Still profitable after all these years. 3q00 notes
21st Century Insurance Group Reports 2000 Third Quarter Results
WOODLAND HILLS, Calif., Oct 25, 2000 (BUSINESS WIRE) -- 21st Century Insurance Group (NYSE: TW chart, msgs) today reported net income of $2.6 million, or $0.03 diluted earnings per share, on revenues of $220.1 million for the third quarter ended September 30, 2000. This compares to 1999 third quarter net income of $18.4 million, or $0.21 diluted earnings per share, on revenues of $198.7 million.
For the first nine months, the Company reported net income of $11.2 million, or $0.13 diluted earnings per share, on revenues of $647.9 million compared to net income of $80.2 million, or $0.92 diluted earnings per share, on revenues of $630.0 million for the same period in 1999.
The GAAP combined ratio was 105.8 in the third quarter and 104.4 for the first nine months of 2000. This compares to 90.5 in the third quarter of 1999 and 88.2 for the first nine months of 1999.
Bruce W. Marlow, 21st Century president and chief executive officer, said, "The negative trends of the year 2000, principally the increase in accident frequency and loss payments, continued to have an adverse impact on results for the quarter. Corrective actions taken in the third quarter include the following:
-- Implemented a class plan revision for our California auto
program on September 1, 2000. This new plan rebalances our
rating factors to create a more accurately priced book of
business.
-- Received approval from the California Department of Insurance
(CDOI) for a 6.4 percent rate increase to our California auto
program that will be implemented beginning November 1, 2000.
-- Implemented a 20 percent overall rate increase in our Arizona
program that was effective September 1, 2000.
-- Filed for rate increases for our Oregon and Washington
programs.
-- Continued our reduction in advertising spending pending
implementation of corrective rate changes.
We are committed to achieving Company goals for an underwriting profit, growth and enhancing the value of the 21st Century Insurance brand. Our primary focus today is on returning the Company to an underwriting profit. We will continue to take the actions necessary to reach this goal."
Customer inquiries have increased in response to the changes in rates and additional staff are being added to handle the higher call volume. Customers are making ready use of the 24-hours a day, 7-days a week phone service added in June. In September, over 21 percent of claim and service calls were handled during the additional hours of operation.
Customers are also increasing their usage of the Company's website. Features recently added to the website include giving new customers real-time quotes and the ability to purchase a policy online. Current customers can now view policy information, billing status and engage in "live chat" with a customer service representative. One of the first chat sessions was with a customer on vacation in Athens, Greece, using a terminal at an internet cafe who wanted to update his policy. The Company will continue to introduce new customer-focused technology through the coming year.
Consumers recognized the Company's service capabilities in two independent surveys reported during the quarter. 21st Century ranked fourth in J.D. Powers and Associates' 2000 National Auto Insurance Customer Satisfaction Survey of more than 13,000 policyholders. The Company received high marks for consistently meeting customer service, billing and claim handling requirements. 21st Century also tied for first place for "Best Insurance Company" in the Los Angeles Daily News Readers' Choice Awards 2000, an independent subscriber survey.
On September 30, 2000, California Governor Davis signed into law SB 1899, a statute that would "revive" certain insurance claims arising out of the 1994 Northridge Earthquake that now are barred by the applicable statute of limitations, the policy contract or settlement agreements signed by the insured. The statute is effective January 1, 2001, and would provide certain policyholders 12 months from that date to file additional earthquake claims or suits against the Company. The Company believes the statute violates federal and state constitutions, which prohibit impairment of contracts, and is evaluating its legal options. The Company has diligently and systematically handled claims from the Northridge Earthquake and has paid out over $1.1 billion in claim payments.
Financial Notes
Other financial information for the 2000 third quarter includes:
-- The total number of vehicles insured at September 30, 2000,
was 1,198,685. In addition, 21st Century Insurance Company of
Arizona insured 21,931 vehicles at the end of the quarter.
-- The total number of other personal lines units (homeowner and
umbrella policies) insured was 83,558 at September 30, 2000.
-- Net premiums earned for the third quarter increased to
$208.1 million compared to $191.2 million for the third
quarter of 1999. For the first nine months, net premiums
earned were $615.4 million compared to $577.9 million a year
ago.
-- In September 2000, the Company exercised its option to prepay
a $33.75 million variable-rate line of credit resulting in a
pre-tax charge of $286,000 from the write-off of previously
unamortized debt issuance costs, which has been included in
third quarter interest expense for financial reporting
purposes.
-- Net investment income was $12.6 million for the third quarter
of 2000 compared to $14.7 million for the third quarter of
1999. Invested assets were $912 million at September 30,
2000, and the annualized average yield for the quarter was 5.2
percent pre-tax and 4.7 percent after-tax. Total assets were
$1.35 billion. At the end of the third quarter, the investment
portfolio at fair value comprised 87.4 percent tax-exempt
fixed income securities compared to 76.5 percent a year ago.
-- Realized after-tax investment losses for the third quarter
were $194,000 compared to $4.7 million for the same quarter a
year ago.
-- Stockholders' equity on a GAAP basis, excluding unrealized
gains and losses, at September 30, 2000, was $723.6 million,
compared to $761.4 million at December 31, 1999. Combined
statutory surplus was $527.2 million compared to
$581.4 million at the end of 1999.
-- Book value per share was $8.26 at September 30, 2000, compared
to $8.39 at December 31, 1999. Excluding unrealized gains and
losses, book value per share was $8.50 and $8.75 respectively.
Founded in 1958, 21st Century Insurance Group was a pioneer of the direct-to-consumer marketing of personal automobile and home insurance. 21st Century markets personal automobile insurance in Arizona, California, Nevada, Oregon and Washington. The Company also offers home insurance in California. 21st Century is rated A+ 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. The Company is headquartered at 21st Century Plaza, 6301 Owensmouth Avenue, Woodland Hills, CA 91367, 818/211-SAVE. 21st Century's address on the Internet is my21st.com
Statements contained in this press release which are not historical facts may be considered forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 relating to, among other things, the Company's future performance and operations, management's future plans and goals, and business environment changes. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to: the effects of competition and competitors' pricing actions; unanticipated adverse claims experience; systems and service problems; financial or investment considerations; and unanticipated results of legislative, regulatory or legal actions, including the inability to obtain approval for rate increases. For additional information, refer to the Company's public filings including the most recently filed Form 10-K and Form 10-Q. |
