21st Century Insurance Group Reports 2003 First Quarter Results.Business Editors WOODLAND HILLS, Calif.--(BUSINESS WIRE)--May 14, 2003 21st Century Insurance Group (NYSE NYSE See: New York Stock Exchange :TW) today reported a net loss for the quarter ended March 31, 2003, of $6.7 million, or $0.08 loss per share, compared to net income of $8.3 million, or $0.10 earnings per share, for the quarter ended March 31, 2002. The results for the latest quarter include an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $24.1 million, or $0.28 per share, to strengthen reserves to resolve 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. claims that were allowed to be reopened by 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). Senate Bill 1899 (SB 1899). 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. (as defined below) for the three months ended March 31, 2003, increased 25% to $14.8 million ($0.17 per share) from $11.8 million ($0.14 per share) in the first quarter of 2002. Direct premiums written for the personal auto lines increased 27% to $293.6 million in the first quarter of 2003 compared to $230.4 million in the first quarter of 2002. The rate of growth has increased steadily for the past five quarters:
% Increase in premium from
Quarter same quarter in prior year
2002 Q1 1%
2002 Q2 8%
2002 Q3 15%
2002 Q4 20%
2003 Q1 27%
The Company also recently passed 750,000 auto policies in force, setting an all time record in its 44-year history. The Company has increased auto policies in force by more than 100,000 over the past year. The personal auto combined ratio improved to 97.0% in the first quarter of 2003 from 98.6% for the same quarter a year ago, continuing steady improvement toward its goal of a 96% combined ratio. "We are achieving strong growth and improved profitability in our personal auto business while making progress resolving legacy liabilities," 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 Marlow is the name of: Places United Kingdom
Concerning SB 1899, the Company regularly reviews its estimates of the cost to resolve the claims created by the passage of this bill by the California legislature, and revises its estimates as necessary based on emerging settlement patterns and costs. During the first quarter of 2003, a discovery stay was lifted by the judge assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to the Company's cases and trial dates were set for all pending lawsuits. The Company continues to make fair and reasonable settlements of claims brought under SB 1899, but will vigorously defend 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. The majority of the reserve increase of $37.0 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($24.1 million after-tax) will be applied to reserves for legal defense. As there is no precedent for this legislatively created event, reserve estimates for SB 1899 are highly uncertain. Definition and Reconciliation of Non-GAAP Measures (Operating Income) Operating Income, a non-GAAP financial measure, is a key metric used by management in monitoring the operating results of the Company's core business. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP financial measures to those of other companies. Operating Income includes (a) the 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. revenues and expenses attributable to the personal auto lines, personal umbrella lines, and related vehicle lines, plus (b) net investment income excluding realized capital gains or losses capital gains or losses n. particularly when calculating the tax liability of an individual or business, this is the difference between the original cost plus the cost of capital improvements, excluding maintenance, called "basis" and the sales price. on the investment portfolio. Specifically excluded from Operating Income are realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses from the investment portfolio, results of the homeowner and earthquake earthquake, trembling or shaking movement of the earth's surface. Most earthquakes are minor tremors. Larger earthquakes usually begin with slight tremors but rapidly take the form of one or more violent shocks, and end in vibrations of gradually diminishing force lines of business, SB 1899 expenses and reserve changes, interest expense on capital leases, non-recurring items and certain state, local and other taxes. The Company believes Operating Income provides investors a valuable measure of the performance of the Company's ongoing business because it excludes the variability created by the particular timing of realized capital gains and losses, results of the run-off run-off n (in contest, election) → desempate m (= extra race); carrera de desempate run-off n (in contest, election) → lines of business and non-recurring items. Schedule A presents the Company's Operating Income for the first quarter of 2003 and 2002, as well as a reconciliation of Operating Income to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income. 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 Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). , 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 Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. 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 and through its full service Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site at www.21st.com or from the Company's neighborhood centers during normal business hours BUSINESS HOURS. The time of the day during which business is transacted. In respect to the time of presentment and demand of bills and notes, business hours generally range through the whole day down to the hours of rest in the evening, except when the paper is payable it a bank or by a . 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 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. earthquake claims under SB 1899; customer service problems; the impact on Company operations of natural disasters, principally earthquake, or civil disturbance Group acts of violence and disorder prejudicial to public law and order. See also domestic emergencies. , due to the concentration of Company facilities and employees in Woodland Hills, California; information systems problems, including failures to implement information technology projects on time and within budget; 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 on 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. (c)2003 21st Century Insurance Group. All rights reserved.
Exhibit A
21st Century Insurance Group and Subsidiaries
Condensed Financial Data - Personal Auto
(amounts in thousands, except share data)
(Unaudited)
Quarter Ended March 31,
2003 2002
----------- ---------
Personal Auto Lines
Direct premiums written $293,616 $230,419
=========== =========
Net premiums written $292,479 $220,699
=========== =========
Net premiums earned $271,441 $215,111
Loss and loss adjustment expenses incurred 216,343 181,777
Underwriting expenses incurred 47,086 30,368
----------- --------
Underwriting income 8,012 2,966
Net investment income 11,637 11,265
Federal income tax expense (4,863) (2,409)
----------- --------
Operating income $14,786 $11,822
=========== =========
Loss and loss adjustment expense ratio 79.7% 84.5%
Underwriting expense ratio 17.3% 14.1%
----------- ---------
GAAP combined ratio 97.0% 98.6%
=========== =========
----------------------------------------------------------------------
Reconciliation of Operating Income to Net
(Loss) Income
After tax amounts
Operating income $14,786 $11,822
Underwriting loss on homeowner and earthquake
lines (24,050) (6,949)
Realized investment gains 2,977 1,081
Interest expense on capital lease (460) --
State, local and other tax expense 36 2,369
----------- ---------
Net (loss) income $(6,711) $8,323
=========== =========
Per share (1)
Operating income $0.17 $0.14
Underwriting loss on homeowner and earthquake
lines (0.28) (0.08)
Realized capital gains 0.03 0.01
Interest expense on capital lease -- --
State, local and other tax expense -- 0.03
----------- ---------
Net (loss) income $(0.08) $0.10
=========== =========
(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 and units in thousands, except share data)
(Unaudited)
Quarter Ended March 31,
2003 2002
------------ ------------
Total All Lines
Direct premiums written $293,605 $233,015
============ ============
Net premiums written $292,472 $209,108
============ ============
Net premiums earned $271,441 $215,111
Loss and loss adjustment expenses incurred 253,343 188,635
Underwriting expenses incurred 47,086 30,459
------------ ------------
Underwriting loss (28,988) (3,983)
Net investment income 11,637 11,265
Realized investment gains 4,580 1,663
Interest and fees expense on capital lease (707) --
Federal income tax benefit (expense) 6,767 (622)
------------ ------------
Net (loss) income $(6,711) $8,323
============ ============
Net (loss) income per common share (1) $(0.08) $0.10
============ ============
----------------------------------------------------------------------
March 31, December 31,
Balance Sheet Data 2003 2002
------------ ------------
Invested assets $1,063,615 $1,030,478
Total assets $1,515,233 $1,470,037
Stockholders' equity $646,592 $655,608
Number of common shares outstanding 85,431,505 85,431,505
Book value per share $7.57 $7.67
Additional Information
Statutory surplus $385,036 $397,381
Net premiums written to statutory surplus
ratio 2.7 2.4
Cash and investments at holding company $3,773 $6,977
Auto units in force 1,275 1,206
Homeowner units in force (in runoff) -- 5
California auto renewal ratio 93% 93%
After-tax yield on investments 3.7% 4.3%
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