Platinum Underwriters Holdings, Ltd. Reports First Quarter 2012 Financial Results

HAMILTON, Bermuda, April 18, 2012 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $53.3 million and diluted earnings per common share of $1.49 for the quarter ended March 31, 2012.

The results for the quarter include net premiums earned of $138.2 million, net favorable development of $27.8 million, net investment income of $28.6 million and net realized gains on investments of $22.3 million.  The results also reflect the net negative impact of $24.8 million from major catastrophe losses, net of retrocessional coverage, reinstatement premiums and taxes.

Michael D. Price, Platinum's Chief Executive Officer, commented, "Our results reflect the previously announced negative financial impact from severe weather in the United States, favorable prior period development, strong investment results on a total return basis and active capital management.  Our book value per common share grew to $49.00 as of March 31, 2012, an increase of 3.0% from December 31, 2011."

Mr. Price added, "Absent major events in the insurance or capital markets, we expect relative stability in overall reinsurance rate adequacy for the remainder of 2012.  We are well positioned to take advantage of quality reinsurance underwriting opportunities as they arise and will continue with our strategy of underwriting for profitability not market share."

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

  • Net income was $53.3 million and diluted earnings per common share were $1.49.
  • Net premiums written were $143.7 million and net premiums earned were $138.2 million.
  • GAAP combined ratio was 88.2%.
  • Net investment income was $28.6 million.
  • Net realized gains on investments were $22.3 million.

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

  • Net income was $53.3 million compared to a net loss of $157.2 million.
  • Net premiums written decreased $51.1 million (or 26.2%) and net premiums earned decreased $44.7 million (or 24.4%).
  • GAAP combined ratio decreased 112.2 percentage points.
  • Net investment income decreased $3.8 million (or 11.8%).
  • Net realized gains on investments increased $21.9 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended March 31, 2012 were $68.2 million, $74.4 million and $1.1 million, respectively, representing 47.4%, 51.8% and 0.8%, respectively, of total net premiums written. Combined ratios for these segments were 93.0%, 83.7% and 130.7%, respectively. Compared with the quarter ended March 31, 2011, net premiums written decreased $43.6 million (or 39.0%), $6.1 million (or 7.6%) and $1.4 million (or 55.0%) in the Property and Marine, Casualty and Finite Risk segments, respectively.

Total assets were $4.5 billion as of March 31, 2012, a decrease of $63.2 million (or 1.4%) from December 31, 2011. Investments and cash and cash equivalents were $4.1 billion as of March 31, 2012, a decrease of $42.4 million (or 1.0%) from December 31, 2011.

Shareholders' equity was $1.7 billion as of March 31, 2012, an increase of $16.0 million (or 0.9%) from December 31, 2011.  Book value per common share was $49.00 as of March 31, 2012 based on 34.8 million common shares outstanding, an increase of $1.41 (or 3.0%) from $47.59 as of December 31, 2011 based on 35.5 million common shares outstanding. During the quarter ended March 31, 2012, the Company repurchased an aggregate of 808,696 common shares for $29.5 million at a weighted average cost, including commissions, of $36.46 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, April 19, 2012 at 8:00 a.m. Eastern time.  The call may be accessed by dialing 800-776-0487 (US callers) or 913-312-0407 (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 1614382.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Thursday, April 19, 2012 until 11:00 a.m. Eastern time on Thursday, April 26, 2012.  To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 1614382. 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 catastrophic loss protection 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; fluctuations in the mortgage-backed and asset-backed securities markets; 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 March 31, 2012 and December 31, 2011

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

 



(unaudited)






March 31,


December 31,




2012


2011


Assets






Investments:






Fixed maturity securities


$      2,743,760


$      2,788,700


Short-term investments


216,047


588,834


Cash and cash equivalents


1,167,848


792,510


Accrued investment income


29,337


29,440


Reinsurance premiums receivable


148,126


159,387


Reinsurance balances (prepaid and recoverable)


7,393


14,662


Funds held by ceding companies


95,357


94,546


Deferred acquisition costs


28,203


28,779


Other assets


52,349


54,753


Total assets


$      4,488,420


$      4,551,611








Liabilities






Unpaid losses and loss adjustment expenses


$      2,315,527


$      2,389,614


Unearned premiums


121,553


121,164


Debt obligations


250,000


250,000


Commissions payable


62,083


62,773


Other liabilities


32,362


37,201


Total liabilities


$      2,781,525


$      2,860,752








Shareholders' Equity






Common shares


$                 348


$                 355


Additional paid-in capital


285,503


313,730


Accumulated other comprehensive income


140,458


146,635


Retained earnings


1,280,586


1,230,139


Total shareholders' equity


$      1,706,895


$      1,690,859








Total liabilities and shareholders' equity


$      4,488,420


$      4,551,611








Book value per common share (1)


$              49.00


$              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 34,838 and 35,526 at March 31, 2012 and December 31, 2011, respectively.





Platinum Underwriters Holdings, Ltd.

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

For the Three Months Ended March 31, 2012 and 2011

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

 



Three Months Ended



March 31,
2012


March 31,
2011

Revenue





Net premiums earned


$   138,212


$   182,881

Net investment income


28,552


32,378

Net realized gains on investments


22,339


407

Net impairment losses on investments


(1,070)


(1,507)

Other income (expense)


(479)


1,096

Total revenue


187,554


215,255






Expenses





Net losses and loss adjustment expenses


79,196


319,595

Net acquisition expenses


30,657


33,950

Net changes in fair value of derivatives


-


(3,726)

Operating expenses


16,983


17,151

Net foreign currency exchange losses (gains)


532


189

Interest expense


4,772


4,766

Total expenses


132,140


371,925






Income (loss) before income taxes


55,414


(156,670)






Income tax expense


2,127


522






Net income (loss)


$     53,287


$  (157,192)











Basic





Weighted average common shares outstanding


35,291


37,199

Basic earnings (loss) per common share


$          1.50


$         (4.20)






Diluted





Adjusted weighted average common shares outstanding


35,510


38,022

Diluted earnings (loss) per share (1)


$          1.49


$         (4.20)






Comprehensive income (loss)





Net income (loss)


$     53,287


$  (157,192)

Other comprehensive income (loss), net of deferred taxes


(6,177)


12,004

Comprehensive income (loss)


$     47,110


$  (145,188)

 

(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 March 31, 2012 and 2011

($ in thousands)

 

Three Months Ended March 31, 2012




Property and
Marine


Casualty


Finite Risk


Total











Net premiums written

$     68,153


$    74,400


$        1,108


$  143,661











Net premiums earned

61,328


75,766


1,118


138,212











Net losses and loss adjustment expenses

40,937


41,036


(2,777)


79,196


Net acquisition expenses

9,235


17,375


4,047


30,657


Other underwriting expenses

6,835


5,036


191


12,062


Segment underwriting income (loss)*

$        4,321


$    12,319


$          (343)


16,297











Net investment income







28,552


Net realized gains (losses) on investments







22,339


Net impairment losses on investments







(1,070)


Other income (expense)







(479)


Net changes in fair value of derivatives







-


Corporate expenses not allocated to segments







(4,921)


Net foreign currency exchange (losses) gains







(532)


Interest expense







(4,772)


Income (loss) before income taxes







$    55,414











Underwriting ratios:*









Net loss and loss adjustment expense

66.8%


54.2%


(248.4%)


57.3%


Net acquisition expense

15.1%


22.9%


362.0%


22.2%


Other underwriting expense

11.1%


6.6%


17.1%


8.7%


Combined

93.0%


83.7%


130.7%


88.2%




















Three Months Ended March 31, 2011




Property and
Marine


Casualty


Finite Risk


Total











Net premiums written

$   111,802


$    80,519


$        2,464


$  194,785











Net premiums earned

97,905


80,824


4,152


182,881











Net losses and loss adjustment expenses

278,330


39,619


1,646


319,595


Net acquisition expenses

13,626


18,563


1,761


33,950


Other underwriting expenses

7,321


5,332


235


12,888


Segment underwriting income (loss)*

$  (201,372)


$    17,310


$           510


(183,552)











Net investment income







32,378


Net realized gains (losses) on investments







407


Net impairment losses on investments







(1,507)


Other income (expense)







1,096


Net changes in fair value of derivatives







3,726


Corporate expenses not allocated to segments







(4,263)


Net foreign currency exchange (losses) gains







(189)


Interest expense







(4,766)


Income (loss) before income taxes







$ (156,670)











Underwriting ratios:*









Net loss and loss adjustment expense

284.3%


49.0%


39.6%


174.8%


Net acquisition expense

13.9%


23.0%


42.4%


18.6%


Other underwriting expense

7.5%


6.6%


5.7%


7.0%


Combined

305.7%


78.6%


87.7%


200.4%


 

* 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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