BALA CYNWYD, Pa., Oct. 23 /PRNewswire-FirstCall/ -- Philadelphia
Consolidated Holding Corp. (NASDAQ:PHLY) today reported net income
for the quarter ended September 30, 2008 of $50.0 million ($0.68
diluted earnings per share and $0.71 basic earnings per share).
This compares to $96.2 million of net income ($1.30 diluted
earnings per share and $1.37 basic earnings per share) for the
quarter ended September 30, 2007. After-tax net realized investment
gains (losses) were $(11.6) million ($0.16 diluted loss per share)
for the quarter ended September 30, 2008 compared to $1.8 million
($0.02 diluted earnings per share) for the quarter ended September
30, 2007. Gross written premiums for the quarter ended September
30, 2008 increased 9.8% to $553.9 million from $504.6 million for
the quarter ended September 30, 2007, and the combined ratio for
the quarter ended September 30, 2008 was 86.0% compared to 68.5%
for the quarter ended September 30, 2007. The Company's book value
per share as of September 30, 2008 increased to $22.38 from $21.47
as of December 31, 2007. Financial results for the quarter ended
September 30, 2008 included: -- A $12.2 million pre-tax benefit
($7.9 million after-tax, or $0.11 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 $39.5 million pre-tax benefit ($25.7 million
after-tax, or $0.35 diluted earnings per share) recognized in the
quarter ended September 30, 2007 from a decrease in net unpaid loss
and loss adjustment expenses due to favorable trends in prior
years' claims emergence. -- $21.7 million of pre-tax losses ($14.1
million after-tax, or $0.19 diluted loss per share) resulting from
losses attributable to Hurricane Ike, and $5.1 million of pre-tax
expense ($3.3 million after-tax, or $0.04 diluted loss per share)
resulting from accelerated and reinstatement ceded premium expense
relating to Hurricane Ike. -- A $7.4 million pre-tax non-cash
realized investment loss ($4.8 million after-tax, or $0.07 diluted
loss per share) resulting from the other than temporary impairment
evaluation for the Company's direct holdings of fixed maturity
securities issued by Lehman Brothers Holdings Inc. and its
subsidiaries ("Lehman"). -- An $11.4 million pre-tax non-cash
realized investment loss ($7.4 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 nine months ended September 30, 2008 was $165.6 million
($2.27 diluted earnings per share and $2.36 basic earnings per
share). This compares to $256.6 million of net income ($3.46
diluted earnings per share and $3.65 basic earnings per share) for
the nine months ended September 30, 2007. After-tax net realized
investment gains (losses) were $(26.5) million ($0.36 diluted loss
per share) for the nine months ended September 30, 2008 compared to
$21.2 million ($0.29 diluted earnings per share) for the nine
months ended September 30, 2007. Gross written premiums for the
nine months ended September 30, 2008 increased 11.2% to $1,442.2
million from $1,297.3 million for the nine months ended September
30, 2007, and the combined ratio for the nine months ended
September 30, 2008 was 84.5% compared to 73.3% for the nine months
ended September 30, 2007. Financial results for the nine months
ended September 30, 2008 included: -- A $36.6 million pre-tax
benefit ($23.8 million after-tax, or $0.33 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 $73.2 million pre-tax benefit ($47.6
million after-tax, or $0.64 diluted earnings per share) recognized
in the nine months ended September 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. -- The Hurricane Ike losses
and related accelerated and reinstatement ceded premium expense as
referred to above. -- The non-cash realized investment loss
resulting from the other than temporary impairment evaluation for
Lehman as referred to above. -- A $34.7 million pre-tax non-cash
realized investment loss ($22.6 million after-tax, or $0.31 diluted
loss per share) resulting from other than temporary impairment
evaluations related to the Company's equity holdings. James J.
Maguire, Jr., CEO, said: "In the wake of turbulent economic times
and disruption in the insurance industry, we continued to produce
superior earnings through profitable underwriting and conservative
investment practices. In the quarter, net written premiums grew by
over 12%, with the month of September growing by over 20%. This
premium growth was achieved while maintaining a very impressive 86%
combined ratio in the quarter. Though competition persisted in most
of our niches, we retained approximately 93% of our renewals and
saw $19 million from new products. Customers and agents are more
focused now than ever before on aligning themselves with a high
quality, reputable insurer. After our recently announced merger
with Tokio Marine Holdings closes, which I expect to occur in the
fourth quarter of this year, PHLY will be better positioned than
ever to capitalize on this market uncertainty and will further
solidify our position as a premier U.S. insurer." 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 September 30, December 31, 2008 2007 (Unaudited)
ASSETS INVESTMENTS: FIXED MATURITIES AVAILABLE FOR SALE AT MARKET
(AMORTIZED COST $2,863,583 AND $2,639,471) $2,778,992 $2,659,197
EQUITY SECURITIES AT MARKET (COST $357,918 AND $322,877) 352,053
356,026 TOTAL INVESTMENTS 3,131,045 3,015,223 CASH AND CASH
EQUIVALENTS 152,050 106,342 ACCRUED INVESTMENT INCOME 31,249 24,964
PREMIUMS RECEIVABLE 433,958 378,217 PREPAID REINSURANCE PREMIUMS
AND REINSURANCE RECEIVABLES 376,263 280,110 DEFERRED INCOME TAXES
115,303 42,855 DEFERRED ACQUISITION COSTS 205,838 184,446 PROPERTY
AND EQUIPMENT, NET 20,870 26,330 OTHER ASSETS 349,879 41,451 TOTAL
ASSETS $4,816,455 $4,099,938 LIABILITIES AND SHAREHOLDERS' EQUITY
POLICY LIABILITIES AND ACCRUALS: UNPAID LOSS AND LOSS ADJUSTMENT
EXPENSES $1,733,936 $1,431,933 UNEARNED PREMIUMS 962,472 847,485
TOTAL POLICY LIABILITIES AND ACCRUALS 2,696,408 2,279,418 PREMIUMS
PAYABLE 97,196 97,674 OTHER LIABILITIES 416,079 175,373 TOTAL
LIABILITIES 3,209,683 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, 71,783,778 AND 72,087,287
SHARES ISSUED AND OUTSTANDING 412,184 423,379 NOTES RECEIVABLE FROM
SHAREHOLDERS (21,487) (19,595) ACCUMULATED OTHER COMPREHENSIVE
INCOME (58,796) 34,369 RETAINED EARNINGS 1,274,871 1,109,320 TOTAL
SHAREHOLDERS' EQUITY 1,606,772 1,547,473 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $4,816,455 $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 Nine Months Ended
September 30, Ended September 30, 2008 2007 2008 2007 REVENUE: NET
EARNED PREMIUMS $408,512 $359,149 $1,180,937 $1,015,182 NET
INVESTMENT INCOME 33,273 30,199 97,577 85,694 NET REALIZED
INVESTMENT GAIN (LOSS) (17,852) 2,817 (40,759) 32,638 OTHER INCOME
870 980 5,877 2,660 TOTAL REVENUE 424,803 393,145 1,243,632
1,136,174 LOSSES AND EXPENSES: LOSS AND LOSS ADJUSTMENT EXPENSES
330,726 146,389 820,218 479,142 NET REINSURANCE RECOVERIES (96,887)
(1,584) (169,690) (35,243) NET LOSS AND LOSS ADJUSTMENT EXPENSES
233,839 144,805 650,528 443,899 ACQUISITION COSTS AND OTHER
UNDERWRITING EXPENSES 117,640 101,252 347,275 299,902 OTHER
OPERATING EXPENSES 4,314 2,992 12,279 9,128 TOTAL LOSSES AND
EXPENSES 355,793 249,049 1,010,082 752,929 INCOME BEFORE INCOME
TAXES 69,010 144,096 233,550 383,245 INCOME TAX EXPENSE (BENEFIT):
CURRENT 24,931 53,198 90,281 146,528 DEFERRED (5,888) (5,346)
(22,282) (19,908) TOTAL INCOME TAX EXPENSE 19,043 47,852 67,999
126,620 NET INCOME $49,967 $96,244 $165,551 $256,625 PER AVERAGE
SHARE DATA: NET INCOME - BASIC $0.71 $1.37 $2.36 $3.65 NET INCOME -
DILUTED $0.68 $1.30 $2.27 $3.46 WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 69,996,068 70,457,765 70,084,248 70,323,834
WEIGHTED-AVERAGE SHARE EQUIVALENTS OUTSTANDING 3,602,386 3,599,654
2,884,758 3,856,902 WEIGHTED-AVERAGE SHARES AND SHARE EQUIVALENTS
OUTSTANDING 73,598,454 74,057,419 72,969,006 74,180,736 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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