Exhibit 99.1
Contact: | Lily Outerbridge Investor Relations (441) 298-0760 |
PLATINUM UNDERWRITERS HOLDINGS, LTD. REPORTS FOURTH QUARTER
AND YEAR ENDED DECEMBER 31, 2006 FINANCIAL RESULTS
HAMILTON, BERMUDA, FEBRUARY 20, 2007 —Platinum Underwriters Holdings, Ltd. (NYSE: PTP) today reported net income of $86.0 million, or $1.28 per diluted common share, for the quarter ended December 31, 2006 and net income of $329.7 million, or $4.96 per diluted common share, for the year ended December 31, 2006. The results for the quarter ended December 31, 2006 include net premiums earned of $315.7 million, a decrease of 28.7% from the same quarter last year, net favorable development of $23.7 million, compared with net favorable development of $12.0 million from the same quarter last year, and net investment income of $50.8 million, an increase of 36.6% from the same quarter last year.
Michael D. Price, Chief Executive Officer, commented, “Overall, 2006 was a successful year for Platinum. Our return on beginning common equity was approximately 23%. For both the quarter and the year, our underwriting results were strong due, in part, to the absence of major catastrophes and favorable prior period development. Investment income grew in the quarter and full year, aided significantly by positive cash flow from operations.”
Mr. Price added, “During an active but orderly January 1 renewal season we expanded our property catastrophe excess-of-loss business where rate adequacy for U.S.-exposed risks improved in line with our expectations. Renewals were mixed in other lines of business with modest additions in some areas and small reductions where rates, terms and conditions did not meet our standards. We believe this marks a strong start for 2007.”
Results for the quarter ended December 31, 2006 were summarized as follows:
• | Net income was $86.0 million or $1.28 per diluted common share. | ||
• | Net premiums written were $275.6 million and net premiums earned were $315.7 million. | ||
• | GAAP combined ratio was 81.3%. | ||
• | Net investment income, including interest on funds held, was $50.8 million. |
1
Results for the quarter ended December 31, 2006 compared to the quarter ended December 31, 2005 were summarized as follows:
• | Net income increased $188.5 million. | ||
• | Net premiums written decreased $115.2 million (or 29.5%) and net premiums earned decreased $127.1 million (or 28.7%). | ||
• | GAAP combined ratio decreased by 50.6 percentage points. | ||
• | Net investment income, which includes interest on funds held, increased $13.6 million (or 36.6%). |
Net premiums written for Platinum’s Property and Marine, Casualty and Finite Risk segments for the quarter ended December 31, 2006 were $91.1 million, $173.7 million and $10.8 million, respectively, representing 33.0%, 63.0% and 4.0%, respectively, of the total net premiums written. Combined ratios for these segments were 64.2%, 94.0% and 47.2%, respectively. Compared to the quarter ended December 31, 2005, net premiums written decreased by $30.7 million (or 25.2%), $14.1 million (or 7.5%) and $70.4 million (or 86.7%) respectively. |
Results for the year ended December 31, 2006 were summarized as follows:
• | Net income was $329.7 million or $4.96 per diluted common share. | ||
• | Net premiums written were $1.18 billion and net premiums earned were $1.34 billion. | ||
• | GAAP combined ratio was 83.6%. | ||
• | Net investment income, including interest on funds held, was $188.0 million. |
Results for the year ended December 31, 2006 compared to the year ended December 31, 2005 were summarized as follows:
• | Net income increased $467.1 million. | ||
• | Net premiums written decreased $541.1 million (or 31.5%) and net premiums earned decreased by $378.0 million (or 22.0%). | ||
• | GAAP combined ratio decreased by 30.9 percentage points. | ||
• | Net investment income, including interest on funds held, increased $58.5 million (or 45.2%). |
2
Net premiums written for Platinum’s Property and Marine and Casualty segments for the year ended December 31, 2006 were $424.9 million and $757.7 million, respectively, representing 36.1% and 64.4%, respectively, of the total net premiums written. Combined ratios for these segments were 57.2% and 96.6%, respectively. Compared to the year ended December 31, 2005, net premiums written decreased $150.1 million (or 26.1%) and $51.4 million (or 6.3%) respectively.
Net premiums written for Platinum’s Finite Risk segment for the year ended December 31, 2006 were ($6.0 million) representing (0.5%) of the total net premiums written. The combined ratio for this segment was 99.4% for the year ended December 31, 2006. Compared to the year ended December 31, 2005, net premiums written decreased $339.6 (or 101.8%) for the Finite Risk segment primarily due to the termination of two quota share contracts. As previously disclosed, one of these contracts was terminated on a cut-off basis which resulted in the return of approximately $56.6 million of previously written but unearned premium.
Total assets were $5.1 billion as of December 31, 2006. Total assets decreased $60.8 million (or 1.2%) from $5.2 billion as of December 31, 2005. Cash, cash equivalents and fixed maturity investments were $4.2 billion as of December 31, 2006, an increase of $398.5 million (or 10.4%) from $3.8 billion as of December 31, 2005.
Shareholders’ equity was $1.9 billion as of December 31, 2006, an increase of $317.8 million (or 20.6%) from $1.5 billion as of December 31, 2005. Book value per common share was $28.33 as of December 31, 2006 based on 59.7 million common shares outstanding, an increase of $5.11 (or 22.0%) from $23.22 based on 59.1 million common shares outstanding as of December 31, 2005.
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 Tuesday, February 20, 2007 at 11:00 a.m. Eastern time. The call can be accessed by dialing 800-810-0924 (US callers) or 913-981-4900 (international callers) or in a listen-only mode via the Investor Relations section of Platinum’s website atwww.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 2:00 p.m. Eastern time on Tuesday, February 20, 2007 until midnight Eastern time on Tuesday, February 27, 2007. To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457-0820 (international callers) and specify passcode: 2473366. The teleconference will also be archived on the Investor Relations section of Platinum’s website atwww.platinumre.com for the same period of time.
3
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. (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. The Company has a financial strength rating of A (Excellent) from A.M. Best Company, Inc. For further information, please visit Platinum’s website atwww.platinumre.com.
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. The Company has a financial strength rating of A (Excellent) from A.M. Best Company, Inc. For further information, please visit Platinum’s website atwww.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.
# # #
4
Platinum Underwriters Holdings, Ltd.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Three Months Unaudited) For the Three and Twelve Months Ended December 31, 2006 and 2005
($ in thousands, except per share amounts)
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Three Months Unaudited) For the Three and Twelve Months Ended December 31, 2006 and 2005
($ in thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, 2006 | December 31, 2005 | December 31, 2006 | December 31, 2005 | |||||||||||||
Revenue | ||||||||||||||||
Net premiums earned | $ | 315,726 | 442,825 | 1,336,701 | $ | 1,714,723 | ||||||||||
Net investment income | 50,822 | 37,195 | 187,987 | 129,445 | ||||||||||||
Net realized gains (losses) on investments | 1,068 | (1,984 | ) | 1,090 | (3,046 | ) | ||||||||||
Other expense | (945 | ) | (385 | ) | (2,872 | ) | (586 | ) | ||||||||
Total revenue | 366,671 | 477,651 | 1,522,906 | 1,840,536 | ||||||||||||
Expenses | ||||||||||||||||
Net losses and LAE | 174,936 | 462,257 | 760,602 | 1,505,425 | ||||||||||||
Net acquisition expenses | 65,638 | 107,100 | 285,923 | 403,135 | ||||||||||||
Other underwriting expenses | 16,232 | 14,467 | 71,296 | 55,669 | ||||||||||||
Corporate expenses | 7,530 | 3,792 | 24,194 | 14,158 | ||||||||||||
Net foreign currency exchange (gains) losses | (277 | ) | 241 | (738 | ) | 2,111 | ||||||||||
Interest expense | 5,453 | 6,820 | 21,805 | 20,006 | ||||||||||||
Loss on repurchase of debt | — | 2,486 | — | 2,486 | ||||||||||||
Total expenses | 269,512 | 597,163 | 1,163,082 | 2,002,990 | ||||||||||||
Income (loss) before income tax expense (benefit) | 97,159 | (119,512 | ) | 359,824 | (162,454 | ) | ||||||||||
Income tax expense (benefit) | 11,209 | (16,976 | ) | 30,167 | (24,967 | ) | ||||||||||
Net income (loss) | 85,950 | (102,536 | ) | 329,657 | (137,487 | ) | ||||||||||
Preferred dividends | 2,602 | 737 | 10,382 | 737 | ||||||||||||
Net income (loss) attributable to common shareholders | $ | 83,348 | (103,273 | ) | 319,275 | $ | (138,224 | ) | ||||||||
Basic | ||||||||||||||||
Weighted average common shares outstanding | 59,621 | 53,339 | 59,371 | 45,915 | ||||||||||||
Basic earnings (loss) per common share | $ | 1.40 | (1.94 | ) | 5.38 | $ | (3.01 | ) | ||||||||
Diluted | ||||||||||||||||
Adjusted weighted average common shares outstanding | 67,091 | 53,339 | 66,498 | 45,915 | ||||||||||||
Diluted earnings (loss) per common share | $ | 1.28 | (1.94 | ) | 4.96 | $ | (3.01 | ) | ||||||||
Comprehensive income (loss) | ||||||||||||||||
Net income (loss) | $ | 85,950 | (102,536 | ) | 329,657 | $ | (137,487 | ) | ||||||||
Other comprehensive income (loss), net of deferred taxes | 2,208 | (15,000 | ) | (3,571 | ) | (52,970 | ) | |||||||||
Comprehensive income (loss) | $ | 88,158 | (117,536 | ) | 326,086 | $ | (190,457 | ) | ||||||||
5
Platinum Underwriters Holdings, Ltd.
Condensed Consolidated Balance Sheets
As of December 31, 2006 and December 31, 2005
($ in thousands, except per share data)
Condensed Consolidated Balance Sheets
As of December 31, 2006 and December 31, 2005
($ in thousands, except per share data)
December 31, 2006 | December 31, 2005 | |||||||
Assets | ||||||||
Investments | $ | 3,350,162 | $ | 3,000,889 | ||||
Cash, cash equivalents and short-term investments | 878,775 | 829,539 | ||||||
Reinsurance premiums receivable | 377,183 | 567,449 | ||||||
Accrued investment income | 32,682 | 29,230 | ||||||
Reinsurance balances (prepaid and recoverable) | 67,636 | 76,109 | ||||||
Deferred acquisition costs | 82,610 | 130,800 | ||||||
Funds held by ceding companies | 238,499 | 291,629 | ||||||
Other assets | 66,020 | 228,730 | ||||||
Total assets | $ | 5,093,567 | $ | 5,154,375 | ||||
Liabilities | ||||||||
Unpaid losses and loss adjustment expenses | $ | 2,368,482 | $ | 2,323,990 | ||||
Unearned premiums | 349,792 | 502,018 | ||||||
Debt obligations | 292,840 | 292,840 | ||||||
Commissions payable | 140,835 | 186,654 | ||||||
Other liabilities | 83,557 | 308,624 | ||||||
Total liabilities | 3,235,506 | 3,614,126 | ||||||
Total shareholders’ equity | 1,858,061 | 1,540,249 | ||||||
Total liabilities and shareholders’ equity | $ | 5,093,567 | $ | 5,154,375 | ||||
Book value per common share (a) | $ | 28.33 | $ | 23.22 | ||||
(a) | Book value per common share is based on shareholders’ equity excluding capital attributable to preferred shares and actual common shares outstanding including unvested restricted common shares. Unvested restricted common shares were as follows: December 31, 2006 — 86,937 and December 31, 2005 - - 97,252. |
6
Platinum Underwriters Holdings, Ltd.
Segment Reporting
For the Three Months Ended December 31, 2006 and 2005 (Unaudited)
($ in thousands)
Segment Reporting
For the Three Months Ended December 31, 2006 and 2005 (Unaudited)
($ in thousands)
Property | ||||||||||||||||
and Marine | Casualty | Finite Risk | Total | |||||||||||||
Three Months Ended December 31, 2006 | ||||||||||||||||
Segment underwriting results | ||||||||||||||||
Net premiums written | $ | 91,023 | 173,725 | 10,825 | $ | 275,573 | ||||||||||
Net premiums earned | 106,637 | 191,173 | 17,916 | 315,726 | ||||||||||||
Net losses and LAE | 41,024 | 128,728 | 5,184 | 174,936 | ||||||||||||
Net acquisition expenses | 15,122 | 47,692 | 2,824 | 65,638 | ||||||||||||
Other underwriting expenses | 12,245 | 3,535 | 452 | 16,232 | ||||||||||||
Total underwriting expenses | 68,391 | 179,955 | 8,460 | 256,806 | ||||||||||||
Segment underwriting income (loss) | $ | 38,246 | 11,218 | 9,456 | 58,920 | |||||||||||
Net investment income | 50,822 | |||||||||||||||
Net realized gains (losses) on investments | 1,068 | |||||||||||||||
Net foreign currency exchange gains (losses) | 277 | |||||||||||||||
Other expense | (945 | ) | ||||||||||||||
Corporate expenses not allocated to segments | (7,530 | ) | ||||||||||||||
Interest expense | (5,453 | ) | ||||||||||||||
Income (loss) before income tax expense (benefit) | $ | 97,159 | ||||||||||||||
GAAP underwriting ratios: | ||||||||||||||||
Loss and LAE | 38.5 | % | 67.3 | % | 28.9 | % | 55.4 | % | ||||||||
Acquisition expense | 14.2 | % | 24.9 | % | 15.8 | % | 20.8 | % | ||||||||
Other underwriting expense | 11.5 | % | 1.8 | % | 2.5 | % | 5.1 | % | ||||||||
Combined | 64.2 | % | 94.0 | % | 47.2 | % | 81.3 | % | ||||||||
Three Months Ended December 31, 2005 | ||||||||||||||||
Segment underwriting results | ||||||||||||||||
Net premiums written | $ | 121,703 | 187,813 | 81,262 | $ | 390,778 | ||||||||||
Net premiums earned | 154,454 | 201,088 | 87,283 | 442,825 | ||||||||||||
Net losses and LAE | 264,442 | 136,422 | 61,393 | 462,257 | ||||||||||||
Net acquisition expenses | 24,546 | 51,135 | 31,419 | 107,100 | ||||||||||||
Other underwriting expenses | 6,479 | 6,511 | 1,477 | 14,467 | ||||||||||||
Total underwriting expenses | 295,467 | 194,068 | 94,289 | 583,824 | ||||||||||||
Segment underwriting income (loss) | $ | (141,013 | ) | 7,020 | (7,006 | ) | (140,999 | ) | ||||||||
Net investment income | 37,195 | |||||||||||||||
Net realized gains (losses) on investments | (1,984 | ) | ||||||||||||||
Net foreign currency exchange gains (losses) | (241 | ) | ||||||||||||||
Other expense | (385 | ) | ||||||||||||||
Corporate expenses not allocated to segments | (3,792 | ) | ||||||||||||||
Interest expense | (6,820 | ) | ||||||||||||||
Loss on repurchase of debt | (2,486 | ) | ||||||||||||||
Income (loss) before income tax expense (benefit) | $ | (119,512 | ) | |||||||||||||
GAAP underwriting ratios: | ||||||||||||||||
Loss and LAE | 171.2 | % | 67.8 | % | 70.3 | % | 104.4 | % | ||||||||
Acquisition expense | 15.9 | % | 25.4 | % | 36.0 | % | 24.2 | % | ||||||||
Other underwriting expense | 4.2 | % | 3.2 | % | 1.7 | % | 3.3 | % | ||||||||
Combined | 191.3 | % | 96.4 | % | 108.0 | % | 131.9 | % | ||||||||
The GAAP underwriting ratios are calculated by dividing each item above by net premiums earned.
7
Platinum Underwriters Holdings, Ltd.
Segment Reporting
For the Twelve Months Ended December 31, 2006 and 2005
($ in thousands)
Segment Reporting
For the Twelve Months Ended December 31, 2006 and 2005
($ in thousands)
Property | ||||||||||||||||
and Marine | Casualty | Finite Risk | Total | |||||||||||||
Twelve Months Ended December 31, 2006 | ||||||||||||||||
Segment underwriting results | ||||||||||||||||
Net premiums written | $ | 424,929 | 757,675 | (5,991 | ) | $ | 1,176,613 | |||||||||
Net premiums earned | 448,959 | 764,341 | 123,401 | 1,336,701 | ||||||||||||
Net losses and LAE | 145,900 | 522,815 | 91,887 | 760,602 | ||||||||||||
Net acquisition expenses | 70,905 | 188,717 | 26,301 | 285,923 | ||||||||||||
Other underwriting expenses | 39,887 | 27,022 | 4,387 | 71,296 | ||||||||||||
Total underwriting expenses | 256,692 | 738,554 | 122,575 | 1,117,821 | ||||||||||||
Segment underwriting income (loss) | $ | 192,267 | 25,787 | 826 | 218,880 | |||||||||||
Net investment income | 187,987 | |||||||||||||||
Net realized gains (losses) on investments | 1,090 | |||||||||||||||
Net foreign currency exchange gains (losses) | 738 | |||||||||||||||
Other expense | (2,872 | ) | ||||||||||||||
Corporate expenses not allocated to segments | (24,194 | ) | ||||||||||||||
Interest expense | (21,805 | ) | ||||||||||||||
Income (loss) before income tax expense (benefit) | $ | 359,824 | ||||||||||||||
GAAP underwriting ratios: | ||||||||||||||||
Loss and LAE | 32.5 | % | 68.4 | % | 74.5 | % | 56.9 | % | ||||||||
Acquisition expense | 15.8 | % | 24.7 | % | 21.3 | % | 21.4 | % | ||||||||
Other underwriting expense | 8.9 | % | 3.5 | % | 3.6 | % | 5.3 | % | ||||||||
Combined | 57.2 | % | 96.6 | % | 99.4 | % | 83.6 | % | ||||||||
Twelve Months Ended December 31, 2005 | ||||||||||||||||
Segment underwriting results | ||||||||||||||||
Net premiums written | $ | 575,055 | 809,031 | 333,636 | $ | 1,717,722 | ||||||||||
Net premiums earned | 569,173 | 789,629 | 355,921 | 1,714,723 | ||||||||||||
Net losses and LAE | 756,742 | 511,609 | 237,074 | 1,505,425 | ||||||||||||
Net acquisition expenses | 93,983 | 194,397 | 114,755 | 403,135 | ||||||||||||
Other underwriting expenses | 26,074 | 24,690 | 4,905 | 55,669 | ||||||||||||
Total underwriting expenses | 876,799 | 730,696 | 356,734 | 1,964,229 | ||||||||||||
Segment underwriting income (loss) | $ | (307,626 | ) | 58,933 | (813 | ) | (249,506 | ) | ||||||||
Net investment income | 129,445 | |||||||||||||||
Net realized gains (losses) on investments | (3,046 | ) | ||||||||||||||
Net foreign currency exchange gains (losses) | (2,111 | ) | ||||||||||||||
Other expense | (586 | ) | ||||||||||||||
Corporate expenses not allocated to segments | (14,158 | ) | ||||||||||||||
Interest expense | (20,006 | ) | ||||||||||||||
Loss on repurchase of debt | (2,486 | ) | ||||||||||||||
Income (loss) before income tax expense (benefit) | $ | (162,454 | ) | |||||||||||||
GAAP underwriting ratios: | ||||||||||||||||
Loss and LAE | 133.0 | % | 64.8 | % | 66.6 | % | 87.8 | % | ||||||||
Acquisition expense | 16.5 | % | 24.6 | % | 32.2 | % | 23.5 | % | ||||||||
Other underwriting expense | 4.6 | % | 3.1 | % | 1.4 | % | 3.2 | % | ||||||||
Combined | 154.1 | % | 92.5 | % | 100.2 | % | 114.5 | % | ||||||||
The GAAP underwriting ratios are calculated by dividing each item above by net premiums earned.
8