Quake Leads 20th Century to Post $256.1-Million Loss : Insurance: The hit will wipe out a third of the company’s surplus, leaving it in substantially weaker condition.

Devastated by earthquake insurance claims, 20th Century Industries on Wednesday reported a first-quarter loss of $256.1 million, which wiped out more than a third of its surplus.

The impact of the quake, far greater than 20th Century’s earlier estimates, leaves the Woodland Hills-based insurance holding company in substantially weaker financial condition. On Tuesday, even before the loss was reported, a major financial rating agency downgraded 20th Century’s claims-paying ability.

20th Century said in a statement that it now expects total gross claim costs from the Jan. 17 quake to reach $475 million. After taxes, reinsurance and other adjustments, the net charge against first-quarter earnings is $269.5 million, the statement said.

The loss, for the quarter ended March 31, nearly matched 20th Century’s $277.6 million in revenue for the period.

The news came after the market closed. The firm’s stock added 25 cents to $18.50 on Wednesday.

Standard & Poor’s Corp. on Tuesday cut its ratings on 20th Century’s two insurance units to A (good) from AA (excellent), citing a much smaller expected charge: $161.7 million. The insurers remain on the ratings agency’s CreditWatch list.

The loss, $4.98 per share, caused stockholders’ equity--roughly equivalent to surplus--to fall to $412.2 million at the end of the quarter, from $655.2 million at year-end 1993.

Because the extent of damage to many structures can only be discovered through engineering inspections, estimates for all insurance companies have been leapfrogging upward in the three months since the 6.8 temblor.

20th Century first projected gross quake costs of $160 million, then last month doubled the estimate to $325 million. As of Monday, 20th Century said it had received 31,000 homeowner and condominium claims and 9,000 automobile claims, resulting in the latest estimate of $475 million.

Outside contracting firms that specialize in catastrophe work have told 20th Century that the damage they are seeing is unprecedented, a company spokesman said.