Standard & Poors Upgrades Outlook for 21st Century Insurance and Affirms Ratings

WOODLAND HILLS, Calif.–(BUSINESS WIRE)–Jan. 6, 2005–21st Century Insurance (NYSE:TW) today announced that Standard & Poor’s Rating Services upgraded its outlook on the company from “negative” to “stable.” Standard & Poor’s also affirmed its “A+” counterparty credit and financial strength ratings on 21st Century Insurance Company and 21st Century Casualty Company and affirmed its “BBB+” counterparty and senior debt ratings on the holding company, 21st Century Insurance.

“The revised outlook reflects the diminishment of concerns regarding 21st Century’s ambitious growth strategy as demonstrated by strong financial results accompanying very strong growth, providing evidence that the quality of the new business is comparable with the historical book,” explained Standard & Poor’s credit analyst Steven Ader. “Positive progress in IT system development work and the closing of over 90% of SB 1899 Northridge earthquake claims also support the revised outlook.”

“We have demonstrated strong progress on S&P’s operating topics and have greatly improved the financial condition of the Company. From the end of 2001 through the third quarter of 2004, we increased invested assets from $856 million to $1.4 billion, increased loss reserves from $349 million to $486 million, increased stockholders equity from $659 million to $754 million while growing revenue over 40% and steadily improving the combined ratio,” said Bruce Marlow, President and Chief Executive Officer of 21st Century Insurance. “With an S&P capital adequacy ratio of 243% at year-end 2003 and a premium to statutory surplus ratio of 2.2:1 at the end of the third quarter of 2004, we are well prepared to support growth in California and our new markets of Illinois, Indiana, Ohio and Texas. With state of the art computer systems scheduled to come online and a new, low cost, call center located in Texas, we will be able to further reduce our operating costs in the coming years,” added Marlow.

“The Company’s operations showed steady improvement in 2004, as evidenced by solid underwriting, investment and cash flow performance,” said Lawrence Bascom, Senior Vice President and Chief Financial Officer of 21st Century Insurance. “Standard & Poor’s rating and upgraded outlook confirms the Company’s positive operational progress,” added Bascom.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor’s web-based credit analysis system, at

About 21st: Good People to Call

Founded in 1958, 21st Century Insurance is a direct-to-consumer provider of personal auto insurance covering over 1.5 million vehicles and with $1.3 billion of premiums in California and eight other Western, Southwestern and Midwestern states. 21st provides superior policy features and customer service at a competitive price. 24/7, customers have the option to purchase insurance, service their policy or report a claim over the phone with our licensed insurance professionals at 1-800-211-SAVE (English) or 1-888-920-2121 (Spanish) or through the Company’s full-service bilingual Web site at 21st Century Insurance Company, 21st Century Casualty Company and 21st Century Insurance Company of the Southwest are rated A+ by A.M. Best. 21st Century Insurance Company and 21st Century Casualty Company are rated A+ by Standard & Poor’s.

21st Century Insurance is listed 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 a 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; internal control failures; 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 (which shall not be deemed to be incorporated in or a part of this release) or by request to the Investor Relations Department.

(C) 2005 by 21st Century Insurance. All rights reserved.CONTACT: 21st Century Insurance

Tony Tomich, 818-673-3996

SOURCE: 21st Century Insurance