Company contact: Tony Tomich 818 / 673-3996 

FOR IMMEDIATE RELEASE 
 
February 26, 2007

21ST CENTURY INSURANCE GROUP REPORTS FOURTH QUARTER RESULTS AND IMPROVING GROWTH IN DIRECT PREMIUMS WRITTEN

(WOODLAND HILLS, CA) - 21st Century Insurance Group (NYSE: TW) today reported an upturn in premium growth. “We have improved from a 3.4% year-over-year decline in third quarter of 2006 to a 1.9% year-over-year increase in direct premiums written in the fourth quarter,” said President and Chief Executive Officer Bruce Marlow. “This turnaround is continuing in the first quarter of 2007, with new customer activity more than double the level of the first quarter of 2006. Since December 31, 2006, total company Vehicles-in-Force (“VIF”) have increased 2.3% to 1.582 million, as of February 25th, 2007,” added Marlow.

Driving the growth is the Company’s expansion into eight new states in 2006, increasing the share of total United States personal auto market in which the Company operates from 34% to 60%. Non-California VIF represents 19.0% of the Company’s total VIF as of February 25th, 2007, compared to 16.5% at year-end 2006 and 8.2% at year-end 2005.

Streamlining of Operations

The Company also announced a reduction of approximately 110 employees, a 4% reduction of the Company’s total work force of approximately 2,900 employees. The Company expects to incur approximately $3.7 million of severance expense in the first quarter of 2007 as a part of this action. The Company also intends to reduce the number of information technology contractors from approximately 300 to 20 over the next three months. A majority of the contractor cost had been capitalized. “2005 and 2006 were periods of implementation of new systems and new markets. Now that we have achieved a national capability, we are committed to reducing our expense ratio through expense management, quality of operations and growth in premiums,” said Steve Erwin, Senior Vice President and Chief Financial Officer.
 
1


Fourth Quarter 2006 and 12 Month 2006 Results

The Company reported net income of $19.2 million ($0.22 per basic share) for the fourth quarter of 2006, compared to $26.4 million ($0.31 per basic share) for the same period in 2005. The decline in net income was primarily attributable to a planned acceleration in the Company’s national expansion efforts during the quarter and the 2006 recognition of stock-based compensation. The Company entered five new states in the fourth quarter of 2006 (Colorado, Minnesota, Missouri, New Jersey, Wisconsin). Overall, the Company entered eight new states in 2006 and increased its footprint from 34% to 60% of the United States personal auto market. The fourth quarter results also included decreases in reserves for prior accident year losses and loss adjustment expenses (“LAE”) totaling $12.4 million, versus decreases of $4.4 million in the fourth quarter of 2005. Other fourth quarter financial highlights:

 
·
Direct premiums written of $322.5 million, versus $316.5 million in the fourth quarter of 2005 (1.9% increase)
 
·
California direct premiums written of $271.0 million, versus $294.5 million in the fourth quarter of 2005 (8.0% decrease)
 
·
Non-California direct premiums written of $51.5 million, versus $22.0 million in the fourth quarter of 2005 (134% increase)
 
·
GAAP combined ratio of 96.9% versus 93.0% for the fourth quarter of 2005. 2006 was favorably impacted by 3.8 points of prior accident year loss and LAE reserve decreases, versus 1.3 points in 2005

For the twelve months ended December 31, 2006, net income was $97.2 million ($1.13 per basic share), compared to $87.4 million ($1.02 per basic share) for the same twelve-month period in 2005. The 2006 twelve-month results include net realized investment losses of $1.4 million, compared to net realized investment losses of $3.3 million for the same twelve-month period in 2005. The 2006 twelve-month results also include decreases in prior accident year loss and LAE reserves totaling $51.9 million, versus decreases of $25.1 million for the same twelve-month period in 2005. Other twelve-month financial highlights:

2


 
·
Direct premiums written of $1.315 billion, versus $1.346 billion for the same twelve-month period in 2005 (2.3% decrease)
 
·
California direct premiums written of $1.166 billion, versus $1.262 billion for the same twelve-month period in 2005 (7.6% decrease)
 
·
Non-California direct premiums written of $149.1 million, versus $84.1 million for the same twelve-month period in 2005 (77.3% increase)
 
·
GAAP combined ratio of 93.7% versus 94.9% for the same twelve-month period in 2005. 2006 was favorably impacted by 4.0 points of prior accident year loss and LAE reserve decreases, versus 1.9 points in 2005

Stockholders’ equity at December 31, 2006 increased to $898.6 million, compared to $830.0 million at December 31, 2005. Book value per share at December 31, 2006 improved to $10.39 per share from $9.66 per share at December 31, 2005. Operating cash flows for the fourth quarter of 2006 were $32.0 million, compared to $37.9 million in the same period of 2005. Operating cash flows for the twelve months ended December 31, 2006 were $116.3 million, compared to $160.3 million for the same period of 2005.

Cash Dividend Doubled

On February 21, 2007, the Company’s Board of Directors declared a quarterly dividend of $0.16 per basic share. “The doubling of the dividend in the first quarter of 2007 from $0.08 per common share in 2006 to $0.16 per common share in 2007 is another indication of our commitment to maximizing long-term shareholder returns,” said Erwin. The Company previously increased cash dividends to shareholders from $0.02 in 2004 to $0.04 in 2005 and $0.08 in 2006. The cash dividend will be payable on March 29, 2007 to shareholders of record as of March 5, 2007.

Proposal from AIG

On January 24, 2007 American International Group, Inc. (“AIG”) submitted an unsolicited proposal to acquire the shares of 21st’s common stock that it does not already own for $19.75 per share in cash, or approximately $690 million. As of December 31, 2006, AIG owned approximately 61.9% of 21st. As previously announced, the 21st Board of Directors formed a Special Committee of independent directors to review and evaluate AIG’s offer and make a recommendation to the 21st Board. The Special Committee reported it is in discussions with AIG and has no further update at this time.

3


“We are pleased with the increasing success of our national expansion and marketing efforts, and we continue to execute our plans during the Special Committee’s process,” said Marlow.

About 21st: Drivers Just Like You

Founded in 1958, 21st Century Insurance Group is a direct-to-consumer provider of personal auto insurance. With $1.4 billion of revenue in 2006, the Company insures over 1.5 million vehicles in 17 states, including California, Florida, New Jersey, and Texas. The Company is executing a multi-year geographic expansion strategy which increased the percentage of the U.S. private passenger automobile market in which 21st operates from approximately 18% in 2003 to approximately 60% at the end of 2006. 21st provides superior policy features and 24/7 customer service at a competitive price. Customers can purchase insurance, service their policy or report a claim at www.21st.com or on the phone with our licensed insurance professionals at 1-800-211-SAVE, 24 hours a day, 365 days a year. Service is offered in English and Spanish, both on the phone and on the web. 21st Century Insurance Company, 21st Century Casualty Company, and 21st Century Insurance Company of the Southwest are rated A+ by A. M. Best, Fitch Ratings and Standard & Poor’s.

21st Century Insurance Group is traded on the New York Stock Exchange under the trading symbol “TW” and is headquartered at 21st Century Plaza, 6301 Owensmouth Avenue, Woodland Hills, CA 91367.
 
**********

21st Century Insurance Group (NYSE: TW) will hold an earnings teleconference for investors on Tuesday, February 27th, 2007 at 11:00 a.m. EST. The public can find information about the call in the Investor Relations section of 21st.com. The call will be broadcast over the Internet via a webcast, as well.

Teleconference Details:
Dial in number - 1-866-578-5801
International dial in number - 1-617-21 3-8058
Passcode - 196-543-23

Teleconference Replay Details:
Available from 1pm (EST) on February 27th, 2007 until 1pm (EST) on March 13th, 2007
Dial in number - 1-888-286-8010
International dial in number - 1-617-801-6888
Passcode - 722-375-20

**********

4


Cautionary Statement:
Statements contained herein and within other publicly available documents may include, and the Company's officers and representatives may from time to time make, statements that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts, but instead represent only the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. These statements may address, among other things, the Company's strategy for growth, underwriting results, expected combined ratio and growth of written premiums, product development, computer systems, litigation, regulatory environment and approvals, market position, financial results, dividend policy, reserves, and potential merger transactions. It is possible that the Company's actual results, actions and financial condition may differ, possibly materially, from the anticipated results, actions and financial condition indicated in these forward-looking statements. Other important factors that could cause the Company's actual results and actions to differ, possibly materially, from those in the specific forward-looking statements include the effects of competition and competitors' pricing actions; changes in consumer preferences or buying habits; adverse underwriting and claims experience; customer service problems; the impact on Company operations of natural disasters, principally earthquake, or civil disturbance, due to the concentration of Company facilities and employees in Southern California; information system problems; control environment failures; adverse developments in financial markets or interest rates; results of legislative, regulatory or legal actions, including the inability to obtain regulatory approval for necessary licenses, rate changes and product changes and possible adverse actions by state regulators in market conduct examinations and rate proceedings; the Company’s ability to service its debt, including its ability to receive dividends and/or sufficient payments from its subsidiaries to service its obligations; and the Company’s participation in potential merger transactions. The Company is not under any obligation (and expressly disclaims any such obligation) to update or alter any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise. Additional financial information is available on the Company's website at 21st.com (which shall not be deemed to be incorporated in or a part of this release) or by request to the Investor Relations Department.

Disclosure of Non-GAAP Measures:
The Company may have included financial measures and other information in this document that may not be presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes these financial measures and other information may enhance investors’ understanding of the Company’s operations or enhance their understanding of the industry, in general. However, these financial measures and other information are not intended to replace, and should be read in conjunction with, the GAAP financial results. When possible, the Company has made efforts to reconcile these financial measures and other information to the most directly comparable GAAP financial measures available.

(1) Premiums Written: Premiums written represent the premiums charged on policies issued and in effect during a fiscal period. Premiums Earned, the most directly comparable GAAP measure, represents the portion of premiums written that is recognized as income in the financial statements for the periods presented and earned on a pro-rata basis over the terms of the policies. Premiums Written are meant as supplemental information and are not intended to replace Premiums Earned. (2) Statutory Surplus: Statutory surplus represents equity as of the end of a fiscal period for the Company’s insurance entities, determined in accordance with Statutory Accounting Principles (“SAP”), as prescribed by insurance regulatory authorities. Stockholders’ Equity is the most directly comparable GAAP measure. Statutory Surplus is presented as supplemental information and is not intended to replace Stockholders’ Equity. (3) Underwriting Profit (Loss): Underwriting profit (loss) consists of net premiums earned less losses from claims, loss adjustment expenses and underwriting expenses. 21st believes that underwriting profit (loss) provides investors with financial information that is not only meaningful, but critically important to understanding the results of property and casualty insurance operations. The results of operations of a property and casualty insurance company include three components: underwriting profit (loss), net investment income and realized capital gains (losses). Without disclosure of underwriting profit (loss), it is difficult to determine how successful an insurance company is in its core business activity of assessing and underwriting risk, as including investment income and realized capital gains (losses) in the results of operations without disclosing underwriting profit (loss) can mask underwriting losses. Underwriting profit (loss) is presented as supplemental information and is not intended to replace Net Income.

5


These non-GAAP, financial measures should be read in conjunction with the GAAP financial results. The Company has reconciled these financial measures with the most directly comparable GAAP financial measures in the supplemental schedules.

**********

 Ó 2007 by 21st Century Insurance Group. All rights reserved
 
6

 
Exhibit A
21st Century Insurance Group
 
Condensed Consolidated Statements of Operations
 
(Unaudited)
 
(Amounts in thousands, except share data)
 
                               
                       
12 Months Ended
 
                       
December 31,
 
   
Q4'05
 
Q1'06
 
Q2'06
 
Q3'06
 
Q4'06
 
2005
 
2006
 
                               
Direct premiums written
 
$
316,466
 
$
338,569
 
$
316,837
 
$
337,217
 
$
322,484
 
$
1,346,370
 
$
1,315,107
 
Net premiums written
 
$
315,172
 
$
337,223
 
$
315,476
 
$
335,810
 
$
321,178
 
$
1,341,418
 
$
1,309,687
 
                                             
Net premiums earned
 
$
335,626
 
$
325,824
 
$
325,512
 
$
327,325
 
$
328,924
 
$
1,352,937
 
$
1,307,585
 
                                             
Net losses and loss adjustment expenses
   
241,513
   
236,496
   
223,094
   
222,550
   
238,706
   
998,933
   
920,846
 
Underwriting expenses
   
70,495
   
71,933
   
74,391
   
77,518
   
79,940
   
284,334
   
303,782
 
Underwriting profit
   
23,618
   
17,395
   
28,027
   
27,257
   
10,278
   
69,670
   
82,957
 
                                             
Net investment income
   
18,011
   
17,755
   
17,174
   
16,897
   
16,667
   
69,096
   
68,493
 
Other income
   
3
   
-
   
10
   
58
   
570
   
367
   
638
 
Net realized investment (losses) gains
   
(606
)
 
(1,067
)
 
30
   
159
   
(551
)
 
(3,272
)
 
(1,429
)
Other expense
   
(410
)
 
-
   
(923
)
 
-
   
(937
)
 
(410
)
 
(1,860
)
Interest and fees expense
   
(1,943
)
 
(1,898
)
 
(1,854
)
 
(1,820
)
 
(1,776
)
 
(8,019
)
 
(7,348
)
Income before provision for income taxes
   
38,673
   
32,185
   
42,464
   
42,551
   
24,251
   
127,432
   
141,451
 
Provision for income taxes
   
12,281
   
10,868
   
14,143
   
14,144
   
5,068
   
40,006
   
44,223
 
Net income
 
$
26,392
 
$
21,317
 
$
28,321
 
$
28,407
 
$
19,183
 
$
87,426
 
$
97,228
 
                                             
                                             
Earnings per share - basic
 
$
0.31
 
$
0.25
 
$
0.33
 
$
0.33
 
$
0.22
 
$
1.02
 
$
1.13
 
Earnings per share - diluted
 
$
0.31
 
$
0.25
 
$
0.33
 
$
0.33
 
$
0.22
 
$
1.02
 
$
1.12
 
                                             
Weighted average shares outstanding
                                           
Basic
   
85,799,397
   
85,868,878
   
85,968,155
   
86,192,395
   
86,252,264
   
85,661,547
   
86,071,808
 
Diluted
   
86,427,724
   
86,517,163
   
86,232,103
   
86,454,509
   
86,844,632
   
86,017,994
   
86,512,841
 
                                             
                                             
Net losses and loss adjustment expense ratio
   
72.0
%
 
72.6
%
 
68.5
%
 
68.0
%
 
72.6
%
 
73.8
%
 
70.4
%
Underwriting expense ratio
   
21.0
%
 
22.1
%
 
22.9
%
 
23.7
%
 
24.3
%
 
21.1
%
 
23.3
%
Combined ratio
   
93.0
%
 
94.7
%
 
91.4
%
 
91.7
%
 
96.9
%
 
94.9
%
 
93.7
%
                                             
Reconciliation of direct premiums written to net premiums earned
                                           
Direct premiums written
 
$
316,466
 
$
338,569
 
$
316,837
 
$
337,217
 
$
322,484
 
$
1,346,370
 
$
1,315,107
 
Ceded premiums written
   
(1,294
)
 
(1,346
)
 
(1,361
)
 
(1,407
)
 
(1,306
)
 
(4,952
)
 
(5,420
)
Net premiums written
   
315,172
   
337,223
   
315,476
   
335,810
   
321,178
   
1,341,418
   
1,309,687
 
Net change in unearned premiums
   
20,454
   
(11,399
)
 
10,036
   
(8,485
)
 
7,746
   
11,519
   
(2,102
)
Net premiums earned
 
$
335,626
 
$
325,824
 
$
325,512
 
$
327,325
 
$
328,924
 
$
1,352,937
 
$
1,307,585
 
                                             
Net losses and loss adjustment expenses
                                           
Current accident year
 
$
245,870
 
$
243,511
 
$
241,215
 
$
236,942
 
$
251,075
 
$
1,024,073
 
$
972,743
 
Prior accident years
   
(4,357
)
 
(7,015
)
 
(18,121
)
 
(14,392
)
 
(12,369
)
 
(25,140
)
 
(51,897
)
Net losses and loss adjustment expenses
 
$
241,513
 
$
236,496
 
$
223,094
 
$
222,550
 
$
238,706
 
$
998,933
 
$
920,846
 
 
7

 
Exhibit B
21st Century Insurance Group
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share data)
                       
   
December 31,
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
   
2005
 
2006
 
2006
 
2006
 
2006
 
                       
Assets
                     
Investments available for sale:
                     
Fixed maturity securities, at fair value
 
$
1,354,707
 
$
1,434,761
 
$
1,426,728
 
$
1,470,385
 
$
1,435,016
 
Equity securities, at fair value
   
47,367
   
850
   
-
   
-
   
-
 
Other long-term investments, equity method
   
-
   
-
   
-
   
9,443
   
14,705
 
Total Investments
   
1,402,074
   
1,435,611
   
1,426,728
   
1,479,828
   
1,449,721
 
Cash and cash equivalents
   
68,668
   
35,146
   
40,188
   
19,497
   
51,999
 
Accrued investment income
   
16,585
   
17,333
   
17,304
   
17,006
   
17,215
 
Premiums receivable
   
100,900
   
107,231
   
98,887
   
115,513
   
110,115
 
Reinsurance receivables and recoverables
   
6,539
   
6,223
   
6,521
   
6,550
   
6,338
 
Prepaid reinsurance premiums
   
1,946
   
2,023
   
2,072
   
2,141
   
2,095
 
Deferred income taxes
   
56,209
   
59,307
   
57,321
   
42,566
   
48,437
 
Deferred policy acquisition costs
   
59,939
   
62,919
   
68,248
   
67,592
   
63,581
 
Leased property under capital lease
   
22,651
   
21,587
   
20,568
   
19,998
   
19,281
 
Property and equipment, net of accumulated depreciation
   
145,811
   
147,047
   
148,213
   
152,480
   
154,966
 
Other assets
   
38,907
   
42,183
   
41,323
   
40,277
   
27,949
 
                                 
Total assets
 
$
1,920,229
 
$
1,936,610
 
$
1,927,373
 
$
1,963,448
 
$
1,951,697
 
                                 
Liabilities and stockholders' equity
                               
Liabilities
                               
Unpaid losses and loss adjustment expenses
 
$
523,835
 
$
508,428
 
$
495,092
 
$
484,258
 
$
482,269
 
Unearned premiums
   
319,676
   
331,152
   
321,166
   
329,719
   
321,927
 
Debt
   
127,972
   
124,796
   
121,619
   
118,853
   
115,895
 
Claims checks payable
   
42,681
   
40,609
   
38,363
   
39,697
   
42,931
 
Reinsurance payable
   
643
   
755
   
748
   
769
   
680
 
Other liabilities
   
75,450
   
94,057
   
95,220
   
92,529
   
89,446
 
Total liabilities
   
1,090,257
   
1,099,797
   
1,072,208
   
1,065,825
   
1,053,148
 
                                 
                                 
Stockholders' equity
                               
Common stock
   
86
   
86
   
86
   
86
   
86
 
Additional paid-in capital
   
425,454
   
430,360
   
435,889
   
438,618
   
441,969
 
Treasury stock
   
(84
)
 
(84
)
 
(84
)
 
(106
)
 
(259
)
Retained earnings
   
414,898
   
429,343
   
450,774
   
472,271
   
484,539
 
Accumulated other comprehensive loss
   
(10,382
)
 
(22,892
)
 
(31,500
)
 
(13,246
)
 
(27,786
)
Total stockholders' equity
   
829,972
   
836,813
   
855,165
   
897,623
   
898,549
 
 
                               
Total liabilities and stockholders' equity
 
$
1,920,229
 
$
1,936,610
 
$
1,927,373
 
$
1,963,448
 
$
1,951,697
 
 
                               
Book Value Per Share
 
$
9.66
 
$
9.72
 
$
9.91
 
$
10.39
 
$
10.39
 
 
                               
Outstanding Shares
   
85,933,960
   
86,095,739
   
86,335,335
   
86,372,668
   
86,471,754
 
 
8

 
Exhibit C
21st Century Insurance Group
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
                       
12 Months Ended
 
                       
December 31,
 
   
Q4'05
 
Q1'06
 
Q2'06
 
Q3'06
 
Q4'06
 
2005
 
2006
 
Operating activities
                             
Net Income
 
$
26,392
 
$
21,317
 
$
28,321
 
$
28,407
 
$
19,183
 
$
87,426
 
$
97,228
 
                                             
Adjustments to reconcile net income to net cash provided by operating activities:
                                           
Depreciation and amortization
   
9,258
   
6,661
   
6,643
   
7,089
   
7,002
   
33,760
   
27,395
 
Net amortization of investment premiums and discounts
   
2,165
   
2,007
   
2,489
   
2,822
   
3,000
   
9,370
   
10,318
 
Stock-based compensation cost
   
81
   
4,099
   
2,379
   
2,274
   
1,664
   
319
   
10,416
 
Provision for premium receivable losses
   
896
   
612
   
539
   
538
   
494
   
3,372
   
2,183
 
Lease and software impairments
   
410
   
-
   
922
   
3
   
935
   
410
   
1,860
 
Provision for deferred income taxes
   
1,664
   
2,820
   
6,611
   
5,754
   
2,052
   
12,351
   
17,237
 
Net realized investment losses (gains)
   
493
   
1,067
   
(30
)
 
(159
)
 
551
   
3,272
   
1,429
 
                                             
Changes in assets and liabilities:
                                           
Premiums receivable
   
15,184
   
(6,943
)
 
7,805
   
(17,164
)
 
4,904
   
1,542
   
(11,398
)
Deferred policy acquisition costs
   
3,821
   
(2,980
)
 
(5,329
)
 
656
   
4,011
   
(1,180
)
 
(3,642
)
Reinsurance receivables and recoverables
   
(722
)
 
352
   
(355
)
 
(76
)
 
168
   
471
   
89
 
Federal income taxes
   
678
   
4,529
   
(1,743
)
 
(8,326
)
 
(268
)
 
(410
)
 
(5,808
)
Other assets
   
(10,307
)
 
(2,880
)
 
1,015
   
3,397
   
(3,155
)
 
(3,584
)
 
(1,623
)
Unpaid losses and loss adjustment expenses
   
6,221
   
(15,407
)
 
(13,336
)
 
(10,834
)
 
(1,989
)
 
28,293
   
(41,566
)
Unearned premiums
   
(20,379
)
 
11,476
   
(9,986
)
 
8,553
   
(7,792
)
 
(11,360
)
 
2,251
 
Claims checks payable
   
1,970
   
(2,072
)
 
(2,246
)
 
1,334
   
3,234
   
3,944
   
250
 
Other liabilities
   
67
   
14,079
   
1,982
   
(4,436
)
 
(1,974
)
 
(7,735
)
 
9,651
 
Net cash provided by operating activities
   
37,892
   
38,737
   
25,681
   
19,832
   
32,020
   
160,261
   
116,270
 
 
                                           
Investing Activities
                                           
Purchases of:
                                           
Fixed maturity securities available-for-sale
   
(42,102
)
 
(146,738
)
 
(33,441
)
 
(47,848
)
 
(3,778
)
 
(136,122
)
 
(231,805
)
Equity securities available-for-sale
   
(77,847
)
 
(35,627
)
 
-
   
-
   
-
   
(317,340
)
 
(35,627
)
Other long-term investments, equity method
   
-
   
-
   
-
   
(9,123
)
 
(5,262
)
 
-
   
(14,385
)
Property and equipment
   
(6,544
)
 
(6,627
)
 
(6,719
)
 
(9,969
)
 
(9,927
)
 
(39,083
)
 
(33,242
)
Sales, maturities, and calls of:
                                           
Fixed maturity securities available-for-sale
   
24,949
   
42,161
   
25,803
   
29,527
   
35,337
   
78,353
   
132,828
 
Equity securities available-for-sale
   
75,696
   
83,989
   
847
   
-
   
-
   
309,580
   
84,836
 
Net cash (used in) provided by investing activities
   
(25,848
)
 
(62,842
)
 
(13,510
)
 
(37,413
)
 
16,370
   
(104,612
)
 
(97,395
)
 
                                           
Financing Activities
                                           
Repayment of debt
   
(3,260
)
 
(3,352
)
 
(3,388
)
 
(3,543
)
 
(3,503
)
 
(12,603
)
 
(13,786
)
Dividends paid
   
(6,874
)
 
(6,872
)
 
(6,891
)
 
-
   
(13,824
)
 
(13,724
)
 
(27,587
)
Proceeds from exercise of stock options
   
1,494
   
718
   
3,126
   
406
   
1,425
   
4,649
   
5,675
 
Excess tax benefits from stock-based compensation
   
-
   
89
   
24
   
27
   
14
   
-
   
154
 
Net cash used in financing activities
   
(8,640
)
 
(9,417
)
 
(7,129
)
 
(3,110
)
 
(15,888
)
 
(21,678
)
 
(35,544
)
 
                                           
Net increase (decrease) in cash and cash equivalents
   
3,404
   
(33,522
)
 
5,042
   
(20,691
)
 
32,502
   
33,971
   
(16,669
)
 
                                           
Cash and cash equivalents, beginning of period
   
65,264
   
68,668
   
35,146
   
40,188
   
19,497
   
34,697
   
68,668
 
Cash and cash equivalents, end of period
 
$
68,668
 
$
35,146
 
$
40,188
 
$
19,497
 
$
51,999
 
$
68,668
 
$
51,999
 
 
9

 
Exhibit D
21st Century Insurance Group
Supplemental Operational Information
(Unaudited)
(Amounts in thousands, except ratios and vehicles in-force)
                       
12 Months Ended
 
                       
December 31,
 
   
Q4'05
 
Q1'06
 
Q2'06
 
Q3'06
 
Q4'06
 
2005
 
2006
 
Direct Premiums Written
                             
California
 
$
294,472
 
$
311,820
 
$
287,388
 
$
295,776
 
$
271,033
 
$
1,262,304
 
$
1,166,017
 
Non - California
   
21,994
   
26,749
   
29,449
   
41,441
   
51,451
   
84,066
   
149,090
 
Total direct premiums written
 
$
316,466
 
$
338,569
 
$
316,837
 
$
337,217
 
$
322,484
 
$
1,346,370
 
$
1,315,107
 
                                             
% of Direct Premiums Written
                                           
California
   
93.1
%
 
92.1
%
 
90.7
%
 
87.7
%
 
84.0
%
 
93.8
%
 
88.7
%
Non - California
   
6.9
%
 
7.9
%
 
9.3
%
 
12.3
%
 
16.0
%
 
6.2
%
 
11.3
%
Total
   
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
                                             
Vehicles in-force
                                           
California
   
1,413,909
   
1,382,296
   
1,359,217
   
1,323,381
   
1,290,498
   
1,413,909
   
1,290,498
 
Non-California
   
127,001
   
138,257
   
157,386
   
196,613
   
255,121
   
127,001
   
255,121
 
Total Vehicles In-force at end of quarter
   
1,540,910
   
1,520,553
   
1,516,603
   
1,519,994
   
1,545,619
   
1,540,910
   
1,545,619
 
                                             
Other Information
                                           
Statutory surplus
 
$
704,671
 
$
725,144
 
$
755,326
 
$
781,633
 
$
771,009
 
$
704,671
 
$
771,009
 
Ratio of net premiums written to statutory surplus
   
1.9
   
1.8
   
1.7
   
1.6
   
1.7
   
1.9
   
1.7
 
Auto renewal ratio
   
91
%
 
91
%
 
91
%
 
91
%
 
91
%
 
91
%
 
91
%
                                             
Reconciliation of stockholders' equity to statutory surplus
                                           
Stockholders' equity - GAAP
 
$
829,972
 
$
836,813
 
$
855,165
 
$
897,623
 
$
898,549
 
$
829,972
 
$
898,549
 
Condensed adjustments to reconcile GAAP stockholders' equity to statutory surplus:
                                           
Equity in non-insurance entities
   
26,798
   
31,728
   
39,558
   
54,827
   
(47,006
)
 
26,798
   
(47,006
)
Capital lease obligation
   
2,975
   
1,178
   
(662
)
 
(2,542
)
 
(4,467
)
 
2,975
   
(4,467
)
Net unrealized losses on investments
   
10,788
   
31,683
   
44,778
   
16,956
   
17,881
   
10,788
   
17,881
 
Deferred policy acquisition costs
   
(59,939
)
 
(62,919
)
 
(68,248
)
 
(67,592
)
 
(63,581
)
 
(59,939
)
 
(63,581
)
Difference in net deferred tax assetrs reported under SAP
   
38,544
   
24,137
   
24,438
   
32,641
   
24,200
   
38,544
   
24,200
 
Assets nonadmitted for statutory purposes
   
(144,467
)
 
(137,476
)
 
(139,703
)
 
(150,280
)
 
(54,567
)
 
(144,467
)
 
(54,567
)
Statutory surplus
 
$
704,671
 
$
725,144
 
$
755,326
 
$
781,633
 
$
771,009
 
$
704,671
 
$
771,009
 
 
 
10


The following information was filed by 21St Century Insurance Group on Friday, March 2, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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