Homeowners Choice Drops Effort to Acquire 21st Century Holding Company

Homeowners Choice Chairman Expects Profitable Third and Fourth Quarters

Tampa, Florida, UNITED STATES

CLEARWATER, Fla., Nov. 4, 2009 (GLOBE NEWSWIRE) -- Homeowners Choice, Inc. (Nasdaq:HCII), a Florida-based insurance holding company, announced today that its proposal to merge with 21st Century Holding Company (Nasdaq:TCHC) expired on Monday, Nov. 2, 2009, and it has ended for now its efforts to effect the merger. The proposal, publicly disclosed on Oct. 13, 2009, was an offer by Homeowners Choice of $1.00 in cash and one-half share of Homeowners Choice common stock for each share of 21st Century common stock. 21st Century announced its rejection of the proposed offer on Oct. 29, 2009.

In conjunction with the announcement, Paresh Patel, Chairman of the Board of Homeowners Choice, issued a statement addressed to the company's shareholders. In the statement, presented in a question and answer format, he explains the rationale behind the proposed merger, discusses the performance of Homeowners Choice and anticipates future profits.

In answer to the question "Will Homeowners Choice consider a hostile acquisition of 21st Century?" Patel's responds, "We may do so at a later date, but the current answer is no." On performance and future profits, Patel states, "Homeowners Choice has been profitable for eight consecutive quarters. And, I am pleased to state that we expect to be profitable in the third and fourth quarters of 2009."

Following is the full text of the statement.

 To my fellow shareholders of Homeowners Choice, Inc.:

 As you probably are aware, Homeowners Choice proposed a merger
 with 21st Century Holding Company several weeks ago. A number of
 you had questions about the transaction and the future of our
 company.  At the time, we asked for your patience as we thought it
 inappropriate to discuss an ongoing situation.  We noted your
 questions and believe this is now the appropriate time for our

 What is the rationale behind the proposal?
   When Homeowners Choice was founded, management outlined a
   strategy for steady, prudent growth.  We continue to implement
   that strategy, which has produced the following results over the
   past two years:

   -- Increased book value from $2.50 to $6.83
   -- Eight consecutive quarters of profitability
   -- More than 53,000 policyholders
   -- Proven capability of our management team to grow the business

   A merger of Homeowners Choice and 21st Century represented an
   opportunity to enhance shareholder value in continuance of our
   growth strategy.  21st Century has an array of business lines
   and geographic markets which would provide a combined entity
   with diversification and avenues for growth.  21st Century,
   however, has struggled in managing these valuable assets.
   According to 21st Century Chief Executive Officer Michael Braun,
   21st Century will not be profitable during the third and fourth
   quarters of 2009.  That means 21st Century will report losses in
   four out of six quarters.

   Mr. Braun blames these losses on the economic environment,
   reinsurance costs and wind mitigation credits.  We of course
   sympathize with 21st Century since we face that same economic
   environment and the same challenges of reinsurance costs and
   wind mitigation credits.  However, Homeowners Choice has been
   profitable for eight consecutive quarters. And I am pleased to
   state that we expect to be profitable in the third and fourth
   quarters of 2009, reaching 10 consecutive quarters of

   Frankly, our track record indicates we could add substantial
   Value to 21st Century's assets.

   Beyond that, the combined entity would be larger, stronger and
   better able to pursue growth.  Also, a larger market
   capitalization should be accompanied by greater share trading
   volume and liquidity, which would make the shares more
   attractive to institutional investors and ultimately lead to
   a greater overall market valuation.

 Did you undervalue 21st Century?
   No.  We believe we offered a fair price to 21st Century
   shareholders.  Publicly-held companies are valued each day
   through their share prices. Those valuations are based on, among
   other things, their assets, the performance of the management
   team and future prospects.

   21st Century has been trading below book value for more than a
   year. The market is substantially discounting the assets of 21st
   Century, perhaps because of past performance of its management
   and concerns for its future prospects.

   Note that while 21st Century's share price jumped substantially
   on our offer, it never neared our offer price.  We believe this
   is a strong indication that the market viewed our offer as fair,
   if not generous.  Putting it differently, the market does not
   believe 21st Century is worth more than our offer.

   While 21st Century described our offer of approximately $5.30 as
   "wholly inadequate," consider the following: (1) 21st Century's
   management never asked for a higher offer or engaged in any
   serious discussions with us and (2) after rejecting our proposed
   offer, 21st Century has now initiated a share buy-back program
   by which it proposes to purchase shares from its own
   shareholders at market prices approaching $4.00.

 Will Homeowners Choice consider a hostile acquisition of 21st
   We may do so at a later date, but the current answer is no.

 Can you comment on the share price of Homeowners Choice?
   We don't typically comment on our share price, preferring to
   focus on managing the business.  As I noted above, the market
   generally values a company's assets, performance and prospects.
   In terms of assets, we have increased book value per share from
   $2.50 to $6.83 in two years.  As for performance, we have had
   eight straight quarters of profitability, and expect to reach 10
   straight quarters during 2009.

   In terms of our future prospects, one need only look at what our
   insiders are doing. We have been buying our own stock.  The
   board authorized a $3 million share buyback several months ago
   based on a determination that buying Homeowners Choice stock was
   the best use of a portion of our investment cash.

   Not one member of the Homeowners Choice board, which includes
   some of our largest shareholders, has sold a single share of
   Homeowners Choice stock.

   Finally, I am the second largest shareholder of Homeowners
   Choice and, as reported to the Securities and Exchange
   Commission, since November of last year I have been purchasing
   Homeowners Choice warrants on the open market.  The exercise
   price of those warrants is $9.10 per share. (The warrants trade
   on the Nasdaq Global Market under the ticker symbol "HCIIW."
   Two warrants must be exercised to purchase one Homeowners Choice

 Are you worried about wind mitigation credits?
   Wind mitigation credits have been in force for several years.
   They do cause uncertainty to the premiums collected.  However,
   it is an industry-wide issue and not a new item.  Our management
   team factored the issue into our business planning 18 months ago
   and our results reflect that.

 What about reinsurance?
   Reinsurance is our single biggest cost.  The Florida Office of
   Insurance Regulation regulates Homeowners Choice as it does all
   insurers in Florida.  At the start of each hurricane season,
   that office reviews all insurers in the state - large or small,
   new or old - for their ability to pay claims in the event of a
   hurricane.  Every year we buy enough reinsurance to meet or
   exceed regulatory requirements.

   The result is that we transfer most of the potential hurricane
   losses to our reinsurers.  This transfer of risk costs 30
   percent to 55 percent of our premiums every year.  We incur this
   cost even in hurricane-free years.

   This hurricane season, the cost of reinsurance has been
   particularly high, which has caused stress to all property
   insurance companies.  The management team of Homeowners Choice
   had the foresight to take appropriate action well in advance.
   Our results, contrasted with those of our competitors, reflect
   that prudent management.

 Is Homeowners Choice profitable only because there have been no
   No. Maintaining profitability is not as simple as dodging
   hurricanes.  First, as noted above, we transfer most of the
   hurricane risks to our reinsurers.  Second, homeowners'
   insurance is a complicated business.  It requires the balance of
   many competing variables, including rates, underwriting criteria,
   risk dispersal, reinsurance costs and operating expenses.

   In general, our rates are limited to the rates charged by
   Citizens Property Insurance Corporation, from which we assume
   most of our policies.  Selecting policies with rates
   commensurate to the risks and without undue geographic
   concentrations requires adherence to our own complex set of
   underwriting criteria.  Miami-Dade County, Florida is a
   particularly challenging environment for comparing rates and
   risks.  Yet we are profitable there.  Dispersing our risks
   geographically plays a role in managing reinsurance costs, our
   single largest cost.

   We have been profitable for eight consecutive quarters.  Our
   competitors have operated during this same hurricane-free period.
   Yet many of them have reported losses or gone out of business.
   For example, we were recently selected by the Florida Department
   of Financial Services as the replacement insurer for
   policyholders of American Keystone Insurance Company, which is
   in receivership.  Being profitable is not easy.  It requires
   diligence and foresight.

 Is Homeowners Choice prepared for an active wind season?
   Yes.  We believe our consistent profitability positions us well
   to surmount an active wind season.  As I stated above, we
   transfer most of the hurricane risks to our reinsurers.  In the
   event of a hurricane, we have plans in place for handling the
   additional service levels required and the higher expenses for
   investigating and estimating policyholder losses.

 What will Homeowners Choice do next?
   We will continue to move forward.  We have a proven strategy
   that produces above average results.  We do not need to develop
   alternative strategies in order to improve results.

   Although the past two years have seen Homeowners Choice grow
   prudently, profitably and quickly, we have captured less than 2
   percent of the Florida homeowners' insurance market.  We have a
   great deal of opportunity ahead of us.

   We recently announced that we have been approved by the Florida
   Department of Insurance Regulation to assume 60,000 policies
   from Citizens Property Insurance Corporation, the state-owned
   insurance company.  We have a solid track record of handling
   these assumptions.

   Finally, we will evaluate opportunities for growth whether
   organic or by acquisition as those opportunities arise.

 In conclusion, Homeowners Choice has exceeded expectations during
 the past two years, not by accident or luck, but rather by having
 an outstanding management team.  This team will continue to pursue
 opportunities to enhance shareholder value.

About Homeowners Choice, Inc.

Homeowners Choice, Inc. is a Florida-based insurance holding company headquartered in Clearwater. Through its subsidiary corporations, Homeowners Choice provides property and casualty homeowners' insurance, condominium owners' insurance and tenants' insurance solely to Florida property owners. Founded in 2006, Homeowners Choice today serves approximately 53,000 policyholders throughout Florida representing approximately $100 million in annualized premiums. The company's common shares trade on the NASDAQ Global Market under the ticker symbol HCII and were recently added to the Russell Microcap Index. Warrants trade on the same market under the ticker symbol HCIIW. More information about Homeowners Choice, Inc. is available at www.hcpci.com.

The Homeowners Choice, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6712

Forward-Looking Statements

This news release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," "intend," "plan" and "project" and other similar words and expressions are intended to signify forward-looking statements. The forward-looking statements in this news release include statements regarding the company's expectations regarding future profits. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company's registration statement filed with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the company's business, financial condition, and results of operations. Homeowners Choice, Inc. disclaims all obligations to update any forward-looking statements.


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