Delaware
|
95-1935264
|
|||
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|||
6301
Owensmouth Avenue
|
||||
Woodland
Hills, California
|
91367
|
|||
(Address
of principal executive offices)
|
(Zip
Code)
|
|||
(818)
704-3700
|
www.21st.com
|
|||
(Registrant’s
telephone number, including area code)
|
(Registrant’s
web site)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Description |
Page
Number
|
|
PART
I - FINANCIAL INFORMATION
|
||
Item
1.
|
2
|
|
Item
2.
|
19
|
|
Item
3.
|
36
|
|
Item
4.
|
37
|
|
PART
II - OTHER INFORMATION
|
|
|
Item
1.
|
38
|
|
Item
1A.
|
38
|
|
Item
6.
|
38
|
|
39
|
||
40
|
||
31.1
|
Certification
of principal executive officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934
|
|
|
Certification
of principal financial officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934
|
|
32
|
Certification
Pursuant to 18 U.S.C. Section 1350
|
|
21ST
CENTURY INSURANCE GROUP
|
|||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|||||||
Unaudited
|
|||||||
AMOUNTS
IN THOUSANDS, EXCEPT SHARE DATA
|
September
30,
2006
|
December
31,
2005
|
|||||
Assets
|
|||||||
Investments
available for sale
|
|||||||
Fixed
maturity securities, at fair value (amortized cost: $1,487,873 and
$1,365,948)
|
$
|
1,470,385
|
$
|
1,354,707
|
|||
Equity
securities, at fair value (cost: $0 and $49,210)
|
—
|
47,367
|
|||||
Other
long-term investments, equity method
|
9,443
|
—
|
|||||
Total
investments
|
1,479,828
|
1,402,074
|
|||||
Cash
and cash equivalents
|
19,497
|
68,668
|
|||||
Accrued
investment income
|
17,006
|
16,585
|
|||||
Premiums
receivable
|
115,513
|
100,900
|
|||||
Reinsurance
receivables and recoverables
|
6,550
|
6,539
|
|||||
Prepaid
reinsurance premiums
|
2,141
|
1,946
|
|||||
Deferred
income taxes
|
42,566
|
56,209
|
|||||
Deferred
policy acquisition costs
|
67,592
|
59,939
|
|||||
Leased
property under capital leases, net of deferred gain of $1,203 and
$1,534
and net of accumulated amortization of $40,853 and $36,995
|
19,998
|
22,651
|
|||||
Property
and equipment, at cost less accumulated depreciation of $105,780
and
$89,595
|
152,480
|
145,811
|
|||||
Other
assets
|
40,277
|
38,907
|
|||||
Total
assets
|
$
|
1,963,448
|
$
|
1,920,229
|
|||
Liabilities
and stockholders’ equity
|
|||||||
Unpaid
losses and loss adjustment expenses
|
$
|
484,258
|
$
|
523,835
|
|||
Unearned
premiums
|
329,719
|
319,676
|
|||||
Debt
|
118,853
|
127,972
|
|||||
Claims
checks payable
|
39,697
|
42,681
|
|||||
Reinsurance
payable
|
769
|
643
|
|||||
Other
liabilities
|
92,529
|
75,450
|
|||||
Total
liabilities
|
1,065,825
|
1,090,257
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Common
stock, par value $0.001 per share; 110,000,000 shares authorized;
shares
issued 86,381,472 and 85,939,889
|
86
|
86
|
|||||
Additional
paid-in capital
|
438,618
|
425,454
|
|||||
Treasury
stock; at cost shares: 8,804 and 5,929
|
(106
|
)
|
(84
|
)
|
|||
Retained
earnings
|
472,271
|
414,898
|
|||||
Accumulated
other comprehensive loss
|
(13,246
|
)
|
(10,382
|
)
|
|||
Total
stockholders’ equity
|
897,623
|
829,972
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
1,963,448
|
$
|
1,920,229
|
21ST
CENTURY INSURANCE GROUP
|
|||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
|
|||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
AMOUNTS
IN THOUSANDS, EXCEPT SHARE DATA
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Revenues
|
|||||||||||||
Net
premiums earned
|
$
|
327,325
|
$
|
344,102
|
$
|
978,661
|
$
|
1,017,311
|
|||||
Net
investment income
|
16,897
|
17,042
|
51,827
|
51,085
|
|||||||||
Other
income (loss)
|
58
|
(3
|
)
|
68
|
364
|
||||||||
Net
realized investment gains (losses)
|
159
|
(939
|
)
|
(878
|
)
|
(2,666
|
)
|
||||||
Total
revenues
|
344,439
|
360,202
|
1,029,678
|
1,066,094
|
|||||||||
Losses
and expenses
|
|||||||||||||
Net
losses and loss adjustment expenses
|
222,550
|
258,105
|
682,140
|
757,420
|
|||||||||
Policy
acquisition costs
|
64,803
|
60,852
|
189,022
|
188,931
|
|||||||||
Other
underwriting expenses
|
12,715
|
8,786
|
34,819
|
24,908
|
|||||||||
Other
expense
|
—
|
—
|
924
|
—
|
|||||||||
Interest
and fees expense
|
1,820
|
1,988
|
5,572
|
6,076
|
|||||||||
Total
losses and expenses
|
301,888
|
329,731
|
912,477
|
977,335
|
|||||||||
Income
before provision for income taxes
|
42,551
|
30,471
|
117,201
|
88,759
|
|||||||||
Provision
for income taxes
|
14,144
|
9,369
|
39,155
|
27,725
|
|||||||||
Net
income
|
$
|
28,407
|
$
|
21,102
|
$
|
78,046
|
$
|
61,034
|
|||||
Earnings
per share:
|
|||||||||||||
Basic
|
$
|
0.33
|
$
|
0.25
|
$
|
0.91
|
$
|
0.71
|
|||||
Diluted
|
$
|
0.33
|
$
|
0.24
|
$
|
0.90
|
$
|
0.71
|
|||||
Cash
dividends declared per share
|
$
|
0.08
|
$
|
0.04
|
$
|
0.24
|
$
|
0.12
|
|||||
Weighted-average
shares outstanding:
|
|||||||||||||
Basic
|
86,192,395
|
85,793,904
|
86,010,994
|
85,672,993
|
|||||||||
Additional
common shares assumed issued under treasury stock method
|
262,114
|
411,695
|
390,035
|
264,823
|
|||||||||
Diluted
|
86,454,509
|
86,205,599
|
86,401,029
|
85,937,816
|
21ST
CENTURY INSURANCE GROUP
|
||||||||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||
Unaudited
|
||||||||||||||||||||||
Common
Stock
|
||||||||||||||||||||||
$0.001
par
value
|
||||||||||||||||||||||
AMOUNTS
IN THOUSANDS,
EXCEPT
SHARE DATA
|
Issued
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
|||||||||||||||
Balance
- January 1, 2006
|
85,939,889
|
$
|
86
|
$
|
425,454
|
$
|
(84
|
)
|
$
|
414,898
|
$
|
(10,382
|
)
|
$
|
829,972
|
|||||||
Comprehensive
income (loss)
|
78,046
|
(1)
|
(2,864
|
)(2)
|
75,182
|
|||||||||||||||||
Cash
dividends declared on common stock
|
(20,673
|
)
|
(20,673
|
)
|
||||||||||||||||||
Exercise
of stock options
|
325,033
|
4,250
|
|
4,250
|
||||||||||||||||||
Issuance
of restricted stock
|
116,550
|
—
|
||||||||||||||||||||
Forfeiture
of 2,875 shares of restricted stock
|
22
|
(22
|
)
|
—
|
||||||||||||||||||
Stock-based
compensation cost
|
8,752
|
8,752
|
||||||||||||||||||||
Excess
tax benefits of stock-based compensation
|
140
|
140
|
||||||||||||||||||||
Balance
- September 30, 2006
|
86,381,472
|
$
|
86
|
$
|
438,618
|
$
|
(106
|
)
|
$
|
472,271
|
$
|
(13,246
|
)
|
$
|
897,623
|
(1) |
Net
income for the nine months ended September 30,
2006.
|
(2)
|
Net
change in accumulated other comprehensive loss
follows:
|
Nine
Months Ended
September
30, 2006
|
||||
Unrealized
holding losses arising during the period, net of tax benefit of
$1,844
|
$
|
(3,423
|
)
|
|
Reclassification
adjustment for investment losses included in net income, net of
tax
benefit of $301
|
559
|
|||
Total
|
$
|
(2,864
|
)
|
21ST
CENTURY INSURANCE GROUP
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
Unaudited
|
|||||||
AMOUNTS
IN THOUSANDS, EXCEPT SHARE DATA
|
|||||||
Nine
Months Ended September 30,
|
2006
|
2005
|
|||||
Operating
activities
|
|||||||
Net
income
|
$
|
78,046
|
$
|
61,034
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
20,393
|
24,502
|
|||||
Net
amortization of investment premiums and discounts
|
7,318
|
7,205
|
|||||
Stock-based
compensation cost
|
8,752
|
238
|
|||||
Provision
for deferred income taxes
|
15,185
|
10,687
|
|||||
Net
realized investment losses
|
878
|
2,779
|
|||||
Changes
in assets and liabilities
|
|||||||
Premiums
receivable
|
(14,613
|
)
|
(11,166
|
)
|
|||
Deferred
policy acquisition costs
|
(7,653
|
)
|
(5,001
|
)
|
|||
Reinsurance
receivables and recoverables
|
(80
|
)
|
1,193
|
||||
Federal
income taxes
|
(5,540
|
)
|
(1,088
|
)
|
|||
Other
assets
|
1,531
|
6,723
|
|||||
Unpaid
losses and loss adjustment expenses
|
(39,577
|
)
|
22,072
|
||||
Unearned
premiums
|
10,043
|
9,019
|
|||||
Claims
checks payable
|
(2,984
|
)
|
1,974
|
||||
Other
liabilities
|
12,551
|
(7,802
|
)
|
||||
Net
cash provided by operating activities
|
84,250
|
122,369
|
|||||
Investing
activities
|
|||||||
Purchases
of:
|
|||||||
Fixed
maturity securities available-for-sale
|
(228,027
|
)
|
(94,020
|
)
|
|||
Equity
securities available-for-sale
|
(35,627
|
)
|
(239,493
|
)
|
|||
Other
long-term investments, equity method
|
(9,123
|
)
|
—
|
||||
Property
and equipment
|
(23,315
|
)
|
(32,539
|
)
|
|||
Maturities
and calls of fixed maturity securitites available-for-sale
|
23,726
|
24,461
|
|||||
Sales
of:
|
|||||||
Fixed
maturity securities available-for-sale
|
73,765
|
28,943
|
|||||
Equity
securities available-for-sale
|
84,836
|
233,884
|
|||||
Net
cash used in investing activities
|
(113,765
|
)
|
(78,764
|
)
|
|||
Financing
activities
|
|||||||
Repayment
of debt
|
(10,283
|
)
|
(9,343
|
)
|
|||
Dividends
paid (per share: $0.16 and $0.08)
|
(13,763
|
)
|
(6,850
|
)
|
|||
Proceeds
from the exercise of stock options
|
4,250
|
3,155
|
|||||
Excess
tax benefit from stock-based compensation
|
198
|
—
|
|||||
Excess
tax liability from stock-based compensation
|
(58
|
)
|
—
|
||||
Net
cash used in financing activities
|
(19,656
|
)
|
(13,038
|
)
|
|||
Net
(decrease) increase in cash and cash equivalents
|
(49,171
|
)
|
30,567
|
||||
Cash
and cash equivalents, beginning of period
|
68,668
|
34,697
|
|||||
Cash
and cash equivalents, end of period
|
$
|
19,497
|
$
|
65,264
|
|||
Supplemental
information:
|
|||||||
Income
taxes paid
|
$
|
29,580
|
$
|
19,281
|
|||
Interest
paid
|
3,991
|
4,495
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Common
stock equivalents excluded from calculation of diluted EPS
|
6,149,111
|
4,501,547
|
5,625,501
|
6,395,088
|
·
|
Stock-based
compensation cost related to stock options granted on or prior to,
but not
vested as of December 31, 2005, based on the grant date fair value
originally estimated for the pro forma disclosures in accordance
with the
original provisions of FAS 123; and
|
·
|
All
stock-based payments granted subsequent to December 31, 2005, based
on the
grant date fair value estimated in accordance with the provisions
of FAS
123R.
|
Three
Months Ended
September
30, 2006
|
Nine
Months Ended
September
30, 2006
|
|||||||||||||||||||
AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE DATA
|
Without
FAS
123R
|
FAS
123R
Impact
|
With
FAS
123R
|
Without
FAS
123R
|
FAS
123R
Impact
|
With
FAS
123R
|
||||||||||||||
Total
revenues
|
$
|
344,439
|
$
|
—
|
$
|
344,439
|
$
|
1,029,678
|
$
|
—
|
$
|
1,029,678
|
||||||||
Losses
and expenses
|
||||||||||||||||||||
Net
losses and loss adjustment expenses
|
221,767
|
783
|
222,550
|
679,464
|
2,676
|
682,140
|
||||||||||||||
Policy
acquisition costs
|
63,893
|
910
|
64,803
|
187,177
|
1,845
|
189,022
|
||||||||||||||
Other
underwriting expenses
|
12,184
|
531
|
12,715
|
32,019
|
2,800
|
34,819
|
||||||||||||||
Other
expense
|
—
|
—
|
—
|
924
|
—
|
924
|
||||||||||||||
Interest
and fees expense
|
1,820
|
—
|
1,820
|
5,572
|
—
|
5,572
|
||||||||||||||
Total
losses and expenses
|
299,664
|
2,224
|
301,888
|
905,156
|
7,321
|
912,477
|
||||||||||||||
Income
before provision for income taxes
|
44,775
|
(2,224
|
)
|
42,551
|
124,522
|
(7,321
|
)
|
117,201
|
||||||||||||
Provision
for income taxes
|
14,876
|
(732
|
)
|
14,144
|
40,932
|
(1,777
|
)
|
39,155
|
||||||||||||
Net
income
|
$
|
29,899
|
1 |
$
|
(1,492
|
)
|
$
|
28,407
|
$
|
83,590
|
1 |
$
|
(5,544
|
)
|
$
|
78,046
|
||||
|
||||||||||||||||||||
Basic
earnings per share 2
|
$
|
0.35
|
$
|
(0.02
|
)
|
$
|
0.33
|
$
|
0.97
|
$
|
(0.06
|
)
|
$
|
0.91
|
||||||
Diluted
earnings per share 2
|
$
|
0.35
|
$
|
(0.02
|
)
|
$
|
0.33
|
$
|
0.97
|
$
|
(0.06
|
)
|
$
|
0.90
|
1 |
Includes
$0.2 million and $0.7 million stock-based compensation related to
restricted shares and $0.1 million and $0.2 million associated tax,
as the
previous accounting
under APB 25 was consistent with that of FAS 123, for the three months
and
nine months ended September 30, 2006,
respectively.
|
2 |
Earnings
per share figures may
not total due to rounding.
|
AMOUNTS
IN THOUSANDS, EXCEPT SHARE DATA
|
Three
Months Ended
September
30, 2005
|
Nine
Months Ended
September
30, 2005
|
|||||
Net
income, as reported
|
$
|
21,102
|
$
|
61,034
|
|||
Add:
Stock-based employee compensation expense included in reported
net income,
net of related tax effects
|
65
|
155
|
|||||
Deduct:
Total stock-based employee compensation expense determined under
fair-value based method for all awards, net of related tax
effects
|
(1,278
|
)
|
(3,844
|
)
|
|||
Net
income, pro forma
|
$
|
19,889
|
$
|
57,345
|
|||
Basic
earnings per share:
|
|||||||
As
reported
|
$
|
0.25
|
$
|
0.71
|
|||
Pro
forma
|
$
|
0.23
|
$
|
0.67
|
|||
Diluted
earnings per share:
|
|
||||||
As
reported
|
$
|
0.24
|
$
|
0.71
|
|||
Pro
forma
|
$
|
0.23
|
$
|
0.67
|
AMOUNTS
IN THOUSANDS
|
1995
Stock
Option
Plan
|
2004
Stock
Option
Plan
|
|||||
Total
number of securities authorized
|
10,000
|
4,000
|
|||||
Number
of securities issued
|
(1,001
|
)
|
(210
|
)
|
|||
Number
of securities issuable upon the exercise of all outstanding
options
|
(6,683
|
)
|
(3,545
|
)
|
|||
Number
of securities forfeited
|
(2,601
|
)
|
(151
|
)
|
|||
Number
of forfeited securities returned to plan
|
2,601
|
151
|
|||||
Unused
options assumed by 2004 Stock Option Plan
|
(2,316
|
)
|
2,316
|
||||
Number
of securities available for future grants under each plan
|
—
|
2,561
|
AMOUNTS
IN THOUSANDS, EXCEPT PRICE DATA
|
Number
of
Options
|
Weighted-
Average
Exercise
Price
|
|||||
Options
outstanding December 31, 2005
|
8,869
|
$
|
16.22
|
||||
Granted
in 2006
|
2,012
|
16.54
|
|||||
Exercised
in 2006
|
(325
|
)
|
13.08
|
||||
Forfeited
in 2006
|
(88
|
)
|
14.38
|
||||
Canceled
in 2006
|
(240
|
)
|
19.49
|
||||
Options
outstanding September 30, 2006
|
10,228
|
16.32
|
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
|||||
Fair
value of stock options granted
|
$
|
10,040
|
$
|
8,186
|
|||
Intrinsic
value of options exercised
|
566
|
590
|
|||||
Grant
date fair value of options vested
|
7,428
|
5,288
|
|||||
Proceeds
from exercise of stock options
|
4,250
|
3,155
|
|||||
Tax
benefit realized as a result of stock option exercises
|
198
|
247
|
Nine
Months Ended September 30,
|
2006
|
2005
Pro
Forma
|
|||||
Risk-free
interest rate:
|
|||||||
Minimum
|
4.5
|
%
|
3.7
|
%
|
|||
Maximum
|
5.0
|
%
|
4.3
|
%
|
|||
Dividend
yield
|
1.9
|
%
|
1.1
|
%
|
|||
Volatility
factor of the expected market price of the Company’s common
stock:
|
|
|
|||||
Minimum
|
0.29
|
0.29
|
|||||
Maximum
|
0.29
|
0.32
|
|||||
Expected
option term
|
6
years
|
6
years
|
Outstanding
|
Exercisable
|
|||||||||||||||||||||||||
Range
of
Exercise
Prices
|
Number
of
Options
|
Weighted-
Average
Remaining
Contractual
Term
|
Weighted-
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
Number
of
Options
|
Weighted-
Average
Remaining
Contractual
Term
|
Weighted-
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
||||||||||||||||||
$
11.68 - 13.00
|
1,240
|
6.5
Years
|
$
|
11.73
|
$
|
3,991
|
1,235
|
6.5
Years
|
$
|
11.73
|
$
|
3,980
|
||||||||||||||
13.01
- 15.00
|
2,839
|
7.5
Years
|
14.28
|
1,894
|
1,409
|
7.5
Years
|
14.31
|
907
|
||||||||||||||||||
15.01
- 17.00
|
3,349
|
7.8
Years
|
16.38
|
—
|
1,489
|
6.1
Years
|
16.18
|
—
|
||||||||||||||||||
17.01
- 19.00
|
1,776
|
4.0
Years
|
18.05
|
—
|
1,776
|
4.0
Years
|
18.05
|
—
|
||||||||||||||||||
19.01
- 22.00
|
131
|
1.5
Years
|
19.65
|
—
|
131
|
1.5
Years
|
19.65
|
—
|
||||||||||||||||||
22.01
- 29.25
|
893
|
1.9
Years
|
24.99
|
—
|
893
|
1.9
Years
|
24.99
|
—
|
||||||||||||||||||
$
11.68 - 29.25
|
10,228
|
6.3
Years
|
16.32
|
$
|
5,885
|
6,933
|
5.3
Years
|
16.69
|
$
|
4,887
|
AMOUNTS
IN THOUSANDS
|
Restricted
Shares
Plan
|
|||
Total
number of securities authorized
|
1,422
|
|||
Number
of securities issued
|
(1,260
|
)
|
||
Number
of forfeited securities returned to plan
|
164
|
|||
Number
of securities remaining available for future grants under the
plan
|
326
|
AMOUNTS
IN THOUSANDS, EXCEPT PRICE DATA
|
Number
of
Shares
|
Weighted-Average
Market
Price Per
Share
on
Date of Grant
|
|||||
Non-vested,
December 31, 2005
|
87
|
$
|
14.08
|
||||
Vested
in 2006
|
(33
|
)
|
14.38
|
||||
Granted
in 2006
|
117
|
15.83
|
|||||
Forfeited
in 2006
|
(3
|
)
|
15.65
|
||||
Non-vested,
September 30, 2006
|
168
|
15.22
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Fair
value of restricted stock awards granted
|
$
|
121
|
$
|
—
|
$
|
1,845
|
$
|
1,267
|
|||||
Fair
value of restricted stock awards vested
|
—
|
29
|
475
|
212
|
SHARE
DATA
|
|||||||||||||
Weighted-average
fair value per share for restricted shares granted
|
$
|
15.11
|
$
|
—
|
$
|
15.83
|
$
|
14.09
|
September
30,
2006
|
December
31,
2005
|
||||||
Net
unrealized losses on available-for-sale investments, net of deferred
income taxes of $6,120 and $4,579
|
$
|
(11,368
|
)
|
$
|
(8,504
|
)
|
|
Minimum
pension liability in excess of unamortized prior service cost, net
of
deferred income taxes of $1,011 and $1,011
|
(1,878
|
)
|
(1,878
|
)
|
|||
Total
accumulated other comprehensive loss
|
$
|
(13,246
|
)
|
$
|
(10,382
|
)
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Service
cost
|
$
|
1,782
|
$
|
1,620
|
$
|
5,347
|
$
|
5,145
|
|||||
Interest
cost
|
1,935
|
1,763
|
5,804
|
5,473
|
|||||||||
Expected
return on plan assets
|
(2,110
|
)
|
(1,827
|
)
|
(6,330
|
)
|
(5,487
|
)
|
|||||
Amortization
of prior service cost
|
36
|
78
|
109
|
131
|
|||||||||
Amortization
of net loss
|
653
|
428
|
1,959
|
1,442
|
|||||||||
Total
|
$
|
2,296
|
$
|
2,062
|
$
|
6,889
|
$
|
6,704
|
Personal
Auto Lines
|
Homeowner
and Earthquake Lines in Runoff 3
|
Total
|
||||||||
Three
Months Ended September 30, 2006
|
||||||||||
Net
premiums earned
|
$
|
327,325
|
$
|
—
|
$
|
327,325
|
||||
Depreciation
and amortization expense
|
7,088
|
1
|
7,089
|
|||||||
Segment
profit (loss)
|
27,447
|
(190
|
)
|
27,257
|
||||||
Three
Months Ended September 30, 2005
|
||||||||||
Net
premiums earned
|
$
|
344,099
|
$
|
3
|
$
|
344,102
|
||||
Depreciation
and amortization expense
|
9,504
|
3
|
9,507
|
|||||||
Segment
profit (loss)
|
16,972
|
(613
|
)
|
16,359
|
||||||
Nine
Months Ended September 30, 2006
|
||||||||||
Net
premiums earned
|
$
|
978,661
|
$
|
—
|
$
|
978,661
|
||||
Depreciation
and amortization expense
|
20,389
|
4
|
20,393
|
|||||||
Segment
profit (loss)
|
73,213
|
(533
|
)
|
72,680
|
||||||
Nine
Months Ended September 30, 2005
|
||||||||||
Net
premiums earned
|
$
|
1,017,302
|
$
|
9
|
$
|
1,017,311
|
||||
Depreciation
and amortization expense
|
24,495
|
7
|
24,502
|
|||||||
Segment
profit (loss)
|
47,035
|
(983
|
)
|
46,052
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Segment
profit
|
$
|
27,257
|
$
|
16,359
|
$
|
72,680
|
$
|
46,052
|
|||||
Net
investment income
|
16,897
|
17,042
|
51,827
|
51,085
|
|||||||||
Other
income
|
58
|
(3
|
)
|
68
|
364
|
||||||||
Net
realized investment gains (losses)
|
159
|
(939
|
)
|
(878
|
)
|
(2,666
|
)
|
||||||
Other
expense
|
—
|
—
|
(924
|
)
|
—
|
||||||||
Interest
and fees expense
|
(1,820
|
)
|
(1,988
|
)
|
(5,572
|
)
|
(6,076
|
)
|
|||||
Income
before provision for income taxes
|
$
|
42,551
|
$
|
30,471
|
$
|
117,201
|
$
|
88,759
|
3 |
2005
revenue for the homeowner and earthquake lines in runoff segment
represents premium earned as a result of the Company’s participation in
the California
FAIR Plan.
|
·
|
Total
direct premiums written decreased 3.4% to $337.2 million
in 2006, from $349.1 million for same period in
2005.
|
·
|
California
direct premiums written decreased 9.3% to $295.8 million in 2006,
compared
to $326.0 million for the same period in 2005.
|
·
|
Non-California
direct premiums written increased 79.6% to $41.4 million in 2006,
compared
to $23.1 million for the same period in 2005.
|
·
|
2006
consolidated combined ratio was 91.7%, versus 95.2% for the third
quarter
of 2005. 2006 was favorably impacted by 4.4 points of prior accident
year
loss and loss adjustment expenses (“LAE”) reserve development in 2006,
while 2005 was favorably impacted by 0.3 points of prior accident
year
development.
|
·
|
Total
direct premiums written decreased 3.6% to $992.6 million
in 2006, from $1,029.9 million for the same period in
2005.
|
·
|
California
direct premiums written decreased 7.5% to $895.0 million in 2006,
compared
to $967.8 million for the same period in
2005.
|
·
|
Non-California
direct premiums written increased 57.2% to $97.6 million in 2006,
compared
to $62.1 million for the same period in
2005.
|
·
|
2006
consolidated combined ratio was 92.6%, versus 95.5% for the same
period in
2005. 2006 was favorably impacted by 4.0 points of prior accident
year
loss and LAE reserve development in 2006, while 2005 was favorably
impacted by 2.0 points of prior accident year
development.
|
·
|
Results
of Operations
|
·
|
Financial
Condition
|
·
|
Liquidity
and Capital Resources
|
·
|
Transactions
with Related Parties
|
·
|
Contractual
Obligations and Commitments
|
·
|
Critical
Accounting Estimates
|
·
|
Recent
Accounting Pronouncements
|
·
|
Forward-Looking
Statements
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||||||||
AMOUNTS
IN THOUSANDS,
EXCEPT
SHARE DATA
|
2006
|
2005
|
Increase/
(Decrease)
|
2006
|
2005
|
Increase/
(Decrease)
|
||||||||||||||||
Personal
auto lines underwriting profit
|
$
|
27,447
|
$
|
16,972
|
61.7
|
% |
|
$
|
73,213
|
$
|
47,035
|
55.7
|
%
|
|||||||||
Homeowner
and earthquake lines in runoff underwriting loss
|
(190
|
)
|
(613
|
)
|
(69.0
|
) |
|
(533
|
)
|
(983
|
)
|
(45.8
|
)
|
|||||||||
Net
investment income
|
16,897
|
17,042
|
(0.9
|
) |
|
51,827
|
51,085
|
1.5
|
||||||||||||||
Other
income (loss)
|
58
|
(3
|
)
|
N/M
|
1 |
68
|
364
|
N/M
|
1 | |||||||||||||
Net
realized investment gain (losses)
|
159
|
(939
|
)
|
N/M
|
1 |
(878
|
)
|
(2,666
|
)
|
(67.1
|
)
|
|||||||||||
Other
expense
|
—
|
—
|
—
|
(924
|
)
|
—
|
—
|
|||||||||||||||
Interest
and fees expense
|
(1,820
|
)
|
(1,988
|
)
|
(8.5
|
) |
|
(5,572
|
)
|
(6,076
|
)
|
(8.3
|
)
|
|||||||||
Provision
for income taxes
|
(14,144
|
)
|
(9,369
|
)
|
51.0
|
(39,155
|
)
|
(27,725
|
)
|
41.2
|
||||||||||||
Net
income
|
$
|
28,407
|
$
|
21,102
|
34.6
|
|
$
|
78,046
|
$
|
61,034
|
27.9
|
|
||||||||||
Basic
earnings per share
|
0.33
|
0.25
|
32.0
|
0.91
|
0.71
|
28.2
|
||||||||||||||||
Diluted
earnings per share
|
0.33
|
0.24
|
37.5
|
0.90
|
0.71
|
26.8
|
1 |
Ratio
is not meaningful.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Net
losses and LAE incurred related to insured events in:
|
|||||||||||||
Current
accident year personal auto lines
|
$
|
236,942
|
$
|
259,301
|
$
|
721,668
|
$
|
778,203
|
|||||
Prior
accident years:
|
|||||||||||||
Personal
auto lines
|
(14,582
|
)
|
(1,811
|
)
|
(40,061
|
)
|
(21,774
|
)
|
|||||
Homeowner
and earthquake lines in runoff
|
190
|
615
|
533
|
991
|
|||||||||
Total
prior years’ redundancy recorded in current year
|
(14,392
|
)
|
(1,196
|
)
|
(39,528
|
)
|
(20,783
|
)
|
|||||
Total
net losses and LAE incurred
|
$
|
222,550
|
$
|
258,105
|
$
|
682,140
|
$
|
757,420
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||||||||
AMOUNTS
IN
THOUSANDS
|
2006
|
2005
|
Increase/
(Decrease)
|
2006
|
2005
|
Increase/
(Decrease)
|
||||||||||||||||
Direct
premiums written
|
$
|
337,217
|
$
|
349,119
|
(3.4
|
)%
|
$
|
992,623
|
$
|
1,029,905
|
(3.6
|
)%
|
||||||||||
Net
premiums written
|
$
|
335,809
|
$
|
347,827
|
(3.5
|
)
|
$
|
988,509
|
$
|
1,026,247
|
(3.7
|
)
|
||||||||||
Net
premiums earned
|
$
|
327,325
|
$
|
344,099
|
(4.9
|
)
|
$
|
978,661
|
$
|
1,017,302
|
(3.8
|
)
|
||||||||||
Net
losses and LAE
|
(222,360
|
)
|
(257,489
|
)
|
(13.6
|
)
|
(681,607
|
)
|
(756,428
|
)
|
(9.9
|
)
|
||||||||||
Underwriting
expenses
|
(77,518
|
)
|
(69,638
|
)
|
11.3
|
(223,841
|
)
|
(213,839
|
)
|
4.7
|
||||||||||||
Underwriting
profit
|
$
|
27,447
|
$
|
16,972
|
61.7
|
|
$
|
73,213
|
$
|
47,035
|
55.7
|
|
||||||||||
Ratios:
|
||||||||||||||||||||||
Loss
and LAE ratio
|
67.9
|
%
|
74.8
|
%
|
(6.9
|
)
|
69.6
|
%
|
74.4
|
%
|
(4.8
|
)
|
||||||||||
Underwriting
expense ratio
|
23.7
|
20.3
|
3.4
|
22.9
|
21.0
|
1.9
|
||||||||||||||||
Combined
ratio
|
91.6
|
%
|
95.1
|
%
|
(3.5
|
)
|
92.5
|
%
|
95.4
|
%
|
(2.9
|
)
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
2006
|
2005
|
||||||||||
Direct
premiums written
|
$
|
337,217
|
$
|
349,119
|
$
|
992,623
|
$
|
1,029,905
|
||||||
Ceded
premiums written
|
(1,408
|
)
|
(1,292
|
)
|
(4,114
|
)
|
(3,658
|
)
|
||||||
Net
premiums written
|
335,809
|
347,827
|
988,509
|
1,026,247
|
||||||||||
Net
change in unearned premiums
|
(8,484
|
)
|
(3,728
|
)
|
(9,848
|
)
|
(8,945
|
)
|
||||||
Net
premiums earned
|
$
|
327,325
|
$
|
344,099
|
$
|
978,661
|
$
|
1,017,302
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
2006
|
2005
|
||||||||||
Fixed
maturity securities available-for-sale
|
$
|
16,597
|
$
|
15,471
|
$
|
50,095
|
$
|
46,145
|
||||||
Equity
securities available-for-sale
|
—
|
1,188
|
811
|
|
4,164
|
|||||||||
Cash
and cash equivalents
|
300
|
383
|
921
|
776
|
||||||||||
Net
investment income
|
$
|
16,897
|
$
|
17,042
|
$
|
51,827
|
$
|
51,085
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||||
Pre-tax
- fixed maturity securities
|
4.5
|
%
|
4.6
|
%
|
4.6
|
%
|
4.6
|
%
|
||||||
After-tax
- fixed maturity securities
|
3.3
|
%
|
3.3
|
%
|
3.3
|
%
|
3.3
|
%
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Gross
realized gains 2
|
$
|
172
|
$
|
1,292
|
$
|
1,722
|
$
|
4,587
|
|||||
Gross
realized losses 3
|
(13
|
)
|
(2,231
|
)
|
(2,600
|
)
|
(7,253
|
)
|
|||||
Net
realized gains (losses) on investments
|
$
|
159
|
$
|
(939
|
)
|
$
|
(878
|
)
|
$
|
(2,666
|
)
|
September
30, 2006
|
December
31, 2005
|
|||||||||||||
AMOUNTS
IN THOUSANDS
|
Gross
|
Net
|
Gross
|
Net
|
||||||||||
Unpaid
losses and LAE
|
||||||||||||||
Personal
auto lines
|
$
|
482,871
|
$
|
478,039
|
$
|
521,528
|
$
|
516,849
|
||||||
Homeowner
and earthquake lines in runoff
|
1,387
|
688
|
2,307
|
1,368
|
||||||||||
Total
|
$
|
484,258
|
$
|
478,727
|
$
|
523,835
|
$
|
518,217
|
2 |
Gross
realized gains during the three months ended September 30, 2005
include
$1.2 million from the sale of equity securities. Gross realized
gains
during the nine months ended September 30, 2006 and 2005 include
$1.2
million and $4.4 million from the sale of equity securities,
respectively.
|
3 |
Gross
realized losses during the three months ended September 30, 2005
include
$2.2 million from the sale of equity securities. Gross realized
losses
during the nine months ended September 30, 2006 and 2005 include
$2.6
million and $ 5.9 million from the sale of equity securities,
respectively.
|
·
|
Ongoing
costs to enhance our computer
software;
|
·
|
The
repayment of the $100 million principal on the Senior Notes due in
2013;
|
·
|
The
repayment of $86.0 million principal on the term loan line to the
insurance subsidiary (scheduled payments include $18.0 million, $40.0
million, and $28.0 million in 2007, 2008,and 2009, respectively);
and
|
·
|
Related
interest on the obligations above.
|
AMOUNTS
IN THOUSANDS
|
September
30,
2006
|
December
31,
2005
|
|||||
Stockholders’
equity - GAAP
|
$
|
897,623
|
$
|
829,972
|
|||
Condensed
adjustments to reconcile GAAP shareholders’ equity to statutory
surplus:
|
|||||||
Net
book value of fixed assets under capital leases
|
(21,200
|
)
|
(24,185
|
)
|
|||
Deferred
gain under capital lease transactions
|
(288
|
)
|
(914
|
)
|
|||
Capital
lease obligation
|
18,946
|
28,074
|
|||||
Nonadmitted
net deferred tax assets
|
(16,018
|
)
|
(34,936
|
)
|
|||
Net
deferred tax assets related to items nonadmitted under SAP
|
32,641
|
38,544
|
|||||
Intercompany
receivables
|
(85,683
|
)
|
(57,683
|
)
|
|||
Fixed
assets
|
(22,801
|
)
|
(22,492
|
)
|
|||
Equity
in non-insurance entities
|
54,827
|
26,798
|
|||||
Net
unrealized losses on investments
|
16,956
|
10,788
|
|||||
Deferred
policy acquisition costs
|
(67,592
|
)
|
(59,939
|
)
|
|||
Prepaid
pension costs and intangible pension asset
|
(17,249
|
)
|
(21,309
|
)
|
|||
Other
prepaid expenses
|
(13,680
|
)
|
(11,049
|
)
|
|||
Other,
net
|
5,151
|
3,002
|
|||||
Statutory
surplus
|
$
|
781,633
|
$
|
704,671
|
Nine
Months Ended
September
30,
|
||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
Decrease
|
|||||||
Net
cash provided by operating activities
|
$
|
84,250
|
$
|
122,369
|
$
|
38,119
|
Nine
Months Ended
September
30,
|
||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
Increase
|
|||||||
Net
cash used in investing activities
|
$
|
113,765
|
$
|
78,764
|
$
|
35,001
|
Nine
Months Ended
September
30,
|
||||||||||
AMOUNTS
IN THOUSANDS
|
2006
|
2005
|
Increase
|
|||||||
Net
cash used in financing activities
|
$
|
19,656
|
$
|
13,038
|
$
|
6,618
|
·
|
Workers’
compensation insurance
|
·
|
General
liability insurance
|
·
|
Property
insurance
|
·
|
Umbrella
excess insurance
|
·
|
Fiduciary
liability insurance
|
·
|
Fidelity
insurance
|
·
|
Auto
insurance
|
·
|
Employment
practices liability insurance
|
·
|
Trading
at a significant (25% or more) discount to par, amortized cost (if
lower)
or cost for an extended period of time (nine months or
longer);
|
·
|
The
occurrence of a discrete credit event resulting in (i) the
issuer defaulting on a material outstanding obligation; or (ii) the
issuer seeking protection from creditors under the bankruptcy laws
or any
similar laws intended for the court supervised reorganization of
insolvent
enterprises; or (iii) the
issuer proposing a voluntary reorganization pursuant to which creditors
are asked to exchange their claims for cash or securities having
a fair
value substantially lower than par value of their claims;
or
|
·
|
In
the opinion of the Company’s management, it is possible that we may not
realize a full recovery on its investment securities, irrespective
of the
occurrence of one of the foregoing
events.
|
September
30, 2006
|
December
31, 2005
|
||||||||||||
AMOUNTS
IN THOUSANDS
|
#
issues
|
Fair
Value
|
#
issues
|
Fair
Value
|
|||||||||
AAA
|
324
|
$
|
737,497
|
286
|
$
|
604,812
|
|||||||
AA
|
112
|
183,576
|
116
|
169,708
|
|||||||||
A
|
115
|
429,433
|
118
|
486,338
|
|||||||||
BBB
|
44
|
114,702
|
44
|
88,918
|
|||||||||
BB
|
—
|
—
|
3
|
2,495
|
|||||||||
Unrated
|
6
|
5,177
|
2
|
2,436
|
|||||||||
Total
fixed maturity securities
|
601
|
$
|
1,470,385
|
569
|
$
|
1,354,707
|
AMOUNTS
IN THOUSANDS
|
September
30,
2006
|
December
31,
2005
|
|||||
Non-investment
grade investments:
|
|||||||
AmerUs
Group Co.4
|
$
|
—
|
$
|
864
|
|||
Ford
Motor Credit Company 5
|
—
|
2,495
|
|||||
Total
non-investment grade investments
|
—
|
3,359
|
|||||
Unrated
fixed maturity securities:
|
|||||||
Impact
Community Capital, LLC 6
|
1,999
|
2,023
|
|||||
Impact
Healthcare, LLC 6
|
413
|
413
|
|||||
Impact
Childcare, LLC 6
|
330
|
—
|
|||||
Impact
Commercial Opportunities, LLC 6
|
1,858
|
—
|
|||||
Impact
Childcare 2, LLC 6
|
480
|
—
|
|||||
Impact
Healthcare 2, LLC 6
|
97
|
—
|
|||||
Total
unrated fixed maturity securities
|
5,177
|
2,436
|
|||||
Unrated
other long-term investments
|
|||||||
Impact
Workforce, LLC 6
|
320
|
—
|
|||||
AIG
PEP7
|
9,123
|
—
|
|||||
Total
unrated other long-term investments
|
9,443
|
—
|
|||||
Total
non-investment grade and unrated investments
|
$
|
14,620
|
$
|
5,795
|
|||
Percentage
of total investments, at fair value
|
1.0
|
%
|
0.4
|
%
|
4 |
The
AmerUs Group Co. was a preferred stock holding that had an unrealized
gain
as of December 31, 2005.
|
5 |
The
Ford Motor Credit Company security matured in the first quarter
of 2006
and the Company received all amounts due, thereby incurring no
loss.
|
6 |
Impact
Community Capital is a limited partnership that was voluntarily
established by a group of California insurers to make loans and
other
investments
that provide housing and other services to economically disadvantaged
communities. See further discussion in Note 8 of the Notes
to the Condensed
Consolidated Financial
Statements.
|
7 |
AIG
PEP is a private equity investment program managed by AIGGIC.
See further discussion in Note 9 of the Notes
to the Condensed Consolidated Financial Statements.
|
September
30, 2006
|
December
31, 2005
|
||||||||||||||||||
AMOUNTS
IN THOUSANDS,
EXCEPT
NUMBER OF ISSUES
|
#
issues
|
Fair
Value
|
Unrealized
Loss
|
#
issues
|
Fair
Value
|
Unrealized
Loss
|
|||||||||||||
Investments
with unrealized losses:
|
|||||||||||||||||||
Fixed
maturity securities:
|
|||||||||||||||||||
Exceeding
$0.1 million and in a loss position for:
|
|||||||||||||||||||
Less
than 6 months
|
1
|
$
|
9,771
|
$
|
228
|
16
|
$
|
141,034
|
$
|
3,074
|
|||||||||
6-12
months
|
29
|
232,850
|
7,297
|
16
|
129,044
|
4,072
|
|||||||||||||
More
than 1 year
|
61
|
475,781
|
19,530
|
56
|
433,368
|
16,896
|
|||||||||||||
Less
than $0.1 million
|
127
|
264,782
|
4,758
|
113
|
204,724
|
4,347
|
|||||||||||||
Total
fixed maturity securities with unrealized losses
|
218
|
983,184
|
31,813
|
201
|
908,170
|
28,389
|
|||||||||||||
Equity
securities:
|
|||||||||||||||||||
Exceeding
$0.1 million
|
—
|
—
|
—
|
2
|
578
|
305
|
|||||||||||||
Less
than $0.1 million
|
—
|
—
|
—
|
245
|
35,672
|
1,873
|
|||||||||||||
Total
equity securities with unrealized losses
|
—
|
—
|
—
|
247
|
36,250
|
2,178
|
|||||||||||||
Total
investments with unrealized losses8
|
218
|
$
|
983,184
|
$
|
31,813
|
448
|
$
|
944,420
|
|
$
|
30,567
|
September
30, 2006
|
December
31, 2005
|
||||||||||||||||||
AMOUNTS
IN THOUSANDS
|
Amortized
Cost
|
Fair
Value
|
Unrealized
Loss
|
Amortized
Cost
|
Fair
Value
|
Unrealized
Loss
|
|||||||||||||
Fixed
maturity securities:
|
|||||||||||||||||||
Due
in one year or less
|
$
|
3,037
|
$
|
3,005
|
$
|
32
|
$
|
5,562
|
$
|
5,512
|
$
|
50
|
|||||||
Due
after one year through five years
|
466,042
|
451,858
|
14,184
|
205,363
|
200,075
|
5,288
|
|||||||||||||
Due
after five years through ten years
|
212,214
|
205,040
|
7,174
|
415,417
|
401,533
|
13,884
|
|||||||||||||
Due
after ten years
|
333,704
|
323,281
|
10,423
|
310,216
|
301,050
|
9,167
|
|||||||||||||
Total
fixed maturity securities with unrealized losses
|
$
|
1,014,997
|
$
|
983,184
|
$
|
31,813
|
$
|
936,558
|
$
|
908,170
|
$
|
28,389
|
8 |
Unrealized
losses represent approximately 3.2% of the total fair value of
investments
with unrealized losses at both September 30, 2006 and December
31,
2005.
|
Year
of Expiration
|
SRLY 9
NOL
of 21st of
the
Southwest
|
|||
2017
|
$
|
1,456
|
||
2018
|
1,068
|
|||
2019
|
1,466
|
|||
2020
|
3,172
|
|||
2021
|
2,180
|
|||
2022
|
—
|
|||
Total
|
$
|
9,342
|
9 |
”SRLY”
stands for Separate Return Limitation Year. Under the Federal tax
code,
only future income generated by 21st of the Southwest may be utilized
against this portion of our
NOL.
|
·
|
Our
strategy for growth;
|
·
|
Underwriting
results;
|
·
|
Our
expected combined ratio and growth of written
premiums;
|
·
|
Product
development;
|
·
|
Computer
systems;
|
·
|
Litigation,
regulatory environment and
approvals;
|
·
|
Market
position;
|
·
|
Financial
results;
|
·
|
Dividend
policy; and
|
·
|
Reserves.
|
·
|
The
effects of competition and competitors’ pricing
actions;
|
·
|
Changes
in consumer preferences or buying
habits;
|
·
|
Adverse
underwriting and claims experience;
|
·
|
Customer
service problems;
|
·
|
The
impact on our operations of natural disasters, principally earthquake,
or
civil disturbance, due to the concentration of our facilities and
employees in Southern California;
|
·
|
Information
system problems;
|
·
|
Control
environment failures;
|
·
|
Adverse
developments in financial markets or interest rates;
|
·
|
Results
of legislative, regulatory or legal actions, including the inability
to
obtain approval for necessary licenses, rate increases and product
changes
and possible adverse actions taken by state regulators in market
conduct
examinations and rate proceedings;
and
|
·
|
Our
ability to service the Senior Notes, including our ability to receive
dividends and/or sufficient payments from our subsidiaries to service
our
obligations.
|
DOLLAR
AMOUNTS IN MILLIONS
September
30, 2006
|
Carrying
Value
|
Estimated
Carrying
Value at
Adjusted
Market
Rates/Prices
Indicated
Above
|
Change
in
Value
as a
Percentage
of
Carrying
Value
|
|||||||
Fixed
maturity securities available-for-sale, at fair value
|
$
|
1,470.4
|
$
|
1,411.1
|
(4.0
|
%)
|
||||
Debt,
at amortized cost
|
118.9
|
125.3
|
5.5
|
%
|
Effective
Duration Ranges (in years)
|
|||||||||||||||||||
September
30, 2006
|
Below
1
|
1
to 3
|
3
to 5
|
5
to 7
|
7
to 10
|
10
to 20
|
|||||||||||||
Fair
value percentage of fixed maturity security portfolio
|
1.2
|
%
|
16.2
|
%
|
43.6
|
%
|
33.9
|
%
|
4.1
|
%
|
1.0
|
%
|
21ST
CENTURY INSURANCE GROUP
|
||||
(Registrant)
|
||||
Date:
|
November
2, 2006
|
/s/
Bruce W. Marlow
|
||
BRUCE
W. MARLOW
|
||||
President
and Chief Executive Officer
|
||||
(Principal
Executive Officer)
|
||||
Date:
|
November
2, 2006
|
/s/
Steven P. Erwin
|
||
STEVEN
P. ERWIN
|
||||
Senior
Vice President and Chief Financial Officer
|
||||
(Principal
Financial Officer)
|
Exhibit
No.
|
Description
of Exhibit
|
Location
|
|
10.1
|
Employment
Letter between Steven P. Erwin and the Company, dated May 5,
2006
|
Current
Report on Form 8-K (filed with SEC on May 11, 2006; Exhibit 10.1
therein).
|
|
Certification
of principal executive officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934
|
Filed
herewith
|
||
Certification
of principal financial officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934
|
Filed
herewith
|
||
Certification
Pursuant to 18 U.S.C. Section 1350
|
Filed
herewith
|