21st Century Holding: HomeWise Purchase Terminated

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April 27, 2010 Tuesday 03:34 PM EST

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21st Century Holding: HomeWise Purchase Terminated

Chad Hemenway

LAUDERDALE LAKES, Fla.

21st Century Holding Co. said it will not go through with a previously announced purchase of HomeWise Insurance Co. and HomeWise Management Co.

The acquisition "has been terminated by mutual decision of the parties," the company said in a statement. President and Chief Executive Officer Michael H. Braun said the company will continue to grow with existing lines of businesses and continue to seek other opportunities.

Braun said the purchase of the businesses from HomeWise Holdings Inc. would diversify 21st Century (NASDAQ: TCHC) and decrease reinsurance costs since the 21st Century of Lauderdale Lakes, Fla., is mostly a South Florida company (BestWire, March 24, 2010). The company's net loss for the fourth quarter 2009 was $2.8 million, and Braun said 21st Century pays out more than 50% of its premium to reinsurance.

Federated National Insurance Co., a subsidiary of 21st Century, got some help with expenses as an average statewide homeowners insurance increase of 14.9% was approved by the Florida Office of Insurance Regulation. The rate will be applied to policies Federated National assumed from Citizens Property Insurance Corp., the state's last-resort insurer, effective July 1 for new and renewed policies.

21st Century said the policies subject to the increase represent about 16% of Federated National's total policies. The company assumed about $12 million of premium from Citizens in December. Braun said he expects to see an improvement in operations due in part to a 19% rate increase the company got since last November and rate decreases he expects in reinsurance in 2010.

21st Century posted a $10.3 million net loss for 2009, widening a $2.5 million loss for 2008. Revenue for the company was down 17.5% to $13.2 million for the fourth quarter from $16 million the prior year at the same time. 21st Century Holding posted a drop in revenue to $58.9 million, down from $67.5 million in 2008.

In early afternoon trading on April 27, shares of 21st Century Holding stock were selling at $3.60, down 2.44% from the previous close.

The top five writers of homeowners multiperil in Florida in 2008, according to BestLink, based on direct premiums written, were: State Farm Group, with a 17.7% market share; Citizens Property Insurance Corp., with 16.2%; Universal P&C Insurance Co., with 7.2%; USAA Group, with 5.1%; and Tower Hill Group, with 4.5%. BestLink provides online access to A.M. Best's Global Insurance & Banking Database.

(By Chad Hemenway, associate editor, BestWeek: [email protected])

April 28, 2010