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Now, at this time, I would like to turn the conference over to Mr. Michael Braun, Chief Executive Officer and President of 21st Century Holding Company. Please go ahead, sir.Michael Braun Good afternoon and thank you for joining us today to discuss our first quarter results. I will review some of the highlights in the quarter and then open up the call to your questions. For the three months ending March 31 the company reported a net loss of $900,000 or $0.12 per share compared to net income of $300,000 or $0.04 during the same three-month period last year. First quarter results decreased year-over-year primarily as a result of higher reinsurance costs in connection with the company’s property line of business. These costs were partially offset by the effects of a 19% rate increase that went into effect in November and also the impact of the new policies written during the fourth quarter of 2009. Gross premiums decreased $1.4 million or 5% to $27 million compared to $28.4 million for the same three-month period last year. Voluntary homeowners’ gross written premium increased $6.9 million or 44% to $22.7 million compared with $15.8 million for the same three-month period last year. The decrease in gross written premium can be attributed to higher reinsurance costs in the first quarter of 2010 as compared with the first quarter of 2009. Net premiums earned decreased $2.9 million or 20.8% to $11 million compared to $13.9 million for the same three-month period last year. Our first quarter results show a decrease from the same period of 2009 primarily because of higher reinsurance costs which is by far our largest expense and the continued effect of the mitigation credits. However, our results improved significantly over the fourth quarter of 2009 due to a number of favorable trends including it was the first full quarter to benefit from the 19% rate increase which has been in effect since last November on our homeowner voluntary business. We expect to build on this momentum for the rest of 2010.
Ample capacity has returned to the reinsurance markets which we believe will push down reinsurance costs. In addition we continue to focus on writing voluntary policies based on our underwriting standards which leads to more profitable business. We anticipate the combination of improving industry conditions, decreasing reinsurance rates, disciplined exposure management and the impact of the previously announced rate increases both on our voluntary homeowner’s book and those assumed from citizens will create a strong foundation for future revenue growth.We expect operating margin improvement for the next several quarters which is anticipated to contribute to growth in the company’s book value for the benefit of our shareholders. The main thing as we look at on a go-forward basis is our reinsurance costs. Last year’s reinsurance costs came in at about $52 million for the year. We are anticipating insurance costs to come down significantly for us based on different exposure, based on our management of exposure as well as we are anticipating a softening in the pricing. Thank you. Operator, if I can go ahead and open up the line for questions for Peter Prygelski and myself? Qu estion and Answer Session Operator (Operator Instructions) The first question comes from the line of William Myers – Miller Asset Management. William Myers – Miller Asset Management Are you saying reinsurance premiums started heading down in the first quarter or are you saying that they weren’t heading down but you have reasons to anticipate they are going to go down later in the year? Michael Braun No, what we do is we have annual contracts that we sign. Those are both with the state which is the Florida Hurricane Catastrophe Fund and also private markets. The private markets we believe there is ample capacity out there which will lead we believe to more favorable pricing. So the reinsurance costs from last year’s contracts, that is July 1 approximately of 2009 through the second quarter, so that is going to be through June of 2010, those costs are fairly consistent. We are anticipating costs effective July 1, 2010 to go down for two reasons; like I said the availability of reinsurance. So just the law of supply and demand. But really our exposure management is different as well. So we are anticipating that exposure will impact the total costs of our reinsurance. Read the rest of this transcript for free on seekingalpha.com