PLATINUM UNDERWRITERS HOLDINGS, LTD. 
By HAMILTON, Bermuda, Feb. 4, 2014 /PRNewswire/ -- Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $48.6 million and diluted earnings per common share of $1.71 for the quarter ended December 31, 2013 and net income of $223.3 million and diluted earnings per common share of $7.35 for the year ended December 31, 2013.
The results for the quarter include net premiums earned of $148.3 million, net favorable development of $33.3 million and net investment income of $17.9 million.
Michael D. Price, Platinum's Chief Executive Officer, commented, "Platinum performed very well in 2013. We produced strong earnings per share reflecting favorable reserve releases, realized capital gains, and lower than expected catastrophe losses. Our annual return on equity was 12.9% and our book value per common share grew to $62.07 as of December 31, 2013, an increase of 7.2% for the full year."
Mr. Price added, "During 2013 we returned significant capital to shareholders while remaining strongly capitalized and poised to respond to market opportunities. Although we expect 2014 will be challenging for both underwriting and investing, we will continue participating selectively in a variety of reinsurance and asset classes while prudently managing capital for the benefit of shareholders."
Results for the quarter ended December 31, 2013 are summarized as follows:
-- Net income was $48.6 million and diluted earnings per common share were
$1.71.
-- Gross premiums written were $149.7 million and net premiums written were
$148.1 million.
-- Net premiums earned were $148.3 million.
-- Combined ratio was 63.5%.
-- Net investment income was $17.9 million.
-- Net realized losses on investments were $0.8 million.
Results for the quarter ended December 31, 2013 as compared with the quarter ended December 31, 2012 are summarized as follows:
-- Net income was $48.6 million compared with net income of $121.5 million.
-- Gross premiums written increased $11.5 million (or 8.4%) and net
premiums written increased $14.2 million (or 10.6%).
-- Net premiums earned increased $3.6 million (or 2.5%).
-- Combined ratio increased 38.1 percentage points.
-- Net investment income decreased $4.1 million (or 18.6%).
-- Net realized losses on investments were $0.8 million compared with net
realized gains on investments of $18.5 million.
Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the quarter ended December 31, 2013 were $53.6 million, $75.1 million and $19.4 million, respectively, representing 36.2%, 50.7% and 13.1%, respectively, of total net premiums written. Combined ratios for these segments were 32.3%, 82.2% and 83.7%, respectively. Compared with the quarter ended December 31, 2012, net premiums written decreased $7.9 million (or 12.8%) in the Property and Marine segment and increased $7.4 million (or 11.0%) and $14.6 million (or 307.1%) in the Casualty and Finite Risk segments, respectively.
Results for the year ended December 31, 2013 are summarized as follows:
-- Net income was $223.3 million and diluted earnings per common share were
$7.35.
-- Gross premiums written were $579.8 million and net premiums written were
$567.1 million.
-- Net premiums earned were $553.4 million.
-- Combined ratio was 62.7%.
-- Net investment income was $72.0 million.
-- Net realized gains on investments were $23.9 million.
Results for the year ended December 31, 2013 as compared with the year ended December 31, 2012 are summarized as follows:
-- Net income was $223.3 million compared with net income of $327.2
million.
-- Gross premiums written increased $10.0 million (or 1.8%) and net
premiums written increased $2.1 million (or 0.4%).
-- Net premiums earned decreased $13.1 million (or 2.3%).
-- Combined ratio increased 0.2 percentage points.
-- Net investment income decreased $27.9 million (or 27.9%).
-- Net realized gains on investments decreased $64.8 million.
Net premiums written for Platinum's Property and Marine, Casualty and Finite Risk segments for the year ended December 31, 2013 were $229.5 million, $295.7 million and $41.9 million, respectively, representing 40.5%, 52.1% and 7.4%, respectively, of total net premiums written. Combined ratios for these segments were 46.7%, 70.8% and 96.5%, respectively. Compared with the year ended December 31, 2012, net premiums written decreased $26.7 million (or 10.4%) in the Property and Marine segment and increased $8.6 million (or 3.0%) and $20.2 million (or 93.2%) in the Casualty and Finite Risk segments, respectively.
Total assets were $3.9 billion as of December 31, 2013, a decrease of $409.4 million (or 9.4%) from December 31, 2012. Investments and cash and cash equivalents were $3.5 billion as of December 31, 2013, a decrease of $455.3 million (or 11.5%) from December 31, 2012.
Net unrealized gains on available-for-sale investments, net of deferred taxes, were $48.1 million as of December 31, 2013, a decrease of $9.3 million from September 30, 2013 and a decrease of $89.6 million from December 31, 2012.
During the quarter ended December 31, 2013, the Company repurchased 8,923 common shares for $0.5 million at a weighted average cost, including commissions, of $59.27 per share. During the year ended December 31, 2013, the Company repurchased 5,360,266 common shares for $303.3 million at a weighted average cost, including commissions, of $56.58 per share.
Shareholders' equity was $1.7 billion as of December 31, 2013, an increase of $47.8 million (or 2.8%) from September 30, 2013 and a decrease of $147.8 million (or 7.8%) as of December 31, 2012. Book value per common share was $62.07 as of December 31, 2013 based on 28.1 million common shares outstanding, an increase of $1.20 per share (or 2.0%) from $60.87 per share as of September 30, 2013 based on 27.9 million common shares outstanding and an increase of $4.17 per share (or 7.2%) from $57.90 per share 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 Wednesday, February 5, 2014 at 8:00 a.m. Eastern time. The call may be accessed by dialing 888-244-2488 (US and Canadian callers) or 913-905-3226 (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 9188115.
The teleconference will be recorded and a replay will be available from 11:00 a.m. Eastern time on Wednesday, February 5, 2014 until 11:00 a.m. Eastern time on Wednesday, February 12, 2014. To access the replay by telephone, dial 888-203-1112 (US and Canadian callers) or 719-457-0820 (international callers) and specify passcode 9188115. 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 return on equity, 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.
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Platinum Underwriters Holdings, Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
For the Three and Twelve Months Ended December 31, 2013 and 2012
($ and amounts in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
Revenue
Net premiums earned $148,267 $144,621 $553,413 $566,496
Net investment income 17,936 22,031 72,046 99,947
Net realized gains (losses) on investments (778) 18,455 23,920 88,754
Net impairment losses on investments (31) (149) (2,033) (3,031)
Other income (expense) 974 527 3,477 (239)
--- --- ----- ----
Total revenue 166,368 185,485 650,823 751,927
------- ------- ------- -------
Expenses
Net losses and loss adjustment expenses 46,639 (7,770) 167,446 183,660
Net acquisition expenses 32,560 28,412 123,767 115,437
Operating expenses 23,019 23,808 82,714 80,453
Net foreign currency exchange losses (gains) 358 292 (234) 1,055
Interest expense 4,784 4,777 19,125 19,098
----- ----- ------ ------
Total expenses 107,360 49,519 392,818 399,703
------- ------ ------- -------
Income before income taxes 59,008 135,966 258,005 352,224
Income tax expense 10,385 14,421 34,727 24,996
------ ------ ------ ------
Net income $48,623 $121,545 $223,278 $327,228
Earnings Per Common Share
Weighted average common shares outstanding 28,097 32,674 29,909 33,714
Basic earnings per common share $1.73 $3.71 $7.46 $9.67
Adjusted weighted average common shares outstanding 28,492 33,048 30,334 33,981
Diluted earnings per common share $1.71 $3.67 $7.35 $9.60
Comprehensive income
Net income $48,623 $121,545 $223,278 $327,228
Other comprehensive income (loss), net of deferred taxes (9,306) (12,697) (89,606) (8,945)
------ ------- ------- ------
Comprehensive income $39,317 $108,848 $133,672 $318,283
======= ======== ======== ========
Platinum Underwriters Holdings, Ltd.
Segment Reporting (Unaudited)
For the Three Months Ended December 31, 2013 and 2012
($ in thousands)
Three Months Ended December 31, 2013
------------------------------------
Property and Marine Casualty Finite Risk Total
------------------- -------- ----------- -----
Net premiums written $53,561 $75,121 $19,406 $148,088
------- ------- ------- --------
Net premiums earned 56,199 78,921 13,147 148,267
Net losses and loss adjustment expenses (1,005) 40,645 6,999 46,639
Net acquisition expenses 10,718 18,264 3,578 32,560
Other underwriting expenses 8,405 6,029 437 14,871
Segment underwriting income (loss)* $38,081 $13,983 $2,133 54,197
------- ------- ------
Net investment income 17,936
Net realized gains (losses) on investments (778)
Net impairment losses on investments (31)
Other income (expense) 974
Corporate expenses not allocated to segments (8,148)
Net foreign currency exchange (losses) gains (358)
Interest expense (4,784)
Income before income taxes $59,008
-------
Underwriting ratios:*
Net loss and loss adjustment expense (1.8%) 51.5% 53.2% 31.5%
Net acquisition expense 19.1% 23.1% 27.2% 22.0%
Other underwriting expense 15.0% 7.6% 3.3% 10.0%
Combined 32.3% 82.2% 83.7% 63.5%
---- ---- ---- ----
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 (losses) 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)
Interest expense (4,777)
Income before income taxes $135,966
--------
Underwriting ratios:*
Net loss and loss adjustment expense 69.9% (79.5%) 52.3% (5.4%)
Net acquisition expense 13.8% 22.7% 56.0% 19.6%
Other underwriting expense 13.6% 9.2% 7.5% 11.2%
Combined 97.3% (47.6%) 115.8% 25.4%
---- ------ ----- ----
* Segment underwriting income or loss and underwriting ratios are non-GAAP measures as defined by Regulation G. The underwriting ratios are calculated by dividing each item above by net premiums
earned.
Platinum Underwriters Holdings, Ltd.
Segment Reporting (Unaudited)
For the Twelve Months Ended December 31, 2013 and 2012
($ in thousands)
Twelve Months Ended December 31, 2013
-------------------------------------
Property and Marine Casualty Finite Risk Total
------------------- -------- ----------- -----
Net premiums written $229,507 $295,668 $41,946 $567,121
-------- -------- ------- --------
Net premiums earned 222,010 297,888 33,515 553,413
Net losses and loss adjustment expenses 34,421 115,888 17,137 167,446
Net acquisition expenses 38,342 71,648 13,777 123,767
Other underwriting expenses 30,898 23,149 1,439 55,486
------ ------ ----- ------
Segment underwriting income (loss)* $118,349 $87,203 $1,162 206,714
-------- ------- ------
Net investment income 72,046
Net realized gains on investments 23,920
Net impairment losses on investments (2,033)
Other income (expense) 3,477
Corporate expenses not allocated to segments (27,228)
Net foreign currency exchange (losses) gains 234
Interest expense (19,125)
-------
Income before income taxes $258,005
--------
Underwriting ratios:*
Net loss and loss adjustment expense 15.5% 38.9% 51.1% 30.3%
Net acquisition expense 17.3% 24.1% 41.1% 22.4%
Other underwriting expense 13.9% 7.8% 4.3% 10.0%
Combined 46.7% 70.8% 96.5% 62.7%
---- ---- ---- ----
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)
Interest expense (19,098)
-------
Income before income taxes $352,224
--------
Underwriting ratios:*
Net loss and loss adjustment expense 52.3% 14.9% 39.0% 32.4%
Net acquisition expense 13.5% 23.5% 64.5% 20.4%
Other underwriting expense 12.3% 7.8% 5.9% 9.7%
---- --- --- ---
Combined 78.1% 46.2% 109.4% 62.5%
---- ---- ----- ----
* Segment underwriting
income or loss and
underwriting ratios are
non-GAAP measures as
defined by Regulation G.
The underwriting ratios
are calculated by
dividing each item above
by net premiums earned.
Platinum Underwriters Holdings, Ltd.
Return on Equity (Unaudited)
For the Twelve Months Ended December 31, 2013 and 2012
($ in thousands)
2013 2012
---- ----
Net income $223,278 $327,228
-------- --------
Shareholders' equity,
beginning of the year 1,894,534 1,690,859
Weighted average adjustments for material
capital transactions:
Share repurchases (181,685) (68,818)
Other 12,521 1,551
------ -----
Adjusted shareholders'
equity, beginning of the
year $1,725,370 $1,623,592
---------- ----------
Return on equity 12.9% 20.2%
---- ----
Return on equity is a non-
GAAP measure as defined by
Regulation G. Return on
equity is calculated by
dividing net income
available to common
shareholders by the
beginning shareholders'
equity for the year,
adjusted for material
capital transactions
during the year.
SOURCE Platinum Underwriters Holdings, Ltd.
