Philadelphia Consolidated Holding (PHLY) 8-K Other events

PHILADELPHIA CONSOLIDATED HOLDING CORP.
FIRST QUARTER RESULTS
MARCH 31, 2003

APRIL 17, 2003 PRESS RELEASE

Bala Cynwyd, PA – Philadelphia Consolidated Holding Corp. (PHLY-NASDAQ) today reported net income for the first quarter ended March 31, 2003 was $13.2 million ($0.59 diluted and $0.61 basic earnings per share) and included $0.8 million in after tax net realized investment losses ($0.03 diluted loss per share). Net income for the first quarter ended March 31, 2002 was $10.7 million ($0.48 diluted and $0.50 basic earnings per share) and included $0.03 million in after tax net realized investment gains. Net operating income for the first quarter ended March 31, 2003 was $14.0 million ($0.62 per diluted share) vs. net operating income of $10.7 million for the same period in 2002. Net operating income is net income adjusted for after tax net realized investment gain (loss). Gross written premiums increased 41.6% to $193.3 million vs. $136.5 million in the first quarter of 2002, and the combined ratio for the quarter was 92.2% vs. 90.6% for the same quarter in 2002.

James J. Maguire, Jr. President and CEO said: “I am very pleased with the results for the quarter. We continued to execute on the fundamentals of disciplined underwriting and superior customer service. Gross Written Premiums grew 41% and Net Earned Premiums were up by over 66% for the quarter. This considerable growth was fueled in large part by rate increases and the demise and/or rating downgrades of certain of our competitors. Additionally, retention levels of 90%, coupled with current rate increases averaging in the range of 5-15%, contributed to overall growth. Our investment portfolio, of which 96% is invested in fixed income securities with an average credit quality rating of “AA+”, generated investment income of $9.8 million, a growth of 10.7% over last year. Net cash provided by operating activities for the quarter was $81.9 million, a 51.1% increase quarter over quarter.”

The Company will hold its quarterly conference call to discuss first quarter 2003 results today at 3:00 p.m. Eastern Time. The call is being webcast by CCBN and can be accessed at the Company’s web site at www.phly.com. The dial-in phone number for the conference call is (800) 915-4836.

This release contains forward-looking statements that are based on management’s estimates, assumptions and projections. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors which, among others, could cause the Company’s actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, results of the Company’s business, and the other matters referred to above include, but are not limited to: (i) changes in the business environment in which the Company operates, including inflation and interest rates; (ii) changes in taxes, governmental laws, and regulations; (iii) competitive product and pricing activity; (iv) difficulties of managing growth profitably; (v) claims development and the adequacy of our liability for unpaid loss and loss adjustment expenses; (vi) severity of natural disasters and other catastrophes; (vii) adequacy of reinsurance coverage which may be obtained by the Company; (viii) ability and willingness of our reinsurers to pay; and (ix) future terrorist attacks.

Philadelphia Insurance Companies, rated “A+” (Superior) by A.M. Best Company, is a specialty niche Company which markets and underwrites property and casualty insurance products through 36 proprietary underwriting offices across the U.S. of A. For more information about our Company or to review our 2002 annual report, visit our web site at www.phly.com.

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

					As of
					March 31,			December 31,
					2003			2002
					(Unaudited)
				ASSETS
INVESTMENTS:
	FIXED MATURITIES AVAILABLE FOR SALE AT MARKET (AMORTIZED COST $933,319 AND $832,701)				$	950,835		$	854,513
	EQUITY SECURITIES AT MARKET (COST $49,154 AND $51,257)					51,607			54,346
			TOTAL INVESTMENTS			1,002,442			908,859
	CASH AND CASH EQUIVALENTS					38,084			42,002
	ACCRUED INVESTMENT INCOME					9,673			8,571
	PREMIUMS RECEIVABLE					130,297			130,007
	PREPAID REINSURANCE PREMIUMS AND REINSURANCE RECEIVABLES					151,029			151,352
	DEFERRED INCOME TAXES					11,023			7,541
	DEFERRED ACQUISITION COSTS					63,046			61,272
	PROPERTY AND EQUIPMENT, NET					13,150			12,794
	GOODWILL					25,724			25,724
	OTHER ASSETS					14,335			10,212
			TOTAL ASSETS		$	1,458,803		$	1,358,334
		LIABILITIES AND SHAREHOLDERS’ EQUITY
POLICY LIABILITIES AND ACCRUALS:
	UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES				$	487,195		$	445,548
	UNEARNED PREMIUMS					326,390			306,093
			TOTAL POLICY LIABILITIES AND ACCRUALS			813,585			751,641
	LOANS PAYABLE					49,317			39,113
	PREMIUMS PAYABLE					29,850			33,553
	PAYABLE FOR SECURITY PURCHASE					11,481			6,100
	OTHER LIABILITIES					66,604			50,104
			TOTAL LIABILITIES			970,837			880,511
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
	PREFERRED STOCK, $.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED, NONE ISSUED AND OUTSTANDING					—			—
	COMMON STOCK, NO PAR VALUE, 100,000,000 SHARES AUTHORIZED, 21,866,961 AND 21,868,877 SHARES ISSUED AND OUTSTANDING					276,905			276,945
	NOTES RECEIVABLE FROM SHAREHOLDERS					(5,952	)		(6,407	)
	ACCUMULATED OTHER COMPREHENSIVE INCOME					12,980			16,185
	RETAINED EARNINGS					204,333			191,100
	LESS COST OF COMMON STOCK HELD IN TREASURY, 10,000 SHARES					(300	)		—
			TOTAL SHAREHOLDERS’ EQUITY			487,966			477,823
			TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,458,803		$	1,358,334

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(Unaudited)

			For the Three Months
			Ended March 31,
			2003			2002
REVENUE:
	NET EARNED PREMIUMS		$	148,362		$	89,244
	NET INVESTMENT INCOME			9,805			8,855
	NET REALIZED INVESTMENT GAIN (LOSS)			(1,133	)		47
	OTHER INCOME			661			1
		TOTAL REVENUE		157,695			98,147
LOSSES AND EXPENSES:
	LOSS AND LOSS ADJUSTMENT EXPENSES			103,085			65,611
	NET REINSURANCE RECOVERIES			(12,725	)		(12,562	)
	NET LOSS AND LOSS ADJUSTMENT EXPENSES			90,360			53,049
	ACQUISITION COSTS AND OTHER UNDERWRITING EXPENSES			46,420			27,821
	OTHER OPERATING EXPENSES			1,674			1,484
		TOTAL LOSSES AND EXPENSES		138,454			82,354
INCOME BEFORE INCOME TAXES				19,241			15,793
INCOME TAX EXPENSE (BENEFIT):
	CURRENT			7,764			6,571
	DEFERRED			(1,756	)		(1,455	)
		TOTAL INCOME TAX EXPENSE		6,008			5,116
		NET INCOME	$	13,233		$	10,677
PER AVERAGE SHARE DATA:
	BASIC EARNINGS PER SHARE		$	0.61		$	0.50
	DILUTED EARNINGS PER SHARE		$	0.59		$	0.48
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING				21,865,269			21,528,091
WEIGHTED-AVERAGE SHARE EQUIVALENTS OUTSTANDING				562,552			724,311
WEIGHTED-AVERAGE SHARES AND SHARE EQUIVALENTS OUTSTANDING				22,427,821			22,252,402