21st Century Has High Ambitions for 2003.

Business Editors

PLANTATION,Fla.--(BUSINESS WIRE)--Jan. 27, 2003

21st Century Holding Company (Nasdaq:TCHC) has high ambitions for 2003 as reported by Patrick Danner of the Miami Herald in today's Business Monday section:

    There's nothing complicated about why Plantation-based 21st
    Century Holding's stock soared 332 percent last year -- the
    largest percentage leap among all South Florida companies, says
    Chairman and Chief Executive Edward "Ted" J. Lawson.

    "I'm going to tell you something I've learned about the stock
    market:  It follows earnings," he says. "Our stock went up
    because we...made a bunch of money in 2002."

    The holding company for various insurance and other financial-
    service businesses got its bottom line back in the black after two
    straight money-losing years. In turn, the stock finished last year
    at an all-time high of $13.61, up from $3.15 at the start of 2002.

    But Lawson sees even bigger things ahead for 21st Century Holding.

    "I'm going to be a national company, not a parochial state
    company," he vows.

    That's an ambitious plan considering its two insurance
    subsidiaries are still small fries in Florida, the only state
    where they do business. Federated National Insurance and American
    Vehicle Insurance each accounted for less than 1 percent of the
    auto and homeowners insurance markets in 2001, according to the
    state Department of Financial Services. State Farm Mutual, the
    state's largest auto insurer, had more than a 20-percent share.
    All told, 21st Century's two carriers have about 84,000 auto and
    homeowners policies.

    And despite the run-up in the stock, 21st Century's market cap is
    a smallish $32.6 million. Nevertheless, Lawson has developed a
    two-pronged strategy to achieve his goal. First, he plans to open
    more franchise locations and expand the breadth of
    financial-service offerings. Second, he's jumping into the
    commercial insurance business.

    `Pick a Career'

    Lawson, a former car salesman, says he got into the insurance
    business when he told his future wife, Michele, to pick between a
    career as a court stenographer or an insurance agent. He says he
    would send car buyers to the independent insurance agency they
    operated. They later started their own finance company and, in
    1992, launched their own insurance company -- Federated.

    By 1998, the pair had raised $7.9 million by taking the holding
    company public. In 2001, the second insurance company, American
    Vehicle, was acquired.

    Since then, 21st Century has flown below the radar of most
    investors, perhaps because it was dogged by poor underwriting
    performance and a spotty investment record.

    The insurance companies primarily write nonstandard auto policies.
    While high-risk drivers with accidents and tickets may fall into
    the nonstandard category, Lawson says 70 percent of their
    customers don't have either. They're considered nonstandard, he
    says, because they carry minimum coverage -- which also is the
    least costly.

    But it was the decision a few years ago to sell auto insurance in
    Miami-Dade County that Lawson rues.

    "That turned out to be a big mistake," he says. "As we started to
    write more business in Dade County, the fraud exploded down there.
    We started taking large losses. Millions of dollars."

    So the companies hiked rates, implemented procedures to weed out
    fraud, ditched a lot of independent agents in their network, and
    all but pulled up stakes in Miami-Dade County, Lawson says.

    "They took a very aggressive stance on what was wrong," says Joe
    Burtone, a financial analyst for A.M. Best, an insurance rating
    agency in Oldwick, N.J. "They re-underwrote their entire book of
    business."

    Meanwhile, the companies bailed out of the stock market after
    declines led to a $2 million charge to earnings last year. Since
    then, premium dollars have been poured into less risky investments.

    Even that hasn't been fool-proof. A $2.5 million investment in
    Worldcom bonds backfired when the telecom company imploded,
    forcing 21st Century to take a $1.5 million loss last year. Still,
    Lawson says bondholders are slated to become shareholders in the
    reorganized Worldcom.

    Notes A.M. Best's Burtone: "At this point, their investment
    portfolio is conservative, and they indicated to us it will
    remain so going forward."

    A.M. Best last month reaffirmed Federated's "B" rating, meaning it
    could be vulnerable to any adverse changes in underwriting or
    economic conditions. The outlook was raised to stable from
    negative. A.M. Best gave American Vehicle a "B+" rating,
    determining the insurer has a "good ability" to meet its
    obligations.

    Convinced the bad news is over, Lawson now is focused on growth.
    He has shifted ownership of storefronts from the company to
    franchisees. There are 40 franchise locations and 22 company-owned
    outlets, and he expects to add 20 more franchise locations this
    year.

    The franchise fee is $15,000. Franchisees also pay 7 percent of
    gross profits to 21st Century. So far, all franchisees have also
    paid an additional $4,500 to operate an Express Tax Service --
    21st Century's tax-preparation arm.

    Eventually, Lawson envisions offering auto loans, mortgage loans
    and investment services. "It's a one-stop shop for financial-
    service products," he says. The company employs about 235 people.

    New Opportunity

    While commercial insurance costs for businesses are spiraling
    upward, he sees an opportunity to break into the market, offering
    general liability and business owner policies for small businesses
    and independent contractors in Florida and elsewhere.

    "It's a good time if you're an insurance company to write risks,
    and general liability is one of the risks where a lot of people
    aren't offering coverage," says Richard A. Widdicombe, president
    of Federated and American Vehicle. The commercial coverage will be
    offered through American Vehicle.

    Much of the risk is expected to be spread with New York-based
    Transatlantic Reinsurance Group, which already reinsures some of
    Federated and American Vehicle's auto policies. That will allow
    American Vehicle to write even more policies.

    Suzanne A. Spantidos, Transatlantic's senior vice president of
    underwriting, says she can't discuss potential deals with 21st
    Century's companies, but she expressed confidence in their
    ability. Transatlantic's parent company is 60 percent owned by
    insurance giant American International Group (AIG).

    The Plantation company hopes to fund its growth by raising
    $5 million from investors. For the time being, 21st Century
    remains tightly controlled. Lawson and his wife own 37 percent of
    the stock. Their stake is worth about $12.1 million based on
    Friday's closing price of $10.89. The stock has fallen about
    25 percent this month.

    In addition, the couple and Widdicombe fill half of the seats on
    21st Century's board, though Lawson says he's looking to add two
    outside directors.

    While Lawson professes not to focus on 21st Century's stock price,
    he says the stock remains undervalued. ''We think our earnings
    power is much greater than anybody realizes,'' he says. ``If these
    things happen, you can expect the stock to go right with it.''

(To view the article, click on http://www.miami.com/mld/miamiherald/business/5034087.htm)

Certain matters described in this report are forward-looking statements and are subject to risk and uncertainties that could cause actual results to differ materially from those projected.