##### 



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 March 31, 2008
 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
 (Address, including zip code and telephone number,
  þ o
  þ o o o
   o þ




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##### 



INDEX
For the Quarterly Period Ended March 31, 2008
 Part I  Financial InformationItem 1. Financial Statements:Consolidated Balance Sheets March 31, 2008 and
December 31, 2007
    
    3Consolidated Statements of Operations and Comprehensive
Income  For the three months ended March 31, 2008 and 2007
    
    4Consolidated Statements of Changes in Shareholders Equity  For
the three months ended March 31, 2008 and the year ended
December 31, 2007
    
    5Consolidated Statements of Cash Flows  For the three
months ended March 31, 2008 and 2007
    
    6Notes to Consolidated Financial Statements
    
    7 - 22Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    23 - 36Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    37Item 4. Controls and Procedures
    
    38Part II  Other InformationItem 1. Legal Proceedings
    
    39Item 1A. Risk Factors
    
    39Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    39Item 3. Defaults Upon Senior Securities
    
    40Item 4. Submission of Matters to a Vote of Security Holders
    
    40Item 5. Other Information
    
    40Item 6. Exhibits
    
    40Signatures
    
    41
 2




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  As ofMarch 31, 2008
    
    
    December 31,(Unaudited)
    
    
    2007ASSETSINVESTMENTS:FIXED MATURITIES AVAILABLE FOR SALE AT MARKET
(AMORTIZED COST $2,745,827 AND $2,639,471)
    
    $
    2,766,054
    
    
    $
    2,659,197EQUITY SECURITIES AT MARKET (COST $323,474
AND $322,877)
    
    
    331,041
    
    
    
    356,026TOTAL INVESTMENTS
    
    
    3,097,095
    
    
    
    3,015,223CASH AND CASH EQUIVALENTS
    
    
    113,105
    
    
    
    106,342ACCRUED INVESTMENT INCOME
    
    
    28,213
    
    
    
    24,964PREMIUMS RECEIVABLE
    
    
    385,997
    
    
    
    378,217PREPAID REINSURANCE PREMIUMS AND REINSURANCE
RECEIVABLES
    
    
    269,805
    
    
    
    280,110DEFERRED INCOME TAXES
    
    
    59,399
    
    
    
    42,855DEFERRED ACQUISITION COSTS
    
    
    186,579
    
    
    
    184,446PROPERTY AND EQUIPMENT, NET
    
    
    25,539
    
    
    
    26,330OTHER ASSETS
    
    
    79,957
    
    
    
    41,451TOTAL ASSETS
    
    $
    4,245,689
    
    
    $
    4,099,938LIABILITIES AND SHAREHOLDERS EQUITYPOLICY LIABILITIES AND ACCRUALS:UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES
    
    $
    1,504,575
    
    
    $
    1,431,933UNEARNED PREMIUMS
    
    
    861,663
    
    
    
    847,485TOTAL POLICY LIABILITIES AND ACCRUALS
    
    
    2,366,238
    
    
    
    2,279,418PREMIUMS PAYABLE
    
    
    74,011
    
    
    
    97,674OTHER LIABILITIES
    
    
    245,696
    
    
    
    175,373TOTAL LIABILITIES
    
    
    2,685,945
    
    
    
    2,552,465COMMITMENTS 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, 71,216,436 AND
72,087,287 SHARES ISSUED AND OUTSTANDING
    
    
    388,144
    
    
    
    423,379NOTES RECEIVABLE FROM SHAREHOLDERS
    
    
    (18,462
    )
    
    
    (19,595
    )ACCUMULATED OTHER COMPREHENSIVE INCOME
    
    
    18,066
    
    
    
    34,369RETAINED EARNINGS
    
    
    1,171,996
    
    
    
    1,109,320TOTAL SHAREHOLDERS EQUITY
    
    
    1,559,744
    
    
    
    1,547,473TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    4,245,689
    
    
    $
    4,099,938
  3




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
 
 For the Three MonthsEnded March 31,2008
    
    
    2007REVENUE:NET EARNED PREMIUMS
    
    $
    379,388
    
    
    $
    318,718NET INVESTMENT INCOME
    
    
    32,005
    
    
    
    26,973NET REALIZED INVESTMENT GAIN (LOSS)
    
    
    (11,394
    )
    
    
    1,757OTHER INCOME
    
    
    1,353
    
    
    
    830TOTAL REVENUE
    
    
    401,352
    
    
    
    348,278LOSSES AND EXPENSES:LOSS AND LOSS ADJUSTMENT EXPENSES
    
    
    223,386
    
    
    
    160,519NET REINSURANCE RECOVERIES
    
    
    (29,967
    )
    
    
    (10,014
    )NET LOSS AND LOSS ADJUSTMENT EXPENSES
    
    
    193,419
    
    
    
    150,505ACQUISITION COSTS AND OTHER UNDERWRITING
EXPENSES
    
    
    114,156
    
    
    
    96,904OTHER OPERATING EXPENSES
    
    
    3,589
    
    
    
    3,155TOTAL LOSSES AND EXPENSES
    
    
    311,164
    
    
    
    250,564INCOME BEFORE INCOME TAXES
    
    
    90,188
    
    
    
    97,714INCOME TAX EXPENSE (BENEFIT):CURRENT
    
    
    35,278
    
    
    
    36,819DEFERRED
    
    
    (7,766
    )
    
    
    (5,085
    )TOTAL INCOME TAX EXPENSE
    
    
    27,512
    
    
    
    31,734NET INCOME
    
    $
    62,676
    
    
    $
    65,980OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:HOLDING INCOME (LOSS) ARISING DURING PERIOD
    
    $
    (23,709
    )
    
    $
    8,881RECLASSIFICATION ADJUSTMENT
    
    
    7,406
    
    
    
    (1,142
    )OTHER COMPREHENSIVE INCOME (LOSS)
    
    
    (16,303
    )
    
    
    7,739COMPREHENSIVE INCOME
    
    $
    46,373
    
    
    $
    73,719PER AVERAGE SHARE DATA:NET INCOME  BASIC
    
    $
    0.89
    
    
    $
    0.94NET INCOME  DILUTED
    
    $
    0.86
    
    
    $
    0.89WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING
    
    
    70,448,471
    
    
    
    70,148,787WEIGHTED-AVERAGE SHARE EQUIVALENTS
OUTSTANDING
    
    
    2,581,468
    
    
    
    4,054,030WEIGHTED-AVERAGE SHARES AND SHARE
EQUIVALENTS OUTSTANDING
    
    
    73,029,939
    
    
    
    74,202,817
  4




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS EQUITY
  For the ThreeMonths EndedMarch 31, 2008
    
    
    For the Year Ended(Unaudited)
    
    
    December 31, 2007COMMON SHARES:BALANCE AT BEGINNING OF YEAR
    
    
    72,087,287
    
    
    
    70,848,482ISSUANCE (FORFEITURE) OF SHARES PURSUANT TO
STOCK PURCHASE PLANS, NET
    
    
    (5,796
    )
    
    
    491,416ISSUANCE OF SHARES PURSUANT TO STOCK
BASED COMPENSATION PLANS
    
    
    488,145
    
    
    
    747,389LESS TREASURY SHARES ACQUIRED
    
    
    (1,353,200
    )
    
    
    BALANCE AT END OF PERIOD
    
    
    71,216,436
    
    
    
    72,087,287COMMON STOCK:BALANCE AT BEGINNING OF YEAR
    
    $
    423,379
    
    
    $
    376,986ISSUANCE (FORFEITURE) OF SHARES PURSUANT TO STOCK
PURCHASE PLANS
    
    
    (367
    )
    
    
    16,448EFFECTS OF ISSUANCE OF SHARES PURSUANT TO STOCK
BASED COMPENSATION PLANS
    
    
    8,033
    
    
    
    29,155OTHER
    
    
    
    
    
    
    790LESS COST OF TREASURY SHARES ACQUIRED
    
    
    (42,901
    )
    
    
    BALANCE AT END OF PERIOD
    
    
    388,144
    
    
    
    423,379NOTES RECEIVABLE FROM SHAREHOLDERS:BALANCE AT BEGINNING OF YEAR
    
    
    (19,595
    )
    
    
    (17,074
    )NOTES RECEIVABLE (ISSUED) FORFEITURES PURSUANT TO
EMPLOYEE STOCK PURCHASE PLANS
    
    
    428
    
    
    
    (8,466
    )COLLECTION OF NOTES RECEIVABLE
    
    
    705
    
    
    
    5,945BALANCE AT END OF PERIOD
    
    
    (18,462
    )
    
    
    (19,595
    )ACCUMULATED OTHER COMPREHENSIVE INCOME,
NET OF DEFERRED INCOME TAXES:BALANCE AT BEGINNING OF YEAR
    
    
    34,369
    
    
    
    24,848OTHER COMPREHENSIVE INCOME (LOSS) INCOME,
NET OF TAXES
    
    
    (16,303
    )
    
    
    9,521BALANCE AT END OF PERIOD
    
    
    18,066
    
    
    
    34,369RETAINED EARNINGS:BALANCE AT BEGINNING OF YEAR
    
    
    1,109,320
    
    
    
    782,507NET INCOME
    
    
    62,676
    
    
    
    326,813BALANCE AT END OF PERIOD
    
    
    1,171,996
    
    
    
    1,109,320TOTAL SHAREHOLDERS EQUITY
    
    $
    1,559,744
    
    
    $
    1,547,473
  5




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 For the Three Months Ended March 31,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:NET INCOME
    
    $
    62,676
    
    
    $
    65,980ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:NET REALIZED INVESTMENT (GAIN) LOSS
    
    
    11,394
    
    
    
    (1,757
    )AMORTIZATION OF INVESTMENT PREMIUMS, NET OF DISCOUNT
    
    
    2,217
    
    
    
    1,513AMORTIZATION OF INTANGIBLE ASSETS
    
    
    789
    
    
    
    661DEPRECIATION
    
    
    2,110
    
    
    
    1,886DEFERRED INCOME TAX BENEFIT
    
    
    (7,766
    )
    
    
    (5,085
    )CHANGE IN PREMIUMS RECEIVABLE
    
    
    (7,780
    )
    
    
    19,541CHANGE IN PREPAID REINSURANCE PREMIUMS AND REINSURANCE
RECEIVABLES, NET OF FUNDS HELD PAYABLE TO REINSURER
    
    
    10,305
    
    
    
    10,955CHANGE IN ACCRUED INVESTMENT INCOME
    
    
    (3,249
    )
    
    
    (2,333
    )CHANGE IN DEFERRED ACQUISITION COSTS
    
    
    (2,133
    )
    
    
    (6,411
    )CHANGE IN INCOME TAXES PAYABLE
    
    
    34,819
    
    
    
    28,426CHANGE IN OTHER ASSETS
    
    
    (5,512
    )
    
    
    433CHANGE IN UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES
    
    
    72,642
    
    
    
    47,419CHANGE IN UNEARNED PREMIUMS
    
    
    14,178
    
    
    
    16,501CHANGE IN OTHER LIABILITIES
    
    
    (24,750
    )
    
    
    (5,129
    )FAIR VALUE OF STOCK BASED COMPENSATION
    
    
    4,155
    
    
    
    3,536EXCESS TAX BENEFIT FROM ISSUANCE OF SHARES PURSUANT TO
STOCK BASED COMPENSATION PLANS
    
    
    (1,175
    )
    
    
    (2,464
    )NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    162,920
    
    
    
    173,672CASH FLOWS FROM INVESTING ACTIVITIES:PROCEEDS FROM SALES OF INVESTMENTS IN FIXED MATURITIES
    
    
    500
    
    
    
    10,436PROCEEDS FROM MATURITY OF INVESTMENTS IN FIXED MATURITIES
    
    
    78,840
    
    
    
    60,795PROCEEDS FROM SALES OF INVESTMENTS IN EQUITY SECURITIES
    
    
    23,088
    
    
    
    39,042COST OF FIXED MATURITIES ACQUIRED
    
    
    (187,980
    )
    
    
    (204,281
    )COST OF EQUITY SECURITIES ACQUIRED
    
    
    (33,147
    )
    
    
    (46,366
    )PURCHASE OF PROPERTY AND EQUIPMENT, NET
    
    
    (1,319
    )
    
    
    (1,385
    )PURCHASE OF INTANGIBLES
    
    
    
    
    
    
    (7,914
    )PAYMENT FOR ACQUISITION, NET OF CASH ACQUIRED
    
    
    (32,881
    )
    
    
    NET CASH USED BY INVESTING ACTIVITIES
    
    
    (152,899
    )
    
    
    (149,673
    )CASH FLOWS FROM FINANCING ACTIVITIES:REPAYMENTS ON LOANS
    
    
    (10,000
    )
    
    
    PROCEEDS FROM LOANS
    
    
    45,000
    
    
    
    PROCEEDS FROM EXERCISE OF EMPLOYEE STOCK OPTIONS
    
    
    2,703
    
    
    
    2,654PROCEEDS FROM COLLECTION OF SHAREHOLDER NOTES RECEIVABLE
    
    
    704
    
    
    
    1,007PROCEEDS FROM SHARES ISSUED PURSUANT TO
STOCK PURCHASE PLANS
    
    
    61
    
    
    
    101EXCESS TAX BENEFIT FROM ISSUANCE OF SHARES PURSUANT TO
STOCK BASED COMPENSATION PLANS
    
    
    1,175
    
    
    
    2,464COST OF COMMON STOCK REPURCHASED
    
    
    (42,901
    )
    
    
    NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES
    
    
    (3,258
    )
    
    
    6,226NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    6,763
    
    
    
    30,225CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    106,342
    
    
    
    108,671CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    113,105
    
    
    $
    138,896NON-CASH TRANSACTIONS:FORFEITURES OF SHARES PURSUANT TO EMPLOYEE STOCK
PURCHASE PLANS IN EXCHANGE FOR NOTES RECEIVABLE
    
    $
    (428
    )
    
    $
    (99
    )
  6




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
  1.
    
    Basis of PresentationThe consolidated financial statements for the quarterly period ended March 31, 2008 are
unaudited, but in the opinion of management have been prepared on the same basis as the annual
audited consolidated financial statements and reflect all adjustments, consisting of normal
recurring adjustments and accruals, necessary for a fair statement of the information set forth
therein. The results of operations for the three months ended March 31, 2008 are not
necessarily indicative of the operating results to be expected for the full year or any other
period.These consolidated financial statements should be read in conjunction with the financial
statements and notes included in the Companys Annual Report on Form 10-K as of and for the year
ended December 31, 2007.2.
    
    Fair Value MeasurementsOn January 1, 2008, the Company adopted the provisions of Financial Accounting Standards Board
(FASB) Statement No. 157 Fair Value Measurements (SFAS 157). SFAS 157 defines fair value
and provides a consistent framework for measuring items at fair value as previously permitted by
existing accounting pronouncements. SFAS 157 provides a fair value hierarchy which
prioritizes the quality of inputs used when measuring items at fair value and requires expanded
disclosures for fair value measurements.On February 12, 2008, SFAS 157 was amended by FASB Staff Position No. FAS 157-2 (FSP FAS
157-2). FSP FAS 157-2 delayed the effective date of SFAS 157 for non-financial assets and
non-financial liabilities which are measured at fair value on a nonrecurring basis.
Non-financial assets and non-financial liabilities which are measured at fair value on a
recurring basis (i.e. at least annually) are not subject to this deferral. This deferral is
effective until fiscal years beginning after November 15, 2008 and interim periods within those
fiscal years. At that time, provisions of SFAS 157 will apply to non-financial assets and
non-financial liabilities which are measured at fair value on a non-recurring basis.As of March 31, 2008, the Company has no non-financial assets or non-financial liabilities that
are measured at fair value on a recurring basis. The Company is currently evaluating the impact
of measuring non-financial assets and non-financial liabilities on a non-recurring basis.The Companys financial assets consist of its investments in fixed maturity and equity
securities, and cash equivalents. The Company accounts for its fixed maturity and equity
securities assets at fair value under FASB Statement No. 115 Accounting for Certain Investments
in Debt and Equity Securities (SFAS 115). Historically, the Companys external fixed
maturity investment manager has provided pricing for the Companys financial assets based upon
pricing methodologies approved by the investment managers internal pricing committee utilizing
pricing information from market vendors on a pre-established provider list. As of March 31,
2008, the Companys external fixed maturity investment manager has assisted the Company in
measuring the fair value of these financial assets accounted for under SFAS 115, in accordance
with the provisions of SFAS 157. No cumulative effect adjustment to the opening balance of
retained earnings as of January 1, 2008 was required as the result of the adoption of SFAS 157.
As of March 31, 2008, the Company has no liabilities required to be measured at fair value in
accordance with the provisions of SFAS 157.SFAS 157 Valuation Techniques:SFAS 157 provides three acceptable valuation techniques that should be used to measure fair
value. The following is a brief description of these valuation techniques:
  7




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##### 



Fair Value Hierarchy to SFAS 157 Valuation Techniques:
      8




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##### 



SFAS 157 Recurring Fair Value Measurements:
  Fair Value Measurements as of March 31, 2008 Utilizing:
 Quoted Prices Active Markets
    
    
    
    
    
    SignificantIdentical Assets 
    
    Significant Other
    
    UnobservableObservable Inputs
    
    Observable Inputs
    
    InputsDescription
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TotalUS Treasury Securities and
Obligations of US Government
Corporations and Agencies
    
    $
    9,642
    
    
    $
    4,036
    
    
    $
    
    
    
    $
    13,678Obligations of States and
Political Subdivisions
    
    
    
    
    
    
    1,527,722
    
    
    
    
    
    
    
    1,527,722Corporate and Bank Debt
Securities
    
    
    
    
    
    
    127,265
    
    
    
    
    
    
    
    127,265Asset Backed Securities
    
    
    
    
    
    
    165,973
    
    
    
    9,682
    
    
    
    175,655Mortgage Pass-Through Securities
    
    
    
    
    
    
    605,331
    
    
    
    
    
    
    
    605,331Collateralized Mortgage
Obligations
    
    
    
    
    
    
    316,261
    
    
    
    142
    
    
    
    316,403Total Fixed Maturities
Available For Sale at Market
    
    $
    9,642
    
    
    $
    2,746,588
    
    
    $
    9,824
    
    
    $
    2,766,054Equity Securities at Market
    
    
    314,319
    
    
    
    323
    
    
    
    16,399
    
    
    
    331,041Cash Equivalents
    
    
    118,947
    
    
    
    
    
    
    
    
    
    
    
    118,947Total Fair Value Measurements
    
    $
    442,908
    
    
    $
    2,746,911
    
    
    $
    26,223
    
    
    $
    3,216,042% of Total Fair Value
Measurements
    
    
    13.8
    %
    
    
    85.4
    %
    
    
    0.8
    %
    
    
    100
    %
  Fair Value Measurements Utilizing Level 3 Inputs:
  9




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##### 



Fair Value Measurements Utilizing Significant Unobservable (Level 3) Inputs:
 Asset
    
    CollateralizedBacked
    
    Mortgage
    
    EquitySecurities
    
    Obligations
    
    Securities
    
    TotalBeginning Balance as of January 1, 2008:
    
    $
    10,511
    
    
    $
    121
    
    
    $
    11,505
    
    
    $
    22,137Total gains or loss (realized/unrealized)Included in earnings
    
    
    1
    
    
    
    (5
    )
    
    
    (603
    )
    
    
    (607
    )Included in Other Comprehensive Income
    
    
    (770
    )
    
    
    34
    
    
    
    (1,248
    )
    
    
    (1,984
    )Purchases, issuances, settlements
    
    
    (60
    )
    
    
    (8
    )
    
    
    6,745
    
    
    
    6,677Transfers in and/or out of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ending Balance as of March 31, 2008:
    
    $
    9,682
    
    
    $
    142
    
    
    $
    16,399
    
    
    $
    26,223Amount of total gains or losses for the
three months ended March 31, 2008
included in earnings attributable to the
change in unrealized gains or losses
relating to assets still held as of March
31, 2008:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Realized gains and losses included in earnings for the three months ended March 31, 2008 are
reported as net realized investment gain (loss). During the three months ended March 31, 2008,
the Company recorded $0.6 million of net realized investment losses on its assets measured at
fair value on a recurring basis utilizing Level 3 inputs within the net realized investment gain
(loss) line of revenues.Due to the fact that the Companys investment portfolio is classified as available for sale
under SFAS 115, unrealized gains and losses are recorded as a component of other comprehensive
income rather than earnings.SFAS 159 Fair Value Option for Eligible Financial Assets and Liabilities:On January 1, 2008, the provisions of Statement No. 159 The Fair Value Options for Financial
Assets and Financial Liabilities (SFAS 159) also became effective. The purpose of SFAS 159
was to expand the use of fair value measurements by providing entities with the option of
measuring certain financial assets and liablities at fair value, which were previously measured
on a basis other than fair value under existing accounting pronouncements. Due to the fact that
the Company currently records its eligible financial assets at fair value under the provisions
of SFAS 115 and SFAS 157, the Company did not elect the fair value option under SFAS 159 for any
of its eligible financial instruments as of March 31, 2008.3.
    
    InvestmentsImpairment Reviews as of March 31, 2008:The Company regularly performs impairment reviews with respect to its investments. There are
certain risks and uncertainties inherent in the Companys impairment methodology, including, but
not limited to, the financial condition of specific industry sectors and the resultant effect on
any such underlying security collateral values and changes in accounting, tax, and/or regulatory
requirements which may have an effect on either, or both, the investor and/or the issuer. For
investments other than interests in securitized assets, these reviews include identifying any
security whose fair value is below its cost and an analysis of securities meeting predetermined
impairment thresholds to determine whether such decline is other than temporary. If the Company
does not intend to hold a security to maturity or determines a decline in value to be other than
temporary, the cost basis of the security is written down to its fair value with the amount of
the write down included in earnings as a realized investment loss in the period the impairment
arose. This evaluation, for
 10




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##### 



Less Than 12 Months
    
    12 Months or More
    
    TotalUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedFair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses(Dollars In Thousands)March 31, 2008Fixed Maturities Available for Sale:U.S. Treasury Securities and
Obligations of U.S. Government
Corporations and Agencies
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Obligations of States and
Political Subdivisions
    
    
    609,081
    
    
    
    13,308
    
    
    
    94,059
    
    
    
    4,211
    
    
    
    703,140
    
    
    
    17,519Corporate and Bank Debt
Securities
    
    
    43,560
    
    
    
    653
    
    
    
    5,587
    
    
    
    207
    
    
    
    49,147
    
    
    
    860Asset Backed Securities
    
    
    77,056
    
    
    
    1,870
    
    
    
    9,343
    
    
    
    141
    
    
    
    86,399
    
    
    
    2,011Mortgage Pass-Through Securities
    
    
    19,419
    
    
    
    54
    
    
    
    27,372
    
    
    
    348
    
    
    
    46,791
    
    
    
    402Collateralized Mortgage
Obligations
    
    
    54,869
    
    
    
    1,738
    
    
    
    22,717
    
    
    
    640
    
    
    
    77,586
    
    
    
    2,378Total Fixed Maturities
Available for Sale
    
    $
    803,985
    
    
    $
    17,623
    
    
    $
    159,078
    
    
    $
    5,547
    
    
    $
    963,063
    
    
    $
    23,170Equity Securities
    
    
    136,550
    
    
    
    28,224
    
    
    
    
    
    
    
    
    
    
    
    136,550
    
    
    
    28,224Total Investments
    
    $
    940,535
    
    
    $
    45,847
    
    
    $
    159,078
    
    
    $
    5,547
    
    
    $
    1,099,613
    
    
    $
    51,394
      11




---



##### 



Structured Securities Investment Portfolio:
  
    
    $604.3 million of U.S. government agency backed Mortgage Pass-Through Securities;
    
    $224.6 million of U.S. government agency backed Collateralized Mortgage Obligations;
    
    $76.9 million of non-U.S. government agency Collateralized Mortgage Obligations backed
by pools of prime loans (generally consists of loans made to the highest credit quality
borrowers with Fair Isaac Corporation (FICO) scores generally greater than 720);
    
    $19.1 million of structured securities backed by pools
of ALT A loans (loans with less than normal documentation and borrowers with FICO scores in the approximate range of 650 to the low
700s); and
 12




---



##### 




    
    $4.5 million of structured securities backed by pools of
subprime loans (loans with less than normal documentation, higher combined loan-to-value ratios and borrowers with FICO scores capped
at approximately 650).
  
    
    first to pay or among the first cash flow tranches of their respective transactions;
    
    have a weighted average life of 2.3 years;
    
    are spread across multiple vintages (origination year of underlying collateral pool);
and
    
    have not experienced any ratings downgrades as of March 31, 2008.
    Amortized Cost of Structured Securities:
    Municipal Bond Portfolio:
  13




---



##### 



Market Value of Insured
    
    
    
    
    
    
    Weighted AverageMunicipal Bonds
    
    
    Percentage of Municipal
    
    
    Underlying Rating ofMonoline Insurer
    
    (in Thousands)
    
    
    Bond Portfolio
    
    
    Insured Municipal BondsFinancial Security
Assurance, Inc.
    
    $
    302,945
    
    
    
    19.8
    %
    
    AAMBIA, Inc.
    
    
    281,452
    
    
    
    18.4
    
    
    AAFGIC Corporation
    
    
    199,067
    
    
    
    13.0
    
    
    AA-AMBAC Financial Group, Inc.
    
    
    158,664
    
    
    
    10.4
    
    
    AA-XL Capital, LTD.
    
    
    4,469
    
    
    
    0.3
    
    
    AA-Total
    
    $
    946,597
    
    
    
    61.9
    %
    
    AA
  Impairment Reviews as of December 31, 2007:
  Less Than 12 Months
    
    12 Months or More
    
    TotalUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedFair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses(Dollars In Thousands)December 31, 2007Fixed Maturities Available for Sale:U.S. Treasury Securities and
Obligations of U.S. Government
Corporations and Agencies
    
    $
    
    
    
    $
    
    
    
    $
    5,670
    
    
    $
    21
    
    
    $
    5,670
    
    
    $
    21Obligations of States and
Political Subdivisions
    
    
    294,719
    
    
    
    2,377
    
    
    
    203,427
    
    
    
    1,006
    
    
    
    498,146
    
    
    
    3,383Corporate and Bank Debt
Securities
    
    
    7,835
    
    
    
    33
    
    
    
    58,709
    
    
    
    570
    
    
    
    66,544
    
    
    
    603Asset Backed Securities
    
    
    50,574
    
    
    
    138
    
    
    
    13,989
    
    
    
    81
    
    
    
    64,563
    
    
    
    219Mortgage Pass-Through Securities
    
    
    68,691
    
    
    
    366
    
    
    
    128,382
    
    
    
    1,493
    
    
    
    197,073
    
    
    
    1,859Collateralized Mortgage
Obligations
    
    
    30,731
    
    
    
    236
    
    
    
    65,252
    
    
    
    725
    
    
    
    95,983
    
    
    
    961Total Fixed Maturities
Available for Sale
    
    
    452,550
    
    
    
    3,150
    
    
    
    475,429
    
    
    
    3,896
    
    
    
    927,979
    
    
    
    7,046Equity Securities
    
    
    118,095
    
    
    
    22,159
    
    
    
    
    
    
    
    
    
    
    
    118,095
    
    
    
    22,159Total Investments
    
    $
    570,645
    
    
    $
    25,309
    
    
    $
    475,429
    
    
    $
    3,896
    
    
    $
    1,046,074
    
    
    $
    29,205
 14




---



##### 



15




---



##### 



4.
    
    Restricted AssetsThe Insurance Subsidiaries have investments, principally U.S. Treasury securities and
Obligations of States and Political Subdivisions, on deposit with the various states in which
they are licensed insurers. As of March 31, 2008 and December 31, 2007, the carrying value of
the securities on deposit totaled $16.0 million and $15.7 million, respectively.5.
    
    Liability for Unpaid Loss and Loss Adjustment ExpensesThe liability for unpaid loss and loss adjustment expenses reflects the Companys best estimate
for future amounts needed to pay losses and related settlement expenses with respect to insured
events. The process of establishing the liability for property and casualty unpaid loss and loss
adjustment expenses is a complex and imprecise process, requiring the use of informed estimates
and judgments. The liability includes an amount determined on the basis of claim adjusters
evaluations with respect to insured events that have been reported to the Company and an amount
for losses incurred that have not yet been reported to the Company. In some cases significant
periods of time, up to several years or more, may elapse between the occurrence of an insured
loss and the reporting it to the Company.Estimates for unpaid loss and loss adjustment expenses are based on managements assessment of
known facts and circumstances, review of past loss experience and settlement patterns and
consideration of other internal and external factors. These factors include, but are not
limited to, the Companys growth, changes in the Companys operations, and legal, social, and
economic developments. These estimates are reviewed regularly and any resulting adjustments are
made in the accounting period in which the adjustment arose. If the Companys ultimate losses,
net of reinsurance, prove to differ substantially from the amounts recorded as of March 31,
2008, the related adjustments could have a material adverse impact on the Companys financial
condition and results of operations.During the three months ended March 31, 2008, the Company increased/(decreased) the estimated
net unpaid loss and loss adjustment expenses for accident years 2007 and prior by the following
amounts (in millions):
 Net Increase (Decrease)Accident Year 2007
    
    $
    1.9Accident Year 2006
    
    
    (4.1
    )Accident Year 2005
    
    
    (1.2
    )Accident Years 2004 and prior
    
    
    (2.5
    )Total
    
    $
    (5.9
    )
     16




---



##### 



6.
    
    Shareholders EquityThe Philadelphia Consolidated Holding Corp Amended and Restated Employees Stock Incentive and
Performance Based Compensation Plan (the Plan) provides incentives and awards to those
employees and members of the Board (participants) largely responsible for the long term
success of the Company. Under the Plan, the Company issued 468,294 and 436,607 stock settled
appreciation rights (SARS) during the three months ended March 31, 2008 and the year ended
December 31, 2007, respectively. The Company also issued 256,595 and 146,884 shares of
restricted stock awards during the three months ended March 31, 2008 and the year ended December
31, 2007, respectively.7.
    
    Stock RepurchaseDuring the three months ended March 31, 2008, the Company repurchased 1,353,200 shares of stock
at a cost of $42.9 million under its stock repurchase authorization. As of March 31, 2008, $2.1
million remains available under previous stock purchase authorizations which aggregated $75.3
million. The Company did not repurchase any shares of stock under its stock repurchase
authorization during the three months ended March 31, 2007.On April 24, 2008, the Companys Board of Directors authorized a $50.0 million increase in its
common stock repurchase program. This $50.0 million authorization is in addition to the $2.1
million remaining under the previous $75.3 million stock purchase authorizations.8.
    
    Earnings Per ShareEarnings per common share have been calculated by dividing net income for the period by the
weighted average number of common shares and common share equivalents outstanding during the
period. Following is the computation of earnings per share for the three months ended March 31,
2008 and 2007, respectively (in thousands):
 As of and For the ThreeMonths EndedMarch 31,2008
    
    
    2007Weighted-Average Common Shares Outstanding
    
    
    70,449
    
    
    
    70,149Weighted-Average Share Equivalents
    
    
    2,581
    
    
    
    4,054Weighted-Average Shares and Share Equivalents
    
    
    73,030
    
    
    
    74,203Net Income
    
    $
    62,676
    
    
    $
    65,980Basic Earnings per Share
    
    $
    0.89
    
    
    $
    0.94Diluted Earnings per Share
    
    $
    0.86
    
    
    $
    0.89
 9.
    
    Income TaxesThe Companys liability for its unrecognized tax benefits was $0.2 million as of March 31, 2008
and December 31, 2007. As of March 31, 2008 and December 31, 2007, the total amount of
unrecognized tax benefits that, if recognized, would affect the effective tax rate was $0.2
million.Interest and penalties accrued for the underpayment of taxes are recorded as a component of
income tax expense. The liability for interest and penalties amounted to $0.1 million as of
March 31, 2008 and December 31, 2007.
 17




---



##### 



The Company and its subsidiaries file Federal and State income tax returns as required, and are
subject to Federal and State examinations for tax years 2003 through 2007, and 2005 through
2007, respectively.The effective tax rate differs from the 35% marginal tax rate principally as a result of
tax-exempt interest income, the dividend received deduction and other differences in the
recognition of revenues and expenses for tax and financial reporting purposes.10.
    
    ReinsuranceIn the normal course of business, the Company has entered into various reinsurance contracts
with unrelated reinsurers. The Company participates in such agreements for the purpose of
limiting loss exposure and diversifying business. Reinsurance contracts do not relieve the
Company from its obligations to policyholders. The effect of reinsurance on premiums written
and earned is as follows (dollars in thousands):
 For the Three Months Ended
    
    
    For the Three Months EndedMarch 31, 2008
    
    
    March 31, 2007Written
    
    
    Earned
    
    
    Written
    
    
    EarnedDirect Business
    
    $
    442,604
    
    
    $
    428,292
    
    
    $
    393,531
    
    
    $
    376,941Reinsurance Assumed
    
    
    483
    
    
    
    616
    
    
    
    583
    
    
    
    673Reinsurance Ceded
    
    
    37,119
    
    
    
    49,520
    
    
    
    56,681
    
    
    
    58,896Net Premiums
    
    $
    405,968
    
    
    $
    379,388
    
    
    $
    337,433
    
    
    $
    318,718
 11.
    
    Commitments and ContingenciesLegal Proceedings:On February 26, 2008, the Company received a complaint filed on February 14, 2008 with the U.S.
District Court for the Southern District of Florida by seven individuals. These individuals
purported to act on behalf of a class of similarly situated persons who had been issued
insurance policies by Liberty American Select Insurance Company, formerly known as Mobile USA
Insurance Company (LASIC). The complaint, which is alleged to be a class action complaint,
was filed against the Company and its subsidiaries, LASIC, Liberty American Insurance Company
and Liberty American Insurance Group, Inc. The complaint requests an unspecified amount of
damages in excess of $5,000,000 and equitable relief to prevent the defendants from committing
what are alleged to be unfair business practices. The plaintiffs allege that from the period
from at least as early as September 1, 2003 through December 31, 2006 they and other
policyholders sustained property damage covered under policies issued by LASIC, and that LASIC
improperly denied or paid only a portion of the policyholders claims for which they were
entitled to be reimbursed.The Company believes that it has valid defenses to the claims made in the complaint, and that
the claims may not be entitled to be brought as a class action. The Company will vigorously
defend against such claims. Although there is no assurance as to the outcome of this litigation
or as to its effect on the Companys financial position, the Company believes, based on the
facts currently known to it, that the outcome of this litigation will not have a material
adverse effect on its financial position.The Company is also subject to routine legal proceedings in connection with its property and casualty
insurance business.Credit Agreement:Effective June 29, 2007, the Company amended its unsecured Credit Agreement (the Credit
Agreement) which establishes a revolving credit facility providing for loans to the Company of
up to $50.0 million in principal amount outstanding at any one time. The amended Credit
Agreement has a maturity date of June 27,
 18




---



##### 



2008 and contains an annual commitment fee of 6.0 basis points per annum on the unused
commitments under the Credit Agreement. Each loan under the amended Credit Agreement will bear
interest at a per annum rate equal to, at the Companys option, (i) Libor plus 0.35% or (ii) the
higher of the administrative agent and lenders prime rate and the Federal Funds rate plus
0.50%. As of March 31, 2008, $35.0 million of borrowings were outstanding under this Credit
Agreement, at interest rates ranging from 2.91% to 3.35%.The Credit Agreement contains various representations, covenants and events of default typical
for credit facilities of this type. As of March 31, 2008, the Company was in compliance with
all covenants contained in the Credit Agreement.State Insurance Guaranty Funds:As of March 31, 2008 and December 31, 2007, included in Other Liabilities in the Consolidated
Balance Sheets were $15.2 million and $13.2 million, respectively, of liabilities for state
insurance guaranty funds. As of March 31, 2008 and December 31, 2007, included in Other Assets
in the Consolidated Balance Sheets were $0.2 million and $0.2 million, respectively, of related
assets for premium tax offsets or policy surcharges. The related asset is limited to the amount
that is determined based upon future premium collections or policy surcharges from policies in
force.State Insurance Facility Assessments:The Company continually monitors developments with respect to state insurance facilities. The
Company is required to participate in various state insurance facilities that provide insurance
coverage to individuals or entities that otherwise are unable to purchase such coverage from
private insurers. Because of the Companys participation, it may be exposed to losses that
surpass the capitalization of these facilities and/or to assessments from these facilities.Among other state insurance facilities, the Company is subject to assessments from Florida
Citizens Property Insurance Corporation (Florida Citizens), which was originally created by
the state of Florida to provide insurance to property owners unable to obtain coverage in the
private insurance market. Florida Citizens, at the discretion and direction of its Board of
Governors (Florida Citizens Board), can levy a regular assessment on participating companies
for a deficit in any calendar year up to a maximum of the greater of 10% of the deficit or 10%
of Florida property premiums industry-wide for the prior year. The portion of the total
assessment attributable to the Company is based on its market share. An insurer may recoup a
regular assessment through a surcharge to policyholders. If a deficit remains after the regular
assessment, Florida Citizens can also fund any remaining deficit through emergency assessments
in the current and subsequent years. Companies are required to collect the emergency assessments
directly from residential property policyholders and remit to Florida Citizens as collected. In
addition, Florida Citizens may issue bonds to further fund a deficit. Participating companies
are obligated to purchase any unsold bonds issued by Florida Citizens.Florida Hurricane Catastrophe Fund:The Company and other insurance companies writing residential property policies in Florida must
participate in the Florida Hurricane Catastrophe Fund (FHCF). If the FHCF does not have
sufficient funds to pay its ultimate reimbursement obligations to participating insurance
companies, it has the authority to issue bonds, which are funded by assessments on generally all
property and casualty premiums in Florida. By law, these assessments are the obligation of
insurance policyholders, which insurance companies must collect. The FHCF assessments are
limited to 6% of premiums per year beginning the first year in which reimbursements require
bonding, and up to a total of 10% of premiums per year for assessments in the second and
subsequent years, if required to fund additional bonding. Upon the order of the Florida Office
of Insurance Regulation (FLOIR), companies are required to collect the FHCF assessments
directly from their policyholders and remit them to the FHCF as they are collected.12.
    
    Comprehensive IncomeComponents of comprehensive income, as detailed in the Consolidated Statements of Operations and
Comprehensive Income, are net of tax. The related tax effect of Holding Gains (Losses) arising
during the three months ended March 31, 2008 and 2007 was $(12.8) million and $4.8 million,
respectively. The related tax
 19




---



##### 



effect of Reclassification Adjustments for the three months ended March 31, 2008 and 2007 was
$4.0 million and $(0.6) million, respectively.13.
    
    New Accounting PronouncementIn March 2008, the FASB issued Statement No. 161 Disclosures about Derivative Instruments and
Hedging Activities (SFAS 161) to enhance disclosures about an entitys derivative and hedging
activities. SFAS 161 is effective for all financial statements issued in fiscal years and
interim periods beginning after November 15, 2008 and early application is encouraged. SFAS 161
also encourages but does not require comparative disclosures for earlier periods at initial
adoption. As the Company does not currently engage in derivative transactions or hedging
activities, the Company does not anticipate any significant financial statement disclosure
impact as a result of its evaluation of SFAS 161.14.
    
    Segment InformationThe Companys operations are classified into three reportable business segments which are
organized around its underwriting divisions:
 
    
    The Commercial Lines Underwriting Group, which has underwriting responsibility for
the commercial multi-peril package, commercial automobile, specialty property and
inland marine, and antique/collector car insurance products;
    
    The Specialty Lines Underwriting Group, which has underwriting responsibility for
the professional and management liability insurance products; and
    
    The Run-Off (previously the Personal Lines Group) business segment, which pursuant
to approval received in February, 2008 from the Florida Office of Insurance Regulation,
is currently in the process of non-renewing all personal lines policies, other than
policies issued pursuant to the National Flood Insurance Program (NFIP), beginning
with policies expiring on or about July 23, 2008. The Company currently expects the
non-renewal process to be completed by July 23, 2009.
    20




---



##### 



As of and For The Three Months Ended March 31,Commercial
    
    SpecialtyLines
    
    Lines
    
    Run-Off
    
    Corporate
    
    Total2008:Gross Written Premiums
    
    $
    358,353
    
    
    $
    69,132
    
    
    $
    15,602
    
    
    $
    
    
    
    $
    443,087Net Written Premiums
    
    $
    327,332
    
    
    $
    73,574
    
    
    $
    5,062
    
    
    $
    
    
    
    $
    405,968Revenue:Net Earned Premiums
    
    $
    321,234
    
    
    $
    55,638
    
    
    $
    2,516
    
    
    $
    
    
    
    $
    379,388Net Investment Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,005
    
    
    
    32,005Net Realized Investment Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,394
    )
    
    
    (11,394
    )Other Income
    
    
    
    
    
    
    
    
    
    
    426
    
    
    
    927
    
    
    
    1,353Total Revenue
    
    
    321,234
    
    
    
    55,638
    
    
    
    2,942
    
    
    
    21,538
    
    
    
    401,352Losses and Expenses:Net Loss and Loss Adjustment Expenses
    
    
    160,979
    
    
    
    30,738
    
    
    
    1,702
    
    
    
    
    
    
    
    193,419Acquisition Costs and Other Underwriting
Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,156
    
    
    
    114,156Other Operating Expenses
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    3,124
    
    
    
    3,589Total Losses and Expenses
    
    
    160,979
    
    
    
    30,738
    
    
    
    2,167
    
    
    
    117,280
    
    
    
    311,164Income Before Income Taxes
    
    
    160,255
    
    
    
    24,900
    
    
    
    775
    
    
    
    (95,742
    )
    
    
    90,188Total Income Tax Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,512
    
    
    
    27,512Net Income
    
    $
    160,255
    
    
    $
    24,900
    
    
    $
    775
    
    
    $
    (123,254
    )
    
    $
    62,676Total Assets
    
    $
    
    
    
    $
    
    
    
    $
    88,951
    
    
    $
    4,156,738
    
    
    $
    4,245,6892007:Gross Written Premiums
    
    $
    311,368
    
    
    $
    60,743
    
    
    $
    22,003
    
    
    $
    
    
    
    $
    394,114Net Written Premiums
    
    $
    285,422
    
    
    $
    50,560
    
    
    $
    1,451
    
    
    $
    
    
    
    $
    337,433Revenue:Net Earned Premiums
    
    $
    271,905
    
    
    $
    45,482
    
    
    $
    1,331
    
    
    $
    
    
    
    $
    318,718Net Investment Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,973
    
    
    
    26,973Net Realized Investment Gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,757
    
    
    
    1,757Other Income
    
    
    
    
    
    
    
    
    
    
    727
    
    
    
    103
    
    
    
    830Total Revenue
    
    
    271,905
    
    
    
    45,482
    
    
    
    2,058
    
    
    
    28,833
    
    
    
    348,278Losses and Expenses:Net Loss and Loss Adjustment Expenses
    
    
    115,467
    
    
    
    30,777
    
    
    
    4,261
    
    
    
    
    
    
    
    150,505Acquisition Costs and Other Underwriting
Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,904
    
    
    
    96,904Other Operating Expenses
    
    
    
    
    
    
    
    
    
    
    438
    
    
    
    2,717
    
    
    
    3,155Total Losses and Expenses
    
    
    115,467
    
    
    
    30,777
    
    
    
    4,699
    
    
    
    99,621
    
    
    
    250,564Income Before Income Taxes
    
    
    156,438
    
    
    
    14,705
    
    
    
    (2,641
    )
    
    
    (70,788
    )
    
    
    97,714Total Income Tax Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,734
    
    
    
    31,734Net Income
    
    $
    156,438
    
    
    $
    14,705
    
    
    $
    (2,641
    )
    
    $
    (102,522
    )
    
    $
    65,980Total Assets
    
    $
    
    
    
    $
    
    
    
    $
    118,178
    
    
    $
    3,517,370
    
    
    $
    3,635,548
 21




---



##### 



2008
    
    
    2007Commercial Lines Net Earned PremiumsCommercial Package
    
    $
    291,802
    
    
    $
    251,442Specialty Property
    
    
    15,543
    
    
    
    13,250Commercial Auto
    
    
    4,872
    
    
    
    4,953Antique/Collector Auto
    
    
    8,390
    
    
    
    1,752All Other
    
    
    627
    
    
    
    508Total Commercial Lines
    
    
    321,234
    
    
    
    271,905Specialty Lines Net Earned PremiumsManagement Liability
    
    
    32,379
    
    
    
    23,718Professional Liability
    
    
    23,259
    
    
    
    21,764Total Specialty Lines
    
    
    55,638
    
    
    
    45,482Run-Off Net Earned PremiumsHomeowners and Manufactured Housing
    
    
    2,516
    
    
    
    1,331National Flood Insurance Program
    
    
    
    
    
    
    Total Run-Off Net Earned Premiums
    
    
    2,516
    
    
    
    1,331Other Income
    
    
    426
    
    
    
    727Total Run-Off
    
    
    2,942
    
    
    
    2,058CorporateNet Investment Income
    
    
    32,005
    
    
    
    26,973Net Realized Investment Gain (Loss)
    
    
    (11,394
    )
    
    
    1,757Other Income
    
    
    927
    
    
    
    103Total Corporate
    
    
    21,538
    
    
    
    28,833Total Revenue
    
    $
    401,352
    
    
    $
    348,278
 22




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 Item 2. Managements Discussion
and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
  General
    Critical Accounting Estimates
  
    
    Investments  fair value;
    
    Investments  Other than temporary impairments;
    
    Liability for unpaid loss and loss adjustment expenses;
    
    Reinsurance receivables;
    
    Liability for preferred agent profit sharing; and
    
    Share-based compensation expense.
  23




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Results of Operations (Three Months Ended March 31, 2008 vs. March 31, 2007)
 Premiums
 Commercial Lines
    
    Specialty Lines
    
    Run-off
    
    Total2008 Gross Written Premiums
    
    $
    358.4
    
    
    $
    69.1
    
    
    $
    15.6
    
    
    $
    443.12007 Gross Written Premiums
    
    $
    311.4
    
    
    $
    60.7
    
    
    $
    22.0
    
    
    $
    394.1Percentage Increase (Decrease)
    
    
    15.1
    %
    
    
    13.8
    %
    
    
    (29.1
    )%
    
    
    12.4
    %2008 Gross Earned Premiums
    
    $
    352.9
    
    
    $
    61.3
    
    
    $
    14.8
    
    
    $
    429.02007 Gross Earned Premiums
    
    $
    297.7
    
    
    $
    56.8
    
    
    $
    23.1
    
    
    $
    377.6Percentage Increase (Decrease)
    
    
    18.5
    %
    
    
    7.9
    %
    
    
    (35.9
    )%
    
    
    13.6
    %
  
    
    Prospecting efforts by marketing personnel in conjunction with long term relationships
formed by our marketing Regional Vice Presidents continue to result in additional prospects
and increased premium writings in existing product offerings, most notably for the
following:
 §
    
    Our antique/collector vehicle product; our condominium and homeowners associations,
religious organizations, non-profit, day care centers, specialty schools, and golf
and country clubs products in the commercial package product
grouping; our inland marine product in the specialty property product grouping; our consultant liability product in the professional liability product grouping,
as well as our private company protection, directors and officers, and business
owners products in the management liability product grouping. These
product offerings accounted for approximately $39.6 million of
the $55.4 million
total commercial and specialty lines segments gross written premiums increase.
 
    
    The introduction of several new niche product offerings, such as the affordable housing,
special events, and campground and recreational vehicle parks commercial package products,
as well as the difference in conditions inland marine specialty property product. These new
product offerings accounted for approximately $11.5 million of the $47.0 million total
commercial lines segment gross written premiums increase.
    
    An increase in our marketing personnel, as well as an increase in the number of our
preferred agents.
    
    Our Firemark producer program, which promotes our product offerings and underwriting
philosophy in selected producers offices.
    
    As a result of the factors noted above:
 §
    
    The commercial lines segment in-force policy counts increased by 6.6% for the
three months ended March 31, 2008
 24




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 §
    
    The specialty lines segment in-force policy counts increased by 26.8% for the
three months ended March 31, 2008.
  
    
    A reduction in personal lines (run-off segment) production for our homeowners and
rental dwelling policies. This reduction was imposed to reduce our exposure to catastrophe
wind losses.On February 29, 2008, we received approval from the Florida Office of Insurance Regulation
(FOIR) to non-renew all of our Florida personal lines policies, other than policies issued
pursuant to the National Flood Insurance Program, beginning with policies expiring on or
about July 23, 2008. We currently expect the non-renewal process to be completed by July
23, 2009. As of March 31, 2008, there were approximately 3,813 in-force policies with an
aggregate in-force premium of approximately $3.0 million which expire between July 23, 2008
and December 31, 2008, which we will not renew during 2008.
    
    A decrease in bowling centers commercial package product gross written premium of
$2.4 million as a result of non-renewing policies due to unacceptable underwriting results.
For the three months ended March 31, 2008, gross written premium for the bowling centers
commercial package product was $0.3 million. The Company anticipates that it will continue
to non-renew its remaining bowling centers commercial package business throughout 2008,
which approximated $1.7 million of gross written premium for the nine months ended December
31, 2007.
    
    Continued price competition during the three months ended March 31, 2008, particularly
with respect to the following:
 §
    
    Large commercial property-driven accounts located in the non-coastal areas of
the country;§
    
    Commercial package business with annual premiums in excess of $100,000; and§
    
    Professional liability accounts at all premium levels.
 
    
    Realized average rate decreases on renewal business approximating 4.7% and 2.1% for the
commercial lines and specialty lines segments, respectively.
  Commercial Lines
    
    Specialty Lines
    
    Run-off
    
    Total2008 Net Written Premiums
    
    $
    327.3
    
    
    $
    73.6
    
    
    $
    5.1
    
    
    $
    406.02007 Net Written Premiums
    
    $
    285.4
    
    
    $
    50.6
    
    
    $
    1.4
    
    
    $
    337.4Percentage Increase
    
    
    14.7
    %
    
    
    45.5
    %
    
    
    264.3
    %
    
    
    20.3
    %2008 Net Earned Premiums
    
    $
    321.3
    
    
    $
    55.6
    
    
    $
    2.5
    
    
    $
    379.42007 Net Earned Premiums
    
    $
    271.9
    
    
    $
    45.5
    
    
    $
    1.3
    
    
    $
    318.7Percentage Increase
    
    
    18.2
    %
    
    
    22.2
    %
    
    
    92.3
    %
    
    
    19.0
    %
  
    
    For our commercial and specialty lines segments, we experienced rate reductions on our
annual January 1, 2008 renewal of our casualty excess of loss reinsurance coverage compared
to the rate on our January 1, 2007 renewal of this coverage.
 25




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 
    
    For our commercial lines segment, we experienced a rate increase on our annual January
1, 2008 renewal of our property excess of loss reinsurance coverage compared to the rate on
our January 1, 2007 renewal of this coverage.
    
    For our run-off segment, our property catastrophe costs were significantly lower for the
three months ended March 31, 2008 compared to March 31, 2007. For our June 1, 2007 run-off
segment property catastrophe reinsurance renewal, we experienced lower reinsurance rates,
reduced our catastrophe loss retention, and purchased decreased catastrophe coverage limits
due to lower exposures, compared to our June 1, 2006 renewal.
    
    For our specialty lines segment, our net written premiums were higher than our gross
written premiums for the three months ended March 31, 2008 due to the previously noted rate
reductions on our January 1, 2008 renewal of our casualty excess of loss reinsurance
coverage compared to the rate on our January 1, 2007 renewal of this coverage. This
reduced rate was applied to our January 1, 2008 gross unearned premiums, which resulted in
a reduction to ceded written premium as of January 1, 2008. For our specialty lines
segment, this reduction exceeded the ceded written premium amount on policies effective
January 1, 2008 through March 31, 2008, thereby resulting in negative overall ceded written
premium, and higher net written premium for this segment.
    
    Certain of our reinsurance contracts have reinstatement or additional premium provisions
under which we must pay reinstatement or additional reinsurance premiums to reinstate
coverage provisions upon utilization of initial reinsurance coverage. During the three
months ended March 31, 2008 and 2007, we accrued $1.7 million ($1.4 million for the commercial lines segment and $0.3
million for the specialty lines segment) and $1.8 million ($0.8 million for the commercial lines segment and $1.0 million for the
specialty lines segment) respectively, of reinstatement or additional reinsurance premium
under our excess of loss reinsurance treaties, as a result of changes in ultimate loss
estimates. The decrease in reinstatement premium reduced ceded written and earned premiums
and increased net written and earned premiums.
 Net Investment Income:
    26




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Net Realized Investment Gain (Loss):
   Other Income
 Net Loss and Loss Adjustment Expenses:
  
    
    The growth in net earned premiums; and
    
    Net reserve actions taken during the three months ended March 31, 2008 which decreased
net estimated unpaid loss and loss adjustment expenses for accident years 2007 and prior by
$5.9 million, as compared to net reserve actions taken during the three months ended March
31, 2007 which decreased estimated net unpaid loss and loss adjustment expenses for
accident years 2006 and prior by $12.9 million. Increases/(decreases) in the estimated net
unpaid loss and loss adjustment expenses for prior accident years during the three months
ended March 31, 2008 were as follows (in millions):
 Net Basis Increase(Decrease)Accident Year 2007
    
    $
    1.9Accident Year 2006
    
    
    (4.1
    )Accident Year 2005
    
    
    (1.2
    )Accident Years 2004 and prior
    
    
    (2.5
    )Total
    
    $
    (5.9
    )
   27




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 due to better than expected case incurred loss development,
primarily as a result of claim severity being less than anticipated.For accident year 2005, the decrease in estimated net unpaid loss and loss adjustment
expenses was principally due to lower loss estimates for commercial general liability
coverages due to better than expected case incurred loss development, primarily as a result
of claim severity being less than anticipated.For accident years 2004 and prior, the decrease in estimated net unpaid loss and loss
adjustment expenses was principally due to lower loss estimates for commercial general
liability, commercial property, and commercial automobile coverages due to better than
expected case incurred loss development, primarily as a result of claim severity being less
than anticipated.
    
    An increase in the current accident year net ultimate loss and loss adjustment expense
ratio for the three months ended March 31, 2008 compared to 2007. During the three months
ended March 31, 2008, a net ultimate loss and loss adjustment expense ratio of 52.5% was
estimated for the 2008 accident year. During the three months ended March 31, 2007, a net
ultimate loss and loss adjustment expense ratio of 51.3% was estimated for the 2007
accident year. The increase in the 2008 accident year loss and loss adjustment expense
ratio is principally attributable to:
 §
    
    Realized average rate decreases on renewal business approximating 4.7% and 2.1%
for the commercial and specialty lines segments, respectively, for the three
months ended March 31, 2008 compared to the same period in 2007.
  Acquisition Costs and Other Underwriting Expenses:
 Income Tax Expense:
 Investments
  28




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 §
    
    The fair value of our total invested assets is primarily measured utilizing a market based
valuation methodology (Market Approach). A Market Approach utilizes prices and other
relevant information generated by market transactions involving identical or comparable assets
or liabilities to measure fair value. We have consistently applied the Market Approach as of
and for the three months ended March 31, 2008.§
    
    Approximately 99.2% of our total invested assets are measured utilizing significant
observable inputs (Level 1 or Level 2 per SFAS 157). Approximately 0.8% of our total invested
assets are measured utilizing significant unobservable inputs (Level 3 per SFAS 157).§
    
    Approximately 99.6% of our fixed maturity investments are measured utilizing significant
observable inputs (Level 1 or Level 2 per SFAS 157). Approximately 95.0% of our equity
investments are measured utilizing significant observable inputs (Level 1 or Level 2 per SFAS
157). We do not consider our use of unobservable inputs (Level 3 per SFAS 157) in our fair
value measurements to be significant to our financial position, results of operations, or
liquidity.§
    
    Significant observable inputs utilized to measure fair value include
matrix pricing for fixed maturity investments (Level 2 per SFAS 157) and quoted market
prices for equity investments (Level 1 per SFAS 157). Matrix pricing relies on observable
inputs from active markets other than quoted market prices including, but not limited to,
benchmark securities and yields, latest reported trades, quotes from brokers or dealers,
issuer spreads, bids, offers, and other relevant reference data to determine fair value.
Matrix pricing is used to measure the fair value of fixed maturity securities where
obtaining individual quoted market prices is impractical.§
    
    The significant unobservable inputs utilized to measure fair value
include broker pricing and net asset value calculations.§
    
    We made no material adjustments to the fair value of our invested assets as of and for the
three months ended March 31, 2008.
     29




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Securities with an Unrealized Loss as of March 31, 2008:
  
    
    The industry concentration as a percentage of total estimated fair value represents
investments in a geographically diversified pool of investment grade municipal securities
issued by states, political subdivisions, and public authorities under general obligation
and/or special district/purpose issuing authority.  The unrealized losses on these
securities are generally attributable to changes both in market spreads and in the level of
Treasury yields.  The primary factor underlying the spread widening is the increasing
market risk aversion to issues surrounding the monoline financial guarantors, given such
guarantors significant participation in the municipal sector through their financial
guarantee insurance.
    
    The industry concentration as a percentage of the total gross unrealized loss primarily
represents investments in equity securities issued by companies in the diversified
financial services industry. The unrealized losses on these securities are generally
attributable to the recent correction in the financial services industry primarily caused
by the deterioration of credit conditions and increased risk aversion in the marketplace
during the second half of 2007 and the first quarter of 2008. As of March 31, 2008, these
securities were evaluated for other than temporary impairment in accordance with the
Companys impairment policy, and the Company concluded that these securities were not other
than temporarily impaired.
  30




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Gross Unrealized Losses as of March 31, 2008Fixed MaturitiesAvailable for SaleContinuous time in
    
    Excluding InterestsUnrealized loss
    
    in Securitized
    
    
    Interests in
    
    
    Fixed Maturities
    
    
    
    
    
    
    Totalposition
    
    Assets
    
    
    Securitized Assets
    
    
    Available for Sale
    
    
    Equity Securities
    
    
    Investments0  3 months
    
    $
    8.7
    
    
    $
    2.5
    
    
    $
    11.2
    
    
    $
    10.5
    
    
    $
    21.74  6 months
    
    
    1.7
    
    
    
    0.3
    
    
    
    2.0
    
    
    
    12.0
    
    
    
    14.07  9 months
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    5.7
    
    
    
    5.910  12 months
    
    
    3.4
    
    
    
    0.8
    
    
    
    4.2
    
    
    
    
    
    
    
    4.213  18 months
    
    
    3.9
    
    
    
    
    
    
    
    3.9
    
    
    
    
    
    
    
    3.919  24 months
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    > 24 months
    
    
    0.6
    
    
    
    1.1
    
    
    
    1.7
    
    
    
    
    
    
    
    1.7Total Gross
Unrealized Losses
    
    $
    18.4
    
    
    $
    4.8
    
    
    $
    23.2
    
    
    $
    28.2
    
    
    $
    51.4Estimated fair
value of securities
with a gross
unrealized loss
    
    $
    752.3
    
    
    $
    210.8
    
    
    $
    963.1
    
    
    $
    136.6
    
    
    $
    1,099.7
             31




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
     Structured Securities Portfolio:
  
    
    $604.3 million of U.S. government agency backed Mortgage Pass-Through Securities;
    
    $224.6 million of U.S. government agency backed Collateralized Mortgage Obligations;
    
    $76.9 million of non-U.S. government agency Collateralized Mortgage Obligations backed by
pools of prime loans (generally consists of loans made to the highest credit quality borrowers
with Fair Isaac Corporation (FICO) scores generally greater than 720);
    
    $19.1 million of structured securities backed by pools
of ALT A loans (loans with less than normal documentation and borrowers with FICO scores in the approximated range of 650 to the low
700s); and
    
    $4.5 million of structured securities backed by pools of subprime loans (loans with less than
normal documentation, higher combined loan-to-value ratios and borrowers with FICO scores
capped at approximately 650).
  
    
    first to pay or among the first cash flow tranches of their respective transactions;
    
    have a weighted average life of 2.3 years;
    
    are spread across multiple vintages (origination year of underlying collateral pool), and
    
    have not experienced any ratings downgrades as of March 31, 2008.
    32




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Municipal Bond Portfolio:
  Market Value of Insured
    
    
    
    
    
    
    Weighted AverageMunicipal Bonds
    
    
    Percentage of Municipal
    
    
    Underlying Rating ofMonoline Insurer
    
    (in Thousands)
    
    
    Bond Portfolio
    
    
    Insured Municipal BondsFinancial Security
Assurance, Inc.
    
    $
    302,945
    
    
    
    19.8
    %
    
    AAMBIA, Inc.
    
    
    281,452
    
    
    
    18.4
    
    
    AAFGIC Corporation
    
    
    199,067
    
    
    
    13.0
    
    
    AA-AMBAC Financial Group, Inc.
    
    
    158,664
    
    
    
    10.4
    
    
    AA-XL Capital, LTD.
    
    
    4,469
    
    
    
    0.3
    
    
    AA-Total
    
    $
    946,597
    
    
    
    61.9
    %
    
    AA
  Securities with an Unrealized Loss as of December 31, 2007:
  
    
    The industry concentration as a percentage of total estimated fair value represents
investments in a geographically diversified pool of investment grade Municipal securities
issued by states, political subdivisions, and public authorities under general obligation
and/or special district/purpose issuing authority.  The unrealized losses on these securities
are generally attributable to spread widening.  The primary factor underlying the spread
widening is the increasing market risk aversion to issues surrounding the monoline financial
guarantors, given the monolines significant participation in the Municipal sector through
their financial guarantee insurance.
    
    The industry concentration as a percentage of the total gross unrealized loss primarily
represents investments in equity securities issued by companies in the Diversified Financial
Services industry. The unrealized losses on these securities are generally attributable to the
recent correction in the Financial Services industry primarily caused by the deterioration of
credit conditions in the marketplace during the third and fourth quarters of 2007. As of
December 31, 2007, these equity securities were evaluated for other than temporary impairment
in accordance with the Companys impairment policy and the Company concluded that these
securities were not other than temporarily impaired.
  33




---



##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Gross Unrealized Losses as of December 31, 2007(Dollars in Millions)Fixed MaturitiesAvailable for SaleExcluding InterestsContinuous time in
    
    in Securitized
    
    
    Interests in
    
    
    Fixed MaturitiesUnrealized loss position
    
    Assets
    
    
    Securitized Assets
    
    
    Available for Sale
    
    
    Equity Securities
    
    
    Total Investments0  3 months
    
    $
    0.2
    
    
    $
    0.7
    
    
    $
    0.9
    
    
    $
    8.1
    
    
    $
    9.0>3  6 months
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    6.5
    
    
    
    6.6>6  9 months
    
    
    0.8
    
    
    
    
    
    
    
    0.8
    
    
    
    7.6
    
    
    
    8.4>9  12 months
    
    
    1.3
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    1.3>12  18 months
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2>18  24 months
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1> 24 months
    
    
    1.4
    
    
    
    2.2
    
    
    
    3.6
    
    
    
    
    
    
    
    3.6Total Gross Unrealized Losses
    
    $
    4.0
    
    
    $
    3.0
    
    
    $
    7.0
    
    
    $
    22.2
    
    
    $
    29.2Estimated fair value of
securities with a gross
unrealized loss
    
    $
    570.4
    
    
    $
    357.6
    
    
    $
    928.0
    
    
    $
    118.1
    
    
    $
    1,046.1
             34




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
     Gross Realized Losses:
   Liquidity and Capital Resources
      35




---



##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    New Accounting Pronouncement
  36




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##### 



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Fair Value
    
    (bp=basis points)
    
    in Interest Rates
    
    Fair Value
    
    Equity(Dollars in Thousands)March 31, 2008:InvestmentsTotal Fixed Maturities Available For Sale
    
    $
    2,766,054
    
    
    200 bp decrease
    
    $
    3,042,597
    
    
    
    10.0
    %
    
    
    11.5
    %100 bp decrease
    
    $
    2,908,375
    
    
    
    5.2
    %
    
    
    5.9
    %50 bp decrease
    
    $
    2,837,984
    
    
    
    2.6
    %
    
    
    3.0
    %50 bp increase
    
    $
    2,693,422
    
    
    
    (2.6
    )%
    
    
    (3.0
    )%100 bp increase
    
    $
    2,620,802
    
    
    
    (5.3
    )%
    
    
    (6.1
    )%200 bp increase
    
    $
    2,476,653
    
    
    
    (10.5
    )%
    
    
    (12.1
    )%March 31, 2007:InvestmentsTotal Fixed Maturities Available For Sale
    
    $
    2,282,135
    
    
    200 bp decrease
    
    $
    2,472,159
    
    
    
    8.3
    %
    
    
    9.9
    %100 bp decrease
    
    $
    2,383,528
    
    
    
    4.4
    %
    
    
    5.3
    %50 bp decrease
    
    $
    2,334,103
    
    
    
    2.3
    %
    
    
    2.7
    %50 bp increase
    
    $
    2,228,838
    
    
    
    (2.3
    )%
    
    
    (2.8
    )%100 bp increase
    
    $
    2,175,311
    
    
    
    (4.7
    )%
    
    
    (5.6
    )%200 bp increase
    
    $
    2,070,678
    
    
    
    (9.3
    )%
    
    
    (11.0
    )%
 37




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##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
 Item 4. Controls and Procedures
    38




---



##### 



PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
 
  
    
   
   (c) Total
    
    (d)Number of
    
    ApproximateShares
    
    Dollar Value ofPurchased as
    
    Shares ThatPart of
    
    May Yet BePublicly
    
    Purchased(a) Total Number
    
    
    
    
    
    Announced
    
    Under theof Shares
    
    (b) Average
    
    Plans or
    
    Plans orPeriod
    
    Purchased
    
    Price Paid per Share
    
    Programs
    
    ProgramsJanuary 1  January 31
    
    
    1,273
    (1)
    
    $
    30.45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    45,000,000
    (2)February 1  February 29
    
    
    3,374
    (1)
    
    $
    33.66
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    45,000,000
    (2)March 1  March 31
    
    
    8,050
    (1)
    
    $
    34.17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,353,200
    
    
    $
    2,100,000
    (2)
 
 (1)
    
    Such shares were issued under the Companys Employee Stock Purchase Plan and
Amended and Restated Employees Stock Incentive and Performance Based Compensation Plan
and were repurchased by the Company upon the employees termination. 39




---



##### 



(2)
    
    The Companys total stock purchase authorization, which was publicly announced
in August 1998 and subsequently increased, was
$75.3 million as of March 31, 2008. As of March 31,
2008, $73.2 million has been utilized. 
   
   
   
   Exhibit No.
    
    Description31.1*
    
    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. 40




---



##### 



SIGNATURES
  PHILADELPHIA CONSOLIDATED HOLDING CORP.
RegistrantDate   May 6, 2008
    
    
    
    James J. Maguire, Jr.

James J. Maguire, Jr.President and Chief Executive Officer(Principal Executive Officer)Date   May 6, 2008
    
    
    
    Craig P. Keller

Craig P. KellerExecutive Vice President, Secretary,Treasurer and Chief Financial Officer(Principal Financial and Accounting Officer)
 41