<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q



              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                  For the Quarterly Period Ended June 30, 2002


                         COMMISSION FILE NUMBER 0-22280

                     PHILADELPHIA CONSOLIDATED HOLDING CORP.
                     ---------------------------------------
             (Exact name of registrant as specified in its charter)



      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, including area code, of
                    registrant's principal executive offices)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 YES: [X] NO [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of August 8, 2002.

Preferred Stock, $.01 par value, no shares outstanding
Common Stock, no par value, 21,626,402 shares outstanding




<PAGE>




            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
                                      INDEX

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002





<TABLE>
<S>                                                                                           <C>
Part I - Financial Information

     Item 1.  Financial Statements:

         Consolidated Balance Sheets - June 30, 2002 and
           December 31, 2001                                                                     3


         Consolidated Statements of Operations and Comprehensive
           Income - For the three and six months ended
           June 30, 2002 and 2001                                                                4


         Consolidated Statements of Changes in Shareholders' Equity - For the
           six months ended June 30, 2002 and year ended
           December 31, 2001                                                                     5


         Consolidated Statements of Cash Flows - For the six
           months ended June 30, 2002 and 2001                                                   6


         Notes to Consolidated Financial Statements                                            7-11

     Item 2.

         Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                           12-17

     Item 3.

         Quantitative and Qualitative Disclosures About Market Risk                             18



Part II - Other Information                                                                    19-21


Signatures                                                                                      22
</TABLE>










                                       2
<PAGE>


            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                             As of
                                                                          --------------------------------------------
                                                                              June 30,                December 31,
                                                                                2002                      2001
                                                                            (Unaudited)
                                                                          -----------------         ------------------
<S>                                                                       <C>                       <C>
                               ASSETS
INVESTMENTS:
   FIXED MATURITIES AVAILABLE FOR SALE AT MARKET
     (AMORTIZED COST $708,101 AND $626,326).....................          $    721,681              $    632,416
   EQUITY SECURITIES AT MARKET (COST $42,653
     AND $34,065)...............................................                47,185                    40,992
                                                                          ------------              ------------
       TOTAL INVESTMENTS........................................               768,866                   673,408

   CASH AND CASH EQUIVALENTS....................................                45,711                    49,910
   ACCRUED INVESTMENT INCOME....................................                 7,722                     6,582
   PREMIUMS RECEIVABLE..........................................               109,609                    96,025
   PREPAID REINSURANCE PREMIUMS AND
   REINSURANCE RECEIVABLES......................................                98,031                    99,601
   DEFERRED INCOME TAXES........................................                 7,480                     6,196
   DEFERRED ACQUISITION COSTS...................................                48,836                    41,526
   PROPERTY AND EQUIPMENT, NET..................................                10,609                    10,082
   GOODWILL.....................................................                25,724                    25,724
   OTHER ASSETS.................................................                 6,882                     8,668
                                                                          ------------              ------------
        TOTAL ASSETS............................................          $  1,129,470              $  1,017,722
                                                                          ============              ============



                   LIABILITIES AND SHAREHOLDERS' EQUITY

POLICY LIABILITIES AND ACCRUALS:
   UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES.....................          $    331,889              $    302,733
   UNEARNED PREMIUMS............................................               244,905                   197,839
                                                                          ------------              ------------
       TOTAL POLICY LIABILITIES AND ACCRUALS....................               576,794                   500,572
   LOANS PAYABLE................................................                31,341                    31,341
   PREMIUMS PAYABLE.............................................                32,451                    25,659
   OTHER LIABILITIES............................................                34,282                    31,458
                                                                          ------------              ------------
       TOTAL LIABILITIES........................................               674,868                   589,030
                                                                          ------------              ------------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' 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, 21,626,519 AND
     21,509,723 SHARES ISSUED AND OUTSTANDING...................               270,977                   268,509
   NOTES RECEIVABLE FROM SHAREHOLDERS...........................                (2,873)                   (3,373)
   ACCUMULATED OTHER COMPREHENSIVE INCOME.......................                11,773                     8,461
   RETAINED EARNINGS............................................               174,725                   155,095
                                                                          ------------              ------------
       TOTAL SHAREHOLDERS' EQUITY...............................               454,602                   428,692
                                                                          ------------              ------------
       TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...............          $  1,129,470              $  1,017,722
                                                                          ============              ============
</TABLE>






         The accompanying notes are an integral part of the consolidated
                             financial statements.





                                       3
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

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


<TABLE>
<CAPTION>

                                                                For the Three Months                 For the Six Months
                                                                   Ended June 30,                      Ended June 30,
                                                           -------------------------------     -------------------------------
                                                               2002             2001               2002             2001
                                                           -------------    --------------     -------------    --------------
<S>                                                        <C>              <C>                <C>              <C>
REVENUE:
   NET EARNED PREMIUMS...............................      $   100,273      $    71,703        $   189,517      $   138,226
   NET INVESTMENT INCOME.............................            9,375            8,091             18,230           16,133
   NET REALIZED INVESTMENT GAIN (LOSS)...............           (3,181)             318             (3,134)           2,617
   OTHER INCOME......................................               15               63                 16              116
                                                           -----------      -----------        -----------      -----------
     TOTAL REVENUE...................................          106,482           80,175            204,629          157,092
                                                           -----------      -----------        -----------      -----------

LOSSES AND EXPENSES:
   LOSS AND LOSS ADJUSTMENT EXPENSES.................           72,067           54,686            137,678          100,224
   NET REINSURANCE RECOVERIES........................          (11,235)         (11,820)           (23,797)         (18,206)
                                                           ------------     ------------       ------------     ------------
   NET LOSS AND LOSS ADJUSTMENT EXPENSES.............           60,832           42,866            113,881           82,018
   ACQUISITION COSTS AND OTHER
        UNDERWRITING EXPENSES........................           31,057           22,695             58,878           45,163
   OTHER OPERATING EXPENSES..........................            1,454            2,130              2,938            4,162
                                                           -----------      -----------        -----------      -----------
     TOTAL LOSSES AND EXPENSES.......................           93,343           67,691            175,697          131,343
                                                           -----------      -----------        -----------      -----------

MINORITY INTEREST:  DISTRIBUTIONS ON COMPANY OBLIGATED
MANDATORILY REDEEMABLE PREFERRED SECURITIES
OF SUBSIDIARY TRUST..................................                -              938                  -            2,749
                                                           -----------      -----------        -----------      -----------

INCOME BEFORE INCOME TAXES...........................           13,139           11,546             28,932           23,000
                                                           -----------      -----------        -----------      -----------

INCOME TAX EXPENSE (BENEFIT):
   CURRENT...........................................            5,798            5,921             12,369           10,698
   DEFERRED..........................................           (1,612)          (2,111)            (3,067)          (3,148)
                                                           ------------     ------------       ------------     ------------

     TOTAL INCOME TAX EXPENSE........................            4,186            3,810              9,302            7,550
                                                           -----------      -----------        -----------      -----------

     NET INCOME......................................      $     8,953      $     7,736        $    19,630      $    15,450
                                                           ===========      ===========        ===========      ===========


OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
   HOLDING GAIN (LOSS) ARISING DURING PERIOD.............        5,334             (921)             1,275           (1,512)
   RECLASSIFICATION ADJUSTMENT...........................        2,068             (207)             2,037           (1,701)
                                                           -----------      ------------       -----------      ------------
   OTHER COMPREHENSIVE INCOME (LOSS).....................        7,402           (1,128)             3,312           (3,213)
                                                           -----------      ------------       -----------      ------------
COMPREHENSIVE INCOME.....................................  $    16,355      $     6,608        $    22,942      $    12,237
                                                           ===========      ===========        ===========      ===========

PER AVERAGE SHARE DATA:
   BASIC EARNINGS PER SHARE..........................      $      0.41      $      0.50        $      0.91      $      1.06
                                                           ===========      ===========        ===========      ===========
   DILUTED EARNINGS PER SHARE........................      $      0.40      $      0.48        $      0.88      $      1.01
                                                           ===========      ===========        ===========      ===========

WEIGHTED-AVERAGE COMMON SHARES
   OUTSTANDING.......................................       21,578,045       15,587,962         21,553,206       14,538,780
WEIGHTED-AVERAGE SHARE EQUIVALENTS
   OUTSTANDING.......................................          753,575          692,256            741,742          712,939
                                                           -----------      -----------        -----------      -----------
WEIGHTED-AVERAGE SHARES AND SHARE
   EQUIVALENTS OUTSTANDING...........................       22,331,620       16,280,218         22,294,948       15,251,719
                                                           ===========      ===========        ===========      ===========
</TABLE>


         The accompanying notes are an integral part of the consolidated
                             financial statements.



                                       4
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF CHANGES
                             IN SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                           For the Six Months
                                                                                 Ended             For the Year Ended
                                                                             June 30, 2002            December 31,
                                                                              (Unaudited)                 2001
                                                                          ---------------------   ---------------------
<S>                                                                       <C>                     <C>
COMMON STOCK:
  BALANCE AT BEGINNING OF YEAR..................................          $         268,509       $          46,582
  ISSUANCE OF SHARES PURSUANT TO PUBLIC OFFERING................                          -                 114,518
  ISSUANCE OF SHARES PURSUANT TO STOCK
    PURCHASE CONTRACTS..........................................                          -                  98,905
  EXERCISE OF EMPLOYEE STOCK OPTIONS............................                      2,115                   6,437
  ISSUANCE OF SHARES PURSUANT TO STOCK
    PURCHASE PLANS..............................................                        353                   2,067
                                                                          -----------------       -----------------
      BALANCE AT END OF PERIOD..................................                    270,977                 268,509
                                                                          -----------------       -----------------
NOTES RECEIVABLE FROM SHAREHOLDERS:
  BALANCE AT BEGINNING OF YEAR..................................                     (3,373)                 (2,287)
  NOTES RECEIVABLE FORFEITED (ISSUED) PURSUANT
    TO STOCK PURCHASE PLAN......................................                         46                  (2,158)
  COLLECTION OF NOTES RECEIVABLE................................                        454                   1,072
                                                                          -----------------       -----------------
      BALANCE AT END OF PERIOD..................................                     (2,873)                 (3,373)
                                                                          ------------------      ------------------
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF
  DEFERRED INCOME TAXES:
  BALANCE AT BEGINNING OF YEAR..................................                      8,461                  13,494
  OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES...............                      3,312                  (5,033)
                                                                          -----------------       ------------------
      BALANCE AT END OF PERIOD..................................                     11,773                   8,461
                                                                          -----------------       -----------------
RETAINED EARNINGS:
  BALANCE AT BEGINNING OF YEAR..................................                    155,095                 124,536
  NET INCOME....................................................                     19,630                  30,559
                                                                          -----------------       -----------------
      BALANCE AT END OF PERIOD..................................                    174,725                 155,095
                                                                          -----------------       -----------------
      TOTAL SHAREHOLDERS' EQUITY................................          $         454,602       $         428,692
                                                                          =================       =================
</TABLE>




         The accompanying notes are an integral part of the consolidated
                             financial statements.



                                       5
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          For the Six Months Ended June 30,
                                                                       -----------------------------------------
                                                                            2002                    2001
                                                                       ----------------       ------------------
<S>                                                                    <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   NET INCOME                                                          $      19,630          $     15,450
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
     PROVIDED BY OPERATING ACTIVITIES:
     NET REALIZED INVESTMENT (GAIN) LOSS........................               3,134                (2,617)
     DEPRECIATION AND AMORTIZATION EXPENSE......................                 738                 1,225
     DEFERRED INCOME TAX BENEFIT................................              (3,067)               (3,148)
   CHANGE IN PREMIUMS RECEIVABLE................................             (13,584)               (1,281)
     CHANGE IN OTHER RECEIVABLES................................                 430               (15,356)
   CHANGE IN INCOME TAXES PAYABLE...............................              (3,078)               (8,015)
     CHANGE IN DEFERRED ACQUISITION COSTS.......................              (7,310)               (5,596)
     CHANGE IN OTHER ASSETS.....................................                   5                   784
     CHANGE IN UNPAID LOSS AND LOSS ADJUSTMENT
     EXPENSES...................................................              29,156                31,094
     CHANGE IN UNEARNED PREMIUMS................................              47,066                31,188
     CHANGE IN OTHER LIABILITIES................................              10,134                  (137)
     TAX BENEFIT FROM EXERCISE OF EMPLOYEE
      STOCK OPTIONS.............................................               1,251                24,474
                                                                       ----------------       ------------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES..............              84,505                68,065
                                                                       ----------------       ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   PROCEEDS FROM SALES OF INVESTMENTS IN FIXED
       MATURITIES...............................................             137,290                23,311
   PROCEEDS FROM MATURITY OF INVESTMENTS IN FIXED
       MATURITIES...............................................              49,730                25,482
   PROCEEDS FROM SALES OF INVESTMENTS IN EQUITY
       SECURITIES...............................................              12,891                11,988
   COST OF FIXED MATURITIES ACQUIRED............................            (264,746)             (131,266)
   COST OF EQUITY SECURITIES ACQUIRED...........................             (23,850)               (7,695)
   PURCHASE OF PROPERTY AND EQUIPMENT, NET......................              (1,736)               (1,083)
                                                                       ----------------       ------------------
       NET CASH USED BY INVESTING ACTIVITIES....................             (90,421)              (79,263)
                                                                       ----------------       ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   REPAYMENTS ON LOANS PAYABLE..................................                   -               (22,000)
   PROCEEDS FROM LOANS PAYABLE..................................                   -                20,841
   PROCEEDS FROM EXERCISE OF EMPLOYEE STOCK OPTIONS.............                 864                 1,860
   PROCEEDS FROM COLLECTION OF NOTES RECEIVABLE.................                 454                   435
   PROCEEDS FROM SHARES ISSUED PURSUANT TO
     STOCK PURCHASE PLANS.......................................                 399                    24
                                                                       ----------------       ------------------
         NET CASH PROVIDED BY FINANCING ACTIVITIES..............               1,717                 1,160
                                                                       ----------------       ------------------

NET DECREASE IN CASH AND CASH EQUIVALENTS.......................              (4,199)              (10,038)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................              49,910                49,742
                                                                       ----------------       ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......................       $      45,711          $     39,704
                                                                       ================       ==================

CASH PAID DURING THE PERIOD FOR:
   INCOME TAXES.................................................       $      13,936          $          -
   INTEREST.....................................................       $         288          $        130

NON-CASH TRANSACTIONS:

   ISSUANCE OF SHARES (FORFEITURES) PURSUANT TO
    EMPLOYEE STOCK PURCHASE PLAN IN EXCHANGE FOR
    NOTES RECEIVABLE............................................       $         (46)         $        (84)

   ISSUANCE OF COMMON SHARES IN SATISFACTION OF
    STOCK PURCHASE CONTRACTS....................................       $           -          $     98,905
</TABLE>


         The accompanying notes are an integral part of the consolidated
                             financial statements.




                                       6
<PAGE>


            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.       Basis of Presentation

         The consolidated financial statements as of and for the six months
         ended June 30, 2002 and 2001 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 only normal recurring accruals, necessary for a fair
         statement of the information set forth therein. The results of
         operations for the six months ended June 30, 2002 are not necessarily
         indicative of the operating results to be expected for the full year or
         any other period.

         These 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, 2001.

2.       Investments

         The carrying amounts for the Company's investments approximates their
         estimated fair value, except for investments in limited partnerships,
         which are valued at cost. The Company measures the fair value of
         investments based upon quoted market prices or by obtaining quotes from
         dealers. At June 30, 2002, the Company held no derivative financial
         instruments or embedded financial derivatives.

         The Company performs various analytical procedures with respect to its
         investments, including identifying any security whose fair value is
         below its cost. Upon identification of such securities, a detailed
         review is performed to determine whether a decline in fair value below
         a security's cost basis is other than temporary. If the Company
         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 loss in the period
         the impairment arose.

         The Company's impairment evaluation and recognition for interests in
         securitized assets is conducted in accordance with the guidance
         provided by the Emerging Issues Task Force of the Financial Accounting
         Standards Board. Under this guidance, impairment losses on securities
         must be recognized if both the fair value of the security is less than
         its book value and the net present value of expected future cash flows
         is less than the net present value of expected future cash flows at the
         most recent (prior) estimation date. If these criteria are met, an
         impairment charge, calculated as the difference between the current
         book value of the security and its fair value, is included in earnings
         as a realized loss in the period the impairment arose. Realized losses
         recorded for the three months ended June 30, 2002 and 2001 were $1.2
         million and $4.3 million, respectively, and for the six months ended
         June 30, 2002 and 2001 were $1.2 million and $4.3 million,
         respectively, as a result of this impairment evaluation.

3.       Goodwill

         The Company adopted the provisions of Statement of Financial Accounting
         Standards No. 142 ("SFAS No. 142"), "Goodwill and Other Intangible
         Assets" on January 1, 2002. SFAS No. 142 eliminates the practice of
         amortizing goodwill through periodic charges to earnings and
         establishes a new methodology for recognizing and measuring goodwill
         and other intangible assets. Under this new accounting standard, the
         Company ceased goodwill amortization on January 1, 2002. Goodwill
         amortization for the six months ended June 30, 2001 amounted to $0.8
         million.






                                       7
<PAGE>

         The following table provides a reconciliation of the prior year's three
         and six month periods ended June 30 reported net income to adjusted net
         income had SFAS No. 142 been applied at the beginning of fiscal 2001
         (in millions, except per share amounts):


<TABLE>
<CAPTION>
                                                 Three Months Ended June 30,         Six Months Ended June 30,
                                                 --------------------------------    ------------------------------
                                                      2002             2001              2002             2001
                                                 --------------    --------------    ------------    --------------
<S>                                              <C>               <C>               <C>             <C>
    Reported net income                          $   8,953         $  7,736          $ 19,630        $  15,450
    Adjustment for goodwill amortization                 -              376                 -              752
                                                 --------------    --------------    ------------    --------------
    Adjusted net income                          $   8,953         $  8,112          $ 19,630        $  16,202
                                                 ==============    ==============    ============    ==============
    Reported basic earnings per share            $    0.41         $   0.50          $   0.91        $    1.06
    Adjustment for goodwill amortization                 -             0.02                 -             0.05
                                                 --------------    --------------    ------------    --------------
    Adjusted basic earnings per share            $    0.41         $   0.52          $   0.91        $    1.11
                                                 ==============    ==============    ============    ==============
    Reported diluted earnings per share          $    0.40         $   0.48          $   0.88        $    1.01
    Adjustment for goodwill amortization                 -             0.02                 -             0.05
                                                 --------------    --------------    ------------    --------------
    Adjusted diluted earnings per share          $    0.40         $   0.50          $   0.88        $    1.06
                                                 ==============    ==============    ============    ==============
</TABLE>


4.       Liability for Unpaid Loss and Loss Adjustment Expenses

         The 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. Estimating
         the ultimate claims liability is necessarily a complex and judgmental
         process, inasmuch as the amounts are based on management's informed
         estimates and judgments using data currently available. 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 of such to
         the Company. The method for determining the Company's liability for
         unpaid loss and loss adjustment expenses includes, but is not limited
         to, reviewing past loss experience and considering other factors such
         as legal, social, and economic developments. As additional experience
         and data become available the Company's estimate for the liability for
         unpaid loss and loss adjustment expenses is revised accordingly. If the
         Company's ultimate losses, net of reinsurance, prove to differ
         substantially from the amounts recorded at June 30, 2002, the related
         adjustments could have a material adverse impact on the Company's
         financial condition, and results of operations.

         As a result of changes in estimates of insured events in prior years,
         the Company increased loss and loss adjustment expenses incurred by
         $5.0 million during the second quarter ended June 30, 2002. Such
         adverse loss development is due to losses emerging at a higher rate on
         automobile leases currently expiring on residual value policies
         underwritten during the years 1996 through 1998 than had been
         originally anticipated when the reserves were estimated as a result of
         changes in the automobile after market.

         The Company continues to evaluate and monitor the remaining leases
         outstanding on its residual value policies underwritten during the
         period 1996 through 2002. As part of this evaluation the Company has
         recently engaged an outside consulting firm, which is a leading
         provider of residual values, portfolio risk analysis and analytical
         data products to the automotive industry, to further evaluate the
         current conditions and determine the impact, if any, on the Company's
         outstanding residual value policies as a result of changes in the
         benchmark for residual values and the automotive after market which
         have occurred subsequent to the inception date of the Company's
         policies. It is expected that the outside consulting firm will complete
         their analysis during the third quarter of 2002.


5.       Loans Payable

         As of June 30, 2002, the Company had aggregate borrowings of $31.3
         million from the Federal Home Loan Bank. These borrowings bear interest
         at adjusted LIBOR and mature twelve months from inception. The proceeds
         from these borrowings were invested in collateralized mortgage
         obligation and asset backed securities to achieve a positive spread
         between the rate of interest on these securities and the borrowing
         rates.



                                       8
<PAGE>

6.       Earnings Per Share

         Earnings per common share has 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 and six months
         ended June 30, 2002 and 2001, respectively (in thousands):

<TABLE>
<CAPTION>

                                                         As of and For the Three         As of and For the Six
                                                          Months Ended June 30,           Months Ended June 30
                                                        --------------------------     ---------------------------
                                                           2002           2001           2002             2001
                                                        -----------    -----------     ----------      -----------
<S>                                                       <C>            <C>             <C>             <C>
Weighted-Average Common Shares Outstanding                21,578         15,588          21,553          14,539

Weighted-Average Share Equivalents Outstanding               754            692             742             713
                                                        --------       --------        --------        --------

Weighted-Average Shares and Share
 Equivalents Outstanding                                  22,332         16,280          22,295          15,252
                                                        ========       ========        ========        ========


Net Income                                              $  8,953       $  7,736        $ 19,630        $ 15,450
                                                        ========       ========        ========        ========

Basic Earnings per Share                                $   0.41       $   0.50        $   0.91        $   1.06
                                                        ========       ========        ========        ========

Diluted Earnings per Share                              $   0.40       $   0.48        $   0.88        $   1.01
                                                        ========       ========        ========        ========
</TABLE>

7.       Income Taxes

         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.

8.       Commitments and Contingencies

         On April 30, 2002, U.S. Bank, N.A. d/b/a Firstar Bank ("Firstar"), a
         bank to which one of the Company's insurance subsidiaries, Philadelphia
         Indemnity Insurance Company ("PIIC"), issued insurance coverages, filed
         a complaint against PIIC in the United States District Court for the
         Southern District of Ohio (Western Division). The complaint asks for
         damages and a declaratory judgment against PIIC. The complaint arises
         principally out of a loss adjustment change and also relates to other
         coverage interpretations made by PIIC under the terms of residual value
         protection insurance policies issued to Firstar relating to vehicles
         financed by Firstar. The complaint alleges that as a result of the loss
         adjustment change Firstar may suffer damages of as much as $75,000,000.
         On June 27, 2002, PIIC filed an answer to the complaint denying
         liability with respect to the matters set forth above. PIIC believes
         that this claim is without merit and intends to vigorously defend this
         action.

         As previously reported in the Company's Form 10-Q for the period ending
         March 31, 2001 and Form 10-K for the period ending December 31, 2001,
         two of the Company's subsidiaries, Liberty American Insurance Group
         Inc. and Mobile Homeowners Insurance Agency Inc., had filed an action
         in the U.S. District Court in the Middle District of Florida against
         WestPoint Underwriters LLC, a managing general agent, two former
         employees of Liberty American and a third individual, and a federal
         magistrate judge issued a report and recommendations to the Federal
         District court. With respect to Liberty American's request for
         preliminary relief, the findings and recommendations stated that one of
         the former employees had misappropriated Liberty American's trade
         secrets by using its software to write WestPoint's software. The
         magistrate judge recommended against injunctive relief, finding that
         damages may be available as a remedy. Liberty American objected, in
         part, to the findings. The District Court judge has now issued orders
         denying Liberty American's objections to the findings, adopting
         substantially all the magistrate judge's recommendations and dismissing
         the Company's subsidiaries' claim against the third individual referred
         to above. The claims against WestPoint and the two former employees
         referred to above are still pending. The accompanying financial
         statements contain no benefit, if any, from damages related to this
         action.

9.       Comprehensive Income

         Components 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
         and six months ended June 30, 2002 and 2001 was $2.9 million and ($0.5)
         million, respectively, and $0.7 million and ($0.8) million,
         respectively. The related tax effect of Reclassification Adjustments
         for the three and six months ended June 30, 2002 and 2001 was $1.1
         million and ($0.1) million, respectively, and $1.1 million and ($0.9)
         million respectively.




                                       9
<PAGE>

         10.      Segment Information

         The Company's operations are classified into three reportable business
         segments: The Commercial Lines Underwriting Group ("Commercial Lines"),
         which has underwriting responsibility for the Commercial Automobile and
         Commercial Property and Commercial multi-peril package insurance
         products; the Specialty Lines Underwriting Group ("Specialty Lines"),
         which has underwriting responsibility for the professional liability
         insurance products; and the Personal Lines Group ("Personal Lines"),
         which designs, markets and underwrites personal property and casualty
         insurance products for the Manufactured Housing and Homeowners markets.
         The reportable segments operate solely within the United States. The
         segments follow the same accounting policies used for the Company's
         consolidated financial statements. Management evaluates a segment's
         performance based upon underwriting results.

         Following is a tabulation of business segment information for the three
         and six months ended June 30, 2002 and 2001. Corporate information is
         included to reconcile segment data to the consolidated financial
         statements (in thousands):

<TABLE>
<CAPTION>
                                                                      Six Months Ended,
                                               -----------------------------------------------------------------
                                               Commercial    Specialty    Personal
                                                  Lines        Lines        Lines       Corporate      Total
                                               -----------------------------------------------------------------
<S>                                            <C>          <C>          <C>            <C>         <C>
June 30, 2002:
Gross Written Premiums                         $  199,029   $   52,324   $   45,894             -   $   297,247
                                               -----------------------------------------------------------------
Net Written Premiums                           $  161,202   $   48,488   $   25,169             -   $   234,859
                                               -----------------------------------------------------------------
Revenue:
  Net Earned Premiums                          $  131,346   $   39,408   $   18,763             -   $   189,517
  Net Investment Income                                 -            -            -        18,230        18,230
  Net Realized Investment Loss                          -            -            -        (3,134)       (3,134)
  Other Income                                          -            -          922          (906)           16
                                               -----------------------------------------------------------------
  Total Revenue                                   131,346       39,408       19,685        14,190       204,629
                                               -----------------------------------------------------------------

Losses and Expenses:
   Net Loss and Loss Adjustment Expenses        37,81,266       23,153        9,462             -       113,881
   Acquisition Costs and Other Underwriting
     Expenses                                           -            -            -        58,878        58,878
   Other Operating Expenses                             -            -           62         2,876         2,938
                                               -----------------------------------------------------------------
   Total Losses and Expenses                       81,266       23,153        9,524        61,754       175,697
                                               -----------------------------------------------------------------


Income Before Income Taxes                         50,080       16,255       10,161       (47,564)       28,932

Total Income Tax Expense                                -            -            -         9,302         9,302
                                               -----------------------------------------------------------------

Net Income                                     $   50,080   $   16,255   $   10,161    $  (56,866)  $    19,630
                                               =================================================================

Total Assets                                            -            -   $  193,830    $  935,640   $ 1,129,470
                                               =================================================================


June 30, 2001:
Gross Written Premiums                         $  135,590   $   41,598   $   47,519             -   $   224,707
                                               -----------------------------------------------------------------
Net Written Premiums                           $   94,306   $   36,732   $   28,585             -   $   159,623
                                               -----------------------------------------------------------------
Revenue:
  Net Earned Premiums                          $   86,077   $   32,711   $   19,438             -   $   138,226
  Net Investment Income                                 -            -            -        16,133        16,133
  Net Realized Investment Gain                          -            -            -         2,617         2,617
  Other Income                                          -            -        1,598        (1,482)          116
                                               -----------------------------------------------------------------
  Total Revenue                                    86,077       32,711       21,036        17,268       157,092
                                               -----------------------------------------------------------------

Losses and Expenses:
   Net Loss and Loss Adjustment Expenses           51,510       20,604        9,904             -        82,018
   Acquisition Costs and Other Underwriting
     Expenses                                           -            -            -        45,163        45,163
   Other Operating Expenses                             -            -          778         3,384         4,162
                                               -----------------------------------------------------------------
   Total Losses and Expenses                       51,510       20,604       10,682        48,547       131,343
                                               -----------------------------------------------------------------

Minority Interest:  Distributions on
Company
  Obligated Mandatorily Redeemable
Preferred
  Securities of Subsidiary Trust                        -            -            -         2,749         2,749
                                               -----------------------------------------------------------------

Income Before Income Taxes                         34,567       12,107       10,354       (34,028)       23,000

Total Income Tax Expense                                -            -            -         7,550         7,550
                                               -----------------------------------------------------------------

Net Income                                     $   34,567   $   12,107   $   10,354    $  (41,578)  $    15,450
                                               =================================================================

Total Assets                                            -            -   $  169,520    $  636,124   $   805,644
                                               =================================================================
</TABLE>



                                       10
<PAGE>


<TABLE>
<CAPTION>
                                                                      Three Months Ended,
                                               ------------------------------------------------------------------
                                               Commercial    Specialty    Personal
                                                  Lines        Lines        Lines        Corporate      Total
                                               ------------------------------------------------------------------
<S>                                            <C>          <C>          <C>            <C>          <C>
June 30, 2002:
Gross Written Premiums                         $  108,471   $   27,895   $   24,414     $        -   $   160,780
                                               ------------------------------------------------------------------
Net Written Premiums                           $   86,340   $   25,715   $   13,305     $        -   $   125,360
                                               ------------------------------------------------------------------
Revenue:
  Net Earned Premiums                          $   70,275   $   20,474   $    9,524              -   $   100,273
  Net Investment Income                                 -            -            -          9,375         9,375
  Net Realized Investment Loss                          -            -            -         (3,181)       (3,181)
  Other Income                                          -            -          352           (337)           15
                                               ------------------------------------------------------------------
  Total Revenue                                    70,275       20,474        9,876          5,857       106,482
                                               ------------------------------------------------------------------

Losses and Expenses:
   Net Loss and Loss Adjustment Expenses           44,609       11,487        4,736              -        60,832
   Acquisition Costs and Other Underwriting
     Expenses                                           -            -            -         31,057        31,057
   Other Operating Expenses                             -            -           43          1,411         1,454
                                               ------------------------------------------------------------------
   Total Losses and Expenses                       44,609       11,487        4,779         32,468        93,343
                                               ------------------------------------------------------------------


Income Before Income Taxes                         25,666        8,987        5,097        (26,611)       13,139

Total Income Tax Expense                                -            -            -          4,186         4,186
                                               ------------------------------------------------------------------

Net Income                                     $   25,666   $    8,987   $    5,097     $  (30,797)  $     8,953
                                               ==================================================================

Total Assets                                            -            -   $  193,830     $  935,640   $ 1,129,470
                                               ==================================================================

June 30, 2001:
Gross Written Premiums                         $   75,200   $   21,015   $   24,459              -   $   120,674
                                               ------------------------------------------------------------------
Net Written Premiums                           $   52,495   $   18,847   $   11,194              -   $    82,536
                                               ------------------------------------------------------------------
Revenue:
  Net Earned Premiums                          $   44,659   $   16,855   $   10,189              -   $    71,703
  Net Investment Income                                 -            -            -          8,091         8,091
  Net Realized Investment Gain                          -            -            -            318           318
  Other Income                                          -            -          693           (630)           63
                                               ------------------------------------------------------------------
  Total Revenue                                    44,659       16,855       10,882          7,779        80,175
                                               ------------------------------------------------------------------

Losses and Expenses:
   Net Loss and Loss Adjustment Expenses           27,097       10,586        5,183              -        42,866
   Acquisition Costs and Other Underwriting
     Expenses                                           -            -            -         22,695        22,695
   Other Operating Expenses                             -            -          389          1,741         2,130
                                               ------------------------------------------------------------------
   Total Losses and Expenses                       27,097       10,586        5,572         24,436        67,691
                                               ------------------------------------------------------------------

Minority Interest:  Distributions on
Company
  Obligated Mandatorily Redeemable
Preferred
  Securities of Subsidiary Trust                        -            -            -            938           938
                                               ------------------------------------------------------------------

Income Before Income Taxes                         17,562        6,269        5,310        (17,595)       11,546

Total Income Tax Expense                                -            -            -          3,810         3,810
                                               ------------------------------------------------------------------

Net Income                                     $   17,562   $    6,269   $    5,310     $  (21,405)  $     7,736
                                               ==================================================================

Total Assets                                            -            -   $  169,520     $  636,124   $   805,644
                                               ==================================================================
</TABLE>



                                       11
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION

GENERAL

Although the Company's financial performance is dependent upon its own specific
business characteristics, certain risk factors can affect the profitability of
the Company. These include, but are not limited to:

o     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.

o     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.

o     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.

o     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.

o     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.

o     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.

The above risk factors should be read in conjunction with the Certain Critical
Accounting Estimates and Judgments included in the Company's Annual Report on
Form 10-K For the Fiscal Year Ended December 31, 2001.

RESULTS OF OPERATIONS (SIX MONTHS ENDED JUNE 30, 2002 VS. JUNE 30, 2001)

         Premiums: Gross written premiums grew $72.5 million (32.3%) to $297.2
million for the six months ended June 30, 2002 from $224.7 million for the same
period of 2001; gross earned premiums grew $58.1 million (30.2%) to $250.5
million for the six months ended June 30, 2002 from $192.4 million for the same
period of 2001; net written premiums increased $75.3 million (47.2%) to $234.9
million for the six months ended June 30, 2002 from $159.6 million for the same
period of 2001; and net earned premiums grew $51.3 million (37.1%) to $189.5
million in 2002 from $138.2 million in 2001.

The respective gross written premium increases (decreases) for commercial lines,
specialty lines and personal lines segments for the six months ended June 30,
2002 vs. June 30, 2001 amount to $63.4 million (46.8%), $10.7 million (25.8%)
and ($1.6) million (3.4%) respectively. The overall growth in gross written
premiums is primarily attributable to the following:

o    Rating downgrades of certain major competitor property and casualty
     insurance companies have led to their diminished presence in the Company's
     commercial and specialty lines business segments and continue to result in
     additional prospects and increased premium writings, most notably for the
     Company's various commercial package and non-profit D&O product lines.



                                       12
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION
                                   (Continued)


o    The consolidation of certain competitor property and casualty insurance
     companies has led to the displacement of certain of their independent
     agency relationships. This consolidation continues to result in new agency
     relationship opportunities for the Company. These relationships have
     resulted in additional prospects and premium writings for the Company's
     commercial and specialty lines segments.

o    Continued expansion of marketing efforts relating to commercial lines and
     specialty lines products through the Company's field organization and
     preferred agents.

o    Rate increases.

Overall premium growth in the specialty lines segment has been offset in part by
the Company's decision not to renew certain policies in the professional
liability product lines due to inadequate pricing levels being experienced as a
result of market conditions and/or loss experience emerging at higher than
expected levels.

The overall premium decrease for the personal lines segment was due principally
to the Company's decision not to write new business or renew certain policies in
designated areas of Florida in the Company's manufactured housing product line,
based on an evaluation of property exposures. This decrease has been partially
offset by an increase in premiums for the Company's homeowners product line for
which new and renewal policies are being added in select areas.

Pursuant to a routine underwriting review which focused on pricing adequacy,
loss experience, as well as other underwriting criteria, the Company cancelled a
Commercial Automobile Excess Liability Insurance customer (Commercial Lines
Underwriting Group) effective October 22, 2002 as a result of an unacceptable
underwriting risk profile. Such customer's gross written premium and net written
premium amounted to $45.8 million and $11.8 million, respectively, for the year
ended December 31, 2001 and $20.1 million and $5.8 million, respectively, for
the six months ended June 30, 2002.

The respective net written premium increases (decreases) for commercial lines,
specialty lines and personal lines segments for the six months ended June 30,
2002 vs. June 30, 2001 amount to $66.9 million (70.9%), $11.8 million (32.0%)
and ($3.4) million (12.0%) respectively. The differing percentage increases
(decreases) in net written premiums versus gross written premiums for the period
is primarily due to the Company commuting a 2001 accident year aggregate stop
loss reinsurance program whereby net written and net earned premiums increased
by $3.6 million ($2.4 million Commercial Lines, $0.8 million Specialty Lines,
0.4 million Personal Lines), and in part to other various changes in the
Company's reinsurance program.

         Net Investment Income: Net investment income approximated $18.2 million
for the six months ended June 30, 2002 and $16.1 million for the same period of
2001. Total investments grew to $768.9 million at June 30, 2002 from $511.0
million at June 30, 2001. The growth in investment income is due to investing
net cash flows provided from operating activities and the proceeds of the
Company's equity offering received during the fourth quarter of 2001. The
capital market environment during 2001 and most of 2002 (low U.S. Treasury
yields) had the effect of increasing the level of prepayments in certain of the
Company's interest rate sensitive investments. The Company's average duration in
its fixed income portfolio approximated 3.5 years at June 30, 2002, compared to
3.2 years at June 30, 2001, and the Company's tax equivalent book yield on its
fixed income holdings was 6.2% at June 30, 2002, compared to 7.2% at June 30,
2001.

         Net Realized Investment Gain (Loss): Net realized investment gains
(losses) were ($3.1) million for the six months ended June 30, 2002 and $2.6
million for the same period in 2001. The Company realized net investment losses
of $1.9 million principally from the sales of common stock equity securities
during the six months ended June 30, 2002. Additionally, $1.2 million in
non-cash realized investment losses were recorded on certain structured
securities as a result of the Company's impairment evaluation. The proceeds from
the common stock sales were reinvested principally in common stock securities.
The Company realized net investment gains of $5.9 million from the sales of
common stock equity securities and $1.0 million from the sales of fixed maturity
securities during the six months ended June 30, 2001. These realized net
investment gains were offset in part by $4.3 million in non-cash realized
investment losses experienced on certain structured securities as a result of an
impairment evaluation. The proceeds from the sales were reinvested in fixed
maturity securities to increase current investment income, lessen




                                       13
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION
                                   (Continued)

the Company's holdings in certain common stock positions, and decrease the
overall percentage of investments in common stock securities.

         Other Income: Other income approximated $16,000 for the six months
ended June 30, 2002 and $116,000 for the same period of 2001. Other income
primarily consisted of commissions earned on brokered personal lines business.
Such commissions earned decreased as brokering activities were discontinued in
favor of writing business directly. However, the Company is seeking to increase
brokering activities in the future, as it is not writing new business or
renewing certain policies in designated areas of Florida for the Company's
manufactured housing product as a result of its property exposures in these
areas and related catastrophe loss considerations.

         Net Loss and Loss Adjustment Expenses: Net loss and loss adjustment
expenses increased $31.9 million (38.9%) to $113.9 million for the six months
ended June 30, 2002 from $82.0 million for the same period of 2001 and the loss
ratio increased to 60.1% in 2002 from 59.3% in 2001. This increase in net loss
and loss adjustment expenses was due principally to the 37.1% growth in net
earned premiums, and in part to the Company increasing loss and loss adjustment
expenses incurred by $5.0 million as a result of changes in estimates of insured
events in prior years. Such adverse loss development is due to losses emerging
at a higher rate on automobile leases currently expiring on residual value
policies underwritten during the years 1996 through 1998 than had been
originally anticipated when the reserves were estimated, as a result of changes
in the automobile after market. The Company also commuted a 2001 accident year
aggregate stop loss reinsurance program, resulting in net written and net earned
premium increasing by $3.6 million. The Company had not ceded any losses to the
2001 accident year aggregate stop loss reinsurance program.

         Acquisition Costs and Other Underwriting Expenses: Acquisition costs
and other underwriting expenses increased $13.7 million (30.3%) to $58.9 million
for the six months ended June 30, 2002 from $45.2 million for the same period of
2001. This increase was due primarily to the 37.1% growth in net earned
premiums, offset by relative changes in the Company's product mix and associated
distribution channel expense.

         Other Operating Expenses: Other operating expenses decreased $1.3
million to $2.9 million for the six months ended June 30, 2002 from $4.2 million
for the same period of 2001. The decrease in other operating expenses was
primarily due to the discontinuance of goodwill amortization effective January
1, 2002.

         Income Tax Expense: The Company's effective tax rate for the six months
ended June 30, 2002 and 2001 was 32.2% and 32.8%, respectively. The effective
rates differed from the 35% statutory rate principally due to investments in
tax-exempt securities and in part due to the discontinuance of goodwill
amortization. The decrease in the effective tax rate is principally due to a
greater investment of cash flows in tax-exempt securities relative to taxable
securities.

RESULTS OF OPERATIONS (THREE MONTHS ENDED JUNE 30, 2002 VS. JUNE 30, 2001)

         Premiums: Gross written premiums grew $40.1 million (33.2%) to $160.8
million for the three months ended June 30, 2002 from $120.7 million for the
same period of 2001; gross earned premiums grew $30.1 million (29.7%) to $131.3
million for the three months ended June 30, 2002 from $101.2 million for the
same period of 2001; net written premiums increased $42.9 million (52.0%) to
$125.4 million for the three months ended June 30, 2002 from $82.5 million for
the same period of 2001; and net earned premiums grew $28.6 million (39.9%) to
$100.3 million in 2002 from $71.7 million in 2001.

The respective gross written premium increases (decreases) for commercial lines,
specialty lines and personal lines segments for the three months ended June 30,
2002 vs. June 30, 2001 amount to $33.3 million (44.2%), $6.9 million (32.7%) and
($45,000), (0.2%) respectively. The overall growth in gross written premiums is
primarily attributable to the following:

o    Rating downgrades of certain major competitor property and casualty
     insurance companies have led to their diminished presence in the Company's
     commercial and specialty lines business segments and continue to result




                                       14
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION
                                   (Continued)

     in additional prospects and increased premium writings, most notably for
     the Company's various commercial package and non-profit D&O product lines.

o    The consolidation of certain competitor property and casualty insurance
     companies has led to the displacement of certain of their independent
     agency relationships. This consolidation continues to result in new agency
     relationship opportunities for the Company. These relationships have
     resulted in additional prospects and premium writings for the Company's
     commercial and specialty lines segments.

o    Continued expansion of marketing efforts relating to commercial lines and
     specialty lines products through the Company's field organization and
     preferred agents.

o    Rate increases.

Overall premium growth in the specialty lines segment has been offset in part by
the Company's decision not to renew certain policies in the professional
liability product lines due to inadequate pricing levels being experienced as a
result of market conditions and/or loss experience emerging at higher than
expected levels.

The overall premium decrease for the personal lines segment was due principally
to the Company's decision not to write new business or renew certain policies in
designated areas of Florida in the Company's manufactured housing product line
based on an evaluation of property exposures. This decrease has been partially
offset by an increase in premiums for the Company's homeowners product line for
which new and renewal policies are being added in select areas.

Pursuant to a recent underwriting review which focused on pricing adequacy, loss
experience, as well as other underwriting criteria, the Company cancelled a
Commercial Automobile Excess Liability Insurance customer (Commercial Lines
Underwriting Group) effective October 27, 2002 as a result of an unacceptable
underwriting risk profile. Such customer's gross written premium and net written
premium amounted to $45.8 million and $11.8 million, respectively, for the year
ended December 31, 2001 and $20.1 million and $5.8 million, respectively, for
the six months ended June 30, 2002.

The respective net written premium increases for commercial lines, specialty
lines and personal lines segments for the three months ended June 30, 2002 vs.
June 30, 2001 amount to $33.8 million (64.5%), $6.9 million (36.4%) and $2.1
million (18.9%) respectively. The differing percentage increases (decreases) in
net written premiums versus gross written premiums for the period is primarily
due to the Company commuting a 2001 accident year aggregate stop loss
reinsurance program whereby net written and net earned premiums increased by
$3.6 million ($2.4 million Commercial Lines, $0.8 million Specialty Lines, $0.4
million Personal Lines), and in part to other various changes in the Company's
reinsurance program.

         Net Investment Income: Net investment income approximated $9.4 million
for the three months ended June 30, 2002 and $8.1 million for the same period of
2001. Total investments grew to $768.9 million at June 30, 2002 from $511.0
million at June 30, 2001. The growth in investment income is due to investing
net cash flows provided from operating activities and the proceeds of the
Company's equity offering received during the fourth quarter of 2001. The
capital market environment of 2001 and the latter part of the second quarter
2002 (low U.S. Treasury yields) had the effect of increasing the level of
prepayments in certain of the Company's interest rate sensitive investments.

         Net Realized Investment Gain (Loss): Net realized investment gains
(losses) were ($3.2) million for the three months ended June 30, 2002 and $0.3
million for the same period in 2001. The Company realized net investment losses
of $2.0 million principally from the sales of common stock equity securities
during the three months ended June 30, 2002. Additionally, $1.2 million in
non-cash realized investment losses were recorded on certain structured
securities as a result of the Company's impairment evaluation. The proceeds from
the common stock sales were reinvested principally in common stock securities.
The Company realized net investment gains of $3.6 million from the sales of
common stock equity securities and $1.0 million from the sales of fixed maturity
securities during the three months ended June 30, 2001. These realized net
investment gains were offset in part by $4.3 million in non-cash realized
investment losses experienced on certain structured securities as a result of an



                                       15
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION
                                   (Continued)


impairment evaluation. The proceeds from the sales were reinvested in fixed
maturity securities to increase current investment income, lessen the Company's
holdings in certain common stock positions, and decrease the overall percentage
of investments in common stock securities.

         Other Income: Other income approximated $15,000 for the three months
ended June 30, 2002 and $63,000 for the same period of 2001. Other income
primarily consisted of commissions earned on brokered personal lines business.
Such commissions earned decreased as brokering activities were discontinued in
favor of writing business directly. However, the Company is seeking to increase
brokering activities in the future as it is not writing new business or renewing
certain policies in designated areas of Florida for the Company's manufactured
housing product as a result of its property exposures in these areas and related
catastrophe loss considerations.

         Net Loss and Loss Adjustment Expenses: Net loss and loss adjustment
expenses increased $17.9 million (41.7%) to $60.8 million for the three months
ended June 30, 2002 from $42.9 million for the same period of 2001 and the loss
ratio increased to 60.7% in 2002 from 59.8% in 2001. This increase in net loss
and loss adjustment expenses was due principally to the 39.9% growth in net
earned premiums, and in part to the Company increasing loss and loss adjustment
expenses incurred by $5.0 million as a result of changes in estimates of insured
events in prior years. Such adverse loss development is due to losses emerging
at a higher rate on automobile leases currently expiring on residual value
policies underwritten during the years 1996 through 1998 than had been
originally anticipated when the reserves were estimated, as a result of changes
in the automobile after market. The Company also commuted a 2001 accident year
aggregate stop loss reinsurance program resulting in net written and net earned
premium increasing by $3.6 million. The Company had not ceded any losses to the
2001 accident year aggregate stop loss reinsurance program.

         Acquisition Costs and Other Underwriting Expenses: Acquisition costs
and other underwriting expenses increased $8.4 million (37.0%) to $31.1 million
for the three months ended June 30, 2002 from $22.7 million for the same period
of 2001. This increase was due primarily to the 39.9% growth in net earned
premiums offset by relative changes in the Company's product mix and associated
distribution channel expense.

         Other Operating Expenses: Other operating expenses decreased $0.6
million to $1.5 million for the three months ended June 30, 2002 from $2.1
million for the same period of 2001. The decrease in other operating expenses
was primarily due to the discontinuance of goodwill amortization effective
January 1, 2002.

         Income Tax Expense: The Company's effective tax rate for the three
months ended June 30, 2002 and 2001 was 31.9% and 33.0%, respectively. The
effective rates differed from the 35% statutory rate principally due to
investments in tax-exempt securities and in part to the discontinuance of
goodwill amortization. The decrease in the effective tax rate is principally due
to a greater investment of cash flows in tax-exempt securities relative to
taxable securities.

LIQUIDITY AND CAPITAL RESOURCES

         For the six months ended June 30, 2002, the Company's investments
experienced unrealized investment appreciation of $3.3 million, net of the
related deferred tax expense of $1.8 million. At June 30, 2002, the Company had
total investments with a carrying value of $768.9 million, of which 93.9%
consisted of investments in fixed maturity securities, including U.S. treasury
securities and obligations of U.S. government corporations and agencies,
obligations of states and political subdivisions, corporate debt securities,
collateralized mortgage securities and asset backed securities. The
collateralized mortgage securities and asset backed securities consist of short
tranche securities possessing favorable pre-payment risk profiles. The remaining
6.1% of the Company's total investments consisted primarily of publicly traded
common stock securities.

         The Company produced net cash from operations of $84.5 million and
$68.1 million, respectively, for the six months ended June 30, 2002 and 2001.
Management believes that the Company has adequate ability to pay all claims and
meet all other cash needs.



                                       16
<PAGE>

            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION
                                   (Continued)


         Risk-based capital is designed to measure the acceptable amount of
capital an insurer should have based on the inherent specific risks of each
insurer. Insurers failing to meet this benchmark capital level may be subject to
scrutiny by the insurer's domiciliary insurance department and ultimately
rehabilitation or liquidation. Based on the standards currently adopted, the
Company's insurance subsidiaries' capital and surplus is in excess of the
prescribed risk-based capital requirements.

FORWARD-LOOKING INFORMATION

         Certain information included in this report and other statements or
materials published or to be published by the Company are not historical facts
but are forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments, new and
existing products, expectations for market segment and growth, and similar
matters. In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company provides the following
cautionary remarks regarding important factors which, among others, could cause
the Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development, results of the Company's business, and the
other matters referred to above include, but are not limited to: (i) changes in
the business environment in which the Company operates, including inflation and
interest rates; (ii) changes in taxes, governmental laws, and regulations; (iii)
competitive product and pricing activity; (iv) difficulties of managing growth
profitably; and (v) catastrophe losses.



                                       17
<PAGE>
            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


         The Company's financial instruments are subject to the market risk of
potential losses from adverse changes in market rates and prices. The primary
market risks to the Company are equity price risk associated with investments in
equity securities and interest rate risk associated with investments in fixed
maturities. The Company has established, among other criteria, duration, asset
quality and asset allocation guidelines for managing its investment portfolio
market risk exposure. The Company's investments are held for purposes other than
trading and consist of diversified issuers and issues.

         The table below provides information about the Company's financial
instruments that are sensitive to changes in interest rates. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates. The information is presented
in U.S. dollar equivalents.


<TABLE>
<CAPTION>
                                                                  JUNE 30, 2002
                                                             EXPECTED MATURITY DATES
                                                   (In thousands, except average interest rate)                             TOTAL
                                                                                                                            FAIR
                                2002          2003        2004         2005        2006      Thereafter      TOTAL          VALUE
                              --------     --------     --------     --------     --------   ----------     --------     -----------

<S>                           <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
FIXED MATURITIES AVAILABLE
FOR SALE:

Principal Amount              $ 34,285     $ 97,076     $ 95,359     $ 91,883     $ 59,577     $330,067     $708,247     $   710,170

Book Value                    $ 34,317     $ 97,331     $ 95,641     $ 92,355     $ 59,875     $317,227     $696,746              --

Average Interest Rate            6.49%        4.63%        6.04%        6.22%        5.77%        5.57%        5.65%           4.79%

PREFERRED:

Principal Amount              $  2,400     $  3,750     $  1,500     $  1,000     $  2,500           --     $ 11,150     $    11,511

Book Value                    $  2,402     $  3,858     $  1,489     $  1,040     $  2,566           --     $ 11,355              --

Average Interest Rate            5.27%        5.90%        6.06%        6.84%        6.41%           --        5.99%           5.90%

SHORT-TERM DEBT:

Principal Amount              $ 34,558           --           --           --           --           --     $ 34,558     $    34,558

Book Value                    $ 34,558           --           --           --           --           --     $ 34,558              --

Average Interest Rate            1.89%           --           --           --           --           --        1.89%           1.89%
</TABLE>







                                       18
<PAGE>


            PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

    (a)  On April 30, 2002, U.S. Bank, N.A. d/b/a Firstar Bank ("Firstar"), a
         bank to which one of the Company's insurance subsidiaries, Philadelphia
         Indemnity Insurance Company ("PIIC"), issued insurance coverages, filed
         a complaint against PIIC in the United States District Court for the
         Southern District of Ohio (Western Division). The complaint asks for
         damages and a declaratory judgment against PIIC. The complaint arises
         principally out of a loss adjustment change and also relates to other
         coverage interpretations made by PIIC under the terms of residual value
         protection insurance policies issued to Firstar relating to vehicles
         financed by Firstar. The complaint alleges that as a result of the loss
         adjustment change Firstar may suffer damages of as much as $75,000,000.
         On June 27, 2002, PIIC filed an answer to the complaint denying
         liability with respect to the matters set forth above. PIIC believes
         that this claim is without merit and intends to vigorously defend this
         action.

    (b)  As previously reported in the Company's Form 10-Q for the period ending
         March 31, 2001 and Form 10-K for the period ending December 31, 2001,
         two of the Company's subsidiaries, Liberty American Insurance Group
         Inc. and Mobile Homeowners Insurance Agency Inc., had filed an action
         in the U.S. District Court in the Middle District of Florida against
         WestPoint Underwriters LLC, a managing general agent, two former
         employees of Liberty American and a third individual, and a federal
         magistrate judge issued a report and recommendations to the Federal
         District court. With respect to Liberty American's request for
         preliminary relief, the findings and recommendations stated that one of
         the former employees had misappropriated Liberty American's trade
         secrets by using its software to write WestPoint's software. The
         magistrate judge recommended against injunctive relief, finding that
         damages may be available as a remedy. Liberty American objected, in
         part, to the findings. The District Court judge has now issued orders
         denying Liberty American's objections to the findings, adopting
         substantially all the magistrate judge's recommendations and dismissing
         the Company's subsidiaries' claim against the third individual referred
         to above. The claims against WestPoint and the two former employees
         referred to above are still pending.

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable.

Item 3.  Defaults Upon Senior Securities

         Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders

         At the Company's annual meeting of shareholders held on May 1, 2002 the
         following nominees were elected to the Board of Directors:

<TABLE>
<CAPTION>
                                                                  Votes For                           Votes Withheld
                                                          --------------------------              -----------------------
         <S>                                              <C>                                     <C>
         Elizabeth H. Gemmill                                    15,846,157                              257,353
         William J. Henrich, Jr.                                 15,845,862                              257,648
         Paul R. Hertel, Jr.                                     15,846,157                              257,353
         James J. Maguire                                        14,041,074                            2,062,436
         James J. Maguire, Jr.                                   14,045,569                            2,057,941
         Thomas J. McHugh                                        15,831,707                              271,803
         Michael J. Morris                                       15,846,157                              257,353
         Dirk A. Stuurop                                         15,846,157                              257,353
         Sean S. Sweeney                                         13,926,964                            2,176,546
         J. Eustace Wolfington                                   15,845,862                              257,648
         James L. Zech                                           13,879,864                            2,223,646
</TABLE>



                                       19
<PAGE>

         The following other matters were approved at the Annual Meeting:

<TABLE>
<CAPTION>
                                                         Votes For       Votes Against     Abstentions       Broker Non
                                                                                                               Votes
                                                         --------------  ----------------- ---------------  -------------
           <S>                                           <C>             <C>               <C>              <C>
           Approval of the Appointment of                 15,993,295         109,538            677              0
           PricewaterhouseCoopers LLP as Independent
           Auditors for the Fiscal Year Ending December
           31, 2002

           Approval of an amendment of the Company's
           Articles of Incorporation to increase its
           authorized shares of common stock from
           50,000,000 to 100,000,000 shares               15,155,143         947,015           1,352             0

           Approval and adoption of the amendment and
           restatement of the Company's Employee Stock
           Option Plan (the "Stock Option Plan") to
           increase the number of shares of the
           Company's common stock for which options
           may be granted under the Stock Option Plan
           and to make certain changes to Plan
           administration                                 14,657,939         381,490           54,962        1,009,119

           Approval of the continuation of the
           Company's Cash Bonus Plan                      14,927,516         111,270           55,605        1,009,119

           Approval of the Company's Nonqualified
           Employee Stock Purchase Plan                   14,533,417         508,174           52,800        1,009,119
</TABLE>

Item 5.  Other information

         Not applicable.



                                       20
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

a.       Exhibits:

<TABLE>
<CAPTION>
  Exhibit No.                                           Description
----------------    ------------------------------------------------------------------------------------
<C>                 <S>

3.1.2*              Amendment to Articles of Incorporation, Philadelphia Consolidated Holding Corp.

10.1                Philadelphia Insurance Companies Non Qualified Employee Stock Purchase Plan -
                    incorporated by reference to Exhibit 4 to Registration Statement on Form S-8 (file
                    no. 333-91216) filed with the Securities and Exchange Commission on June 26, 2002

10.2                Philadelphia Consolidated Holding Corp. Employee's Stock Option Plan (Amended and
                    Restated Effective March 24, 2002) - incorporated by reference to Exhibit 4 to
                    Registration Statement on Form S-8 (file no. 333-91218) filed with the Securities
                    and Exchange Commission on June 26, 2002

10.3                Philadelphia Insurance Companies Key Employee Deferred Compensation Plan -
                    incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8
                    (file no. 333-90534) filed with the Securities and Exchange Commission on June 14,
                    2002

10.4*               Employment Agreement with James J. Maguire, Jr. effective June 1, 2002

10.5*               Employment Agreement with Sean S. Sweeney effective June 1, 2002

10.6*               Employment Agreement with Craig P. Keller effective June 1, 2002

99.1*               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 2002

99.2*               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
</TABLE>

* Filed herewith.



b.       The Company has not filed any reports on Form 8-K during the quarter
         for which this report is filed.




                                       21
<PAGE>

                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                       PHILADELPHIA CONSOLIDATED HOLDING CORP.
                                       Registrant


Date      August 12, 2002              /s/ James J. Maguire
          ------------------------     -----------------------------------------
                                       James J. Maguire
                                       Chairman of the Board of Directors,
                                       and Chief Executive Officer
                                       (Principal Executive Officer)


Date      August 12, 2002              /s/ Craig P. Keller
          ------------------------     -----------------------------------------
                                       Craig P. Keller
                                       Senior Vice President, Secretary,
                                       Treasurer and Chief Financial Officer
                                       (Principal Financial and Accounting
                                       Officer)



                                       22