PHLY Philadelphia Consolidated Corp (MM)

BALA CYNWYD, Pa., July 23 /PRNewswire-FirstCall/ -- Philadelphia Consolidated Holding Corp. (NASDAQ:PHLY) today reported net income for the quarter ended June 30, 2008 of $52.9 million ($0.73 diluted earnings per share and $0.76 basic earnings per share). This compares to $94.4 million of net income ($1.27 diluted earnings per share and $1.34 basic earnings per share) for the quarter ended June 30, 2007. After-tax net realized investment gains (losses) were $(7.5) million ($(0.10) diluted loss per share) for the quarter ended June 30, 2008 compared to $18.2 million ($0.25 diluted earnings per share) for the quarter ended June 30, 2007. Gross written premiums for the quarter ended June 30, 2008 increased 11.7% to $445.3 million from $398.5 million for the quarter ended June 30, 2007, and the combined ratio for the quarter ended June 30, 2008 was 86.2% compared to 74.2% for the quarter ended June 30, 2007. The Company's book value per share as of June 30, 2008 increased to $22.30 from $21.47 as of December 31, 2007. Financial results for the quarter ended June 30, 2008 included: -- An $18.5 million pre-tax benefit ($12.0 million after-tax, or $0.17 diluted earnings per share) from a decrease in net unpaid loss and loss adjustment expenses due to favorable trends in prior years' claim emergence. This benefit compares to a $20.8 million pre-tax benefit ($13.5 million after-tax, or $0.18 diluted earnings per share) recognized in the quarter ended June 30, 2007 from a decrease in net unpaid loss and loss adjustment expenses due to favorable trends in prior years' claims emergence. -- $20.6 million of pre-tax losses ($13.4 million after-tax, or $0.18 diluted loss per share) resulting from hail, tornado, and wind losses which occurred in Minnesota, Nebraska, Kansas, and Oklahoma during the period of May 22, 2008 through May 26, 2008, and which occurred in Illinois, Indiana, Kansas, Minnesota, Nebraska, and Oklahoma during the period of May 29, 2008 through June 1, 2008. -- An $11.6 million pre-tax non-cash realized investment loss ($7.5 million after-tax, or $0.10 diluted loss per share) resulting from other than temporary impairment evaluations related to the Company's equity holdings. Net income for the six months ended June 30, 2008 was $115.6 million ($1.59 diluted earnings per share and $1.65 basic earnings per share). This compares to $160.4 million of net income ($2.16 diluted earnings per share and $2.28 basic earnings per share) for the six months ended June 30, 2007. After-tax net realized investment gains (losses) were $(14.9) million ($0.20 diluted loss per share) for the six months ended June 30, 2008 compared to $19.4 million ($0.26 diluted earnings per share) for the six months ended June 30, 2007. Gross written premiums for the six months ended June 30, 2008 increased 12.1% to $888.4 million from $792.6 million for the six months ended June 30, 2007, and the combined ratio for the six months ended June 30, 2008 was 83.7% compared to 75.9% for the six months ended June 30, 2007. Financial results for the six months ended June 30, 2008 included: -- A $24.4 million pre-tax benefit ($15.9 million after-tax, or $0.22 diluted earnings per share) from a decrease in net unpaid loss and loss adjustment expenses due to favorable trends in prior years' claim emergence. This benefit compares to a $33.7 million pre-tax benefit ($21.9 million after-tax, or $0.30 diluted earnings per share) recognized in the six months ended June 30, 2007 from a decrease in net unpaid loss and loss adjustment expenses due to favorable trends in prior years' claims emergence. -- The hail, tornado, and wind losses as referred to above. -- A $23.3 million pre-tax non-cash realized investment loss ($15.1 million after-tax, or $0.21 diluted loss per share) resulting from other than temporary impairment evaluations related to the Company's equity holdings. James J. Maguire, Jr., CEO, said: "I am very pleased with our performance in this quarter and I sincerely thank our more than 1,400 employees for continuing to execute on our business plan through a challenging market. Gross written premiums grew by nearly 12%, with our core Commercial Lines Segment growing by 13.3%. Our combined ratio for the quarter was an impressive 86.2%. We continued to maintain our profitable renewal business with retention ratios of 95% on quoted business for our Commercial and Specialty Segments." As a result of the Company's announcement today that it has entered into a merger agreement with Tokio Marine Holdings, Inc., the earnings call previously scheduled for Friday July 25th has been cancelled. Forward-Looking Information This release may contain 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 the Company's liability for unpaid loss and loss adjustment expenses; (vi) severity of natural disasters and other catastrophe losses; (vii) adequacy of reinsurance coverage which may be obtained by the Company; (viii) ability and willingness of the Company's reinsurers to pay; (ix) future terrorist attacks; and (x) the outcome of the Securities and Exchange Commission's industry-wide investigation relating to the use of non-traditional insurance products, including finite risk reinsurance arrangements. The Company does not intend to publicly update any forward looking statement, except as may be required by law. In operation since 1962, PHLY designs, markets, and underwrites commercial property/casualty and professional liability insurance products incorporating value added coverages and services for select industries. The Company, whose commercial lines insurance subsidiaries are rated A+ (Superior) by A.M. Best Company and A1 for insurance financial strength by Moody's Investors Service, is nationally recognized as a member of Ward's Top 50, Forbes' Platinum 400 list of America's Best Big Companies and Forbes' 100 Best Mid-Cap Stocks in America. The organization has 47 offices strategically located across the United States to provide superior local service. PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) As of June 30, 2008 December 31, (Unaudited) 2007 ASSETS INVESTMENTS: FIXED MATURITIES AVAILABLE FOR SALE AT MARKET (AMORTIZED COST $2,864,732 AND $2,639,471) $2,844,209 $2,659,197 EQUITY SECURITIES AT MARKET (COST $339,169 AND $322,877) 348,374 356,026 TOTAL INVESTMENTS 3,192,583 3,015,223 CASH AND CASH EQUIVALENTS 89,657 106,342 ACCRUED INVESTMENT INCOME 28,300 24,964 PREMIUMS RECEIVABLE 399,896 378,217 PREPAID REINSURANCE PREMIUMS AND REINSURANCE RECEIVABLES 301,012 280,110 DEFERRED INCOME TAXES 81,717 42,855 DEFERRED ACQUISITION COSTS 187,389 184,446 PROPERTY AND EQUIPMENT, NET 21,992 26,330 OTHER ASSETS 100,964 41,451 TOTAL ASSETS $4,403,510 $4,099,938 LIABILITIES AND SHAREHOLDERS' EQUITY POLICY LIABILITIES AND ACCRUALS: UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES $1,613,322 $1,431,933 UNEARNED PREMIUMS 866,596 847,485 TOTAL POLICY LIABILITIES AND ACCRUALS 2,479,918 2,279,418 PREMIUMS PAYABLE 77,770 97,674 OTHER LIABILITIES 251,135 175,373 TOTAL LIABILITIES 2,808,823 2,552,465 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: PREFERRED STOCK, $.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED, NONE ISSUED AND OUTSTANDING - - COMMON STOCK, NO PAR VALUE, 125,000,000 SHARES AUTHORIZED, 71,503,346 AND 72,087,287 SHARES ISSUED AND OUTSTANDING 399,704 423,379 NOTES RECEIVABLE FROM SHAREHOLDERS (22,565) (19,595) ACCUMULATED OTHER COMPREHENSIVE INCOME (7,356) 34,369 RETAINED EARNINGS 1,224,904 1,109,320 TOTAL SHAREHOLDERS' EQUITY 1,594,687 1,547,473 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,403,510 $4,099,938 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (Unaudited) For the Three Months For the Six Months Ended June 30, Ended June 30, 2008 2007 2008 2007 REVENUE: NET EARNED PREMIUMS $393,037 $337,315 $772,425 $656,033 NET INVESTMENT INCOME 32,299 28,522 64,304 55,495 NET REALIZED INVESTMENT GAIN (LOSS) (11,513) 28,064 (22,907) 29,821 OTHER INCOME 3,654 850 5,007 1,680 TOTAL REVENUE 417,477 394,751 818,829 743,029 LOSSES AND EXPENSES: LOSS AND LOSS ADJUSTMENT 266,106 172,234 489,492 332,753 EXPENSES NET REINSURANCE RECOVERIES (42,836) (23,645) (72,803) (33,659) NET LOSS AND LOSS ADJUSTMENT EXPENSES 223,270 148,589 416,689 299,094 ACQUISITION COSTS AND OTHER UNDERWRITING EXPENSES 115,479 101,746 229,635 198,650 OTHER OPERATING EXPENSES 4,376 2,981 7,965 6,136 TOTAL LOSSES AND EXPENSES 343,125 253,316 654,289 503,880 INCOME BEFORE INCOME TAXES 74,352 141,435 164,540 239,149 INCOME TAX EXPENSE (BENEFIT): CURRENT 30,072 56,511 65,350 93,330 DEFERRED (8,628) (9,477) (16,394) (14,562) TOTAL INCOME TAX EXPENSE 21,444 47,034 48,956 78,768 NET INCOME $52,908 $94,401 $115,584 $160,381 PER AVERAGE SHARE DATA: NET INCOME - BASIC $0.76 $1.34 $1.65 $2.28 NET INCOME - DILUTED $0.73 $1.27 $1.59 $2.16 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 69,809,174 70,361,554 70,128,823 70,255,758 WEIGHTED-AVERAGE SHARE EQUIVALENTS OUTSTANDING 2,608,996 3,835,617 2,597,895 3,966,198 WEIGHTED-AVERAGE SHARES AND SHARE EQUIVALENTS OUTSTANDING 72,418,170 74,197,171 72,726,718 74,221,956 DATASOURCE: Philadelphia Consolidated Holding Corp. CONTACT: Investor Relations: Joseph Barnholt, Assistant Vice President of Philadelphia Consolidated Holding Corp., +1-610-617-7626, Web site: http://www.phly.com/

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