GAINSCO INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934

For Quarter Ended March 31, 2003 Commission File Number 1-9828

GAINSCO, INC.
(exact name of registrant as specified in its charter)

Texas 75-1617013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1445 Ross Ave., Suite 5300, Dallas, Texas 75202
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (214) 647-0415

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of May 9, 2003, there were 21,169,736 shares of the registrant's Common Stock
($.10 par value) outstanding.

GAINSCO, INC. AND SUBSIDIARIES
INDEX

Page
----

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS:

Independent Auditors' Review Report 3

Consolidated Balance Sheets as of March 31, 2003 (unaudited) and
December 31, 2002 4

Consolidated Statements of Operations for the Three Months
Ended March 31, 2003 and 2002 (unaudited) 6

Consolidated Statements of Shareholders' Equity and Comprehensive
Loss for the Three Months Ended March 31, 2003 (unaudited) and the
Twelve Months Ended December 31, 2002 7

Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2003 and 2002 (unaudited) 8

Notes to Consolidated Financial Statements
March 31, 2003 and 2002 (unaudited) 10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 23

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 29

ITEM 4. CONTROLS AND PROCEDURES 31

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS 32

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 32

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 32

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 32

ITEM 5. OTHER INFORMATION 32

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 32

SIGNATURE 37

CERTIFICATIONS 38

2

PART I. FINANCIAL INFORMATION

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Shareholders
GAINSCO, INC.:

We have reviewed the accompanying consolidated balance sheets of GAINSCO, INC.
and subsidiaries as of March 31, 2003, the related consolidated statements of
operations for the three-months ended March 31, 2003 and 2002, and the related
consolidated statements of shareholders' equity and comprehensive loss, and cash
flows for the three-months ended March 31, 2003 and 2002. These interim
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with accounting principles generally accepted in the United
States of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheets of
GAINSCO, INC. and subsidiaries as of December 31, 2002, and the related
consolidated statements of operations, statements of shareholders' equity and
comprehensive loss, and statements of cash flows for the year then ended (not
presented herein); and in our report dated March 24, 2003, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the financial information set forth in the accompanying consolidated balance
sheets as of December 31, 2002 and the accompanying consolidated statement of
shareholders' equity and comprehensive loss for the year ended December 31,
2002, is fairly presented, in all material respects, in relation to the
consolidated balance sheets and consolidated statement of shareholders' equity
and comprehensive loss from which they have been derived.

As discussed in Note 1(g) to the condensed consolidated financial statements,
effective January 1, 2002, GAINSCO, INC. and subsidiaries adopted the provisions
of Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets."

Dallas, Texas /s/KPMG LLP
May 9, 2003 -----------
KPMG LLP

3

GAINSCO, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31,
2003 December 31,
(unaudited) 2002
------------ ------------

Assets
Investments:

Fixed maturities:

Bonds available for sale, at fair value (amortized cost: $53,579,143
- 2003, $59,019,871 - 2002) $ 56,825,339 62,657,328

Certificates of deposit, at cost (which approximates fair value) 1,189,532 645,000

Short-term investments, at cost (which approximates fair value) 54,768,558 51,671,557
------------ ------------

Total investments 112,783,429 114,973,885

Cash 2,181,616 2,512,454

Accrued investment income 702,924 714,760

Premiums receivable (net of allowance for doubtful accounts: $275,000 -
2003 and 2002) 5,017,501 3,684,195

Reinsurance balances receivable (net of allowance for doubtful accounts:
$1,043,681 - 2003, $1,001,461 - 2002) (note 2) 25,784,114 31,622,971

Ceded unpaid claims and claim adjustment expenses (note 2) 42,693,275 46,802,114

Ceded unearned premiums (note 2) 64,196 178,572

Deferred policy acquisition costs 1,666,831 1,674,346

Property and equipment (net of accumulated depreciation and amortization:
$5,177,139 - 2003, $5,074,441 - 2002) 826,347 913,526

Current Federal income taxes (note 1) - 1,055,753

Deferred Federal income taxes (net of valuation allowance: $31,533,811 -
2003, $31,972,504 - 2002) (note 1) - -

Other assets 9,885,668 9,647,641

Goodwill (note 1) 609,000 609,000
------------ ------------

Total assets $202,214,901 214,389,217
============ ============

See accompanying notes to consolidated financial statements.

4

GAINSCO, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31,
2003 December 31,
(unaudited) 2002
------------- ------------

Liabilities and Shareholders' Equity

Liabilities
Unpaid claims and claim adjustment expenses $ 134,081,432 143,270,964

Unearned premiums 8,820,680 8,580,082

Commissions payable 5,981,444 6,110,340

Accounts payable 2,382,032 2,631,066

Reinsurance balances payable 430,367 -

Deferred revenue 3,333,468 4,451,261

Drafts payable 1,441,423 1,631,846

Note payable (note 3) 1,761,000 3,700,000

Deferred Federal income taxes (note 1) 1,103,707 1,236,736

Other liabilities 462,847 171,708
------------- ------------

Total liabilities 159,798,400 171,784,003
------------- ------------
Redeemable convertible preferred stock - Series A ($1,000 stated value,
31,620 shares authorized, 31,620 issued at March 31, 2003 and
December 31, 2002), liquidation value of $31,620,000 (note 4) 22,054,000 21,343,000

Redeemable convertible preferred stock - Series B ($1,000 stated value,
3,000 shares authorized, 3,000 issued at March 31, 2003 and
December 31, 2002), at liquidation value (note 4) 3,547,208 3,449,057

Redeemable preferred stock - Series C ($1,000 stated value,
3,000 shares authorized, 3,000 issued at March 31, 2003 and
December 31, 2002), at liquidation value (note 4) 3,655,209 3,566,057
------------- ------------

29,256,417 28,358,114
------------- ------------
Shareholders' Equity (note 4)

Common stock ($.10 par value, 250,000,000 shares authorized, 22,013,830 issued
at March 31, 2003 and December 31, 2002) 2,201,383 2,201,383

Common stock warrants 540,000 540,000

Additional paid-in capital 100,866,124 100,866,124

Accumulated other comprehensive income (note 1) 2,142,489 2,400,722

Retained deficit (84,895,387) (84,066,604)

Treasury stock, at cost (844,094 shares at March 31, 2003 and
December 31, 2002) (7,694,525) (7,694,525)
------------- ------------

Total shareholders' equity 13,160,084 14,247,100
------------- ------------
Commitments and contingencies (note 4)

Total liabilities and shareholders' equity $ 202,214,901 214,389,217
============= ============

See accompanying notes to consolidated financial statements.

5

GAINSCO, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)

Three months ended March 31,
------------------------------------
2003 2002
------------- ------------

Revenues:

Net premiums earned (note 2) $ 8,689,656 17,442,156

Net investment income 845,006 1,293,193

Net realized gains (note 1) 751,054 362,541

Other income 859,669 677,577
------------- ------------

Total revenues 11,145,385 19,775,467
------------- ------------

Expenses:

Claims and claims adjustment expenses (note 2) 7,483,307 15,073,621

Commissions 1,500,244 4,006,668

Change in deferred policy acquisition costs and deferred ceding commission income 7,515 (531,006)

Interest expense (note 3) 52,509 110,566

Underwriting and operating expenses 2,032,290 3,493,997
------------- ------------

Total expenses 11,075,865 22,153,846
------------- ------------
Income (loss) before Federal income taxes 69,520 (2,378,379)

Federal income taxes:
Current benefit - -
Deferred expense (benefit) - 1,844,945
------------- ------------

Total taxes - 1,844,945
------------- ------------

Net income (loss) $ 69,520 (4,223,324)
============= ============

Loss per common share, basic and diluted (note 1):

Net loss per common share $ (.04) (.24)
============= ============

See accompanying notes to consolidated financial statements.

6

GAINSCO, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity and Comprehensive Loss

Three months ended
March 31, 2003 Twelve months ended
(unaudited) December 31, 2002
---------------------------- ---------------------------

Common stock:

Balance at beginning and at end of period 2,201,383 2,201,383
------------ ------------

Common stock warrants:

Balance at beginning and at end of period 540,000 540,000
------------ ------------

Additional paid-in capital:

Balance at beginning and at end of period $100,866,124 100,866,124
------------ ------------

Retained deficit:

Balance at beginning of period $(84,066,604) (71,977,743)

Net income (loss) 69,520 69,520 (8,761,087) (8,761,087)

Accrued dividends - redeemable preferred stock
(note 4) (178,303) (670,774)
Accretion of discount on redeemable preferred
shares (720,000) (2,657,000)
------------ ------------

Balance at end of period (84,895,387) (84,066,604)
------------ ------------

Accumulated other comprehensive income (loss):

Balance at beginning of period 2,400,722 3,580,690

Unrealized losses on securities, net of
reclassification adjustment, net of tax (note 1) (258,233) (258,233) (1,179,968) (1,179,968)
------------ -------- ------------ ----------

Comprehensive loss (188,713) (9,941,055)
======== ==========
Balance at end of period 2,142,489 2,400,722
------------ ------------

Treasury stock:

Balance at beginning and at end of period (7,694,525) (7,694,525)
------------ ------------

Total shareholders' equity at end of period $ 13,160,084 14,247,100
============ ============

See accompanying notes to consolidated financial statements.

7

GAINSCO, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
(Unaudited)

Three months ended March 31,
---------------------------------
2003 2002
------------ -----------

Cash flows from operating activities:

Net income (loss) $ 69,520 (4,223,324)

Adjustments to reconcile net loss to cash (used for) provided by
operating activities:

Depreciation and amortization 80,051 105,465

Impairment of other investments - 2,010,670

Deferred Federal income tax expense (benefit) - 1,844,945

Change in accrued investment income 11,836 1,086,576

Change in premiums receivable (1,333,306) 7,796,543

Change in reinsurance balances receivable 5,838,857 4,809,090

Change in ceded unpaid claims and claim adjustment expenses 4,108,839 1,664,160

Change in ceded unearned premiums 114,376 8,373,351

Change in deferred policy acquisition costs and deferred ceding
commission income 7,515 (531,006)

Change in other assets (238,027) (17,970,877)

Change in unpaid claims and claim adjustment expenses (9,189,532) (7,398,503)

Change in unearned premiums 240,598 (7,901,759)

Change in commissions payable (128,896) 214,567

Change in accounts payable (249,034) (2,602,280)

Change in reinsurance balances payable 430,367 (5,552,530)

Change in deferred revenue (1,117,793) (736,382)

Change in drafts payable (190,423) 1,269,894

Change in funds held under reinsurance agreements - (47,783,905)

Change in other liabilities 291,139 (26,314)

Change in current Federal income taxes 1,055,753 -
------------ -----------

Net cash used for operating activities $ (198,160) (65,551,619)
------------ -----------

See accompanying notes to consolidated financial statements.

(continued)

8

GAINSCO, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
(Unaudited)

Three months ended March 31,
------------------------------------
2003 2002
----------- ------------

Cash flows from investing activities:

Bonds available for sale:

Sold $ 7,433,199 72,242,260

Matured 2,946,000 2,202,000

Purchased (4,915,824) (12,587,344)

Other investments sold - 2,110,467

Certificates of deposit matured - 100,000

Certificates of deposit purchased (544,532) (100,000)

Net change in short term investments (3,097,001) 10,319,627

Property and equipment disposed (purchased) (15,520) 179,045
----------- ------------

Net cash provided by investing activities 1,806,322 74,466,055
----------- ------------
Cash flows from financing activities:

Payments on note payable (1,939,000) (6,600,000)
----------- ------------

Net cash used for financing activities (1,939,000) (6,600,000)
----------- ------------

Net increase (decrease) in cash (330,838) 2,314,436

Cash at beginning of period 2,512,454 3,567,717
----------- ------------

Cash at end of period $ 2,181,616 5,882,153
=========== ============

See accompanying notes to consolidated financial statements.

9

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

(1) Summary of Accounting Policies

(a) Basis of Consolidation

The accompanying consolidated financial statements include the
accounts of GAINSCO, INC. ("GNAC") and its wholly-owned
subsidiaries (collectively, the "Company"), General Agents
Insurance Company of America, Inc. ("General Agents"), General
Agents Premium Finance Company, Agents Processing Systems, Inc.,
Risk Retention Administrators, Inc., GAINSCO Service Corp.
("GSC"), Lalande Financial Group, Inc. ("Lalande"), National
Specialty Lines, Inc. ("NSL"), DLT Insurance Adjusters, Inc.
("DLT") (Lalande, NSL and DLT collectively, the "Lalande Group")
and Midwest Casualty Insurance Company ("MCIC"). On March 31, 2003
MCIC was liquidated and all of its assets, liabilities and equity
were transferred to General Agents. General Agents has one wholly
owned subsidiary, MGA Insurance Company, Inc. ("MGAI") which, in
turn, owns 100% of MGA Agency, Inc. GSC has one wholly owned
subsidiary, MGA Premium Finance Company. All significant
intercompany accounts have been eliminated in consolidation.

Prior to December 2, 2002, GSC owned the management contract
controlling GAINSCO County Mutual Insurance Company ("GCM") and
prior to that time its accounts were included in the accompanying
consolidated financial statements. The management contract of GCM
was sold on December 2, 2002 to an unaffiliated third party. See
(b) "Nature of Operations."

Previously, while GCM was legally owned by its policyholders, it
was controlled, through a management contract, by GSC. Inclusion
of GCM's accounts in the Company's Consolidated Financial
Statements was in accordance with the criteria under EITF 97-2.
The term of the management contract was 25 years when the Company
acquired it in the fourth quarter of 1992. It was only terminable
by GCM for the Company's failure to comply with its obligations
under the management contract. The Company had exclusive authority
over all decision making related to all operations of GCM, and the
operations were under the direction of the same officer group that
managed the insurance subsidiaries of the Company. The management
contract was unilaterally salable by the Company (subject to
normal regulatory approvals), which was done on December 2, 2002.
The Company had the right to receive the income of GCM through the
management contract as ongoing fees and the proceeds from the sale
of its interest in the management contract. Additionally, GCM's
insurance business was pooled with all of the other insurance
subsidiaries of the Company through an inter-company quota share
reinsurance agreement.

The accompanying consolidated financial statements are prepared on
the basis of accounting principals generally accepted in the
United States of America ("U.S. GAAP"). The preparation of
financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.

Reference is made to the Company's annual consolidated financial
statements for the year ended December 31, 2002 for a description
of all other accounting policies.

10

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

(b) Nature of Operations

On February 7, 2002, the Company announced its decision to
discontinue writing commercial lines insurance business due to
continued adverse claims development and unprofitable results.

As respects the Company's remaining active insurance line,
personal auto, management continues in 2003 to implement actions
intended to enhance the profit potential of this business and its
future strategic direction, which could include the expansion,
contraction, or disposition of the business.

The Company anticipates a lengthy period of transition as it
lessens its exposure to the insurance industry. During the
transition process, the Company may consider the sale of
additional subsidiaries associated with that business. The Company
intends to redeploy capital no longer required by its insurance
business, once it becomes available, to pursue other opportunities
in the future that offer a better prospect for profitability. The
Company believes that suitable capital redeployment opportunities
should be available after the capital no longer required by its
insurance business becomes available, but cannot predict the
amount of capital that will ultimately be available for
redeployment, the timing or the nature of the opportunities that
may be available at the time capital becomes available. The
opportunities may be outside of the insurance business and could
be in the financial services business. The opportunities could
require more capital than the Company has available, which could
result in the Company having to seek such capital from other
sources, but the Company has no assurance that it would be able to
effect any such transaction or the terms thereof.

On December 2, 2002, the Company completed the sale and transfer
of the management contract controlling GCM to an affiliate of
Liberty Mutual Insurance Company ("Liberty"), for a purchase price
of up to $10 million, of which $1 million was paid at closing and
the balance is payable in contingent payments through September
2009. The $9 million total of future payments would be payable $3
million in September 2003 and $1 million each year thereafter
through September 2009 and each payment is contingent on there
being no materially adverse change in the regulatory treatment of
GCM specifically, or county mutuals generally, from legislative or
regulatory administrative actions prior to the applicable payment
date. Legislation has been introduced in the current session of
the Texas Legislature ending June 2, 2003 which, depending whether
or in what form it is ultimately adopted, could prejudice the
rights of the Company to receive some or all of the future
payments from Liberty. The Company has a receivable of $300,000
due from Liberty, which there is no certainty of receiving given
the potential legislation mentioned previously. The Company has a
contingent gain related to the sale of the management contract for
the amount of the sale in excess of cost of approximately $8.5
million. Such gain is to be recognized if and as the related
contingencies are satisfied at each due date of future Liberty
payments under the sale agreement. The Company made a $500,000
prepayment of outstanding bank debt from the closing proceeds of
the transaction.

GNAC needs cash for principal and interest payments on its bank
note payable and administrative expenses. The primary source of
cash to meet these obligations are statutory permitted dividends
from its insurance subsidiaries. GNAC believes the cash dividends
from its insurance subsidiaries should be sufficient to meet its
expected obligations for 2003.

11

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

(c) Investments

Bonds available for sale and other investments are stated at fair
value with changes in fair value recorded as a component of
comprehensive income. There were no components of other
investments at March 31, 2003 and December 31, 2002. Short-term
investments are stated at cost.

The "specific identification" method is used to determine costs of
investments sold. Provisions for possible losses are recorded only
when the values have experienced impairment considered "other than
temporary" by a charge to realized losses resulting in a new cost
basis of the investment.

The unrealized gains (losses) on investments at March 31, 2003 and
December 31, 2002 are set forth in the following table:

March 31, 2003 December 31, 2002
-------------- -----------------

Bonds available for sale:

Unrealized gain $ 3,246,196 3,637,457

Deferred tax expense (1,103,707) (1,236,735)
----------- ------------

Net unrealized gain $ 2,142,489 2,400,722
=========== ============

Proceeds from the sale of bond securities totaled $7,433,199 and
$72,242,260 for the three months ended March 31, 2003 and 2002,
respectively. There were no sales of common stocks for the three
months ended March 31, 2003 and 2002. Proceeds from the sale of
other investments totaled $0 and $2,110,467 for the three months
ended March 31, 2003 and 2002, respectively.

Realized gains and losses on investments for the three months
ended March 31, 2003 and 2002, respectively, are presented in the
following table:

Three months ended March 31,
----------------------------------
2003 2002
----- ----

Realized gains:

Bonds $ 751,054 2,843,861

Other investments - 241
---------- ---------
Total realized gains 751,054 2,844,102
---------- ---------
Realized losses:

Bonds - 470,891

Impairment of bonds - 2,010,670
---------- ---------
Total realized losses - 2,481,561
---------- ---------
Net realized gains $ 751,054 362,541
========== =========

During the first three months of 2002, the Company reduced the
carrying value of a non-rated commercial mortgage backed security
to $0 resulting in a write down of $2,010,670 as a result of a
significant increase in the default rate in January and February
of 2002 in the underlying commercial mortgage portfolio, which has
disrupted the cash flow stream sufficiently to make future cash
flows unpredictable. This write down was offset by net realized
gains of $2,373,211 recorded from the sale of various bond
securities.

12

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

In August 2002, the Company entered into an amendment to its
Investment Management Agreements with Goff Moore Strategic
Partners, L.P. ("GMSP"). The amendment reduces, effective as of
October 1, 2002, the minimum aggregate monthly payment owed by the
Company to GMSP from $75,000 to $63,195 (with respect to each
calendar month from October 2002 through September 2003), $53,750
(with respect to each calendar month from October 2003 through
September 2004) and $45,417 (with respect to each calendar month
after September 2004). The amendment also changes the date upon
which either party to each of the Investment Management Agreements
can terminate the agreement at its sole option from October 4,
2002 to September 30, 2005. The amendment was approved by each of
the required applicable state insurance departments.

(d) Federal Income Taxes

The Company and its subsidiaries file a consolidated Federal
income tax return. Deferred income tax items are accounted for
under the "asset and liability" method which provides for
temporary differences between the reporting of earnings for
financial statement purposes and for tax purposes, primarily
deferred policy acquisition costs, the discount on unpaid claims
and claim adjustment expenses, net operating loss carry forwards
and the nondeductible portion of the change in unearned premiums.
The Company paid no Federal income taxes during the three months
ended March 31, 2002. The Company received Federal income tax
refunds totaling $1,055,753 during the three months ended March
31, 2003.

In assessing the realization of its deferred tax assets,
management considers whether it is more likely than not that a
portion or all of the deferred tax assets will be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which
those temporary differences become deductible. Based upon
management's consideration of expected reversal of deferred tax
liabilities and projected future taxable income, management
believes it is more likely than not that the Company will not
realize the benefits of these deferred tax assets in the near
future. The Company has established a valuation allowance against
its net deferred tax assets, exclusive of the tax effect of
unrealized gains at March 31, 2003 and December 31, 2002, in the
amount of $31,533,811 and $31,972,504, respectively.

As of March 31, 2003, the Company has net operating loss carry
forwards for tax purposes of $1,639,332, $23,531,349, $33,950,174,
$9,302,952 and $440,537 which, if not utilized, will expire in
2018, 2020, 2021, 2022 and 2023, respectively.

13

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

(e) Earnings Per Share

The following table sets forth the computation of basic and
diluted earnings per share:

Three months ended March 31,
-----------------------------------
2003 2002
------ ----

Basic loss per share:
Numerator:

Net income (loss) $ 69,520 (4,223,324)

Less: Preferred stock dividends 178,303 161,538

Accretion of discount on preferred stock 720,000 632,000
----------- ----------

Net loss to common shareholders $ (828,783) (5,016,862)
----------- ----------
Denominator:
Weighted average shares outstanding 21,169,736 21,169,736
----------- ----------

Basic loss per common share $ (.04) (.24)
=========== ==========
Diluted loss per share:
Numerator:

Net income (loss) $ 69,520 (4,223,324)
----------- ----------
Denominator:
Weighted average shares outstanding 21,169,736 21,169,736
Effect of dilutive securities:
Convertible preferred stock - -
----------- ----------
Weighted average shares and assumed
Conversions 21,169,736 21,169,736
----------- ----------

Diluted loss per common share * $ (.04) (.24)
=========== ==========

*The effects of common stock equivalents and convertible preferred stock are
antidilutive for the three months ended March 31, 2003 and 2002, respectively,
due to the net loss for the periods; therefore, diluted loss per share is
reported the same as basic loss per share.

(f) Stock-Based Compensation

In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation"
("Statement 123"). Statement 123 defines a fair value based method
of accounting for an employee stock option or similar equity
instrument. Under Statement 123, the Company elects to measure
compensation costs using the intrinsic value based method of
accounting prescribed by APB 25 "Accounting for Stock Issued to
Employees". There have been no options granted since 2000.

The Company applies APB 25 and related Interpretations in
accounting for its plans. Accordingly, no compensation cost has
been recognized for its stock option plans. Had compensation cost
been determined consistent with Statement 123 for the options
granted, the Company's net income and earnings per share would
have been the pro forma amounts indicated below:

14

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

(g) Accumulated Other Comprehensive Income

The following schedule presents the components of other
comprehensive income:

Three months ended March 31,
--------------------------------
2003 2002
---- ----

Unrealized losses on securities:

Unrealized holding gain (loss) during period $ 359,793 (838,229)

Less: Reclassification adjustment for amounts included in net
income for realized gains 751,054 2,373,211
----------- ----------
Other comprehensive loss before Federal income taxes (391,261) (3,211,440)

Federal income tax benefit (133,028) (1,091,914)
----------- ----------

Other comprehensive loss $ (258,233) (2,119,526)
=========== ==========

The 2002 reclassification adjustment for amounts included in net
income for realized gains excludes the realized loss due to the
impairment of a fixed maturity because this amount was not a
component of accumulated other comprehensive income as of December
31, 2001.

(h) Goodwill

Goodwill as of March 31, 2003 and as of December 31, 2002 is
$609,000 and is related to the 1998 acquisition of the Lalande
Group and reflects a value no less than the estimated fair
valuation of combined agency and claims handling operations of
this type in the personal auto marketplace. Effective in 2002,
goodwill is no longer amortized but will be subject to an
impairment test based on its estimated fair value. Therefore,
additional impairment losses could be recorded in future periods.

(i) Accounting Pronouncements

In June 2002, the FASB issued Statement of Financial Accounting
Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities" (Statement 146). The provisions of Statement
146 are effective for exit or disposal activities that are
initiated after December 31, 2002. The adoption of Statement 146
did not have a material effect on the Company's consolidated
financial position or result of operations.

In November 2002, the FASB issued Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness to
Others, an interpretation of FASB Statements No. 5, 57 and 107 and
a rescission of FASB Interpretation No. 34." This Interpretation
elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations
under guarantees issued. The Interpretation also clarifies that a
guarantor is required to recognize, at inception of a guarantee, a
liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of the
Interpretation are applicable to guarantees issued or modified
after December 31, 2002 and are not expected to have a material
effect of the Company's financial statements.

15

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

In January 2003, the FASB issued Interpretation No. 46,
"Consolidation of Variable Interest Entities, an interpretation of
ARB No. 51." This Interpretation addresses the consolidation by
business enterprises of variable interest entities as defined in
the Interpretation. The Interpretation applies immediately to
variable interests in variable interest entities obtained after
January 31, 2003. The application of this Interpretation is not
expected to have a material effect on the Company's financial
statements.

(j) Benefit Plans

Because of their importance to the Company, in August 2002 the
Company entered into executive severance agreements with two
senior executives, Richard M. Buxton and Daniel J. Coots. The
agreements generally provide that the Company shall pay the
executive, upon termination of the employment of the executive by
the Company without cause or by the executive with good reason
during the term of the agreement, a lump sum severance amount
equal to the base annual salary of the executive as of the date
that the executive's employment with the Company ends. The current
base annual salaries of Mssrs. Buxton and Coots are $170,000 and
$155,000, respectively. The executive severance agreements do not
supersede the change in control agreements or any other severance
agreements the employees may have with the Company.

The Company entered into retention incentive agreements with
sixteen of its employees, three of whom are officers of the
Company. Each of the retention incentive agreements generally
requires that the Company pay the applicable employee an amount
based upon the employee's annual base salary, less amounts owed by
the Company to the employee pursuant to any change in control or
severance agreements the employee may have with the Company. The
Company's obligation to make payments under each retention
incentive agreement is conditioned upon the employee remaining in
the employ of the Company through a specified date, unless
terminated earlier by the Company without cause or by the employee
with good reason. The Company could be obligated to make up to an
aggregate of approximately $787,000 in payments under the
retention incentive agreements. Other than Jackiben N. Wisdom (who
was not one of the five most highly compensated employees of the
Company at the time he entered into his retention incentive
agreement), none of the five most highly compensated employees of
the Company are parties to the retention incentive agreements.

(2) Reinsurance

The amounts deducted in the Consolidated Statements of Operations for
reinsurance ceded for the three months ended March 31, 2003 and 2002,
respectively, are set forth in the following table.

Three months ended March 31,
-------------------------------
2003 2002
---- ----

Premiums earned - all other $ 60,143 9,130,840
Premiums earned - Florida business $ - (3,217)
Premiums earned - fronting arrangements $ 81,496 4,994,963

Claims and claim adjustment expenses - all other $ (1,006,133) 7,924,472
Claims and claim adjustment expenses - Florida business $ (556,574) 209,774
Claims and claim adjustment expenses - plan servicing $ 3,028 (341,727)
Claims and claim adjustment expenses - Fronting arrangements $ (180,053) 3,422,543

16

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

Claims ceded to the commercial automobile plans of Arkansas, California,
Louisiana, Mississippi and Pennsylvania are designated as "plan
servicing".

There were no plan servicing or Florida business unearned premiums at
March 31, 2003 and December 31, 2002, respectively. The amounts included
in the Consolidated Balance Sheets for reinsurance ceded under fronting
arrangements and reinsurance ceded to the commercial automobile plans of
Arkansas, California, Louisiana, Mississippi and Pennsylvania as of March
31, 2003 and December 31, 2002 were as follows:

2003 2002
---- ----

Unearned premiums - fronting arrangements $ 47,606 106,145

Unpaid claims and claim adjustment expenses - Florida business $ - 556,574
Unpaid claims and claim adjustment expenses - plan servicing $ 118,814 184,320
Unpaid claims and claim adjustment expenses - fronting arrangements $ 1,680,743 2,032,541

Effective December 31, 2000 the Company entered into a quota share
reinsurance agreement whereby the Company ceded 100% of its commercial
auto liability unearned premiums and 50% of all other commercial business
unearned premiums at December 31, 2000 to a non-affiliated reinsurer. For
policies with an effective date of January 1, 2001 through December 31,
2001, the Company entered into a quota share reinsurance agreement
whereby the Company ceded 20% of its commercial business to a
non-affiliated reinsurer. Also effective December 31, 2000, the Company
entered into a reserve reinsurance cover agreement with a non-affiliated
reinsurer.

This agreement reinsures the Company's ultimate net aggregate liability
in excess of $32,500,000 up to an aggregate limit of $89,650,000 for net
commercial auto liability losses and loss adjustment expense incurred but
unpaid as of December 31, 2000. At March 31, 2003 and December 31, 2002 a
deferred reinsurance gain of $3,333,468 and $3,855,062, respectively, has
been recorded in deferred revenues. For the first quarter of 2003 and
first quarter of 2002, $521,594 and $579,014, respectively, was recorded
in other income. Since its inception at December 31, 2000, $5,716,532 has
been recorded in other income which represents the reserve development
under the reserve reinsurance cover agreement. The deferred gain item
will be recognized in income in future periods based upon the ratio of
claims paid in the $57,150,000 layer to the total of the layer. The
reinsurer remains responsible for reimbursing the Company for claim
payments covered under this agreement.

The Company does not have catastrophe reinsurance for business written in
2003 because of the exit from commercial lines and because the cost for
coverage for the personal auto line was determined to be excessive in
relation to the evaluation of risks to be retained.

The Company remains directly liable to its policyholders for all policy
obligations and the reinsuring companies are obligated to the Company to
the extent of the reinsured portion of the risks.

(3) Note Payable

In November 1998, the Company entered into a credit agreement with a
commercial bank pursuant to which it borrowed $18,000,000. Interest was
due monthly at an interest rate that approximated the 30-day London
Interbank Offered Rate (LIBOR) plus 175 basis points. Principal payments
of $500,000 were due each quarter with the balance of $10,500,000 due at
maturity of the note on October 1, 2003.

17

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

In March 2001, the credit agreement was amended, specific breaches of
covenants were waived, $2,500,000 in principal was prepaid and certain
terms were amended. Interest was due monthly at an interest rate that
approximates the 30-day LIBOR plus 250 basis points with an increase of
25 basis points each quarter beginning October 1, 2001. Principal
payments of $500,000 were due each quarter and were scheduled to increase
to $750,000 beginning April 1, 2002, with the balance of $6,500,000 due
at maturity of the note on November 1, 2003.

On November 13, 2001, the credit agreement was further amended to change
certain covenants and to provide the following revised principal
amortization schedule: $200,000 upon effectiveness of the amendment on
November 13, 2001; $500,000 on January 2, 2002; and $1,000,000 on the
first day of each calendar quarter thereafter. A $50,000 fee was paid to
the bank for this amendment.

On February 27, 2002 the Company entered into an amendment to the credit
agreement which cured covenant breaches and provided for principal
prepayments. The Company prepaid $6,100,000 of the indebtedness
outstanding under the credit agreement on March 4, 2002. Several
covenants in the existing credit agreement were eliminated or modified by
the amendment and the interest rate was changed to a base rate (which
approximates prime) plus 175 basis points (6% at March 31, 2003). The
Company paid $500,000 of the indebtedness outstanding under the credit
agreement in December 2002 as a result of the sale of GCM. On March 24,
2003 the Company paid $1,939,000 of the indebtedness outstanding under
the credit agreement, as a result of the dividend received from General
Agents of $3,878,000. The principal amortization schedule was amended
such that the remaining $1,761,000 principal balance under the credit
agreement is payable in November 2003.

The Company recorded interest expense of $52,509 and $110,566 for the
three months ended March 31, 2003 and 2002, respectively. The Company
paid interest expense of $52,509 and $127,459 for the three months ended
March 31, 2003 and 2002, respectively. The Company made a scheduled
principal payment of $500,000 in January 2002 and unscheduled principal
prepayments of $500,000 and $1,939,000 in December 2002 and March 2003,
respectively.

(4) Redeemable Preferred Stock and Shareholders' Equity

The Company has authorized 250,000,000 shares of common stock, par value
$.10 per share (the "Common Stock"). Of the authorized shares of Common
Stock, 22,013,830 were issued as of March 31, 2003 and December 31, 2002,
respectively, and 21,169,736 were outstanding as of March 31, 2003 and
December 31, 2002, respectively.

On October 4, 1999 GNAC sold to GMSP, for an aggregate purchase price of
$31,620,000 (i) 31,620 shares of Series A Preferred Stock, which are
convertible into 6,200,000 shares of Common Stock at a conversion price
of $5.10 per share and, should the Company pay dividends on its Common
Stock, the Series A Preferred Stock would be entitled to dividends as if
converted into Common Stock, (ii) the Series A Warrant to purchase an
aggregate of 1,550,000 shares of Common Stock at an exercise price of
$6.375 per share with an expiration of October 2004 and (iii) the Series
B Warrant to purchase an aggregate of 1,550,000 shares of Common Stock at
an exercise of $8.50 per share with an expiration date of October 2006.
As a result of the value attributable to the Common Stock purchase
warrants issued with the Series A Preferred Stock, the Series A Preferred
Stock was issued at a discount which is being amortized over a five year
period using the effective interest method. Proceeds were allocated based
upon the relative fair values of the Series A Preferred Stock, and the
Series A Warrants and the Series B Warrants. The Series A Warrants and
the Series B Warrants are anti-dilutive.

18

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

On March 23, 2001, GNAC consummated a transaction with GMSP pursuant to
which, among other things, the Company issued shares of its newly created
Series C Preferred Stock to GMSP in exchange for an aggregate purchase
price of $3,000,000 in cash.

The annual dividend rate on the Series C Preferred Stock is 10% until
March 23, 2004 and 20% thereafter. Unpaid dividends are cumulative and
compounded. The Series C Preferred Stock is redeemable at GNAC's option
after March 23, 2006 and at the option of the majority holders after
March 23, 2007 at a price of $1,000 per share ($3,000,000) plus accrued
and unpaid dividends. The Series C Preferred Stock is not convertible
into Common Stock.

The agreement with GMSP was conditioned upon the following changes in the
securities currently held by GMSP. The exercise prices of the Series A
Warrant and the Series B Warrant held by GMSP were amended to equal $2.25
and $2.5875 per share, respectively. Each of these warrants provides for
the purchase of 1,550,000 shares of Common Stock, subject to adjustment.
Further, GNAC is required to redeem the outstanding shares of its Series
A Preferred Stock on January 1, 2006, subject to certain conditions at a
price of $1,000 per share ($31,620,000) plus unpaid dividends, if any.
Any Series A Preferred Stock unredeemed for any reason after that date
would accrue interest, payable quarterly at a rate equal to eight percent
per year with any unpaid interest compounded annually.

On March 23, 2001, GNAC consummated a transaction with Robert W.
Stallings pursuant to which, among other things, GNAC issued shares of
its newly created Series B Preferred Stock and a Warrant to purchase an
aggregate of 1,050,000 shares of Common Stock at $2.25 per share in
exchange for an aggregate purchase price of $3,000,000 in cash. The
annual dividend provisions and the redemption provisions of the Series B
Preferred Stock are the same as those for the Series C Preferred Stock.
The Series B Preferred Stock is convertible into Common Stock at $2.25
per share. Subject to adjustment for certain events, the Series B
Preferred Stock is convertible into a maximum of 1,333,333 shares of
Common Stock. The Warrant expires in March 2006.

The transaction dated March 23, 2001 results in all preferred stock being
redeemable. The discount on the preferred stock is being amortized over
the period until redemption using the effective interest method. At March
31, 2003 and December 31, 2002, respectively, there was $9,674,000 and
$10,394,000 in unaccreted discount and $1,310,421 and $1,132,118 in
accrued dividends on the Series A and Series B Preferred Stock.

As of March 31, 2003 there were 511,324 options outstanding to purchase
common stock ("options") at an average exercise price of $9.38 per share
that had been granted to officers and directors of the Company under the
Company's 1995 Stock Option Plan; 374,440 options, at an average exercise
price of $5.59 per share, that had been granted to officers, directors
and employees of the Company under the Company's 1998 Long-Term Incentive
Plan; and 579,710 options, at an exercise price of $5.75 per share, that
had been granted to Glenn W. Anderson under an employment agreement.

(5) Segment Reporting

On February 7, 2002, the Company announced its decision to discontinue
writing commercial lines insurance business due to continued adverse
claims development and unprofitable results.

19

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

Previously the Company made operating decisions and assessed performance
for the commercial lines segment and the personal lines segment. The
commercial lines segment wrote primarily commercial auto, garage, general
liability and property. The personal lines segment writes primarily
nonstandard personal auto coverages.

The Company considers many factors including the nature of the insurance
product and distribution strategies in determining how to aggregate
operating segments.

The Company has elected not to allocate assets to the commercial lines or
personal lines segments for management reporting purposes.

The following tables present a summary of segment profit (loss) for the
three months ended March 31, 2003 and 2002:

Three months ended March 31, 2003
---------------------------------
Commercial Personal
Lines Lines Other Total
-------- -------- ------ -------
(Amounts in thousands)

Gross premiums written $ 23 9,026 - 9,049
======== ======== ====== =======

Net premiums earned $ 693 7,997 - 8,690
Net investment income 140 695 10 845
Other income 661 199 - 860
Expenses (2,667) (7,841) (515) (11,023)
-------- -------- ------ -------

Operating income (loss) (1,173) 1,050 (505) (628)

Net realized gains - - 751 751
Interest expense - - (53) (53)
-------- -------- ------ -------
Income (loss) before Federal income taxes (1,173) 1,050 193 70
======== ======== ====== =======

Combined ratio (U.S. GAAP) basis 388.5% 98.1% -% 120.9%
======== ======== ====== =======

Three months ended March 31, 2002
---------------------------------
Commercial Personal
Lines Lines Other Total
-------- -------- ------ -------
(Amounts in thousands)

Gross premiums written $ 9,679 9,974 - 19,653
======== ======== ====== =======

Net premiums earned $ 10,704 6,738 - 17,442
Net investment income 528 762 3 1,293
Other income 776 (98) - 678
Expenses (14,408) (7,227) (408) (22,043)
-------- -------- ------ -------

Operating income (loss) (2,400) 175 (405) (2,630)

Net realized gains - - 363 363
Interest expense - (111) (111)
-------- ------ -------
Income (loss) before Federal income taxes $ (2,400) 175 (153) (2,378)
======== ======== ====== =======

Combined ratio (U.S. GAAP) basis 134.6% 107.3% -% 123.9%
======== ======== ====== =======

20

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

The following tables provide additional detail of segment revenue
components by product line for the three months ended March 31, 2003 and
2002.

Three months ended March 31, 2003
---------------------------------
Commercial Personal
Lines Lines Other Total
-------- -------- ------ -------
(Dollar amounts in thousands)

Gross premiums written:
Commercial auto $ (9) - - (9)
General liability 24 - - 24
Personal auto - 9,040 - 9,040
Other 8 (14) - (6)
-------- -------- ------ -------

Total gross premiums written $ 23 9,026 - 9,049
======== ======== ====== =======

Net premiums earned:
Commercial auto $ 397 - - 397
General liability 260 - - 260
Personal auto - 8,002 - 8,002
Other 36 (5) - 31
-------- -------- ------ -------

Total net premiums earned $ 693 7,997 - 8,690
======== ======== ====== =======

Three months ended March 31, 2002
---------------------------------
Commercial Personal
Lines Lines Other Total
-------- -------- ------ -------
(Dollar amounts in thousands)

Gross premiums written:
Commercial auto $ 5,311 - - 5,311
General liability 3,816 - - 3,816
Personal auto - 9,626 - 9,626
Other 552 348 - 900
-------- -------- ------ -------

Total gross premiums written $ 9,679 9,974 - 19,653
======== ======== ====== =======

Net premiums earned:
Commercial auto $ 6,360 - - 6,360
General liability 3,576 - - 3,576
Personal auto - 6,409 - 6,409
Other 768 329 - 1,097
-------- -------- ------ -------

Total net premiums earned $ 10,704 6,738 - 17,442
======== ======== ====== =======

21

GAINSCO, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

(6) Subsequent Event

Securities litigation has been filed in United States District Court,
Southern District of Florida against the Company and two of its officers
(one of whom is also a director). The plaintiffs seek class certification
for the litigation and principally allege violations of securities laws
in respect of the Company's previously acquired and disposed of
Tri-State, Ltd. subsidiary and seek an unspecified amount of damages. The
Company believes the allegations are without merit and intends to
vigorously defend the proceedings.

In May 2003, Michael S. Johnston, the President - Personal Lines Division
of the Company, entered into an Executive Severance Agreement with the
Company. This agreement generally provides that if Mr. Johnston resigns
his employment with the Company for good reason or if the Company
terminates Mr. Johnston without cause or in connection with a change in
control of National Specialty Lines, Inc. and DLT Insurance Adjusters,
Inc. and Mr. Johnston is not offered employment with comparable
compensation with the acquiring company in the change in control, the
Company will pay Mr. Johnston an amount equal to his annual base salary
at the time of termination or resignation. Also pursuant to this
agreement, the Company and Mr. Johnston each mutually released the other
from obligations under the stock purchase agreement and employment
contract between the Company and Mr. Johnston and generally from any and
all other claims that each otherwise may have had against the other.

In May, 2003 the Company entered into retention incentive agreements with
four of its employees. Each of the retention incentive agreements
generally requires that the Company pay the applicable employee an amount
based upon the employee's annual base salary, less amounts owed by the
Company to the employee pursuant to any change in control or severance
agreements the employee may have with the Company. The Company's
obligation to make payments under each retention incentive agreement is
conditioned upon the employee remaining in the employ of the Company
through a specified date, unless terminated earlier by the Company
without cause or by the employee with good reason. The Company could be
obligated to make up to an aggregate of approximately $289,000 in
payments under the retention incentive agreements.

22

GAINSCO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations

BUSINESS OPERATIONS

Discontinuance of Commercial Lines

On February 7, 2002, the Company announced its decision to cease writing
its primary line of business, commercial insurance, due to continued
adverse claims development and unprofitable results. The Company notified
all of its commercial lines agents of its intent to cancel their agency
contracts and notified all states, where required by statute, of its
intent to cease writing commercial lines of insurance in their state. The
discontinuance of writing commercial lines has resulted in the Company
ceasing to be approved to write insurance in a number of states.

At March 31, 2003, the Company had 218 commercial lines policies in force
which will expire during 2003. Concurrently, the Company continued to
settle and reduce its inventory of commercial lines claims. At March 31,
2003, there were 850 claims associated with our overall runoff book
outstanding, compared to 1,634 a year earlier. Due to the long tail
nature of these claims, the Company anticipates it will take a
substantial number of years to complete an orderly adjustment and
settlement process with regard to existing claims and any additional
claims it receives in the future from its past business writings. In the
course of reducing its employee count, in the first quarter of 2003 the
Company outsourced certain of its information technology operations
related to the run-off of its commercial lines to an unaffiliated third
party provider with which Richard A. Laabs, a former senior executive of
the Company, and three other former employees of the Company are
affiliated.

As respects the Company's remaining active insurance line, personal auto,
management continues in 2003 to implement actions intended to enhance the
profit potential of this business and its future strategic direction,
which could include the expansion, contraction, or disposition of the
business.

Redeployment of Capital

The Company anticipates a lengthy period of transition as it lessens its
exposure to the insurance industry. During the transition process, the
Company may consider the sale of additional subsidiaries associated with
that business. The Company intends to redeploy capital no longer required
by its insurance business, once it becomes available, to pursue other
opportunities in the future that offer a better prospect for
profitability. The Company believes that suitable capital redeployment
opportunities should be available after the capital no longer required by
its insurance business becomes available, but cannot predict the amount
of capital that will ultimately be available for redeployment, the timing
or the nature of the opportunities that may be available at the time
capital becomes available. The opportunities may be outside of the
insurance business and could be in the financial services business. The
opportunities could require more capital than the Company has available,
which could result in the Company having to seek such capital from other
sources, but the Company has no assurance that it would be able to effect
any such transaction or the terms thereof.

Sale of GAINSCO County Mutual Insurance Company

On December 2, 2002, the Company completed the sale and transfer of the
management contract controlling Gainsco County Mutual Insurance Company
("GCM") to an affiliate of Liberty Mutual Insurance Company ("Liberty"),
for a purchase price of up to $10 million, of which $1 million was paid
at closing and the balance is payable in contingent payments through
September 2009. The $9 million total of future payments would be payable
$3 million in September 2003 and $1 million each year thereafter through
September 2009 and each payment is contingent on there being no
materially adverse change in the regulatory treatment of GCM
specifically, or county mutuals generally, from legislative or regulatory
administrative actions prior to the applicable payment date. Legislation
has been introduced in the current session of the Texas

23

Legislature ending June 2, 2003 which, depending whether or in what form
it is ultimately adopted, could prejudice the rights of the Company to
receive some or all of the future payments from Liberty. The Company has
a receivable of $300,000 due from Liberty, which there is no certainty of
receiving given the potential legislation mentioned previously. The
Company has a contingent gain related to the sale of the management
contract for the amount of the sale in excess of cost of approximately
$8.5 million. Such gain is to be recognized if and as the related
contingencies are satisfied at each due date of future Liberty payments
under the sale agreement. The Company made a $500,000 prepayment of
outstanding bank debt from the closing proceeds of the transaction.

RESULTS OF OPERATIONS

Gross premiums written for the first quarter of 2003 were $9,048,936
versus $19,653,342 for the comparable 2002 period representing a 54%
decrease. Commercial lines accounts for the majority of the decrease as a
result of the Company's decision in the first quarter of 2002 to
discontinue writing commercial lines due to continued adverse claims
development and unprofitable results. Personal lines decreased 10%
primarily as a result of a change in geographical mix in nonstandard
personal auto.

The following table compares the major lines between the periods for
gross premiums written.

Three months ended March 31,
-----------------------------
2003 2002
---- ----
(Amounts in thousands)

Commercial lines $ 23 .3% $ 9,679 49.2%
Personal lines 9,026 99.7 9,974 50.8
-------- ----- ------- -------

Total $ 9,049 100.0% $19,653 100.0%
======== ===== ======= =======

Personal auto, which is included in Personal lines, is the only line of
insurance currently marketed by the Company. Personal auto was profitable
with a 96.6% combined ratio for the first quarter of 2003 versus 105.2%
for the comparable 2002 period.

Net premiums earned decreased 50% for the first quarter of 2003 versus
the comparable 2002 period primarily as a result of discontinuance of
commercial lines mentioned previously.

Net investment income decreased 35% for the first quarter of 2003 versus
the comparable 2002 periods due to the decline in investments and
short-term investments comprising a significantly greater portion of
investments in the first quarter of 2003 versus the comparable period
last year

Claims and claims adjustment expenses ("C & CAE") decreased $7,590,314 in
the first quarter of 2003 from the first quarter of 2002 and the C & CAE
ratio was 86.1% in the first quarter of 2003 versus 86.4% in the first
quarter of 2002. The C & CAE ratios are comparable for both periods, the
decrease in the amount is related to the run-off of commercial lines.

The ratio of commissions plus the change in deferred policy acquisition
costs and deferred ceding commission income to net premiums earned was
17% for the first quarter of 2003 versus 20% for the first quarter of
2002. The primary reason for the decrease in the ratio was due to the
shift in the mix of business to nonstandard personal auto which has lower
acquisition expenses than commercial lines.

Commissions are comprised of commission expenses (which vary with gross
premiums written), offset by commission income, (which varies with ceded
premium written). Commission expenses are paid to agents to produce the
business for the Company. Commission income is received by the Company
from reinsurers as compensation to

24

the Company for business the Company cedes to the reinsurers. Commissions
decreased in 2003 as a result of the decrease in gross premiums written
discussed previously.

Change in deferred policy acquisition costs ("DPAC") and deferred ceding
commission income ("DCCI") represents the change during the period in the
asset "Deferred policy acquisition cost." This asset item is comprised of
commission expenses, premium taxes and certain marketing and underwriting
expenses which are deferred, offset by commission income received from
reinsurers, which is also deferred. This net asset DPAC is amortized into
the results of operations through "Change in deferred policy acquisition
costs and deferred ceding commission income," as the underlying gross
premiums written and ceded premiums written are earned. Change in DPAC
and DCCI resulted in a charge in 2003 of $7,515 and a credit in 2002 of
$531,006. The charge in 2003 is primarily attributable to the
amortization of previous DPAC and DCCI exceeding DPAC and DCCI incurred
for 2003 as a result of the decision to discontinue writing commercial
lines in 2002.

Interest expense from the note payable decreased in the first quarter of
2003 from the comparable 2002 period primarily due to principal payments
on the note payable. The Company paid principal amounts of $2,439,000
since March 31, 2002.

Underwriting and operating expenses were down 42% in the first quarter of
2003 from the comparable 2002 period primarily due to expense reductions
implemented as a result of the decision to discontinue writing commercial
lines.

The Company recorded tax expense during the first quarter of 2002 due to
an increase to the deferred tax asset valuation allowance, as a result of
excluding the effects of unrealized gains in the deferred tax asset.

LIQUIDITY AND CAPITAL RESOURCES

Parent Company

GAINSCO, INC. ("GNAC") is a holding company that provides administrative
and financial services for its wholly owned subsidiaries. GNAC needs cash
for: (1) principal and interest on its bank note payable, (2)
administrative expenses, and (3) investments. The primary sources of cash
to meet these obligations are statutory permitted dividend payments from
General Agents Insurance Company of America, Inc. ("General Agents") a
wholly owned subsidiary. Statutes in Oklahoma restrict the payment of
dividends by General Agents to the available surplus funds derived from
their realized net profits. The maximum amount of cash dividends that
General Agents may declare without regulatory approval in any 12-month
period is the greater of net income for the 12-month period ended the
previous December 31 or 10% of policyholders' surplus as of the previous
December 31. On March 20, 2003 General Agents paid dividends to GNAC of
$3,878,000. Based on its surplus amounts at December 31, 2003 and
generally without prior regulatory approval, in March 2004 General Agents
may declare dividends to GNAC of up to the greater of net income for the
12-month period ended December 31, 2003 or 10% of policyholders' surplus
as of December 31, 2003. GNAC expects to meet it obligations for 2003.

The Company had Federal income tax loss carry forward tax benefits at
March 31, 2003 of approximately $23,167,309 that could be applied against
any future earnings of the Company, subject to certain limitations. Thus,
the Company does not currently require funds to satisfy Federal income
tax obligations.

GNAC entered into an amendment dated as of February 27, 2002 to its bank
credit agreement which cured GNAC's covenant breaches and provided for
additional principal prepayments. Pursuant to the amendment, GNAC prepaid
$6,100,000 of the indebtedness outstanding under the credit agreement.
Several covenants in the existing credit agreement were eliminated or
modified by the amendment and the interest rate was changed to a base
rate (which approximates prime) plus 175 basis points. The major
financial covenant of the amended credit agreement requires the statutory
surplus of General Agents to be at a minimum of three times the unpaid
principal balance. General Agents' statutory surplus at March 31, 2003
was approximately $38,167,000, which is approximately $32,884,000

25

above the minimum threshold. The remaining $1,761,000 principal balance
under the credit agreement is payable in November 2003 which GNAC intends
to fund with short-term investments. The credit agreement, among other
things, precludes payment of dividends on common or preferred stock and
restricts the kinds of investments that GNAC may make.

Subject to bank credit agreement restrictions, GNAC may also obtain cash
through the sale of subsidiaries or assets and through the issuance of
common or preferred stock. The bank credit agreement generally requires a
note prepayment in the event of the sale by GNAC of any subsidiary or
assets (except certain ordinary course of business sales), or any
issuance of stock (subject to certain exceptions), equal to 50% of the
proceeds received.

The Company will be in a lengthy period of transition as it lessens its
exposure to the insurance industry. During the transition process, the
Company may consider the sale of additional subsidiaries associated with
that business.

Subsidiaries, Principally Insurance Operations

The primary sources of the insurance subsidiaries' liquidity are funds
generated from insurance premiums, net investment income and maturing
investments. The short-term investments and cash are intended to provide
adequate funds to pay claims without selling the fixed maturity
investments. The Company has short-term investments and cash that the
Company believes are adequate liquidity for the payment of claims and
other short-term commitments.

With regard to long term liquidity, the average maturity of the
investment portfolio is approximately 2 years. The fair value of the
fixed maturity portfolio at March 31, 2003 was $3,246,195 above amortized
cost.

Net cash used for operating activities was $198,160 for the first quarter
of 2003 versus $65,551,619 in net cash used for operating activities for
the first quarter of 2002.

Investments decreased primarily due to the principal payment on the Note
payable and the decrease in unrealized gains on Bonds available for sale.
Premiums receivable increased primarily as a result of an increase in
nonstandard personal auto writings in the first quarter of 2003 versus
the fourth quarter of 2002. Reinsurance balances receivable decreased
primarily due to paid C & CAE recoveries received from the commercial
quota share treaty and a decrease in ceded unpaid C & CAE under the
reserve reinsurance cover agreement. Ceded unpaid claims and claim
adjustment expenses decreased primarily as a result of the decrease in
unpaid claims and claim adjustment expenses with regard to commercial
claims subject to the commercial quota share treaty. Current Federal
income taxes decreased as a result of the Company receiving a refund in
January 2003 for previously paid taxes.

Unpaid claims and claims adjustment expenses decreased primarily due to
the run-off of commercial business. This amount represents management's
best estimate, as derived from actuarial analysis and was set equal to
the selected reserve estimate as established by our outside actuary.
Management has reviewed and discussed the results of the actuarial
analysis with the actuary and believes the reserve estimate selected by
the actuary to be the best estimate of reserves at this time.

As of March 31, 2003, in respect of its commercial lines, the Company had
$77,498,489 in reserves for unpaid claims and claim adjustment expenses
net of ceded unpaid claims and claim adjustment expense. This balance has
not been reduced for the ceded unpaid C & CAE of $20,058,770 under the
reserve reinsurance cover agreement that is included in Reinsurance
balances receivable. Historically, the Company has experienced
significant volatility in its reserve projections for its commercial
lines. This volatility has been primarily attributable to its commercial
automobile and general liability product lines. On February 7, 2002, the
Company announced it had decided to discontinue writing commercial lines
insurance due to continued adverse claims development and unprofitable
results. As of March 31, 2003 only 218 commercial policies remain in
force and they will expire in 2003. Concurrently, the Company has been
settling and reducing its remaining inventory of commercial claims. See
"BUSINESS OPERATIONS - Discontinuance of Commercial Lines." As of March
31, 2003, 850 commercial claims remained, compared with 1,634 claims a
year earlier. The average commercial lines claim at March 31, 2003 was
approximately $91,175 per claim.

26

As of March 31, 2003, in respect of its personal lines, the Company had
$13,889,668 in unpaid claims and claim adjustment expenses net of ceded
unpaid claims and claim adjustment expense. Personal lines claims
generally are shorter in duration than the Company's commercial lines
claims. At March 31, 2003, the Company had 2,199 personal auto claims.
The average personal auto claim at March 31, 2003 was approximately
$6,004 per claim.

The Company considers the unpaid claims and claim adjustment expenses to
be adequate; they are set to equal the selected reserve estimate
determined by an outside actuarial firm.

Deferred revenue decreased primarily as a result of reinsurance
recoveries under the reserve reinsurance cover agreement. The note
payable decreased due to a prepayment made during the first quarter of
2003.

Preferred Stock

As a result of the March 23, 2001 transactions with Goff Moore Strategic
Partners, L.P. and Robert W. Stallings, the Company has three series of
redeemable Preferred Stock, which are classified as mezzanine financing.
The Series A Preferred Stock was previously classified in shareholders'
equity because it was not subject to mandatory redemption. The Company is
required to redeem the Series A Preferred Stock on January 1, 2006 at a
price of $31,620,000 plus unpaid dividends, if any. As of March 31, 2003,
there were no accrued but unpaid dividends in respect of the Series A
Preferred Stock. The Series B and Series C Preferred Stock are redeemable
at the Company's option in March 2006 and at the option of the majority
holders in March 2007 at a price of $3,000,000 each plus accrued
dividends. The Series B and the Series C Preferred Stock each include
accrued dividends in the amount of $655,211 as of March 31, 2003. At
March 31, 2003, $9,674,000 has yet to be charged to Retained deficit
related to the accretion of the discount on the Series A and Series B
Preferred Stock.

Accumulated other comprehensive income of $2,142,489 was recorded at
March 31, 2003 primarily as a result of the unrealized gains on bonds
available for sale, net of tax. The increase in Retained deficit of
$828,783 attributable to the accretion of discount on the Series A and
Series B Preferred Stock of $720,000, and the accrual of dividends on the
Series B and Series C Preferred Stock of $178,303, offset by net income
of $69,520.

Proposed Change in Accounting for Preferred Stock

In March 2003, the Financial Accounting Standards Board announced it
expects to issue the proposed limited-scope statement "Accounting for
Certain Financial Instruments with Characteristics of Both Liabilities
and Equity," in the second quarter of 2003. This statement would require
redeemable preferred stock to be classified as a liability and any
related accretion of discount and accrued dividends to be charged to the
results of operations. If this statement is adopted as proposed, the
Company would record all series of preferred stock as liabilities and
would record the related accretion of discount and accrued dividends as
charges to Results of Operations. For the first quarter of 2003 the
accretion of discount on redeemable preferred stock was $720,000 and the
dividends accrued were $178,303. Under this proposed statement these
amounts would be recorded as charges to Results of Operations which would
have resulted in a net loss of $828,783 for the three months ended March
31, 2003.

Regulatory Capital

The Company is not aware of any current recommendations by regulatory
authorities, which if implemented, would have a material adverse effect
on the Company's liquidity, capital resources or results of operations.
The Company's statutory capital exceeds the benchmark capital level under
the Risk Based Capital formula for its insurance companies that are
subject to Risk Based Capital requirements. Risk Based Capital is a
method for establishing the minimum amount of capital appropriate for an
insurance company to support its overall business operations in
consideration of its size and risk profile.

Off-Balance Sheet Transactions and Related Matters

27

There are no off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or other relationships of the Company
with unconsolidated entities or other persons that have, or may have, a
material effect on financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources of the Company.

Shareholders' Equity Assuming Redemption of Preferred Stock

At March 31, 2003, total assets less total liabilities of the Company was
$42,416,501 and there were outstanding three series of Preferred Stock
with an aggregate liquidation value of $38,930,421 ($37,620,000 stated
value plus accrued dividends of $1,310,421). Based on the foregoing, the
Shareholders' Equity assuming the redemption of all series of the
Preferred Stock at March 31, 2003, would be $3,486,080 ($0.17 per common
share). The amount ultimately available to the shareholders would vary
with changes in the assets and liabilities of the Company.

Legal Proceedings

Securities litigation has been filed in United States District Court,
Southern District of Florida against the Company and two of its officers
(one of whom is also a director). The plaintiffs seek class certification
for the litigation and principally allege violations of securities laws
in respect of the Company's previously acquired and disposed of
Tri-State, Ltd. subsidiary and seek an unspecified amount of damages. The
Company believes the allegations are without merit and intends to
vigorously defend the proceedings.

In the normal course of its operations, the Company has been named as
defendant in various legal actions seeking payments for claims denied by
the Company and other monetary damages. In the opinion of the Company's
management the ultimate liability, if any, resulting from the disposition
of these claims will not have a material adverse effect on the Company's
consolidated financial position or results of operations. The Company's
management believes that unpaid claims and claim adjustment expenses are
adequate to cover liabilities from claims that arise in the normal course
of its insurance business.

28

GAINSCO, INC. AND SUBSIDIARIES
Quantitative and Qualitative Disclosures
About Market Risk

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of economic losses due to adverse changes in the
estimated fair value of a financial instrument as the result of changes
in equity prices, interest rates, foreign exchange rates and commodity
prices. The Company's consolidated balance sheets include assets whose
estimated fair values are subject to market risk. The primary market risk
to the Company is interest rate risk associated with investments in fixed
maturities. The Company has no foreign exchange, commodity or equity
risk.

INTEREST RATE RISK

The Company's fixed maturity investments are subject to interest rate
risk. Increases and decreases in interest rates typically result in
decreases and increases in the fair value of these investments.

Most of the Company's investable assets are in the portfolios of the
insurance company subsidiaries and come from premiums paid by
policyholders. These funds are invested predominately in high quality
bonds with relatively short durations. The fixed maturity portfolio is
exposed to interest rate fluctuations; as interest rates rise, fair
values decline and as interest rates fall, fair values rise. The changes
in the fair value of the fixed maturity portfolio are presented as a
component of shareholders' equity in accumulated other comprehensive
income, net of taxes.

The effective duration of the fixed maturity portfolio is managed with
consideration given to the estimated duration of the Company's
liabilities. The Company has investment policies that limit the maximum
duration and maturity of the fixed maturity portfolio.

FORWARD LOOKING STATEMENTS

Statements made in this report that are not strictly historical may be
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that important
factors, representing certain risks and uncertainties, could cause actual
results to differ materially from those contained in the forward-looking
statements. These factors include, but are not limited to, (a) the
Company's ability to effect the successful exit from unprofitable lines
and businesses that the Company believes cannot be counted on to produce
future profit, (b) heightened competition from existing competitors and
new competitor entrants into the Company's markets, (c) the extent to
which market conditions firm up, the acceptance of higher prices in the
market place and the Company's ability to realize and sustain higher
rates, (d) contraction of the markets for the Company's business, (e)
acceptability of the Company's A.M. Best rating to its end markets, (f)
the Company's ability to meet its obligations under its capital and debt
agreements, (g) the ongoing level of claims and claims-related expenses
and the adequacy of claim reserves, (h) the outcome of pending
litigation, (i) the effectiveness of investment strategies implemented by
the Company's investment manager, (j) continued justification of
recoverability of goodwill in the future, (k) the availability of
reinsurance and the ability to collect reinsurance recoverables, (l) the
Company's ability to invest in new endeavors that are successful, (m) the
limitation on the Company's ability to use net operating loss
carryforwards as a result of constraints caused by ownership changes
within the meaning of Internal Revenue Code Section 382, (n) the ability
of the company to realize contingent acquisition payments in connection
with its sale of the management contract controlling GAINSCO County
Mutual Insurance Company, which in turn depends upon whether, or in what
form, the Texas Legislature passes legislation that has been introduced
in the current

29

session of the Texas Legislature ending June 2, 2003 which could
prejudice the rights of the Company to receive any of the future payments
from Liberty Mutual Insurance Company or its affiliates, (o) the effect
of the adoption by the Financial Accounting Standards Board of the
proposed limited-scope statement "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" which
could require the Company to record all series of preferred stock as
liabilities and to record the related accretion of discount and accrued
dividends as charges to Results of Operations, and (p) general economic
conditions, including fluctuations in interest rates. A forward-looking
statement is relevant as of the date the statement is made. The Company
undertakes no obligation to update any forward-looking statements to
reflect events or circumstances arising after the date on which the
statements are made.

30

GAINSCO, INC. AND SUBSIDIARIES
Controls and Procedures

CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the Company's disclosure controls and procedures (as defined in
Rule 13a-14(c) and Rule 15d-14(c) under the Exchange Act) as of March 31,
2003 and concluded that those disclosure controls and procedures are
effective.

There have been no changes in the Company's internal controls or in other
factors known to the Company that could significantly affect these
controls subsequent to their evaluation, nor any corrective actions with
regard to significant deficiencies and material weaknesses.

While the Company believes that its existing disclosure controls and
procedures have been effective to accomplish these objectives, the
Company intends to continue to examine, refine and formulize its
disclosure controls and procedures and to monitor ongoing developments in
this area.

31

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Securities litigation has been filed in United States District
Court, Southern District of Florida against the Company and two of
its officers (one of whom is also a director). The plaintiffs seek
class certification for the litigation and principally allege
violations of securities laws in respect of the Company's
previously acquired and disposed of Tri-State, Ltd. subsidiary and
seek an unspecified amount of damages. The Company believes the
allegations are without merit and intends to vigorously defend the
proceedings.

In the normal course of its operations, the Company has been named
as defendant in various legal actions seeking payments for claims
denied by the Company and other monetary damages. In the opinion
of the Company's management, the ultimate liability, if any,
resulting from the disposition of these claims will not have a
material adverse effect on the Company's consolidated financial
position or results of operations. The Company's management
believes that unpaid claims and claim adjustment expenses are
adequate to cover liabilities from claims that arise in the normal
course of its insurance business.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

*3.1 Restated Articles of Incorporation of Registrant
as filed with the Secretary of State of Texas on
July 24, 1986 [Exhibit 3.1, filed in Registration
Statement No. 33-7846 on Form S-1, effective
November 6, 1986].

*3.2 Articles of Amendment to the Articles of
Incorporation as filed with the Secretary of State
of Texas on June 10, 1988 [Exhibit 3.2, filed in
Registration Statement No. 33-25226 on Form S-1,
effective November 14, 1988].

*3.3 Articles of Amendment to Articles of Incorporation
as filed with the Secretary of State of Texas on
August 13, 1993 [Exhibit 3.6, Form 10-K dated
March 25, 1994]

32

*3.4 Statement of Resolution Establishing and
Designating Series A Convertible Preferred Stock
of Registrant as filed with the Secretary of State
of the State of Texas on October 1, 1999 [Exhibit
99.18, Form 8-K dated June 29, 1999].

*3.5 Bylaws of Registrant as amended through September
6, 2001. [Exhibit 3.5, Form 8-K dated August 31,
2001].

*3.6 Statement of Resolution Establishing and
Designating Series B Convertible Redeemable
Preferred Stock of Registrant as filed with the
Secretary of State of the State of Texas on March
22, 2001. [Exhibit 99.19, Form 8-K/A dated March
30, 2001].

*3.7 Statement of Resolution Establishing and
Designating Series C Redeemable Preferred Stock of
Registrant as filed with the Secretary of State of
the State of Texas on March 22, 2001. [Exhibit
99.20, Form 8-K/A dated March 30, 2001].

*4.1 Rights Agreement, dated as of March 3, 1988,
between the Registrant and Team Bank/Fort Worth,
N.A. [Exhibit 1, Form 8-K dated March 14, 1988].

*4.2 Amendment No. 1 dated as of March 5, 1990 to
Rights Agreement dated as of March 3, 1988 between
Registrant and Team Bank as Rights Agent [Exhibit
4.2, Form 10-K dated March 27, 1992].

*4.3 Amendment No. 2 dated as of May 25, 1993 to Rights
Agreement between Registrant and Society National
Bank (successor to Team Bank (formerly Texas
American Bank/Fort Worth, N.A.)), as Rights Agent
[Exhibit 4.4, Form 10-K dated March 25, 1994].

*4.4 Amendment No. 3 to Rights Agreement and
appointment of Continental Stock Transfer & Trust
Company as Successor Rights Agent, dated September
30, 1994 [Exhibit 10.29, Form 10-K dated March 30,
1995].

*4.5 Amendment No. 4 dated June 29, 1999 to Rights
Agreement between Registrant and Continental Stock
Transfer & Trust Company [Exhibit 99.21, Form 8-K
dated June 29, 1999].

*4.6 Form of Common Stock Certificate [Exhibit 4.6,
Form 10-K dated March 28, 1997].

*4.7 Agreement dated August 26, 1994 appointing
Continental Stock Transfer & Trust Company
transfer agent and registrar [Exhibit 10.28, Form
10-K dated March 30, 1995].

*10.1 1990 Stock Option Plan of the Registrant [Exhibit
10.16, Form 10-K dated March 22, 1991].

*10.2 1995 Stock Option Plan of the Registrant [Exhibit
10.31, Form 10-K dated March 28, 1996].

*10.3 1998 Long Term Incentive Plan of the Registrant
[Exhibit 99.8, Form 10-Q dated August 10, 1998].

*10.4 Forms of Change of Control Agreements [Exhibit
10.4, Form 10-K dated March 29, 2002].

*10.5 Employment Agreement dated April 25, 1998 between
Glenn W. Anderson and the Registrant [Exhibit
99.5, Form 10-Q/A dated June 16, 1998].

33

*10.6 Change of Control Agreement for Glenn W. Anderson
[Exhibit 99.7, Form 10-Q/A dated June 16, 1998].

*10.7 Replacement Non-Qualified Stock Option Agreement
dated July 24, 1998 between Glenn W. Anderson and
the Registrant [Exhibit 99.6, Form 10-Q dated
August 10, 1998].

*10.8 Management Contract between GAINSCO County Mutual
Insurance Company and GAINSCO Service Corp. and
related Surplus Debenture, Amendment to Surplus
Debenture, Certificate of Authority and
accompanying Commissioner's Order granting
Certificate Authority, allowing for charter
amendments and extension of charter [Exhibits
10.23, 10.24 and 10.25, Form 10-K dated March 29,
1993; Exhibit 10.27, Form 10-K dated March 25,
1994].

*10.9 Revolving Credit Agreement dated November 13, 1998
among Registrant, GAINSCO Service Corp. and Bank
One, Texas, N.A., First Amendment thereto dated
October 4, 1999 and related Promissory Note,
Security Agreement and Pledge Agreement, Amendment
No. 2 thereto dated March 23, 2001, Amendment No.3
thereto dated November 13, 2001, and Amendment No.
4 thereto dated February 27, 2002. [Exhibits 10.50
to 10.53, Form 10-K/A dated March 30, 1999;
Exhibit 99.22, Form 8-K dated October 4, 1999;
Exhibit 99.24, Form 8-K/A dated March 30, 2001,
Exhibit 10.23, Form 10-Q dated November 13, 2001,
Exhibit 10.9, Form 8-K dated February 27, 2002].

*10.10 Securities Purchase Agreement dated as of June 29,
1999 between Registrant and Goff Moore Strategic
Partners, L.P. ("GMSP") and related Series A
Common Stock Purchase Warrant and Series B Common
Stock Purchase Warrant [Exhibit 2.1, Form 8-K
dated June 29, 1999; Exhibits 99.19 and 99.20,
Form 8-K dated October 4, 1999].

*10.11 Investment Management Agreements dated October 4,
1999 between GMSP and each of Registrant, General
Agents Insurance Company of America, Inc., MGA
Insurance Company, Inc. and GAINSCO County Mutual
Insurance Company; and Investment Management
Agreement dated January 6, 2000 between GMSP and
Midwest Casualty Insurance Company. [Exhibit
10.11, Form 10-K dated March 30, 2000].

*10.12 Stock Purchase Agreements dated August 17, 1998
with Carlos de la Torre, McRae B. Johnston,
Michael S. Johnston and Ralph Mayoral relating to
acquisition by Registrant of Lalande Group and
related employment agreements with them [Exhibits
99.6 to 99.13, Form 8-K dated August 26, 1998].

*10.13 Asset Purchase Agreement dated March 9, 1999
between the Registrant, Agents Processing Systems,
Inc. and Insurance Business Solutions Incorporated
[Exhibit 10.49, Form 10-K dated March 30, 1999].

*10.14 Stock Purchase Agreement dated as of November 17,
1999 among Registrant, Tri-State, Ltd., Herbert A.
Hill and Alan E. Heidt and related Pledge
Agreement dated as of January 7, 2000 executed by
the Registrant in favor of Bank One, NA and
Unlimited Guaranty dated as of January 7, 2000
executed by Tri-State, Ltd. in favor of Bank One,
N.A. [Exhibit 10.14, Form 10-K dated March 30,
2000].

*10.15 Agreement of Limited Partnership of GNA
Investments I, L.P. dated as of November 30, 1999
between Registrant and GMSP [Exhibit 10.15, Form
10-K dated March 30, 2000].

*10.16 Professional Service Agreement dated as of October
22, 1999 between Registrant and ClientSoft, Inc.
[Exhibit 10.16, Form 10-K dated March 30, 2000].

34

*10.17 First Amendment to Stock Purchase Agreement dated
May 16, 2000 among Registrant, Tri-State, Ltd.,
Herbert A. Hill and Alan E. Heidt [Exhibit 10.14,
Form 10-Q dated August 11, 2000].

*10.18 GAINSCO, INC. 401(k) Plan and related Adoption
Agreement [Exhibit 99.1 to Registration Statement
on Form S-8, effective April 12, 2000].

*10.19 Securities Purchase Agreement dated as of February
26, 2001 between Registrant and GMSP (including
exhibits) and related First Amendment to
Securities Purchase Agreement, letter regarding
redemption of Registrant's outstanding Series A
Convertible Preferred Stock, First Amendment to
Series A Common Stock Purchase Warrant, and First
Amendment to Series B Common Stock Purchase
Warrant [Exhibit 2.1, Form 8-K dated March 2,
2001; Exhibits 2.2, 2.8, 99.21 and 99.22, Form
8-K/A dated March 30, 2001].

*10.20 Securities Purchase Agreement dated as of February
26, 2001 between Registrant and Robert W.
Stallings ("Stallings") (including exhibits) and
related First Amendment to Securities Purchase
Agreement, Assignment and Assumption Agreement
between Stallings and ING Pilgrim Capital
Corporation, LLC, Amendment to Assignment and
Assumption Agreement, letter dated March 23, 2001
from Stallings to Registrant, and Common Stock
Purchase Warrant [Exhibit 2.2, Form 8-K dated
March 2, 2001; Exhibits 2.4 to 2.7 and 99.23, Form
8-K/A dated March 30, 2001].

*10.21 Consulting Agreement dated as of February 26, 2001
between Registrant and Stallings [Exhibit 99.15,
Form 8-K dated March 2, 2001].

*10.22 Agreement dated March 23, 2001 among Registrant,
GAINSCO Service Corp., GMSP, Stallings and Bank
One, N.A. [Exhibit 99.25, Form 8-K/A dated March
30, 2001].

*10.23 Letter agreement dated February 27, 2002 between
the Registrant and GMSP pursuant to which the
Registrant exercised its right to put certain
illiquid investments to GMSP for $2,087,354.27
pursuant to Section 6.9 of the Securities Purchase
Agreement dated February 26, 2001 between the
Registrant and GMSP, as amended [Exhibit 10.24,
Form 8-K/A dated February 27, 2002].

*10.24 Agreement of Sale and Purchase dated March 7, 2002
between General Agents Insurance Company of
America, Inc. and Turonian Corp. [Exhibit 10.24,
Form 10-K dated March 29, 2002].

*10.25 First Amendment to Investment Management
Agreements dated August 9, 2002 among Goff Moore
Strategic Partners, L.P., the Registrant, General
Agents Insurance Company of America, Inc., MGA
Insurance Company, Inc., GAINSCO County Mutual
Insurance Company and Midwest Casualty Insurance
Company [Exhibit 10.25, Form 10-Q dated August 14,
2002].

*10.26 Acquisition Agreement dated August 12, 2002 among
the Registrant, GAINSCO Service Corp., GAINSCO
County Mutual Insurance Company, Berkeley
Management Corporation and Liberty Mutual
Insurance Company [Exhibit 10.26, Form 10-Q dated
August 14, 2002].

*10.27 Commercial Lease Agreement dated July 31, 2002
between JaGee Real Properties, L.P. and General
Agents Insurance Company of America, Inc. [Exhibit
10.27, Form 10-Q dated August 14, 2002].

35

*10.28 Form of Executive Severance Agreement between
GAINSCO Service Corp. and each of Richard M.
Buxton, Richard A. Laabs and Daniel J. Coots
[Exhibit 10.28, Form 10-Q dated August 14, 2002].

*10.29 Representative Forms of Retention Incentive
Agreement [Exhibit 10.30, Form 10-Q dated August
14, 2002].

*10.30 Acquisition Agreement dated August 12, 2002 among
the Registrant, GAINSCO Service Corp., Berkeley
Management Corporation, Liberty Mutual Insurance
Company, and GAINSCO County Mutual Insurance
Company and Amendment to Acquisition Agreement
dated December 2, 2002 among the Registrant,
GAINSCO Service Corp., Berkeley Management
Corporation, Liberty Mutual Insurance Company, and
GAINSCO County Mutual Insurance Company [Exhibit
10.26, Form 10-Q dated August 14, 2002 and Exhibit
10.32, Form 8-K filed December 5, 2002].

*10.31 Office Lease dated August 19, 2002 between
Crescent Real Estate Funding X, L.P. and the
Registrant [Exhibit 10.31, Form 10-Q dated
November 14, 2002].

*10.32 Separation Agreement and Release dated December
17, 2002 between McRae B. Johnston and MGA
Insurance Company, Inc.; Separation Agreement and
Release dated December 17, 2002 among McRae B.
Johnston, Registrant, National Specialty Lines,
Inc., Lalande Financial Group, Inc., DLT Insurance
Adjustors, Inc. and Midwest Casualty Insurance
Company; Consulting Agreement dated December 17,
2002 between McRae B. Johnston and MGA Insurance
Company, Inc.; and Form of Separation Agreement
and Release entered into as of March 1, 2003
between McRae B. Johnston and MGA Insurance
Company, Inc. [Exhibit 10.33, Form 8-K filed
December 17, 2002; Exhibit 10.34, Form 8-K filed
December 17, 2002; Exhibit 10.35, Form 8-K filed
December 17, 2002; and Exhibit 10.36, Form 8-K
filed December 17, 2002].

15. Awareness Letter of KPMG LLP (1)

99.1 Certificate Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002 - Chief Executive Officer (2)

99.2 Certificate Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002 - Chief Financial Officer (2)

99.3 Press release dated May 14, 2003. (2)

* Exhibit has previously been filed with the
Commission as an exhibit in the filing designated
in brackets and is incorporated herein by this
reference. Registrant's file number for reports
filed under the Securities Exchange Act of 1934 is
1-9828.

(1) Filed herewith.

(2) Furnished (but not filed) herewith.

(b) Reports on Form 8-K

None

36

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the Registrant as
well as in his capacity as Chief Financial Officer.

GAINSCO, INC.

Date: May 15, 2003 By: /s/ Daniel J. Coots
-------------------
Daniel J. Coots
Senior Vice President, Treasurer and
Chief Financial Officer

37

CERTIFICATION

I, Glenn W. Anderson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of GAINSCO, INC.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 15, 2003 Signature: /s/Glenn W. Anderson
---------------------
Glenn W. Anderson
President and Chief Executive
Officer

38

CERTIFICATION

I, Daniel J. Coots, certify that:

1. I have reviewed this quarterly report on Form 10-Q of GAINSCO, INC.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 15, 2003 Signature: /s/Daniel J. Coots
-------------------
Daniel J. Coots

Senior Vice President, Treasurer
and
Chief Financial Officer

39

INDEX OF EXHIBITS

Exhibit No. Description

*3.1 Restated Articles of Incorporation of Registrant as
filed with the Secretary of State of Texas on July
24, 1986 [Exhibit 3.1, filed in Registration
Statement No. 33-7846 on Form S-1, effective
November 6, 1986].

*3.2 Articles of Amendment to the Articles of
Incorporation as filed with the Secretary of State
of Texas on June 10, 1988 [Exhibit 3.2, filed in
Registration Statement No. 33-25226 on Form S-1,
effective November 14, 1988].

*3.3 Articles of Amendment to Articles of Incorporation
as filed with the Secretary of State of Texas on
August 13, 1993 [Exhibit 3.6, Form 10-K dated March
25, 1994].

*3.4 Statement of Resolution Establishing and Designating
Series A Convertible Preferred Stock of Registrant
as filed with the Secretary of State of the State of
Texas on October 1, 1999 [Exhibit 99.18, Form 8-K
dated June 29, 1999].

*3.5 Bylaws of Registrant as amended through September 6,
2001. [Exhibit 3.5, Form 8-K dated August 31, 2001].

*3.6 Statement of Resolution Establishing and Designating
Series B Convertible Redeemable Preferred Stock of
Registrant as filed with the Secretary of State of
the State of Texas on March 22, 2001. [Exhibit
99.19, Form 8-K/A dated March 30, 2001].

*3.7 Statement of Resolution Establishing and Designating
Series C Redeemable Preferred Stock of Registrant as
filed with the Secretary of State of the State of
Texas on March 22, 2001. [Exhibit 99.20, Form 8-K/A
dated March 30, 2001].

*4.1 Rights Agreement, dated as of March 3, 1988, between
the Registrant and Team Bank/Fort Worth, N.A.
[Exhibit 1, Form 8-K dated March 14, 1988].

*4.2 Amendment No. 1 dated as of March 5, 1990 to Rights
Agreement dated as of March 3, 1988 between
Registrant and Team Bank as Rights Agent [Exhibit
4.2, Form 10-K dated March 27, 1992].

*4.3 Amendment No. 2 dated as of May 25, 1993 to Rights
Agreement between Registrant and Society National
Bank (successor to Team Bank (formerly Texas
American Bank/Fort Worth, N.A.)), as Rights Agent
[Exhibit 4.4, Form 10-K dated March 25, 1994].

*4.4 Amendment No. 3 to Rights Agreement and appointment
of Continental Stock Transfer & Trust Company as
Successor Rights Agent, dated September 30, 1994
[Exhibit 10.29, Form 10-K dated March 30, 1995].

40

Exhibit No. Description

*4.5 Amendment No. 4 dated June 29, 1999 to Rights
Agreement between Registrant and Continental Stock
Transfer & Trust Company [Exhibit 99.21, Form 8-K
dated June 29, 1999].

*4.6 Form of Common Stock Certificate [Exhibit 4.6, Form
10-K dated March 28, 1997].

*4.7 Agreement dated August 26, 1994 appointing
Continental Stock Transfer & Trust Company transfer
agent and registrar [Exhibit 10.28, Form 10-K dated
March 30, 1995].

*10.1 1990 Stock Option Plan of the Registrant [Exhibit
10.16, Form 10-K dated March 22, 1991].

*10.2 1995 Stock Option Plan of the Registrant [Exhibit
10.31, Form 10-K dated March 28, 1996].

*10.3 1998 Long Term Incentive Plan of the Registrant
[Exhibit 99.8, Form 10-Q dated August 10, 1998].

*10.4 Forms of Change of Control Agreements [Exhibit 10.4,
Form 10-K dated March 29, 2002].

*10.5 Employment Agreement dated April 25, 1998 between
Glenn W. Anderson and the Registrant [Exhibit 99.5,
Form 10-Q/A dated June 16, 1998].

*10.6 Change of Control Agreement for Glenn W. Anderson
[Exhibit 99.7, Form 10-Q/A dated June 16, 1998].

*10.7 Replacement Non-Qualified Stock Option Agreement
dated July 24, 1998 between Glenn W. Anderson and
the Registrant [Exhibit 99.6, Form 10-Q dated August
10, 1998].

*10.8 Management Contract between GAINSCO County Mutual
Insurance Company and GAINSCO Service Corp. and
related Surplus Debenture, Amendment to Surplus
Debenture, Certificate of Authority and accompanying
Commissioner's Order granting Certificate Authority,
allowing for charter amendments and extension of
charter [Exhibits 10.23, 10.24 and 10.25, Form 10-K
dated March 29, 1993; Exhibit 10.27, Form 10-K dated
March 25, 1994].

*10.9 Revolving Credit Agreement dated November 13, 1998
among Registrant, GAINSCO Service Corp. and Bank
One, Texas, N.A., First Amendment thereto dated
October 4, 1999 and related Promissory Note,
Security Agreement and Pledge Agreement, Amendment
No. 2 thereto dated March 23, 2001, Amendment No.3
thereto dated November 13, 2001, and Amendment No. 4
thereto dated February 27, 2002. [Exhibits 10.50 to
10.53, Form 10-K/A dated March 30, 1999; Exhibit
99.22, Form 8-K dated October 4, 1999; Exhibit
99.24, Form 8-K/A dated March 30, 2001, Exhibit
10.23, Form 10-Q dated November 13, 2001, Exhibit
10.9, Form 8-K dated February 27, 2002].

41

Exhibit No. Description

*10.10 Securities Purchase Agreement dated as of June 29,
1999 between Registrant and Goff Moore Strategic
Partners, L.P. ("GMSP") and related Series A Common
Stock Purchase Warrant and Series B Common Stock
Purchase Warrant [Exhibit 2.1, Form 8-K dated June
29, 1999; Exhibits 99.19 and 99.20, Form 8-K dated
October 4, 1999].

*10.11 Investment Management Agreements dated October 4,
1999 between GMSP and each of Registrant, General
Agents Insurance Company of America, Inc., MGA
Insurance Company, Inc. and GAINSCO County Mutual
Insurance Company; and Investment Management
Agreement dated January 6, 2000 between GMSP and
Midwest Casualty Insurance Company. [Exhibit 10.11,
Form 10-K dated March 30, 2000].

*10.12 Stock Purchase Agreements dated August 17, 1998 with
Carlos de la Torre, McRae B. Johnston, Michael S.
Johnston and Ralph Mayoral relating to acquisition
by Registrant of Lalande Group and related
employment agreements with them [Exhibits 99.6 to
99.13, Form 8-K dated August 26, 1998].

*10.13 Asset Purchase Agreement dated March 9, 1999 between
the Registrant, Agents Processing Systems, Inc. and
Insurance Business Solutions Incorporated [Exhibit
10.49, Form 10-K dated March 30, 1999].

*10.14 Stock Purchase Agreement dated as of November 17,
1999 among Registrant, Tri-State, Ltd., Herbert A.
Hill and Alan E. Heidt and related Pledge Agreement
dated as of January 7, 2000 executed by the
Registrant in favor of Bank One, NA and Unlimited
Guaranty dated as of January 7, 2000 executed by
Tri-State, Ltd. in favor of Bank One, N.A. [Exhibit
10.14, Form 10-K dated March 30, 2000].

*10.15 Agreement of Limited Partnership of GNA Investments
I, L.P. dated as of November 30, 1999 between
Registrant and GMSP [Exhibit 10.15, Form 10-K dated
March 30, 2000].

*10.16 Professional Service Agreement dated as of October
22, 1999 between Registrant and ClientSoft, Inc.
[Exhibit 10.16, Form 10-K dated March 30, 2000].

*10.17 First Amendment to Stock Purchase Agreement dated
May 16, 2000 among Registrant, Tri-State, Ltd.,
Herbert A. Hill and Alan E. Heidt [Exhibit 10.14,
Form 10-Q dated August 11, 2000].

*10.18 GAINSCO, INC. 401(k) Plan and related Adoption
Agreement [Exhibit 99.1 to Registration Statement on
Form S-8, effective April 12, 2000].

42

Exhibit No. Description

*10.19 Securities Purchase Agreement dated as of February
26, 2001 between Registrant and GMSP (including
exhibits) and related First Amendment to Securities
Purchase Agreement, letter regarding redemption of
Registrant's outstanding Series A Convertible
Preferred Stock, First Amendment to Series A Common
Stock Purchase Warrant, and First Amendment to
Series B Common Stock Purchase Warrant [Exhibit 2.1,
Form 8-K dated March 2, 2001; Exhibits 2.2, 2.8,
99.21 and 99.22, Form 8-K/A dated March 30, 2001].

*10.20 Securities Purchase Agreement dated as of February
26, 2001 between Registrant and Robert W. Stallings
("Stallings") (including exhibits) and related First
Amendment to Securities Purchase Agreement,
Assignment and Assumption Agreement between
Stallings and ING Pilgrim Capital Corporation, LLC,
Amendment to Assignment and Assumption Agreement,
letter dated March 23, 2001 from Stallings to
Registrant, and Common Stock Purchase Warrant
[Exhibit 2.2, Form 8-K dated March 2, 2001; Exhibits
2.4 to 2.7 and 99.23, Form 8-K/A dated March 30,
2001].

*10.21 Consulting Agreement dated as of February 26, 2001
between Registrant and Stallings [Exhibit 99.15,
Form 8-K dated March 2, 2001].

*10.22 Agreement dated March 23, 2001 among Registrant,
GAINSCO Service Corp., GMSP, Stallings and Bank One,
N.A. [Exhibit 99.25, Form 8-K/A dated March 30,
2001].

*10.23 Letter agreement dated February 27, 2002 between the
Registrant and GMSP pursuant to which the Registrant
exercised its right to put certain illiquid
investments to GMSP for $2,087,354.27 pursuant to
Section 6.9 of the Securities Purchase Agreement
dated February 26, 2001 between the Registrant and
GMSP, as amended [Exhibit 10.24, Form 8-K/A dated
February 27, 2002].

*10.24 Agreement of Sale and Purchase dated March 7, 2002
between General Agents Insurance Company of America,
Inc. and Turonian Corp. [Exhibit 10.24, Form 10-K
dated March 29, 2002].

*10.25 First Amendment to Investment Management Agreements
dated August 9, 2002 among Goff Moore Strategic
Partners, L.P., the Registrant, General Agents
Insurance Company of America, Inc., MGA Insurance
Company, Inc., GAINSCO County Mutual Insurance
Company and Midwest Casualty Insurance Company
[Exhibit 10.25, Form 10-Q dated August 14, 2002].

*10.26 Acquisition Agreement dated August 12, 2002 among
the Registrant, GAINSCO Service Corp., GAINSCO
County Mutual Insurance Company, Berkeley Management
Corporation and Liberty Mutual Insurance Company
[Exhibit 10.26, Form 10-Q dated August 14, 2002].

*10.27 Commercial Lease Agreement dated July 31, 2002
between JaGee Real Properties, L.P. and General
Agents Insurance Company of America, Inc. [Exhibit
10.27, Form 10-Q dated August 14, 2002].

43

Exhibit No. Description

*10.28 Form of Executive Severance Agreement between
GAINSCO Service Corp. and each of Richard M. Buxton,
Richard A. Laabs and Daniel J. Coots [Exhibit 10.28,
Form 10-Q dated August 14, 2002].

*10.29 Representative Forms of Retention Incentive
Agreement [Exhibit 10.30, Form 10-Q dated August 14,
2002].

*10.30 Acquisition Agreement dated August 12, 2002 among
the Registrant, GAINSCO Service Corp., Berkeley
Management Corporation, Liberty Mutual Insurance
Company, and GAINSCO County Mutual Insurance Company
and Amendment to Acquisition Agreement dated
December 2, 2002 among the Registrant, GAINSCO
Service Corp., Berkeley Management Corporation,
Liberty Mutual Insurance Company, and GAINSCO County
Mutual Insurance Company [Exhibit 10.26, Form 10-Q
dated August 14, 2002 and Exhibit 10.32, Form 8-K
filed December 5, 2002].

*10.31 Office Lease dated August 19, 2002 between Crescent
Real Estate Funding X, L.P. and the Registrant
[Exhibit 10.31, Form 10-Q dated November 14, 2002].

*10.32 Separation Agreement and Release dated December 17,
2002 between McRae B. Johnston and MGA Insurance
Company, Inc.; Separation Agreement and Release
dated December 17, 2002 among McRae B. Johnston,
Registrant, National Specialty Lines, Inc., Lalande
Financial Group, Inc., DLT Insurance Adjustors, Inc.
and Midwest Casualty Insurance Company; Consulting
Agreement dated December 17, 2002 between McRae B.
Johnston and MGA Insurance Company, Inc.; and Form
of Separation Agreement and Release entered into as
of March 1, 2003 between McRae B. Johnston and MGA
Insurance Company, Inc. [Exhibit 10.33, Form 8-K
filed December 17, 2002; Exhibit 10.34, Form 8-K
filed December 17, 2002; Exhibit 10.35, Form 8-K
filed December 17, 2002; and Exhibit 10.36, Form 8-K
filed December 17, 2002].

15. Awareness Letter of KPMG LLP (1)

99.1 Certificate Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 - Chief Executive
Officer (2)

99.2 Certificate Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 - Chief Financial
Officer (2)

99.3 Press release dated May 14, 2003. (2)

* Exhibit has previously been filed with the Commission as an
exhibit in the filing designated in brackets and is incorporated
herein by this reference. Registrant's file number for reports
filed under the Securities Exchange Act of 1934 is 1-9828.

(1) Filed herewith.

(2) Furnished (but not filed) herewith.

44