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8-07-2006 TCHC - 21st Century Holding Co.

CURRENT PRICE: $13.24

TYPE OF PLAY: EARNINGS GROWTH /TECHNICAL ANALYSIS/VALUE

TCHC, through its subsidiaries, underwrites standard and non-standard personal automobile insurance, flood insurance, general liability insurance, mobile home insurance and homeowners' property and casualty insurance in the State of Florida. They underwrite general liability coverage as an admitted carrier in the States of Louisiana, Texas and Alabama for more than 300 classes of business, including special events, as well as homeowners' coverage in the State of Louisiana. The Company also operates as an approved (non-admitted) carrier in the States of Georgia and Kentucky offering the same general liability products. In addition, the Company has underwriting authority and processes claims for third party insurance companies. In addition to insurance services, the Company offers premium finance services to its insured parties as well as insured parties of certain third party insurance companies.

Just last week, the TCHC reported QUARTERLY earnings of $1.19 per share, based on 7,465,896 average diluted shares outstanding for the same three month period as compared to $0.46 per share based on 6,620,510 average diluted shares outstanding for the three months ended June 30, 2005. Total revenues increased $11.0 million or 23.5% to $57.5 million for the six months ended June 30, 2006, as compared to $46.5 million for the same six month period last year. These numbers handily beat the 1.00 EPS estimate.

During the conference call (directions to listen in link at bottom) the CEO discusses premium increases on existing business and for new customers. This began effective in June and has not been fully realized in the earnings per share as the increase is being phased in gradually for existing customers. It will, however, reflect immediately in newly written policies for the foreseeable future. The CEO also discusses their plans to enter markets in other states and is estimating the growth rate at 30% or higher for the next 2 - 3 years. The conference call also addressed the hurricane threat. The CEO stated that in some scenarios, they could end up making MORE money on a hurricane due to their current reinsurance package.

TCHC is breaking their previous EPS records and has and has a p/e of 5. Their revenue growth and net profit margins are at the top echelon of the entire sector. (see link at the bottom to see entire industry comparisons.) Although it had quite a few analysts on the conference call, few have official coverage, leaving it largely undiscovered to the general investment community.

Management has also demonstrated its confidence in the true valuation of the company in May by repurchasing 130,461 shares of its common stock in the open market at an average price of $15.34 per share.

From a technical standpoint, TCHC has retraced a large portion of its previous move to above 19, despite record earnings. It has been basing in the 13 area since mid June and a gap on the daily chart remains unfilled at 17.90 (from 5/15/2006).



TCHC also has a current dividend of 3.7% which pays you to wait for true valuaion to occur. We feel that this combination of factors makes TCHC worth a hard look by potential investors and only needs to get exposure for true value to be realized.

LINKS FOR FURTHER READING:
TCHC Homepage
Insurance Industry Comparisons
August 2nd Earnings Release
SEC filings for TCHC
General TCHC statistics
To listen to conference call (will be on thier website after the CC expires) call 1-800-642-1687 Use ID number: 3760248