2014

Platinum Underwriters Holdings, Ltd. Reports First Quarter 2013 Financial Results

HAMILTON, Bermuda, April 17, 2013 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $86.5 million and diluted earnings per common share of $2.63 for the quarter ended March 31, 2013.

The results for the quarter include net premiums earned of $126.9 million, net favorable development of $54.5 million, net investment income of $18.5 million, net realized gains on investments of $13.3 million and no losses from 2013 major catastrophes.

Michael D. Price, Platinum's Chief Executive Officer, commented, "Our results reflect favorable prior period development, the absence of major catastrophe activity and active capital management.  Our book value per common share grew to $60.23 as of March 31, 2013, an increase of 4.0% from December 31, 2012."

Mr. Price added, "Absent major events in the insurance or capital markets, we expect stability in overall reinsurance rate adequacy. Given our attractive balance sheet composition and broad market access, we are well positioned to take advantage of quality reinsurance underwriting, investment and capital management opportunities as they arise."

Results for the quarter ended March 31, 2013 are summarized as follows: 

  • Net income was $86.5 million and diluted earnings per common share were $2.63.
  • Net premiums written were $134.8 million and net premiums earned were $126.9 million.
  • Combined ratio was 45.4%.
  • Net investment income was $18.5 million.
  • Net realized gains on investments were $13.3 million.

Results for the quarter ended March 31, 2013 as compared with the quarter ended March 31, 2012 are summarized as follows:

  • Net income was $86.5 million compared to net income of $53.3 million.
  • Net premiums written decreased $8.9 million (or 6.2%) and net premiums earned decreased $11.4 million (or 8.2%).
  • Combined ratio decreased 42.8 percentage points.
  • Net investment income decreased $10.0 million (or 35.1%).
  • Net realized gains on investments decreased $9.0 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended March 31, 2013 were $59.4 million, $70.8 million and $4.5 million, respectively, representing 44.1%, 52.6% and 3.3%, respectively, of total net premiums written. Combined ratios for these segments were 2.6%, 73.0% and 110.2%, respectively. Compared with the quarter ended March 31, 2012, net premiums written decreased $8.7 million (or 12.8%) and $3.6 million (or 4.8%) in the Property and Marine and Casualty segments, respectively, and increased $3.4 million (or 305.6%) in the Finite Risk segment.

Total assets were $4.3 billion as of March 31, 2013, a decrease of $64.0 million (or 1.5%) from December 31, 2012. Investments and cash and cash equivalents were $3.9 billion as of March 31, 2013, a decrease of $64.5 million (or 1.6%) from December 31, 2012.

Shareholders' equity was $1.9 billion as of March 31, 2013, an increase of $18.1 million (or 1.0%) from December 31, 2012.  Book value per common share was $60.23 as of March 31, 2013 based on 31.8 million common shares outstanding, an increase of $2.33 (or 4.0%) from $57.90 as of December 31, 2012 based on 32.7 million common shares outstanding. During the quarter ended March 31, 2013, the Company repurchased an aggregate of 1,291,864 common shares for $68.3 million at a weighted average cost, including commissions, of $52.88 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 18, 2013 at 8:00 a.m. Eastern time.  The call may be accessed by dialing 888-264-8892 (US callers) or 913-312-0724 (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 9883734.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Thursday, April 18, 2013 until 11:00 a.m. Eastern time on Thursday, April 25, 2013.  To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 9883734. 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 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 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 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. Reconciliations of such measures to the most comparable GAAP figures are included 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, including the effect of new entrants to the 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, 2012.

 


Platinum Underwriters Holdings, Ltd.
Condensed Consolidated Balance Sheets
As of March 31, 2013 and December 31, 2012
($ and amounts in thousands, except per share data)
















(unaudited)






March 31,


December 31,




2013


2012


Assets






Investments:






Fixed maturity securities


$      1,992,457


$      2,054,498


Short-term investments


104,443


172,801


Cash and cash equivalents


1,786,246


1,720,395


Accrued investment income


22,995


21,299


Reinsurance premiums receivable


124,590


128,517


Reinsurance balances (prepaid and recoverable)


4,701


6,560


Funds held by ceding companies


115,915


114,090


Deferred acquisition costs


28,789


28,112


Reinsurance deposit asset


52,088


50,693


Other assets


37,084


36,338


Total assets


$      4,269,308


$      4,333,303








Liabilities






Unpaid losses and loss adjustment expenses


$      1,862,278


$      1,961,282


Unearned premiums


119,537


113,960


Debt obligations


250,000


250,000


Commissions payable


67,667


64,849


Other liabilities


57,160


48,678


Total liabilities


$      2,356,642


$      2,438,769








Shareholders' Equity






Common shares


$                 318


$                 327


Additional paid-in capital


150,693


209,897


Accumulated other comprehensive income


131,103


137,690


Retained earnings


1,630,552


1,546,620


Total shareholders' equity


$      1,912,666


$      1,894,534








Total liabilities and shareholders' equity


$      4,269,308


$      4,333,303








Book value per common share (1)


$              60.23


$              57.90








(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 31,757 and 32,722 at March 31, 2013 and December 31, 2012, respectively.




 


Platinum Underwriters Holdings, Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 2013 and 2012
($ and amounts in thousands, except per share data)













2013


2012

Revenue





Net premiums earned


$       126,853


$     138,212

Net investment income


18,544


28,552

Net realized gains on investments


13,318


22,339

Net impairment losses on investments


(421)


(1,070)

Other income (expense)


1,392


(479)

Total revenue


159,686


187,554






Expenses





Net losses and loss adjustment expenses


13,998


79,196

Net acquisition expenses


30,219


30,657

Operating expenses


19,305


16,983

Net foreign currency exchange losses (gains)


(220)


532

Interest expense


4,779


4,772

Total expenses


68,081


132,140

Income before income taxes


91,605


55,414

Income tax expense


5,089


2,127

Net income


$         86,516


$        53,287











Basic





Weighted average common shares outstanding


32,373


35,291

Basic earnings per common share


$              2.67


$            1.50






Diluted





Adjusted weighted average common shares outstanding


32,838


35,510

Diluted earnings per common share


$              2.63


$            1.49






Comprehensive income





Net income


$         86,516


$        53,287

Other comprehensive income (loss), net of deferred taxes


(6,587)


(6,177)

Comprehensive income


$         79,929


$        47,110

 

Platinum Underwriters Holdings, Ltd.
Segment Reporting (Unaudited)
For the Three Months Ended March 31, 2013 and 2012
($ in thousands)









Three Months Ended March 31, 2013



Property
and Marine


Casualty


Finite Risk


Total


Net premiums written

$     59,427


$   70,844


$      4,494


$ 134,765











Net premiums earned

51,852


70,795


4,206


126,853


Net losses and loss adjustment expenses

(14,205)


29,643


(1,440)


13,998


Net acquisition expenses

8,227


16,249


5,743


30,219


Other underwriting expenses

7,332


5,723


333


13,388


Segment underwriting income (loss)*

$     50,498


$   19,180


$        (430)


69,248











Net investment income







18,544


Net realized gains on investments







13,318


Net impairment losses on investments







(421)


Other income (expense)







1,392


Corporate expenses not allocated to segments







(5,917)


Net foreign currency exchange (losses) gains







220


Interest expense







(4,779)


Income before income taxes







$   91,605











Underwriting ratios:*









Net loss and loss adjustment expense

(27.4%)


41.9%


(34.2%)


11.0%


Net acquisition expense

15.9%


23.0%


136.5%


23.8%


Other underwriting expense

14.1%


8.1%


7.9%


10.6%


Combined

2.6%


73.0%


110.2%


45.4%





















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 on investments







22,339


Net impairment losses on investments







(1,070)


Other income (expense)







(479)


Corporate expenses not allocated to segments







(4,921)


Net foreign currency exchange (losses) gains







(532)


Interest expense







(4,772)


Income 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%


* 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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