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Platinum Underwriters Holdings Ltd (NYSE: PTP) $31.00

Note to the reader: This report contains substantially new material. Subsequent editions will have new or revised material highlighted

Overview

Platinum Underwriters Holdings, Ltd (based out of Pembroke, Bermuda). holds subsidiaries that provide property and marine, casualty and finite reinsurance coverage to a diverse clientele of insurers and select reinsurers on a worldwide basis. The Company's Property and Marine operating segment includes principally property per-risk, excess-of-loss treaties, property proportional treaties, and catastrophe excess-of-loss reinsurance treaties that are written both in the United States and international markets. The Casualty operating segment includes principally reinsurance treaties that cover umbrella liability, general and products liability, professional liability, directors and officers’ liability, workers' compensation, and automobile liability. The Finite Risk operating segment includes principally structured reinsurance contracts with ceding companies whose needs may not be met efficiently through traditional reinsurance products. Its website is

The Company’s fourth quarter results indicate that management has met analyst expectations, but their conservative guidance for FY 05 has led to speculation among analysts and investors. The Company writes significant contracts on a finite basis, but, given the increased scrutiny by regulators, potential investors and analysts are concerned about the loss of income from this business in the upcoming quarters. A majority of the analysts maintain a positive rating on the stock, and Market Analysts believe that the price to book valuation is the most important financial metric for the Company. Analysts are concerned that net premium growth is decelerating, and they have lowered FY 05 earnings estimates based on Management guidance.

|Key Positive Arguments |Key Negative Arguments |

|The Company has a financial strength rating of “A” from A.M. Best Company. |Scrutiny by regulators has increased in the finite risk business. |

| | |

|PTP has adopted a disciplined approach to underwriting. |PTP is involved in finite reinsurance but this business does not have the |

| |potential for very high margin. |

|The Company’s book value is high quality, and PTP has a substantial client | |

|base. |The Company is in the volatile business of reinsuring against global |

| |catastrophes |

| | |

| | |

| | |

The Company’s fiscal year ends in December, and all quarterly and annual references are to be construed accordingly.

Revenue

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The 4Q FY 04 Pre tax Operating Income figure was $67 mm (5. 2% YOY growth).

Net Premium Earned

The 4Q 04 net premium earned figure is $433 mm (55.8% YOY growth). One analyst (Merrill Lynch) believes that there is significant growth in all three (Property, Casualty, Finite Risk) of the Company’s segments in the fourth quarter.

One analyst (Smith Barney) believes that Platinum’s premium generation may be lower in the forthcoming quarters due to non-renewal of some business, higher retentions by primary insurers, and expected decline in premium rates. Analysts are expecting top-line growth to decelerate over the next 12-18 months.

Management has guided investors towards net premium written and net premium earned of approximately $1.6 billion.

Investment Income

The 4Q 04 Investment Income figure is $26 mm (72.4% YOY growth). The fourth quarter net investment income figure was aided by strong cash flow.

Please see the separately saved spreadsheet for more details

COMBINED RATIO

The combined ratio was 89.8% (4Q 04). Analysts are impressed with the number considering it includes losses from the 3Q 04 hurricanes. Due to the hurricane losses, the combined ratio was negatively impacted by 10 points in the quarter.

Earnings per Share

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Fourth quarter EPS was $1.02, compared to $1.05 in the year-earlier quarter (2.86% YOY decline). Street Consensus was $1.02. Some one time items impacted the EPS in the fourth quarter, such as realized investment gains ($0.01) per share and an after-tax charge of $31.6 million ($0.63 per share) pertaining to catastrophe losses from hurricanes.

The Company Management has given EPS guidance of $3.50 - 4.00 per share for FY 05.

A majority of the analysts have reduced their EPS estimates for FY 05.The estimate reduction incorporates the assumption of slow growth in earned premium in the upcoming quarters and is based on Management guidance. One analyst (Smith Barney) has increased the projected EPS estimate for FY 05 and FY 06 on the basis of management guidance that underwriting income is expected to accelerate in the forthcoming quarters.

Please see the separately saved spreadsheet for more details.

Target Price/Valuation

The average target price for PTP is $34.83.

The excel spreadsheet associated with this report contains a complete breakdown of ratings, price targets, and valuation methods by individual analysts. Most of the analysts (56%) have given a positive rating to the stock and the remaining (44%) of the analysts have given a neutral rating. For those analysts providing price targets, the range is $32 (UBS) to $36 (Banc of America, Merrill Lynch, and Wachovia). The analyst with the highest target price (Banc of America) rates the stock Buy, valuing the shares on 1.4x 12 month forward book value excluding FAS 115. The analyst with the lowest target price (UBS) has a Neutral rating on the stock and values the shares at 8.3x 2006 estimated EPS. The analyst (Wachovia) has an Outperform rating on the stock and values the shares on a 1.3x projected 2005 book value. Another analyst (Merrill Lynch) maintains a Buy rating on the stock and values the shares on 9.2x 2005 estimated EPS.

| |

|Ratings Distribution |

|Positive |56% |

|Neutral |44% |

|Negative |0% |

|Average Price Objective |$34.83 |

|Number of Analysts |9 |

Risks to the target price objective are competitive property market conditions, large shock losses, inability of management to change the underwriting culture, and increased competition in reinsurance.

Please see the separately saved spreadsheet for more details

Long-Term Growth

The long-term growth rates for PTP fall within the range of 10% (Banc of America, Keefe, Bruyette) and 15 %( Wachovia). Digest long-term growth rate is 12%.

The Company is involved with finite risk reinsurance and about 30% of Platinum’s premium came from contracts written on a finite basis in FY 04. Recently there has been increased regarding about the finite risk reinsurance business. One analyst (Merrill Lynch) believes that this business does not generate a significant amount of underwriting income, and the loss of this business will not impact the bottom-line in the long run.

Individual Analyst Opinions

POSITIVE RATINGS

Banc of America-Buy-(36) - report date 2/24/2005

The analyst holds the opinion that the Company has a strong balance sheet and disciplined market approach, which is expected to generate global opportunities in the upcoming quarters. PTP Management may repurchase shares in FY 05, which will reward potential investors.

Janney Montgomery-Overweight- report date 2/23/2005

The analyst believes that Platinum’s US based casualty platform provides the Company with a competitive advantage. The analyst feels that the Company has a diversified business model and opportunities for growth in the forthcoming quarters.

Keefe, Bruyette-Outperform-($35) - report date 2/23/2005

The analyst believes that the PTP stock is currently undervalued relative to its peers and, based on strong fourth quarter results, maintains a positive rating.

Merrill Lynch-Buy-($36) - report date 2/23/2005

The analyst believes that Platinum’s involvement with finite risk reinsurance has weighed on the valuation for some time. According to the analyst, PTP should report an ROE of about 14% in FY 05, which is above its equity cost of capital and in line with the peer group average. The analyst feels that the Company’s book value is of high quality, and there is limited downside risk in the upcoming quarters.

Wachovia – Outperform -($36) – report date 2/22/2005

The analyst believes that the stock is currently trading at 1.2x book value and is at a discount to the peer group average of 1.4x book value. According to the analyst, the Company has a strong balance sheet, with owned assets that primarily have no claims against it. The analyst also feels that PTP is expected to benefit from a business mix shift towards casualty lines and continued favorable returns in the property market.

NEUTRAL RATINGS

Goldman Sachs-In Line- report date 2/23/2005

The analyst believes that their current projections are more bullish than management guidance but feels that management has been conservative in its outlook.

J. P. Morgan-Neutral- report date 2/23/2005

The analyst believes that capital management is a critical issue for the Company in the upcoming quarters. Given the complex nature of the business model and that the underlying demand for both financial solutions and traditional risk transfer is lower, the analyst maintains a neutral rating on the stock.

Smith Barney – Hold - ($34) –report date 2/24/2005

The analyst has based their target price on 1.3x current book value per share of $26.30. The analyst feels that the Company may not be able to sustain its Return on Equity (ROE) in the upcoming quarters. According to the analyst, PTP as a casualty underwriter is not able to exert as much investment leverage as some of its peers. However, the analyst expects modest upside appreciation in the forthcoming quarters.

UBS-Neutral-($32)-report date 2/23/2005

The analyst believes that the fourth quarter results were in line with market expectations, and based on Management Guidance, the analyst maintains a neutral rating on the stock.

NEGATIVE RATINGS

There are no analysts with negative ratings on the stock currently.

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March 4, 2005

[pic]Research Digest Shalini Jindal, Research Associate

Editor: Ian Madsen, MBA, CFA

imadsen@

Tel:  1-800-767-3771, x 417

155 North Wacker Drive Chicago, IL 60606

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