Lawrence Insurance Group Inc. Consents to Liquidation of Subsidiary United Community Insurance Company

Strategic Insights -

In a major development, the board of directors of Lawrence Insurance Group Inc. (LIG) has voted to consent to a New York State Order of Liquidation of United Community Insurance Company (UCIC). This move will not impact LIG's other subsidiaries and will enable the company to refocus its energies on healthier businesses. The liquidation is expected to have a positive impact on LIG's fourth quarter 1995 net income and stockholders' equity, with net income increasing by $39,374,000 and stockholders' equity increasing by $57,621,000.

Key Takeaways:

  • The liquidation of UCIC will have no negative impact on Lawrence Insurance Group Inc.'s other subsidiaries.
  • The company expects to pay all but a handful of UCIC claims covered by state guarantee funds in full.
  • The state guarantee funds are supported by various insurance companies that have done business in the respective states and do not involve taxpayer dollars.
  • The elimination of UCIC's liability will have a positive effect on LIG's fourth quarter 1995 net income and stockholders' equity.
  • Net income will increase by $39,374,000 and stockholders' equity will increase by $57,621,000.
  • The decision to liquidate UCIC was made to enable LIG to refocus its energies on healthier businesses and to serve the public interest by making use of the state's guarantee funds.
  • Albert W. Lawrence, chairman, stated that the company had done its best to rehabilitate UCIC, but the situation was similar to a tree losing a damaged limb, allowing the tree to grow stronger in the future.

Statistics:

  • Net income increase: $39,374,000
  • Stockholders' equity increase: $57,621,000
  • Net income for the third quarter of 1995: $464,000 (compared to a restated net income of $601,000 for the same period of 1994)
  • Per share profit for the current quarter: $0.03 (versus $0.04 for the same period in 1994)
  • Average shares outstanding: 14,121,482
  • Net earnings for the 9 months ended Sept. 30, 1995: $859,000 (compared to a restated net loss of $7,469,000 for the same period in 1994)

Sources:

  • Business Wire, "Lawrence Insurance Group Inc. Board of Directors Votes to Consent to New York State Order of Liquidation of United Community Insurance Company", November 13, 1995
  • Lawrence Insurance Group Inc. Press Release, "Lawrence Insurance Group Inc. Announces Third Quarter 1995 Net Income and Stockholders' Equity", November 10, 1995