##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For
the quarterly period ended September 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 Commission File Number 001-31341
 Platinum Underwriters Holdings, Ltd.
  Bermuda
    
    98-0416483(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)The Belvedere Building69 Pitts Bay RoadPembroke, Bermuda
    
    HM 08(Address of principal executive
    
    (Zip Code)offices)
  (Registrants telephone number, including area code)
  (Former name, former address and former fiscal year, if changed since last report)
 þ o
  þ o o
 o þ




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##### 



PagePART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsConsolidated Balance Sheets as of September 30, 2006 (Unaudited) and
December 31, 2005
    
    
    1Consolidated Statements of Operations and Comprehensive Income
(Loss) for the Three and Nine Months Ended September 30, 2006 and
2005 (Unaudited)
    
    
    2Consolidated Statements of Changes in Shareholders Equity for the
Nine Months
Ended September 30, 2006 and 2005 (Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2006 and 2005 (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements for the
Three and Nine Months Ended September 30, 2006 and 2005 (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    53Item 4. Controls and Procedures
    
    
    54PART II  OTHER INFORMATIONItem 6. Exhibits
    
    
    56SIGNATURES
    
    
    57EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 
 (Unaudited)September 30,
    
    
    December 31,2006
    
    
    2005ASSETSInvestments:Fixed maturity available-for-sale securities at fair value
(amortized cost  $3,286,729 and $2,936,152, respectively)
    
    $
    3,233,580
    
    
    $
    2,888,922Fixed maturity trading securities at fair value
(amortized cost  $122,311 and $99,141, respectively)
    
    
    120,572
    
    
    
    98,781Preferred stocks (cost  $8,735 and $8,735, respectively)
    
    
    8,322
    
    
    
    8,186Other invested asset
    
    
    5,000
    
    
    
    5,000Short-term investments
    
    
    42,502
    
    
    
    8,793Total investments
    
    
    3,409,976
    
    
    
    3,009,682Cash and cash equivalents
    
    
    773,323
    
    
    
    820,746Accrued investment income
    
    
    30,356
    
    
    
    29,230Reinsurance premiums receivable
    
    
    385,052
    
    
    
    567,449Reinsurance recoverable on ceded losses and loss adjustment expenses
    
    
    59,014
    
    
    
    68,210Prepaid reinsurance premiums
    
    
    20,625
    
    
    
    7,899Funds held by ceding companies
    
    
    249,359
    
    
    
    291,629Deferred acquisition costs
    
    
    90,195
    
    
    
    130,800Income tax recoverable
    
    
    114
    
    
    
    24,522Deferred tax assets
    
    
    34,542
    
    
    
    31,934Due from investment broker
    
    
    2,642
    
    
    
    157,930Other assets
    
    
    11,587
    
    
    
    14,344Total assets
    
    $
    5,066,785
    
    
    $
    5,154,375LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesUnpaid losses and loss adjustment expenses
    
    $
    2,358,801
    
    
    $
    2,323,990Unearned premiums
    
    
    399,524
    
    
    
    502,018Reinsurance deposit liabilities
    
    
    4,003
    
    
    
    6,048Debt obligations
    
    
    292,840
    
    
    
    292,840Ceded premiums payable
    
    
    32,610
    
    
    
    22,544Commissions payable
    
    
    143,672
    
    
    
    186,654Deferred tax liabilities
    
    
    601
    
    
    
    118Due to investment broker
    
    
    
    
    
    
    259,834Other liabilities
    
    
    61,206
    
    
    
    20,080Total liabilities
    
    
    3,293,257
    
    
    
    3,614,126Shareholders 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,
59,638,834 and 59,126,675 shares issued and outstanding,
respectively
    
    
    596
    
    
    
    590Additional paid-in capital
    
    
    1,542,228
    
    
    
    1,527,316Unearned share grant compensation
    
    
    
    
    
    
    (2,467
    )Accumulated other comprehensive loss
    
    
    (46,497
    )
    
    
    (40,718
    )Retained earnings
    
    
    277,144
    
    
    
    55,471Total shareholders equity
    
    
    1,773,528
    
    
    
    1,540,249Total liabilities and shareholders equity
    
    $
    5,066,785
    
    
    $
    5,154,375
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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue:Net premiums earned
    
    $
    339,609
    
    
    
    429,388
    
    
    
    1,020,975
    
    
    $
    1,271,898Net investment income
    
    
    48,302
    
    
    
    36,441
    
    
    
    137,165
    
    
    
    92,250Net realized gains (losses) on investments
    
    
    (57
    )
    
    
    (879
    )
    
    
    22
    
    
    
    (1,062
    )Other income (expense)
    
    
    1,714
    
    
    
    (433
    )
    
    
    (1,927
    )
    
    
    (201
    )Total revenue
    
    
    389,568
    
    
    
    464,517
    
    
    
    1,156,235
    
    
    
    1,362,885Expenses:Losses and loss adjustment expenses
    
    
    191,428
    
    
    
    564,618
    
    
    
    585,666
    
    
    
    1,043,168Acquisition expenses
    
    
    74,994
    
    
    
    98,858
    
    
    
    220,285
    
    
    
    296,035Operating expenses
    
    
    25,348
    
    
    
    8,080
    
    
    
    71,728
    
    
    
    51,568Net foreign currency exchange losses
(gains)
    
    
    228
    
    
    
    (88
    )
    
    
    (461
    )
    
    
    1,870Interest expense
    
    
    5,452
    
    
    
    6,839
    
    
    
    16,352
    
    
    
    13,186Total expenses
    
    
    297,450
    
    
    
    678,307
    
    
    
    893,570
    
    
    
    1,405,827Income (loss) before income tax
expense (benefit)
    
    
    92,118
    
    
    
    (213,790
    )
    
    
    262,665
    
    
    
    (42,942
    )Income tax expense (benefit)
    
    
    7,195
    
    
    
    (37,766
    )
    
    
    18,958
    
    
    
    (7,991
    )Net income (loss)
    
    
    84,923
    
    
    
    (176,024
    )
    
    
    243,707
    
    
    
    (34,951
    )Preferred dividends
    
    
    2,602
    
    
    
    
    
    
    
    7,780
    
    
    
    Net income (loss) attributable to
common shareholders
    
    $
    82,321
    
    
    
    (176,024
    )
    
    
    235,927
    
    
    $
    (34,951
    )Earnings (loss) per share:Basic earnings (loss) per share
    
    $
    1.38
    
    
    
    (4.02
    )
    
    
    3.98
    
    
    $
    (0.80
    )Diluted earnings (loss) per share
    
    $
    1.28
    
    
    
    (4.02
    )
    
    
    3.68
    
    
    $
    (0.80
    )Comprehensive income (loss):Net income (loss)
    
    $
    84,923
    
    
    
    (176,024
    )
    
    
    243,707
    
    
    $
    (34,951
    )Other comprehensive income (loss):Net change in unrealized gains and
losses on available-for-sale
securities, net of deferred taxes
    
    
    53,893
    
    
    
    (36,414
    )
    
    
    (6,002
    )
    
    
    (37,992
    )Cumulative translation adjustments,
net of deferred taxes
    
    
    48
    
    
    
    59
    
    
    
    223
    
    
    
    22Comprehensive income (loss)
    
    $
    138,864
    
    
    
    (212,379
    )
    
    
    237,928
    
    
    $
    (72,921
    )Shareholder dividends:Preferred dividends declared
    
    $
    2,602
    
    
    
    
    
    
    
    7,216
    
    
    $
    Preferred dividends declared per share
    
    
    0.45
    
    
    
    
    
    
    
    1.26
    
    
    
    Common dividends declared
    
    
    4,767
    
    
    
    3,490
    
    
    
    14,254
    
    
    
    10,401Common dividends declared per share
    
    $
    0.08
    
    
    
    0.08
    
    
    
    0.24
    
    
    $
    0.24
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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 
  2006
    
    
    2005Preferred shares:Balances at beginning and end of periods
    
    $
    57
    
    
    $
    Common shares:Balances at beginning of period
    
    
    590
    
    
    
    430Exercise of share options
    
    
    5
    
    
    
    7Issuance of restricted shares
    
    
    1
    
    
    
    1Issuance of common shares
    
    
    
    
    
    
    58Balances at end of period
    
    
    596
    
    
    
    496Additional paid-in-capital:Balances at beginning of period
    
    
    1,527,316
    
    
    
    911,851Issuance of restricted shares
    
    
    
    
    
    
    13,063Exercise of common share options
    
    
    12,224
    
    
    
    2,749Share based compensation
    
    
    5,155
    
    
    
    2,559Issuance of common shares
    
    
    
    
    
    
    161,807Transfer of unearned common share grant compensation
    
    
    (2,467
    )
    
    
    Balances at end of period
    
    
    1,542,228
    
    
    
    1,092,029Unearned common share grant compensation:Balances at beginning of period
    
    
    (2,467
    )
    
    
    Shares issued
    
    
    
    
    
    
    (2,750
    )Amortization
    
    
    
    
    
    
    642Transfer of unearned common share grant compensation
    
    
    2,467
    
    
    
    Balances at end of period
    
    
    
    
    
    
    (2,108
    )Accumulated other comprehensive income (loss):Balances at beginning of period
    
    
    (40,718
    )
    
    
    12,252Net change in unrealized gains and losses on
available-for-sale securities, net of deferred tax
    
    
    (6,002
    )
    
    
    (37,992
    )Net change in cumulative translation adjustments,
net of deferred tax
    
    
    223
    
    
    
    22Balances at end of period
    
    
    (46,497
    )
    
    
    (25,718
    )Retained earnings:Balances at beginning of period
    
    
    55,471
    
    
    
    208,470Net income (loss)
    
    
    243,707
    
    
    
    (34,951
    )Preferred share dividends
    
    
    (7,780
    )
    
    
    Common share dividends
    
    
    (14,254
    )
    
    
    (10,401
    )Balances at end of period
    
    
    277,144
    
    
    
    163,118Total shareholders equity
    
    $
    1,773,528
    
    
    $
    1,227,817
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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 
  2006
    
    
    2005Operating Activities:Net income (loss)
    
    $
    243,707
    
    
    $
    (34,951
    )Adjustments to reconcile net income (loss) to cash provided by
operations:Depreciation and amortization
    
    
    12,298
    
    
    
    13,361Net realized (gains) losses on investments
    
    
    (22
    )
    
    
    1,062Net foreign currency exchange (gains) losses
    
    
    (461
    )
    
    
    1,870Share based compensation
    
    
    5,155
    
    
    
    3,301Deferred income tax expense
    
    
    (2,446
    )
    
    
    (22,539
    )Trading securities activities
    
    
    (15,019
    )
    
    
    (14,195
    )Changes in assets and liabilities:Increase in accrued investment income
    
    
    (1,126
    )
    
    
    (7,350
    )Decrease in reinsurance premiums receivable
    
    
    182,397
    
    
    
    22,626(Increase) decrease in funds held by ceding companies
    
    
    42,270
    
    
    
    (52,276
    )(Increase) decrease in deferred acquisition costs
    
    
    40,605
    
    
    
    (3,120
    )Increase in net unpaid losses and loss adjustment expenses
    
    
    35,723
    
    
    
    638,669Increase (decrease) in net unearned premiums
    
    
    (115,220
    )
    
    
    48,600Decrease in reinsurance deposit liabilities
    
    
    (2,045
    )
    
    
    (14,257
    )Increase in ceded premiums payable
    
    
    10,066
    
    
    
    23,894Decrease in commissions payable
    
    
    (42,982
    )
    
    
    (5,889
    )Increase in funds withheld
    
    
    
    
    
    
    (11,999
    )Decrease in income tax recoverable
    
    
    24,408
    
    
    
    (8,781
    )Net changes in other assets and liabilities
    
    
    42,113
    
    
    
    (16,607
    )Other net
    
    
    577
    
    
    
    (2,399
    )Net cash provided by operating activities
    
    
    459,998
    
    
    
    559,020Investing Activities:Proceeds from sale of available-for-sale fixed maturity
securities
    
    
    195,899
    
    
    
    478,134Proceeds from maturity or paydown of available-for-sale fixed
maturity securities
    
    
    184,609
    
    
    
    97,070Acquisition of available-for-sale fixed maturity securities
    
    
    (847,276
    )
    
    
    (1,363,918
    )Net acquisitions of short-term investments
    
    
    (31,412
    )
    
    
    Net cash used in investing activities
    
    
    (498,180
    )
    
    
    (788,714
    )Financing Activities:Dividends paid to preferred shareholders
    
    
    (7,216
    )
    
    
    Dividends paid to common shareholders
    
    
    (14,254
    )
    
    
    (10,401
    )Proceeds from issuance of debt
    
    
    
    
    
    
    246,900Proceeds from exercise of share options
    
    
    12,229
    
    
    
    13,070Proceeds from issuance of common shares
    
    
    
    
    
    
    161,865Net cash provided by (used in) financing activities
    
    
    (9,241
    )
    
    
    411,434Net increase (decrease) in cash and cash equivalents
    
    
    (47,423
    )
    
    
    181,740Cash and cash equivalents at beginning of period
    
    
    820,746
    
    
    
    209,897Cash and cash equivalents at end of period
    
    $
    773,323
    
    
    $
    391,637Supplemental disclosures of cash flow information:Income taxes paid (recovered)
    
    $
    (3,342
    )
    
    $
    32,507Interest paid
    
    $
    10,740
    
    
    $
    7,219
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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 
 1. Basis of Presentation
   Share-Based Compensation
    - 5 -




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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
  AsReported
    
    Pro FormaThree Months Ended September 30, 2005:Share-based compensation expense
    
    $
    908
    
    
    $
    2,140Net loss
    
    
    (176,024
    )
    
    
    (177,256
    )Basic loss per share
    
    
    (4.02
    )
    
    
    (4.05
    )Diluted loss per share
    
    
    (4.02
    )
    
    
    (4.05
    )Nine Months Ended September 30, 2005:Share-based compensation expense
    
    
    2,710
    
    
    
    6,256Net loss
    
    
    (34,951
    )
    
    
    (38,497
    )Basic loss per share
    
    
    (0.80
    )
    
    
    (0.89
    )Diluted loss per share
    
    $
    (0.80
    )
    
    $
    (0.89
    )
 Recently Issued Accounting Standards
  Reclassifications
  2. Investments
  - 6 -




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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 2006
    
    
    2005Fixed maturities
    
    $
    (5,782
    )
    
    $
    (44,218
    )Less  deferred taxes
    
    
    (220
    )
    
    
    6,226Net change in unrealized investment gains and losses
    
    $
    (6,002
    )
    
    $
    (37,992
    )
   UnrealizedFair Value
    
    
    LossLess than twelve months:U.S. Government
    
    $
    90,078
    
    
    $
    963Corporate bonds
    
    
    343,979
    
    
    
    4,055Mortgage-backed and asset-backed securities
    
    
    331,255
    
    
    
    2,386Municipal bonds
    
    
    17,578
    
    
    
    69Foreign governments and states
    
    
    1,957
    
    
    
    19Total
    
    
    784,847
    
    
    
    7,492Twelve months or more:U.S. Government
    
    
    41,031
    
    
    
    818Corporate bonds
    
    
    986,265
    
    
    
    23,958Mortgage-backed and asset-backed securities
    
    
    703,695
    
    
    
    19,705Municipal bonds
    
    
    181,221
    
    
    
    2,726Foreign governments and states
    
    
    38,778
    
    
    
    985Preferred stocks
    
    
    8,322
    
    
    
    413Total
    
    
    1,959,312
    
    
    
    48,605Total of securities with unrealized losses:U.S. Government
    
    
    131,109
    
    
    
    1,781Corporate bonds
    
    
    1,330,244
    
    
    
    28,013Mortgage-backed and asset-backed securities
    
    
    1,034,950
    
    
    
    22,091Municipal bonds
    
    
    198,799
    
    
    
    2,795Foreign governments and states
    
    
    40,735
    
    
    
    1,004Preferred stocks
    
    
    8,322
    
    
    
    413Total
    
    $
    2,744,159
    
    
    $
    56,097
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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
     3. Earnings (Loss) Per Share
  - 8 -




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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 Weighted
    
    
    EarningsAverage
    
    
    (Loss)Net
    
    
    Common
    
    
    PerIncome
    
    
    Shares
    
    
    Common(Loss)
    
    
    Outstanding
    
    
    ShareThree Months Ended September 30, 2006:Basic earnings per share:Net income attributable to common shareholders
    
    $
    82,321
    
    
    
    59,537
    
    
    $
    1.38Effect of dilutive securities:Common share options, restricted common shares
and common share units
    
    
    
    
    
    
    1,233Conversion of preferred shares
    
    
    
    
    
    
    5,750Preferred share dividends
    
    
    2,602
    
    
    
    Adjusted net income for diluted earnings per share
    
    $
    84,923
    
    
    
    66,520
    
    
    $
    1.28Three Months Ended September 30, 2005:Basic and diluted loss per share:Net loss attributable to common shareholders
    
    $
    (176,024
    )
    
    
    43,785
    
    
    $
    (4.02
    )Nine Months Ended September 30, 2006:Basic earnings per share:Net income attributable to common shareholders
    
    $
    235,927
    
    
    
    59,287
    
    
    $
    3.98Effect of dilutive securities:Common share options, restricted common shares
and common share units
    
    
    
    
    
    
    1,236Conversion of preferred shares
    
    
    
    
    
    
    5,750Preferred share dividends
    
    
    7,780
    
    
    
    Adjusted net income for diluted earnings per share
    
    $
    243,707
    
    
    
    66,273
    
    
    $
    3.68Nine Months Ended September 30, 2005:Basic and diluted loss per share:Net loss attributable to common shareholders
    
    $
    (34,951
    )
    
    
    43,459
    
    
    $
    (0.80
    )
 4. Operating Segment Information
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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
   Propertyand Marine
    
    
    Casualty
    
    
    Finite Risk
    
    
    TotalThree months ended September 30,
2006:Net premiums written
    
    $
    83,018
    
    
    
    202,302
    
    
    
    12,680
    
    
    $
    298,000Net premiums earned
    
    
    97,686
    
    
    
    214,427
    
    
    
    27,496
    
    
    
    339,609Losses and LAE
    
    
    17,181
    
    
    
    149,698
    
    
    
    24,549
    
    
    
    191,428Acquisition expenses
    
    
    14,895
    
    
    
    54,503
    
    
    
    5,596
    
    
    
    74,994Other underwriting expenses
    
    
    8,608
    
    
    
    9,464
    
    
    
    1,991
    
    
    
    20,063Segment underwriting income (loss)
    
    $
    57,002
    
    
    
    762
    
    
    
    (4,640
    )
    
    
    53,124Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,302Net realized losses on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57
    )Net foreign currency exchange losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (228
    )Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,714Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,285
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,452
    )Income before income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    92,118
 - 10 -




---



##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 Propertyand Marine
    
    
    Casualty
    
    
    Finite Risk
    
    
    TotalRatios:Loss and LAE
    
    
    17.6
    %
    
    
    69.8
    %
    
    
    89.3
    %
    
    
    56.4
    %Acquisition expense
    
    
    15.2
    %
    
    
    25.4
    %
    
    
    20.4
    %
    
    
    22.1
    %Other underwriting expense
    
    
    8.8
    %
    
    
    4.4
    %
    
    
    7.2
    %
    
    
    5.9
    %Combined
    
    
    41.6
    %
    
    
    99.6
    %
    
    
    116.9
    %
    
    
    84.4
    %Three months ended September
30, 2005:Net premiums written
    
    $
    133,350
    
    
    
    216,659
    
    
    
    60,177
    
    
    $
    410,186Net premiums earned
    
    
    145,853
    
    
    
    205,050
    
    
    
    78,485
    
    
    
    429,388Losses and LAE
    
    
    373,761
    
    
    
    129,218
    
    
    
    61,639
    
    
    
    564,618Acquisition expenses
    
    
    17,753
    
    
    
    50,097
    
    
    
    31,008
    
    
    
    98,858Other underwriting expenses
    
    
    3,632
    
    
    
    1,894
    
    
    
    524
    
    
    
    6,050Segment underwriting income (loss)
    
    $
    (249,293
    )
    
    
    23,841
    
    
    
    (14,686
    )
    
    
    (240,138
    )Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,441Net realized losses on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (879
    )Net foreign currency exchange gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Other expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (433
    )Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,030
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,839
    )Loss before income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (213,790
    )Ratios:Loss and LAE
    
    
    256.3
    %
    
    
    63.0
    %
    
    
    78.5
    %
    
    
    131.5
    %Acquisition expense
    
    
    12.2
    %
    
    
    24.4
    %
    
    
    39.5
    %
    
    
    23.0
    %Other underwriting expense
    
    
    2.5
    %
    
    
    0.9
    %
    
    
    0.7
    %
    
    
    1.4
    %Combined
    
    
    271.0
    %
    
    
    88.3
    %
    
    
    118.7
    %
    
    
    155.9
    %
 - 11 -




---



##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 Propertyand Marine
    
    
    Casualty
    
    
    Finite Risk
    
    
    TotalNine Months Ended September
30, 2006:Net premiums written
    
    $
    333,906
    
    
    
    583,950
    
    
    
    (16,816
    )
    
    $
    901,040Net premiums earned
    
    
    342,322
    
    
    
    573,168
    
    
    
    105,485
    
    
    
    1,020,975Losses and LAE
    
    
    104,876
    
    
    
    394,087
    
    
    
    86,703
    
    
    
    585,666Acquisition expenses
    
    
    55,783
    
    
    
    141,025
    
    
    
    23,477
    
    
    
    220,285Other underwriting expenses
    
    
    27,642
    
    
    
    23,487
    
    
    
    3,935
    
    
    
    55,064Segment underwriting income (loss)
    
    $
    154,021
    
    
    
    14,569
    
    
    
    (8,630
    )
    
    
    159,960Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,165Net realized gains on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22Net foreign currency exchange gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461Other expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,927
    )Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,664
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,352
    )Income before income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    262,665Ratios:Loss and LAE
    
    
    30.6
    %
    
    
    68.8
    %
    
    
    82.2
    %
    
    
    57.4
    %Acquisition expense
    
    
    16.3
    %
    
    
    24.6
    %
    
    
    22.3
    %
    
    
    21.6
    %Other underwriting expense
    
    
    8.1
    %
    
    
    4.1
    %
    
    
    3.7
    %
    
    
    5.4
    %Combined
    
    
    55.0
    %
    
    
    97.5
    %
    
    
    108.2
    %
    
    
    84.4
    %Nine Months Ended September
30, 2005:Net premiums written
    
    $
    453,352
    
    
    
    621,218
    
    
    
    252,374
    
    
    $
    1,326,944Net premiums earned
    
    
    414,719
    
    
    
    588,541
    
    
    
    268,638
    
    
    
    1,271,898Losses and LAE
    
    
    492,300
    
    
    
    375,187
    
    
    
    175,681
    
    
    
    1,043,168Acquisition expenses
    
    
    69,437
    
    
    
    143,262
    
    
    
    83,336
    
    
    
    296,035Other underwriting expenses
    
    
    19,595
    
    
    
    18,179
    
    
    
    3,428
    
    
    
    41,202Segment underwriting income (loss)
    
    $
    (166,613
    )
    
    
    51,913
    
    
    
    6,193
    
    
    
    (108,507
    )Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,250Net realized losses on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,062
    )Net foreign currency exchange losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,870
    )Other expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (201
    )Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,366
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,186
    )Loss before income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (42,942
    )
 - 12 -




---



##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 Propertyand Marine
    
    
    Casualty
    
    
    Finite Risk
    
    
    TotalRatios:Loss and LAE
    
    
    118.7
    %
    
    
    63.7
    %
    
    
    65.4
    %
    
    
    82.0
    %Acquisition expense
    
    
    16.7
    %
    
    
    24.3
    %
    
    
    31.0
    %
    
    
    23.3
    %Other underwriting expense
    
    
    4.7
    %
    
    
    3.1
    %
    
    
    1.3
    %
    
    
    3.2
    %Combined
    
    
    140.1
    %
    
    
    91.1
    %
    
    
    97.7
    %
    
    
    108.5
    %
 5. Income Taxes
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Expected income tax
expense (benefit) at 35%
    
    $
    32,241
    
    
    
    (74,827
    )
    
    
    91,933
    
    
    $
    (15,030
    )Effect of foreign income
subject to tax at rates
other than 35%
    
    
    (24,913
    )
    
    
    38,528
    
    
    
    (71,726
    )
    
    
    270Tax exempt investment income
    
    
    (142
    )
    
    
    (1,047
    )
    
    
    (1,281
    )
    
    
    (2,011
    )U.S. withholding taxes
related to transfer to
foreign affiliate
    
    
    
    
    
    
    (1,000
    )
    
    
    
    
    
    
    8,150Other, net
    
    
    9
    
    
    
    580
    
    
    
    32
    
    
    
    630Income tax expense (benefit)
    
    $
    7,195
    
    
    
    (37,766
    )
    
    
    18,958
    
    
    $
    (7,991
    )
  - 13 -




---



##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
  6. Condensed Consolidating Financial Information
    Non-Condensed Consolidating Balance Sheet
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingSeptember 30, 2006
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedASSETSTotal investments
    
    $
    
    
    
    
    11,695
    
    
    
    3,398,281
    
    
    
    
    
    
    $
    3,409,976Investment in subsidiaries
    
    
    1,657,191
    
    
    
    475,554
    
    
    
    376,792
    
    
    
    (2,509,537
    )
    
    
    Cash and cash equivalents
    
    
    109,183
    
    
    
    22,415
    
    
    
    641,725
    
    
    
    
    
    
    
    773,323Reinsurance assets
    
    
    
    
    
    
    
    
    
    
    804,245
    
    
    
    
    
    
    
    804,245Income tax recoverable
    
    
    
    
    
    
    3,751
    
    
    
    (3,637
    )
    
    
    
    
    
    
    114Other assets
    
    
    12,216
    
    
    
    3,840
    
    
    
    63,071
    
    
    
    
    
    
    
    79,127Total assets
    
    $
    1,778,590
    
    
    
    517,255
    
    
    
    5,280,477
    
    
    
    (2,509,537
    )
    
    $
    5,066,785LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesReinsurance liabilities
    
    $
    
    
    
    
    
    
    
    
    2,938,610
    
    
    
    
    
    
    $
    2,938,610Debt obligations
    
    
    
    
    
    
    292,840
    
    
    
    
    
    
    
    
    
    
    
    292,840Other liabilities
    
    
    5,062
    
    
    
    7,394
    
    
    
    49,351
    
    
    
    
    
    
    
    61,807Total liabilities
    
    
    5,062
    
    
    
    300,234
    
    
    
    2,987,961
    
    
    
    
    
    
    
    3,293,257Shareholders EquityPreferred shares
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57Common shares
    
    
    596
    
    
    
    
    
    
    
    6,250
    
    
    
    (6,250
    )
    
    
    596Additional paid-in capital
    
    
    1,542,228
    
    
    
    192,036
    
    
    
    2,051,134
    
    
    
    (2,243,170
    )
    
    
    1,542,228Accumulated other comprehensive loss
    
    
    (46,497
    )
    
    
    (9,474
    )
    
    
    (58,044
    )
    
    
    67,518
    
    
    
    (46,497
    )Retained earnings
    
    
    277,144
    
    
    
    34,459
    
    
    
    293,176
    
    
    
    (327,635
    )
    
    
    277,144Total shareholders equity
    
    
    1,773,528
    
    
    
    217,021
    
    
    
    2,292,516
    
    
    
    (2,509,537
    )
    
    
    1,773,528Total liabilities and shareholders equity
    
    $
    1,778,590
    
    
    
    517,255
    
    
    
    5,280,477
    
    
    
    (2,509,537
    )
    
    $
    5,066,785
 - 14 -




---



##### Table of Contents



Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 
 Non-Condensed Consolidating Balance Sheet
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingDecember 31, 2005
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedASSETSTotal investments
    
    $
    
    
    
    
    12,448
    
    
    
    2,997,234
    
    
    
    
    
    
    $
    3,009,682Investment in subsidiaries
    
    
    1,410,794
    
    
    
    448,839
    
    
    
    436,368
    
    
    
    (2,296,001
    )
    
    
    Cash and cash equivalents
    
    
    129,962
    
    
    
    5,010
    
    
    
    685,774
    
    
    
    
    
    
    
    820,746Reinsurance assets
    
    
    
    
    
    
    
    
    
    
    1,065,987
    
    
    
    
    
    
    
    1,065,987Income tax recoverable
    
    
    
    
    
    
    5,874
    
    
    
    18,648
    
    
    
    
    
    
    
    24,522Other assets
    
    
    2,963
    
    
    
    4,086
    
    
    
    226,389
    
    
    
    
    
    
    
    233,438Total assets
    
    $
    1,543,719
    
    
    
    476,257
    
    
    
    5,430,400
    
    
    
    (2,296,001
    )
    
    $
    5,154,375LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesReinsurance liabilities
    
    $
    
    
    
    
    
    
    
    
    3,041,254
    
    
    
    
    
    
    $
    3,041,254Debt obligations
    
    
    
    
    
    
    292,840
    
    
    
    
    
    
    
    
    
    
    
    292,840Other liabilities
    
    
    3,470
    
    
    
    2,243
    
    
    
    274,319
    
    
    
    
    
    
    
    280,032Total liabilities
    
    
    3,470
    
    
    
    295,083
    
    
    
    3,315,573
    
    
    
    
    
    
    
    3,614,126Shareholders EquityPreferred shares
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57Common shares
    
    
    590
    
    
    
    
    
    
    
    6,250
    
    
    
    (6,250
    )
    
    
    590Unearned share grant compensation
    
    
    (2,467
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,467
    )Additional paid-in capital
    
    
    1,527,316
    
    
    
    192,036
    
    
    
    2,050,834
    
    
    
    (2,242,870
    )
    
    
    1,527,316Accumulated other comprehensive loss
    
    
    (40,718
    )
    
    
    (10,199
    )
    
    
    (52,840
    )
    
    
    63,039
    
    
    
    (40,718
    )Retained earnings
    
    
    55,471
    
    
    
    (663
    )
    
    
    110,583
    
    
    
    (109,920
    )
    
    
    55,471Total shareholders equity
    
    
    1,540,249
    
    
    
    181,174
    
    
    
    2,114,827
    
    
    
    (2,296,001
    )
    
    
    1,540,249Total liabilities and shareholders
equity
    
    $
    1,543,719
    
    
    
    476,257
    
    
    
    5,430,400
    
    
    
    (2,296,001
    )
    
    $
    5,154,375
 - 15 -




---



##### Table of Contents



Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 
 Consolidating Statement of Operations
    
    
    
    
    
    
    
    
    
    Non-For the Three Months Ended
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingSeptember 30, 2006
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Net premiums earned
    
    $
    
    
    
    
    
    
    
    
    339,609
    
    
    
    
    
    
    $
    339,609Net investment income
    
    
    1,568
    
    
    
    171
    
    
    
    46,563
    
    
    
    
    
    
    
    48,302Net realized gains on investments
    
    
    
    
    
    
    
    
    
    
    (57
    )
    
    
    
    
    
    
    (57
    )Other income (expense), net
    
    
    2,000
    
    
    
    
    
    
    
    (286
    )
    
    
    
    
    
    
    1,714Total revenue
    
    
    3,568
    
    
    
    171
    
    
    
    385,829
    
    
    
    
    
    
    
    389,568Expenses:Losses and loss adjustment expenses
    
    
    
    
    
    
    
    
    
    
    191,428
    
    
    
    
    
    
    
    191,428Acquisition expenses
    
    
    
    
    
    
    
    
    
    
    74,994
    
    
    
    
    
    
    
    74,994Operating expenses
    
    
    5,167
    
    
    
    105
    
    
    
    20,076
    
    
    
    
    
    
    
    25,348Net foreign currency exchange losses
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    228Interest expense
    
    
    
    
    
    
    5,452
    
    
    
    
    
    
    
    
    
    
    
    5,452Total expenses
    
    
    5,167
    
    
    
    5,557
    
    
    
    286,726
    
    
    
    
    
    
    
    297,450Income (loss) before income tax expense
(benefit)
    
    
    (1,599
    )
    
    
    (5,386
    )
    
    
    99,103
    
    
    
    
    
    
    
    92,118Income tax expense (benefit)
    
    
    
    
    
    
    (1,870
    )
    
    
    9,065
    
    
    
    
    
    
    
    7,195Net income (loss) before equity in
earnings of subsidiaries
    
    
    (1,599
    )
    
    
    (3,516
    )
    
    
    90,038
    
    
    
    
    
    
    
    84,923Equity in earnings of subsidiaries
    
    
    86,522
    
    
    
    12,443
    
    
    
    14,097
    
    
    
    (113,062
    )
    
    
    Net income
    
    
    84,923
    
    
    
    8,927
    
    
    
    104,135
    
    
    
    (113,062
    )
    
    
    84,923Preferred dividends
    
    
    2,602
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,602Net income attributable to common
shareholders
    
    $
    82,321
    
    
    
    8,927
    
    
    
    104,135
    
    
    
    (113,062
    )
    
    $
    82,321
 - 16 -




---



##### Table of Contents



Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 
 Consolidating Statement of Operations
    
    
    
    
    
    
    
    
    
    Non-For the Three Months Ended
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingSeptember 30, 2005
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Net premiums earned
    
    $
    
    
    
    
    
    
    
    
    429,388
    
    
    
    
    
    
    $
    429,388Net investment income
    
    
    153
    
    
    
    295
    
    
    
    36,077
    
    
    
    (84
    )
    
    
    36,441Net realized losses on investments
    
    
    
    
    
    
    7
    
    
    
    (886
    )
    
    
    
    
    
    
    (879
    )Other income (expense), net
    
    
    3,500
    
    
    
    
    
    
    
    (3,933
    )
    
    
    
    
    
    
    (433
    )Total revenue
    
    
    3,653
    
    
    
    302
    
    
    
    460,646
    
    
    
    (84
    )
    
    
    464,517Expenses:Losses and loss adjustment expenses
    
    
    
    
    
    
    
    
    
    
    564,618
    
    
    
    
    
    
    
    564,618Acquisition expenses
    
    
    
    
    
    
    
    
    
    
    98,858
    
    
    
    
    
    
    
    98,858Operating expenses
    
    
    1,795
    
    
    
    131
    
    
    
    6,238
    
    
    
    (84
    )
    
    
    8,080Net foreign currency exchange gains
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    (88
    )Interest expense
    
    
    13
    
    
    
    6,826
    
    
    
    
    
    
    
    
    
    
    
    6,839Total expenses
    
    
    1,808
    
    
    
    6,957
    
    
    
    669,626
    
    
    
    (84
    )
    
    
    678,307Income (loss) before income tax
expense (benefit)
    
    
    1,845
    
    
    
    (6,655
    )
    
    
    (208,980
    )
    
    
    
    
    
    
    (213,790
    )Income tax benefit
    
    
    
    
    
    
    (2,329
    )
    
    
    (35,437
    )
    
    
    
    
    
    
    (37,766
    )Net income (loss) before equity in
loss of subsidiaries
    
    
    1,845
    
    
    
    (4,326
    )
    
    
    (173,543
    )
    
    
    
    
    
    
    (176,024
    )Equity in loss of subsidiaries
    
    
    (177,869
    )
    
    
    (37,728
    )
    
    
    (74,343
    )
    
    
    289,940
    
    
    
    Net loss
    
    $
    (176,024
    )
    
    
    (42,054
    )
    
    
    (247,886
    )
    
    
    289,940
    
    
    $
    (176,024
    )
 - 17 -




---



##### Table of Contents



Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 
 Consolidating Statement of Operations
    
    
    
    
    
    
    
    
    
    Non-For the Nine Months Ended
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingSeptember 30, 2006
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Net premiums earned
    
    $
    
    
    
    
    
    
    
    
    1,020,975
    
    
    
    
    
    
    $
    1,020,975Net investment income
    
    
    4,474
    
    
    
    618
    
    
    
    132,073
    
    
    
    
    
    
    
    137,165Net realized gains on investments
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Other income (expense), net
    
    
    3,100
    
    
    
    
    
    
    
    (5,027
    )
    
    
    
    
    
    
    (1,927
    )Total revenue
    
    
    7,574
    
    
    
    618
    
    
    
    1,148,043
    
    
    
    
    
    
    
    1,156,235Expenses:Losses and loss adjustment expenses
    
    
    
    
    
    
    
    
    
    
    585,666
    
    
    
    
    
    
    
    585,666Acquisition expenses
    
    
    
    
    
    
    
    
    
    
    220,285
    
    
    
    
    
    
    
    220,285Operating expenses
    
    
    16,039
    
    
    
    471
    
    
    
    55,218
    
    
    
    
    
    
    
    71,728Net foreign currency exchange gains
    
    
    
    
    
    
    
    
    
    
    (461
    )
    
    
    
    
    
    
    (461
    )Interest expense
    
    
    
    
    
    
    16,352
    
    
    
    
    
    
    
    
    
    
    
    16,352Total expenses
    
    
    16,039
    
    
    
    16,823
    
    
    
    860,708
    
    
    
    
    
    
    
    893,570Income (loss) before income tax expense
(benefit)
    
    
    (8,465
    )
    
    
    (16,205
    )
    
    
    287,335
    
    
    
    
    
    
    
    262,665Income tax expense (benefit)
    
    
    
    
    
    
    (5,656
    )
    
    
    24,614
    
    
    
    
    
    
    
    18,958Net income (loss) before equity in
earnings of subsidiaries
    
    
    (8,465
    )
    
    
    (10,549
    )
    
    
    262,721
    
    
    
    
    
    
    
    243,707Equity in earnings of subsidiaries
    
    
    252,172
    
    
    
    45,670
    
    
    
    37,162
    
    
    
    (335,004
    )
    
    
    Net income
    
    
    243,707
    
    
    
    35,121
    
    
    
    299,883
    
    
    
    (335,004
    )
    
    
    243,707Preferred dividends
    
    
    7,780
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,780Net income attributable to common
shareholders
    
    $
    235,927
    
    
    
    35,121
    
    
    
    299,883
    
    
    
    (335,004
    )
    
    $
    235,927
 - 18 -




---



##### Table of Contents



Platinum
Underwriters Holdings, Ltd. and Subsidiaries
 
 Non-Consolidating Statement of Operations
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingFor the Nine Months Ended September 30, 2005
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Net premiums earned
    
    $
    
    
    
    
    
    
    
    
    1,271,898
    
    
    
    
    
    
    $
    1,271,898Net investment income
    
    
    225
    
    
    
    551
    
    
    
    91,558
    
    
    
    (84
    )
    
    
    92,250Net realized gains (losses) on investments
    
    
    
    
    
    
    8
    
    
    
    (1,070
    )
    
    
    
    
    
    
    (1,062
    )Other income, net
    
    
    3,500
    
    
    
    
    
    
    
    (3,701
    )
    
    
    
    
    
    
    (201
    )Total revenue
    
    
    3,725
    
    
    
    559
    
    
    
    1,358,685
    
    
    
    (84
    )
    
    
    1,362,885Expenses:Losses and loss adjustment expenses
    
    
    
    
    
    
    
    
    
    
    1,043,168
    
    
    
    
    
    
    
    1,043,168Acquisition expenses
    
    
    
    
    
    
    
    
    
    
    296,035
    
    
    
    
    
    
    
    296,035Operating expenses
    
    
    9,668
    
    
    
    439
    
    
    
    41,545
    
    
    
    (84
    )
    
    
    51,568Net foreign currency exchange losses
    
    
    2
    
    
    
    
    
    
    
    1,868
    
    
    
    
    
    
    
    1,870Interest expense
    
    
    66
    
    
    
    13,120
    
    
    
    
    
    
    
    
    
    
    
    13,186Total expenses
    
    
    9,736
    
    
    
    13,559
    
    
    
    1,382,616
    
    
    
    (84
    )
    
    
    1,405,827Loss before income tax expense
    
    
    (6,011
    )
    
    
    (13,000
    )
    
    
    (23,931
    )
    
    
    
    
    
    
    (42,942
    )Income tax benefit
    
    
    
    
    
    
    (4,550
    )
    
    
    (3,441
    )
    
    
    
    
    
    
    (7,991
    )Net loss before equity in loss of
subsidiaries
    
    
    (6,011
    )
    
    
    (8,450
    )
    
    
    (20,490
    )
    
    
    
    
    
    
    (34,951
    )Equity in loss of subsidiaries
    
    
    (28,940
    )
    
    
    (1,128
    )
    
    
    (32,898
    )
    
    
    62,966
    
    
    
    Net loss
    
    $
    (34,951
    )
    
    
    (9,578
    )
    
    
    (53,388
    )
    
    
    62,966
    
    
    $
    (34,951
    )
 - 19 -




---



##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 Condensed Consolidating Statement of Cash Flows
    
    
    
    
    
    
    
    
    
    Non-For the Nine Months Ended
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingSeptember 30, 2006
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    (11,538
    )
    
    
    (3,009
    )
    
    
    474,545
    
    
    
    
    
    
    $
    459,998Investing Activities:Proceeds from sale of
available-for-sale fixed maturities
    
    
    
    
    
    
    
    
    
    
    195,899
    
    
    
    
    
    
    
    195,899Proceeds from maturity or paydown of
available-for-sale fixed maturities
    
    
    
    
    
    
    1,212
    
    
    
    183,397
    
    
    
    
    
    
    
    184,609Acquisition of available-for-sale fixed
maturities
    
    
    
    
    
    
    (498
    )
    
    
    (846,778
    )
    
    
    
    
    
    
    (847,276
    )Increase in short-term investments
    
    
    
    
    
    
    
    
    
    
    (31,412
    )
    
    
    
    
    
    
    (31,412
    )Contributions to subsidiaries
    
    
    
    
    
    
    (300
    )
    
    
    300
    
    
    
    
    
    
    
    Dividends from subsidiaries
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    (20,000
    )
    
    
    Net cash provided by (used in)
investing activities
    
    
    
    
    
    
    20,414
    
    
    
    (498,594
    )
    
    
    (20,000
    )
    
    
    (498,180
    )Financing Activities:Dividends paid to preferred shareholders
    
    
    (7,216
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,216
    )Dividends paid to common shareholders
    
    
    (14,254
    )
    
    
    
    
    
    
    (20,000
    )
    
    
    20,000
    
    
    
    (14,254
    )Proceeds from exercise of share options
    
    
    12,229
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,229Net cash used in financing activities
    
    
    (9,241
    )
    
    
    
    
    
    
    (20,000
    )
    
    
    20,000
    
    
    
    (9,241
    )Net increase (decrease) in cash and
cash equivalents
    
    
    (20,779
    )
    
    
    17,405
    
    
    
    (44,049
    )
    
    
    
    
    
    
    (47,423
    )Cash and cash equivalents at beginning of
period
    
    
    129,962
    
    
    
    5,010
    
    
    
    685,774
    
    
    
    
    
    
    
    820,746Cash and cash equivalents at end of period
    
    $
    109,183
    
    
    
    22,415
    
    
    
    641,725
    
    
    
    
    
    
    $
    773,323
 - 20 -




---



##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
   Condensed Consolidating Statement of Cash Flows
    
    
    
    
    
    
    
    
    
    Non-For the Nine Months Ended
    
    Platinum
    
    
    Platinum
    
    
    guarantor
    
    
    ConsolidatingSeptember 30, 2005
    
    Holdings
    
    
    Finance
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    (6,885
    )
    
    
    (4,872
    )
    
    
    570,777
    
    
    
    
    
    
    $
    559,020Investing Activities:Proceeds from sale of
available-for-sale fixed maturities
    
    
    
    
    
    
    2,983
    
    
    
    475,151
    
    
    
    
    
    
    
    478,134Proceeds from sale of subsidiary shares
    
    
    
    
    
    
    
    
    
    
    193,000
    
    
    
    (193,000
    )
    
    
    Proceeds from maturity or paydown of
available-for-sale fixed maturities
    
    
    
    
    
    
    316
    
    
    
    96,754
    
    
    
    
    
    
    
    97,070Acquisition of available-for-sale fixed
maturities
    
    
    
    
    
    
    (12,347
    )
    
    
    (1,351,571
    )
    
    
    
    
    
    
    (1,363,918
    )Dividends from subsidiaries
    
    
    202,000
    
    
    
    
    
    
    
    
    
    
    
    (202,000
    )
    
    
    Contributions to subsidiaries
    
    
    (185,000
    )
    
    
    (25,000
    )
    
    
    
    
    
    
    210,000
    
    
    
    Net cash provided by (used in)
investing activities
    
    
    17,000
    
    
    
    (34,048
    )
    
    
    (586,666
    )
    
    
    (185,000
    )
    
    
    (788,714
    )Financing Activities:Dividends paid to shareholders
    
    
    (10,401
    )
    
    
    
    
    
    
    (202,000
    )
    
    
    202,000
    
    
    
    (10,401
    )Proceeds from exercise of share options
    
    
    13,070
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,070Proceeds from issuance of debt
    
    
    
    
    
    
    246,900
    
    
    
    
    
    
    
    
    
    
    
    246,900Purchase of common shares
    
    
    
    
    
    
    (193,000
    )
    
    
    
    
    
    
    193,000
    
    
    
    Proceeds from issuance of common shares
    
    
    161,865
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,865Capital contribution from parent
    
    
    
    
    
    
    
    
    
    
    210,000
    
    
    
    (210,000
    )
    
    
    Net cash provided by financing
activities
    
    
    164,534
    
    
    
    53,900
    
    
    
    8,000
    
    
    
    185,000
    
    
    
    411,434Net increase (decrease) in cash and
cash equivalents
    
    
    174,649
    
    
    
    14,980
    
    
    
    (7,889
    )
    
    
    
    
    
    
    181,740Cash and cash equivalents at beginning of
period
    
    
    1,945
    
    
    
    8,204
    
    
    
    199,748
    
    
    
    
    
    
    
    209,897Cash and cash equivalents at end of period
    
    $
    176,594
    
    
    
    23,184
    
    
    
    191,859
    
    
    
    
    
    
    $
    391,637
 - 21 -




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##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 7.
    
    Retrocessional Reinsurance
  Gross
    
    
    Ceded
    
    
    NetFor the Three Months Ended September 30,
2006:Premiums written
    
    $
    319,625
    
    
    
    21,625
    
    
    $
    298,000Premiums earned
    
    
    369,782
    
    
    
    30,173
    
    
    
    339,609Losses and LAE incurred
    
    
    192,923
    
    
    
    1,495
    
    
    
    191,428For the Three Months Ended September 30,
2005:Premiums written
    
    
    425,146
    
    
    
    14,960
    
    
    
    410,186Premiums earned
    
    
    439,843
    
    
    
    10,455
    
    
    
    429,388Losses and LAE incurred
    
    
    622,466
    
    
    
    57,848
    
    
    
    564,618For the Nine Months Ended September 30, 2006:Premiums written
    
    
    984,797
    
    
    
    83,757
    
    
    
    901,040Premiums earned
    
    
    1,092,668
    
    
    
    71,693
    
    
    
    1,020,975Losses and LAE incurred
    
    
    599,853
    
    
    
    14,187
    
    
    
    585,666For the Nine Months Ended September 30, 2005:Premiums written
    
    
    1,366,647
    
    
    
    39,703
    
    
    
    1,326,944Premiums earned
    
    
    1,303,744
    
    
    
    31,846
    
    
    
    1,271,898Losses and LAE incurred
    
    $
    1,109,735
    
    
    
    66,567
    
    
    $
    1,043,168
  - 22 -




---



##### Table of Contents



Platinum Underwriters Holdings, Ltd. and Subsidiaries
 
 8.
    
    Hurricane Losses
  2005Gross losses and LAE
    
    $
    396,923Retrocessional reinsurance
    
    
    (56,083
    )Net losses and LAE
    
    
    340,840Additional premiums earned
    
    
    (19,554
    )Net adverse impact on income before income taxes
    
    $
    321,286
  - 23 -




---



##### Table of Contents



ITEM
2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Business Overview
      - 24 -




---



##### Table of Contents



Results of Operations
 Three Months Ended September 30, 2006 as Compared with the Three Months Ended September
30, 2005
  2006
    
    2005
    
    IncreaseNet income (loss)
    
    $
    84,923
    
    
    
    (176,024
    )
    
    $
    260,947
    2005Gross losses and LAE
    
    $
    396,923Retrocessional reinsurance
    
    
    (56,083
    )Net losses and LAE
    
    
    340,840Additional premiums earned
    
    
    (19,554
    )Net adverse impact on income before income taxes
    
    $
    321,286
 - 25 -




---



##### Table of Contents



Increase2006
    
    
    2005
    
    
    (decrease)Gross premiums written
    
    $
    319,625
    
    
    
    425,146
    
    
    $
    (105,521
    )Ceded premiums written
    
    
    21,625
    
    
    
    14,960
    
    
    
    6,665Net premiums written
    
    
    298,000
    
    
    
    410,186
    
    
    
    (112,186
    )Gross premiums earned
    
    
    369,782
    
    
    
    439,843
    
    
    
    (70,061
    )Ceded premiums earned
    
    
    30,173
    
    
    
    10,455
    
    
    
    19,718Net premiums earned
    
    $
    339,609
    
    
    
    429,388
    
    
    $
    (89,779
    )
    - 26 -




---



##### Table of Contents



2006
    
    2005
    
    DecreaseLosses and LAE
    
    $
    191,428
    
    
    
    564,618
    
    
    $
    (373,190
    )Loss and LAE ratios
    
    
    56.4
    %
    
    
    131.5
    %
        
    (75.1
    ) points
   2006
    
    2005
    
    DecreaseAcquisition expenses
    
    $
    74,994
    
    
    
    98,858
    
    
    $
    (23,864
    )Acquisition expense ratios
    
    
    22.1
    %
    
    
    23.0
    %
        
    (0.9
    ) points
   - 27 -




---



##### Table of Contents



Increase2006
    
    2005
    
    (decrease)Income tax expense (benefit)
    
    $
    7,195
    
    
    
    (37,766
    )
    
    $
    44,961Effective income tax rates
    
    
    7.8
    %
    
    
    17.7
    %
        
    (9.9
    ) points
  Nine Months Ended September 30, 2006 as Compared with the Nine Months Ended September 30,
2005
  2006
    
    2005
    
    IncreaseNet income (loss)
    
    $
    243,707
    
    
    
    (34,951
    )
    
    $
    278,658
  - 28 -




---



##### Table of Contents



Increase2006
    
    2005
    
    (decrease)Gross premiums written
    
    $
    984,797
    
    
    
    1,366,647
    
    
    $
    (381,850
    )Ceded premiums written
    
    
    83,757
    
    
    
    39,703
    
    
    
    44,054Net premiums written
    
    
    901,040
    
    
    
    1,326,944
    
    
    
    (425,904
    )Gross premiums earned
    
    
    1,092,668
    
    
    
    1,303,744
    
    
    
    (211,076
    )Ceded premiums earned
    
    
    71,693
    
    
    
    31,846
    
    
    
    39,847Net premiums earned
    
    $
    1,020,975
    
    
    
    1,271,898
    
    
    $
    (250,923
    )
    - 29 -




---



##### Table of Contents



2006
    
    2005
    
    DecreaseLosses and LAE
    
    $
    585,666
    
    
    
    1,043,168
    
    
    $
    (457,502
    )Loss and LAE ratios
    
    
    57.4
    %
    
    
    82.0
    %
    
    
    (24.6
    ) points
   2006
    
    2005
    
    DecreaseAcquisition expenses
    
    $
    220,285
    
    
    
    296,035
    
    
    $
    (75,750
    )Acquisition expense ratios
    
    
    21.6
    %
    
    
    23.3
    %
        
    (1.7
    ) points
   - 30 -




---



##### Table of Contents



Increase2006
    
    2005
    
    (decrease)Income tax expense (benefit)
    
    $
    18,958
    
    
    
    (7,991
    )
    
    $
    26,949Effective income tax (benefit)
rates
    
    
    7.2
    %
    
    
    18.6
    %
        
    (11.4
    ) points
  Segment Information
  - 31 -




---



##### Table of Contents



Propertyand Marine
    
    
    Casualty
    
    
    Finite Risk
    
    
    TotalThree months ended September 30,
2006:Net premiums written
    
    $
    83,018
    
    
    
    202,302
    
    
    
    12,680
    
    
    $
    298,000Net premiums earned
    
    
    97,686
    
    
    
    214,427
    
    
    
    27,496
    
    
    
    339,609Losses and LAE
    
    
    17,181
    
    
    
    149,698
    
    
    
    24,549
    
    
    
    191,428Acquisition expenses
    
    
    14,895
    
    
    
    54,503
    
    
    
    5,596
    
    
    
    74,994Other underwriting expenses
    
    
    8,608
    
    
    
    9,464
    
    
    
    1,991
    
    
    
    20,063Segment underwriting income (loss)
    
    $
    57,002
    
    
    
    762
    
    
    
    (4,640
    )
    
    
    53,124Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,302Net realized losses on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57
    )Net foreign currency exchange losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (228
    )Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,714Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,285
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,452
    )Income before income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    92,118Ratios:Loss and LAE
    
    
    17.6
    %
    
    
    69.8
    %
    
    
    89.3
    %
    
    
    56.4
    %Acquisition expense
    
    
    15.2
    %
    
    
    25.4
    %
    
    
    20.4
    %
    
    
    22.1
    %Other underwriting expense
    
    
    8.8
    %
    
    
    4.4
    %
    
    
    7.2
    %
    
    
    5.9
    %Combined
    
    
    41.6
    %
    
    
    99.6
    %
    
    
    116.9
    %
    
    
    84.4
    %Three months ended September 30,
2005:Net premiums written
    
    $
    133,350
    
    
    
    216,659
    
    
    
    60,177
    
    
    $
    410,186Net premiums earned
    
    
    145,853
    
    
    
    205,050
    
    
    
    78,485
    
    
    
    429,388Losses and LAE
    
    
    373,761
    
    
    
    129,218
    
    
    
    61,639
    
    
    
    564,618Acquisition expenses
    
    
    17,753
    
    
    
    50,097
    
    
    
    31,008
    
    
    
    98,858Other underwriting expenses
    
    
    3,632
    
    
    
    1,894
    
    
    
    524
    
    
    
    6,050Segment underwriting income (loss)
    
    $
    (249,293
    )
    
    
    23,841
    
    
    
    (14,686
    )
    
    
    (240,138
    )Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,441Net realized losses on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (879
    )Net foreign currency exchange gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Other expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (433
    )Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,030
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,839
    )Loss before income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (213,790
    )Ratios:Loss and LAE
    
    
    256.3
    %
    
    
    63.0
    %
    
    
    78.5
    %
    
    
    131.5
    %Acquisition expense
    
    
    12.2
    %
    
    
    24.4
    %
    
    
    39.5
    %
    
    
    23.0
    %Other underwriting expense
    
    
    2.5
    %
    
    
    0.9
    %
    
    
    0.7
    %
    
    
    1.4
    %Combined
    
    
    271.0
    %
    
    
    88.3
    %
    
    
    118.7
    %
    
    
    155.9
    %
 - 32 -




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##### Table of Contents



Propertyand Marine
    
    
    Casualty
    
    
    Finite Risk
    
    
    TotalNine Months Ended September 30, 2006:Net premiums written
    
    $
    333,906
    
    
    
    583,950
    
    
    
    (16,816
    )
    
    $
    901,040Net premiums earned
    
    
    342,322
    
    
    
    573,168
    
    
    
    105,485
    
    
    
    1,020,975Losses and LAE
    
    
    104,876
    
    
    
    394,087
    
    
    
    86,703
    
    
    
    585,666Acquisition expenses
    
    
    55,783
    
    
    
    141,025
    
    
    
    23,477
    
    
    
    220,285Other underwriting expenses
    
    
    27,642
    
    
    
    23,487
    
    
    
    3,935
    
    
    
    55,064Segment underwriting income (loss)
    
    $
    154,021
    
    
    
    14,569
    
    
    
    (8,630
    )
    
    
    159,960Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,165Net realized gains on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22Net foreign currency exchange gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461Other expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,927
    )Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,664
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,352
    )Income before income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    262,665Ratios:Loss and LAE
    
    
    30.6
    %
    
    
    68.8
    %
    
    
    82.2
    %
    
    
    57.4
    %Acquisition expense
    
    
    16.3
    %
    
    
    24.6
    %
    
    
    22.3
    %
    
    
    21.6
    %Other underwriting expense
    
    
    8.1
    %
    
    
    4.1
    %
    
    
    3.7
    %
    
    
    5.4
    %Combined
    
    
    55.0
    %
    
    
    97.5
    %
    
    
    108.2
    %
    
    
    84.4
    %Nine Months Ended September 30, 2005:Net premiums written
    
    $
    453,352
    
    
    
    621,218
    
    
    
    252,374
    
    
    $
    1,326,944Net premiums earned
    
    
    414,719
    
    
    
    588,541
    
    
    
    268,638
    
    
    
    1,271,898Losses and LAE
    
    
    492,300
    
    
    
    375,187
    
    
    
    175,681
    
    
    
    1,043,168Acquisition expenses
    
    
    69,437
    
    
    
    143,262
    
    
    
    83,336
    
    
    
    296,035Other underwriting expenses
    
    
    19,595
    
    
    
    18,179
    
    
    
    3,428
    
    
    
    41,202Segment underwriting income (loss)
    
    $
    (166,613
    )
    
    
    51,913
    
    
    
    6,193
    
    
    
    (108,507
    )Net investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,250Net realized losses on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,062
    )Net foreign currency exchange losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,870
    )Other expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (201
    )Corporate expenses not allocated to segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,366
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,186
    )Loss before income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (42,942
    )Ratios:Loss and LAE
    
    
    118.7
    %
    
    
    63.7
    %
    
    
    65.4
    %
    
    
    82.0
    %Acquisition expense
    
    
    16.7
    %
    
    
    24.3
    %
    
    
    31.0
    %
    
    
    23.3
    %Other underwriting expense
    
    
    4.7
    %
    
    
    3.1
    %
    
    
    1.3
    %
    
    
    3.2
    %Combined
    
    
    140.1
    %
    
    
    91.1
    %
    
    
    97.7
    %
    
    
    108.5
    %
 - 33 -




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##### Table of Contents



Property and Marine
  Three Months Ended September 30, 2006 as Compared with the Three Months Ended September
30, 2005
  Increase2006
    
    
    2005
    
    
    (decrease)Gross premiums written
    
    $
    100,382
    
    
    
    145,673
    
    
    $
    (45,291
    )Ceded premiums written
    
    
    17,364
    
    
    
    12,323
    
    
    
    5,041Net premiums written
    
    
    83,018
    
    
    
    133,350
    
    
    
    (50,332
    )Gross premiums earned
    
    
    123,597
    
    
    
    153,248
    
    
    
    (29,651
    )Ceded premiums earned
    
    
    25,911
    
    
    
    7,395
    
    
    
    18,516Net premiums earned
    
    $
    97,686
    
    
    
    145,853
    
    
    $
    (48,167
    )
   2006
    
    2005
    
    DecreaseLosses and LAE
    
    $
    17,181
    
    
    
    373,761
    
    
    $
    (356,580
    )Loss and LAE ratios
    
    
    17.6
    %
    
    
    256.3
    %
    
    
    (238.7
    ) points
  - 34 -




---



##### Table of Contents



Increase2006
    
    2005
    
    (decrease)Acquisition expenses
    
    $
    14,895
    
    
    
    17,753
    
    
    $
    (2,858
    )Acquisition expense ratios
    
    
    15.2
    %
    
    
    12.2
    %
    
    
    3.0
    points
   Nine Months Ended September 30, 2006 as Compared with the Nine Months Ended September 30,
2005
  Increase2006
    
    
    2005
    
    
    (decrease)Gross premiums written
    
    $
    409,561
    
    
    
    472,493
    
    
    $
    (62,932
    )Ceded premiums written
    
    
    75,655
    
    
    
    19,141
    
    
    
    56,514Net premiums written
    
    
    333,906
    
    
    
    453,352
    
    
    
    (119,446
    )Gross premiums earned
    
    
    404,560
    
    
    
    427,273
    
    
    
    (22,713
    )Ceded premiums earned
    
    
    62,238
    
    
    
    12,554
    
    
    
    49,684Net premiums earned
    
    $
    342,322
    
    
    
    414,719
    
    
    $
    (72,397
    )
  - 35 -




---



##### Table of Contents



2006
    
    2005
    
    DecreaseLosses and LAE
    
    $
    104,876
    
    
    
    492,300
    
    
    $
    (387,424
    )Loss and LAE ratios
    
    
    30.6
    %
    
    
    118.7
    %
    
    
    (88.1
    ) points
   2006
    
    2005
    
    DecreaseAcquisition expenses
    
    $
    55,783
    
    
    
    69,437
    
    
    $
    (13,654
    )Acquisition expense ratios
    
    
    16.3
    %
    
    
    16.7
    %
    
    
    (0.4
    ) points
   - 36 -




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##### Table of Contents



Casualty
  Three Months Ended September 30, 2006 as Compared with the Three Months Ended September
30, 2005
  Increase2006
    
    
    2005
    
    
    (decrease)Gross premiums written
    
    $
    202,395
    
    
    
    216,643
    
    
    $
    (14,248
    )Ceded premiums written
    
    
    93
    
    
    
    (16
    )
    
    
    109Net premiums written
    
    
    202,302
    
    
    
    216,659
    
    
    
    (14,357
    )Gross premiums earned
    
    
    214,521
    
    
    
    205,127
    
    
    
    9,394Ceded premiums earned
    
    
    94
    
    
    
    77
    
    
    
    17Net premiums earned
    
    $
    214,427
    
    
    
    205,050
    
    
    $
    9,377
   2006
    
    2005
    
    IncreaseLosses and LAE
    
    $
    149,698
    
    
    
    129,218
    
    
    $
    20,480Loss and LAE ratios
    
    
    69.8
    %
    
    
    63.0
    %
    
    
    6.8
    points
  - 37 -




---



##### Table of Contents



2006
    
    2005
    
    IncreaseAcquisition expenses
    
    $
    54,503
    
    
    
    50,097
    
    
    $
    4,406Acquisition expense ratios
    
    
    25.4
    %
    
    
    24.4
    %
    
    
    1.0
    points
   Nine Months Ended September 30, 2006 as Compared with the Nine Months Ended September 30,
2005
  2006
    
    
    2005
    
    
    DecreaseGross premiums written
    
    $
    584,026
    
    
    
    621,302
    
    
    $
    (37,276
    )Ceded premiums written
    
    
    76
    
    
    
    84
    
    
    
    (8
    )Net premiums written
    
    
    583,950
    
    
    
    621,218
    
    
    
    (37,268
    )Gross premiums earned
    
    
    573,244
    
    
    
    589,078
    
    
    
    (15,834
    )Ceded premiums earned
    
    
    76
    
    
    
    537
    
    
    
    (461
    )Net premiums earned
    
    $
    573,168
    
    
    
    588,541
    
    
    $
    (15,373
    )
  - 38 -




---



##### Table of Contents



2006
    
    2005
    
    IncreaseLosses and LAE
    
    $
    394,087
    
    
    
    375,187
    
    
    $
    18,900Loss and LAE ratios
    
    
    68.8
    %
    
    
    63.7
    %
    
    
    5.1
    points
   Increase2006
    
    2005
    
    (decrease)Acquisition expenses
    
    $
    141,025
    
    
    
    143,262
    
    
    $
    (2,237
    )Acquisition expense ratios
    
    
    24.6
    %
    
    
    24.3
    %
    
    
    0.3
    points
   Finite Risk
  - 39 -




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##### Table of Contents



Three Months Ended September 30, 2006 as Compared with the Three Months Ended September
30, 2005
  Increase2006
    
    
    2005
    
    
    (decrease)Gross premiums written
    
    $
    16,848
    
    
    
    62,830
    
    
    $
    (45,982
    )Ceded premiums written
    
    
    4,168
    
    
    
    2,653
    
    
    
    1,515Net premiums written
    
    
    12,680
    
    
    
    60,177
    
    
    
    (47,497
    )Gross premiums earned
    
    
    31,664
    
    
    
    81,468
    
    
    
    (49,804
    )Ceded premiums earned
    
    
    4,168
    
    
    
    2,983
    
    
    
    1,185Net premiums earned
    
    $
    27,496
    
    
    
    78,485
    
    
    $
    (50,989
    )
   Increase2006
    
    2005
    
    (decrease)Losses and LAE
    
    $
    24,549
    
    
    
    61,639
    
    
    $
    (37,090
    )Loss and LAE ratios
    
    
    89.3
    %
    
    
    78.5
    %
    
    
    10.8
    pointsAcquisition expenses
    
    $
    5,596
    
    
    
    31,008
    
    
    $
    (25,412
    )Acquisition expense ratios
    
    
    20.4
    %
    
    
    39.5
    %
    
    
    (19.1
    ) pointsLosses, LAE and acquisition expenses
    
    $
    30,145
    
    
    
    92,647
    
    
    $
    (62,502
    )Loss, LAE and acquisition expense
ratios
    
    
    109.7
    %
    
    
    118.0
    %
    
    
    (8.3
    ) points
  - 40 -




---



##### Table of Contents



Nine Months Ended September 30, 2006 as Compared with the Nine Months Ended September 30,
2005
  2006
    
    
    2005
    
    
    DecreaseGross premiums written
    
    $
    (8,790
    )
    
    
    272,852
    
    
    $
    (281,642
    )Ceded premiums written
    
    
    8,026
    
    
    
    20,478
    
    
    
    (12,452
    )Net premiums written
    
    
    (16,816
    )
    
    
    252,374
    
    
    
    (269,190
    )Gross premiums earned
    
    
    114,864
    
    
    
    287,393
    
    
    
    (172,529
    )Ceded premiums earned
    
    
    9,379
    
    
    
    18,755
    
    
    
    (9,376
    )Net premiums earned
    
    $
    105,485
    
    
    
    268,638
    
    
    $
    (163,153
    )
   Increase2006
    
    2005
    
    (decrease)Losses and LAE
    
    $
    86,703
    
    
    
    175,681
    
    
    $
    (88,978
    )Loss and LAE ratios
    
    
    82.2
    %
    
    
    65.4
    %
    
    
    16.8
    pointsAcquisition expenses
    
    $
    23,477
    
    
    
    83,336
    
    
    $
    (59,859
    )Acquisition expense ratios
    
    
    22.3
    %
    
    
    31.0
    %
    
    
    (8.7
    ) pointsLosses, LAE and acquisition expenses
    
    $
    110,180
    
    
    
    259,017
    
    
    $
    (148,837
    )Loss, LAE and acquisition expense
ratios
    
    
    104.5
    %
    
    
    96.4
    %
    
    
    8.1
    points
  - 41 -




---



##### Table of Contents



Financial Condition, Liquidity and Capital Resources
 Financial Condition
  September 30,
    
    
    December 31,
    
    
    Increase2006
    
    
    2005
    
    
    (decrease)Cash and cash equivalents
    
    $
    773,323
    
    
    
    820,746
    
    
    $
    (47,423
    )Fixed maturity securities
    
    
    3,354,152
    
    
    
    2,987,703
    
    
    
    366,449Preferred stocks
    
    
    8,322
    
    
    
    8,186
    
    
    
    136Short-term investments
    
    
    42,502
    
    
    
    8,793
    
    
    
    33,709Other invested asset
    
    
    5,000
    
    
    
    5,000
    
    
    
    Total
    
    $
    4,183,299
    
    
    
    3,830,428
    
    
    $
    352,871
    - 42 -




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##### Table of Contents



Sources of Liquidity
      - 43 -




---



##### Table of Contents



Liquidity Requirements
     Capital Resources
  - 44 -




---



##### Table of Contents



Economic Conditions
  Current Outlook
       - 45 -




---



##### Table of Contents



Critical Accounting Policies, Estimates and Judgments
  - 46 -




---



##### Table of Contents



Premiums
      - 47 -




---



##### Table of Contents



Unpaid Losses and LAE
     - 48 -




---



##### Table of Contents



Propertyand Marine
    
    
    Casualty
    
    
    Finite Risk
    
    
    TotalCase reserves
    
    $
    379,804
    
    
    
    244,409
    
    
    
    117,683
    
    
    $
    741,896IBNR
    
    
    248,173
    
    
    
    1,124,592
    
    
    
    244,140
    
    
    
    1,616,905Total unpaid losses and LAE
    
    $
    627,977
    
    
    
    1,369,001
    
    
    
    361,823
    
    
    $
    2,358,801
     - 49 -




---



##### Table of Contents



- 50 -




---



##### Table of Contents



Reinsurance
  Investments
  - 51 -




---



##### Table of Contents



Income Taxes
   Share-Based Compensation
   - 52 -




---



##### Table of Contents



ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market and Credit Risk
    Interest Rate Risk
  - 53 -




---



##### Table of Contents



Interest Rate Shift in Basis Points- 100 bp
    
    - 50 bp
    
    Current
    
    + 50 bp
    
    + 100 bpTotal market value
    
    $
    3,453,049
    
    
    
    3,404,411
    
    
    
    3,354,152
    
    
    
    3,302,777
    
    
    $
    3,250,914Percent change in market value
    
    
    2.9
    %
    
    
    1.5
    %
    
    
    
    
    
    
    (1.5
    %)
    
    
    (3.1
    %)Resulting unrealized
appreciation / (depreciation)
    
    $
    44,009
    
    
    
    (4,629
    )
    
    
    (54,888
    )
    
    
    (106,263
    )
    
    $
    (158,126
    )
 Foreign Currency Exchange Rate Risk
  Sources of Fair Value
  CarryingAmount
    
    Fair ValueFinancial assets:Fixed maturity securities
    
    $
    3,354,152
    
    
    $
    3,354,152Preferred stocks
    
    
    8,322
    
    
    
    8,322Other invested asset
    
    
    5,000
    
    
    
    5,000Short-term investments
    
    
    42,502
    
    
    
    42,502Financial liabilities:Debt obligations
    
    $
    292,840
    
    
    $
    301,479
  
 Item 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
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Changes in Internal Control over Financial Reporting
  Forward-Looking Statements
    (1)
    
    conducting operations in a competitive environment;(2)
    
    our ability to maintain our A.M. Best rating;(3)
    
    significant weather-related or other natural or man-made disasters over which we have
no control;(4)
    
    the effectiveness of our loss limitation methods and pricing models;(5)
    
    the adequacy of our liability for unpaid losses and loss adjustment expenses,
including, but not limited to, losses from Hurricanes Katrina, Rita and Wilma and the
possibility that estimates of losses and LAE from Hurricanes Katrina, Rita and Wilma may
prove to be materially different from estimates made to date;(6)
    
    the availability of retrocessional reinsurance on acceptable terms;(7)
    
    our ability to maintain our business relationships with reinsurance brokers;
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(8)
    
    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;(9)
    
    the cyclicality of the property and casualty reinsurance business;(10)
    
    market volatility and interest rate and currency exchange rate fluctuation;(11)
    
    tax, regulatory or legal restrictions or limitations applicable to us or the property
and casualty reinsurance business generally; and(12)
    
    changes in our plans, strategies, objectives, expectations or intentions, which may
happen at any time at our discretion.
  
 PART II  OTHER INFORMATION
 
 Item 6. EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    Share Unit Plan for Nonemployee Directors (1)10.2
    
    Letter Agreement dated July 25, 2006 between H. Elizabeth Mitchell and Platinum US (1)10.3
    
    Amended and Restated Credit Agreement, dated as of September 13, 2006, by and among
the Company, certain subsidiaries of the Company, Wachovia Bank, National Association, Citibank,
N.A., HSBC Bank USA, National Association, Bayerische Hypo-Und Vereinsbank AG
and Comerica Bank as the Lenders, and Wachovia Bank, National Association, as Administrative
Agent. (2)10.4
    
    List of Contents of Exhibits and Schedules to the Amended and Restated Credit Agreement. (2)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 Joseph F. Fisher, 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 Joseph F. Fisher, 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.
 
 (1)
    
    Incorporated by reference from Platinum Holdings Current Report on Form 8-K, filed with
the SEC on July 26, 2006.(2)
    
    Incorporated by reference from Platinum Holdings Current Report on Form 8-K, filed with
the SEC on September 18. 2006.
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SIGNATURES
  Platinum Underwriters Holdings, LtdDate: October 30, 2006
    
    /s/ Michael D. PriceBy: Michael D. PricePresident and Chief Executive Officer(Principal Executive Officer)Date: October 30, 2006
    
    /s/Joseph F. FisherBy: Joseph F. FisherExecutive Vice President and Chief Financial Officer(Principal Financial Officer)Date: October 30, 2006
    
    /s/James A. KrantzBy: James A. KrantzSenior Vice President and Chief Accounting Officer(Principal Accounting Officer)
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