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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda (State or other jurisdiction of incorporation or organization) | 98-0416483 (I.R.S. Employer Identification No.) |
The Belvedere Building 69 Pitts Bay Road Pembroke, Bermuda (Address of principal executive offices) | HM 08 (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Common Shares, par value $0.01 per share | New York Stock Exchange | |
6.00% Series A Mandatory Convertible | ||
Preferred Shares par value $0.01 per share, | ||
liquidation preference $30.15 per share | New York Stock Exchange |
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(1) | significant weather-related or other natural or man-made disasters over which we have no control; | ||
(2) | the adequacy of our liability for unpaid losses and loss adjustment expenses, including, but not limited to, losses from Hurricanes Katrina, Rita and Wilma and the possibility that ultimate losses and loss adjustment expenses from these hurricanes may prove to be materially different from estimates made to date; | ||
(3) | the effectiveness of our loss limitation methods and pricing models; |
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(4) | our ability to maintain our A.M. Best Company, Inc. rating; | ||
(5) | conducting operations in a competitive environment; | ||
(6) | the cyclicality of the property and casualty reinsurance business; | ||
(7) | tax, regulatory or legal restrictions or limitations applicable to us or the property and casualty reinsurance business generally; | ||
(8) | our ability to maintain our business relationships with reinsurance brokers; | ||
(9) | the availability of retrocessional reinsurance on acceptable terms; | ||
(10) | market volatility and interest rate and currency exchange rate fluctuation; | ||
(11) | 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; and | ||
(12) | changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at our discretion. |
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• | Operate as a multi-class reinsurer.We seek to offer a broad range of reinsurance coverage to our ceding companies. We believe that this approach enables us to more effectively serve our clients, diversify our risk and leverage our capital. | ||
• | Focus on profitability, not market share.Our management team pursues a strategy that emphasizes profitability rather than market share. Key elements of this strategy are prudent risk selection, appropriate pricing and adjustment of our business mix to respond to changing market conditions. | ||
• | Exercise disciplined underwriting and risk management.We exercise underwriting and risk management discipline by: (i) maintaining a diverse spread of risk in our book of business across product lines and geographic zones, (ii) emphasizing excess-of-loss contracts over proportional contracts, (iii) managing our aggregate catastrophe exposure through the application of sophisticated property catastrophe modeling tools and (iv) monitoring our accumulating exposures on non-property catastrophe exposed coverages. | ||
• | Operate from a position of financial strength.As of December 31, 2006, we had a total capitalization of $2,108,061,000. Our capital position is unencumbered by any potential adverse development of unpaid losses for business written prior to January 1, 2002. Our investment strategy focuses on security and stability in our investment portfolio by maintaining a portfolio that consists of diversified, high quality, predominantly publicly traded fixed maturity securities. |
Years Ended December 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Property and Marine | ||||||||||||||||||||||||
Excess-of-loss | $ | 318,260 | 27 | % | 412,781 | 24 | % | $ | 366,184 | 22 | % | |||||||||||||
Proportional | 106,669 | 9 | % | 162,274 | 9 | % | 138,255 | 8 | % | |||||||||||||||
Subtotal Property and Marine | 424,929 | 36 | % | 575,055 | 33 | % | 504,439 | 30 | % | |||||||||||||||
Casualty | ||||||||||||||||||||||||
Excess-of-loss | 663,338 | 56 | % | 676,276 | 39 | % | 593,752 | 37 | % | |||||||||||||||
Proportional | 94,337 | 8 | % | 132,755 | 8 | % | 83,647 | 5 | % | |||||||||||||||
Subtotal Casualty | 757,675 | 64 | % | 809,031 | 47 | % | 677,399 | 42 | % | |||||||||||||||
Finite Risk | ||||||||||||||||||||||||
Excess-of-loss | 50,220 | 4 | % | 63,628 | 4 | % | 155,090 | 9 | % | |||||||||||||||
Proportional | (56,211 | ) | (4 | %) | 270,008 | 16 | % | 309,085 | 19 | % | ||||||||||||||
Subtotal Finite Risk | (5,991 | ) | 0 | % | 333,636 | 20 | % | 464,175 | 28 | % | ||||||||||||||
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Years Ended December 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Combined Segments | ||||||||||||||||||||||||
Excess-of-loss | 1,031,818 | 87 | % | 1,152,685 | 67 | % | 1,115,026 | 68 | % | |||||||||||||||
Proportional | 144,795 | 13 | % | 565,037 | 33 | % | 530,987 | 32 | % | |||||||||||||||
Total | $ | 1,176,613 | 100 | % | 1,717,722 | 100 | % | $ | 1,646,013 | 100 | % | |||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Property and Marine | ||||||||||||||||||||||||
United States | $ | 275,870 | 23 | % | 401,270 | 23 | % | $ | 320,506 | 19 | % | |||||||||||||
International | 149,059 | 13 | % | 173,785 | 10 | % | 183,933 | 11 | % | |||||||||||||||
Subtotal Property and Marine | 424,929 | 36 | % | 575,055 | 33 | % | 504,439 | 30 | % | |||||||||||||||
Casualty | ||||||||||||||||||||||||
United States | 686,278 | 58 | % | 718,103 | 42 | % | 601,878 | 37 | % | |||||||||||||||
International | 71,397 | 6 | % | 90,928 | 5 | % | 75,521 | 5 | % | |||||||||||||||
Subtotal Casualty | 757,675 | 64 | % | 809,031 | 47 | % | 677,399 | 42 | % | |||||||||||||||
Finite Risk | ||||||||||||||||||||||||
United States | (12,626 | ) | (1 | %) | 329,843 | 19 | % | 428,024 | 26 | % | ||||||||||||||
International | 6,635 | 1 | % | 3,793 | 1 | % | 36,151 | 2 | % | |||||||||||||||
Subtotal Finite Risk | (5,991 | ) | 0 | % | 333,636 | 20 | % | 464,175 | 28 | % | ||||||||||||||
Combined Segments | ||||||||||||||||||||||||
United States | 949,522 | 80 | % | 1,449,216 | 84 | % | 1,350,408 | 82 | % | |||||||||||||||
International | 227,091 | 20 | % | 268,506 | 16 | % | 295,605 | 18 | % | |||||||||||||||
Total | $ | 1,176,613 | 100 | % | 1,717,722 | 100 | % | $ | 1,646,013 | 100 | % | |||||||||||||
• | Property.We provide reinsurance coverage for damage to property and crops. Our catastrophe excess-of-loss reinsurance contracts provide a defined limit of liability, permitting us to quantify our aggregate maximum loss exposure for various catastrophe events. Quantification of loss exposure is fundamental to our ability to manage our loss exposure through geographical zone limits and program limits. In addition, when our pricing standards are met, we write other property coverages, including per-risk excess-of-loss or proportional treaties. We have also entered into an agreement with an underwriting manager to underwrite property facultative and program reinsurance risks. |
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• | Marine.We provide reinsurance coverage for marine and offshore energy insurance programs. Coverages reinsured include hull damage, protection and indemnity, cargo damage, satellite damage and general marine liability. Within Marine, we also write commercial and general aviation reinsurance. Marine reinsurance treaties include excess-of-loss as well as proportional treaties. We emphasize excess-of-loss treaties that allow our evaluation using experience and exposure pricing models. |
• | Umbrella Liability.An umbrella policy is an excess insurance policy that provides coverage, typically for general liability or automobile liability, when claims, individually or in the aggregate, exceed the limit of the original policy underlying the excess policy. A claim must exceed the limit of some underlying policy for the claim to be considered under an umbrella policy. We primarily reinsure commercial umbrella liability policies. | ||
• | General and Product Liability.We provide reinsurance of various third party liability coverages to both small and large insureds in both commercial and personal lines predominantly on an excess-of-loss basis. This business includes commercial, farmowners and homeowners policies as well as third party liability coverages such as product liability. | ||
• | Professional Liability.We write reinsurance treaties for professional liability programs, including directors and officers, employment practices, and errors and omissions for professionals such as accountants, lawyers, medical professionals, architects and engineers. In most circumstances, the underlying insurance products for these lines of business are written on a claims made basis, which requires claims related to the liabilities insured under the policy to be submitted to the insurer during a specified coverage period. | ||
• | Workers’ Compensation.We reinsure workers’ compensation on a catastrophic basis as well as on a per-claimant basis. We may provide full statutory coverage or coverage that is subject to specific carve-outs. Our predominant exposure to workers’ compensation would generally arise from a single occurrence, such as a factory explosion or earthquake, involving claims from more than one employer. |
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• | Casualty Clash.Casualty clash reinsurance responds to claims arising from a single set of circumstances covered by more than one insurance policy or multiple claimants on one policy. This type of reinsurance is analogous to property catastrophe reinsurance, but written for casualty lines of business. Our casualty clash treaties are generally excess-of-loss contracts with both occurrence limits and aggregate limits. | ||
• | Automobile Liability.Automobile insurance policies provide first party coverage for damage to the insured’s vehicle and third party coverage for the insured’s liability to other parties for injuries and for damage to their property due to the use of the insured vehicle. These insurance policies may also provide coverage for uninsured motorists and medical payments. We generally reinsure automobile liability on an excess-of-loss basis. Our predominant exposure arises from third party liability claims and the related legal defense costs. | ||
• | Surety.Our surety business relates to the reinsurance of risks associated with commercial and contract surety bonds issued to third parties to guarantee the performance of an obligation by the principal under the bond. Commercial bonds guarantee the performance of compliance obligations arising out of regulatory or statutory requirements. Contract bonds guarantee the performance of contractual obligations between two parties and include payment and performance bonds. The majority of our surety treaties are written on an excess-of-loss basis with an aggregate limit. | ||
• | Trade Credit.Trade credit insurance is purchased by companies to ensure that invoices for goods and services provided to their customers are paid on time. Our trade credit coverages provide reinsurance for financial losses sustained through the failure of an insured’s customers to pay for goods or services supplied to them. We reinsure trade credit both on a proportional and an excess-of-loss basis. | ||
• | Accident and Health.We provide accident and health reinsurance, most often covering employer self-insured or fully insured health plans, on a quota share and excess-of-loss basis. We also write reinsurance of student health insurance, sports disability, Medicare and Medicare supplement and other forms of accident and health insurance. |
• | Finite quota share.Under finite quota share reinsurance contracts, the reinsurer agrees to indemnify a ceding company for a percentage of its losses up to an aggregate maximum or cap in return for a percentage of the ceding company’s premium, less a ceding commission. The expected benefit to the ceding company provided by finite quota share reinsurance is increased underwriting capacity of the ceding company and a sharing of premiums and losses with the |
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reinsurer. These contracts often provide broad protection and may cover multiple classes of a ceding company’s business. Unlike traditional quota share reinsurance agreements, these contracts often provide for profit commissions which take into account investment income for purposes of calculating the reinsurer’s profit on business ceded. Additionally, finite quota share contracts are often written on a funds withheld basis, meaning the parties agree that funds that would normally be remitted to a reinsurer are withheld by the ceding company. |
• | Multi-year excess-of-loss.These reinsurance contracts often complement ceding companies’ traditional excess-of-loss reinsurance programs. This type of contract often carries an up-front premium plus additional premiums which are dependent on the magnitude of losses claimed by the ceding company under the contract. The expected benefit to the ceding company on multi-year excess-of-loss reinsurance is that the ceding company has the ability to negotiate specific terms and conditions that remain applicable over multiple years of coverage. These contracts may cover multiple classes of a ceding company’s business and typically provide the benefit of reducing the impact of large or catastrophic losses on a ceding company’s underwriting results. In general, these contracts are designed so that the ceding company funds the expected level of loss activity over the multi-year period. The reinsurer incorporates a profit margin to cover its costs and the risk that losses are worse than expected. The payment of premiums based on the magnitude of losses claimed is intended to benefit the ceding company by linking its own loss experience to the actual cost of reinsurance over time. The multiple year term and premium structure of multi-year excess-of-loss reinsurance contracts are not typically found in traditional reinsurance contracts. | ||
• | Whole account aggregate stop loss.Aggregate stop loss reinsurance contracts provide broad protection against a wide range of contingencies that are difficult to address with traditional reinsurance, including inadequate pricing by a ceding company or higher frequency of claims than the ceding company expected. The reinsurer on a whole account aggregate stop loss contract agrees to indemnify a ceding company for aggregate losses in excess of a deductible specified in the contract. These contracts can be offered on a single or multi-year basis, and may provide catastrophic and attritional loss protection. The benefit of whole account aggregate stop loss contracts to ceding companies is that such contracts provide the broadest possible protection of a ceding company’s underwriting results which is not generally available in the traditional reinsurance market. Unlike traditional reinsurance contracts, these contracts often contain sub-limits of coverage for losses on certain classes of business or exposures. These contracts are often written on a funds withheld basis. In addition, these contracts often include provisions for profit commissions which take into account investment income for purposes of calculating the reinsurer’s profit on business ceded. |
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2006 | 2005 | 2004 | ||||||||||
Net unpaid losses and LAE as of the beginning of the year | $ | 2,268,655 | 1,379,227 | $ | 731,918 | |||||||
Net incurred related to: | ||||||||||||
Current year | 811,250 | 1,577,944 | 1,101,820 | |||||||||
Prior years | (50,648 | ) | (72,519 | ) | (82,016 | ) | ||||||
Total net incurred losses and LAE | 760,602 | 1,505,425 | 1,019,804 | |||||||||
Net paid losses and LAE: | ||||||||||||
Current year | 96,112 | 210,306 | 174,870 | |||||||||
Prior years | 624,477 | 390,598 | 205,889 | |||||||||
Total net paid losses and LAE | 720,589 | 600,904 | 380,759 | |||||||||
Effects of foreign currency exchange rate changes | 17,559 | (15,093 | ) | 8,264 | ||||||||
Net unpaid losses and LAE as of the end of the year | 2,326,227 | 2,268,655 | 1,379,227 | |||||||||
Reinsurance recoverable | 42,255 | 55,335 | 1,728 | |||||||||
Gross unpaid losses and LAE at end of the year | $ | 2,368,482 | 2,323,990 | $ | 1,380,955 | |||||||
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2002 | 2003 | 2004 | 2005 | 2006 | ||||||||||||||||
Net unpaid losses and LAE at end of year | $ | 281,659 | 731,918 | 1,379,227 | 2,268,655 | $ | 2,326,227 | |||||||||||||
Net unpaid losses and LAE re-estimated as of: | ||||||||||||||||||||
One year later | 224,693 | 649,902 | 1,306,708 | 2,215,635 | ||||||||||||||||
Two years later | 194,422 | 604,891 | 1,277,627 | |||||||||||||||||
Three years later | 176,884 | 603,293 | ||||||||||||||||||
Four years later | 175,683 | |||||||||||||||||||
Net cumulative redundancy | 105,976 | 128,625 | 101,600 | 53,020 | ||||||||||||||||
Adjustment for foreign currency exchange | 13,736 | 5,620 | (9,782 | ) | 3,984 | |||||||||||||||
Cumulative redundancy excluding foreign currency exchange | 119,712 | 134,245 | 91,818 | 57,004 | ||||||||||||||||
Net cumulative paid losses and LAE as of: | ||||||||||||||||||||
One year later | 41,709 | 205,889 | 388,700 | 624,006 | ||||||||||||||||
Two years later | 62,604 | 265,376 | 536,351 | |||||||||||||||||
Three years later | 73,908 | 320,399 | ||||||||||||||||||
Four years later | 90,982 | |||||||||||||||||||
Gross liability-end of year | 281,659 | 736,934 | 1,380,955 | 2,323,990 | 2,368,482 | |||||||||||||||
Reinsurance recoverable | — | 5,016 | 1,728 | 55,335 | 42,255 | |||||||||||||||
Net liability-end of year | 281,659 | 731,918 | 1,379,227 | 2,268,655 | 2,326,227 | |||||||||||||||
Gross liability-re-estimated | 175,683 | 608,404 | 1,279,319 | 2,269,819 | ||||||||||||||||
Gross cumulative redundancy | $ | 105,976 | 128,530 | 101,636 | 54,171 |
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U.S. Government | $ | 153,794 | ||
Corporate bonds | 1,527,211 | |||
Mortgage-backed and asset-backed securities | 1,328,967 | |||
Municipal bonds | 197,598 | |||
Foreign governments and states | 127,075 | |||
Subtotal — fixed maturity securities | 3,334,645 | |||
Preferred stocks | 10,772 | |||
Short-term investments | 27,123 | |||
Total | $ | 3,372,540 | ||
Fair Value | % of Total | |||||||
Aaa | $ | 2,068,357 | 61.8 | % | ||||
Aa | 512,978 | 15.3 | % | |||||
A | 670,974 | 20.1 | % | |||||
Baa | 93,108 | 2.8 | % | |||||
Total | $ | 3,345,417 | 100.0 | % | ||||
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Amortized | ||||||||
Cost | Fair Value | |||||||
Due in one year or less | $ | 400,723 | $ | 397,408 | ||||
Due from one to five years | 1,065,670 | 1,051,975 | ||||||
Due from five to ten years | 258,003 | 249,685 | ||||||
Due in ten or more years | 202,988 | 198,319 | ||||||
Mortgage and asset backed securities | 1,349,586 | 1,328,967 | ||||||
Total | $ | 3,276,970 | $ | 3,226,354 | ||||
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(1) | is required, with respect to its general business, to maintain a minimum solvency margin equal to the greatest of: |
(A) | $100,000,000; | ||
(B) | 50% of net premiums written (being gross premiums written less any premiums ceded by Platinum Bermuda, but Platinum Bermuda may not deduct more than 25% of gross premiums when computing net premiums written); and | ||
(C) | 15% of loss and other insurance reserves; |
(2) | is prohibited from declaring or paying any dividends during any financial year if it is in breach of its minimum solvency margin or minimum liquidity ratio or if the declaration or payment of such dividends would cause it to fail to meet such margin or ratio (and if it has failed to meet its minimum solvency margin or minimum liquidity ratio on the last day of any financial year, Platinum Bermuda is prohibited, without the approval of the Authority, from declaring or paying any dividends during the next financial year); | ||
(3) | is prohibited from declaring or paying in any financial year dividends of more than 25% of its total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) unless it files with the Authority (at least seven days before payment of such dividends) an affidavit stating that it will continue to meet the required margins; | ||
(4) | is prohibited, without the approval of the Authority, from reducing by 15% or more its total statutory capital as set out in its previous year’s financial statements, and any application for such approval must include an affidavit stating that it will continue to meet the required margins; and | ||
(5) | is required, at any time it fails to meet its solvency margin, within 30 days (45 days where total statutory capital and surplus falls to $75 million or less) after becoming aware of that failure or having reason to believe that such failure has occurred, to file with the Authority a written report containing certain information. |
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(1) | all or any part of the long-term business, other than long-term business that is reinsurance business, may be transferred only with and in accordance with the sanction of the applicable Bermuda court; and | ||
(2) | an insurer or reinsurer carrying on long-term business may only be wound-up or liquidated by order of the applicable Bermuda court, and this may increase the length of time and costs incurred in the winding-up of Platinum Bermuda when compared with a voluntary winding-up or liquidation. |
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(1) | 10% of statutory policyholders’ surplus (as determined under statutory accounting principles) as of December 31 of the prior year; or | ||
(2) | net investment income excluding realized capital gains (as determined under statutory accounting principles) for the twelve-month period ending on December 31 of the prior year and pro rata distribution of any class of securities of Platinum US, plus any amounts of net |
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investment income (excluding realized capital gains) in the three calendar years prior to the preceding year which have not been distributed. |
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Price Range of | ||||||||
Common Shares | ||||||||
Year | High | Low | ||||||
2006: | ||||||||
First Quarter | $ | 32.30 | $ | 28.00 | ||||
Second Quarter | 30.00 | 26.14 | ||||||
Third Quarter | 31.11 | 27.34 | ||||||
Fourth Quarter | $ | 31.41 | $ | 29.51 |
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Price Range of | ||||||||
Common Shares | ||||||||
Year | High | Low | ||||||
2005: | ||||||||
First Quarter | $ | 32.03 | $ | 29.02 | ||||
Second Quarter | 32.15 | 26.43 | ||||||
Third Quarter | 35.21 | 27.45 | ||||||
Fourth Quarter | $ | 31.70 | $ | 27.10 |
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Indexed Returns * | ||||||||||||||||||||
Years Ending December 31, | ||||||||||||||||||||
2002 | 2003 | 2004 | 2004 | 2006 | ||||||||||||||||
Platinum | 105.61 | 121.69 | 127.49 | 128.69 | 129.55 | |||||||||||||||
S&P 500 Index | 97.98 | 126.08 | 139.80 | 146.67 | 169.84 | |||||||||||||||
S&P 500 Property & Casualty Index | 96.57 | 122.07 | 134.79 | 155.16 | 175.14 |
* | Index value at November 1, 2002 — 100.00 |
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($ in millions, except per share amounts)
St. Paul Re | ||||||||||||||||||||||||
Platinum Underwriters Holdings, Ltd. | (Predecessor) | |||||||||||||||||||||||
As of and | ||||||||||||||||||||||||
for the | Period from | |||||||||||||||||||||||
period from | January 1, | |||||||||||||||||||||||
April 19, 2002 | 2002 | |||||||||||||||||||||||
through | through | |||||||||||||||||||||||
Years ended December 31, | December 31, | November 1, | ||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2002 | |||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||
Net premiums written | $ | 1,176.6 | 1,717.7 | 1,646.0 | 1,172.1 | $ | 298.1 | $ | 1,007.0 | |||||||||||||||
Net premiums earned | 1,336.7 | 1,714.7 | 1,447.9 | 1,067.5 | 107.1 | 1,102.0 | ||||||||||||||||||
Net investment income | 188.0 | 129.4 | 84.5 | 57.6 | 5.2 | |||||||||||||||||||
Net losses and LAE | 760.6 | 1,505.4 | 1,019.8 | 584.2 | 60.4 | 791.0 | ||||||||||||||||||
Underwriting expenses | 357.2 | 458.8 | 381.0 | 320.7 | 37.6 | $ | 319.0 | |||||||||||||||||
Net income (loss) | 329.7 | (137.5 | ) | 84.8 | 144.8 | 6.4 | ||||||||||||||||||
Basic earnings (loss) per common share | 5.38 | (3.01 | ) | 1.96 | 3.37 | 0.15 | ||||||||||||||||||
Diluted earnings (loss) per common share | 4.96 | (3.01 | ) | 1.81 | 3.09 | 0.15 | ||||||||||||||||||
Dividends declared per common share | $ | 0.32 | 0.32 | 0.32 | 0.32 | $ | — |
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Platinum Underwriters Holdings, Ltd. | ||||||||||||||||||||
As of and | ||||||||||||||||||||
for the | ||||||||||||||||||||
period from | ||||||||||||||||||||
April 19, 2002 | ||||||||||||||||||||
through | ||||||||||||||||||||
Years ended December 31, | December 31, | |||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total investments and cash | $ | 4,228.9 | 3,830.4 | 2,456.9 | 1,790.5 | $ | 1,346.7 | |||||||||||||
Premiums receivable | 377.2 | 567.4 | 580.0 | 487.4 | 5.6 | |||||||||||||||
Total assets | 5,093.6 | 5,154.4 | 3,422.0 | 2,485.6 | 1,644.9 | |||||||||||||||
Unpaid losses and LAE | 2,368.5 | 2,324.0 | 1,381.0 | 736.9 | 281.7 | |||||||||||||||
Unearned premiums | 349.8 | 502.0 | 502.4 | 306.0 | 191.0 | |||||||||||||||
Debt obligations | 292.8 | 292.8 | 137.5 | 137.5 | 137.5 | |||||||||||||||
Shareholders’ equity | 1,858.1 | 1,540.2 | 1,133.0 | 1,067.2 | 921.2 | |||||||||||||||
Book value per common share | $ | 28.33 | 23.22 | 26.30 | 24.79 | $ | 21.42 | |||||||||||||
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Property | ||||||||||||||||
and Marine | Casualty | Finite Risk | Total | |||||||||||||
December 31, 2006 | ||||||||||||||||
Gross case reserves | $ | 336,503 | 269,447 | 113,897 | $ | 719,847 | ||||||||||
Gross IBNR | 235,932 | 1,198,432 | 214,271 | 1,648,635 | ||||||||||||
Total gross unpaid losses and LAE | $ | 572,435 | 1,467,879 | 328,168 | $ | 2,368,482 | ||||||||||
December 31, 2005 | ||||||||||||||||
Gross case reserves | $ | 292,722 | 152,872 | 66,151 | $ | 511,745 | ||||||||||
Gross IBNR | 570,783 | 954,444 | 287,018 | 1,812,245 | ||||||||||||
Total gross unpaid losses and LAE | $ | 863,505 | 1,107,316 | 353,169 | $ | 2,323,990 | ||||||||||
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2006 | 2005 | Increase | ||||||||||
Net income (loss) | $ | 329,657 | (137,487 | ) | $ | 467,144 |
Gross losses and LAE | $ | 654,090 | ||
Retrocessional reinsurance | (73,800 | ) | ||
Net losses and LAE | 580,290 | |||
Additional net premiums earned | (46,666 | ) | ||
Profit commissions | (3,654 | ) | ||
Net adverse impact on income before income taxes | $ | 529,970 | ||
Increase | ||||||||||||
2006 | 2005 | (decrease) | ||||||||||
Gross premiums written | $ | 1,275,200 | 1,765,155 | $ | (489,955 | ) | ||||||
Ceded premiums written | 98,587 | 47,433 | 51,154 | |||||||||
Net premiums written | 1,176,613 | 1,717,722 | (541,109 | ) | ||||||||
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Increase | ||||||||||||
2006 | 2005 | (decrease) | ||||||||||
Gross premiums earned | 1,434,282 | 1,757,138 | (322,856 | ) | ||||||||
Ceded premiums earned | 97,581 | 42,415 | 55,166 | |||||||||
Net premiums earned | $ | 1,336,701 | 1,714,723 | $ | (378,022 | ) | ||||||
2006 | 2005 | Decrease | ||||||||||
Net losses and LAE | $ | 760,602 | 1,505,425 | $ | (744,823 | ) | ||||||
Net loss and LAE ratios | 56.9 | % | 87.8 | % | (30.9) points |
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2006 | 2005 | Decrease | ||||||||||
Net acquisition expenses | $ | 285,923 | 403,135 | $ | (117,212 | ) | ||||||
Net acquisition expense ratios | 21.4 | % | 23.5 | % | (2.1) points |
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Increase | ||||||||||||
2006 | 2005 | (decrease) | ||||||||||
Income taxes (benefit) | $ | 30,167 | (24,967 | ) | $ | 55,134 | ||||||
Effective tax rates | 8.4 | % | 15.4 | % | (7.0) points |
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2005 | 2004 | Decrease | ||||||||||
Net income (loss) | $ | (137,487 | ) | 84,783 | $ | (222,270 | ) |
2005 | 2004 | |||||||
Gross losses and LAE | $ | 654,090 | $ | 230,475 | ||||
Retrocessional reinsurance | (73,800 | ) | — | |||||
Net losses and LAE | 580,290 | 230,475 | ||||||
Additional net premiums earned | (46,666 | ) | (29,265 | ) | ||||
Profit commissions | (3,654 | ) | (10,243 | ) | ||||
Net adverse impact on underwriting results | $ | 529,970 | $ | 190,967 | ||||
2005 | 2004 | Increase | ||||||||||
Gross premiums written | $ | 1,765,155 | 1,659,790 | $ | 105,365 | |||||||
Ceded premiums written | 47,433 | 13,777 | 33,656 | |||||||||
Net premiums written | 1,717,722 | 1,646,013 | 71,709 | |||||||||
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2005 | 2004 | Increase | ||||||||||
Gross premiums earned | 1,757,138 | 1,465,058 | 292,080 | |||||||||
Ceded premiums earned | 42,415 | 17,123 | 25,292 | |||||||||
Net premiums earned | $ | 1,714,723 | 1,447,935 | $ | 266,788 | |||||||
2005 | 2004 | Increase | ||||||||||
Net losses and LAE | $ | 1,505,425 | 1,019,804 | $ | 485,621 | |||||||
Net loss and LAE ratios | 87.8 | % | 70.4 | % | 17.4 points |
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2005 | 2004 | Increase | ||||||||||
Net acquisition expenses | $ | 403,135 | 327,821 | $ | 75,314 | |||||||
Net acquisition expense ratios | 23.5 | % | 22.6 | % | 0.9 points |
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2005 | 2004 | Decrease | ||||||||||
Income tax expense (benefit) | $ | (24,967 | ) | 30,349 | $ | (55,316 | ) | |||||
Effective tax rates | 15.4 | % | 26.4 | % | (11.0) points |
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Property | ||||||||||||||||
and Marine | Casualty | Finite Risk | Total | |||||||||||||
Year ended December 31, 2006: | ||||||||||||||||
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 | ||||||||||||
Segment underwriting income | $ | 192,267 | 25,787 | 826 | 218,880 | |||||||||||
Net investment income | 187,987 | |||||||||||||||
Net realized gains on investments | 1,090 | |||||||||||||||
Net foreign currency exchange gains | 738 | |||||||||||||||
Other expense | (2,872 | ) | ||||||||||||||
Corporate expenses not allocated to segments | (24,194 | ) | ||||||||||||||
Interest expense | (21,805 | ) | ||||||||||||||
Income before income tax expense | $ | 359,824 | ||||||||||||||
Ratios: | ||||||||||||||||
Net loss and LAE | 32.5 | % | 68.4 | % | 74.5 | % | 56.9 | % | ||||||||
Net 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 | % | ||||||||
Year ended December 31, 2005: | ||||||||||||||||
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 | ||||||||||||
Segment underwriting income (loss) | $ | (307,626 | ) | 58,933 | (813 | ) | (249,506 | ) | ||||||||
Net investment income | 129,445 | |||||||||||||||
Net realized losses on investments | (3,046 | ) | ||||||||||||||
Net foreign currency exchange 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 | ) | ||||||||||||||
Loss before income tax benefit | $ | (162,454 | ) | |||||||||||||
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Property | ||||||||||||||||
and Marine | Casualty | Finite Risk | Total | |||||||||||||
Ratios: | ||||||||||||||||
Net loss and LAE | 133.0 | % | 64.8 | % | 66.6 | % | 87.8 | % | ||||||||
Net 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 | % | ||||||||
Year ended December 31, 2004 | ||||||||||||||||
Net premiums written | $ | 504,439 | 677,399 | 464,175 | $ | 1,646,013 | ||||||||||
Net premiums earned | 485,135 | 611,893 | 350,907 | 1,447,935 | ||||||||||||
Net losses and LAE | 349,557 | 418,355 | 251,892 | 1,019,804 | ||||||||||||
Net acquisition expenses | 76,360 | 151,649 | 99,812 | 327,821 | ||||||||||||
Other underwriting expenses | 27,827 | 19,086 | 6,224 | 53,137 | ||||||||||||
Segment underwriting income | $ | 31,391 | 22,803 | (7,021 | ) | 47,173 | ||||||||||
Net investment income | 84,532 | |||||||||||||||
Net realized gains on investments | 1,955 | |||||||||||||||
Net foreign currency exchange gains | 725 | |||||||||||||||
Other income | 3,211 | |||||||||||||||
Corporate expenses not allocated to segments | (13,196 | ) | ||||||||||||||
Interest expense | (9,268 | ) | ||||||||||||||
Income before income tax expense | $ | 115,132 | ||||||||||||||
Ratios: | ||||||||||||||||
Net loss and LAE | 72.1 | % | 68.4 | % | 71.8 | % | 70.4 | % | ||||||||
Net acquisition expense | 15.7 | % | 24.8 | % | 28.4 | % | 22.6 | % | ||||||||
Other underwriting expense | 5.7 | % | 3.1 | % | 1.8 | % | 3.7 | % | ||||||||
Combined | 93.5 | % | 96.3 | % | 102.0 | % | 96.7 | % | ||||||||
Increase | ||||||||||||
2006 | 2005 | (decrease) | ||||||||||
Gross premiums written | $ | 514,316 | 596,576 | $ | (82,260 | ) | ||||||
Ceded premiums written | 89,387 | 21,521 | 67,866 | |||||||||
Net premiums written | 424,929 | 575,055 | (150,126 | ) | ||||||||
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Increase | ||||||||||||
2006 | 2005 | (decrease) | ||||||||||
Gross premiums earned | 535,988 | 586,500 | (50,512 | ) | ||||||||
Ceded premiums earned | 87,029 | 17,327 | 69,702 | |||||||||
Net premiums earned | $ | 448,959 | 569,173 | $ | (120,214 | ) | ||||||
2006 | 2005 | Decrease | ||||||||||
Net losses and LAE | $ | 145,900 | 756,742 | $ | (610,842 | ) | ||||||
Net loss and LAE ratios | 32.5 | % | 133.0 | % | (100.5) points |
2006 | 2005 | Decrease | ||||||||||
Net acquisition expenses | $ | 70,905 | 93,983 | $ | (23,078 | ) | ||||||
Net acquisition expense ratios | 15.8 | % | 16.5 | % | (0.7) point |
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2005 | 2004 | Increase | ||||||||||
Gross premiums written | $ | 596,576 | 517,468 | $ | 79,108 | |||||||
Ceded premiums written | 21,521 | 13,029 | 8,492 | |||||||||
Net premiums written | 575,055 | 504,439 | 70,616 | |||||||||
Gross premiums earned | 586,500 | 501,040 | 85,460 | |||||||||
Ceded premiums earned | 17,327 | 15,905 | 1,422 | |||||||||
Net premiums earned | $ | 569,173 | 485,135 | $ | 84,038 | |||||||
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2005 | 2004 | Increase | ||||||||||
Net losses and LAE | $ | 756,742 | 349,557 | $ | 407,185 | |||||||
Net loss and LAE ratios | 133.0 | % | 72.1 | % | 60.9 points |
2005 | 2004 | Increase | ||||||||||
Net acquisition expenses | $ | 93,983 | 76,360 | $ | 17,623 | |||||||
Net acquisition expense ratios | 16.5 | % | 15.7 | % | 0.8 point |
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2006 | 2005 | Decrease | ||||||||||
Gross premiums written | $ | 757,749 | 809,164 | $ | (51,415 | ) | ||||||
Ceded premiums written | 74 | 133 | (59 | ) | ||||||||
Net premiums written | 757,675 | 809,031 | (51,356 | ) | ||||||||
Gross premiums earned | 764,414 | 790,290 | (25,876 | ) | ||||||||
Ceded premiums earned | 73 | 661 | (588 | ) | ||||||||
Net premiums earned | $ | 764,341 | 789,629 | $ | (25,288 | ) | ||||||
2006 | 2005 | Increase | ||||||||||
Net losses and LAE | $ | 522,815 | 511,609 | $ | 11,206 | |||||||
Net loss and LAE ratios | 68.4 | % | 64.8 | % | 3.6 points |
Increase | ||||||||||||
2006 | 2005 | (decrease) | ||||||||||
Net acquisition expenses | $ | 188,717 | 194,397 | $ | (5,680 | ) | ||||||
Net acquisition expense ratios | 24.7 | % | 24.6 | % | 0.1 point |
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Increase | ||||||||||||
2005 | 2004 | (decrease) | ||||||||||
Gross premiums written | $ | 809,164 | 678,147 | $ | 131,017 | |||||||
Ceded premiums written | 133 | 748 | (615 | ) | ||||||||
Net premiums written | 809,031 | 677,399 | 131,632 | |||||||||
Gross premiums earned | 790,290 | 613,111 | 177,179 | |||||||||
Ceded premiums earned | 661 | 1,218 | (557 | ) | ||||||||
Net premiums earned | $ | 789,629 | 611,893 | $ | 177,736 | |||||||
Increase | ||||||||||||
2005 | 2004 | (decrease) | ||||||||||
Net losses and LAE | $ | 511,609 | 418,355 | $ | 93,254 | |||||||
Net loss and LAE ratios | 64.8 | % | 68.4 | % | (3.6) points |
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Increase | ||||||||||||
2005 | 2004 | (decrease) | ||||||||||
Net acquisition expenses | $ | 194,397 | 151,649 | $ | 42,748 | |||||||
Net acquisition expense ratios | 24.6 | % | 24.8 | % | (0.2) point |
2006 | 2005 | Decrease | ||||||||||
Gross premiums written | $ | 3,135 | 359,415 | $ | (356,280 | ) | ||||||
Ceded premiums written | 9,126 | 25,779 | (16,653 | ) | ||||||||
Net premiums written | (5,991 | ) | 333,636 | (339,627 | ) | |||||||
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2006 | 2005 | Decrease | ||||||||||
Gross premiums earned | 133,880 | 380,348 | (246,468 | ) | ||||||||
Ceded premiums earned | 10,479 | 24,427 | (13,948 | ) | ||||||||
Net premiums earned | $ | 123,401 | 355,921 | $ | (232,520 | ) | ||||||
2006 | 2005 | Decrease | ||||||||||
Net losses and LAE | $ | 91,887 | 237,074 | $ | (145,187 | ) | ||||||
Net acquisition expenses | 26,301 | 114,755 | (88,454 | ) | ||||||||
Net losses, LAE and acquisition expenses | $ | 118,188 | 351,829 | $ | (233,641 | ) | ||||||
Net loss, LAE and acquisition expense ratios | 95.8 | % | 98.8 | % | (3.0) points |
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Increase | ||||||||||||
2005 | 2004 | (decrease) | ||||||||||
Gross premiums written | $ | 359,415 | 464,175 | $ | (104,760 | ) | ||||||
Ceded premiums written | 25,779 | — | 25,779 | |||||||||
Net premiums written | 333,636 | 464,175 | (130,539 | ) | ||||||||
Gross premiums earned | 380,348 | 350,907 | 29,441 | |||||||||
Ceded premiums earned | 24,427 | — | 24,427 | |||||||||
Net premiums earned | $ | 355,921 | 350,907 | $ | 5,014 | |||||||
Increase | ||||||||||||
2005 | 2004 | (decrease) | ||||||||||
Net losses and LAE | $ | 237,074 | 251,892 | $ | (14,818 | ) | ||||||
Net acquisition expenses | 114,755 | 99,812 | 14,943 | |||||||||
Net losses, LAE and acquisition expenses | $ | 351,829 | 351,704 | $ | 125 | |||||||
Net loss, LAE and acquisition expense ratios | 98.8 | % | 100.2 | % | (1.4) points |
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2006 | 2005 | Increase | ||||||||||
Cash and cash equivalents | $ | 851,652 | 820,746 | $ | 30,906 | |||||||
Fixed maturity securities | 3,334,645 | 2,987,703 | 346,942 | |||||||||
Preferred stocks | 10,772 | 8,186 | 2,586 | |||||||||
Short-term investments | 27,123 | 8,793 | 18,330 | |||||||||
Total | $ | 4,224,192 | 3,825,428 | $ | 398,764 | |||||||
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1 - 3 | 3 - 5 | |||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | years | Years | More than 5 years | |||||||||||||||
Series B Remarketed Notes due November 16, 2007(1) | $ | 42,840 | 42,840 | — | — | $ | — | |||||||||||||
Series B Notes due June 1, 2017(1) | 250,000 | — | — | — | 250,000 | |||||||||||||||
Scheduled interest payments | 199,604 | 21,479 | 37,500 | 37,500 | 103,125 | |||||||||||||||
Subtotal — Debt Obligations | 492,444 | 64,319 | 37,500 | 37,500 | 353,125 | |||||||||||||||
Operating Leases(2) | 14,748 | 2,707 | 7,194 | 3,880 | 967 | |||||||||||||||
Gross unpaid losses and LAE(3) | $ | 2,368,482 | 646,063 | 779,970 | 427,186 | $ | 515,263 |
(1) | See note 5 of the Notes to the Consolidated Financial Statements. | |
(2) | See note 12 of the Notes to the Consolidated Financial Statements. | |
(3) | There are generally no stated amounts related to reinsurance contracts. Both the amounts and timing of future loss and LAE payments are estimates and subject to the inherent variability of legal and market conditions affecting the obligations and make the timing of cash outflows uncertain. The ultimate amount and timing of unpaid losses and LAE could differ materially from the amounts in the table above. Further, the gross unpaid losses and LAE do not represent all of the obligations that will arise under the contracts, but rather only the estimated liability incurred through December 31, 2006. There are reinsurance contracts that have terms extending into 2007 under which additional obligations will be incurred. |
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Interest Rate Shift in Basis Points | ||||||||||||||||||||
- 100 bp | - 50 bp | Current | + 50 bp | + 100 bp | ||||||||||||||||
Total market value | $ | 3,423,278 | 3,379,953 | 3,334,645 | 3,287,573 | $ | 3,239,193 | |||||||||||||
Percent change in market value | 2.7 | % | 1.4 | % | — | (1.4 | %) | (2.9 | %) | |||||||||||
Resulting unrealized appreciation / (depreciation) | $ | 35,463 | (7,862 | ) | (53,170 | ) | (100,242 | ) | $ | (148,622 | ) |
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Carrying | ||||||||
Amount | Fair Value | |||||||
Financial assets: | ||||||||
Fixed maturity securities | $ | 3,334,645 | $ | 3,334,645 | ||||
Preferred stocks | 10,772 | 10,772 | ||||||
Other invested asset | 4,745 | 4,745 | ||||||
Short-term investments | 27,123 | 27,123 | ||||||
Financial liabilities: | ||||||||
Debt obligations | $ | 292,840 | $ | 303,589 |
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Platinum Underwriters Holdings, Ltd.:
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February 27, 2007
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(a) | (b) | (c) | ||||||||||
Number of | Weighted- | Number of Securities | ||||||||||
Securities to be | Average | Remaining Available | ||||||||||
Issued upon | Exercise Price | for Future Issuance | ||||||||||
Exercise of | of Outstanding | under Equity | ||||||||||
Outstanding | Options, | Compensation Plans | ||||||||||
Options, Warrants | Warrants and | (excluding securities | ||||||||||
Plan Category | and Rights | Rights | reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders (1) | 3,786,915 | $ | 24.20 | 5,564,492 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 3,786,915 | $ | 24.20 | 5,564,492 |
(1) | These plans consist of the 2002 Share Incentive Plan, which was approved by our shareholders at the 2004 Annual General Meeting of Shareholders, the 2006 Share Incentive Plan, which was approved by our shareholders at the 2006 Annual General Meeting of Shareholders and replaced the 2002 Share Incentive Plan, and the Share Incentive Plan for Nonemployee Directors which was approved by our sole shareholder prior to our initial public offering in 2002. |
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Exhibit | ||
Number | Description | |
2.1 | Formation and Separation Agreement dated October 28, 2002 between The St. Paul Companies, Inc. and Platinum Holdings.(2) | |
3(i).1 | Memorandum of Association of Platinum Holdings.(1) | |
3(ii).1 | Bye-Laws of Platinum Holdings.(27) | |
3(ii).2 | Certificate of Designation of 6% Series A Mandatory Convertible Preferred Shares of Platinum Holdings dated December 1, 2005.(22) | |
4.1 | Form of Certificate of the Common Shares of Platinum Holdings.(2) | |
4.2 | Indenture dated October 10, 2002 among Platinum Holdings, Platinum Finance and JP Morgan Chase.(2) | |
4.3 | Indenture Supplement dated November 1, 2002 among Platinum Holdings, Platinum Finance and JP Morgan Chase.(2) | |
4.4 | Second Supplemental Indenture dated August 16, 2005 between Platinum Holdings, Platinum Finance and JP Morgan Chase.(18) | |
4.5 | Indenture dated May 26, 2005 between Platinum Holdings, Platinum Finance and JP Morgan Chase.(15) | |
4.6 | First Supplemental Indenture dated May 26, 2005 between Platinum Holdings, Platinum Finance and JP Morgan Chase.(15) | |
4.7 | Second Supplemental Indenture dated as of November 2, 2005 among Platinum Finance, Platinum Holdings and JP Morgan Chase.(20) | |
4.8 | Purchase Contract Agreement dated November 1, 2002 between Platinum Holdings and JP Morgan Chase.(2) | |
4.9 | Form of Senior Note of Platinum Finance.(2) | |
4.10 | Form of Guarantee of Platinum Holdings.(2) | |
4.11 | Exchange and Registration Rights Agreement dated May 26, 2005 among Platinum Holdings, Platinum Finance and Goldman, Sachs & Co.(15) | |
4.12 | Exchange and Registration Rights Agreement dated August 16, 2005 between Platinum Holdings, Platinum Finance, and Goldman, Sachs & Co. and Merrill Lynch.(18) | |
4.13 | Transfer Restrictions, Registration Rights and Standstill Agreement dated November 1, 2002 between Platinum Holdings and Renaissance Re.(2) | |
4.14 | Amendment No. 1 dated December 5, 2005 to the Transfer Restrictions, Registration Rights and Standstill Agreement dated November 1, 2002 between Platinum Holdings and RenaissanceRe.(22) | |
10.1* | Share Unit Plan for Non-Employee Directors.(24) | |
10.2* | Form of Nonemployee Director Share Unit Award Agreement.(23) |
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Exhibit | ||
Number | Description | |
10.3* | 2002 Share Incentive Plan (2004 Update).(5) | |
10.4* | 2002 Share Incentive Plan (UK Sub-Plan) (included in Exhibit 10.3).(5) | |
10.5* | 2006 Share Incentive Plan.(30) | |
10.6 * | Amended and Restated Annual Incentive Plan.(26) | |
10.7* | Section 162(m) Performance Incentive Plan.(5) | |
10.8* | Executive Retirement Savings Plan.(5) | |
10.9* | Executive Bonus Deferral Plan.(5) | |
10.10* | Amended and Restated Executive Incentive Plan.(26) | |
10.11* | Form of EIP Share Unit Award Agreement.(23) | |
10.12* | Capital Accumulation Plan.(2) | |
10.13* | Form of Nonqualified Share Option Agreement (Employee).(9) | |
10.14* | Form of Nonqualified Share Option Agreement (New Nonemployee Director).(9) | |
10.15* | Form of Nonqualified Share Option Agreement (Annual Nonemployee Director).(9) | |
10.16* | Form of Time-Based Share Unit Award Agreement.(9) | |
10.17* | Form of Special Share Unit Award Agreement.(9) | |
10.18* | Form of Restricted Share Award Agreement.(9) | |
10.19* | Employment Agreement dated November 1, 2005 between Platinum Holdings and Michael E. Lombardozzi.(21) | |
10.20* | Amended Letter Agreement dated October 27, 2005 between Platinum Holdings and Steven H. Newman.(19) | |
10.21* | Amended Consulting Agreement dated October 27, 2005 between Platinum US, Steven H. Newman and SHN Enterprises, Inc.(19) | |
10.22* | Amendment dated April 27, 2005 to the Letter Agreement between Platinum US and SHN dated March 1, 2002.(11) | |
10.23* | Employment Agreement dated August 4, 2004 between Michael D. Price and Platinum Holdings.(6) | |
10.24* | Amendment dated February 21, 2007 to the Employment Agreement dated August 4, 2004 between Michael D. Price and Platinum Holdings.(26) | |
10.25* | Employment Agreement dated June 24, 2004 between Joseph F. Fisher and Platinum Holdings.(6) | |
10.26* | Amended and Restated Letter Agreement dated February 26, 2006 between Platinum Holdings and Gregory E.A. Morrison.(23) |
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Exhibit | ||
Number | Description | |
10.27* | Employment Agreement dated February 26, 2006 between Platinum Bermuda and Robert S. Porter.(23) | |
10.28* | Letter Agreement dated July 25, 2006 between H. Elizabeth Mitchell and Platinum US.(24) | |
10.29 | Capital Support Agreement dated November 26, 2002 between Platinum Holdings and Platinum US.(2) | |
10.30 | Option Agreement dated November 1, 2002 between St. Paul and Platinum Holdings.(2) | |
10.31 | Amendment dated January 10, 2005 to the Option Agreement dated November 1, 2002 among St. Paul Reinsurance Company Limited, Platinum Holdings and St. Paul.(8) | |
10.32 | Amendment dated January 10, 2005 to the Option Agreement dated November 1, 2002 between St. Paul and Platinum Holdings.(8) | |
10.33 | Investment Management Agreement dated May 12, 2005 between Platinum US and Hyperion Capital Management, Inc.(12) | |
10.34 | Investment Management Agreement dated May 12, 2005 between Platinum Bermuda and Hyperion Capital Management, Inc. (12) | |
10.35 | Investment Management Agreement dated May 12, 2005 between Platinum Holdings, Platinum Bermuda, Platinum Regency and BlackRock Financial Management, Inc.(12) | |
10.36 | Investment Management Agreement dated May 12, 2005 between Platinum UK and BlackRock Financial Management, Inc.(12) | |
10.37 | Investment Management Agreement dated May 12, 2005 between Platinum US, Platinum Finance and BlackRock Financial Management, Inc.(12) | |
10.38 | Investment Agreement dated September 20, 2002 among Platinum Holdings, St. Paul, and RenaissanceRe.(2) | |
10.39 | First Amendment dated November 1, 2002 to the Investment Agreement dated September 20, 2002 among Platinum Holdings, St. Paul, and RenaissanceRe.(2) | |
10.40 | Option Agreement dated November 1, 2002 between Platinum Holdings and RenaissanceRe.(2) | |
10.41 | Amended and Restated Option Agreement dated November 18, 2004 between Platinum Holdings and RenaissanceRe.(7) | |
10.42 | Services and Capacity Reservation Agreement dated November 1, 2002 between Platinum Holdings and RenaissanceRe.(2) | |
10.43 | Quota Share Retrocession Agreement dated November 26, 2002 between Platinum Bermuda and Platinum UK.(2) | |
10.44 | Quota Share Retrocession Agreement dated March 27, 2003 between Platinum Bermuda and Platinum UK.(5) | |
10.45 | Addendum No. 1 effective April 1, 2003 to the Quota Share Retrocession Agreement dated March 27, 2003, between Platinum Bermuda and Platinum UK.(5) |
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Exhibit | ||
Number | Description | |
10.46 | Addendum No. 2 effective March 27, 2003 to the Quota Share Retrocession Agreement dated March 27, 2003, between Platinum Bermuda and Platinum UK.(5) | |
10.47 | Addendum No. 3 effective April 1, 2005 to the Quota Share Reinsurance Agreement dated March 27, 2003 between Platinum Bermuda and Platinum UK.(10) | |
10.48 | Security Agreement dated November 26, 2002 between Platinum Bermuda and Platinum UK.(2) | |
10.49 | Addendum No. 1 effective January 1, 2004 to the Security Agreement dated November 26, 2002, between Platinum Bermuda and Platinum UK.(5) | |
10.50 | Control Agreement dated November 26, 2002 among Platinum Bermuda, Platinum UK and State Street Bank.(2) | |
10.51 | Discretionary Investment Advisory Agreement dated November 26, 2002 between Platinum Bermuda and Platinum UK.(2) | |
10.52 | Trust Agreement effective January 1, 2003 among Platinum Bermuda, Platinum US and State Street Bank.(3) | |
10.53 | Quota Share Retrocession Agreement dated May 13, 2003 between Platinum Bermuda and Platinum US.(3) | |
10.54 | Addendum No. 1 dated December 31, 2003 to the Quota Share Retrocession Agreement dated May 13, 2003, between Platinum Bermuda and Platinum US.(4) | |
10.55 | Addendum No. 2 effective as of April 1, 2005 to the Quota Share Retrocession Agreement between Platinum Bermuda and Platinum US.(13) | |
10.56 | Quota Share Retrocession Agreement dated May 6, 2004 between Platinum Bermuda and Platinum US.(6) | |
10.57 | Amended and Restated Quota Share Retrocession Agreement dated January 1, 2006 between Platinum Bermuda and Platinum US.(27) | |
10.58 | Excess of Loss Retrocession Agreement by and between Platinum Bermuda and Platinum US dated as of April 1, 2006.(28) | |
10.59 | Quota Share Retrocession Agreement by and between Platinum Underwriters Bermuda, Ltd. and Platinum Re (UK) Limited dated as of January 1, 2006.(28) | |
10.60 | Excess of Loss Retrocession Agreement effective as of April 1, 2005 between Platinum US and Platinum UK.(13) | |
10.61 | Termination Addendum effective December 31, 2006 to Amended and Restated Quota Share Retrocession Agreement dated April 11, 2006 between Platinum Bermuda and Platinum US. | |
10.62 | Casualty and Specialty Quota Share Retrocession Agreement between Platinum Bermuda and Platinum US dated as of January 1, 2007. |
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Exhibit | ||
Number | Description | |
10.63 | Amended and Restated Credit Agreement, dated as of September 13, 2006, by and among the Company, certain subsidiaries of the Company, Wachovia Bank, National Association, Citibank, N.A., HSBC Bank USA, National Association, Bayerische Hypo-Und Vereinsbank AG and Comerica Bank as the Lenders, and Wachovia Bank, National Association, as Administrative Agent.(25) | |
10.64 | List of Contents of exhibits and Schedules to the Amended and Restated Credit Agreement.(25) | |
10.65 | Referral Agreement between Platinum Bermuda and Renaissance Underwriting Managers Ltd.(3) | |
10.66 | Referral Agreement between Platinum US and Renaissance Underwriting Managers Ltd.(4) | |
10.67 | Guaranty dated December 31, 2003 between Platinum Holdings and Platinum US.(4) | |
10.68 | Amendment No. 1 dated January 1, 2005 to Guaranty dated December 31, 2003 between Platinum Holdings and Platinum US.(16) | |
10.69 | Guarantee dated December 31, 2003 between Platinum Holdings and Platinum UK.(4) | |
10.70 | Purchase Agreement dated May 20, 2005 among Platinum Holdings, Platinum Finance and Goldman, Sachs & Co.(14) | |
10.71 | Remarketing Agreement dated August 8, 2005 among Platinum Holdings, Platinum Finance, Goldman, Sachs & Co. and Merrill Lynch.(16) | |
10.72 | Pledge Agreement dated November 1, 2002 among Platinum Holdings, State Street Bank and Trust Company and JP Morgan Chase.(2) | |
21.1 | Subsidiaries of Platinum Holdings. | |
23.1 | Independent Registered Public Accounting Firm’s Consent. | |
31.1 | Certification of Michael D. Price, Chief Executive Officer of Platinum Holdings, pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. | |
31.2 | Certification of Joseph F. Fisher, Chief Financial Officer of Platinum Holdings, pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. | |
32.1 | Certification of Michael D. Price, Chief Executive Officer of Platinum Holdings, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Joseph F. Fisher, Chief Financial Officer of Platinum Holdings, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
* | Items denoted with an asterisk represent management contracts or compensatory plans or arrangements. | |
(1) | Incorporated by reference from the Registration Statement on Form S-1 (Registration No. 333-86906) of Platinum Holdings. |
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(2) | Incorporated by reference from Platinum Holdings’ Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003. | |
(3) | Incorporated by reference from Platinum Holdings’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed with the SEC on August 14, 2003. | |
(4) | Incorporated by reference from Platinum Holdings’ Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC on March 15, 2004. | |
(5) | Incorporated by reference from Platinum Holdings’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, filed with the SEC on May 10, 2004. | |
(6) | Incorporated by reference from Platinum Holdings’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, filed with the SEC on August 6, 2004. | |
(7) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on November 18, 2004. | |
(8) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on January 11, 2005. | |
(9) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on February 23, 2005. | |
(10) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on April 14, 2005. | |
(11) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on April 28, 2005. | |
(12) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on May 13, 2005. | |
(13) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on May 18, 2005. | |
(14) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on May 24, 2005. | |
(15) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on May 27, 2005. | |
(16) | Incorporated by reference from Platinum Holdings’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 5, 2005. | |
(17) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on August 9, 2005. | |
(18) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on August 17, 2005. | |
(19) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on October 28, 2005. | |
(20) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on November 3, 2005. | |
(21) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on November 21, 2005. |
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(22) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on December 6, 2005. | |
(23) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on February 27, 2006. | |
(24) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on July 26, 2006. | |
(25) | Incorporated by reference from Platinum Holdings’ Current Report on Form 8-K, filed with the SEC on September 18, 2006. | |
(26) | Incorporated by reference from Platinum Holding’s Current Report on Form 8-K, filed with the SEC on February 22, 2007. | |
(27) | Incorporated by reference from Platinum Holdings’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, filed with the SEC on April 28, 2006. | |
(28) | Incorporated by reference from Platinum Holdings’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed with the SEC on July 31, 2006. | |
(29) | Incorporated by reference from Platinum Holdings’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, filed with the SEC on October 30, 2006. | |
(30) | Incorporated by reference from the Registration Statement on Form S-8 (Registration No. 333-133521) of Platinum Holdings, filed with the SEC on April 25, 2006. |
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PLATINUM UNDERWRITERS HOLDINGS, LTD. | ||||
/s/ Michael D. Price | ||||
Michael D. Price | ||||
President and Chief Executive Officer | ||||
Signature | Title | Date | ||
/s/ Michael D. Price | President, Chief Executive Officer and Director | February 21, 2007 | ||
Michael D. Price | (Principal Executive Officer) | |||
/s/ Joseph F. Fisher | Executive Vice President and Chief Financial Officer | February 21, 2007 | ||
Joseph F. Fisher | (Principal Financial Officer) | |||
/s/ James A. Krantz | Senior Vice President and Chief Accounting Officer | February 21, 2007 | ||
James A. Krantz | (Principal Accounting Officer) | |||
/s/ Steven H. Newman | Chairman of the Board of Directors | February 21, 2007 | ||
Steven H. Newman | ||||
/s/ H. Furlong Baldwin | Director | February 21, 2007 | ||
H. Furlong Baldwin | ||||
/s/ Jonathan F. Bank | Director | February 21, 2007 | ||
Jonathan F. Bank | ||||
/s/ Dan R. Carmichael | Director | February 21, 2007 | ||
Dan R. Carmichael | ||||
/s/ Robert V. Deutsch | Director | February 21, 2007 | ||
Robert V. Deutsch | ||||
/s/ Peter T. Pruitt | Director | February 21, 2007 | ||
Peter T. Pruitt |
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CONSOLIDATED FINANCIAL STATEMENTS
Page | ||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 |
F-1
Table of Contents
Platinum Underwriters Holdings, Ltd.:
February 27, 2007
F-2
Table of Contents
December 31, 2006 and 2005
(amounts in thousands, except share data)
2006 | 2005 | |||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed maturity available-for-sale securities at fair value (amortized cost – $3,276,970 and $2,936,152, respectively) | $ | 3,226,354 | $ | 2,888,922 | ||||
Fixed maturity trading securities at fair value (amortized cost – $110,845 and $99,141, respectively) | 108,291 | 98,781 | ||||||
Preferred stocks (cost – $11,246 and $8,735, respectively) | 10,772 | 8,186 | ||||||
Other invested asset | 4,745 | 5,000 | ||||||
Short-term investments | 27,123 | 8,793 | ||||||
Total investments | 3,377,285 | 3,009,682 | ||||||
Cash and cash equivalents | 851,652 | 820,746 | ||||||
Accrued investment income | 32,682 | 29,230 | ||||||
Reinsurance premiums receivable | 377,183 | 567,449 | ||||||
Reinsurance recoverable on ceded losses and loss adjustment expenses | 57,956 | 68,210 | ||||||
Prepaid reinsurance premiums | 9,680 | 7,899 | ||||||
Funds held by ceding companies | 238,499 | 291,629 | ||||||
Deferred acquisition costs | 82,610 | 130,800 | ||||||
Income tax recoverable | 7,515 | 24,522 | ||||||
Deferred tax assets | 38,577 | 31,934 | ||||||
Due from investment broker | 5,631 | 157,930 | ||||||
Other assets | 14,297 | 14,344 | ||||||
Total assets | $ | 5,093,567 | $ | 5,154,375 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Unpaid losses and loss adjustment expenses | $ | 2,368,482 | $ | 2,323,990 | ||||
Unearned premiums | 349,792 | 502,018 | ||||||
Reinsurance deposit liabilities | 4,009 | 6,048 | ||||||
Debt obligations | 292,840 | 292,840 | ||||||
Ceded premiums payable | 17,597 | 22,544 | ||||||
Commissions payable | 140,835 | 186,654 | ||||||
Deferred tax liabilities | 4,234 | 118 | ||||||
Due to investment broker | — | 259,834 | ||||||
Other liabilities | 57,717 | 20,080 | ||||||
Total liabilities | 3,235,506 | 3,614,126 | ||||||
Shareholders’ Equity | ||||||||
Preferred shares, $.01 par value, 25,000,000 shares authorized, 5,750,000 shares issued and outstanding | 57 | 57 | ||||||
Common shares, $.01 par value, 200,000,000 shares authorized, 59,671,959 and 59,126,675 shares issued and outstanding, respectively | 597 | 590 | ||||||
Additional paid-in capital | 1,545,979 | 1,527,316 | ||||||
Unearned share grant compensation | — | (2,467 | ) | |||||
Accumulated other comprehensive loss | (44,289 | ) | (40,718 | ) | ||||
Retained earnings | 355,717 | 55,471 | ||||||
Total shareholders’ equity | 1,858,061 | 1,540,249 | ||||||
Total liabilities and shareholders’ equity | $ | 5,093,567 | $ | 5,154,375 | ||||
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For the years ended December 31, 2006, 2005 and 2004
2006 | 2005 | 2004 | ||||||||||
Revenue: | ||||||||||||
Net premiums earned | $ | 1,336,701 | 1,714,723 | $ | 1,447,935 | |||||||
Net investment income | 187,987 | 129,445 | 84,532 | |||||||||
Net realized gains (losses) on investments | 1,090 | (3,046 | ) | 1,955 | ||||||||
Other income (expense) | (2,872 | ) | (586 | ) | 3,211 | |||||||
Total revenue | 1,522,906 | 1,840,536 | 1,537,633 | |||||||||
Expenses: | ||||||||||||
Net losses and loss adjustment expenses | 760,602 | 1,505,425 | 1,019,804 | |||||||||
Net acquisition expenses | 285,923 | 403,135 | 327,821 | |||||||||
Operating expenses | 95,490 | 69,827 | 66,333 | |||||||||
Net foreign currency exchange losses (gains) | (738 | ) | 2,111 | (725 | ) | |||||||
Interest expense | 21,805 | 20,006 | 9,268 | |||||||||
Loss on repurchase of debt | — | 2,486 | — | |||||||||
Total expenses | 1,163,082 | 2,002,990 | 1,422,501 | |||||||||
Income (loss) before income tax expense (benefit) | 359,824 | (162,454 | ) | 115,132 | ||||||||
Income tax expense (benefit) | 30,167 | (24,967 | ) | 30,349 | ||||||||
Net income (loss) | 329,657 | (137,487 | ) | 84,783 | ||||||||
Preferred dividends | 10,382 | 737 | — | |||||||||
Net income (loss) attributable to common shareholders | $ | 319,275 | (138,224 | ) | $ | 84,783 | ||||||
Earnings (loss) per common share: | ||||||||||||
Basic earnings (loss) per common share | $ | 5.38 | (3.01 | ) | $ | 1.96 | ||||||
Diluted earnings (loss) per common share | $ | 4.96 | (3.01 | ) | $ | 1.81 | ||||||
Comprehensive income (loss): | ||||||||||||
Net income (loss) | $ | 329,657 | (137,487 | ) | $ | 84,783 | ||||||
Other comprehensive income (loss): | ||||||||||||
Net change in unrealized gains and losses on available-for-sale securities, net of deferred tax | (3,887 | ) | (52,454 | ) | (6,910 | ) | ||||||
Cumulative translation adjustments, net of deferred tax | 316 | (516 | ) | 388 | ||||||||
Comprehensive income (loss) | $ | 326,086 | (190,457 | ) | $ | 78,261 | ||||||
Shareholder dividends: | ||||||||||||
Preferred dividends declared | 9,818 | — | — | |||||||||
Preferred dividends declared per share | 1.71 | — | — | |||||||||
Common shareholder dividends declared | $ | 19,029 | 14,775 | $ | 13,807 | |||||||
Dividends declared per common share | $ | 0.32 | 0.32 | $ | 0.32 |
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For the years ended December 31, 2006, 2005 and 2004
2006 | 2005 | 2004 | ||||||||||
Preferred shares: | ||||||||||||
Balances at beginning of year | $ | 57 | — | $ | — | |||||||
Issuance of preferred shares | — | 57 | — | |||||||||
Balances at end of year | 57 | 57 | — | |||||||||
Common shares: | ||||||||||||
Balances at beginning of year | 590 | 430 | 430 | |||||||||
Exercise of share options | 6 | 7 | 2 | |||||||||
Issuance of restricted shares and shares for share units | — | 1 | — | |||||||||
Issuance of common shares | 1 | 152 | 1 | |||||||||
Purchase of common shares | — | — | (3 | ) | ||||||||
Balances at end of year | 597 | 590 | 430 | |||||||||
Additional paid-in-capital: | ||||||||||||
Balances at beginning of year | 1,527,316 | 911,851 | 910,505 | |||||||||
Transfer of unearned common share grant compensation | (2,467 | ) | — | — | ||||||||
Exercise of share options | 12,969 | 15,020 | 7,405 | |||||||||
Issuance of restricted shares and shares for share units | — | 3,274 | — | |||||||||
Share based compensation | 7,995 | 3,516 | 2,358 | |||||||||
Issuance of common shares | — | 425,604 | 1,565 | |||||||||
Issuance of preferred shares | — | 167,451 | — | |||||||||
Purchase of common shares | — | — | (9,982 | ) | ||||||||
Tax benefit of share options | 166 | 600 | — | |||||||||
Balances at end of year | 1,545,979 | 1,527,316 | 911,851 | |||||||||
Unearned share grant compensation: | ||||||||||||
Balances at beginning of year | (2,467 | ) | — | — | ||||||||
Transfer of unearned common share grant compensation | 2,467 | — | — | |||||||||
Shares issued | — | (3,275 | ) | — | ||||||||
Amortization | — | 808 | — | |||||||||
Balances at end of year | — | (2,467 | ) | ��� | ||||||||
Accumulated other comprehensive income (loss): | ||||||||||||
Balances at beginning of year | (40,718 | ) | 12,252 | 18,774 | ||||||||
Net change in unrealized gains and losses on available-for-sale securities, net of deferred tax | (3,887 | ) | (52,454 | ) | (6,910 | ) | ||||||
Net change in cumulative translation adjustments, net of deferred tax | 316 | (516 | ) | 388 | ||||||||
Balances at end of year | (44,289 | ) | (40,718 | ) | 12,252 | |||||||
Retained earnings: | ||||||||||||
Balances at beginning of year | 55,471 | 208,470 | 137,494 | |||||||||
Net income (loss) | 329,657 | (137,487 | ) | 84,783 | ||||||||
Preferred share dividends | (10,382 | ) | (737 | ) | — | |||||||
Common share dividends | (19,029 | ) | (14,775 | ) | (13,807 | ) | ||||||
Balances at end of year | 355,717 | 55,471 | 208,470 | |||||||||
Total shareholders’ equity | $ | 1,858,061 | 1,540,249 | $ | 1,133,003 | |||||||
F-5
Table of Contents
For the years ended December 31, 2006, 2005 and 2004
(amounts in thousands)
2006 | 2005 | 2004 | ||||||||||
Operating Activities: | ||||||||||||
Net income (loss) | $ | 329,657 | (137,487 | ) | $ | 84,783 | ||||||
Adjustments to reconcile net income to cash used in operations: | ||||||||||||
Depreciation and amortization | 16,213 | 14,993 | 20,642 | |||||||||
Net realized (gains) losses on investments | (1,090 | ) | 3,046 | (1,955 | ) | |||||||
Loss on repurchase of debt | — | 2,486 | — | |||||||||
Net foreign currency exchange (gains) losses | (738 | ) | 2,111 | (725 | ) | |||||||
Share based compensation | 7,995 | 4,424 | 2,358 | |||||||||
Deferred income tax expense (benefit) | (2,613 | ) | (24,590 | ) | 2,216 | |||||||
Trading securities activities | 1,776 | (21,235 | ) | 16,510 | ||||||||
Changes in assets and liabilities: | ||||||||||||
Increase in accrued investment income | (3,452 | ) | (5,567 | ) | (6,171 | ) | ||||||
(Increase) decrease in reinsurance premiums receivable | 195,094 | 12,599 | (92,607 | ) | ||||||||
(Increase) decrease in funds held by ceding companies | 53,130 | (93,581 | ) | (132,988 | ) | |||||||
(Increase) decrease in deferred acquisition costs | 48,190 | 5,238 | (56,731 | ) | ||||||||
Increase (decrease) in net unpaid losses and loss adjustment expenses | 37,188 | 887,563 | 641,062 | |||||||||
Increase (decrease) in net unearned premiums | (154,007 | ) | (5,417 | ) | 199,680 | |||||||
Increase (decrease) in reinsurance deposit liabilities | (2,039 | ) | (14,141 | ) | 14,490 | |||||||
Increase (decrease) in ceded premiums payable | (4,947 | ) | 20,160 | (3,821 | ) | |||||||
Increase (decrease) in commissions payable | (45,819 | ) | 4,729 | 5,615 | ||||||||
Increase (decrease) in funds withheld | — | (11,999 | ) | 11,999 | ||||||||
(Increase) decrease in income tax recoverable | 17,174 | (22,595 | ) | 8,035 | ||||||||
Changes in other assets and liabilities | 35,496 | (23,598 | ) | 1,944 | ||||||||
Other net | (407 | ) | 535 | 397 | ||||||||
Net cash provided by operating activities | 526,801 | 597,674 | 714,733 | |||||||||
Investing Activities: | ||||||||||||
Proceeds from sale of available-for-sale securities | 348,142 | 891,799 | 498,945 | |||||||||
Proceeds from maturity or paydown of available-for-sale securities | 270,939 | 97,931 | 136,472 | |||||||||
Acquisition of available-for-sale securities | (1,083,282 | ) | (1,711,505 | ) | (1,230,895 | ) | ||||||
Increase in short-term investments | (15,822 | ) | (8,793 | ) | — | |||||||
Net cash used in investing activities | (480,023 | ) | (730,568 | ) | (595,478 | ) | ||||||
Financing Activities: | ||||||||||||
Dividends paid to preferred shareholders | (9,818 | ) | — | — | ||||||||
Dividends paid to common shareholders | (19,029 | ) | (14,775 | ) | (13,807 | ) | ||||||
Proceeds from exercise of share options | 12,975 | 15,027 | 7,406 | |||||||||
Net proceeds from issuance of common shares | — | 425,756 | 1,567 | |||||||||
Net proceeds from issuance of preferred shares | — | 167,509 | — | |||||||||
Net proceeds from issuance of debt securities | — | 246,900 | — | |||||||||
Purchase of common shares | — | — | (9,985 | ) | ||||||||
Repurchase of debt obligations | — | (96,674 | ) | — | ||||||||
Net cash provided by (used in) financing activities | (15,872 | ) | 743,743 | (14,819 | ) | |||||||
Net increase in cash and cash equivalents | 30,906 | 610,849 | 104,436 | |||||||||
Cash and cash equivalents at beginning of year | 820,746 | 209,897 | 105,461 | |||||||||
Cash and cash equivalents at end of year | $ | 851,652 | 820,746 | $ | 209,897 | |||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Income taxes paid | $ | 15,602 | 33,569 | $ | 8,549 | |||||||
Interest paid | $ | 21,479 | 17,662 | $ | 7,442 |
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F-7
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F-9
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F-10
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F-11
Table of Contents
As | ||||||||
Reported | Pro Forma | |||||||
Year Ended December 31, 2005: | ||||||||
Share-based compensation expense | $ | 3,799 | $ | 8,149 | ||||
Net loss | (138,224 | ) | (142,574 | ) | ||||
Basic loss per share | (3.01 | ) | (3.11 | ) | ||||
Diluted loss per share | (3.01 | ) | (3.11 | ) | ||||
Year Ended December 31, 2004: | ||||||||
Share-based compensation expense | 2,358 | 7,026 | ||||||
Net income | 84,783 | 80,115 | ||||||
Basic earnings per share | 1.96 | 1.86 | ||||||
Diluted earnings per share | $ | 1.81 | $ | 1.72 |
F-12
Table of Contents
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
December 31, 2006: | ||||||||||||||||
U.S. Government | $ | 155,766 | 64 | 2,036 | $ | 153,794 | ||||||||||
Corporate bonds | 1,529,400 | 609 | 24,853 | 1,505,156 | ||||||||||||
Mortgage-backed and asset-backed securities | 1,349,586 | 1,098 | 21,717 | 1,328,967 | ||||||||||||
Municipal bonds | 200,445 | 4 | 2,851 | 197,598 | ||||||||||||
Foreign governments and states | 41,773 | — | 934 | 40,839 | ||||||||||||
Total available-for-sale fixed maturity securities | 3,276,970 | 1,775 | 52,391 | 3,226,354 | ||||||||||||
Preferred stocks | 11,246 | — | 474 | 10,772 | ||||||||||||
Total available-for-sale securities | $ | 3,288,216 | 1,775 | 52,865 | $ | 3,237,126 | ||||||||||
F-13
Table of Contents
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
December 31, 2005: | ||||||||||||||||
U.S. Government | $ | 140,218 | 11 | 644 | $ | 139,585 | ||||||||||
Corporate bonds | 1,379,702 | 991 | 26,389 | 1,354,304 | ||||||||||||
Mortgage-backed and asset-backed securities | 1,159,250 | 598 | 17,917 | 1,141,931 | ||||||||||||
Municipal bonds | 215,237 | 125 | 3,001 | 212,361 | ||||||||||||
Foreign governments and states | 41,745 | — | 1,004 | 40,741 | ||||||||||||
Total available-for-sale fixed maturity securities | 2,936,152 | 1,725 | 48,955 | 2,888,922 | ||||||||||||
Preferred stocks | 8,735 | — | 549 | 8,186 | ||||||||||||
Total available-for-sale securities | $ | 2,944,887 | 1,725 | 49,504 | $ | 2,897,108 | ||||||||||
Amortized | ||||||||
Cost | Fair Value | |||||||
Due in one year or less | $ | 400,723 | $ | 397,408 | ||||
Due from one to five years | 1,065,670 | 1,051,975 | ||||||
Due from five to ten years | 258,003 | 249,685 | ||||||
Due in ten or more years | 202,988 | 198,319 | ||||||
Mortgage and asset backed securities | 1,349,586 | 1,328,967 | ||||||
Total | $ | 3,276,970 | $ | 3,226,354 | ||||
2006 | 2005 | 2004 | ||||||||||
Fixed maturity securities | $ | 148,708 | 114,234 | $ | 82,038 | |||||||
Cash and cash equivalents | 35,684 | 11,063 | 2,261 | |||||||||
Funds held | 7,998 | 8,172 | 2,651 | |||||||||
192,390 | 133,469 | 86,950 | ||||||||||
Less investment expenses | 4,403 | 4,024 | 2,418 | |||||||||
Net investment income | $ | 187,987 | 129,445 | $ | 84,532 | |||||||
F-14
Table of Contents
2006 | 2005 | 2004 | ||||||||||
Available-for-sale securities and other invested asset: | ||||||||||||
Gross realized gains | $ | 1,591 | 4,333 | $ | 5,554 | |||||||
Gross realized losses | 316 | 7,503 | 3,144 | |||||||||
Subtotal | 1,275 | (3,170 | ) | 2,410 | ||||||||
Trading securities: | ||||||||||||
Gross realized gains | 1 | 272 | 151 | |||||||||
Gross realized losses | 186 | 148 | 606 | |||||||||
Subtotal | (185 | ) | 124 | (455 | ) | |||||||
Net realized gains (losses) | $ | 1,090 | (3,046 | ) | $ | 1,955 | ||||||
2006 | 2005 | 2004 | ||||||||||
Available for sale securities | $ | (3,311 | ) | (61,018 | ) | $ | (9,459 | ) | ||||
Less deferred tax | (576 | ) | 8,564 | 2,549 | ||||||||
Net change in unrealized gains and losses | $ | (3,887 | ) | (52,454 | ) | $ | (6,910 | ) | ||||
F-15
Table of Contents
Unrealized | ||||||||
Fair Value | Loss | |||||||
Less than twelve months: | ||||||||
U.S. Government | $ | 46,214 | $ | 741 | ||||
Corporate bonds | 399,866 | 1,854 | ||||||
Mortgage-backed and asset-backed securities | 302,707 | 1,630 | ||||||
Municipal bonds | 15,871 | 73 | ||||||
Foreign governments and states | 5,976 | 96 | ||||||
Preferred stocks | 2,406 | 105 | ||||||
Total | $ | 773,040 | $ | 4,499 | ||||
Twelve months or more: | ||||||||
U.S. Government | $ | 85,450 | $ | 1,295 | ||||
Corporate bonds | 1,028,912 | 22,999 | ||||||
Mortgage-backed and asset-backed securities | 767,217 | 20,087 | ||||||
Municipal bonds | 174,468 | 2,778 | ||||||
Foreign governments and states | 34,863 | 838 | ||||||
Preferred stocks | 8,365 | 369 | ||||||
Total | $ | 2,099,275 | $ | 48,366 | ||||
Total unrealized losses: | ||||||||
U.S. Government | $ | 131,664 | $ | 2,036 | ||||
Corporate bonds | 1,428,778 | 24,853 | ||||||
Mortgage-backed and asset-backed securities | 1,069,924 | 21,717 | ||||||
Municipal bonds | 190,339 | 2,851 | ||||||
Foreign governments and states | 40,839 | 934 | ||||||
Preferred stocks | 10,771 | 474 | ||||||
Total | $ | 2,872,315 | $ | 52,865 | ||||
F-16
Table of Contents
December 31, 2006 | December 31, 2005 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed maturity securities | $ | 3,334,645 | 3,334,645 | 2,987,703 | $ | 2,987,703 | ||||||||||
Preferred stocks | 10,772 | 10,772 | 8,186 | 8,186 | ||||||||||||
Short-term investments | 27,123 | 27,123 | 8,793 | 8,793 | ||||||||||||
Other invested asset | 4,745 | 4,745 | 5,000 | 5,000 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Debt obligations | $ | 292,840 | 303,589 | 292,840 | $ | 296,708 |
F-17
Table of Contents
2005 | 2004 | |||||||
Gross losses and LAE | $ | 654,090 | $ | 230,475 | ||||
Retrocessional reinsurance | (73,800 | ) | — | |||||
Net losses and LAE | 580,290 | 230,475 | ||||||
Additional net premiums earned | (46,666 | ) | (29,265 | ) | ||||
Profit commissions | (3,654 | ) | (10,243 | ) | ||||
Net adverse impact on income before income taxes | $ | 529,970 | $ | 190,967 | ||||
2006 | 2005 | 2004 | ||||||||||
Net unpaid losses and LAE as of the beginning of year | $ | 2,268,655 | 1,379,227 | $ | 731,918 | |||||||
Net incurred related to: | ||||||||||||
Current year | 811,250 | 1,577,944 | 1,101,820 | |||||||||
Prior years | (50,648 | ) | (72,519 | ) | (82,016 | ) | ||||||
Total incurred net losses and LAE | 760,602 | 1,505,425 | 1,019,804 | |||||||||
Net paid losses and LAE: | ||||||||||||
Current year | 96,112 | 210,306 | 174,870 | |||||||||
Prior year | 624,477 | 390,598 | 205,889 | |||||||||
Total net paid losses and LAE | 720,589 | 600,904 | 380,759 | |||||||||
Effects of foreign currency exchange rate changes | 17,559 | (15,093 | ) | 8,264 | ||||||||
Net unpaid losses and LAE as of the end of year | 2,326,227 | 2,268,655 | 1,379,227 | |||||||||
Reinsurance recoverable | 42,255 | 55,335 | 1,728 | |||||||||
Gross unpaid losses and LAE at end of year | $ | 2,368,482 | 2,323,990 | $ | 1,380,955 | |||||||
F-18
Table of Contents
F-19
Table of Contents
Assumed | Ceded | Net | ||||||||||
As of and for the year ended December 31, 2006: | ||||||||||||
Premiums written | $ | 1,275,200 | 98,587 | $ | 1,176,613 | |||||||
Premiums earned | 1,434,282 | 97,581 | 1,336,701 | |||||||||
Losses and LAE | 778,836 | 18,234 | 760,602 | |||||||||
Unpaid losses and LAE | 2,368,482 | 42,255 | 2,326,227 | |||||||||
As of and for the year ended December 31, 2005: | ||||||||||||
Premiums written | 1,765,155 | 47,433 | 1,717,722 | |||||||||
Premiums earned | 1,757,139 | 42,416 | 1,714,723 | |||||||||
Losses and LAE | 1,594,737 | 89,312 | 1,505,425 | |||||||||
Unpaid losses and LAE | 2,323,990 | 55,335 | 2,268,655 | |||||||||
As of and for the year ended December 31, 2004: | ||||||||||||
Premiums written | 1,659,790 | 13,777 | 1,646,013 | |||||||||
Premiums earned | 1,465,058 | 17,123 | 1,447,935 | |||||||||
Losses and LAE | 1,018,106 | (1,698 | ) | 1,019,804 | ||||||||
Unpaid losses and LAE | $ | 1,380,955 | 1,728 | $ | 1,379,227 |
F-20
Table of Contents
2006 | 2005 | 2004 | ||||||||||
Retroceded by Platinum US to Platinum Bermuda: | ||||||||||||
Premiums earned | $ | 666,331 | 697,992 | $ | 515,869 | |||||||
Incurred losses and LAE | 457,447 | 893,237 | 562,193 | |||||||||
Retroceded by Platinum UK to Platinum Bermuda: | ||||||||||||
Premiums earned | 79,173 | 86,163 | 89,394 | |||||||||
Incurred losses and LAE | 28,113 | 54,657 | 57,830 | |||||||||
Retroceded by Platinum Bermuda to Platinum UK: | ||||||||||||
Premiums earned | 4,583 | 8,250 | — | |||||||||
Incurred losses and LAE | 19,678 | 55,000 | — | |||||||||
Retroceded by Platinum UK to Platinum US: | ||||||||||||
Premiums earned | 250 | 1,800 | — | |||||||||
Incurred losses and LAE | — | — | — | |||||||||
Retroceded by Platinum Bermuda to Platinum US | ||||||||||||
Premiums earned | 977 | — | — | |||||||||
Incurred losses and LAE | $ | — | — | $ | — |
F-21
Table of Contents
2006 | 2005 | |||||||
Series B Notes, 7.5%, due June 1, 2017 | $ | 250,000 | $ | 250,000 | ||||
Series B Remarketed Notes, 6.371%, due November 16, 2007 | 42,840 | 42,840 | ||||||
Total debt obligations | $ | 292,840 | $ | 292,840 | ||||
F-22
Table of Contents
F-23
Table of Contents
2006 | 2005 | 2004 | ||||||||||
United States | $ | 75,374 | (66,181 | ) | $ | 73,020 | ||||||
Bermuda | 263,327 | (73,165 | ) | 19,423 | ||||||||
Other | 21,123 | (23,108 | ) | 22,689 | ||||||||
Income before income tax expense (benefit) | $ | 359,824 | (162,454 | ) | $ | 115,132 | ||||||
2006 | 2005 | 2004 | ||||||||||
Current tax expense (benefit) | $ | 32,780 | (377 | ) | $ | 28,133 | ||||||
Deferred tax expense (benefit) | (2,613 | ) | (24,590 | ) | 2,216 | |||||||
Total | $ | 30,167 | (24,967 | ) | $ | 30,349 | ||||||
2006 | 2005 | 2004 | ||||||||||
Expected income tax expense (benefit) at 35% | $ | 125,938 | (56,859 | ) | $ | 40,296 | ||||||
Effect of income or loss subject to tax at rates other than 35% | (93,347 | ) | 26,474 | (8,222 | ) | |||||||
Tax exempt investment income | (2,062 | ) | (2,932 | ) | (1,084 | ) | ||||||
U.S. withholding taxes deemed taxable transfer to foreign affiliate | (450 | ) | 6,500 | — | ||||||||
Other, net | 88 | 1,850 | (641 | ) | ||||||||
Income tax expense (benefit) | $ | 30,167 | (24,967 | ) | $ | 30,349 | ||||||
F-24
Table of Contents
2006 | 2005 | |||||||
Deferred tax assets: | ||||||||
Unpaid losses and LAE | $ | 34,433 | $ | 45,516 | ||||
Timing differences in recognition of expenses | 1,448 | — | ||||||
Unearned premiums | 7,499 | 12,555 | ||||||
Net unrealized losses on investments | 5,985 | 6,565 | ||||||
Other deferred tax assets | 6,586 | 41 | ||||||
Total deferred tax assets | $ | 55,951 | $ | 64,677 | ||||
Deferred tax liabilities: | ||||||||
Deferred acquisition costs | 11,051 | 31,716 | ||||||
Timing differences in recognition of expenses | — | 261 | ||||||
Unrealized net foreign currency exchange losses | 10,557 | 884 | ||||||
Total deferred tax liabilities | 21,608 | 32,861 | ||||||
Total net deferred tax assets (liabilities) | $ | 34,343 | $ | 31,816 | ||||
2006 | 2005 | |||||||
Platinum US deferred tax assets | $ | 49,627 | $ | 64,871 | ||||
Platinum US deferred tax liabilities | 11,051 | 32,937 | ||||||
Net Platinum US deferred tax assets | 38,576 | 31,934 | ||||||
Platinum UK deferred tax assets | 6,585 | 1,073 | ||||||
Platinum UK deferred tax liabilities | 10,818 | 1,191 | ||||||
Net Platinum UK deferred tax liabilities | 4,233 | 118 | ||||||
Total net deferred tax assets (liabilities) | $ | 34,343 | $ | 31,816 | ||||
F-25
Table of Contents
F-26
Table of Contents
2006 | 2005 | 2004 | ||||||||||
Before tax amounts: | ||||||||||||
Foreign currency translation adjustment | $ | 452 | (737 | ) | $ | 555 | ||||||
Net change in unrealized holding gains and losses arising during the period | (1,786 | ) | (62,441 | ) | (6,866 | ) | ||||||
Less: reclassification adjustment for net gains (losses) realized in net income | 1,522 | (1,423 | ) | 2,594 | ||||||||
Other comprehensive income (loss) before tax | (2,856 | ) | (61,755 | ) | (8,905 | ) | ||||||
F-27
Table of Contents
2006 | 2005 | 2004 | ||||||||||
Deferred income tax (expense) benefit on: | ||||||||||||
Foreign currency translation adjustment | (136 | ) | 221 | (167 | ) | |||||||
Net change in unrealized holding gains and losses arising during the period | (654 | ) | 8,536 | 2,337 | ||||||||
Less: reclassification adjustment for net gains (losses) realized in net income | (75 | ) | (28 | ) | (213 | ) | ||||||
Deferred tax on other comprehensive income (loss) | (715 | ) | 8,785 | 2,383 | ||||||||
Net of tax amounts: | ||||||||||||
Net foreign currency translation adjustment | 316 | (516 | ) | 388 | ||||||||
Net change in unrealized holding gains and losses arising during the period | (2,440 | ) | (53,905 | ) | (4,529 | ) | ||||||
Less: reclassification adjustment for net (gains) losses realized in net income | 1,447 | (1,451 | ) | 2,381 | ||||||||
Other comprehensive income (loss), net of tax | $ | (3,571 | ) | (52,970 | ) | $ | (6,522 | ) | ||||
2006 | 2005 | 2004 | ||||||||||
Statutory capital and surplus | ||||||||||||
Bermuda | $ | 1,178,261 | 930,072 | $ | 535,054 | |||||||
United States | 530,822 | 447,207 | 403,121 | |||||||||
United Kingdom | 174,474 | 156,927 | 186,270 | |||||||||
Total statutory capital and surplus | 1,883,557 | 1,534,206 | 1,124,445 | |||||||||
Statutory net income (loss) | ||||||||||||
Bermuda | 281,247 | (68,459 | ) | 29,356 | ||||||||
United States | 117,980 | (21,884 | ) | 20,575 | ||||||||
United Kingdom | (7,927 | ) | (4,685 | ) | 1,872 | |||||||
Total statutory net income (loss) | $ | 391,300 | (95,028 | ) | $ | 51,803 | ||||||
F-28
Table of Contents
Earnings | ||||||||||||
Weighted | (Loss) | |||||||||||
Net | Average | Per | ||||||||||
Income | Shares | Common | ||||||||||
(Loss) | Outstanding | Share | ||||||||||
Year Ended December 31, 2006: | ||||||||||||
Basic earnings per common share: | ||||||||||||
Net income attributable to common shareholders | $ | 319,275 | 59,371 | $ | 5.38 | |||||||
Effect of dilutive securities: | ||||||||||||
Common share options, restricted common shares and restricted share units | — | 1,377 | ||||||||||
Conversion of preferred shares | — | 5,750 | ||||||||||
Preferred shares dividends | 10,382 | — | ||||||||||
Adjusted net income for diluted earnings per common share | $ | 329,657 | 66,498 | $ | 4.96 | |||||||
Year Ended December 31, 2005: | ||||||||||||
Basic and diluted loss per common share: | ||||||||||||
Loss attributable to common shareholders | $ | (138,224 | ) | 45,915 | $ | (3.01 | ) |
F-29
Table of Contents
Earnings | ||||||||||||
Weighted | (Loss) | |||||||||||
Net | Average | Per | ||||||||||
Income | Shares | Common | ||||||||||
(Loss) | Outstanding | Share | ||||||||||
Year Ended December 31, 2004: | ||||||||||||
Basic earnings per common share: | ||||||||||||
Net income | $ | 84,783 | 43,158 | $ | 1.96 | |||||||
Effect of dilutive securities: | ||||||||||||
Common share options, restricted common shares and restricted share units | — | 2,094 | ||||||||||
Interest expense related to ESU’s | 6,097 | — | ||||||||||
Common share conversion of ESU’s | — | 5,009 | ||||||||||
Adjusted net income for diluted earnings per common share | $ | 90,880 | 50,261 | $ | 1.81 | |||||||
F-30
Table of Contents
As of and for the years ended | ||||||||||||||||||||||||
December 31, 2006 | December 31, 2005 | December 31, 2004 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Options | Price | Options | Price | Options | Price | |||||||||||||||||||
Outstanding — beginning of the year | 3,918 | $ | 23.93 | 4,428 | $ | 23.40 | 4,614 | $ | 22.92 | |||||||||||||||
Granted | 249 | 30.47 | 333 | 29.78 | 227 | 31.43 | ||||||||||||||||||
Exercised | 530 | 24.49 | 663 | 22.65 | 329 | 22.50 | ||||||||||||||||||
Forfeited | 171 | 26.24 | 180 | 25.20 | 84 | 22.50 | ||||||||||||||||||
Outstanding — end of the year | 3,466 | $ | 24.20 | 3,918 | $ | 23.93 | 4,428 | $ | 23.40 | |||||||||||||||
Options exercisable at year-end | 2,930 | 2,896 | 3,636 | |||||||||||||||||||||
Weighted average exercise price of options exercisable at year-end | $ | 23.11 | $ | 23.04 | $ | 22.99 |
2006 | 2005 | 2004 | ||||||||||
Dividend yield | 1.0 | % | 1.0 | % | 1.4 | % | ||||||
Risk free interest rate | 4.6 | % | 3.0 | % | 3.0 | % | ||||||
Expected volatility | 22.0 | % | 30.0 | % | 30.0 | % | ||||||
Expected option life | 5.4 years | 7 years | 7 years | |||||||||
Weighted average grant fair value | $ | 8.08 | $ | 9.92 | $ | 9.76 |
F-31
Table of Contents
As of and for the years ended | ||||||||||||||||
December 31, 2006 | December 31, 2005 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Share | Grant Date | Share | Grant Date | |||||||||||||
Units | Fair Value | Units | Fair Value | |||||||||||||
Outstanding — beginning of the year | 112 | $ | 30.93 | — | — | |||||||||||
Granted | 82 | 30.31 | 122 | $ | 30.91 | |||||||||||
Converted | — | — | 3 | 30.75 | ||||||||||||
Forfeited | 13 | 30.73 | 7 | 30.75 | ||||||||||||
Outstanding — end of the year | 181 | $ | 30.66 | 112 | $ | 30.93 | ||||||||||
Share-based compensation expense | $ | 7,995 | ||
Tax benefit | (995 | ) | ||
Share-based compensation expense, net of tax | $ | 7,000 |
F-32
Table of Contents
F-33
Table of Contents
F-34
Table of Contents
Property | ||||||||||||||||
and Marine | Casualty | Finite Risk | Total | |||||||||||||
Year ended December 31, 2006: | ||||||||||||||||
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 | ||||||||||||
Segment underwriting income | $ | 192,267 | 25,787 | 826 | 218,880 | |||||||||||
Net investment income | 187,987 | |||||||||||||||
Net realized gains on investments | 1,090 | |||||||||||||||
Net foreign currency exchange gains | 738 | |||||||||||||||
Other expense | (2,872 | ) | ||||||||||||||
Corporate expenses not allocated to segments | (24,194 | ) | ||||||||||||||
Interest expense | (21,805 | ) | ||||||||||||||
Income before income tax expense | $ | 359,824 | ||||||||||||||
Ratios: | ||||||||||||||||
Net loss and LAE | 32.5 | % | 68.4 | % | 74.5 | % | 56.9 | % | ||||||||
Net 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 | % | ||||||||
Year ended December 31, 2005: | ||||||||||||||||
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 | ||||||||||||
Segment underwriting income (loss) | $ | (307,626 | ) | 58,933 | (813 | ) | (249,506 | ) | ||||||||
Net investment income | 129,445 | |||||||||||||||
Net realized losses on investments | (3,046 | ) | ||||||||||||||
Net foreign currency exchange 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 | ) | ||||||||||||||
Loss before income tax benefit | $ | (162,454 | ) | |||||||||||||
F-35
Table of Contents
Property | ||||||||||||||||
and Marine | Casualty | Finite Risk | Total | |||||||||||||
Ratios: | ||||||||||||||||
Net loss and LAE | 133.0 | % | 64.8 | % | 66.6 | % | 87.8 | % | ||||||||
Net 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 | % | ||||||||
Year ended December 31, 2004 | ||||||||||||||||
Net premiums written | $ | 504,439 | 677,399 | 464,175 | $ | 1,646,013 | ||||||||||
Net premiums earned | 485,135 | 611,893 | 350,907 | 1,447,935 | ||||||||||||
Net losses and LAE | 349,557 | 418,355 | 251,892 | 1,019,804 | ||||||||||||
Net acquisition expenses | 76,360 | 151,649 | 99,812 | 327,821 | ||||||||||||
Other underwriting expenses | 27,827 | 19,086 | 6,224 | 53,137 | ||||||||||||
Segment underwriting income | $ | 31,391 | 22,803 | (7,021 | ) | 47,173 | ||||||||||
Net investment income | 84,532 | |||||||||||||||
Net realized gains on investments | 1,955 | |||||||||||||||
Net foreign currency exchange gains | 725 | |||||||||||||||
Other income | 3,211 | |||||||||||||||
Corporate expenses not allocated to segments | (13,196 | ) | ||||||||||||||
Interest expense | (9,268 | ) | ||||||||||||||
Income before income tax expense | $ | 115,132 | ||||||||||||||
Ratios: | ||||||||||||||||
Net loss and LAE | 72.1 | % | 68.4 | % | 71.8 | % | 70.4 | % | ||||||||
Net acquisition expense | 15.7 | % | 24.8 | % | 28.4 | % | 22.6 | % | ||||||||
Other underwriting expense | 5.7 | % | 3.1 | % | 1.8 | % | 3.7 | % | ||||||||
Combined | 93.5 | % | 96.3 | % | 102.0 | % | 96.7 | % | ||||||||
2006 | 2005 | 2004 | ||||||||||
United States | $ | 949,522 | 1,449,216 | $ | 1,350,408 | |||||||
International | 227,091 | 268,506 | 295,605 | |||||||||
Total | $ | 1,176,613 | 1,717,722 | $ | 1,646,013 | |||||||
F-36
Table of Contents
Years Ending December 31, | ||||
2007 | $ | 2,707 | ||
2008 | 2,613 | |||
2009 | 2,579 | |||
2010 | 2,002 | |||
2011 | 1,945 | |||
Thereafter | 2,902 | |||
Total | $ | 14,748 | ||
F-37
Table of Contents
Three months ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2006 | 2006 | 2006 | 2006 | |||||||||||||
Net premiums earned | $ | 344,301 | 337,065 | 339,609 | $ | 315,726 | ||||||||||
Net investment income | 43,515 | 45,348 | 48,302 | 50,822 | ||||||||||||
Net losses and LAE | 206,774 | 187,464 | 191,428 | 174,936 | ||||||||||||
Net acquisition expenses | 69,239 | 76,052 | 74,994 | 65,638 | ||||||||||||
Operating expenses | 22,988 | 23,392 | 25,348 | 23,762 | ||||||||||||
Net income attributable to common shareholders | 74,460 | 79,146 | 82,321 | 83,348 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic | 1.26 | 1.34 | 1.38 | 1.40 | ||||||||||||
Diluted | $ | 1.16 | 1.24 | 1.28 | $ | 1.28 | ||||||||||
Average common shares outstanding: | ||||||||||||||||
Basic | 59,097 | 59,224 | 59,537 | 59,621 | ||||||||||||
Diluted | 66,597 | 65,725 | 66,520 | 67,091 |
Three months ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2005 | 2005 | 2005 | 2005 | |||||||||||||
Net premiums earned | $ | 411,040 | 431,470 | 429,388 | $ | 442,825 | ||||||||||
Net investment income | 26,905 | 28,904 | 36,441 | 37,195 | ||||||||||||
Net losses and LAE | 237,698 | 240,852 | 564,618 | 462,257 | ||||||||||||
Net acquisition expenses | 93,249 | 103,928 | 98,858 | 107,100 | ||||||||||||
Operating expenses | 20,008 | 23,480 | 8,080 | 18,259 | ||||||||||||
Net income (loss) attributable to common shareholders | 73,088 | 67,985 | (176,024 | ) | (103,273 | ) | ||||||||||
Earnings (loss) per common share: | ||||||||||||||||
Basic | 1.69 | 1.57 | (4.02 | ) | (1.94 | ) | ||||||||||
Diluted | $ | 1.49 | 1.39 | (4.02 | ) | $ | (1.94 | ) | ||||||||
Average common shares outstanding: | ||||||||||||||||
Basic | 43,163 | 43,293 | 43,785 | 53,339 | ||||||||||||
Diluted | 50,032 | 50,009 | 43,785 | 53,339 |
F-38
Table of Contents
F-39
Table of Contents
Non- | ||||||||||||||||||||
Condensed Consolidating Balance Sheet | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
December 31, 2006 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Total investments | $ | — | 11,342 | 3,365,943 | — | $ | 3,377,285 | |||||||||||||
Investment in subsidiaries | 1,749,762 | 475,194 | 402,098 | (2,627,054 | ) | — | ||||||||||||||
Cash and cash equivalents | 106,039 | 39,294 | 706,319 | — | 851,652 | |||||||||||||||
Reinsurance assets | — | — | 765,928 | — | 765,928 | |||||||||||||||
Income tax recoverable | — | (1,418 | ) | 8,933 | — | 7,515 | ||||||||||||||
Other assets | 9,296 | 3,792 | 78,099 | — | 91,187 | |||||||||||||||
Total assets | $ | 1,865,097 | 528,204 | 5,327,320 | (2,627,054 | ) | $ | 5,093,567 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | $ | — | — | 2,880,715 | — | $ | 2,880,715 | |||||||||||||
Debt obligations | — | 292,840 | — | — | 292,840 | |||||||||||||||
Other liabilities | 7,036 | 2,024 | 52,891 | — | 61,951 | |||||||||||||||
Total liabilities | 7,036 | 294,864 | 2,933,606 | — | 3,235,506 | |||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||
Preferred shares | 57 | — | — | — | 57 | |||||||||||||||
Common shares | 597 | — | 6,250 | (6,250 | ) | 597 | ||||||||||||||
Additional paid-in capital | 1,545,979 | 192,203 | 2,051,468 | (2,243,671 | ) | 1,545,979 | ||||||||||||||
Accumulated other comprehensive loss | (44,289 | ) | (9,071 | ) | (55,012 | ) | 64,083 | (44,289 | ) | |||||||||||
Retained earnings | 355,717 | 50,208 | 391,008 | (441,216 | ) | 355,717 | ||||||||||||||
Total shareholders’ equity | 1,858,061 | 233,340 | 2,393,714 | (2,627,054 | ) | 1,858,061 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,865,097 | 528,204 | 5,327,320 | (2,627,054 | ) | $ | 5,093,567 | ||||||||||||
F-40
Table of Contents
Non- | ||||||||||||||||||||
Condensed Consolidating Balance Sheet | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
December 31, 2005 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Total investments | $ | — | 12,448 | 2,997,234 | — | $ | 3,009,682 | |||||||||||||
Investment in subsidiaries | 1,410,794 | 448,839 | 436,368 | (2,296,001 | ) | — | ||||||||||||||
Cash and cash equivalents | 129,962 | 5,010 | 685,774 | — | 820,746 | |||||||||||||||
Reinsurance assets | — | — | 1,065,987 | — | 1,065,987 | |||||||||||||||
Income tax recoverable | — | 5,874 | 18,648 | — | 24,522 | |||||||||||||||
Other assets | 2,963 | 4,086 | 226,389 | — | 233,438 | |||||||||||||||
Total assets | $ | 1,543,719 | 476,257 | 5,430,400 | (2,296,001 | ) | $ | 5,154,375 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | $ | — | — | 3,041,254 | — | $ | 3,041,254 | |||||||||||||
Debt obligations | — | 292,840 | — | — | 292,840 | |||||||||||||||
Other liabilities | 3,470 | 2,243 | 274,319 | — | 280,032 | |||||||||||||||
Total liabilities | 3,470 | 295,083 | 3,315,573 | — | 3,614,126 | |||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||
Preferred shares | 57 | — | — | — | 57 | |||||||||||||||
Common shares | 590 | — | 6,250 | (6,250 | ) | 590 | ||||||||||||||
Unearned share grant compensation | (2,467 | ) | — | — | — | (2,467 | ) | |||||||||||||
Additional paid-in capital | 1,527,316 | 192,036 | 2,050,834 | (2,242,870 | ) | 1,527,316 | ||||||||||||||
Accumulated other comprehensive loss | (40,718 | ) | (10,199 | ) | (52,840 | ) | 63,039 | (40,718 | ) | |||||||||||
Retained earnings | 55,471 | (663 | ) | 110,583 | (109,920 | ) | 55,471 | |||||||||||||
Total shareholders’ equity | 1,540,249 | 181,174 | 2,114,827 | (2,296,001 | ) | 1,540,249 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,543,719 | 476,257 | 5,430,400 | (2,296,001 | ) | $ | 5,154,375 | ||||||||||||
F-41
Table of Contents
Non- | ||||||||||||||||||||
Consolidating Statement of Operations | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
For the year ended December 31, 2006 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue: | ||||||||||||||||||||
Net premiums earned | $ | — | — | 1,336,701 | — | $ | 1,336,701 | |||||||||||||
Net investment income | 5,912 | 1,033 | 181,042 | — | 187,987 | |||||||||||||||
Net realized gains on investments | — | — | 1,090 | — | 1,090 | |||||||||||||||
Other income (expense) | 3,577 | — | (6,449 | ) | — | (2,872 | ) | |||||||||||||
Total revenue | 9,489 | 1,033 | 1,512,384 | — | 1,522,906 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Net losses and loss adjustment expenses | — | — | 760,602 | — | 760,602 | |||||||||||||||
Net acquisition expenses | — | — | 285,923 | — | 285,923 | |||||||||||||||
Operating expenses | 23,803 | 544 | 71,143 | — | 95,490 | |||||||||||||||
Net foreign currency exchange gains | — | — | (738 | ) | — | (738 | ) | |||||||||||||
Interest expense | — | 21,803 | 2 | — | 21,805 | |||||||||||||||
Total expenses | 23,803 | 22,347 | 1,116,932 | — | 1,163,082 | |||||||||||||||
Income (loss) before income tax expense (benefit) | (14,314 | ) | (21,314 | ) | 395,452 | — | 359,824 | |||||||||||||
Income tax expense (benefit) | — | (7,444 | ) | 37,611 | — | 30,167 | ||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | (14,314 | ) | (13,870 | ) | 357,841 | — | 329,657 | |||||||||||||
Equity in earnings of subsidiaries | 343,971 | 64,741 | 61,473 | (470,185 | ) | — | ||||||||||||||
Net income (loss) | 329,657 | 50,871 | 419,314 | (470,185 | ) | 329,657 | ||||||||||||||
Preferred dividends | 10,382 | — | — | — | 10,382 | |||||||||||||||
Net income attributable to common shareholders | $ | 319,275 | 50,871 | 419,314 | (470,185 | ) | $ | 319,275 | ||||||||||||
F-42
Table of Contents
Non- | ||||||||||||||||||||
Consolidating Statement of Operations | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
For the year ended December 31, 2005 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue: | ||||||||||||||||||||
Net premiums earned | $ | — | — | 1,714,723 | — | $ | 1,714,723 | |||||||||||||
Net investment income | 1,724 | 937 | 126,867 | (83 | ) | 129,445 | ||||||||||||||
Net realized losses on investments | — | (15 | ) | (3,031 | ) | — | (3,046 | ) | ||||||||||||
Other income (expense) | 7,036 | — | (7,622 | ) | — | (586 | ) | |||||||||||||
Total revenue | 8,760 | 922 | 1,830,937 | (83 | ) | 1,840,536 | ||||||||||||||
�� | ||||||||||||||||||||
Expenses: | ||||||||||||||||||||
Net losses and loss adjustment expenses | — | — | 1,505,425 | — | 1,505,425 | |||||||||||||||
Net acquisition expenses | — | — | 407,680 | (4,545 | ) | 403,135 | ||||||||||||||
Operating expenses | 13,393 | 635 | 51,337 | 4,462 | 69,827 | |||||||||||||||
Net foreign currency exchange losses | 2 | — | 2,109 | — | 2,111 | |||||||||||||||
Interest expense | 71 | 19,935 | — | — | 20,006 | |||||||||||||||
Loss on repurchase of debt | — | 2,486 | — | — | 2,486 | |||||||||||||||
Total expenses | 13,466 | 23,056 | 1,966,551 | (83 | ) | 2,002,990 | ||||||||||||||
Loss before income tax benefit | (4,706 | ) | (22,134 | ) | (135,614 | ) | — | (162,454 | ) | |||||||||||
Income tax benefit | — | (7,746 | ) | (17,221 | ) | — | (24,967 | ) | ||||||||||||
Net income (loss) before equity in earnings of subsidiaries | (4,706 | ) | (14,388 | ) | (118,393 | ) | — | (137,487 | ) | |||||||||||
Equity in loss of subsidiaries | (132,781 | ) | (27,557 | ) | (62,160 | ) | 222,498 | — | ||||||||||||
Net loss | (137,487 | ) | (41,945 | ) | (180,553 | ) | 222,498 | (137,487 | ) | |||||||||||
Preferred dividends | 737 | — | — | — | 737 | |||||||||||||||
Net loss attributable to common shareholders | $ | (138,224 | ) | (41,945 | ) | (180,553 | ) | 222,498 | $ | (138,224 | ) | |||||||||
F-43
Table of Contents
Non- | ||||||||||||||||||||
Consolidating Statement of Operations | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
For the year ended December 31, 2004 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue: | ||||||||||||||||||||
Net premiums earned | $ | — | — | 1,447,935 | — | $ | 1,447,935 | |||||||||||||
Net investment income | 53 | 164 | 84,315 | — | 84,532 | |||||||||||||||
Net realized gains on investments | — | 6 | 1,949 | — | 1,955 | |||||||||||||||
Other income | 2,944 | — | 48 | 219 | 3,211 | |||||||||||||||
Total revenue | 2,997 | 170 | 1,534,247 | 219 | 1,537,633 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Net losses and loss adjustment expenses | — | — | 1,019,804 | — | 1,019,804 | |||||||||||||||
Net acquisition expenses | — | — | 331,754 | (3,933 | ) | 327,821 | ||||||||||||||
Operating expenses | 12,725 | 288 | 49,387 | 3,933 | 66,333 | |||||||||||||||
Net foreign currency exchange gains | (3 | ) | — | (722 | ) | — | (725 | ) | ||||||||||||
Interest expense | 207 | 9,061 | — | — | 9,268 | |||||||||||||||
Total expenses | 12,929 | 9,349 | 1,400,223 | — | 1,422,501 | |||||||||||||||
Income (loss) before income tax expense (benefit) | (9,932 | ) | (9,179 | ) | 134,024 | 219 | 115,132 | |||||||||||||
Income tax expense (benefit) | — | (3,213 | ) | 33,562 | — | 30,349 | ||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | (9,932 | ) | (5,966 | ) | 100,462 | 219 | 84,783 | |||||||||||||
Equity in earnings of subsidiaries | 94,715 | 55,006 | 60,799 | (210,520 | ) | — | ||||||||||||||
Net income | $ | 84,783 | 49,040 | 161,261 | (210,301 | ) | $ | 84,783 | ||||||||||||
F-44
Table of Contents
Non- | ||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
For the year ended December 31, 2006 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net cash provided by (used in) operating activities | $ | (9,650 | ) | (6,483 | ) | 542,934 | — | $ | 526,801 | |||||||||||
Investing Activities: | ||||||||||||||||||||
Proceeds from sale of available-for-sale fixed maturity securities | — | 1,564 | 346,578 | — | 348,142 | |||||||||||||||
Proceeds from maturity or paydown of available-for-sale fixed maturity securities | — | — | 270,939 | — | 270,939 | |||||||||||||||
Acquisition of available-for-sale fixed maturity securities | — | (498 | ) | (1,082,784 | ) | — | (1,083,282 | ) | ||||||||||||
Dividends from subsidiaries | 1,600 | 40,000 | — | (41,600 | ) | — | ||||||||||||||
Increase in short-term investments | — | — | (15,822 | ) | — | (15,822 | ) | |||||||||||||
Contributions to subsidiaries | — | (300 | ) | 300 | — | |||||||||||||||
Net cash provided by (used in) investing activities | 1,600 | 40,766 | (481,089 | ) | (41,300 | ) | (480,023 | ) | ||||||||||||
Financing Activities: | ||||||||||||||||||||
Dividends paid to common shareholders | (19,029 | ) | — | (41,600 | ) | 41,600 | (19,029 | ) | ||||||||||||
Dividends paid to preferred shareholders | (9,818 | ) | — | — | — | (9,818 | ) | |||||||||||||
Proceeds from exercise of share options | 12,975 | — | — | — | 12,975 | |||||||||||||||
Capital contribution from parent | — | — | 300 | (300 | ) | — | ||||||||||||||
Net cash used in financing activities | (15,872 | ) | — | (41,300 | ) | 41,300 | (15,872 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (23,922 | ) | 34,283 | 20,545 | — | 30,906 | ||||||||||||||
Cash and cash equivalents at beginning of year | 129,962 | 5,010 | 685,774 | — | 820,746 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 106,040 | 39,293 | 706,319 | — | $ | 851,652 | |||||||||||||
F-45
Table of Contents
Non- | ||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
For the year ended December 31, 2005 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net cash provided by (used in) operating activities | $ | (4,999 | ) | (16,340 | ) | 619,013 | — | $ | 597,674 | |||||||||||
Investing Activities: | ||||||||||||||||||||
Proceeds from sale of available-for-sale fixed maturity securities | — | 3,026 | 888,773 | — | 891,799 | |||||||||||||||
Proceeds from maturity or paydown of available-for-sale fixed maturity securities | — | 439 | 97,492 | — | 97,931 | |||||||||||||||
Proceeds from sale of subsidiary shares | — | — | 193,000 | (193,000 | ) | — | ||||||||||||||
Purchase of subsidiary shares | — | — | (139,902 | ) | 139,902 | — | ||||||||||||||
Acquisition of available-for-sale fixed maturity securities | — | (12,347 | ) | (1,699,158 | ) | — | (1,711,505 | ) | ||||||||||||
Dividends from subsidiaries | 17,000 | — | — | (17,000 | ) | — | ||||||||||||||
Decrease in short-term investments | — | — | (8,793 | ) | — | (8,793 | ) | |||||||||||||
Contributions to subsidiaries | (477,500 | ) | (75,100 | ) | — | 552,600 | — | |||||||||||||
Net cash used in investing activities | (460,500 | ) | (83,982 | ) | (668,588 | ) | 482,502 | (730,568 | ) | |||||||||||
Financing Activities: | ||||||||||||||||||||
Dividends paid to shareholders | (14,775 | ) | — | (17,000 | ) | 17,000 | (14,775 | ) | ||||||||||||
Proceeds from exercise of share options | 15,026 | — | — | — | 15,026 | |||||||||||||||
Proceeds from issuance of common shares | 425,757 | 139,902 | — | (139,902 | ) | 425,757 | ||||||||||||||
Proceeds from issuance of debt | — | 246,900 | — | — | 246,900 | |||||||||||||||
Proceeds from issuance of preferred shares | 167,509 | — | — | — | 167,509 | |||||||||||||||
Capital contribution from parent | — | — | 552,600 | (552,600 | ) | — | ||||||||||||||
Purchase of common shares | — | (193,000 | ) | — | 193,000 | — | ||||||||||||||
Repurchase of debt obligations | — | (96,674 | ) | — | — | (96,674 | ) | |||||||||||||
Net cash provided by financing activities | 593,517 | 97,128 | 535,600 | (482,502 | ) | 743,743 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | 128,018 | (3,194 | ) | 486,025 | — | 610,849 | ||||||||||||||
Cash and cash equivalents at beginning of year | 1,944 | 8,204 | 199,749 | — | 209,897 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 129,962 | 5,010 | 685,774 | — | $ | 820,746 | |||||||||||||
F-46
Table of Contents
Non- | ||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | Platinum | Platinum | guarantor | Consolidating | ||||||||||||||||
For the year ended December 31, 2004 | Holdings | Finance | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net cash provided by (used in) operating activities | $ | (8,400 | ) | (436 | ) | 723,569 | — | $ | 714,733 | |||||||||||
Investing Activities: | ||||||||||||||||||||
Proceeds from sale of available-for-sale fixed maturity securities | — | 998 | 497,947 | — | 498,945 | |||||||||||||||
Proceeds from maturity or paydown of available-for-sale fixed maturity securities | — | 697 | 135,775 | — | 136,472 | |||||||||||||||
Acquisition of available-for-sale fixed maturity securities | — | (2,972 | ) | (1,227,923 | ) | — | (1,230,895 | ) | ||||||||||||
Dividends from subsidiaries | 22,000 | — | — | (22,000 | ) | — | ||||||||||||||
Contributions to subsidiaries | (250 | ) | — | — | 250 | — | ||||||||||||||
Net cash provided by (used in) investing activities | 21,750 | (1,277 | ) | (594,201 | ) | (21,750 | ) | (595,478 | ) | |||||||||||
Financing Activities: | ||||||||||||||||||||
Dividends paid to shareholders | (13,807 | ) | — | (22,000 | ) | 22,000 | (13,807 | ) | ||||||||||||
Proceeds from exercise of share options | 7,406 | — | — | — | 7,406 | |||||||||||||||
Proceeds from issuance of common shares | 1,567 | — | — | — | 1,567 | |||||||||||||||
Purchase of common shares | (9,985 | ) | — | — | — | (9,985 | ) | |||||||||||||
Capital contribution from parent | — | — | 250 | (250 | ) | — | ||||||||||||||
Net cash used in financing activities | (14,819 | ) | — | (21,750 | ) | 21,750 | (14,819 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (1,469 | ) | (1,713 | ) | 107,618 | — | 104,436 | |||||||||||||
Cash and cash equivalents at beginning of year | 3,413 | 9,917 | 92,131 | — | 105,461 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 1,944 | 8,204 | 199,749 | — | $ | 209,897 | |||||||||||||
F-47
Table of Contents
Page | ||||||||
Report of Independent Registered Public Accounting Firm | S-2 | |||||||
Schedule I | S-3 | |||||||
Schedule II | S-4 | |||||||
Schedule III | S-7 | |||||||
Schedule IV | S-8 |
S-1
Table of Contents
Platinum Underwriters Holdings, Ltd.:
February 27, 2007
S-2
Table of Contents
Summary of Investments — Other Than Investments in Related Parties
As of December 31, 2006
($ in thousands)
Amount at | ||||||||||||
which | ||||||||||||
shown in | ||||||||||||
Balance | ||||||||||||
Cost* | Fair Value | Sheet | ||||||||||
Fixed maturity securities: | ||||||||||||
Bonds: | ||||||||||||
United States Government and government agencies and authorities | $ | 231,900 | 227,599 | $ | 227,599 | |||||||
State, municipalities and political subdivisions | 162,600 | 160,165 | 160,165 | |||||||||
Foreign governments | 130,245 | 127,075 | 127,075 | |||||||||
Foreign corporate | 201,764 | 197,799 | 197,799 | |||||||||
Public utilities | 128,696 | 126,175 | 126,175 | |||||||||
All other corporate | 2,493,052 | 2,456,566 | 2,456,566 | |||||||||
Total bonds | 3,348,257 | 3,295,379 | 3,295,379 | |||||||||
Redeemable preferred stock | 39,558 | 39,266 | 39,266 | |||||||||
Total fixed maturity securities | 3,387,815 | 3,334,645 | 3,334,645 | |||||||||
Preferred stock | 11,246 | 10,772 | 10,772 | |||||||||
Other long term investments | 5,000 | 4,745 | 4,745 | |||||||||
Short-term investments | 27,123 | 27,123 | 27,123 | |||||||||
Total investments | $ | 3,431,184 | 3,377,285 | $ | 3,377,285 | |||||||
* | Original cost of fixed maturity securities reduced by repayments and adjusted for amortization of premiums and discounts. |
S-3
Table of Contents
(Parent Company)
Condensed Balance Sheets
December 31, 2006 and 2005
($ in thousands, except share data)
2006 | 2005 | |||||||
ASSETS | ||||||||
Investment in affiliates | $ | 1,749,762 | $ | 1,410,794 | ||||
Cash | 106,039 | 129,962 | ||||||
Other assets | 9,296 | 2,963 | ||||||
Total assets | $ | 1,865,097 | $ | 1,543,719 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Accrued expenses and other liabilities | $ | 7,036 | $ | 3,470 | ||||
Total liabilities | 7,036 | 3,470 | ||||||
Shareholders’ equity | ||||||||
Preferred shares, $.01 par value, 25,000,000 shares authorized, 5,750,000 shares issued and outstanding | 57 | 57 | ||||||
Common shares, $.01 par value, 200,000,000 shares authorized, 59,671,959 and 59,126,675 shares issued and outstanding, respectively | 597 | 590 | ||||||
Additional paid-in capital | 1,545,979 | 1,527,316 | ||||||
Unearned share grant compensation | — | (2,467 | ) | |||||
Accumulated other comprehensive income (loss) | (44,289 | ) | (40,718 | ) | ||||
Retained earnings | 355,717 | 55,471 | ||||||
Total shareholders’ equity | 1,858,061 | 1,540,249 | ||||||
Total liabilities and shareholders’ equity | $ | 1,865,097 | $ | 1,543,719 | ||||
S-4
Table of Contents
(Parent Company)
Condensed Statements of Operations
For the years ended December 31, 2006, 2005 and 2004
($ in thousands)
2006 | 2005 | 2004 | ||||||||||
Revenues: | ||||||||||||
Net investment income | $ | 5,912 | 1,724 | $ | 53 | |||||||
Other income | 3,577 | 7,036 | 2,944 | |||||||||
9,489 | 8,760 | 2,997 | ||||||||||
Expenses: | ||||||||||||
Interest expenses | — | 71 | 207 | |||||||||
Operating expenses | 23,803 | 13,395 | 12,722 | |||||||||
Total expenses | 23,803 | 13,466 | 12,929 | |||||||||
Net loss before equity in earnings of affiliate | (14,314 | ) | (4,706 | ) | (9,932 | ) | ||||||
Equity in earnings (loss) of affiliates | 343,971 | (132,781 | ) | 94,715 | ||||||||
Net income (loss) before preferred dividends | 329,657 | (137,487 | ) | 84,783 | ||||||||
Preferred dividends | 10,382 | 737 | — | |||||||||
Net income (loss) attributable to common shareholders | $ | 319,275 | (138,224 | ) | $ | 84,783 | ||||||
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Table of Contents
(Parent Company)
Condensed Statements of Cash Flows
For the years ended December 31, 2006, 2005 and 2004
($ in thousands)
2006 | 2005 | 2004 | ||||||||||
Operating Activities: | ||||||||||||
Net loss before equity in earnings of affiliates | $ | (14,314 | ) | (4,706 | ) | $ | (9,932 | ) | ||||
Adjustments to reconcile net income to net cash provided in operations: | ||||||||||||
Share based compensation | 3,552 | 2,313 | 1,777 | |||||||||
Depreciation and amortization | 129 | 129 | 125 | |||||||||
Other, net | 983 | (2,735 | ) | (369 | ) | |||||||
Net cash used in operating activities | (9,650 | ) | (4,999 | ) | (8,399 | ) | ||||||
Investing Activities: | ||||||||||||
Dividends and distributions from subsidiaries | 1,600 | 17,000 | 22,000 | |||||||||
Contributions to subsidiaries | — | (477,500 | ) | (250 | ) | |||||||
Net cash provided by (used in) investing activities | 1,600 | (460,500 | ) | 21,750 | ||||||||
Financing Activities: | ||||||||||||
Dividends paid to preferred shareholders | (9,818 | ) | — | — | ||||||||
Dividends paid to common shareholders | (19,029 | ) | (14,775 | ) | (13,807 | ) | ||||||
Proceeds from exercise of share options | 12,974 | 15,026 | 7,406 | |||||||||
Net proceeds from issuance of common shares | — | 425,757 | 1,566 | |||||||||
Net proceeds from issuance of preferred shares | — | 167,509 | — | |||||||||
Purchase of common shares | — | — | (9,985 | ) | ||||||||
Net cash (used in) provided by financing activities | (15,873 | ) | 593,517 | (14,820 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (23,923 | ) | 128,018 | (1,469 | ) | |||||||
Cash and cash equivalents at beginning of year | 129,962 | 1,944 | 3,413 | |||||||||
Cash and cash equivalents at end of year | $ | 106,039 | 129,962 | $ | 1,944 | |||||||
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Table of Contents
Supplementary Insurance Information
($ in thousands)
Net unpaid | Other | Net losses | Amortization | |||||||||||||||||||||||||||||||||||||
Deferred | losses | policy | and loss | of deferred | ||||||||||||||||||||||||||||||||||||
policy | and loss | Net | claims and | Net | Net | adjustment | policy | Other | Net | |||||||||||||||||||||||||||||||
acquisition | adjustment | unearned | benefits | earned | investment | expenses | acquisition | operating | written | |||||||||||||||||||||||||||||||
Period | costs | expenses | premiums | payable | premium | income | incurred | costs | expenses | premiums | ||||||||||||||||||||||||||||||
Year ended December 31, 2006: | ||||||||||||||||||||||||||||||||||||||||
Property and Marine | $ | 9,969 | 537,794 | 46,022 | 448,959 | 145,900 | 47,183 | $ | 424,929 | |||||||||||||||||||||||||||||||
Casualty | 72,641 | 1,467,879 | 289,966 | 764,341 | 522,815 | 114,880 | 757,675 | |||||||||||||||||||||||||||||||||
Finite Risk | — | 320,554 | 4,124 | 123,401 | 91,887 | 58,695 | (5,991 | ) | ||||||||||||||||||||||||||||||||
Total | 82,610 | 2,326,227 | 340,112 | — | 1,336,701 | 187,987 | 760,602 | 220,758 | 24,194 | 1,176,613 | ||||||||||||||||||||||||||||||
Year ended December 31, 2005: | ||||||||||||||||||||||||||||||||||||||||
Property and Marine | 14,357 | 816,328 | 66,741 | 569,173 | 756,742 | 70,005 | 575,055 | |||||||||||||||||||||||||||||||||
Casualty | 73,622 | 1,107,316 | 292,513 | 789,629 | 511,609 | 140,758 | 809,031 | |||||||||||||||||||||||||||||||||
Finite Risk | 42,821 | 345,011 | 134,865 | 355,921 | 237,074 | 88,797 | 333,636 | |||||||||||||||||||||||||||||||||
Total | 130,800 | 2,268,655 | 494,119 | — | 1,714,723 | 129,455 | 1,505,425 | 299,560 | 14,158 | 1,717,722 | ||||||||||||||||||||||||||||||
Year ended December 31, 2004: | ||||||||||||||||||||||||||||||||||||||||
Property and Marine | 15,747 | 410,347 | 64,985 | 485,135 | 349,557 | 58,792 | 504,439 | |||||||||||||||||||||||||||||||||
Casualty | 72,454 | 715,314 | 278,634 | 611,893 | 418,355 | 118,734 | 677,399 | |||||||||||||||||||||||||||||||||
Finite Risk | 47,837 | 253,566 | 155,917 | 350,907 | 251,892 | 46,781 | 464,175 | |||||||||||||||||||||||||||||||||
Total | $ | 136,038 | 1,379,227 | 499,536 | — | 1,447,935 | 84,532 | 1,019,804 | 224,307 | 13,196 | $ | 1,646,013 | ||||||||||||||||||||||||||||
S-7
Table of Contents
Reinsurance
($ in thousands)
Assumed from | Percentage of | |||||||||||||||||||
Direct | Ceded to other | other | amount | |||||||||||||||||
Description | Amount | companies | companies | Net Amount | assumed to net | |||||||||||||||
Property and liability premiums written: | ||||||||||||||||||||
Year ended December 31, 2006: | ||||||||||||||||||||
Property and Marine | — | $ | 89,387 | 514,316 | $ | 424,929 | 121.0 | % | ||||||||||||
Casualty | — | 74 | 757,749 | 757,675 | 100.0 | % | ||||||||||||||
Finite Risk | — | 9,126 | 3,135 | (5,991 | ) | (52.3 | %) | |||||||||||||
Total | — | 98,587 | 1,275,200 | 1,176,613 | 108.4 | % | ||||||||||||||
Year ended December 31, 2005: | ||||||||||||||||||||
Property and Marine | — | 21,521 | 596,576 | 575,055 | 103.7 | % | ||||||||||||||
Casualty | — | 133 | 809,164 | 809,031 | 100.0 | % | ||||||||||||||
Finite Risk | — | 25,779 | 359,415 | 333,636 | 107.7 | % | ||||||||||||||
Total | — | 47,433 | 1,765,155 | 1,717,722 | 102.8 | % | ||||||||||||||
Year ended December 31, 2004: | ||||||||||||||||||||
Property and Marine | — | 13,029 | 517,468 | 504,439 | 102.6 | % | ||||||||||||||
Casualty | — | 748 | 678,147 | 677,399 | 100.1 | % | ||||||||||||||
Finite Risk | — | — | 464,175 | 464,175 | 100.0 | % | ||||||||||||||
Total | — | $ | 13,777 | 1,659,790 | $ | 1,646,013 | 100.8 | % | ||||||||||||
S-8