Philadelphia Consolidated CEO Pleased with Q4 Report

February 11, 2005

Philadelphia Consolidated Holding Corp. on Friday reported net income for the quarter ended Dec. 31, 2004 increased 58.0% to $32.4 million ($1.38 diluted and $1.45 basic earnings per share) from $20.5 million ($0.89 diluted and $0.93 basic earnings per share) for the same period in 2003.

Net income for the quarter ended Dec. 31, 2004 included $0.1 million ($0.00 diluted loss per share) of after-tax net realized investment losses from $1.4 million ($0.06 diluted gain per share) of after-tax net realized investment gains for the same quarter in 2003. Gross written premiums increased 25.9% to $271.1 million from $215.4 million in the fourth quarter of 2003, and the combined ratio for the quarter was 83.0% vs. 89.1% for the same quarter in 2003.

Financial results for the fourth quarter of 2004 included:

— The following change in losses and reinsurance premium expense due to revised estimates of gross losses attributable to Hurricanes Charley, Frances, Ivan and Jeanne, as previously announced in the company’s Jan. 25, 2005 report:

— $8.3 million pretax ($5.4 million after-tax, or $0.23 diluted loss
per share) increase in net reserves for loss and loss adjustment
expenses, due to a higher loss estimate for Hurricane Frances,
which, when combined with the aggregate loss estimates for
Hurricanes Charley and Jeanne resulted in catastrophe losses
exceeding the coverage limit available on a loss layer of the
company’s catastrophe reinsurance program by $8.3 million;
— $1.5 million pretax ($1.0 million after-tax, or $0.04 diluted
earnings per share) reduction in reinstatement premium expense and accelerated reinsurance premium expense as a result of the revised gross hurricane loss estimates and a change in the distribution of losses by storm;
— A $3.8 million pretax ($2.5 million after-tax, or $0.11 after-tax diluted loss per share) increase in net reserves for loss and loss adjustment expenses, primarily for the commercial excess automobile lines of business, principally in accident years 2002 and 2001.

Financial results for the fourth quarter of 2003 included:
— A $5.8 million pretax charge ($3.8 million after-tax, or $0.16 after- tax diluted loss per share) to increase gross and net reserves for loss and loss adjustment expenses for residual value policies;
— A $7.5 million pretax charge ($4.9 million after-tax, or $0.21 after- tax diluted loss per share) to increase net reserves for loss and loss
adjustment expenses, primarily for claims made professional liability and commercial automobile lines of business in prior accident years.

Net income for the year ended Dec. 31, 2004 increased 34.6% to $83.7 million ($3.59 diluted earnings per share and $3.78 basic earnings per share) from $62.2 million ($2.74 diluted earnings per share and $2.84 basic earnings per share) for the year ended Dec. 31, 2003. Net income for the years ended Dec. 31, 2004 and Dec. 31, 2003 each included $0.5 million ($0.02 diluted earnings per share) of net after-tax investment gains.

Gross written premiums increased 29.3% to $1,171.3 million from $906.0 million for the year ended Dec. 31, 2003 and the combined ratio for the year was 89.6% from 90.9%. The company’s book value per share at Dec. 31, 2004 was $28.92.

Financial results for the year 2004 included:
— $46.7 million pretax, net of reinsurance, ($30.4 million after-tax, or $1.30 diluted loss per share) hurricane catastrophe losses as a result of Hurricanes Charley, Frances, Ivan and Jeanne;
— $26.0 million pretax ($16.9 million after-tax, or $0.73 diluted loss per share) of reinstatement premium expense and accelerated reinsurance premium expense due to the utilization of certain catastrophe reinsurance coverages as a result of the above mentioned multiple hurricane events;
— An increase in the loss ratios for certain prior accident years resulting in a $28.9 million pretax ($18.8 million after-tax, or $0.81 diluted loss per share) increase in loss reserves.

Financial results for the year 2003 included:
— A $38.8 million pretax charge ($25.2 million after-tax, or $1.12 after-tax diluted loss per share) to increase the gross and net liability
for loss and loss adjustment expense reserves for the discontinued automobile leasing residual value product;
— A $9.0 million pretax benefit ($5.9 million after-tax, or $0.26 after- tax diluted earnings per share) from favorable prior year development principally in the property line of the commercial package product;
— A $7.5 million pretax charge ($4.9 million after-tax, or $0.22 after- tax diluted loss per share) to increase net reserves for loss and loss adjustment expenses primarily for claims made professional liability and commercial automobile lines of business in prior accident years.

James Maguire, Jr. CEO said, “I am pleased with the continued
profitable top line growth in core operations, achieved as a result of
executing on our clearly defined business processes and adhering to our core covenants of disciplined underwriting and aggressive marketing. Renewal retention has remained high, and although pricing levels have declined from the start of the year, rates continue to be adequate for all lines of new business. We have broadened our product offerings and expanded our distribution platform among independent agents and brokers, both of which should help to sustain our profitable growth into 2005.”

Topics Catastrophe Profit Loss Hurricane Abuse Molestation Reinsurance

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