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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-31341
PLATINUM UNDERWRITERS HOLDINGS, LTD.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Bermuda Not Applicable
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
The Belvedere Building
69 Pitts Bay Road
Pembroke, Bermuda HM-08
(Address of principal executive offices) (Zip Code)
(441) 295-7195
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date: 43,004,000 Common Shares as of
May 12, 2003.
PLATINUM UNDERWRITERS HOLDINGS, LTD.
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2003
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements
Platinum Underwriters Holdings, Ltd. and Subsidiaries
Consolidated Balance Sheets as of March 31, 2003 (Unaudited)
and December 31, 2002 1
Consolidated Statements of Income and Comprehensive Income for
the Three Months Ended March 31, 2003 (Unaudited) 2
Consolidated Statement of Cash Flows for the Three Months Ended
March 31, 2003 (Unaudited) 3
Notes to Condensed Consolidated Financial Statements (Unaudited) 4
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 3 Quantitative and Qualitative Disclosure about Market Risk 14
Item 4 Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 15
Item 2 Changes in Securities and Use of Proceeds 15
Item 3 Defaults Upon Senior Securities 15
Item 4 Submission of Matters to a Vote of Security Holders 15
Item 5 Other Information 16
Combined Financial Data of Reinsurance Underwriting Segment of
The St. Paul Companies, Inc. (the Predecessor)
Combined Statement of Underwriting Results for the Three Months
Ended March 31, 2002 (Unaudited) 17
Combined Statement of Identifiable Cash Flows for the Three
Months Ended March 31, 2002 (Unaudited) 17
Notes to Combined Statements of March 31, 2002 (Unaudited) 18
Item 6 Exhibits and Reports on Form 8-K 20
(a) Exhibits 23
(b) Reports on Form 8-K
SIGNATURES 20
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER 21
EXHIBIT INDEX 20
EXHIBITS 23
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands, except share data)
(Unaudited)
March 31, December 31,
2003 2002
---- ----
ASSETS
Investments - Fixed maturities available for sale
at fair value
(cost - $1,311,050 and $1,052,923, respectively) $1,333,433 $1,065,216
Cash and cash equivalents 160,287 281,486
Accrued investment income 16,300 9,993
Reinsurance premiums receivable 320,900 5,599
Reinsurance recoverable on ceded losses and loss
adjustment expenses 450 --
Prepaid reinsurance premiums 2,107 --
Amounts receivable from The St. Paul Companies, Inc. 5,174 162,908
Funds held by ceding companies 59,783 54,902
Deferred acquisition costs 70,454 49,332
Other assets 32,300 15,451
---------- ----------
Total assets $2,001,188 $1,644,887
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unpaid losses and loss adjustment expenses $ 417,372 $ 281,659
Unearned premiums 314,492 191,016
Reinsurance deposit liabilities 29,230 23,661
Debt obligations 137,500 137,500
Ceded premiums payable 3,691 --
Commissions payable 106,128 37,562
Income taxes payable 10,613 --
Deferred taxes 7,681 6,496
Other liabilities 18,442 45,747
---------- ----------
Total liabilities 1,045,149 723,641
---------- ----------
Shareholders' Equity
Preferred shares, $.01 par value, 25,000,000
shares authorized, no shares issued or outstanding -- --
Common shares, $.01 par value, 200,000,000 shares
authorized, 43,004,000 shares issued and
outstanding 430 430
Additional paid-in capital 903,797 903,797
Accumulated other comprehensive income 18,228 10,581
Retained earnings 33,584 6,438
---------- ----------
Total shareholders' equity 956,039 921,246
---------- ----------
Total liabilities and shareholders' equity $2,001,188 $1,644,887
========== ==========
See accompanying notes to condensed consolidated financial statements.
-1-
PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 2003
($ in thousands, except per share data)
Revenue:
Net premiums earned $238,069
Net investment income 14,203
Net realized investment gains 744
Other income 1,075
--------
Total revenue 254,091
--------
Expenses:
Losses and loss adjustment expenses 138,803
Acquisition expenses 51,719
Operating expenses 20,169
Interest expense 2,468
--------
Total expenses 213,159
--------
Income before income tax expense 40,932
Income tax expense 10,346
--------
Net income $ 30,586
========
Earnings per share:
Basic earnings per share $ 0.71
Diluted earnings per share $ 0.66
Shareholder dividends:
Dividends declared $ 3,440
Dividends declared per share $ 0.08
Comprehensive Income:
Net income $ 30,586
Other comprehensive income:
Net change in unrealized gains on
available-for-sale securities, net of
deferred tax 7,647
--------
Comprehensive income $ 38,233
========
See accompanying notes to condensed consolidated financial statements.
-2-
PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2003
($ in thousands)
Operating Activities:
Net income $ 30,586
Adjustments to reconcile net income to cash used in operations:
Depreciation and amortization 4,760
Net realized gain on investments (744)
Changes in assets and liabilities:
Increase in accrued investment income (6,307)
Increase in reinsurance premiums receivable (315,301)
Decrease in amounts receivable from St. Paul 157,734
Increase in funds held (4,881)
Increase in deferred acquisition costs (21,122)
Increase in unpaid losses and loss adjustment expenses 135,263
Increase in unearned premiums 121,369
Increase in commissions payable 68,566
Increase in income taxes payable 10,613
Increase in deferred taxes 1,185
Increase in reinsurance deposit liabilities 5,569
Increase in ceded premiums payable 3,691
Decrease in other assets and liabilities (6,313)
Other, net (3,022)
-----------
Net cash provided by operating activities 181,646
-----------
Investing Activities:
Investments sold, matured, and called - fixed maturities 95,004
Investments acquired - fixed maturities (394,409)
-----------
Net cash used in investing activities (299,405)
-----------
Financing Activities - Dividends to shareholders (3,440)
-----------
Net decrease in cash and cash equivalents (121,199)
Cash and cash equivalents at beginning of period 281,486
-----------
Cash and cash equivalents at end of period $ 160,287
===========
Supplemental disclosures of cash flow information:
Taxes paid $ --
Interest paid $ 2,807
See accompanying notes to condensed consolidated financial statements.
-3-
PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2003
NOTE 1 BASIS OF PRESENTATION
The consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America
("U.S. GAAP") and include the accounts of Platinum Underwriters Holdings, Ltd.
and its subsidiaries (the "Company"), including Platinum Re (UK) Limited,
Platinum Underwriters Bermuda, Ltd. ("Platinum Bermuda"), Platinum Underwriters
Finance, Inc., Platinum Regency Holdings and Platinum Underwriters Reinsurance,
Inc. ("Platinum US"). All material inter-company transactions have been
eliminated in preparing these consolidated financial statements. The amounts
included in this report as of and for the three months ended March 31, 2003 are
unaudited and include those adjustments consisting of normal recurring items
that management considers necessary for a fair presentation under U.S. GAAP.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ from these
estimates. The results of operations for any interim period are not necessarily
indicative of results for the full year.
In November 2002 Platinum Underwriters Holdings, Ltd. ("Platinum
Holdings") completed an initial public offering of 33,044,000 shares of common
stock. Concurrent with the public offering, Platinum Holdings sold 6,000,000
common shares to The St. Paul Companies, Inc. ("St. Paul") and 3,960,000 common
shares to RenaissanceRe Holdings Ltd. in private placements. Also concurrent
with these transactions the Company and St. Paul entered into several agreements
for the transfer of continuing reinsurance business and certain related assets
of St. Paul. Among these agreements were quota share retrocession agreements
effective November 2, 2002 under which the Company assumed from St. Paul unpaid
losses and loss adjustment expenses ("LAE"), unearned premiums and certain other
liabilities on reinsurance contracts becoming effective in 2002.
Stock-Based Compensation
Pursuant to the provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company has
elected to continue using the intrinsic value method of accounting for
stock-based awards granted to employees established by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25").
Under APB 25, if the exercise price of the Company's employee stock options is
equal to or greater than the fair market value of the underlying stock on the
date of the grant, no compensation expense is recorded.
Had the Company calculated and recorded compensation expense for stock
option grants based on the "fair value" method described in SFAS 123, net income
and earnings per share, net of tax, for the three months ended March 31, 2003
would have been the pro forma amounts as indicated below:
Stock-based compensation expense:
As reported --
Pro forma $ 1,633,000
-4-
PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited), continued
March 31, 2003
Net income:
As reported $ 30,586,000
Pro forma 28,953,000
Basic earnings per share:
As reported $ 0.71
Pro forma 0.67
Diluted earnings per share:
As reported $ 0.66
Pro forma 0.62
NOTE 2 INVESTMENTS
Fixed maturities classified as available-for-sale are carried at fair
value as of the balance sheet date. Net change in unrealized investment gains
for the three months ended March 31, 2003 were as follows ($000's):
Fixed maturities $ 10,090
Less deferred taxes (2,443)
--------
Net change in unrealized gains $ 7,647
--------
Investments with a carrying value of $356,478,000 and cash and cash
equivalents of $57,097,000 at March 31, 2003 were held in trust to secure an
equivalent amount of liabilities arising under the quota share retrocession
agreements with St. Paul.
NOTE 3 EARNINGS PER SHARE
Following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the three months ended
March 31, 2003:
Weighted
Average Net
Net Shares Income
Income Outstanding Per Share
------ ----------- ---------
Basic earnings per share:
Income available to common
shareholders $30,586,000 43,004,000 $ 0.71
Effect of dilutive securities:
Stock options -- 279,000
Equity Security Units 1,633,000 5,725,000
----------- ----------
Diluted earnings per share:
Income available to common
shareholders $32,219,000 49,008,000 $ 0.66
----------- ----------
NOTE 4 OPERATING SEGMENT INFORMATION
The Company has organized its worldwide reinsurance business around three
operating segments: Global Property and Marine, Global Casualty and Finite Risk.
The Global Property and Marine operating
-5-
PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited), continued
March 31, 2003
segment includes principally property and marine reinsurance coverages that are
written both in the United States and international markets. This business
consists of catastrophe excess-of-loss reinsurance treaties and property per
risk excess-of-loss treaties and property proportional treaties. The Global
Casualty operating segment includes principally reinsurance treaties that cover
umbrella liability, general liability, professional liability, workers'
compensation and automobile liability. This segment also includes accident and
health reinsurance treaties, which are predominantly reinsurance of health
insurance products. The Finite Risk operating segment includes principally
finite reinsurance solutions to ceding companies whose needs may not be met
efficiently through traditional reinsurance products.
The following table summarizes underwriting activity and ratios for the
operating segments together with a reconciliation of underwriting profit or loss
to income before income taxes for the three months ended March 31, 2003
($000's):
Global
Property
and Global Finite
Marine Casualty Risk Total
------ -------- ---- -----
Net premiums written $ 117,767 $ 113,694 $ 128,630 $ 360,091
--------- --------- --------- ---------
Net premiums earned 89,932 77,726 70,411 238,069
Losses and LAE 41,585 53,907 43,311 138,803
Acquisition expenses 15,618 19,029 17,072 51,719
Operating expenses 10,459 4,618 2,137 17,214
--------- --------- --------- ---------
Segment underwriting income $ 22,270 $ 172 $ 7,891 $ 30,333
--------- --------- ---------
Corporate expenses not allocated to segments (2,955)
Interest expense (2,468)
Net investment income, realized gains and
other income 16,022
---------
Income before income tax expense $ 40,932
---------
Ratios:
Losses and LAE 46.2% 69.4% 61.5% 58.3%
Acquisition costs 17.4% 24.5% 24.2% 21.7%
Operating expenses 11.6% 5.9% 3.0% 7.2%
--------- --------- --------- ---------
Combined 75.2% 99.8% 88.7% 87.2%
--------- --------- --------- ---------
NOTE 5 SUBSEQUENT EVENT
On May 13, 2003 the Company entered into a Separation and Consulting
Agreement with Jerome T. Fadden, the Company's President and Chief Executive
Officer, pursuant to which the Company will pay Mr. Fadden approximately $5
million in June 2003 and accelerate the vesting of his option to purchase
975,000 of the Company's common shares. The acceleration of option vesting will
result in an expense of approximately $4.3 million for a total charge of $9.3
million and is expected to be reflected in the second quarter of 2003. The
Agreement supersedes the employment agreement between Mr. Fadden and The St.
Paul Companies, Inc. dated March 3, 2002 which was assigned to and assumed by
the Company effective November 1, 2002.
-6-
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003
BUSINESS OVERVIEW
Platinum Underwriters Holdings, Ltd. ("Platinum Holdings") is a Bermuda
insurance holding company. Platinum Holdings and its subsidiaries (the
"Company") operate through three licensed reinsurance subsidiaries: Platinum
Underwriters Reinsurance, Inc. ("Platinum US"), Platinum Re (UK) Limited
("Platinum UK") and Platinum Underwriters Bermuda, Ltd. ("Platinum Bermuda").
The Company provides property, casualty, marine, and finite reinsurance
coverages to a diverse clientele of insurers and select reinsurers on a
worldwide basis.
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and related notes thereto and management's
discussion and analysis of financial condition and results of operations
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002. The Company's consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP").
In November 2002 Platinum Holdings completed an initial public offering of
33,044,000 common shares. Concurrent with the public offering, Platinum Holdings
sold 6,000,000 common shares to The St. Paul Companies, Inc. ("St. Paul") and
3,960,000 common shares to RenaissanceRe Holdings Ltd. ("Renaissance Re") in
private placements. Also concurrent with these transactions the Company and St.
Paul entered into several agreements for the transfer of continuing reinsurance
business and certain related assets of St. Paul. Among these agreements were
quota share retrocession agreements effective November 2, 2002 under which the
Company assumed from St. Paul unpaid losses and loss adjustment expenses
("LAE"), unearned premiums and certain other liabilities on reinsurance
contracts becoming effective in 2002.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are necessarily based on
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by, or on behalf of, us.
In particular, statements using words such as "may," "should," "estimate,"
"expect," "anticipate," "intend," "believe," "predict," "potential," or words of
similar import generally involve forward-looking statements. For example, we
have included certain forward-looking statements in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" with regard to trends
in results, prices, volumes, operations, investment results, margins, risk
management and exchange rates. This Form 10-Q also contains forward-looking
statements with respect to our business and industry, such as those relating to
our strategy and management objectives and trends in market conditions, market
standing, product volumes, investment results and pricing conditions.
In light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this Form 10-Q
should not be considered as a representation by us or any other
-7-
person that our objectives or plans will be achieved. Numerous factors could
cause our actual results to differ materially from those in the forward-looking
statements, including the following:
(1) our ability to successfully implement the Company's business strategy
and continue the business acquired from St. Paul;
(2) conducting operations in a competitive environment;
(3) our ability to maintain our A.M. Best Company rating;
(4) significant weather-related or other natural or man-made disasters over
which the Company has no control;
(5) the effectiveness of our loss limitation methods;
(6) the adequacy of the Company's liability for unpaid losses and LAE;
(7) the availability of retrocessional reinsurance on acceptable terms;
(8) our ability to maintain our business relationships with reinsurance
brokers;
(9) general political and economic conditions, including the effects of
civil interest, war or a prolonged U.S. or global economic downturn or
recession;
(10) the cyclicality of the property and casualty reinsurance business;
(11) factors such as market volatility and interest rate and currency
exchange rate fluctuation;
(12) tax, regulatory or legal restrictions or limitations applicable to the
Company or the property and casualty reinsurance business generally;
and
(13) changes in the Company's plans, strategies, objectives, expectations or
intentions which may happen at any time at the Company's discretion.
As a consequence, current plans, anticipated actions and future financial
condition and results may differ from those expressed in any forward-looking
statements made by or on behalf of the Company. The foregoing factors should not
be construed as exhaustive. Additionally, forward-looking statements speak only
as of the date they are made, and we undertake no obligation to release publicly
the results of any future revisions or updates we may make to forward-looking
statements to reflect new information or circumstances after the date hereof or
to reflect the occurrence of future events.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
It is important to understand the Company's accounting policies in order
to understand its consolidated financial statements. Management considers
certain of these policies to be critical to the presentation of the financial
position and results of operations since they require management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets, liabilities, revenues, expenses, and related disclosures at
the financial reporting date and throughout the period being reported upon.
Certain of the estimates result from judgments that can be subjective and
complex, and consequently actual results may materially differ from these
estimates. The Company's most critical accounting policies involve written,
earned and unearned premiums, unpaid losses and LAE, reinsurance, other than
temporary declines in fair value of investments, income taxes and stock-based
compensation. The critical accounting policies discussed herein are discussed in
more detail in the notes to the consolidated financial statements included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
-8-
Due to the nature of reinsurance, premiums are not always reported to the
Company in a timely manner. Additionally, premiums on proportional treaty type
contracts are generally not reported to the reinsurers until after the
reinsurance coverage is in force and the reinsurer is at risk. Consequently, an
estimate of premiums earned but not reported ("EBNR") is recorded. The Company
estimates EBNR based on estimates of ultimate premium, calculated unearned
premiums and premiums reported from ceding companies. Along with estimating EBNR
the Company records the expenses associated with these premiums in the form of
losses, LAE and commissions. Unpaid losses and LAE represent an estimate of the
expected cost of the ultimate settlement and administration of losses. Actuarial
methodologies are employed to assist in establishing such estimates and include
judgments relative to estimates of future claims severity and frequency, length
of time to develop to ultimate, judicial theories of liability and other third
party factors which are often beyond our control. Due to the inherent
uncertainty associated with the estimation process the ultimate liability may
materially differ from the original estimate. Such estimates are regularly
reviewed and updated and any resulting adjustments are included in the current
period's results.
Reinsurance accounting is followed for assumed and ceded transactions when
risk transfer requirements have been met. These requirements involve significant
assumptions being made relating to the amount and timing of expected cash flows,
as well as the interpretation of underlying contract terms. Reinsurance
contracts that do not transfer significant insurance risk are accounted for as
deposits with interest expense credited to the contract deposit.
Unrealized depreciation in the value of individual securities considered
by management to be other than temporary is charged to income in the period it
is determined. The Company continually monitors the difference between cost and
the estimated fair value of investments, which involves uncertainty as to
whether declines in value are temporary in nature. When a decline in fair value
of an investment is considered to be "other than temporary", the investment is
written down to fair value and the write down is recorded as a realized loss.
Management's assessment of a decline in value includes current judgment as to
the financial position and future prospects of the entity that issued the
investment security.
Platinum Holdings and Platinum Bermuda are domiciled in Bermuda. The
Company also has subsidiaries in the United States, the United Kingdom and
Ireland which are subject to the tax laws thereof. The Company applies the asset
and liability method of accounting for income taxes under which deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
The Company has elected to use the intrinsic value method of accounting
for stock-based awards granted to employees, established by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
under which if the exercise price of the Company's employee stock options is
equal to or greater than the fair market value of the underlying stock on the
date of the grant, no compensation expense is recorded.
RESULTS OF OPERATIONS
Platinum Holdings completed its initial public offering and assumed
certain rights and obligations of the reinsurance business from St. Paul in
November 2002. Consequently, the operations of the Company commenced in November
2002 and there are no operations in comparable prior periods.
Net premiums written for the three months ended March 31, 2003 were
$360,092,000 and $298,114,000 for the period from November 1, 2002 through
December 31, 2002. Net premiums written
-9-
in 2002 includes $244,000,000 of unearned premiums assumed from St. Paul as of
November 2, 2002. Net premiums written for the three months ended March 31, 2003
increased significantly as compared to net premiums written for the period ended
December 31, 2002, exclusive of the November 2, 2002 assumption Most premiums
are written in the first month of any given quarter and thus a greater amount of
premium is written in the first three months of the year than in the last two
months. Additionally, premiums from reinsurance contracts in any given
underwriting year may be generated over several calendar years. Consequently,
premiums written in 2003 include premiums from reinsurance contracts
underwritten in 2003 and 2002 whereas net premiums written in 2002 includes only
reinsurance contracts becoming effective in 2002. Net premiums earned were
$238,069,000 for the three months ended March 31, 2003 and $107,098,000 for the
period from November 1, 2002 through December 31, 2002. The increase in net
premiums earned as compared to the period ended December 31, 2002 is the result
of the additional month of earned premiums in 2003 as well as the increasing net
premiums written.
Net investment income from fixed maturities and cash and cash equivalents
was $14,203,000 for the three months ended March 31, 2003 resulting in a cost
basis yield of 4%. The yield is reflective of current market yields.
Losses and LAE incurred were $138,803,000 for the three months ended March
31, 2003. The ratio of losses and LAE incurred to premiums earned, also referred
to as loss ratio, was 58.3% for the three months ended March 31, 2003. The loss
ratio for the period from November 1, 2002 through December 31, 2002 was 56.4%.
Both periods were favorably impacted by the absence of any major catastrophe
losses during the quarter.
Acquisition costs include brokerage, commissions and other direct
underwriting expenses associated with underwriting activities and were
$51,719,000 for the three months ended March 31, 2003 representing 21.7% of net
premiums earned as compared to 23.8% during the period ended December 31, 2002.
The modest improvement is due primarily to an increasing premium base. Operating
expenses were $20,169,000 and include other underwriting expenses related to the
reinsurance operations as well as costs associated with the Bermuda holding
company.
SEGMENT INFORMATION
The Company has organized its worldwide reinsurance business around three
operating segments. The following table summarizes underwriting activity and
ratios for the three operating segments for the three months ended March 31,
2003 ($000's):
Global
Property
and Global Finite
Marine Casualty Risk Total
------ -------- ---- -----
Net premiums earned $ 89,932 $ 77,726 $ 70,411 $238,069
Losses and LAE 41,585 53,907 43,311 138,803
Acquisition costs 15,618 19,029 17,072 51,719
Other underwriting
expenses 10,459 4,618 2,137 17,214
-------- -------- -------- --------
Underwriting income $ 22,270 $ 172 $ 7,891 $ 30,333
======== ======== ======== ========
-10-
Global
Property
and Global Finite
Marine Casualty Risk Total
------ -------- ---- -----
Ratios:
Losses and LAE 46.2% 69.4% 61.5% 58.3%
Acquisition costs 17.4% 24.5% 24.2% 21.7%
Other underwriting expense 11.6% 5.9% 3.0% 7.2%
---- ---- ---- ----
Combined ratio 75.2% 99.8% 88.7% 87.2%
==== ==== ==== ====
GLOBAL PROPERTY AND MARINE
The Global Property and Marine operating segment includes principally
property and marine reinsurance coverages that are written both in the United
States and international markets. This business includes catastrophe
excess-of-loss reinsurance treaties and property per risk excess-of-loss
treaties and property proportional treaties. This operating segment generated
33% of the Company's net premiums written for the three months ended March 31,
2003.
Net premiums written were $117,767,000 for the three months ended March
31, 2003 and $89,341,000 for the period from November 1, 2002 through December
31, 2002. Net premiums written for the three months ended March 31, 2003 was the
result of business underwritten by the company as opposed to net premiums
written for the period from November 1, 2002 through December 31, 2002 which was
primarily unearned premiums assumed under the St. Paul quota share retrocession
agreement. Net earned premiums were $89,932,000 for the three months ended March
31, 2003 and $43,047,000 for the period from November 1, 2002 through December
31, 2002. The increase in net earned premiums is consistent with the increase in
net premiums written.
The loss ratio of 46.2% was favorably impacted by the absence of any major
catastrophe losses during the quarter. Acquisition costs were 17.4% of net
premiums earned. Other underwriting expenses were $10,459,000, and represents
costs associated with the property segment, including $2,822,000 of fees
relating to an agreement with Renaissance Re that provides for a periodic review
and assistance in measuring risk and managing aggregate catastrophe exposures.
GLOBAL CASUALTY
The Global Casualty operating segment includes principally reinsurance
treaties that cover umbrella liability, general liability, professional
liability, workers' compensation and automobile liability. This segment also
includes accident and health reinsurance treaties, which are predominantly
reinsurance of health insurance products. We generally write casualty
reinsurance on an excess-of-loss basis which responds when all claims from
multiple original insureds from a single event for a particular ceding company
exceeds our attachment point. This operating segment generated 32% of the
Company's net premiums written for the three months ended March 31, 2003.
Net premiums written were $113,694,000 for the three months ended March
31, 2003 and $164,929,000 for the period from November 1, 2002 through December
31, 2002. Net premiums written for the three months ended March 31, 2003 was the
result of business underwritten by the Company as opposed to net premiums
written for the period from November 1, 2002 through December 31, 2002 which was
primarily unearned premium assumed under the St. Paul quota share retrocession
agreement. Net earned premiums were $77,726,000 for the three months ended March
31, 2003 and $39,320,000 for the period from November 1, 2002 through December
31, 2002. The net earned premium is impacted by the same factors as the net
premium written.
-11-
The loss ratio incurred for the Global Casualty segment was 69.4% for the
three months ended March 31, 2003. Acquisition expenses were $19,029,000 and
represent 24.5% of net earned premiums. Other underwriting expenses were
$4,618,000 and represents costs associated with the casualty segment.
FINITE RISK
The Finite Risk operating segment includes principally finite reinsurance
solutions to ceding companies whose needs may not be met efficiently through
traditional reinsurance products. We focus on providing such clients with
customized solutions for their risk management and other financial management
needs. The classes of risks underwritten through finite products are generally
consistent with the classes covered using traditional products. This operating
segment generated 36% of the Company's net premiums written for the three months
ended March 31, 2003.
Net premiums written were $128,630,000 for the three months ended March
31, 2003 and $43,844,000 for the period from November 1, 2002 through December
31, 2002. Finite risk premiums tend to be written on an opportunistic basis and
several significant finite Quota share treaties were written in the three months
ended March 31, 2003. Net premiums written for the period from November 1, 2002
through December 31, 2002 includes premiums assumed under the 2002 St. Paul
quota share retrocession agreement. Net earned premiums for the three months
ended March 31, 2003 were $70,411,000 and $24,731,000 for the period from
November 1, 2002 through December 31, 2002. The net earned premium is impacted
by the same factors as the net premium written.
The loss ratio incurred for the Finite Risk segment of 61.5% for the three
months ended March 31, 2003 was also favorably impacted by the absence of any
major catastrophe activity. Acquisition expenses were $17,072,000 and represent
24.2% of net earned premiums. Other underwriting expenses were $2,137,000 and
represents costs associated with the finite risk segment.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES OF CASH
The consolidated sources of funds of the Company consist primarily of
premiums written, losses recovered from retrocessionaires, investment income and
proceeds from sales and redemption of investments. Net cash flow provided by
operations was $181,646,000. Operating cash flow was used primarily to acquire
additional investments.
Invested assets were $1,333,433,000 as of March 31, 2003. The Company's
fixed maturity investment portfolio primarily consists of investment grade
bonds. The portfolio has an average duration of 3.4 years as of March 31, 2003.
Management continually monitors the composition of the investment portfolio and
cash flows from the portfolio in order to maintain the appropriate levels of
liquidity in order to ensure the Company's ability to satisfy claims.
Investments with a carrying value of $356,478,000 and cash and cash equivalents
of $57,097,000 at March 31, 2003 were held in trust to secure an equivalent
amount of liabilities arising under the quota share retrocession agreements with
St. Paul.
Platinum Holdings is a holding company that conducts no reinsurance
operations of its own. All of its reinsurance operations are conducted through
its wholly owned operating subsidiaries Platinum US (which it owns through
Platinum Ireland and Platinum Finance), Platinum UK (which it owns through
Platinum Ireland) and Platinum Bermuda. As a holding company, the cash flow of
Platinum Holdings consists primarily of dividends, interest and other
permissible payments from its subsidiaries. Platinum Holdings depends on such
payments to receive funds for general corporate purposes and to meet its
obligations, including the payment of any dividends to its shareholders.
-12-
Platinum Holdings has entered into a 364-day committed credit facility
with a group of banks which provides $100,000,000 of aggregate borrowing
capacity. The credit facility contains various covenants and agreements,
including the requirement to maintain a specified tangible net worth and
leverage ratios, and terminates on June 20, 2003 unless extended with the
consent of the banks. Although there can be no assurance, the Company expects to
be able to extend the current credit facility upon its expiration or negotiate a
new credit facility on substantially comparable terms. As of March 31, 2003,
there were no amounts outstanding pursuant to the credit facility.
LIQUIDITY REQUIREMENTS
The principal consolidated cash requirements of the Company are the
payment of losses and LAE, commissions, brokerages, operating expenses,
dividends to its shareholders, the servicing of debt, (including interest
payments on the senior notes and contract adjustment payments on the purchase
contracts included in the Company's equity security units), the acquisition of
and investment in businesses, capital expenditures, premiums retroceded and
excise taxes.
Platinum UK and Platinum Bermuda are not licensed, approved or accredited
as reinsurers anywhere in the United States and therefore, under the terms of
most of their contracts in the United States, they have to provide security to
reinsureds to cover unpaid liabilities in a form acceptable to state insurance
commissioners. Typically, this type of security takes the form of a letter of
credit issued by an acceptable bank, the establishment of a trust, or a cash
advance. Platinum UK and Platinum Bermuda expect to obtain letters of credit
through commercial banks. In turn, Platinum UK and Platinum Bermuda may be
required to provide the banks security by giving the banks liens over certain of
Platinum UK's and Platinum Bermuda's investments.
The payment of dividends and other distributions from the Company's
regulated reinsurance subsidiaries is limited by applicable laws and statutory
requirements of the jurisdictions in which the subsidiaries operate, including
Bermuda, the United States and the United Kingdom. Based on the regulatory
restrictions of the applicable jurisdictions, the maximum amount available for
payment of dividends or other distributions by the reinsurance subsidiaries of
the Company in 2003 without prior regulatory approval is estimated to be
$127,313,000.
Platinum Holdings operates a treasury function responsible for managing
banking relationships, capital raising activities including equity and debt
issues, Platinum Holdings's overall cash, cash pooling and liquidity positions
and the payment of internal and external dividends.
The Company believes that the cash flow generated by the operating
activities of the Company's subsidiaries will provide sufficient funds for the
Company to meet its liquidity needs over the next twelve months. Beyond the next
twelve months, cash flow available to the Company may be influenced by a variety
of factors, including general economic conditions and conditions in the
insurance and reinsurance markets, as well as fluctuations from year to year in
claims experience.
ECONOMIC CONDITIONS
Periods of moderate economic recession or inflation tend not to have a
significant direct effect on the Company's underwriting operations. Significant
inflationary or recessionary periods can, however, impact the Company's
underwriting operations and investment portfolio. Management considers the
potential impact of economic trends in estimating its unpaid losses and LAE.
Management believes that the underwriting controls it maintains assist in
estimating ultimate claim costs and lessen the potential adverse impact of the
economy on the Company. A decrease in interest rates will tend to decrease the
Company's yield and have a positive effect on the fair value of its invested
assets. An increase in interest
-13-
rates will tend to increase the Company's yield and have a negative effect on
the fair value of its invested assets.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET AND CREDIT RISK
The Company's principal invested assets are fixed maturities, which are
subject to the risk of potential losses from adverse changes in market rates and
prices and credit risk resulting from adverse changes in the borrower's ability
to repay the debt. The Company's strategy to limit this risk is to place its
investments in high quality credit issues and to limit the amount of credit
exposure with respect to any one issuer or industry. The Company also selects
investments with characteristics such as duration, yield, currency and liquidity
to reflect the underlying characteristics of related estimated claim
liabilities. The Company attempts to minimize the credit risk by actively
monitoring the portfolio and requiring a minimum average credit rating of A2 as
defined by Moody's Investor Service. As of March 31, 2003, the portfolio has a
dollar weighted average rating of AA3.
The Company has other receivable amounts subject to credit risk. The most
significant of these are reinsurance premiums receivable and reinsurance
recoverables. To mitigate credit risk related to these counterparties, we
establish business and financial standards for reinsurer approval, incorporate
ratings by major rating agencies and consider current market information, and
obtain letters of credit where deemed necessary. We also establish similar
minimum rating standards for ceding companies.
FOREIGN CURRENCY RISK
The Company's principal exposure to foreign currency risk is its
obligation to settle claims in foreign currencies. The Company may manage its
exposure by entering into forward contracts for foreign currency claims in
the event of a large or catastrophic loss denominated in a foreign currency.
SOURCES OF FAIR VALUE
The following table presents the carrying amounts and estimated fair
values of the Company's financial instruments as of March 31, 2003 ($ in
thousands):
Carrying Fair
Amount Value
------ -----
Financial assets:
Fixed maturities $1,333,433 $1,333,433
Financial liabilities:
Debt obligations $ 137,500 $ 152,900
The fair values of financial instruments are based on quoted market prices
at the reporting date for those or similar investments.
ITEM 4 CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
our management, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
-14-
controls and procedures pursuant to Rule 13a-15 promulgated under the Securities
and Exchange Act of 1934. Based on that evaluation, our management, including
the Chief Executive Officer and Chief Financial Officer, concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information required to be included in our periodic reports to be filed
with the Securities and Exchange Commission. In addition, there have been no
significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant deficiencies or
material weaknesses. It should be noted that the design of any system of
controls is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of
how remote.
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
In the normal course of business, the Company may become involved in
various claims and legal proceedings. The Company is not currently aware of any
pending or threatened material litigation.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
-15-
ITEM 5 OTHER INFORMATION
THE PREDECESSOR BUSINESS
The St. Paul Companies, Inc.
Reinsurance Underwriting Segment
Following is selected historical combined financial data for the three months
ended March 31, 2002 of the reinsurance underwriting segment of The St. Paul
Companies, Inc. (the Predecessor) prior to the initial public offering of
Platinum Underwriters Holdings, Ltd. ("Platinum"). The Predecessor operations
include the continuing business and related assets transferred to Platinum upon
completion of its initial public offering as well as the reinsurance business
that remained with The St. Paul Companies, Inc. ("St. Paul") after the public
offering. Accordingly, underwriting results and combined statements of the
Predecessor presented in this report are not indicative of the actual results of
Platinum subsequent to the public offering.
In addition to the effect of the retention of certain portions of the
Predecessor business by St. Paul and the exclusion of the corporate aggregate
excess-of-loss reinsurance program of St. Paul, other factors may cause the
actual results of Platinum to differ materially from the results of the
Predecessor. For example, although Platinum continues to be afforded the
benefits of St. Paul Re's retrocessional program for the 2002 underwriting year,
Platinum has entered into reinsurance contracts with significantly different
terms and conditions from those that have been made available to the Predecessor
from St. Paul and which form the basis of the Predecessor's results. In
addition, the Predecessor's combined statements reflect the discounting of the
liability for certain assumed reinsurance contracts using rates up to 7.5%,
based on its return on invested assets or, in many cases, on yields
contractually guaranteed to it on funds held by the ceding company, as permitted
by applicable law. If arrangements permitting Platinum to discount reserves to
the same extent as the Predecessor are not made, reinsurance contracts of a
similar type entered into in the future would be reported on an undiscounted
basis.
-16-
The St. Paul Companies, Inc.
Reinsurance Underwriting Segment (Predecessor)
Combined Statement of Underwriting Results (Unaudited)
For the Three Months Ended March 31, 2002
($ in millions)
Net premiums earned
Net premiums written $ 463
Net change in unearned premiums (86)
-----
Net premiums earned 377
-----
Underwriting deductions
Losses and loss adjustment
expenses incurred 247
Policy acquisition costs 100
Other underwriting expenses 15
-----
Total underwriting deductions 362
-----
Net underwriting gain $ 15
=====
Combined Statement of Identifiable Underwriting Cash Flows (Unaudited)
For the Three Months Ended March 31, 2002
($ in millions)
Premiums collected, net $ 470
Losses and loss adjustment expenses paid (284)
Policy acquisition expenses paid (104)
Other underwriting expenses paid (35)
-----
Net cash provided by underwriting $ 47
=====
See accompanying notes to combined statements
-17-
The St. Paul Companies, Inc.
Reinsurance Underwriting Segment (Predecessor)
Notes to Combined Statements (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying combined statements include the identifiable reinsurance
underwriting activity of the reinsurance underwriting segment of The St. Paul
Companies, Inc. ("St. Paul"), for the three months ended March 31, 2002. The
reinsurance underwriting segment of St. Paul represent the predecessor
operations to Platinum Underwriters Holdings, Ltd. ("Platinum") and is
hereinafter referred to as "Predecessor". The Predecessor statements are
presented on a combined basis and include certain insurance and reinsurance
subsidiaries of St. Paul, as well as the underwriting results of the reinsurance
departments of St. Paul Fire and Marine Insurance Company ("Fire and Marine")
and United States Fidelity and Guarantee Company ("USF&G"). Fire and Marine and
USF&G are the two largest U.S. insurance subsidiaries of St. Paul.
The amounts included in this report as of and for the three months ended
are unaudited but include those adjustments, consisting of normal recurring
items, that management considers necessary for a fair presentation under U.S.
GAAP. These combined financial statements should be read in conjunction with the
combined statements of the Predecessor and related notes included in the Annual
Report on Form 10-K for the year ended December 31, 2002 of Platinum.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates. The results of operations for any interim period are not necessarily
indicative of results for the full year.
The statements of underwriting results reconcile to the reinsurance
underwriting segment results as reported in the Quarterly Report of St. Paul on
Form 10-Q as of March 31, 2002 as filed with the Securities and Exchange
Commission. It is the practice of St. Paul to evaluate the performance of its
property-liability insurance underwriting segments on the basis of underwriting
results.
The combined statements of underwriting results and identifiable cash
flows represent activity that is specifically attributable to the underwriting
operations of the Predecessor. St. Paul manages its property-liability
investment portfolio in the aggregate, as part of a separate segment and does
not allocate assets, or investment income, to its respective underwriting
segments. Additionally, the statement of identifiable cash flows includes only
cash flow activity that is specifically attributable to the underwriting
operations of Predecessor, and does not include any cash flows from investment
and financing activities.
2. REINSURANCE
The primary purpose of Predecessor's ceded reinsurance program is to
protect its operations from potential losses in excess of acceptable levels.
Reinsurers are expected to honor their obligations under ceded reinsurance
contracts. In the event these companies are unable to honor their obligations,
Predecessor will pay these amounts. Allowances have been established for
possible nonpayment of such amounts due.
In the first quarter of 2002, St. Paul was not party to an all-lines,
corporate excess-of-loss reinsurance treaty. Predecessor was party to a separate
aggregate excess-of-loss reinsurance treaty,
-18-
The St. Paul Companies, Inc.
Reinsurance Underwriting Segment (Predecessor)
Notes to Combined Statements (Unaudited), continued
unrelated to the corporate treaty, in 2002. Coverage was not triggered under
that treaty in the first quarter of 2002; however, Predecessor did record ceded
written and earned premiums of $4 million, representing the initial premium for
this treaty.
The effect of assumed and ceded reinsurance on premiums written, premiums
earned and insurance losses and loss adjustment expenses for the three months
ended March 31, 2002 was as follows:
Assumed Ceded Net
------- ----- ---
Premium written $ 493 30 $ 463
Premium earned 396 19 377
Insurance losses and LAE 246 (1) 247
3. FOURTH QUARTER 2001 STRATEGIC REVIEW
In December 2001, St. Paul announced the results of a strategic review of
all of its operations, which included a decision to exit a number of businesses
and countries. These decisions included the narrowing of product offerings and
geographic presence relative to Predecessor's businesses. As part of that
review, it was determined that Predecessor would no longer underwrite aviation
or bond and credit reinsurance, or offer certain financial risk and capital
markets reinsurance products. Predecessor would also substantially reduce the
North American business underwritten in London. Predecessor would focus on
several areas, including property catastrophe reinsurance, excess-of-loss
casualty reinsurance, marine and traditional finite reinsurance.
The net premiums earned and underwriting loss for three months ended March
31, 2002 for the businesses exited under these actions were $87 million and $3
million, respectively. During the three months ended March 31, 2002, St. Paul
did not enter into a corporate aggregate excess-of loss reinsurance program.
4. SEGMENT INFORMATION
Predecessor has four reportable segments: North American Property, North
American Casualty, International, and Finite Reinsurance. These segments are
consistent with the manner in which Predecessor's business has been managed.
Predecessor monitors and evaluates the performance of its segments based
principally on their underwriting results. Assets are not specifically
identifiable for these segments.
The summary below presents premiums earned and underwriting results for
Predecessor's reportable segments for the three months ended March 31, 2002:
Premium Underwriting
earned gain (loss)
------ -----------
North American Property $ 64 $ 25
North American Casualty 168 (28)
International 57 28
Finite Risk 88 (10)
-------- --------
Total 377 15
======== ========
-19-
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 at the Sarbanes-Oxley Act of 2002.
(b) Reports of Form 8-K
On March 4, 2003 the Company filed a report on Form 8-K
incorporating under Item 9 slides used by Jerome T. Fadden at
the Association of Insurance and Financial Analysts Conference
on March 4, 2003.
On February 14, 2003 the Company filed a report on Form 8-K
incorporating under Item 5 the Company's press release
reporting its financial results for its first two months of
operations ended December 31, 2002 and a financial supplement.
On January 28, 2003 the Company filed a report on Form 8-K
incorporating under Item 9 slides used by Jerome T. Fadden at
the New York Society of Security Analysts Insurance conference
on January 28, 2003.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLATINUM UNDERWRITERS HOLDINGS, LTD
------------------------------------------
(Registrant)
Date: May 13, 2003 By:/s/ JEROME T. FADDEN
------------------------------------------
By: Jerome T. Fadden
President and Chief Executive Officer
Date: May 13, 2003 By:/s/ WILLIAM A. ROBBIE
------------------------------------------
By: William A. Robbie
Executive Vice President and Chief
Financial Officer
-20-
CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER
I, Jerome T. Fadden, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Platinum
Underwriters Holdings, Ltd.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003 By: /s/ JEROME T. FADDEN
------------------------------------------
By: Jerome T. Fadden
President and Chief Executive Officer
-21-
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, William A. Robbie, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Platinum
Underwriters Holdings, Ltd.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003 By: /s/ WILLIAM A. ROBBIE
------------------------------------------
By: William A. Robbie
Executive Vice President and Chief
Financial Officer
-22-