Platinum Underwriters Holdings, Ltd. Reports Financial Results For The Fourth Quarter And Year Ended December 31, 2012

06 Feb, 2013, 16:00 ET from Platinum Underwriters Holdings, Ltd.

HAMILTON, Bermuda, Feb. 6, 2013 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $121.5 million and diluted earnings per common share of $3.67 for the quarter ended December 31, 2012 and net income of $327.2 million and earnings per common share of $9.60 for the year ended December 31, 2012.

The results for the quarter include net premiums earned of $144.6 million, net favorable development of $121.7 million, net investment income of $22.0 million and net realized gains on investments of $18.5 million, partially offset by $30.2 million net negative impact related to Hurricane Sandy.

Michael D. Price, Platinum's Chief Executive Officer, commented, "2012 was an excellent year for Platinum.  We produced record earnings per share reflecting strong reserve releases and realized gains combined with manageable catastrophe losses.  Our book value per common share grew to $57.90 as of December 31, 2012, an increase of 21.7% for the full year."

Mr. Price added, "Absent major events in the insurance or capital markets, we expect relative stability in overall reinsurance rate adequacy in 2013.  We have the financial flexibility to expand our underwriting, hold riskier assets or buy back shares.  We expect to participate selectively in a variety of reinsurance and asset classes while managing down our capital base through share repurchases."

Results for the quarter ended December 31, 2012 are summarized as follows:

  • Net income was $121.5 million and diluted earnings per common share were $3.67.
  • Net premiums written were $133.9 million and net premiums earned were $144.6 million.
  • Combined ratio was 25.4%.
  • Net investment income was $22.0 million.
  • Net realized gains on investments were $18.5 million.

Results for the quarter ended December 31, 2012 as compared with the quarter ended December 31, 2011 are summarized as follows:

  • Net income was $121.5 million compared with net income of $7.1 million.
  • Net premiums written decreased $19.8 million (or 12.9%) and net premiums earned decreased $22.7 million (or 13.6%).
  • Combined ratio decreased 76.8 percentage points.
  • Net investment income decreased $7.7 million (or 26.0 %).
  • Net realized gains on investments increased $17.7 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended December 31, 2012 were $61.5 million, $67.7 million and $4.8 million, respectively, representing 45.9%, 50.5% and 3.6%, respectively, of total net premiums written. Combined ratios for these segments were 97.3%, (47.6%) and 115.8%, respectively. Compared with the quarter ended December 31, 2011, net premiums written decreased $15.4 million (or 20.0%) and $6.9 million (or 9.2%) in the Property and Marine and Casualty segments, respectively, and increased $2.4 million (or 104.1%) in the Finite Risk segment.

Results for the year ended December 31, 2012 are summarized as follows:

  • Net income was $327.2 million and the diluted earnings per common share were $9.60.
  • Net premiums written were $565.0 million and net premiums earned were $566.5 million.
  • Combined ratio was 62.5%.
  • Net investment income was $99.9 million.
  • Net realized gains on investments were $88.8 million.

Results for the year ended December 31, 2012 as compared with the year ended December 31, 2011 are summarized as follows:

  • Net income was $327.2 million compared with a net loss of $224.1 million.
  • Net premiums written decreased $86.5 million (or 13.3%) and net premiums earned decreased $123.0 million (or 17.8%).
  • Combined ratio decreased 80.5 percentage points.
  • Net investment income decreased $25.9 million (or 20.6%).
  • Net realized gains on investments increased $84.8 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the year ended December 31, 2012 were $256.2 million, $287.1 million and $21.7 million, respectively, representing 45.3%, 50.8% and 3.9%, respectively, of total net premiums written. Combined ratios for these segments were 78.1%, 46.2% and 109.4%, respectively. Compared with the year ended December 31, 2011, net premiums written decreased $88.5 million (or 25.7%) and $9.9 million (or 3.3%) in the Property and Marine and Casualty segments, respectively, and increased $11.9 million (or 120.5%) in the Finite Risk segment.

Total assets were $4.3 billion as of December 31, 2012, a decrease of $218.3 million (or 4.8%) from December 31, 2011. Fixed maturity investments and cash and cash equivalents were $3.9 billion as of December 31, 2012, a decrease of $222.4 million (or 5.3%) from December 31, 2011.

Shareholders' equity was $1.9 billion as of December 31, 2012, an increase of $203.7 million (or 12.0%) from $1.7 billion as of December 31, 2011.  Book value per common share was $57.90 as of December 31, 2012 based on 32.7 million common shares outstanding, an increase of $10.31 (or 21.7%) from $47.59 as of December 31, 2011 based on 35.5 million common shares outstanding. During the quarter ended December 31, 2012, the Company repurchased an aggregate of 132,327 common shares for $6.1 million at a weighted average cost, including commissions, of $45.87 per share.  During the year ended December 31, 2012, the Company repurchased an aggregate of 3,088,589 common shares for approximately $115.7 million at a weighted average cost, including commissions, of $37.46 per share. 

Financial Supplement Platinum has posted a financial supplement on the Financial Reports page of the Investor Relations section of its website (Financial Supplement).  The Financial Supplement provides additional detail regarding the financial performance of Platinum and its business segments.

Teleconference Platinum will host a teleconference to discuss its financial results on Thursday, February 7, 2013 at 8:00 a.m. Eastern time.  The call may be accessed by dialing 888-244-2414 (US callers) or 913-312-0843 (international callers) or in a listen-only mode via the Investor Relations section of Platinum's website at www.platinumre.com.  Those who intend to participate in the teleconference should register at least ten minutes in advance to ensure access to the call.  Please specify passcode 5854308.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Thursday, February 7, 2013 until 11:00 a.m. Eastern time on Thursday, February 14, 2013.  To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 5854308. The teleconference will also be archived on the Investor Relations section of Platinum's website at www.platinumre.com for the same period of time.

Non-GAAP Financial Measures In presenting the Company's results, management has included and discussed certain financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP). Such measures, including segment underwriting income (or loss), related underwriting ratios and book value per common share, are referred to as non-GAAP. These non-GAAP measures may be defined or calculated differently by other companies. Management believes these measures, which are used to monitor the results of operations, allow for a more complete understanding of the underlying business. These measures should not be viewed as a substitute for those determined in accordance with GAAP. A reconciliation of such measures to the most comparable GAAP figures such as income (loss) before income taxes and total shareholders' equity is presented in the attached financial information in accordance with Regulation G.

About Platinum Platinum Underwriters Holdings, Ltd. (NYSE: PTP) is a leading provider of property, casualty and finite risk reinsurance coverages, through reinsurance intermediaries, to a diverse clientele on a worldwide basis.  Platinum operates through its principal subsidiaries in Bermuda and the United States.  For further information, please visit Platinum's website at www.platinumre.com.

Safe Harbor Statement Regarding Forward-Looking Statements: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements are based on our current plans or expectations that are inherently subject to significant business, economic and competitive uncertainties and contingencies.  These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us.  In particular, statements using words such as "may," "should," "estimate," "expect," "anticipate," "intend," "believe," "predict," "potential," or words of similar import generally involve forward-looking statements.  The inclusion of forward-looking statements in this press release should not be considered as a representation by us or any other person that our current plans or expectations will be achieved.  Numerous factors could cause our actual results to differ materially from those in forward-looking statements, including, but not limited to, the occurrence of severe natural or man-made catastrophic events; the effectiveness of our loss limitation methods and pricing models; the adequacy of our ceding companies' ability to assess the risks they underwrite; the adequacy of our liability for unpaid losses and loss adjustment expenses; the effects of emerging claim and coverage issues on our business; our ability to maintain our A.M. Best and S&P ratings; our ability to raise capital on acceptable terms if necessary; our exposure to credit loss from counterparties in the normal course of business; our ability to provide reinsurance from Bermuda to insurers domiciled in the United States; the effect on our business of the cyclicality of the property and casualty reinsurance business; the effect on our business of the highly competitive nature of the property and casualty reinsurance industry; losses that we could face from terrorism, political unrest and war; our dependence on the business provided to us by reinsurance brokers and our exposure to credit risk associated with our brokers during the premium and loss settlement process; the availability of retrocessional reinsurance on acceptable terms; foreign currency exchange rate fluctuation; our ability to maintain and enhance effective operating procedures and internal controls over financial reporting; our need to make many estimates and judgments in the preparation of our financial statements; the limitations placed on our financial and operational flexibility by the representations, warranties and covenants in our debt and credit facilities; our ability to retain key executives and attract and retain additional qualified personnel in the future; the performance of our investment portfolio; the effects of changes in market interest rates on our investment portfolio; the concentration of our investment portfolio in any particular industry, asset class or geographic region; the effects that the imposition of U.S. corporate income tax would have on Platinum Underwriters Holdings, Ltd. and its non-U.S. subsidiaries; the risk that U.S. persons who hold our shares will be subject to adverse U.S. federal income tax consequences under certain circumstances; the risk that U.S. persons who dispose of our shares may be subject to U.S. federal income taxation at the rates applicable to dividends on all or a portion of their gains, if any; the risk that holders of 10% or more of our shares may be subject to U.S. income taxation under the "controlled foreign corporation" rules; the effect of changes in U.S. federal income tax law on an investment in our shares; the possibility that we may become subject to taxes in Bermuda; the effect on our business of potential changes in the regulatory system under which we operate; the impact of regulatory regimes and changes to accounting rules on our financial results, irrespective of business operations; the uncertain impact on our business of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010; the dependence of the cash flows of Platinum Underwriters Holdings, Ltd., a holding company, on dividends, interest and other permissible payments from its subsidiaries to meet its obligations; the risk that our shareholders may have greater difficulty in protecting their interests than would shareholders of a U.S. corporation; and limitations on the ownership, transfer and voting rights of our common shares.  As a consequence, our future financial condition and results may differ from those expressed in any forward-looking statements made by or on behalf of us. The foregoing factors should not be construed as exhaustive. Additionally, forward-looking statements speak only as of the date they are made, and we undertake no obligation to revise or update forward-looking statements to reflect new information or circumstances after the date hereof or to reflect the occurrence of future events.  For a detailed discussion of our risk factors, refer to Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2011.

 

Platinum Underwriters Holdings, Ltd.

Condensed Consolidated Balance Sheets

As of December 31, 2012 and 2011

($ and amounts in thousands, except per share data)

(unaudited)

December 31,

December 31,

2012

2011

Assets

Investments:

Fixed maturity securities

$        2,054,498

$         2,788,700

Short-term investments

172,801

588,834

Cash and cash equivalents

1,720,395

792,510

Accrued investment income

21,299

29,440

Reinsurance premiums receivable

128,517

159,387

Reinsurance balances (prepaid and recoverable)

6,560

14,662

Funds held by ceding companies

114,090

94,546

Deferred acquisition costs

28,112

28,779

Reinsurance deposit asset

50,693

-

Other assets

36,338

54,753

Total assets

$        4,333,303

$         4,551,611

Liabilities

Unpaid losses and loss adjustment expenses

$        1,961,282

$         2,389,614

Unearned premiums

113,960

121,164

Debt obligations

250,000

250,000

Commissions payable

64,849

62,773

Other liabilities

48,678

37,201

Total liabilities

$        2,438,769

$         2,860,752

Shareholders' Equity

Common shares

$                  327

$                   355

Additional paid-in capital

209,897

313,730

Accumulated other comprehensive income

137,690

146,635

Retained earnings

1,546,620

1,230,139

Total shareholders' equity

$        1,894,534

$         1,690,859

Total liabilities and shareholders' equity

$        4,333,303

$         4,551,611

Book value per common share (1)

$               57.90

$               47.59

(1) Book value per common share is a non-GAAP financial measure as defined by Regulation G and is determined by dividing shareholders' equity by common shares outstanding of 32,722 and 35,526 at December 31, 2012 and December 31, 2011, respectively.

 

Platinum Underwriters Holdings, Ltd.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

For the Three and Twelve Months Ended December 31, 2012 and 2011

($ and amounts in thousands, except per share data)

Three Months Ended

Twelve Months Ended

December 31, 2012

December 31, 2011

December 31, 2012

December 31, 2011

Revenue

Net premiums earned

$        144,621

$        167,322

$        566,496

$         689,452

Net investment income

22,031

29,758

99,947

125,863

Net realized gains on investments

18,455

718

88,754

3,934

Net impairment losses on investments

(149)

(14,746)

(3,031)

(22,370)

Other income (expense)

527

(193)

(239)

645

Total revenue

185,485

182,859

751,927

797,524

Expenses

Net losses and loss adjustment expenses

(7,770)

125,032

183,660

805,437

Net acquisition expenses

28,412

34,904

115,437

133,177

Operating expenses

23,808

14,168

80,453

63,179

Net foreign currency exchange losses (gains)

292

(294)

1,055

(473)

Net changes in fair value of derivatives

-

(965)

-

4,329

Interest expense

4,777

4,770

19,098

19,072

Total expenses

49,519

177,615

399,703

1,024,721

Income (loss) before income taxes

135,966

5,244

352,224

(227,197)

Income tax expense (benefit)

14,421

(1,820)

24,996

(3,133)

Net income (loss)

$        121,545

$            7,064

$        327,228

$      (224,064)

Basic

Weighted average common shares outstanding

32,674

36,117

33,714

36,901

Basic earnings (loss) per common share

$              3.71

$               0.20

$               9.67

$              (6.04)

Diluted

Adjusted weighted average common shares outstanding

33,048

36,302

33,981

37,260

Diluted earnings (loss) per common share (1)

$              3.67

$               0.19

$               9.60

$              (6.04)

Comprehensive income (loss)

Net income (loss)

$        121,545

$            7,064

$        327,228

$      (224,064)

Other comprehensive income (loss), net of deferred taxes

(12,697)

19,797

(8,945)

171,123

Comprehensive income (loss)

$        108,848

$          26,861

$        318,283

$        (52,941)

(1)  During a period of loss, the basic weighted average common shares outstanding is used in the denominator of the diluted loss per common share computation as the effect of including potential dilutive shares would be anti-dilutive.

 

Platinum Underwriters Holdings, Ltd.

Segment Reporting (Unaudited)

For the Three Months Ended December 31, 2012 and 2011

($ in thousands)

Three Months Ended December 31, 2012

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$       61,458

$      67,676

$            4,767

$    133,901

Net premiums earned

67,538

72,284

4,799

144,621

Net losses and loss adjustment expenses

47,200

(57,482)

2,512

(7,770)

Net acquisition expenses

9,308

16,415

2,689

28,412

Other underwriting expenses

9,190

6,614

358

16,162

Segment underwriting income (loss)*

$         1,840

$    106,737

$              (760)

107,817

Net investment income

22,031

Net realized gains on investments

18,455

Net impairment losses on investments

(149)

Other income (expense)

527

Corporate expenses not allocated to segments

(7,646)

Net foreign currency exchange (losses) gains

(292)

Net changes in fair value of derivatives

-

Interest expense

(4,777)

Income (loss) before income taxes

$    135,966

Underwriting ratios:*

Net loss and loss adjustment expense

69.9%

(79.5%)

52.3%

(5.4%)

Net acquisition expense

13.8%

22.7%

56.0%

19.6%

Other underwriting expense

13.6%

9.2%

7.5%

11.2%

Combined

97.3%

(47.6%)

115.8%

25.4%

Three Months Ended December 31, 2011

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$       76,836

$      74,547

$            2,335

$    153,718

Net premiums earned

81,980

82,785

2,557

167,322

Net losses and loss adjustment expenses

76,194

52,459

(3,621)

125,032

Net acquisition expenses

11,645

19,251

4,008

34,904

Other underwriting expenses

6,341

4,541

223

11,105

Segment underwriting income (loss)*

$      (12,200)

$        6,534

$            1,947

(3,719)

Net investment income

29,758

Net realized gains on investments

718

Net impairment losses on investments

(14,746)

Other income (expense)

(193)

Corporate expenses not allocated to segments

(3,063)

Net foreign currency exchange (losses) gains

294

Net changes in fair value of derivatives

965

Interest expense

(4,770)

Income (loss) before income taxes

$        5,244

Underwriting ratios:*

Net loss and loss adjustment expense

92.9%

63.4%

(141.6%)

74.7%

Net acquisition expense

14.2%

23.3%

156.7%

20.9%

Other underwriting expense

7.7%

5.5%

8.7%

6.6%

Combined

114.8%

92.2%

23.8%

102.2%

* Segment underwriting income or loss and underwriting ratios are non-GAAP measures as defined by Regulation G. The underwriting ratios are calculated by dividing each item above by net premiums earned.

 

Platinum Underwriters Holdings, Ltd.

Segment Reporting (Unaudited)

For the Twelve Months Ended December 31, 2012 and 2011

($ in thousands)

Twelve Months Ended December 31, 2012

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$     256,182

$   287,112

$           21,706

$   565,000

Net premiums earned

253,604

294,122

18,770

566,496

Net losses and loss adjustment expenses

132,580

43,763

7,317

183,660

Net acquisition expenses

34,342

68,987

12,108

115,437

Other underwriting expenses

31,140

22,937

1,105

55,182

Segment underwriting income (loss)*

$       55,542

$   158,435

$            (1,760)

212,217

Net investment income

99,947

Net realized gains on investments

88,754

Net impairment losses on investments

(3,031)

Other income (expense)

(239)

Corporate expenses not allocated to segments

(25,271)

Net foreign currency exchange (losses) gains

(1,055)

Net changes in fair value of derivatives

-

Interest expense

(19,098)

Income (loss) before income taxes

$   352,224

Underwriting ratios:*

Net loss and loss adjustment expense

52.3%

14.9%

39.0%

32.4%

Net acquisition expense

13.5%

23.5%

64.5%

20.4%

Other underwriting expense

12.3%

7.8%

5.9%

9.7%

Combined

78.1%

46.2%

109.4%

62.5%

Twelve Months Ended December 31, 2011

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$     344,682

$   296,989

$             9,843

$   651,514

Net premiums earned

356,976

318,734

13,742

689,452

Net losses and loss adjustment expenses

628,062

178,650

(1,275)

805,437

Net acquisition expenses

49,348

72,738

11,091

133,177

Other underwriting expenses

27,622

19,002

940

47,564

Segment underwriting income (loss)*

$    (348,056)

$     48,344

$             2,986

(296,726)

Net investment income

125,863

Net realized gains on investments

3,934

Net impairment losses on investments

(22,370)

Other income (expense)

645

Corporate expenses not allocated to segments

(15,615)

Net foreign currency exchange (losses) gains

473

Net changes in fair value of derivatives

(4,329)

Interest expense

(19,072)

Income (loss) before income taxes

$  (227,197)

Underwriting ratios:*

Net loss and loss adjustment expense

175.9%

56.0%

(9.3%)

116.8%

Net acquisition expense

13.8%

22.8%

80.7%

19.3%

Other underwriting expense

7.7%

6.0%

6.8%

6.9%

Combined

197.4%

84.8%

78.2%

143.0%

* Segment underwriting income or loss and underwriting ratios are non-GAAP measures as defined by Regulation G. The underwriting ratios are calculated by dividing each item above by net premiums earned.

 

SOURCE Platinum Underwriters Holdings, Ltd.



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