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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 June 30, 2005
 Commission File Number 0-22280
 PHILADELPHIA CONSOLIDATED HOLDING CORP.
  PENNSYLVANIA
    
    23-2202671(State of Incorporation)
    
    (IRS Employer Identification No.)
 One Bala Plaza, Suite 100
Bala Cynwyd, Pennsylvania 19004
(610) 617-7900
 
    þ o
  þ o




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INDEX
For the Quarterly Period Ended June 30, 2005
  
 Part I  Financial InformationItem 1. Financial Statements:Consolidated Balance Sheets  June 30, 2005 and
December 31, 2004
    
    
    3Consolidated Statements of Operations and Comprehensive
Income  For the three and six months ended June 30, 2005 and 2004
    
    
    4Consolidated Statements of Changes in Shareholders Equity  For
the six months ended June 30, 2005 and year ended
December 31, 2004
    
    
    5Consolidated Statements of Cash Flows  For the six
months ended June 30, 2005 and 2004
    
    
    6Notes to Consolidated Financial Statements
    
    
    7-16Item 2.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    17-31Item 3.
Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4.
Controls and Procedures
    
    
    33Part II  Other InformationItem 1.
Legal Proceedings
    
    
    34Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3.
Defaults Upon Senior Securities
    
    
    34Item 4.
Submission of Matters to a Vote of Security Holders
    
    
    34-35Item 5.
Other Information
    
    
    35Item 6.
Exhibits
    
    
    36-38Signatures
    
    
    39Excess Catastrophe Reinsurance Contract effective June 1, 200465% Florida Only Third and Fourth Event Excess Catastrophe Reinsurance Contract effective September 1, 2004$45 million excess of $195 million Florida Only Catastrophe Reinsurance Contract effective September 10, 2004$6.5 million excess of $3.5 million Florida Only Fifth Event Catastrophe Reinsurance Contract effective September 24, 2004$50 million excess of $240 million Florida Only Catastrophe Reinsurance Contract effective October 1, 2004$40 million excess of $50 million Florida Only Third Event Catastrophe Reinsurance Contract effective October 1, 2004$50 million excess of $140 million Florida Only Catastrophe Excess Reinsurance Contract effective October 1, 2004Florida Hurricane Catastrophe Rund Reinsurance Contract effective June 1, 2005 (Liberty American Insurance Company)Florida Hurricane Catastrophe Rund Reinsurance Contract effective June 1, 2005 (Mobile USA Insurance Compnay)Excess Catastrophe Reinsurance Contract effective June 1, 2005 (Preliminary Agreement)Reinstatement Premium Protection Reinsurance Contract effective June 1, 2005 (Preliminary Agreement)Florida Only Excess Catastrophe Reinsurance Contract effective June 1, 2005 (Preliminary Agreement)Florida Only Reinstatement Premium Protection Reinsurance Contract effective June 1, 2005 (Preliminary Agreement)Third Event Catastrophe Reinsurance Contract effective September 3, 2004Third Event Catastrophe Reinsurance Contract effective September 3, 2004Certification of the Company's chief executive officer pursuant to Section 302Certification of the Company's chief financial officer pursuant to Section 302Certification of the Company's chief executive officer pursuant to Section 906Certification of the Company's chief financial officer pursuant to Section 906
  2




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PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 As ofJune 30,
    
    December 31,2005
    
    2004(Unaudited)ASSETSINVESTMENTS:FIXED MATURITIES AVAILABLE FOR SALE AT MARKET
(AMORTIZED COST $1,591,461 AND $1,287,094)
    
    $
    1,599,748
    
    
    $
    1,299,704EQUITY SECURITIES AT MARKET (COST $132,172 AND $110,601)
    
    
    138,205
    
    
    
    128,447TOTAL INVESTMENTS
    
    
    1,737,953
    
    
    
    1,428,151CASH AND CASH EQUIVALENTS
    
    
    56,182
    
    
    
    195,496ACCRUED INVESTMENT INCOME
    
    
    16,339
    
    
    
    13,475PREMIUMS RECEIVABLE
    
    
    228,877
    
    
    
    229,502PREPAID REINSURANCE PREMIUMS AND REINSURANCE
RECEIVABLES
    
    
    302,077
    
    
    
    429,850DEFERRED INCOME TAXES
    
    
    29,981
    
    
    
    14,396DEFERRED ACQUISITION COSTS
    
    
    105,697
    
    
    
    91,647PROPERTY AND EQUIPMENT, NET
    
    
    23,051
    
    
    
    21,281GOODWILL
    
    
    25,724
    
    
    
    25,724OTHER ASSETS
    
    
    27,075
    
    
    
    36,134TOTAL ASSETS
    
    $
    2,552,956
    
    
    $
    2,485,656LIABILITIES AND SHAREHOLDERS EQUITYPOLICY LIABILITIES AND ACCRUALS:UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES
    
    $
    1,052,502
    
    
    $
    996,667UNEARNED PREMIUMS
    
    
    533,084
    
    
    
    531,849TOTAL POLICY LIABILITIES AND ACCRUALS
    
    
    1,585,586
    
    
    
    1,528,516FUNDS HELD PAYABLE TO REINSURER
    
    
    44,667
    
    
    
    131,119LOANS PAYABLE
    
    
    
    
    
    
    33,406PREMIUMS PAYABLE
    
    
    47,879
    
    
    
    48,111OTHER LIABILITIES
    
    
    114,812
    
    
    
    100,347TOTAL LIABILITIES
    
    
    1,792,944
    
    
    
    1,841,499COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY:PREFERRED STOCK, $.01 PAR VALUE,
10,000,000 SHARES AUTHORIZED,
NONE ISSUED AND OUTSTANDING
    
    
    
    
    
    
    COMMON STOCK, NO PAR VALUE,
100,000,000 SHARES AUTHORIZED, 23,046,184 AND
22,273,917 SHARES ISSUED AND OUTSTANDING
    
    
    333,808
    
    
    
    292,856NOTES RECEIVABLE FROM SHAREHOLDERS
    
    
    (9,082
    )
    
    
    (5,465
    )RESTRICTED STOCK DEFERRED COMPENSATION COST
    
    
    (3,704
    )
    
    
    ACCUMULATED OTHER COMPREHENSIVE INCOME
    
    
    9,309
    
    
    
    19,796RETAINED EARNINGS
    
    
    429,681
    
    
    
    336,970TOTAL SHAREHOLDERS EQUITY
    
    
    760,012
    
    
    
    644,157TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,552,956
    
    
    $
    2,485,656
  3




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PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
 For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004REVENUE:NET EARNED PREMIUMS
    
    $
    233,136
    
    
    $
    189,563
    
    
    $
    469,891
    
    
    $
    360,985NET INVESTMENT INCOME
    
    
    15,373
    
    
    
    10,800
    
    
    
    28,864
    
    
    
    20,773NET REALIZED INVESTMENT GAIN (LOSS)
    
    
    296
    
    
    
    (1,061
    )
    
    
    11,094
    
    
    
    717OTHER INCOME
    
    
    300
    
    
    
    829
    
    
    
    780
    
    
    
    2,211TOTAL REVENUE
    
    
    249,105
    
    
    
    200,131
    
    
    
    510,629
    
    
    
    384,686LOSSES AND EXPENSES:LOSS AND LOSS ADJUSTMENT EXPENSES
    
    
    142,393
    
    
    
    136,520
    
    
    
    296,857
    
    
    
    267,206NET REINSURANCE RECOVERIES
    
    
    (26,591
    )
    
    
    (29,203
    )
    
    
    (54,584
    )
    
    
    (63,646
    )NET LOSS AND LOSS ADJUSTMENT EXPENSES
    
    
    115,802
    
    
    
    107,317
    
    
    
    242,273
    
    
    
    203,560ACQUISITION COSTS AND OTHER
UNDERWRITING EXPENSES
    
    
    57,826
    
    
    
    51,272
    
    
    
    121,774
    
    
    
    98,626OTHER OPERATING EXPENSES
    
    
    6,010
    
    
    
    2,642
    
    
    
    9,949
    
    
    
    4,411TOTAL LOSSES AND EXPENSES
    
    
    179,638
    
    
    
    161,231
    
    
    
    373,996
    
    
    
    306,597INCOME BEFORE INCOME TAXES
    
    
    69,467
    
    
    
    38,900
    
    
    
    136,633
    
    
    
    78,089INCOME TAX EXPENSE (BENEFIT):CURRENT
    
    
    29,585
    
    
    
    13,889
    
    
    
    53,860
    
    
    
    25,763DEFERRED
    
    
    (7,258
    )
    
    
    (1,656
    )
    
    
    (9,938
    )
    
    
    (1,101
    )TOTAL INCOME TAX EXPENSE
    
    
    22,327
    
    
    
    12,233
    
    
    
    43,922
    
    
    
    24,662NET INCOME
    
    $
    47,140
    
    
    $
    26,667
    
    
    $
    92,711
    
    
    $
    53,427OTHER COMPREHENSIVE INCOME, NET OF TAX:HOLDING GAIN (LOSS) ARISING DURING
PERIOD
    
    $
    13,220

    
    
    $
    (18,943
    )
    
    $
    (3,276
    )
    
    $
    (11,375
    )RECLASSIFICATION ADJUSTMENT
    
    
    (192
    )
    
    
    690
    
    
    
    (7,211
    )
    
    
    (466
    )OTHER COMPREHENSIVE INCOME (LOSS)
    
    
    13,028
    
    
    
    (18,253
    )
    
    
    (10,487
    )
    
    
    (11,841
    )COMPREHENSIVE INCOME
    
    $
    60,168
    
    
    $
    8,414
    
    
    $
    82,224
    
    
    $
    41,586PER AVERAGE SHARE DATA:BASIC EARNINGS PER SHARE
    
    $
    2.05
    
    
    $
    1.21
    
    
    $
    4.09
    
    
    $
    2.42DILUTED EARNINGS PER SHARE
    
    $
    1.93
    
    
    $
    1.15
    
    
    $
    3.86
    
    
    $
    2.31WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING
    
    
    22,952,906
    
    
    
    22,111,232
    
    
    
    22,690,118
    
    
    
    22,064,751WEIGHTED-AVERAGE SHARE EQUIVALENTS
OUTSTANDING
    
    
    1,487,016
    
    
    
    1,081,954
    
    
    
    1,318,593
    
    
    
    1,107,482WEIGHTED-AVERAGE SHARES AND SHARE
EQUIVALENTS OUTSTANDING
    
    
    24,439,922
    
    
    
    23,193,186
    
    
    
    24,008,711
    
    
    
    23,172,233
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PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS EQUITY
 For the SixMonths EndedJune 30, 2005
    
    For the Year Ended(Unaudited)
    
    December 31, 2004COMMON SHARES:BALANCE AT BEGINNING OF YEAR
    
    
    22,273,917
    
    
    
    22,007,552ISSUANCE OF SHARES PURSUANT TO STOCK
BASED COMPENSATION PLANS
    
    
    280,408
    
    
    
    67,250ISSUANCE OF SHARES PURSUANT TO STOCK
PURCHASE PLANS, NET
    
    
    491,859
    
    
    
    199,115BALANCE AT END OF PERIOD
    
    
    23,046,184
    
    
    
    22,273,917COMMON STOCK:BALANCE AT BEGINNING OF YEAR
    
    $
    292,856
    
    
    $
    281,088ISSUANCE OF SHARES PURSUANT TO STOCK
BASED COMPENSATION PLANS
    
    
    12,585
    
    
    
    2,183ISSUANCE OF SHARES PURSUANT TO STOCK
PURCHASE PLANS
    
    
    28,367
    
    
    
    9,585BALANCE AT END OF PERIOD
    
    
    333,808
    
    
    
    292,856NOTES RECEIVABLE FROM SHAREHOLDERS:BALANCE AT BEGINNING OF YEAR
    
    
    (5,465
    )
    
    
    (5,444
    )NOTES RECEIVABLE ISSUED PURSUANT TO
EMPLOYEE STOCK PURCHASE PLANS
    
    
    (4,681
    )
    
    
    (2,326
    )COLLECTION OF NOTES RECEIVABLE
    
    
    1,064
    
    
    
    2,305BALANCE AT END OF PERIOD
    
    
    (9,082
    )
    
    
    (5,465
    )RESTRICTED STOCK DEFERRED COMPENSATION COST:BALANCE AT BEGINNING OF YEAR
    
    
    
    
    
    
    DEFERRED COMPENSATION COST PURSUANT TO
ISSUANCE OF RESTRICTED STOCK
    
    
    (3,735
    )
    
    
    AMORTIZATION OF DEFERRED COMPENSATION COST
    
    
    31
    
    
    
    BALANCE AT END OF PERIOD
    
    
    (3,704
    )
    
    
    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:BALANCE AT BEGINNING OF YEAR
    
    
    19,796
    
    
    
    16,715OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
    
    
    (10,487
    )
    
    
    3,081BALANCE AT END OF PERIOD
    
    
    9,309
    
    
    
    19,796RETAINED EARNINGS:BALANCE AT BEGINNING OF YEAR
    
    
    336,970
    
    
    
    253,287NET INCOME
    
    
    92,711
    
    
    
    83,683BALANCE AT END OF PERIOD
    
    
    429,681
    
    
    
    336,970TOTAL SHAREHOLDERS EQUITY
    
    $
    760,012
    
    
    $
    644,157
  5




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PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months Ended June 30,2005
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:NET INCOME
    
    $
    92,711
    
    
    $
    53,427ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:NET REALIZED INVESTMENT GAIN
    
    
    (11,094
    )
    
    
    (717
    )DEPRECIATION AND AMORTIZATION EXPENSE
    
    
    8,075
    
    
    
    6,508DEFERRED INCOME TAX BENEFIT
    
    
    (9,938
    )
    
    
    (1,101
    )CHANGE IN PREMIUMS RECEIVABLE
    
    
    625
    
    
    
    (2,278
    )CHANGE IN PREPAID REINSURANCE PREMIUMS AND
REINSURANCE RECEIVABLES, NET OF FUNDS HELD
PAYABLE TO REINSURER
    
    
    41,321
    
    
    
    13,961CHANGE IN OTHER RECEIVABLES
    
    
    (2,864
    )
    
    
    (1,416
    )CHANGE IN INCOME TAXES PAYABLE
    
    
    3,150
    
    
    
    1,196CHANGE IN DEFERRED ACQUISITION COSTS
    
    
    (14,050
    )
    
    
    (22,482
    )CHANGE IN OTHER ASSETS
    
    
    6,875
    
    
    
    (4,498
    )CHANGE IN UNPAID LOSS AND LOSS ADJUSTMENT
EXPENSES
    
    
    55,835
    
    
    
    99,685CHANGE IN UNEARNED PREMIUMS
    
    
    1,235
    
    
    
    32,879CHANGE IN OTHER LIABILITIES
    
    
    (6,493
    )
    
    
    7,736TAX BENEFIT FROM EXERCISE OF EMPLOYEE
STOCK OPTIONS
    
    
    5,172
    
    
    
    387NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    170,560
    
    
    
    183,287CASH FLOWS FROM INVESTING ACTIVITIES:PROCEEDS FROM SALES OF INVESTMENTS IN FIXED
MATURITIES
    
    
    131,447
    
    
    
    41,734PROCEEDS FROM MATURITY OF INVESTMENTS IN FIXED
MATURITIES
    
    
    98,750
    
    
    
    83,854PROCEEDS FROM SALES OF INVESTMENTS IN EQUITY
SECURITIES
    
    
    117,951
    
    
    
    17,236COST OF FIXED MATURITIES ACQUIRED
    
    
    (517,119
    )
    
    
    (259,770
    )COST OF EQUITY SECURITIES ACQUIRED
    
    
    (128,791
    )
    
    
    (45,395
    )SETTLEMENT
OF CASH FLOW HEDGE
    
    
    (3,148
    )
    
    
    PURCHASE OF PROPERTY AND EQUIPMENT
    
    
    (3,987
    )
    
    
    (4,078
    )NET CASH USED BY INVESTING ACTIVITIES
    
    
    (304,897
    )
    
    
    (166,419
    )CASH FLOWS FROM FINANCING ACTIVITIES:REPAYMENTS ON LOANS PAYABLE
    
    
    (44,787
    )
    
    
    (43,435
    )PROCEEDS FROM LOANS PAYABLE
    
    
    11,381
    
    
    
    39,138PROCEEDS FROM EXERCISE OF EMPLOYEE STOCK OPTIONS
    
    
    3,679
    
    
    
    432PROCEEDS FROM COLLECTION OF NOTES RECEIVABLE
    
    
    1,064
    
    
    
    1,153PROCEEDS FROM SHARES ISSUED PURSUANT TO
STOCK PURCHASE PLANS
    
    
    23,686
    
    
    
    7,107NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES
    
    
    (4,977
    )
    
    
    4,395NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (139,314
    )
    
    
    21,263CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    195,496
    
    
    
    73,942CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    56,182
    
    
    $
    95,205CASH PAID DURING THE PERIOD FOR:INCOME TAXES
    
    $
    45,533
    
    
    $
    26,435INTEREST
    
    $
    165
    
    
    $
    283NON-CASH TRANSACTIONS:ISSUANCE OF SHARES PURSUANT TO
EMPLOYEE STOCK PURCHASE PLAN IN EXCHANGE FOR
NOTES RECEIVABLE
    
    $
    4,681
    
    
    $
    2,326ISSUANCE OF RESTRICTED SHARES PURSUANT TO
STOCK BASED COMPENSATION PLAN
    
    $
    3,735
    
    
    $
    
  6




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PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
  1.
    
    Basis of Presentation
   2.
    
    Stock-Based Compensation
  Three Months Ended June 30,
    
    Six Months Ended June 30,(In thousands, except per share data)
    
    2005
    
    2004
    
    2005
    
    2004Net Income As Reported
    
    $
    47,140
    
    
    $
    26,667
    
    
    $
    92,711
    
    
    $
    53,427Assumed Stock Compensation Cost
    
    
    (1,533
    )
    
    
    (998
    )
    
    
    (3,027
    )
    
    
    (1,798
    )Pro Forma Net Income
    
    $
    45,607
    
    
    $
    25,669
    
    
    $
    89,684
    
    
    $
    51,629Basic Earnings Per Share:As Reported
    
    $
    2.05
    
    
    $
    1.21
    
    
    $
    4.09
    
    
    $
    2.42Pro Forma
    
    $
    1.99
    
    
    $
    1.16
    
    
    $
    3.95
    
    
    $
    2.34Diluted Earnings Per Share:As Reported
    
    $
    1.93
    
    
    $
    1.15
    
    
    $
    3.86
    
    
    $
    2.31Pro Forma
    
    $
    1.87
    
    
    $
    1.11
    
    
    $
    3.74
    
    
    $
    2.23
 3.
    
    Investments
   7




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Less Than 12 Months
    
    12 Months or More
    
    TotalUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedFair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesFixed Maturities:Available for SaleU.S. Treasury Securities and
Obligations of U.S. Government
Corporations and Agencies
    
    $
    52,440
    
    
    $
    371
    
    
    $
    23,067
    
    
    $
    245
    
    
    $
    75,507
    
    
    $
    616Obligations of States and
Political Subdivisions
    
    
    218,131
    
    
    
    874
    
    
    
    40,757
    
    
    
    377
    
    
    
    258,888
    
    
    
    1,251Corporate and Bank Debt Securities
    
    
    120,917
    
    
    
    1,311
    
    
    
    75,648
    
    
    
    1,543
    
    
    
    196,565
    
    
    
    2,854Asset Backed Securities
    
    
    17,551
    
    
    
    131
    
    
    
    16,738
    
    
    
    372
    
    
    
    34,289
    
    
    
    503Mortgage Pass-Through Securities
    
    
    99,997
    
    
    
    762
    
    
    
    11,084
    
    
    
    247
    
    
    
    111,081
    
    
    
    1,009Collateralized Mortgage Obligations
    
    
    62,915
    
    
    
    401
    
    
    
    10,005
    
    
    
    250
    
    
    
    72,920
    
    
    
    651Total Fixed Maturities
Available for Sale
    
    
    571,951
    
    
    
    3,850
    
    
    
    177,299
    
    
    
    3,034
    
    
    
    749,250
    
    
    
    6,884Equity Securities
    
    
    50,677
    
    
    
    2,989
    
    
    
    
    
    
    
    
    
    
    
    50,677
    
    
    
    2,989Total Investments
    
    $
    622,628
    
    
    $
    6,839
    
    
    $
    177,299
    
    
    $
    3,034
    
    
    $
    799,927
    
    
    $
    9,873
 8




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4.
    
    Restricted Assets
    5.
    
    Derivative Instruments
    6.
    
    Goodwill
  9




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7.
    
    Liability for Unpaid Loss and Loss Adjustment Expenses
   Gross Basis
    
    Net Basis(In millions)
    
    increase (decrease)
    
    increase (decrease)Accident Year 2004
    
    $
    5.2
    
    
    $
    (3.4
    )Accident Year 2003
    
    
    0.6
    
    
    
    Accident Year 2002
    
    
    (0.9
    )
    
    
    (1.9
    )Accident Years 2001 and prior
    
    
    (0.9
    )
    
    
    (2.8
    )Total
    
    $
    4.0
    
    
    $
    (8.1
    )
    8.
    
    Funds Held Payable To Reinsurer
  10




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As of and For the
    
    As of and For theSix Months Ended
    
    Year EndedJune 30, 2005
    
    December 31, 2004Funds Held Payable to Reinsurer Balance at Beginning of
Period
    
    $
    131,119
    
    
    $
    110,011Net Written Premiums Ceded
    
    
    (148
    )
    
    
    94,474Reinsurer Expense Allowance
    
    
    5
    
    
    
    (3,318
    )Provisional Commission
    
    
    (4,018
    )
    
    
    (48,971
    )Paid Loss and Loss Adjustment Expenses
    
    
    (5,203
    )
    
    
    (25,585
    )Interest Credit
    
    
    818
    
    
    
    4,853Commutation
    
    
    (77,906
    )
    
    
    Other
    
    
    
    
    
    
    (345
    )Subtotal Activity
    
    
    (86,452
    )
    
    
    21,108Funds Held Payable to Reinsurer Balance at End of Period
    
    $
    44,667
    
    
    $
    131,119
  9.
    
    Loans Payable
  10.
    
    Shareholders Equity
  11




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##### Table of Contents



11.
    
    Earnings Per Share
  As of and For the Three
    
    As of and For the SixMonths Ended June 30,
    
    Months Ended June 302005
    
    2004
    
    2005
    
    2004Weighted-Average Common Shares Outstanding
    
    
    22,953
    
    
    
    22,111
    
    
    
    22,690
    
    
    
    22,065Weighted-Average Potential Shares Issuable
    
    
    1,487
    
    
    
    1,082
    
    
    
    1,319
    
    
    
    1,107Weighted-Average Shares and Potential
Shares Issuable
    
    
    24,440
    
    
    
    23,193
    
    
    
    24,009
    
    
    
    23,172Net Income
    
    $
    47,140
    
    
    $
    26,667
    
    
    $
    92,711
    
    
    $
    53,427Basic Earnings per Share
    
    $
    2.05
    
    
    $
    1.21
    
    
    $
    4.09
    
    
    $
    2.42Diluted Earnings per Share
    
    $
    1.93
    
    
    $
    1.15
    
    
    $
    3.86
    
    
    $
    2.31
 12.
    
    Income Taxes
  13.
    
    Reinsurance
  12




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##### Table of Contents



For the Three Months Ended
    
    For the Six Months EndedJune 30, 2005
    
    June 30, 2005(In thousands)
    
    Written
    
    Earned
    
    Written
    
    EarnedDirect Business
    
    $
    283,378
    
    
    $
    279,395
    
    
    $
    567,445
    
    
    $
    566,167Reinsurance Assumed
    
    
    967
    
    
    
    808
    
    
    
    2,005
    
    
    
    2,048Reinsurance Ceded
    
    
    33,995
    
    
    
    47,067
    
    
    
    65,314
    
    
    
    98,324Net Premiums
    
    $
    250,350
    
    
    $
    233,136
    
    
    $
    504,136
    
    
    $
    469,891
 For the Three Months Ended
    
    For the Six Months EndedJune 30, 2004
    
    June 30, 2004Written
    
    Earned
    
    Written
    
    EarnedDirect Business
    
    $
    279,535
    
    
    $
    256,856
    
    
    $
    530,396
    
    
    $
    495,943Reinsurance Assumed
    
    
    847
    
    
    
    1,867
    
    
    
    2,423
    
    
    
    3,997Reinsurance Ceded
    
    
    56,184
    
    
    
    69,160
    
    
    
    106,042
    
    
    
    138,955Net Premiums
    
    $
    224,198
    
    
    $
    189,563
    
    
    $
    426,777
    
    
    $
    360,985
   14.
    
    Commitments and Contingencies
  15.
    
    Comprehensive Income
  16.
    
    Segment Information
  13




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##### Table of Contents



14




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##### Table of Contents



Three Months Ended,Commercial
    
    Specialty
    
    PersonalLines
    
    Lines
    
    Lines
    
    Corporate
    
    TotalJune 30, 2005:Gross Written Premiums
    
    $
    211,801
    
    
    $
    48,187
    
    
    $
    24,357
    
    
    
    
    
    
    $
    284,345Net Written Premiums
    
    $
    198,051
    
    
    $
    39,608
    
    
    $
    12,691
    
    
    
    
    
    
    $
    250,350Revenue:Net Earned Premiums
    
    $
    183,457
    
    
    $
    36,836
    
    
    $
    12,843
    
    
    
    
    
    
    $
    233,136Net Investment Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,373
    
    
    
    15,373Net Realized Investment Gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    296Other Income
    
    
    
    
    
    
    
    
    
    
    236
    
    
    
    64
    
    
    
    300Total Revenue
    
    
    183,457
    
    
    
    36,836
    
    
    
    13,079
    
    
    
    15,733
    
    
    
    249,105Losses and Expenses:Net Loss and Loss Adjustment Expenses
    
    
    83,238
    
    
    
    23,878
    
    
    
    8,686
    
    
    
    
    
    
    
    115,802Acquisition Costs and Other Underwriting
Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,826
    
    
    
    57,826Other Operating Expenses
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    5,967
    
    
    
    6,010Total Losses and Expenses
    
    
    83,238
    
    
    
    23,878
    
    
    
    8,729
    
    
    
    63,793
    
    
    
    179,638Income Before Income Taxes
    
    
    100,219
    
    
    
    12,958
    
    
    
    4,350
    
    
    
    (48,060
    )
    
    
    69,467Total Income Tax Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,327
    
    
    
    22,327Net Income
    
    $
    100,219
    
    
    $
    12,958
    
    
    $
    4,350
    
    
    $
    (70,387
    )
    
    $
    47,140Total Assets
    
    
    
    
    
    
    
    
    
    $
    190,472
    
    
    $
    2,362,484
    
    
    $
    2,552,956June 30, 2004:Gross Written Premiums
    
    $
    198,615
    
    
    $
    46,438
    
    
    $
    35,329
    
    
    
    
    
    
    $
    280,382Net Written Premiums
    
    $
    165,024
    
    
    $
    38,143
    
    
    $
    21,031
    
    
    
    
    
    
    $
    224,198Revenue:Net Earned Premiums
    
    $
    146,634
    
    
    $
    31,603
    
    
    $
    11,326
    
    
    
    
    
    
    $
    189,563Net Investment Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,800
    
    
    
    10,800Net Realized Investment Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,061
    )
    
    
    (1,061
    )Other Income
    
    
    
    
    
    
    
    
    
    
    660
    
    
    
    169
    
    
    
    829Total Revenue
    
    
    146,634
    
    
    
    31,603
    
    
    
    11,986
    
    
    
    9,908
    
    
    
    200,131Losses and Expenses:Net Loss and Loss Adjustment Expenses
    
    
    81,083
    
    
    
    21,699
    
    
    
    4,535
    
    
    
    
    
    
    
    107,317Acquisition Costs and Other Underwriting
Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,272
    
    
    
    51,272Other Operating Expenses
    
    
    
    
    
    
    
    
    
    
    867
    
    
    
    1,775
    
    
    
    2,642Total Losses and Expenses
    
    
    81,083
    
    
    
    21,699
    
    
    
    5,402
    
    
    
    53,047
    
    
    
    161,231Income Before Income Taxes
    
    
    65,551
    
    
    
    9,904
    
    
    
    6,584
    
    
    
    (43,139
    )
    
    
    38,900Total Income Tax Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,233
    
    
    
    12,233Net Income
    
    $
    65,551
    
    
    $
    9,904
    
    
    $
    6,584
    
    
    $
    (55,372
    )
    
    $
    26,667Total Assets
    
    
    
    
    
    
    
    
    
    $
    304,191
    
    
    $
    1,775,332
    
    
    $
    2,079,523
 15




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##### Table of Contents



Six Months Ended,Commercial
    
    Specialty
    
    PersonalLines
    
    Lines
    
    Lines
    
    Corporate
    
    TotalJune 30, 2005:Gross Written Premiums
    
    $
    421,811
    
    
    $
    101,822
    
    
    $
    45,817
    
    
    
    
    
    
    $
    569,450Net Written Premiums
    
    $
    402,374
    
    
    $
    75,909
    
    
    $
    25,853

    
    
    
    
    
    
    $
    504,136Revenue:Net Earned Premiums
    
    $
    367,175
    
    
    $
    72,221
    
    
    $
    30,495
    
    
    
    
    
    
    $
    469,891Net Investment Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    28,864
    
    
    
    28,864Net Realized Investment Gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,094
    
    
    
    11,094Other Income
    
    
    
    
    
    
    
    
    
    
    450
    
    
    
    330
    
    
    
    780Total Revenue
    
    
    367,175
    
    
    
    72,221
    
    
    
    30,945
    
    
    
    40,288
    
    
    
    510,629Losses and Expenses:Net Loss and Loss Adjustment Expenses
    
    
    172,924
    
    
    
    49,741
    
    
    
    19,608
    
    
    
    
    
    
    
    242,273Acquisition Costs and Other Underwriting
Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121,774
    
    
    
    121,774Other Operating Expenses
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    9,906
    
    
    
    9,949Total Losses and Expenses
    
    
    172,924
    
    
    
    49,741
    
    
    
    19,651
    
    
    
    131,680
    
    
    
    373,996Income Before Income Taxes
    
    
    194,251
    
    
    
    22,480
    
    
    
    11,294
    
    
    
    (91,392
    )
    
    
    136,633Total Income Tax Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,922
    
    
    
    43,922Net Income
    
    $
    194,251
    
    
    $
    22,480
    
    
    $
    11,294
    
    
    $
    (135,314
    )
    
    $
    92,711Total Assets
    
    
    
    
    
    
    
    
    
    $
    190,472
    
    
    $
    2,362,484
    
    
    $
    2,552,956June 30, 2004:Gross Written Premiums
    
    $
    373,688
    
    
    $
    93,830
    
    
    $
    65,301
    
    
    
    
    
    
    $
    532,819Net Written Premiums
    
    $
    309,764
    
    
    $
    78,194
    
    
    $
    38,819
    
    
    
    
    
    
    $
    426,777Revenue:Net Earned Premiums
    
    $
    280,153
    
    
    $
    61,018
    
    
    $
    19,814
    
    
    
    
    
    
    $
    360,985Net Investment Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,773
    
    
    
    20,773Net Realized Investment Gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    717
    
    
    
    717Other Income
    
    
    
    
    
    
    
    
    
    
    1,803
    
    
    
    408
    
    
    
    2,211Total Revenue
    
    
    280,153
    
    
    
    61,018
    
    
    
    21,617
    
    
    
    21,898
    
    
    
    384,686Losses and Expenses:Net Loss and Loss Adjustment Expenses
    
    
    154,991
    
    
    
    39,754
    
    
    
    8,815
    
    
    
    
    
    
    
    203,560Acquisition Costs and Other Underwriting
Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,626
    
    
    
    98,626Other Operating Expenses
    
    
    
    
    
    
    
    
    
    
    1,112
    
    
    
    3,299
    
    
    
    4,411Total Losses and Expenses
    
    
    154,991
    
    
    
    39,754
    
    
    
    9,927
    
    
    
    101,925
    
    
    
    306,597Income Before Income Taxes
    
    
    125,162
    
    
    
    21,264
    
    
    
    11,690
    
    
    
    (80,027
    )
    
    
    78,089Total Income Tax Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,662
    
    
    
    24,662Net Income
    
    $
    125,162
    
    
    $
    21,264
    
    
    $
    11,690
    
    
    $
    (104,689
    )
    
    $
    53,427Total Assets
    
    
    
    
    
    
    
    
    
    $
    304,191
    
    
    $
    1,775,332
    
    
    $
    2,079,523
 16




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
  
    
    Business Environment and Industry factors  Historically
the financial performance of the property and casualty
insurance industry has tended to fluctuate in cyclical
patterns of soft markets followed by hard markets. The
Companys strategy is to focus on underwriting profits, and
accordingly the Companys marketing organization is being
directed into those niche businesses that exhibit the
greatest potential for underwriting profits.
    
    Changes in taxes, governmental laws and regulations 
Significant new legislation and/or regulation could adversely
impact profitability.
    
    Competition  The Company competes in the property and
casualty business with other domestic and international
insurers having greater financial and other resources than
the Company.
    
    Financial Strength Rating  If A.M. Best Company
downgrades the rating of the Companys insurance
subsidiaries, the Company may not be able to compete as
effectively with its commercial and specialty lines
competitors.
    
    Regulation  The Companys insurance subsidiaries are
subject to a substantial degree of regulatory oversight,
which generally is designed to protect the interests of
policyholders, as opposed to shareholders.
    
    Litigation  Adverse rulings in any material litigation
to which the Company is a party could materially affect its
financial position and results of operations.
    
    Inflation  Property and casualty insurance premiums are
established before the amount of losses and loss adjustment
expenses, or the extent to which inflation may affect such
amounts, is known.
    
    Investment Risk  Substantial future increases in
interest rates could result in a decline in the market value
of the Companys investment portfolio and resulting losses
and/or reduction in shareholders equity.
    
    Claims development and the process of estimating loss
reserves  Estimating the Companys ultimate liability for
unpaid loss and loss adjustment expenses is necessarily a
complex and judgmental process, inasmuch as the amounts of
any ultimate liability of the Company with respect to such
claims are based on managements informed estimates and
judgments using data currently available.
    
    Catastrophe Exposure  The Companys insurance
subsidiaries issue insurance policies which provide coverage
for commercial and personal property and casualty risks. It
is possible that a catastrophic event could greatly increase
claims under the insurance policies the insurance
subsidiaries issue. Catastrophes may result from a variety
of events or conditions, including hurricanes, windstorms,
earthquakes, hail and other severe weather conditions and may
include terrorist events. It is possible that a catastrophic
event could adversely impact profitability.
    
    Reinsurance  The adequacy of reinsurance coverage which
may be obtained by the Company and the ability and
willingness of the Companys reinsurers to pay.
    
    Contingent Commission Arrangements  The outcome of
industry-wide investigations being conducted by various
insurance departments, attorneys-general and other
authorities relating to the use of contingent commission
arrangements.
 17




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 
    
    Finite Risk Reinsurance Arrangements  The outcome of
the Securities and Exchange Commissions industry-wide
investigation relating to the use of non-traditional
insurance products, including finite risk reinsurance
arrangements.
    
    Future Terrorist Attacks  The Companys insurance
subsidiaries issue insurance policies which provide coverage
for commercial and personal property and casualty risks. It
is possible that a terrorist attack could greatly increase
claims under the insurance policies the insurance
subsidiaries issue. It is possible that a terrorist attack
could adversely impact profitability.
  Investments
     18




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    Gross Unrealized Losses(in millions)Fixed MaturitiesAvailable for Sale
    
    
    
    
    
    TotalExcluding Interests
    
    Interests in
    

    Fixed MaturitiesContinuous time in unrealized loss position
    
    in Securitized Assets
    
    Securitized Assets
    
    Available for Sale
    
    Equity Securities
    
    Total Investments0  3 months
    
    $
    0.1
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    1.2
    
    
    $
    1.34  6 months
    
    
    1.0
    
    
    
    0.6
    
    
    
    1.6
    
    
    
    1.6
    
    
    
    3.27  9 months
    
    
    1.2
    
    
    
    0.6
    
    
    
    1.8
    
    
    
    0.2
    
    
    
    2.010  12 months
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.4
    
    
    
    
    
    
    
    0.413  18 months
    
    
    2.1
    
    
    
    0.4
    
    
    
    2.5
    
    
    
    
    
    
    
    2.519  24 months
    
    
    
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2> 24 months
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    
    
    
    
    0.3Total Gross
Unrealized Losses
    
    $
    4.7
    
    
    $
    2.2
    
    
    $
    6.9
    
    
    $
    3.0
    
    
    $
    9.9Estimated fair
value of securities
with a gross
unrealized loss
    
    $
    531.0
    
    
    $
    218.3
    
    
    $
    749.2
    
    
    $
    50.7
    
    
    $
    799.9
  19




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    Results of Operations (Six Months ended June 30, 2005 vs. June 30, 2004)
 Premiums
 Commercial Lines
    
    
    Specialty Lines
    
    
    Personal Lines
    
    
    Total2005 Gross Written Premiums
    
    $
    421.8
    
    
    $
    101.8
    
    
    $
    45.8
    
    
    $
    569.42004 Gross Written Premiums
    
    $
    373.7
    
    
    $
    93.8
    
    
    $
    65.3
    
    
    $
    532.8Percentage Increase (Decrease)
    
    
    12.9
    %
    
    
    8.5
    %
    
    
    (29.9
    )%
    
    
    6.9
    %2005 Gross Earned Premiums
    
    $
    423.0
    
    
    $
    94.5
    
    
    $
    50.7
    
    
    $
    568.22004 Gross Earned Premiums
    
    $
    370.3
    
    
    $
    80.8
    
    
    $
    48.8
    
    
    $
    499.9Percentage Increase (Decrease)
    
    
    14.2
    %
    
    
    17.0
    %
    
    
    3.9
    %
    
    
    13.7
    %
  
    
    Prospecting efforts by marketing personnel in conjunction with long term relationships
formed by the Companys marketing Regional Vice Presidents continue to result in additional
prospects and increased premium writings, most notably for the Companys various commercial
package and non profit management liability product lines.
    
    Continued expansion of marketing efforts relating to commercial lines and specialty
lines products through the Companys field organization and preferred agents.
    
    In-force policy counts as of June 30, 2005 versus June 30, 2004 have increased 14.8% and
22.1% for the commercial lines and specialty lines segments, respectively, primarily as a
result of the factors discussed above with respect to the commercial and specialty lines
segment.
 20




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 
    
    Realized average rate increases on renewal business approximating 0.8%, 2.9%, and 15.9%
for the commercial, specialty and personal lines segments, respectively.
  
    
    Liberty American Insurance Group, Inc.s planned shift in product mix of reducing mobile
homeowners product policies and increasing homeowners product policies. As a result,
mobile homeowners gross written premium decreased $27.6 million and homeowners gross
written premium increased $5.8 million. Additionally, it is anticipated that the shift in
product mix from mobile homeowners products to homeowners products will result in
approximately $18.0 million of lower mobile homeowners gross written premiums during the
remaining six months of 2005 compared to the same period in 2004.
    
    In-force policy counts for the personal lines segment decreased 31.3%, resulting from a
decrease in the in-force counts for the mobile homeowners product of 46.7% and an increase
in in-force policy counts for the homeowners product of 63.5%, as a result of the planned
shift in product mix.
    
    An automobile leasing customer and an automobile excess liability customer decision to
self-insure business previously written by the Company. As a result, gross written
premiums for the commercial lines segment were reduced by $28.1 million. Additionally, it
is anticipated that this decision to self insure will result in approximately $49.0 million
of non renewed commercial automobile gross written premium during the remaining six months
of 2005 compared to the same period in 2004.
    
    Re-underwriting the lawyers errors and omissions book of business, resulting in gross
written premiums for the specialty lines segment being reduced by $7.0 million.
    
    Increased pricing competition for specialty lines segment products and for the specialty
property product (commercial lines segment).
  Commercial Lines
    
    
    Specialty Lines
    
    
    Personal Lines
    
    
    Total2005 Net Written Premiums
    
    $
    402.3
    
    
    $
    75.9
    
    
    $
    25.9
    
    
    $
    504.12004 Net Written Premiums
    
    $
    309.8
    
    
    $
    78.2
    
    
    $
    38.8
    
    
    $
    426.8Percentage Increase (Decrease)
    
    
    29.9
    %
    
    
    (2.9
    )%
    
    
    (33.2
    )%
    
    
    18.1
    %2005 Net Earned Premiums
    
    $
    367.2
    
    
    $
    72.2
    
    
    $
    30.5
    
    
    $
    469.92004 Net Earned Premiums
    
    $
    280.2
    
    
    $
    61.0
    
    
    $
    19.8
    
    
    $
    361.0Percentage Increase
    
    
    31.0
    %
    
    
    18.4
    %
    
    
    54.0
    %
    
    
    30.2
    %
  
    
    A change in the Companys reinsurance program whereby, effective April 1, 2003, the Company
entered into a Quota Share reinsurance agreement covering substantially all of the Companys
lines of business. Under this agreement:
 
    
    The Company ceded 22% of its net written and earned premiums and loss and loss
adjustment expenses for policies effective April 1, 2003 through December 31, 2003 and 10%
of its commercial and specialty lines net written and earned premiums and loss and loss
adjustment expenses for policies becoming effective during 2004. During the six months
ended June 30, 2005 and 2004, the Company ceded $(0.4) million and $41.3 million of net
written premiums, respectively, and $33.2 million and $76.1 million of net earned premiums,
respectively.
 21




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 
    
    As a result of the January 1, 2005 casualty excess of loss treaty
renewal, the reinsurance costs by product charged by the
reinsurers are at a different level than that charged under the
prior treaty to reflect their view of expected treaty experience.
Accordingly, specialty lines segment product reinsurance costs
were increased and commercial lines segment product reinsurance
costs were decreased. The overall cost of the casualty excess of
loss treaty reinsurance renewal is expected to approximate 8.1% of
gross written casualty premiums.
    
    Certain of the Companys reinsurance contracts have provisions
whereby the Company is entitled to a return profit commission
based on the ultimate experience of the underlying business ceded
to the contracts. Under the terms of these contracts, the Company
accrued profit commissions of $2.5 million and $8.7 million for
the six months ended June 30, 2005 and 2004, respectively. The
profit commissions reduce ceded written and earned premiums and
increase net written and earned premiums.
    
    Certain of the Companys reinsurance contracts have reinstatement
provisions whereby the Company must pay additional reinsurance
premiums to reinstate coverage provisions upon utilization of
initial reinsurance coverage. The Company accrued $1.9 million of
reinstatement reinsurance premium under its casualty excess of
loss reinsurance treaty, during the six months ended June 30,
2005, as a result of changes in ultimate loss estimates. The
reinstatement premium increased ceded and written premiums and
reduced net written and earned premiums.
    
    On December 31, 2004, the Company terminated a quota share
reinsurance agreement under which it ceded 15% of its mobile
homeowners and homeowners business (personal lines segment). Upon
termination the Company increased its unearned premium reserve and
net written premium by $5.7 million.
 Net Investment Income:
  Net Realized Investment Gain:
 22




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Other Income
 Net Loss and Loss Adjustment Expenses:
 
    
    A 30.2% growth in net earned premiums
    
    A $3.0 million increase in gross and net loss and loss adjustment expenses due to
estimated catastrophe losses from Florida hailstorms in March, 2005. The hailstorm losses
were incurred in the personal lines segment.
  
    
    Reserve actions taken during the six months ended June 30, 2005 wherein the estimated
net unpaid loss and loss adjustment expenses for accident years 2004 and prior were
decreased by $7.4 million.
 Net Basis(In millions)
    
    increase (decrease)Accident Year 2004
    
    $
    (7.7
    )Accident Year 2003
    
    
    (0.3
    )Accident Year 2002
    
    
    (1.9
    )Accident Years 2001 and prior
    
    
    2.5Total
    
    $
    (7.4
    )
   Gross Basis(In millions)
    
    increase (decrease)Accident Year 2004
    
    $
    (19.7
    )Accident Year 2003
    
    
    3.0Accident Year 2002
    
    
    19.2Accident Years 2001 and prior
    
    
    4.8Total
    
    $
    7.3
  23




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
     Hurricane:
    
    Charley
    
    
    Frances
    
    
    Ivan
    
    
    Jeanne
    
    
    TotalChange in gross loss estimate Increase (Decrease)
    
    $
    7.9
    
    
    $
    (5.5
    )
    
    $
    (2.4
    )
    
    $
    (26.2
    )
    
    $
    (26.2
    )
    Acquisition Costs and Other Underwriting Expenses:
 24




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Other Operating Expenses
 Income Tax Expense:
 Results of Operations (Three Months ended June 30, 2005 vs. June 30, 2004)
 Premiums
 Commercial Lines
    
    
    Specialty Lines
    
    
    Personal Lines
    
    
    Total2005 Gross Written Premiums
    
    $
    211.8
    
    
    $
    48.2
    
    
    $
    24.3
    
    
    $
    284.32004 Gross Written Premiums
    
    $
    198.7
    
    
    $
    46.4
    
    
    $
    35.3
    
    
    $
    280.4Percentage Increase (Decrease)
    
    
    6.6
    %
    
    
    3.9
    %
    
    
    (31.2
    )%
    
    
    1.4
    %2005 Gross Earned Premiums
    
    $
    209.3
    
    
    $
    47.2
    
    
    $
    23.7
    
    
    $
    280.22004 Gross Earned Premiums
    
    $
    191.4
    
    
    $
    41.6
    
    
    $
    25.7
    
    
    $
    258.7Percentage Increase (Decrease)
    
    
    9.4
    %
    
    
    13.5
    %
    
    
    (7.8
    )%
    
    
    8.3
    %
  
    
    Prospecting efforts by marketing personnel in conjunction with long term relationships
formed by the Companys marketing Regional Vice Presidents continue to result in additional
prospects and increased premium writings, most notably for the Companys various commercial
package and non profit management liability product lines.
    
    Continued expansion of marketing efforts relating to commercial lines and specialty
lines products through the Companys field organization and preferred agents.
    
    In-force policy counts as of June 30, 2005 versus June 30, 2004 have increased 14.8% and
22.1% for the commercial lines and specialty lines segments, respectively, primarily as a
result of the factors discussed above with respect to the commercial and specialty lines
segment.
    
    Realized average rate increases on renewal business approximating 2.6% and 19.2% for the
specialty and personal lines segments, respectively.
  
    
    Liberty American Insurance Group, Inc.s planned shift in product mix of reducing mobile
homeowners product policies and increasing homeowners product policies. As a result,
mobile homeowners gross written premium decreased $16.6 million and homeowners gross
written premium increased $4.2 million.
    
    In-force policy counts for the personal lines segment decreased 31.3%, resulting from a
decrease in the mobile homeowners product of 46.7%, and an increase in in-force policy
counts for the homeowners product of 63.5%, as a result of the planned shift in product
mix.
 25




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 
    
    An automobile leasing customer and an automobile excess liability customer decision to
self-insure business previously written by the Company. As a result, gross written
premiums for the commercial lines segment were reduced by $25.1 million;
    
    Realized average rate decreases on renewal business approximating 0.4% for the
commercial lines segment.
    
    Re-underwriting the professional liability excess and lawyers errors and omissions books
of business, resulting in gross written premiums for the specialty lines segment being
reduced by $1.6 million and $4.1 million, respectively.
    
    Increased pricing competition for specialty lines segment products and for the specialty
property product (commercial lines segment).
  Commercial Lines
    
    
    Specialty Lines
    
    
    Personal Lines
    
    
    Total2005 Net Written Premiums
    
    $
    198.1
    
    
    $
    39.6
    
    
    $
    12.7
    
    
    $
    250.42004 Net Written Premiums
    
    $
    165.1
    
    
    $
    38.1
    
    
    $
    21.0
    
    
    $
    224.2Percentage Increase (Decrease)
    
    
    20.0
    %
    
    
    3.9
    %
    
    
    (39.5
    )%
    
    
    11.7
    %2005 Net Earned Premiums
    
    $
    183.5
    
    
    $
    36.8
    
    
    $
    12.8
    
    
    $
    233.12004 Net Earned Premiums
    
    $
    146.7
    
    
    $
    31.6
    
    
    $
    11.3
    
    
    $
    189.6Percentage Increase (Decrease)
    
    
    25.1
    %
    
    
    16.5
    %
    
    
    13.3
    %
    
    
    23.0
    %
  
    
    A change in the Companys reinsurance program whereby, effective April 1, 2003, the Company
entered into a Quota Share reinsurance agreement covering substantially all of the Companys
lines of business. Under this agreement:
 
    
    The Company ceded 22% of its net written and earned premiums and loss and loss
adjustment expenses for policies effective April 1, 2003 through December 31, 2003 and 10%
of its commercial and specialty lines net written and earned premiums and loss and loss
adjustment expenses for policies becoming effective during 2004. During the three months
ended June 30, 2005 and 2004, the Company ceded $(0.2) million and $21.5 million of net
written premiums, respectively, and $14.4 million and $35.8 million of net earned premiums,
respectively.
 
    
    As a result of the January 1, 2005 casualty excess of loss treaty
renewal, the reinsurance costs by product charged by the
reinsurers are at a different level than that charged under the
prior treaty to reflect their view of expected treaty experience.
Accordingly, specialty lines segment product reinsurance costs
were increased and commercial lines segment product reinsurance
costs were decreased. The overall cost of the casualty excess of
loss treaty reinsurance renewal is expected to approximate 8.1% of
gross written casualty premiums.
 
    
    Certain of the Companys reinsurance contracts have provisions
whereby the Company is entitled to a return profit commission
based on the ultimate experience of the underlying business ceded
to the contracts. Under the terms of these contracts, the Company
accrued profit commissions of $1.2 million and $4.6 million for
the three months ended June 30, 2005 and 2004, respectively. The
profit commissions reduce ceded written and earned premiums and
increase net written and earned premiums.
 26




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Net Investment Income
  Net Realized Investment Gain (Loss):
  Other Income
 Net Loss and Loss Adjustment Expenses:
 
    
    A 23.0% growth in net earned premiums
  
    
    Reserve actions taken during the three months ended June 30, 2005, wherein the Company
decreased the estimated net unpaid loss and loss adjustment expenses for accident years
2004 and prior, respectively, by the following amounts:
 27




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Net Basis(In millions)
    
    increase (decrease)Accident Year 2004
    
    $
    (3.4
    )Accident Year 2003
    
    
    Accident Year 2002
    
    
    (1.9
    )Accident Years 2001 and prior
    
    
    (2.8
    )Total
    
    $
    (8.1
    )
   Gross Basis(In millions)
    
    increase (decrease)Accident Year 2004
    
    $
    5.2Accident Year 2003
    
    
    0.6Accident Year 2002
    
    
    (0.9
    )Accident Years 2001 and prior
    
    
    (0.9
    )Total
    
    $
    4.0
    Hurricane:
    
    Charley
    
    Frances
    
    Ivan
    
    Jeanne
    
    TotalChange in gross loss estimate Increase (Decrease)
    
    $
    0.7
    
    
    $
    0.9
    
    
    $
    0.8
    
    
    $
    (3.6
    )
    
    $
    (1.2
    )
   28




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Acquisition Costs and Other Underwriting Expenses:
 Other Operating Expenses
 Income Tax Expense:
 Liquidity and Capital Resources
    29




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   TotalFHCF
    
    OM
    
    Total(In Millions)Personal Lines Segment:Total Estimated Loss and LAE Recoverables
    
    $
    168.4
    
    
    $
    402.5
    
    
    $
    570.9Recoverable on Catastrophe Loss and LAE Paid
    
    $
    164.9
    
    
    $
    391.1
    
    
    $
    556.0Catastrophe Loss and LAE Billed to Reinsurers
    
    $
    168.2
    
    
    $
    378.6
    
    
    $
    546.8Catastrophe Loss and LAE Collected from Reinsurers
    
    $
    167.8
    
    
    $
    378.6
    
    
    $
    546.4Commercial Lines Segment:Total Estimated Loss and LAE Recoverables
    
    $
    1.7
    
    
    $
    14.0
    
    
    $
    15.7Recoverable on Catastrophe Loss and LAE Paid
    
    $
    1.7
    
    
    $
    4.6
    
    
    $
    6.3Catastrophe Loss and LAE Billed to Reinsurers
    
    $
    1.7
    
    
    $
    4.6
    
    
    $
    6.3Catastrophe Loss and LAE Collected from Reinsurers
    
    $
    1.2
    
    
    $
    3.7
    
    
    $
    4.9
    30




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 New Accounting Pronouncements
   Forward-Looking Information
  31




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Estimated
    
    
    Hypothetical PercentageHypothetical Change
    
    
    Fair Value after
    
    
    Increase (Decrease) inEstimated
    
    
    in Interest Rates
    
    
    Hypothetical Changes
    
    
    
    
    
    
    ShareholdersInvestments
    
    Fair Value
    
    
    (bp=basis points)
    
    
    in Interest Rates
    
    
    Fair Value
    
    
    EquityTotal Fixed Maturities Available For Sale
    
    $
    1,599,748
    
    
    200 bp decrease
    
    $
    1,720,295
    
    
    
    7.5
    %
    
    
    10.3
    %100 bp decrease
    
    $
    1,661,621
    
    
    
    3.9
    %
    
    
    5.3
    %50 bp decrease
    
    $
    1,631,882
    
    
    
    2.0
    %
    
    
    2.8
    %50 bp increase
    
    $
    1,566,142
    
    
    
    (2.1
    )%
    
    
    (2.9
    )%100 bp increase
    
    $
    1,532,150
    
    
    
    (4.2
    )%
    
    
    (5.8
    )%200 bp increase
    
    $
    1,465,058
    
    
    
    (8.4
    )%
    
    
    (11.5
    )%
 32




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 Item 4. Controls and Procedures
    33




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##### Table of Contents



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
  
   
   (c) Total Number ofShares Purchased as
    
    
    (d) Approximate DollarPart of Publicly
    
    
    Value of Shares That May(a) Total Number of
    
    
    (b) Average Price
    
    
    Announced Plans or
    
    
    Yet Be Purchased UnderPeriod
    
    Shares Purchased
    
    
    Paid per Share
    
    
    Programs
    
    
    the Plans or ProgramsApril 1  April 30
    
    
    175
    (1)
    
    $
    53.27
    
    
    
    
    
    
    
    $
    45,000,000
    (2)May 1  May 31
    
    
    175
    (1)
    
    $
    35.93
    
    
    
    
    
    
    
    $
    45,000,000
    (2)June 1  June 30
    
    
    100
    (1)
    
    $
    57.67
    
    
    
    
    
    
    
    $
    45,000,000
    (2)Total
  (1)
    Such shares were issued under the Companys Employee Stock Purchase Plan and
were repurchased by the Company upon the employees termination.(2)
    The Companys total stock purchase authorization, which was publicly announced
in August 1998 and subsequently increased, amounted to $75.3 million, of which $30.3
million has been utilized. 
   
   34




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##### Table of Contents



Name
    
    Votes For
    
    
    Votes WithheldMichael J. Cascio
    
    
    20,061,202
    
    
    
    1,178,727Elizabeth H. Gemmill
    
    
    21,049,979
    
    
    
    189,950James J. Maguire
    
    
    19,162,775
    
    
    
    2,077,154James J. Maguire, Jr.
    
    
    19,163,118
    
    
    
    2,076,811Margaret M. Mattix
    
    
    20,547,514
    
    
    
    692,415Michael J. Morris
    
    
    18,660,963
    
    
    
    2,528,966Donald A. Pizer
    
    
    21,050,014
    
    
    
    189,915Dirk A. Stuurop
    
    
    21,050,014
    
    
    
    189,915Sean S. Sweeney
    
    
    19,162,560
    
    
    
    2,077,369
  Votes For
    
    
    Votes Against
    
    
    Abstentions
    
    
    Broker-Non VotesApproval of the
Amended and
Restated Employees
Stock Incentive and
Performance Based
Compensation Plan
    
    
    11,191,225
    
    
    
    8,606,304
    
    
    
    44,789
    
    
    
    1,397,611
 Votes For
    
    
    Votes Against
    
    
    Abstentions
    
    
    Broker-Non VotesApproval of the
Appointment of
PricewaterhouseCoopers, LLP as
Independent
Registered Public
Accounting Firm for
the Fiscal Year
Ending December 31,
2005
    
    
    21,174,451
    
    
    
    58,144
    
    
    
    7,334
 
   35




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##### Table of Contents



Exhibit No.
    
    Description3.1**
    
    Amendment to the Companys bylaws effective as of April 29, 200510.1*
    
    Excess Catastrophe Reinsurance Contract effective June 1, 2004
with the Subscribing Reinsurers.10.2*
    
    65% Florida Only Third and Fourth Event Excess Catastrophe
Reinsurance Contract effective September 1, 2004 with the
Subscribing Reinsurers.10.3*
    
    $45 million excess of $195 million Florida Only Catastrophe
Reinsurance Contract effective September 10, 2004 with the
Subscribing Reinsurers.10.4*
    
    $6.5 million excess of $3.5 million Florida Only Fifth Event
Catastrophe Reinsurance Contract effective September 24, 2004
with the Subscribing Reinsurers.10.5*
    
    $50 million excess of $240 million Florida Only Catastrophe
Reinsurance Contract effective October 1, 2004 with the
Subscribing Reinsurers.10.6*
    
    $40 million excess of $50 million Florida Only Third Event
Catastrophe Reinsurance Contract effective October 1, 2004 with
the Subscribing Reinsurers.10.7*
    
    $50 million excess of $140 million Florida Only Catastrophe
Excess Reinsurance Contract effective October 1, 2004 with the
Subscribing Reinsurers.10.8*
    
    Florida Hurricane Catastrophe Fund Reinsurance Contract
effective June 1, 2005 (Liberty American Insurance Company)10.9*
    
    Florida Hurricane Catastrophe Fund Reinsurance Contract
effective June 1, 2005 (Mobile USA Insurance Company)10.10*
    
    Excess Catastrophe Reinsurance Contract effective June 1, 2005
(Preliminary Agreement).The participating reinsurers on the $5.0 million excess of $5.0
million in coverage are Aspen Insurance Limited, AXA Re,
Everest Reinsurance Company, Munchener Ruckversicherungs 
Gesellschaf, Quanta Reinsurance LTD, Renaissance Reinsurance
Limited (Bermuda), Rosemont Reinsurance LTD and Transatlantic
Reinsurance Company at varying levels of participation.The participating reinsurers on the $10.0 million excess of $10
million in coverage are AXA Re, AXIS Specialty Limited
(Bermuda), Everest Reinsurance Company, Munchener
Ruckversicherungs  Gesellschaft, Partner Re (Bermuda), PXRE
Reinsurance, Quanta Reinsurance LTD, Rosemont Reinsurance LTD,
Sirius International Insurance Corporation , Swiss Reinsurance
America, Swiss Re Underwriting Agency Inc. and Transatlantic
Reinsurance Co. at varying levels of participation.The participating reinsurers on the $20.0 million excess of
$20.0 million in coverage are American Re Broker Market, AXA
Re, AXIS Specialty Limited (Bermuda), Everest Reinsurance
Company, Hannover Re (Bermuda) Ltd., Munchener
Ruckversicherungs  Gesellschaft, Partner Re (Bermuda), PXRE
Reinsurance, Quanta Reinsurance LTD, Rosemont Reinsurance LTD,
Sirius International Insurance Corporation, Swiss Reinsurance
America, Transatlantic Reinsurance Co.and XL Re Limited at
varying levels of participation.The participating reinsurers on the $60.0 million excess of
$40.0 million in coverage are American Re Broker Market, AXA
Re, AXIS Specialty Limited (Bermuda), Everest Reinsurance
Company, Hannover Re (Bermuda) Ltd., Munchener
Ruckversicherungs  Gesellschaft, Partner Re (Bermuda), PXRE
Reinsurance, Quanta Reinsurance LTD, Rosemont Reinsurance LTD,
Sirius International Insurance Corporation, Swiss Reinsurance
America, Swiss Re Underwriting Agency Inc., Transatlantic
Reinsurance Co., Syndicate #2020 and XL Re Limited at varying
levels of participation.
 36




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##### Table of Contents



Exhibit No.
    
    Description10.11*
    
    Reinstatement Premium Protection Reinsurance Contract effective
June1, 2005 (Preliminary Agreement). The participating
reinsurers are ACE Tempest Reinsurance LTD, AXIS Specialty
Limited, Everest Reinsurance Company, Munchener
Ruckversicherungs  Gesellschaft and Rosemont Reinsurance LTD
at varying levels of participation.10.12*
    
    Florida Only Excess Catastrophe Reinsurance Contract effective
June 1, 2005 (Preliminary Agreement).The participating reinsurers on the $3.5 million excess of $3.5
million in coverage are Aspen Insurance UK LTD, Rosemont
Reinsurance LTD, Ascot Insurance Services Limited, Syndicate
#2623, Syndicate #0033, Syndicate #0623, Syndicate #0780,
Syndicate #0958, Syndicate #2001 and Syndicate #2791 at varying
levels of participationThe participating reinsurers on the $13.0 million excess of
$7.0 million in coverage are Ascot Insurance Services Limited,
Aspen Insurance UK LTD, AXIS Specialty Limited (Bermuda ), AXA
Re, Montpelier Reinsurance Ltd, Platinum Underwriters Re,
Partner Re (Bermuda), PXRE Reinsurance, Rosemont Reinsurance
LTD, Syndicate #2623, Syndicate #0033, Syndicate #0566,
Syndicate #0623, Syndicate #0780, Syndicate #0958, Syndicate
#2001, Syndicate #2003, Syndicate #2010 and Syndicate #2791 at
varying levels of participation.The participating reinsurers on the $15.0 million excess of $20
million in coverage are Ascot Insurance Services Limited ,
Aspen Insurance UK LTD, AXIS Specialty Limited (Bermuda ), AXA
Re, General Reinsurance Corporation, Montpelier Reinsurance Ltd
        , Partner Re (Bermuda), Platinum Underwriters Re, PXRE
Reinsurance, Rosemont Reinsurance LTD, Syndicate #2623,
Syndicate #0566, Syndicate #0623, Syndicate #0780, Syndicate
#0958, Syndicate #2001, Syndicate #2003, Syndicate #2010 and
Syndicate #2791 at varying levels of participation.The participating reinsurers on the $25.0 million excess of
$35.0 million layer in coverage are Ascot Insurance Services
Limited , Aspen Insurance UK LTD, AXIS Specialty Limited
(Bermuda ), AXA Re, General Reinsurance Corporation, Hannover
Re (Bermuda) Ltd, Montpelier Reinsurance Ltd, Partner Re
(Bermuda), Platinum Underwriters Re, PXRE Reinsurance,
Rosemont Reinsurance LTD, XL Re Limited , Syndicate #2623,
Syndicate #0566, Syndicate #0623, Syndicate #0780 and Syndicate
#2010 at varying levels of participation.The participating reinsurers on the $60.0 million excess of
$60.0 million in coverage are American Re Broker Market, Ascot
Insurance Services Limited, AXIS Specialty Limited (Bermuda ),
AXA Re, General Reinsurance Corporation , Hannover Re
(Bermuda) Ltd., Montpelier Reinsurance Ltd., Munchener
Ruckversicherungs  Gesellschaft, Partner Re (Bermuda), PXRE
Reinsurance, Rosemont Reinsurance LTD, Swiss Re Underwriting
Agency Inc., Transatlantic Reinsurance Co., XL Re Limited,
Syndicate #0566, Syndicate #0626, Syndicate #2001, Syndicate
#2003, Syndicate #2010, Syndicate #2020 and Syndicate #2791 at
varying levels of participation.The participating reinsurers on the $65.0 million excess of
$120.0 million in coverage are American Re Broker Market, Ascot
Insurance Services Limited, AXIS Specialty Limited (Bermuda),
AXA Re, Hannover Re (Bermuda) Ltd., Montpelier Reinsurance
Ltd., Munchener Ruckversicherungs  Gesellschaft, Partner Re
(Bermuda), PXRE Reinsurance, Rosemont Reinsurance LTD, Swiss Re
Underwriting Agency Inc., Transatlantic Reinsurance Co., XL Re
Limited, Syndicate #2001, Syndicate #2020 and Syndicate #2791
at varying levels of
 37




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##### Table of Contents



Exhibit No.
    
    Descriptionparticipation.10.13*
    
    Florida Only Reinstatement Premium Protection Reinsurance
Contract effective June 1, 2005 (Preliminary Agreement). The
participating reinsurers are ACE Tempest Reinsurance LTD, Aspen
Insurance UK LTD, AXIS Specialty Limited, Hannover Re (Bermuda)
Ltd., Rosemont Reinsurance LTD, Syndicate #0958 and Syndicate
#2001 at varying levels of participation.10.14*
    
    Third Event Catastrophe Reinsurance Contract effective
September 3, 2004 with the Subscribing Reinsurers for 50%
share.10.15*
    
    Third Event Catastrophe Reinsurance Contract effective
September 3, 2004 with the Subscribing Reinsurers for 50%
share.10.16**
    
    Amendment and Restatement of the Companys Employees Stock
Incentive and Performance Based Compensation Plan.10.17***
    
    Form of Stock Option Award Agreement.10.18***
    
    Form of Restricted Stock Award Agreement.31.1*
    
    Certification of the Companys chief executive officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of the Companys chief financial officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 200232.1*
    
    Certification of the Companys chief executive officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 200232.2*
    
    Certification of the Companys chief financial officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith.**
    
    Filed as an Exhibit to the Companys Form 8-K dated April 28, 2005 and incorporated by reference***
    
    Filed as an Exhibit to the Companys Form 8-K dated June 9, 2005 and incorporated by reference. 38




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##### Table of Contents



SIGNATURES
  PHILADELPHIA CONSOLIDATED HOLDING CORP.RegistrantDate August 15, 2005
    
    
    
    James J. Maguire, Jr.James J. Maguire, Jr.President and Chief Executive Officer(Principal Executive Officer)Date August 15, 2005
    
    
    
    Craig P. KellerCraig P. KellerExecutive Vice President, Secretary,Treasurer and Chief Financial Officer(Principal Financial and Accounting Officer)
 39