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

18 Jul, 2012, 16:00 ET from Platinum Underwriters Holdings, Ltd.

HAMILTON, Bermuda, July 18, 2012 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $67.5 million and diluted earnings per common share of $1.97 for the quarter ended June 30, 2012.

The results for the quarter include net premiums earned of $145.1 million, net favorable development of $23.2 million, net investment income of $26.2 million and net realized gains on investments of $25.0 million

Michael D. Price, Platinum's Chief Executive Officer, commented, "Our results reflect favorable non-catastrophe prior period development, strong investment results on a total return basis and active capital management.  Catastrophe activity did not meaningfully impact our results this quarter.  Our book value per common share grew to $51.84 as of June 30, 2012, an increase of 5.8% from March 31, 2012."

Mr. Price added, "With our strong balance sheet, low expense structure, specialized analytic capabilities, and broad market access, we are well positioned to participate in those underwriting and investment opportunities that may exist during this soft portion of the insurance pricing cycle."

Results for the quarter ended June 30, 2012 are summarized as follows: 

  • Net income was $67.5 million and diluted earnings per common share were $1.97.
  • Gross premiums written were $141.2 million.
  • Net premiums written were $141.5 million and net premiums earned were $145.1 million.
  • Combined ratio was 76.3%.
  • Net investment income was $26.2 million.
  • Net realized gains on investments were $25.0 million.

Results for the quarter ended June 30, 2012 as compared with the quarter ended June 30, 2011 are summarized as follows:

  • Net income was $67.5 million compared to a net loss of $20.4 million.
  • Gross premiums written decreased $6.9 million (or 4.7%).
  • Net premiums written increased $15.6 million (or 12.4%) and net premiums earned decreased $27.4 million (or 15.9%).
  • Combined ratio decreased 43.1 percentage points.
  • Net investment income decreased $7.8 million (or 23.0%).
  • Net realized gains on investments were $25.0 million compared to net realized losses on investments of $4.7 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended June 30, 2012 were $61.7 million, $72.7 million and $7.1 million, respectively, representing 43.6%, 51.4% and 5.0%, respectively, of total net premiums written. Combined ratios for these segments were 53.9%, 92.3% and 105.9%, respectively. Compared with the quarter ended June 30, 2011, net premiums written increased $7.3 million (or 13.4%), $3.4 million (or 5.0%) and $4.8 million (or 216.1%) in the Property and Marine, Casualty and Finite Risk segments, respectively.

Results for the six months ended June 30, 2012 are summarized as follows: 

  • Net income was $120.8 million and diluted earnings per common share were $3.46.
  • Gross premiums written were $285.3 million.
  • Net premiums written were $285.1 million and net premiums earned were $283.3 million.
  • Combined ratio was 82.1%.
  • Net investment income was $54.7 million.
  • Net realized gains on investments were $47.3 million.

Results for the six months ended June 30, 2012 as compared with the six months ended June 30, 2011 are summarized as follows:

  • Net income was $120.8 million compared to a net loss of $177.6 million.
  • Gross premiums written decreased $69.6 million (or 19.6%).
  • Net premiums written decreased $35.6 million (or 11.1%) and net premiums earned decreased $72.0 million (or 20.3%).
  • Combined ratio decreased 79.0 percentage points.
  • Net investment income decreased $11.6 million (or 17.5%).
  • Net realized gains on investments were $47.3 million compared to net realized losses on investments of $4.3 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the six months ended June 30, 2012 were $129.8 million, $147.1 million and $8.2 million, respectively, representing 45.5%, 51.6% and 2.9%, respectively, of total net premiums written. Combined ratios for these segments were 73.2%, 88.0% and 109.5%, respectively. Compared with the six months ended June 30, 2011, net premiums written decreased $36.4 million (or 21.9%) and $2.7 million (or 1.8%) in the Property and Marine and Casualty segments, respectively, and increased $3.5 million (or 74.1%) in the Finite Risk segment.

Total assets were $4.4 billion as of June 30, 2012, a decrease of $126.7 million (or 2.8%) from December 31, 2011. Investments and cash and cash equivalents were $4.1 billion as of June 30, 2012, a decrease of $112.4 million (or 2.7%) from December 31, 2011.

Shareholders' equity was $1.7 billion as of June 30, 2012, an increase of $31.0 million (or 1.8%) from December 31, 2011.  Book value per common share was $51.84 as of June 30, 2012 based on 33.2 million common shares outstanding, an increase of $4.25 (or 8.9%) from $47.59 as of December 31, 2011 based on 35.5 million common shares outstanding. During the quarter ended June 30, 2012, the Company repurchased an aggregate of 1,655,775 common shares for $60.4 million at a weighted average cost, including commissions, of $36.51 per share.  During the six months ended June 30, 2012, the Company repurchased 2,464,471 common shares for approximately $89.9 million at a weighted average cost, including commissions, of $36.49 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, July 19, 2012 at 8:00 a.m. Eastern time.  The call may be accessed by dialing 888-215-6899 (US callers) or 913-981-5575 (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 1402479.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Thursday, July 19, 2012 until 11:00 a.m. Eastern time on Thursday, July 26, 2012.  To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 1402479. 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 June 30, 2012 and December 31, 2011

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

(unaudited)

June 30,

December 31,

2012

2011

Assets

Investments:

Fixed maturity securities

$      2,423,834

$      2,788,700

Short-term investments

167,778

588,834

Cash and cash equivalents

1,465,983

792,510

Accrued investment income

24,541

29,440

Reinsurance premiums receivable

145,132

159,387

Reinsurance balances (prepaid and recoverable)

4,538

14,662

Funds held by ceding companies

111,408

94,546

Deferred acquisition costs

27,620

28,779

Other assets

54,103

54,753

Total assets

$      4,424,937

$      4,551,611

Liabilities

Unpaid losses and loss adjustment expenses

$      2,229,603

$      2,389,614

Unearned premiums

114,759

121,164

Debt obligations

250,000

250,000

Commissions payable

64,304

62,773

Other liabilities

44,444

37,201

Total liabilities

$      2,703,110

$      2,860,752

Shareholders' Equity

Common shares

$                 332

$                 355

Additional paid-in capital

227,482

313,730

Accumulated other comprehensive income

148,562

146,635

Retained earnings

1,345,451

1,230,139

Total shareholders' equity

$      1,721,827

$      1,690,859

Total liabilities and shareholders' equity

$      4,424,937

$      4,551,611

Book value per common share (1)

$              51.84

$              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 33,212 and 35,526 at June 30, 2012 and December 31, 2011, respectively.

 

 

Platinum Underwriters Holdings, Ltd.

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

For the Three and Six Months Ended June 30, 2012 and 2011

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

Three Months Ended

Six Months Ended

June 30, 2012

June 30, 2011

June 30, 2012

June 30, 2011

Revenue

Net premiums earned

$ 145,075

$   172,436

$ 283,287

$   355,317

Net investment income

26,155

33,965

54,707

66,343

Net realized gains (losses) on investments

24,978

(4,689)

47,317

(4,282)

Net impairment losses on investments

(1,113)

(1,666)

(2,183)

(3,173)

Other income (expense)

(191)

(60)

(670)

1,036

Total revenue

194,904

199,986

382,458

415,241

Expenses

Net losses and loss adjustment expenses

67,117

159,357

146,313

478,952

Net acquisition expenses

30,200

34,115

60,857

68,065

Net changes in fair value of derivatives

-

4,474

-

748

Operating expenses

19,696

17,105

36,679

34,256

Net foreign currency exchange losses (gains)

(310)

614

222

803

Interest expense

4,774

4,767

9,546

9,533

Total expenses

121,477

220,432

253,617

592,357

Income (loss) before income taxes

73,427

(20,446)

128,841

(177,116)

Income tax expense (benefit)

5,895

(45)

8,022

477

Net income (loss)

$   67,532

$    (20,401)

$ 120,819

$ (177,593)

Basic

Weighted average common shares outstanding

33,914

37,113

34,602

37,155

Basic earnings (loss) per common share

$        1.98

$        (0.55)

$      3.48

$        (4.75)

Diluted

Adjusted weighted average common shares outstanding

34,104

37,399

34,805

37,692

Diluted earnings (loss) per common share (1)

$        1.97

$        (0.55)

$      3.46

$        (4.75)

Comprehensive income (loss)

Net income (loss)

$   67,532

$    (20,401)

$ 120,819

$ (177,593)

Other comprehensive income, net of deferred taxes

8,104

52,518

1,927

64,522

Comprehensive income (loss)

$   75,636

$     32,117

$ 122,746

$ (113,071)

(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 June 30, 2012 and 2011

($ in thousands)

Three Months Ended June 30, 2012

Property

and Marine

Casualty

Finite Risk

Total

Net premiums written

$ 61,695

$ 72,678

$ 7,086

$ 141,459

Net premiums earned

62,838

75,746

6,491

145,075

Net losses and loss adjustment expenses

17,653

45,851

3,613

67,117

Net acquisition expenses

8,721

18,487

2,992

30,200

Other underwriting expenses

7,454

5,625

267

13,346

Segment underwriting income (loss)*

$ 29,010

$ 5,783

$ (381)

34,412

Net investment income

26,155

Net realized gains (losses) on investments

24,978

Net impairment losses on investments

(1,113)

Other income (expense)

(191)

Net changes in fair value of derivatives

-

Corporate expenses not allocated to segments

(6,350)

Net foreign currency exchange (losses) gains

310

Interest expense

(4,774)

Income (loss) before income taxes

$ 73,427

Underwriting ratios:*

Net loss and loss adjustment expense

28.1%

60.5%

55.7%

46.3%

Net acquisition expense

13.9%

24.4%

46.1%

20.8%

Other underwriting expense

11.9%

7.4%

4.1%

9.2%

Combined

53.9%

92.3%

105.9%

76.3%

Three Months Ended June 30, 2011

Property

and Marine

Casualty

Finite Risk

Total

Net premiums written

$ 54,411

$ 69,234

$ 2,242

$ 125,887

Net premiums earned

91,852

77,104

3,480

172,436

Net losses and loss adjustment expenses

116,543

43,868

(1,054)

159,357

Net acquisition expenses

12,009

18,144

3,962

34,115

Other underwriting expenses

7,274

4,829

264

12,367

Segment underwriting income (loss)*

$ (43,974)

$ 10,263

$ 308

(33,403)

Net investment income

33,965

Net realized gains (losses) on investments

(4,689)

Net impairment losses on investments

(1,666)

Other income (expense)

(60)

Net changes in fair value of derivatives

(4,474)

Corporate expenses not allocated to segments

(4,738)

Net foreign currency exchange (losses) gains

(614)

Interest expense

(4,767)

Income (loss) before income taxes

$ (20,446)

Underwriting ratios:*

Net loss and loss adjustment expense

126.9%

56.9%

(30.3%)

92.4%

Net acquisition expense

13.1%

23.5%

113.9%

19.8%

Other underwriting expense

7.9%

6.3%

7.6%

7.2%

Combined

147.9%

86.7%

91.2%

119.4%

* 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.

 

 

Platinum Underwriters Holdings, Ltd.

Segment Reporting (Unaudited)

For the Six Months Ended June 30, 2012 and 2011

($ in thousands)

Six Months Ended June 30, 2012

Property

and Marine

Casualty

Finite Risk

Total

Net premiums written

$ 129,848

$ 147,078

$ 8,194

$ 285,120

Net premiums earned

124,166

151,512

7,609

283,287

Net losses and loss adjustment expenses

58,590

86,887

836

146,313

Net acquisition expenses

17,956

35,862

7,039

60,857

Other underwriting expenses

14,289

10,661

458

25,408

Segment underwriting income (loss)*

$ 33,331

$ 18,102

$ (724)

50,709

Net investment income

54,707

Net realized gains (losses) on investments

47,317

Net impairment losses on investments

(2,183)

Other income (expense)

(670)

Net changes in fair value of derivatives

-

Corporate expenses not allocated to segments

(11,271)

Net foreign currency exchange (losses) gains

(222)

Interest expense

(9,546)

Income (loss) before income taxes

$ 128,841

Underwriting ratios:*

Net loss and loss adjustment expense

47.2%

57.3%

11.0%

51.6%

Net acquisition expense

14.5%

23.7%

92.5%

21.5%

Other underwriting expense

11.5%

7.0%

6.0%

9.0%

Combined

73.2%

88.0%

109.5%

82.1%

Six Months Ended June 30, 2011

Property

and Marine

Casualty

Finite Risk

Total

Net premiums written

$ 166,213

$ 149,753

$ 4,706

$ 320,672

Net premiums earned

189,757

157,928

7,632

355,317

Net losses and loss adjustment expenses

394,873

83,487

592

478,952

Net acquisition expenses

25,635

36,707

5,723

68,065

Other underwriting expenses

14,595

10,161

499

25,255

Segment underwriting income (loss)*

$ (245,346)

$ 27,573

$ 818

(216,955)

Net investment income

66,343

Net realized gains (losses) on investments

(4,282)

Net impairment losses on investments

(3,173)

Other income (expense)

1,036

Net changes in fair value of derivatives

(748)

Corporate expenses not allocated to segments

(9,001)

Net foreign currency exchange (losses) gains

(803)

Interest expense

(9,533)

Income (loss) before income taxes

$ (177,116)

Underwriting ratios:*

Net loss and loss adjustment expense

208.1%

52.9%

7.8%

134.8%

Net acquisition expense

13.5%

23.2%

75.0%

19.2%

Other underwriting expense

7.7%

6.4%

6.5%

7.1%

Combined

229.3%

82.5%

89.3%

161.1%

* 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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