21st Century Insurance
[GRAPHIC OMITTED]
Company contact: Mel Spinella 818 / 704-3533
FOR IMMEDIATE RELEASE February 11, 2004
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21ST CENTURY INSURANCE GROUP REPORTS STRONG 2003 RESULTS
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(WOODLAND HILLS, CA) - 21st Century Insurance Group (NYSE: 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 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 charge of $24.1
million to strengthen earthquake reserves and certain nonrecurring,
nonoperational 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 W. Marlow, President and CEO.
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 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 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, Indiana and Ohio
on January 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 to Delaware 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 under the symbol TW. Delaware
is the state of incorporation for 58% of the Fortune 500 and 51% of all publicly
traded companies.
Cash flow from operations 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
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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, Nevada,
Oregon and Washington) and three midwestern 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 licensed insurance agents at
1-800-211-SAVE or through the Company's full-service website at WWW.21ST.COM.
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Service is also provided at the Company's neighborhood centers during normal
business hours. 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 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" 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, 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 earthquake claims under SB 1899; 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 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 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 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,
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2003 2002 2003 2002
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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
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Personal auto lines underwriting profit 13,288 5,328 41,006 13,383
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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%
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Combined ratio 95.7% 97.9% 96.5% 98.5%
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SUPPLEMENTAL RECONCILIATION OF PERSONAL AUTO LINES GAAP UNDERWRITING PROFIT TO NET INCOME*
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
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Net income (loss) $ 18,426 $ 14,797 $ 53,575 $(12,256)
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<FN>
* 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,
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2003 2002 2003 2002
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TOTAL ALL LINES
Direct premiums written $ 304,672 $ 268,862 $1,223,484 $998,248
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Net premiums written $ 303,433 267,707 $1,218,630 $965,299
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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
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Underwriting profit (loss) 13,270 5,328 831 (45,385)
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Net investment income 11,173 11,967 45,833 46,345
Realized investment gains (loses) 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
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Net income (loss) $ 18,426 $ 14,797 $ 53,575 $(12,256)
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Net income per common share (1) $ 0.22 $ 0.17 $ 0.63 $ (0.14)
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Net cash provided by operating activities $ 42,250 $ 15,676 $ 187,515 $ 76,292
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DECEMBER 31, DECEMBER 31,
BALANCE SHEET DATA 2003 2002
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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%
<FN>
(1) Basic and diluted amounts per common share are the same for all periods shown.