Platinum Underwriters Misses on Q3 Earnings & Revenues - Analyst Blog

Platinum Underwriters Holdings Ltd. (PTP) posted third-quarter 2014 operating earnings of $1.03 per share, which missed the Zacks Consensus Estimate by 3.7%. Earnings also declined 23.7% year over year on lower premiums.

Behind the Headlines

Total revenue of Platinum Underwriters grossed $150 million in the reported quarter, down 2.6% year over year owing to decrease in premiums, net investment income and other income. The top line also missed the Zacks Consensus Estimate of $155 million.

A year-over-year decline in net premiums across all segments – Property and Marine (down 2.9%), Casualty (down 4.2%) and Finite Risk (15.6%) – led to the overall decrease.

Net Investment Income fell 1.3% year over year to $17.5 million.   

Total expense increased 16.6% to $117 million from the prior-year quarter owing to a 49.9% rise in net loss and loss adjustment expenses as well as net foreign currency exchange loss of $0.1 million against a gain of $0.5 million a year ago.

Underwriting income of Platinum Underwriters was $22.3 million in the third quarter, down 52.3% year over year. The decrease was due to a sharp year-over-year fall of 73.5% in underwriting income at the Casualty segment, which came in at $9.9 million.

The combined ratio of the property and casualty insurer deteriorated 1730 basis points to 82.8% due to deterioration in Casualty segments' combined ratio.

Financial Update

Platinum Underwriters exited the third quarter with cash and cash equivalents of $1.3 billion, down 8.6% from 2013-end.

Total assets were $3.7 billion as of Sep 30, 2014, down 6.1% from Dec 31, 2013.

Shareholders' equity was $1.7 billion as of Sep 30, 2014, down 2.9% from Dec 31, 2013.

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

Platinum Underwriters book value per common share was $68.34 as of Sep 30, 2014, down 10.10% from Dec 31, 2013.

Share Repurchase Update

Platinum Underwriters spent $104.9 million to buy back 1.7 million common shares in the third quarter. With this, the company repurchased a total of 3.6 billion shares worth $215.7 million in the first nine months of 2014.

Other Property and Casualty Insurers

Progressive Corp.'s (PGR) operating earnings for the third quarter of 2014 came in at 46 cents per share, surpassing the Zacks Consensus Estimate by 3 cents. Earnings improved about 28% year over year.

RLI Corp. (RLI) reported third-quarter 2014 operating earnings 68 cents per share, surpassing the Zacks Consensus Estimate by 13.3%. However, operating earnings fell 2.9% from the year-ago quarter.

Meanwhile, United Insurance Holdings Corp. (UIHC) is slated to release third-quarter earnings by the end of Oct 2014.

Zacks Rank

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