpelier Re US Holdings.
Gainsco has received $4.75 million, plus $5 million of policyholders’ surplus that remained in General Agents at closing. The company is expecting to record a gain on sale from this transaction during the fourth quarter of 2007 of approximately $4.5 million, with the net proceeds expected to be contributed to policyholders’ surplus of MGA.
As part of the closing transaction, all direct obligations of General Agents were assumed 100% by MGA, and MGA also indemnified General Agents against other liabilities existing prior to closing. Additionally, the company guaranteed the obligations of MGA to General Agents.
MGA will manage the continued, orderly disposition of the company’s runoff business and will continue to write the company’s ongoing nonstandard personal automobile business.