Platinum Underwriters Holdings, Ltd. Reports Second Quarter 2014 Financial Results

Jul 16, 2014, 16:00 ET from Platinum Underwriters Holdings, Ltd.

HAMILTON, Bermuda, July 16, 2014 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $36.2 million and diluted earnings per common share of $1.34 for the quarter ended June 30, 2014.

The results for the quarter include net premiums earned of $124.8 million, net favorable development of $28.6 million and net investment income of $17.6 million.

Michael D. Price, Platinum's Chief Executive Officer, commented, "Our results reflect favorable prior period development, strong investment results on a total return basis, no losses from major catastrophes and active capital management.  Our book value per common share grew to $67.38 as of June 30, 2014, an increase of 3.1% from March 31, 2014."

Mr. Price added, "Absent major events in the insurance or capital markets, we expect continued downward pressure on overall reinsurance rate adequacy.  We will continue emphasizing profitability over market share while seeking to maintain a position in larger markets by participating on the most attractive business available."

Results for the quarter ended June 30, 2014 are summarized as follows: 

  • Net income was $36.2 million and diluted earnings per common share were $1.34.
  • Gross premiums written were $122.9 million and net premiums written were $120.3 million.
  • Net premiums earned were $124.8 million.
  • Combined ratio was 74.2%.
  • Net investment income was $17.6 million.
  • Net realized losses on investments were $0.6 million.

Results for the quarter ended June 30, 2014 as compared with the quarter ended June 30, 2013 are summarized as follows:

  • Net income was $36.2 million compared with net income of $49.9 million.
  • Gross premiums written decreased $25.1 million (or 17.0%) and net premiums written decreased $26.0 million (or 17.8%).
  • Net premiums earned decreased $18.1 million (or 12.7%).
  • Combined ratio decreased 0.2 percentage points.
  • Net investment income decreased $0.2 million (or 0.9%).
  • Net realized losses on investments were $0.6 million compared with net realized gains on investments of $11.7 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended June 30, 2014 were $58.5 million, $54.8 million and $7.0 million, respectively, representing 48.6%, 45.5% and 5.9%, respectively, of total net premiums written. Combined ratios for these segments were 89.5%, 59.2% and 84.4%, respectively.  Compared with the quarter ended June 30, 2013, net premiums written increased $1.2 million (or 2.0%) in the Property and Marine segment and decreased $24.9 million (or 31.2%) and $2.3 million (or 24.7%) in the Casualty and Finite Risk segments, respectively.

Results for the six months ended June 30, 2014 are summarized as follows: 

  • Net income was $99.9 million and diluted earnings per common share were $3.63.
  • Gross premiums written were $261.2 million and net premiums written were $256.1 million.
  • Net premiums earned were $251.1 million.
  • Combined ratio was 63.5%.
  • Net investment income was $35.3 million.
  • Net realized losses on investments were $1.1 million.

Results for the six months ended June 30, 2014 as compared with the six months ended June 30, 2013 are summarized as follows:

  • Net income was $99.9 million compared with net income of $136.4 million.
  • Gross premiums written decreased by $22.0 million (or 7.8%) and net premiums written decreased $25.0 million (or 8.9%).
  • Net premiums earned decreased $18.7 million (or 6.9%).
  • Combined ratio increased 2.8 percentage points.
  • Net investment income decreased $1.0 million (or 2.8%).
  • Net realized losses on investments were $1.1 million compared with net realized gains on investments of $25.0 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the six months ended June 30, 2014 were $116.3 million, $126.5 million and $13.4 million, respectively, representing 45.4%, 49.4% and 5.2%, respectively, of total net premiums written. Combined ratios for these segments were 66.8%, 56.8% and 96.4%, respectively.  Compared with the six months ended June 30, 2013, net premiums written decreased $0.5 million (or 0.4%), $24.1 million (or 16.0%) and $0.4 million (or 3.1%) in the Property and Marine, Casualty and Finite Risk segments, respectively.

Total assets were $3.8 billion as of June 30, 2014, a decrease of $60.6 million (or 1.6%) from March 31, 2014 and a decrease of $99.2 million (or 2.5%) from December 31, 2013.  Investable assets, consisting of investments, cash and cash equivalents, accrued investment income and net balances due from brokers, were $3.5 billion as of June 30, 2014, a decrease of $14.9 million (or 0.4%) from March 31, 2014 and a decrease of $62.3 million (or 1.8%) from December 31, 2013. 

Net unrealized gains on available-for-sale investments, net of deferred taxes, were $91.4 million as of June 30, 2014, an increase of $16.8 million from March 31, 2014 and an increase of $43.3 million from December 31, 2013.

During the quarter ended June 30, 2014, the Company repurchased an aggregate of 556,092 common shares for $35.0 million at a weighted average cost, including commissions, of $62.95 per share.  During the six months ended June 30, 2014, the Company repurchased an aggregate of 1,854,096 common shares for $110.8 million at a weighted average cost, including commissions, of $59.74 per share. 

Shareholders' equity was $1.8 billion as of June 30, 2014, an increase of $17.9 million (or 1.0%) from March 31, 2014 and an increase of $31.2 million (or 1.8%) from December 31, 2013.  Book value per common share was $67.38 as of June 30, 2014 based on 26.4 million common shares outstanding, an increase of $2.03 (or 3.1%) from $65.35 as of March 31, 2014 based on 26.9 million common shares outstanding and an increase of $5.31 (or 8.6%) from $62.07 as of December 31, 2013 based on 28.1 million common shares outstanding.  

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 17, 2014 at 8:00 a.m. Eastern time.  The call may be accessed by dialing 888-239-5289 (US and Canadian 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 5668803.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Thursday, July 17, 2014 until 11:00 a.m. Eastern time on Thursday, July 24, 2014.  To access the replay by telephone, dial 888-203-1112 (US and Canadian callers) or 719-457-0820 (international callers) and specify passcode 5668803. 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 brokers, 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 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 estimated 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 financial strength ratings; our ability to raise capital on acceptable terms if necessary; our exposure to credit loss from counterparties in the normal course of business; the availability and cost of collateral arrangements in order to provide reinsurance; 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 fluctuations; 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 effect of technology breaches or failures on our business; 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 of income, premium or other taxes on Platinum Underwriters Holdings, Ltd. or its subsidiaries by other jurisdictions; 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 non-compliance with laws, regulations and taxation on transactions with international counter-parties; 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, 2013.

Platinum Underwriters Holdings, Ltd.

Condensed Consolidated Balance Sheets

As of June 30, 2014 and December 31, 2013

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

(unaudited)

June 30,

December 31,

2014

2013

Assets

Investments:

Fixed maturity securities

$        2,025,418

$         1,961,265

Short-term investments

42,144

66,679

Cash and cash equivalents

1,361,730

1,464,418

Accrued investment income

20,593

20,026

Reinsurance premiums receivable

134,391

138,454

Reinsurance balances (prepaid and recoverable)

4,438

2,089

Funds held by ceding companies

88,091

119,241

Deferred acquisition costs

33,019

31,103

Reinsurance deposit assets

82,164

79,303

Other assets

32,728

41,307

Total assets

$        3,824,716

$         3,923,885

Liabilities

Unpaid losses and loss adjustment expenses

$        1,560,517

$         1,671,365

Unearned premiums

133,244

126,300

Debt obligations

250,000

250,000

Commissions payable

51,497

78,791

Other liabilities

51,589

50,722

Total liabilities

$        2,046,847

$         2,177,178

Shareholders' Equity

Common shares

$                  264

$                   281

Additional paid-in capital

-

10,711

Accumulated other comprehensive income

91,351

48,084

Retained earnings

1,686,254

1,687,631

Total shareholders' equity

$        1,777,869

$         1,746,707

Total liabilities and shareholders' equity

$        3,824,716

$         3,923,885

Book value per common share (1)

$               67.38

$                62.07

(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 26,385 and 28,143 at June 30, 2014 and December 31, 2013, respectively.

 

 

Platinum Underwriters Holdings, Ltd.

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

For the Three and Six Months Ended June 30, 2014 and 2013

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

Three Months Ended

Six Months Ended

June 30,

June 30,

2014

2013

2014

2013

Revenue

Net premiums earned

$         124,825

$        142,933

$        251,098

$        269,786

Net investment income

17,645

17,808

35,337

36,352

Net realized gains (losses) on investments

(596)

11,686

(1,111)

25,004

Net impairment losses on investments

(136)

(1,516)

(224)

(1,937)

Other income (expense)

1,194

(315)

2,711

1,077

Total revenue

142,932

170,596

287,811

330,282

Expenses

Net losses and loss adjustment expenses

50,865

62,667

77,374

76,665

Net acquisition expenses

27,848

30,313

55,349

60,532

Operating expenses

21,434

19,718

39,717

39,023

Net foreign currency exchange losses (gains)

34

(859)

(153)

(1,079)

Interest expense

4,788

4,780

9,574

9,559

Total expenses

104,969

116,619

181,861

184,700

Income before income taxes

37,963

53,977

105,950

145,582

Income tax expense

1,783

4,123

6,035

9,212

Net income

$           36,180

$          49,854

$          99,915

$        136,370

Earnings Per Common Share

Weighted average common shares outstanding

26,577

30,571

27,167

31,467

Basic earnings per common share

$               1.36

$              1.63

$              3.68

$              4.32

Adjusted weighted average common shares outstanding

26,928

30,970

27,516

31,904

Diluted earnings per common share

$               1.34

$              1.61

$              3.63

$              4.26

Comprehensive income (loss)

Net income

$           36,180

$          49,854

$          99,915

$        136,370

Other comprehensive income (loss)

16,792

(66,736)

43,267

(73,323)

Comprehensive income (loss)

$           52,972

$         (16,882)

$        143,182

$          63,047

 

 

Platinum Underwriters Holdings, Ltd.

Segment Reporting (Unaudited)

For the Three Months Ended June 30, 2014 and 2013

($ in thousands)

Three Months Ended June 30, 2014

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$        58,518

$       54,806

$         7,013

$     120,337

Net premiums earned

55,528

61,555

7,742

124,825

Net losses and loss adjustment expenses

31,400

15,261

4,204

50,865

Net acquisition expenses

10,229

15,636

1,983

27,848

Other underwriting expenses

8,085

5,537

346

13,968

Segment underwriting income (loss)*

$          5,814

$       25,121

$         1,209

32,144

Net investment income

17,645

Net realized gains (losses) on investments

(596)

Net impairment losses on investments

(136)

Other income (expense)

1,194

Corporate expenses not allocated to segments

(7,466)

Net foreign currency exchange (losses) gains

(34)

Interest expense

(4,788)

Income before income taxes

$       37,963

Underwriting ratios:*

Net loss and loss adjustment expense

56.5%

24.8%

54.3%

40.7%

Net acquisition expense

18.4%

25.4%

25.6%

22.3%

Other underwriting expense

14.6%

9.0%

4.5%

11.2%

Combined

89.5%

59.2%

84.4%

74.2%

Three Months Ended June 30, 2013

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$        57,350

$       79,711

$         9,309

$     146,370

Net premiums earned

58,832

75,629

8,472

142,933

Net losses and loss adjustment expenses

21,292

35,358

6,017

62,667

Net acquisition expenses

9,698

18,068

2,547

30,313

Other underwriting expenses

7,414

5,670

327

13,411

Segment underwriting income (loss)*

$        20,428

$       16,533

$         (419)

36,542

Net investment income

17,808

Net realized gains (losses) on investments

11,686

Net impairment losses on investments

(1,516)

Other income (expense)

(315)

Corporate expenses not allocated to segments

(6,307)

Net foreign currency exchange (losses) gains

859

Interest expense

(4,780)

Income before income taxes

$       53,977

Underwriting ratios:*

Net loss and loss adjustment expense

36.2%

46.8%

71.0%

43.8%

Net acquisition expense

16.5%

23.9%

30.1%

21.2%

Other underwriting expense

12.6%

7.5%

3.9%

9.4%

Combined

65.3%

78.2%

105.0%

74.4%

 

*    Segment underwriting income or loss and related underwriting ratios are non-GAAP financial 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, 2014 and 2013

($ in thousands)

Six Months Ended June 30, 2014

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$      116,263

$      126,480

$        13,371

$      256,114

Net premiums earned

108,720

127,272

15,106

251,098

Net losses and loss adjustment expenses

37,010

30,221

10,143

77,374

Net acquisition expenses

20,272

31,278

3,799

55,349

Other underwriting expenses

15,455

10,765

638

26,858

Segment underwriting income (loss)*

$        35,983

$        55,008

$             526

91,517

Net investment income

35,337

Net realized gains (losses) on investments

(1,111)

Net impairment losses on investments

(224)

Other income (expense)

2,711

Corporate expenses not allocated to segments

(12,859)

Net foreign currency exchange (losses) gains

153

Interest expense

(9,574)

Income before income taxes

$      105,950

Underwriting ratios:*

Net loss and loss adjustment expense

34.0%

23.7%

67.1%

30.8%

Net acquisition expense

18.6%

24.6%

25.1%

22.0%

Other underwriting expense

14.2%

8.5%

4.2%

10.7%

Combined

66.8%

56.8%

96.4%

63.5%

Six Months Ended June 30, 2013

Property and Marine

Casualty

Finite Risk

Total

Net premiums written

$      116,777

$      150,555

$        13,803

$      281,135

Net premiums earned

110,684

146,424

12,678

269,786

Net losses and loss adjustment expenses

7,087

65,001

4,577

76,665

Net acquisition expenses

17,925

34,317

8,290

60,532

Other underwriting expenses

14,746

11,393

660

26,799

Segment underwriting income (loss)*

$        70,926

$        35,713

$           (849)

105,790

Net investment income

36,352

Net realized gains (losses) on investments

25,004

Net impairment losses on investments

(1,937)

Other income (expense)

1,077

Corporate expenses not allocated to segments

(12,224)

Net foreign currency exchange (losses) gains

1,079

Interest expense

(9,559)

Income before income taxes

$      145,582

Underwriting ratios:*

Net loss and loss adjustment expense

6.4%

44.4%

36.1%

28.4%

Net acquisition expense

16.2%

23.4%

65.4%

22.4%

Other underwriting expense

13.3%

7.8%

5.2%

9.9%

Combined

35.9%

75.6%

106.7%

60.7%

 

*    Segment underwriting income or loss and related underwriting ratios are non-GAAP financial 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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