Philadelphia Consolidated Holding Corp. Second Quarter Results June 30, 2008

BALA CYNWYD, Pa., July 23 /PRNewswire-FirstCall/ -- Philadelphia
Consolidated Holding Corp. (Nasdaq: PHLY) today reported net income for the
quarter ended June 30, 2008 of $52.9 million ($0.73 diluted earnings per share
and $0.76 basic earnings per share). This compares to $94.4 million of net
income ($1.27 diluted earnings per share and $1.34 basic earnings per share)
for the quarter ended June 30, 2007. After-tax net realized investment gains
(losses) were $(7.5) million ($(0.10) diluted loss per share) for the quarter
ended June 30, 2008 compared to $18.2 million ($0.25 diluted earnings per
share) for the quarter ended June 30, 2007. Gross written premiums for the
quarter ended June 30, 2008 increased 11.7% to $445.3 million from $398.5
million for the quarter ended June 30, 2007, and the combined ratio for the
quarter ended June 30, 2008 was 86.2% compared to 74.2% for the quarter ended
June 30, 2007. The Company's book value per share as of June 30, 2008
increased to $22.30 from $21.47 as of December 31, 2007.
Financial results for the quarter ended June 30, 2008 included:
-- An $18.5 million pre-tax benefit ($12.0 million after-tax, or $0.17
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 $20.8 million pre-tax benefit ($13.5 million
after-tax, or $0.18 diluted earnings per share) recognized in the quarter
ended June 30, 2007 from a decrease in net unpaid loss and loss adjustment
expenses due to favorable trends in prior years' claims emergence.
-- $20.6 million of pre-tax losses ($13.4 million after-tax, or $0.18
diluted loss per share) resulting from hail, tornado, and wind losses which
occurred in Minnesota, Nebraska, Kansas, and Oklahoma during the period of May
22, 2008 through May 26, 2008, and which occurred in Illinois, Indiana,
Kansas, Minnesota, Nebraska, and Oklahoma during the period of May 29, 2008
through June 1, 2008.
-- An $11.6 million pre-tax non-cash realized investment loss ($7.5
million after-tax, or $0.10 diluted loss per share) resulting from other than
temporary impairment evaluations related to the Company's equity holdings.
Net income for the six months ended June 30, 2008 was $115.6 million
($1.59 diluted earnings per share and $1.65 basic earnings per share). This
compares to $160.4 million of net income ($2.16 diluted earnings per share and
$2.28 basic earnings per share) for the six months ended June 30, 2007.
After-tax net realized investment gains (losses) were $(14.9) million ($0.20
diluted loss per share) for the six months ended June 30, 2008 compared to
$19.4 million ($0.26 diluted earnings per share) for the six months ended June
30, 2007. Gross written premiums for the six months ended June 30, 2008
increased 12.1% to $888.4 million from $792.6 million for the six months ended
June 30, 2007, and the combined ratio for the six months ended June 30, 2008
was 83.7% compared to 75.9% for the six months ended June 30, 2007.
Financial results for the six months ended June 30, 2008 included:
-- A $24.4 million pre-tax benefit ($15.9 million after-tax, or $0.22
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 $33.7 million pre-tax benefit ($21.9 million
after-tax, or $0.30 diluted earnings per share) recognized in the six months
ended June 30, 2007 from a decrease in net unpaid loss and loss adjustment
expenses due to favorable trends in prior years' claims emergence.
-- The hail, tornado, and wind losses as referred to above.
-- A $23.3 million pre-tax non-cash realized investment loss ($15.1
million after-tax, or $0.21 diluted loss per share) resulting from other than
temporary impairment evaluations related to the Company's equity holdings.
James J. Maguire, Jr., CEO, said: "I am very pleased with our performance
in this quarter and I sincerely thank our more than 1,400 employees for
continuing to execute on our business plan through a challenging market.
Gross written premiums grew by nearly 12%, with our core Commercial Lines
Segment growing by 13.3%. Our combined ratio for the quarter was an
impressive 86.2%. We continued to maintain our profitable renewal business
with retention ratios of 95% on quoted business for our Commercial and
Specialty Segments."
As a result of the Company's announcement today that it has entered into a
merger agreement with Tokio Marine Holdings, Inc., the earnings call
previously scheduled for Friday July 25th has been cancelled.
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.

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

As of
June 30, 2008 December 31,
(Unaudited) 2007

ASSETS
INVESTMENTS:
FIXED MATURITIES AVAILABLE FOR SALE AT
MARKET (AMORTIZED COST $2,864,732 AND
$2,639,471) $2,844,209 $2,659,197
EQUITY SECURITIES AT MARKET (COST
$339,169 AND $322,877) 348,374 356,026
TOTAL INVESTMENTS 3,192,583 3,015,223

CASH AND CASH EQUIVALENTS 89,657 106,342
ACCRUED INVESTMENT INCOME 28,300 24,964
PREMIUMS RECEIVABLE 399,896 378,217
PREPAID REINSURANCE PREMIUMS AND
REINSURANCE RECEIVABLES 301,012 280,110
DEFERRED INCOME TAXES 81,717 42,855
DEFERRED ACQUISITION COSTS 187,389 184,446
PROPERTY AND EQUIPMENT, NET 21,992 26,330
OTHER ASSETS 100,964 41,451
TOTAL ASSETS $4,403,510 $4,099,938

LIABILITIES AND SHAREHOLDERS' EQUITY
POLICY LIABILITIES AND ACCRUALS:
UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES $1,613,322 $1,431,933
UNEARNED PREMIUMS 866,596 847,485
TOTAL POLICY LIABILITIES AND ACCRUALS 2,479,918 2,279,418
PREMIUMS PAYABLE 77,770 97,674
OTHER LIABILITIES 251,135 175,373
TOTAL LIABILITIES 2,808,823 2,552,465

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
PREFERRED STOCK, $.01 PAR VALUE,
10,000,000 SHARES AUTHORIZED, NONE ISSUED
AND OUTSTANDING - -
COMMON STOCK, NO PAR VALUE, 125,000,000
SHARES AUTHORIZED, 71,503,346 AND
72,087,287 SHARES ISSUED AND OUTSTANDING 399,704 423,379

NOTES RECEIVABLE FROM SHAREHOLDERS (22,565) (19,595)
ACCUMULATED OTHER COMPREHENSIVE INCOME (7,356) 34,369
RETAINED EARNINGS 1,224,904 1,109,320
TOTAL SHAREHOLDERS' EQUITY 1,594,687 1,547,473
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $4,403,510 $4,099,938

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(Unaudited)

For the Three Months For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
REVENUE:
NET EARNED PREMIUMS $393,037 $337,315 $772,425 $656,033
NET INVESTMENT INCOME 32,299 28,522 64,304 55,495
NET REALIZED INVESTMENT
GAIN (LOSS) (11,513) 28,064 (22,907) 29,821
OTHER INCOME 3,654 850 5,007 1,680
TOTAL REVENUE 417,477 394,751 818,829 743,029

LOSSES AND EXPENSES:
LOSS AND LOSS ADJUSTMENT 266,106 172,234 489,492 332,753
EXPENSES
NET REINSURANCE RECOVERIES (42,836) (23,645) (72,803) (33,659)
NET LOSS AND LOSS
ADJUSTMENT EXPENSES 223,270 148,589 416,689 299,094
ACQUISITION COSTS AND OTHER
UNDERWRITING EXPENSES 115,479 101,746 229,635 198,650
OTHER OPERATING EXPENSES 4,376 2,981 7,965 6,136
TOTAL LOSSES AND
EXPENSES 343,125 253,316 654,289 503,880

INCOME BEFORE INCOME TAXES 74,352 141,435 164,540 239,149

INCOME TAX EXPENSE (BENEFIT):
CURRENT 30,072 56,511 65,350 93,330
DEFERRED (8,628) (9,477) (16,394) (14,562)

TOTAL INCOME TAX EXPENSE 21,444 47,034 48,956 78,768

NET INCOME $52,908 $94,401 $115,584 $160,381

PER AVERAGE SHARE DATA:
NET INCOME - BASIC $0.76 $1.34 $1.65 $2.28
NET INCOME - DILUTED $0.73 $1.27 $1.59 $2.16

WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING 69,809,174 70,361,554 70,128,823 70,255,758
WEIGHTED-AVERAGE SHARE
EQUIVALENTS OUTSTANDING 2,608,996 3,835,617 2,597,895 3,966,198
WEIGHTED-AVERAGE SHARES
AND SHARE EQUIVALENTS
OUTSTANDING 72,418,170 74,197,171 72,726,718 74,221,956

SOURCE Philadelphia Consolidated Holding Corp.

Investor Relations: Joseph Barnholt, Assistant Vice President of Philadelphia
Consolidated Holding Corp., +1-610-617-7626, jbarnholt@phlyins.com