EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT:
EDWARD J. LAWSON, PRESIDENT AND CHAIRMAN, 21ST CENTURY HOLDING COMPANY
(954) 308-1257 OR (954) 581-9993
21ST CENTURY HOLDING COMPANY REPORTS
THIRD QUARTER RESULTS
PLANTATION, FLORIDA, NOVEMBER 11, 2004 - 21st Century Holding Company
(Nasdaq: TCHC), today reported results for the quarter ended September 30, 2004
(see attached tables).
For the quarter ended September 30, 2004, the Company reported net loss of
$13,754,082, or $2.32 per share on 5,925,952 undiluted shares, versus net income
of $1,990,831 or $0.42 per share on 4,738,130 undiluted shares in the same
three-month period last year. On a diluted share basis, the Company reported a
loss of $2.19 per share, based on 6,279,826 average diluted shares outstanding.
The net loss was due to the four hurricanes that hit Florida during the third
quarter. The net loss consisted primarily of approximately $20 million incurred
as a result of hurricane claims paid and reserved net of tax benefits and
reinsurance recoveries.
For the nine months ended September 30, 2004, the Company reported net
loss of $7,155,297, or $1.24 per share on 5,786,803 undiluted shares, versus net
income of $6,413,166 or $1.39 per share on 4,612,370 undiluted shares in the
same nine-month period last year. On a diluted share basis, the Company reported
a loss of $1.15 per share, based on 6,248,663 average diluted shares
outstanding.
Net premiums earned increased $11.3 million or 95.8% to $23.2 million for
the three months ended September 30, 2004, as compared to $11.8 million for the
same three-month period last year.
Total revenues increased $11.3 million or 75.4% to $26.3 million for the
three months ended September 30, 2004, as compared to $15.0 million for the same
three-month period last year.
EDWARD J. (TED) LAWSON, PRESIDENT & CHAIRMAN OF THE BOARD, said, "Even
though revenue was higher this last quarter, with an unprecedented four
hurricanes striking Florida, this year can only be described as disappointing.
Even though our reinsurers are assuring us that the hurricane season that took
place in Florida is only a 1-in-700 year event, we are implementing precautions
that we believe should enable us to return to record profitability.
o We are in the process of filing for an additional rate increase on our
homeowners business pending approval of the insurance regulators;
o We are changing our reinsurance structures to better handle our hurricane
exposure;
o We are changing our mix of homeowners business to better take advantage of
new construction and wind deductibles; and
o We are diversifying our book of business.
In this regard, our auto production has already increased from $1 million
per month through the first nine months of this year to now $2.5 million per
month. Our general liability and special events coverage business is running at
a $2 million per month pace versus the $1 million per month it was running at
last year. Also, American Vehicle's surplus has grown from $10 million at the
end of 2003 to over $15 million today. This is the primary company that writes
our general liability and auto business. This added surplus will give us the
ability to accelerate our expansion into other states which should further
diversify our company and increase our revenue and profitability going forward."
Mr. Lawson continued, "These changes are now taking place and although
we're disappointed in this year's results, we are very much looking forward to
next year and beyond. This year's guidance for calendar year 2004 ending
December 31st, which was for us to approximately break even, may be lowered, as
more information is available to us. However, this past quarter is behind us now
and we now anticipate returning to profitability in our current fourth quarter
ending 12/31/04. Also, we remain confident in our 2005 guidance of $2.67 per
share. Furthermore, the first quarter of next year should be a record first
quarter for revenue and profitability."
Mr. Lawson continued, "In conclusion, this was a trying year but I can
assure you that this company remains strong and well positioned for future
record growth and profitability."
The Company will hold an investor conference call at 4:30 PM (ET) on
Thursday, November 11, 2004. Mr. Lawson, Mr. Richard A. Widdicombe, CEO, and Mr.
J. Gordon Jennings III, CFO, will discuss the financial results and review the
outlook for the Company. Messrs. Lawson, Widdicombe and Jennings invite
interested parties to participate in the conference call. Listeners can access
the conference call by dialing toll free 888-460-6235. Please call at least five
minutes in advance to ensure that you are connected prior to the presentation.
ABOUT THE COMPANY
The Company, through its subsidiaries, underwrites standard and
non-standard personal automobile insurance, flood insurance, general liability
insurance, mobile home insurance and homeowners' property and casualty insurance
in the State of Florida. The Company underwrites general liability and
homeowners insurance as an admitted carrier in the State of Louisiana. The
Company also operates as an approved (non-admitted) carrier in the States of
Georgia and Kentucky underwriting general liability coverage for contractors,
mercantile classes and special events. In addition, the Company has underwriting
authority and processes claims for third party insurance companies. In addition
to insurance services, the Company offers premium finance services to its
insureds as well as insureds of certain third party insurance companies. Lastly,
the Company offers other ancillary services including licensing of its tax
preparation software products, electronic income tax filing, tax preparation,
and automobile tag and title transfer services.
The Company offers single and master franchise opportunities to
individuals through its subsidiaries, Fed USA Insurance/Financial Services and
EXPRESSTAX(R) Franchise Corporation.
Safe harbor statements under the Private Securities Litigation Reform Act
of 1995: Statements in this press release that are not historical fact are
forward-looking statements that are subject to certain risks and uncertainties
that could cause actual events and results to differ materially from those
discussed herein. Without limiting the generality of the foregoing, words such
as "may," "will," "expect," "believe," "anticipate," "intend," "could," "would,"
"estimate," or "continue" or the other negative variations thereof or comparable
terminology are intended to identify forward-looking statements. The risks and
uncertainties include, without limitation, uncertainties related to estimates,
assumptions and projections generally; inflation and other changes in economic
conditions (including changes in interest rates and financial markets); pricing
competition and other initiatives by competitors; ability to obtain regulatory
approval for applications to underwrite in an additional jurisdiction or for
requested rate changes, and the timing thereof; legislative and regulatory
developments; the outcome of litigation pending against the Company and any
settlement thereof; risks related to the nature of the Company's business;
dependence on investment income and the composition of the Company's investment
portfolio; the adequacy of the Company's liability for loss and loss adjustment
expense; insurance agents; claims experience; limited experience in the
insurance industry; ratings by industry services; catastrophe losses; reliance
on key personnel; weather conditions (including the severity and frequency of
storms, hurricanes, tornadoes and hail); changes in driving patterns and loss
trends; acts of war and terrorist activities; court decisions and trends in
litigation, and health care and auto repair costs; and other matters described
from time to time by the Company in releases and publications, and in periodic
reports and other documents filed with the United States Securities and Exchange
Commission. In addition, investors should be aware that generally accepted
accounting principles prescribe when a company may reserve for particular risks,
including litigation exposures. Accordingly, results for a given reporting
period could be significantly affected if and when a reserve is established for
a major contingency. Reported results may therefore appear to be volatile in
certain accounting periods.
#####
21st CENTURY HOLDING COMPANY
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
Revenue: 2004 2003 2004 2003
---- ---- ---- ----
Gross premiums written $ 24,301,800 $ 22,369,229 $ 73,929,571 $ 56,559,803
Gross premiums ceded 71,385 (5,627,904) 975,429 (15,830,769)
------------ ------------ ------------ ------------
Net premiums written 24,373,185 16,741,325 74,905,000 40,729,034
Decrease in prepaid reinsurance premiums (1,330,351) (2,486,527) (7,426,095) (2,550,620)
Decrease (increase) in unearned premiums 156,954 (2,404,301) (14,342,263) (4,921,972)
------------ ------------ ------------ ------------
Net change in prepaid reinsurance
premiums and unearned premiums (1,173,397) (4,890,828) (21,768,358) (7,472,592)
------------ ------------ ------------ ------------
Net premiums earned 23,199,788 11,850,497 53,136,642 33,256,442
Commission income 476,421 394,599 1,785,290 1,143,116
Finance revenue 784,584 984,644 2,824,568 3,247,673
Managing general agent fees 501,225 640,661 1,488,405 1,894,524
Net investment income 839,641 513,515 2,141,686 1,229,185
Net realized investments gains (losses) 80,959 33,765 261,386 1,453,465
Other income 459,345 603,740 2,849,555 2,603,805
------------ ------------ ------------ ------------
Total revenue 26,341,963 15,021,421 64,487,532 44,828,210
------------ ------------ ------------ ------------
Expenses:
Loss and loss adjustment expenses 42,292,556 6,322,281 56,385,548 20,603,737
Operating and underwriting expenses 5,353,136 2,969,326 11,803,803 8,308,583
Salaries and wages 2,467,014 2,356,613 7,107,344 6,714,432
Interest expense 186,902 177,466 631,824 287,350
Policy acquisition costs, net of amortization 2,521,738 123,080 4,645,906 (914,412)
------------ ------------ ------------ ------------
Total expenses 52,821,346 1,948,766 80,574,425 34,999,690
------------ ------------ ------------ ------------
Income before provision for income tax expense (26,479,383) 3,072,655 (16,086,893) 9,828,520
Provision (benefit) for income tax expense (12,725,301) 1,081,824 3,415,354
------------ ------------ ------------
Net income (loss) $(13,754,082) $ 1,990,831 $ (7,155,297) $ 6,413,166
============ ============ ============ ============
Basic net income (loss) per share $ (2.32) $ 0.42 $ (1.24) $ 1.39
============ ============ ============ ============
Weighted average number of common shares
outstanding 5,925,952 4,738,130 5,786,803 4,612,370
============ ============ ============ ============
Fully diluted net income (loss) per share $ (2.19) $ 0.38 $ (1.15) $ 1.32
============ ============ ============ ============
Weighted average number of common shares
outstanding (assuming dilution) 6,279,826 5,277,875 6,248,663 4,874,178
============ ============ ============ ============
Dividends declared per share $ 0.08 $ 0.07 $ 0.16 $ 0.17
============ ============ ============ ============
21st CENTURY HOLDING COMPANY
Balance Sheet Data
(Unaudited)
Period Ending
09/30/04 12/31/03
-------- --------
Total Cash & Investments $107,025,191 $ 54,060,589
Total Assets $187,854,253 $106,695,593
Unpaid Loss and Loss Adjustment Expense $ 76,653,620 $ 24,570,198
Total Liabilities $159,975,734 $ 74,649,217
Total Shareholders' Equity $ 27,878,519 $ 32,046,376
PREMIUM BREAKOUT
Line of Business 09/30/04 09/30/03
- ---------------- -------- --------
Automobile 21.4% 70.6%
Homeowners 63.8% 22.3%
General Liability 13.2% 4.7%
Mobile Home Owners 1.6% 2.4%
---- ----
Gross Written Premiums 100.0% 100.0%