20th Century Industries Inc., parent of 20th Century Insurance Co., on Thursday doubled its estimate of claims costs from the Northridge earthquake to $325 million, saying the damage was more severe and widespread than earlier believed.
The Woodland Hills-based insurer has its greatest market share in the San Fernando Valley, where the destruction was heaviest, and thus may have been proportionately harder hit by the Jan. 17 quake than any other carrier.
"It was among our worst-case disaster scenarios," spokesman Rick Dinon said.
After taxes and reinsurance payments, quake-related claims are expected to result in a charge of about $161.7 million, or $3.15 per share, against first-quarter earnings, the company said in a statement Thursday.
20th Century will also incur a $13-million premium to reinstate its reinsurance, resulting in an additional after-tax charge against earnings of $8.5 million, or 16 cents a share.
Together, the net charges of nearly $170 million will wipe out 26% of the company's surplus, or cushion against claims, which stood at $655.2 million at the end of 1993.
After the charges, 20th Century's ratio of premiums to surplus will be about 2.5 to 1, a ratio the company called prudent.
20th Century on Feb. 9 projected gross earthquake claims of $160 million. The number doubled after claims adjusters visited more homes and discovered that the average amount of damage was greater than first realized and that about 25% more claims were being filed than expected, Dinon said.
As of Tuesday, 20th Century had received 29,015 homeowner claims and 8,534 auto claims arising from the earthquake.
Dinon said 20th Century remains financially secure, well able to pay claims and even able to grow. However, he acknowledged that the company is not advertising for customers and that there is a debate internally over whether it ought to add new business in the Los Angeles area.
Trading in 20th Century's stock on the New York Stock Exchange was halted for the announcement at 2:35 p.m. EST on Thursday and did not resume.
Shares fell 25 cents to $25.125 for the day.