2014

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

HAMILTON, Bermuda, Oct. 16, 2013 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $38.3 million and diluted earnings per common share of $1.32 for the quarter ended September 30, 2013.

The results for the quarter include net premiums earned of $135.4 million, net favorable development of $41.2 million, net investment income of $17.8 million and net losses from German hailstorms of $15.7 million.

Michael D. Price, Platinum's Chief Executive Officer, commented, "Our performance reflects favorable prior period development, investment results on a total return basis and active capital management.  Our book value per common share was $60.87 as of September 30, 2013, an increase of 2.0% from June 30, 2013."

Mr. Price added, "Our talented professionals, strong balance sheet and financial flexibility allow us to operate effectively in the current challenging market conditions.  We currently expect to write a portfolio of business in 2014 that is similar to our 2013 portfolio."

Results for the quarter ended September 30, 2013 are summarized as follows: 

  • Net income was $38.3 million and diluted earnings per common share were $1.32.
  • Gross premiums written were $146.8 million and net premiums written were $137.9 million.
  • Net premiums earned were $135.4 million.
  • Combined ratio was 65.5%.
  • Net investment income was $17.8 million.
  • Net realized losses on investments were $0.3 million.

Results for the quarter ended September 30, 2013 as compared with the quarter ended September 30, 2012 are summarized as follows:

  • Net income was $38.3 million compared to net income of $84.9 million.
  • Gross premium written increased by $0.6 million (or 0.4%) and net premiums written decreased $8.1 million (or 5.5%).
  • Net premiums earned decreased $3.2 million (or 2.3%).
  • Combined ratio increased 4.2 percentage points.
  • Net investment income decreased $5.5 million (or 23.5%).
  • Net realized losses on investments were $0.3 million compared to net realized gains on investments of $23.0 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended September 30, 2013 were $59.2 million, $70.0 million and $8.7 million, respectively, representing 42.9%, 50.8% and 6.3%, respectively, of total net premiums written. Combined ratios for these segments were 83.1%, 48.3% and 101.5%, respectively.  Compared with the quarter ended September 30, 2012, net premiums written decreased $5.7 million (or 8.8%) and $2.4 million (or 3.3%) in the Property and Marine and Casualty segments, respectively, and were level in the Finite Risk segment.

Results for the nine months ended September 30, 2013 are summarized as follows: 

  • Net income was $174.7 million and diluted earnings per common share were $5.63.
  • Gross premiums written were $430.0 million and net premiums written were $419.0 million.
  • Net premiums earned were $405.1 million.
  • Combined ratio was 62.3%.
  • Net investment income was $54.1 million.
  • Net realized gains on investments were $24.7 million.

Results for the nine months ended September 30, 2013 as compared with the nine months ended September 30, 2012 are summarized as follows:

  • Net income was $174.7 million compared to net income of $205.7 million.
  • Gross premiums written decreased by $1.5 million (or 0.3%) and net premiums written decreased $12.1 million (or 2.8%).
  • Net premiums earned decreased $16.7 million (or 4.0%).
  • Combined ratio decreased 12.9 percentage points.
  • Net investment income decreased $23.8 million (or 30.6%).
  • Net realized gains on investments decreased $45.6 million.

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the nine months ended September 30, 2013 were $175.9 million, $220.5 million and $22.6 million, respectively, representing 42.0%, 52.6% and 5.4%, respectively, of total net premiums written. Combined ratios for these segments were 51.7%, 66.6% and 104.8%, respectively.  Compared with the nine months ended September 30, 2012, net premiums written decreased $18.8 million (or 9.6%) in the Property and Marine segment and increased $1.1 million (or 0.5%) and $5.6 million (or 33.1%) in the Casualty and Finite Risk segments, respectively.

Total assets were $4.0 billion as of September 30, 2013, a decrease of $38.6 million (or 1.0%) from June 30, 2013 and a decrease of $324.0 million (or 7.5%) from December 31, 2012.  Investments and cash and cash equivalents were $3.6 billion as of September 30, 2013, a decrease of $30.8 million (or 0.9%) from June 30, 2013 and a decrease of $370.7 million (or 9.4%) from December 31, 2012. 

Net unrealized gains on available-for-sale investments, net of deferred taxes, were $57.4 million as of September 30, 2013, a decrease of $7.0 million from June 30, 2013 and a decrease of $80.3 million from December 31, 2012.

During the quarter ended September 30, 2013, the Company repurchased 1,353,682 common shares for $78.5 million at a weighted average cost, including commissions, of $58.01 per share.  During the nine months ended September 30, 2013, the Company repurchased 5,351,343 common shares for $302.8 million at a weighted average cost, including commissions, of $56.58 per share. 

Shareholders' equity was $1.7 billion as of September 30, 2013, a decrease of $47.6 million (or 2.7%) from June 30, 2013 and a decrease of $195.6 million (or 10.3%) from December 31, 2012.  Book value per common share was $60.87 as of September 30, 2013 based on 27.9 million common shares outstanding, an increase of $1.20 (or 2.0%) from $59.67 as of June 30, 2013 based on 29.3 million common shares outstanding and an increase of $2.97 (or 5.1%) from $57.90 as of December 31, 2012 based on 32.7 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, October 17, 2013 at 8:00 a.m. Eastern Time.  The call may be accessed by dialing 888-256-9132 (US callers) or 913-312-0982 (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 7381260.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern Time on Thursday, October 17, 2013 until 11:00 a.m. Eastern Time on Thursday, October 24, 2013.  To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 7381260. 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 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 measures. 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 are used to monitor our results and 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 September 30, 2013 and December 31, 2012

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



(unaudited)




September 30,


December 31,


2013


2012

Assets




Investments:




Fixed maturity securities

$        1,937,984


$         2,054,498

Short-term investments

73,635


172,801

Cash and cash equivalents

1,565,405


1,720,395

Accrued investment income

20,451


21,299

Reinsurance premiums receivable

133,769


128,517

Reinsurance balances (prepaid and recoverable)

8,645


6,560

Funds held by ceding companies

118,983


114,090

Deferred acquisition costs

32,378


28,112

Reinsurance deposit assets

78,179


50,693

Other assets

39,830


36,338

Total assets

$        4,009,259


$         4,333,303





Liabilities




Unpaid losses and loss adjustment expenses

$        1,758,056


$         1,961,282

Unearned premiums

130,488


113,960

Debt obligations

250,000


250,000

Commissions payable

75,018


64,849

Other liabilities

96,767


48,678

Total liabilities

$        2,310,329


$         2,438,769





Shareholders' Equity




Common shares

$                  279


$                   327

Additional paid-in capital

-


209,897

Accumulated other comprehensive income

57,390


137,690

Retained earnings

1,641,261


1,546,620

Total shareholders' equity

$        1,698,930


$         1,894,534

Total liabilities and shareholders' equity

$        4,009,259


$         4,333,303


$               60.87


$                57.90

Book value per common share (1)






(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 27,910 and 32,722 at September 30, 2013 and December 31, 2012, respectively.

 

Platinum Underwriters Holdings, Ltd.

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

For the Three and Nine Months Ended September 30, 2013 and 2012

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



Three Months Ended


Nine Months Ended


September 30,


September 30,


2013


2012


2013


2012

Revenue








Net premiums earned

$         135,360


$        138,588


$        405,146


$        421,875

Net investment income

17,758


23,209


54,110


77,916

Net realized gains (losses) on investments

(306)


22,982


24,698


70,299

Net impairment losses on investments

(65)


(699)


(2,002)


(2,882)

Other income (expense)

1,426


(96)


2,503


(766)

Total revenue

154,173


183,984


484,455


566,442









Expenses








Net losses and loss adjustment expenses

44,142


45,117


120,807


191,430

Net acquisition expenses

30,675


26,168


91,207


87,025

Operating expenses

20,672


19,966


59,695


56,645

Net foreign currency exchange losses (gains)

487


541


(592)


763

Interest expense

4,782


4,775


14,341


14,321

Total expenses

100,758


96,567


285,458


350,184

Income before income taxes

53,415


87,417


198,997


216,258

Income tax expense

15,130


2,553


24,342


10,575

Net income

$           38,285


$          84,864


$        174,655


$        205,683

















Earnings Per Common Share








Weighted average common shares outstanding

28,655


32,996


30,519


34,063

Basic earnings per common share

$               1.34


$              2.56


$              5.71


$              6.02









Adjusted weighted average common shares

   outstanding

29,065


33,272


30,949


34,286

Diluted earnings per common share

$               1.32


$              2.54


$              5.63


$              5.98









Comprehensive income








Net income

$           38,285


$          84,864


$        174,655


$        205,683

Other comprehensive income (loss), net of

   deferred taxes

(6,977)


1,825


(80,300)


3,752

Comprehensive income

$           31,308


$          86,689


$          94,355


$        209,435

 

 

Platinum Underwriters Holdings, Ltd.

Segment Reporting (Unaudited)

For the Three Months Ended September 30, 2013 and 2012

($ in thousands)



Three Months Ended September 30, 2013


Property

and Marine


Casualty


Finite Risk


Total

Net premiums written

$        59,169


$       69,992


$         8,737


$     137,898









Net premiums earned

55,127


72,543


7,690


135,360

Net losses and loss adjustment expenses

28,339


10,242


5,561


44,142

Net acquisition expenses

9,699


19,067


1,909


30,675

Other underwriting expenses

7,747


5,727


342


13,816

Segment underwriting income (loss)*

$          9,342


$       37,507


$          (122)


46,727









Net investment income







17,758

Net realized gains (losses) on investments







(306)

Net impairment losses on investments







(65)

Other income (expense)







1,426

Corporate expenses not allocated to segments







(6,856)

Net foreign currency exchange (losses) gains







(487)

Interest expense







(4,782)

Income before income taxes







$       53,415









Underwriting ratios:*








Net loss and loss adjustment expense

51.4%


14.1%


72.3%


32.6%

Net acquisition expense

17.6%


26.3%


24.8%


22.7%

Other underwriting expense

14.1%


7.9%


4.4%


10.2%

Combined

83.1%


48.3%


101.5%


65.5%










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 (losses) on investments







22,982

Net impairment losses on investments







(699)

Other income (expense)







(96)

Corporate expenses not allocated to segments







(6,354)

Net foreign currency exchange (losses) gains







(541)

Interest expense







(4,775)

Income 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%



*

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, 2013 and 2012

($ in thousands)



Nine Months Ended September 30, 2013


Property

and Marine


Casualty


Finite Risk


Total

Net premiums written

$      175,946


$      220,547


$        22,540


$      419,033









Net premiums earned

165,811


218,967


20,368


405,146

Net losses and loss adjustment expenses

35,426


75,243


10,138


120,807

Net acquisition expenses

27,624


53,384


10,199


91,207

Other underwriting expenses

22,493


17,120


1,002


40,615

Segment underwriting income (loss)*

$        80,268


$        73,220


$           (971)


152,517









Net investment income







54,110

Net realized gains on investments







24,698

Net impairment losses on investments







(2,002)

Other income (expense)







2,503

Corporate expenses not allocated to segments







(19,080)

Net foreign currency exchange (losses) gains







592

Interest expense







(14,341)

Income before income taxes







$      198,997









Underwriting ratios:*








Net loss and loss adjustment expense

21.4%


34.4%


49.8%


29.8%

Net acquisition expense

16.7%


24.4%


50.1%


22.5%

Other underwriting expense

13.6%


7.8%


4.9%


10.0%

Combined

51.7%


66.6%


104.8%


62.3%




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)

Corporate expenses not allocated to segments







(17,625)

Net foreign currency exchange (losses) gains







(763)

Interest expense







(14,321)

Income 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%



*   

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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