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SARASOTA, Fla.-The term "growing pains" doesn't begin to describe what Riscorp Inc., one of Florida's largest workers compensation insurers, is going through only a year after its initial public offering.

The $128 million IPO was followed last April by a civil racketeering suit against the company by disgruntled former policyholders of one of its insurance units.

As Riscorp's stock price slid from a high of $24.50, Florida insurance regulators in October announced a workers comp rate reduction, Riscorp reported lower-than-expected third-quarter earnings and the company disclosed that a federal grand jury had subpoenaed it in an investigation of political contributions.

The company's stock plummeted to about $4 a share.

The inevitable followed: In the past two months, Riscorp has been peppered with nine shareholder lawsuits charging that the company and its officers falsified Riscorp's financial statements and concealed other information, including large political contributions that triggered the grand jury subpoenas.

The shareholder suits are expected to be consolidated in federal court in Tampa, Fla.

Riscorp has not yet answered the complaints, and a company spokes-man declined to comment on the allegations or on details of the grand jury probe.

Riscorp has filed a motion to dismiss the racketeering complaint.

Meanwhile, a company-formed committee is evaluating "strategic alternatives" for its future operations. These could include sale or merger of Riscorp, a joint venture or continued independent operation, the spokes-man said.

"They are taking a very serious look at the company, where it needs to go in the future and what it needs to do to get there," he said of the committee, which comprises three outside directors.

Riscorp has grown rapidly since 1991 to become a major provider of managed care workers comp insurance and services in Florida, North Carolina and several other states.

The company had its genesis in 1988, when Riscorp Chairman William D. Griffin organized the Florida Chamber of Commerce Workers Compensation Self-Insurance Fund and its management company, Riscorp of Florida Inc.

In 1993, the group self-insurance fund converted into an assessable mutual insurer, Commerce Mutual Insurance Co. In 1995, Commerce Mutual converted again into a stock company controlled by Mr. Griffin and changed its name to Riscorp Insurance Co.

Parent company Riscorp Inc. launched its IPO in February 1996, selling 7.2 million shares for $128 million. At the same time, Mr. Griffin, Riscorp's majority shareholder, sold 2.8 million of his shares for more than $50 million and continued to hold about 23 million shares after the offering, court papers show.

Much of the IPO proceeds were plowed into Riscorp's insurance units and into acquisitions, including the March 1996 acquisitions of CompSource Inc., a North Carolina-based workers comp management firm, and Atlas Insurance Co., since renamed Riscorp National Insurance Co.

Riscorp's operations now comprise three insurer subsidiaries, writing workers comp business in eight states and licensed to write workers comp or property/casualty business in 11 others, and several workers comp managed care services units. The company also operates Third Coast Insurance Co., a joint venture in Rosemont, Ill., formed last year with Blue Cross & Blue Shield of Illinois to write managed workers comp coverage (BI, May 6, 1996).

Riscorp reported revenues of $162.5 million for the first nine months of 1996. Revenues in 1995 totaled $166 million, up from $59.9 million in 1994.

Smooth sailing has not followed Riscorp's launch as a public company, though.

Little more than a month after the IPO, the company was hit with a civil racketeering complaint filed in federal court in Miami by three former policyholders of Commerce Mutual.

The suit, which seeks class-action status, charges that Riscorp, Mr. Griffin and several other Riscorp officers conspired to artificially deflate the value of Commerce Mutual so its policyholders would approve the takeover by Riscorp for no cash compensation.

The policyholders, Commerce Mutual's owners, agreed to the conversion and sale for no compensation other than a release from future assessments and contingent liabilities connected to their policies, the suit says.

While Riscorp officials told policyholders that reserve increases and other adjustments had cut Commerce Mutual's policyholders' equity to $680,806 at year-end 1993, Riscorp's subsequent public offering documents put the insurer's equity at $2.8 million. Its fair value at the time of the takeover actually may have been $8.2 million, according to the suit, which charges Riscorp and several of its officials with extortion, fraud and other acts of racketeering.

Riscorp has denied the charges and filed a motion to dismiss the suit, which is still pending.

Riscorp's stock trended generally downward after last May, and a series of setbacks late in the year sent the shares into a tailspin.

In October 1996, Florida Insurance Commissioner Bill Nelson ordered an 11.2% reduction in state workers comp rates, reflecting the success of managed care efforts.

While Riscorp downplayed any potential impact of the reduction, the announcement coincided with a sharp drop in its stock, shareholder court papers say.

On Oct. 31, 1996, Riscorp also announced that the company and two of its officers had been subpoenaed in a federal grand jury investigation that Riscorp "understands is a broad examination related to political candidates and political campaign contributions."

Other parties unrelated to Riscorp also have received subpoenas, the company announced.

A December 1996 story in the Lakeland, Fla., Ledger reported that Riscorp, its executives, their spouses and affiliated companies had contributed nearly $230,000 to state legislative campaigns in 1996. Similar donations totaling nearly $100,000 had gone to former Insurance Commissioner Tom Gallagher and a political committee he headed in 1994, when he unsuccessfully ran for the Republican gubernatorial nomination, according to the story, which described Riscorp as one of the biggest campaign contributors in the state.

In November, Riscorp reported unexpectedly poor third-quarter results, with net income reduced to $312,000 from $1.1 million in the year-earlier period.

The results were due to a "confluence of unanticipated factors," the company said, including competitive pressures in Florida and a $4.1 million aftertax charge because of higher-than-expected return premiums due on retrospectively rated policies.

The bad news further battered Riscorp's shares, driving the price down to about $4 by late November. The stock, trading on NASDAQ, closed at $3.81 last Thursday.

Shareholder suits weren't far behind: By last month, nine separate suits seeking class-action status had been filed against the company, its top officers and stockbrokers involved in Riscorp's IPO.

Allegations contained in the suits are roughly similar. One suit, for example, filed in December in federal court in Tampa, charges that Riscorp and its officials:

Filed false financial statements as part of the public offering and for the three quarters since. Among other things, the statements inflated revenues by underestimating Riscorp's liabilities for return premiums due on retro programs, the suit charges.

Failed to disclose political contributions that totaled more than the amounts donated by Riscorp's nine largest competitors combined and that have "subjected Riscorp to needless inquiry and legal expense."

The contributions were part of a "desperate attempt" to avert adverse workers comp legislation in Florida and to ensure the continued existence of the Florida Special Disabilities Trust Fund, the suit charges. The state-run SDTF is meant to encourage hiring of disabled workers and reimburses employers and insurers for excess workers comp claims related to those workers. Riscorp's third-quarter 1996 assets include $56.3 million receivable from the SDTF, though Florida regulators are debating the extent to which insurers will be allowed to include estimated future SDTF recoveries on their balance sheets, Riscorp disclosed in its statement.

Failed to adequately disclose potential liabilities arising from the Commerce Mutual racketeering suit.

The nine shareholder suits likely will be consolidated in a single action, the Riscorp spokesman and plaintiffs lawyers agree. After a consolidated complaint is filed, Riscorp will respond in court, the spokesman said.

Whatever the outcome of the litigation, the huge decline in Riscorp's stock may have ripple effects, including adding to the cost of two 1996 acquisitions, the third-quarter report shows.

Riscorp acquired CompSource, for example, for cash and 112,582 shares of Riscorp stock, the statement says. CompSource's former owner, however, has an option requiring Riscorp to buy back the stock at $18.65 per share over a one-year period beginning March 8, Riscorp reports.