Platinum Underwriters Misses Q2 Earnings on Lower Premiums

Zacks Equity Research

Platinum Underwriters Holdings Ltd. (PTP) reported second-quarter 2014 operating earnings of $1.34 per share, missing the Zacks Consensus Estimate by a couple of cents. Earnings declined 16% year over year due to lower premiums.

The weak performance was also reflected in the share price that lost 4.31% to close at $62.59 in the last trading session.

Behind the Headlines

Total revenue of Platinum Underwriters grossed $125 million in the second quarter, down 12.7% year over year on lower premiums.

Decline in net premiums across all the segments - Property and Marine (down 5.6%), Casualty (down 18.6%) and Finite Risk (8.6%) led to the overall decrease.

Net Investment Income declined 0.9% to $17.6 million year over year.   

Total expense fell 10% to $105 million owing to a decrease in net loss and loss adjustment expenses as well as net acquisition expenses.

Underwriting income of Platinum Underwriters was $32.1 million in the second quarter, down 12% year over year mostly due to lower underwriting income at Property and Marine segment.

The combined ratio of the property and casualty insurer improved 20 basis points to 74.2% due to improvement in Casualty and Finite Risk segments’ combined ratio.

Financial Update

Platinum Underwriters exited the second quarter of 2014 with cash and cash equivalents of $1.36 billion, down 7% from 2013-end.

Total assets were $3.8 billion as of Jun 30, 2104, down 2.5% from Dec 31, 2013.

Shareholders’ equity was $1.8 billion as of Jun 30, 2014, up 1.8% from Dec 31, 2013.

Debt balance was $250 million at the quarter-end, flat with 2013 year-end level.

Platinum Underwriters book value per common share was $67.38 as of Jun 30, 2014, up 8.5% from Dec 31, 2014.

Share Repurchase Update

Platinum Underwriters spent $35.0 million to buy back 0.6 million common shares in the second quarter. With this the company repurchased 1.8 billion total shares in the first half of 2014.

Performance of Other Property and Casualty Insurers

Progressive Corp. (PGR) reported second-quarter operating earnings of 45 cents per share, falling short of the Zacks Consensus Estimate by a couple of cents. However, earnings improved 10% year over year.

RLI Corp. (RLI) reported second-quarter operating income of 66 cents per share, in line with Zacks Consensus Estimate. The figure also marked a 4.8% year-over-year increase.

Zacks Rank

Platinum Underwriters currently has a Zacks Rank #3 (Hold).

A better ranked property and casualty insurer, Everest Re Group Ltd. (RE) with Zacks Rank #2 (Buy) is slated to release second-quarter earnings in the upcoming week.

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