21st Century Insurance Group Reports 2002 Fourth Quarter and Year-End Results.Business Editors WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Feb. 18, 2003 21st Century Insurance Group (NYSE NYSE See: New York Stock Exchange :TW) today reported net income for the quarter ended December 31, 2002, of $14.8 million, or $0.17 earnings per share, compared to a net loss of $41.0 million, or $0.48 loss per share, for the quarter ended December 31, 2001. For the year ended December 31, 2002, the Company incurred a net loss of $12.3 million, or $0.14 per share, compared to a net loss of $27.6 million, or $0.32 per share for the year ended December 31, 2001. The full-year results include after-tax charges of $34.2 million in 2002 and $45.7 million in 2001 related to SB 1899/Northridge Earthquake claims. The 2002 results also include an after-tax write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of $24.2 million of certain capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. software costs taken in the third quarter. Direct premiums written for the personal auto lines increased 20% to $268.9 million in the fourth quarter of 2002 compared to $224.3 million in the fourth quarter of 2001. For the full year of 2002, direct premiums written for the personal auto lines rose 11% to $995.8 million from $898.9 million for 2001. The personal auto combined ratio improved to 97.9% in the fourth quarter of 2002 from 108.9% for the same quarter a year ago. For the year ended December 31, 2002, the personal auto combined ratio was 98.5% compared to 103.0% for the prior year. Personal auto lines operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (i.e., net income before realized investment gains or losses, excluding results of the homeowner and earthquake lines of business, the software write-off referred to above, and certain state, local and other taxes) for the three months ended December 31, 2002, increased to $13.4 million ($0.16 per share) from an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $2.2 million ($0.03 per share) in 2001. For the full year of 2002, personal auto lines operating income increased to $48.2 million ($0.56 per share) from $24.8 million ($0.29 per share) in 2001. "In the fourth quarter we increased our growth rate in personal auto direct premiums written to 20% over the same quarter last year while also improving our combined ratio to 97.9%," said Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. W. Marlow, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "New customers have increased from an average of over 2,000 per week in the first quarter of 2002 to over 4,000 per week in the fourth quarter of 2002. Growth has continued into 2003 with 124 new customers on New Year's Day New Year's Day, among ancient peoples the first day of the year frequently corresponded to the vernal or autumnal equinox, or to the summer or winter solstice. In the Middle Ages it was celebrated among Christians usually on Mar. 25. and over 5,000 per week in January. "Growth in the fourth quarter was driven by increases in advertising spending, greater effectiveness of advertising and contributions from several new marketing campaigns and products introduced during 2002, such as the Latino marketing effort. "2002 is the first year since 1993 that the personal auto line has grown in excess of 10% and made an underwriting profit Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. . We've reestablished 21st as the innovative, high quality and high growth franchise that was the vision of Lou Foster when he founded the Company in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. in 1958." The Company received approval for a 3.9% rate increase for its California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). auto product that it will implement in March. During the fourth quarter 2002, the Company filed a $100 million arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the demand against Computer Sciences Corporation ("CSC (Card Security Code) A three- or four-digit number printed on the back of credit cards for security purposes. Called "Card Verification Value" (CVV) by Visa, "Card Validation Code" (CVC) by MasterCard and "Card Identification (CID) by American Express and Discover, ") for performance failures of CSC's COGEN computer system. 21st uncovered Uncovered may refer to:
On December 31, 2002, the Company entered into a sale-leaseback transaction with GE Capital for equipment, software and leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. . The transaction, which increased statutory surplus by $53.7 million, is accounted for as a capital lease. The Company continues to promptly settle reasonable earthquake claims brought under SB 1899 and other Northridge-related theories. The Company is vigorously defending itself against excessive demands and fraudulent The description of a willful act commenced with the Specific Intent to deceive or cheat, in order to cause some financial detriment to another and to engender personal financial gain. claims. In December, the Company filed suit against a public adjuster A public adjuster is an an advocate for the policy holder in negotiating an insurance claim. Public Adjusters exist because of the inherent conflict of interest that exists when one person or entity attempts to represent two sides of a financial transaction. that filed over 260 allegedly inflated estimates with the Company. On February 13, 2003, one of the Company's subsidiaries filed suit against the State of California to overturn SB 1899 on constitutional grounds. The Company's legal team will be led by the noted constitutional lawyer, Floyd Abrams, of the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of firm of Cahill Gordon & Reindel. Loss reserves for this legislatively created event continue to be highly uncertain. Additional information on the Company's SB 1899 exposure will be provided in the Company's forthcoming 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. . The Company expects to file its annual report to shareholders and its Form 10-K within the next five business days. These reports will be available through the Company's web site at www.21st.com. About 21st Founded in 1958, 21st Century Insurance Group provides personal automobile insurance to customers in California, Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). , Nevada, Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. and Washington who prefer excellent service and a high-feature product at a competitive price. Twenty-four-hours-a-day, 365 days a year, customers choose to purchase insurance over the phone from 21st Century's centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. licensed insurance agents at 1-800-211-SAVE or through its full service Internet site at www.21st.com. 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 and is headquartered at 21st Century Plaza, 6301 Owensmouth Avenue, Woodland Hills, CA 91367. Cautionary Statement: Statements contained herein and within other publicly available documents may include, and the Company's officers and representatives may from time to time make, statements which may constitute "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. " within the meaning of 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. These statements are not historical facts but instead represent only the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. These statements may address, among other things, the Company's strategy for growth, 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. results, product development, computer systems, regulatory approvals, market position, financial results, dividend policy and reserves. It is possible that the Company's actual results, actions and financial condition may differ, possibly materially, from the anticipated results, actions and financial condition indicated in these forward-looking statements. Important factors that could cause the Company's actual results and actions to differ, possibly materially, from those in the specific forward-looking statements include 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; 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 and adverse actions taken by state regulators in market conduct examinations. The Company is not under any obligation to (and expressly disclaims any such obligations to) update or alter any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise. Additional financial information is available at the Company's website at www.21st.com (which shall not be deemed to be incorporated in or a part of this release) or by request to the Investor Relations Investor relations The process by which the corporation communicates with its investors. Department.
Exhibit A
21st Century Insurance Group and Subsidiaries
Condensed Financial Data - Personal Auto
(amounts in thousands, except share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
Personal Auto Lines
Direct premiums written $268,862 $224,279 $995,794 $898,862
Net premiums written $267,707 $210,201 $976,892 $842,656
Net premiums earned $254,591 $209,183 $924,559 $838,489
Loss and loss adjustment
expenses incurred 208,472 193,185 768,277 738,335
Underwriting expenses incurred 40,791 34,445 142,899 124,564
Underwriting profit (loss) 5,328 (18,447) 13,383 (24,410)
Net investment income 11,967 10,896 46,345 44,932
Federal income tax (expense)
benefit (3,935) 5,329 (11,529) 4,233
Operating income (loss) $13,360 $(2,222) $48,199 $24,755
Loss and loss adjustment
expense ratio 81.9% 92.4% 82.9% 88.1%
Underwriting expense ratio 16.0% 16.5% 15.6% 14.9%
GAAP combined ratio 97.9% 108.9% 98.5% 103.0%
Reconciliation of Operating
Income (Loss) to Net Income
(Loss)
After tax amounts
Operating income (loss) $13,360 $(2,222) $48,199 $24,755
Underwriting loss on homeowner
and earthquake lines - (36,583) (38,199) (50,439)
Realized capital gains 1,981 1,618 6,754 3,251
Write-off of software - - (24,165) -
State, local and other tax
expense (544) (3,779) (4,845) (5,135)
Net (loss) income $14,797 $(40,966) $(12,256) $(27,568)
Per share(1)
Operating income (loss) $0.16 $(0.03) $0.56 $0.29
Underwriting loss on homeowner
and earthquake lines - (0.43) (0.45) (0.59)
Realized capital gains 0.02 0.02 0.08 0.04
Write-off of software - - (0.28) -
State, local and other tax
expense (0.01) (0.04) (0.05) (0.06)
Net (loss) income $0.17 $(0.48) $(0.14) $(0.32)
(1) Basic and diluted amounts per common share are the same for all
periods shown.
Exhibit B
21st Century Insurance Group and Subsidiaries
Condensed Financial Data - All Lines
(amounts in thousands, except share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
Total All Lines
Direct premiums written $268,862 $227,483 $998,248 $929,315
Net premiums written $267,707 212,472 $965,299 $868,955
Net premiums earned $254,591 $215,537 $924,559 $864,145
Loss and loss adjustment
expenses incurred 208,472 253,909 826,657 836,236
Underwriting expenses
incurred 40,791 36,357 143,287 129,917
Underwriting income
(loss) 5,328 (74,729) (45,385) (102,008)
Net investment income
and other 11,967 10,896 46,345 44,932
Realized investment
gains 3,048 2,489 10,391 5,001
Write-off of software - - (37,177) -
Federal income tax
(expense) benefit (5,546) 20,378 13,570 24,507
Net income (loss) $14,797 $(40,966) $(12,256) $(27,568)
Net income (loss) per
common share (1) $0.17 $(0.48) $(0.14) $(0.32)
December December
Balance Sheet Data 31, 2002 31, 2001
Invested assets $1,030,478 $884,633
Total assets $1,470,037 $1,354,398
Stockholders' equity $655,608 $659,306
Number of common shares
outstanding 85,431,505 85,361,848
Book value per share $7.67 $7.72
Additional Information
Statutory surplus $397,381 $393,119
Net premiums written to
statutory surplus ratio 2.4 2.2
Cash and investments at
holding company $6,977 $52,847
Auto units in force 1,206 1,075
Homeowner units in force
(in runoff) 5 73
California auto renewal
ratio 93% 92%
After-tax yield on
investments 4.3% 4.5%
(1) Basic and diluted amounts per common share are the same for all
periods shown.
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