SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
21ST CENTURY INSURANCE GROUP SAVINGS AND SECURITY PLAN
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(Exact name of the plan)
21ST CENTURY INSURANCE GROUP
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(Name of issuer)
6301 OWENSMOUTH AVENUE, WOODLAND HILLS, CALIFORNIA 91367
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(Address of principal executive offices) (Zip Code)
Financial Statements and Supplemental Schedule
21st Century Insurance Group Savings and Security Plan
Years ended December 31, 2000 and 1999
with Report of Independent Auditors
21st Century Insurance Group Savings and Security Plan
Financial Statements
and Supplemental Schedule
Years ended December 31, 2000 and 1999
CONTENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . .1
Audited Financial Statements
Statements of Net Assets Available for Benefits . . . . . . . . . . . . .2
Statements of Changes in Net Assets Available for Benefits . . . . . . . . . . 3
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) . . . . . . . . 9
Independent Auditors' Consent . . . . . . . . . . . . . . . . . . . . . . . 10
Report of Independent Auditors
21st Century Insurance Group as Plan Administrator of the
21st Century Insurance Group Savings and Security Plan
We have audited the accompanying statements of net assets available for benefits
of the 21st Century Insurance Group Savings and Security Plan (the Plan) as of
December 31, 2000 and 1999, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held at end of year, is presented for purposes of additional analysis and is not
a required part of the financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
our audit of the financial statements and, in our opinion, is fairly stated in
all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Los Angeles, California
May 24, 2001
1
21st Century Insurance Group Savings and Security Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2000 1999
------------ ------------
ASSETS
Investments, at fair value:
Mutual funds $ 65,673,781 $ 63,754,691
21st Century Insurance Group common stock 3,742,439 5,251,648
Short-term investment funds 43,198 83,042
------------ ------------
69,459,418 69,089,381
Guaranteed investment contract, at fair value 26,415,653 25,859,734
Loans to participants 7,199,999 7,302,570
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Total investments 103,075,070 102,251,685
Receivables:
Employer contribution 138,197 -
Employee contributions 246,468 -
Other - 46,638
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Net assets available for benefits $103,459,735 $102,298,323
============ ============
See accompanying notes.
2
21st Century Insurance Group Savings and Security Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
2000 1999
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Additions to net assets:
Investment income:
Net appreciation (depreciation) in fair value of
mutual funds $ (7,833,900) $ 4,803,965
Net depreciation in fair value of 21st Century
Insurance Group common stock (1,168,034) (1,114,918)
Interest and dividends 5,318,121 7,041,162
Loan interest income 653,235 578,265
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(3,030,578) 11,308,474
Contributions:
Employer 3,377,624 2,974,939
Employee 6,581,704 6,185,071
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9,959,328 9,160,010
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Total additions 6,928,750 20,468,484
Deductions from net assets:
Benefits paid to participants 5,735,143 4,896,654
Administrative expenses 32,195 29,106
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Net increase in net assets 1,161,412 15,542,724
Net assets available for benefits:
Beginning of year 102,298,323 86,755,599
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End of year $103,459,735 $102,298,323
============= =============
See accompanying notes.
3
21st Century Insurance Group Savings and Security Plan
Notes to Financial Statements
December 31, 2000
1. DESCRIPTION OF PLAN
The following brief description of the 21st Century Insurance Group Savings and
Security Plan (Plan) provides only general information. Participants should
refer to the Plan Document for more complete information. Copies of the Plan
Document are available from the Human Resources Benefits Office.
GENERAL
The Plan is a defined contribution plan incorporating the provisions of Section
401(k) of the Internal Revenue Code and covering substantially all employees of
21st Century Insurance Group (Employer). The Plan enables participants to make
contributions which the Employer matches in part. Contributions by and on behalf
of participants are invested in accordance with the participants' investment
designations in one or more investment categories. Plan participants have 15
investment categories from which they may choose to have their funds invested.
The Employer pays most of the Plan's administrative expenses. These expenses
include, but are not limited to, legal, accounting and recordkeeping fees.
However, loan fees are paid by participants, and investment expenses are paid by
the Plan.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA).
CONTRIBUTIONS
Each participant can contribute up to 12% of earnings on a before-tax basis and
up to an additional 5% of earnings on an after-tax basis. The Employer matches
$.75 for every dollar contributed by a participant (before tax) up to a maximum
of 6% of the participant's earnings. Forfeitures are used to offset future
Employer-matching contributions. Participants may change their contribution
percentages or cease making contributions at any time during the Plan year. In
addition, they may elect to stop making contributions entirely. Effective June
17, 1991, Employer contributions follow the participant's fund election.
4
21st Century Insurance Group Savings and Security Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
VESTING
Participants are immediately vested in their own contributions. Vesting in the
Employer-contributed amount is based on years of service. A participant vests
25% after two years of service and an additional 25% for each additional year. A
participant is 100% vested after five years of credited service.
PARTICIPANT ACCOUNTS
Each participant's account is credited with his or her other contributions, any
Employer matching contribution and an allocation of Plan earnings, and is
charged with any withdrawals.
PARTICIPANT LOANS
Each participant may obtain loans against his or her vested account balance.
Loans made for purposes other than the purchase of a primary residence are at
the prime rate plus two percent. Loans made for the purchase of a home are at
the prime rate.
PAYMENT OF BENEFITS
Upon termination of service, a participant may generally elect to receive the
value of his or her account in either a lump-sum amount (if eligible) or in
installment payments for up to 15 years. Benefits become payable to participants
upon their termination of employment with the Employer or in the event of
elective withdrawal as permitted by the Plan.
PLAN TERMINATION
Although it has not expressed any intention to do so, the Employer has the right
under the Plan to terminate the Plan subject to the provisions set forth in
ERISA. Should the Plan terminate, or should contributions be discontinued, at
some future time, the rights of each affected participant to the entire amount
credited to his or her account on the date of such termination or discontinuance
shall be non-forfeitable and fully vested. Payment of such amounts to each
participant or beneficiary, upon the termination of the Plan or upon the
complete discontinuance of contributions under the Plan, shall be made by the
5
21st Century Insurance Group Savings and Security Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
PLAN TERMINATION (CONTINUED)
Plan administrator at such time and in such manner as the Plan administrator
shall state, provided, however, that all participants and beneficiaries
similarly situated shall be treated in a nondiscriminatory manner.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
VALUATION OF INVESTMENTS
Investments are reported at fair value, using quoted market prices. Participant
loans are reported at amounts owed by the participants.
3. GUARANTEED INVESTMENT CONTRACT
The fixed rate fund is a guaranteed investment contract consisting of funds
deposited with Pacific Life Insurance Company (Pacific Life). Pacific Life
maintains the contributions in an unallocated account, with a guaranteed
interest rate which is set annually not less than 30 days prior to the beginning
of the Plan year. The set rate was 6.25% for 2000 and 1999. The account is
credited with deposits and interest earnings and charged with Plan withdrawals.
The Employer pays the contract administration charge.
Per the contract, no transfer may be made out of the account by an individual
participant directly to a competing fixed income fund offered by the Plan.
The Employer may cancel the contract at any time by giving notice to Pacific
Life. Ordinarily, transfer of the balance in the account would be made in four
substantially equal annual installments starting within 90 days of cancellation.
However, if the announced guaranteed interest rate is less than the current rate
6
21st Century Insurance Group Savings and Security Plan
Notes to Financial Statements (continued)
3. GUARANTEED INVESTMENT CONTRACT (CONTINUED)
and the balance in the account 60 days prior to the end of the Plan year exceeds
75% of the balance in the account at the beginning of the current Plan year, the
Employer may cancel the contract within 30 days of the new rate announcement and
may withdraw the total account balance within 30 days of cancellation.
4. INVESTMENTS
The Plan's investments are invested in the Pacific Life guaranteed investment
contract, in 21st Century Insurance Group Common Stock (21st Century Insurance
Group Stock) and in 13 mutual funds administered by Fidelity Investments, which
also acts as trustee for the Plan. Funds in transit to and from any of the
investment options and the Plan Sponsor or the participants or other investment
options are temporarily invested in short-term investments by the trustee.
Fidelity Investments and 21st Century Insurance Group are considered parties in
interest.
The following table presents the Plan's investments:
DECEMBER 31
2000 1999
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Investments at fair value:
Guaranteed Investment Contract $26,415,654* $25,859,734*
Mutual Funds:
Fidelity Magellan Fund 28,755,925* 30,261,203*
Fidelity Equity-Income Fund 13,612,201* 13,665,370*
Spartan U.S. Equity Index Fund 5,726,535* 6,459,446*
Fidelity Contrafund 6,342,191* 5,917,948*
Fidelity Retirement Government Money Market
Portfolio 2,038,486 1,217,272
INVESCO Small Company Growth Fund 5,108,434 2,796,836
Dreyfus Founders Balanced Fund 564,829 702,374
Templeton Foreign Fund I 1,052,676 783,222
Fidelity Freedom 2000 Fund 125,179 136,115
Fidelity Freedom 2010 Fund 873,197 725,771
Fidelity Freedom 2020 Fund 611,573 675,260
Fidelity Freedom 2030 Fund 862,556 377,361
Fidelity Freedom Income Fund 43,198 36,513
21st Century Insurance Group Stock 3,681,095 5,251,648*
Loans to participants 7,199,999* 7,302,570*
Short-Term Investment Funds 61,342 83,042
------------ ------------
$103,075,070 $102,251,685
============ ============
*Represents 5% or more of the fair value of net assets available for benefits.
7
21st Century Insurance Group Savings and Security Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
Interest and dividend income was $5,318,121 for 2000 and $7,041,162 for 1999.
Net appreciation (depreciation) in fair value of mutual funds and Company stock
was $(9,001,934) for 2000 and $3,689,047 for 1999.
5. INCOME TAX STATUS
The Internal Revenue Service has issued a determination letter dated May 11,
1995, that the Plan qualifies, in form, under Sections 401(a) and 401(k) of the
Internal Revenue Code of 1986, as amended (the Code), and the underlying trust
is, therefore, exempt from federal income taxes under Section 501(a) of the
Code. The Plan is required to operate in accordance with the Code to maintain
its tax qualification. The Plan administrator is not aware of any course of
actions or series of events that have occurred which might adversely affect the
Plan's qualified status.
8
Supplemental Schedule
20th Century Insurance Group Savings and Security Plan
EIN: 95-1935264 Plan: 001
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2000
DESCRIPTION OF INVESTMENT,
IDENTITY OF ISSUE, INCLUDING MATURITY DATE,
BORROWER, LESSOR RATE OF INTEREST, PAR OR CURRENT
OR SIMILAR PARTY MATURITY VALUE COST VALUE
- ---------------------------------- -------------------------------- ----------- ------------
Pacific Life Insurance Company Guaranteed Investment
Contract $26,415,654 $ 26,415,654
Fidelity Retirement Government
Money Market Fund (1) Money Market Fund 2,038,486 2,038,486
Fidelity Equity-Income Fund (1) 254,767 Mutual Fund Shares 11,773,174 13,612,201
Fidelity Magellan Fund (1) 241,039 Mutual Fund Shares 25,075,672 28,755,925
Fidelity Freedom Income Fund (1) 3,867 Mutual Fund Shares 43,430 43,198
Fidelity Freedom 2000 Fund (1) 10,599 Mutual Fund Shares 126,866 125,179
Fidelity Freedom 2010 Fund (1) 63,092 Mutual Fund Shares 827,471 873,197
Fidelity Freedom 2020 Fund (1) 40,003 Mutual Fund Shares 622,873 611,573
Fidelity Freedom 2030 Fund (1) 57,504 Mutual Fund Shares 908,757 862,556
Dreyfus Founders Balanced Fund (1) 61,261 Mutual Fund Shares 691,352 564,829
Spartan U.S. Equity Index Fund 122,336 Mutual Fund Shares 5,342,498 5,726,535
Fidelity Contrafund (1) 128,985 Mutual Fund Shares 7,141,324 6,342,191
INVESCO Small Company Growth
Fund 332,797 Mutual Fund Shares 5,778,956 5,108,434
Templeton Foreign Fund I 101,806 Mutual Fund Shares 1,041,723 1,052,676
Fidelity Short Term Investment
Fund (1) Short-Term Investment Fund 61,342 61,342
21st Century Insurance Group
Stock (1) 258,320 Common Stock Shares 4,597,040 3,681,095
Participant Loans (1) Interest rates between 8.5% and
10.5% - 7,199,999
------------
$103,075,070
============
<FN>
(1) Party-in-interest to the Plan.
9
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-80180) pertaining to 21st Century Insurance Group Savings and
Security Plan of our report dated May 24, 2001, with respect to the financial
statements and schedule of 21st Century Insurance Group Savings and Security
Plan included in this Annual Report (Form 11-K) for the year ended December 31,
2000.
/s/ Ernst & Young LLP
Los Angeles, California
June 26, 2001
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
21st Century Insurance Group Savings and Security Plan
Date: June 29, 2001
By: /s/ Richard Andre
------------------------------------
Richard Andre, Senior Vice President
21st Century Insurance Group
Chairman Benefits Committee
11