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Century Holding Company (TCHC)

Q4 2012 Earnings Call

March 22, 2011 4:30 pm ET


Michael H. Braun – President, Chief Executive Officer & Director

Peter J. Prygelski, III – Chief Financial Officer, Treasurer & Director


Douglas Ruth – Lenox Financial Services, Inc.

William Meyers – Miller Asset Management



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Welcome to the 21


Century Holding Company’s fourth quarter and year end 2011 financial results conference call. Please note that today’s call is being recorded. At this time all participants are in a listen only mode. Later we’ll conduct a question and answer session. (Operator Instructions) Now, per the request of management I will read the following Safe Harbor Statement.

Statements in this conference call that are not historical facts are forward-looking statements. Without limiting generality of the foregoing words such as may, will, expect, believe, anticipate, intend, could, would, estimate, belief, or continue, or other variations therefore comparable terminologies are intended to identify forward-looking statements. The matters discussed on this call that are forward-looking statements are based on the current management expectations involving risks and uncertainties that may result in these expectations not being realized.

Actual events, outcomes, and results may differ materially from what is expressed or forecasted in forward-looking statements made on this call due to numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in the conference call, our press release issued today, and other filings made by the company with the SEC from time-to-time.

Forward-looking statements made during this presentation speak only as of the date on which they are made and 21


Century Holding Company specifically disclaims any obligations to update or revise any forward-looking statements to reflect new information, future events, or circumstances, or otherwise.

Now, I’ll turn the call over to Michael Braun, President and Chief Executive Officer.

Michael H. Braun

Thank you for joining us to discuss 21


Century Holding Company’s fourth quarter and full year 2011 financial results. I am joined on the call by Pete Prygelski, our Chief Financial Officer. Our full financial results for the quarter can be found in our earnings press release on our website. I will go over some brief highlights from the quarter and then Pete and I will open up the line for questions.

Our disciplined focus on underwriting, risk management, and expense control continues to translate into earnings results. We are pleased to report our second consecutive profitable quarter which included an underwriting profit for our insurance subsidiary. We reported fourth quarter net income of $2 million or $0.25 per share. Our loss ratio improved to 52.9% for the fourth quarter 2011 compared with 105.4% for the fourth quarter 2010 and 63.7% for the full year 2011 compared with 89% for the full year 2010.

We are very encouraged by our results and the continued improvements we are seeing in our book of business and feel we are well positioned as we head into 2012. We also announced that we have been granted a 14% rate increase from the Florida Office of Insurance Regulation on our homeowner’s assumption policies which account for about 10% of our total property book effective April 5


. As these rate increases take effect and flow through our book of business we expect to see continued benefits.

During 2012 we expect to receive a single digit rate increase on our voluntary book. While we continue to see great demand in the market to write a lot of business, we are being prudent in our decision making process and are focused on making sure that we’re adding profitable policies to our book of business.

We continue to keep a watchful eye on our expenses, which are down year-over-year. We have moved our corporate headquarters to a better and more efficient space for the company at a significant cost reduction and we continue to look for other ways to be prudent and conservative in our spending. We anticipate a successful renewal of our reinsurance program in July as our disciplined approach to underwriting has improved the quality of our book of business.

One final note before we open it up to questions, based on your feedback from some of our investors we will be changing our earnings release to four o’clock on our next earnings call and subsequent calls thereafter instead of at two o’clock and then we’ll be having the earnings calls at 4:30. Before we open it up to questions as well, there’s a few questions that were emailed in. I just want to take a moment to answer those.

The first one is a question about our homeowner’s book of business and if we’re going to continue to write policies through the wind seasons and if we expect to grow it through 2012. The homeowner’s book of business is doing much better. It’s doing very well. We continue to have policies that we have non-renewed like we had in 2010 and ’11 but the quantity of policies we’re non-renewing is much lower than it has been in years past.

In terms of writing policies, we were prudent with what we were writing, however, we’re seeing a significant increase in demand in 2012 and we think that the business in 2012 could increase by our projection is 10% but it could be more than that depending on how we do with our reinsurance and a couple other variables. But, there is significantly more demand out there for us to write more business but we’re writing it in a very managed manner.

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