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

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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