SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996 Commission File Number 0-6964
------
20TH CENTURY INDUSTRIES
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-1935264
- - -------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) number)
Suite 700, 6301 Owensmouth Avenue, Woodland Hills, California 91367
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 704-3700
-----------------------------
None
- - --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and ( 2 ) has been subject to such filing
requirements for the past 90 days.
YES X NO
----------------- ---------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 22, 1996
Common Stock, Without Par Value 51,512,006 shares
<PAGE> 1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
March 31, December 31,
1996 1995
---- ----
(unaudited)
(Amounts in thousands)
Investments:
<S> <C> <C>
Fixed maturities - available-for-
sale, at fair value - Note 3 $1,078,117 $1,125,548
Equity securities, at fair value 2,226 1,564
---------- ----------
Total investments 1,080,343 1,127,112
Cash and cash equivalents 54,503 50,609
Accrued investment income 19,830 19,862
Premiums receivable 87,538 90,835
Reinsurance receivables and recoverables 58,695 48,314
Prepaid reinsurance premiums 28,901 28,823
Deferred income taxes - Note 4 211,063 206,230
Deferred policy acquisition costs 10,023 10,481
Other assets 25,015 26,620
---------- ----------
$1,575,911 $1,608,886
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 2
<TABLE>
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
---- ----
(unaudited)
(Amounts in thousands, except share data)
<S> <C> <C>
Unpaid losses and loss
adjustment expenses $ 566,559 $ 584,834
Unearned premiums 279,480 288,927
Bank loan payable - Note 5 175,000 175,000
Claims checks payable 46,818 49,306
Reinsurance payable 22,836 23,176
Other liabilities 29,140 21,058
---------- ----------
Total liabilities 1,119,833 1,142,301
---------- ----------
Stockholders' equity
Capital stock
Preferred stock, par value $1.00 per
share; authorized 500,000 shares,
none issued
Series A convertible preferred
stock, stated value $1,000 per
share, authorized 376,126 shares,
outstanding 224,950 in 1996 and
1995 224,950 224,950
Common stock without par value;
authorized 110,000,000 shares,
outstanding 51,512,006 in 1996
and 51,493,406 in 1995 69,889 69,805
Common stock warrants 16,000 16,000
Unrealized investment gains, net 2,396 33,508
Retained earnings 142,843 122,322
---------- ----------
Total stockholders' equity 456,078 466,585
---------- ----------
$1,575,911 $1,608,886
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 3
<TABLE>
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
(Amounts in thousands, except per share data)
<S> <C> <C>
REVENUES:
Net premiums earned $ 232,628 $ 248,737
Net investment income 18,689 21,179
Realized investment gains 2,588 185
---------- ----------
253,905 270,101
---------- ----------
LOSSES AND EXPENSES:
Net losses and loss
adjustment expenses 191,596 244,993
Policy acquisition costs 8,168 11,449
Other operating expenses 12,372 12,991
Loan interest and fees expense 3,565 4,388
---------- ----------
215,701 273,821
---------- ----------
Income (loss) before
federal income taxes 38,204 (3,720)
Federal income taxes (benefit) - Note 4 12,621 (2,302)
---------- ---------
NET INCOME (LOSS) $ 25,583 $ (1,418)
========== =========
EARNINGS (LOSS) PER COMMON SHARE - Note 2
- - -----------------------------------------
PRIMARY $ 0.35 $ (0.12)
========== =========
FULLY DILUTED $ 0.32 $ -
========== =========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 4
<TABLE>
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Three Months Ended March 31, 1996
(unaudited)
Convertible
Preferred Stock Common Stock Unrealized
$1 Par Value Without Common Investment
Per Share Par Value Stock Gains Retained
Amount Amount Warrants (Losses) Earnings
--------- ---------- ---------- ----------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $224,950 $ 69,805 $ 16,000 $ 33,508 $ 122,322
Net profit for the three
months 25,583
Effects of common stock issued
under restricted shares plan 84
Net change in unrealized
gains (losses) on
investments, net of
taxes of $16,753 (31,112)
Cash dividends paid on
preferred stock (5,062)
-------- -------- -------- -------- ---------
Balance at March 31, 1996 $224,950 $ 69,889 $ 16,000 $ 2,396 $ 142,843
======== ======== ======== ======== =========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 5
<TABLE>
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
------------------------------
1996 1995
---- ----
(unaudited)
(Amounts in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 25,583 $ (1,418)
Adjustments to reconcile net
income (loss) to net cash provided
(used) by operating activities:
Provision for depreciation
and amortization 1,299 1,734
Provision for deferred income taxes 11,912 (2,302)
Realized gains on sale of investments,
fixed assets, etc. (2,590) (136)
Federal income taxes (896) 74,064
Prepaid reinsurance premiums
and reinsurance receivables
and recoverables (10,459) (25,336)
Unpaid losses and loss
adjustment expenses (18,276) (70,535)
Unearned premiums (9,447) 25
Claims checks payable (2,488) (4,013)
Proposition 103 payable - (16,001)
Other 13,352 33,579
---------- ----------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES $ 7,990 $ (10,339)
</TABLE>
<PAGE> 6
<TABLE>
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
Three Months Ended March 31,
------------------------------
1996 1995
---- ----
(unaudited)
(Amounts in thousands)
<S> <C> <C>
INVESTING ACTIVITIES:
Investments available-for-sale:
Purchases $ (118,468) $ (47,180)
Called or matured 12,107 1,128
Sales 107,674 16,101
Net purchases of property and equipment (347) (521)
---------- ----------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES 966 (30,472)
FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock - 20,000
Proceeds from bank loan - 10,000
Dividends paid (5,062) (4,500)
---------- ----------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES (5,062) 25,500
---------- ----------
Net increase (decrease) in cash 3,894 (15,311)
Cash, beginning of year 50,609 249,834
---------- ----------
Cash, end of quarter $ 54,503 $ 234,523
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 7
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended
March 31, 1996 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and notes
thereto included in the 20th Century Industries and Subsidiaries
annual report on Form 10-K for the year ended December 31, 1995.
2. Earnings (Loss) Per Common Share
Primary earnings (loss) per common share are computed using the
weighted average number of common shares plus the net effect of
dilutive common equivalent shares (warrants and stock options)
outstanding during the period. Common equivalent shares outstanding
are computed using the modified treasury stock method. The primary
weighted average number of shares was 59,294,292 and 51,435,734 for
the three months ended March 31, 1996 and 1995, respectively. The
fully diluted weighted average number of shares was 79,148,661 for the
three months ended March 31, 1996 assuming conversion of the
convertible preferred stock. Fully diluted earnings per share for the
three months ended March 31, 1995 are not presented as the results are
anti-dilutive.
<PAGE> 8
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3. Investments
In accordance with Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," the Company classifies all of its bond portfolio as
available-for-sale.
The amortized cost, gross unrealized gains and losses, and fair values
of fixed maturities as of March 31, 1996 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
(Amounts in thousands)
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 44,127 $ 122 $ 261 $ 43,988
Obligations of states and
political subdivisions 258,785 1,826 8,288 252,323
Public utilities 189,000 2,512 3,187 188,325
Corporate securities 581,000 13,990 1,509 593,481
---------- ------- ------- ----------
Total available-for-sale $1,072,912 $18,450 $13,245 $1,078,117
========== ======= ======= ==========
4. Income Taxes
Income taxes do not bear the expected relationship to pre-tax income
primarily because of tax-exempt investment income. As of March 31,
1996, the Company has a net operating loss carryforward of
approximately $486,000,000 and $342,000,000 for regular tax and
alternative minimum tax, respectively, and an alternative tax credit
carryforward of $9,462,000. The net operating loss carryforwards will
expire in 2009. Alternative minimum tax credits may be carried
forward indefinitely to offset future regular tax liabilities.
<PAGE> 9
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. Income Taxes (continued)
Federal income tax expense consists of:
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
(Amounts in thousands)
Current tax expense $ 709 $ -
Deferred tax expense (benefit) 11,912 (2,302)
--------- ---------
$ 12,621 $ (2,302)
========= =========
5. Bank Loan Payable
Effective December, 1995, the Company increased its reducing-revolver
credit facility (the "Facility") to an aggregate commitment of
$225 million.
As of March 31, 1996, the Company's outstanding advances against the
Facility totalled $175 million for which loan origination fees
totaling $9.8 million were incurred. Loan fees are being amortized
over the life of the Facility. Interest is charged at a variable rate
based, at the option of the Company, on either (1) the contractually
defined Alternate Base Rate ("ABR") plus a margin of 0.25% or (2) the
Eurodollar rate plus a margin of 1.00%. Margins will be adjusted in
relation to certain financial and operational levels of the Company.
The ABR is defined as a daily rate which is the higher of (a) the
prime rate for such day or (b) the Federal Funds Effective Rate for
such day plus 1/2% per annum. Interest is payable at the end of each
interest period. The stock of the Company's insurance subsidiaries is
pledged as collateral under the loan agreement. At March 31, 1996,
the annual interest rate for the specified interest period was
approximately 6.5%. Interest paid was approximately $980,000 and
$3.7 million for the three months ended March 31, 1996 and 1995,
respectively.
<PAGE> 10
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
5. Bank Loan Payable (continued)
On both April 1, 1996 and July 1, 1996, the aggregate commitment will
be reduced by $5,625,000, and thereafter by $11,250,000 on the first
day of each quarter through the Facility's maturity on April 1, 2001.
Principal repayments are required when total outstanding advances
exceed the aggregate commitment. The Company may prepay principal
amounts of the advances, as well as voluntarily cause the aggregate
commitment to be reduced at any time during the term of the Facility.
6. Stock Option Plan
On May 25, 1995, the shareholders of the Company approved the
1995 Stock Option Plan (the "Plan"), which provides for the grant of
stock options to key employees and nonemployee directors of the
Company. The aggregate number of common shares issued and issuable
under the Plan shall not exceed 1,000,000. At March 31, 1996, options
to purchase common shares were granted as follows:
Common Market Price
Share per Share on
Options Date of Grant
------- -------------
Outstanding, January 1, 1996 180,000 $12.560
Granted in 1996 339,839 $19.375
-------
Outstanding, March 31, 1996 519,839
=======
<PAGE> 11
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
- - -------------------
The Company's performance improved markedly in the first quarter of 1996 as it
continued toward a full recovery from the financial effects of the 1994
Northridge Earthquake. The Company's strategy to focus on its core automobile
insurance business was rewarded in 1996 with favorable underwriting results,
demonstrating the profitability and stability of the line. Overall, the Company
achieved an underwriting profit of $20.5 million and net income of $25.6 million
on revenues of $253.9 million for the quarter ended March 31, 1996.
As a result of the capital infusion by American International Group, Inc.
("AIG") in December 1994 and subsequent operating profits, the Company's
statutory surplus has been restored to levels within the regulatory norm. As of
March 31, 1996, the Company's insurance subsidiaries had a combined statutory
surplus of $401.6 million, a ratio of 2.4:1 of net written premium to surplus,
and was in compliance with California Department of Insurance ("DOI")
requirements and its loan covenants.
The Company received approval from the DOI to implement a new automobile rating
plan effective March 15, 1996, which includes an overall 3.15% rate reduction.
The Company expects the new rates, combined with an aggressive marketing and
advertising campaign, to restore unit growth in the automobile line. Because
the Company is still subject to the order issued by the DOI in June 1994, the
homeowner and condominium policies will be non-renewed starting in July 1996,
and the Company will be fully withdrawn from this line by the end of July 1997.
As of March 31, 1996, the Company had total cash of $54,503,000 and total
investments at fair value of $1,080,343,000. Of the Company's total
investments, 21% at fair value was invested in tax-exempt state and municipal
bonds and 79% was invested in taxable government, corporate and municipal
securities.
Loss and loss expense payments are the most significant cash flow requirements
of the Company. The Company continually monitors loss payments to provide
projections of future cash requirements. The Company believes it can meet its
current cash requirements through cash flow from operations.
<PAGE> 12
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
ITEM 2. (CONTINUED)
At March 31, 1996, the Company has $225 million of preferred stock outstanding,
bearing dividends of 9% per year payable quarterly in cash or in kind. Cash
dividends of $5,061,375 were paid in the first quarter of 1996.
The Company has a revolving credit line of $225 million, with interest
obligations varying according to market conditions. As of March 31, 1996, the
outstanding balance on the loan was $175 million. Presently, interest is paid
quarterly, with interest payments of $980,000 and $2.9 million on January 9,
1996 and April 10, 1996, respectively.
Funds required by 20th Century Industries to pay dividends and meet its debt
obligations are provided by the insurance subsidiaries. The ability of the
insurance subsidiaries to pay dividends to the holding company is regulated by
state law. As of March 31, 1996, both net income and earned surplus were
sufficient to enable the subsidiaries to declare a $10 million dividend to the
parent to service the debt and preferred dividend requirements, which was paid
on April 9, 1996.
Results of Operations
- - ---------------------
Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995
- - -------------------------------------------------------------------------------
UNITS IN FORCE
Units in force for the Company's insurance programs as of March 31 were as
follows:
1996 1995
---- ----
Private Passenger Automobile
(number of vehicles) 1,033,274 1,112,223
Homeowner and Condominium
(number of policies) 170,481 197,336
Personal Excess Liability
(number of policies) 10,328 10,875
--------- ---------
1,214,083 1,320,434
Total ========= =========
<PAGE> 13
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
ITEM 2. (CONTINUED)
The Company's voluntary auto units in force declined by 7.1% as compared to a
year ago from 1,104,271 units in force at March 31, 1995 to 1,026,105 units in
force at March 31, 1996. Assigned Risk units decreased by 9.9% from the same
period a year ago, from 7,952 units in force at March 31, 1995 to 7,169 units in
force at March 31, 1996.
Units in force for the Company's other programs, homeowner, condominium and
personal excess liability, declined by 13.2% between March 31, 1995 and
March 31, 1996 primarily as a result of the DOI's order for the Company to
discontinue writing new homeowners, condominium owners and earthquake insurance
in order to reduce the Company's earthquake exposure.
UNDERWRITING RESULTS
Premium revenue and underwriting results for the Company's insurance programs
were as follows:
March 31,
---------------------
1996 1995
---- ----
Gross Premiums Written
Automobile $ 236,295 $ 252,778
Homeowner and Condominium 14,977 16,830
Personal Excess Liability 475 496
--------- ---------
Total $ 251,747 $ 270,104
========= =========
Net Premiums Earned
Automobile $ 219,722 $ 242,945
Homeowner and Condominium 12,708 5,567
Personal Excess Liability 198 225
--------- ---------
Total $ 232,628 $ 248,737
========= =========
Underwriting Profit (Loss)
Automobile $ 20,504 $ 3,662
Homeowner and Condominium (228) (24,286)
Personal Excess Liability 216 (72)
--------- ---------
Total $ 20,492 $ (20,696)
========= =========
<PAGE> 14
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
ITEM 2. (CONTINUED)
Automobile
Automobile insurance is the primary line of business written by the Company and
has been consistently profitable. The Company's voluntary automobile programs
experienced an underwriting profit of $20.8 million during the first three
months of 1996 compared to an underwriting profit of $4.7 million during the
same period of 1995. Gross written premiums decreased by 6.5% from the same
period a year ago primarily due to the decline in auto units as a result of not
offering new homeowner business or earthquake coverage and from rate increases
of 6% in late 1994 and 3.65% in mid-1995. Net earned premiums decreased by 9.6%
between March 1995 and March 1996. This decrease resulted from the decline in
automobile units and the full impact of a 10% quota share agreement with AIG
partially offset by rate increases. Assigned Risk units produced an
underwriting loss of $263,000 in the first three months of 1996 compared to a
$1 million underwriting loss for the first three months of 1995. This decline
is largely due to a rate increase of 5.2% implemented in June 1995.
The significant improvement in underwriting results in both the voluntary and
assigned risk programs results primarily from a combination of rate increases
implemented in the latter part of 1995 and an overall reduction in claim
frequency and severity.
Homeowner and Condominium
As ordered by the DOI, the Company no longer writes new homeowner or condominium
policies or earthquake coverage endorsements. The Company will continue to
renew existing homeowner and condominium policies without earthquake coverage
through July 1996. Due to the requirement to exit the homeowners market, units
in force for the homeowner and condominium program decreased 13.6% between March
1995 and March 1996. This decline in units resulted in lower gross premiums
written, although the net earned premiums increased due to the expiration of the
high-limit, high premium earthquake catastrophe reinsurance program in July
1995. The Company will continue to maintain a less costly catastrophe
reinsurance program at a cost of approximately $3.3 million per quarter until
the remaining homeowner and condominium policies expire.
<PAGE> 15
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
ITEM 2. (CONTINUED)
Underwriting results for these programs are subject to the variability caused by
weather-related claims and by infrequent disasters. The underwriting loss for
this line was $228,000 for the first three months of 1996 compared to an
underwriting loss of $24.3 million for the same period in 1995. The improvement
in underwriting results reflects a decrease in overall exposure during the
period, due to the runoff of the business, milder weather in the first quarter
of 1996 compared to that of 1995 and the reduction in reinsurance premium
expense. The 1995 underwriting loss included first-party property claims
totaling $14.2 million on a pre-tax basis, resulting directly from a series of
severe storms in that first quarter.
Personal Excess Liability
Units in force and gross premiums written have decreased by 5.0% and 4.2%,
respectively, between March 1995 and March 1996. The decline in this business
is primarily attributable to the runoff of the homeowner and condominium
programs, as policyholders for this program are likely to purchase excess
liability coverage in conjunction with their homeowner policies. Underwriting
profits can vary significantly with the number of claims which occur
infrequently.
Policy Acquisition and General Operating Expenses
The Company's policy acquisition and general operating expense ratio continues
to be one of the lowest in the industry. The ratio of net underwriting expenses
(excluding loan interest and fees) to net earned premium was 8.8% for the first
three months of 1996 and 9.8% for the first three months of 1995. The decline
in the ratio reflects a reduction in general operating expenses due to the
decline in business as well as cost efficiencies. Such efficiency, as reflected
in its expense advantage over its competitors, enables the Company to maintain
its price leadership and provide for future growth and profitability.
INVESTMNET INCOME
Net pre-tax investment income decreased 11.7% during the first three months of
1996 compared to the same period of 1995. Average invested assets decreased
<PAGE> 16
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
ITEM 2. (CONTINUED)
14.5% between March 1995 and March 1996. The average annual pre-tax yield on
invested assets increased from 6.4% for the first three months of 1995 to 6.6%
for the first three months of 1996. The decline in investment income from March
1995 levels is the result of lower investable funds offset by the increase in
yield.
Realized gains on sales of investments increased in the first three months of
1996 to $2.6 million from $185,000 for the same period of 1995. Unrealized
gains on investments decreased $31.1 million (92.8%) since December 31, 1995,
primarily because of unfavorable conditions in the bond market.
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K
The registrant filed one Form 8-K during the three months ended March 31, 1996
as follows:
January 17, 1996 The Company announced that certain officers and
directors of the Company had been named as defendants
in a lawsuit relating to financial losses suffered by
the Company as a result of the January 17, 1994
Northridge Earthquake.
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
20TH CENTURY INDUSTRIES
-----------------------
(Registrant)
Date May 8, 1996 WILLIAM L. MELLICK
--------------------- ---------------------------------------
President and Chief Executive Officer
Date May 8, 1996 ROBERT B. TSCHUDY
--------------------- ---------------------------------------
Senior Vice President and
Chief Financial Officer
<PAGE> 19
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
EXHIBIT 11: COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
(Amounts in thousands, except per share data)
<S> <C> <C>
Primary:
Average shares outstanding 51,458 51,436
Net effect of dilutive stock
warrants and options based
on the modified treasury
stock method using average
market price 7,836 -
---------- ---------
Totals 59,294 51,436
========== =========
Net income (loss) $ 25,583 $ (1,418)
Dividends on preferred stock (5,061) (4,500)
---------- ---------
Net income (loss) applicable
to common stock $ 20,522 $ (5,918)
========== =========
Profit (loss) per share $ 0.35 $ (0.12)
========== =========
</TABLE>
<PAGE> 20
20TH CENTURY INDUSTRIES AND SUBSIDIARIES
EXHIBIT 11: COMPUTATION OF EARNINGS PER COMMON SHARE (continued)
<TABLE>
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
(Amounts in thousands, except per share data)
<S> <C> <C>
Fully diluted:
Average shares outstanding 51,458 51,436
Net effect of dilutive stock
warrants and options based
on the modified treasury stock
method using the higher of
average market price or
closing price 7,836 -
Assuming conversion
of convertible
preferred stock 19,855 17,809
---------- ---------
Totals 79,149 69,245
========== =========
Net income (loss) $ 25,583 $ (1,418)
Net interest expense reduction - -
---------- ---------
Net income (loss) applicable
to common stock $ 25,583 $ (1,418)
========== =========
Profit (loss) per share $ 0.32 $ (.02)*
========== =========
*Not presented in the financial statements as the results are anti-dilutive.
</TABLE>
<PAGE> 21
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 1078117
<DEBT-CARRYING-VALUE> 1078117
<DEBT-MARKET-VALUE> 1078117
<EQUITIES> 2226
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 1080343
<CASH> 54503
<RECOVER-REINSURE> 58695
<DEFERRED-ACQUISITION> 10023
<TOTAL-ASSETS> 1575911
<POLICY-LOSSES> 566559
<UNEARNED-PREMIUMS> 279480
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
224950
<COMMON> 69889
<OTHER-SE> 161239
<TOTAL-LIABILITY-AND-EQUITY> 1575911
232628
<INVESTMENT-INCOME> 18689
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