20th Century Industries Reports 1998 Third Quarter Results

Business Wire, Oct 22, 1998

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Oct. 21, 1998--20th Century Industries (NYSE:TW), the Woodland Hills-based insurance holding company, today reported 1998 third quarter net income of $38.2 million, or $0.49 per share (77,148,300 basic shares), on revenues of $219.6 million, compared to 1997 third quarter net income of $33.2 million, or $0.55 per share (51,506,343 basic shares), on revenues of $217.7 million. Diluted earnings per share increased to $0.44 (86,240,989 shares) for the 1998 third quarter from $0.41 (81,649,283 shares) for the same period of 1997.

Net income for the first nine months of 1998 increased to $106.2 million, or $1.60 per share (60,097,532 basic shares), on revenues of $652.5 million, compared to net income of $91.6 million, or $1.48 per share (51,495,176 basic shares), on revenues of $645.6 million for the first three quarters of 1997. Diluted earnings per share for the first nine months increased to $1.27 (83,898,357 shares) from $1.14 (80,277,289 shares) for the same period of 1997.

Commenting on the company's third quarter results, William L. Mellick, president and chief executive officer of the company, said, "Our strategic marketing program has been very successful in attracting the desired new business leads. For example, the consistent growth in our Northern California customer base has created the need to expand our regional service office in Concord, California, and open a new office in San Jose, California. However, our net growth rate has been impacted as a result of the current price environment.

"Although California's personal automobile insurance market is in its most competitive pricing cycle in more than a decade, 20th Century remains committed to retaining its position as a premier low-cost, low-overhead personal automobile insurer. This commitment extends beyond our home state into Arizona and our continuing expansion into other western states," Mellick added.

The company said it is forging ahead with its expansion objectives in Nevada, Oregon and Washington and has already obtained business licenses in all three states. In addition, the company recently received the necessary regulatory approval of its planned operation in Nevada to open for business. It expects to begin insurance sales before year-end, utilizing its traditional emphasis on multi-car customers in urban markets.

The company also recently launched an online rate quote capability, allowing customers to obtain real-time automobile rate quotes via the company's website, www.20thCenturyInsurance.com.

The real-time rate quotes provide instant rate information to shoppers at their convenience and in the privacy of their homes. This complements the company's expansion plans, as electronic commerce emerges in the insurance industry.

As previously announced, American International Group, Inc. (AIG) recently converted its preferred shares and exercised its common stock warrants, the latter resulting in an additional $145.6 million in new working capital for 20th Century. Combined with additional purchases of common shares in the open market, AIG owns a majority of the 20th Century common shares outstanding. The two companies also recently agreed to reconstitute 20th Century's board of directors and elected AIG Chairman and Chief Executive Officer, M.R. Greenberg as chairman of 20th Century Industries. Since the strategic alliance began in late 1994, both companies have expressed a shared vision for 20th Century's growth and profitability.

In August, construction began on the new 20th Century Plaza project to significantly expand 20th Century's leased headquarters facility in Woodland Hills. The company, which will be the primary tenant of the new additional 11-story tower, will centralize nearby operations to further improve efficiencies consistent with its current growth strategy throughout California, Arizona, Nevada, Oregon and Washington.

Financial Notes

Other financial information for the 1998 third quarter includes:

-- Vehicles insured grew by 10,596 in the third quarter of 1998 and

by 50,130 for the first nine months. The total vehicles insured

at September 30, 1998, were 1,127,006. Additionally, 20th Century

Insurance Company of Arizona insured 14,795 vehicles as of

September 30, 1998.

-- The total non-auto units insured were 68,466 at the end of 1998

third quarter.

-- Net premiums earned for the 1998 third quarter decreased to

$193.5 million from $197.7 million for the third quarter of 1997,

due to implemented rate decreases, offset, in part, by overall

unit growth.

-- Net investment income was $19.2 million for the 1998 third

quarter compared to $18.6 million for the third quarter of 1997.

Invested assets were approximately $1.1 billion at September 30,

1998, and the average pre-tax yield was 6.4 percent for the

quarter. Total assets were approximately $1.6 billion.

-- Realized after-tax investment gains for the third quarter were

$4.5 million compared to $944,000 for the same quarter a year