EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1

News Release

21st Century Insurance Group Announces Third Quarter Results and Plans to Enter New Markets in 2006

WOODLAND HILLS, Calif., Oct 26, 2005 (BUSINESS WIRE) -- 21st Century Insurance Group (NYSE:TW) today reported net income of $21.1 million ($0.25 per basic share) for the third quarter of 2005, compared to $24.6 million ($0.29 per basic share) for the same period in 2004. The third quarter of 2004 included a $4.9 million reduction in income tax expense ($0.06 per basic share) associated with the resolution of California legislation (AB 263) related to holding company taxes on dividends from insurance subsidiaries. The 2005 third quarter results include net realized capital losses of $0.9 million, compared to net realized capital losses of $0.2 million for the same period in 2004. For the nine months ended September 30, 2005, net income was $61.0 million ($0.71 per basic share), compared to $65.8 million ($0.77 per basic share) for the same period in 2004. The 2005 results include net realized capital losses of $2.7 million, compared to net realized capital gains of $8.8 million for the same period in 2004.

The GAAP combined ratio was 95.2% in the third quarter of 2005, compared to 95.1% for the same period in 2004. For the nine-month period ending on September 30, 2005, the Company's GAAP combined ratio was 95.5%, compared to 95.4% for the same period in 2004.

In the third quarter of 2005, direct premiums written of $349.1 million represented a 0.9% increase over the $346.0 million written in the same period of 2004. California direct premiums written in the third quarter of 2005 decreased by 2.2% to $326.0 million, compared to $333.3 million for the same period in 2004. Direct premiums written outside of California increased 82% to $23.1 million compared to $12.7 million in the third quarter of 2004.

"Our new markets outside of California are performing well," said President & Chief Executive Officer Bruce Marlow. "We intend to enter three additional states in the second quarter of 2006 and three states in the third quarter. By mid 2006, we expect to be actively marketing in 50% of the total U.S. personal auto market, up from 30% currently. The conversion of our California personal auto policies to our new policy processing system is nearing completion, with over 90% of policies converted," added Marlow.

Stockholders' equity at September 30, 2005 increased 5.0% to $813.0 million, compared to $774.4 million at December 31, 2004. Book value per share at September 30, 2005 improved 4.5% to $9.47 per share from $9.06 per share at December 31, 2004. Statutory surplus increased 7.3% to $657.7 million at September 30, 2005 from $614.9 million at December 31, 2004. The ratio of net premiums written to statutory surplus improved from 2.2 at December 31, 2004 to 2.1 at September 30, 2005.

About 21st: Good people to call

Founded in 1958, 21st Century Insurance Group is a direct-to-consumer provider of personal auto insurance. With $1.3 billion of revenue in 2004, 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 http://www.21st.com or on the phone with our licensed insurance professionals at 1-800-211-SAVE. Service is offered in English and Spanish both on the phone and on the web, 24 hours a day, 365 days a year. 21st Century Insurance Company and 21st Century Casualty Company are rated A+ by Standard & Poor's. 21st Century Insurance Company, 21st Century Casualty Company, and 21st Century Insurance Company of the Southwest are rated A+ by Fitch Ratings.

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 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, including experience 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 Southern California; information system problems, including failures to implement information technology projects on time and within budget; 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 http://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) 2005 by 21st Century Insurance Group. All rights reserved


Exhibit A

21st Century Insurance Group and Subsidiaries
Condensed Operating Results - All Lines
(amounts in thousands)
(Unaudited)


   
Quarter Ended
September 30,
  
9 Months Ended
September 30,
  
                   
   
   2005
  
   2004
  
   2005
  
   2004
  
                   
Direct premiums written
  
$
349,118
  
$
345,982
  
$
1,029,904
  
$
1,011,435
  
Net premiums written
  
$
347,827
  
$
344,718
  
$
1,026,246
  
$
1,007,845
  
Net premiums earned
  
$
344,102
  
$
333,440
  
$
1,017,311
  
$
978,681
  
Net loss and loss adjustment expenses
    
258,105
    
252,359
    
757,420
    
744,429
  
                           
Underwriting expenses
    
69,638
    
64,808
    
213,839
    
189,524
  
Underwriting profit
    
16,359
    
16,273
    
46,052
    
44,728
  
                           
Net investment income
    
17,042
    
15,118
    
51,085
    
42,579
  
Other (loss) income
    
(3
)
  
-
    
364
    
-
  
Realized investment (losses) gains
    
(939
)
  
(162
)
  
(2,666
)
  
8,821
  
Interest and fees expense
    
(1,988
)
  
(2,116
)
  
(6,076
)
  
(6,527
)
Income before provision for income taxes
    
30,471
    
29,113
    
88,759
    
89,601
  
                           
Provision for income taxes
    
(9,369
)
  
(4,554
)
  
(27,725
)
  
(23,843
)
Net income
  
$
21,102
  
$
24,559
  
$
61,034
  
$
65,758
  
   
 
                      
Net income per common share - basic
  
$
0.25
  
$
0.29
  
$
0.71
  
$
0.77
  
Net income per common share - diluted
  
$
0.24
  
$
0.29
  
$
0.71
  
$
0.77
  
                           
Loss and loss adjustment expense ratio
    
75.0
%
  
75.7
%
  
74.5
%
  
76.1
%
Underwriting expense ratio
    
20.2
%
  
19.4
%
  
21.0
%
  
19.3
%
Combined ratio
    
95.2
%
  
95.1
%
  
95.5
%
  
95.4
%
                           
Reconciliation of direct premiums written to net premiums earned
                           
Direct premiums written
  
$
349,118
  
$
345,982
  
$
1,029,904
  
$
1,011,435
  
Ceded premiums written
    
(1,291
)
  
(1,264
)
  
(3,658
)
  
(3,590
)
Net premiums written
    
347,827
    
344,718
    
1,026,246
    
1,007,845
  
Net change in unearned premiums
    
(3,725
)
  
(11,278
)
  
(8,935
)
  
(29,164
)
Net premiums earned
  
$
344,102
  
$
333,440
  
$
1,017,311
  
$
978,681
  
                           
Net losses and loss adjustment expenses
                          
Current accident year
  
$
259,301
  
$
255,786
  
$
778,203
  
$
747,326
  
Prior accident years
    
(1,196
)
 
(3,427
)
  
(20,783
)
  
(2,897
)
Net losses and loss adjustment expenses
  
$
258,105
  
$
252,359
  
$
757,420
  
$
744,429
  


Exhibit B

21st Century Insurance Group and Subsidiaries
Selected Other Information - All Lines
(amounts in thousands, except ratio and share data)
(Unaudited)


Balance Sheet Data
  
As of
September
30,
2005 
As of
December
31,
2004 
Total investments
  
$
1,396,791
  
$
1,384,215
  
Total assets
  
$
1,921,670
  
$
1,864,314
  
Unrealized gain, net of taxes
  
$
(1,095
)
$
14,412
  
Stockholders' equity
  
$
813,018
  
$
774,401
  
Number of common shares outstanding
  
 
85,835,038
    
85,489,061
  
Book value per share
  
$
9.47
  
$
9.06
  
               
Additional Information
        
 
    
Statutory surplus
  
$
657,666
  
$
614,893
  
Ratio of net premiums written to statutory surplus ratio
    
2.1
    
2.2
  
               
California vehicles in force
    
1,447
    
1,461
  
Non-California vehicles in force
    
118
    
65
  
Total vehicles in force
    
1,565
    
1,526
  
Auto renewal ratio - Quarter ended 9/30/05 & 12/31/04
    
92
%
  
92
%
               
Auto renewal ratio - 9 months ended 9/30/05 and 12 months ended 12/31/04
    
92
%
  
92
%
               
               
Reconciliation of stockholders' equity to statutory surplus
              
Stockholders' equity - GAAP
  
$
813,018
  
$
774,401
  
Condensed adjustments to reconcile GAAP stockholders' equity to statutory surplus:
              
Equity in non-insurance entities
    
22,073
    
8,082
  
Net difference due to capital lease obligation
    
3,095
    
2,961
  
Difference in net unrealized gain (loss) on investments
    
644
    
(21,709
)
Deferred policy acquisition costs
    
(63,760
)
  
(58,759
)
Difference in net deferred tax assets
    
38,394
    
50,712
  
Assets nonadmitted for statutory purposes
    
(155,798
)
  
(140,795
)
Statutory surplus
  
$
657,666
  
$
614,893
  


Exhibit C

21st Century Insurance Group and Subsidiaries
Condensed Consolidated Statement of Cash Flows - All Lines
(amounts in thousands)
(Unaudited)


   
Quarter Ended
September 30,
  
9 Months Ended
September 30,
  
 
Operating activities
  
    2005
    
    2004 
    
    2005
    
    2004
  
Direct premiums collected
  
$
337,295
  
$
336,752
  
$
1,017,110
  
$
999,831
  
Investment income collected
    
19,659
    
16,688
    
58,268
    
47,084
  
Ceded losses and LAE collected
    
238
    
1,241
    
2,409
    
5,004
  
Ceded premiums paid
    
(326
)
  
(338
)
  
(979
)
  
(1,180
)
Direct losses and LAE paid
    
(232,748
)
  
(228,921
)
  
(730,333
)
  
(696,787
)
Underwriting expenses paid
    
(61,665
)
  
(61,605
)
  
(200,330
)
  
(180,143
)
Income taxes (paid) refunded
    
(9,847
)
  
(10,006
)
  
(19,281
)
  
474
  
Interest paid
    
(478
)
  
(633
)
  
(4,495
)
  
(5,072
)
Net cash provided by operating activities
    
52,128
    
53,178
    
122,369
    
169,211
  
Investing activities
                          
Investments available-for-sale
                          
Purchases
    
(96,208
)
  
(116,450
)
  
(333,513
)
  
(809,793
)
Calls or maturities
    
7,236
    
2,323
    
24,461
    
29,847
  
Sales
    
82,947
    
10,381
    
262,827
    
623,157
  
Purchases of property and equipment
    
(19,948
)
  
(10,589
)
  
(32,539
)
  
(29,567
)
Net cash used in investing activities
    
(25,973
)
  
(114,335
)
  
(78,764
)
  
(186,356
)
Financing activities
                          
Repayment of debt
    
(3,390
)
  
(2,878
)
  
(9,343
)
  
(8,495
)
Dividends paid (per share: $0.08 and $0.06)
    
(4
)
  
-
    
(6,850
)
  
(5,126
)
Proceeds from the exercise of stock options
    
1,181
    
103
    
3,155
    
510
  
Net cash used in financing activities
    
(2,213
)
  
(2,775
)
  
(13,038
)
  
(13,111
)
                           
Net increase (decrease) in cash and cash equivalents
    
23,942
    
(63,932
)
  
30,567
    
(30,256
)
                           
Cash and cash equivalents, beginning of period
    
41,322
    
98,686
    
34,697
    
65,010
  
Cash and cash equivalents, end of period
  
$
65,264
  
$
34,754
  
$
65,264
  
$
34,754
  
                           
                           
Reconciliation of net income to net cash provided by operating activities:
                          
                           
Operating activities
                          
Net income
  
$
21,102
  
$
24,559
  
$
61,034
  
$
65,758
  
Adjustments to reconcile net income to net cash provided by operating activities:
                          
Depreciation and amortization
    
9,507
    
5,500
    
24,502
    
16,182
  
Net amortization of investment premiums and discounts
    
2,365
    
1,944
    
7,205
    
4,865
  
Amortization of restricted stock grants
    
100
    
99
    
238
    
297
  
Provision for deferred income taxes
    
4,784
    
4,505
    
10,687
    
18,781
  
Realized losses (gains) on sale of investments
    
1,062
    
245
    
2,779
    
(8,738
)
Changes in assets and liabilities:
                          
Premium receivable
    
(11,400
)
  
(9,422
)
  
(11,166
)
  
(12,390
)
Deferred policy acquisition costs
    
(1,555
)
  
(2,782
)
  
(5,001
)
  
(5,824
)
Reinsurance balances
    
(184
)
  
376
    
1,193
    
4,009
  
Federal income taxes
    
(1,019
)
  
(5,154
)
  
(1,088
)
  
697
  
Other assets
    
1,482
    
(2,420
)
  
6,723
    
(110
)
Unpaid losses and loss adjustment expenses
    
22,092
    
24,131
    
22,072
    
47,757
  
Unearned premiums
    
3,812
    
11,342
    
9,019
    
29,215
  
Claims checks payable
    
2,144
    
(1,982
)
  
1,974
    
(5,560
)
Other liabilities
    
(2,164
)
  
2,237
    
(7,802
)
  
14,272
  
                           
Net cash provided by operating activities
  
$
52,128
  
$
53,178
  
$
122,369
  
$
169,211
  



SOURCE: 21st Century Insurance Group

21st Century Insurance Group
Tony Tomich, 818-673-3996