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Platinum swings to $53m profit

Bermuda reinsurer Platinum Underwriters Holdings Ltd last night reported net income of $53.3 million for the first quarter despite being hit by almost $25 million in catastrophe losses.

It was a huge swing in the right direction for Platinum from a first-quarter loss of $157.2 million in the same period last year, when the company’s results were impacted by the earthquake and tsunami in Japan.

The negative impact of $24.8 million from major catastrophe losses, in particular the devastating tornadoes that ravaged parts of the US, were net of retrocessional coverage, reinstatement premiums and taxes.

Platinum’s net premiums earned fell by nearly a quarter to $138.2 million, down $44.7 million, or 24.4 percent.

CEO Michael Price had a positive outlook for the rest of the year. “Absent major events in the insurance or capital markets, we expect relative stability in overall reinsurance rate adequacy for the remainder of 2012,” he said. “We are well positioned to take advantage of quality reinsurance underwriting opportunities as they arise and will continue with our strategy of underwriting for profitability not market share.

“Our results reflect the previously announced negative financial impact from severe weather in the United States, favourable prior period development, strong investment results on a total return basis and active capital management.”

Diluted earnings per common share were $1.49 for the first quarter. Net investment income totalled $28.6 million, up 11.8 percent from the same period last year, while net realised gains on investments were $22.3 million.

The company’s combined ratio for the quarter, which reflects the proportion of premium dollars spent on claims and expenses, was 88.2 percent, indicating a profitable underwriting period, compared to 200.4 percent in the same quarter last year. The company benefited from net favourable development of $27.8 million during the quarter.

Total assets were $4.5 billion as of March 31, a decrease of $63.2 million, or 1.4 percent, from the end of last year. Investments and cash and cash equivalents were $4.1 billion.

Shareholders’ equity was $1.7 billion as of March 31, 2012, an increase of $16 million, or 0.9 percent, from December 31, 2011.

Book value per common share was $49 as of March 31, based on 34.8 million common shares outstanding, an increase of $1.41, or three percent, from $47.59 three months earlier, based on 35.5 million common shares outstanding.

During the quarter, the Company repurchased an aggregate of 808,696 common shares for $29.5 million at a weighted average cost, including commissions, of $36.46 per share.

Platinum CEO Michael Price

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Published April 19, 2012 at 9:17 am (Updated April 19, 2012 at 9:16 am)

Platinum swings to $53m profit

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