21st Century Holding CEO Discusses Q4 2010 Results - Earnings Call Transcript

21st Century Holding Company (TCHC)

Q4 2010 Earnings Call (Qtr End December 31, 2010)

March 24, 2011 4:30 p.m. EDT

Executives

Michael Braun – President, CEO, Director

Pete Prygelski – CFO, Treasurer, Director

Analysts

Douglas Ruth – Lenox Financial

[Jason Herr] – Private Investor

Presentation

Operator

Good afternoon and welcome to 21st Century Holding Company's Yearend 2010 Financial Results Conference Call. My name is [Said] and I will be your operator today.

Please note that today's conference call is being recorded. At this time all participants are in a listen-only mode. Later we'll conduct a question-and-answer session. If you wish to ask a question at that time, please press star then 1 on your touchtone telephone. Please limit your questions to allow others time as well. You may re-enter the queue with additional questions.

Statements in this conference call that are not historical facts are forward-looking statements, 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 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 and outcomes, results may differ materially from what is expected 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 this conference call or 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 as of the date on which they are made and 21st Century Holding Company specifically disclaims any obligation to update or revise any forward-looking statement to reflect new information, future events or circumstances, 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

Thank you. Good afternoon and thank you for joining us today to discuss 21st Century Holding Company’s 2010 fourth quarter and full year financial results. I'd like to start the call off with the highlights of our results from both the quarter and for the year. I'll also discuss a few recent developments and provide you with an outlook as we head into 2011. Pete Prygelski, our Chief Financial Officer, is here with me. Following my remarks, we will open up the call and we'll be glad to answer your questions.

Our results for the fourth quarter were primarily affected by our decision to take a more conservative approach to our reserves. The company reviews its reserve position on a monthly basis, however, annually we perform a more in-depth review of our reserves. And upon analyzing our position for the fourth quarter, we decided to take a $2.4 million charge to strengthen our reserves.

For the three months ended December 31, 2010, the company reported a net loss of $3.5 million or $0.43 per share compared to a net loss of $7.4 million or $0.93 per share in the same three-month period in 2009. For the 12 months ended December 31, 2010, the company reported a net loss of $8 million or $1.01 per share compared to a net loss of $10.3 million or $1.29 per share in the same 12-month period the prior year.

Net premiums earned increased $1.2 million or 12% to $11.5 million for the three months ended December 31, 2010 as compared to $10.3 million for the same three-month period the prior year. Net premiums earned decreased $2.9 million or 6.1% to $45.1 million for the 12 months ended December 31, 2010 as compared to $48 million for the same 12-month period in 2009. Gross premiums written decreased by $5.3 million or 18.1% to $24.1 million for the three months ended December 31, 2010 as compared to $29.4 million for the three months ended December 31, 2009.

Total revenues remained strong this quarter as we continued to see the results of our disciplined approach to underwriting and the rate improvement for the last 18 months take effect. Total revenues increased $1.4 million or 11.2% to $14.3 million for the three months ended December 31, 2010 as compared to $12.9 million for the same three months in 2009. Total revenues increased $1.7 million or 3% to $60.6 million for the 12 months ended December 31, 2010 as compared to $58.9 million for the same 12-month period in 2009.

As we mentioned, 21st Century Holding Company recently merged its two wholly-owned insurance company subsidiaries, Federated National Insurance Company and American Vehicle Insurance Company, in January. As part of the merger, the company agreed with the Florida Office of Insurance Regulation to, among other things, better distribute its book of business throughout the entire state versus our current concentration in south Florida. The merger yields the benefits of scale and provides better use of our capital from a regulatory, rating agency and operations perspectives. We will benefit from the reduction of redundant regulatory filing administrative expenses. We will also have increased flexibility with our reinsurance program and anticipate more favorable terms on the company's upcoming reinsurance treaties.

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