21st Century Insurance Group Reports First Quarter Results as Expansion Outside California Contributes to Revenue Growth.WOODLAND HILLS, Calif. -- 21st Century Insurance Group (NYSE NYSE See: New York Stock Exchange :TW) today reported net income of $19.4 million ($0.23 per share) for the first quarter of 2005, compared to $19.8 million ($0.23 per share) for the same period in 2004. The 2004 results include net realized capital gains of $7.6 million, compared to a net realized capital loss of $0.5 million for the same period in 2005. The GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio was 95.9% in the first quarter of 2005, compared to 96.6% for the same period in 2004. Direct premiums written increased 3.4% to $352.1 million in the first quarter of 2005, compared to $340.6 million for the same period in 2004. Substantially all of the growth in direct premiums written was generated outside of 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). . California direct premiums written increased by 0.5% to $332.6 million, compared to $331.0 million for the same period in 2004. Non-California direct premiums written increased by 103% to $19.5 million, compared to $9.6 million for the same period in 2004. "Expansion outside of California is a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategy of 21st. With our entry into the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians in Q1, 2004 and Texas in Q1, 2005, we have increased the size of the market we operate in from $28 billion to $53 billion," 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. Marlow Marlow is the name of: Places United Kingdom
adj. 1. Almost exact or correct: the approximate time of the accident. 2. 86,000. Non-California vehicles-in-force, as a percentage of total vehicles-in-force, increased from 4.3% to 5.5% in that same time period." "Consumers in our core California market have been remarkably quiet. The primary provocation Conduct by which one induces another to do a particular deed; the act of inducing rage, anger, or resentment in another person that may cause that person to engage in an illegal act. for consumer shopping is a rate increase from their current carrier and there have been no significant rate increases by a top ten company in California since 2003," said Mr. Marlow. "Q3, 2004 rate decreases by AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. and State Farm in California, which represent 23% of the market, along with substantially increased advertising spend by ourselves and several competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in Q1, 2005 have not appeared to generate much consumer interest." "In Q1, 2005, we experienced a higher than normal level of expenses reflecting start-up Start-up The earliest stage of a new business venture. marketing costs in new markets, California marketing costs noted above, plus non-capitalizable implementation costs of our customer service technology platform. Conversion of California policyholders to this real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. , state of the art system has begun and is expected to be completed by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . This system will be a source of cost savings and improved customer service in the years ahead," added Mr. Marlow. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. at March 31, 2005 decreased 0.1% to $773.4 million, compared to $774.4 million at December 31, 2004. Book value per share at March 31, 2005 declined 0.3% to $9.03 per share from $9.06 per share at December 31, 2004. These changes resulted from a 0.7% decline in the fair market value of our investment grade bond portfolio as a result of changes in market interest rates. Statutory surplus increased 0.4% to $617.3 million at March 31, 2005 from $614.9 million at December, 2004. The net premiums written to statutory surplus ratio was unchanged at 2.2 for March 31, 2005, compared to December 31, 2004. 21st Century Insurance: Good people to call Founded in 1958, 21st Century Insurance Group is a direct-to-consumer provider of personal auto insurance. With $1.3 billion of revenue in 2004, the Company insures over 1.5 million vehicles in California, Texas, Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. and six other states. 21st provides superior policy features and 24/7 customer service at a competitive price. Customers can purchase insurance, service their policy or report a claim over the phone, in English 1. English - (Obsolete) The source code for a program, which may be in any language, as opposed to the linkable or executable binary produced from it by a compiler. The idea behind the term is that to a real hacker, a program written in his favourite programming language is or Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. , at any time with our licensed insurance professionals at 1-800-211-SAVE or through the Company's full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. bilingual bi·lin·gual adj. 1. a. Using or able to use two languages, especially with equal or nearly equal fluency. b. Web site at 21st.com. 21st Century Insurance Company, 21st Century Casualty Company and 21st Century Insurance Company of the Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. . 21st Century Insurance Company and 21st Century Casualty Company are rated 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 For the hotel in New York City, see . Plaza (IPA /'plaθa/ or /'plasa/ , 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, expected combined ratio and growth of written premiums, product development, computer systems, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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; adverse underwriting and claims experience, including as a result of 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 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 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; internal control failures; adverse developments in financial markets or interest rates; results of legislative, regulatory or legal actions, including the inability to obtain regulatory approval for rate increases and product changes and possible adverse actions by state regulators in market conduct examinations; and the Company's ability to service its debt, including its ability to receive dividends and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. sufficient payments from its subsidiaries to service its obligations. 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. Disclosure of Non-GAAP Measures: The Company may have included financial measures and other information in this document that may not be presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Accounting Principles Generally Accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ("GAAP"). Management believes these financial measures and other information may enhance investors' understanding of the Company's operations or enhance their understanding of the industry, in general. However, these financial measures and other information are not intended to replace, and should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with, the GAAP financial results. When possible, the Company has made efforts to reconcile these financial measures and other information to the most directly comparable GAAP financial measures available. Premiums Written represent the premiums charged on policies issued during a fiscal period. Premiums Earned, the most directly comparable GAAP measure, represents the portion of premiums written that is recognized as income in the financial statements for the periods presented and earned on a pro-rata Pro-rata Used to describe a proportionate allocation. Notes: For example, a pro-rata dividend means that every shareholder gets an equal proportion for each share they own. See also: Dividend basis over the term of the policies. Premiums Written are meant as supplemental information and are not intended to replace Premiums Earned. Statutory Surplus represents equity as of the end of a fiscal period for the Company's insurance entities, determined in accordance with Statutory Accounting Principles The Statutory Accounting Principles are a set of accounting rules for insurance companies set forth by the National Association of Insurance Commissioners. They are used to prepare the statutory financial statements of insurance companies. ("SAP sap, fluid in plants consisting of water and dissolved substances. Cell sap refers to this fluid present in the large vacuole, or cell cavity, that occupies most of the central portion of mature plant cells. "), as prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by insurance regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . Stockholders' Equity is the most directly comparable GAAP measure. Statutory Surplus is presented as supplemental information and is not intended to replace Stockholders' Equity. These non-GAAP, financial measures should be read in conjunction with the GAAP financial results. The Company has reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. these financial measures with the most directly comparable GAAP financial measures in supplemental schedules. (C) 2005 by 21st Century Insurance Group. All rights reserved.
Exhibit A
21st Century Insurance Group and Subsidiaries
Condensed Operating Results - All Lines
(amounts in thousands, except share data)
(Unaudited)
QTD March 31,
-------------------
2005 2004
--------- ---------
Total All Lines
Direct premiums written $352,117 $340,648
========= =========
Net premiums written $350,940 $339,459
========= =========
Net premiums earned $336,364 $318,220
Losses and loss adjustment expenses 251,031 247,514
Underwriting expenses 71,681 60,090
--------- ---------
Underwriting profit 13,652 10,616
Net investment income 17,037 13,146
Realized investment (losses) gains (460) 7,646
Interest and fees expense (2,057) (2,226)
--------- ---------
Income before provision for income taxes 28,172 29,182
Provision for income taxes (8,735) (9,357)
--------- ---------
Net income $19,437 $19,825
========= =========
Net income per common share - basic & diluted $0.23 $0.23
========= =========
Loss and loss adjustment expense ratio 74.6% 77.7%
Underwriting expense ratio 21.3% 18.9%
--------- ---------
Combined ratio 95.9% 96.6%
========= =========
Reconciliation of direct premiums written to
net premiums earned
Direct premiums written $352,117 $340,648
Ceded premiums written (1,177) (1,189)
--------- ---------
Net premiums written 350,940 339,459
Net change in unearned premiums (14,576) (21,239)
--------- ---------
Net premiums earned $336,364 $318,220
========= =========
Exhibit B
21st Century Insurance Group and Subsidiaries
Condensed Operating Results - Personal Auto
(amounts in thousands, except share data)
(Unaudited)
QTD March 31,
-------------------
2005 2004
--------- ---------
Personal Auto Lines
Direct premiums written $352,117 $340,592
========= =========
Net premiums written $350,940 $339,404
========= =========
Net premiums earned $336,361 $318,165
Losses and loss adjustment expenses 250,856 247,239
Underwriting expenses 71,681 60,090
--------- ---------
Underwriting profit $13,824 $10,836
========= =========
Loss and loss adjustment expense ratio 74.6% 77.7%
Underwriting expense ratio 21.3% 18.9%
--------- ---------
Combined ratio 95.9% 96.6%
========= =========
Reconciliation of personal auto lines underwriting
profit to consolidated net income
Personal auto lines underwriting profit $13,824 $10,836
Underwriting loss on homeowner
and earthquake lines in runoff (172) (220)
Net investment income 17,037 13,146
Realized investment (losses) gains (460) 7,646
Interest and fees expense (2,057) (2,226)
Provision for income taxes (8,735) (9,357)
--------- ---------
Net income $19,437 $19,825
========= =========
Reconciliation of direct premiums written to
net premiums earned
Direct premiums written $352,117 $340,592
Ceded premiums written (1,177) (1,188)
--------- ---------
Net premiums written 350,940 339,404
Net change in unearned premiums (14,579) (21,239)
--------- ---------
Net premiums earned $336,361 $318,165
========= =========
Exhibit C
21st Century Insurance Group and Subsidiaries
Selected Other Information - All Lines
(amounts in thousands, except share data)
(Unaudited)
As of As of
March 31, December 31,
Balance Sheet Data 2005 2004
------------ ------------
Total investments $1,373,325 $1,384,215
Total assets $1,877,758 $1,864,314
Net unrealized (loss) gain $(3,930) $14,412
Stockholders' equity $773,393 $774,401
Number of common shares outstanding 85,599,941 85,489,061
Book value per share $9.03 $9.06
Additional Information
Statutory surplus $617,319 $614,893
Net premiums written to statutory surplus
ratio 2.2 2.2
California vehicles in force 1,466 1,461
Non-California vehicles in force 86 65
------------ ------------
Total vehicles in force 1,552 1,526
Auto renewal ratio 92% 92%
Reconciliation of stockholders' equity to statutory surplus
Stockholders' equity - GAAP $773,393 $774,401
Condensed adjustments to reconcile GAAP
equity to statutory surplus:
Equity in non-insurance subsidiaries 12,450 8,082
Net difference due to capital lease
obligation 3,029 2,961
Difference in net unrealized loss (gain)
on investments 3,929 (21,709)
Deferred policy acquisition costs (67,395) (58,759)
Difference in net deferred tax assets 42,031 50,712
Assets nonadmitted for statutory purposes (150,118) (140,795)
------------ ------------
Statutory surplus $617,319 $614,893
============ ============
Exhibit D
21st Century Insurance Group and Subsidiaries
Condensed Consolidated Statement of Cash Flows - All Lines
(amounts in thousands)
(Unaudited)
QTD March 31,
-------------------
Operating activities 2005 2004
--------- ---------
Direct premiums collected $346,587 $332,496
Investment income collected 19,577 15,104
Ceded losses and LAE collected 1,833 2,062
Ceded premiums paid (326) (505)
Direct losses and LAE paid (254,409) (237,826)
Underwriting expenses paid (66,487) (51,691)
Income taxes paid (6,784) (1,277)
Interest paid (547) (787)
--------- ---------
Net cash provided by operating activities 39,444 57,576
--------- ---------
Investing activities
Investments available-for-sale
Purchases (102,661) (576,783)
Calls or maturities 10,775 11,597
Sales 71,735 515,988
Purchases of property and equipment (7,629) (8,082)
--------- ---------
Net cash used in investing activities (27,780) (57,280)
--------- ---------
Financing activities
Repayment of debt (2,954) (2,732)
Dividends paid (per share: $0.04 and $0.04) (3,422) (3,417)
Proceeds from the exercise of stock options 1,308 239
--------- ---------
Net cash used in financing activities (5,068) (5,910)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 6,596 (5,614)
Cash and cash equivalents, beginning of period 34,697 65,010
--------- ---------
Cash and cash equivalents, end of period $41,293 $59,396
========= =========
Reconciliation of net income to net cash provided by operating
activities:
Operating activities
Net income $19,437 $19,825
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,602 5,232
Net amortization of investment premiums 2,371 1,173
Amortization of restricted stock grants 34 99
Provision for deferred income taxes 3,459 8,005
Realized losses (gains) on sale of investments 454 (7,638)
Changes in assets and liabilities:
Reinsurance balances 1,181 1,823
Federal income taxes 10,407 (556)
Other assets (14,243) (11,736)
Unpaid losses and loss adjustment expenses (5,371) 8,985
Unearned premiums 14,579 21,237
Claims checks payable 1,277 (1,214)
Other liabilities (743) 12,341
--------- ---------
Net cash provided by operating activities $39,444 $57,576
========= =========
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