21st Century Insurance Group Reports 2001 Second Quarter Results.Business Editors WOODLAND HILLS, Calif.--(BUSINESS WIRE)--July 25, 2001 21st Century Insurance Group (NYSE NYSE See: New York Stock Exchange :TW) today reported net income of $5.8 million, or $0.07 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , on gross written premiums of $236.0 million for the second quarter of 2001. This compares to 2000 second quarter net income of $5.0 million, or $0.06 diluted earnings per share, on gross written premiums of $232.8 million. For the first six months, the Company reported net income of $10.7 million, or $0.13 diluted earnings per share, on revenues of $456.6 million compared to net income of $8.6 million, or $0.10 diluted earnings per share, on revenues of $427.8 million for the same period in 2000. Bruce W. Marlow, 21st Century's president and chief executive officer, said, "We are very pleased with the 3 point improvement in GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio for Personal Lines to 100.5 in the second quarter 2001 compared to 103.7 in the second quarter 2000. "These results reflect the positive impact of our rate increases and underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. actions of the past 10 months. At a time of increasing loss costs and unfavorable results for the industry, our results are moving in the right direction. "On July 1st, we began implementing an additional 3.9% rate increase and a class plan change in our California personal auto business to further improve the pricing accuracy and profitability of this book of business. "We also are heartened to see competitors raising rates. Companies representing more than 30% of the California personal auto market had rate increases of 5% or more approved in June and July. More increases are pending approval. As competitors increase rates, more of their customers will shop and they will find the lower rates and superior service provided by 21st Century Insurance." Financial Notes Other financial information for the 2001 second quarter includes: -- Net premiums earned for the second quarter 2001 increased to $217.4 million compared to $207.1 million for the second quarter 2000. For the first six months, net premiums earned were $432.0 million compared to $407.3 million a year ago. -- The total number of vehicles insured at June 30, 2001 was 1,094,979. Renewal retention in California personal auto was 92% for the quarter. In addition, 21st Century Insurance Company of Arizona insured 17,375 vehicles at the end of the quarter. -- The total number of non-auto units insured was 89,051 at June 30, 2001. -- Operating income, which represents pre-tax income excluding realized investments gains or losses and the discontinued earthquake line of business, was $10.3 million in the second quarter of 2001 compared to $3.9 million in the second quarter of 2000. For the first six months of 2001 and 2000, pre-tax operating income was $17.0 million and $8.2 million, respectively. -- Net investment income was $11.6 million for the 2001 second quarter compared to $12.6 million for the second quarter 2000. Year-to-date investment income was $23.4 million and $25.8 million for 2001 and 2000, respectively. Realized after-tax investment gains for the second quarter and first six months of 2001 were $0.3 million and $1.1 million, respectively, compared to after-tax losses of $0.8 million and $3.2 million for the same periods a year ago. -- Invested assets were $897.3 million at June 30, 2001, and the annualized average yield for the quarter was 5.06 percent pre-tax and 4.54 percent after-tax. Total assets were $1.4 billion at June 30, 2001. At the end of the second quarter, the investment portfolio at fair value was comprised of 86.3 percent tax-exempt fixed income securities compared to 88.9 percent a year ago. The Company holds no equity or debt instruments of California electric utilities. -- Stockholders' equity on a GAAP basis at June 30, 2001 was $717.2 million, compared to $699.4 million at June 30, 2000. -- Book value per share was $8.42 at June 30, 2001, compared to $8.21 at June 30, 2000. -- Additional financial information is available at the Company's website at i21.com or by request to the Investor Relations Department. Regulatory Notes California SB 1899 took effect January 1, 2001, potentially reviving re·vive v. re·vived, re·viv·ing, re·vives v.tr. 1. To bring back to life or consciousness; resuscitate. 2. To impart new health, vigor, or spirit to. 3. certain insurance claims arising out of the 1994 Northridge earthquake The Northridge earthquake occurred on January 17, 1994 at 4:31 AM Pacific Standard Time in the city of Los Angeles, California. The earthquake had a "strong" moment magnitude of 6. that previously were barred by the applicable statute of limitations A type of federal or state law that restricts the time within which legal proceedings may be brought. Statutes of limitations, which date back to early Roman Law, are a fundamental part of European and U.S. law. , the policy contract or settlement agreements. The Company believes this statute violates federal and state constitutional provisions prohibiting impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of contracts. The Company is evaluating its options for further legal review following an adverse ruling by the California appellate court A court having jurisdiction to review decisions of a trial-level or other lower court. An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed. on July 24, 2001. However, to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the risk of an ultimate adverse determination, the Company has,
since the effective date of this legislation, been adjusting and
settling claims made under SB 1899 in a normal manner while reserving
its right to assert the unconstitutionality of the law as a defense to
any claim or action. As of June 30, 2001, approximately 850 previously
reported Northridge earthquake claims have been presented for
reconsideration re·con·sid·er v. re·con·sid·ered, re·con·sid·er·ing, re·con·sid·ers v.tr. 1. To consider again, especially with intent to alter or modify a previous decision. 2. under SB 1899. Approximately 30 percent of claims have been closed. Loss and loss adjustment expenses related to the 1994 earthquake totaled $6.1 million and $10.7 million in the quarter and six months ended June 30, 2001, respectively. At this time, the Company cannot predict either how many claims ultimately may require further adjustment or their ultimate cost. The Company incurred more than $1.1 billion in earthquake-related losses and expenses, closing 94% of the total 46,000 claims within the first year and 98.6% without litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . On July 19, 2001, the Company was served with a class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax filed on behalf of claim adjusters who allege To state, recite, assert, or charge the existence of particular facts in a Pleading or an indictment; to make an allegation. allege v. the Company had improperly im·prop·er adj. 1. Not suited to circumstances or needs; unsuitable: improper shoes for a hike; improper medical treatment. 2. classified them as salaried workers not eligible for overtime pay. Similar suits have been filed against other California insurance companies. The Company believes it was in compliance with applicable law and will vigorously defend itself in the litigation. About 21st Century Founded in 1958, 21st Century Insurance Group is a pioneer of the direct-to-consumer marketing of personal automobile and home insurance. The Company provides full service 24 hours a day, 365 days a year at 1-800-211-SAVE and its website, i21.com. The Company also operates twelve In-Person Neighborhood centers. 21st Century markets personal automobile insurance in Arizona, California, Nevada, Oregon and Washington. The Company also offers home insurance in California. 21st Century is rated A+ (Superior) by A.M. Best and A+ by Standard & Poor's. 21st Century Insurance Group is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the trading symbol Trading symbol See: Ticker symbol TW. The Company is headquartered at 21st Century Plaza, 6301 Owensmouth Avenue, Woodland Hills, CA 91367, and 818/211-SAVE. 21st Century's address on the Internet is www.i21.com Cautionary Statement: Statements contained in this press release which are not historical facts may be considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc , among other things, the Company's future performance and operations, management's future plans and goals, and business environment changes. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to: the effects of competition and competitors' pricing actions; unanticipated adverse underwriting and claims experience, including revived re·vive v. re·vived, re·viv·ing, re·vives v.tr. 1. To bring back to life or consciousness; resuscitate. 2. To impart new health, vigor, or spirit to. 3. claims under SB 1899; systems and customer service problems, including potential negative effects of power shortages in California; adverse developments in financial markets or interest rates; and unanticipated results of legislative, regulatory or legal actions, including the inability to obtain approval for rate increases and product changes. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For additional information, refer to the Company's public filings including the most recently filed Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q Form 10-Q See 10-Q. .
21st Century Insurance Group and Subsidiaries
Condensed Financial Data
Quarter and Year to Date Ended June 30, 2001 and 2000
(amounts in thousands, except share data)
Current Quarter Year to Date
2001 2000 2001 2000
Gross premium written $235,950 $232,796 $472,863 $466,651
Net premium earned 217,366 207,062 431,977 407,334
Underwriting loss (7,171) (7,750) (16,811) (15,371)
Net investment income 11,561 12,599 23,366 25,825
Operating income(1) 10,282 3,870 16,988 8,163
Net income 5,797 4,960 10,719 8,615
Operating income per
common share(2) $0.12 $0.05 $0.20 $0.10
Net income per
common share(2) $0.07 $0.06 $0.13 $0.10
Basic weighted average
number of shares 85,177,132 85,110,001 85,182,653 85,226,351
Diluted weighted average
number of shares 85,371,653 85,411,514 85,366,357 85,492,077
Loss ratio(3) 67.4% 70.6% 69.5% 71.4%
Loss adjustment
expense ratio(3) 18.3% 18.3% 17.6% 17.7%
Underwriting expense
ratio(3) 14.8% 14.8% 14.3% 14.7%
GAAP combined
ratio(3) 100.5% 103.7% 101.4% 103.7%
(1) Represents pre-tax income excluding realized investment gains
or losses and the discontinued earthquake line of business.
(2) Income per common share, basic and diluted.
(3) Represents ratios for total personal lines excluding
discontinued earthquake.
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