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

HAMILTON, Bermuda, Oct. 17, 2012 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $84.9 million and diluted earnings per common share of $2.54 for the quarter ended September 30, 2012.

The results for the quarter include net premiums earned of $138.6 million, net favorable development of $61.3 million, net investment income of $23.2 million and net realized gains on investments of $23.0 million, partially offset by $17.6 million of underwriting losses related to North American crop reinsurance. 

Michael D. Price, Platinum's Chief Executive Officer, commented, "Our results reflect favorable prior period development, a low level of major catastrophe activity, crop losses arising from the severe U.S. drought conditions, strong investment results on a total return basis and active capital management.  Our book value per common share grew to $54.60 as of September 30, 2012, an increase of 5.3% from June 30, 2012."

Mr. Price added, "As we conclude our tenth full year of operations as a public company, our strong balance sheet and excellent reinsurance market access leave us well positioned for the underwriting, investment and capital management opportunities that lie ahead."

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

  • Net income was $84.9 million and diluted earnings per common share were $2.54.
  • Gross premiums written were $146.3 million.
  • Net premiums written were $146.0 million and net premiums earned were $138.6 million.
  • Combined ratio was 61.3%.
  • Net investment income was $23.2 million.
  • Net realized gains on investments were $23.0 million.

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

  • Net income was $84.9 million versus a net loss of $53.5 million.
  • Gross premiums written decreased $31.4 million (or 17.7%).
  • Net premiums written decreased $31.1 million (or 17.6%) and net premiums earned decreased $28.2 million (or 16.9%).
  • Combined ratio decreased 84.3 percentage points.
  • Net investment income decreased $6.6 million (or 22.0%).
  • Net realized gains on investments increased $15.5 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended September 30, 2012 were $64.9 million, $72.4 million and $8.7 million, respectively, representing 44.4%, 49.6% and 6.0%, respectively, of total net premiums written. Combined ratios for these segments were 67.1%, 52.3% and 104.3%, respectively. Compared with the quarter ended September 30, 2011, net premiums written decreased $36.8 million (or 36.2%) and $0.3 million (or 0.5%) in the Property and Marine and Casualty segments, respectively, and increased $5.9 million (or 212.1%) in the Finite Risk segment.

Results for the nine months ended September 30, 2012 are summarized as follows: 

  • Net income was $205.7 million and diluted earnings per common share were $5.98.
  • Gross premiums written were $431.5 million.
  • Net premiums written were $431.1 million and net premiums earned were $421.9 million.
  • Combined ratio was 75.2%.
  • Net investment income was $77.9 million.
  • Net realized gains on investments were $70.3 million.

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

  • Net income was $205.7 million versus a net loss of $231.1 million.
  • Gross premiums written decreased $101.0 million (or 19.0%).
  • Net premiums written decreased $66.7 million (or 13.4%) and net premiums earned decreased $100.3 million (or 19.2%).
  • Combined ratio decreased 80.9 percentage points.
  • Net investment income decreased $18.2 million (or 18.9%).
  • Net realized gains on investments increased $67.1 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the nine months ended September 30, 2012 were $194.7 million, $219.4 million and $16.9 million, respectively, representing 45.2%, 50.9% and 3.9%, respectively, of total net premiums written. Combined ratios for these segments were 71.2%, 76.7% and 107.1%, respectively. Compared with the nine months ended September 30, 2011, net premiums written decreased $73.1 million (or 27.3%) and $3.0 million (or 1.4%) in the Property and Marine and Casualty segments, respectively, and increased $9.4 million (or 125.6%) in the Finite Risk segment.

Total assets were $4.5 billion as of September 30, 2012, a decrease of $58.7 million (or 1.3%) from December 31, 2011. Investments and cash and cash equivalents were $4.1 billion as of September 30, 2012, a decrease of $48.5 million (or 1.2%) from December 31, 2011.

Shareholders' equity was $1.8 billion as of September 30, 2012, an increase of $99.1 million (or 5.9%) from December 31, 2011.  Book value per common share was $54.60 as of September 30, 2012 based on 32.8 million common shares outstanding, an increase of $7.01 (or 14.7%) from $47.59 as of December 31, 2011 based on 35.5 million common shares outstanding. During the quarter ended September 30, 2012, the Company repurchased an aggregate of 491,791 common shares for $19.7 million at a weighted average cost, including commissions, of $40.05 per share.  During the nine months ended September 30, 2012, the Company repurchased 2,956,262 common shares for approximately $109.6 million at a weighted average cost, including commissions, of $37.08 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, October 18, 2012 at 8:00 a.m. Eastern time.  The call may be accessed by dialing 800-419-9895 (US callers) or 913-981-5550 (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 1779417.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Thursday, October 18, 2012 until 11:00 a.m. Eastern time on Thursday, October 25, 2012.  To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 1779417. 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 September 30, 2012 and December 31, 2011

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









(unaudited)






September 30,


December 31,




2012


2011


Assets






Investments:






Fixed maturity securities


$      2,293,094


$      2,788,700


Short-term investments


165,741


588,834


Cash and cash equivalents


1,662,679


792,510


Accrued investment income


23,856


29,440


Reinsurance premiums receivable


150,775


159,387


Reinsurance balances (prepaid and recoverable)


4,335


14,662


Funds held by ceding companies


113,310


94,546


Deferred acquisition costs


29,189


28,779


Other assets


49,943


54,753


Total assets


$      4,492,922


$      4,551,611








Liabilities






Unpaid losses and loss adjustment expenses


$      2,160,154


$      2,389,614


Unearned premiums


122,150


121,164


Debt obligations


250,000


250,000


Commissions payable


67,489


62,773


Other liabilities


103,183


37,201


Total liabilities


$      2,702,976


$      2,860,752








Shareholders' Equity






Common shares


$                 328


$                 355


Additional paid-in capital


211,546


313,730


Accumulated other comprehensive income


150,387


146,635


Retained earnings


1,427,685


1,230,139


Total shareholders' equity


$      1,789,946


$      1,690,859


Total liabilities and shareholders' equity


$      4,492,922


$      4,551,611








Book value per common share (1)


$              54.60


$              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 32,782 and 35,526 at
September 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 Nine Months Ended September 30, 2012 and 2011

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








Three Months Ended


Nine Months Ended



September 30, 2012


September 30, 2011


September 30, 2012


September 30, 2011

Revenue









Net premiums earned


$         138,588


$       166,813


$       421,875


$       522,130

Net investment income


23,209


29,762


77,916


96,105

Net realized gains on investments


22,982


7,498


70,299


3,216

Net impairment losses on investments


(699)


(4,451)


(2,882)


(7,624)

Other income (expense)


(96)


(198)


(766)


838

Total revenue


183,984


199,424


566,442


614,665










Expenses









Net losses and loss adjustment expenses


45,117


201,453


191,430


680,405

Net acquisition expenses


26,168


30,208


87,025


98,273

Net changes in fair value of derivatives


-


4,546


-


5,294

Operating expenses


19,966


14,755


56,645


49,011

Net foreign currency exchange losses (gains)


541


(982)


763


(179)

Interest expense


4,775


4,769


14,321


14,302

Total expenses


96,567


254,749


350,184


847,106

Income (loss) before income taxes


87,417


(55,325)


216,258


(232,441)

Income tax expense (benefit)


2,553


(1,790)


10,575


(1,313)

Net income (loss)


$           84,864


$        (53,535)


$       205,683


$      (231,128)



















Basic









Weighted average common shares outstanding


32,996


37,183


34,063


37,165

Basic earnings (loss) per common share


$               2.56


$            (1.43)


$              6.02


$            (6.18)










Diluted









Adjusted weighted average common shares 
          outstanding


33,272


37,360


34,286


37,578

Diluted earnings (loss) per common share (1)


$                2.54


$            (1.43)


$              5.98


$            (6.18)










Comprehensive income (loss)









Net income (loss)


$           84,864


$        (53,535)


$       205,683


$      (231,128)

Other comprehensive income (loss), net of 
          deferred taxes


1,825


86,804


3,752


151,326

Comprehensive income (loss)


$           86,689


$         33,269


$       209,435


$        (79,802)


(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 September 30, 2012 and 2011

($ in thousands)





Three Months Ended September 30, 2012



Property and Marine


Casualty


Finite Risk


Total


Net premiums written

$     64,876


$   72,358


$      8,745


$ 145,979


Net premiums earned

61,900


70,326


6,362


138,588


Net losses and loss adjustment expenses

26,790


14,358


3,969


45,117


Net acquisition expenses

7,078


16,710


2,380


26,168


Other underwriting expenses

7,661


5,662


289


13,612


Segment underwriting income (loss)*

$     20,371


$   33,596


$        (276)


53,691











Net investment income







23,209


Net realized gains on investments







22,982


Net impairment losses on investments







(699)


Other income (expense)







(96)


Net changes in fair value of derivatives







-


Corporate expenses not allocated to segments







(6,354)


Net foreign currency exchange (losses) gains







(541)


Interest expense







(4,775)


Income (loss) before income taxes







$   87,417











Underwriting ratios:*









Net loss and loss adjustment expense

43.3%


20.4%


62.4%


32.6%


Net acquisition expense

11.4%


23.8%


37.4%


18.9%


Other underwriting expense

12.4%


8.1%


4.5%


9.8%


Combined

67.1%


52.3%


104.3%


61.3%





















Three Months Ended September 30, 2011



Property and Marine


Casualty


Finite Risk


Total


Net premiums written

$  101,633


$   72,689


$      2,802


$ 177,124


Net premiums earned

85,239


78,021


3,553


166,813


Net losses and loss adjustment expenses

156,995


42,704


1,754


201,453


Net acquisition expenses

12,068


16,780


1,360


30,208


Other underwriting expenses

6,686


4,300


218


11,204


Segment underwriting income (loss)*

$   (90,510)


$   14,237


$         221


(76,052)











Net investment income







29,762


Net realized gains on investments







7,498


Net impairment losses on investments







(4,451)


Other income (expense)







(198)


Net changes in fair value of derivatives







(4,546)


Corporate expenses not allocated to segments







(3,551)


Net foreign currency exchange (losses) gains







982


Interest expense







(4,769)


Income (loss) before income taxes







$  (55,325)











Underwriting ratios:*









Net loss and loss adjustment expense

184.2%


54.7%


49.4%


120.8%


Net acquisition expense

14.2%


21.5%


38.3%


18.1%


Other underwriting expense

7.8%


5.5%


6.1%


6.7%


Combined

206.2%


81.7%


93.8%


145.6%











* 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 Nine Months Ended September 30, 2012 and 2011

($ in thousands)




Nine Months Ended September 30, 2012


Property and Marine


Casualty


Finite Risk


Total

Net premiums written

$  194,724


$  219,436


$     16,939


$  431,099

Net premiums earned

186,066


221,838


13,971


421,875

Net losses and loss adjustment expenses

85,380


101,245


4,805


191,430

Net acquisition expenses

25,034


52,572


9,419


87,025

Other underwriting expenses

21,950


16,323


747


39,020

Segment underwriting income (loss)*

$     53,702


$     51,698


$      (1,000)


104,400









Net investment income







77,916

Net realized gains on investments







70,299

Net impairment losses on investments







(2,882)

Other income (expense)







(766)

Net changes in fair value of derivatives







-

Corporate expenses not allocated to segments







(17,625)

Net foreign currency exchange (losses) gains







(763)

Interest expense







(14,321)

Income (loss) before income taxes







$  216,258









Underwriting ratios:*








Net loss and loss adjustment expense

45.9%


45.6%


34.4%


45.4%

Net acquisition expense

13.5%


23.7%


67.4%


20.6%

Other underwriting expense

11.8%


7.4%


5.3%


9.2%

Combined

71.2%


76.7%


107.1%


75.2%










Nine Months Ended September 30, 2011


Property and Marine


Casualty


Finite Risk


Total

Net premiums written

$  267,846


$  222,442


$       7,508


$  497,796

Net premiums earned

274,996


235,949


11,185


522,130

Net losses and loss adjustment expenses

551,868


126,191


2,346


680,405

Net acquisition expenses

37,703


53,487


7,083


98,273

Other underwriting expenses

21,281


14,461


717


36,459

Segment underwriting income (loss)*

$ (335,856)


$     41,810


$       1,039


(293,007)









Net investment income







96,105

Net realized gains on investments







3,216

Net impairment losses on investments







(7,624)

Other income (expense)







838

Net changes in fair value of derivatives







(5,294)

Corporate expenses not allocated to segments







(12,552)

Net foreign currency exchange (losses) gains







179

Interest expense







(14,302)

Income (loss) before income taxes







$ (232,441)









Underwriting ratios:*








Net loss and loss adjustment expense

200.7%


53.5%


21.0%


130.3%

Net acquisition expense

13.7%


22.7%


63.3%


18.8%

Other underwriting expense

7.7%


6.1%


6.4%


7.0%

Combined

222.1%


82.3%


90.7%


156.1%


* 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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