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

Apr 18, 2012, 16:17 ET from Platinum Underwriters Holdings, Ltd.

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.



RELATED LINKS

http://www.platinumre.com