SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q



||X|  QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) 
|------------------------------------------------------------
|OF THE SECURITIES EXCHANGE ACT OF 1934                      
|                                                            
|FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004                
|                                                            
|OR                                                          
|                                                            
||_|  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d)
|OF THE SECURITIES EXCHANGE
      ACT OF 1934                
|                                                            

FOR THE TRANSITION PERIOD FROM ________________ TO ________________
  .



|Commission file number 0-2500111
|--------------------------------



|21stCentury Holding Company(Exact name of registrant as specified in its charter)
|---------------------------------------------------------------------------------



|Florida                         | 65-0248866         
|------------------------------- | -------------------
|                                |                    
|(State or Other Jurisdiction of | (IRS Employer      
|Incorporation or Organization)  | Identification No.)

3661 West Oakland Park Boulevard, Suite 300, Lauderdale Lakes,
  Florida 33317(Address of principal executive offices) (Zip Code)



|954-581-9993(Registrants telephone number, including area code)
|----------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes |X|  No |_|

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes |_|  No |X|

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value  3,940,551 outstanding as of August
  13, 2004.



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21STCENTURY HOLDING COMPANY

INDEX

|PART I: FINANCIAL INFORMATION                                                               | PAGE
|------------------------------------------------------------------------------------------- | ----
|ITEM 1                                                                                      |     
|FINANCIAL STATEMENTS (UNAUDITED)                                                            |     
|Consolidated Balance Sheets as
      of June 30, 2004 and December 31, 2003                 | 3   
|Consolidated Statements of Operations
      for the six months ended June 30, 2004 and 2003 | 4   
|Consolidated Cash Flow Statements
      for the six months ended June 30, 2004 and 2003     | 5   
|Notes to Consolidated Financial
      Statements                                            | 6   
|ITEM 2                                                                                      |     
|Managements Discussion
      and Analysis of Financial Condition and Results of Operations | 15  
|ITEM 3                                                                                      |     
|Quantitative and Qualitative
      Disclosures About Market Risk                            | 28  
|ITEM 4                                                                                      |     
|Controls and Procedures                                                                     | 28  
|PART II: OTHER INFORMATION                                                                  |     
|ITEM 1                                                                                      |     
|Legal Proceedings                                                                           | 29  
|ITEM 2                                                                                      |     
|Unregistered Sales of Equity
      Securities and Use of Proceeds                           | 30  
|ITEM 3                                                                                      |     
|Defaults upon Senior Securities                                                             | 30  
|ITEM 4                                                                                      |     
|Submission of Matters to a Vote
      of Security Holders                                   | 30  
|ITEM 5                                                                                      |     
|Other Information                                                                           | 30  
|ITEM 6                                                                                      |     
|Exhibits and Reports on Form
      8-K                                                      | 31  
|Signatures                                                                                  | 32  



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PART I: FINANCIAL INFORMATION
  ITEM I.FINANCIAL STATEMENTS

**21****STCENTURY HOLDING COMPANY
  CONSOLIDATED BALANCE SHEETS**

|                                                                                                     | **June 30, 2004** |             | **December 31, 2003** |  
|---------------------------------------------------------------------------------------------------- | ----------------- | ----------- | --------------------- | -
|                                                                                                     | **Unaudited**     |             | **See Note 1**        |  
|                                                                                                     |                   |             |                       |  
|ASSETS                                                                                               |                   |             |                       |  
|Investments                                                                                          |                   |             |                       |  
|Fixed maturities,
      available for sale, at fair value                                            | $                 | 72,152,579  |                       | $
|Equity securities                                                                                    |                   | 6,517,812   |                       |  
|Mortgage loans                                                                                       |                   |            |                       |  
|                                                                                                     |                   |             |                       |  
|Total
      investments                                                                              |                   | 78,670,391  |                       |  
|                                                                                                     |                   |             |                       |  
|Cash and cash equivalents                                                                            |                   | 2,040,650   |                       |  
|Receivable for investments sold                                                                      |                   |            |                       |  
|Finance contracts, net of allowance for credit                                                       |                   |             |                       |  
|losses of
      $723,756 in 2004 and $832,231 in 2003                                                |                   | 9,145,058   |                       |  
|Prepaid reinsurance premiums                                                                         |                   | 1,727,630   |                       |  
|Premiums receivable, net of allowance for credit
      losses of $199,311 and $123,000, respectively |                   | 6,997,857   |                       |  
|Reinsurance recoverable, net                                                                         |                   | 7,793,362   |                       |  
|Deferred policy acquisition costs                                                                    |                   | 6,155,510   |                       |  
|Income taxes recoverable                                                                             |                   |            |                       |  
|Deferred income taxes                                                                                |                   | 3,837,616   |                       |  
|Property, plant and equipment, net                                                                   |                   | 4,165,513   |                       |  
|Goodwill, net                                                                                        |                   | 1,739,716   |                       |  
|Other assets                                                                                         |                   | 2,070,808   |                       |  
|                                                                                                     |                   |             |                       |  
|Total
      assets                                                                                   | $                 | 124,344,111 |                       | $
|                                                                                                     |                   |             |                       |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                 |                   |             |                       |  
|Unpaid losses and loss adjustment expenses                                                           | $                 | 21,185,177  |                       | $
|Unearned premiums                                                                                    |                   | 48,621,880  |                       |  
|Premiums deposits                                                                                    |                   | 447,561     |                       |  
|Revolving credit outstanding                                                                         |                   | 2,857,693   |                       |  
|Income taxes payable                                                                                 |                   | 1,119,047   |                       |  
|Subordinated debt                                                                                    |                   | 5,625,000   |                       |  
|Accounts payable and accrued expenses                                                                |                   | 4,266,322   |                       |  
|                                                                                                     |                   |             |                       |  
|Total
      liabilities                                                                              |                   | 84,122,680  |                       |  
|                                                                                                     |                   |             |                       |  
|Commitments and contingencies                                                                        |                   |             |                       |  
|Shareholders equity:                                                                                |                   |             |                       |  
|Common
      stock, $0.01 par value. Authorized 25,000,000 shares; issued 4,357,027 and              |                   |             |                       |  
|4,088,924
      shares, respectively; Outstanding 3,893,061 and 3,625,058, respectively              |                   | 43,571      |                       |  
|Additional
      paid-in capital                                                                     |                   | 24,162,527  |                       |  
|Accumulated
      other comprehensive income (deficit)                                               |                   | (1,535,931  | )                     |  
|Retained earnings                                                                                    |                   | 19,321,235  |                       |  
|Treasury stock,
      463,966 shares and 463,866 shares, at cost, respectively                       |                   | (1,769,971  | )                     |  
|                                                                                                     |                   |             |                       |  
|Total
      shareholders equity                                                                     |                   | 40,221,431  |                       |  
|                                                                                                     |                   |             |                       |  
|Total
      liabilities and shareholders equity                                                     | $                 | 124,344,111 |                       | $
|                                                                                                     |                   |             |                       |  

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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**21****STCENTURY HOLDING COMPANYCONSOLIDATED STATEMENTS OF OPERATIONS
  (UNAUDITED)**

|                                                     | **Three Months
      Ended** | ****        | **Six Months
      Ended** |     
|---------------------------------------------------- | ---------------------------- | ----------- | -------------------------- | ----
|                                                     |                              |             |                            |     
|                                                     | **June 30,
      2004**      | ****        | **June 30,
      2003**    | ****
|                                                     |                              |             |                            |     
|Revenue:                                             |                              |             |                            |     
|Gross premiums written                               | $                            | 31,810,045  |                            | $   
|Gross premiums ceded                                 |                              | 217,036     |                            |     
|                                                     |                              |             |                            |     
|Net
      premiums written                           |                              | 32,027,081  |                            |     
|                                                     |                              |             |                            |     
|Decrease in prepaid reinsurance
      premiums       |                              | (2,327,592  | )                          |     
|Increase in unearned premiums                        |                              | (12,770,311 | )                          |     
|                                                     |                              |             |                            |     
|Net
      change in prepaid reinsurance premiums     |                              |             |                            |     
|and
      unearned premiums                          |                              | (15,097,903 | )                          |     
|                                                     |                              |             |                            |     
|Net
      premiums earned                            |                              | 16,929,178  |                            |     
|Commission income                                    |                              | 801,435     |                            |     
|Finance revenue                                      |                              | 949,164     |                            |     
|Managing general agent fees                          |                              | 539,822     |                            |     
|Net investment income                                |                              | 773,921     |                            |     
|Net realized investment gains                        |                              | 58,508      |                            |     
|Other income                                         |                              | 521,240     |                            |     
|                                                     |                              |             |                            |     
|Total
      revenue                                  |                              | 20,573,268  |                            |     
|                                                     |                              |             |                            |     
|Expenses:                                            |                              |             |                            |     
|Loss and loss adjustment expenses                    |                              | 7,618,159   |                            |     
|Operating and underwriting expenses                  |                              | 3,108,601   |                            |     
|Salaries and wages                                   |                              | 2,200,806   |                            |     
|Interest expense                                     |                              | 213,841     |                            |     
|Policy acquisition costs, net
      of amortization  |                              | 1,682,440   |                            |     
|                                                     |                              |             |                            |     
|Total
      expenses                                 |                              | 14,823,847  |                            |     
|Income before provision for income tax expense       |                              | 5,749,421   |                            |     
|Provision for income tax expense                     |                              | 2,074,643   |                            |     
|                                                     |                              |             |                            |     
|Net
      income                                     | $                            | 3,674,778   |                            | $   
|                                                     |                              |             |                            |     
|                                                    
|                                                    
|Basic net income per share                           |                              | $0.95       |                            |     
|                                                     |                              |             |                            |     
|                                                    
|Weighted average number of common shares outstanding |                              | 3,863,262   |                            |     
|                                                     |                              |             |                            |     
|                                                    
|Fully diluted net income per share                   |                              | $0.91       |                            |     
|                                                     |                              |             |                            |     
|                                                    
|Weighted average number of common shares outstanding |                              |             |                            |     
|(assuming dilution)                                  |                              | 4,055,944   |                            |     
|                                                     |                              |             |                            |     
|                                                    
|Dividends declared per share                         |                              | $0.12       |                            |     
|                                                     |                              |             |                            |     

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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|**21****STCENTURY HOLDING COMPANYCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)**
|-----------------------------------------------------------------------------------

|                                                                                                  | **Six months ended June 30,** |            
|------------------------------------------------------------------------------------------------- | ----------------------------- | -----------
|                                                                                                  |                               |            
|                                                                                                  | **2004**                      |            
|                                                                                                  |                               |            
|Cash flow from operating activities:                                                              |                               |            
|Net income                                                                                        | $                             | 6,598,786  
|Adjustments
      to reconcile net income to net cash (used in) provided by operating activities: |                               |            
|Amortization
      of investment premium, net                                                     |                               | 124,962    
|Depreciation
      and amortization of property plant and equipment, net                          |                               | 256,704    
|Deferred
      income tax expense                                                                 |                               | (807,433   
|Net
      realized investment gains                                                               |                               | (180,427   
|Common
      Stock issued for interest on Notes                                                   |                               | 196,875    
|Provision
      for credit losses, net                                                            |                               | 634,736    
|Provision
      for uncollectible premiums receivable                                             |                               | 195,845    
|Recognition
      of deferred income from sale of franchises                                      |                               | (110,638   
|Changes in operating assets
      and liabilities:                                                |                               |            
|Premiums
      receivable                                                                         |                               | 134,554    
|Prepaid
      reinsurance premiums                                                                |                               | 6,095,744  
|Due
      from reinsurers, net                                                                    |                               | 3,852,106  
|Income
      taxes recoverable                                                                    |                               | 824,787    
|Policy
      acquisition costs, net of amortization                                               |                               | (4,415,825 
|Goodwill                                                                                          |                               |           
|Finance
      contracts receivable                                                                |                               | 111,848    
|Other
      assets                                                                                |                               | 268,847    
|Unpaid
      losses and loss adjustment expenses                                                  |                               | (3,385,021 
|Unearned
      premiums                                                                           |                               | 14,499,217 
|Premium
      deposits                                                                            |                               | (174,216   
|Income
      taxes payable                                                                        |                               | 1,119,047  
|Accounts
      payable and accrued expenses                                                       |                               | (94,471    
|                                                                                                  |                               |            
|Net cash provided by operating activities                                                         |                               | 25,746,027 
|                                                                                                  |                               |            
|Cash flow (used in) provided by investing activities:                                             |                               |            
|Proceeds from sale of
      investment securities available for sale                              |                               | 34,275,107 
|Purchases of investment
      securities available for sale                                       |                               | (66,948,234
|Receivable for investments
      sold                                                             |                               | 2,118,595  
|Collection of mortgage
      loans                                                                |                               | 137,571    
|Purchases of property
      and equipment                                                         |                               | (157,936   
|Proceeds from sale of
      assets                                                                |                               |           
|                                                                                                  |                               |            
|Net cash used in investing activities                                                             |                               | (30,574,897
|                                                                                                  |                               |            
|Cash flow (used in) provided by financing activities:                                             |                               |            
|Exercised stock options                                                                           |                               | 2,263,417  
|Dividends paid                                                                                    |                               | (920,776   
|Purchases of treasury
      stock                                                                 |                               | (2,197     
|Revolving credit outstanding                                                                      |                               | (1,241,093 
|                                                                                                  |                               |            
|Net cash provided by financing activities                                                         |                               | 99,351     
|                                                                                                  |                               |            
|Net (decrease) increase in cash and cash equivalents                                              |                               | (4,729,519 
|Cash and cash equivalents at beginning of period                                                  |                               | 6,770,169  
|                                                                                                  |                               |            
|Cash and cash equivalents at end of period                                                        | $                             | 2,040,650  
|                                                                                                  |                               |            
|                                                                                                 
|Supplemental disclosure of cash flow information:                                                 |                               |            
|Cash paid during the period
      for:                                                            |                               |            
|Interest                                                                                          | $                             | 113,626    
|                                                                                                  |                               |            
|Income
      taxes                                                                                | $                             | 2,095,000  
|                                                                                                  |                               |            
|Non - cash investing and
      finance activities:                                                |                               |            
|Accrued
      dividends payable                                                                   | $                             | 436,229    
|                                                                                                  |                               |            
|Retirement
      of subordinated debt by Common Stock issuance                                    | $                             | 1,250,000  
|                                                                                                  |                               |            
|Notes
      reveivable, net of deferred gains, received for sale of agencies                      | $                             | 214,220    
|                                                                                                  |                               |            

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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|21stCentury Holding CompanyNotes to Consolidated Financial Statements
|---------------------------------------------------------------------

The accompanying unaudited consolidated financial statements of 21stCentury Holding Company (the
Company) have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. These financial
statements do not include all information and notes required by GAAP for a complete financial statement presentation, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual
report on Form 10-K for the year ended December 31, 2003. The December 31, 2003 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The financial information furnished
reflects all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The results
of operations are not necessarily indicative of the results of operations that may be achieved in the future.

We are a vertically integrated insurance holding company, which, through our subsidiaries, control substantially all aspects of the insurance underwriting, distribution and claims process. We
underwrite personal automobile insurance, general liability insurance, flood insurance, homeowners insurance and mobile home property and casualty insurance in Florida, Georgia and Louisiana through our wholly owned subsidiaries, Federated
National Insurance Company (Federated National) and American Vehicle Insurance Company (American Vehicle). American Vehicle was approved in August 2003 to be a foreign insurer in the State of Georgia on an excess and surplus
lines basis. Additionally, during March 2004, American Vehicle was admitted as a foreign insurer in the State of Louisiana to write homeowners and general liability insurance.

During the six months ended June 30, 2004, 23.7%, 61.7%, 1.8% and 12.8% of the policies we underwrote were for personal automobile insurance, homeowners property and casualty insurance,
mobile home property and casualty insurance, and commercial general liability, respectively. During the year ended December 31, 2003, 67.5%, 23.0%, 2.4% and 7.1% of the policies we underwrote were for personal automobile insurance, homeowners
property and casualty insurance, mobile home property and casualty insurance and commercial general liability, respectively. We internally process claims made by our own and third party insureds through our wholly owned claims adjusting company,
Superior Adjusting, Inc. (Superior). We also offer premium financing to our own and third-party insureds through our wholly owned subsidiary, Federated Premium Finance, Inc. (Federated Premium).

We market and distribute our own and third-party insurers products and our other services primarily in Central and South Florida, through a network of 24 agencies owned by Federated
Agency Group, Inc. (Federated Agency Group), a wholly owned subsidiary, 45 franchised agencies, approximately 1500 independent agents and a select number of general agents. Our independent agents and general agents are primarily
responsible for the distribution of our homeowner insurance and commercial general liability products. Through our wholly owned subsidiary, FedUSA, Inc. (FedUSA), we franchise agencies under the FedUSA name. As of June 30, 2004,
franchises were granted for 45 FedUSA agencies, of which 40 were operating and 5 are pending. We intend to focus our future expansion efforts for our agency network on franchised agencies.

Assurance Managing General Agents, Inc. (Assurance MGA), a wholly owned subsidiary, acts as Federated Nationals and American Vehicles exclusive managing general agent.
Assurance MGA currently provides all underwriting policy administration, marketing, accounting and financial services to Federated National, American Vehicle and our agencies, and participates in the negotiation of reinsurance contracts. Assurance
MGA generates revenue through policy fee income and other administrative fees from the marketing of companies products through our distribution network. Assurance MGA plans to establish relationships with additional carriers and add additional
insurance products in the future.

We offer electronic tax filing services through Express Tax Service, Inc. (Express Tax), an 80%-owned subsidiary, as well as franchise opportunities for these services through EXPRESSTAX Franchise Corporation.
As of June 30, 2004, there were 235 franchises granted in 18 states. Revenue is generated through franchise sales, collection of royalties on tax preparation fees, incentives from business partners as well as fees from the preparation of income tax
returns and income tax refund anticipation loans. In addition, Express Tax offers tax preparation services through approximately 500 licensees nationwide.



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|21stCentury Holding CompanyNotes to Consolidated Financial Statements
|---------------------------------------------------------------------

(2)      SUMMARY
  OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(A)      CRITICAL ACCOUNTING
  POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions about future
events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.
Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with our evaluation of the determination of liability for unpaid
losses and loss adjustment expenses.  In addition, significant estimates form the basis for our reserves with respect to finance contracts, premiums receivable, deferred income taxes, deferred policy acquisition costs and loss contingencies and the
recoverability of goodwill. Various assumptions and other factors underlie the determination of these significant estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical
experience, as well as current and expected economic conditions.  We periodically re-evaluate these significant factors and make adjustments where facts and circumstances dictate.

(B)      IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which requires the
consolidation of certain entities considered to be variable interest entities (VIEs). An entity is considered to be a VIE when it has equity investors who lack the characteristics of having a controlling financial interest, or its
capital is insufficient to permit it to finance its activities without additional subordinated financial support. Consolidation of a VIE by an investor is required when it is determined that the investor will absorb a majority of the VIEs
expected losses if they occur, receive a majority of the entitys expected residual returns if they occur, or both. The adoption of Interpretation No. 46 did not have any impact on our Consolidated Financial Statements.

In May 2003, the FASB issued Statement of Financial Accounting Standard Number 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This
Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and it requires that an issuer classify a financial instrument that is within its scope as a
liability because the financial instrument embodies an obligation of the issuer. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective in the first interim period beginning
after June 15, 2003. On July 31, 2003, we completed a private placement of our 6% Senior Subordinated Notes (the Notes), which were offered and sold to accredited investors as units consisting of one Note with a principal amount of
$1,000 and warrants (the Warrants) to purchase shares of our Common Stock. These Notes fall within the definition of financial instruments as described in Financial Accounting Standard Number 150 and were originally presented as a
liability in conformity with Statement of Financial Accounting Standard Number 150. As such, the adoption of this Statement did not have any impact on our Consolidated Financial Statements.

We continue to account for stock-based compensation using the intrinsic value method prescribed by APB Opinion No. 25, under which no compensation cost for stock options is recognized for stock
option awards granted to employees at or above fair market value.  Had compensation expense for our stock compensation plans been determined based upon fair values at the grant dates for awards under the plan in accordance with SFAS No. 123, our net
income and net income per share would have been reduced to the pro forma amounts indicated below.



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21stCentury Holding Company
  Notes to Consolidated Financial Statements

|                                | **For
      the three months
      ending June 30,** | ****      | **For the
      six months
      ending June 30,**
|------------------------------- | ---------------------------------------------------- | --------- | --------------------------------------------------
|                                |                                                      |           |                                                   
|                                | **2004**                                             | ****      | **2003**                                          
|                                |                                                      |           |                                                   
|Net Income as reported          | $                                                    | 3,674,778 |                                                   
|Compensation, net of tax effect |                                                      | 329,851   |                                                   
|                                |                                                      |           |                                                   
|Pro forma net income            | $                                                    | 3,344,927 |                                                   
|                                |                                                      |           |                                                   
|Net income per share            |                                                      |           |                                                   
|As reported - Basic             | $                                                    | 0.95      |                                                   
|As reported - Diluted           | $                                                    | 0.91      |                                                   
|Pro forma - Basic               | $                                                    | 0.87      |                                                   
|Pro forma - Diluted             | $                                                    | 0.82      |                                                   

Additional stock option awards are anticipated in future years.

The weighted average fair value of options granted during the six months ended June 30, 2004, estimated on the date of grant using the Black-Scholes option-pricing model, was $27.01. The weighted average fair value of
options granted during 2004 and 2003, estimated on the date of grant using the Black-Scholes option-pricing model, was $10.00 to $14.69 in 2004 and $6.32 to $12.46 in 2003. The fair value of options granted is estimated on the date of grant using
the following assumptions:

|                         | **June 30, 2004** | **** | **December 31, 2003**
|------------------------ | ----------------- | ---- | ---------------------
|                         |                   |      |                      
|Dividend yield           | 2.24%             |      | 1.96% to 2.10%       
|Expected volatility      | 100.98%           |      | 105.91% to 108.73%   
|Risk-free interest rate  | 3.25% - 3.33%     |      | 2.30% to 3.94%       
|Expected life (in years) | 3.44              |      | 3.00 to 6.36         

| | (D)      EARNINGS PER SHARE
| | ---------------------------

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during each period presented. Diluted earnings per share is computed by
dividing net income by the weighted average number of shares of common stock and common stock equivalents during the period presented; outstanding warrants and stock options are considered common stock equivalents and are included in the calculation
using the treasury stock method.

| | (E)      RECLASSIFICATIONS
| | --------------------------

Certain amounts in 2003 financial statements have been reclassified
  to conform with the 2004 presentation.

Federated Premiums operations are funded by a revolving loan agreement (Revolving Agreement) with FlatIron Funding Company LLC (FlatIron).  The Revolving Agreement
is structured as a sale of contracts receivable under a sale and assignment agreement with FPF, Inc. (FPF, a wholly-owned subsidiary of FlatIron), which gives FPF the right to sell or assign these contracts receivable. Federated Premium,
which services these contracts, has recorded transactions under the Revolving Agreement as secured borrowings.

The amount of FPFs advance is subject to availability under a borrowing base calculation, with maximum advances outstanding not to exceed the credit commitment. The annual interest rate
on advances under the Revolving Agreement is the prime rate plus additional interest varying from 1.25% to 3.25% based on the prior months ratio of contracts receivable related to insurance companies with an A. M. Best rating of B or lower to
total contracts receivable. As of June 30, 2004, our rate was 5.75% as compared to our rate as of June 30, 2003 of 6.00%

The Revolving Agreement contains various operating and financial covenants, with
  which we were in compliance at June 30, 2004 and December 31, 2003. The Revolving Agreement, as amended, expires September 30, 2004
  and we have begun to negotiate a similar agreement to replace the expiring agreement. Outstanding borrowings under the Revolving Agreement
  as of June 30, 2004 and December 31, 2003 were $2.9 million and $4.1 million, respectively. Outstanding borrowings in excess of the
  $4.0 million commitment totaled $98,786 as of December 31, 2003. The excess amount, permissible by reason of a compensating cash balance
  of $200,430 for December 31, 2003, was held for the benefit of FPF and is included in other assets. Interest expense on this revolving
  credit line for the six months ended June 30, 2004 and 2003 totaled approximately $104,000 and $110,000, respectively. For the six months
  ended June 30, 2004 and 2003 the effective interest rate on this line of credit, based on our average outstanding borrowings under the
  Revolving Agreement, was 5.97% and 5.68%, respectively.



|8
|-

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|21stCentury Holding CompanyNotes to Consolidated Financial Statements
|---------------------------------------------------------------------

We also implemented a direct bill program during 2001 for policies underwritten by our carriers. Direct billing is where the insurance company accepts from the insured, as a receivable, a
promise to pay the premium, as opposed to requiring the full amount of the policy, either directly from the insured or from a premium finance company.

(4)      COMMITMENTS AND CONTINGENCIES

We are involved in various claims and legal actions arising in the ordinary course of business.  In the opinion of management, the ultimate disposition of these matters will not have
a material adverse effect on our consolidated financial position, results of operations, or liquidity.

In June 2000, a lawsuit was filed against us, our directors and our executive officers seeking compensatory damages in an undisclosed amount on the basis of allegations that our amended
registration statement dated November 4, 1998 was inaccurate and misleading concerning the manner in which we recognized ceded insurance commission income, in violation of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934. The lawsuit was filed in the United States District Court for the Southern District of New York. The plaintiff class purportedly includes purchasers of our Common Stock between November 5, 1998 and August 13,
1999. The Court granted the plaintiffs class status.

Specifically, the plaintiffs allege that we recognized ceded commission income on a written basis, rather than amortized on a pro rata basis. The plaintiffs allege that this was contrary to the
Statement of Financial Accounting Concepts Nos. 1, 2 and 5. We believe, however, that the lawsuit is without merit and we have vigorously defended the action, because we reasonably relied upon outside subject matter experts to make these
determinations at the time. We have also since accounted for ceded commission on a pro rata basis and have done so since these matters were brought to our attention in 1998. Nevertheless, we have also continued to actively participate in settlement
negotiations with the plaintiffs and have tentatively agreed to settle the case. The parties are currently negotiating the final terms of a Memorandum of Understanding, which will have to be executed by the parties and then approved by the court.
We have reserved and charged against fourth quarter 2003 earnings $600,000 for the potential settlement and associated costs.

As a direct premium writer in the State of Florida, we are required to participate in certain insurer solvency pools under Florida Statutes section 631.57(3)(a) . Participation in these pools
is based on our written premium by line of business to total premiums written statewide by all insurers. Participation may result in assessments against us.

Federated National and American Vehicle are also required to participate in an insurance apportionment plan under Florida Statutes section 627.351 referred to as a Joint Underwriting
Association Plan (JUA Plan). The JUA Plan provides for the equitable apportionment of any profits realized, or losses and expenses incurred, among participating insurers.  In the event of an underwriting deficit incurred by the JUA Plan
and the deficit is not recovered through the policyholders in the JUA Plan, such deficit shall be recovered from the companies participating in the JUA Plan in the proportion that the net direct premiums of each such member written during the
preceding calendar year bear to the aggregate net direct premiums written in this state by all members of the JUA Plan.

No assessments have been incurred by either insurance company through the date of issuance of this report pursuant to our participation in the above noted participation pool and JUA plan.



|9
|-

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|21stCentury Holding CompanyNotes to Consolidated Financial Statements
|---------------------------------------------------------------------

(5)      COMPREHENSIVE INCOME

For the three and six months ended June 30, 2004 and 2003, comprehensive income consisted of the following:

|                                                                           | **Three months
      ended June 30,** | ****       | **Six months
      ended June 30,** |     
|-------------------------------------------------------------------------- | ------------------------------------- | ---------- | ----------------------------------- | ----
|                                                                           |                                       |            |                                     |     
|                                                                           | **2004**                              | ****       | **2003**                            | ****
|                                                                           |                                       |            |                                     |     
|Net income                                                                 | $                                     | 3,674,778  |                                     | $   
|Change in net unrealized gains on investments
      available for sale     |                                       | (2,751,268 | )                                   |     
|                                                                           |                                       |            |                                     |     
|Comprehensive income, before tax                                           |                                       | 923,510    |                                     |     
|Income tax benefit (expense) related to items of
      other comprehensive |                                       |            |                                     |     
|income                                                                     |                                       | 1,036,371  |                                     |     
|                                                                           |                                       |            |                                     |     
|Comprehensive income                                                       | $                                     | 1,959,881  |                                     | $   
|                                                                           |                                       |            |                                     |     

|(6)      SEGMENT INFORMATION
|----------------------------

We operate principally in two business segments consisting of insurance and financing.  The insurance segment consists of underwriting through Federated National and American Vehicle, managing
general agent operations through Assurance MGA, claims processing through Superior, and marketing and distribution through Federated Agency Group.  The insurance segment sells personal automobile, general liability, homeowners and mobile
homeowners insurance and includes substantially all aspects of the insurance, distribution and claims process. The financing segment consists of premium financing through Federated Premium. The financing segment provides premium financing to
our insureds and is marketed through our distribution network of Company-owned agencies and franchised agents.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies and practices. We evaluate our business segments based on GAAP pretax
operating earnings. Corporate overhead expenses are allocated to business segments.  Transactions between reportable segments are accounted for at fair value.

Operating segments that are not individually reportable, based on the extent of the current operations in such segments, are included in the All Other category. The All
Other category currently includes the operations of 21st Century Holding Company, franchise operations and income tax preparation.



|10
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|21stCentury Holding CompanyNotes to Consolidated Financial Statements
|---------------------------------------------------------------------

Information regarding components of operations for the six months ended
  June 30, 2004 and 2003 follows:

|                                                                                      | **Three
      months ended June 30,** | ****        | **Six months
      ended June 30,** |     
|------------------------------------------------------------------------------------- | ------------------------------------- | ----------- | ----------------------------------- | ----
|                                                                                      |                                       |             |                                     |     
|                                                                                      | **2004**                              | ****        | **2003**                            | ****
|Total revenue                                                                         |                                       |             |                                     |     
|Insurance segments                                                                    | $                                     | 20,970,381  |                                     | $   
|Financing segment                                                                     |                                       | 727,331     |                                     |     
|All other segments                                                                    |                                       | 958,794     |                                     |     
|                                                                                      |                                       |             |                                     |     
|Total
      operating segments                                                        |                                       | 22,656,506  |                                     |     
|Intercompany
      eliminations                                                       |                                       | (2,083,239  | )                                   |     
|                                                                                      |                                       |             |                                     |     
|Total
      revenues                                                                  | $                                     | 20,573,267  |                                     | $   
|                                                                                      |                                       |             |                                     |     
|                                                                                     
|Earnings before income taxes                                                          |                                       |             |                                     |     
|Insurance segments                                                                    | $                                     | 5,624,649   |                                     | $   
|Financing segment                                                                     |                                       | 448,840     |                                     |     
|All other segments                                                                    |                                       | (324,068    | )                                   |     
|                                                                                      |                                       |             |                                     |     
|Total
      earnings before income taxes                                              | $                                     | 5,749,421   |                                     | $   
|                                                                                      |                                       |             |                                     |     
|                                                                                     
|Information regarding total assets as of June 30, 2004 and December 31, 2003 follows:
|                                                                                     
|                                                                                      | **June 30,
      2004**               | ****        | **December 31,
      2003**         |     
|Total assets                                                                          |                                       |             |                                     |     
|Insurance segments                                                                    | $                                     | 113,255,956 |                                     | $   
|Financing segment                                                                     |                                       | 9,480,319   |                                     |     
|All other segments                                                                    |                                       | 3,031,736   |                                     |     
|                                                                                      |                                       |             |                                     |     
|Total
      operating segments                                                        |                                       | 125,768,011 |                                     |     
|Intercompany eliminations                                                             |                                       | (1,423,900  | )                                   |     
|                                                                                      |                                       |             |                                     |     
|Total
      assets                                                                    | $                                     | 124,344,111 |                                     | $   
|                                                                                      |                                       |             |                                     |     

|(7)     REINSURANCE AGREEMENTS
|------------------------------

We are not subscribing to quota-share reinsurance for automobile insurance policies issued with an effective date beyond December 31, 2003. The quota-share reinsurance treaties for 2003
automobile insurance policies include loss corridors with varying layers of coverage based on ultimate incurred loss ratio results whereby Federated National and American Vehicle will retain 100% of the losses between incurred loss ratios of 66% and
86%. Despite the loss corridors, substantially all of the insurance risk relating to the reinsured portions of the underlying insurance agreements has been assumed by the reinsurer, wherein the reinsurers exposure to loss is essentially the
same as ours.

We continue to participate in the Florida Hurricane Catastrophe Fund (FCAT)
  and we subscribe to an excess of loss reinsurance policy to protect our interest in the insurable risks associated with our homeowner
  and mobile home owner insurance products. Maximum coverage afforded from the combined policies of our FCAT and excess of loss policies
  in effect for the 2004  2005 hurricane season total approximately $200.0 million where we will retain the first $10 million of
  insurable losses. Our amount of reinsurance coverage was determined by subjecting our homeowner and mobile homeowner exposures to statistical
  forecasting models that are designed to quantify a catastrophic event in terms of the frequency a storm occurring once in every n
  years. Our reinsurance coverage contemplated a catastrophic event occurring once every 100 years.



|11
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|21stCentury Holding CompanyNotes to Consolidated Financial Statements
|---------------------------------------------------------------------

|(8)      STOCK COMPENSATION PLANS
|---------------------------------

In 1998, we issued warrants to two employees to purchase a total of 62,500 shares of our common stock at $9.00 per share. The warrants vested immediately and are exercisable until December
2004, at which time if they have not been exercised, they will be canceled. The estimated fair value of these warrants at the date issued was approximately $226,000 using a Black-Scholes option pricing model and assumptions similar to those used for
valuing the Companys stock options as described below. During the six months ended June 30, 2004, all of the 7,800 remaining warrants were exercised.

We implemented a stock option plan in November 1998 that provides for the granting of stock options to officers, key employees and consultants.  The objectives of this plan include attracting and retaining the best
personnel, providing for additional performance incentives, and promoting our success by providing employees the opportunity to acquire common stock.  Options outstanding under this plan have been granted at prices that are either equal to or above
the market value of the stock on the date of grant, vest over a four-year period, and expire ten years after the grant date. Under this plan, we are authorized to grant options to purchase up to 600,000 common shares, and, as of June 30, 2004 and
December 31, 2003, we had outstanding exercisable options to purchase 169,938 and 272,353 shares, respectively.

In 2001, we implemented a franchisee stock option plan that provides for the granting of stock options to individuals purchasing Company-owned agencies that are then converted to franchised
agencies. The purpose of the plan is to advance our interests by providing an additional incentive to encourage managers of Company-owned agencies to purchase the agencies and convert them to franchises. Options outstanding under the plan have been
granted at prices that are above the market value of the stock on the date of grant, vest over a ten-year period, and expire ten years after the grant date. Under this plan, we are authorized to grant options to purchase up to 689,000 common shares,
and as of June 30, 2004 and December 31, 2003, we had outstanding exercisable options to purchase 13,780 and 26,640 shares, respectively.

In 2002, we implemented the 2002 Option Plan. The purpose of this plan is to advance our interests by providing an additional incentive to attract, retain and motivate highly qualified and
competent persons who are key to the Company, including key employees, consultants, independent contractors, officers and directors, upon whose efforts and judgment our success is largely dependent, by authorizing the grant of options to purchase
Common Stock to persons who are eligible to participate thereunder, thereby encouraging stock ownership by such persons, all upon and subject to the terms and conditions of the plan. Options outstanding under the plan have been granted at prices
that are above the market value of the stock on the date of grant, vest over a five-year period, and expire six years after the grant date. Under this plan, we are authorized to grant options to purchase up to 1,200,000 common shares, and, as of
June 30, 2004 and December 31, 2003, we had outstanding exercisable options to purchase 615,800 and 625,400 shares, respectively.

Activity in the Companys stock option plans for the period from January 1, 2002 to June 30, 2004 is summarized below:

|                             | 1998 Plan     |   | 2001 Franchisee Plan |   | 2002
      Plan
|---------------------------- | ------------- | - | -------------------- | - | ---------------
|                             |               |   |                      |   |                
|                             |               |   | **Weighted Average** |   |                
|                             | **Number of** |   | **Option Exercise**  |   | **Number of**  
|                             | **Shares**    |   | **Price**            |   | **Shares**     
|                             |               |   |                      |   |                
|Outstanding at December 31,  |               |   |                      |   |                
|2002                         | 534,338       |   |                      | $ | 10.00          
|Granted                      |              |   |                      | $ | 10.00          
|Exercised                    | (250,247      | ) |                      | $ | 10.00          
|Cancelled                    | (11,738       | ) |                      | $ | 10.00          
|                             |               |   |                      |   |                
|Outstanding at December 31,  |               |   |                      |   |                
|2003                         | 272,353       |   |                      | $ | 10.00          
|Granted                      |              |   |                      |   |                
|Exercised                    | (93,415       | ) |                      | $ | 10.00          
|Cancelled                    | (9,000        | ) |                      | $ | 10.00          
|                             |               |   |                      |   |                
|                            
|Outstanding at June 30, 2004 | 169,938       |   |                      | $ | 10.00          
|                             |               |   |                      |   |                



|12
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21stCentury Holding Company
  Notes to Consolidated Financial Statements

Options outstanding as of June 30, 2004 are exercisable as follows:

|                          | 1998 Plan            |  | 2001 Franchisee Plan |   | 2002
      Plan
|------------------------- | -------------------- |  | -------------------- | - | ---------------
|                          |                      |  |                      |   |                
|                          |                      |  | **Weighted Average** |   |                
|                          |                      |  | **Option Exercise**  |   | **Number of**  
|Options Exercisable at:   | **Number of Shares** |  | **Price**            |   | **Shares**     
|                          |                      |  |                      |   |                
|June 30, 2004             | 106,438              |  |                      | $ | 10.00          
|December 31, 2004         |                     |  |                      | $ | 10.00          
|December 31, 2005         | 31,750               |  |                      | $ | 10.00          
|December 31, 2006         | 31,750               |  |                      | $ | 10.00          
|December 31, 2007         |                     |  |                      |   |                
|December 31, 2008         |                     |  |                      |   |                
|Thereafter                |                     |  |                      |   |                
|                          |                      |  |                      |   |                
|                         
|Total options exercisible | 169,938              |  |                      |   |                
|                          |                      |  |                      |   |                

We continue to account for stock-based compensation using the intrinsic value method prescribed by APB Opinion No. 25, under which no compensation cost for stock options is recognized for stock
option awards granted to employees at or above fair market value. Had compensation expense for the Companys stock compensation plans been determined based upon fair values at the grant dates for awards under the plan in accordance with SFAS
No. 123, our net income and net income per share would have been reduced to the pro forma amounts indicated below.



|                                | **For the three months
      ending June 30,** |           | **For the six months
      ending June 30,**
|------------------------------- | ---------------------------------------------- | --------- | --------------------------------------------
|                                |                                                |           |                                             
|                                | **2004**                                       |           | **2003**                                    
|                                |                                                |           |                                             
|Net Income as reported          | $                                              | 3,674,778 |                                             
|Compensation, net of tax effect |                                                | 329,851   |                                             
|                                |                                                |           |                                             
|Pro forma net income            | $                                              | 3,344,927 |                                             
|                                |                                                |           |                                             
|Net income per share            |                                                |           |                                             
|As reported - Basic             | $                                              | 0.95      |                                             
|As reported - Diluted           | $                                              | 0.91      |                                             
|Pro forma - Basic               | $                                              | 0.87      |                                             
|Pro forma - Diluted             | $                                              | 0.82      |                                             

Additional stock option awards are anticipated in future years.

The weighted average fair value of options granted during the six months ended June 30, 2004, estimated on the date of grant using the Black-Scholes option-pricing model, was $27.01. The weighted average fair value of
options granted during 2004 and 2003, estimated on the date of grant using the Black-Scholes option-pricing model, was $10.00 to $14.69 in 2004 and $6.32 to $12.46 in 2003. The fair value of options granted is estimated on the date of grant using
the following assumptions:

|                         | **June 30, 2004** |  | **December 31, 2003**
|------------------------ | ----------------- |  | ---------------------
|                         |                   |  |                      
|Dividend yield           | 2.24%             |  | 1.96% to 2.10%       
|Expected volatility      | 100.98%           |  | 105.91% to 108.73%   
|Risk-free interest rate  | 3.25% - 3.33%     |  | 2.30% to 3.94%       
|Expected life (in years) | 3.44              |  | 3.00 to 6.36         



|13
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|21stCentury Holding CompanyNotes to Consolidated Financial Statements
|---------------------------------------------------------------------

Summary information about the Companys stock options outstanding at June 30, 2004:

|                    |                    |                |                   |         |                      | **Weighted Average** |                    | **Weighted** |                   |      
|------------------- | ------------------ | -------------- | ----------------- | ------- | -------------------- | -------------------- | ------------------ | ------------ | ----------------- | -----
|                    | **Range of**       |                | **Outstanding**   |         | **Contractual**      |                      | **Average**        |              | **Exercisable**  
|                    | **Exercise Price** |                | **at 06/30/2004** |         | **Periods in Years** |                      | **Exercise Price** |              | **at 06/30/2004**
|                    |                    |                |                   |         |                      |                      |                    |              |                  
|1998 Plan           |                    | $10.00         |                   | 169,938 |                      | 2.47                 |                    |              | $                 | 10.00
|2001 Franchise Plan | $                  | 10.00 - $13.75 |                   | 13,780  |                      | 3.55                 |                    |              | $                 | 12.72
|2002 Plan           | $                  | 12.50 - $30.00 |                   | 615,800 |                      | 3.60                 |                    |              | $                 | 16.06

On July 31, 2003, we completed a private placement of our 6% Senior Subordinated Notes (the Notes), which were offered and sold to accredited investors as units consisting of one Note with a principal amount of
$1,000 and warrants (the Warrant) to purchase shares of our Common Stock.  We sold an aggregate of $7.5 million of Notes in this placement, which resulted in proceeds to us (net of placement agent fees of $450,724 and offering expenses
of $110,778) of $6,938,498.

The Notes pay interest at the annual rate of 6%, are subordinated to senior debt of the Company, and mature on July 31, 2006. Quarterly payments of principal and interest due on the Notes may be made in cash or, at our
option, in shares of our Common Stock. If paid in shares of Common Stock, the number of shares to be issued shall be determined by dividing the payment due by 95% of the weighted-average volume price for the Common Stock on Nasdaq as reported by
Bloomberg Financial Markets (Bloomberg) for the 20 consecutive trading days preceding the payment date.

We issued Warrants to purchase shares of our Common Stock to the purchasers of the Notes and to the placement agent in the offering, J. Giordano Securities Group (J. Giordano). Each Warrant entitles the holder
to purchase one-half of one share of our Common Stock.  The total number of shares issuable upon exercise of Warrants issued to the purchasers of the Notes and to J. Giordano were determined after the expiration of 60 consecutive trading days
following July 31, 2003, which was the date of closing of the offering and totaled 408,050. The number of shares issued upon exercise of the Warrants issued to purchasers equaled $7.5 million divided by the exercise price of the Warrants and totaled
392,356 shares.  The number of shares issuable upon exercise of the Warrants issued to J. Giordano equaled $300,000 divided by the exercise price of the Warrants and totaled 15,694 shares.  The exercise price of the Warrants equals 115% of the
weighted-average volume price of the Common Stock on Nasdaq as reported by Bloomberg for the 60 consecutive trading days following July 31, 2003, with a maximum of $25.00 per share and a minimum of $15.00 per share. As computed, the exercise price
of the Warrants equaled $19.1153. The terms of the Warrants provide for adjustment of the exercise price and the number of shares issuable thereunder upon the occurrence of certain events typical for private offerings of this type. The Warrants will
be exercisable until July 31, 2006. GAAP requires that detachable warrants be valued separately from debt and included in paid-in capital. Based on the terms of the unit purchase agreement with the investors in the private placement, management
believes that the Warrants had zero value at the date of issuance of the Notes.

Quarterly principal and interest payments, totaling approximately $0.7 million per payment, are due on January 31, April 30, July 31, and October 31 with the last installment due on July 31, 2006. The scheduled loan
payments for the next three years are as follows:

|For the period                      |  |   |          
|----------------------------------- |  | - | ---------
|Six months ending December 31, 2004 |  |   | 1,250,000
|Year ending December 31, 2005       |  |   | 2,500,000
|Year ending December 31, 2006       |  |   | 1,875,000
|                                    |  |   |          
|Total                               |  | $ | 5,625,000
|                                    |  |   |          

On or about January 31, 2004, April 30,
  2004 and July 31, 2004, we paid, pursuant to the terms of the Notes, the quarterly payments of principal and interest due in shares
  of our Common Stock and in accordance with the contractual computations issued 36,009, 35,819 and 33,310 shares of Common Stock, respectively.



|14
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21 st Century Holding Company  Managements Discussion
  and Analysis of Financial Condition and Results of Operations


|ITEM 2:
|-------

|Forward-Looking
      Statements
|--------------------------------

Statements
  in this report or in documents that are incorporated by reference that are not
  historical fact are forward-looking statements that are subject to certain risks
  and uncertainties that could cause actual events and results to differ materially
  from those discussed herein. Without limiting the generality of the foregoing,
  words such as may, will, expect, believe,
  anticipate, intend, could, would,
  estimate, or continue or the negative other variations
  thereof or comparable terminology are intended to identify forward-looking statements.
  The risks and uncertainties include, without limitation, uncertainties related
  to estimates, assumptions and projections generally; inflation and other changes
  in economic conditions (including changes in interest rates and financial markets);
  pricing competition and other initiatives by competitors; ability to obtain
  regulatory approval for requested rate changes and the timing thereof; legislative
  and regulatory developments; the outcome of litigation pending against us, including
  the terms of any settlements; risks related to the nature and the type of our
  business; dependence on investment income and the composition of our investment
  portfolio; the adequacy of our liability for loss and loss adjustment expense;
  insurance agents; claims experience; ratings by industry services; catastrophe
  losses; reliance on key personnel; weather conditions (including the severity
  and frequency of storms, hurricanes, tornadoes and hail); changes in driving
  patterns and loss trends; acts of war and terrorist activities; court decisions
  and trends in litigation and health care and auto repair costs; and other matters
  described from time to time by us in this report, and our other filings with
  the SEC.

You
  are cautioned not to place reliance on these forward-looking statements, which
  are valid only as of the date they were made. We undertake no obligation to
  update or revise any forward-looking statements to reflect new information or
  the occurrence of unanticipated events or otherwise. In addition, readers should
  be aware that GAAP prescribes when a company may reserve for particular risks,
  including litigation exposures. Accordingly, results for a given reporting period
  could be significantly affected if and when a reserve is established for a major
  contingency. Reported results may therefore appear to be volatile in certain
  accounting periods.

|Overview
|--------

We
  are a vertically integrated insurance holding company, which, through our subsidiaries,
  control substantially all aspects of the insurance underwriting, distribution
  and claims process. We underwrite personal automobile insurance, general liability
  insurance, flood insurance, homeowners insurance and mobile home property
  and casualty insurance in Florida, Georgia and Louisiana through our wholly
  owned subsidiaries, Federated National Insurance Company (Federated National)
  and American Vehicle Insurance Company (American Vehicle). American
  Vehicle was approved in August 2003 to be a foreign insurer in the State of
  Georgia on an excess and surplus lines basis. Additionally, during March 2004,
  American Vehicle was admitted as a foreign insurer in the State of Louisiana
  to write homeowners and general liability insurance.

During
  the six months ended June 30, 2004, 23.7%, 61.7%, 1.8% and 12.8% of the policies
  we underwrote were for personal automobile insurance, homeowners property
  and casualty insurance, mobile home property and casualty insurance, and commercial
  general liability, respectively. During the year ended December 31, 2003, 67.5%,
  23.0%, 2.4% and 7.1% of the policies we underwrote were for personal automobile
  insurance, homeowners property and casualty insurance, mobile home property
  and casualty insurance, and commercial general liability, respectively. We internally
  process claims made by our own and third party insureds through our wholly owned
  claims adjusting company, Superior Adjusting, Inc.(Superior). We
  also offer premium financing to our own and third-party insureds through our
  wholly owned subsidiary, Federated Premium Finance, Inc. (Federated Premium).

We
  market and distribute our own and third-party insurers products and our
  other services primarily in Central and South Florida, through a network of
  24 agencies owned by Federated Agency Group, Inc. (Federated Agency Group),
  a wholly owned subsidiary, 45 franchised agencies, approximately 1,500 independent
  agents and a select number of general agents. Our independent agents and general
  agents are primarily responsible for the distribution of our homeowner insurance
  and commercial general liability products. Through our wholly owned subsidiary,
  FedUSA, Inc. (FedUSA), we franchise agencies under the FedUSA name.
  As of June 30, 2004, franchises were granted to 45 FedUSA agencies, of which
  40 were operating and 5 are pending. We intend to focus our future expansion
  efforts on our agency network of franchised agencies.





|15
|--

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21 st Century Holding Company  Managements Discussion
  and Analysis of Financial Condition and Results of Operations


Assurance
  Managing General Agents, Inc. (Assurance MGA), a wholly owned subsidiary,
  acts as Federated Nationals and American Vehicles exclusive managing
  general agent. Assurance MGA currently provides all underwriting policy administration,
  marketing, accounting and financial services to Federated National, American
  Vehicle and our agencies, and participates in the negotiation of reinsurance
  contracts. Assurance MGA generates revenue through policy fee income and other
  administrative fees from the marketing of companies products through the
  Companys distribution network. Assurance MGA plans to establish relationships
  with additional carriers and add additional insurance products in the future.

We offer electronic tax filing services through Express Tax Service, Inc. (Express
  Tax), an 80%-owned subsidiary, as well as franchise opportunities for
  these services. As of June 30, 2004, there were 235 franchises granted in 18
  states. Revenue is generated through franchise sales, collection of royalties
  on tax preparation fees, incentives from business partners as well as fees from
  the preparation of income tax returns and income tax refund anticipation loans.
  In addition, Express Tax offers tax preparation services through approximately
  500 licensees nationwide.

Our
  business, results of operations and financial condition are subject to fluctuations
  due to a variety of factors. Abnormally high severity or frequency of claims
  in any period could have a material adverse effect on our business, results
  of operations and financial condition. Also, if our estimated liabilities for
  unpaid losses and loss adjustment expenses are less than actual losses and loss
  adjustment expenses, we will be required to increase reserves with a corresponding
  reduction in our net income in the period in which the deficiency is identified.

We
  operate in a highly competitive market and face competition from both national
  and regional insurance companies, many of whom are larger and have greater financial
  and other resources, have better A.M. Best ratings and offer more diversified
  insurance coverage. Our competitors include other companies which market their
  products through agents, as well as companies which sell insurance directly
  to their customers. Large national writers may have certain competitive advantages
  over agency writers, including increased name recognition, increased loyalty
  of their customer base and reduced policy acquisition costs. We may also face
  competition from new or temporary entrants in our niche markets. In some cases,
  such entrants may, because of inexperience, desire for new business or other
  reasons, price their insurance below ours. Although our pricing is inevitably
  influenced to some degree by that of our competitors, we believe that it is
  generally not in our best interest to compete solely on price. We instead tend
  to compete on the basis of underwriting criteria, our distribution network and
  superior service to our agents and insureds. We compete with respect to automobile
  insurance in Florida with more than 100 companies, which underwrite personal
  automobile insurance. Comparable companies which compete with us in the personal
  automobile insurance market include U.S. Security Insurance Company, United
  Automobile Insurance Company, Direct General Insurance Company and Security
  National Insurance Company, as well as major insurers such as Progressive Casualty
  Insurance Company. Comparable companies which compete with us in the homeowners
  market include Florida Family Insurance Company, Florida Select Insurance Company,
  Atlantic Preferred Insurance Company and Vanguard Insurance Company. Comparable
  companies which compete with us in the general liability insurance market include
  Century Surety Insurance Company, Atlantic Casualty Insurance Company, Colony
  Insurance Company and Burlington/First Financial Insurance Companies. Competition
  could have a material adverse effect on our business, results of operations
  and financial condition.

Our
  executive offices are located at 3661 West Oakland Park Boulevard, Suite 300,
  Lauderdale Lakes, Florida 33313 and our telephone number is (954) 581-9993.

|Recent Events
|-------------

On August 12 and 13, 2004, the Gulf Coast of Florida
  was affected by two storms, Tropical Storm Bonnie and Hurricane Charley. As of the date of this report, we have begun determining the
  extent of claims made and likely to be made under our homeowners and mobile homeowners policies in the affected areas. We
  do not currently expect claims from Tropical Storm Bonnie to be significant. The claims from Hurricane Charley are expected to be more
  significant, although as of the date of this report there are not enough facts available in order for us to estimate the extent of the
  damages.

On
  June 14, 2004 we announced a 3-for-2 stock split. The stock split will be in
  the form of a stock dividend to be distributed on or about September 7, 2004,
  to shareholders of record at the close of business on August 23, 2004. Shareholders
  will receive three shares of common stock for every two shares of our stock
  held on the record date.



|16
|--

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21stCentury Holding CompanyManagements Discussion and Analysis of Financial Condition and Results
    of Operations Analysis of Financial ConditionAs of June 30, 2004 as Compared to December 31, 2003


Investments.

Investments
  increased $31.4 million, or 66.4%, to $78.7 million as of June 30, 2004, as
  compared to $47.3 million as of December 31, 2003, primarily as a result of
  our investment of the proceeds from an increase in written insurance premiums
  and positive underwriting experience.

As
  a result of the adverse market conditions that occurred in 2002, management
  more carefully monitors its concentrations, industries and asset allocations.
  There were no other instances of large concentrations of investment securities
  requiring write-downs.

Financial
  Accounting Standards (FAS) number 115 addresses accounting and reporting
  for (a) investments in equity securities that have readily determinable fair
  values and (b) all investments in debt securities. FAS 115 requires that these
  securities be classified in three categories and given specific accounting treatment
  as follows:

|**Classification**                          | **Accounting Treatment**                           
|------------------------------------------- | ---------------------------------------------------
|                                            |                                                    
|Held-to-maturity                            |                                                    
|Debt securities with the intent and ability | Amortized cost                                     
|to hold to maturity                         |                                                    
|Trading securities                          |                                                    
|Debt and equity securities bought and       | Fair value, with unrealized holding gains and      
|held primarily for sale in the near term    | losses included in operations                      
|Available-for-sale                          |                                                    
|Debt and equity securities not classified   | Fair value, with unrealized holding
      gains and
|as held-to-maturity or trading securities   | losses excluded from earnings and reported as a    
|                                            | separate component of shareholders equity,        
|                                            | namely Other Comprehensive Income                

In
  accordance with the above we have classified all of our investment portfolio
  as available-for-sale during the six months ending June 30, 2004 and the year
  ended December 31, 2003.

Below
  is a summary of unrealized gains and (losses) at June 30, 2004 and December
  31, 2003 by category.



|17
|--

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|21stCentury Holding Company
|---------------------------

|                                                       | **Unrealized Gain and (Loss)**
|------------------------------------------------------ | ------------------------------
|                                                       |                               
|                                                       | **June 30,
      2004**       
|                                                       |                               
|Fixed maturities:                                      |                               
|U.S. government
      obligations                      | $                             
|Obligations of
      states and political subdivisions |                               
|                                                       |                               
|                                                       |                               
|                                                       |                               
|Corporate securities:                                  |                               
|Communications                                         |                               
|Financial                                              |                               
|Other                                                  |                               
|                                                       |                               
|                                                       |                               
|                                                       |                               
|Equity securities:                                     |                               
|Preferred stocks                                       |                               
|Common stocks                                          |                               
|                                                       |                               
|                                                       |                               
|                                                       |                               
|Total unrealized gain and (loss)                       | $                             
|                                                       |                               

For
  further detail, see the sectiontitledITEM3.
  QUANTITATIVEAND
  QUALITATIVE DISCLOSURES
  ABOUT MARKET RISK.

Receivable
  for Investments Sold.

The receivable for investments sold decreased $2.1 million, or 100%, from $2.1
  million as of December 31, 2003. The decrease is a result of investment trading
  activity that occurred in late December 2003 and did not settle until early
  January 2004.

|Prepaid
      Reinsurance Premiums.
|-----------------------------------

Prepaid
  reinsurance premiums decreased $6.1 million, or 77.9%, to $1.7 million as of
  June 30, 2004, as compared to $7.8 million as of December 31, 2003. The decline
  reflects the decrease in our insurance subsidiaries reliance on automobile
  quota-share reinsurance. During 2003 we ceded 40% of our automobile premiums
  to our reinsurer, and for the first six months of 2004, the company has not
  ceded any automobile premiums.

|Deferred
      Policy Acquisition Costs.
|----------------------------------------

Deferred
  policy acquisition costs increased $4.5 million, or 253.8%, to $6.2 million
  as of June 30, 2004, as compared to $1.7 million as of December 31, 2003. For
  the six months ended June 30, 2004, commission expense and commission income,
  net, were approximately $5.5 million and expenses connected with the writing
  of premiums such as salaries and premium taxes, net of policy fees, totaled
  approximately $0.6 million. Deferred policy acquisition costs increased primarily
  due to a $2.3 million increase in deferred commission expenses and a $1.8 million
  decrease in ceded unearned commissions income during the six months ended June
  30, 2004. The increase in deferred commission expenses primarily related to
  the increase in lines of insurance other than automobile, which are not subject
  to quota-share agreements. The decrease in ceded commissions income is due to
  a $6.1 million decline in ceded commissions and is due to the intentional absence
  of a quota-share agreement in place for premiums written in 2004. Deferred policy
  acquisition costs was formerly titled Deferred acquisition costs.



|18
|--

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|21stCentury Holding Company
|---------------------------

|Unpaid
      Losses and Loss Adjustment Expenses.
|-------------------------------------------------

Unpaid
  losses and loss adjustment expenses decreased $3.4 million, or 13.8%, to $21.2
  million as of June 30, 2004, as compared to $24.6 million as of December 31,
  2003. The decline in estimated reserves primarily relates to our intentional
  reduction in automobile insurance exposure during the first and second quarters
  of 2004, which traditionally take a longer period of time to settle. Secondarily,
  the decline in overall reserves is a reflection of the nature and the type of
  other property and casualty insurance products that we now offer, which is generally
  settled more expeditiously.

Factors
  that affect unpaid losses and loss adjustment expenses include the estimates
  made on a claim-by-claim basis known as case reserves coupled with
  bulk estimates known as incurred but not reported (IBNR). Periodic
  estimates by management of the ultimate costs required to settle all claim files
  are based on the Companys analysis of historical data and estimations
  of the impact of numerous factors such as (i) per claim information; (ii) company
  and industry historical loss experience; (iii) legislative enactments, judicial
  decisions, legal developments in the awarding of damages, and changes in political
  attitudes; and (iv) trends in general economic conditions, including the effects
  of inflation. Management revises its estimates based on the results of its analysis.
  This process assumes that past experience, adjusted for the effects of current
  developments and anticipated trends, is an appropriate basis for estimating
  the ultimate settlement of all claims. There is no precise method for subsequently
  evaluating the impact of any specific factor on the adequacy of the reserves,
  because the eventual redundancy or deficiency is affected by multiple factors.
  For further discussion, see Loss and Loss Adjustment Expenses below.

|Unearned
      Premiums.
|------------------------

Unearned
  premiums increased by $14.5 million or, 42.5%, to $48.6 million as of June 30,
  2004, as compared to $34.1 million as of December 31, 2003. The increase was
  due to an $18.1 million increase in unearned homeowners insurance premiums
  and $2.0 million in unearned premiums associated with the newly launched commercial
  liability program. Offsetting these increases was a $5.6 million decrease in
  automobile unearned premiums. These changes reflect our emphasis on property
  and commercial general liability insurance products. During the quarter ending
  June 30, 2004, our plans to assume homeowner policies from the insurer created
  by the State of Florida, Citizens Property Insurance Corporation (Citizens),
  came to fruition. Of the $18.1 million increase in our homeowners insurance
  unearned premiums as of June 30, 2004, 51.2 %, or $9.3 million relates to our
  assumption of homeowner insurance policies from Citizens.

|Income
      Taxes Payable.
|---------------------------

Income
  taxes payable increased by 100% to $1.1 million as of June 30, 2004, as compared
  to December 31, 2003 and are primarily due to payment patterns established by
  our estimations of taxable income.

Results of OperationsThree Months Ended June 30, 2004 as Compared to Three Months Ended June 30, 2003

Gross Premiums Written.

Gross premiums written increased $14.2 million, or 81.0%, to $31.8 million for
  the three months ended June 30, 2004, as compared to $17.6 million for the comparable
  period in 2003. The following table denotes gross premiums written by major
  product line.

|                             | **Three
      months ended June 30,**
|---------------------------- | -------------------------------------
|                             |                                      
|                             | **2004**                             
|                             |                                      
|Automobile                   | $                                    
|Homeowners                  |                                      
|Commercial
      liability   |                                      
|Mobile
      home owners    |                                      
|                             |                                      
|Gross
      written premiums | $                                    
|                             |                                      

As
  noted above, our efforts to expand our lines of insurance products to emphasize
  products other than automobile insurance are coming to fruition. Furthermore,
  our assumption of policies from Citizens during the three months ended June
  30, 2004 totaled 34.9% or $11.1 million of the $31.8 million of gross written
  premiums.



|19
|--

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21stCentury Holding Company

Gross
  Premiums Ceded.

Gross
  premiums ceded decreased $6.0 million to $0.2 million for the three months ended
  June 30, 2004, as compared to a charge to operations of $5.8 million for the
  three months ended June 30, 2003. The decrease is due to the decline in our
  ceded quota-share reinsurance associated with our automobile insurance. For
  the quarter ended June 30, 2004, we did not cede any automobile insurance premiums,
  as compared to a 40% cession for the same period last year.

|Decrease
      in Prepaid Reinsurance Premiums.
|-----------------------------------------------

The
  change in the decrease in prepaid reinsurance premiums was $1.8 million, or
  ($2.3) million for the three months ended June 30, 2004, compared to ($0.6)
  million for the three months ended June 30, 2003. The decrease is due to the
  intentional absence of a quota-share agreement in place for premiums written
  in 2004.

|Increase
      in Unearned Premiums.
|------------------------------------

Unearned
  premiums increased by $12.5 million to ($12.8) million as of June 30, 2004,
  as compared to ($0.3) million as of June 30, 2003. The increase was due to a
  $16.4 million increase in unearned homeowners insurance premiums and $1.1
  million in unearned premiums associated with the commercial liability insurance
  program. Offsetting these increases was a $4.8 million decrease in automobile
  unearned premiums. During the three months ended June 30, 2004, unearned homeowners
  insurance premiums increased by $16.4 million, of which $11.1 million is associated
  with the homeowner insurance premiums assumed from Citizens. For further discussion,
  see Unearned Premiums above.

Net
  Investment Income.

Net
  investment income increased by $0.4 million, or 120.8%, to $0.8 million for
  the three months ended June 30, 2004, as compared to $0.4 million for the same
  three month period ended June 30, 2003. The increase in investment income is
  a result of the additional amounts of invested assets. Also affecting our net
  investment income were our relatively stable yields of 4.36% for the three months
  ended June 30, 2004 as compared to 4.44% for the three months ended June 30,
  2003.

Net Realized Investment
  Gains.

Net realized investment gains decreased by $1.0 million, or 94.5% to $0.1 million
  for the three months ended June 30, 2004, as compared to $1.1 million for the
  three months ended June 30, 2003. The table below depicts the gains by investment
  category.



|20
|--

---



|21stCentury Holding Company
|---------------------------

|****                                                   | **Net Realized Gains**        
|------------------------------------------------------ | ------------------------------
|****                                                   | **Three Months Ended June 30**
|                                                       |                               
|****                                                   | **2004**                      
|                                                       |                               
|Fixed maturities:                                      |                               
|U.S. government obligations                            | $                             
|Obligations of states
      and political subdivisions |                               
|                                                       |                               
|                                                       |                               
|                                                       |                               
|Corporate securities:                                  |                               
|Communications                                         |                               
|Financial                                              |                               
|Other                                                  |                               
|                                                       |                               
|                                                       |                               
|                                                       |                               
|Equity securities:                                     |                               
|Preferred stocks                                       |                               
|Common stocks                                          |                               
|                                                       |                               
|                                                       |                               
|                                                       |                               
|Total net realized gains                               | $                             
|                                                       |                               

|Loss
      and Loss Adjustment Expenses.
|----------------------------------------

Loss
  and loss adjustment expenses increased by $0.1 million, or 1.7%, to $7.6 million
  for the three months ended June 30, 2004, as compared to $7.5 million as of
  June 30, 2003. The modest increase is predominantly due to the decline in automobile
  premiums as a percentage of our overall premium volume and an increase in homeowner
  premiums as a percentage of our overall premium volume. Our loss ratio, as determined
  in accordance with GAAP, for the three month period ended June 30, 2004 was
  45.0% compared with 68.4% for the same period in 2003. The table below reflects
  the loss ratios by product line.

|                           | **Three
      months ending June 30,** | ****
|-------------------------- | -------------------------------------- | ----
|                           |                                        |     
|                           | **2004**                               | ****
|                           |                                        |     
|Automobile                 | 78.75                                  | %   
|Home
      owners          | 26.61                                  | %   
|Commercial
      liability | 25.45                                  | %   
|Mobile
      home owners   | 12.02                                  | %   
|All
      product lines    | 45.00                                  | %   

Losses
  and loss adjustment expense, our most significant expense, represent actual
  payments made and changes in estimated future payments to be made to or on behalf
  of our policyholders, including expenses required to settle claims and losses.
  Management revises its estimates based on the results of its analysis of estimated
  future payments to be made. This process assumes that past experience, adjusted
  for the effects of current developments and anticipated trends, is an appropriate
  basis for predicting future events. We attribute the all lines decrease
  in the loss ratio primarily to the increasingly significant operational contributions
  made by our lines of insurance other than automobile.

|Operating
      and Underwriting Expenses.
|------------------------------------------

Operating
  and underwriting expenses rose by $0.4 million, or 14.6%, to $3.1 million for
  the three months ended June 30, 2004, as compared to $2.7 million for the three
  months ended June 30, 2003. The increase is primarily associated with our cost
  of obtaining various types of insurance products.

|Policy
      Acquisition Costs, Net of Amortization.
|----------------------------------------------------

Policy
  acquisition costs, net of amortization, increased by $2.4 million, charging
  earnings $1.7 million for the three months ended June 30, 2004, as compared
  to a credit of $0.7 million as of June 30, 2003. Policy acquisition costs, net
  of amortization consists of the actual policy acquisition costs, including commissions,
  payroll and premium taxes, less commissions earned on reinsurance ceded and
  policy fees earned attributable to premiums earned during the period.



|21
|--

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21stCentury Holding Company

During
  the three months ended June 30, 2004, the difference between the ceded commissions
  earned of $0.7 million and amortized costs of $2.4 million resulted in a charge
  to earnings of $1.7 million. The $2.4 million increase in the amortization of
  deferred policy acquisition costs in the 2004 period as compared to the 2003
  period is attributable to the decrease in ceded commissions earned totaling
  $1.3 million, and increased amortized costs of $1.1 million during the three
  month period ended June 30, 2004. Policy acquisition costs, net of amortization
  was formerly titled Amortization of deferred acquisition costs, net.

Provision
  for Income Tax Expense.

The
  effective rate for income tax expense is 36.1% for the three months ended June
  30, 2004, compared with 32.9% for the same three-month period in 2003. The increase
  in the estimated income tax provision is primarily associated with the increase
  in pre-tax income.

Gross
  premiums written increased $15.4 million, or 45.2%, to $49.6 million for the
  six months ended June 30, 2004, as compared to $34.2 million for the comparable
  period in 2003. The following table denotes gross premiums written by major
  product line.

|                             | **Six
      months ended June 30,**
|---------------------------- | -----------------------------------
|                             |                                    
|                             | **2004**                           
|                             |                                    
|Automobile                   | $                                  
|Homeowners                  |                                    
|Commercial
      liability   |                                    
|Mobile
      home owners    |                                    
|                             |                                    
|Gross
      written premiums | $                                  
|                             |                                    

As noted above, our efforts to expand our lines of insurance products to emphasize
  products other than automobile insurance are coming to fruition. Furthermore,
  our assumption of policies from Citizens during the six months ended June 30,
  2004 totaled 22.4% or $11.1 million of the $49.6 million of gross written premiums
  as of June 30, 2004.

Gross
  Premiums Ceded.

Gross
  premiums ceded decreased $11.1 million to $0.9 million for the six months ended
  June 30, 2004, as compared to a charge to operations of $10.2 million for the
  six months ended June 30, 2003. The decrease is due to the decline in our ceded
  quota-share reinsurance associated with our automobile insurance. For the quarter
  ended June 30, 2004, we did not cede any automobile insurance premiums, as compared
  to a 40% cession for the same period last year.

|Decrease
      in Prepaid Reinsurance Premiums.
|-----------------------------------------------

The
  change in the decrease in prepaid reinsurance premiums was $3.6 million, or
  ($6.1) million for the six months ended June 30, 2004, compared to ($2.5) million
  for the six months ended June 30, 2003. The decrease is due to the intentional
  absence of a quota-share agreement in place for premiums written in 2004.

|Increase
      in Unearned Premiums.
|------------------------------------

Unearned
  premiums increased by $14.4 million to ($14.5) million as of June 30, 2004,
  as compared to $0.1 million as of June 30, 2003. The increase was due to a $15.4
  million increase in unearned homeowners insurance premiums and $2.0 million
  in unearned premiums associated with the commercial liability insurance program.



|22
|--

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21stCentury Holding Company

Offsetting these increases
  was a $2.9 million decrease in automobile unearned premiums. During the six
  months ended June 30, 2004, unearned homeowners insurance premiums increased
  by $15.4 million, of which $11.1 million is associated with the homeowner insurance
  premiums assumed from Citizens. For further discussion, see Unearned Premiums
  above.

Net
  Investment Income.

Net
  investment income increased by $0.6 million, or 81.9%, to $1.3 million for the
  six months ended June 30, 2004, as compared to $0.7 million for the same six
  month period ended June 30, 2003. The increase in investment income is a result
  of the additional amounts of invested assets. Also affecting our net investment
  income were our relatively stable yields of 4.1% for the six months ended June
  30, 2004 as compared to 4.6% for the six months ended June 30, 2003.

Net
  Realized Investment Gains.

Net realized investment gains decreased by $1.2 million, or 87.3% to $0.2 million
  for the six months ended June 30, 2004, as compared to $1.4 million for the
  six months ended June 30, 2003. The table below depicts the gains by investment
  category.



|                                                       | **Net Realized Gains**       
|------------------------------------------------------ | -----------------------------
|                                                       | **Six Months Ended June 30,**
|                                                       |                              
|                                                       | **2004**                     
|                                                       |                              
|Fixed maturities:                                      |                              
|U.S. government obligations                            | $                            
|Obligations of states
      and political subdivisions |                              
|                                                       |                              
|                                                       |                              
|                                                       |                              
|Corporate securities:                                  |                              
|Communications                                         |                              
|Financial                                              |                              
|Other                                                  |                              
|                                                       |                              
|                                                       |                              
|                                                       |                              
|Equity securities:                                     |                              
|Preferred stocks                                       |                              
|Common stocks                                          |                              
|                                                       |                              
|                                                       |                              
|                                                       |                              
|Total net realized gains                               | $                            
|                                                       |                              

|Loss
      and Loss Adjustment Expenses.
|----------------------------------------

Loss
  and loss adjustment expenses decreased by $0.2 million, or 1.3%, to $14.1 million
  for the six months ended June 30, 2004, as compared to $14.3 million as of June
  30, 2003. The modest decrease is predominantly due to the decline in automobile
  premiums as a percentage of our overall premium volume and an increase in homeowner
  premiums as a percentage of our overall premium volume. Our loss ratio, as determined
  in accordance with GAAP, for the six month period ended June 30, 2004 was 47.0%
  compared with 66.7% for the same period in 2003. The table below reflects the
  loss ratios by product line.



|23
|--

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21stCentury Holding Company

|                           | **Six
      months ending June 30,** |  
|-------------------------- | ------------------------------------ | -
|                           |                                      |  
|                           | **2004**                             |  
|                           |                                      |  
|Automobile                 | 79.65                                | %
|Home
      owners          | 25.37                                | %
|Commercial
      liability | 22.80                                | %
|Mobile
      home owners   | 22.14                                | %
|All
      product lines    | 47.08                                | %

Losses
  and loss adjustment expense, our most significant expense, represent actual
  payments made and changes in estimated future payments to be made to or on behalf
  of our policyholders, including expenses required to settle claims and losses.
  Management revises its estimates based on the results of its analysis of estimated
  future payments to be made. This process assumes that past experience, adjusted
  for the effects of current developments and anticipated trends, is an appropriate
  basis for predicting future events. We attribute the all lines decrease
  in the loss ratio primarily to the increasingly significant operational contributions
  made by our lines of insurance other than automobile.

|Operating
      and Underwriting Expenses.
|------------------------------------------

Operating
  and underwriting expenses rose by $1.1 million, or 20.8%, to $6.4 million for
  the six months ended June 30, 2004, as compared to $5.3 million for the six
  months ended June 30, 2003. The increase is primarily associated with our cost
  of obtaining various types of insurance products.

|Policy
      Acquisition Costs, Net of Amortization.
|----------------------------------------------------

Policy
  acquisition costs, net of amortization, increased by $3.2 million, charging
  earnings by $2.1 million for the six months ended June 30, 2004, as compared
  to a credit of $1.1 million as of June 30, 2003. Policy acquisition costs, net
  of amortization consists of the actual policy acquisition costs, including commissions,
  payroll and premium taxes, less commissions earned on reinsurance ceded and
  policy fees earned attributable to premiums earned during the period.

During
  the six months ended June 30, 2004, the difference between the ceded commissions
  earned of $1.6 million and amortized costs of $3.7 million resulted in a charge
  to earnings of $2.1 million. The $3.2 million increase in the amortization of
  deferred policy acquisition costs in the 2004 period as compared to the 2003
  period is attributable to the decrease in ceded commissions earned totaling
  $2.1 million, and increased amortized costs of $1.1 million during the six month
  period ended June 30, 2004. Policy acquisition costs, net of amortization was
  formerly titled Amortization of deferred acquisition costs, net.

Provision
  for Income Tax Expense.

The
  effective rate for income tax expense is 36.5% for the six months ended June
  30, 2004, compared with 34.5% for the same six-month period in 2003. The increase
  in the estimated income tax provision is primarily associated with the increase
  in pre-tax income.

Liquidity
  And Capital Resources

Our
  primary sources of capital during the six months ended June 30, 2004 are revenues
  generated from operations, issuance of debt securities, investment income and
  borrowings under the Revolving Agreement, described below. Because we are a
  holding company, we are largely dependent upon fees from our subsidiaries for
  cash flow.

Federated
  Premiums operations are funded by a revolving loan agreement (Revolving
  Agreement) with FlatIron Funding Company LLC (FlatIron). The
  Revolving Agreement is structured as a sale of contracts receivable under a
  sale and assignment agreement with FPF, Inc. (FPF, a wholly-owned
  subsidiary of FlatIron), which gives FPF the right to sell or assign these contracts
  receivable. Federated Premium, which services these contracts, has recorded
  transactions under the Revolving Agreement as secured borrowings.





|24
|--

---



|21stCentury Holding Company
|---------------------------

The
  amount of FPFs advance is subject to availability under a borrowing base
  calculation, with maximum advances outstanding not to exceed the maximum credit
  commitment. The annual interest rate on advances underthe Revolving Agreement
  is the prime rate plus additional interest varying from 1.25% to 3.25% based
  on the prior months ratio of contracts receivable related to insurance
  companies with an A. M. Best rating of B or lower to total contracts receivable.
  As of June 30, 2004 our rate was 5.75% as compared to our rate as of June 30,
  2003 of 6.00%

The
  Revolving Agreement contains various operating and financial covenants, with
  which we were in compliance at June 30, 2004 and December 31, 2003.

The
  Revolving Agreement, as amended, expires September 30, 2004 and we have begun
  to negotiate a similar agreement to replace the expiring agreement. Outstanding
  borrowings under the Revolving Agreement as of June 30, 2004 and December 31,
  2003 were $2.9 million and $4.1 million, respectively. Outstanding borrowings
  in excess of the $4.0 million commitment totaled $98,786 as of December 31,
  2003. The excess amount, permissible by reason of a compensating cash balance
  of $200,430 for December 31, 2003, was held for the benefit of FPF and is included
  in other assets. Interest expense on this revolving credit line for the six
  months ended June 30, 2004 and 2003 totaled approximately $104,000 and $110,000,
  respectively. For the six months ended June 30, 2004 and 2003 the effective
  interest rate on this line of credit, based on our average outstanding borrowings
  under the Revolving Agreement, was 5.97% and 5.68%, respectively.

We
  also implemented a direct bill program during 2001 for policies underwritten
  by our carriers. Direct billing is where the insurance company accepts from
  the insured, as a receivable, a promise to pay the premium, as opposed to requiring
  the full amount of the policy, either directly from the insured or from a premium
  finance company.

On
  July 31, 2003, we completed a private placement of our 6% Senior Subordinated
  Notes (the Notes), which were offered and sold to accredited investors
  as units consisting of one Note with a principal amount of $1,000 and warrants
  (the Warrant) to purchase one-half of one share of our Common Stock.
  We sold an aggregate of $7.5 million of Notes in this placement, which resulted
  in proceeds to us (net of placement agent fees of $450,724 and offering expenses
  of $110,778) of $6,938,498.

The Notes pay interest
  at the annual rate of 6%, are subordinated to senior debt of the Company, and
  mature on July 31, 2006. Quarterly payments of principal and interest due on
  the Notes may be made in cash or, at the our option, in shares of the our Common
  Stock. If paid in shares of Common Stock, the number of shares to be issued
  shall be determined by dividing the payment due by 95% of the weighted-average
  volume price for the Common Stock on Nasdaq as reported by Bloomberg Financial
  Markets (Bloomberg) for the 20 consecutive trading days preceding
  the payment date.

We
  issued Warrants to purchase shares of our Common Stock to the purchasers of
  the Notes and to the placement agent in the offering, J. Giordano Securities
  Group (J. Giordano). Each Warrant entitles the holder to purchase
  one-half of one share of our Common Stock. The total number of shares issuable
  upon exercise of Warrants issued to the purchasers of the Notes and to J. Giordano
  was determined after the expiration of 60 consecutive trading days following
  July 31, 2003, which was the date of closing of the offering and totals 408,050.
  The number of shares issuable upon exercise of the Warrants issued to purchasers
  equaled $7.5 million divided by the exercise price of the Warrants and totaled
  392,356. The number of shares issuable upon exercise of the Warrants issued
  to J. Giordano equaled $300,000 divided by the exercise price of the Warrants
  and totaled 15,694. The exercise price of the Warrants equals 115% of the weighted-average
  volume price of the Common Stock on Nasdaq as reported by Bloomberg for the
  60 consecutive trading days following July 31, 2003, with a maximum of $25.00
  per share and a minimum of $15.00 per share. As computed, the exercise price
  of the Warrants equals $19.1153. The terms of the Warrants provide for adjustment
  of the exercise price and the number of shares issuable thereunder upon the
  occurrence of certain events typical for private offerings of this type. The
  Warrants will be exercisable until July 31, 2006.

On
  or about October 31, 2003, we elected, pursuant to the terms of the Notes, to
  make our quarterly estimated payment in shares of our Common Stock and in accordance
  with the contractual computations issued a total of 41,195 shares of our Common
  Stock. On or about January 31, 2004, April 30, 2004 and July 31, 2004, we again
  elected to make our quarterly payments of principal and interest due in shares
  of our Common Stock and in accordance with the contractual computations issued
  36,009, 35,819 and 33,310 shares of our Common Stock, respectively.

|25
|--

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|21stCentury Holding Company
|---------------------------

For
  the six months ended June 30, 2004, operations generated net operating cash
  flow of $25.7 million as compared to $9.2 million for the six months ended June
  30, 2003. Gross cash flow provided by operations generated approximately $28.3
  million, mostly by increased unearned premiums liability totaling $14.5 million,
  increased prepaid reinsurance premiums totaling $6.1 million, decreased balances
  due from reinsurer, net totaling $3.9 million and income taxes totaling $1.9
  million, in conjunction with net income of $6.6 million. The same operations
  for the six-month period ended June 30, 2004 used $9.1 million of gross cash
  flow primarily to reduce unpaid loss and loss adjustment expenses totaling $3.4
  million and amortization of deferred policy acquisition costs totaling $4.4
  million. Operating cash flow is currently expected to be positive in both the
  short-term and the reasonably foreseeable future.

In
  addition, our investment portfolio is highly liquid as it consists almost entirely
  of readily marketable securities. Cash flow used in net investing activities
  was $30.7 million and $9.4 million for the six months ended June 30, 2004 and
  June 30, 2003, respectively, as we invested the cash flow from operating and
  financing activities. While in a period in which written premiums are increasing,
  it is reasonably expected that cash from insurance premiums will be used for
  investing activities. In the future, we expect a continued cash flow deficit
  from investing activities, as we invest cash from operations.

Net
  cash provided by financing activities was $0.1 million for the six months ended
  June 30, 2004, reflecting the receipt of $2.3 million from exercised stock options
  netted against the use of $0.9 million to pay dividends and $1.2 million to
  reduce our revolving line of credit. For the six months ended June 30, 2003,
  net cash provided by financing activities was $0.3 million reflecting the receipt
  of $1.3 million from exercised stock options netted against the use of $0.5
  million to pay dividends and $0.5 million to reduce our revolving line of credit.
  We believe that our current capital resources will be sufficient to meet our
  currently anticipated working capital requirements. There can be no assurances,
  however, that such will be the case.

To
  retain our certificates of authority, Florida insurance laws and regulations
  require that Federated National and American Vehicle maintain capital surplus
  equal to the greater of 10% of its liabilities or the 2003 statutory minimum
  capital and surplus requirement of $3.60 million as defined in the Florida Insurance
  Code. The insurance companies are also required to adhere to prescribed premium-to-capital
  surplus ratios.

Under
  Florida law, a domestic insurer may not pay any dividend or distribute cash
  or other property to its shareholders except out of that part of its available
  and accumulated capital surplus funds which is derived from realized net operating
  profits on its business and net realized capital gains. A Florida domestic insurer
  may not make dividend payments or distributions to shareholders without prior
  approval of the Florida Department of Financial Services if the dividend or
  distribution would exceed the larger of (i) the lesser of (a) 10.0% of its capital
  surplus or (b) net income, not including realized capital gains, plus a two-year
  carryforward, (ii) 10.0% of capital surplus with dividends payable constrained
  to unassigned funds minus 25% of unrealized capital gains or (iii) the lesser
  of (a) 10.0% of capital surplus or (b) net investment income plus a three-year
  carryforward with dividends payable constrained to unassigned funds minus 25.0%
  of unrealized capital gains. Alternatively, a Florida domestic insurer may pay
  a dividend or distribution without the prior written approval of the Florida
  Department of Financial Services (i) if the dividend is equal to or less than
  the greater of (a) 10.0% of the insurers capital surplus as regards policyholders
  derived from realized net operating profits on its business and net realized
  capital gains or (b) the insurers entire net operating profits and realized
  net capital gains derived during the immediately preceding calendar year, (ii)
  the insurer will have policy holder capital surplus equal to or exceeding 115.0%
  of the minimum required statutory capital surplus after the dividend or distribution,
  (iii) the insurer files a notice of the dividend or distribution with the Florida
  Department of Financial Services at least ten business days prior to the dividend
  payment or distribution and (iv) the notice includes a certification by an officer
  of the insurer attesting that, after the payment of the dividend or distribution,
  the insurer will have at least 115% of required statutory capital surplus as
  to policyholders. Except as provided above, a Florida domiciled insurer may
  only pay a dividend or make a distribution (i) subject to prior approval by
  the Florida Department of Financial Services or (ii) 30 days after the Florida
  Department of Financial Services has received notice of such dividend or distribution
  and has not disapproved it within such time.

Under
  these laws, Federated National would be permitted to pay dividends of approximately
  $629,500 to the Company in 2004, and American Vehicle would be permitted to
  pay approximately $141,000 in dividends to the Company in 2004. No dividends
  were paid by Federated National or American Vehicle in the second quarter of
  2004, 2003 nor 2002 and none are anticipated in 2004. Although we believe that
  amounts required to meet our financial and operating obligations will be available
  from sources other than dividends from its insurance subsidiaries, there can
  be no assurance in this regard. Further, there can be no assurance that, if
  requested, the Florida Department of Financial Services will allow any dividends
  in excess of the amount available to be paid by Federated National or American
  Vehicle in the future. The maximum dividends permitted by state law are not
  necessarily indicative of an insurers actual ability to pay dividends or other
  distributions to a parent company. The ability to pay dividends also may be
  constrained by business and regulatory considerations, such as the impact of
  dividends on capital surplus, which could affect an insurers competitive position,
  the amount of premiums that can be written and the ability to pay future dividends.
  Further, state insurance laws and regulations require that the statutory capital
  surplus of an insurance company, following any dividend or distribution by it,
  be reasonable in relation to its outstanding liabilities and adequate for its
  financial needs.



|26
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|21stCentury Holding Company
|---------------------------

Insurance
  companies are required to comply with the risk-based capital requirements of
  the National Association of Insurance Commissioners (NAIC). The
  NAICs risk-based capital requirements are a method of measuring the amount
  of capital appropriate for an insurance company to support its overall business
  operations in light of its size and risk profile. NAICs risk-based capital
  standards are used by regulators to determine appropriate regulatory actions
  relating to insurers who show signs of weak or deteriorating condition. Based
  on calculations using the appropriate NAIC formula and the respective insurance
  company data for the year ended December 31, 2003, both of the insurance companies
  total adjusted capital were in excess of ratios that would require regulatory
  action. GAAP differs in some respects from statutory reporting practices prescribed
  or permitted by the Florida Department of Financial Services. Federated Nationals
  and American Vehicles statutory capital surplus levels as of June 30,
  2004 were approximately $19.6 million and $11.0 million, respectively, and their
  statutory net income for the six months ended June 30, 2004 was $1.5 million
  and $0.2 million, respectively.

Federated
  National Insurance Company entered into an agreement with the insurer created
  by the State of Florida, Citizens to assume the unexpired portion of specifically
  chosen homeowner insurance policies on varying dates during May, June and July
  of 2004. As part of the assumption agreement, there exists provisions which
  provide for a take out bonus to be afforded to Federated National
  based upon the successful retention of the assumed policies for the next three
  subsequent years, subject to certain qualifications. Citizens has agreed to
  fund an escrow account in the name of both Citizens and Federated National in
  accordance with the contract provisions; however, Federated National is prevented
  from recognizing the take out bonus until it has fulfilled its policyholder
  retention responsibilities, which is expected to be some time subsequent to
  May 2007. As of June 30, 2004, the escrow account has been funded for $2.3 million
  and in accordance with generally accepted accounting principle is not included
  in our consolidated balance sheet nor our consolidated statement of operations.

|Impact
      of Inflation and Changing Prices
|---------------------------------------------

The
  consolidated financial statements and related data presented herein have been
  prepared in accordance with GAAP which requires the measurement of financial
  position and operating results in terms of historical dollars without considering
  changes in the relative purchasing power of money over time due to inflation.
  The primary assets and liabilities of the Company are monetary in nature. As
  a result, interest rates have a more significant impact on our performance than
  the effects of general levels of inflation. Interest rates do not necessarily
  move in the same direction or with the same magnitude as the inflationary effect
  on the cost of paying losses and loss adjustment expenses.

Insurance
  premiums are established before we know the amount of loss and LAE and the extent
  to which inflation may affect such expenses. Consequently, we attempt to anticipate
  the future impact of inflation when establishing rate levels. While we attempt
  to charge adequate premiums, we may be limited in raising premium levels for
  competitive and regulatory reasons. Inflation also affects the market value
  of our investment portfolio and the investment rate of return. Any future economic
  changes which result in prolonged and increased levels of inflation could cause
  increases in the dollar amount of incurred loss and loss adjustment expenses
  and thereby materially adversely affect future liability requirements.



|27
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21stCentury Holding Company

Item 3. Quantitative
  and Qualitative Disclosures About Market Risk

Information related to quantitative and qualitative disclosures about market
  risk was included under Item 7a, Quantitative and Qualitative Disclosures
  about Market Risk, in our Annual Report on Form 10-K as of December 31,
  2003. No material changes have occurred in market risk since this information
  was disclosed except as discussed below.

Our investment portfolio is available for sale and is carried at fair value.
  Gains that represent securities with a fair value in excess of amortized cost,
  and losses (amortized cost is in excess of fair value) that are deemed temporary
  by management are recorded in shareholders equity in accumulated other
  comprehensive income. Losses that are deemed other than temporary by management
  are recorded as net realized losses in the consolidated statement of operations.
  A summary of the investment portfolio as of June 30, 2004 follows:

|                                                       |                    |            | ****           |        |   | ****       |   |            | **** |        |   | **** | **Unrealized Gain** |           
|------------------------------------------------------ | ------------------ | ---------- | -------------- | ------ | - | ---------- | - | ---------- | ---- | ------ | - | ---- | ------------------- | ----------
|                                                       | **Amortized Cost** |            | **Fair Value** |        |   | **(Loss)** |  
|                                                       |                    |            |                |        |   |            |  
|Fixed maturities:                                      |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|U.S. government obligations                            | $                  | 57,795,898 |                | 71.23  | % |            | $ | 56,178,738 |      | 71.41  | % |      | $                   | (1,617,160
|Obligations of states
      and political subdivisions |                    | 8,627,759  |                | 10.63  | % |            |   | 8,389,301  |      | 10.66  | % |      |                     | (238,458  
|                                                       |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|                                                       |                    | 66,423,657 |                | 81.86  | % |            |   | 64,568,039 |      | 82.07  | % |      |                     | (1,855,618
|                                                       |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|Corporate securities:                                  |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|Communications                                         |                    | 497,035    |                | 0.61   | % |            |   | 672,425    |      | 0.85   | % |      |                     | 175,390   
|Financial                                              |                    | 2,300,582  |                | 2.84   | % |            |   | 2,296,910  |      | 2.92   | % |      |                     | (3,672    
|Other                                                  |                    | 4,643,320  |                | 5.72   | % |            |   | 4,615,205  |      | 5.87   | % |      |                     | (28,115   
|                                                       |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|                                                       |                    | 7,440,937  |                | 9.17   | % |            |   | 7,584,540  |      | 9.64   | % |      |                     | 143,603   
|                                                       |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|Equity securities:                                     |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|Preferred stocks                                       |                    | 250,000    |                | 0.31   | % |            |   | 233,500    |      | 0.30   | % |      |                     | (16,500   
|Common stocks                                          |                    | 7,023,022  |                | 8.66   | % |            |   | 6,284,312  |      | 7.99   | % |      |                     | (738,710  
|                                                       |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|                                                       |                    | 7,273,022  |                | 8.97   | % |            |   | 6,517,812  |      | 8.29   | % |      |                     | (755,210  
|                                                       |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           
|Total fixed, corporate and equity securities           | $                  | 81,137,616 |                | 100.00 | % |            | $ | 78,670,391 |      | 100.00 | % |      | $                   | (2,467,225
|                                                       |                    |            |                |        |   |            |   |            |      |        |   |      |                     |           

As
  of June 30, 2004, there were no concentrations greater than 5% of total investments
  in any single investment other than United States government obligations.

|Item 4. Controls
      And Procedures
|-------------------------------------

|Evaluation
      of Disclosure Controls and Procedures
|------------------------------------------------------

An
  evaluation of the effectiveness of the design and operation of our disclosure
  controls and procedures within 90 days of this report was carried out by us
  under the supervision and with the participation of our management, including
  the Chief Executive Officer and Chief Financial Officer. Based on that evaluation,
  the Chief Executive Officer and Chief Financial Officer concluded that our disclosure
  controls and procedures have been designed and are being operated in a manner
  that provides reasonable assurance that the information required to be disclosed
  by us in reports filed under the Securities Exchange Act of 1934 is recorded,
  processed, summarized and reported within the time periods specified in the
  SECs rules and forms. Nevertheless, the controls system, no matter how
  well designed and operated, cannot provide absolute assurance that the objectives
  of the controls system are met, and no evaluation of controls can provide absolute
  assurance that all control issues and instances of fraud, if any, within a company
  have been detected.

|Changes
      in Internal Controls
|----------------------------------

Subsequent
  to the date of the most recent evaluation of our internal controls, there were
  no significant changes in our internal controls or in other factors that could
  significantly affect the internal controls, including any corrective actions
  with regard to significant deficiencies and material weaknesses.



|28
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21 st Century
  Holding Company Other Information


PART II: OTHER INFORMATION
  Item 1.   Legal Proceedings


We
  are involved in various claims and legal actions arising in the ordinary course
  of business. In the opinion of management, the ultimate disposition of these
  matters will not have a material adverse effect on our consolidated financial
  position, results of operations, or liquidity.

In
  June 2000, a lawsuit was filed against us, our directors and our executive officers
  seeking compensatory damages in an undisclosed amount on the basis of allegations
  that our amended registration statement dated November 4, 1998 was inaccurate
  and misleading concerning the manner in which we recognized ceded insurance
  commission income, in violation of Sections 11 and 15 of the Securities Act
  of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
  The lawsuit was filed in the United States District Court for the Southern District
  of New York. The plaintiff class purportedly includes purchasers of our common
  stock between November 5, 1998 and August 13, 1999. The Court granted the plaintiffs
  class status.

Specifically,
  the plaintiffs allege that we recognized ceded commission income on a written
  basis, rather than amortized on a pro rata basis. The plaintiffs allege that
  this was contrary to the Statement of Financial Accounting Concepts Nos. 1,
  2 and 5. We believe, however, that the lawsuit is without merit and we have
  vigorously defended the action, because we reasonably relied upon outside subject
  matter experts to make these determinations at the time. We have also since
  accounted for ceded commission on a pro rata basis and have done so since these
  matters were brought to our attention in 1998. Nevertheless, we have also continued
  to actively participate in settlement negotiations with the plaintiffs and have
  tentatively agreed to settle the case. The parties are currently negotiating
  the final terms of a Memorandum of Understanding, which will have to be executed
  by the parties and then approved by the court. We have reserved and charged
  against fourth quarter 2003 earnings $600,000 for the potential settlement and
  associated costs.

Prior
  to its acquisition by us in 2001, American Vehicle was involved in litigation
  with a former officer and director. The litigation was adjudicated and American
  Vehicle, among others, was found liable and paid the final judgment. A petition
  was filed seeking costs of $136,000 and appellate attorneys fees in excess
  of $2.0 million. To secure this obligation, American Vehicles previous
  owners have agreed to indemnify the Company against any award of fees and costs
  and the $500,000 purchase price for American Vehicle was placed in escrow. On
  February 26, 2003, the court entered an amended final judgment awarding the
  plaintiffs $1,140,387 in attorneys fees and costs. On or about May 10,
  2004, the parties finalized this case without further costs to us and all parties
  have now agreed that this case is closed.

As
  a direct premium writer in the State of Florida, we are required to participate
  in certain insurer solvency pools under Florida Statutes Section 631.57(3)(a)
  . Participation in these pools is based on our written premiums by line of business
  to total premiums written statewide by all insurers. Participation may result
  in assessments against us.

Federated
  National and American Vehicle are also required to participate in an insurance
  apportionment plan under Florida Statutes Section 627.351 referred to as a Joint
  Underwriting Association Plan (JUA Plan). The JUA Plan provides
  for the equitable apportionment of any profits realized, or losses and expenses
  incurred, among participating motor vehicle insurers. In the event of an underwriting
  deficit incurred by the JUA Plan which is not recovered through the policyholders
  in the JUA Plan, such deficit shall be recovered from the companies participating
  in the JUA Plan in the proportion that the net direct written premiums of each
  such member during the preceding calendar year bear to the aggregate net direct
  premiums written in this state by all members of the JUA Plan.

No
  assessments have been incurred by either insurance company through the date
  of issuance of this report pursuant to our participation in the above noted
  participation pool and JUA plan.



|29
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|21stCentury Holding CompanyOther Information
|--------------------------------------------

|Item 2.
|-------

Unregistered Sales of
  Equity Securities and Use of Proceeds

On April 30, 2004
  and July 31, 2004 we issued an aggregate of 35,819 and 33,310 shares, respectively,
  of our common stock to holders of our Notes in payment of the quarterly interest
  and principal payment due pursuant to the terms of the Notes. These shares were
  issued without registration under the Securities Act of 1933 (the Act)
  by reason of the exemption from registration pursuant to Section 4(2) of the
  Act and Regulation D thereunder.

|Item 3.
|-------

|Defaults
      Upon Senior Securities
|-------------------------------------

|None.
|-----

|Item 4.
|-------

|Submission
      of Matters to a Vote of Security Holders
|---------------------------------------------------------

On June 8, 2004 we held our Annual Meeting of Shareholders (the Meeting).
  At the Meeting, the shareholders reelected Edward J. Lawson and Richard A. Widdicombe
  to the Board of Directors and the shareholders also authorized the possible
  issuance of 20% or more of our Common Stock, $.01 par value (the Common
  Stock), in connection with the July 2003 private placement in which we
  received net proceeds of approximately $6.9 million from the sale of units consisting
  of one note with a principal amount of $1,000 and one warrant to purchase one-half
  one share of our Common Stock. Directors whose terms of office continued after
  the meeting were: Charles B. Hart, Jr, Richard W. Wilcox, Jr, Bruce F. Simberg,
  Carl Dorf and Peter J. Prygelski.

For
  Mr. Lawson and Mr. Widdicombe, there were 4,027,597 votes in favor, no votes
  withheld and 44,183 abstentions. With respect to the possible issuance of 20%
  or more of our Common Stock, there were 2,289,916 votes in favor, 86,638 votes
  withheld and 7,853 abstentions. There were 1,687,373 broker non-votes.

|Item 5
|------

|Other Information
|-----------------

|None.
|-----



|30
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|21stCentury Holding CompanyOther
      Information
|--------------------------------------------------

|Item 6Exhibits And Reports
      On Form 8-K
|--------------------------------------------

|(a) | Exhibits:                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------
|    |                                                                                                                 
|    | 10.1                                                                                                            
|    |                                                                                                                 
|    | 10.2                                                                                                            
|    |                                                                                                                 
|    | 10.3                                                                                                            
|    |                                                                                                                 
|    | 31.1                                                                                                            
|    | 31.2                                                                                                            
|    | 32.1                                                                                                            
|    | 32.2                                                                                                            
|    |                                                                                                                 
|(b) | Reports on Form 8-K.                                                                                            
|    |                                                                                                                 
|    | Form 8K dated August 5, 2004 attaching a press
      release announcing our results for our fiscal quarter ended
|    | June 30, 2004.                                                                                                  

|* Management
      contract or compensatory plan.
|-------------------------------------------------



|31
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|21stCentury Holding CompanyOther
      Information
|--------------------------------------------------

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934,
  the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

|                      | 21stCENTURY HOLDING COMPANY
|--------------------- | ---------------------------
|                     
|                      | By:                        
|                      |                            
|                      |                            
|                     
|                      |                            
|                      |                            
|                      |                            
|                      |                            
|Date: August 16, 2004 |                            



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