21st Century Insurance Group (NYSE:TW) today reported net income of $21.3 million ($0.25 per basic share) for the first quarter of 2006, compared to $19.4 million ($0.23 per basic share) for the same period in 2005. The 2006 results include net realized capital losses of $1.1 million, compared to net realized capital losses of $0.5 million for the same three-month period in 2005. Other first quarter financial highlights:
— GAAP combined ratio of 94.7%, versus 95.9% for the same period
— Direct premiums written of $338.6 million, versus $352.1
million for the same period in 2005 (3.8% decrease)
— California direct premiums written of $311.8 million, versus
$332.6 million for the same period in 2005 (6.2% decrease)
— Non-California direct premiums written of $26.7 million,
versus $19.6 million for the same period in 2005 (36.7%
Stockholders’ equity at March 31, 2006 increased to $836.8 million, compared to $830.0 million at December 31, 2005. Book value per share at March 31, 2006 improved to $9.72 per share from $9.66 per share at December 31, 2005. Operating cash flow for the first quarter of 2006 was $38.7 million, compared to $39.4 million in the same period of 2005.
“First quarter combined ratio and net income were very solid and premium growth in new markets has been strong,” said Chief Executive Officer & President Bruce Marlow. “Last fall we announced plans to enter three additional states in the second quarter of 2006 to further our national expansion strategy. I’m pleased to announce that we will begin operations in Florida, Georgia and Pennsylvania in the second quarter of this year. These three states represent 15% of the total U.S. personal auto premium, bringing the percentage of the U.S. where we actively market to 45%,” added Marlow.
About 21st: Good people to call
Founded in 1958, 21st Century Insurance Group is a direct-to-consumer provider of personal auto insurance. With $1.4 billion of revenue in 2005, the Company insures over 1.5 million vehicles in California, Texas, Illinois, and six other states. 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 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.
21st Century Insurance Group (NYSE:TW) will hold an earnings teleconference for investors on Thursday, April 27, 2006 at 10:00 a.m. EDT. The public can find information about the call in the Investor Relations section of www.21st.com. The call will be broadcast over the Internet via a webcast, as well. Teleconference Details: Dial in number – 1-866-713-8564 International dial in number – 1-617-597-5312 Passcode – 463-658-68 Teleconference Replay Details: Available from 12pm (EDT) on April 27th, 2006 until 12pm (EDT) on May 11th, 2006 Dial in number – 1-888-286-8010 International dial in number – 1-617-801-6888 Passcode – 846-867-82
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, 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. 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 increases and product changes and possible adverse actions 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 (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 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.
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.
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. 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, 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.
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) 2006 by 21st Century Insurance Group. All rights reserved Exhibit A 21st Century Insurance Group and Subsidiaries Condensed Operating Results – All Lines (amounts in thousands, except share data) (Unaudited) Quarter Ended March 31, ——————————– 2006 2005 ————— ————– Direct premiums written $ 338,569 $ 352,117 =============== ============== Net premiums written $ 337,223 $ 350,940 =============== ============== Net premiums earned $ 325,824 $ 336,364 Net losses and loss adjustment expenses 236,496 251,031 Underwriting expenses 71,933 71,681 ————— ————– Underwriting profit 17,395 13,652 Net investment income 17,755 17,037 Net realized investment losses (1,067) (460) Interest and fees expense (1,898) (2,057) ————— ————– Income before provision for income taxes 32,185 28,172 Provision for income taxes 10,868 8,735 ————— ————– Net income $ 21,317 $ 19,437 =============== ============== Net income per common share – basic & diluted $ 0.25 $ 0.23 =============== ============== Losses and loss adjustment expense ratio 72.6% 74.6% Underwriting expense ratio 22.1% 21.3% ————— ————– Combined ratio 94.7% 95.9% =============== ============== Reconciliation of direct premiums written to net premiums earned Direct premiums written $ 338,569 $ 352,117 Ceded premiums written (1,346) (1,177) ————— ————– Net premiums written 337,223 350,940 Net change in unearned premiums (11,399) (14,576) ————— ————– Net premiums earned $ 325,824 $ 336,364 =============== ============== Net losses and loss adjustment expenses Current accident year $ 243,511 $ 258,702 Prior accident years (7,015) (7,671) ————— ————– Net losses and loss adjustment expenses $ 236,496 $ 251,031 =============== ============== ADOPTION OF FAS 123(R): On 1/1/06, the Company adopted FAS 123(R), Share-Based Payment, and began recognizing the cost of all employee stock options. The adoption resulted in additional stock-based compensation costs of $4.0 million in the first quarter ($1.1 million in Net losses and loss adjustment expenses; $2.4 million in Underwriting expenses; $0.5 million was deferred as Deferred policy acquisition costs). The net impact after taxes was $2.7 million, or $0.03 per share. Exhibit B 21st Century Insurance Group and Subsidiaries Selected Other Information – All Lines (amounts in thousands, except ratio and share data) (Unaudited) As of As of March 31, December 31, 2006 2005 ————— ————– Balance Sheet Data Total investments $ 1,435,611 $ 1,402,074 Deferred policy acquisition costs $ 62,919 $ 59,939 Total assets $ 1,936,610 $ 1,920,229 Unpaid losses and loss adjustment expenses $ 508,428 $ 523,835 Unrealized loss, net of taxes $ (21,014) $ (8,504) Stockholders’ equity $ 836,813 $ 829,972 Number of common shares outstanding 86,095,739 85,933,960 Book value per share $ 9.72 $ 9.66 Additional Information Statutory surplus $ 725,144 $ 704,671 Ratio of net premiums written to statutory surplus 1.8 1.9 California vehicles in force 1,382 1,414 Non-California vehicles in force 139 127 ————— ————– Total vehicles in force 1,521 1,541 Auto renewal ratio – Quarter ended 3/31/06 and 12/31/05 91% 91% Reconciliation of stockholders’ equity to statutory surplus Stockholders’ equity – GAAP $ 836,813 $ 829,972 Condensed adjustments to reconcile GAAP stockholders’ equity to statutory surplus: Equity in non-insurance entities 31,728 26,798 Capital lease obligation 1,178 2,975 Net unrealized losses on investments 31,683 10,788 Deferred policy acquisition costs (62,919) (59,939) Net deferred tax assets related to items nonadmitted under SAP 24,137 38,544 Assets nonadmitted for statutory purposes (137,476) (144,467) ————— ————– Statutory surplus $ 725,144 $ 704,671 =============== ==============