21st Century Holding CEO Discusses Q3 2010 Results – Earnings Call Transcript

21st Century Holding Company (TCHC)

Q3 2010 Earnings Call Transcript

November 11, 2010 4:30 pm ET

Executives

Michael Braun – President and CEO

Analysts

William Myers – Miller Asset Management

Presentation

Operator

Good afternoon. And welcome to 21st Century Holding Company’s third quarter 2010 financial results conference call. My name is Divan, and I will be your operator today. Please note that today’s call is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

Statements in this conference call or in documents incorporated by reference that are not historical fact are forward-looking statements. Forward-looking statements 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 negative other variations thereof or comparable terminology are intended to identify forward-looking statements.

The risks and uncertainties include but are not limited to the risks and uncertainties described in this conference call. Our press release issued today and other filings made by the Company with the SEC from time to time. Furthermore, the unaudited consolidated financial statements of 21st Century Holding Company for the quarter ended September 30th, 2010 have been prepared in accordance with Generally Accepted Accounting Principles for internal financial information and with instructions for Form 10-Q and Rule 10-01 of Regulation S-X.

These financial statements do not include all information in those requested by GAAP for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and notes there to, included in the company’s Annual Report on Form 10-K for the year ended December 31, 2009. 21st Century Holding Company specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

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 21st Century Holding Company’s third quarter 2010 financial results. I’d like to review the highlights of our financial results as well as provide our outlook for the company. Following my remarks, Pete and I will open up the call to your questions.

While we experienced a loss in the quarter, our net earned premiums and total revenue grew at double-digit rates and we experienced lower losses on our property book than we experienced during the same quarter last year. We also incurred a lower reinsurance expense as a result of negotiating coverage at more favorable terms.

Looking forward, we are encouraged by the consistent positive trends that we are seeing and the solid momentum that we have built over the last few quarters and we see continuing into 2011.

Now for the financial highlights, for the three months ended September 30, 2010 the company reported a net loss of 1.3 million compared with a net loss of 4 million in the same three month period last year. For the nine months ended September 30, 2010, the company reported a net loss of 4.5 million compared to a net loss of 2.9 million in the same nine month period last year.

Year-over-year, third quarter results improved due to a more disciplined underwriting and the positive effects of the 19% rate increase that went into effect on our voluntary book last November. Net – net premiums increased to 2.1 million or 22.2% to 11.6 million for the three months ended September 30, 2010 compared with 9.5 million for the same three months period last year.

Net premiums earned decreased 4.2 or 11% to 33.5 million for the nine months ended September 30, 2010 compared with 37.7 million for the same nine months period last year. We continue to see very high demand in the foreign market for our homeowners’ product. We typically write few policies in the third quarter during the active wind season. While we continue to measure – maintain a measured and disciplined approach, we are significantly increased writing business in the fourth quarter.

Total revenues increased 2.5 million or 19.1% to 15.5 million for the three months ended September 30, 2010 compared with 13 million for the same three months period last year. Total revenue increased 300,000 or 0.7% to 46.3 million for the nine months ended September 30, 2010 compared with 46 million for the same nine months period last year.

While we are pleased with the momentum and the positive trends that we are seeing in our third quarter results, we continue to operate in a challenging rate environment. And as our more disciplined and measured approach to underwriting – and as such our disciplined and more measured approach to underwriting is even more important.

On the reinsurance side, while the costs were lower this quarter, due to more favorable terms we tend to take a more risk as risk approach to buying reinsurance than some of our competitors. We currently retain 5 million per catastrophic event which represents a conservative 8% of the company’s capital. While no hurricanes hit the state of Florida this year, it was a third most active hurricane season on record.

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