LOS ANGELES -- For years, 20th Century Industries earned praise from policyholders for its low-priced insurance and impressed Wall Street with its steady profits.
The suburban Woodland Hills-based insurer won customers by charging among the lowest auto and homeowners premiums in the state. Investors appreciated the company's lean operations and consistent growth.
But 20th Century's good standing with policyholders and investors is being tested by the Jan. 17 Northridge earthquake, which presented the company with 40,000 claims at a total cost of $325 million.
Analysts watching 20th Century's publicly traded stock are concerned about how the company is going to pay for the damage, which is expected to cause a charge to earnings in the first quarter of $161.7 million, of $3.15 a share. The company is under pressure to raise its rates or cut back on coverage to avoid another major loss.
Some policyholders complain that 20th Century is hard to reach or taking too long to inspect quake damage, offering low settlements or refusing to pay for losses that they believed were covered.
Rick Dinon, vice president at 20th Century, acknowledged the company has heard complaints from both investors and policyholders, but he defended its handling of claims. "We are performing quite well under the circumstances," Mr. Dinon said. "Our [complaint] experience has not been much different than other major insurers."
He noted that 20th Century suffered significant quake damage to its headquarters. For nearly a week following the quake, 20th Century operated from tents in the parking lot. Then the company had to hire and train hundreds of outside independent adjusters to handle claims.
The company temporarily has halted advertising and other operations, and transferred scores of workers from other units into claims-handling departments.
Mr. Dinon stressed that the top priority for the insurer is settling policyholder claims for quake damage.
"Our entire energy at 20th Century is focused on delivering the goods to our customers," he said. "In the order of priorities, our investors come second."
Founded in 1958, 20th Century expanded into homeowners insurance in 1982. The company built its success by offering low-priced auto policies directly to consumers. By eliminating agents, 20th Century kept overhead down and passed the savings on to policyholders.
Now, some policyholders say they are seeing a downside to lean administration and no agents.
Audrey Brandt, for example, is dissatisfied with 20th Century's handling of damage to her home after the quake burst a neighbor's water heater. The insurer sent workers to Ms. Brandt's suburban Chatsworth townhouse to remove her soaked carpet, she said, but two months later the insurer will not pay for new carpeting.
A group of more than two dozen Northridge policyholders gathered recently to compare notes about 20th Century's handling of claims, according to Gordon Lester, who recently hosted a meeting at his home.
Other policyholders said they still are waiting for initial loss estimates, more than two months after the temblor. Some who have received checks said the offers are below what outside contractors estimated.
"We're putting together a list of the damage that they left out," said Jerry Weitzman, a Northridge homeowner who said he received a check from 20th Century for $12,000 less than what contractors estimated was needed to repair his home."
Ina De Long, founder of United Policyholders, a support group for disaster victims, said she is hearing 20th Century's name at meetings with homeowners around the San Fernando Valley.
Peter Rincon, a condo owner in the Los Angeles area of Tarzana, said he was not happy to discover that neither his standard policy nor his quake policy would cover the $7,000 assessment from his condo association.
The company is not aware of any problems with Mr. Rincon's claim, which the company considers settled, said Ric Hill, spokesman for 20th Century.