Platinum Underwriters Holdings reported on its first two months of operations that began on Nov. 1, 2002 when the company completed its initial public offering and assumed the continuing 2002 reinsurance business of The St. Paul Companies, Inc.
Net income was $6.4 million, or $0.15 per diluted common share. Platinum’s financial results reflect $5.4 million of underwriting and corporate expenses incurred in connection with completion of the IPO, the formation of the Company and the transfer of the St. Paul Re business to Platinum (the “transactions”).
Jerome Fadden, Platinum’s president and CEO, noted, “We are very pleased with our initial results of operations as an independent public company, which reflect our success in establishing Platinum as a high-quality reinsurer committed to generating underwriting profits and attractive shareholder returns. With the successful transfer of the continuing 2002 reinsurance business from The St. Paul to Platinum and the continuity of relationships with our brokers and clients, we believe we are well positioned to capitalize on our position in the marketplace. We also expect to benefit from improving conditions in many casualty lines of business, where market withdrawals by several competitors and poor historical industry results have enhanced the current environment.”
Net premiums written were $298.1 million of which $292.3 million is related to the reinsurance business assumed from The St. Paul Companies. Net premiums earned were $107.1 million. Net investment income was $5.2 million. The deployment of Platinum’s investment portfolio was delayed pending receipt of required regulatory approvals. The portfolio was substantially invested by the end of 2002.
Losses and loss adjustment expenses for the period were $60.4 million, or 56.4 percent of net premiums earned, reflecting the mix of business underwritten in 2002 and the relatively low level of catastrophe losses incurred.
Acquisition costs for the period were $25.5 million, representing a 23.8 percent GAAP acquisition expense ratio. Underwriting expenses totaled $12.2 million, including $2.6 million of costs incurred in connection with the transactions.
Platinum’s GAAP combined ratio for the period was 91.5% including the costs incurred in connection with the transactions. The company’s Global Property segment reported net premiums written of $89.3 million and a GAAP combined ratio of 82.0 percent. Net premiums written for the Global Casualty segment were $164.9 million and its GAAP combined ratio was 109.1 percent. The Finite Risk segment produced net premiums written of $43.9 million and a GAAP combined ratio of 80.0 percent.
Corporate items include net foreign exchange gains of $2.0 million, interest expense of $1.3 million and corporate expenses totaling $4.2 million, of which $2.8 million represent expenses incurred in connection with the transactions.
Following its success during the Jan. 1, 2003 renewal season, Platinum estimates that 2003 net premiums written will be slightly less than $1 billion.
Based on the current environment and a normal level of catastrophe losses, the company expects its GAAP combined ratio to be in the range of 90 percent to 95 percent, depending on the mix of business underwritten. Given the capitalization of its operating subsidiaries and the anticipated level of net premiums written in 2003, the Company anticipates an effective tax rate of approximately 22 percent to 25 percent.
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