Philadelphia Consolidated (NASDAQ:PHLY)
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BALA CYNWYD, Pa., Feb. 22 /PRNewswire-FirstCall/ -- Philadelphia Consolidated Holding Corp. (NASDAQ:PHLY) today reported net income for the quarter ended December 31, 2007 of $70.2 million ($0.94 diluted earnings per share and $0.99 basic earnings per share). This compares to $73.8 million of net income ($1.00 diluted earnings per share and $1.05 basic earnings per share) for the quarter ended December 31, 2006. After-tax net realized investment losses were $(2.0) million ($0.03 diluted loss per share) for the quarter ended December 31, 2007 versus $(0.1) million ($0.00 diluted loss per share) for the quarter ended December 31, 2006. Gross written premiums for the quarter ended December 31, 2007 increased 7.5% to $395.0 million from $367.3 million for the quarter ended December 31, 2006, and the combined ratio for the quarter ended December 31, 2007 was 79.2% compared to 70.9% for the quarter ended December 31, 2006. The Company's book value per share at December 31, 2007 increased 30.3% to $21.47 from $16.48 at December 31, 2006.
Financial results for the quarter ended December 31, 2007 included:
-- A $12.5 million pre-tax benefit ($8.1 million after-tax, or $0.11
diluted earnings per share) from a decrease in net unpaid loss and loss
adjustment expenses due to favorable trends in prior years' claim
emergence. This benefit compares to a $13.2 million pre-tax ($8.6
million after-tax, or $0.12 diluted earnings per share) benefit
recognized in the quarter ended December 31, 2006 from a decrease in
net unpaid loss and loss adjustment expenses due to favorable trends in
prior years' claims emergence.
-- A $(7.5) million pre-tax loss ($4.9 million after-tax, or $0.07 diluted
loss per share) attributable to the October 2007 California wildfires.
Net income for the year ended December 31, 2007 increased 13.2% to $326.8 million ($4.40 diluted earnings per share and $4.64 basic earnings per share) from $288.8 million ($3.93 diluted earnings per share and $4.14 basic earnings per share) for the year ended December 31, 2006. After-tax net realized investment gains (losses) were $19.2 million of gains ($0.26 diluted earnings per share) for the year ended December 31, 2007 versus $(6.4) million of losses ($0.09 diluted loss per share) for the year ended December 31, 2006. Gross written premiums for the year ended December 31, 2007 increased 13.3% to $1,692.2 million from $1,493.2 million for the year ended December 31, 2006, and the combined ratio for the year ended December 31, 2007 was 74.8% compared to 69.0% for the year ended December 31, 2006.
Financial results for the year ended December 31, 2007 included:
-- An $85.8 million pre-tax benefit ($55.8 million after-tax, or $0.75
diluted earnings per share) from a decrease in net unpaid loss and loss
adjustment expenses due to favorable trends in prior years' claims
emergence. This benefit compares to a $91.4 million pre-tax benefit
($59.4 million after-tax, or $0.81 diluted earnings per share)
recognized for the year ended December 31, 2006 from a decrease in net
unpaid loss and loss adjustment expenses due to favorable trends in
prior years' claims emergence.
-- $22.2 million of pre-tax net realized investment gains ($14.4 million
after-tax, or $0.19 diluted earnings per share) resulting from the
liquidation of one of the Company's equity security portfolios
following the Company's decision to change one of its equity security
investment managers during the second quarter of 2007.
-- The $7.5 million of pre-tax loss due to the October 2007 California
wildfires noted above.
James J. Maguire, Jr., CEO, said: "In the wake of increased competition, I am very pleased with our financial results for the fourth quarter, having achieved a 23% return on equity. We continued to see new business opportunities across most products, with newly launched products contributing $37.6 million of gross written premium in the quarter. Renewal retention levels remained high, approximating 95% on quoted accounts. Underwriting results were excellent, with a combined ratio of 79.2%, aided by $12.5 million of prior year reserve redundancy. Investment income grew by just under 21%, and the overall credit quality of our fixed maturity portfolio remains AAA rated. Our capital position is very strong, and is appropriate to support our anticipated growth goals through 2008."
The Company will hold its quarterly conference call to discuss fourth quarter and year-end 2007 results today at 3:00 PM EST. The call will be webcast and may be accessed at the Company's website at http://www.phly.com/. The dial-in phone number for the conference call is (800) 289-0504.
Forward-Looking Information
This release may contain forward-looking statements that are based on management's estimates, assumptions and projections. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors which, among others, could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, results of the Company's business, and the other matters referred to above include, but are not limited to: (i) changes in the business environment in which the Company operates, including inflation and interest rates; (ii) changes in taxes, governmental laws, and regulations; (iii) competitive product and pricing activity; (iv) difficulties of managing growth profitably; (v) claims development and the adequacy of the Company's liability for unpaid loss and loss adjustment expenses; (vi) severity of natural disasters and other catastrophe losses; (vii) adequacy of reinsurance coverage which may be obtained by the Company; (viii) ability and willingness of the Company's reinsurers to pay; (ix) future terrorist attacks; and (x) the outcome of the Securities and Exchange Commission's industry-wide investigation relating to the use of non-traditional insurance products, including finite risk reinsurance arrangements. The Company does not intend to publicly update any forward looking statement, except as may be required by law.
In operation since 1962, PHLY designs, markets, and underwrites commercial property/casualty, professional liability and personal lines insurance products incorporating value added coverages and services for select industries. The Company, whose commercial and personal lines subsidiaries are rated A+ (Superior), and A- (Excellent), respectively, by A.M. Best Company, is nationally recognized as a member of Ward's Top 50, Forbes' Platinum 400 list of America's Best Big Companies and Forbes' 100 Best Mid-Cap Stocks in America. The Company has 45 offices strategically located across the United States to provide superior local service.
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
As of
December 31, December 31,
2007 2006
ASSETS
INVESTMENTS:
FIXED MATURITIES AVAILABLE
FOR SALE AT MARKET (AMORTIZED COST
$2,639,471 AND $2,136,231) $2,659,197 $2,129,609
EQUITY SECURITIES AT MARKET (COST
$322,877 AND $259,184) 356,026 304,033
TOTAL INVESTMENTS 3,015,223 2,433,642
CASH AND CASH EQUIVALENTS 106,342 108,671
ACCRUED INVESTMENT INCOME 24,964 20,083
PREMIUMS RECEIVABLE 378,217 346,836
PREPAID REINSURANCE PREMIUMS AND REINSURANCE
RECEIVABLES 280,110 272,798
DEFERRED INCOME TAXES 42,855 26,657
DEFERRED ACQUISITION COSTS 184,446 158,805
PROPERTY AND EQUIPMENT, NET 26,330 26,999
OTHER ASSETS 41,451 44,046
TOTAL ASSETS $4,099,938 $3,438,537
LIABILITIES AND SHAREHOLDERS' EQUITY
POLICY LIABILITIES AND ACCRUALS:
UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES $1,431,933 $1,283,238
UNEARNED PREMIUMS 847,485 759,358
TOTAL POLICY LIABILITIES AND ACCRUALS 2,279,418 2,042,596
PREMIUMS PAYABLE 97,674 66,827
OTHER LIABILITIES 175,373 161,847
TOTAL LIABILITIES 2,552,465 2,271,270
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
PREFERRED STOCK, $.01 PAR VALUE,
10,000,000 SHARES AUTHORIZED, NONE ISSUED
AND OUTSTANDING - -
COMMON STOCK, NO PAR VALUE, 100,000,000 SHARES
AUTHORIZED, 2,087,287 AND 70,848,482 SHARES
ISSUED AND OUTSTANDING 423,379 376,986
NOTES RECEIVABLE FROM SHAREHOLDERS (19,595) (17,074)
ACCUMULATED OTHER COMPREHENSIVE INCOME 34,369 24,848
RETAINED EARNINGS 1,109,320 782,507
TOTAL SHAREHOLDERS' EQUITY 1,547,473 1,167,267
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,099,938 $3,438,537
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
For the Three Months For the Year
Ended December 31, Ended December 31,
2007 2006 2007 2006
REVENUE:
NET EARNED PREMIUMS $364,061 $307,596 $1,379,243 $1,169,302
NET INVESTMENT INCOME 31,530 26,127 117,224 91,699
NET REALIZED INVESTMENT GAIN
(LOSS) (3,072) (79) 29,566 (9,861)
OTHER INCOME 901 927 3,561 2,630
TOTAL REVENUE 393,420 334,571 1,529,594 1,253,770
LOSSES AND EXPENSES:
LOSS AND LOSS ADJUSTMENT
EXPENSES 199,617 143,999 678,759 497,288
NET REINSURANCE RECOVERIES (24,563) (12,913) (59,806) (29,076)
NET LOSS AND LOSS ADJUSTMENT
EXPENSES 175,054 131,086 618,953 468,212
ACQUISITION COSTS AND OTHER
UNDERWRITING EXPENSES 113,201 86,861 413,103 338,267
OTHER OPERATING EXPENSES 3,113 3,993 12,241 12,637
TOTAL LOSSES AND EXPENSES 291,368 221,940 1,044,297 819,116
INCOME BEFORE INCOME TAXES 102,052 112,631 485,297 434,654
INCOME TAX EXPENSE (BENEFIT):
CURRENT 33,280 38,956 179,808 155,404
DEFERRED (1,416) (106) (21,324) (9,599)
TOTAL INCOME TAX EXPENSE 31,864 38,850 158,484 145,805
NET INCOME $70,188 $73,781 $326,813 $288,849
PER AVERAGE SHARE DATA:
NET INCOME - BASIC $0.99 $1.05 $4.64 $4.14
NET INCOME - DILUTED $0.94 $1.00 $4.40 $3.93
WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING 70,553,136 70,029,636 70,381,631 69,795,947
WEIGHTED-AVERAGE SHARE
EQUIVALENTS OUTSTANDING 3,858,124 3,887,446 3,845,044 3,674,121
WEIGHTED-AVERAGE SHARES AND
SHARE EQUIVALENTS
OUTSTANDING 74,411,260 73,917,082 74,226,675 73,470,068
DATASOURCE: Philadelphia Consolidated Holding Corp.
CONTACT: Investor Relations: Joseph Barnholt, Assistant Vice President
of Philadelphia Consolidated Holding Corp., +1-610-617-7626,
Web site: http://www.phly.com/