Director Pressures 20th Century

A disgruntled board member at 20th Century Industries wants his fellow directors to explore a sale, merger or reorganization of the Woodland Hills-based property insurance company.

Gregory M. Shepard, whose company American Union Insurance Co. owns 6.3% of 20th Century, also urged in a Securities and Exchange Commission filing that the board have more independent directors.

The filing said American Union, which Shepard chairs, was unhappy with 20th Century’s management and was seeking ways to “maximize the value of [American Union’s] investment.”

“All I can say is I’m dissatisfied,” said Shepard.

But Wall Street apparently doesn’t think Shepard carries much weight: 20th Century’s stock closed down 13 cents at $19.19 Monday on the New York Stock Exchange.

20th Century’s board was taken over last year by insurance giant American International Group Inc., which now owns more than 50% of the smaller company’s stock. New York-based AIG rescued 20th Century with a capital infusion after 1994 Northridge earthquake claims nearly bankrupted the Southern California insurer.

20th Century’s stock has fallen about 18% this year, but the insurer’s shares have held up better than many peers’ in the face of increased competition, premium-rate cuts and higher casualty losses.

The Standard & Poor’s property-casualty insurance stock index is off 30% this year. Several auto and home insurers have warned of lower profits, including Progressive Corp., which announced Monday that higher-than-expected claims would mean fourth-quarter profit “significantly” below forecasts. Shares of Ohio-based Progressive, the nation’s fourth-largest auto insurer, fell $5.94 to $71.06 on the NYSE.

American Union has been a 20th Century investor since 1987. Shepard joined the board in 1995.

Insurance analyst Ira Zuckerman speculated that Shepard might be disappointed that AIG had recently halted its purchase of 20th Century stock and that 20th Century’s repurchase of its own stock had not boosted the shares.

“Maybe he was hoping AIG was going to buy him out at $30, but [AIG Chairman] Hank Greenberg is not about to do that,” Zuckerman said. “I’m not sure what he [Shepard] hopes to accomplish with this.”