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8-K - PLATINUM UNDERWRITERS HOLDINGS LTDfourthquarter2012_8k.htm
EX-99.2 - PLATINUM UNDERWRITERS HOLDINGS LTDfinancialsupplementq4_2012.htm
 
Exhibit 99.1
 
PLATINUM UNDERWRITERS HOLDINGS, LTD. REPORTS
FINANCIAL RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2012

HAMILTON, BERMUDA, February 6, 2013 – Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $121.5 million and diluted earnings per common share of $3.67 for the quarter ended December 31, 2012 and net income of $327.2 million and earnings per common share of $9.60 for the year ended December 31, 2012.

The results for the quarter include net premiums earned of $144.6 million, net favorable development of $121.7 million, net investment income of $22.0 million and net realized gains on investments of $18.5 million, partially offset by $30.2 million net negative impact related to Hurricane Sandy.

Michael D. Price, Platinum’s Chief Executive Officer, commented, “2012 was an excellent year for Platinum.  We produced record earnings per share reflecting strong reserve releases and realized gains combined with manageable catastrophe losses.  Our book value per common share grew to $57.90 as of December 31, 2012, an increase of 21.7% for the full year.”

Mr. Price added, “Absent major events in the insurance or capital markets, we expect relative stability in overall reinsurance rate adequacy in 2013.  We have the financial flexibility to expand our underwriting, hold riskier assets or buy back shares.  We expect to participate selectively in a variety of reinsurance and asset classes while managing down our capital base through share repurchases.”

Results for the quarter ended December 31, 2012 are summarized as follows:

·  
Net income was $121.5 million and diluted earnings per common share were $3.67.

·  
Net premiums written were $133.9 million and net premiums earned were $144.6 million.

·  
Combined ratio was 25.4%.

·  
Net investment income was $22.0 million.

·  
Net realized gains on investments were $18.5 million.

Results for the quarter ended December 31, 2012 as compared with the quarter ended December 31, 2011 are summarized as follows:

·  
Net income was $121.5 million compared with net income of $7.1 million.

·  
Net premiums written decreased $19.8 million (or 12.9%) and net premiums earned decreased $22.7 million (or 13.6%).

·  
Combined ratio decreased 76.8 percentage points.

·  
Net investment income decreased $7.7 million (or 26.0 %).

·  
Net realized gains on investments increased $17.7 million.

Net premiums written for Platinum’s Property and Marine, Casualty and Finite Risk segments for the quarter ended December 31, 2012 were $61.5 million, $67.7 million and $4.8 million, respectively, representing 45.9%, 50.5% and 3.6%, respectively, of total net premiums written. Combined ratios for these segments were 97.3%, (47.6%) and 115.8%, respectively. Compared with the quarter ended December 31, 2011, net premiums written decreased $15.4 million (or 20.0%) and $6.9 million (or 9.2%) in the Property and Marine and Casualty segments, respectively, and increased $2.4 million (or 104.1%) in the Finite Risk segment.
 
 
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Results for the year ended December 31, 2012 are summarized as follows:

·  
Net income was $327.2 million and the diluted earnings per common share were $9.60.

·  
Net premiums written were $565.0 million and net premiums earned were $566.5 million.

·  
Combined ratio was 62.5%.

·  
Net investment income was $99.9 million.

·  
Net realized gains on investments were $88.8 million.

Results for the year ended December 31, 2012 as compared with the year ended December 31, 2011 are summarized as follows:

·  
Net income was $327.2 million compared with a net loss of $224.1 million.

·  
Net premiums written decreased $86.5 million (or 13.3%) and net premiums earned decreased $123.0 million (or 17.8%).

·  
Combined ratio decreased 80.5 percentage points.

·  
Net investment income decreased $25.9 million (or 20.6%).

·  
Net realized gains on investments increased $84.8 million.

Net premiums written for Platinum’s Property and Marine, Casualty and Finite Risk segments for the year ended December 31, 2012 were $256.2 million, $287.1 million and $21.7 million, respectively, representing 45.3%, 50.8% and 3.9%, respectively, of total net premiums written. Combined ratios for these segments were 78.1%, 46.2% and 109.4%, respectively. Compared with the year ended December 31, 2011, net premiums written decreased $88.5 million (or 25.7%) and $9.9 million (or 3.3%) in the Property and Marine and Casualty segments, respectively, and increased $11.9 million (or 120.5%) in the Finite Risk segment.

Total assets were $4.3 billion as of December 31, 2012, a decrease of $218.3 million (or 4.8%) from December 31, 2011. Fixed maturity investments and cash and cash equivalents were $3.9 billion as of December 31, 2012, a decrease of $222.4 million (or 5.3%) from December 31, 2011.

Shareholders’ equity was $1.9 billion as of December 31, 2012, an increase of $203.7 million (or 12.0%) from $1.7 billion as of December 31, 2011.  Book value per common share was $57.90  as of December 31, 2012 based on 32.7 million common shares outstanding, an increase of $10.31 (or 21.7%) from $47.59 as of December 31, 2011 based on 35.5 million common shares outstanding. During the quarter ended December 31, 2012, the Company repurchased an aggregate of 132,327 common shares for $6.1 million at a weighted average cost, including commissions, of $45.87 per share.  During the year ended December 31, 2012, the Company repurchased an aggregate of 3,088,589 common shares for approximately $115.7 million at a weighted average cost, including commissions, of $37.46 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, February 7, 2013 at 8:00 a.m. Eastern time.  The call may be accessed by dialing 888-244-2414 (US 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 5854308.
 
The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Thursday, February 7, 2013 until 11:00 a.m. Eastern time on Thursday, February 14, 2013.  To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode 5854308. 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.
 
 
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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 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, 2011.


 
#    #     #

 
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Platinum Underwriters Holdings, Ltd.
Condensed Consolidated Balance Sheets
As of December 31, 2012 and 2011
($ and amounts in thousands, except per share data)

   
(unaudited)
       
   
December 31,
   
December 31,
 
   
2012
   
2011
 
Assets
           
Investments:
           
Fixed maturity securities
  $ 2,054,498     $ 2,788,700  
Short-term investments
    172,801       588,834  
Cash and cash equivalents
    1,720,395       792,510  
Accrued investment income
    21,299       29,440  
Reinsurance premiums receivable
    128,517       159,387  
Reinsurance balances (prepaid and recoverable)
    6,560       14,662  
Funds held by ceding companies
    114,090       94,546  
Deferred acquisition costs
    28,112       28,779  
Reinsurance deposit asset
    50,693       -  
Other assets
    36,338       54,753  
Total assets
  $ 4,333,303     $ 4,551,611  
                 
Liabilities
               
Unpaid losses and loss adjustment expenses
  $ 1,961,282     $ 2,389,614  
Unearned premiums
    113,960       121,164  
Debt obligations
    250,000       250,000  
Commissions payable
    64,849       62,773  
Other liabilities
    48,678       37,201  
Total liabilities
  $ 2,438,769     $ 2,860,752  
                 
Shareholders' Equity
               
Common shares
  $ 327     $ 355  
Additional paid-in capital
    209,897       313,730  
Accumulated other comprehensive income
    137,690       146,635  
Retained earnings
    1,546,620       1,230,139  
Total shareholders' equity
  $ 1,894,534     $ 1,690,859  
                 
Total liabilities and shareholders' equity
  $ 4,333,303     $ 4,551,611  
                 
Book value per common share (1)
  $ 57.90     $ 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 32,722 and 35,526 at December 31, 2012 and December 31, 2011, respectively.
 
 
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Platinum Underwriters Holdings, Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
For the Three and Twelve Months Ended December 31, 2012 and 2011
($ and amounts in thousands, except per share data)

   
Three Months Ended
   
Twelve Months Ended
 
   
December 31, 2012
   
December 31, 2011
   
December 31, 2012
   
December 31, 2011
 
Revenue
                       
Net premiums earned
  $ 144,621     $ 167,322     $ 566,496     $ 689,452  
Net investment income
    22,031       29,758       99,947       125,863  
Net realized gains on investments
    18,455       718       88,754       3,934  
Net impairment losses on investments
    (149 )     (14,746 )     (3,031 )     (22,370 )
Other income (expense)
    527       (193 )     (239 )     645  
Total revenue
    185,485       182,859       751,927       797,524  
                                 
Expenses
                               
Net losses and loss adjustment expenses
    (7,770 )     125,032       183,660       805,437  
Net acquisition expenses
    28,412       34,904       115,437       133,177  
Operating expenses
    23,808       14,168       80,453       63,179  
Net foreign currency exchange losses (gains)
    292       (294 )     1,055       (473 )
Net changes in fair value of derivatives
    -       (965 )     -       4,329  
Interest expense
    4,777       4,770       19,098       19,072  
Total expenses
    49,519       177,615       399,703       1,024,721  
Income (loss) before income taxes
    135,966       5,244       352,224       (227,197 )
Income tax expense (benefit)
    14,421       (1,820 )     24,996       (3,133 )
Net income (loss)
  $ 121,545     $ 7,064     $ 327,228     $ (224,064 )
                                 
Basic
                               
Weighted average common shares outstanding
    32,674       36,117       33,714       36,901  
Basic earnings (loss) per common share
  $ 3.71     $ 0.20     $ 9.67     $ (6.04 )
                                 
Diluted
                               
Adjusted weighted average common shares outstanding
    33,048       36,302       33,981       37,260  
Diluted earnings (loss) per common share (1)
  $ 3.67     $ 0.19     $ 9.60     $ (6.04 )
                                 
Comprehensive income (loss)
                               
Net income (loss)
  $ 121,545     $ 7,064     $ 327,228     $ (224,064 )
Other comprehensive income (loss), net of deferred taxes
    (12,697 )     19,797       (8,945 )     171,123  
Comprehensive income (loss)
  $ 108,848     $ 26,861     $ 318,283     $ (52,941 )

(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.
 
 
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Platinum Underwriters Holdings, Ltd.
Segment Reporting (Unaudited)
For the Three Months Ended December 31, 2012 and 2011
($ in thousands)

   
Three Months Ended December 31, 2012
 
   
Property and Marine
   
Casualty
   
Finite Risk
   
Total
 
Net premiums written
  $ 61,458     $ 67,676     $ 4,767     $ 133,901  
                                 
Net premiums earned
    67,538       72,284       4,799       144,621  
Net losses and loss adjustment expenses
    47,200       (57,482 )     2,512       (7,770 )
Net acquisition expenses
    9,308       16,415       2,689       28,412  
Other underwriting expenses
    9,190       6,614       358       16,162  
Segment underwriting income (loss)*
  $ 1,840     $ 106,737     $ (760 )     107,817  
                                 
Net investment income
                            22,031  
Net realized gains on investments
                            18,455  
Net impairment losses on investments
                            (149 )
Other income (expense)
                            527  
Corporate expenses not allocated to segments
                            (7,646 )
Net foreign currency exchange (losses) gains
                            (292 )
Net changes in fair value of derivatives
                            -  
Interest expense
                            (4,777 )
Income (loss) before income taxes
                          $ 135,966  
                                 
Underwriting ratios:*
                               
Net loss and loss adjustment expense
    69.9 %     (79.5 %)     52.3 %     (5.4 %)
Net acquisition expense
    13.8 %     22.7 %     56.0 %     19.6 %
Other underwriting expense
    13.6 %     9.2 %     7.5 %     11.2 %
Combined
    97.3 %     (47.6 %)     115.8 %     25.4 %
                                 
                                 
   
Three Months Ended December 31, 2011
 
   
Property and Marine
   
Casualty
   
Finite Risk
   
Total
 
Net premiums written
  $ 76,836     $ 74,547     $ 2,335     $ 153,718  
                                 
Net premiums earned
    81,980       82,785       2,557       167,322  
Net losses and loss adjustment expenses
    76,194       52,459       (3,621 )     125,032  
Net acquisition expenses
    11,645       19,251       4,008       34,904  
Other underwriting expenses
    6,341       4,541       223       11,105  
Segment underwriting income (loss)*
  $ (12,200 )   $ 6,534     $ 1,947       (3,719 )
                                 
Net investment income
                            29,758  
Net realized gains on investments
                            718  
Net impairment losses on investments
                            (14,746 )
Other income (expense)
                            (193 )
Corporate expenses not allocated to segments
                            (3,063 )
Net foreign currency exchange (losses) gains
                            294  
Net changes in fair value of derivatives
                            965  
Interest expense
                            (4,770 )
Income (loss) before income taxes
                          $ 5,244  
                                 
Underwriting ratios:*
                               
Net loss and loss adjustment expense
    92.9 %     63.4 %     (141.6 %)     74.7 %
Net acquisition expense
    14.2 %     23.3 %     156.7 %     20.9 %
Other underwriting expense
    7.7 %     5.5 %     8.7 %     6.6 %
Combined
    114.8 %     92.2 %     23.8 %     102.2 %

*
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.
 
 
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Platinum Underwriters Holdings, Ltd.
Segment Reporting (Unaudited)
For the Twelve Months Ended December 31, 2012 and 2011
($ in thousands)

   
Twelve Months Ended December 31, 2012
 
   
Property and Marine
   
Casualty
   
Finite Risk
   
Total
 
Net premiums written
  $ 256,182     $ 287,112     $ 21,706     $ 565,000  
                                 
Net premiums earned
    253,604       294,122       18,770       566,496  
Net losses and loss adjustment expenses
    132,580       43,763       7,317       183,660  
Net acquisition expenses
    34,342       68,987       12,108       115,437  
Other underwriting expenses
    31,140       22,937       1,105       55,182  
Segment underwriting income (loss)*
  $ 55,542     $ 158,435     $ (1,760 )     212,217  
                                 
Net investment income
                            99,947  
Net realized gains on investments
                            88,754  
Net impairment losses on investments
                            (3,031 )
Other income (expense)
                            (239 )
Corporate expenses not allocated to segments
                            (25,271 )
Net foreign currency exchange (losses) gains
                            (1,055 )
Net changes in fair value of derivatives
                            -  
Interest expense
                            (19,098 )
Income (loss) before income taxes
                          $ 352,224  
                                 
Underwriting ratios:*
                               
Net loss and loss adjustment expense
    52.3 %     14.9 %     39.0 %     32.4 %
Net acquisition expense
    13.5 %     23.5 %     64.5 %     20.4 %
Other underwriting expense
    12.3 %     7.8 %     5.9 %     9.7 %
Combined
    78.1 %     46.2 %     109.4 %     62.5 %
                                 
                                 
   
Twelve Months Ended December 31, 2011
 
   
Property and Marine
   
Casualty
   
Finite Risk
   
Total
 
Net premiums written
  $ 344,682     $ 296,989     $ 9,843     $ 651,514  
                                 
Net premiums earned
    356,976       318,734       13,742       689,452  
Net losses and loss adjustment expenses
    628,062       178,650       (1,275 )     805,437  
Net acquisition expenses
    49,348       72,738       11,091       133,177  
Other underwriting expenses
    27,622       19,002       940       47,564  
Segment underwriting income (loss)*
  $ (348,056 )   $ 48,344     $ 2,986       (296,726 )
                                 
Net investment income
                            125,863  
Net realized gains on investments
                            3,934  
Net impairment losses on investments
                            (22,370 )
Other income (expense)
                            645  
Corporate expenses not allocated to segments
                            (15,615 )
Net foreign currency exchange (losses) gains
                            473  
Net changes in fair value of derivatives
                            (4,329 )
Interest expense
                            (19,072 )
Income (loss) before income taxes
                          $ (227,197 )
                                 
Underwriting ratios:*
                               
Net loss and loss adjustment expense
    175.9 %     56.0 %     (9.3 %)     116.8 %
Net acquisition expense
    13.8 %     22.8 %     80.7 %     19.3 %
Other underwriting expense
    7.7 %     6.0 %     6.8 %     6.9 %
Combined
    197.4 %     84.8 %     78.2 %     143.0 %

*
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.



Contact:
Kenneth A. Kurtzman
 
(203) 252-5833
 
 
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