Philadelphia Consolidated Holding Corp. Announces Estimated Hurricane Ike Losses and Investment Related Charges and Exposures
October 07 2008 - 5:37PM
PR Newswire (US)
BALA CYNWYD, Pa., Oct. 7 /PRNewswire-FirstCall/ -- Philadelphia
Consolidated Holding Corp. (NASDAQ:PHLY) today reported its initial
estimate of losses attributable to Hurricane Ike. Although claims
information is preliminary, the Company estimates its net pre-tax
losses to be approximately $22.0 million. Such net pre-tax losses
may change due to the preliminary nature of the information
currently available. In addition, as a result of utilizing certain
catastrophe reinsurance coverage in connection with this hurricane
event, the Company will also recognize approximately: -- $1.2
million, pre-tax, of net reinstatement reinsurance premium expense;
and -- $4.1 million, pre-tax, of accelerated reinsurance premium
expense which the Company would have otherwise been required to
expense over the remaining reinsurance contract period. The
estimated reduction of third quarter net income as a result of
Hurricane Ike is approximately $17.6 million. In connection with
recent developments in the financial markets, the Company also
commented on its investment exposure to several specific entities.
The Company has current direct holdings of fixed maturity
securities issued by Lehman Brothers Holdings Inc. and its
subsidiaries ("Lehman") of $8.5 million (par amount) within its
fixed maturity investment portfolio. The Company intends to record
a $7.4 million, pre-tax, other-than-temporary impairment loss on
this Lehman investment in the third quarter. The Company has no
investments in fixed maturity securities issued by American
International Group, Inc. ("AIG") or Washington Mutual, Inc.
("WaMu"). The Company has no direct holdings of preferred or common
shares issued by Lehman Brothers, The Federal National Mortgage
Association ("Fannie Mae") or the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). During the third quarter, the Company
sold all of its common stock investments in AIG and WaMu, realizing
pre-tax losses of $6.1 million and $1.4 million, respectively.
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 and professional liability
insurance products incorporating value added coverages and services
for select industries. The Company, whose commercial lines
insurance subsidiaries are rated A+ (Superior) by A.M. Best Company
and A1 for insurance financial strength by Moody's Investors
Service, 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 organization has 47
offices strategically located across the United States to provide
superior local service. 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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