Platinum Underwriters Holdings, Ltd. became another casualty of the Florida hurricanes. The Bermuda-based insurer posted a net loss for the period of $69.8 million, or $1.62 per common share, as its GAAP combined ratio ballooned to 124.8 percent.
The company also noted: “Net premiums written were $440.5 million. Net premiums written for Platinum’s Property and Marine, Casualty and Finite Risk segments for the quarter ended September 30, 2004 were $120.6 million, $172.0 million and $147.9 million, respectively, representing 27.4 percent, 39 percent and 33.6 percent, respectively, of our total net premiums written. Combined ratios for these segments were 164.2 percent, 95.9 percent and 116.1 percent, respectively.
“During the quarter the Company recorded an estimated after-tax negative impact from hurricanes Charley, Frances, Ivan and Jeanne of approximately $145 million. The impact of the hurricanes for both the quarter and nine months ended September 30, 2004 was as follows: gross losses of $186 million, additional premiums earned of $20 million and reduction in profit commissions of $10 million. Hurricane losses adversely impacted the quarterly combined ratio by approximately 41.6 percentage points.”
Platinum explained that “due to the unusual size and frequency of the recent hurricanes,” it has received relatively few claims advices from its brokers and clients. “As a result, the estimated impact is based on reported losses to date, commercial and proprietary catastrophe modeling and industry losses of approximately $28 billion. Consequently, the ultimate impact on the Company’s results arising from these events may differ materially from the current estimate.”
The announcement said the Company had “recently evaluated the negative impact of the hurricanes in light of an excess-of-loss retrocessional contract which provided aggregate coverage to the Company. Based on results of operations for the quarter ended September 30, 2004 a cession to the contract was indicated; however, that cession was unlikely to produce a significant economic benefit to the Company and accordingly the Company commuted the contract effective November 8, 2004. Results for the quarter ended September 30, 2004 reflect no benefit from this contract.”
Board Chairman Steven H. Newman commented: “Despite our hurricane losses, Platinum distinguished itself by achieving a modest underwriting profit on a year to date basis. This serves to confirm the quality and diversity of our underwriting commitments.”
CEO Gregory Morrison added: “While our results this quarter were dominated by the losses arising from the hurricanes, these losses were consistent with the size of our portfolio and our position in the market. We are encouraged by the underlying growth of our business and the opportunities we see for the future. Market conditions should provide us with a strong upcoming January reinsurance renewal season.”
Platinum summarized its results for the quarter ended September 30, 2004, compared to the quarter ended September 30, 2003 are as follows:
— Net income decreased $107.6 million and the combined ratio increased 39.4 percentage points, largely as a result of the significant catastrophe losses incurred in the current period.
— Net premiums written increased $159.2 million, or 56.6 percent, driven by an increase in all three segments. Net premiums earned rose $110.8 million or 40.7 percent.
— Net investment income increased $6.6 million or 45 percent.
Its summary of the results for the nine months ended September 30, 2004 are as follows:
— Net income was $34.9 million.
— Basic and diluted net income per common share was $0.81 and $0.78, respectively.
— GAAP combined ratio was 99.6 percent.
— Net premiums written were $1.3 billion.
The 2004 nine months results, compared to the nine months ended September 30, 2003 were as follows:
— Net income decreased $60.1 million and the combined ratio increased 13.9 percentage points, largely as a result of the significant catastrophe losses incurred in the current period.
— Net premiums written increased $302.5 million, or 31.9 percent, driven by an increase in all three segments. Net premiums earned rose $225.3 million or 28.5 percent.
— Net investment income increased $15.9 million or 37.4 percent.
The bulletin concluded with a revised estimate of the company’s 2004 results: “Based on the third quarter results, the current industry environment, the mix of business underwritten and in the absence of any unusual catastrophe activity.” Platinum said it, “estimates that net premiums written for 2004 will be approximately $1.6 billion, and its GAAP combined ratio for 2004 will be approximately 97 percent.” It also “expects its combined portfolio of cash and fixed maturity investments to be approximately $2.5 billion at year-end 2004. On this basis Platinum now projects that earnings for 2004 will be approximately $1.75 per diluted common share based on an estimate of 51,000,000 diluted shares.”
Platinum will host a teleconference to discuss its financial results on Tuesday, November 9, 2004 at 8:30 am Eastern Time (ET). The call can be accessed by dialing 877-502-9274 (US callers) or 913-981-5584 (international callers) or in a listen-only mode via the Investor Relations section of Platinum’s website at http://www.platinumre.com . Those who intend to access the teleconference should register at least ten minutes in advance to ensure access to the call.
The teleconference will be recorded and a replay will be available from 11:30 am ET on Tuesday, November 9 until midnight ET on Tuesday, November 16. To access the replay by telephone, dial 888-203-1112 (US callers) or 719-457- 0820 (international callers) and specify passcode 878959. The teleconference will also be archived on the Investor Relations section of http://www.platinumre.com for the same period of time.
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