PHLY Philadelphia Consolidated Corp (MM)

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/

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