UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended June 30,
      2008ORo
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from __________ to
  __________
 
 Commission
File Number: 001-31341
 
 Platinum
      Underwriters Holdings, Ltd.(Exact
      name of registrant as specified in its
charter)
 
 Bermuda
              
              98-0416483(State
      or other jurisdiction of incorporation or organization)
              
              (I.R.S.
      Employer Identification No.)
 
 The
      Belvedere Building
                69
      Pitts Bay Road
                Pembroke,
      Bermuda
              
              HM
      08(Address
      of principal executive offices)
              
              (Zip
      Code)
 
 (441)
295-7195
 (Registrant's
telephone number, including area code)
 
 Not
Applicable
 (Former
name, former address and former fiscal year, if changed since last
report)
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.      YesX
No ___
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definitions of "accelerated filer”, “large accelerated
filer" and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.:
  Large
      accelerated filer
              X
              
              Accelerated
      filerNon-accelerated
      filer
              
              (Do
      not check if a smaller reporting company)
              Smaller
      Reporting Company
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).     Yes  No
X_
 
 As of
July 16, 2008, there were outstanding 48,688,706 common shares, par value $0.01
per share, of the registrant.
  
  PLATINUM
UNDERWRITERS HOLDINGS, LTD.
 QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2008
 
 TABLE OF
CONTENTS
 PagePART
      I  –  FINANCIAL INFORMATIONItem
      1. Condensed Consolidated Financial StatementsConsolidated
      Balance Sheetsas
      of June 30, 2008 (Unaudited) and December 31,
    2007
              1Consolidated
      Statements of Operations and Comprehensive Incomefor
      the Three and
                Six
      Months Ended June 30, 2008 and 2007 (Unaudited)
              2Consolidated
      Statements of Changes in Shareholders’ Equityfor
      the Six Months Ended June 30, 2008 and 2007
    (Unaudited)
              3Consolidated
      Statements of Cash Flowsfor
      the Six Months Ended June 30, 2008 and 2007
      (Unaudited)
              4Notes
      to Condensed Consolidated Financial Statementsfor
      the Three and Six Months
                Ended
      June 30, 2008 and 2007 (Unaudited)
              5Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
              17Item
      3. Quantitative and Qualitative Disclosures about Market
    Risk
              32Item
      4. Controls and Procedures
              33PART
      II  –  OTHER INFORMATIONItem
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              35Item
      4. Submission of Matters to a Vote of Security Holders
              35Item
      6. Exhibits
              36SIGNATURES
              36
 
  
  
 PART
I - FINANCIAL INFORMATION
  ITEM
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 Consolidated Balance Sheets
 ($ in
thousands, except share data)
  
 (Unaudited)June 30,
      2008
              
              
              December 31,
      2007ASSETSInvestments:Fixed
      maturity available-for-sale securities at fair value
                (amortized
      cost – $3,349,054 and $3,214,981, respectively)
              $
              3,281,686
              
              
              $
              3,191,923Fixed
      maturity trading securities at fair value
                (amortized
      cost – $139,024 and $170,952,
      respectively)
              
              134,888
              
              
              
              169,818Preferred
      stocks (cost – $12,246 and $12,246, respectively)
              
              8,782
              
              
              
              9,607Short-term
      investments
              
              127,951
              
              
              
              13,876Total
      investments
              
              3,553,307
              
              
              
              3,385,224Cash
      and cash equivalents
              
              825,108
              
              
              
              1,076,279Accrued
      investment income
              
              34,429
              
              
              
              34,696Reinsurance
      premiums receivable
              
              262,128
              
              
              
              244,360Reinsurance
      recoverable on ceded losses and loss adjustment expenses
              
              15,385
              
              
              
              27,979Prepaid
      reinsurance premiums
              
              12,265
              
              
              
              9,369Funds
      held by ceding companies
              
              157,603
              
              
              
              165,604Deferred
      acquisition costs
              
              62,237
              
              
              
              70,508Deferred
      tax assets
              
              48,236
              
              
              
              43,342Other
      assets
              
              18,106
              
              
              
              21,389Total
      assets
              $
              4,988,804
              
              
              $
              5,078,750LIABILITIES
      AND SHAREHOLDERS’ EQUITYLiabilitiesUnpaid
      losses and loss adjustment expenses
              $
              2,352,116
              
              
              $
              2,361,038Unearned
      premiums
              
              263,672
              
              
              
              298,498Debt
      obligations
              
              250,000
              
              
              
              250,000Ceded
      premiums payable
              
              2,997
              
              
              
              4,559Commissions
      payable
              
              110,346
              
              
              
              100,204Other
      liabilities
              
              41,081
              
              
              
              66,074Total
      liabilities
              
              3,020,212
              
              
              
              3,080,373Shareholders’
      EquityPreferred
      shares, $.01 par value, 25,000,000 shares authorized, 5,750,000 shares
      issued and outstanding
              
              57
              
              
              
              57Common
      shares, $.01 par value, 200,000,000 shares authorized, 48,688,706 and
      53,779,914 shares issued and outstanding, respectively
              
              487
              
              
              
              538Additional
      paid-in capital
              
              1,157,535
              
              
              
              1,338,466Accumulated
      other comprehensive loss
              
              (67,336
              )
              
              
              (24,339
              )Retained
      earnings
              
              877,849
              
              
              
              683,655Total
      shareholders' equity
              
              1,968,592
              
              
              
              1,998,377Total
      liabilities and shareholders' equity
              $
              4,988,804
              
              
              $
              5,078,750
 
 See
accompanying Notes to the Condensed Consolidated Financial
Statements.
  -
1 -
  Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 Consolidated Statements of Operations and Comprehensive
Income (Unaudited)
 For the
Three and Six Months Ended June 30, 2008 and 2007
 ($ in
thousands, except per share data)
 
 Three
      Months Ended
                June 30,
              
              
              Six
      Months Ended
                June 30,2008
              
              2007
              
              
              2008
              
              
              2007Revenue:Net
      premiums earned
              $
              257,982
              
              
              295,918
              
              
              
              559,833
              
              
              $
              580,766Net
      investment income
              
              46,932
              
              
              54,684
              
              
              
              95,994
              
              
              
              106,383Net
      realized losses on investments
              
              (184
              )
              
              (1,639
              )
              
              
              (139
              )
              
              
              (1,657
              )Other
      expense
              
              (6,227
              )
              
              (2,206
              )
              
              
              (4,206
              )
              
              
              (2,986
              )Total
      revenue
              
              298,503
              
              
              346,757
              
              
              
              651,482
              
              
              
              682,506Expenses:Net
      losses and loss adjustment expenses
              
              93,392
              
              
              164,431
              
              
              
              253,595
              
              
              
              346,344Net
      acquisition expenses
              
              66,137
              
              
              56,827
              
              
              
              126,679
              
              
              
              104,947Operating
      expenses
              
              25,100
              
              
              26,108
              
              
              
              46,790
              
              
              
              49,314Net
      foreign currency exchange (gains) losses
              
              1,998
              
              
              (1,416
              )
              
              
              (2,871
              )
              
              
              (1,458
              )Interest
      expense
              
              4,751
              
              
              5,456
              
              
              
              9,501
              
              
              
              10,911Total
      expenses
              
              191,378
              
              
              251,406
              
              
              
              433,694
              
              
              
              510,058Income
      before income tax expense
              
              107,125
              
              
              95,351
              
              
              
              217,788
              
              
              
              172,448Income
      tax expense
              
              4,768
              
              
              4,701
              
              
              
              10,260
              
              
              
              8,965Net
      income
              
              102,357
              
              
              90,650
              
              
              
              207,528
              
              
              
              163,483Preferred
      dividends
              
              2,602
              
              
              2,602
              
              
              
              5,204
              
              
              
              5,204Net
      income attributable to common shareholders
              $
              99,755
              
              
              88,048
              
              
              
              202,324
              
              
              $
              158,279Earnings
      per share:Basic
      earnings per share
              $
              2.06
              
              
              1.47
              
              
              
              4.02
              
              
              $
              2.64Diluted
      earnings per share
              $
              1.82
              
              
              1.34
              
              
              
              3.58
              
              
              $
              2.42Comprehensive
      income:Net
      income
              $
              102,357
              
              
              90,650
              
              
              
              207,528
              
              
              $
              163,483Other
      comprehensive income (loss):Net
      change in unrealized gains and losses on available-for-sale securities,
      net of deferred taxes
              
              (38,876
              )
              
              (32,294
              )
              
              
              (42,997
              )
              
              
              (22,865
              )Cumulative
      translation adjustments
              
              –
              
              
              (632
              )
              
              
              –
              
              
              
              (676
              )Comprehensive
      income
              $
              63,481
              
              
              57,724
              
              
              
              164,531
              
              
              $
              139,942Shareholder
      dividends:Preferred
      dividends declared
              $
              2,602
              
              
              2,602
              
              
              
              5,204
              
              
              $
              5,204Preferred
      dividends declared per share
              
              0.45
              
              
              0.45
              
              
              
              0.91
              
              
              
              0.91Common
      dividends declared
              
              3,976
              
              
              4,827
              
              
              
              8,130
              
              
              
              9,611Common
      dividends declared per share
              $
              0.08
              
              
              0.08
              
              
              
              0.16
              
              
              $
              0.16
 
 
 See
accompanying Notes to the Condensed Consolidated Financial
Statements.
  -
2 -
  Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 Consolidated Statements of Changes in Shareholders’
Equity (Unaudited)
 For the
Six Months Ended June 30, 2008 and 2007
 ($ in
thousands)
 
 2008
              
              2007Preferred
      shares:Balances
      at beginning and end of periods
              $
              57
              
              $
              57Common
      shares:Balances
      at beginning of period
              
              538
              
              
              597Exercise
      of common share options
              
              11
              
              
              7Issuance
      of common shares
              
              1
              
              
              –Purchase
      of common shares
              
              (63
              )
              
              (3
              )Balances
      at end of period
              
              487
              
              
              601Additional
      paid-in-capital:Balances
      at beginning of period
              
              1,338,466
              
              
              1,545,979Exercise
      of common share options
              
              24,444
              
              
              16,804Issuance
      of common shares
              
              1,647
              
              
              –Share
      based compensation
              
              7,711
              
              
              3,233Settlement
      of equity awards
              
              (925
              )
              
              –Purchase
      of common shares
              
              (213,877
              )
              
              (12,572
              )Tax
      benefit of share options
              
              69
              
              
              369Balances
      at end of period
              
              1,157,535
              
              
              1,553,813Accumulated other
      comprehensive loss:Balances
      at beginning of period
              
              (24,339
              )
              
              (44,289
              )Net
      change in unrealized gains and losses on available-for-sale securities,
      net of deferred tax
              
              (42,997
              )
              
              (22,865
              )Net
      change in cumulative translation adjustments, net of deferred
      tax
              
              –
              
              
              (676
              )Balances
      at end of period
              
              (67,336
              )
              
              (67,830
              )Retained
      earnings:Balances
      at beginning of period
              
              683,655
              
              
              355,717Net
      income
              
              207,528
              
              
              163,483Preferred
      share dividends
              
              (5,204
              )
              
              (5,204
              )Common
      share dividends
              
              (8,130
              )
              
              (9,611
              )Balances
      at end of period
              
              877,849
              
              
              504,385Total
      shareholders’ equity
              $
              1,968,592
              
              $
              1,991,026
 
  See
accompanying Notes to the Condensed Consolidated Financial
Statements.
  -
3 -
  Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 Consolidated Statements of Cash Flows
(Unaudited)
 For the
Six Months Ended June 30, 2008 and 2007
 ($ in
thousands)
  2008
              
              2007Operating
      Activities:Net
      income
              $
              207,528
              
              $
              163,483Adjustments
      to reconcile net income to cash provided by operations:Depreciation
      and amortization
              
              3,955
              
              
              6,284Net
      realized (gains) losses on investments
              
              139
              
              
              1,657Net
      foreign currency exchange gains
              
              (2,871
              )
              
              (1,458
              )Share
      based compensation
              
              7,711
              
              
              3,233Deferred
      income tax expense
              
              (2,736
              )
              
              (12,050
              )Trading
      securities activities
              
              41,632
              
              
              (4,709
              )Changes
      in assets and liabilities:(Increase)
      decrease in accrued investment income
              
              267
              
              
              (3,032
              )(Increase)
      decrease in reinsurance premiums receivable
              
              (15,387
              )
              
              42,096Decrease
      in funds held by ceding companies
              
              8,001
              
              
              10,992(Increase)
      decrease in deferred acquisition costs
              
              8,271
              
              
              (468
              )Increase
      (decrease)  in net unpaid losses and loss adjustment
      expenses
              
              (4,742
              )
              
              42,904Increase
      (decrease) in net unearned premiums
              
              (37,722
              )
              
              6,586Decrease
      in ceded premiums payable
              
              (1,562
              )
              
              (10,532
              )Increase
      (decrease) in commissions payable
              
              10,142
              
              
              (22,030
              )Net
      changes in other assets and liabilities
              
              (14,773
              )
              
              (10,743
              )Other
      net
              
              1,292
              
              
              1,253Net
      cash provided by operating activities
              
              209,145
              
              
              213,466Investing
      Activities:Proceeds
      from sale of available-for-sale fixed maturity securities
              
              7,691
              
              
              15,887Proceeds
      from maturity or paydown of available-for-sale fixed maturity
      securities
              
              668,560
              
              
              605,260Acquisition
      of available-for-sale fixed maturity securities
              
              (820,720
              )
              
              (780,459
              )Proceeds
      from sale of other invested asset
              
              –
              
              
              4,745Net
      change in short-term investments
              
              (113,019
              )
              
              22,506Net
      cash used in investing activities
              
              (257,488
              )
              
              (132,061
              )Financing
      Activities:Dividends
      paid to preferred shareholders
              
              (5,204
              )
              
              (5,204
              )Dividends
      paid to common shareholders
              
              (8,130
              )
              
              (9,611
              )Proceeds
      from exercise of share options
              
              24,446
              
              
              16,809Purchase
      of common shares
              
              (213,940
              )
              
              (12,576
              )Net
      cash used in financing activities
              
              (202,828
              )
              
              (10,582
              )Net
      increase (decrease) in cash and cash equivalents
              
              (251,171
              )
              
              70,823Cash
      and cash equivalents at beginning of period
              
              1,076,279
              
              
              851,652Cash
      and cash equivalents at end of period
              $
              825,108
              
              $
              922,475Supplemental
      disclosures of cash flow information:Income
      taxes paid
              $
              11,213
              
              $
              11,566Interest
      paid
              $
              9,375
              
              $
              10,740
 
 See
accompanying Notes to the Condensed Consolidated Financial
Statements.
   -
4 -
   Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 Notes to the Condensed Consolidated Financial Statements
(Unaudited)
 For the
Three and Six Months Ended June 30, 2008 and 2007
   1.
      Basis of
      Presentation
  Platinum
Underwriters Holdings, Ltd. ("Platinum Holdings") is a Bermuda holding company
organized in 2002.  Platinum Holdings and its subsidiaries
(collectively, the "Company") operate through two licensed reinsurance
subsidiaries:  Platinum Underwriters Bermuda, Ltd. ("Platinum
Bermuda") and Platinum Underwriters Reinsurance, Inc. ("Platinum
US").  The terms "we," "us," and "our" also refer to Platinum Holdings
and its consolidated subsidiaries, unless the context otherwise
indicates.  Through December 31, 2006 we also underwrote business
through Platinum Re (UK) Limited ("Platinum UK"), our other licensed reinsurance
subsidiary.  In 2007, Platinum UK ceased underwriting reinsurance
business.  We provide property and marine, casualty and finite risk
reinsurance coverages, through reinsurance intermediaries, to a diverse
clientele of insurers and select reinsurers on a worldwide basis.
  The
condensed consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States ("U.S. GAAP")
and include the accounts of Platinum Holdings and its consolidated subsidiaries,
including Platinum Bermuda, Platinum US, Platinum UK, Platinum Underwriters
Finance, Inc. ("Platinum Finance"), Platinum Regency Holdings ("Platinum
Regency"), Platinum Administrative Services, Inc. and Platinum UK Services
Company Limited.  All material inter-company transactions have been
eliminated in preparing these condensed consolidated financial
statements.  The condensed consolidated financial statements included
in this report as of and for the six months ended June 30, 2008 and 2007
are unaudited and include adjustments consisting of normal recurring items that
management considers necessary for a fair presentation under U.S.
GAAP.  These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and related notes
included in our Annual Report on Form 10-K for the year ended December 31,
2007.
  The
preparation of financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could materially differ from these
estimates.  The results of operations for any interim period are not
necessarily indicative of results for the full year.
  New
Accounting Pronouncements
  In
February 2007, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities" ("SFAS 159").  SFAS 159
permits an entity to irrevocably elect fair value on a contract-by-contract
basis as the initial and subsequent measurement attribute for many financial
assets and liabilities and certain other items.  Most provisions of
SFAS 159 are elective.  Entities electing the fair value measurement
attributes of SFAS 159 are required to recognize changes in fair values in
earnings and to expense upfront costs and fees associated with the items for
which the fair values option is elected.  SFAS 159 is effective for
fiscal years beginning after November 15, 2007.  We have not
applied the fair value measurement attributes of SFAS 159 to any financial
assets or liabilities, and therefore our adoption of SFAS 159 as of January 1,
2008 did not have an effect on our financial condition or results of
operations.
   -
5 -
   In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
"Disclosure about Derivative Instruments and Hedging Activities – an amendment
of FASB Statement No. 133" ("SFAS 161").  SFAS 161 amends and expands
the disclosure requirements in SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities” about an entity’s derivative and hedging
activities and how these activities affect an entity’s financial position,
financial performance and cash flows, thereby improving the transparency of
financial reporting.  SFAS 161 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008,
with early application encouraged.  We are currently evaluating the
impact that SFAS 161 may have, if any, on the presentation of our consolidated
financial statements.
  In May
2008 the FASB issued Statement of Financial Accounting Standards No. 162, "The
Hierarchy of Generally Accepted Accounting Principles" ("SFAS
162").  SFAS 162 identifies the sources of accounting principles and
the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with U.S. GAAP.  This statement is effective 60 days
following approval by the Security and Exchange Commission ("SEC") of the Public
Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of
‘Present Fairly in Conformity With Generally Accepted Accounting
Principles’.”  Our adoption of SFAS 162 will have no impact on our
current selection of applicable accounting principles.
   2.
      Investments
  Investments
classified as available-for-sale are carried at fair value as of the balance
sheet date.  Net change in unrealized investment gains and losses on
available-for-sale securities, net of deferred taxes, for the six months ended
June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007Net
      change in fair value
              $
              (45,155
              )
              $
              (23,350
              )Deferred
      taxes
              
              2,158
              
              
              485Net
      change in unrealized investment gains and losses
              $
              (42,997
              )
              $
              (22,865
              )
 
 Gross
unrealized gains and losses on available-for-sale securities as of June 30, 2008
were $16,923,000 and $87,754,000, respectively.  As of June 30, 2008
there were a total of 414 issues in an unrealized loss position in our
investment portfolio, with the single largest unrealized loss being an
asset-backed security with an amortized cost of $10,088,000 and an unrealized
loss of $4,360,000.  Corporate, mortgage-backed and asset-backed
securities represent the largest categories within our available-for-sale
portfolio and consequently accounted for the greatest amount of our overall
unrealized loss as of June 30, 2008.  Investment holdings within our
corporate portfolio were diversified across approximately 30 industry sectors
and within each sector across many individual issuers and issues.  As
of June 30, 2008 there were 148 corporate issues in an unrealized loss position,
with the single largest unrealized loss being $1,651,000 on an amortized cost of
$7,393,000.  Investment holdings within the mortgage-backed and
asset-backed portfolio were diversified across a number of
sub-categories.  As of June 30, 2008 there were 213 issues within the
mortgage-backed and asset-backed portfolio in an unrealized loss
position.
   -
6 -
   The
unrealized losses on securities classified as available-for-sale, aggregated by
investment category and length of time that individual securities have been in a
continuous unrealized loss position as of June 30, 2008, were as follows
($ in thousands):
  Fair
      Value
              
              Unrealized
                LossLess than twelve
      months:U.S.
      Government
              $
              –
              
              $
              –U.S.
      Government agencies
              
              199,232
              
              
              1,919Corporate
      bonds
              
              359,646
              
              
              7,645Mortgage-backed
      and asset-backed securities
              
              672,954
              
              
              19,996Municipal
      bonds
              
              105,676
              
              
              1,449Foreign
      governments and states
              
              37,672
              
              
              631Preferred
      stocks
              
              916
              
              
              84Total
              $
              1,376,096
              
              $
              31,724Twelve months or
      more:U.S.
      Government
              $
              2,576
              
              $
              88U.S.
      Government agencies
              
              –
              
              
              –Corporate
      bonds
              
              179,584
              
              
              18,687Mortgage-backed
      and asset-backed securities
              
              343,969
              
              
              33,241Municipal
      bonds
              
              8,089
              
              
              466Foreign
      governments and states
              
              1,551
              
              
              168Preferred
      stocks
              
              7,866
              
              
              3,380Total
              $
              543,635
              
              $
              56,030Total unrealized
      losses:U.S.
      Government
              $
              2,576
              
              $
              88U.S.
      Government agencies
              
              199,232
              
              
              1,919Corporate
      bonds
              
              539,230
              
              
              26,332Mortgage-backed
      and asset-backed securities
              
              1,016,923
              
              
              53,237Municipal
      bonds
              
              113,765
              
              
              1,915Foreign
      governments and states
              
              39,223
              
              
              799Preferred
      stocks
              
              8,782
              
              
              3,464Total
              $
              1,919,731
              
              $
              87,754
 
 We
routinely review our available-for-sale investments to determine whether
unrealized losses represent temporary changes in fair value or were the result
of "other-than-temporary impairments."  The process of determining
whether a security is other than temporarily impaired is subjective and involves
analyzing many factors.  These factors include, but are not limited
to:  the overall financial condition of the issuer, the length and
magnitude of an unrealized loss, specific credit events, the collateral
structure and the credit support that may be applicable to mortgage-backed and
asset-backed securities.  We also consider our ability and intent to
hold a security for a sufficient period of time for the value to recover the
unrealized loss, which is based, in part, on current and anticipated future
positive net cash flows from operations that generate sufficient liquidity in
order to meet our obligations.  If we determine that an unrealized
loss on a security is other than temporary, we write down the carrying value of
the security and record a realized loss in the consolidated statement of
operations.
   -
7 -
   Fair
Value Measurements
  We
adopted SFAS No. 157, “Fair Value Measurements” ("SFAS 157") as of January
1, 2008.  SFAS 157 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.  This
statement establishes a framework for measuring fair value and expands
disclosures regarding fair value measurements in accordance with U.S.
GAAP.  The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to fair values derived from unobservable inputs (Level
3).  The level in the fair value hierarchy within which the fair value
measurement in its entirety falls shall be determined based on the lowest level
input that is significant to the fair value measurement in its
entirety.
  We
consider prices for actively traded treasury securities and exchange traded
preferred stocks to be based on quoted prices in active markets for identical
assets (Level 1 as defined by SFAS 157).  The fair values of our other
fixed maturities, which generally include mortgage-backed and asset-backed
securities, corporate bonds, municipal bonds, U.S. government-sponsored
enterprises, foreign governments and states, are based on prices obtained
from independent pricing vendors, index providers, or broker-dealers using
observable inputs (Level 2 as defined by SFAS 157).  The observable
inputs used in standard market valuation pricing models may include but are not
limited to: credit ratings, interest rates and yield curves at commonly quoted
intervals, volatilities, prepayment speeds, loss severities, credit risks and
default rates.  The fair values of our derivative instruments, which
are included in other assets in the consolidated balance sheet, are determined
by management using unobservable inputs through the application of our own
assumptions and internal valuation pricing models (Level 3 as defined by SFAS
157).
  The
following table presents the fair value measurement levels for all assets and
liabilities which the Company has recorded at fair value as of June 30, 2008
($ in thousands):
  Fair
      Value Measurementat
      Reporting Date Using:Total
              
              Level
      1
              
              Level
      2
              
              Level
      3Assets:Fixed
      maturity available-for-sale securities
              $
              3,281,686
              
              
              108,230
              
              
              3,173,456
              
              $
              –Fixed
      maturity trading securities
              
              134,888
              
              
              52,140
              
              
              82,748
              
              
              –Preferred
      stocks
              
              8,782
              
              
              5,748
              
              
              3,034
              
              
              –Short-term
      investments
              
              127,951
              
              
              107,005
              
              
              20,946
              
              
              –Derivative
      instruments
              
              4,990
              
              
              –
              
              
              –
              
              
              4,990Total
              $
              3,558,297
              
              
              273,123
              
              
              3,280,184
              
              $
              4,990
 
 The
following table presents the reconciliation of the beginning and ending fair
value measurements of our Level 3 assets for the six months ended June 30, 2008,
consisting of derivative instruments, measured at fair value using significant
unobservable inputs ($ in thousands):
  Beginning
      balance at January 1, 2008
              
              $
              –Purchases,
      issuances, and settlements
              
              
              6,760Total
      unrealized losses included in earnings
              
              
              (1,770
              )Ending
      balance at June 30, 2008
              
              
              4,990Losses
      for the period attributable to the change in unrealized losses relating to
      assets still held
              
              $
              (1,770
              )
 
 Unrealized
losses of $1,770,000 have been included in earnings for the period ended June
30, 2008 and are reported in other expense in the consolidated statement of
operations.
   -
8 -
   3.
      Earnings Per
      Share
  The
following is a calculation of the basic and diluted earnings per common share
for the three and six months ended June 30, 2008 and 2007 (in thousands, except
per share data):
  Net
                Income
              
              WeightedAverage
                CommonShares
                Outstanding
              
              Earnings
                Per
      Common
                ShareThree Months Ended
      June 30, 2008:Basic
      earnings per share:Net
      income attributable to common shareholders
              $
              99,755
              
              
              48,468
              
              $
              2.06Effect
      of dilutive securities:Common
      share options, restricted common shares and common share
    units
              
              –
              
              
              2,676Conversion
      of preferred shares
              
              –
              
              
              4,953Preferred
      share dividends
              
              2,602
              
              
              –Adjusted
      net income for diluted earnings per share
              $
              102,357
              
              
              56,097
              
              $
              1.82Three Months Ended
      June 30, 2007:Basic
      earnings per share:Net
      income attributable to common shareholders
              $
              88,048
              
              
              60,061
              
              $
              1.47Effect
      of dilutive securities:Common
      share options, restricted common shares and common share
    units
              
              –
              
              
              2,710Conversion
      of preferred shares
              
              –
              
              
              5,086Preferred
      share dividends
              
              2,602
              
              
              –Adjusted
      net income for diluted earnings per share
              $
              90,650
              
              
              67,857
              
              $
              1.34Six Months Ended
      June 30, 2008:Basic
      earnings per share:Net
      income attributable to common shareholders
              $
              202,324
              
              
              50,286
              
              $
              4.02Effect
      of dilutive securities:Common
      share options, restricted common shares and common share
    units
              
              –
              
              
              2,707Conversion
      of preferred shares
              
              –
              
              
              5,028Preferred
      share dividends
              
              5,204
              
              
              –Adjusted
      net income for diluted earnings per share
              $
              207,528
              
              
              58,021
              
              $
              3.58Six Months Ended
      June 30, 2007:Basic
      earnings per share:Net
      income attributable to common shareholders
              $
              158,279
              
              
              59,891
              
              $
              2.64Effect
      of dilutive securities:Common
      share options, restricted common shares and common share
    units
              
              –
              
              
              2,372Conversion
      of preferred shares
              
              –
              
              
              5,315Preferred
      share dividends
              
              5,204
              
              
              –Adjusted
      net income for diluted earnings per share
              $
              163,483
              
              
              67,578
              
              $
              2.42
 
  -
9 -
   4.
      Operating
      Segment Information
  We
conduct our worldwide reinsurance business through three operating segments:
Property and Marine, Casualty and Finite Risk.  The Property and
Marine operating segment includes principally property and marine reinsurance
coverages that are written in the United States and international
markets.  This operating segment includes property reinsurance, crop
reinsurance and marine and aviation reinsurance.  The Property and
Marine operating segment includes reinsurance contracts that are either
catastrophe excess-of-loss, per-risk excess-of-loss or proportional
contracts.  The Casualty operating segment includes principally
reinsurance contracts that cover umbrella liability, general and product
liability, professional liability, workers' compensation, casualty clash,
automobile liability, surety, trade credit, political risk and accident and
health.  The Finite Risk operating segment includes principally
structured reinsurance contracts with ceding companies whose needs may not be
met efficiently through traditional reinsurance products.  In exchange
for contractual features that limit our downside risk, reinsurance contracts
that we classify as finite risk provide the potential for significant profit
commission to the ceding company.  The classes of risks underwritten
through finite risk contracts are generally consistent with the classes covered
by traditional products.  The finite risk contracts that we underwrite
generally provide prospective protection, meaning coverage is provided for
losses that are incurred after inception of the contract, as contrasted with
retrospective coverage, which covers losses that are incurred prior to inception
of the contract.  The three main categories of finite risk contracts
are quota share, multi-year excess-of-loss and whole account aggregate stop
loss.
  In
managing our operating segments, we use measures such as underwriting income and
underwriting ratios to evaluate segment performance.  We do not
allocate by segment our assets or certain income and expenses such as investment
income, interest expense and certain corporate expenses.  Total
underwriting income is reconciled to income before income tax
expense.  The measures we use in evaluating our operating segments
should not be used as a substitute for measures determined under U.S.
GAAP.  The following table summarizes underwriting activity and ratios
for the operating segments, together with a reconciliation of total underwriting
income to income before income tax expense, for the three and six months ended
June 30, 2008 and 2007 ($ in thousands):
  Property
                and
      Marine
              
              Casualty
              
              Finite
      Risk
              
              
              TotalThree months ended
      June 30, 2008:Net
      premiums written
              $
              118,588
              
              
              102,893
              
              
              3,379
              
              
              $
              224,860Net
      premiums earned
              
              141,716
              
              
              113,245
              
              
              3,021
              
              
              
              257,982Net
      losses and LAE
              
              33,367
              
              
              66,783
              
              
              (6,758
              )
              
              
              93,392Net
      acquisition expenses
              
              24,774
              
              
              32,214
              
              
              9,149
              
              
              
              66,137Other
      underwriting expenses
              
              9,635
              
              
              6,991
              
              
              365
              
              
              
              16,991Segment
      underwriting income
              $
              73,940
              
              
              7,257
              
              
              265
              
              
              
              81,462Net
      investment income
              
              
              
              46,932Net
      realized losses on investments
              
              
              
              (184
              )Net
      foreign currency exchange losses
              
              
              
              (1,998
              )Other
      expense
              
              
              
              (6,227
              )Corporate
      expenses not allocated to segments
              
              
              
              (8,109
              )Interest
      expense
              
              
              
              (4,751
              )Income
      before income tax expense
              
              
              $
              107,125Ratios:Net
      loss and LAE
              
              23.5
              %
              
              59.0
              %
              
              (223.7
              %)
              
              
              36.2
              %Net
      acquisition expense
              
              17.5
              %
              
              28.4
              %
              
              302.8
              %
              
              
              25.6
              %Other
      underwriting expense
              
              6.8
              %
              
              6.2
              %
              
              12.1
              %
              
              
              6.6
              %Combined
              
              47.8
              %
              
              93.6
              %
              
              91.2
              %
              
              
              68.4
              %Three months ended
      June 30, 2007:Net
      premiums written
              $
              119,226
              
              
              162,548
              
              
              5,949
              
              
              $
              287,723Net
      premiums earned
              
              125,136
              
              
              163,845
              
              
              6,937
              
              
              
              295,918Net
      losses and LAE
              
              43,242
              
              
              117,993
              
              
              3,196
              
              
              
              164,431Net
      acquisition expenses
              
              16,264
              
              
              40,061
              
              
              502
              
              
              
              56,827Other
      underwriting expenses
              
              10,582
              
              
              6,442
              
              
              593
              
              
              
              17,617Segment
      underwriting income (loss)
              $
              55,048
              
              
              (651
              )
              
              2,646
              
              
              
              57,043Net
      investment income
              
              
              
              54,684Net
      realized losses on investments
              
              
              
              (1,639
              )Net
      foreign currency exchange gains
              
              
              
              1,416Other
      expense
              
              
              
              (2,206
              )Corporate
      expenses not allocated to segments
              
              
              
              (8,491
              )Interest
      expense
              
              
              
              (5,456
              )Income
      before income tax expense
              
              
              $
              95,351Ratios:Net
      loss and LAE
              
              34.6
              %
              
              72.0
              %
              
              46.1
              %
              
              
              55.6
              %Acquisition
      expense
              
              13.0
              %
              
              24.5
              %
              
              7.2
              %
              
              
              19.2
              %Other
      underwriting expense
              
              8.5
              %
              
              3.9
              %
              
              8.5
              %
              
              
              6.0
              %Combined
              
              56.1
              %
              
              100.4
              %
              
              61.8
              %
              
              
              80.8
              %
   -
10 -
   Property
                and
      Marine
              
              
              Casualty
              
              
              Finite
      Risk
              
              
              
              TotalSix Months Ended
      June 30, 2008:Net
      premiums written
              $
              287,405
              
              
              228,469
              
              
              5,257
              
              
              $
              521,131Net
      premiums earned
              
              295,106
              
              
              260,740
              
              
              3,987
              
              
              
              559,833Net
      losses and LAE
              
              95,406
              
              
              166,176
              
              
              (7,987
              )
              
              
              253,595Net
      acquisition expenses
              
              45,428
              
              
              69,702
              
              
              11,549
              
              
              
              126,679Other
      underwriting expenses
              
              18,231
              
              
              13,786
              
              
              675
              
              
              
              32,692Segment
      underwriting income (loss)
              $
              136,041
              
              
              11,076
              
              
              (
      250
              )
              
              
              146,867Net
      investment income
              
              
              
              95,994Net
      realized losses on investments
              
              
              
              (
      139
              )Net
      foreign currency exchange gains
              
              
              
              2,871Other
      expense
              
              
              
              (4,206
              )Corporate
      expenses not allocated to segments
              
              
              
              (14,098
              )Interest
      expense
              
              
              
              (9,501
              )Income
      before income tax expense
              
              
              $
              217,788Ratios:Net
      loss and LAE
              
              32.3
              %
              
              63.7
              %
              
              (200.3
              %)
              
              
              45.3
              %Net
      acquisition expense
              
              15.4
              %
              
              26.7
              %
              
              289.7
              %
              
              
              22.6
              %Other
      underwriting expense
              
              6.2
              %
              
              5.3
              %
              
              16.9
              %
              
              
              5.8
              %Combined
              
              53.9
              %
              
              95.7
              %
              
              106.3
              %
              
              
              73.7
              %Six Months Ended
      June 30, 2007:Net
      premiums written
              $
              256,880
              
              
              314,731
              
              
              15,029
              
              
              $
              586,640Net
      premiums earned
              
              244,846
              
              
              317,864
              
              
              18,056
              
              
              
              580,766Net
      losses and LAE
              
              105,869
              
              
              230,375
              
              
              10,100
              
              
              
              346,344Net
      acquisition expenses
              
              32,199
              
              
              72,096
              
              
              652
              
              
              
              104,947Other
      underwriting expenses
              
              20,610
              
              
              13,159
              
              
              1,627
              
              
              
              35,396Segment
      underwriting income
              $
              86,168
              
              
              2,234
              
              
              5,677
              
              
              
              94,079Net
      investment income
              
              
              
              106,383Net
      realized losses on investments
              
              
              
              (1,657
              )Net
      foreign currency exchange gains
              
              
              
              1,458Other
      expense
              
              
              
              (2,986
              )Corporate
      expenses not allocated to segments
              
              
              
              (13,918
              )Interest
      expense
              
              
              
              (10,911
              )Income
      before income tax expense
              
              
              $
              172,448Ratios:Net
      loss and LAE
              
              43.2
              %
              
              72.5
              %
              
              55.9
              %
              
              
              59.6
              %Net
      acquisition expense
              
              13.2
              %
              
              22.7
              %
              
              3.6
              %
              
              
              18.1
              %Other
      underwriting expense
              
              8.4
              %
              
              4.1
              %
              
              9.0
              %
              
              
              6.1
              %Combined
              
              64.8
              %
              
              99.3
              %
              
              68.5
              %
              
              
              83.8
              %
 
  5.
      Income
      Taxes
  We
provide for income tax expense based upon income reported in the condensed
consolidated financial statements and the provisions of currently enacted tax
laws.  Platinum Holdings and Platinum Bermuda are incorporated in
Bermuda.  Under current Bermuda law, they are not taxed on any Bermuda
income or capital gains and they have received an assurance that if any
legislation is enacted in Bermuda that would impose tax computed on profits or
income, or computed on any capital asset, gain or appreciation, or any tax in
the nature of estate duty or inheritance tax, then the imposition of any such
tax will not be applicable to Platinum Holdings or Platinum Bermuda or any of
their respective operations, shares, debentures or other obligations until March
28, 2016.  We also have subsidiaries in the United States, the United
Kingdom and Ireland that are subject to the tax laws thereof.  The
income tax returns of our U.S. based subsidiaries that remain open to
examination are for calendar years 2003 and forward and tax years 2003 and 2004
are currently under examination.
   -
11 -
   A
reconciliation of expected income tax expense, computed by applying a 35% income
tax rate to income before income taxes, to actual income tax expense for the six
months ended June 30, 2008 and 2007 was as follows ($ in
thousands):
  2008
              
              
              2007Expected
      income tax expense at 35%
              
              $
              76,226
              
              
              $
              60,357Effect
      of foreign income subject to tax at rates other than 35%
              
              
              (65,506
              )
              
              
              (53,158
              )Tax
      exempt investment income
              
              
              (1,575
              )
              
              
              (1,015
              )Other,
      net
              
              
              1,115
              
              
              
              2,781Income
      tax expense
              
              $
              10,260
              
              
              $
              8,965
 
  6.
      Condensed
      Consolidating Financial
Information
  Platinum
Finance is a U.S. based intermediate holding company and a wholly owned
subsidiary of Platinum Regency.  The outstanding Series B 7.5% Notes,
due June 1, 2017, issued by Platinum Finance are fully and unconditionally
guaranteed by Platinum Holdings.  The Series B 6.371% Remarketed
Senior Guaranteed Notes that were issued by Platinum Finance and were due and
fully repaid on November 16, 2007, were also fully and unconditionally
guaranteed by Platinum Holdings.
  The
payment of dividends from our regulated reinsurance subsidiaries is limited by
applicable laws and statutory requirements of the jurisdictions in which the
subsidiaries operate, including Bermuda, the United States, the United Kingdom
and Ireland.  Based on the regulatory restrictions of the applicable
jurisdictions, the maximum amount available for payment of dividends or other
distributions by Platinum US to Platinum Finance in 2008 without prior
regulatory approval is estimated to be approximately $24,796,000.  The
maximum amount available for payment of dividends or other distributions by the
reinsurance subsidiaries of Platinum Holdings in 2008, including Platinum US,
without prior regulatory approval is estimated to be approximately
$398,241,000.  During the six months ended June 30, 2008, dividends
totaling $180,000,000 were paid by Platinum Bermuda to Platinum
Holdings.
  The
tables below present condensed consolidating financial information of Platinum
Holdings, Platinum Finance and the non-guarantor subsidiaries of Platinum
Holdings as of June 30, 2008 and December 31, 2007 and for the three
and six months ended June 30, 2008 and 2007
($ in thousands):
  
 Condensed
      Consolidating Balance Sheet
                June
      30, 2008
              Platinum
      Holdings
              
              Platinum
      Finance
              
              Non-guarantor
      Subsidiaries
              
              Consolidating
      Adjustments
              
              
              ConsolidatedASSETSTotal
      investments
              $
              –
              
              
              6,063
              
              
              3,547,244
              
              
              –
              
              
              $
              3,553,307Investment
      in subsidiaries
              
              1,949,797
              
              
              526,162
              
              
              321,752
              
              
              (2,797,711
              )
              
              
              –Cash
      and cash equivalents
              
              15,054
              
              
              11,225
              
              
              798,829
              
              
              –
              
              
              
              825,108Reinsurance
      assets
              
              –
              
              
              –
              
              
              509,618
              
              
              –
              
              
              
              509,618Other
      assets
              
              10,915
              
              
              2,214
              
              
              87,642
              
              
              –
              
              
              
              100,771Total
      assets
              $
              1,975,766
              
              
              545,664
              
              
              5,265,085
              
              
              (2,797,711
              )
              
              $
              4,988,804LIABILITIES
      AND
                SHAREHOLDERS’
      EQUITYLiabilitiesReinsurance
      liabilities
              $
              –
              
              
              –
              
              
              2,729,131
              
              
              –
              
              
              $
              2,729,131Debt
      obligations
              
              –
              
              
              250,000
              
              
              –
              
              
              –
              
              
              
              250,000Other
      liabilities
              
              7,174
              
              
              1,105
              
              
              32,802
              
              
              –
              
              
              
              41,081Total
      liabilities
              
              7,174
              
              
              251,105
              
              
              2,761,933
              
              
              –
              
              
              
              3,020,212Shareholders’
      EquityPreferred
      shares
              
              57
              
              
              –
              
              
              –
              
              
              –
              
              
              
              57Common
      shares
              
              487
              
              
              –
              
              
              6,250
              
              
              (6,250
              )
              
              
              487Additional
      paid-in capital
              
              1,157,535
              
              
              193,123
              
              
              1,896,301
              
              
              (2,089,424
              )
              
              
              1,157,535Accumulated
      other comprehensive loss
              
              (67,336
              )
              
              (6,521
              )
              
              (73,801
              )
              
              80,322
              
              
              
              (67,336
              )Retained
      earnings
              
              877,849
              
              
              107,957
              
              
              674,402
              
              
              (782,359
              )
              
              
              877,849Total
      shareholders’ equity
              
              1,968,592
              
              
              294,559
              
              
              2,503,152
              
              
              (2,797,711
              )
              
              
              1,968,592Total
      liabilities and shareholders’ equity
              $
              1,975,766
              
              
              545,664
              
              
              5,265,085
              
              
              (2,797,711
              )
              
              $
              4,988,804
   -
12 -
 
 Condensed
      Consolidating Balance Sheet
                December
      31, 2007
              Platinum
      Holdings
              
              Platinum
      Finance
              
              Non-guarantor
      Subsidiaries
              
              Consolidating
      Adjustments
              
              
              ConsolidatedASSETSTotal
      investments
              $
              –
              
              
              6,661
              
              
              3,378,563
              
              
              –
              
              
              $
              3,385,224Investment
      in subsidiaries
              
              1,958,019
              
              
              504,642
              
              
              306,373
              
              
              (2,769,034
              )
              
              
              –Cash
      and cash equivalents
              
              39,593
              
              
              18,348
              
              
              1,018,338
              
              
              –
              
              
              
              1,076,279Reinsurance
      assets
              
              –
              
              
              –
              
              
              517,820
              
              
              –
              
              
              
              517,820Other
      assets
              
              10,815
              
              
              2,106
              
              
              86,506
              
              
              –
              
              
              
              99,427Total
      assets
              $
              2,008,427
              
              
              531,757
              
              
              5,307,600
              
              
              (2,769,034
              )
              
              $
              5,078,750LIABILITIES
      AND
                SHAREHOLDERS’
      EQUITYLiabilitiesReinsurance
      liabilities
              $
              –
              
              
              –
              
              
              2,764,299
              
              
              –
              
              
              $
              2,764,299Debt
      obligations
              
              –
              
              
              250,000
              
              
              –
              
              
              –
              
              
              
              250,000Other
      liabilities
              
              10,050
              
              
              1,714
              
              
              54,310
              
              
              –
              
              
              
              66,074Total
      liabilities
              
              10,050
              
              
              251,714
              
              
              2,818,609
              
              
              –
              
              
              
              3,080,373Shareholders’
      EquityPreferred
      shares
              
              57
              
              
              –
              
              
              –
              
              
              –
              
              
              
              57Common
      shares
              
              538
              
              
              –
              
              
              6,250
              
              
              (6,250
              )
              
              
              538Additional
      paid-in capital
              
              1,338,466
              
              
              193,054
              
              
              1,896,161
              
              
              (2,089,215
              )
              
              
              1,338,466Accumulated
      other comprehensive loss
              
              (24,339
              )
              
              (2,513
              )
              
              (26,814
              )
              
              29,327
              
              
              
              (24,339
              )Retained
      earnings
              
              683,655
              
              
              89,502
              
              
              613,394
              
              
              (702,896
              )
              
              
              683,655Total
      shareholders' equity
              
              1,998,377
              
              
              280,043
              
              
              2,488,991
              
              
              (2,769,034
              )
              
              
              1,998,377Total
      liabilities and shareholders’ equity
              $
              2,008,427
              
              
              531,757
              
              
              5,307,600
              
              
              (2,769,034
              )
              
              $
              5,078,750
 
 Consolidating
      Statement of Operations
                For
      the Three Months Ended June 30, 2008
              Platinum
      Holdings
              
              Platinum
      Finance
              
              Non-guarantor
      Subsidiaries
              
              Consolidating
      Adjustments
              
              
              ConsolidatedRevenue:Net
      premiums earned
              $
              –
              
              
              –
              
              
              257,982
              
              
              –
              
              
              $
              257,982Net
      investment income
              
              255
              
              
              175
              
              
              46,502
              
              
              –
              
              
              
              46,932Net
      realized gains (losses) on investments
              
              –
              
              
              1
              
              
              (185
              )
              
              –
              
              
              
              (184
              )Other
      income (expense), net
              
              635
              
              
              –
              
              
              (6,862
              )
              
              –
              
              
              
              (6,227
              )Total
      revenue
              
              890
              
              
              176
              
              
              297,437
              
              
              –
              
              
              
              298,503Expenses:Net
      losses and loss adjustment expenses
              
              –
              
              
              –
              
              
              93,392
              
              
              –
              
              
              
              93,392Net
      acquisition expenses
              
              –
              
              
              –
              
              
              66,137
              
              
              –
              
              
              
              66,137Operating
      expenses
              
              7,967
              
              
              80
              
              
              17,053
              
              
              –
              
              
              
              25,100Net
      foreign currency exchange loss
              
              –
              
              
              –
              
              
              1,998
              
              
              –
              
              
              
              1,998Interest
      expense
              
              –
              
              
              4,751
              
              
              –
              
              
              –
              
              
              
              4,751Total
      expenses
              
              7,967
              
              
              4,831
              
              
              178,580
              
              
              –
              
              
              
              191,378Income
      (loss) before income tax expense (benefit)
              
              (7,077
              )
              
              (4,655
              )
              
              118,857
              
              
              –
              
              
              
              107,125Income
      tax expense (benefit)
              
              300
              
              
              (797
              )
              
              5,265
              
              
              –
              
              
              
              4,768Income
      (loss) before equity in earnings of subsidiaries
              
              (7,377
              )
              
              (3,858
              )
              
              113,592
              
              
              –
              
              
              
              102,357Equity
      in earnings of subsidiaries
              
              109,734
              
              
              11,961
              
              
              8,329
              
              
              (130,024
              )
              
              
              –Net
      income
              
              102,357
              
              
              8,103
              
              
              121,921
              
              
              (130,024
              )
              
              
              102,357Preferred
      dividends
              
              2,602
              
              
              –
              
              
              –
              
              
              –
              
              
              
              2,602Net
      income attributable to common shareholders
              $
              99,755
              
              
              8,103
              
              
              121,921
              
              
              (130,024
              )
              
              $
              99,755
   -
13 -
   Consolidating
      Statement of Operations
                For
      the Three Months Ended June 30, 2007
              Platinum
      Holdings
              
              Platinum
      Finance
              
              Non-guarantor
      Subsidiaries
              
              Consolidating
      Adjustments
              
              
              ConsolidatedRevenue:Net
      premiums earned
              $
              –
              
              
              –
              
              
              295,918
              
              
              –
              
              
              $
              295,918Net
      investment income
              
              1,297
              
              
              601
              
              
              52,786
              
              
              –
              
              
              
              54,684Net
      realized losses on investments
              
              –
              
              
              –
              
              
              (1,639
              )
              
              –
              
              
              
              (1,639
              )Other
      income (expense), net
              
              2,025
              
              
              –
              
              
              (4,231
              )
              
              –
              
              
              
              (2,206
              )Total
      revenue
              
              3,322
              
              
              601
              
              
              342,834
              
              
              –
              
              
              
              346,757Expenses:Net
      losses and loss adjustment expenses
              
              –
              
              
              –
              
              
              164,431
              
              
              –
              
              
              
              164,431Net
      acquisition expenses
              
              –
              
              
              –
              
              
              56,827
              
              
              –
              
              
              
              56,827Operating
      expenses
              
              8,348
              
              
              90
              
              
              17,670
              
              
              –
              
              
              
              26,108Net
      foreign currency exchange gains
              
              –
              
              
              –
              
              
              (1,416
              )
              
              –
              
              
              
              (1,416
              )Interest
      expense
              
              –
              
              
              5,456
              
              
              –
              
              
              –
              
              
              
              5,456Total
      expenses
              
              8,348
              
              
              5,546
              
              
              237,512
              
              
              –
              
              
              
              251,406Income
      (loss) before income tax expense (benefit)
              
              (5,026
              )
              
              (4,945
              )
              
              105,322
              
              
              –
              
              
              
              95,351Income
      tax expense (benefit)
              
              –
              
              
              (1,224
              )
              
              5,925
              
              
              –
              
              
              
              4,701Income
      (loss) before equity in earnings of subsidiaries
              
              (5,026
              )
              
              (3,721
              )
              
              99,397
              
              
              –
              
              
              
              90,650Equity
      in earnings of subsidiaries
              
              95,676
              
              
              12,509
              
              
              15,925
              
              
              (124,110
              )
              
              
              –Net
      income
              
              90,650
              
              
              8,788
              
              
              115,322
              
              
              (124,110
              )
              
              
              90,650Preferred
      dividends
              
              2,602
              
              
              –
              
              
              –
              
              
              –
              
              
              
              2,602Net
      income attributable to common shareholders
              $
              88,048
              
              
              8,788
              
              
              115,322
              
              
              (124,110
              )
              
              $
              88,048
   Consolidating
      Statement of Operations
                For
      the Six Months Ended June 30, 2008
              Platinum
      Holdings
              
              Platinum
      Finance
              
              Non-guarantor
      Subsidiaries
              
              Consolidating
      Adjustments
              
              
              ConsolidatedRevenue:Net
      premiums earned
              $
              –
              
              
              –
              
              
              559,833
              
              
              –
              
              
              $
              559,833Net
      investment income
              
              855
              
              
              400
              
              
              94,739
              
              
              –
              
              
              
              95,994Net
      realized gains (losses) on investments
              
              –
              
              
              4
              
              
              (143
              )
              
              –
              
              
              
              (139
              )Other
      income (expense), net
              
              1,084
              
              
              –
              
              
              (5,290
              )
              
              –
              
              
              
              (4,206
              )Total
      revenue
              
              1,939
              
              
              404
              
              
              649,139
              
              
              –
              
              
              
              651,482Expenses:Net
      losses and loss adjustment expenses
              
              –
              
              
              –
              
              
              253,595
              
              
              –
              
              
              
              253,595Net
      acquisition expenses
              
              –
              
              
              –
              
              
              126,679
              
              
              –
              
              
              
              126,679Operating
      expenses
              
              13,816
              
              
              180
              
              
              32,794
              
              
              –
              
              
              
              46,790Net
      foreign currency exchange gains
              
              –
              
              
              –
              
              
              (2,871
              )
              
              –
              
              
              
              (2,871
              )Interest
      expense
              
              –
              
              
              9,501
              
              
              –
              
              
              –
              
              
              
              9,501Total
      expenses
              
              13,816
              
              
              9,681
              
              
              410,197
              
              
              –
              
              
              
              433,694Income
      (loss) before income tax expense (benefit)
              
              (11,877
              )
              
              (9,277
              )
              
              238,942
              
              
              –
              
              
              
              217,788Income
      tax expense (benefit)
              
              300
              
              
              (2,305
              )
              
              12,265
              
              
              –
              
              
              
              10,260Income
      (loss) before equity in earnings of subsidiaries
              
              (12,177
              )
              
              (6,972
              )
              
              226,677
              
              
              –
              
              
              
              207,528Equity
      in earnings of subsidiaries
              
              219,705
              
              
              25,426
              
              
              19,336
              
              
              (264,467
              )
              
              
              –Net
      income
              
              207,528
              
              
              18,454
              
              
              246,013
              
              
              (264,467
              )
              
              
              207,528Preferred
      dividends
              
              5,204
              
              
              –
              
              
              –
              
              
              –
              
              
              
              5,204Net
      income attributable to common shareholders
              $
              202,324
              
              
              18,454
              
              
              246,013
              
              
              (264,467
              )
              
              $
              202,324
 
 -
14 -
 
 Consolidating
      Statement of Operations
                  For
      the Six Months Ended June 30, 2007
                Platinum
      Holdings
                
                Platinum
      Finance
                
                Non-guarantor
      Subsidiaries
                
                Consolidating
      Adjustments
                
                
                ConsolidatedRevenue:Net
      premiums earned
                $
                –
                
                
                –
                
                
                580,766
                
                
                –
                
                
                $
                580,766Net
      investment income
                
                2,655
                
                
                1,239
                
                
                102,489
                
                
                –
                
                
                
                106,383Net
      realized gains (losses) on investments
                
                –
                
                
                –
                
                
                (1,657
                )
                
                –
                
                
                
                (1,657
                )Other
      income (expense), net
                
                1,855
                
                
                –
                
                
                (4,841
                )
                
                –
                
                
                
                (2,986
                )Total
      revenue
                
                4,510
                
                
                1,239
                
                
                676,757
                
                
                –
                
                
                
                682,506Expenses:Net
      losses and loss adjustment expenses
                
                –
                
                
                –
                
                
                346,344
                
                
                –
                
                
                
                346,344Net
      acquisition expenses
                
                –
                
                
                –
                
                
                104,947
                
                
                –
                
                
                
                104,947Operating
      expenses
                
                13,659
                
                
                186
                
                
                35,469
                
                
                –
                
                
                
                49,314Net
      foreign currency exchange gains
                
                –
                
                
                –
                
                
                (1,458
                )
                
                –
                
                
                
                (1,458
                )Interest
      expense
                
                –
                
                
                10,911
                
                
                –
                
                
                –
                
                
                
                10,911Total
      expenses
                
                13,659
                
                
                11,097
                
                
                485,302
                
                
                –
                
                
                
                510,058Income
      (loss) before income tax expense (benefit)
                
                (9,149
                )
                
                (9,858
                )
                
                191,455
                
                
                –
                
                
                
                172,448Income
      tax expense (benefit)
                
                –
                
                
                (3,406
                )
                
                12,371
                
                
                –
                
                
                
                8,965Income
      (loss) before equity in earnings of subsidiaries
                
                (9,149
                )
                
                (6,452
                )
                
                179,084
                
                
                –
                
                
                
                163,483Equity
      in earnings of subsidiaries
                
                172,632
                
                
                22,164
                
                
                25,406
                
                
                (220,202
                )
                
                
                –Net
      income
                
                163,483
                
                
                15,712
                
                
                204,490
                
                
                (220,202
                )
                
                
                163,483Preferred
      dividends
                
                5,204
                
                
                –
                
                
                –
                
                
                –
                
                
                
                5,204Net
      income attributable to common shareholders
                $
                158,279
                
                
                15,712
                
                
                204,490
                
                
                (220,202
                )
                
                $
                158,279
   Condensed
      Consolidating Statement of Cash Flows
                For
      the Six Months Ended June 30, 2008
              Platinum
                Holdings
              
              Platinum
      Finance
              
              Non-guarantor
                Subsidiaries
              
              Consolidating
      Adjustments
              
              
              ConsolidatedNet
      cash provided by (used in) operating activities
              $
              (6,712
              )
              
              (7,666
              )
              
              223,523
              
              
              –
              
              
              $
              209,145Investing
      Activities:Proceeds
      from sale of available-for-sale fixed maturity securities
              
              –
              
              
              –
              
              
              7,691
              
              
              –
              
              
              
              7,691Proceeds
      from maturity or paydown of available-for-sale fixed maturity
      securities
              
              –
              
              
              542
              
              
              668,018
              
              
              –
              
              
              
              668,560Acquisition
      of available-for-sale fixed maturities
              
              –
              
              
              –
              
              
              (820,720
              )
              
              –
              
              
              
              (820,720
              )Proceeds
      from sale of other invested asset
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              
              –Increase
      in short-term investments
              
              –
              
              
              –
              
              
              (113,019
              )
              
              –
              
              
              
              (113,019
              )Dividends
      from subsidiaries
              
              185,000
              
              
              –
              
              
              –
              
              
              (185,000
              )
              
              
              –Net
      cash provided by (used in) investing activities
              
              185,000
              
              
              542
              
              
              (258,030
              )
              
              (185,000
              )
              
              
              (257,488
              )Financing
      Activities:Dividends
      paid to preferred shareholders
              
              (5,204
              )
              
              –
              
              
              –
              
              
              –
              
              
              
              (5,204
              )Dividends
      paid to common shareholders
              
              (8,130
              )
              
              –
              
              
              (185,000
              )
              
              185,000
              
              
              
              (8,130
              )Proceeds
      from exercise of share options
              
              24,446
              
              
              –
              
              
              –
              
              
              –
              
              
              
              24,446Purchase
      of common shares
              
              (213,940
              )
              
              –
              
              
              –
              
              
              –
              
              
              
              (213,940
              )Net
      cash used in financing activities
              
              (202,828
              )
              
              –
              
              
              (185,000
              )
              
              185,000
              
              
              
              (202,828
              )Net
      decrease in cash and cash equivalents
              
              (24,540
              )
              
              (7,124
              )
              
              (219,507
              )
              
              –
              
              
              
              (251,171
              )Cash
      and cash equivalents at beginning of period
              
              39,592
              
              
              18,349
              
              
              1,018,338
              
              
              –
              
              
              
              1,076,279Cash
      and cash equivalents at end of period
              $
              15,052
              
              
              11,225
              
              
              798,831
              
              
              –
              
              
              $
              825,108
 
 -
15 -
   Condensed
      Consolidating Statement of Cash Flows
                  For
      the Six Months Ended June 30, 2007
              Platinum
                Holdings
              
              Platinum
      Finance
              
              Non-guarantor
                Subsidiaries
              
              Consolidating
      Adjustments
              
              
              ConsolidatedNet
      cash provided by (used in) operating activities
              $
              (6,853
              )
              
              (9,642
              )
              
              229,961
              
              
              –
              
              
              $
              213,466Investing
      Activities:Proceeds
      from sale of available-for-sale fixed maturity securities
              
              –
              
              
              
              
              
              15,887
              
              
              –
              
              
              
              15,887Proceeds
      from maturity or paydown of available-for-sale fixed maturity
      securities
              
              –
              
              
              1,475
              
              
              603,785
              
              
              –
              
              
              
              605,260Acquisition
      of available-for-sale fixed maturities
              
              –
              
              
              –
              
              
              (780,459
              )
              
              –
              
              
              
              (780,459
              )Proceeds
      from sale of other invested asset
              
              –
              
              
              –
              
              
              4,745
              
              
              –
              
              
              
              4,745Increase
      in short-term investments
              
              –
              
              
              –
              
              
              22,506
              
              
              –
              
              
              
              22,506Dividends
      from subsidiaries
              
              –
              
              
              10,000
              
              
              –
              
              
              (10,000
              )
              
              
              –Net
      cash provided by (used in) investing activities
              
              –
              
              
              11,475
              
              
              (133,536
              )
              
              (10,000
              )
              
              
              (132,061
              )Financing
      Activities:Dividends
      paid to preferred shareholders
              
              (5,204
              )
              
              –
              
              
              –
              
              
              –
              
              
              
              (5,204
              )Dividends
      paid to common shareholders
              
              (9,611
              )
              
              –
              
              
              (10,000
              )
              
              10,000
              
              
              
              (9,611
              )Proceeds
      from exercise of share options
              
              16,809
              
              
              –
              
              
              –
              
              
              –
              
              
              
              16,809Purchase
      of common shares
              
              (12,576
              )
              
              –
              
              
              –
              
              
              –
              
              
              
              (12,576
              )Net
      cash used in financing activities
              
              (10,582
              )
              
              –
              
              
              (10,000
              )
              
              10,000
              
              
              
              (10,582
              )Net
      increase (decrease) in cash and cash equivalents
              
              (17,435
              )
              
              1,833
              
              
              86,425
              
              
              –
              
              
              
              70,823Cash
      and cash equivalents at beginning of period
              
              106,039
              
              
              39,294
              
              
              706,319
              
              
              –
              
              
              
              851,652Cash
      and cash equivalents at end of period
              $
              88,604
              
              
              41,127
              
              
              792,744
              
              
              –
              
              
              $
              922,475
 
  7.
      Company Share
      Repurchase
  On August
4, 2004, our Board of Directors established a program to repurchase our common
shares.  On July 26, 2007, our Board of Directors approved an increase
in the then existing repurchase program to result in authority as of such date
to repurchase up to a total of $250,000,000 of our common
shares.  After repurchases of our common shares, on each of
October 25, 2007, February 21, 2008, April 23, 2008 and July 24,
2008, our Board of Directors approved additional increases in the repurchase
program to result in authority as of such dates to repurchase up to a total of
$250,000,000 of our common shares.  During the three months ended June
30, 2008, the Company repurchased 1,315,000 of its common shares in the open
market at an aggregate cost including commissions of $45,999,000 and a weighted
average cost including commissions of $34.98 per share.  During the
six months ended June 30, 2008, the Company repurchased 6,241,992 of its
common shares in the open market at an aggregate cost including commissions of
$213,940,000 and a weighted average cost including commissions of $34.27 per
share.  All of the common shares we repurchased were
canceled.
   -
16 -
   ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
  
 Business
Overview
  Platinum
Underwriters Holdings, Ltd. ("Platinum Holdings") is a Bermuda holding company
organized in 2002.  Platinum Holdings and its subsidiaries
(collectively, the "Company") operate through two licensed reinsurance
subsidiaries:  Platinum Underwriters Bermuda, Ltd. ("Platinum
Bermuda") and Platinum Underwriters Reinsurance, Inc. ("Platinum
US").  The terms "we", "us", and "our" also refer to Platinum Holdings
and its consolidated subsidiaries, unless the context otherwise
indicates.  We provide property and marine, casualty and finite risk
reinsurance coverages, through reinsurance intermediaries, to a diverse
clientele of insurers and select reinsurers on a worldwide
basis.   Through December 31, 2006, we also underwrote
business through Platinum Re (UK) Limited ("Platinum UK").  In 2007
Platinum UK ceased underwriting reinsurance business.
  The
following discussion and analysis should be read in conjunction with the
consolidated financial statements and related notes thereto and management's
discussion and analysis of financial condition and results of operations
included in our Annual Report on Form 10-K for the year ended December 31,
2007.  Our condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States ("U.S. GAAP").
  We write
property and casualty reinsurance.  Property reinsurance protects a
ceding company against financial loss arising out of damage to the insured’s
property or loss of its use caused by an insured peril.  Property
reinsurance covers damage principally to buildings and their contents and may be
in the form of catastrophe coverage or per-risk coverage.  Catastrophe
reinsurance coverage protects a ceding company against losses arising out of
multiple claims for a single event, while per-risk reinsurance coverage protects
a ceding company against loss arising out of a single claim for a single risk or
policy.  We also write marine reinsurance which protects a ceding
company against financial losses arising out of damage to ships and
cargo or damage caused by ships.  Also included in marine
are reinsurance contracts covering off-shore energy.  Casualty
reinsurance protects a ceding company against financial loss arising out of the
insured’s obligation to others for loss or damage to their persons or
property.  Examples of casualty coverages are umbrella liability,
general and product liability, professional liability, workers' compensation,
casualty clash, automobile liability, surety, trade credit, political risk and
accident and health.  Casualty reinsurance may also be in the form of
catastrophe and per-risk contracts.
  The
property and casualty reinsurance industry is highly competitive.  We
compete with reinsurers worldwide, many of which have greater financial,
marketing and management resources than we do.  Our competitors vary
by type of business.  Large multi-national and multi-line reinsurers
represent some of our competitors in all lines and classes, while specialty
reinsurance companies in the United States compete in selective
lines.  Bermuda-based reinsurers tend to be significant competitors on
property catastrophe business.  Lloyd’s of London syndicates are our
significant competitors on marine business.  For casualty and other
international classes of business, the large U.S. and European reinsurers are
our significant competitors.  Financial institutions have also created
alternative capital market products that compete with reinsurance products, such
as reinsurance securitization.
  The
reinsurance industry historically has been cyclical, characterized by periods of
price competition due to excessive underwriting capacity as well as periods of
favorable pricing due to shortages of underwriting capacity.  Cyclical
trends in the industry and the industry's profitability can also be
significantly affected by volatile developments, including natural and other
catastrophes, such as hurricanes, windstorms, earthquakes, floods, fires,
explosions and terrorist attacks, the frequency and severity of which are
inherently difficult to predict.  Property and casualty reinsurance
rates often rise in the aftermath of significant catastrophe
losses.  To the extent that actual claim liabilities are higher than
anticipated, the industry's capacity to write new business
diminishes.  The industry is also affected by changes in the
propensity of courts to expand insurance coverage and grant large liability
awards, as well as fluctuations in interest rates, inflation and other changes
in the economic environment that affect market prices of
investments.
   -
17 -
   Results of
Operations
  Three Months Ended
June 30, 2008 as Compared with the Three Months Ended June 30,
2007
  Net
income for the three months ended June 30, 2008 and 2007 was as follows
($ in thousands):
  2008
              
              2007
              
              IncreaseNet
      income
              $
              102,357
              
              
              90,650
              
              $
              11,707
 
 The
increase in net income in 2008 as compared with 2007 was primarily due to an
increase in net underwriting income of $24,419,000.  Net Underwriting
income consists of net premiums earned less net losses and loss adjustment
expenses ("LAE"), net acquisition expenses and operating costs related to
underwriting operations.  The increase in net underwriting income was
due to an increase in net favorable development and a decrease in major
catastrophe losses.  Actual reported losses were significantly less
than expected and gained sufficient credibility in the current period to reduce
estimated ultimate losses.  Net favorable development, which included
the development of prior years’ unpaid losses and LAE and the related impact on
premiums and commissions, was $36,826,000 and $22,193,000 in 2008 and 2007,
respectively.  We had no major catastrophe losses in 2008 as compared
with the estimated net adverse impacts in 2007 from European storm Kyrill and
from the June floods in the United Kingdom of $13,100,000.  Partially
offsetting the increase in net underwriting income was a decrease in net
investment income of $7,752,000, which resulted from lower yields on
investments.  Also, partially offsetting the increase in net
underwriting income was an increase in the foreign currency exchange loss of
$3,414,000 and an increase in other expenses of $4,021,000, primarily resulting
from the decline in fair value of fixed maturities in our trading
portfolio.
  Gross,
ceded and net premiums written and earned for the three months ended
June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              Increase
                (decrease)Gross
      premiums written
              $
              234,261
              
              
              294,462
              
              $
              (60,201
              )Ceded
      premiums written
              
              9,401
              
              
              6,739
              
              
              2,662Net
      premiums written
              
              224,860
              
              
              287,723
              
              
              (62,863
              )Gross
      premiums earned
              
              263,565
              
              
              301,159
              
              
              (37,594
              )Ceded
      premiums earned
              
              5,583
              
              
              5,241
              
              
              342Net
      premiums earned
              $
              257,982
              
              
              295,918
              
              $
              (37,936
              )
 
 The
decrease in gross premiums written in 2008 as compared with 2007 was primarily
attributable to decreases in gross premiums written across most classes in the
Casualty segment, partially offset by an increase in gross premiums written in
the Property and Marine segment.  The comparison of gross premiums in
2008 with 2007 was affected by decreases in estimates in 2008 of net premiums
written of $14,912,000 and net premiums earned of $16,160,000 that related to
business written in prior underwriting years, compared with insignificant
changes in 2007.  Ceded premium written increased as we purchased
additional retrocession protection for our North American property catastrophe
business.  The decrease in net premiums earned was due to the
decreases in premiums written.
  Net
investment income for the three months ended June 30, 2008 and 2007 was
$46,932,000 and $54,684,000, respectively.  Net investment income
decreased in 2008 as compared with 2007 primarily due to a decrease in yields on
invested assets.  Net investment income includes interest earned on
funds held of $803,000 and $1,685,000 in 2008 and 2007,
respectively.  Net realized losses on investments were $184,000 and
$1,639,000 in 2008 and 2007, respectively.  Net realized gains and
losses on investments primarily resulted from our efforts to manage credit
quality.
  Other
expense for the three months ended June 30, 2008 and 2007 were $6,227,000
and $2,206,000, respectively.  Other expense in 2008 included
$5,983,000 of net unrealized losses relating to changes in fair value of fixed
maturity securities classified as trading, an expense of $960,000 for the fair
value adjustment of derivative contracts, and $125,000 of net expense on
reinsurance contracts accounted for as deposits.  Our trading
portfolio consists of non-U.S. dollar denominated securities, primarily Euro and
U.K. government bonds and during the quarter yields on those securities
increased resulting in a decline in fair value.  Other expense in 2007
included $2,048,000 of net unrealized losses relating to changes in the fair
value of fixed maturity securities classified as trading and $113,000 of net
expense on reinsurance contracts accounted for as deposits.
   -
18 -
   Net
losses and LAE and the resulting net loss and LAE ratios for the three months
ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              DecreaseNet
      losses and LAE
              $
              93,392
              
              
              
              164,431
              
              
              $
              71,039Net
      loss and LAE ratios
              
              36.2
              %
              
              
              55.6
              %
              
              19.4 points
 
 The
decreases in net losses and LAE and the related ratios in 2008 as compared with
2007 were due to a decrease in major catastrophe losses and an increase in net
favorable loss development.  We had no major catastrophe losses in
2008 as compared with $14,700,000 of losses in 2007 from European storm Kyrill
and June floods in the United Kingdom, which, with related premium adjustments,
increased the net loss and LAE ratio in 2007 by 5.0 points.  Net
favorable loss development was $47,355,000 in 2008 as compared with $24,615,000
in 2007.  Net favorable loss development and premium adjustments
related to prior years’ losses decreased the net loss and LAE ratios in 2008 and
2007 by 18.6 and 8.3 points, respectively.  Rates across most of our
classes of business have declined resulting in higher net loss and LAE ratios in
2008.  However, net premiums earned increased in the Property and
Marine segment and decreased in the Casualty segment.  Net loss ratios
are generally higher in the Casualty segment, in the absence of major
catastrophe losses, so as a result these changes in the mix of business between
these two segments contributed to a lower net loss ratio.
  Net
acquisition expenses and resulting net acquisition expense ratios for the three
months ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              IncreaseNet
      acquisition expenses
              $
              66,137
              
              
              
              56,827
              
              
              $
              9,310Net
      acquisition expense ratios
              
              25.6
              %
              
              
              19.2
              %
              
              6.4
      points
 
 The
increases in net acquisition expenses and the related net acquisition expense
ratio in 2008 as compared with 2007 were primarily due to increases in
commissions related to prior years.  Net increases in commissions
related to prior years were $13,387,000 and $2,363,000 in 2008 and 2007,
respectively.  The net adjustments to commissions and premiums related
to prior years’ losses decreased the net acquisition ratios by 5.2 points and
0.8 points in 2008 and 2007, respectively.  The increase in the net
acquisition expense ratio was also impacted by changes in the mix of business
within both the Property and Marine and Casualty segments.
  Operating
expenses were $25,100,000 and $26,108,000 for the three months ended
June 30, 2008 and 2007, respectively.  Operating expenses include
costs such as salaries, rent and like items related to reinsurance operations as
well as costs associated with Platinum Holdings and its non-operating
intermediate holding company subsidiaries.  The decrease in expenses
in 2008 as compared with 2007 was primarily due to the expiration on September
30, 2007 of the Services and Capacity Reservation Agreement with Renaissance Re
Holdings Ltd. ("RenaissanceRe") effective October 1, 2002 (the "RenRe
Agreement") pursuant to which RenaissanceRe provided consulting services to us
in connection with our property catastrophe book of business.  In 2007
we incurred fees of $2,172,000 under the RenRe Agreement.  Partially
offsetting this decrease was an increase in performance based compensation
accruals in 2008 as compared with 2007.
  Net
foreign currency exchange (gains) losses for the three months ended
June 30, 2008 and 2007 were $1,998,000 and ($1,416,000),
respectively.  We routinely transact business in various currencies
other than the U.S. dollar.  Foreign currency exchange gains and
losses result from the re-valuation into U.S. dollars of assets and liabilities
denominated in currencies other than the U.S. dollar.  Net foreign
currency exchange gains and losses arise as a result of fluctuations in the
amounts of assets and liabilities denominated in foreign currencies as well as
fluctuations in the currency exchange rates.  We periodically monitor
our foreign currency exposures and may purchase or sell foreign currency
denominated assets based on these exposures.  The net foreign currency
exchange losses in 2008 were the result of us holding more non-U.S. dollar
denominated assets than non-U.S. dollar denominated liabilities, primarily the
Euro, as the U.S. dollar strengthened against the Euro.
  Interest
expense for the three months ended June 30, 2008 and 2007 was $4,751,000
and $5,456,000, respectively.  The decrease in interest expense in
2008 as compared with 2007 was the result of a reduction in our debt obligations
outstanding in 2008 as compared to 2007.
  Income
tax expense and the effective income tax rates for the three months ended
June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              
              2007
              
              
              Increase
                (decrease)Income
      tax expense
              $
              4,768
              
              
              
              4,701
              
              
              $
              67Effective
      income tax rates
              
              4.5
              %
              
              
              4.9
              %
              
              (0.4)
      points
 
 The
increase in income tax expense for 2008 as compared with 2007 was due to the
increase in taxable income generated by our subsidiaries that operate in taxable
jurisdictions.  The decrease in the effective income tax rate was due
to a greater portion of income before income tax expense being generated by
Platinum Holdings and Platinum Bermuda in 2007, which are not subject to
corporate income tax.  In 2008, the percentage of the combined net
income derived from Platinum Holdings and Platinum Bermuda was 87.1% as compared
with 77.2% in 2007.  The effective tax rate in any given year is based
on income before income tax expense of our subsidiaries that operate in various
jurisdictions, each of which has its own corporate income tax rate.
   -
19 -
   Six Months Ended
June 30, 2008 as Compared with the Six Months Ended June 30,
2007
  Net
income for the six months ended June 30, 2008 and 2007 was as follows
($ in thousands):
  2008
              
              
              2007
              
              
              IncreaseNet
      income
              $
              207,528
              
              
              
              163,483
              
              
              $
              44,045
 
 The
increase in net income in 2008 as compared with 2007 was primarily due to an
increase in underwriting income of $52,788,000.  The increase in
underwriting income was due to an increase in net favorable development and a
decrease in major catastrophe losses.  Net favorable development was
$66,281,000 and $36,088,000 in 2008 and 2007, respectively.  The
estimated net adverse impact in 2008 from European storm Emma was $5,356,000 as
compared to the estimated net adverse impact of $33,100,000 from European storm
Kyrill and the June floods in the United Kingdom in 2007.  Partially
offsetting the increase in underwriting income in 2008 was a decrease in
investment income of $10,389,000, which was the result of a decrease in
investment yields.
  Gross,
ceded and net premiums written and earned for the six months ended June 30, 2008
and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              Increase
                (decrease)Gross
      premiums written
              $
              534,615
              
              
              597,597
              
              $
              (62,982
              )Ceded
      premiums written
              
              13,484
              
              
              10,957
              
              
              2,527Net
      premiums written
              
              521,131
              
              
              586,640
              
              
              (65,509
              )Gross
      premiums earned
              
              570,440
              
              
              593,182
              
              
              (22,742
              )Ceded
      premiums earned
              
              10,607
              
              
              12,416
              
              
              (1,809
              )Net
      premiums earned
              $
              559,833
              
              
              580,766
              
              $
              (20,933
              )
 
 The
decrease in gross premiums written in 2008 as compared with 2007 was primarily
attributable to decreases in gross premiums written across most classes in the
Casualty segment, partially offset by an increase in gross written premiums in
the Property and Marine segment.  Ceded premiums written increased as
we purchased additional retrocession protection for our North American property
catastrophe business.  The decrease in net premiums earned was due to
a decrease in net premiums written.
  Net
investment income for the six months ended June 30, 2008 and 2007 was
$95,994,000 and $106,383,000, respectively.  Net investment income
decreased in 2008 as compared with 2007 due to a decrease in yields on invested
assets.  Net investment income included interest earned on funds held
of $1,640,000 and $3,390,000 in 2008 and 2007,
respectively.  Net realized losses on investments were $139,000 and
$1,657,000 in 2008 and 2007, respectively.  Net realized gains and
losses on investments primarily resulted from our efforts to manage credit
quality.
  Other
expense for the six months ended June 30, 2008 and 2007 was $4,206,000 and
$2,986,000, respectively.  Other expense in 2008 included $3,057,000
of net unrealized losses relating to changes in fair value of fixed maturity
securities classified as trading, an expense of $1,770,000 for the fair value
adjustment of derivative contracts, and $248,000 of net expense on reinsurance
contracts accounted for as deposits.  Other expense in 2007 included
$2,713,000 of net unrealized losses relating to changes in the fair value of
fixed maturity securities classified as trading and $228,000 of net expense
relating to reinsurance contracts accounted for as deposits.
  Net
losses and LAE and the resulting net loss and LAE ratios for the six months
ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              DecreaseNet
      losses and LAE
              $
              253,595
              
              
              
              346,344
              
              
              $
              92,749Net
      loss and LAE ratios
              
              45.3
              %
              
              
              59.6
              %
              
              14.3
      points
   -
20 -
 
 The
decreases in net losses and LAE and the related ratios in 2008 as compared with
2007 were due to a decrease in major catastrophe losses and an increase in net
favorable loss development.  The decrease in net losses and LAE is
also due to the decrease in net premiums earned.  European storm Emma
resulted in $7,320,000 of losses in 2008, which, with related premium
adjustments, increased the net loss and LAE ratio by 1.3
points.  European storm Kyrill and the June floods in the United
Kingdom resulted in net losses of $39,200,000 in 2007 which, with related
premium adjustments, increased the net loss and LAE ratio by 6.8
points.  Net losses and LAE and the resulting net loss and LAE ratios
were also impacted by net favorable loss development of $76,441,000 in 2008 and
$37,192,000 in 2007.  Net favorable loss development and premium
adjustments related to prior years’ losses decreased the net loss and LAE ratios
in 2008 and 2007 by 13.9 and 6.4 points, respectively.  Rates across
most of our classes of business have declined resulting in higher net loss and
LAE ratios.  However, net premiums earned increased in the Property
and Marine segment and decreased in the Casualty segment.  Net loss
ratios are generally lower in the Property and Marine segment in
the absence of major catastrophe losses so this change in the mix of business
offset the effect of the overall decline in rates.
  Net
acquisition expenses and resulting net acquisition expense ratios for the six
months ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              IncreaseNet
      acquisition expenses
              $
              126,679
              
              
              
              104,947
              
              
              $
              21,732Net
      acquisition expense ratios
              
              22.6
              %
              
              
              18.1
              %
              
              4.5
      points
 
 The
increases in net acquisition expenses and the related net acquisition expense
ratio in 2008 as compared with 2007 were primarily due to increases in
commissions related to prior years.  Net increases in commissions in
2008 relating to prior years were $18,955,000 in 2008, as compared with
insignificant adjustments in 2007.  Net adjustments to commissions and
premiums related to prior years’ losses decreased the net acquisition ratio by
3.4 points in 2008.  The increase in the net acquisition expense ratio
was also impacted by changes in the mix of business within both the Property and
Marine and Casualty segments.
  Operating
expenses for the six months ended June 30, 2008 and 2007 were $46,790,000
and $49,314,000, respectively.  The decrease in 2008 as compared with
2007 was primarily due to the expiration on September 30, 2007 of the RenRe
Agreement.  In 2007 we incurred fees of $5,052,000 under the RenRe
Agreement.  Partially offsetting this decrease was an increase in
performance based compensation in 2008 as compared with 2007.
  Net
foreign currency exchange gains for the six months ended June 30, 2008 and
2007 were $2,871,000 and $1,458,000, respectively.  Foreign currency
exchange gains and losses result from the re-valuation into U.S. dollars of
assets and liabilities denominated in currencies other than the U.S.
dollar.  The net foreign currency exchange gains in 2008 were the
result of our holding more non-U.S. dollar denominated assets than non-U.S.
dollar denominated liabilities, primarily the Euro, in the normal course of
doing business in these currencies, while the U.S. dollar declined in value
against these currencies.
  Interest
expense for the six months ended June 30, 2008 and 2007 was $9,501,000 and
$10,911,000, respectively.  The decrease in interest expense was the
result of a reduction in our debt obligations outstanding in 2008 as compared to
2007.
  Income
tax expense and the effective income tax rates for the six months ended
June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              
              2007
              
              
              Increase
                (decrease)Income
      tax expense
              $
              10,260
              
              
              
              8,965
              
              
              $
              1,295Effective
      income tax rates
              
              4.7
              %
              
              
              5.2
              %
              
              (0.5)
      points
 
 The
increase in income tax expense in 2008 as compared with 2007 was due to the
increase in taxable income generated by our subsidiaries that operate in taxable
jurisdictions.  The decrease in the effective income tax rate was the
result of a greater portion of income before income tax expense being generated
by Platinum Holdings and Platinum Bermuda in 2008, which are not subject to
corporate income tax.  In 2008, the percentage of the combined net
income before income tax expense derived from Platinum Holdings and Platinum
Bermuda was 85.5% as compared to 79.0% in 2007.  The effective tax
rate in any given period is based on income before income tax expense of our
subsidiaries that operate in various taxable jurisdictions, each of which has
its own corporate income tax rate.
  Segment
Information
  We
conduct our worldwide reinsurance business through three operating segments:
Property and Marine, Casualty and Finite Risk.  In managing our
operating segments, we use measures such as underwriting income and underwriting
ratios to evaluate segment performance.  We do not allocate by segment
our assets or certain income and expenses such as investment income, interest
expense and certain corporate expenses.  Total underwriting income is
reconciled to income before income tax expense.  The measures we use
in evaluating our operating segments should not be used as a substitute for
measures determined under U.S. GAAP.  The following table summarizes
underwriting activity and ratios for the three operating segments for the three
and six months ended June 30, 2008 and 2007 ($ in
thousands):
   -
21 -
   Property
                and
      Marine
              
              Casualty
              
              Finite
      Risk
              
              
              TotalThree months ended
      June 30, 2008:Net
      premiums written
              $
              118,588
              
              
              102,893
              
              
              3,379
              
              
              $
              224,860Net
      premiums earned
              
              141,716
              
              
              113,245
              
              
              3,021
              
              
              
              257,982Net
      losses and LAE
              
              33,367
              
              
              66,783
              
              
              (6,758
              )
              
              
              93,392Net
      acquisition expenses
              
              24,774
              
              
              32,214
              
              
              9,149
              
              
              
              66,137Other
      underwriting expenses
              
              9,635
              
              
              6,991
              
              
              365
              
              
              
              16,991Segment
      underwriting income
              $
              73,940
              
              
              7,257
              
              
              265
              
              
              
              81,462Net
      investment income
              
              
              
              46,932Net
      realized losses on investments
              
              
              
              (184
              )Net
      foreign currency exchange losses
              
              
              
              (1,998
              )Other
      expense
              
              
              
              (6,227
              )Corporate
      expenses not allocated to segments
              
              
              
              (8,109
              )Interest
      expense
              
              
              
              (4,751
              )Income
      before income tax expense
              
              
              $
              107,125Ratios:Net
      loss and LAE
              
              23.5
              %
              
              59.0
              %
              
              (223.7
              %)
              
              
              36.2
              %Net
      acquisition expense
              
              17.5
              %
              
              28.4
              %
              
              302.8
              %
              
              
              25.6
              %Other
      underwriting expense
              
              6.8
              %
              
              6.2
              %
              
              12.1
              %
              
              
              6.6
              %Combined
              
              47.8
              %
              
              93.6
              %
              
              91.2
              %
              
              
              68.4
              %Three months ended
      June 30, 2007:Net
      premiums written
              $
              119,226
              
              
              162,548
              
              
              5,949
              
              
              $
              287,723Net
      premiums earned
              
              125,136
              
              
              163,845
              
              
              6,937
              
              
              
              295,918Net
      losses and LAE
              
              43,242
              
              
              117,993
              
              
              3,196
              
              
              
              164,431Net
      acquisition expenses
              
              16,264
              
              
              40,061
              
              
              502
              
              
              
              56,827Other
      underwriting expenses
              
              10,582
              
              
              6,442
              
              
              593
              
              
              
              17,617Segment
      underwriting income (loss)
              $
              55,048
              
              
              (651
              )
              
              2,646
              
              
              
              57,043Net
      investment income
              
              
              
              54,684Net
      realized gains on investments
              
              
              
              (1,639
              )Net
      foreign currency exchange gains
              
              
              
              1,416Other
      expense
              
              
              
              (2,206
              )Corporate
      expenses not allocated to segments
              
              
              
              (8,491
              )Interest
      expense
              
              
              
              (5,456
              )Income
      before income tax expense
              
              
              $
              95,351Ratios:Net
      loss and LAE
              
              34.6
              %
              
              72.0
              %
              
              46.1
              %
              
              
              55.6
              %Acquisition
      expense
              
              13.0
              %
              
              24.5
              %
              
              7.2
              %
              
              
              19.2
              %Other
      underwriting expense
              
              8.5
              %
              
              3.9
              %
              
              8.5
              %
              
              
              6.0
              %Combined
              
              56.1
              %
              
              100.4
              %
              
              61.8
              %
              
              
              80.8
              %
   -
22 -
   Property
                and
      Marine
              
              
              Casualty
              
              
              Finite
      Risk
              
              
              
              TotalSix Months Ended
      June 30, 2008:Net
      premiums written
              $
              287,405
              
              
              228,469
              
              
              5,257
              
              
              $
              521,131Net
      premiums earned
              
              295,106
              
              
              260,740
              
              
              3,987
              
              
              
              559,833Net
      losses and LAE
              
              95,406
              
              
              166,176
              
              
              (7,987
              )
              
              
              253,595Net
      acquisition expenses
              
              45,428
              
              
              69,702
              
              
              11,549
              
              
              
              126,679Other
      underwriting expenses
              
              18,231
              
              
              13,786
              
              
              675
              
              
              
              32,692Segment
      underwriting income (loss)
              $
              136,041
              
              
              11,076
              
              
              (
      250
              )
              
              
              146,867Net
      investment income
              
              
              
              95,994Net
      realized losses on investments
              
              
              
              (
      139
              )Net
      foreign currency exchange gains
              
              
              
              2,871Other
      expense
              
              
              
              (4,206
              )Corporate
      expenses not allocated to segments
              
              
              
              (14,098
              )Interest
      expense
              
              
              
              (9,501
              )Income
      before income tax expense
              
              
              $
              217,788Ratios:Net
      loss and LAE
              
              32.3
              %
              
              63.7
              %
              
              (200.3
              %)
              
              
              45.3
              %Net
      acquisition expense
              
              15.4
              %
              
              26.7
              %
              
              289.7
              %
              
              
              22.6
              %Other
      underwriting expense
              
              6.2
              %
              
              5.3
              %
              
              16.9
              %
              
              
              5.8
              %Combined
              
              53.9
              %
              
              95.7
              %
              
              106.3
              %
              
              
              73.7
              %Six Months Ended
      June 30, 2007:Net
      premiums written
              $
              256,880
              
              
              314,731
              
              
              15,029
              
              
              $
              586,640Net
      premiums earned
              
              244,846
              
              
              317,864
              
              
              18,056
              
              
              
              580,766Net
      losses and LAE
              
              105,869
              
              
              230,375
              
              
              10,100
              
              
              
              346,344Net
      acquisition expenses
              
              32,199
              
              
              72,096
              
              
              652
              
              
              
              104,947Other
      underwriting expenses
              
              20,610
              
              
              13,159
              
              
              1,627
              
              
              
              35,396Segment
      underwriting income
              $
              86,168
              
              
              2,234
              
              
              5,677
              
              
              
              94,079Net
      investment income
              
              
              
              106,383Net
      realized losses on investments
              
              
              
              (1,657
              )Net
      foreign currency exchange gains
              
              
              
              1,458Other
      expense
              
              
              
              (2,986
              )Corporate
      expenses not allocated to segments
              
              
              
              (13,918
              )Interest
      expense
              
              
              
              (10,911
              )Income
      before income tax expense
              
              
              $
              172,448Ratios:Net
      loss and LAE
              
              43.2
              %
              
              72.5
              %
              
              55.9
              %
              
              
              59.6
              %Net
      acquisition expense
              
              13.2
              %
              
              22.7
              %
              
              3.6
              %
              
              
              18.1
              %Other
      underwriting expense
              
              8.4
              %
              
              4.1
              %
              
              9.0
              %
              
              
              6.1
              %Combined
              
              64.8
              %
              
              99.3
              %
              
              68.5
              %
              
              
              83.8
              %
   -
23 -
   Property and Marine
  The
Property and Marine operating segment includes principally property (including
crop) and marine reinsurance coverages that are written in the United States and
international markets.  This business includes property catastrophe
excess-of-loss contracts, property per-risk excess-of-loss contracts and
property proportional contracts.  This operating segment represented
52.7% and 41.4% of our net premiums written during the three months ended June
30, 2008 and 2007, respectively, and 55.2% and 43.8% of our net premiums written
in the six months ended June 30, 2008 and 2007, respectively.
  Three Months Ended
June 30, 2008 as Compared with the Three Months Ended June 30,
2007
  Gross,
ceded and net premiums written and earned for the three months ended
June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              Increase
                (decrease)Gross
      premiums written
              $
              128,022
              
              
              125,937
              
              $
              2,085Ceded
      premiums written
              
              9,434
              
              
              6,711
              
              
              2,723Net
      premiums written
              
              118,588
              
              
              119,226
              
              
              (
      638
              )Gross
      premiums earned
              
              147,332
              
              
              130,363
              
              
              16,969Ceded
      premiums earned
              
              5,616
              
              
              5,227
              
              
              389Net
      premiums earned
              $
              141,716
              
              
              125,136
              
              $
              16,580
 
 The
increase in gross premiums written in 2008 as compared with 2007 was primarily
due to an increase in North American crop business which was substantially
offset by decreases in North American property and marine as well as decreases
in estimates of net premiums written related to business written in prior
underwriting years.  The decreases in estimates in 2008 of net
premiums written and net premiums earned were $4,610,000 and $2,653,000,
respectively.  The increase in ceded premiums written was attributable
to the purchase of additional retrocession protection for our North American
property catastrophe business.  Net premiums earned in 2008 increased
primarily as a result of increases in net premiums written in prior
quarters.
  Net
losses and LAE and the resulting net loss and LAE ratios for the three months
ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              DecreaseNet
      losses and LAE
              $
              33,367
              
              
              
              43,242
              
              
              $
              9,875Net
      loss and LAE ratios
              
              23.5
              %
              
              
              34.6
              %
              
              11.1
      points
 
 The
decreases in net losses and LAE and the related ratios in 2008 as compared with
2007 were due to a decrease in major catastrophe losses and an increase in net
favorable loss development.  Net favorable loss development was
$22,857,000 and $18,756,000 in 2008 and 2007, respectively.  Net
favorable loss development and premium adjustments related to prior years’
losses decreased the net loss and LAE ratios in 2008 and 2007 by 16.4 and 14.9
points, respectively.  We had no significant net losses from major
catastrophes in 2008 as compared with losses of $14,700,000 in 2007 from
European storm Kyrill and from the June floods in the United Kingdom, which,
with related premium adjustments, increased the net loss and LAE ratio by 11.9
points.  Exclusive of the catastrophe losses and net favorable loss
development, the net loss and LAE ratio increased by approximately 2.1 points in
2008 as compared to 2007.  Expected loss ratios for the 2008
underwriting year for most classes were higher than for the 2007 underwriting
year due to decreasing rates.  The net loss and LAE ratios were also
affected by changes in the mix of business.
  Net
acquisition expenses and resulting net acquisition expense ratios for the three
months ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              IncreaseNet
      acquisition expenses
              $
              24,774
              
              
              
              16,264
              
              
              $
              8,510Net
      acquisition expense ratios
              
              17.5
              %
              
              
              13.0
              %
              
              4.5
      points
 
 The
increase in net acquisition expenses in 2008 as compared with 2007 was primarily
due to an increase in net premiums earned.  The increase in the net
acquisition expense ratio was due in part to an increase in commissions related
to prior years.  Net increases in commissions in 2008 relating to
prior years were $2,875,000 in 2008, as compared with insignificant adjustments
in 2007.  Net adjustments to commissions and premiums related to prior
years’ losses decreased the net acquisition ratio by 2.1 points in
2008.  The increase in the net acquisition expense ratios was also due
to changes in the mix of business.
  Other
underwriting expenses in 2008 and 2007 were $9,635,000 and $10,582,000,
respectively.  The decrease in 2008 as compared with 2007 was
primarily due to the expiration of the RenRe Agreement on September 30,
2007.  Other underwriting expenses in 2007 included fees of
$2,172,000, relating to the RenRe Agreement.  This decrease was
partially offset by increased performance based compensation accruals allocated
to the Property and Marine segment.
   -
24 -
   Six Months Ended
June 30, 2008 as Compared with the Six Months Ended June 30,
2007
  Gross,
ceded and net premiums written and earned for the six months ended June 30,
2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              Increase
                (decrease)Gross
      premiums written
              $
              300,922
              
              
              269,728
              
              $
              31,194Ceded
      premiums written
              
              13,517
              
              
              12,848
              
              
              669Net
      premiums written
              
              287,405
              
              
              256,880
              
              
              30,525Gross
      premiums earned
              
              305,746
              
              
              259,180
              
              
              46,566Ceded
      premiums earned
              
              10,640
              
              
              14,334
              
              
              (3,694
              )Net
      premiums earned
              $
              295,106
              
              
              244,846
              
              $
              50,260
 
 The
increase in gross premiums written in 2008 as compared with 2007 was primarily
due to an increase in North American crop business.  In addition,
there was an increase in reinstatement premiums in the ocean marine class
associated with large loss activity.  The increase in ceded premiums
written was attributable to the purchase of additional retrocession protection
for our North American property catastrophe business.  This increase
was partially offset by a decrease that resulted from the non-renewal in 2007 of
a quota share retrocessional agreement under which we ceded 30% of our property
catastrophe business.  Net premiums earned in 2008 increased primarily
as a result of the increase in net premiums written.
  Net
losses and LAE and the resulting net loss and LAE ratios for the six months
ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              DecreaseNet
      losses and LAE
              $
              95,406
              
              
              
              105,869
              
              
              $
              10,463Net
      loss and LAE ratios
              
              32.3
              %
              
              
              43.2
              %
              
              10.9
      points
 
 The
decreases in net losses and LAE and the related ratios in 2008 as compared to
2007 were due to a decrease in major catastrophe losses and an increase in net
favorable loss development.  European storm Emma resulted in
$7,320,000 of losses in 2008 which, with related premium adjustments, increased
the net loss and LAE ratio by 2.5 points, compared to European storm Kyrill and
the June floods in the United Kingdom that resulted in $39,200,000 of losses in
2007, which, with related premium adjustments, increased the net loss and LAE
ratio by 16.4 points.  Net losses and LAE and the resulting net loss
and LAE ratios were also impacted by net favorable loss development of
$38,088,000 in 2008 as compared with $26,951,000 during 2007.  Net
favorable loss development and premium adjustments related to prior years’
losses decreased the net loss and LAE ratios in 2008 and 2007 by 13.3 and 11.0
points, respectively.  Exclusive of losses related to European storms
Emma and Kyrill, the June floods in the United Kingdom and net favorable
development, the net loss and LAE ratio increased by approximately 5.2 points
due primarily to an increase in crop quota share business that has a higher
expected loss ratio than the remainder of the segment.  In addition,
expected loss ratios for the 2008 underwriting year for most classes were higher
than for the 2007 underwriting year due to decreasing rates.  The net
loss and LAE ratios were also affected by other changes in the mix of
business.
  Net
acquisition expenses and the resulting net acquisition expense ratios for the
six months ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              IncreaseNet
      acquisition expenses
              $
              45,428
              
              
              
              32,199
              
              
              $
              13,229Net
      acquisition expense ratios
              
              15.4
              %
              
              
              13.2
              %
              
              2.2
      points
 
 The
increase in net acquisition expenses in 2008 as compared with 2007 was due, in
part, to an increase in net premiums earned.  The net acquisition
expenses and resulting net acquisition expense ratio in 2008 were also affected
by an increase in commissions related to prior years.  Net increases
in commissions related to prior years were $3,045,000 and $465,000 in 2008 and
2007, respectively.  The net adjustments to commissions and premiums
related to prior years’ losses increased the net acquisition ratio by 1.1 points
in 2008, and decreased the ratio by 0.2 points in 2007.  The increase
in the net acquisition expense ratio in 2008 as compared with 2007 was also due
to changes in the mix of business.
  Other
underwriting expenses in 2008 and 2007 were $18,231,000 and $20,610,000
respectively.  The decrease in 2008 as compared with 2007 was
primarily due to the expiration of the RenRe Agreement on September 30,
2007.  Other underwriting expenses in 2007 included fees of
$5,052,000, relating to the RenRe Agreement.  This decrease was
partially offset by increased performance based compensation accruals allocated
to the Property and Marine segment.
   -
25 -
   Casualty
  The
Casualty operating segment principally includes reinsurance contracts that cover
umbrella liability, general and product liability, professional liability,
workers' compensation, casualty clash, automobile liability, surety, trade
credit, political risk and accident and health.  This operating
segment represented 45.8% and 56.5% of our net premiums written during the three
months ended June 30, 2008 and 2007, respectively, and 43.8% and 53.6% of
our net premiums written during the six months ended June 30, 2008 and
2007, respectively.
  Three Months Ended
June 30, 2008 as Compared with the Three Months Ended June 30,
2007
  Gross,
ceded and net premiums written and earned for the three months ended
June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              DecreaseGross
      premiums written
              $
              102,860
              
              
              162,576
              
              $
              59,716Ceded
      premiums written
              
              (33
              )
              
              28
              
              
              61Net
      premiums written
              
              102,893
              
              
              162,548
              
              
              59,655Gross
      premiums earned
              
              113,212
              
              
              163,859
              
              
              50,647Ceded
      premiums earned
              
              (33
              )
              
              14
              
              
              47Net
      premiums earned
              $
              113,245
              
              
              163,845
              
              $
              50,600
 
 The
decrease in net premiums written in 2008 as compared with 2007 was primarily due
to decreases in business underwritten in 2007 and 2008 across most North
American casualty classes, with the most significant decreases in the North
American excess classes.  The decrease was the result of fewer
opportunities that met our underwriting standards.  The decreases in
premiums written and earned were also impacted by decreases in estimates of net
premiums written related to business written in prior underwriting
years.  The decreases in estimates in 2008 of net premiums written and
net premiums earned were $10,279,000 and $13,484,000,
respectively.  The decrease in net premiums earned was the result of
the decrease in net premiums written.  Net premiums written and earned
were also affected by changes in the mix of business and the structure of the
underlying reinsurance contracts.
  Net
losses and LAE and the resulting net loss and LAE ratios for the three months
ended June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              
              2007
              
              
              DecreaseNet
      losses and LAE
              $
              66,783
              
              
              
              117,993
              
              
              $
              51,210Net
      loss and LAE ratios
              
              59.0
              %
              
              
              72.0
              %
              
              13.0
      points
 
 The
decrease in net losses and LAE in 2008 as compared with 2007 was primarily due
to the decrease in net premiums earned and an increase in net favorable loss
development.  Net favorable loss development was $15,567,000 in 2008
as compared with $2,033,000 in 2007.  Net favorable loss development
and premium adjustments related to prior years’ losses decreased the net loss
and LAE ratios in 2008 and 2007 by 13.8 and 1.2 points,
respectively.  Rates across most of our classes of business have
declined resulting in higher net loss and LAE ratios.  However, the
decrease in estimated premiums of $13,484,000 related to casualty contracts with
loss ratios higher than the remainder of the segment contributed to the decline
in the loss ratio.  Also impacting the loss ratio were other changes
in the mix of business.
  Net
acquisition expenses and resulting net acquisition expense ratios for the three
months ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              Increase
                (decrease)Net
      acquisition expenses
              $
              32,214
              
              
              
              40,061
              
              
              $
              (7,847
              )Net
      acquisition expense ratios
              
              28.4
              %
              
              
              24.5
              %
              
              3.9
      points
 
 The
decrease in net acquisition expenses in 2008 as compared with 2007 was due to
the decrease in net premiums earned.  The increase in the net
acquisition expense ratio was due, in part, to increases in commissions in 2008
relating to prior years and to deteriorating terms and conditions that have
generally resulted in higher commission and brokerage rates.  Net
increases in commissions in 2008 relating to prior years were $1,994,000,
representing 1.8% of net premiums earned as compared with increases of $607,000
in 2007, representing 0.4% of net premiums earned.  Net acquisition
expense ratios were also impacted by changes in the mix of
business.
  Other
underwriting expenses for the three months ended June 30, 2008 and 2007 were
$6,991,000 and $6,442,000, respectively.  This increase was primarily
due to increased performance based compensation accruals allocated to the
Casualty segment.
   -
26 -
  Six Months Ended
June 30, 2008 as Compared with the Six Months Ended June 30,
2007
  Gross,
ceded and net premiums written and earned for the six months ended June 30,
2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              DecreaseGross
      premiums written
              $
              228,436
              
              
              314,782
              
              $
              86,346Ceded
      premiums written
              
              (33
              )
              
              51
              
              
              84Net
      premiums written
              
              228,469
              
              
              314,731
              
              
              86,262Gross
      premiums earned
              
              260,707
              
              
              317,888
              
              
              57,181Ceded
      premiums earned
              
              (33
              )
              
              24
              
              
              57Net
      premiums earned
              $
              260,740
              
              
              317,864
              
              $
              57,124
 
 The
decrease in net premiums written in 2008 as compared with 2007 was primarily due
to decreases in business underwritten in 2007 and 2008 across most North
American casualty classes, with the most significant decreases in the umbrella
class.  The decrease was the result of fewer opportunities that met
our underwriting standards.  The decrease in net premiums earned was
the result of the decrease in net premiums written.  Net premiums
written and earned were also affected by changes in the mix of business and the
structure of the underlying reinsurance contracts.
  Net
losses and LAE and the resulting net loss and LAE ratios for the six months
ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              DecreaseNet
      losses and LAE
              $
              166,176
              
              
              
              230,375
              
              
              $
              64,199Net
      loss and LAE ratios
              
              63.7
              %
              
              
              72.5
              %
              
              8.8
      points
 
 The
decreases in net losses and LAE and the related ratios in 2008 as compared with
2007 were primarily due to a decrease in net premiums earned and an increase in
net favorable loss development.  Net favorable loss development was
$27,655,000 in 2008 as compared with $3,430,000 in 2007.  Net
favorable loss development and premium adjustments related to prior years’
losses decreased the net loss and LAE ratios in 2008 and 2007 by 10.6 and 1.1
points, respectively.  Exclusive of net favorable loss development,
the net loss and LAE ratio increased in 2008 as compared with 2007 due to higher
initial expected loss ratios in certain significant classes reflecting a decline
in price adequacy.  The net loss and LAE ratios were also affected by
changes in the mix of business.
  Net
acquisition expenses and resulting net acquisition expense ratios for the six
months ended June 30, 2008 and 2007 were as follows ($ in
thousands):
  2008
              
              
              2007
              
              
              Increase
      (decrease)Net
      acquisition expenses
              $
              69,702
              
              
              
              72,096
              
              
              $
              (2,394
              )Net
      acquisition expense ratios
              
              26.7
              %
              
              
              22.7
              %
              
              4.0
      points
 
 The
decrease in net acquisition expenses in 2008 as compared with 2007 was due to
the decrease in net premiums earned.  The increase in the net
acquisition expense ratio in 2008 as compared with 2007 was due, in part, to
differences in commissions relating to prior years and to deteriorating terms
and conditions that have generally resulted in higher commission and brokerage
rates.  Net acquisition expenses in 2008 included an increase in
commissions relating to prior years of $5,412,000, representing 2.1% of net
premiums earned as compared with a decrease of $1,583,000 in 2007, representing
0.5% of net premiums earned.  Net acquisition expense ratios were also
impacted by changes in the mix of business.
  Other
underwriting expenses were comparable at $13,786,000 and $13,159,000 for the six
months ended June 30, 2008 and 2007, respectively.
   Finite Risk
  The
Finite Risk operating segment includes principally structured reinsurance
contracts with ceding companies whose needs may not be met efficiently through
traditional reinsurance products.  In exchange for contractual
features that limit our downside risk, reinsurance contracts that we classify as
finite risk provide the potential for significant profit commission to the
ceding company.  The classes of risks underwritten through finite risk
contracts are generally consistent with the classes covered by traditional
products.  The finite risk contracts that we underwrite generally
provide prospective protection, meaning coverage is provided for losses that are
incurred after inception of the contract, as contrasted with retrospective
coverage, which covers losses that are incurred prior to inception of the
contract.  The three main categories of our finite risk contracts are
quota share, multi-year excess-of-loss and whole account aggregate stop
loss.  Due to the often significant inverse relationship between
losses and commissions for this segment, we believe it is important to evaluate
the overall combined ratio, rather than its component parts of net loss and LAE
ratio and net acquisition expense ratio.  The ongoing industry-wide
investigations by legal and regulatory authorities into potential misuse of
finite products have curtailed demand for these products beginning in
2005.  This diminished demand continues in 2008.  This
operating segment represented 1.5% and 2.1% of our net premiums written during
the three months ended June 30, 2008 and 2007, respectively, and 1.0% and 2.6%
of our net premiums written during the six months ended June 30, 2008 and
2007, respectively.
   -
27 -
   Three Months Ended
June 30, 2008 as Compared with the Three Months Ended June 30,
2007
  Gross,
ceded and net premiums written and earned for the three months ended
June 30, 2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              DecreaseGross
      premiums written
              $
              3,379
              
              
              5,949
              
              $
              2,570Ceded
      premiums written
              
              –
              
              
              –
              
              
              –Net
      premiums written
              
              3,379
              
              
              5,949
              
              
              2,570Gross
      premiums earned
              
              3,021
              
              
              6,937
              
              
              3,916Ceded
      premiums earned
              
              –
              
              
              –
              
              
              –Net
      premiums earned
              $
              3,021
              
              
              6,937
              
              $
              3,916
 
 The
decreases in net premiums written and net premiums earned in 2008 as compared
with 2007 reflect the continuing reduction in the demand for finite
business.
  Net
losses and LAE, net acquisition expenses and the resulting net loss, LAE and
acquisition expense ratios for the three months ended June 30, 2008 and 2007
were as follows ($ in thousands):
  2008
              
              
              2007
              
              
              Increase
                (decrease)Net
      losses and LAE
              $
              (6,758
              )
              
              
              3,196
              
              
              $
              (9,954
              )Net
      acquisition expenses
              
              9,149
              
              
              
              502
              
              
              
              8,647Net
      losses, LAE and acquisition expenses
              $
              2,391
              
              
              
              3,698
              
              
              $
              (1,307
              )Net
      loss, LAE and acquisition expense ratios
              
              79.1
              %
              
              
              53.3
              %
              
              25.8
      points
 
 The
decrease in net losses, LAE and acquisition expenses in 2008 as compared with
2007 was primarily due to the decrease in net premiums earned.  The
increase in the net loss, LAE and acquisition expense ratio was due to more net
favorable development in 2007 as compared with 2008.  Net favorable
development was $413,000 in 2008 as compared with $1,821,000 in
2007.  Net favorable development and premium adjustments related to
prior years’ losses decreased the net loss, LAE and acquisition expense ratios
in 2008 and 2007 by 13.7 and 27.5 points, respectively.  Exclusive of
net favorable development, the increase in the net loss, LAE and acquisition
expense ratio is the result of a change in the mix of business.
  Other
underwriting expenses for the three months ended June 30, 2008 and 2007
were $365,000 and $593,000, respectively.  The decrease in 2008 as
compared with 2007 is the result of less expense incurred by the Finite Risk
segment as the demand for finite risk products decreases.
  Six Months Ended
June 30, 2008 as Compared with the Six Months Ended June 30,
2007
  Gross,
ceded and net premiums written and earned for the six months ended June 30,
2008 and 2007 were as follows ($ in thousands):
  2008
              
              2007
              
              Increase
                (decrease)Gross
      premiums written
              $
              5,257
              
              
              13,087
              
              $
              (7,830
              )Ceded
      premiums written
              
              –
              
              
              (1,942
              )
              
              1,942Net
      premiums written
              
              5,257
              
              
              15,029
              
              
              (9,772
              )Gross
      premiums earned
              
              3,987
              
              
              16,114
              
              
              (12,127
              )Ceded
      premiums earned
              
              –
              
              
              (1,942
              )
              
              1,942Net
      premiums earned
              $
              3,987
              
              
              18,056
              
              $
              (14,069
              )
 
 The
decreases in net premiums written and net premiums earned in 2008 as compared
with 2007 reflect the continuing reduction in the demand for finite
business.
   -
28 -
   Net
losses and LAE, net acquisition expenses and the resulting net loss, LAE and
acquisition expense ratios for the six months ended June 30, 2008 and 2007
were as follows ($ in thousands):
  2008
              
              
              2007
              
              
              Increase
                (decrease)Net
      losses and LAE
              $
              (7,987
              )
              
              
              10,100
              
              
              $
              (18,087
              )Net
      acquisition expenses
              
              11,549
              
              
              
              652
              
              
              
              10,897Net
      losses, LAE and acquisition expenses
              $
              3,562
              
              
              
              10,752
              
              
              $
              (7,190
              )Net
      loss, LAE and acquisition expense ratios
              
              89.3
              %
              
              
              59.5
              %
              
              29.8
      points
 
 The
decrease in net losses, LAE and acquisition expenses in 2008 as compared with
2007 was primarily due to the decrease in net premiums earned.  The
increase in the net loss, LAE and acquisition expense ratio was primarily due to
more net favorable development in 2007 as compared with 2008.  Net
favorable development was $200,000 in 2008 as compared with $4,509,000 in
2007.  Net favorable loss development and premium adjustments related
to prior years’ losses decreased the net loss, LAE and acquisition expense
ratios in 2008 and 2007 by 5.0 and 25.1 points,
respectively.  Exclusive of net favorable development, the increase in
the net loss, LAE and acquisition expense ratio is the result of a change in the
mix of business.
  Other
underwriting expenses for the six months ended June 30, 2008 and 2007 were
$675,000 and $1,627,000, respectively.  The decrease in 2008 as
compared with 2007 was due to a decline in underwriting activity in the segment
and a lower percentage of underwriting expenses allocated to the
segment.
  Financial Condition,
Liquidity and Capital Resources
   Financial Condition
  Cash and
cash equivalents and investments as of June 30, 2008 and December 31, 2007
were as follows ($ in thousands):
  June
      30, 2008
              
              December 31,
                2007
              
              Increase
                (decrease)Cash
      and cash equivalents
              $
              825,108
              
              
              1,076,279
              
              $
              (251,171
              )Fixed
      maturity securities
              
              3,416,574
              
              
              3,361,741
              
              
              54,833Preferred
      stocks
              
              8,782
              
              
              9,607
              
              
              (
      825
              )Short-term
      investments
              
              127,951
              
              
              13,876
              
              
              114,075Total
              $
              4,378,415
              
              
              4,461,503
              
              $
              (83,088
              )
 
 The net
decrease in total cash and cash equivalents and investments as of June 30, 2008
as compared with December 31, 2007 was primarily due to our share repurchases in
2008.  Our available-for-sale and trading portfolios are primarily
composed of diversified, high quality, predominantly publicly traded fixed
maturity securities.  The investment portfolio, excluding cash and
cash equivalents, had a weighted average duration of 3.2 years as of
June 30, 2008.  We routinely monitor the composition of our
investment portfolio and cash flows in order to maintain the liquidity necessary
to meet our obligations.
  As of
June 30, 2008, we had $1,542,049,000 of mortgage-backed and asset-backed
securities in our investment portfolio, representing approximately 35% of cash
and cash equivalents and investments.  The following is a breakdown of
our mortgage-backed and asset-backed securities as of June 30, 2008 ($ in
thousands):
  Amortized
                Cost
              
              Fair
                Value
              
              Weighted
                Average
                Credit
      RatingU.S.
      Government agency mortgage-backed securities
              $
              718,919
              
              $
              717,892
              
              AaaCommercial
      mortgage-backed securities
              
              437,729
              
              
              417,109
              
              AaaAsset-backed
      securities
              
              244,644
              
              
              233,743
              
              AaaResidential
      mortgage-backed securities
              
              187,141
              
              
              173,305
              
              AaTotal
              $
              1,588,433
              
              $
              1,542,049
              
              Aaa
 
 Approximately
47% of the mortgage-backed and asset-backed securities in our investment
portfolio were issued or guaranteed by the Government National Mortgage
Association, the Federal National Mortgage Association, or the Federal Home Loan
Mortgage Corporation and are referred to as U.S. Government agency
mortgage-backed securities.  Included in residential mortgage-backed
securities were securities with an amortized cost of $21,694,000 and fair value
of $19,381,000 where the underlying collateral consists primarily of “Alt-A”
mortgages.  These securities had a weighted average credit rating of
Aa at June 30, 2008.
   -
29 -
   The U.S.
sub-prime residential mortgage market continues to experience higher than
expected delinquencies and decreasing liquidity which has, in turn, resulted in
increased volatility in the financial markets in general and the structured
securities markets in particular.  Our securities with underlying
sub-prime mortgage exposure were categorized above as asset-backed securities
and were investment grade at June 30, 2008.  The following table
summarizes the nine asset-backed securities within our fixed income portfolio
exposed to the sub-prime residential mortgage market as of June 30, 2008
($ in thousands):
  AmortizedCost
              
              Fair
      ValueVintage
      year 2005 and ratings of Aa or A
              $
              38,134
              
              $
              27,340Vintage
      year 2006 and ratings of Aaa or Aa
              
              3,993
              
              
              2,753Total
              $
              42,127
              
              $
              30,093
 
 We
continually monitor market events that impact our portfolio, including our
sub-prime securities, and review sub-prime securities along with the rest of our
portfolio for potential other-than-temporary impairments.  We did not
consider any of the mortgage-backed and asset-backed securities we held to be
other-than-temporarily impaired as of June 30, 2008.
  Certain
assets and liabilities associated with underwriting include significant
estimates.  Reinsurance premiums receivable, deferred acquisition
costs, unpaid losses and LAE, unearned premiums and commissions payable all
represent or include significant estimates.  Reinsurance premiums
receivable as of June 30, 2008 of $262,128,000 included $237,091,000 that was based upon
estimates.  Reinsurance premiums receivable as of December 31,
2007 of $244,360,000 included $195,890,000 that was based upon
estimates.  Reinsurance premiums receivable at any point in time is a
function of the amount of premiums written as well as the contractual terms of
settlement included in each reinsurance agreement.  The increase in
reinsurance premiums receivable as of June 30, 2008 as compared with
December 31, 2007 was primarily due to the contractual terms of settlement
included in reinsurance agreements in lines of business such as in the North
American crop business.  An allowance for uncollectible reinsurance
premiums is considered for possible non-payment of such amounts due, as deemed
necessary.  As of June 30, 2008, based on our historical
experience, the general profile of our ceding companies and our ability, in most
cases, to contractually offset reinsurance premiums receivable with losses and
LAE or other amounts payable to the same parties, we did not establish an
allowance for uncollectible reinsurance premiums receivable.
  Gross
unpaid losses and LAE as of June 30, 2008 of $2,352,116,000 included
$1,680,652,000 of estimates of claims that are incurred but not reported
("IBNR").  Gross unpaid losses and LAE as of December 31, 2007 of
$2,361,038,000 included $1,700,454,000 of IBNR.  The decrease in
unpaid losses related primarily to the casualty lines of business as minor
increases in the property and marine lines were offset by declines in unpaid
losses related to finite business.
  Commissions
payable includes estimated commissions that are comprised of estimated profit
commission and commission on premium estimates.  Commissions payable
as of June 30, 2008 of $110,346,000 included $100,954,000 of estimated
commissions.  Commissions payable as of December 31, 2007 of
$100,204,000 included $91,035,000 of estimated commissions.  The
increase in commissions payable as of June 30, 2008 as compared with
December 31, 2007 is consistent with the increase in reinsurance premiums
receivable.
  We
entered into two derivative contracts during the first six months of
2008.  The first was an option to purchase retrocessional
protection.  The second was a derivative contract under which we can
recover up to $120,000,000 from the counterparty if modeled losses from both a
first and second catastrophe event exceed a specified attachment
point.  The fair values of these derivatives were adjusted and the
resulting unrealized loss of $1,770,000 was included in other expense in
2008.  We expect to enter into another derivative contract during the
third quarter of 2008 under which we can recover up to $200,000,000 from the
counterparty if modeled losses from second and subsequent catastrophe events
involving certain perils and territories exceed specific
thresholds.
   Sources of Liquidity
  Our
consolidated sources of funds consist primarily of premiums written, investment
income, proceeds from sales and redemption of investments, losses recovered from
retrocessionaires, issuance of securities and actual cash and cash equivalents
held by us.  Net cash flows provided by operations, excluding trading
security activities, for the six months ended June 30, 2008 were
$167,513,000.
  Platinum
Holdings is a holding company that conducts no reinsurance operations of its
own.  Our reinsurance operations are conducted primarily through our
wholly owned reinsurance subsidiaries, Platinum Bermuda and Platinum
US.  As a holding company, the cash flows of Platinum Holdings consist
primarily of interest income, dividends and other permissible payments from its
subsidiaries and issuances of securities.  Platinum Holdings depends
on such payments for general corporate purposes and to meet its obligations,
including the payment of preferred dividends, common dividends and repurchases
of common shares.
  In
addition to the net cash flows generated from operations, we have an effective
universal shelf registration statement whereby we may issue and sell, in one or
more offerings, up to $750,000,000 of debt, equity and other types of securities
or a combination of such securities, including debt securities of Platinum
Finance that would be unconditionally guaranteed by Platinum
Holdings.  This shelf registration statement had approximately
$440,000,000 of remaining capacity as of June 30, 2008.  We also have
a $400,000,000 credit facility with a syndicate of lenders available for
revolving borrowings and letters of credit expiring on September 13,
2011.  The credit facility is generally available for our working
capital, liquidity, letters of credit and general corporate requirements and
those of our subsidiaries.  As of June 30, 2008 this facility had
approximately $318,000,000 of remaining capacity.
   -
30 -
   Liquidity Requirements
  Our
principal consolidated cash requirements are the payment of losses and LAE,
commissions, brokerage, operating expenses, dividends to our preferred and
common shareholders, the servicing of debt, capital expenditures, purchase of
retrocessional contracts and payment of taxes.
  Platinum
Bermuda is not licensed, approved or accredited as a reinsurer anywhere in the
United States and, therefore, under the terms of most of its contracts with
United States ceding companies, it is required to provide collateral to its
ceding companies for unpaid ceded liabilities in a form acceptable to state
insurance commissioners.  Typically, this type of collateral takes the
form of letters of credit issued by a bank, the establishment of a trust, or
funds withheld.  Platinum Bermuda provides letters of credit through
commercial banks and may be required to provide the banks with a security
interest in certain investments of Platinum Bermuda including the credit
facility described above.
  We
believe that the net cash flows generated by the operating activities of our
subsidiaries in combination with cash and cash equivalents on hand will provide
sufficient funds to meet our liquidity needs over the next twelve
months.  Beyond the next twelve months, cash flows available to us may
be influenced by a variety of factors, including economic conditions in general
and in the insurance and reinsurance markets, legal and regulatory changes as
well as fluctuations from year to year in claims experience and the occurrence
or absence of large catastrophic events.  If our liquidity needs
accelerate beyond our ability to fund such obligations from current operating
cash flows, we may need to liquidate a portion of our investment portfolio,
borrow under the credit facility described above or raise additional capital in
the capital markets.  Our ability to meet our liquidity needs by
selling investments or raising additional capital is subject to the timing and
pricing risks inherent in the capital markets.
   Capital Resources
  The
Company does not have any material commitments for capital expenditures as of
June 30, 2008.
   Off-Balance Sheet Arrangements
  The
Company does not have any off-balance sheet arrangements and, therefore, there
is no effect on its financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources from these
types of arrangements.
   Contractual Obligations
  There
have been no material changes to our contractual obligations as disclosed under
Management’s Discussion and Analysis of Financial Condition – Contractual
Obligations in our Annual Report on Form 10-K for the year ended December 31,
2007.
  Economic
Conditions
  Periods
of moderate economic recession or inflation tend not to have a significant
direct effect on our underwriting operations.  Significant unexpected
inflationary or recessionary periods can, however, impact our underwriting
operations and investment portfolio.  Management considers the
potential impact of economic trends in the estimation process for establishing
unpaid losses and LAE.
  Current
Outlook
  During
the period from January 1, 2008 through July 1, 2008, approximately 88% of our
business was up for renewal.  While rate adequacy declined in most
classes, we found relatively more attractive opportunities in our Property and
Marine segment and fewer attractive opportunities in our Casualty and Finite
segments. Our overall portfolio of business declined approximately
4%.
  For the
Property and Marine segment, during the period from January 1, 2008 through July
1, 2008 we experienced average rate decreases of 8% on our U.S. property
catastrophe excess renewal business while rates on our non-U.S. property
catastrophe excess renewal business were down 4%. On average, rates for our
portfolio of US catastrophe business that renewed after April 1 were
unchanged.  In addition, we experienced average rate decreases of
approximately 12% on our marine renewal business.  Per risk excess
rates decreased by approximately 8% on average for our U.S. business and by
approximately 3% on average for our non-U.S. business.
  During
the period from January 1 through July 1, 2008 we increased our writings of
North American crop business from approximately $48,000,000 to approximately
$130,000,000. Most of this increase was attributable to one large quota share
contract.  While favorable experience in recent years has led to some
deterioration in terms and conditions in this class of business, we believe
there remains an adequate opportunity for profit.  As most of the crop
reinsurance contracts incept at January 1 we do not expect to write a
significant amount of additional crop business for the remainder of
2008.
  During
the period from January 1 through July 1, 2008 we wrote approximately 10% less
U.S. catastrophe excess-of-loss premium than we did during the same period in
2007.  However, due to the rate decreases in this class of business,
our net retained risk has remained at the same level for 2008 while our
potential profit has decreased.  In the same period our non-U.S.
catastrophe excess-of-loss premium has increased approximately 6% as measured in
U.S. dollars due to the weakening of the dollar against the Euro and the British
Pound Sterling.  We believe the profitability remains adequate for the
risk and for 2008 we plan to deploy capacity such that up to approximately 22.5%
of our total capital could be exposed to an event with a probability of 1 in 250
years.
   -
31 -
   The lack
of significant catastrophe activity in 2007 contributed to excellent financial
results, stronger balance sheets and increased capacity for many reinsurers.
Though many reinsurers have implemented capital management programs, we believe
the net effect has been increased industry capacity.  This has led to
intensified competition and rate decreases in 2008.  We believe that
most classes within the Property and Marine segment will continue to experience
some rate deterioration for the remainder of 2008.
  For the
Casualty segment, although we believe that the market offers adequate returns on
certain accounts, pricing has been softening.  Ceding companies are
willing to increase retentions and reinsurers are competing for participation on
the best contracts.  During the period from January 1 through July 1,
2008 rate decreases across our casualty business, other than accident and
health, have ranged from approximately 0% to 19%.  The overall average
was a decrease of approximately 7%, against a background of upward trending loss
costs.  As a result, we believe the business underwritten in 2008 will
have a lower level of expected profitability as compared with the business
underwritten in 2007.
  During
the period from January 1 through July 1, 2008 we wrote approximately 19% less
casualty business than we did during the same period in 2007.  We
expect market conditions will continue to weaken through the remainder of 2008
and that fewer casualty opportunities will be attractive.  We believe
that financial security remains a significant concern for buyers of long-tailed
reinsurance protection who typically seek reinsurers with strong balance sheets,
quality ratings, and a proven claims-paying record.  We believe that
our rating, capitalization and reputation as a lead casualty reinsurer position
us well to write profitable business as opportunities arise.
  Recent
increases in fuel costs have reduced demand for less fuel efficient vehicles,
which has reduced the market value of such vehicles.  If this trend
continues, we may experience losses under a residual value reinsurance contract
we have written.  No losses have yet been ceded to us under this
contract and our maximum loss, net of premium, is less than
$38,000,000.
  In the
Finite Risk segment, we believe that the ongoing investigations by the SEC, the
office of the Attorney General for the State of New York, the U.S. Attorney for
the Southern District of New York as well as various non-U.S. regulatory
authorities continue to limit demand for finite risk products.  We
expect the relatively low level of demand will continue for the foreseeable
future.
  Critical Accounting
Estimates
  It is
important to understand our accounting estimates in order to understand our
financial position and results of operations.  We consider certain of
these estimates to be critical to the presentation of the financial results
since they require management to make estimates and valuation
assumptions.  These estimates and assumptions affect the reported
amounts of assets, liabilities, revenues, expenses and related
disclosures.  Certain of the estimates and assumptions result from
judgments that are necessarily subjective and, consequently, actual results may
materially differ from these estimates.  Our critical accounting
estimates include premiums written and earned, unpaid losses and LAE, valuation
of investments and evaluation of risk transfer.  For a detailed
discussion of the Company’s critical accounting estimates please refer to
Management’s Discussion and Analysis of Financial Condition and Results of
Operations included in our Annual Report on Form 10-K for the year ended
December 31, 2007.  There have been no material changes in the
application of the Company’s critical accounting estimates subsequent to
December 31, 2007.
  ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
  Market and Credit
Risk
  During
the second quarter of 2008, the fair values of our fixed maturity securities
continued to experience volatility as interest rates on treasuries increased
significantly due to inflation concerns and expected future tightening by the
U.S. Federal Reserve.  The Federal Reserve took actions in the first
quarter to enhance and promote market liquidity and ensure financial market
stability.  The financial markets responded to the Federal Reserve’s
actions and interest rate spreads over treasuries for fixed income products
declined only to retreat towards the end of the current
quarter.  Deteriorating financial market liquidity and concerns over a
combination of economic events caused the interest rate spreads to widen as the
second quarter came to a close.
  Our
principal invested assets are fixed maturity securities, which are subject to
the risk of potential losses from adverse changes in market rates and prices and
credit risk resulting from adverse changes in the borrower's ability to meet its
debt service obligations.  Our strategy to limit this risk is to place
our investments in high quality credit issues and to limit the amount of credit
exposure with respect to any one issuer or asset class.  We also
select investments with characteristics such as duration, yield, currency and
liquidity to reflect, in the aggregate, the underlying characteristics of our
unpaid losses and LAE.  We attempt to minimize the credit risk by
actively monitoring the portfolio and establishing a guideline minimum average
credit rating for our portfolio of A2 as defined by Moody's Investor Service
("Moody’s").  As of June 30, 2008, the portfolio, excluding cash,
cash equivalents and short-term investments, had a dollar weighted average
credit rating of Aa1 as defined by Moody’s.
  We have
other receivable amounts subject to credit risk.  The most significant
of these are reinsurance premiums receivable from ceding
companies.  We also have reinsurance recoverable amounts from our
retrocessionaires.  To mitigate credit risk related to premiums
receivable, we have established standards for ceding companies and, in most
cases, have a contractual right of offset which would allow us to settle claims
net of any premiums receivable.  To mitigate credit risk related to
our reinsurance recoverable amounts, we consider the financial strength of our
retrocessionaires when determining whether to purchase coverage from
them.  Retrocessional coverage is obtained from companies rated “A-”
or better by A. M. Best Company, Inc. (“A.M. Best”) or from retrocessionaires
whose obligations are fully collateralized.  The financial performance
and rating status of all material retrocessionaires is routinely
monitored.
  In
accordance with industry practice, we frequently pay amounts in respect of
claims under contracts to reinsurance brokers for payment over to the ceding
companies.  In the event that a broker fails to make such a payment,
depending on the jurisdiction, we may remain liable to the ceding company for
the payment.  Conversely, in certain jurisdictions, when ceding
companies remit premiums to reinsurance brokers, such premiums are deemed to
have been paid to us and the ceding company is no longer liable to us for those
amounts whether or not the funds are actually received by
us.  Consequently, we assume a degree of credit risk associated with
our brokers during the premium and loss settlement process.  To
mitigate credit risk related to reinsurance brokers, we have established
guidelines for brokers and intermediaries.
   -
32 -
   Interest Rate
Risk
  We are
exposed to fluctuations in interest rates.  Movements in rates can
result in changes in the market value of our fixed maturity portfolio and can
cause changes in the actual timing of receipt of principal payments of certain
securities.  Rising interest rates result in a decrease in the market
value of our fixed maturity portfolio and can expose our portfolio, in
particular our mortgage-backed securities, to extension
risk.  Conversely, a decrease in interest rates will result in an
increase in the market value of our fixed maturity portfolio and can expose our
portfolio, in particular our mortgage-backed securities, to prepayment
risk.  An aggregate hypothetical impact on the market value of our
fixed maturity portfolio, generated from an immediate parallel shift in the
treasury yield curve, as of June 30, 2008 is as follows ($ in
thousands):
  Interest
      Rate Shift in Basis Points-
      100bp
              
              
              -
      50bp
              
              Current
              
              
              +
      50bp
              
              
              +
      100bpTotal
      market value
              $
              3,532,479
              
              
              3,476,329
              
              
              3,416,574
              
              
              3,357,617
              
              $
              3,295,769Percent
      change in market value
              
              3.4
              %
              
              1.7
              %
              
              
              
              
              (1.7
              %)
              
              (3.5
              %)Resulting
      unrealized appreciation / (depreciation)
              $
              44,402
              
              
              (11,748
              )
              
              (71,503
              )
              
              (130,460
              )
              $
              (192,308
              )
 
 Foreign Currency Exchange
Rate Risk
  We write
business on a worldwide basis.  Consequently, our principal exposure
to foreign currency risk is the transaction of business in foreign
currencies.  Changes in foreign currency exchange rates can impact
revenues, costs, receivables and liabilities, as measured in the U.S. dollar,
our financial reporting currency.  We manage our exposure to large
foreign currency risks by holding invested assets denominated in non-U.S. dollar
currencies to offset liabilities denominated in the same foreign
currencies.  We may from time to time hold more non-U.S. dollar
denominated assets than non-U.S. dollar liabilities.
  Sources of Fair
Value
  The
following table presents the carrying amounts and estimated fair values of our
financial instruments as of June 30, 2008 ($ in
thousands):
  CarryingAmount
              
              Fair
      ValueFinancial
      assets:Fixed
      maturity securities
              $
              3,416,574
              
              $
              3,416,574Preferred
      stocks
              
              8,782
              
              
              8,782Short-term
      investments
              
              127,951
              
              
              127,951Financial
      liabilities:Debt
      obligations
              $
              250,000
              
              $
              242,700
 
 The fair
value of our fixed maturity securities, preferred stocks, short-term investments
and debt obligations are based on prices obtained from independent sources for
those or similar investments using quoted prices in active markets and standard
market valuation pricing models.  The inputs used in standard market
valuation pricing models may include but are not limited to: credit ratings,
interest rates and yield curves at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks and default
rates.  Our derivative instruments, which are included in other assets
in the consolidated balance sheet, are priced at fair value using unobservable
inputs through the application of our own assumptions and internal valuation
pricing models.
  ITEM
      4. CONTROLS AND PROCEDURES
  Disclosure Controls and
Procedures
  Our
management, including the Chief Executive Officer and Chief Financial Officer,
carried out an evaluation of the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the
period covered by this report.  Based on that evaluation, our
management, including the Chief Executive Officer and Chief Financial Officer,
concluded that our disclosure controls and procedures are effective to provide
reasonable assurance that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and timely reported as specified in the SEC’s rules and forms.
  Changes in Internal Control
over Financial Reporting
  No
changes occurred during the quarter ended June 30, 2008 in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
  Forward-Looking
Statements
  This Form
10-Q contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Exchange
Act.  Forward-looking statements are necessarily based on estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are subject to
change.  These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by, or on behalf of, us.
   -
33 -
   In
particular, statements using words such as “may,” “should,” “estimate,”
“expect,” “anticipate,” “intend,” “believe,” “predict,” “potential,” or words of
similar import generally involve forward-looking statements.  For
example, we have included certain forward-looking statements in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” with
regard to trends in results, prices, volumes, operations, investment results,
margins, risk management and exchange rates.  This Form 10-Q also
contains forward-looking statements with respect to our business and industry,
such as those relating to our strategy and management objectives and trends in
market conditions, market standing, product volumes, investment results and
pricing conditions.
  In light
of the risks and uncertainties inherent in all future projections, the inclusion
of forward-looking statements in this Form 10-Q should not be considered as a
representation by us or any other person that our objectives or plans will be
achieved.  Numerous factors could cause our actual results to differ
materially from those in forward-looking statements, including the
following:
  (1)
              significant
      weather-related or other natural or man-made disasters over which we have
      no control;
  (2)
              the
      effectiveness of our loss limitation methods and pricing
      models;
  (3)
              the
      adequacy of our liability for unpaid losses and
  LAE;
  (4)
              our
      ability to maintain our A.M. Best
rating;
  (5)
              the
      cyclicality of the property and casualty reinsurance
    business;
  (6)
              conducting
      operations in a competitive
environment;
  (7)
              our
      ability to maintain our business relationships with reinsurance
      brokers;
  (8)
              the
      availability of retrocessional reinsurance on acceptable
      terms;
  (9)
              market
      volatility, interest rate and currency exchange rate fluctuation, and
      credit risk on invested assets;
  (10)
              tax,
      regulatory or legal restrictions or limitations applicable to us or the
      property and casualty reinsurance business
  generally;
  (11)
              general
      political and economic conditions, including the effects of civil unrest,
      acts of terrorism, war or a prolonged U.S. or global economic downturn or
      recession; and
  (12)
              changes
      in our plans, strategies, objectives, expectations or intentions, which
      may happen at any time at our
discretion.
 
 As a
consequence, current plans, anticipated actions and future financial condition
and results may differ from those expressed in any forward-looking statements
made by or on behalf of us.  The foregoing factors, which are
discussed in more detail in Item 1A – “Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2007, should not be construed as
exhaustive.  Additionally, forward-looking statements speak only as of
the date they are made, and we undertake no obligation to release publicly the
results of any future revisions or updates we may make to forward-looking
statements to reflect new information or circumstances after the date hereof or
to reflect the occurrence of future events.
   -
34 -
   PART
II – OTHER INFORMATION
  ITEM
      2. UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
  PROCEEDS
  (c)           Following
is a summary of purchases by us of our common shares during the three month
period ended June 30, 2008:
  Period
              
              (a)
                Total
      Number of Shares Purchased
              
              (b)
                Average
      Price paid per Share
              
              (c)
                Total
      Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs*
              
              (d)
                Maximum
      Dollar Value of Shares that May Yet Be Purchased Under the Plan or
      ProgramsApril
      1, 2008 – April 30, 2008
              
              
              –
              
              $
              n/a
              
              
              –
              
              $
              250,000,000May
      1, 2008 – May 31, 2008
              
              
              –
              
              
              n/a
              
              
              –
              
              
              250,000,000June
      1, 2008 – June 30, 2008
              
              
              1,315,000
              
              
              34.95
              
              
              1,315,000
              
              
              204,001,285Total
              
              
              1,315,000
              
              $
              34.95
              
              
              1,315,000
              
              $
              204,001,285
 
 *
              On
      August 4, 2004, our Board of Directors established a program to repurchase
      our common shares.  On July 26, 2007, our Board of Directors
      approved an increase in the then existing repurchase program to result in
      authority as of such date to repurchase up to a total of $250,000,000 of
      our common shares.  After repurchases of our common shares, on
      each of October 25, 2007, February 21, 2008, April 23, 2008 and
      July 24, 2008 our Board of Directors approved additional increases in the
      repurchase program to result in authority as of such dates to repurchase
      up to a total of $250,000,000 of our common shares.  During the
      three months ended June 30, 2008, the Company repurchased 1,315,000
      of its common shares in the open market at an aggregate cost including
      commissions of $45,999,000 and a weighted average cost including
      commissions of $34.98 per share.  During the six months ended
      June 30, 2008, the Company repurchased 6,241,992 of its common shares
      in the open market at an aggregate cost including commissions of
      $213,940,000 and a weighted average cost including commissions of $34.27
      per share.  The common shares we repurchased were
      canceled.
  
 ITEM
      4. SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS
  The
Company’s 2008 Annual General Meeting of Shareholders (the "Annual Meeting") was
held on April 23, 2008.  Proxies for the Annual Meeting were solicited
pursuant to Regulation 14A under the Exchange Act.  There was no
solicitation in opposition to management’s nominees as listed in the Company’s
proxy statement dated March 24, 2008.  The Company’s shareholders (1)
elected eight directors to the Company’s Board of Directors to serve until the
2009 Annual General Meeting of Shareholders and (2) ratified the selection of
KPMG LLP as the Company’s independent registered public accounting firm for the
2008 fiscal year.  Set forth below are the voting results for these
proposals:
  ELECTION
OF DIRECTORS OF THE COMPANY
  For
              
              WithheldH.
      Furlong Baldwin
              44,460,395
              
              3,231,632Jonathan
      F. Bank
              44,492,136
              
              3,199,891Dan
      R. Carmichael
              44,472,153
              
              3,219,874Robert
      V. Deutsch
              44,492,636
              
              3,199,391A.
      John Hass
              44,492,011
              
              3,200,016Edmund
      R. Megna
              44,492,011
              
              3,200,016Michael
      D. Price
              44,492,636
              
              3,199,391Peter
      T. Pruitt
              37,093,496
              
              10,598,531
 
 RATIFICATION
OF SELECTION OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
THE 2008 FISCAL YEAR
  For
              
              Against
              
              Abstain
              
              Broker
      Non-Votes47,576,239
              
              108,054
              
              7,734
              
              0
 
 -
35 -
   ITEM
      6. EXHIBITS
  Exhibit
      Number
                
                Description10.1*
                
                Employment
      Agreement dated July 24, 2008 between the Company and Michael D. Price
      (1)10.2*
                
                Amended
      and Restated Share Unit Plan for Nonemployee Directors (1)10.3*
                
                Amended
      and Restated Employee Severance Plan (1)10.4*
                
                Amended
      and Restated Change in Control Severance Plan (1)10.5*
                
                Amended
      and Restated Executive Incentive Plan (1)10.6*
                
                Amended
      and Restated Executive Bonus Deferral Plan (1)10.7*
                
                Form
      of Amendment to EIP Award Agreement for the 2005-2009 Performance Cycle
      (1)10.8*
                
                Form
      of Restricted Share Award Agreement (1)10.9*
                
                Form
      of EIP Share Unit Award Agreement10.10*
                
                Form
      of Time-Based Share Unit Agreement10.11*
                
                Form
      of Nonqualified Share Option Agreement (Employee)31.1
                
                Certification
      of Michael D. Price, Chief Executive Officer of Platinum Holdings,
      pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange
      Act.31.2
                
                Certification
      of James A. Krantz, Chief Financial Officer of Platinum
      Holdings, pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange
      Act.32.1
                
                Certification
      of Michael D. Price, Chief Executive Officer of Platinum Holdings,
      pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of
      the Sarbanes-Oxley Act of 2002.32.2
                
                Certification
      of James A. Krantz, Chief Financial Officer of Platinum
      Holdings, pursuant to 18 U.S.C. section 1350, as adopted pursuant to
      section 906 of the Sarbanes-Oxley Act of 2002.
  * Items
denoted with an asterisk represent management contracts or compensatory plans or
arrangements.
 (1)
Incorporated by reference from the Company’s current report on Form 8-K filed
with the SEC on July 25, 2008.
 SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 Platinum
      Underwriters Holdings, Ltd.
 
 Date:
      July 24, 2008
              /s/  Michael
      D. PriceBy:
      Michael D. PricePresident
      and Chief Executive Officer
                (Principal
      Executive Officer)
 
 Date:
      July 24, 2008
              /s/  James
      A. KrantzBy:
      James A. KrantzExecutive
      Vice President and Chief Financial Officer
                (Principal
      Financial and Accounting Officer)
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36 -