EX-99.1 2 w63971exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
PHILADELPHIA CONSOLIDATED HOLDING CORP.
SECOND QUARTER RESULTS
JUNE 30, 2008
JULY 23, 2008 PRESS RELEASE
Bala Cynwyd, PA – 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

 

 

Press Release
July 23, 2008
Page 2
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

 

 

Press Release
July 23, 2008
Page 3
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.
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, 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 EXPENSES
     266,106       172,234       489,492       332,753  
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