| Contact: |
Peter J. Prygelski, CFO, 21st Century Holding Company
(954) 308-1252 or (954) 581-9993 |
|
21st CENTURY HOLDING COMPANY REPORTS THIRD QUARTER 2008 FINANCIAL RESULTS
|
Lauderdale Lakes
,
Florida
,
November 3, 2008
21st Century Holding Company (Nasdaq: TCHC), today reported results for the quarter ended September 30, 2008 (see attached tables).
For the three months ended September 30, 2008, the Company reported a net loss of $1,513,139 or $0.19 per share on 8,013,894 average undiluted shares outstanding, as compared to net income of $1,868,802, or $0.24 per share on 7,891,650 average undiluted shares outstanding in the same three month period last year. Excluding a pretax investment loss of $3,265,532, the Company would have earned $0.13 per share during the three months ended September 30, 2008. On a diluted share basis, the Company reported a loss of $0.19 per share, based on 8,013,894 average diluted shares outstanding for the same three month period, as compared to $0.24 per share, based on 7,948,385 average diluted shares outstanding for the three months ended September 30, 2007.
For the nine months ended September 30, 2008, the Company reported net income of $295,419, or $0.04 per share on 7,967,087 undiluted shares versus net income of $13,190,036, or $1.66 per share on 7,927,366 undiluted shares in the same nine month period last year. Excluding a pretax investment loss of $9,788,757, the Company would have earned $0.87 per share during the nine months ended September 30, 2008. On a diluted share basis, the Company reported earnings of $0.04 per share, based on 7,978,178 average diluted shares outstanding for the same nine month period, as compared to $1.64 per share, based on 8,050,983 average diluted shares outstanding for the nine months ended September 30, 2007.
Net premiums earned decreased $10.9 million or 40.2% to $16.2 million for the three months ended September 30, 2008, as compared to $27.2 million for the same three-month period last year. Net premium earned decreased $24.1 million or 32.3% to $50.3 million for the nine months ended September 30, 2008, as compared to $74.4 million for the same nine month period last year.
Total revenues decreased $13.6 million or 46.0% to $16.0 million for the three months ended September 30, 2008, as compared to $29.6 million for the same three-month period last year. Total revenues decreased $38.2 million or 42.6% to $51.4 million for the nine months ended September 30, 2008, as compared to $89.6 million for the same nine month period last year.
Mr. Michael H. Braun, the Company’s Chief Executive Officer, said “While our strategy of managing the Company for long term success has had a negative impact on premiums written in the short term, we believe our prudent philosophy has the Company poised to create significant shareholder value in the coming quarters.
We are continuing our initiatives, which include the assumption of policies from Citizens Property Insurance Corporation, expanding our certificate of authority and increasing the marketability of our casualty line through the use of a carrier with an A.M. Best “A” rating. Subject to regulatory approval, we expect these initiatives to start generating premium in the first quarter of 2009. While we have experienced investment write downs during the first three quarters, we believe that, based on the current construction of our investment portfolios, the risk of future write downs has been reduced. The Company’s current portfolio asset allocation is as follows: 42% in cash and cash equivalents, 57% in fixed income instruments and 1% in equities. Further, the construction of the fixed income portfolio consists of 71% government, 18% municipal, 5% corporate and 6% in other.
Lastly, we are debt free and while other insurers have cut their dividends we plan to keep our dividend policy unchanged.” The Company will hold an investor conference call at 4:30 PM (ET) today, November 3, 2008. The Company’s CEO and its CFO, Peter J. Prygelski, III, will discuss the financial results and review the outlook for the Company. Messrs. Braun and Prygelski invite interested parties to participate in the conference call. A live webcast of the call will be available online at http://www.21stcenturyholding.com in the Conference Calls section. Listeners interested in participating in the Q&A session can access the conference call by dialing toll free 877-440-5788. Please call at least five minutes in advance to ensure that you are connected prior to the presentation. A webcast replay of the conference call will be available shortly after the live webcast is completed.
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 coverage as an admitted carrier in the States of Louisiana, Texas and Alabama for more than 300 classes of business, including special events, as well as homeowners’ coverage in the State of Louisiana. The Company also operates as an approved (non-admitted) carrier in the States of Georgia and Kentucky offering the same general liability products. 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.
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, |
Six Months Ended September 30, |
| Revenue: |
2008
|
2007
|
2008
|
2007
|
| Gross premiums written |
$ 15,850,565 |
$ 16,063,633 |
$ 70,694,874 |
$ 109,715,866 |
| Gross premiums ceded |
(25,698,536) |
(30,736,350) |
(33,931,350) |
(46,545,180) |
| |
|
|
|
|
| Net premiums written |
(9,847,971) |
(14,672,717) |
36,763,524 |
63,170,686 |
| |
|
|
|
|
| (Decrease) in prepaid reinsurance premiums |
15,351,293 |
19,321,814 |
1,831,129 |
1,503,984 |
| (Increase) decrease in unearned premiums |
10,746,004 |
22,532,155 |
11,719,249 |
9,693,313 |
| Net change in prepaid reinsurance premiums and unearned premiums |
26,097,297 |
41,853,969 |
13,550,378 |
11,197,297 |
| |
|
|
|
|
| Net premiums earned |
16,249,326 |
27,181,252 |
50,313,902 |
74,367,983 |
| Commission Income |
133,384 |
430,530 |
1,160,433 |
6,921,886 |
| Finance revenue |
91,200 |
116,357 |
268,467 |
462,968 |
| Managing general agent fees |
346,349 |
178,129 |
1,375,772 |
1,600,174 |
| Net investment income |
1,541,444 |
2,328,718 |
5,316,878 |
6,028,654 |
| Net realized investment (losses) gains |
(2,995,351) |
(1,441,182) |
(9,308,640) |
(1,489,227) |
| Regulatory assessments recovered |
384,260 |
578,602 |
1,618,595 |
1,260,326 |
| Other income |
215,730 |
198,915 |
689,982 |
496,409 |
| |
|
|
|
|
| Total revenue |
15,966,342 |
29,571,321 |
51,435,389 |
89,649,173 |
| |
|
|
|
|
| Expenses: |
|
|
|
|
| Loss and loss adjustment expenses |
9,887,634 |
14,849,851 |
30,255,333 |
38,610,206 |
| Operating and underwriting expenses |
1,670,776 |
3,883,616 |
4,699,386 |
10,948,979 |
| Salaries and wages |
2,086,295 |
1,775,041 |
5,607,764 |
5,064,909 |
| Interest expense |
-- |
27,824 |
-- |
173,077 |
| Policy acquisition costs, net of amortization |
4,170,497 |
5,379,240 |
11,793,812 |
14,895,770 |
| |
|
|
|
|
| Total expenses |
17,815,202 |
25,915,572 |
52,356,295 |
69,692,941 |
| |
|
|
|
|
| (Loss) income before provision for income tax (benefit) expense |
(1,848,860) |
3,655,749 |
(920,906) |
19,956,232 |
| Provision for income tax (benefit) expense |
(335,721) |
1,786,947 |
(1,216,325) |
6,766,196 |
| Net (loss) income |
$ (1,513,139) |
$ 1,868,802 |
$ 295,419 |
$ 13,190,036 |
| Basic net (loss) income per share |
$ (0.19) |
$ 0.24 |
$ 0.04 |
$ 1.66 |
| Fully diluted net (loss) income per share |
$ (0.19) |
$ 0.24 |
$ 0.04 |
$ 1.64 |
| |
|
|
|
|
| Weighted average number of common shares outstanding |
8,013.894 |
7,891,650 |
7,967,087 |
7,927,366 |
| |
|
|
|
|
| Weighted average number of common shares outstanding (assuming dilution) |
8,013,894 |
7,948,385 |
7,978,178 |
8,050,983 |
| |
|
|
|
|
| Dividends paid per share |
$ 0.18 |
$ 0.18 |
$ 0.54 |
$ 0.54 |
21st CENTURY HOLDING COMPANY
Other Selected Data
(Unaudited)
Balance Sheet
| |
Period Ending |
| |
09/30/08 |
12/31/07 |
| Total Cash & Investments |
$158,529,651 |
$165,168,346 |
| Total Assets |
$198,434,909 |
$219,360,763 |
| Unpaid Loss and Loss Adjustment Expense |
$59,202,298 |
$59,684,790 |
| Total Liabilities |
$118,710,865 |
$138,104,140 |
| Total Shareholders’ Equity |
$79,724,044 |
$81,256,623 |
| Common Stock Outstanding |
8,013,894 |
7,871,234 |
| Book Value Per Share |
$9.95 |
$10.32 |
Premium Breakout
| |
3 Months Ending
|
6 Months Ending
|
| Line of Business |
09/30/08
|
09/30/07
|
09/30/08
|
09/30/07
|
| |
(Dollars in thousands)
|
(Dollars in thousands)
|
| Homeowners' |
$11,014
|
$8,513
|
$50,935
|
$82,472
|
| General Liability |
4,795 |
7,378 |
19,385 |
25,601 |
| Automobile |
41 |
174 |
375 |
1,642 |
| Gross Written Premiums |
$15,851 |
$16,064
|
$70,695
|
$109,716
|
Commercial General Liability
Written Premium by State
| |
3 Months Ending
|
6 Months Ending
|
| State |
09/30/08
|
09/30/07
|
09/30/08
|
09/30/07
|
| |
(Dollars in thousands)
|
(Dollars in thousands)
|
| Alabama |
$27 |
$-- |
$98 |
$-- |
| Arkansas |
-- |
-- |
12 |
-- |
| California |
51 |
-- |
251 |
-- |
| Florida |
3,497 |
4,563 |
12,891 |
17,067 |
| Georgia |
141 |
208 |
471 |
800 |
| Kentucky |
-- |
-- |
1 |
5 |
| Louisiana |
986 |
1,365 |
3,501 |
4,047 |
| Maryland |
2 |
-- |
2 |
-- |
| South Carolina |
7 |
47 |
66 |
134 |
| Texas |
84 |
1,194 |
2,084 |
3,516 |
| Virginia |
-- |
-- |
8 |
32 |
| Gross Written Premiums |
$4,795 |
$7,377 |
$19,385 |
$25,601 |
Loss Ratios
| |
3 Months Ending
|
6 Months Ending
|
| Line of Business |
09/30/08
|
09/30/07
|
09/30/08
|
09/30/07
|
| Homeowners’ |
65.13% |
28.70% |
58.27% |
43.00% |
| Commercial General Liability |
51.22% |
95.51% |
64.19% |
55.65% |
| Automobile |
210.88% |
262.11% |
15.98% |
166.20% |
| All Lines |
60.85% |
54.69% |
60.13% |
51.95% |
|
|
