21st Century Insurance Group Reports Improving Growth in Direct Premiums Written in First Quarter of 2007.

WOODLAND HILLS, Calif. -- 21st Century Insurance Group (NYSE:TW) today reported continued growth in direct premiums written in the first quarter of 2007. Primarily as a result of its multi-year geographic expansion strategy, the Company's first quarter of 2007 generated a 3.5% year-over-year increase in direct premiums written, following a 1.9% year-over-year increase in the fourth quarter of 2006.

The Company also reported net income of $18.3 million ($0.21 per basic share) for the first quarter of 2007, compared to $21.3 million ($0.25 per basic share) for the same period in 2006. Excluding after-tax costs of $2.7 million associated with a previously announced reduction in force on February 26th, 2007 and costs associated with the January 24, 2007 unsolicited merger proposal by American International Group, Inc. ("AIG"), adjusted net income was $21.1 million ($0.24 per basic share). The first quarter of 2007 results include net realized investment gains of $0.3 million, compared to net realized investment losses of $1.1 million for the same period in 2006. The first quarter results also included decreases in reserves for prior accident year losses and loss adjustment expenses ("LAE") totaling $17.9 million, versus decreases of $7.0 million in the first quarter of 2006. Other first quarter financial highlights:

* Direct premiums written of $350.5 million, versus $338.6 million in the first quarter of 2006 (3.5% increase)

* California direct premiums written of $279.5 million, versus $311.8 million in the first quarter of 2006 (10.3% decrease)

* Non-California direct premiums written of $71.0 million, versus $26.8 million in the first quarter of 2006 (165% increase)

* GAAP combined ratio of 95.3% versus 94.7% for the first quarter of 2006. 2007 was favorably impacted by 5.5 points of prior accident year loss and LAE reserve decreases, versus 2.2 points in 2006

Stockholders' equity at March 31, 2007 increased to $929.3 million, compared to $836.8 million at March 31, 2006. Book value per share at March 31, 2007 improved to $10.57 per share from $9.72 per share at March 31, 2006. Operating cash flows for the first quarter of 2007 were $29.7 million, compared to $38.7 million in the same period of 2006.

Entry into New York Market

On April 22, 2007, 21st began writing business in the State of New York. The Company's entry into New York, the latest milestone in the company's national expansion strategy, makes 21st policies available in 18 states and 66% of the national auto insurance market. Since the beginning of 2006 - when 21st was available in just nine states and 34% of the national market - the company has entered Colorado, Florida, Georgia, Minnesota, Missouri, New Jersey, Pennsylvania and Wisconsin. It also added Texas in 2005 and Illinois, Indiana and Ohio in 2004.

The geographic expansion strategy and the growth in new markets has increased the percentage of Vehicles-In-Force in non-California markets to 20% as of March 31st, 2007, compared to 17% at year-end 2006 and 8% at year-end 2005.

The Company also reported that it had closed its last remaining SB1899 Northridge earthquake claim file.

Proposal from AIG

On January 24, 2007, American International Group, Inc., the owner of approximately 61.9% of the outstanding shares of Company Common Stock, submitted an unsolicited proposal to the Company's Board of Directors to acquire the remaining shares of Company Common Stock for $19.75 per share in cash. A Special Committee comprised entirely of independent and outside directors has been reviewing and evaluating AIG's offer. Though no director on the Special Committee is affiliated with AIG, four of eleven of the members of the Company's Board of Directors, including the Chairman, are current or former officers or employees of AIG or its affiliates. While the Special Committee has engaged in discussions with AIG with respect to its proposal, no decisions whatsoever have been made by the Special Committee with respect to its response, if any, to the proposal. There can be no assurance that the proposed transaction or any other transaction will be approved or completed.

About 21st: Drivers Just Like You

Founded in 1958, 21st Century Insurance Group is a direct-to-consumer provider of personal auto insurance. With $1.4 billion of revenue in 2006, the Company insures over 1.5 million vehicles in 18 states, including California, Florida, New Jersey, Texas and the Company's newest market, New York. The Company is executing a multi-year geographic expansion strategy which increased the percentage of the U.S. private passenger automobile market in which 21st operates from approximately 18% in 2003 to approximately 66% currently. 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 at www.21st.com or on the phone with our licensed insurance professionals at 1-800-211-SAVE, 24 hours a day, 365 days a year. Service is offered in English and Spanish, both on the phone and on the web. 21st Century Insurance Company, 21st Century Casualty Company, and 21st Century Insurance Company of the Southwest are rated A+ by A. M. Best, Fitch Ratings and Standard & Poor's.

21st Century Insurance Group is traded on the New York Stock Exchange under the trading 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 that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act 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, expected combined ratio and growth of written premiums, product development, computer systems, litigation, regulatory environment and approvals, market position, financial results, dividend policy, reserves, and potential merger transactions. 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. Other 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; changes in consumer preferences or buying habits; adverse underwriting and claims experience; customer service problems; the impact on Company operations of natural disasters, principally earthquake, or civil disturbance, due to the concentration of Company facilities and employees in Southern California; information system problems; control environment failures; adverse developments in financial markets or interest rates; results of legislative, regulatory or legal actions, including the inability to obtain regulatory approval for necessary licenses, rate changes and product changes and possible adverse actions by state regulators in market conduct examinations and rate proceedings; the Company's ability to service its debt, including its ability to receive dividends and/or sufficient payments from its subsidiaries to service its obligations; and the Company's participation in potential merger transactions. The Company is not under any obligation (and expressly disclaims any such obligation) 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 21st.com (which shall not be deemed to be incorporated in or a part of this release) or by request to the Investor Relations 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 with accounting principles generally accepted in the United States of America ("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 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.

(1) Premiums Written: Premiums written represent the premiums charged on policies issued and in effect 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 basis over the terms of the policies. Premiums Written are meant as supplemental information and are not intended to replace Premiums Earned. (2) Statutory Surplus: 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 ("SAP"), as prescribed by insurance regulatory authorities. Stockholders' Equity is the most directly comparable GAAP measure. Statutory Surplus is presented as supplemental information and is not intended to replace Stockholders' Equity. (3) Underwriting Profit (Loss): Underwriting profit (loss) consists of net premiums earned less losses from claims, loss adjustment expenses and underwriting expenses. 21st believes that underwriting profit (loss) provides investors with financial information that is not only meaningful, but critically important to understanding the results of property and casualty insurance operations. The results of operations of a property and casualty insurance company include three components: underwriting profit (loss), net investment income and realized capital gains (losses). Without disclosure of underwriting profit (loss), it is difficult to determine how successful an insurance company is in its core business activity of assessing and underwriting risk, as including investment income and realized capital gains (losses) in the results of operations without disclosing underwriting profit (loss) can mask underwriting losses. Underwriting profit (loss) is presented as supplemental information and is not intended to replace Net Income. (4) Adjusted Net Income: Adjusted net income represents net profit (loss) excluding non-recurring items, such as severance costs, merger transaction costs, and other items that are not part of the Company's regular operations. This item is included to provide a basis for comparison to prior periods where these items did not exist. Net Income is the most directly comparable GAAP measure. Adjusted Net Income is presented as supplemental information and is not intended to replace Net Income.

These non-GAAP, financial measures should be read in conjunction with the GAAP financial results. The Company has reconciled these financial measures with the most directly comparable GAAP financial measures in the supplemental schedules.

(c) 2007 by 21st Century Insurance Group. All rights reserved

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