20th Century announces agreement concerning Proposition 103 refunds.

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Jan. 27, 1995--20th Century Industries Friday announced a settlement of rebate liabilities associated with Proposition 103, passed by California voters on Nov. 8, 1988.

According to Neil H. Ashley, chief executive officer, the agreement applies to both insurance subsidiaries, 20th Century Insurance Co. and 21st Century Casualty Co., and applies to those customers insured between Nov. 8, 1988, and Nov. 7, 1989.

Ashley said the settlement with the California Department of Insurance will permit refunds to customers while providing immediate capital additions to buttress the financial strength of the company and provide additional financial resources for potential earthquake claim increases.

Highlights of the order and agreement with California Insurance Commissioner Chuck Quackenbush are:

-- 20th Century will allocate $78 million for customer refunds, consistent with the company's liability established through a Department of Insurance administrative hearing during 1992.

-- 20th Century will obtain new capital in the amount of $50 million and contribute the funds to the insurance subsidiaries. The company will promptly undertake the necessary financing actions required with the assistance of American International Group Inc. (NYSE:AIG). The New York-based international insurance organization contributed $216 million to 20th Century's capital under the terms of an investment agreement approved by shareholders Dec. 15, 1994.

-- The companies will refund $46 million to customers specified in the agreement as soon as practicable, representing an average payment per household of $80, approximately 7.5 percent of premiums paid between Nov. 8, 1988, and Nov. 7, 1989.

-- $32 million will be set aside for additional customer refunds conditioned on the ultimate level of claim cost associated with the 1994 Northridge earthquake.

-- The company will immediately add an additional $44 million to its capital base from funds it had accumulated for possible interest liability on the $78-million Proposition 103 rollback order. Interest penalties on the liability established through the original refund order will not be assessed.

-- The request for a hearing with the U.S. Supreme Court to appeal the California Supreme Court decision in the Proposition 103 test case, ``20th Century v. Garamendi,'' will be withdrawn and the company agrees to abide by the terms of Commissioner Quackenbush's order.

Commenting on the agreement, Ashley said: ``This was a very tough decision. We believed strongly in the merits of our legal case challenging the constitutionality of the Commissioner's refund order as applied to 20th Century. However, the company was badly damaged by the Northridge earthquake, and we can certainly use the additional capital resources to provide a more secure insurance environment for all our existing customers.

``This dialogue was initiated by Commissioner Quackenbush. He indicated his desire soon after his election to clear up the outstanding Proposition 103 rebate issues, and the Commissioner recognized the 20th Century case as an obstacle in doing so. He also stated he wanted the company better capitalized so it could withstand any unrecognized earthquake claim development and provide for the security of customers having pending earthquake claims.

``Commissioner Quackenbush also stated he wanted to see that a low-cost California insurer would continue to provide competition within the California marketplace. Based upon the Commissioner's representations, we began negotiations several weeks ago to find a satisfactory solution that would balance the interests of the company's customers, the solvency duties of the Commissioner and motivate the company to discontinue its pursuit of the legal challenge to Proposition 103 refunds.

``As difficult as it is to accept this outcome emotionally, it is clearly a benefit for a variety of competing interests, and it recognizes that an unfavorable decision in the company's lawsuit was a possibility. With this dispute behind us, 20th Century can move ahead and set goals and aspirations for the next century.''

20th Century Industries is a publicly held company traded on the New York Stock Exchange under the trading symbol TW. Wholly owned subsidiaries are 20th Century Insurance, which markets automobile and excess liability insurance, and 21st Century Casualty, which markets automobile insurance.

Both insurance subsidiaries sell directly to consumers without agents. 20th Century Industries and subsidiaries' offices are located at 6301 Owensmouth Ave., Woodland Hills, Calif. 91367; telephone, 818/704-3514.

CONTACT: 20th Century Industries

Rick Dinon/Ric Hill, 818/704-3595

or

Fleishman & Hillard

Jeanne Ouellette/Rob Williams, 213/629-4974