20th Century Raises Quake Cost Estimate : Disasters: Company says damage losses will far exceed its reinsurance coverage through Lloyd’s.


20th Century Industries said Wednesday that property-damage claims and other expenses due to the Northridge earthquake will far exceed its reinsurance coverage and will result in after-tax charges of more than $50 million against first-quarter earnings.

The Woodland Hills-based parent of 20th Century Insurance is California’s sixth-largest carrier of earthquake insurance, with about 3.5% of the market, according to the state Insurance Department.

The company estimated that catastrophic costs due to the Jan. 17 quake will total $160 million, far more than an initial estimate of between $10 million and $100 million.


After reinsurance payments, the claims will cost 20th Century an estimated $83.7 million before taxes and $54.4 million after taxes, the company said in a statement.

The company also said it will pay an additional $13 million before taxes--or $8.5 million after taxes--to reinstate its reinsurance coverage.

The earthquake charges will wipe out about 9.8% of 20th Century’s capital, which stood at $641 million on Sept. 30, the company said.

However, “20th Century is in the best position in its history to handle the expected claims arising from the devastating earthquake and to remain conservatively leveraged and prudently invested,” Senior Vice President Rick Dinon said.

As of last week, 20th Century said, it had received approximately 21,000 claims from owners of houses and condominiums and about 5,000 quake-related automobile damage claims.

“The ultimate costs cannot be projected with a high degree of certainty,” Dinon said. “We do believe it is appropriate to now make an estimate, because we anticipate exceeding the reinsurance limit.”


Under its Lloyd’s of London coverage, 20th Century will receive $75 million against the $160 million in claims. It is obligated to pay the first $10 million in claims, 25% of the next $100 million and 100% of all claims above $110 million.

20th Century stock fell 87.5 cents to $25.375 a share Wednesday on the New York Stock Exchange, after trading at a 52-week low of $25 a share during the day.