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 S
|
Non-accelerated
filer £
|
Description |
Page
Number
|
||
PART I – FINANCIAL INFORMATION | |||
2
|
|||
14
|
|||
29
|
|||
30
|
|||
PART II – OTHER INFORMATION | |||
31
|
|||
31
|
|||
31
|
|||
SIGNATURES |
32
|
||
EXHIBIT INDEX |
33
|
||
31.1
|
Certification
of principal executive officer pursuant to Rule 13a-14(a)
under the
Securities Exchange Act of 1934
|
||
31.2
|
Certification
of principal financial officer pursuant to Rule 13a-14(a)
under the
Securities Exchange Act of 1934
|
||
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350
|
AMOUNTS
IN THOUSANDS, EXCEPT SHARE DATA
|
March
31,
2007
|
December
31,
2006
|
||||||
Assets
|
||||||||
Investments
available-for-sale
|
||||||||
Fixed
maturity securities, at fair value (amortized cost:
$1,444,354 and
$1,453,468)
|
$
|
1,431,213
|
$
|
1,435,016
|
||||
Other
long-term investments, equity method
|
14,528
|
14,705
|
||||||
Total
investments
|
1,445,741
|
1,449,721
|
||||||
Cash
and cash equivalents
|
86,051
|
51,999
|
||||||
Accrued
investment income
|
16,722
|
17,215
|
||||||
Premiums
receivable
|
118,763
|
110,115
|
||||||
Reinsurance
receivables and recoverables
|
6,401
|
6,338
|
||||||
Prepaid
reinsurance premiums
|
2,060
|
2,095
|
||||||
Deferred
income taxes
|
41,807
|
48,437
|
||||||
Deferred
policy acquisition costs
|
69,181
|
63,581
|
||||||
Leased
property under capital leases, net of deferred gain
of $982 and $1,092 and
net of accumulated amortization of $42,913 and $42,149
|
18,164
|
19,281
|
||||||
Property
and equipment, at cost less accumulated depreciation
of $108,881 and
$104,279
|
156,996
|
154,966
|
||||||
Other
assets
|
29,375
|
27,949
|
||||||
Total
assets
|
$
|
1,991,261
|
$
|
1,951,697
|
||||
Liabilities
and stockholders’ equity
|
||||||||
Unpaid
losses and loss adjustment expenses
|
$
|
465,810
|
$
|
482,269
|
||||
Unearned
premiums
|
341,632
|
321,927
|
||||||
Debt
|
112,551
|
115,895
|
||||||
Claims
checks payable
|
41,759
|
42,931
|
||||||
Reinsurance
payable
|
639
|
680
|
||||||
Other
liabilities
|
99,596
|
89,446
|
||||||
Total
liabilities
|
1,061,987
|
1,053,148
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Common
stock, par value $0.001 per share; 110,000,000 shares
authorized; shares
issued 87,918,687 and 86,489,082
|
88
|
86
|
||||||
Additional
paid-in capital
|
467,358
|
441,969
|
||||||
Treasury
stock; at cost shares: 29,419 and 17,328
|
(443 | ) | (259 | ) | ||||
Retained
earnings
|
486,417
|
484,539
|
||||||
Accumulated
other comprehensive loss
|
(24,146 | ) | (27,786 | ) | ||||
Total
stockholders’ equity
|
929,274
|
898,549
|
||||||
Total
liabilities and stockholders’ equity
|
$
|
1,991,261
|
$
|
1,951,697
|
AMOUNTS
IN THOUSANDS, EXCEPT SHARE DATA
Three
Months Ended March 31,
|
2007
|
2006
|
||||||
Revenues
|
||||||||
Net
premiums earned
|
$
|
329,282
|
$
|
325,824
|
||||
Net
investment income
|
16,925
|
17,755
|
||||||
Net
realized investment gains (losses)
|
287
|
(1,067 | ) | |||||
Total
revenues
|
346,494
|
342,512
|
||||||
Losses
and expenses
|
||||||||
Net
losses and loss adjustment expenses
|
233,457
|
236,496
|
||||||
Policy
acquisition costs
|
68,652
|
59,333
|
||||||
Other
underwriting expenses
|
11,725
|
12,600
|
||||||
Other
expense
|
4,194
|
—
|
||||||
Interest
and fees expense
|
1,726
|
1,898
|
||||||
Total
losses and expenses
|
319,754
|
310,327
|
||||||
Income
before provision for income taxes
|
26,740
|
32,185
|
||||||
Provision
for income taxes
|
8,394
|
10,868
|
||||||
Net
income
|
$
|
18,346
|
$
|
21,317
|
||||
Earnings
per share:
|
||||||||
Basic
and diluted
|
$
|
0.21
|
$
|
0.25
|
||||
Cash
dividends declared per share
|
$
|
0.16
|
$
|
0.08
|
||||
Weighted-average
shares outstanding:
|
||||||||
Basic
|
87,108,898
|
85,868,878
|
||||||
Additional
common shares assumed issued under treasury stock method
|
1,057,931
|
648,285
|
||||||
Diluted
|
88,166,829
|
86,517,163
|
Common
Stock
|
||||||||||||||||||||||||||||
$0.001
par
value
|
Accumulated
|
|||||||||||||||||||||||||||
AMOUNTS
IN THOUSANDS,
EXCEPT
SHARE DATA
|
Issued
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Other
Comprehensive
Loss
|
Total
|
|||||||||||||||||||||
Balance
– January 1, 2007
|
86,489,082
|
$
|
86
|
$
|
441,969
|
$
|
(259 | ) |
$
|
484,539
|
$
|
(27,786 | ) |
$
|
898,549
|
|||||||||||||
Cumulative
effect of adopting FIN 48
|
(2,422 | ) | (2,422 | ) | ||||||||||||||||||||||||
Comprehensive
income
|
18,346 | (1) | 3,640 | (2) |
21,986
|
|||||||||||||||||||||||
Cash
dividends declared on common stock
|
(14,046 | ) | (14,046 | ) | ||||||||||||||||||||||||
Exercise
of stock options
|
1,310,455
|
2
|
21,080
|
21,082
|
||||||||||||||||||||||||
Issuance
of restricted stock
|
119,150
|
—
|
||||||||||||||||||||||||||
Forfeiture
of 12,091 shares
of restricted
stock
|
184
|
(184 | ) |
—
|
||||||||||||||||||||||||
Stock-based
compensation cost
|
1,924
|
1,924
|
||||||||||||||||||||||||||
Excess
tax benefit of stock-based compensation
|
2,201
|
2,201
|
||||||||||||||||||||||||||
Balance
– March 31, 2007
|
87,918,687
|
$
|
88
|
$
|
467,358
|
$
|
(443 | ) |
$
|
486,417
|
$
|
(24,146 | ) |
$
|
929,274
|
(1)
|
Net
income for the three months ended March 31,
2007.
|
(2)
|
Net
change in accumulated other comprehensive loss
follows:
|
Three
Months Ended
March
31, 2007
|
||||
Unrealized
holding gains arising during the period, net of tax
expense of
$1,857
|
$
|
3,450
|
||
Reclassification adjustment for investment losses included in net income, net of tax expense of $1 | 3 | |||
Amortization
of prior service cost and net actuarial loss on defined
benefit plans, net
of deferred tax expense of $100
|
187 | |||
Total
net other comprehensive income
|
$
|
3,640
|
AMOUNTS
IN THOUSANDS, EXCEPT SHARE DATA
Three
Months Ended March 31,
|
2007
|
2006
|
||||||
Operating
activities
|
||||||||
Net
income
|
$
|
18,346
|
$
|
21,317
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
6,218
|
6,661
|
||||||
Net
amortization of investment premiums and discounts
|
2,585
|
2,007
|
||||||
Stock-based
compensation cost
|
1,924
|
4,099
|
||||||
Provision
for deferred income taxes
|
3,179
|
2,820
|
||||||
Provision
for premiums receivable losses
|
545
|
612
|
||||||
Net
realized investment (gains) losses
|
(287 | ) |
1,067
|
|||||
Equity
loss of other long-term investment
|
187
|
—
|
||||||
Changes
in assets and liabilities
|
||||||||
Premiums
receivable
|
(9,193 | ) | (6,943 | ) | ||||
Deferred
policy acquisition costs
|
(5,600 | ) | (2,980 | ) | ||||
Reinsurance
receivables and recoverables
|
(69 | ) |
352
|
|||||
Federal
income taxes
|
4,389
|
4,529
|
||||||
Other
assets
|
(3,280 | ) | (2,880 | ) | ||||
Unpaid
losses and loss adjustment expenses
|
(16,459 | ) | (15,407 | ) | ||||
Unearned
premiums
|
19,705
|
11,476
|
||||||
Claims
checks payable
|
(1,172 | ) | (2,072 | ) | ||||
Other
liabilities
|
8,695
|
14,079
|
||||||
Net
cash provided by operating activities
|
29,713
|
38,737
|
||||||
Investing
activities
|
||||||||
Purchases
of:
|
||||||||
Fixed
maturity securities available-for-sale
|
(3,404 | ) | (146,738 | ) | ||||
Equity
securities available-for-sale
|
—
|
(35,627 | ) | |||||
Other
long-term investments, equity method
|
(133 | ) |
—
|
|||||
Property
and equipment
|
(6,820 | ) | (6,627 | ) | ||||
Maturities
and calls of fixed maturity securities available-for-sale
|
8,207
|
8,299
|
||||||
Sales
of:
|
||||||||
Fixed
maturity securities available-for-sale
|
1,722
|
33,862
|
||||||
Equity
securities available-for-sale
|
—
|
83,989
|
||||||
Other
long-term investments, equity method
|
123
|
—
|
||||||
Net
cash used in investing activities
|
(305 | ) | (62,842 | ) | ||||
Financing
activities
|
||||||||
Repayment
of debt
|
(3,662 | ) | (3,352 | ) | ||||
Dividends
paid (per share: $0.16 and $0.08)
|
(14,046 | ) | (6,872 | ) | ||||
Proceeds
from the exercise of stock options
|
21,082
|
718
|
||||||
Excess
tax benefit from stock-based compensation
|
1,270
|
89
|
||||||
Net
cash provided by (used in) financing activities
|
4,644
|
(9,417 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
34,052
|
(33,522 | ) | |||||
Cash
and cash equivalents, beginning of period
|
51,999
|
68,668
|
||||||
Cash
and cash equivalents, end of period
|
$
|
86,051
|
$
|
35,146
|
||||
Supplemental
information:
|
||||||||
Income
taxes paid
|
$
|
1,209
|
$
|
3,519
|
||||
Interest
paid
|
210
|
388
|
March
31,
2007
|
December
31,
2006
|
|||||||
Net
unrealized losses on available-for-sale investments,
net of deferred
income taxes of $(4,600) and $(6,458)
|
$
|
(8,541 | ) |
$
|
(11,994 | ) | ||
Unamortized
prior service cost and net actuarial loss of defined
benefit pension
plans, net of deferred income taxes of $8,403 and $8,503
|
(15,605 | ) | (15,792 | ) | ||||
Total
accumulated other comprehensive loss
|
$
|
(24,146 | ) |
$
|
(27,786 | ) |
Three
Months Ended
March
31,
|
||||||||
2007
|
2006
|
|||||||
Service
cost
|
$
|
1,771
|
$
|
1,872
|
||||
Interest
cost
|
2,105
|
1,971
|
||||||
Expected
return on plan assets
|
(2,360 | ) | (2,108 | ) | ||||
Amortization
of prior service cost
|
36
|
34
|
||||||
Amortization
of net loss
|
251
|
678
|
||||||
Total
|
$
|
1,803
|
$
|
2,447
|
Three
Months Ended
March
31,
|
||||||||
AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE DATA
|
2007
|
2006
|
||||||
Net
losses and loss adjustment expenses
|
$
|
228
|
$
|
1,134
|
||||
Policy
acquisition costs
|
149
|
487
|
||||||
Other
underwriting expenses
|
929
|
1,835
|
||||||
Income
before provision for income taxes
|
(1,306 | ) | (3,456 | ) | ||||
Provision
for income taxes
|
355
|
757
|
||||||
Net
income
|
$
|
(951 | ) |
$
|
(2,699 | ) | ||
Basic
and diluted earnings per share
|
$
|
(0.01 | ) |
$
|
(0.03 | ) |
AMOUNTS
IN THOUSANDS
|
Number
of
Options
|
Aggregate
Intrinsic
Value
|
Weighted-
Average
Exercise
Price
|
|||||||||
Outstanding
|
8,570
|
$
|
44,490
|
$
|
16.40
|
|||||||
Exercisable
|
6,752
|
34,557
|
16.58
|
Three
Months Ended
March
31,
|
||||||||
AMOUNTS
IN THOUSANDS
|
2007
|
2006
|
||||||
Fair
value of stock options granted
|
$
|
—
|
$
|
9,093
|
||||
Intrinsic
value of options exercised
|
6,568
|
217
|
||||||
Grant
date fair value of options vested
|
6,647
|
6,519
|
||||||
Proceeds
from exercise of stock options
|
21,082
|
718
|
||||||
Tax
benefit realized as a result of stock option exercises
|
2,299
|
76
|
Personal
Auto
Lines
|
Homeowner
and
Earthquake
Lines
in Runoff
|
Total
|
||||||||||
Three
Months Ended March 31, 2007
|
||||||||||||
Net
premiums earned
|
$
|
329,282
|
$
|
—
|
$
|
329,282
|
||||||
Depreciation
and amortization expense
|
6,218
|
—
|
6,218
|
|||||||||
Segment
profit (loss)
|
15,510
|
(62 | ) |
15,448
|
||||||||
Three
Months Ended March 31, 2006
|
||||||||||||
Net
premiums earned
|
$
|
325,824
|
$
|
—
|
$
|
325,824
|
||||||
Depreciation
and amortization expense
|
6,659
|
2
|
6,661
|
|||||||||
Segment
profit (loss)
|
17,472
|
(77 | ) |
17,395
|
Three
Months Ended
March
31,
|
||||||||
2007
|
2006
|
|||||||
Segment
profit
|
$
|
15,448
|
$
|
17,395
|
||||
Net
investment income
|
16,925
|
17,755
|
||||||
Net
realized investment gains (losses)
|
287
|
(1,067 | ) | |||||
Other
expense
|
(4,194 | ) |
—
|
|||||
Interest
and fees expense
|
(1,726 | ) | (1,898 | ) | ||||
Consolidated
income before provision for income taxes
|
$
|
26,740
|
$
|
32,185
|
|
·
|
Overview
|
|
·
|
Results
of Operations
|
|
·
|
Financial
Condition
|
|
·
|
Liquidity
and Capital Resources
|
|
·
|
Contractual
Obligations and Commitments
|
|
·
|
Critical
Accounting Estimates
|
|
·
|
Recent
Accounting Pronouncements
|
|
·
|
Forward-Looking
Statements
|
AMOUNTS
IN THOUSANDS
Three
Months Ended March 31,
|
2007
|
2006
|
%
Change
’07
vs.‘06
|
|||||||||
Direct
premiums written
|
$
|
350,530
|
$
|
338,569
|
3.5 | % | ||||||
Net
premiums written
|
349,022
|
337,223
|
3.5
|
|||||||||
|
||||||||||||
Net
premiums earned
|
$
|
329,282
|
$
|
325,824
|
1.1
|
|||||||
Net
losses and loss adjustment expenses (“LAE”)
|
(233,457 | ) | (236,496 | ) | (1.3 | ) | ||||||
Underwriting
expenses
|
(80,377 | ) | (71,933 | ) |
11.7
|
|||||||
Underwriting
profit
|
$
|
15,448
|
$
|
17,395
|
(11.2 | ) |
|
·
|
California
direct premiums written decreased 10.3% to $279.5 million in 2007,
compared to $311.8 million for the same period in
2006.
|
|
·
|
Non-California
direct premiums written increased 165.4% to $71.0 million in 2007,
compared to $26.8 million for the same period in
2006.
|
|
·
|
First
quarter 2007 consolidated combined ratio was 95.3%, versus 94.7%
for the
same period in 2006. First quarter 2007 was favorably impacted by
5.5
points of prior accident year loss and LAE reserve development, while
2006
was favorably impacted by 2.2 points of prior accident year
development.
|
AMOUNTS
IN THOUSANDS,
|
Three
Months Ended
March
31,
|
%
Change
|
||||||||||
EXCEPT
SHARE DATA
|
2007
|
2006
|
’07
vs.‘06
|
|||||||||
Personal
auto lines underwriting profit
|
$
|
15,510
|
$
|
17,472
|
(11.2 | )% | ||||||
Homeowner
and earthquake lines in runoff, underwriting loss
|
(62 | ) | (77 | ) | (18.7 | ) | ||||||
Net
investment income
|
16,925
|
17,755
|
(4.7 | ) | ||||||||
Net
realized investment gains (losses)
|
287
|
(1,067 | ) |
N/M
|
1 | |||||||
Other
expense
|
(4,194 | ) |
—
|
0.0
|
||||||||
Interest
and fees expense
|
(1,726 | ) | (1,898 | ) | (9.1 | ) | ||||||
Provision
for income taxes
|
(8,394 | ) | (10,868 | ) | (22.8 | ) | ||||||
Net
income
|
$
|
18,346
|
$
|
21,317
|
(13.9 | ) | ||||||
Basic
and diluted earnings per share
|
$
|
0.21
|
$
|
0.25
|
(16.0 | ) |
Three
Months Ended
March
31,
|
||||||||
AMOUNTS
IN THOUSANDS
|
2007
|
2006
|
||||||
Net
losses and LAE incurred related to insured events in:
|
||||||||
Current
accident year personal auto lines
|
$
|
251,340
|
$
|
243,511
|
||||
Prior
accident years:
|
||||||||
Personal
auto lines
|
(17,945 | ) | (7,092 | ) | ||||
Homeowner
and earthquake lines in runoff
|
62
|
77
|
||||||
Total
prior years’ redundancy recorded in current year
|
(17,883 | ) | (7,015 | ) | ||||
Total
net losses and LAE incurred
|
$
|
233,457
|
$
|
236,496
|
Three
Months Ended
|
||||||||||||||||
|
March
31,
|
$
Change
|
%
Change
|
|||||||||||||
AMOUNTS IN THOUSANDS |
2007
|
2006
|
’07
vs.‘06
|
’07
vs.‘06
|
||||||||||||
Direct
premiums written
|
$
|
350,530
|
$
|
338,569
|
$
|
11,961
|
3.5 | % | ||||||||
Net
premiums written
|
$
|
349,022
|
$
|
337,223
|
11,799
|
3.5
|
||||||||||
Net
premiums earned
|
$
|
329,282
|
$
|
325,824
|
3,458
|
1.1
|
||||||||||
Net
losses and LAE
|
(233,395 | ) | (236,419 | ) | (3,024 | ) | (1.3 | ) | ||||||||
Underwriting
expenses
|
(80,377 | ) | (71,933 | ) |
8,444
|
11.7
|
||||||||||
Underwriting
profit
|
$
|
15,510
|
$
|
17,472
|
(1,962 | ) | (11.2 | ) | ||||||||
Ratios:
|
||||||||||||||||
Loss
and LAE ratio
|
70.9 | % | 72.6 | % | (1.7 | ) | ||||||||||
Underwriting
expense ratio
|
24.4
|
22.1
|
2.4
|
|||||||||||||
Combined
ratio
|
95.3 | % | 94.7 | % |
0.7
|
Three
Months Ended
March
31,
|
||||||||
AMOUNTS
IN THOUSANDS
|
2007
|
2006
|
||||||
Direct
premiums written
|
$
|
350,530
|
$
|
338,569
|
||||
Ceded
premiums written
|
(1,508 | ) | (1,346 | ) | ||||
Net
premiums written
|
349,022
|
337,223
|
||||||
Net
change in unearned premiums
|
(19,740 | ) | (11,399 | ) | ||||
Net
premiums earned
|
$
|
329,282
|
$
|
325,824
|
AMOUNTS
IN THOUSANDS
|
Net
Investment Income
|
|||||||
Three
Months Ended March 31,
|
2007
|
2006
|
||||||
Interest
on fixed maturity securities, at fair value
|
$
|
16,824
|
$
|
16,867
|
||||
Interest
on cash and cash equivalents
|
527
|
334
|
||||||
Interest
on other long-term investments, equity method
|
(187 | ) |
—
|
|||||
Dividends
on equity securities
|
—
|
810
|
||||||
Total
investment income
|
17,164
|
18,011
|
||||||
Investment
expense
|
(239 | ) | (256 | ) | ||||
Net
investment income
|
$
|
16,925
|
$
|
17,755
|
Average
Annual Yields
on
Fixed Maturity Securities
|
||||||||
Three
Months Ended March 31,
|
2007
|
2006
|
||||||
Pre-tax
– fixed maturity securities
|
4.5 | % | 4.8 | % | ||||
After-tax
– fixed maturity securities
|
3.3 | % | 3.5 | % |
AMOUNTS
IN THOUSANDS
|
Net
Realized Gains
(Losses)
on Investments
|
|||||||
Three
Months Ended March 31,
|
2007
|
2006
|
||||||
Gross
realized gains
|
$
|
384
|
$
|
1,492
|
||||
Gross
realized losses
|
(97 | ) | (2,559 | ) | ||||
Net
realized gains (losses) on investments
|
$
|
287
|
$
|
(1,067 | ) |
March
31, 2007
|
December
31, 2006
|
|||||||||||||||
AMOUNTS
IN THOUSANDS
|
Gross
|
Net
|
Gross
|
Net
|
||||||||||||
Unpaid
losses and LAE
|
||||||||||||||||
Personal
auto lines
|
$
|
464,416
|
$
|
459,389
|
$
|
480,731
|
$
|
475,261
|
||||||||
Homeowner
and earthquake lines in runoff
|
1,394
|
690
|
1,538
|
808
|
||||||||||||
Total
|
$
|
465,810
|
$
|
460,079
|
$
|
482,269
|
$
|
476,069
|
|
·
|
Ongoing
costs to enhance our computer
software;
|
|
·
|
The
repayment of the $100 million principal on the Senior Notes due in
2013;
|
|
·
|
Related
interest on the Senior Notes above;
and
|
|
·
|
Any
dividends to stockholders that our directors may
declare.
|
AMOUNTS
IN THOUSANDS
|
March
31,
2007
|
December
31,
2006
|
||||||
Stockholders’
equity – GAAP
|
$
|
929,274
|
$
|
898,549
|
||||
Condensed
adjustments to reconcile GAAP shareholders’ equity to statutory
surplus:
|
||||||||
Net
book value of fixed assets under capital leases
|
(19,146 | ) | (20,373 | ) | ||||
Deferred
loss (gain) under capital lease transactions
|
130
|
(79 | ) | |||||
Capital
lease obligation
|
12,638
|
15,985
|
||||||
Nonadmitted
net deferred tax assets
|
(15,752 | ) | (17,419 | ) | ||||
Difference
in net deferred tax assets reported under Statutory
Accounting
Principles
|
31,545
|
24,200
|
||||||
Intercompany
receivables
|
(1,433 | ) | (11,488 | ) | ||||
Fixed
assets
|
(22,920 | ) | (22,955 | ) | ||||
Equity
in non-insurance entities
|
(67,643 | ) | (47,006 | ) | ||||
Net
unrealized losses on investments
|
12,611
|
17,881
|
||||||
Deferred
policy acquisition costs
|
(69,181 | ) | (63,581 | ) | ||||
Pension
related liabilities (assets)
|
17,174
|
15,648
|
||||||
Other
prepaid expenses
|
(18,623 | ) | (14,195 | ) | ||||
FIN
48 liability
|
1,750
|
—
|
||||||
Other,
net
|
(4,650 | ) | (4,158 | ) | ||||
Statutory
surplus
|
$
|
785,774
|
$
|
771,009
|
AMOUNTS
IN THOUSANDS
Three
Months Ended March 31,
|
2007
|
2006
|
‘07
vs.‘06
Increase/
(Decrease)
|
|||||||||
Net
cash and cash equivalents provided by operating activities
|
$
|
29,713
|
$
|
38,737
|
$
|
(9,024 | ) | |||||
Net
cash and cash equivalents used in investing activities
|
(305 | ) | (62,842 | ) |
62,537
|
|||||||
Net
cash and cash equivalents provided by (used in) financing
activities
|
4,644
|
(9,417 | ) |
14,061
|
||||||||
Net
increase (decrease) in cash and cash equivalents
|
$
|
34,052
|
$
|
(33,522 | ) |
$
|
67,574
|
|
·
|
It
requires assumptions to be made that were uncertain at the time the
estimate was made; and
|
|
·
|
Change
in the estimate or different estimates that may have been selected
could
have a material impact on the Company’s consolidated results of operations
or financial condition.
|
|
·
|
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 the debtor defaulting
or seeking bankruptcy or insolvency protection or voluntary
reorganization, and
|
|
·
|
The
probability of non-realization of a full recovery on our investment,
irrespective of the occurrence of one of the foregoing
events.
|
March
31, 2007
|
December
31, 2006
|
|||||||||||||||
AMOUNTS
IN THOUSANDS,
EXCEPT
NUMBER OF ISSUES
|
#
issues
|
Fair
Value
|
#
issues
|
Fair
Value
|
||||||||||||
AAA
|
321
|
$
|
724,717
|
322
|
$
|
728,033
|
||||||||||
AA
|
112
|
205,227
|
106
|
165,216
|
||||||||||||
A
|
99
|
361,947
|
109
|
423,429
|
||||||||||||
BBB
|
40
|
131,053
|
42
|
113,162
|
||||||||||||
BB
|
3
|
3,036
|
—
|
—
|
||||||||||||
Unrated
|
4
|
5,233
|
4
|
5,176
|
||||||||||||
Total
fixed maturity securities
|
579
|
$
|
1,431,213
|
583
|
$
|
1,435,016
|
AMOUNTS
IN THOUSANDS
|
March
31,
2007
|
December
31,
2006
|
||||||
Unrated
fixed maturity securities (fair value):
|
||||||||
Impact
Community Capital, LLC 2
|
$
|
1,999
|
$
|
1,999
|
||||
Impact
Healthcare, LLC 2
|
567
|
510
|
||||||
Impact
Childcare, LLC 2
|
810
|
810
|
||||||
Impact
Commercial Opportunities, LLC 2
|
1,857
|
1,857
|
||||||
Total
unrated fixed maturity securities
|
5,233
|
5,176
|
||||||
Unrated
other long-term investments (equity method):
|
||||||||
Impact
Workforce, LLC 2
|
320
|
320
|
||||||
AIG
PEP3
|
14,208
|
14,385
|
||||||
Total
unrated other long-term investments
|
14,528
|
14,705
|
||||||
Total
unrated investments
|
$
|
19,761
|
$
|
19,881
|
||||
Percentage
of total investments, at fair value
|
1.4 | % | 1.4 | % | ||||
Percentage
of total unrealized losses
|
0.0 | % | 0.0 | % |
March
31, 2007
|
December
31, 2006
|
|||||||||||||||||||||||
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
|
—
|
$
|
—
|
$
|
—
|
2
|
$
|
12,075
|
$
|
216
|
||||||||||||||
6-12
months
|
3
|
21,544
|
947
|
1
|
9,625
|
375
|
||||||||||||||||||
More
than 1 year
|
79
|
657,765
|
20,204
|
88
|
698,674
|
25,919
|
||||||||||||||||||
Less
than $0.1 million
|
136
|
290,836
|
4,256
|
142
|
304,838
|
4,764
|
||||||||||||||||||
Total
investments with unrealized losses 4
|
218
|
$
|
970,145
|
$
|
25,407
|
233
|
$
|
1,025,212
|
$
|
31,274
|
March
31, 2007
|
December
31, 2006
|
|||||||||||||||||||||||
AMOUNTS
IN THOUSANDS
|
Amortized
Cost
|
Fair
Value
|
Unrealized
Loss
|
Amortized
Cost
|
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||||||
Due
in one year or less
|
$
|
22,100
|
$
|
21,873
|
$
|
227
|
$
|
3,040
|
$
|
2,983
|
$
|
57
|
||||||||||||
Due
after one year through five years
|
586,932
|
571,858
|
15,074
|
602,148
|
584,279
|
17,869
|
||||||||||||||||||
Due
after five years through ten years
|
60,916
|
59,433
|
1,483
|
96,077
|
93,043
|
3,034
|
||||||||||||||||||
Due
after ten years
|
325,604
|
316,981
|
8,623
|
355,221
|
344,907
|
10,314
|
||||||||||||||||||
Total
fixed maturity securities with unrealized losses
|
$
|
995,552
|
$
|
970,145
|
$
|
25,407
|
$
|
1,056,486
|
$
|
1,025,212
|
$
|
31,274
|
DOLLAR
AMOUNTS IN MILLIONS
March
31, 2007
|
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
|
$
|
1,431.2
|
$
|
1,376.5
|
(3.82 | %) | ||||||
Debt,
at amortized cost
|
112.6
|
118.6
|
5.36 | % |
Duration
Ranges
|
||||||||||||||||||||||||
March
31, 2007
|
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
|
3.5%
|
23.8%
|
58.3%
|
9.9%
|
3.9%
|
0.6%
|
21ST
CENTURY INSURANCE GROUP
|
|||
(Registrant)
|
|||
Date:
|
May
2, 2007
|
/s/
Bruce W. Marlow
|
|
BRUCE
W. MARLOW
|
|||
President
and Chief Executive Officer
|
|||
(Principal
Executive Officer)
|
|||
Date:
|
May
2, 2007
|
/s/
Steven P. Erwin
|
|
STEVEN
P. ERWIN
|
|||
Senior
Vice President and Chief Financial Officer
|
|||
(Principal
Financial
Officer)
|
Exhibit
No.
|
Description
of Exhibit
|
Location
|
|
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
|