Platinum Underwriters Holdings Ltd. Q1 2010 Earnings Call Transcript

Platinum Underwriters Holdings Ltd. Q1 2010 Earnings Call Transcript
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Platinum Underwriters Holdings Ltd. (PTP)

Q1 2010 Earnings Call

April 22, 2010 8:00 a.m. ET

Executives

Michael Price - Chief Executive Officer

Jim Krantz - Chief Financial Officer

Neil Schmidt - Chief Actuary

Analysts

Matthew Heimermann - JPMorgan

Larry Greenberg - Langen McAlenney

Ian Gutterman [ph] - Adage Capital

DeForest Hinman - Walthausen & Company

Vinay Misquith - Credit Suisse

Chris Tam [ph] - PioneerPath Capital

Ron Bobman - Capital Returns

Presentation

Operator

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Good morning and welcome to the Platinum Underwriters first quarter 2010 earnings conference call and webcast. The conference earnings press release and financial supplement can be found in the Investor Relations section on the company's website at www.platinumre.com.

This call is being recorded. A replay of this call and webcast will be available from 11:00 a.m. Eastern Time today, until midnight Eastern Time on Thursday, April 29, 2010. The replay call can be accessed by dialing 888-203-1112 for the U.S. callers and for international callers, please dial 719-457-0820. Please specify pass code 9603704.

Before we begin, please note that management believes certain statements on this teleconference may constitute forward-looking statements, under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about expectations, estimates and assumptions; concerning future events and financial performance of the company and are subject to significant uncertainties and risks that could cause current plans, anticipated actions and the company’s future financial condition and results to differ materially from expectations.

These uncertainties and risks include those disclosed in the company's filings with the US Securities and Exchange Commission.

Forward-looking statements speak only as of date they are made and the company assumes no obligation to update or revise them in light of new information, future events or otherwise.

In addition management will refer to certain non-GAAP measures, which management believes allows for more complete understanding of the company's financial results. A reconciliation of these measures to the most comparable GAAP measures is presented in the company's earnings press release.

At this time we will turn the conference over to Mr. Michael Price, Chief Executive Officer of Platinum. Please go ahead sir.

Michael Price

Thank you, Operator. Welcome to this morning's call. With me today are Jim Krantz, our Chief Financial Officer and Neil Schmidt, our Chief Actuary.

I will provide an overview of our financial results for the quarter. And then Jim will offer a little more detail. Following that, I'll review our recent underwriting activity, discuss our outlook on market conditions, and update you on our recent share buyback activity. Then we'll be happy to take your questions.

First quarter of 2010 was active from a natural catastrophe perspective with numerous events around the world, giving rise to insured losses. We produce net income of $15.4 million in the quarter, which is $0.32 per diluted common share.

These results reflect an adverse financial impact of $84 million dollars from the Chilean earthquake, which is consistent with our initial loss estimate for the event. Favorable prior period development, significant investment income and active capital management also meaningfully influenced the result.

Net premiums earned are lower than the same quarter last year, reflecting our disciplined approach to underwriting in the face of deteriorating market condition. Investment income and capital gains are lower than last year due mostly to greater realized gains last year.

Other than temporary impairments were $18.1 million, reflecting anticipated defaults in residential and commercial mortgages.

Jim will now take us through the numbers in more detail. Jim.

Jim Krantz

Thank you, Michael and good morning. I’ll now provide some highlights on our financial results for the quarter ended March 31, 2010.

Net income was $15.4 million or $0.32 per share on a diluted basis. Net underwriting income was $2.8 million reflecting the impact of major catastrophe losses and net favorable developments. Net investment income and net realized investment gains contributed $43 million to net income. Net impaired losses on investment were $18.1 million.

Focusing on the underwriting results, net underwriting income decreased by $46.5 million in the first quarter of 2009, due primarily to $89 million in net underwriting losses from major catastrophes in the first quarter of 2010, as compared with $9.9 million in last year's first quarter.

Net favorable development was $49.5 million in the first quarter of 2010, as compared with net favorable development of $22.1 million in the first quarter of 2009. Net premiums earned were $220.2 million for the quarter, a decrease of $11.1% from the first quarter of 2009. The decrease occurred in both the property and marine, and casualty segments.

Looking at the segments, net premiums earned in the property and marine segment were $127.8 million for the first quarter of 2010, a decrease of 4.4% from last year's first quarter. The decrease was primarily the result of reduction in crop business that was substantially offset by an increase in property catastrophe business.

Net premiums earned in the casualty segment were $87.9 million for the first quarter of 2010, a decrease of 20.1% from last year's first quarter. The decrease was due to reductions in most casualty classes, primarily the North American casualty excess. Net premiums earned in the finite risk segment were $4.5 million for the first quarter of 2010, an increase of 8.5% from last year's first quarter.

Turning to the non-underwriting results, net investment income was $37.5 million for the first quarter of 2010 and comparable to last year's first quarter. Net realized gains on investments were $5.5 million for the first quarter of 2010 as compared with $20.6 million for the first quarter of 2009. The net realized gains on investments in the first quarter of 2010 were primarily from agency RMBS, corporate bonds and asset-backed securities.

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