EX-99.1 2 v056208_ex99-1.htm

FOR IMMEDIATE RELEASE
CONTACT:
Edward J. Lawson, CEO, President and Chairman, 21st Century Holding Company
(954) 308-1257 or (954) 581-9993


21st CENTURY HOLDING COMPANY REPORTS
3RD QUARTER RESULTS BEATING ESTIMATES BY 30% AND RAISES GUIDANCE


Lauderdale Lakes, Florida, November 1, 2006 - 21st Century Holding Company (Nasdaq: TCHC), today reported results for the quarter ended September 30, 2006 (see included tables).

For the three months ended September 30, 2006, the Company reported net income of $4,232,292, or $0.56 per share on 7,560,872 average undiluted shares outstanding, as compared to net income of $1,852,718 or $0.29 per share on 6,384,386 average undiluted shares outstanding in the same three-month period last year. On a diluted share basis, the Company reported earnings of $0.56 per share, based on 7,562,563 average diluted shares outstanding, as compared to $0.28 per share on 6,589,257 average diluted shares outstanding for the three months ended September 30, 2005. These results beat consensus estimates of $0.43 per share by $0.13, or 30.2%.

For the nine months ended September 30, 2006, the Company reported net income of $19,150,163, or $2.58 per share on 7,433,953 average undiluted shares outstanding, as compared to net income of $10,696,539 or $1.73 per share on 6,189,040 average undiluted shares outstanding in the same nine-month period last year. On a diluted share basis, the Company reported earnings of $2.42 per share, based on 7,912,077 average diluted shares outstanding, as compared to $1.64 per share on 6,533,575 average diluted shares outstanding for the nine months ended September 30, 2005.

Net premiums earned increased $1.0 million or 4.9% to $21.7 million for the three months ended September 30, 2006, as compared to $20.7 million for the same three-month period last year. Net premium earned increased $10.8 million or 17.6% to $72.3 million for the nine months ended September 30, 2006, as compared to $61.4 million for the same nine-month period last year.

Total revenues increased $1.1 million or 4.7% to $24.8 million for the three months ended September 30, 2006, as compared to $23.7 million for the same three-month period last year. Total revenues increased $12.1 million or 17.2% to $82.2 million for the nine months ended September 30, 2006, as compared to $70.2 million for the same nine-month period last year.

Edward J. (Ted) Lawson, Chairman, CEO, and President, said, “Beneficial weather conditions and the development of an El Nino pattern in the Central and Eastern Pacific should push down reinsurance costs next year. El Nino weather conditions are known to create a lull in hurricane activity. Also, the Company’s increased rates will be continuing to take hold boosting revenues and profitability. Additionally, our highly profitable general liability book of business is continuing to expand geographically across the country, as we are now authorized to write business in ten states - Florida, Georgia, Texas, Louisiana, Kentucky, South Carolina, Alabama, Virginia, Missouri and Arkansas. We are currently producing business in six of the ten states and expect to begin writing business in the other four within the next 12 months. We also have an application submitted and pending Department approval in the state of California.

Mr. Lawson continued, “Everything considered, I continue to expect sequential quarterly growth through 2007. I am now increasing guidance for calendar year 2006 from $3.00 per share to $3.10 to $3.20 per share. This will result in a more than 50% increase over last year’s record earnings of $1.95 per share. Guidance for calendar year 2007 remains at $4.00 to $5.00 per share.”

Mr. Lawson further continued, “All of these factors combined will make it possible for us to report our fourth year of record earnings over the last five with additional records expected in the future. The Company’s Board of Directors will be meeting on December 5, 2006, at which time I expect positive dividend action will be addressed.”

The Company will hold an investor conference call at 4:30 PM (ET) today, November 1, 2006. Mr. Lawson and Mr. J. Gordon Jennings III, CFO, will discuss the financial results and review the outlook for the Company. Messrs. Lawson and Jennings invite interested parties to participate in the conference call. Listeners can access the conference call by dialing toll free 888-460-6235, conference ID 9246166. Please call at least five minutes in advance to ensure that you are connected prior to the presentation. A replay of the conference call will be available for 7 days at 800-642-1687.

About the Company
 
The Company, through its subsidiaries, underwrites general liability insurance homeowners’ property and casualty insurance, flood insurance and personal automobile 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. The Company also operates as an approved (non-admitted) carrier in the States of Georgia, Kentucky, Virginia, South Carolina, Missouri and Arkansas offering the same general liability products. The Company is licensed and has the facilities to market and underwrite other insurance carriers’ lines of business, as well as to process and adjust claims for third party insurance carriers. 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 Sept. 30,
  
Nine Months Ended Sept. 30,
  
Revenue:
  
2006
  
2005
  
2006
  
2005
  
Gross premiums written
  
$
24,669,503
  
$
25,355,235
  
$
111,031,248
  
$
86,815,187
  
Gross premiums ceded
    
(57,378,252
)
  
(7,188,343
)
  
(60,750,033
)
  
(12,142,786
)
                           
Net premiums (ceded) written
    
(32,708,749
)
  
18,166,892
    
50,281,215
    
74,672,401
  
                           
Increase (Decrease) in prepaid reinsurance premiums
    
42,060,048
    
72,745
    
32,795,387
    
(5,437,633
)
Decrease (Increase) in unearned premiums
    
12,356,106
    
2,462,575
    
(10,821,117
)
  
(7,808,508
)
Net change in prepaid reinsurance premiums and unearned premiums
    
54,416,154
    
2,535,320
    
21,974,270
    
(13,246,141
)
                           
Net premiums earned
    
21,707,405
    
20,702,212
    
72,255,485
    
61,426,260
  
                           
Finance revenue
    
335,181
    
807,778
    
1,467,324
    
2,849,989
  
Managing general agent fees
    
483,413
    
558,883
    
1,983,107
    
1,811,576
  
Net investment income
    
1,572,606
    
972,302
    
4,380,885
    
2,776,098
  
Net realized investment gains
    
263,072
    
--
    
742,624
    
285,033
  
Other income
    
408,750
    
614,393
    
1,397,805
    
1,018,774
  
                           
Total revenue
    
24,770,427
    
23,655,568
    
82,227,230
    
70,167,730
  
                           
Expenses:
                      
 
  
Loss and loss adjustment expenses
    
10,270,956
    
13,275,690
    
27,182,957
    
32,494,462
  
Operating and underwriting expenses
    
1,851,087
    
1,607,749
    
6,463,663
    
5,396,561
  
Salaries and wages
    
1,698,993
    
1,600,716
    
5,309,465
    
4,759,417
  
Interest expense
    
135,168
    
313,962
    
545,455
    
1,123,893
  
Policy acquisition costs, net of amortization
    
4,998,739
    
3,920,679
    
13,043,776
    
10,968,721
  
                           
Total expenses
    
18,954,943
    
20,718,796
    
52,545,316
    
54,743,054
 
                       
 
  
Income from cont’d ops before provision for income tax expense
    
5,815,484
    
2,936,772
    
29,681,914
    
15,424,676
  
Provision for income tax expense
    
1,583,192
    
1,084,054
    
10,531,751
    
5,762,741
  
Net income from continuing operations
    
4,232,292
    
1,852,718
    
19,150,163
    
9,661,935
  
                           
Discontinued operations:
                          
Income from discontinued operations(including gain on disposal of $0 and $1,630,000, respectively)
    
--
    
--
          
1,630,000
  
Provision for income tax expense 
    
--
   
--
   
 
    
595,396
 
Income from discontinued operations
    
--
    
--
   
 
    
1,034,604
 
Net income
  
$
4,232,292
 
$
1,852,718
 
$
19,150,163
 
$
10,696,539
 
Basic net income per share from continuing operations
 
$
0.56
 
$
0.29
 
$
2.58
 
$
1.56
 
Basic net income per share from discontinued operations
  
$
--
 
$
--
 
$
--
 
$
0.17
 
Basic net income per share
  
$
0.56
 
$
0.29
 
$
2.58
 
$
1.73
 
Fully diluted net income per share from continuing operations
 
$
0.56
 
$
0.28
 
$
2.42
 
$
1.48
 
Fully diluted net income per share from discontinued operations
  
$
--
 
$
--
 
$
--
 
$
0.16
 
Fully diluted net income per share
  
$
0.56
 
$
0.28
 
$
2.42
 
$
1.64
 
                           
Weighted average number of common shares outstanding
    
7,560,872
    
6,384,386
   
7,433,953
   
6,189,040
 
                           
Weighted average number of common shares outstanding (assuming dilution)
    
7,562,563
   
6,589,257
   
7,912,077
   
6,533,575
 
                           
Dividends declared per share
  
$
0.12
 
$
0.08
 
$
0.36
 
$
0.24
 

21st CENTURY HOLDING COMPANY
Other Selected Data
(Unaudited)

Balance Sheet
   
Period Ending
  
   
09/30/06
  
12/31/05
  
Total Cash & Investments
  
$
136,911,900
  
$
106,157,869
  
Total Assets
  
$
217,763,305
  
$
290,154,753
  
Unpaid Loss and Loss Adjustment Expense
  
$
31,227,291
  
$
154,038,543
  
Total Liabilities
  
$
150,358,077
  
$
249,387,383
  
Total Shareholders’ Equity
  
$
67,405,228
  
$
40,767,370
  
Common Stock Outstanding
    
7,564,788
    
6,771,864
  
Book Value Per Share
  
$
8.91
  
$
6.02
  


Premium Breakout
   
9 Months Ending
  
Line of Business
  
09/30/06
  
09/30/05
  
Homeowners’
    
72.8
%
  
61.4
%
General Liability
    
22.3
%
  
19.6
%
Automobile
    
4.9
%
  
19.0
%
               
Gross Written Premiums
    
100.0
%
  
100.0
%

Commercial General Liability
Written Premium by State
   
3 Months Ending
  
9 Months Ending
  
State
  
09/30/06
 
09/30/05
 
09/30/06
 
09/30/05
  
   
(Dollars in millions)
  
Florida
  
$
5.4
  
$
4.5
  
$
18.2
  
$
14.5
  
Georgia
    
.7
    
.4
    
1.2
    
1.0
  
Louisiana
    
1.4
    
.5
    
4.2
    
1.5
  
Texas
    
.8
    
--
    
1.1
    
--
  
                           
Gross Written Premiums
  
$
8.3
  
$
5.4
  
$
24.7
  
$
17.0
  

Loss Ratios
 
  
3 Months Ending
  
9 Months Ending
  
Line of Business
  
09/30/06
  
09/30/05
  
09/30/06
  
09/30/05
  
Homeowners’
    
63.42
%
  
99.25
%
  
36.17
%
  
64.76
%
General Liability
    
18.01
%
  
6.83
%
  
17.76
%
  
17.00
%
Automobile
    
64.13
%
  
55.27
%
  
77.83
%
  
59.75
%
All Lines
    
47.32
%
  
64.13
%
  
37.62
%
  
52.90
%