EX-99.1 2 w37654exv99w1.htm PRESS RELEASE RELATING TO SECOND QUARTER RESULTS exv99w1
 

PHILADELPHIA CONSOLIDATED HOLDING CORP.
SECOND QUARTER RESULTS
JUNE 30, 2007
JULY 27, 2007 PRESS RELEASE
Bala Cynwyd, PA – Philadelphia Consolidated Holding Corp. (NASDAQ: PHLY) today reported net income for the quarter ended June 30, 2007 increased 26.0% to $94.4 million ($1.27 diluted earnings per share and $1.34 basic earnings per share) from $74.9 million ($1.03 diluted earnings per share and $1.07 basic earnings per share) for the quarter ended June 30, 2006. After-tax net realized investment gains (losses) were $18.2 million of gains ($0.25 diluted earnings per share) for the quarter ended June 30, 2007 versus $(1.6) million of losses ($0.02 diluted loss per share) for the quarter ended June 30, 2006. Gross written premiums for the quarter ended June 30, 2007 increased 16.7% to $398.5 million from $341.4 million for the quarter ended June 30, 2006, and the combined ratio for the quarter ended June 30, 2007 was 74.2% versus 67.2% for the quarter ended June 30, 2006. The Company’s book value per share at June 30, 2007 increased 12.4% to $18.53 from $16.48 at December 31, 2006.
Financial results for the second quarter of 2007 included:
•   A $20.8 million pre-tax ($13.5 million after-tax, or $0.18 diluted earnings per share) benefit from a decrease in net unpaid loss and loss adjustment expenses due to favorable trends in prior years’ claims emergence.
 
•   $22.2 million of pre-tax ($14.4 million after-tax, or $0.19 diluted earnings per share) net realized investment gains resulting from the liquidation of one of the Company’s equity security portfolios following the Company’s decision to change one of its equity security investment managers.
Financial results for the second quarter of 2006 included:
•   A $35.7 million pre-tax ($23.2 million after-tax, or $0.32 diluted earnings per share) benefit from a decrease in net unpaid loss and loss adjustment expenses due to favorable trends in prior years’ claims emergence.
 
•   A $3.3 million pre-tax ($2.1 million after-tax or $0.03 diluted loss per share) charge for an assessment levied by the Florida Insurance Guaranty Association, Inc. (“FIGA”) on member insurers.
Net income for the six months ended June 30, 2007 increased 28.1% to $160.4 million ($2.16 diluted earnings per share and $2.28 basic earnings per share) compared to $125.2 million ($1.73 diluted earnings per share and $1.80 basic earnings per share) for the same period in 2006. After-tax net realized investment gains (losses) were $19.4 million of gains ($0.26 diluted earnings per share) for the six months ended June 30, 2007 versus $(1.8) million of losses ($0.02 diluted loss per share) for the six months ended June 30, 2006. Gross written premiums for the six months ended

 

 

Press Release
July 27, 2007
Page 2
June 30, 2007 increased 18.4% to $792.6 million from $669.4 million for the six months ended June 30, 2006, and the combined ratio for the six months ended June 30, 2007 was 75.9% compared to 73.4% for the six months ended June 30, 2006.
Financial results for the six months ended June 30, 2007 included:
•   A $33.7 million pre-tax ($21.9 million after-tax, or $0.30 diluted earnings per share) benefit from a decrease in net unpaid loss and loss adjustment expenses due to favorable trends in prior years’ claims emergence.
 
•   $22.2 million of pre-tax ($14.4 million after-tax, or $0.19 diluted earnings per share) net realized investment gains resulting from the liquidation of one of the Company’s equity security portfolios following the Company’s decision to change one of its equity security investment managers.
Financial results for the six months ended June 30, 2006 included the impact of the benefit from the decrease in the loss and loss adjustment expenses, and the charge for the FIGA assessment as referred to above.
James J. Maguire, Jr., CEO, said: “In the wake of increasing competition, we continued to validate our differentiated business model during the quarter by producing superior underwriting results and double-digit gross written premium growth. New business for the quarter grew by approximately 30% over last year to $107 million, while renewal retention levels remained high at approximately 93% for our commercial business. During the quarter, non-recurring premium from discontinued products amounted to $3.5 million and production from new products contributed roughly $19 million. I thank our more than 1,300 professionals on executing at a high level, and I remain optimistic about our opportunities for continued profitable growth through the balance of the year.”
The Company will hold its quarterly conference call to discuss second quarter 2007 results today at 3:00 PM EDT. The call is being webcast and may be accessed at the Company’s web site at www.phly.com. The dial-in phone number for the conference call is (800) 289-0544.

 

 

Press Release
July 27, 2007
Page 3
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; (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; and (xi) the outcome of industry-wide investigations being conducted by various insurance departments, attorneys-general and other authorities relating to the use of contingent commission 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, personal lines and professional liability insurance products incorporating value added coverages and services for select industries. The Company, whose commercial and personal lines subsidiaries are rated A+ (Superior), and A- (Excellent), respectively, by A.M. Best Company, is nationally recognized as a member of Ward’s Top 50 and Forbes’ Platinum 400 list of America’s Best Big Companies. The organization has 41 offices strategically located across the United States to provide superior local service.
CONTACT: Investor Relations: Joseph Barnholt, Assistant Vice President, +1-610-617-7626, jbarnholt@phlyins.com.

 

 

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
                 
    As of  
    June 30, 2007     December 31,  
    (Unaudited)     2006  
ASSETS
                
INVESTMENTS:
                
FIXED MATURITIES AVAILABLE FOR SALE AT MARKET (AMORTIZED COST $2,408,375 AND $2,136,231)
   $ 2,367,228     $ 2,129,609  
EQUITY SECURITIES AT MARKET (COST $313,353 AND $259,184)
     358,231       304,033  
 
            
TOTAL INVESTMENTS
     2,725,459       2,433,642  
 
                
CASH AND CASH EQUIVALENTS
     102,101       108,671  
ACCRUED INVESTMENT INCOME
     22,255       20,083  
PREMIUMS RECEIVABLE
     337,817       346,836  
PREPAID REINSURANCE PREMIUMS AND REINSURANCE RECEIVABLES
     275,664       272,798  
DEFERRED INCOME TAXES
     53,293       26,657  
DEFERRED ACQUISITION COSTS
     167,352       158,805  
PROPERTY AND EQUIPMENT, NET
     25,882       26,999  
OTHER ASSETS
     45,126       44,046  
 
            
TOTAL ASSETS
   $ 3,754,949     $ 3,438,537  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
POLICY LIABILITIES AND ACCRUALS:
                
UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES
   $ 1,383,452     $ 1,283,238  
UNEARNED PREMIUMS
     778,871       759,358  
 
            
TOTAL POLICY LIABILITIES AND ACCRUALS
     2,162,323       2,042,596  
PREMIUMS PAYABLE
     64,174       66,827  
OTHER LIABILITIES
     204,292       161,847  
 
            
TOTAL LIABILITIES
     2,430,789       2,271,270  
 
            
 
                
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, 71,457,574 AND 70,848,482 SHARES ISSUED AND OUTSTANDING
     396,580       376,986  
NOTES RECEIVABLE FROM SHAREHOLDERS
     (17,733 )     (17,074 )
ACCUMULATED OTHER COMPREHENSIVE INCOME
     2,425       24,848  
RETAINED EARNINGS
     942,888       782,507  
 
            
TOTAL SHAREHOLDERS’ EQUITY
     1,324,160       1,167,267  
 
            
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 3,754,949     $ 3,438,537  
 
            

 

 

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,  
    2007     2006     2007     2006  
REVENUE:
                                
NET EARNED PREMIUMS
   $ 337,315     $ 288,794     $ 656,033     $ 565,340  
NET INVESTMENT INCOME
     28,522       21,677       55,495       41,739  
NET REALIZED INVESTMENT GAIN (LOSS)
     28,064       (2,412 )     29,821       (2,806 )
OTHER INCOME
     850       417       1,680       908  
 
                        
TOTAL REVENUE
     394,751       308,476       743,029       605,181  
 
                        
 
                                
LOSSES AND EXPENSES:
                                
LOSS AND LOSS ADJUSTMENT EXPENSES
     172,234       95,603       332,753       257,627  
NET REINSURANCE RECOVERIES
     (23,645 )     13,152       (33,659 )     (5,207 )
 
                        
NET LOSS AND LOSS ADJUSTMENT EXPENSES
     148,589       108,755       299,094       252,420  
ACQUISITION COSTS AND OTHER UNDERWRITING EXPENSES
     101,746       85,337       198,650       162,354  
OTHER OPERATING EXPENSES
     2,981       2,948       6,136       5,280  
 
                        
TOTAL LOSSES AND EXPENSES
     253,316       197,040       503,880       420,054  
 
                        
 
                                
INCOME BEFORE INCOME TAXES
     141,435       111,436       239,149       185,127  
 
                        
 
                                
INCOME TAX EXPENSE (BENEFIT):
                                
CURRENT
     56,511       37,599       93,330       66,723  
DEFERRED
     (9,477 )     (1,020 )     (14,562 )     (6,774 )
 
                        
 
                                
TOTAL INCOME TAX EXPENSE
     47,034       36,579       78,768       59,949  
 
                        
 
                                
NET INCOME
   $ 94,401     $ 74,857     $ 160,381     $ 125,178  
 
                        
 
                                
PER AVERAGE SHARE DATA:
                                
NET INCOME — BASIC
   $ 1.34     $ 1.07     $ 2.28     $ 1.80  
 
                        
NET INCOME — DILUTED
   $ 1.27     $ 1.03     $ 2.16     $ 1.73  
 
                        
 
                                
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
     70,361,554       69,775,336       70,255,758       69,577,653  
WEIGHTED-AVERAGE SHARE EQUIVALENTS OUTSTANDING
     3,835,617       2,721,730       3,966,198       2,915,528  
 
                        
WEIGHTED-AVERAGE SHARES AND SHARE EQUIVALENTS OUTSTANDING
     74,197,171       72,497,066       74,221,956       72,493,181