-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OsJu2dS9Go1VvxkJ/3OapCHxCzi0TpC0tEKdtMENfShWFRV9UjzKMLdl2YNi6lme kOI6qKcGyKV972wWUcZ/mg== 0000893220-98-000964.txt : 19980515 0000893220-98-000964.hdr.sgml : 19980515 ACCESSION NUMBER: 0000893220-98-000964 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHILADELPHIA CONSOLIDATED HOLDING CORP CENTRAL INDEX KEY: 0000909109 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 232202671 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22280 FILM NUMBER: 98620176 BUSINESS ADDRESS: STREET 1: ONE BALA PLAZA STREET 2: SUITE 100 CITY: WYNNEWOOD STATE: PA ZIP: 19004 BUSINESS PHONE: 6106428400 MAIL ADDRESS: STREET 1: ONE BALA PLAZA STREET 2: SUITE 100 CITY: BALA CYNWYD STATE: PA ZIP: 19004 FORMER COMPANY: FORMER CONFORMED NAME: MAGUIRE HOLDING CORP DATE OF NAME CHANGE: 19930714 10-Q 1 FORM 10-Q PHILADELPHIA CONSOLIDATED HOLDING CORP. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 1998 COMMISSION FILE NUMBER 0-22280 PHILADELPHIA CONSOLIDATED HOLDING CORP. (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-2202671 (State of Incorporation) (IRS Employer Identification No.) ONE BALA PLAZA, SUITE 100 BALA CYNWYD, PENNSYLVANIA 19004 (610) 617-7900 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /x/ NO / / Indicate the number of shares outstanding of each of the issuer's classes of common stock as of May 8, 1998. Preferred Stock, $.01 par value, no shares outstanding Common Stock, no par value, 12,290,770 shares outstanding 2 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES INDEX FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
Part I - Financial Information Consolidated Balance Sheets - March 31, 1998 and December 31, 1997 3 Consolidated Statements of Operations - For the three months ended March 31, 1998 and 1997 4 Consolidated Statements of Comprehensive Income - For the three months ended March 31, 1998 and 1997 5 Consolidated Statements of Changes in Shareholders' Equity - For the three months ended March 31, 1998 and year ended December 31, 1997 6 Consolidated Statements of Cash Flows - For the three months ended March 31, 1998 and 1997 7 Notes to Consolidated Financial Statements 8 Management's Discussion and Analysis of Results of Operations and Financial Condition 9-10 Part II - Other Information 11 Signatures 12 Exhibits 13
2 3 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
As of -------------------------------- March 31, December 31, 1998 1997 ---- ---- (Unaudited) ASSETS INVESTMENTS: FIXED MATURITIES AVAILABLE FOR SALE AT MARKET (AMORTIZED COST $181,518 AND $165,052) ......... $ 186,847 $ 170,678 EQUITY SECURITIES AT MARKET (COST $29,836 AND $29,501) ................................... 53,205 46,988 --------- --------- TOTAL INVESTMENTS ............................ 240,052 217,666 CASH AND CASH EQUIVALENTS ........................ 8,337 11,933 ACCRUED INVESTMENT INCOME ........................ 2,488 2,786 PREMIUMS RECEIVABLE .............................. 16,753 15,269 PREPAID REINSURANCE PREMIUMS AND REINSURANCE RECEIVABLES .................................... 18,432 18,573 DEFERRED ACQUISITION COSTS ....................... 11,932 10,970 PROPERTY AND EQUIPMENT ........................... 5,901 5,797 OTHER ASSETS ..................................... 7,250 5,132 --------- --------- TOTAL ASSETS ................................ $ 311,145 $ 288,126 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY POLICY LIABILITIES AND ACCRUALS: UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES ......... $ 128,081 $ 122,430 UNEARNED PREMIUMS ................................ 44,964 42,116 --------- --------- TOTAL POLICY LIABILITIES AND ACCRUALS ........ 173,045 164,546 PAYABLE FOR SECURITY PURCHASES ................... 4,895 -- OTHER LIABILITIES ................................ 5,803 7,948 DEFERRED INCOME TAXES ............................ 6,130 4,348 INCOME TAXES PAYABLE ............................. 1,571 -- --------- --------- TOTAL LIABILITIES ............................ 191,444 176,842 --------- --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: PREFERRED STOCK, $.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED, NONE ISSUED AND OUTSTANDING COMMON STOCK, NO PAR VALUE, 50,000,000 SHARES AUTHORIZED, 12,284,870 AND 12,242,431 SHARES ISSUED AND OUTSTANDING ....... 43,386 42,788 NOTES RECEIVABLE FROM SHAREHOLDERS ............... (1,752) (1,422) UNREALIZED INVESTMENT APPRECIATION (DEPRECIATION), NET OF DEFERRED INCOME TAXES .. 18,654 15,023 RETAINED EARNINGS ................................ 59,413 54,895 --------- --------- TOTAL SHAREHOLDERS' EQUITY ................... 119,701 111,284 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ... $ 311,145 $ 288,126 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. 3 4 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (Unaudited)
For the Three Months Ended March 31, --------------------------- 1998 1997 ---- ---- REVENUE: GROSS EARNED PREMIUMS .................. $ 37,466 $ 32,617 CEDED EARNED PREMIUMS .................. (10,551) (10,229) ------------ ------------ NET EARNED PREMIUMS .................... 26,915 22,388 NET INVESTMENT INCOME .................. 2,700 2,211 NET REALIZED INVESTMENT GAIN ........... 3 28 OTHER INCOME ........................... 57 57 ------------ ------------ TOTAL REVENUE ........................ 29,675 24,684 ------------ ------------ LOSSES AND EXPENSES: LOSS AND LOSS ADJUSTMENT EXPENSES ...... 16,064 13,385 NET REINSURANCE RECOVERIES ............. (1,206) (904) ------------ ------------ NET LOSS AND LOSS ADJUSTMENT EXPENSES .. 14,858 12,481 ACQUISITION COSTS AND OTHER UNDERWRITING EXPENSES ............................. 8,219 6,946 OTHER OPERATING EXPENSES ............... 533 523 ------------ ------------ TOTAL LOSSES AND EXPENSES ............ 23,610 19,950 ------------ ------------ INCOME BEFORE INCOME TAXES ................ 6,065 4,734 ------------ ------------ INCOME TAX EXPENSE (BENEFIT): CURRENT ................................ 1,720 1,562 DEFERRED ............................... (173) (450) ------------ ------------ TOTAL INCOME TAX EXPENSE ............. 1,547 1,112 ------------ ------------ NET INCOME ........................... $ 4,518 $ 3,622 ============ ============ PER SHARE DATA: BASIC EARNINGS PER SHARE(1) ............ $ 0.37 $ 0.30 ============ ============ DILUTED EARNINGS PER SHARE(1) .......... $ 0.30 $ 0.25 ============ ============ WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING(1) ......................... 12,262,983 12,133,216 WEIGHTED-AVERAGE SHARE EQUIVALENTS OUTSTANDING(1) ......................... 2,790,988 2,570,174 ------------ ------------ WEIGHTED-AVERAGE SHARES AND SHARE EQUIVALENTS OUTSTANDING(1) ............. 15,053,971 14,703,390 ============ ============
(1) 1997 share information restated to reflect a two-for-one split of the Company's common stock distributed in November 1997. The accompanying notes are an integral part of the consolidated financial statements. 4 5 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) (Unaudited)
For the Three Months Ended March 31, ---------------------- 1998 1997 ---- ---- NET INCOME ................................ $ 4,518 $ 3,622 ------- ------- OTHER COMPREHENSIVE INCOME, NET OF DEFERRED INCOME TAXES: UNREALIZED GAINS (LOSSES) ON SECURITIES: UNREALIZED HOLDING GAINS ARISING DURING PERIOD ............................... 3,741 7,649 LESS: RECLASSIFICATION ADJUSTMENT ..... (2) -- ------- ------- OTHER COMPREHENSIVE INCOME ................ 3,739 7,649 ------- ------- COMPREHENSIVE INCOME ...................... $ 8,257 $11,271 ------- -------
The accompanying notes are an integral part of the consolidated financial statements. 5 6 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE DATA)
For the Three Months For the Year Ended Ended March 31, December 31, 1998 1997 ---- ---- (Unaudited) COMMON SHARES: BALANCE AT BEGINNING OF PERIOD(1) .............. 12,242,431 12,079,612 ISSUANCE OF SHARES PURSUANT TO EMPLOYEE STOCK PURCHASE PLAN ..... 34,339 78,569 PURSUANT TO EMPLOYEE STOCK OPTION PLAN ....... 8,100 84,250 ------------ ------------ BALANCE AT END OF PERIOD ................... 12,284,870 12,242,431 ============ ============ COMMON STOCK: BALANCE AT BEGINNING OF PERIOD ................. $ 42,788 $ 41,167 ISSUANCE OF SHARES PURSUANT TO EMPLOYEE STOCK PURCHASE PLAN .......................... 571 898 EXERCISE OF EMPLOYEE STOCK OPTIONS, NET OF TAX BENEFIT .................................. 27 723 ------------ ------------ BALANCE AT END OF PERIOD ................... 43,386 42,788 ------------ ------------ NOTES RECEIVABLE FROM SHAREHOLDERS: BALANCE AT BEGINNING OF PERIOD ................. (1,422) (924) NOTES RECEIVABLE ISSUED PURSUANT TO EMPLOYEE STOCK PURCHASE PLAN ................. (558) (873) COLLECTION OF NOTES RECEIVABLE ................. 228 375 ------------ ------------ BALANCE AT END OF PERIOD ................... (1,752) (1,422) ------------ ------------ UNREALIZED INVESTMENT APPRECIATION (DEPRECIATION), NET OF DEFERRED INCOME TAXES: BALANCE AT BEGINNING OF PERIOD ............... 15,023 7,374 CHANGE IN UNREALIZED INVESTMENT APPRECIATION (DEPRECIATION), NET OF DEFERRED INCOME TAXES 3,631 7,649 ------------ ------------ BALANCE AT END OF PERIOD ................... 18,654 15,023 ------------ ------------ RETAINED EARNINGS: BALANCE AT BEGINNING OF PERIOD ................. 54,895 38,025 NET INCOME ..................................... 4,518 16,870 ------------ ------------ BALANCE AT END OF PERIOD ................... 59,413 54,895 ------------ ------------ TOTAL SHAREHOLDERS' EQUITY ................. $ 119,701 $ 111,284 ============ ============
(1) 1997 share information restated to reflect a two for one split of the Company's common stock distributed in November 1997. The accompanying notes are an integral part of the consolidated financial statements. 6 7 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (Unaudited)
For the Three Months Ended March 31, ------------------------------------ 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME ...................................... $ 4,518 $ 3,622 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: NET REALIZED INVESTMENT GAIN .................... (3) (28) DEPRECIATION AND AMORTIZATION EXPENSE ........... 338 336 DEFERRED INCOME TAX BENEFIT ..................... (173) (450) CHANGE IN PREMIUMS RECEIVABLE ................... (1,484) (2,885) CHANGE IN OTHER RECEIVABLES ..................... 439 3,234 CHANGE IN DEFERRED ACQUISITION COSTS ............ (962) (829) CHANGE IN OTHER ASSETS .......................... (45) (782) CHANGE IN UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES ...................................... 5,651 5,429 CHANGE IN UNEARNED PREMIUMS ..................... 2,848 1,999 CHANGE IN OTHER LIABILITIES ..................... (1,934) (2,629) CHANGE IN INCOME TAXES PAYABLE .................. 1,571 977 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES ... 10,764 7,994 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: PROCEEDS FROM SALES OF INVESTMENTS IN FIXED MATURITIES AVAILABLE FOR SALE ................. 5,314 1,208 PROCEEDS FROM MATURITY OF INVESTMENTS IN FIXED MATURITIES AVAILABLE FOR SALE ................. 3,805 660 PROCEEDS FROM SALES OF INVESTMENTS IN EQUITY SECURITIES .................................... 2,040 2,224 COST OF FIXED MATURITIES SECURITIES AVAILABLE FOR SALE ACQUIRED ................................. (22,793) (10,538) COST OF EQUITY SECURITIES ACQUIRED .............. (2,565) (4,055) PURCHASE OF PROPERTY AND EQUIPMENT .............. (429) (594) -------- -------- NET CASH USED BY INVESTING ACTIVITIES ....... (14,628) (11,095) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: EXERCISE OF EMPLOYEE STOCK OPTIONS, NET OF TAX BENEFIT ................................ 27 137 COLLECTION OF NOTES RECEIVABLE .................. 228 66 PROCEEDS FROM SHARES PURSUANT TO EMPLOYEE STOCK PURCHASE PLAN .................. 13 -- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES ... 268 203 -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS .......... (3,596) (2,898) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ... 11,933 11,483 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ......... $ 8,337 $ 8,585 ======== ======== CASH PAID DURING THE PERIOD FOR: INCOME TAXES .................................... $ -- $ 599 NON-CASH TRANSACTIONS: ISSUANCE OF SHARES PURSUANT TO EMPLOYEE STOCK PURCHASE PLAN IN EXCHANGE FOR NOTES RECEIVABLE .............................. $ 558 $ 599
The accompanying notes are an integral part of the consolidated financial statements. 7 8 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The consolidated financial statements as of and for the three months ended March 31, 1998 and 1997 are unaudited, but in the opinion of management, have been prepared on the same basis as the annual audited consolidated financial statements and reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the information set forth therein. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the operating results to be expected for the full year or any other period. Certain prior year amounts have been reclassified for comparative purposes. These financial statements should be read in conjunction with the financial statements and notes as of and for the year ended December 31, 1997 included in the Company's Annual Report on Form 10-K. 2. Earnings Per Share Earnings per common share has been calculated by dividing net income for the period by the weighted average number of common shares and common share equivalents outstanding during the period. 3. Comprehensive Income In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," which is effective for years beginning after December 15, 1997. This statement establishes standards for the reporting and display of comprehensive income and its components. Comprehensive income includes all changes in equity during a period, except those resulting from investments by owners and distributions to owners. 4. Income Taxes The effective tax rate differs from the 35% marginal tax rate principally as a result of interest exempt from tax, the dividend received deduction and other differences in the recognition of revenues and expenses for tax and financial reporting purposes. 5. Subsequent Event - FELINE PRIDES(SM) and Trust Preferred Securities Offering The Company closed on its FELINE PRIDES(SM) and Trust Preferred Securities offering on May 4, 1998. FELINE PRIDES(SM) are units consisting of a contract under which the holder is obligated to purchase common stock from the Company approximately three years following the May 4, 1998 closing date and beneficial ownership of either (1) interest bearing preferred securities issued by a business trust subsidiary of the Company or (2) U.S. Treasury securities. Proceeds to the Company, net of underwriting commission, from the sales of 10,350,000 FELINE PRIDES(SM) and 1,000,000 7.00% Trust Originated Preferred Securities were $100.1 million. These amounts include 1,350,000 Income Prides, a component of the FELINE PRIDES(SM), purchased pursuant to the exercise of the underwriters' over allotment option. 8 9 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION GENERAL Although the Company's financial performance is dependent upon its own specific business characteristics, certain risk factors can affect the profitability of the Company. These include: - Industry factors - Historically the financial performance of the commercial property and casualty insurance industry has tended to fluctuate in cyclical patterns of soft markets followed by hard markets. In the current environment, insurance industry pricing in general continues to be soft; however, the Company's strategy is to focus on underwriting profits and accordingly the Company's marketing organization is being directed into those niche businesses that exhibit the greatest potential for underwriting profits. - Competition - The Company competes in the commercial property and casualty business with other domestic and international insurers having greater financial and other resources than the Company. - Regulation - The Company's insurance subsidiaries are subject to a substantial degree of regulatory oversight, which generally is designed to protect the interests of policyholders, as opposed to shareholders. - Inflation - Commercial property and casualty insurance premiums are established before the amount of losses and loss adjustment expenses, or the extent to which inflation may effect such amounts is known. - Investment Risk - Substantial future increases in interest rates could result in a decline in the market value of the Company's investment portfolio and resulting losses and/or reduction in shareholders' equity. RESULTS OF OPERATIONS (THREE MONTHS ENDED MARCH 31, 1998 VS MARCH 31, 1997) Premiums: Gross written premiums grew $5.7 million (16.5%) to $40.3 million for the three months ended March 31, 1998 from $34.6 million for the same period of 1997; gross earned premiums grew $4.9 million (15.0%) to $37.5 million for the three months ended March 31, 1998 from $32.6 million for the same period of 1997; net written premiums increased $2.8 million (10.3%) to $30.0 million for the three months ended March 31, 1998 from $27.2 million for the same period of 1997; and net earned premiums grew $4.5 million (20.1%) to $26.9 million in 1998 from $22.4 million in 1997. The overall growth in premiums and the varying growth rates for gross written premiums, gross earned premiums, net written premiums, and net earned premiums are attributable to a number of factors: - - Overall premium growth is primarily attributable to: expanded marketing efforts relating to commercial auto, commercial package, and specialty lines products through the increase in the Company's proprietary field organization to a total of 100 professionals, production underwriters and customer service representatives and the Company maintaining a 90% retention of policies renewing in the quarter; the continued development of the Company's Preferred Agent Program, initiated in 1996, wherein business relationships are formed with brokers specializing in certain of the Company's business niches, thereby increasing the distribution of the Company's niche products. - - Net earned premiums grew at a higher rate than gross written and gross earned premiums primarily due to the renegotiation of the Company's reinsurance program effective January 1, 1997 whereby more favorable reinsurance rates were realized while substantially the same retentions and coverages were maintained; net written premiums for the three months ended March 31, 1998 grew at a lower rate than gross written and gross earned premiums due to returned unearned reinsurance premiums recorded in the first quarter of 1997 as a result of the renegotiation of the Company's reinsurance program. Net Investment Income: Net investment income approximated $2.7 million for the three months ended March 31, 1998 and $2.2 million for the same period of 1997. Total investments grew to $240.1 million at March 31, 1998 from $177.9 million at March 31, 1997, primarily due to cash flows provided from operating activities. 9 10 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (continued) Net Loss and Loss Adjustment Expenses: Net loss and loss adjustment expenses increased $2.4 million (19.2%) to $14.9 million in the first quarter of 1998 from $12.5 million in the first quarter of 1997 and the loss ratio decreased to 55.2% in 1998 from 55.7% in 1997. The increase in net loss and loss adjustment expenses was due primarily to the 20.1% growth in net earned premiums. Acquisition Costs and Other Underwriting Expenses: Acquisition costs and other underwriting expenses increased $1.3 million (18.8%) to $8.2 million for the three months ended March 31, 1998 from $6.9 million for the same period of 1997. This increase was due primarily to the 20.1% growth in net earned premiums. Income Tax Expense: The Company's effective tax rate for the three months ended March 31, 1998 and 1997 was 25.5% and 23.5%, respectively. The effective rates differed from the 35% statutory rate principally due to investments in tax-exempt securities. The increase in the effective tax rate is principally due to a greater investment in taxable securities relative to tax exempt securities during 1997. LIQUIDITY AND CAPITAL RESOURCES For the three months ended March 31, 1998 the Company's investments experienced unrealized investment appreciation of $3.6 million, net of the related deferred tax expense of $2.0 million. At March 31, 1998, 100% of the Company's fixed maturity securities consisted of U.S. Government securities or securities rated "1" or "2" by the NAIC, 96.3% were rated "A-" or better (with no security rated lower than "BBB-") by Standard & Poor's Corporation. The Company produced net cash from operations of $10.8 million and $8.0 million, respectively, for the three months ended March 31, 1998 and 1997. Management believes that the Company has adequate ability to pay all claims and meet all other cash needs. On May 4, 1998, the Company realized proceeds of $100.1 million, net of underwriting commission, from its FELINE PRIDES(SM) and Trust Preferred securities offering. Of these proceeds, $20.0 million was contributed to the Company's insurance subsidiaries and the remaining proceeds are presently being retained for general corporate purposes, which may include acquisitions, including acquisitions of programs or books of business, capital expenditures, additional capital contributions to its subsidiaries and the repurchase of its common stock. The investment of the proceeds by the Company and the insurance subsidiaries is being made in accordance with prevailing investment policies. Risk-based capital is designed to measure the acceptable amount of capital an insurer should have based on the inherent specific risks of each insurer. Insurers failing to meet this benchmark capital level may be subject to scrutiny by the insurer's domiciliary insurance department and ultimately rehabilitation or liquidation. Based on the standards currently adopted, the Company's insurance subsidiaries' capital and surplus is in excess of the prescribed risk-based capital requirements. 10 11 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other information None. Item 6. Exhibits and Reports on Form 8-K a. Exhibits
Exhibit No. Page No. Description ----------- -------- ----------- 11.0 13 Computation of Earnings Per Share
b. The Company has not filed any reports on Form 8-K during the quarter for which this report is filed. 11 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PHILADELPHIA CONSOLIDATED HOLDING CORP. Registrant Date May 8, 1998 /s/ James J. Maguire ------------ --------------------- James J. Maguire Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer) Date May 8, 1998 /s/ Craig P. Keller ------------- -------------------- Craig P. Keller Vice President, Secretary, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) 12 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Dollars and Share Data in Thousands, except Per Share Data) (Unaudited)
As of and For the Three Months Ended March 31, 1998 1997(1) ---- ------- Weighted Average Common Shares Outstanding 12,263 12,133 Weighted Average Share Equivalents Outstanding 2,791 2,570 ------- ------- Weighted Average Shares and Share Equivalents Outstanding 15,054 14,703 ======= ======= Net Income $ 4,518 $ 3,622 ======= ======= Basic Earnings per Share $ 0.37 $ 0.30 ======= ======= Diluted Earnings per Share $ 0.30 $ 0.25 ======= =======
(1) 1997 share information restated to reflect a two-for-one split of the Company's common stock distributed in November 1997. 13 EX-27 3 FINANCIAL DATA SCHEDULE
7 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 186,847 0 0 53,205 0 0 240,052 8,337 1,833 11,932 311,145 128,081 44,964 0 0 0 0 0 43,386 76,315 311,145 26,915 2,700 3 57 14,858 8,219 533 6,065 1,547 4,518 0 0 0 4,518 0.37 0.30 108,928 14,858 0 1,560 7,487 114,739 0 UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES DIFFER FROM THE AMOUNTS REPORTED IN THE CONSOLIDATED FINANCIAL STATEMENTS BECAUSE OF THE INCLUSION HEREIN OF REINSURANCE RECEIVABLES OF $13,342 AND $13,502 AT MARCH 31, 1998 AND DECEMBER 31, 1997.
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