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Platinum Underwriters Holdings, Ltd. Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2008

Posted on: Tuesday, 21 October 2008, 18:00 CDT

HAMILTON, Bermuda, Oct. 21 /PRNewswire-FirstCall/ -- Platinum Underwriters Holdings, Ltd. ("Platinum") today reported a net loss of $45.3 million, or $0.99 per basic common share, for the quarter ended September 30, 2008.

The results for the quarter are consistent with previously announced ultimate loss estimates from Hurricanes Gustav and Ike of approximately $120 million, net of reinstatement premiums and tax benefit, and other-than-temporary impairments and realized losses of $18.2 million associated with certain securities held in Platinum's investment portfolio. The results for the quarter include net premiums earned of $280.7 million, a decrease of 3.3% from the same quarter last year, net favorable development of $32.0 million, compared with net favorable development of $13.4 million for the same quarter last year, and net investment income of $48.0 million, a decrease of 11.5% from the same quarter last year.

Michael D. Price, Chief Executive Officer, commented, "Significant catastrophe activity and the impact of the global financial crisis on our investment portfolio adversely affected our results in the quarter. Our book value per share was $33.64 as of September 30, 2008, a decrease of 9.1% for the quarter and a decrease of 1.2% for the nine months ending September 30, 2008."

Mr. Price added, "Our outlook for market conditions is cautiously optimistic. Given the challenging state of the credit and equity markets, we expect increasing demand for reinsurance. However, reinsurers may be reluctant to provide capacity without appropriate rate increases. We believe we are well capitalized and have the financial strength to continue writing a significant multi-class reinsurance portfolio and buying back shares, provided the business performs as expected."

Results for the quarter ended September 30, 2008 were summarized as follows:

-- Net loss was $45.3 million, or $0.99 per basic common share. -- Net premiums written were $279.1 million and net premiums earned were $280.7 million. -- GAAP combined ratio was 122.6%. -- Net investment income was $48.0 million.

Results for the quarter ended September 30, 2008 compared to the quarter ended September 30, 2007 were summarized as follows:

-- Net loss of $45.3 million compared to net income of $91.3 million. -- Net premiums written decreased $13.0 million (or 4.4%) and net premiums earned decreased $9.6 million (or 3.3%). -- GAAP combined ratio increased 41.3 percentage points. -- Net investment income decreased $6.2 million (or 11.5%).

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended September 30, 2008 were $167.1 million, $106.8 million and $5.2 million, respectively, representing 59.9%, 38.3% and 1.8%, respectively, of the total net premiums written. Combined ratios for these segments were 144.3%, 96.7% and 102.8%, respectively, for the quarter. Compared to the quarter ended September 30, 2007, net premiums written increased by $24.6 million (or 17.2%) in the Property and Marine segment and decreased $34.4 million (or 24.4%) and $3.2 million (or 38.1%) in the Casualty and Finite Risk segments, respectively.

Results for the nine months ended September 30, 2008 were summarized as follows:

-- Net income was $162.2 million, or $2.83 per diluted common share. -- Net premiums written were $800.3 million and net premiums earned were $840.6 million. -- GAAP combined ratio was 90.1%. -- Net investment income was $144.0 million.

Results for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007 were summarized as follows:

-- Net income decreased $92.6 million (or 36.3%). -- Net premiums written decreased $78.5 million (or 8.9%) and net premiums earned decreased $30.5 million (or 3.5%). -- GAAP combined ratio increased 7.1 percentage points. -- Net investment income decreased $16.7 million (or 10.4%).

Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the nine months ended September 30, 2008 were $454.5 million, $335.3 million, and $10.4 million, respectively, representing 56.8%, 41.9% and 1.3%, respectively, of the total net premiums written. Combined ratios for these segments were 84.7%, 96.1% and 104.4%, respectively, for the nine months ended September 30, 2008. Compared to the nine months ended September 30, 2007, net premiums written increased $55.1 million (or 13.8%) in the Property and Marine segment and decreased $120.7 million (or 26.5%) and $13.0 million (or 55.4%) in the Casualty and Finite Risk segments, respectively.

Total assets were $4.91 billion as of September 30, 2008, a decrease of $173.4 million (or 3.4%) from $5.08 billion as of December 31, 2007. The decrease in total assets reflects an increase of $156.2 million in the unrealized loss on fixed maturity securities to $183.0 million as of September 30, 2008. Cash, cash equivalents and fixed maturity investments were $4.26 billion as of September 30, 2008, a decrease of $202.8 million (or 4.6%) from December 31, 2007.

Shareholders' equity was $1.77 billion as of September 30, 2008, a decrease of $226.0 million (or 11.3%) from December 31, 2007. Book value per common share was $33.64 as of September 30, 2008 based on 47.7 million common shares outstanding, a decrease of $0.40 (or 1.2%) from $34.04 as of December 31, 2007 based on 53.8 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 Wednesday, October 22, 2008 at 8:00 a.m. Eastern time. The call may be accessed by dialing 888-812-8569 (US callers) or 913-312-1382 (international callers), or in a listen-only mode via the Investor Relations section of Platinum's website at http://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.

The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Wednesday, October 22, 2008 until midnight Eastern time on Wednesday, October 29, 2008. To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 4379337. The teleconference will also be archived on the Investor Relations section of Platinum's website at http://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 schedules containing 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) and related underwriting ratios 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 before income tax expense and total shareholders' equity is presented in the attached financial information in accordance with Regulation G.

About Platinum

Platinum Underwriters Holdings, Ltd. 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. The Company has a financial strength rating of A (Excellent) from A.M. Best Company, Inc. For further information, please visit Platinum's website at http://www.platinumre.com/.

Safe Harbor Statement Regarding Forwarding-Looking Statements

Management believes certain statements in this press release may constitute "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 include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "may,""should,""estimate,""expect,""anticipate,""intend,""believe,""predict,""potential," or words of similar import. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and risks, many of which are subject to change. These uncertainties and risks include, but are not limited to, conducting operations in a competitive environment; our ability to maintain our A.M. Best Company, Inc. rating; significant weather-related or other natural or man-made disasters over which the Company has no control; the effectiveness of our loss limitation methods and pricing models; the adequacy of the Company's liability for unpaid losses and loss adjustment expenses; the availability of retrocessional reinsurance on acceptable terms; our ability to maintain our business relationships with reinsurance brokers; general political and economic conditions, including the effects of civil unrest, acts of terrorism, war or a prolonged U.S. or global economic downturn or recession; the cyclicality of the property and casualty reinsurance business; market volatility and interest rate and currency exchange rate fluctuation; tax, regulatory or legal restrictions or limitations applicable to the Company or the property and casualty reinsurance business generally; and changes in the Company's plans, strategies, objectives, expectations or intentions, which may happen at any time at the Company's discretion. As a consequence, current plans, anticipated actions and future financial condition and results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. Additionally, forward-looking statements speak only as of the date they are made, and we undertake no obligation to release publicly the results of any future revisions or updates we may make to forward-looking statements to reflect new information or circumstances after the date hereof or to reflect the occurrence of future events.

Platinum Underwriters Holdings, Ltd. Condensed Consolidated Balance Sheets As of September 30, 2008 and December 31, 2007 (amounts in thousands, except per share amounts) September 30, December 31, 2008 2007 ------------- ------------ (Unaudited) Assets Investments $3,562,033 $3,371,348 Cash, cash equivalents and short-term investments 696,660 1,090,155 Reinsurance premiums receivable 295,914 244,360 Accrued investment income 30,932 34,696 Reinsurance balances (prepaid and recoverable) 27,131 37,348 Deferred acquisition costs 58,731 70,508 Funds held by ceding companies 146,470 165,604 Other assets 87,502 64,731 ---------- ---------- Total assets $4,905,373 $5,078,750 ========== ========== Liabilities Unpaid losses and loss adjustment expenses $2,460,185 $2,361,038 Unearned premiums 261,979 298,498 Debt obligations 250,000 250,000 Commissions payable 122,699 100,204 Other liabilities 38,118 70,633 --------- --------- Total liabilities 3,132,981 3,080,373 Total shareholders' equity 1,772,392 1,998,377 ---------- ---------- Total liabilities and shareholders' equity $4,905,373 $5,078,750 ========== ========== ------ ------ Book value per common share (a) $33.64 $34.04 ====== ====== (a) Book value per common share is determined by dividing shareholders' equity, excluding capital attributable to preferred shares, by actual common shares outstanding including unvested restricted common shares. Unvested restricted common shares were as follows: September 30, 2008 - 276,026; December 31, 2007 - 55,910 Platinum Underwriters Holdings, Ltd. Consolidated Statements of Operations and Comprehensive Income (Unaudited) For the Three and Nine Months Ended September 30, 2008 and 2007 (amounts in thousands, except per share amounts) Three Months Ended Nine Months Ended September September September September 30, 2008 30, 2007 30, 2008 30, 2007 Revenue Net premiums earned $280,725 290,310 840,558 $871,076 Net investment income 48,043 54,283 144,037 160,666 Net realized losses on investments (18,214) (864) (18,353) (2,521) Other expense (1,686) (659) (5,892) (3,645) ------- ------- ------- --------- Total revenue 308,868 343,070 960,350 1,025,576 ------- ------- ------- --------- Expenses Net losses and LAE 270,863 163,923 524,458 510,267 Net acquisition expenses 56,320 51,445 182,999 156,392 Other underwriting expenses 16,777 20,757 49,469 56,153 Corporate expenses 4,376 7,404 18,474 21,322 Net foreign currency exchange (gains) losses 6,134 (1,429) 3,263 (2,887) Interest expense 4,752 5,457 14,253 16,368 ------- ------- ------- ------- Total expenses 359,222 247,557 792,916 757,615 ------- ------ ------- ------- Income (loss) before income tax expense (benefit) (50,354) 95,513 167,434 267,961 Income tax expense (benefit) (5,014) 4,210 5,246 13,175 ------- ------ ------- ------- Net income (loss) (45,340) 91,303 162,188 254,786 Preferred dividends 2,602 2,602 7,806 7,806 -------- ------ ------- -------- Net income (loss) attributable to common shareholders $(47,942) 88,701 154,382 $246,980 ======== ====== ======= ======== Basic Weighted average common shares outstanding 48,260 58,946 49,606 59,572 Basic earnings (loss) per common share $(0.99) 1.50 3.11 $4.15 Diluted Adjusted weighted average common shares outstanding 48,260 66,710 57,276 67,294 Diluted earnings (loss) per common share $(0.99) 1.37 2.83 $3.79 Comprehensive income (loss) Net income (loss) $(45,340) 91,303 162,188 $254,786 Other comprehensive income (loss), net of deferred taxes (102,921) 23,719 (145,918) 178 -------- ------ -------- --- Comprehensive income (loss) $(148,261) 115,022 16,270 $254,964 ========= ======= ====== ======== Platinum Underwriters Holdings, Ltd. Segment Reporting For the Three Months Ended September 30, 2008 and 2007 ($ in thousands) Three Months Ended September 30, 2008 (Unaudited) ---------------------------- Property and Segment underwriting results Marine Casualty Finite Risk Total -------- -------- ----------- ----- Net premiums written $167,136 106,826 5,180 $279,142 Net premiums earned 151,763 124,319 4,643 280,725 ------- ------- ----- ------- Net losses and LAE 183,759 86,057 1,047 270,863 Net acquisition expenses 23,691 29,191 3,438 56,320 Other underwriting expenses 11,543 4,948 286 16,777 ------ ----- --- ------ Total underwriting expenses 218,993 120,196 4,771 343,960 -------- ----- ---- ------- Segment underwriting income (loss) $(67,230) 4,123 (128) (63,235) -------- ----- ---- Net investment income 48,043 Net realized losses on investments (18,214) Net foreign currency exchange losses (6,134) Other expense (1,686) Corporate expenses not allocated to segments (4,376) Interest expense (4,752) -------- Loss before income tax benefit $(50,354) ======== GAAP underwriting ratios: Loss and LAE 121.1% 69.2% 22.6% 96.5% Acquisition expense 15.6% 23.5% 74.0% 20.1% Other underwriting expense 7.6% 4.0% 6.2% 6.0% --- --- --- --- Combined 144.3% 96.7% 102.8% 122.6% ----- ---- ----- ----- Three Months Ended September 30, 2007 (Unaudited) ------------------- Segment underwriting results Net premiums written $142,549 141,214 8,369 $292,132 Net premiums earned 128,380 153,938 7,992 290,310 ------- ------- ----- ------- Net losses and LAE 43,396 110,365 10,162 163,923 Net acquisition expenses 18,549 33,403 (507) 51,445 Other underwriting expenses 12,086 8,304 367 20,757 ------ ----- --- ------ Total underwriting expenses 74,031 152,072 10,022 236,125 ------- ----- ------ ------ Segment underwriting income (loss) $54,349 1,866 (2,030) 54,185 ------- ----- ------ Net investment income 54,283 Net realized losses on investments (864) Net foreign currency exchange gains 1,429 Other expense (659) Corporate expenses not allocated to segments (7,404) Interest expense (5,457) ------- Income before income tax expense $95,513 ======= GAAP underwriting ratios: Loss and LAE 33.8% 71.7% 127.2% 56.5% Acquisition expense 14.4% 21.7% (6.3%) 17.7% Other underwriting expense 9.4% 5.4% 4.6% 7.1% --- --- --- --- Combined 57.6% 98.8% 125.5% 81.3% ---- ---- ----- ---- The GAAP underwriting ratios are calculated by dividing each item above by net premiums earned. Platinum Underwriters Holdings, Ltd. Segment Reporting For the Nine Months Ended September 30, 2008 and 2007 ($ in thousands) Nine Months Ended September 30, 2008 (Unaudited) ------------------------------------------------ Property Segment underwriting and results Marine Casualty Finite Risk Total -------- -------- ----------- ----- Net premiums written $454,541 335,295 10,437 $800,273 Net premiums earned 446,869 385,059 8,630 840,558 ------- ------- ----- ------- Net losses and LAE 279,165 252,233 (6,940) 524,458 Net acquisition expenses 69,119 98,893 14,987 182,999 Other underwriting expenses 29,774 18,734 961 49,469 ------ ------ --- ------ Total underwriting expenses 378,058 369,860 9,008 756,926 ------- ------ ---- ------ Segment underwriting income (loss) $68,811 15,199 (378) 83,632 ------- ------ ---- Net investment income 144,037 Net realized losses on investments (18,353) Net foreign currency exchange losses (3,263) Other expense (5,892) Corporate expenses not allocated to segments (18,474) Interest expense (14,253) -------- Income before income tax expense $167,434 ======== GAAP underwriting ratios: Loss and LAE 62.5% 65.5% (80.4%) 62.4% Acquisition expense 15.5% 25.7% 173.7% 21.8% Other underwriting expense 6.7% 4.9% 11.1% 5.9% --- --- ---- --- Combined 84.7% 96.1% 104.4% 90.1% ---- ---- ----- ---- Nine Months Ended September 30, 2007 (Unaudited) ------------------------------------------------ Segment underwriting results Net premiums written $399,429 455,945 23,398 $878,772 Net premiums earned 373,226 471,802 26,048 871,076 ------- ------- ------ ------- Net losses and LAE 149,265 340,740 20,262 510,267 Net acquisition expenses 50,748 105,499 145 156,392 Other underwriting expenses 32,696 21,463 1,994 56,153 ------ ------ ----- ------ Total underwriting expenses 232,709 467,702 22,401 722,812 -------- ----- ----- ------- Segment underwriting income $140,517 4,100 3,647 148,264 -------- ----- ----- Net investment income 160,666 Net realized losses on investments (2,521) Net foreign currency exchange gains 2,887 Other expense (3,645) Corporate expenses not allocated to segments (21,322) Interest expense (16,368) -------- Income before income tax expense $267,961 ======== GAAP underwriting ratios: Loss and LAE 40.0% 72.2% 77.8% 58.6% Acquisition expense 13.6% 22.4% 0.6% 18.0% Other underwriting expense 8.8% 4.5% 7.7% 6.4% --- --- --- --- Combined 62.4% 99.1% 86.1% 83.0% ---- ---- ---- ---- The GAAP underwriting ratios are calculated by dividing each item above by net premiums earned.

Platinum Underwriters Holdings, Ltd.

CONTACT: Lily Outerbridge, Investor Relations, +1-441-298-0760

Web Site: http://www.platinumre.com/

Source: PRNewswire-FirstCall

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