21st Century Insurance Group Reports Strong 2003 Results.Business Editors WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Feb. 11, 2004 21st Century Insurance Group (NYSE NYSE See: New York Stock Exchange :TW), reported a 24.5% increase in net income to $18.4 million, or $0.22 per share, in the fourth quarter of 2003 compared to the same period in 2002. For the year ended December December: see month. 31, 2003, net income increased to $53.6 million, or $0.63 per share, compared to a net loss of $12.3 million, or $0.14 per share in 2002. The 2003 full year results include a first quarter 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 to strengthen earthquake reserves and certain nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. , nonoperational Adj. 1. nonoperational - (military) not involved in military operations inactive armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; "the military machine is items that increased second quarter net income by $9.6 million after-tax. In 2002, the Company's results included third quarter after-tax charges for earthquake and software write-offs totaling $58.4 million. "2003 was an outstanding year for 21st. We grew in excess of 20%, our best growth rate since 1987, and improved our personal auto combined ratio by two points to 96.5," 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
The Company also reported in its core personal auto lines that: -- Direct premiums written increased 13.3% to $304.6 million in the fourth quarter of 2003 compared to $268.9 million for the same period in 2002. For the year ended December 31, 2003, direct premiums written for the personal auto lines increased 22.9% to $1,223.4 million from $995.8 million in 2002. -- The GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio for the personal auto lines improved to 95.7% in the fourth quarter of 2003 from 97.9% in the same quarter a year ago. For the years ended December 31, 2003 and 2002, the GAAP combined ratio for the personal auto lines was 96.5% and 98.5%, respectively. -- 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. increased to $13.3 million in the three months ended December 31, 2003, compared to $5.3 million in the fourth quarter of 2002. For the year ended December 31, 2003, personal auto lines underwriting profit was $41.0 million compared to $13.4 million for 2002. The Company began offering personal auto insurance in 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. , Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). and Ohio on January January: see month. 28, 2004. "These are important markets for our long term growth. In 2004, we will concentrate on a slow but steady introduction of our brand and our unmatched package of more standard policy features, superior customer service and low cost," said Marlow. Results from these new markets are not expected to be material in 2004. As previously announced, the reincorporation of 21st Century Insurance Group from 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). to Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). was effective on December 4, 2003. There will be no change in the location of company operations, location of employees, or in the way the company does business as a result of the reincorporation. The Company's common stock will continue to trade 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 symbol TW. Delaware is the state of incorporation for 58% of the Fortune 500 and 51% of all publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. . Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the fourth quarter of 2003 increased to $42.3 million compared to $15.7 million from the fourth quarter of 2002. For the year ended December 31, 2003, cash flow from operations was $187.5 million compared to $76.3 million for 2002. Total assets increased from $1.5 billion at December 31, 2002 to $1.7 billion at December 31, 2003. Book value per share increased 7% in 2003 over 2002 to $8.20 per share. In December 2003, the Company completed a $100 million senior debt offering and used $85 million of the proceeds to increase the statutory surplus of its principal insurance subsidiary. The ratio of net premiums written to statutory surplus improved to 2.3 at the end of 2003 compared to 2.4 a year ago. About 21st Founded in 1958, 21st Century Insurance Group primarily markets and underwrites personal automobile insurance to customers in California. The Company also provides personal auto insurance in four other western states (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. ) and three midwestern Mid·west or Middle West A region of the north-central United States around the Great Lakes and the upper Mississippi Valley. It is generally considered to include Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, Kansas, and states (Illinois, Indiana and Ohio). 21st provides a superior combination of policy features and customer service at a competitive price. Twenty-four-hours-a-day, 365 days a year, customers have the option to purchase insurance, service their policy or report a claim over the phone directly through our 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 the Company's full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. website at www.21st.com. Service is also provided at 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 Insurance Company 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 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, expected combined ratio and growth of written premiums, 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; adverse underwriting and claims experience, including as 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 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; 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; 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.
Exhibit A
21st Century Insurance Group and Subsidiaries
Condensed Financial Data - Personal Auto Lines
(amounts in thousands, except share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------- ---------------------
2003 2002 2003 2002
--------- --------- ----------- ---------
Personal Auto Lines
Direct premiums written $304,647 $268,862 $1,223,377 $995,794
========= ========= =========== =========
Net premiums written $303,408 $267,707 $1,218,519 $976,892
========= ========= =========== =========
Net premiums earned $310,419 $254,591 $1,172,679 $924,559
Loss and loss adjustment
expenses incurred 239,914 208,472 922,122 768,277
Underwriting expenses
incurred 57,217 40,791 209,551 142,899
--------- --------- ----------- ---------
Personal auto lines
underwriting profit 13,288 5,328 41,006 13,383
========= ========= =========== =========
Loss and loss adjustment
expense ratio 77.3% 81.9% 78.6% 82.9%
Underwriting expense ratio 18.4% 16.0% 17.9% 15.6%
--------- --------- ----------- ---------
Combined ratio 95.7% 97.9% 96.5% 98.5%
========= ========= =========== =========
---------------------------------------------------------------------
Supplemental Reconciliation of Personal Auto Lines GAAP Underwriting
Profit to Net Income (a)
Personal auto lines
underwriting profit $13,288 $5,328 $41,006 $13,383
Results of homeowner and
earthquake lines, in run
off (18) -- (40,175) (58,768)
Net investment income 11,173 11,967 45,833 46,345
Realized investment gains 61 3,048 13,177 10,391
Other income 711 -- 14,777 --
Write-off of software -- -- -- (37,177)
Interest and fees expense (1,135) -- (3,471) --
Federal income tax (expense)
benefit (5,654) (5,546) (17,572) 13,570
--------- ------------ -------- ---------
Net income (loss) $18,426 $14,797 $53,575 $(12,256)
========= ============ ======== =========
(a) Commencing with the second quarter of 2003, in light of recent
views expressed by the Securities and Exchange Commission over the use
of non-GAAP financial measures, the Company elected to report premiums
and GAAP underwriting results for its personal auto lines as an
indication of ongoing business performance and to discontinue
disclosing operating income (defined by the Company as (a) the
underwriting 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 on
the investment portfolio. Specifically excluded from operating income
were realized gains and losses from the investment portfolio, results
of the homeowner and earthquake lines of business, SB 1899 expenses
and reserve changes, interest expense on capital leases, non-recurring
items and certain state, local and other taxes).
Exhibit B
21st Century Insurance Group and Subsidiaries
Condensed Financial Data - All Lines
(amounts in thousands, except share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
--------------------- ---------------------
2003 2002 2003 2002
--------- ----------- ----------- ---------
Total All Lines
Direct premiums written $304,672 $268,862 $1,223,484 $998,248
========= =========== =========== =========
Net premiums written $303,433 $267,707 $1,218,630 $965,299
========= =========== =========== =========
Net premiums earned $310,330 $254,591 $1,172,677 $924,559
Loss and loss adjustment
expenses incurred 239,859 208,472 962,311 826,657
Underwriting expenses
incurred 57,201 40,791 209,535 143,287
--------- ----------- ----------- ---------
Underwriting profit
(loss) 13,270 5,328 831 (45,385)
Net investment income 11,173 11,967 45,833 46,345
Realized investment
gains (losses) 61 3,048 13,177 10,391
Other income 711 -- 14,777 --
Write-off of software -- -- -- (37,177)
Interest and fees
expense (1,135) -- (3,471) --
Federal income tax
(expense) benefit (5,654) (5,546) (17,572) 13,570
--------- ----------- ----------- ---------
Net income (loss) $18,426 $14,797 $53,575 $(12,256)
========= =========== =========== =========
Net income per common
share (1) $0.22 $0.17 $0.63 $(0.14)
========= =========== =========== =========
Net cash provided by
operating activities $42,250 $15,676 $187,515 $76,292
----------------------------------------------------------------------
December December
31, 31,
Balance Sheet Data 2003 2002
----------- -----------
Invested assets $1,283,741 $1,030,478
Total assets $1,737,187 $1,470,037
Loss and LAE reserves $438,323 $384,009
Stockholders' equity $700,690 $655,608
Number of common shares
outstanding 85,435,505 85,431,505
Book value per share $8.20 $7.67
Additional Information
Cash flow from operations $187,515 $76,292
Statutory surplus $531,658 $397,381
Net premiums written to statutory
surplus ratio 2.3 2.4
Cash and investments at holding
company $24,361 $6,977
Auto units in force 1,417 1,206
Homeowner units in force (in
runoff) -- 5
California auto renewal ratio 92% 93%
After-tax yield on investments 3.6% 4.3%
(1) Basic and diluted amounts per common share are the same for all
periods shown.
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