<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1

      [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

            FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

      [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM      TO

                        Commission File Number 001-31341

                      PLATINUM UNDERWRITERS HOLDINGS, LTD.
             (Exact name of registrant as specified in its charter)

                     BERMUDA                              98-0416483
         (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)              Identification No.)

              THE BELVEDERE BUILDING
                69 PITTS BAY ROAD
                PEMBROKE, BERMUDA                            HM 08
    (Address of principal executive offices)               (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (441) 295-7195

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

     COMMON SHARES, PAR VALUE $0.01 PER SHARE       NEW YORK STOCK EXCHANGE
              (Title of each class)                 (Name of each exchange
                                                     on which registered)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

            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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

            Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [X]
No [ ]

            Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ ]

            The aggregate market value of common shares held by non-affiliates
of the registrant as of June 30, 2004, the last business day of our most
recently completed second fiscal quarter, was $1,191,311,069 based on the
closing sale price of $30.43 per common share on the New York Stock Exchange on
that date. For purposes of this computation only, all officers, directors, and
10% beneficial owners of the registrant are deemed to be affiliates.

            As of February 15, 2005, there were outstanding 43,109,407 common
shares, par value $0.01 per share, of the registrant.

                       DOCUMENTS INCORPORATED BY REFERENCE

            Portions of the registrant's definitive proxy statement for the 2005
Annual General Meeting of Shareholders are incorporated by reference into Part
III of this report.

<PAGE>

This Amendment No. 1 on Form 10-K/A amends Platinum Underwriters Holdings,
Ltd.'s Report on Form 10-K for the year ended December 31, 2004, (the "2004 Form
10-K") as initially filed with the Securities and Exchange Commission ("SEC") on
March 16, 2005. This amendment is being filed in response to comments received
from the SEC staff. We believe that the SEC staff's comments result from a
routine review of the 2004 Form 10-K and a review of our Form S-4 filed on July
26, 2005 (File No. 333-126883) and that the comments are generally similar to
comments received by other companies in the reinsurance industry in connection
with the SEC's review of their filings under the Securities Exchange Act of 1934
and the Securities Act of 1933. In response to the comments received from the
SEC staff, this Amendment contains additional disclosure under "Business --
Operating Segments -- Finite Risk" regarding the economic benefit and nature of
the protection provided by finite risk contracts, additional disclosure under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Critical Accounting Policies" regarding the premium estimation
process, claims reserving process, loss reserving process and development of
loss reserves and includes consolidating financial information regarding
Platinum Underwriters Finance, Inc. as a new Footnote 17 to the consolidated
financial statements. This amendment presents the 2004 Form 10-K, as amended, in
its entirety, but does not modify or update the disclosure in the 2004 Form 10-K
in any way other than as required to reflect the changes discussed above and
does not reflect events occurring after the initial filing of the 2004 Form 10-K
on March 16, 2005.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>                                                                                                    <C>
                                               PART I

Item 1.    Business ................................................................................     2
Item 2.    Properties ..............................................................................    32
Item 3.    Legal Proceedings .......................................................................    32
Item 4.    Submission of Matters to a Vote of Security Holders .....................................    32

                                              PART II

Item 5.    Market For Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases
             of Equity Securities ..................................................................    33
Item 6.    Selected Financial Data .................................................................    34
Item 7.    Management's Discussion and Analysis of Financial Condition and
             Results of Operations .................................................................    35
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk ..............................    68
Item 8.    Financial Statements and Supplementary Data .............................................    70
Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ....    70
Item 9A.   Controls and Procedures .................................................................    70
Item 9B.   Other Information .......................................................................    74

                                              PART III

Item 10.   Directors and Executive Officers of the Registrant ......................................    74
Item 11.   Executive Compensation ..................................................................    74
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
             Matters ...............................................................................    74
Item 13.   Certain Relationships and Related Transactions ..........................................    74
Item 14.   Principal Accountant Fees and Services ..................................................    75

                                              PART IV

Item 15.   Exhibits and Financial Statement Schedules ..............................................    75

Signatures .........................................................................................    84
Platinum Underwriters Holdings, Ltd. and Subsidiaries Financial Statements .........................   F-1
Platinum Underwriters Holdings, Ltd. and Subsidiaries Financial Statement Schedules ................   S-1
The Predecessor Business Combined Financial Statements .............................................   P-1
Exhibits
</TABLE>

                                      - i -
<PAGE>

                                     PART I

            The "Company," "Platinum," "we," "us," and "our" refer to Platinum
Underwriters Holdings, Ltd. and its consolidated subsidiaries, unless the
context otherwise indicates. "Platinum Holdings" refers to Platinum Underwriters
Holdings, Ltd., a Bermuda holding company. "Platinum Bermuda" refers to Platinum
Underwriters Bermuda, Ltd., a Bermuda reinsurance company and wholly owned
subsidiary of Platinum Holdings. "Platinum Ireland" refers to Platinum Regency
Holdings, an intermediate holding company domiciled in Ireland and a wholly
owned subsidiary of Platinum Holdings. "Platinum UK" refers to Platinum Re (UK)
Limited, a reinsurance company domiciled in the U.K. and a wholly owned
subsidiary of Platinum Ireland. "Platinum Finance" refers to Platinum
Underwriters Finance, Inc., a finance company in the U.S. and a wholly owned
subsidiary of Platinum Ireland. "Platinum US" refers to Platinum Underwriters
Reinsurance, Inc., a reinsurance company based in the U.S. and a wholly owned
subsidiary of Platinum Finance. "Platinum Services" refers to Platinum
Administrative Services, Inc., a U.S. company and a wholly owned subsidiary of
Platinum Finance that provides administrative services to the Company. The
"Initial Public Offering" refers to our initial public offering of common
shares, which was completed on November 1, 2002. The "ESU Offering" refers to
our offering of equity security units, consisting of a contract to purchase
common shares in 2005 and an ownership interest in a senior note of Platinum
Finance due 2007, which was completed concurrently with the Initial Public
Offering. "St. Paul" refers to The St. Paul Travelers Companies, Inc. (formerly
The St. Paul Companies, Inc.). "St. Paul Re" refers to the reinsurance
underwriting segment of St. Paul prior to the Initial Public Offering. "St. Paul
Investment" refers to our issuance to St. Paul of common shares and an option to
purchase additional common shares. "RenaissanceRe" refers to RenaissanceRe
Holdings Ltd., and "RenaissanceRe Investment" refers to our issuance to
RenaissanceRe of common shares and an option to purchase additional common
shares. The St. Paul Investment and the RenaissanceRe Investment each occurred
concurrently with the Initial Public Offering.

NOTE ON FORWARD-LOOKING STATEMENTS

            This Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements
are necessarily based on estimates and assumptions that are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, us.

            In particular, statements using words such as "may," "should,"
"estimate," "expect," "anticipate," "intend," "believe," "predict," "potential,"
or words of similar import generally involve forward-looking statements. For
example, we have included certain forward-looking statements in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" with
regard to trends in results, prices, volumes, operations, investment results,
margins, risk management and exchange rates. This Form 10-K also contains
forward-looking statements with respect to our business and industry, such as
those relating to our strategy and management objectives and trends in market
conditions, market standing, product volumes, investment results and pricing
conditions.

            In light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this Form 10-K
should not be considered as a representation by us or any other person that our
objectives or plans will be achieved. Numerous factors could cause our actual
results to differ materially from those in forward-looking statements, including
the following:

                                     - 1 -
<PAGE>

      (1)      conducting operations in a competitive environment;

      (2)      our ability to maintain our A.M. Best Company rating;

      (3)      significant weather-related or other natural or man-made
               disasters over which the Company has no control;

      (4)      the effectiveness of our loss limitation methods and pricing
               models;

      (5)      the adequacy of the Company's liability for unpaid losses and
               loss adjustment expenses;

      (6)      the availability of retrocessional reinsurance on acceptable
               terms;

      (7)      our ability to maintain our business relationships with
               reinsurance brokers;

      (8)      general political and economic conditions, including the effects
               of civil unrest, war or a prolonged U.S. or global economic
               downturn or recession;

      (9)      the cyclicality of the property and casualty reinsurance
               business;

      (10)     market volatility and interest rate and currency exchange rate
               fluctuation;

      (11)     tax, regulatory or legal restrictions or limitations applicable
               to the Company or the property and casualty reinsurance business
               generally; and

      (12)     changes in the Company's plans, strategies, objectives,
               expectations or intentions, which may happen at any time at the
               Company's discretion.

            As a consequence, current plans, anticipated actions and future
financial condition and results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. The foregoing
factors, which are discussed in more detail in "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Risk Factors,"
should not be construed as exhaustive. Additionally, forward-looking statements
speak only as of the date they are made, and we undertake no obligation to
release publicly the results of any future revisions or updates we may make to
forward-looking statements to reflect new information or circumstances after the
date hereof or to reflect the occurrence of future events.

ITEM 1. BUSINESS

                                INDUSTRY OVERVIEW

GENERAL

            Reinsurance is an arrangement in which an insurance company,
referred to as the reinsurer, agrees to assume from another insurance company,
referred to as the ceding company, all or a portion of the insurance risks that
the ceding company has underwritten under one or more insurance policies. In
return, the reinsurer receives a premium for the risks that it assumes from the
ceding company. Reinsurance, however, does not discharge the ceding company from
its liabilities to policyholders. Reinsurance can provide ceding companies with
three principal benefits: a reduction in net liability on individual risks,
catastrophe protection from large or multiple losses and assistance in
maintaining acceptable financial ratios. Reinsurance also provides a ceding
company with additional underwriting capacity by permitting it to accept larger
risks or write more business than would be possible without an accompanying
increase in capital.

                                     - 2 -
<PAGE>

TYPES OF REINSURANCE

            Reinsurance is typically classified into two categories based on the
underlying insurance coverage: property and casualty reinsurance, and life and
annuity reinsurance.

      PROPERTY AND CASUALTY REINSURANCE

            We write property and casualty reinsurance. Property reinsurance
protects a ceding company against financial loss arising out of damage to
property or loss of its use caused by an insured peril. Examples of property
reinsurance are property catastrophe and property per-risk coverages. Property
catastrophe reinsurance protects a ceding company against losses arising out of
multiple claims for a single event while property per-risk reinsurance protects
a ceding company against loss arising out of a single claim for a single event.

            Casualty reinsurance protects a ceding company against financial
loss arising out of the obligation to others for loss or damage to persons or
property. Examples of casualty reinsurance are general and automobile liability,
professional liability, workers' compensation, accident and health, surety and
trade credit coverages.

            Although property reinsurance involves a high degree of volatility,
property reinsurance claims are generally reported soon after the event giving
rise to the claim and tend to be assessed and paid relatively expeditiously. In
comparison, there tends to be a greater time lag between the occurrence,
reporting and payment of casualty reinsurance claims.

      LIFE AND ANNUITY REINSURANCE

            We do not currently write any life or annuity reinsurance although
we may do so in the future. Life reinsurance provides coverage with respect to
individual and group life risks to primary life insurers. Annuity reinsurance
provides coverage to insurers who issue annuity contracts to consumers who seek
to accumulate personal wealth or as protection against outliving their financial
resources. We may write this business through treaty arrangements.

      EXCESS-OF-LOSS AND PROPORTIONAL REINSURANCE

            Reinsurance can be written on either an excess-of-loss basis or a
pro rata, or proportional, basis. In the case of excess-of-loss reinsurance, the
reinsurer assumes all or a specified portion of the ceding company's risks in
excess of a specified claim amount, referred to as the ceding company's
retention or the reinsurer's attachment point, subject to a negotiated
reinsurance contract limit. For example, property catastrophe excess-of-loss
reinsurance provides coverage to a ceding company when its aggregate claims,
arising from a single occurrence during a covered period, such as a hurricane or
an earthquake, exceed the attachment point specified in the reinsurance
contract. Other forms of excess-of-loss reinsurance respond when each single
claim exceeds the ceding company's retention. Premiums for excess-of-loss
reinsurance may be either a specified dollar amount or a percentage of the
premium charged by the ceding company.

            Excess-of-loss contracts can help reinsurers manage their
underwriting risk by increasing their ability to determine reinsurance premiums
at specific retention levels, independent of the premiums charged by primary
insurers, and based upon their own underwriting assumptions. Also, because
primary insurers typically retain a larger loss exposure under excess-of-loss
contracts, we believe that they have a greater incentive to underwrite risks and
adjust losses in a prudent manner.

                                     - 3 -
<PAGE>

            In the case of proportional reinsurance, the reinsurer assumes a
predetermined portion of the ceding company's risks under the covered primary
insurance contract or contracts. The frequency of claims under a proportional
contract is usually greater than under an excess-of-loss contract, since the
reinsurer shares proportionally in all losses. Premiums for proportional
reinsurance are typically a predetermined portion of the premiums the ceding
company receives from its insureds.

      TREATY AND FACULTATIVE REINSURANCE

            Reinsurance can be written either through treaty or facultative
reinsurance arrangements. In treaty reinsurance, the ceding company cedes, and
the reinsurer assumes, a specified portion of a type or category of risks
insured by the ceding company. In facultative reinsurance, the ceding company
cedes, and the reinsurer assumes, all or part of a specific risk or risks.
Substantially all of the reinsurance that we underwrite is on a treaty basis. We
underwrite facultative reinsurance in limited and opportunistic circumstances.

            Generally, treaty reinsurers do not separately evaluate each of the
individual risks assumed under their treaties and are largely dependent on the
original risk underwriting decisions made by the ceding company's underwriters.
Accordingly, reinsurers will carefully evaluate the ceding company's risk
management and underwriting practices, as well as claims settlement practices
and procedures, in deciding whether to provide treaty reinsurance and in
appropriately pricing the treaty.

            Generally, reinsurers who provide facultative reinsurance do so
separately from their treaty operations. Facultative reinsurance is normally
purchased by ceding companies for risks not covered by their reinsurance
treaties, for amounts in excess of the claims limits of their reinsurance
treaties and for unusual and complex risks. In addition, facultative reinsurance
often provides coverages for relatively large exposures, which may result in
greater potential claims volatility. Facultative reinsurance typically has
higher underwriting and other expenses than treaty reinsurance because each risk
is individually underwritten and administered.

      FINITE REINSURANCE

            Finite reinsurance, often referred to as non-traditional
reinsurance, involves structured reinsurance contracts designed to meet an
individual ceding company's strategic objectives. The same types of risks that
are reinsured on a traditional basis can be reinsured on a finite basis and
usually involve an excess-of-loss or proportional treaty. Typically, the amount
of claims we might pay is finite or capped. In return for this limit on claims,
we often accept a cap on our potential profit margin specified in the treaty and
return profits above this margin to the ceding company.

      BROKER AND DIRECT REINSURANCE

            Reinsurance can be written through reinsurance brokers or directly
with ceding companies. We believe that a ceding company's decision to select
either the broker market or the direct market is influenced by various factors
including, among others, market capacity, market competition, the value of the
broker's advocacy on the ceding company's behalf, the spread of risk,
flexibility in the terms and conditions, the ability to efficiently compare the
analysis and quotes of several reinsurers, the speed of a reinsurance placement,
the historical relationship with the reinsurer and the efficiency of claims
settlement with respect to a coverage.

            We underwrite substantially all of our reinsurance through brokers,
as we believe that the use of reinsurance brokers enables us to operate on a
more cost-effective basis and to maintain the flexibility to

                                     - 4 -
<PAGE>

enter and exit reinsurance lines in a quick and efficient manner. We believe
that brokers are particularly useful in assisting with placements of
excess-of-loss reinsurance programs.

      RETROCESSION

            Reinsurers typically purchase reinsurance to reduce their own risk
exposure. Reinsurance of a reinsurer's risks is called retrocession. Reinsurance
companies cede risks under retrocessional agreements to other reinsurers, known
as retrocessionaires, for reasons that include reducing liability on individual
risks, protecting against catastrophic losses, stabilizing financial ratios and
obtaining additional underwriting capacity. We purchase and issue retrocessional
contracts.

                                  OUR BUSINESS

GENERAL

            Platinum Holdings is a Bermuda holding company organized in 2002. We
provide property and marine, casualty and finite risk reinsurance coverages,
through reinsurance intermediaries, to a diverse clientele of insurers and
select reinsurers on a worldwide basis. We operate through three licensed
reinsurance subsidiaries: Platinum US, Platinum Bermuda and Platinum UK.

            Platinum UK and Platinum Bermuda were formed in 2002 and have no
prior operating history or loss reserves subject to development prior to January
1, 2002. Platinum US had been an inactive licensed insurance company with no
underwriting activity prior to January 1, 2002. Platinum Ireland has no business
operations other than activity necessary to maintain its corporate existence and
its ownership of Platinum Finance and Platinum UK. Platinum Finance's activities
have generally been limited to raising funds for Platinum US through the
issuance of the senior note component of the ESU Offering. Platinum Services'
activities are limited to providing administrative services to the Company,
including legal, finance, actuarial, information technology and human resources
services. The following chart summarizes our corporate structure:

                                     - 5 -
<PAGE>

                                  [FLOW CHART]

OUR STRATEGY

            Our goal is to achieve attractive long-term returns for our
shareholders, while establishing Platinum as a disciplined risk manager and
market leader in selected classes of property and casualty reinsurance, through
the following strategies:

      -     Operate as a Multi-Class Reinsurer. We seek to offer a broad range
            of reinsurance coverage to our ceding companies. We believe that
            this approach enables us to more effectively serve our clients,
            diversify our risk and leverage our capital.

      -     Focus on profitability, not market share. Our management team
            pursues a strategy that emphasizes profitability rather than market
            share. Key elements of this strategy are prudent risk selection,
            appropriate pricing and adjustment of our business mix to respond to
            changing market conditions.

                                     - 6 -
<PAGE>

      -     Exercise disciplined underwriting and risk management. We exercise
            underwriting and risk management discipline by (i) maintaining a
            diverse spread of risk in our book of business across product lines
            and geographic zones, (ii) emphasizing excess-of-loss contracts over
            proportional contracts, (iii) managing our aggregate catastrophe
            exposure through the application of sophisticated property
            catastrophe modeling tools and (iv) monitoring our accumulating
            exposures on our non-property catastrophe exposed coverages.

      -     Operate from a position of financial strength. As of December 31,
            2004, we had a total capitalization of $1,270,503,000. Our capital
            position is unencumbered by any potential adverse development of
            unpaid losses for business written prior to January 1, 2002. Our
            investment strategy focuses on security and stability in our
            investment portfolio by maintaining a diversified portfolio that
            consists primarily of investment grade fixed-income securities. We
            believe these factors, combined with our strict underwriting
            discipline, allow us to maintain our strong financial position and
            to be opportunistic when market conditions are most attractive.

OPERATING SEGMENTS

            We have organized our worldwide reinsurance business around the
following three operating segments: Property and Marine, Casualty and Finite
Risk. In each of our operating segments, we offer our reinsurance products to
providers of commercial and personal lines of insurance. The following table
sets forth the net premiums written by the Company for the years ended December
31, 2004 and 2003 and the two-month period ended December 31, 2002 by operating
segment and by type of reinsurance ($ in thousands):

<TABLE>
<CAPTION>
                                              Years Ended December 31,
                                       -------------------------------------     Period Ended
                                              2004                2003         December 31, 2002
                                       ------------------   ----------------   -----------------
<S>                                    <C>           <C>    <C>         <C>    <C>          <C>
Property and Marine
  Excess-of-loss ..................    $   366,184    22%     224,715    19%   $  56,549     19%
  Proportional ....................        138,255     8%     128,193    11%      32,792     11%
                                       -----------   ---    ---------   ---    ---------    ---
    Total Property and Marine .....        504,439    30%     352,908    30%      89,341     30%
                                       -----------   ---    ---------   ---    ---------    ---

Casualty
  Excess-of-loss ..................        593,752    37%     389,992    33%     155,377     52%
  Proportional ....................         83,647     5%      84,008     7%       9,552      3%
                                       -----------   ---    ---------   ---    ---------    ---
    Total Casualty ................        677,399    42%     474,000    40%     164,929     55%
                                       -----------   ---    ---------   ---    ---------    ---

Finite Risk
  Excess-of-loss ..................        270,629    16%     250,634    22%      43,844     15%
  Proportional ....................        193,546    12%      94,600     8%           -      0%
                                       -----------   ---    ---------   ---    ---------    ---
    Total Finite Risk .............        464,175    28%     345,234    30%      43,844     15%
                                       -----------   ---    ---------   ---    ---------    ---

Total
  Excess-of-loss ..................      1,230,565    75%     865,341    74%     255,770     86%
  Proportional ....................        415,448    25%     306,801    26%      42,344     14%
                                       -----------   ---    ---------   ---    ---------    ---
    Total .........................    $ 1,646,013   100%   1,172,142   100%   $ 298,114    100%
                                       -----------   ---    ---------   ---    ---------    ---
</TABLE>

            The following table sets forth the net premiums written by the
Company for years ended December 31, 2004 and 2003 and the two-month period
ended December 31, 2002 by operating segment and by geographic location of the
ceding company ($ in thousands):

                                     - 7 -
<PAGE>

<TABLE>
<CAPTION>
                                              Years Ended December 31,
                                       -------------------------------------     Period Ended
                                              2004                2003         December 31, 2002
                                       ------------------   ----------------   -----------------
<S>                                    <C>           <C>    <C>         <C>    <C>          <C>
Property and Marine
  United States ...................    $   320,506    19%     211,324    18%   $  37,523     13%
  International ...................        183,933    11%     141,584    12%      51,818     17%
                                       -----------   ---    ---------   ---    ---------    ---
    Total Property and Marine .....        504,439    30%     352,908    30%      89,341     30%
                                       -----------   ---    ---------   ---    ---------    ---

Casualty
  United States ...................        601,878    37%     436,789    37%      87,412     29%
  International ...................         75,521     5%      37,211     3%      77,517     26%
                                       -----------   ---    ---------   ---    ---------    ---
    Total Casualty ................        677,399    42%     474,000    40%     164,929     55%
                                       -----------   ---    ---------   ---    ---------    ---

Finite Risk
  United States ...................        428,024    26%     264,473    23%      28,937     10%
  International ...................         36,151     2%      80,761     7%      14,907      5%
                                       -----------   ---    ---------   ---    ---------    ---
    Total Finite Risk .............        464,175    28%     345,234    30%      43,844     15%
                                       -----------   ---    ---------   ---    ---------    ---

Total
  United States ...................      1,350,408    82%     912,586    78%     153,872     52%
  International ...................        295,605    18%     259,556    22%     144,242     48%
                                       -----------   ---    ---------   ---    ---------    ---
    Total .........................    $ 1,646,013   100%   1,172,142   100%   $ 298,114    100%
                                       -----------   ---    ---------   ---    ---------    ---
</TABLE>

PROPERTY AND MARINE

            The Property and Marine operating segment includes principally
property and marine reinsurance coverages that are written in the United States
and international markets. This business includes catastrophe excess-of-loss
reinsurance treaties, per-risk excess-of-loss treaties and proportional
treaties. We write a limited amount of other types of reinsurance on an
opportunistic basis. We employ underwriters and actuaries with expertise in each
of the following areas:

      -     Property. We provide reinsurance coverage for damage to property and
            crops. Our catastrophe excess-of-loss reinsurance contracts provide
            a defined limit of liability, permitting us to quantify our
            aggregate maximum loss exposure for various catastrophe events.
            Quantification of loss exposure is fundamental to our ability to
            manage our loss exposure through geographical zone limits and
            program limits. In addition, when our pricing standards are met, we
            write other property coverages, including per-risk excess-of-loss or
            proportional treaties. We have also entered into an agreement with
            an underwriting manager to underwrite property facultative and
            program reinsurance risks.

      -     Marine. We provide reinsurance coverage for marine and offshore
            energy insurance programs. Coverages reinsured include hull damage,
            protection and indemnity, cargo damage, satellite damage and general
            marine liability. Within Marine, we also write commercial and
            general aviation reinsurance. Marine reinsurance treaties include
            excess-of-loss as well as proportional treaties. We emphasize
            excess-of-loss treaties that allow our evaluation using experience
            and exposure pricing models.

CASUALTY

            The Casualty operating segment includes principally reinsurance
treaties that cover umbrella liability, general and product liability,
professional liability, workers' compensation, casualty clash, automobile
liability, surety and trade credit. This segment also includes accident and
health reinsurance

                                     - 8 -
<PAGE>

treaties, which are predominantly reinsurance of health insurance products. We
generally write casualty reinsurance on an excess-of-loss basis. Most
frequently, we respond to claims on an individual risk basis, providing coverage
when a claim for a single, original insured reaches our attachment point. We
write some excess-of-loss treaties on an occurrence basis that respond when all
of a ceding company's claims from multiple original insureds arising from a
single claims event exceed our attachment point. On an opportunistic basis, we
may write proportional treaties.

            We seek reinsurance treaties covering established books of insurance
products where we believe that past experience permits a reasonable estimation
of the reinsurance premium adequacy. We underwrite new exposures selectively and
only after a comprehensive evaluation of the risk being reinsured and the
capabilities of the ceding company. We employ underwriters and pricing actuaries
with expertise in each of the following areas:

      -     Umbrella Liability. An umbrella policy is an excess insurance policy
            that provides coverage, typically for general liability or
            automobile liability, when claims, individually or in the aggregate,
            exceed the limit of the original policy underlying the excess
            policy. A claim must exceed the limit of some underlying policy for
            the claim to be considered under an umbrella policy. We primarily
            reinsure commercial umbrella liability policies.

      -     General and Product Liability. We provide reinsurance of third party
            liability coverages for commercial and personal insureds. We
            provide, predominantly on an excess-of-loss basis, various coverages
            of both small and large companies, including commercial, farmowners
            and homeowners policies as well as third party liability coverages
            such as product liability.

      -     Professional Liability. We write reinsurance treaties for
            professional liability programs, including directors and officers,
            employment practices liability, and errors and omissions for
            professionals such as lawyers, medical professionals, architects,
            engineers and other professionals. In most circumstances, the
            underlying insurance products for these lines of business are
            written on a claims made basis, which requires claims related to the
            liabilities insured under the policy to be submitted to the insurer
            during a specified coverage period.

      -     Accident and Health. We provide accident and health reinsurance,
            often in the form of quota share reinsurance of a ceding company
            writing aggregate and per-person stop loss coverage of self-insured
            employer medical plans. We also write reinsurance of first dollar
            health insurance, student health insurance, Medicare and Medicare
            supplement, and other forms of accident and health insurance.

      -     Workers' Compensation. We reinsure workers' compensation on a
            catastrophic basis as well as on a per-claimant basis. We may
            provide full statutory coverage or coverage that is subject to
            specific carve-outs. Our predominant exposure to workers'
            compensation would generally arise from a single claims occurrence,
            such as a factory explosion, involving more than one claimant.

      -     Casualty Clash. Casualty clash reinsurance responds to claims
            arising from a single set of circumstances covered by more than one
            insurance policy or multiple claimants on one policy. This type of
            reinsurance is analogous to property catastrophe reinsurance, but
            written for casualty lines of business. Our casualty clash treaties
            are generally excess-of-loss contracts with both occurrence limits
            and aggregate limits.

      -     Automobile Liability. Automobile insurance policies provide first
            party coverage for damage to the insured's vehicle and third party
            coverage for the insured's liability to other parties for injuries
            and for damage to their property due to the use of the insured
            vehicle. These insurance

                                     - 9 -
<PAGE>

            policies may also provide coverage for uninsured motorists and
            medical payments. We generally reinsure automobile liability on an
            excess-of-loss basis, generally for claims greater than $100,000.
            Our predominant exposure arises from third party liability claims
            and the related legal defense costs.

      -     Surety. Our surety business relates to the reinsurance of risks
            associated with commercial and contract surety bonds issued to third
            parties to guarantee the performance of an obligation by the
            principal under the bond. Commercial bonds guarantee the performance
            of compliance obligations arising out of regulatory or statutory
            requirements. Contract bonds guarantee the performance of
            contractual obligations between two parties and include payment and
            performance bonds. The majority of our surety treaties are written
            on an excess-of-loss basis with an aggregate limit.

      -     Trade Credit. Trade credit insurance is purchased by companies to
            ensure that invoices for goods and services provided to their
            customers are paid on time. Our trade credit coverages provide
            reinsurance for financial losses sustained through the failure of an
            insured's customers to pay for goods or services supplied to them.
            We reinsure trade credit both on a proportional and an
            excess-of-loss basis.

FINITE RISK

            The Finite Risk operating segment includes principally structured
reinsurance contracts with ceding companies whose needs may not be met
efficiently through traditional reinsurance products. The classes of risks
underwritten through finite risk contracts are fundamentally the same as the
classes covered by traditional products. Typically, the potential amount of
losses paid is finite or capped. In return for this limit on losses, there is
typically a cap on the potential profit margin specified in the treaty. Profits
above this margin are returned to the ceding company. Thus, this type of
coverage typically is less expensive to the ceding company. The finite risk
contracts that we underwrite generally provide prospective protection, meaning
coverage is provided for losses that are incurred after inception of the
contract, as contrasted with retrospective coverage which covers losses that are
incurred prior to inception of the contract. The three main categories of
finite risk contracts are quota share, multi-year excess-of-loss and whole
account aggregate stop loss:

      -     Finite quota share. Under finite quota share reinsurance contracts,
            the reinsurer agrees to indemnify a ceding company for a percentage
            of its losses up to an aggregate maximum or cap in return for a
            percentage of the ceding company's premium, less a ceding
            commission. The expected benefit to the ceding company provided by
            finite quota share reinsurance is a sharing of losses with the
            reinsurer and increased underwriting capacity of the ceding company.
            These contracts often provide broad protection and may cover
            multiple classes of a ceding company's business. Unlike a typical
            traditional quota share reinsurance agreement, these contracts often
            provide for profit commissions which take into account investment
            income for purposes of calculating the reinsurer's profit on
            business ceded. Unlike traditional quota share reinsurance
            agreements, finite quota share contracts are often written on a
            funds withheld basis, meaning the parties agree that funds that
            would normally be remitted to a reinsurer are withheld by the ceding
            company.

      -     Multi-year excess-of-loss. These reinsurance contracts often
            complement ceding companies' traditional excess-of-loss reinsurance
            programs. This type of contract often carries an up-front premium
            plus additional premiums which are dependent on the magnitude of
            losses claimed by the ceding company under the contract. The
            expected benefit to the ceding company on multi-year excess-of-loss
            reinsurance is that the ceding company has the ability to negotiate
            specific terms and conditions that remain applicable over multiple
            years of coverage. These contracts

                                     - 10 -
<PAGE>

            may cover multiple classes of a ceding company's business and
            typically provide the benefit of reducing the impact of large losses
            on a ceding company's underwriting results. In general, these
            contracts are designed so that the ceding company funds the expected
            level of loss activity over the multi-year period. The reinsurer
            incorporates a profit margin to cover its costs and the risk that
            losses are worse than expected. The payment of premiums based on the
            magnitude of losses claimed is intended to benefit the ceding
            company by linking its own loss experience to the actual cost of
            reinsurance over time. The multiple year term and premium structure
            of multi-year excess-of-loss reinsurance contracts are not typically
            found in traditional reinsurance contracts.

      -     Whole account aggregate stop loss. Aggregate stop loss reinsurance
            contracts provide broad protection against a wide range of
            contingencies that are difficult to address with traditional
            reinsurance, including inadequate pricing by a ceding company or
            higher frequency of claims than the ceding company expected. The
            reinsurer on a whole account aggregate stop loss contract agrees to
            indemnify a ceding company for aggregate losses in excess of a
            deductible specified in the contract. These contracts can be offered
            on a single or multi-year basis, and may provide catastrophic and
            attritional loss protection. The benefit of whole account aggregate
            stop loss contracts to ceding companies is that such contracts
            provide the broadest possible protection of a ceding company's
            underwriting results which is not generally available in the
            traditional reinsurance market. Unlike traditional reinsurance
            contracts, these contracts often contain sub-limits of coverage for
            losses on certain classes of business or exposures. These contracts
            are often written on a funds withheld basis. In addition, these
            contracts often include provisions for profit commissions which take
            into account investment income for purposes of calculating the
            reinsurer's profit on business ceded.

MARKETING

            We market our reinsurance products worldwide through our
underwriting offices and non-exclusive relationships with the leading
reinsurance brokers active in the U.S. and non-U.S. markets.

            Based on in-force premiums written by the Company at December 31,
2004, the five brokers from which we derived the largest portions of our
business (with the approximate percentage of business derived from such brokers
and their affiliates) are Benfield Blanch Inc. (28%), Marsh & McLennan Companies
(25%), Aon Corporation (16%), Willis Group Holdings (8%) and Towers Perrin (7%).
The loss of business relationships with any of these top five brokers could have
a material adverse effect on our business.

            In addition to their role as intermediaries in placing risk, brokers
perform data collection, contract preparation and other administrative tasks. We
believe that by relying largely on reinsurance brokers we are able to avoid the
expense and regulatory complications of a worldwide network of offices, thereby
minimizing fixed costs associated with marketing activities. We believe that by
maintaining close relationships with brokers we are able to obtain access to a
broad range of potential ceding companies.

UNDERWRITING AND RISK MANAGEMENT

            Our disciplined approach to underwriting and risk management
emphasizes profitability rather than premium volume or market share.

            We seek to limit our overall exposure to risk by limiting the amount
of reinsurance we write by geographic zone, by peril and by type of program or
contract. Our risk management uses a variety of means, including the use of
contract terms, diversification criteria, probability analysis and analysis of
comparable historical loss experience. We estimate the impact of certain
catastrophic events using

                                     - 11 -
<PAGE>

catastrophe modeling software and contract information to evaluate our exposure
to losses from individual contracts and in the aggregate.

            For catastrophe coverages exposed to natural perils, we measure our
exposure to aggregate catastrophe claims using a catastrophe computer model that
analyzes the effect of wind speed and earthquakes on the property values within
our portfolio. We seek to limit the amount of capital that we can potentially
lose from a severe catastrophe event, however there can be no assurance that we
will successfully limit actual losses from such a catastrophe event. We also
monitor our exposures from non-natural peril catastrophe exposed accumulating
risks, including surety, umbrella liability, directors and officers liability,
trade credit and terrorism reinsurance.

            Many of our reinsurance contracts do not contain an aggregate loss
limit or a loss ratio limit, which means that there is no contractual limit to
the number of claims that we may be required to pay pursuant to such reinsurance
contracts. However, substantially all of our property reinsurance contracts with
natural catastrophe exposure have occurrence limits that limit our exposure. In
addition, substantially all of our high layer property, casualty and marine
excess-of-loss contracts contain aggregate loss limits. Our actuaries and
underwriters work together to establish appropriate pricing models for these
purposes.

            In connection with the review of any program proposal, we consider
the quality of the ceding company, including the experience and reputation of
its management, its capital and its risk management strategy. In addition, we
seek to obtain information on the nature of the perils to be included and, in
the case of natural peril catastrophe exposures, aggregate information as to the
location or locations of the risks covered under the reinsurance contract. We
request information on the ceding company's loss history for the perils proposed
to be reinsured, together with relevant underwriting considerations, which would
impact exposures to reinsurers. If the program meets all these initial
underwriting criteria, we then evaluate the proposal in terms of its risk/reward
profile to assess the adequacy of the proposed pricing and its potential impact
on our overall return on capital.

            We use sophisticated modeling techniques to measure and estimate
loss exposure under both simulated and actual loss scenarios and in comparing
exposure portfolios to both single and multiple events. We take an active role
in the evaluation of commercial catastrophe exposure models, which form the
basis for our own proprietary pricing models. These computer-based loss modeling
systems primarily utilize direct exposure information obtained from our clients
in addition to independent external data, including data compiled by A.M. Best
Company ("Best's"), to assess each client's potential for catastrophe losses. We
believe that modeling is an important part of the underwriting process for
catastrophe exposure pricing. Our client base may also use one or more of the
various modeling consulting firms in their exposure management analysis. We also
have access to the historical loss experience of St. Paul Re to assist us in
pricing individual treaties and overall lines of business.

            In 2002, we entered into a five-year Services and Capacity
Reservation Agreement with RenaissanceRe, pursuant to which RenaissanceRe
provides consulting services to us in connection with our property catastrophe
book of business. No more than twice per year, at our request, RenaissanceRe
analyzes our property catastrophe treaties and contracts and assists us in
measuring risk and managing our aggregate catastrophe exposures.

RISK DIVERSIFICATION

            In addition to the strategies described above to manage our risks,
we seek to diversify our property catastrophe exposure across geographic zones
around the world in order to obtain a favorable spread of risk. We attempt to
limit our coverage for risks located in a particular zone to a predetermined

                                     - 12 -
<PAGE>

level. Currently, our greatest property exposures are in states on the west and
gulf coasts and in the southeastern part of the United States, as well as in the
Caribbean, Japan and northern Europe.

            We maintain a database of our exposures in each geographic zone and
estimate our probable maximum loss for each zone and for each peril (e.g.,
earthquakes, hurricanes and floods) to which that zone is subject based on
catastrophe models and underwriting assessments. We also use catastrophe
modeling to review exposures on events that cross country borders such as wind
events that may affect the Caribbean and Florida or the United Kingdom and
continental Europe. The largest exposures are in the United States for
earthquake and hurricane, in Europe for flood and wind, and in Japan for
earthquake and typhoons.

            We seek to diversify our casualty exposure by writing casualty
business throughout the United States and internationally. In addition, we seek
to diversify our casualty exposure by writing casualty reinsurance across a
broad range of product lines.

RETROCESSIONAL REINSURANCE

            We may obtain retrocessional reinsurance to reduce liability on
individual risks, protect against catastrophic losses and obtain additional
underwriting capacity. The major types of retrocessional coverage that we
purchase or may purchase include specific coverage for certain property, marine
and casualty exposures and catastrophe coverage for property exposures.

            We may purchase other retrocessional coverage on a selective basis.
Our decisions with respect to purchasing retrocessional coverage take into
account both the potential coverage and market conditions with respect to the
pricing, terms, conditions and availability of such coverage, with the aim of
securing cost-effective protection. We expect that the type and level of
retrocessional coverage will vary over time, reflecting our view of the changing
dynamics of both the underlying exposure and the reinsurance markets. There can
be no assurance that retrocessional coverage will be available on terms
acceptable to us.

            We consider the financial strength of retrocessionaires when
determining whether to purchase retrocessional coverage from them.
Retrocessional coverage is generally derived from companies rated "A" or better
by Best's unless the retrocessionaire's obligations are fully collateralized.
For exposures where losses become known and are paid in a relatively short
period of time, we may obtain retrocessional coverage from companies rated "A-"
or better by Best's. The financial performance and rating status of all material
retrocessionaires is routinely monitored. Retrocessional agreements do not
relieve us from our obligations to the insurers and reinsurers from whom we
assume business. Consequently, the failure of retrocessionaires to honor their
obligations would result in losses to us.

            For the year ended December 31, 2004, Platinum Bermuda reinsured in
the aggregate approximately 70% of Platinum US' reinsurance business and 55% of
Platinum UK's reinsurance business. Platinum Bermuda established and funded
trusts to collateralize its retrocessional obligations to Platinum US and
Platinum UK. Platinum US and Platinum UK also obtained from third party
retrocessionaires excess-of-loss per occurrence coverage of $21.25 million in
excess of $10 million with respect to marine business and aggregate
excess-of-loss coverage of $5 million with respect to crop business. In
addition, Platinum US reinsured Platinum UK for $60 million per occurrence on an
excess-of-loss basis in excess of $50 million with respect to international
property business.

            Pursuant to the Services and Capacity Reservation Agreement with
Renaissance Re described above, at our request RenaissanceRe will provide us
with quotations for non-marine property catastrophe retrocessional coverage with
aggregate limits up to $100 million annually, either on an excess-of-loss or

                                     - 13 -
<PAGE>

proportional basis. These quotations, which are in RenaissanceRe's sole
discretion, reflect, among other things, an analysis of exposure, limit,
retention, exclusions and other treaty terms. The annual fee that we pay to
RenaissanceRe for this coverage commitment and the consulting services is the
greater of (i) $4 million or (ii) 3.5% of our aggregate gross written non-marine
non-finite property catastrophe premium (including reinstatements), adjusted
annually 30 days after each anniversary. This annual fee is in addition to any
retrocessional premium otherwise payable to RenaissanceRe for retrocessional
coverage purchased by us from RenaissanceRe. The fees under this agreement were
approximately $6.1 million for the contract period from October 1, 2003 through
September 30, 2004.

CLAIMS ADMINISTRATION

      Our claims personnel administer claims arising from our reinsurance
contracts. The responsibilities of our claims personnel include reviewing loss
reports, monitoring claims, handling activities of clients, requesting
additional information where appropriate, posting case reserves and approving
payment of individual claims. Authority for payment and establishing reserves is
based upon the level and experience of claims personnel.

      In addition to managing reported claims and conferring with ceding
companies on claims matters, our claims personnel conduct periodic audits of
specific claims and the overall claims procedures of our ceding companies at
their offices. We rely on our ability to effectively monitor the claims handling
and claims reserving practices of ceding companies in order to establish the
proper reinsurance premium for reinsurance agreements and to establish proper
loss reserves. Moreover, prior to accepting certain risks, our underwriters will
often request that our claims personnel conduct pre-underwriting claims audits
of prospective ceding companies. Through these audits, we attempt to evaluate
the ceding company's claims-handling practices, including the organization of
their claims department, their fact-finding and investigation techniques, their
loss notifications, the adequacy of their reserves, their negotiation and
settlement practices and their adherence to claims-handling guidelines.
Following these audits, our claims personnel provide feedback to the ceding
company, including an assessment of the claims operation and, if appropriate,
recommendations regarding procedures, processing and personnel.

      With respect to the reinsurance contracts that we assumed from St. Paul
Re, claims are managed by St. Paul Re's claims department, subject to our
supervision and management, pursuant to the quota share retrocession agreements
that we entered into with St. Paul. Under those agreements, St. Paul's
subsidiaries transferred to us the liabilities, related assets and rights and
risks under substantially all of the reinsurance contracts entered into by St.
Paul's subsidiaries on or after January 1, 2002 (except for certain liabilities
relating to the flooding in Europe in August 2002 and reinsurance underwritten
in London covering exposures arising from financial institutions). We reimburse
St. Paul for its costs of managing these claims. We may, at our discretion and
expense, take over administration of any specific claims.

UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

      Under applicable insurance laws and regulations and accounting principles
generally accepted in the United States of America ("U.S. GAAP"), we establish
liabilities for payment of losses and loss adjustment expenses ("LAE") that will
arise from our reinsurance products. These liabilities are balance sheet
estimates of future amounts required to pay losses and LAE for reinsured claims
that have occurred on or before the balance sheet date. Unpaid losses and LAE
fall into two categories: estimates of liabilities for losses and LAE incurred
but not reported ("IBNR") and case basis estimates for reported losses and LAE.
Estimates of IBNR are balance sheet liabilities established to provide for
losses for claims arising from occurrences or events that have given rise to a
loss before any claims are reported. Significant periods of time can elapse
between the occurrence of a reinsured claim, its reporting by the

                                     - 14 -
<PAGE>

insured to the primary insurer and from the primary insurer to the reinsurer.
Under U.S. GAAP, we do not establish liabilities until the occurrence of an
event that may give rise to a loss.

      Upon receipt of a notice of claim from a ceding company, we establish an
estimate of the case basis liability for our portion of the ultimate settlement.
Case basis liabilities are usually based upon the liability estimate and other
information reported by the ceding company and may be increased or reduced as
deemed necessary by our claims personnel. We establish liabilities for losses
and LAE based on past experience (including the historical loss experience of
St. Paul Re, current developments and likely trends). Because estimation of
unpaid losses and LAE is an inherently uncertain process, we believe that
quantitative techniques are enhanced by professional and managerial judgment.
The establishment of liabilities for losses and LAE, and adjustments to
liabilities resulting from changes in our estimates, are reflected in current
income.

      Unpaid losses and LAE represent our best estimates, at a given point in
time, of the ultimate settlement and administration costs of claims incurred,
and it is possible that the ultimate liability may materially differ from such
estimates. Such estimates are not precise because, among other things, they are
based on predictions of future developments and estimates of future trends in
claim severity and frequency and other factors. During the claim settlement
period, it often becomes necessary to refine and adjust the case basis estimates
of liability, and thus the estimates may be adjusted either upward or downward,
based on periodic reviews of developments. Even after such adjustments, ultimate
liability may materially differ from the revised estimates.

      The uncertainty inherent in loss estimation is particularly pronounced for
casualty coverages, such as umbrella, general and product liability,
professional liability and automobile liability, where information, such as
required medical treatment and costs for bodily injury claims, only emerges over
time. In the overall reserve setting process, provisions for economic inflation
and changes in the social and legal environment are considered. The uncertainty
inherent in the reserving process for primary insurers is even greater for the
reinsurer. This is because of, but not limited to, the time lag inherent in
reporting information from the primary insurer to the reinsurer and differing
reserving practices among ceding companies.

      Development of liability for unpaid losses and LAE for the years ended
December 31, 2004 and 2003 and the two-month period ended December 31, 2002 is
summarized as follows ($ in thousands):

                                     - 15 -
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   2002
                                                                 2004               2003          Period
                                                              -----------          -------       ----------
<S>                                                           <C>                  <C>           <C>
Net unpaid losses and LAE as of the beginning
  of period .............................................     $   731,918          281,659       $        -
                                                              -----------          -------       ----------
Net incurred related to:
  Current year ..........................................       1,101,820          648,137           60,356
  Prior years ...........................................         (82,016)         (63,966)               -
                                                              -----------          -------       ----------
        Total net incurred losses and LAE ...............       1,019,804          584,171           60,356
                                                              -----------          -------       ----------
Unpaid losses and LAE assumed from St. Paul .............               -                -          221,303
                                                              -----------          -------       ----------
Net paid losses and LAE:
  Current year ..........................................         174,870          102,669                -
  Prior years ...........................................         205,889           41,709                -
                                                              -----------          -------       ----------
        Total net paid losses and LAE ...................         380,759          144,378                -

Effects of foreign currency exchange rate changes .......           8,264           10,466                -
                                                              -----------          -------       ----------
Net unpaid losses and LAE as of the end of period .......       1,379,227          731,918          281,659
Reinsurance recoverable .................................           1,728            5,016                -
                                                              -----------          -------       ----------
Gross unpaid losses and LAE at end of period ............     $ 1,380,955          736,934       $  281,659
                                                              -----------          -------       ----------
</TABLE>

      The favorable development in 2004 related to the prior year of $82,016,000
includes approximately $57,151,000 of net favorable development on property and
certain other lines of business with relatively short patterns of reported
losses, including approximately $7,700,000 attributable to prior years'
catastrophe losses. In addition, the favorable development in 2004 includes
approximately $24,865,000 of reductions in unpaid losses and LAE associated with
changes in 2004 of estimates of premiums and the patterns of their earnings
across current and prior accident years. Such changes did not have a significant
net effect on the current year's results of operations.

      The lines experiencing favorable development are principally property
coverages provided in both the Property and Marine and Finite Risk segments.
During 2004 and 2003, actual reported losses were significantly less than
expected for these short-tailed property lines resulting in reductions in
estimated ultimate losses.

      The favorable development in 2003 related to the prior year of $63,966,000
includes approximately $50,866,000 of net favorable development on property and
certain other lines of business with relatively short patterns of reported
losses. The favorable development also includes approximately $13,100,000 of
reductions in unpaid losses and LAE associated with the reduction in 2003 of
casualty premiums originally estimated and earned in 2002.

      The following table shows the development of liability for net unpaid
losses and LAE for the years ended December 31, 2004 and 2003 and the two-month
period ended December 31, 2002. The re-estimated liabilities reflect additional
information regarding claims incurred prior to the end of the preceding
financial year. A redundancy or deficiency will result from changes in estimates
of liabilities recorded at the end of the prior year. The cumulative redundancy
reflects the cumulative differences between the original estimate and the
currently re-estimated liability. Annual changes in the estimates are reflected
in the statement of income for each year as the liabilities are revalued. Unpaid
losses and LAE denominated in foreign currencies are restated at the foreign
exchange rates in effect at December 31, 2004 and the resulting cumulative
foreign exchange effect is shown as an adjustment to the cumulative redundancy.
Each amount in the tables includes the effects of all changes in amounts for the
prior year. The table does not present accident year or underwriting year
development data. Conditions and trends

                                     - 16 -
<PAGE>

that have affected the development of liabilities in the past may not
necessarily occur in the future. Therefore, it would not be appropriate to
extrapolate future deficiencies or redundancies based on the following table ($
in thousands):

<TABLE>
<CAPTION>
                                                        2002            2003          2004
                                                     ----------        -------     ----------
<S>                                                  <C>               <C>         <C>
Net unpaid losses and LAE                            $  281,659        731,918     $1,379,227
Net unpaid losses and LAE re-estimated as of:
  One year later                                        224,693        680,173
  Two years later                                       194,422
        Net cumulative redundancy                        87,237         51,745
Less deficiency due to foreign currency exchange          8,986          7,000
                                                     ----------        -------
Cumulative redundancy excluding foreign currency
  exchange                                               96,223         58,745
                                                     ----------        -------
Net cumulative paid losses and LAE paid as of:
  One year later                                         41,709        287,663
  Two years later                                        62,604
Gross liability-end of year                             281,659        736,934      1,380,955
Reinsurance recoverable                                       -          5,016          1,728
                                                     ----------        -------     ----------
Net liability-end of year                               281,659        731,918     $1,379,227
                                                     ----------        -------     ----------
Gross liability- re-estimated                           194,422        685,189
Gross cumulative redundancy                          $   87,237         51,745
</TABLE>

INVESTMENTS

      Reinsurance company investments must comply with applicable laws and
regulations, which prescribe the kind, quality and concentration of investments.
In general, these laws and regulations permit investments, within specified
limits and subject to some qualifications, in federal, state and municipal
obligations, corporate bonds, mortgage and asset backed securities, preferred
and common equity securities, sovereign and supranational securities, mortgage
loans, real estate and some other investments.

   INVESTMENT MANAGEMENT AGREEMENT

      We have entered into an investment management agreement with Alliance
Capital Management L.P. ("Alliance"), which provides investment advisory
services to us. The agreement may be terminated by either party by giving 30
days' notice of termination. We pay Alliance a fee based on the amount of assets
managed. We intend to consider alternative investment management firms during
2005.

   GENERAL GUIDELINES

         We have developed investment guidelines for the management of our
investment portfolio by Alliance. Although these guidelines stress
diversification of risk, preservation of capital and market liquidity,
investments are subject to market risks and fluctuations, as well as risks
inherent in particular securities. Interest rates and levels of inflation also
affect investment returns. The primary objective of the portfolio, set forth in
the guidelines, is to maximize investment returns consistent with appropriate

                                     - 17 -
<PAGE>

safety, diversification, tax and regulatory considerations and to provide
sufficient liquidity to enable us to meet our obligations on a timely basis.

      Our investment strategy takes into consideration the risks inherent in our
business. For this reason, our investment policy is conservative with a strong
emphasis on high quality, fixed maturity investments. Consistent with this
policy, the duration of our portfolio takes into account the estimated duration
of our reinsurance liabilities and other contractual liabilities.

      Within our fixed maturity portfolio we invest only in investment grade
securities. We currently do not intend to invest in real estate, common equity
securities or other classes of alternative investments, although from time to
time we make equity investments of a strategic nature. Our investment guidelines
contain restrictions on the portion of the portfolio that may be invested in the
securities of any single issue or issuer, with the exception of governments or
government agencies with prescribed minimum ratings. Our investment managers may
be instructed to invest some of the investment portfolio in currencies other
than U.S. dollars based upon the business we anticipate writing, the exposures
and unpaid losses and LAE on our books, or regulatory requirements. Our
investment guidelines provide that financial futures and options and foreign
exchange contracts may not be used in a speculative manner but may be used only
as part of a defensive hedging strategy.

      From time to time, we expect to reevaluate our investment guidelines to
reflect any changes in our assumptions about liability duration, market
conditions, prevailing interest rates and other factors discussed above. Any
change in our guidelines will be subject to the ongoing oversight and approval
of the Board of Directors.

   CLASSIFICATION

      We classify our investments as available-for-sale, trading or other
invested assets. Our available-for-sale and trading portfolios are comprised
entirely of investment grade fixed maturity investments. Other invested assets
currently represent a strategic equity investment in a privately held
reinsurance company.

   VALUATION

      All of our fixed maturity securities are carried at their estimated fair
value. For our available-for-sale securities, the difference between amortized
cost and the fair value, net of any deferred tax, (commonly referred to as net
unrealized gain or loss) is charged or credited directly to our shareholders'
equity. For our trading securities, the difference is charged or credited to our
statement of income. We calculate the fair value based on quoted market prices,
as reported by reputable market data providers. If quoted market prices are not
available, fair values are estimated either based on values obtained from
independent pricing services or based on cash flow estimates. Realized gains and
losses on disposal of our fixed maturity investments are determined based upon
specific identification of the cost of investments sold and are recorded in our
statement of income. We routinely review our available-for-sale investments to
determine whether unrealized losses represent temporary changes in fair value or
are the result of "other than temporary impairments." The process of determining
whether a security is other than temporarily impaired is subjective and involves
analyzing many factors, including the duration and magnitude of an unrealized
loss, specific credit events, the overall financial condition of the issuer, and
the Company's intent to hold a security for a sufficient period of time for the
value to recover the unrealized loss. The Company believes it has the ability to
hold any specific security to its stated maturity. This is based on current and
anticipated future positive cash flow from operations that generates sufficient
liquidity in order to meet our obligations. If we determine that an unrealized
loss on a

                                     - 18 -
<PAGE>

security is other than temporary, we write down the carrying value of the
security and record a realized loss in our statement of income.

      Other invested assets, which do not have a quoted market price, are
carried at estimated fair value.

      Cash equivalents and short-term investments are carried at cost, which
approximates fair value.

      The following table shows, in the aggregate, the fair value of our
portfolio of invested assets (except for other invested assets) at December 31,
2004 ($ in thousands):

<TABLE>
<S>                                                   <C>
U.S. Government and U.S. Government agencies ......   $    4,203
  Corporate bonds .................................    1,158,797
Mortgage and asset-backed securities ..............      511,069
Municipal bonds ...................................      215,251
Foreign governments, states and foreign
  corporate .......................................      347,206
                                                      ----------
        Total bonds ...............................    2,236,526
Redeemable preferred stocks .......................        3,676
                                                      ----------
        Total fixed maturities ....................   $2,240,202
                                                      ----------
</TABLE>

   QUALITY

      Our current investment guidelines call for our invested asset portfolio to
have at least an average A2 rating as measured by Moody's Investors Service
("Moody's"). At December 31, 2004, our fixed maturity portfolio had a dollar
weighted average rating of Aa3. The average yield of our portfolio for the year
ended December 31, 2004 was 4.3%.

      The following table summarizes the composition of the fair value of the
fixed maturity portfolio at December 31, 2004 by rating as assigned by Moody's:

<TABLE>
<CAPTION>
                          Fair Value        % of Total
                          ----------        ----------
<S>                       <C>               <C>
Aaa..................     $  764,002           34.1%
Aa - Aa3.............        447,071           20.0%
A - A3...............        909,403           40.6%
Baa..................        119,726            5.3%
                          ----------          -----
    Total............     $2,240,202          100.0%
                          ----------          -----
</TABLE>

   DURATION

      At December 31, 2004, our fixed maturity portfolio had an average weighted
duration of 3.9 years. The following table summarizes the fair value of our
available-for-sale fixed maturity portfolio by contractual maturities at
December 31, 2004; actual maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties ($ in thousands):

                                     - 19 -
<PAGE>

<TABLE>
<CAPTION>
                                                      Amortized
                                                         Cost        Fair Value
                                                      ----------     ----------
<S>                                                   <C>            <C>
Due in one year or less .........................     $   54,567     $   54,390
Due from one to five years ......................        929,647        932,655
Due from five to ten years ......................        411,388        415,697
Due in ten or more years ........................        236,181        240,042
Mortgage and asset backed securities ............        508,757        511,069
                                                      ----------     ----------
        Total bonds .............................      2,140,540      2,153,853
Redeemable preferred stocks .....................          3,750          3,676
                                                      ----------     ----------
        Total available-for-sale fixed
            maturities ..........................     $2,144,290     $2,157,529
                                                      ----------     ----------
</TABLE>

COMPETITION

      The property and casualty reinsurance industry is highly competitive. We
compete with reinsurers worldwide, some of which have greater financial,
marketing and management resources than ours. Some of our competitors are large
financial institutions that have reinsurance segments, while others are
specialty reinsurance companies. Financial institutions have also created
alternative capital market products that compete with reinsurance products, such
as reinsurance securitization. Our principal competitors vary by type of
business. Bermuda-based reinsurers are significant competitors on property
catastrophe business. Lloyd's of London syndicates are significant competitors
on marine business. On international business, the large European reinsurers are
significant competitors. Large U.S. direct reinsurers, as well as lead
U.S.-based broker market reinsurers, are significant competitors on U.S.
casualty business. On an overall basis, we expect that our most significant
competitors include ACE Limited, Arch Capital Group Ltd., Axis Capital Holdings,
The Chubb Corporation, White Mountains Insurance Group, Ltd., Endurance
Specialty Holdings, Everest Re Group, General Re Corporation, IPC Holdings Ltd.,
Lloyd's of London, Montpelier Re Holdings Ltd., Munich Re Group, Odyssey Re
Holdings Corp., Partner Re Limited, RenaissanceRe, Swiss Reinsurance Company,
Transatlantic Holdings and XL Capital Limited.

      Following the September 11, 2001 terrorist attack, a number of individuals
and companies in the reinsurance industry established new, well-capitalized,
Bermuda-based reinsurers to benefit from improved market conditions, and a
number of existing competitors raised additional capital. Many of the reinsurers
that entered the reinsurance markets have more capital than we have. In
addition, there may be established companies or new companies of which we are
not aware that may be planning to commit capital to this market. The full effect
of this additional capital on the reinsurance market and on the terms and
conditions of the reinsurance contracts of the types we expect to underwrite may
not be known for some time. Competition in the types of reinsurance business
that we underwrite is based on many factors, including premium charges and other
terms and conditions offered, services provided, ratings assigned by independent
rating agencies, speed of claims payment, claims handling experience, perceived
financial strength and experience and reputation of the reinsurer in the line of
reinsurance to be underwritten.

      Traditional as well as new capital market participants from time to time
produce alternative products (such as reinsurance securitizations, catastrophe
bonds and various derivatives such as swaps) that may compete with certain types
of reinsurance, such as property catastrophe. Over time, these numerous
initiatives could significantly affect supply, pricing and competition in our
industry.

RATINGS AND COLLATERAL

      Best's is generally considered to be a significant rating agency for the
evaluation of insurance and reinsurance companies. Best's ratings are based on a
quantitative evaluation of performance with respect

                                     - 20 -
<PAGE>

to profitability, capital adequacy and liquidity and a qualitative evaluation of
spread of risk, reinsurance programs, investments, unpaid losses and management.

      Best's has assigned a financial strength rating of "A" (Excellent) to our
operating subsidiaries. This rating is the third highest of sixteen rating
levels. According to Best's, a rating of "A" indicates Best's opinion that a
company has an excellent ability to meet its ongoing obligations to
policyholders.

      Ratings are used by ceding companies and reinsurance intermediaries as an
important means of assessing the financial strength and quality of reinsurers.
In addition, a ceding company's own rating may be adversely affected by a
downgrade in the rating of its reinsurer. Therefore, a downgrade of our rating
may dissuade a ceding company from reinsuring with us and may influence a ceding
company to reinsure with a competitor of ours that has a higher rating.

      Furthermore, it is increasingly common for our reinsurance contracts to
contain terms that would allow the ceding companies to cancel the contract or
require us to provide collateral if we are downgraded below a certain rating
level. Whether a client would exercise this cancellation right would depend,
among other factors, on the reason for such downgrade, the extent of the
downgrade, the prevailing market conditions and the pricing and availability of
replacement reinsurance coverage. Therefore, we cannot predict the extent to
which this cancellation right would be exercised, if at all, or what effect any
such cancellations would have on our financial condition or future operations,
but such effect potentially could be material.

      We may from time to time secure our obligations under our various
reinsurance contracts using trusts and letters of credit. We have entered into
agreements with several ceding companies that require us to provide collateral
for our obligations under certain reinsurance contracts with these ceding
companies under various circumstances, including where our obligations to these
ceding companies exceed negotiated thresholds. These thresholds may vary
depending on our rating from Best's or other rating agencies and a downgrade of
our ratings or a failure to achieve a certain rating may increase the amount of
collateral we are required to provide. We may provide the collateral by
delivering letters of credit to the ceding company, depositing assets into trust
for the benefit of the ceding company or permitting the ceding company to
withhold funds that would otherwise be delivered to us under the reinsurance
contract. The amount of collateral we are required to provide typically
represents a portion of the obligations we may owe the ceding company, often
including estimates of IBNR made by the ceding company. Since we may be required
to provide collateral based on the ceding company's estimate, we may be
obligated to provide collateral that exceeds our estimates of the ultimate
liability to the ceding company.

EMPLOYEES

      At December 31, 2004, we employed 159 people. None of our employees is
subject to collective bargaining agreements. We are not aware of any efforts to
implement such agreements at any of our subsidiaries.

      Certain of the Bermuda-based employees of Platinum Holdings, including our
Chief Executive Officer, Chief Financial Officer and General Counsel, are
employed pursuant to work permits granted by Bermuda authorities. These permits
expire at various times during the next few years. We have no reason to believe
that these permits would not be extended at expiration upon request, although no
assurance can be given in this regard.

                                     - 21 -
<PAGE>

REGULATION

   GENERAL

      The business of reinsurance is regulated in most countries, although the
degree and type of regulation varies significantly from one jurisdiction to
another. Reinsurers are generally subject to less direct regulation than primary
insurers. In Bermuda, we operate under relatively less intensive regulatory
requirements. However, in the United States and in the United Kingdom, licensed
reinsurers must comply with financial supervision standards comparable to those
governing primary insurers. Accordingly, Platinum US and Platinum UK are subject
to extensive regulation under applicable statutes. In the United States, those
statutes delegate regulatory, supervisory and administrative powers to state
insurance commissioners.

   BERMUDA REGULATION

      Platinum Holdings and Platinum Bermuda are organized and domiciled in
Bermuda. As a holding company, Platinum Holdings is not subject to Bermuda
insurance regulations.

      The Insurance Act 1978 (the "Insurance Act"), which regulates the
insurance business of Platinum Bermuda, provides that no person may carry on any
insurance business in or from within Bermuda unless registered as an insurer
under the Insurance Act by the Bermuda Monetary Authority (the "Authority"),
which is responsible for the day-to-day supervision of insurers. Under the
Insurance Act, insurance business includes reinsurance business.

      An insurer's registration may be canceled by the Authority on certain
grounds specified in the Insurance Act, including failure of the insurer to
comply with its obligations under the Insurance Act or if, in the opinion of the
Authority, the insurer has not been carrying on business in accordance with
sound insurance principles. The Insurance Act also imposes solvency and
liquidity standards and auditing and reporting requirements on Bermuda insurance
companies and grants to the Authority powers to supervise, investigate and
intervene in the affairs of insurance companies. Certain significant aspects of
the Bermuda insurance regulatory framework are set forth below.

      The Insurance Act distinguishes between insurers carrying on long-term
business and insurers carrying on general business. There are four
classifications of insurers carrying on general business, with Class 4 insurers
being the largest and, consequently, subject to the strictest regulation.
Platinum Bermuda is registered as a Class 4 and long-term insurer and is
regulated as such under the Insurance Act.

      Principal Representative. An insurer is required to maintain a principal
office in Bermuda and to appoint and maintain a principal representative in
Bermuda. For the purpose of the Insurance Act, the principal office of Platinum
Bermuda is at our principal executive offices in Bermuda, and Platinum Bermuda's
principal representative is Barton W. Hedges, the President and Chief Operating
Officer of Platinum Bermuda. Without a reason acceptable to the Authority, an
insurer may not terminate the appointment of its principal representative, and
the principal representative may not cease to act as such, unless 30 days'
notice in writing to the Authority is given of the intention to do so. It is the
duty of the principal representative, within 14 days of reaching the view that
there is a likelihood of the insurer for which the principal representative acts
becoming insolvent or that a reportable "event" has, to the principal
representative's knowledge, occurred or is believed to have occurred, to make a
report in writing to the Authority setting out all the particulars of the case
that are available to the principal representative. Examples of such a
reportable "event" include failure by the insurer to comply substantially with a
condition imposed upon the insurer by the Authority relating to a solvency
margin or liquidity or other ratio.

                                     - 22 -
<PAGE>

      Independent Approved Auditor. Every registered insurer must appoint an
independent auditor who will annually audit and report on the statutory
financial statements and the statutory financial return of the insurer, both of
which, in the case of Platinum Bermuda, are required to be filed annually with
the Authority. The independent auditor of Platinum Bermuda must be approved by
the Authority and may be the same person or firm that audits Platinum Bermuda's
financial statements and reports for presentation to its shareholders. Platinum
Bermuda's independent auditor is KPMG Bermuda.

      Loss Reserve Specialist. As a registered Class 4 insurer, Platinum Bermuda
is required to submit an opinion of its approved loss reserve specialist with
its statutory financial return in respect of its loss and LAE provisions. The
loss reserve specialist, who will normally be a qualified casualty actuary, must
be approved by the Authority. Platinum Bermuda's loss reserve specialist is Neal
J. Schmidt, our Chief Actuary. Mr. Schmidt is a fellow of the Casualty Actuarial
Society and a member of the American Academy of Actuaries.

      Approved Actuary. Platinum Bermuda, as a registered long-term insurer, is
required to submit an annual actuary's certificate when filing its statutory
financial return. The actuary's certificate shall state whether or not (in the
opinion of the insurer's approved actuary) the aggregate amount of the
liabilities of the insurer in relation to long-term business as at the end of
the relevant year, exceeds the aggregate amount of those liabilities as shown in
the insurer's statutory balance sheet. The actuary must be approved by the
Authority and will normally be a qualified life actuary. Platinum Bermuda's
approved actuary is William Hines. Mr. Hines is a Fellow of the Society of
Actuaries and a Member of the American Academy of Actuaries.

      Statutory Financial Statements. Platinum Bermuda, as a general business
insurer, will be required to submit its annual statutory financial statements as
part of its annual statutory financial return. The Insurance Act prescribes
rules for the preparation and substance of such statutory financial statements
(which include, in statutory form, a balance sheet, an income statement, a
statement of capital and surplus and notes thereto). The statutory financial
statements are not prepared in accordance with U.S. GAAP and are distinct from
the financial statements prepared for presentation to the insurer's shareholders
under the Bermuda Companies Act 1981 (the "Companies Act"), which financial
statements will be prepared in accordance with U.S. GAAP.

      Annual Statutory Financial Return. Platinum Bermuda is required to file
with the Authority a statutory financial return no later than four months after
its financial year-end (unless specifically extended). The statutory financial
return for an insurer registered as a Class 4 general business and long-term
insurer includes, among other matters, a report of the approved independent
auditor on the statutory financial statements of such insurer, a general
business solvency certificate, a long-term business solvency certificate, the
statutory financial statements themselves, the opinion of the loss reserve
specialist, an actuary's certificate and a schedule of reinsurance ceded. The
solvency certificates must be signed by the principal representative and at
least two directors of the insurer who are required to certify, among other
matters, whether the minimum solvency margin has been met and whether the
insurer complied with the conditions attached to its certificate of
registration. The independent approved auditor is required to state whether in
its opinion it was reasonable for the directors to so certify.

      Minimum Solvency Margin and Restrictions on Dividends and Distributions.
Under the Insurance Act, the value of its long-term business assets must exceed
the amount of its long-term liabilities by at least $250,000. The Insurance Act
also provides that the general business assets of a Class 4 insurer, such as
Platinum Bermuda, must exceed the amount of an insurer's general business
liabilities by an amount greater than the prescribed minimum solvency margin.
Platinum Bermuda:

                                     - 23 -
<PAGE>

      (1)   is required, with respect to its general business, to maintain a
            minimum solvency margin equal to the greatest of:

            (A)   $100,000,000;

            (B)   50% of net premiums written (being gross premiums written less
                  any premiums ceded by Platinum Bermuda, but Platinum Bermuda
                  may not deduct more than 25% of gross premiums when computing
                  net premiums written); and

            (C)   15% of loss and other insurance reserves;

      (2)   is prohibited from declaring or paying any dividends during any
            financial year if it is in breach of its minimum solvency margin or
            minimum liquidity ratio or if the declaration or payment of such
            dividends would cause it to fail to meet such margin or ratio (and
            if it has failed to meet its minimum solvency margin or minimum
            liquidity ratio on the last day of any financial year, Platinum
            Bermuda is prohibited, without the approval of the Authority, from
            declaring or paying any dividends during the next financial year);

      (3)   is prohibited from declaring or paying in any financial year
            dividends of more than 25% of its total statutory capital and
            surplus (as shown on its previous financial year's statutory balance
            sheet) unless it files with the Authority (at least seven days
            before payment of such dividends) an affidavit stating that it will
            continue to meet the required margins;

      (4)   is prohibited, without the approval of the Authority, from reducing
            by 15% or more its total statutory capital as set out in its
            previous year's financial statements, and any application for such
            approval must include an affidavit stating that it will continue to
            meet the required margins; and

      (5)   is required, at any time it fails to meet its solvency margin,
            within 30 days (45 days where total statutory capital and surplus
            falls to $75 million or less) after becoming aware of that failure
            or having reason to believe that such failure has occurred, to file
            with the Authority a written report containing certain information.

      Additionally, under the Companies Act, Platinum Holdings and Platinum
Bermuda may not declare or pay a dividend if Platinum Holdings or Platinum
Bermuda, as the case may be, has reasonable grounds for believing that it is, or
after the payment would be, unable to pay its liabilities as they become due, or
that the realizable value of its assets would thereby be less than the aggregate
of its liabilities and its issued share capital and share premium accounts.

      Minimum Liquidity Ratio. The Insurance Act provides a minimum liquidity
ratio for general business insurers. An insurer engaged in general business is
required to maintain the value of its relevant assets at not less than 75% of
the amount of its relevant liabilities. Relevant assets include cash and time
deposits, quoted investments, unquoted bonds and debentures, first liens on real
estate, investment income due and accrued, accounts and premiums receivable and
reinsurance balances receivable. There are certain categories of assets which,
unless specifically permitted by the Authority, do not automatically qualify as
relevant assets, such as unquoted equity securities, investments in and advances
to affiliates and real estate and collateral loans. The relevant liabilities are
total general business insurance reserves and total other liabilities less
deferred income tax and sundry liabilities (by interpretation, those not
specifically defined).

      Long-term Business Fund. An insurer carrying on long-term business is
required to keep its accounts in respect of its long-term business separate from
any accounts kept in respect of any other business. All receipts of its
long-term business form part of its long-term business fund. No payment may be
made directly or indirectly from an insurer's long-term business fund for any
purpose other than a purpose related to the insurer's long-term business, unless
such payment can be made out of any surplus

                                     - 24 -
<PAGE>

(certified by the insurer's approved actuary) to be available for distribution
otherwise than to policyholders. Platinum Bermuda may not declare or pay a
dividend to any person other than a policyholder unless the value of the assets
in its long-term business fund (as certified by its approved actuary) exceeds
the liabilities of the insurer's long-term business (as certified by the
insurer's approved actuary) by the amount of the dividend and at least the
$250,000 minimum solvency margin prescribed by the Insurance Act, and the amount
of any such dividend may not exceed the aggregate of that excess (excluding the
said $250,000) and any other funds properly available for payment of dividends,
such as funds arising out of business of the insurer other than long-term
business.

      Restrictions on Transfer of Business and Winding-Up. As a long-term
insurer, Platinum Bermuda is subject to the following provisions of the
Insurance Act:

   (1)   all or any part of the long-term business, other than long-term
         business that is reinsurance business, may be transferred only with and
         in accordance with the sanction of the applicable Bermuda court; and

   (2)   an insurer or reinsurer carrying on long-term business may only be
         wound-up or liquidated by order of the applicable Bermuda court, and
         this may increase the length of time and costs incurred in the
         winding-up of Platinum Bermuda when compared with a voluntary
         winding-up or liquidation.

      Supervision and Intervention. If it appears to the Authority that there is
a risk of the insurer becoming insolvent, or that it is in breach of the
Insurance Act or any conditions imposed upon its registration, the Authority
may, among other things, direct the insurer (i) not to take on any new insurance
business, (ii) not to vary any insurance contract if the effect would be to
increase the insurer's liabilities, (iii) not to make certain investments, (iv)
to realize certain investments, (v) to maintain in, or transfer to the custody
of, a specified bank, certain assets, (vi) not to declare or pay any dividends
or other distributions or to restrict the making of such payments, and/or (vii)
to limit its premium income.

      Although Platinum Bermuda is organized in Bermuda, it is classified as a
non-resident of Bermuda for exchange control purposes by the Authority. Pursuant
to its non-resident status, Platinum Bermuda may hold any currency other than
Bermuda dollars and convert that currency into any other currency (other than
Bermuda dollars) without restriction. Platinum Bermuda is permitted to hold
Bermuda dollars to the extent necessary to pay its expenses in Bermuda.

      As "exempted" companies, Platinum Holdings and Platinum Bermuda may not,
without the express authorization of the Bermuda legislature or under a license
granted by the Minister of Finance, participate in certain business
transactions. Platinum Bermuda is a licensed reinsurer in Bermuda and so may
carry on activities in Bermuda that are related to and in support of its
reinsurance business.

      The Bermuda government actively encourages foreign investment in
"exempted" entities like Platinum Holdings that are based in Bermuda, but do not
operate in competition with local businesses. As well as having no restrictions
on the degree of foreign ownership, Platinum Holdings and Platinum Bermuda are
not currently subject to taxes on income or dividends or to any foreign exchange
controls in Bermuda. In addition, currently there is no capital gains tax in
Bermuda.

      Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may
not engage in any gainful occupation in Bermuda without the specific permission
of the appropriate governmental authority. None of our executive officers is a
Bermudian, and all such officers will be working in Bermuda under work permits.
The Bermuda government recently announced a new policy that places a six-year
term limit on individuals with work permits, subject to certain exceptions for
key employees.

                                     - 25 -
<PAGE>

   U.S. REGULATION

      Platinum US is organized and domiciled in the State of Maryland, is
licensed in Maryland as a property and casualty insurer, and is licensed,
authorized or accredited to write reinsurance in all 50 states of the United
States and the District of Columbia. Although Platinum US is regulated by state
insurance departments and applicable state insurance laws in each state where it
is licensed, authorized or accredited, Platinum US' principal insurance
regulatory authority is the Maryland Insurance Administration. In connection
with the acquisition of Platinum US by Platinum Holdings, the Maryland Insurance
Administration issued a consent order relating to Platinum US pursuant to which,
among other things, we have agreed to comply with the notice and approval
requirements with respect to certain transactions with RenaissanceRe and its
affiliates.

      U.S. Insurance Holding Company Regulation of Platinum Holdings, Platinum
Ireland and Platinum Finance. Platinum Holdings and Platinum Ireland as the
indirect parent companies of Platinum US, and Platinum Finance as the direct
parent company of Platinum US, are subject to the insurance holding company laws
of Maryland, where Platinum US is organized and domiciled. These laws generally
require an authorized insurer that is a member of a holding company system to
register with the insurance department of the State of Maryland and to furnish
annually financial and other information about the operations of companies
within the holding company system. Generally, all transactions among companies
in the holding company system affecting Platinum US, including sales, loans,
reinsurance agreements, service agreements and dividend payments, must be fair
and, if material or of a specified category, require prior notice and approval
or non-disapproval by the Maryland Insurance Commissioner (the "Commissioner").

      The insurance laws of Maryland prohibit any person from acquiring control
of Platinum Holdings, Platinum Ireland, Platinum Finance or Platinum US unless
that person has filed a notification with specified information with the
Commissioner and has obtained the Commissioner's prior approval. Under the
Maryland statutes, acquiring 10% or more of the voting stock of an insurance
company or its parent company is presumptively considered a change of control,
although such presumption may be rebutted. Accordingly, any person or entity who
acquires, directly or indirectly, 10% or more of the voting securities of
Platinum Holdings without the prior approval of the Commissioner will be in
violation of these laws and may be subject to injunctive action requiring the
disposition or seizure of those securities by the Commissioner or prohibiting
the voting of those securities, or to other actions that may be taken by the
Commissioner. In addition, many U.S. state insurance laws require prior
notification to state insurance departments of a change in control of a
nondomiciliary insurance company doing business in that state. While these
pre-notification statutes do not authorize the state insurance departments to
disapprove the change in control, they authorize regulatory action in the
affected state if particular conditions exist, such as undue market
concentration. In addition, any transactions that would constitute a change in
control of Platinum Holdings, Platinum Ireland or Platinum Finance may require
prior notification in those states that have adopted pre-acquisition
notification laws.

      These laws may discourage potential acquisition proposals and may delay,
deter or prevent a change of control of Platinum Holdings, including through
transactions, and in particular unsolicited transactions, that some or all of
the shareholders of Platinum Holdings might consider to be desirable.

      U.S. Insurance Regulation of Platinum US. The terms and conditions of
reinsurance agreements generally are not subject to regulation by any state
insurance department in the U.S. with respect to rates or policy terms. This
contrasts with primary insurance agreements, the rates and policy terms of which
are generally closely regulated by state insurance departments. As a practical
matter, however, the rates charged by primary insurers do have an effect on the
rates that can be charged by reinsurers.

                                     - 26 -
<PAGE>

      State insurance authorities have broad administrative powers with respect
to various aspects of the reinsurance business, including licensing to transact
business, admittance of assets to statutory surplus, regulating unfair trade and
claims practices, establishing reserve requirements and solvency standards, and
regulating investments and dividends. State insurance laws and regulations
require Platinum US to file financial statements with insurance departments in
each state where it is licensed, authorized or accredited to do business, and
the operations of Platinum US are subject to examination by those departments at
any time. Platinum US prepares statutory financial statements in accordance with
accounting practices and procedures prescribed or permitted by these
departments. State insurance departments conduct periodic examinations of the
books and records and financial reporting of insurance companies domiciled in
their states and of policy filing and market conduct of insurance companies
doing business in their states, generally once every three to five years.
Examinations are generally carried out in cooperation with the insurance
departments of other states under guidelines promulgated by the National
Association of Insurance Commissioners ("NAIC").

      Under Maryland insurance law, Platinum US must give ten days' prior notice
to the Commissioner of its intention to pay any dividend or make any
distribution other than an extraordinary dividend or extraordinary distribution.
The Commissioner has the right to prevent payment of such a dividend or such a
distribution if the Commissioner determines, in the Commissioner's discretion,
that after the payment thereof, Platinum US' policyholders' surplus would be
inadequate or could cause Platinum US to be in a hazardous financial condition.

      In addition, Platinum US must give at least 30 days prior notice to the
Commissioner before paying an "extraordinary dividend" or making an
"extraordinary distribution" out of earned surplus. Extraordinary dividends and
extraordinary distributions are dividends or distributions which, together with
any other dividends and distributions paid during the immediately preceding
twelve-month period, would exceed the lesser of:

   (1)   10% of Platinum US' statutory policyholders' surplus (as determined
         under statutory accounting principles) as of December 31 of the prior
         year; or

   (2)   Platinum US' net investment income excluding realized capital gains
         (as determined under statutory accounting principles) for the
         twelve-month period ending on December 31 of the prior year and pro
         rata distribution of any class of Platinum US' own securities, plus any
         amounts of net investment income (excluding realized capital gains) in
         the three calendar years prior to the preceding year which have not
         been distributed.

      In order to enhance the regulation of insurers' solvency, the NAIC adopted
a model law to implement risk-based capital ("RBC") requirements for life,
health, and property and casualty insurance companies. Maryland has adopted the
NAIC's model law. The RBC calculation, which regulators use to assess the
sufficiency of an insurer's capital, measures the risk characteristics of a
company's assets, liabilities and certain off-balance sheet items. RBC is
calculated by applying factors to various asset, premium and liability items.
Within a given risk category, these factors are higher for those items with
greater underlying risk and lower for items with lower underlying risk. Insurers
that have less statutory capital than the RBC calculation requires are
considered to have inadequate capital and are subject to varying degrees of
regulatory action depending upon the level of capital inadequacy. The RBC ratios
of Platinum US are above the ranges that would require any regulatory or
corrective action.

      The NAIC assists state insurance departments in achieving insurance
regulatory objectives, including the maintenance and improvement of state
regulation. From time to time various regulatory and legislative changes have
been proposed in the insurance industry, some of which could have an effect on
reinsurers. The NAIC has instituted its Financial Regulatory Accreditation
Standards Program

                                     - 27 -
<PAGE>

("FRASP") in response to federal initiatives to regulate the business of
insurance. FRASP provides a set of standards designed to establish effective
state regulation of the financial condition of insurance companies. Under FRASP,
a state must adopt certain laws and regulations, institute required regulatory
practices and procedures, and have adequate insurance department personnel for
enforcement thereof in order to become an "accredited" state. The NAIC
determines whether individual states should be accredited, and each state's
accreditation is determined by the NAIC periodically. If a state is not
accredited or loses its accreditation, accredited states are not able to accept
certain financial examination reports of insurers prepared solely by the
regulatory agency in such unaccredited state. The State of Maryland is currently
accredited under FRASP.

      Platinum Holdings has entered into a guaranty pursuant to which it has
agreed to guarantee Platinum US' payment obligations under reinsurance contracts
written by Platinum US on or after December 31, 2003 to the extent such payment
obligations are not disputed or contested by Platinum US. In addition, Platinum
Holdings has entered into a capital support agreement with Platinum US pursuant
to which Platinum Holdings may be required from time to time to contribute
capital to Platinum US in such amounts as shall be necessary to ensure that
Platinum US will have adequate capital and surplus.

      The ability of a primary insurer to take credit for the reinsurance
purchased from reinsurance companies is a significant component of reinsurance
regulation. Typically, a primary insurer will only enter into a reinsurance
agreement if it can obtain credit to statutory reserves on its statutory
financial statements for the reinsurance ceded to the reinsurer. With respect to
U.S. domiciled reinsurers that reinsure U.S. insurers, credit is usually granted
when the reinsurer is licensed or accredited in a state where the primary
insurer is domiciled.

      Platinum UK and Platinum Bermuda. Platinum UK and Platinum Bermuda are not
licensed, accredited or approved in any state in the U.S. The great majority of
states, however, permit a credit to statutory surplus resulting from reinsurance
obtained from a non-licensed or non-accredited reinsurer to the extent that the
reinsurer provides a letter of credit, trust fund or other acceptable collateral
arrangement. A few states do not allow credit for reinsurance ceded to
non-licensed reinsurers except in certain limited circumstances and others
impose additional requirements that make it difficult to become accredited.
Platinum UK or Platinum Bermuda may be subject to reinsurance premium excise
taxes in the United States (1%) and certain other jurisdictions.

   U.K. REGULATION

      The framework for supervision of insurance companies in the U.K. is
largely formed by European Union Directives ("Directives"), which are required
to be implemented in member states through national legislation. Directives aim
to harmonize insurance regulation and supervision throughout the European Union
by establishing minimum standards in key areas, and requiring member states to
give mutual recognition to each other's standards of prudential supervision.

      On December 1, 2001, the Financial Services Authority (the "FSA") assumed
its full powers and responsibilities under the Financial Services and Markets
Act 2000 ("FSMA"). The FSA is now the single statutory regulator responsible for
regulating deposit-taking, insurance, investment and most other financial
services business. It is a criminal offense for any person to carry on a
regulated activity in the U.K. unless that person is authorized by the FSA or
falls under an exemption.

      Insurance business (which includes reinsurance business) is authorized and
supervised by the FSA. On December 4, 2002, Platinum UK received approval from
the FSA to write the business formerly conducted by St. Paul Re in the U.K.

                                     - 28 -
<PAGE>

      Supervision. In its role as supervisor of insurance companies, the primary
objective of the FSA is to fulfill its responsibilities under the FSMA regime
relating to the safety and soundness of insurance companies with the aim of
strengthening, but not guaranteeing, the protection of insureds. The FSA has
adopted a risk-based approach to the supervision of insurance companies. Under
this approach, the FSA performs a formal risk assessment of every insurance
company or group carrying on business in the U.K. during each supervisory
period, which varies in length according to the risk profile of the insurer.
After each risk assessment, the FSA will inform the insurer of its views on the
insurer's risk profile. This report will include details of any remedial action
which the FSA requires and the likely consequences if this action is not taken.

      Solvency Requirements. Insurance companies are required to maintain a
margin of solvency at all times in respect of any general insurance undertaken
by the insurance company, the calculation of which in any particular case
depends on the type and amount of insurance business a company writes. The
method of calculation of the solvency margin is set out in the FSA rules, and
for these purposes, an insurer's assets and its liabilities are subject to
specific valuation rules. Failure to maintain the required solvency margin is
one of the grounds on which wide powers of intervention conferred upon the FSA
may be exercised.

      Platinum Holdings has entered into a guaranty pursuant to which it has
agreed to guarantee Platinum UK's undisputed payment obligations under
reinsurance contracts written by Platinum UK on or after December 31, 2003. In
addition, Platinum Holdings has entered into a capital support agreement with
Platinum UK pursuant to which Platinum Holdings may be required from time to
time to contribute capital to Platinum UK by way of interest-free, subordinated
debt in such amounts as shall be necessary to ensure that Platinum UK will have
adequate capital and surplus.

      Restrictions on Dividend Payments. English law prohibits Platinum UK from
declaring a dividend to its shareholders unless it has "profits available for
distribution." The determination of whether a company has profits available for
distribution is based on its accumulated realized profits less its accumulated
realized losses. While the U.K. insurance regulatory laws impose no statutory
restrictions on a general insurer's ability to declare a dividend, the FSA
strictly controls the maintenance of each insurance company's solvency margin
within its jurisdiction and may restrict Platinum UK from declaring a dividend
at a level that the FSA determines would adversely affect Platinum UK's solvency
requirements. It is common practice in the U.K. to notify the FSA in advance of
any significant dividend payment.

      Reporting Requirements. Insurance companies incorporated in England or
Wales must prepare their financial statements under the Companies Act 1985 (as
amended), which requires the filing with Companies House of audited financial
statements and related reports.

      Equalization Reserves. Each insurance company writing property, aviation,
marine, business interruption or nuclear insurance or reinsurance business is
required to maintain an equalization reserve in respect of business written in
the financial years ending on or after December 23, 1996. Insurance companies
writing credit insurance business must maintain equalization reserves calculated
in accordance with certain provisions related specifically to credit insurance
business.

      Supervision of Management. The FSA closely supervises the management of
insurance companies through the approved persons regime, by which any
appointment of a person to a position of significant influence within an
insurance company must be approved by the FSA. The FSA also has the authority to
require there to be one or more independent directors on the board of directors
of an insurance company.

                                     - 29 -
<PAGE>

      Change of Control. FSMA regulates changes in "control" of any insurance
company authorized under FSMA. Any company or individual that (together with the
associates thereof) directly or indirectly holds 10% or more of the shares in
the parent company of a U.K. authorized insurance company, or is entitled to
exercise or control the exercise of 10% or more of the voting power in such a
parent company, would be considered to be a "controller" for the purposes of the
relevant legislation, as would a person who had significant influence over the
management of such parent company by virtue of his shareholding in it. A
purchaser of more than 10% of the common shares of Platinum Holdings would
therefore be considered to have acquired "control" of Platinum UK.

      Under FSMA, any person proposing to acquire "control" over an authorized
insurance company must give prior notification to the FSA of his intention to do
so. In addition, if an existing controller proposed to increase its control in
excess of certain thresholds set out in FSMA, that person must also notify the
FSA in advance. The FSA then has three months to consider that person's
application to acquire or increase "control". In considering whether to approve
such application, the FSA must be satisfied both that the person is a fit and
proper person to have such "control" and that the interests of consumers would
not be threatened by such acquisition of or increase in "control". Failure to
make the relevant prior application would constitute a criminal offense.

      Intervention and Enforcement. The FSA has extensive powers to intervene in
the affairs of an authorized person. FSMA imposes on the FSA statutory
obligations to monitor compliance with the requirements imposed by FSMA, and to
enforce the provisions of FSMA and its related secondary legislation and take
disciplinary measures.

      The FSA has a general power on giving notice to require information and
documents from authorized persons that the FSA reasonably requires in connection
with the exercise of its functions under the regulatory regime. The FSA also has
distinct statutory powers to appoint investigators under FSMA.

      Proposed Regulatory Developments in the U.K. and at the European Union
Level. The legal and regulatory framework under which financial institutions
(including insurance and reinsurance companies) conduct regulated business in
the U.K. has been subject to significant reform over the past few years and
further reforms are both imminent and contemplated.

      Recent reforms include the production by the FSA of the final form of
those Rules in the Integrated Prudential Sourcebook ("PSB") (the single
prudential regulatory framework for all financial institutions in the U.K.) that
govern the calculation of capital resources requirements for insurers (which
includes pure reinsurers). These Rules came into force on December 31, 2004,
replacing the majority of the provisions in the FSA's Interim Prudential
Sourcebook for insurers.

      These Rules implement the FSA's proposals for the calculation by companies
of a Minimum Capital Requirement ("MCR"), and the obligation on companies to
maintain capital resources equal to this capital requirement. The Rules also
require Platinum UK to calculate an Enhanced Capital Requirement ("ECR"), and to
report this calculation privately to the FSA. The ECR is intended to provide a
risk-responsive, but standardized, method for benchmarking a company's capital
requirements.

      Platinum UK is required to make an individual assessment of its capital
needs, which, together with the result of the ECR calculation, is used as a
starting point in the FSA's discussions with Platinum UK concerning its
individual capital assessment and when the FSA gives individual capital guidance
("ICG"). The FSA has stated that it intends to give authorized companies ICG
reflecting its views as to what level of capital would be adequate for their
particular businesses. The view of the FSA is that a decrease in a company's
capital below the level of its ICG would represent a regulatory intervention
point.

                                     - 30 -
<PAGE>

      The FSA has also announced that it will review by 2006 whether to
implement the ECR as a `hard' test, requiring that companies maintain capital
resources at least equal to their ECR. This aspect of the new regime may mean
that Platinum UK is required to increase the level of capital held, and it will
therefore be necessary for Platinum UK to monitor developments in this area.

      The PSB also contains provisions aimed at ensuring adequate
diversification of an insurer's or reinsurer's exposures to reinsurers (whether
intra- or extra-group). In particular, in each financial year, a company will
need to restrict the gross earned premiums which it pays to a reinsurer or group
of closely related reinsurers to the higher of (a) 20% of the firm's projected
gross earned premiums for that financial year; or (b) (pound)4 million. Where a
company exceeds, or anticipates exceeding, this limit, it will need to notify
the FSA and explain how, despite the excess reinsurance concentration, the
credit risk is being safely managed.

      The PSB requires a company to notify the FSA as soon as it first becomes
aware that a reinsurance exposure to a reinsurer or group of closely related
reinsurers is reasonably likely to exceed or has exceeded 100% of the capital
resources of the reinsurer or group. This notification must demonstrate that
prudent provision has been made for the reinsurance exposure in excess of the
100% limit (or detail why in the opinion of the firm no provision is required)
and explain how the reinsurance exposure is being safely managed.

      Significant current regulatory developments at the European Union level
include the proposed adoption of a Directive creating a single market within the
European Union in reinsurance (the "Reinsurance Directive"). The Reinsurance
Directive is currently in draft form, but is likely to include rules on the
establishment of technical provisions (the amount that a reinsurance undertaking
must set aside in order to enable it to pay its contractual commitments) and on
the investment of assets covering those technical provisions. It is also likely
to contain rules on required solvency margins and minimum capital requirements
as well as rules on measures to be adopted by regulators if reinsurance
undertakings are in financial difficulty. Although the Reinsurance Directive is
currently in draft form, it may, once implemented, affect the level of capital
that Platinum UK is required to hold, and it will therefore be necessary for
Platinum UK to monitor developments in this area.

      In the longer term, the European Union is running the "Solvency II"
project, which, on the basis of a review of all aspects of the insurance
industry, is intended to establish a solvency system that is better matched to
the risks incurred by insurance undertakings than the framework imposed under
current European legislation. It contains a fundamental and wide-ranging review
of the current solvency regime for European insurers in light of current
developments in insurance, risk management, finance techniques and financial
reporting. However, the Solvency II project is not expected to be implemented
for several years, and it is not currently possible to point to legislative
developments with any certainty. It will therefore also be necessary for
Platinum UK to monitor developments in this area.

   IRELAND REGULATION

      Platinum Ireland is organized and domiciled in Ireland. As a holding
company, Platinum Ireland is not subject to Irish insurance regulation. Irish
law prohibits Platinum Ireland from declaring a dividend to its shareholders
unless it has "profits available for distribution." The determination of whether
a company has profits available for distribution is based on its accumulated
realized profits less its accumulated realized losses.

                                     - 31 -
<PAGE>

AVAILABLE INFORMATION

      Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and any amendments to those reports, are available free of
charge on our Internet website at www.platinumre.com as soon as reasonably
practicable after such reports are electronically filed with the SEC. We also
post on our website the charters of our Audit, Compensation, Governance and
Executive Committees, our Corporate Governance Guidelines, our Code of Business
Conduct and Ethics and Compliance Procedures, and any amendments or waivers
thereto, and any other corporate governance materials required to be posted by
SEC or New York Stock Exchange ("NYSE") regulations. These documents are also
available in print to any shareholder requesting a copy from our corporate
secretary at our principal executive offices. Information contained on Platinum
Holdings' website is not part of this report.

      On May 7, 2004, our Chief Executive Officer submitted to the NYSE his
Section 303A.12(a) Annual CEO Certification in which he stated that he is not
aware of any violations by the Company of the NYSE's Corporate Governance
listing standards.

ITEM 2. PROPERTIES

      Platinum Holdings' principal executive offices are located in
approximately 3,837 square feet of office space subleased from Platinum Bermuda
at The Belvedere Building, 69 Pitts Bay Road, Pembroke, Bermuda. Platinum
Bermuda leases a total of 7,674 square feet of office space, using approximately
3,837 square feet for its principal offices. The term of this lease ends on
December 31, 2006.

      The principal offices of Platinum US are located at Two World Financial
Center, New York, New York, where Platinum US leases approximately 49,600 square
feet of office space. The term of this lease ends on September 29, 2013.
Platinum US has also entered into assignments of leases with St. Paul with
respect to approximately 4,000 square feet of office space in Chicago, 6,300
square feet of office space in Miami and 540 square feet of office space in
Tokyo. The terms of these leases will end in 2005, 2006 and 2006, respectively.

      The principal offices of Platinum UK are located at Fitzwilliam House, 10
St. Mary Axe, London, where Platinum UK leases approximately 7,265 square feet
of office space. The term of this lease ends on February 15, 2006.

ITEM 3. LEGAL PROCEEDINGS

      In November and December 2004, we received subpoenas from the SEC and the
Office of the Attorney General for the State of New York for documents and
information relating to certain non-traditional, or loss mitigation, insurance
products. We are fully cooperating in responding to all such requests. Other
reinsurance companies have reported receiving similar subpoenas and requests.
This investigation appears to be at a very preliminary stage and, accordingly,
we are unable to predict the direction the investigation will take and the
impact, if any, it may have on our business.

      In the normal course of business, the Company may become involved in
various claims and legal proceedings. We are not currently aware of any pending
or threatened material litigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of Platinum Holdings shareholders
during the fourth quarter of 2004.

                                     - 32 -
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

      Our common shares are listed on the NYSE under the symbol "PTP." The
following table shows the high and low per share sale prices of our common
shares, as reported on the NYSE for the periods indicated:

<TABLE>
<CAPTION>
                     Price Range of Common Shares
                     ----------------------------
    Period                 High       Low
----------------          ------     ------
<S>                  <C>             <C>
2003:
  First Quarter           $26.45     $21.29
  Second Quarter           28.70      24.00
  Third Quarter            28.55      25.66
  Fourth Quarter           32.05      26.80

2004:
  First Quarter            34.20      29.00
  Second Quarter           34.00      30.00
  Third Quarter            31.13      27.49
  Fourth Quarter          $31.13     $27.30
</TABLE>

      On February 15, 2005, the last reported sale price for our common shares
on the NYSE was $30.46 per share.

      At February 15, 2005, there were approximately 29 holders of record and
approximately 2,800 beneficial holders of our common shares.

      During the years ended December 31, 2004 and 2003, we paid quarterly
dividends of $0.08 per common share. The Board has declared a dividend for the
first quarter of 2005 of $0.08 per common share, payable on March 31, 2005 to
shareholders of record at the close of business on March 1, 2005. The
declaration and payment of dividends is at the discretion of the Board of
Directors and depend upon our results of operations and cash flows, the
financial positions and capital requirements of Platinum US, Platinum UK and
Platinum Bermuda, general business conditions, legal, tax and regulatory
restrictions on the payment of dividends and other factors the Board of
Directors deems relevant; however, the declaration and payment of dividends will
be prohibited if certain contract adjustment payments in respect of the
Company's equity security units are deferred. Additionally, under the Bermuda
Companies Act 1981, Platinum Holdings may declare or pay a dividend only if,
among other things, it has reasonable grounds for believing that it is, or after
the payment would be, able to pay its liabilities as they become due.
Accordingly, there is no assurance that dividends will be declared or paid in
the future. Currently, there is no Bermuda withholding tax on dividends paid by
Platinum Holdings.

      Platinum US is subject to regulatory constraints imposed by Maryland
insurance law, Platinum UK is subject to regulatory constraints imposed by U.K.
insurance law, Platinum Ireland is subject to constraints imposed by Irish law,
and Platinum Bermuda is subject to regulatory constraints imposed by Bermuda
insurance law, which constraints affect the ability of each to pay dividends to
Platinum Holdings. See "Business - Regulation."

      We have agreed to adjust the exercise price of the options granted to St.
Paul and RenaissanceRe as part of the St. Paul Investment and RenaissanceRe
Investment, respectively, to the extent dividend

                                     - 33 -
<PAGE>

increases exceed 10% per year; however, we do not expect that dividend
increases, if any, will exceed such rate.

      We did not issue any common shares that were not registered under the
Securities Act of 1933 during the quarter ended December 31, 2004.

      On August 4, 2004, the board of directors of the Company approved a plan
to purchase up to $50,000,000 of its common shares. During the year ended
December 31, 2004 the Company purchased 349,700 of its common shares in the open
market at an aggregate amount of $9,985,000 at a weighted average price of
$28.55 per share. The shares purchased by the Company were canceled. No
repurchases of the Company's common shares were made during the quarter ended
December 31, 2004.

ITEM 6. SELECTED FINANCIAL DATA

      The following table sets forth certain selected financial data of the
Company as of and for the years ended December 31, 2004 and 2003 and as of and
for the period ended December 31, 2002, and of St. Paul Re for the period from
January 1, 2002 through November 1, 2002 and for the years ended December 31,
2001 and 2000. The data for the Company as of and for the years ended December
31, 2004 and 2003 and as of and for the period ended December 31, 2002 were
derived from the Company's consolidated financial statements beginning on page
F-1 of this Form 10-K. The data for St. Paul Re for the period ended November 1,
2002 were derived from the audited combined financial statements of St. Paul Re
prior to the Initial Public Offering (the Predecessor Business) beginning on
page P-1 of this Form 10-K. The data for the years ended December 31, 2001 and
2000 were derived from the selected historical combined financial statements of
St. Paul Re not included in this Form 10-K. You should read the selected
financial data in conjunction with the Company's consolidated financial
statements as of and for the years ended December 31, 2004 and 2003 and the
period ended December 31, 2002 beginning on page F-1 of this Form 10-K, and the
related "Management's Discussion and Analysis of Financial Condition and Results
of Operations" beginning on page 35 of this Form 10-K. You should also read the
selected financial data in conjunction with the Predecessor financial
information beginning on page P-1 of this Form 10-K.

      THE UNDERWRITING RESULTS AND THE AUDITED HISTORICAL COMBINED FINANCIAL
STATEMENTS OF ST. PAUL RE PRIOR TO THE INITIAL PUBLIC OFFERING (THE PREDECESSOR
BUSINESS) ARE NOT INDICATIVE OF THE ACTUAL RESULTS OF THE COMPANY SUBSEQUENT TO
THE INITIAL PUBLIC OFFERING.

                                     - 34 -
<PAGE>

                  FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
                    ($ in millions, except per share amounts)

<TABLE>
<CAPTION>
                                            Platinum Underwriters Holdings, Ltd.           St. Paul Re (Predecessor)
                                          ----------------------------------------     --------------------------------
                                                                     As of and for
                                                                      the period       Period from
                                                                         from           January 1,
                                                                      November 1,          2002         Years ended
                                           Years ended December 31,   2002 through        through       December 31,
                                          ------------------------    December 31,        November    -----------------
                                             2004          2003          2002             1, 2002      2001      2000
                                          ----------    ----------   -------------     -----------    -----    --------
<S>                                       <C>           <C>          <C>               <C>            <C>      <C>
Statement of Income Data:

Net premiums written ..................   $  1,646.0       1,172.1   $       298.1     $     1,007    1,677    $  1,073
Net premiums earned ...................      1,447.9       1,067.5           107.1           1,102    1,593       1,121
Net investment income .................         84.5          57.6             5.2
Losses and LAE ........................      1,019.8         584.2            60.4             791    1,922         811
Underwriting expenses .................   $    381.0         320.7   $        37.6             319      397         424
Underwriting gain (loss) ..............                                                $        (8)    (726)   $   (114)

Net income ............................         84.8         144.8             6.4
Basic earnings per share ..............         1.96          3.37            0.15
Diluted earnings per share ............         1.81          3.09            0.15
Dividends declared per share ..........   $     0.32          0.32   $           -

Balance Sheet Data:

Total investments and cash ............   $  2,456.9       1,790.5   $     1,346.7
Premiums receivable ...................        580.0         487.4             5.6
Total assets ..........................      3,422.0       2,485.6         1,644.9
Net unpaid losses and LAE .............      1,379.2         731.9           281.7
Net unearned premiums .................        499.5         299.9           191.0
Debt obligations ......................        137.5         137.5           137.5
Shareholders' equity ..................      1,133.0       1,067.2           921.2

Book value per share ..................   $    26.30         24.79   $       21.42
</TABLE>

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

            The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and the related notes
included on pages F-1 through F-40 of this Form 10-K. The Company's consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP").

OVERVIEW

            Platinum Underwriters Holdings, Ltd. ("Platinum Holdings") is a
Bermuda holding company organized in 2002. Platinum Holdings and its
subsidiaries (the "Company") operate through three licensed reinsurance
subsidiaries: Platinum Underwriters Reinsurance, Inc. ("Platinum US"), Platinum
Re (UK) Limited ("Platinum UK") and Platinum Underwriters Bermuda, Ltd.
("Platinum Bermuda"). The Company provides property and marine, casualty and
finite risk reinsurance coverages, through reinsurance intermediaries, to a
diverse clientele of insurers and select reinsurers on a worldwide basis.

            In November 2002, Platinum Holdings completed the Initial Public
Offering. Concurrent with the Initial Public Offering, Platinum Holdings sold
6,000,000 common shares to The St. Paul Travelers

                                     - 35 -
<PAGE>

Companies, Inc., formerly The St. Paul Companies, Inc., ("St. Paul"), and
3,960,000 common shares to RenaissanceRe Holdings Ltd. ("RenaissanceRe") in
private placements. As part of the Public Offering, St. Paul and RenaissanceRe
received options to purchase up to 6,000,000 and 2,500,000 of additional common
shares, respectively, at any time during the ten years following the Initial
Public Offering at a price of $27.00 per share. St. Paul subsequently sold its
6,000,000 common shares in June 2004. Also, concurrent with the transactions in
November 2002, the Company and St. Paul entered into several agreements for the
transfer of continuing reinsurance business and certain related assets of St.
Paul. Among these agreements were quota share retrocession agreements effective
November 2, 2002 under which the Company assumed from St. Paul unpaid losses and
loss adjustment expenses ("LAE"), unearned premiums and certain other
liabilities on reinsurance contracts becoming effective in 2002 (the "Quota
Share Retrocession Agreements"). In addition to these transactions, the Company
issued Equity Security Units ("ESU's"), consisting of a contract to purchase
common shares in 2005 and an ownership interest in a senior note due 2007.

CRITICAL ACCOUNTING POLICIES

            It is important to understand the Company's accounting policies in
order to understand its financial position and results of operations. Management
considers certain of these policies to be critical to the presentation of the
financial results since they require management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets, liabilities, revenues, expenses, and related disclosures at the
financial reporting date and throughout the relevant periods. Certain of the
estimates and assumptions result from judgments that can be subjective and
complex, and consequently actual results may differ from these estimates. The
Company's most critical accounting policies involve written and unearned
premium, unpaid losses and LAE, reinsurance, investments, income taxes and
stock-based compensation.

      PREMIUMS

            Assumed reinsurance premiums are recognized as revenues when
premiums become earned proportionately over the coverage period. Net premiums
earned are recorded in the statement of income, net of the cost of retrocession.
Net premiums written not yet recognized as revenue are recorded on the balance
sheet as unearned premiums, gross of any ceded unearned premiums.

            Due to the nature of reinsurance, ceding companies routinely report
and remit premiums subsequent to the contract coverage period. Consequently,
reinsurance premiums written include amounts reported by the ceding companies,
supplemented by estimates of premiums that are written but not reported
("WBNR"). In addition to estimating WBNR, the Company estimates the portion of
premiums earned but not reported ("EBNR"). The Company also estimates the
expenses associated with these premiums in the form of losses, LAE and
commissions. The time lag involved in the process of reporting premiums is
shorter than the lag in reporting losses. Premiums are generally reported within
two years. The net impact on the results of operations of changes in estimated
premiums is reduced by the losses and acquisition expenses related to such
premiums. When estimating premiums written and earned, each of the Company's
reinsurance subsidiaries segregates business into classes by type of coverage
and type of contract (approximately 80 classes). Within each class, business is
further segregated by the year in which the contract incepted (the "underwriting
year"), starting with 2002. Estimates of WBNR and EBNR are made for each class
and underwriting year. Premiums are estimated based on ceding company estimates
and the Company's own judgment after considering factors such as the ceding
company's historical premium versus projected premium, the ceding company's
history of providing accurate estimates, anticipated changes in the marketplace
and the ceding company's competitive position therein, reported premiums to date
and the anticipated impact of proposed underwriting changes. The appropriateness
of the premium estimates is evaluated in light of the actual

                                     - 36 -
<PAGE>

premium reported by the ceding companies and any adjustments to these estimates
are accounted for as changes in estimates and are reflected in results of
operations in the period in which they are made. The initial estimates of
premiums derived by the Company's underwriting function in respect of 2004
year-end were reviewed based upon the foregoing considerations. The cumulative
impact of this review was to reduce the estimate by approximately $56 million or
10% of reinsurance premiums receivable at December 31, 2004. At December 31,
2004, the Company recorded reinsurance premiums receivable of $580,048,000. As
an illustration, the Company had one contract that, at December 31, 2004,
represented approximately $88 million of its total reinsurance premiums
receivable. With respect to that contract, the Company reduced reinsurance
premiums receivable by approximately $20 million because it did not expect the
ceding company to meet its production estimates or to achieve its estimated rate
increases. The Company believes that it reasonably could have made an adjustment
of between $0 and $20 million with respect to that contract at December 31,
2004. Had it made a $0 adjustment, the reinsurance premiums receivable for that
contract at December 31, 2004 would have been $108 million. It made the $20
million adjustment, resulting in reinsurance premiums receivable for that
contract of $88 million. While an adjustment of greater than $20 million is
possible with respect to that contract, the Company does not consider such
circumstance to be reasonably likely. Reinsurance premiums receivable under a
particular contract can vary significantly from estimates derived from the
Company's underwriting function depending upon its assessment of the production
and rate changes likely to be achieved by the ceding company. Due to the time
lag inherent in the reporting of premiums by ceding companies, a significant
portion of amounts included as premiums written and premiums earned represents
estimated premiums and are not currently due based on the terms of the
underlying contracts. Earned premiums, including EBNR, are a measure of exposure
to losses, LAE and acquisition expenses. Consequently, when previous estimates
of premiums earned are increased or decreased, the related provisions for losses
and LAE and acquisition costs previously recorded are also increased or
decreased.

            Certain of the Company's reinsurance contracts include provisions
that adjust premiums or acquisition expenses based upon the loss experience
under the contracts. Reinstatement premiums and additional premiums are
recognized in accordance with the provisions of assumed reinsurance contracts,
based on loss experience under such contracts. Reinstatement premiums are the
premiums charged for the restoration of the reinsurance limit of a reinsurance
contract to its full amount, generally coinciding with the payment by the
reinsurer of losses. These premiums relate to the future coverage obtained for
the remainder of the initial policy term and are earned over the remaining
policy term. Additional premiums are those premiums triggered by losses and not
related to reinstatement of limits and are earned immediately. An allowance for
uncollectible premiums is established for possible non-payment of such amounts
due, as deemed necessary. At year-end 2004, no such allowance was made based on
the Company's historical experience, the general profile of its ceding companies
and its ability in most cases to contractually affect those premium receivables
with losses and loss adjustment expense or other amounts payable to the same
parties.

      UNPAID LOSSES AND LAE

            The most significant judgment made by management in the preparation
of financial statements is the estimation of unpaid losses and LAE, also
referred to as "loss reserves." These liabilities are balance sheet estimates of
future amounts required to pay losses and LAE for reinsured claims which have
occurred at or before the balance sheet date. Every quarter, the Company's
actuaries prepare estimates of the loss reserves based on established actuarial
techniques. Because the ultimate amount of unpaid losses and LAE is uncertain,
we believe that quantitative techniques to estimate these amounts are enhanced
by professional and managerial judgment. Company management reviews these
estimates and determines its best estimate of the liabilities to record in the
Company's financial statements.

                                     - 37 -
<PAGE>

            Unpaid losses and LAE include estimates of the cost of claims that
were reported but not yet paid ("case reserves") and the cost of claims that
were incurred but not reported ("IBNR"). Case reserves are usually based upon
claim reports received from ceding companies. The information the Company
receives varies by ceding company and may include paid losses, estimated case
reserves, and an estimated provision for IBNR reserves. Case reserves may be
increased or reduced by the Company's claims personnel based on receipt of
additional information, including information received from ceding companies.
IBNR is based on actuarial methods including the loss ratio method, the
Bornhuetter-Ferguson method and the chain ladder method. IBNR related to a
specific event may be based on the Company's estimated exposure to an industry
loss and may include the use of catastrophe modeling software.

            When estimating unpaid losses and LAE, each of the Company's
reinsurance subsidiaries segregates business into classes by type of coverage
and type of contract (approximately 80 classes). Within each class the business
is further segregated by the year in which the contract incepted ("underwriting
year"), starting with 2002.

            The gross liabilities recorded on the Company's balance sheet as of
December 31, 2004 for unpaid losses and LAE were $1,380,955,000. The following
table sets forth a breakdown between case reserves and IBNR by segment at
December 31, 2004 ($ in thousands):

<TABLE>
<CAPTION>
                                                                Property
                                                               and Marine    Casualty   Finite Risk       Total
                                                               -----------   --------   -----------   ------------
<S>                                                            <C>           <C>        <C>           <C>
Case reserves ............................................     $     9,221     87,993     132,240     $    229,454
IBNR .....................................................         223,740    647,926     279,835        1,151,501
                                                               -----------    -------     -------     ------------
     Total unpaid losses and LAE..........................     $   232,961    735,919     412,075     $  1,380,955
                                                               -----------    -------     -------     ------------
</TABLE>

            Generally, initial actuarial estimates of IBNR not related to a
specific event are based on the loss ratio method applied to each underwriting
year for each class of business. Actual paid losses and case reserves ("reported
losses") are subtracted from expected ultimate losses to determine IBNR. The
initial expected ultimate losses involve management judgment and are based on:
(i) contract by contract expected loss ratios derived from the Company's pricing
process, and (ii) historical loss ratios of the Company and St. Paul Re adjusted
for rate changes and trends. These judgments will take into account management's
view of past, current and future: (i) market conditions, (ii) changes in the
business underwritten, (iii) changes in timing of the emergence of claims and
(iv) other factors that may influence expected ultimate losses.

            Over time, as a greater number of claims are reported, actuarial
estimates of IBNR are based on the Bornhuetter-Ferguson and the chain ladder
techniques. The Bornhuetter-Ferguson technique utilizes actual reported losses
and expected patterns of reported losses, taking the initial expected ultimate
losses into account to determine an estimate of expected ultimate losses. This
technique is most appropriate when there are few reported claims and a
relatively less stable pattern of reported losses. The chain ladder technique
utilizes actual reported losses and expected patterns of reported losses to
determine an estimate of expected ultimate losses that is independent of the
initial expected ultimate losses. This technique is most appropriate when there
are a large number of reported losses with significant statistical credibility
and a relatively stable pattern of reported losses. Multiple point estimates
using a variety of actuarial techniques are calculated for many, but not all, of
the Company's 80 classes of coverage for each underwriting year. The Company
does not believe that these multiple point estimates are or should be considered
a range. The Company's actuaries look at each class and determine the most
appropriate point estimate based on the characteristics of the particular class
and other relevant factors such as historical ultimate loss ratios, the presence
of individual large losses, and known occurrences that have

                                     - 38 -
<PAGE>

not yet resulted in reported losses. For some classes of business the Company's
actuaries believe that a review of individual contract information improves the
loss reserve estimate. For example, individual contract review is particularly
important for the Finite Risk segment and the Accident and Health class within
the Casualty segment. Once the actuaries make their determinations of the most
appropriate point estimate for each class, this information is aggregated and
presented to executive management for review and approval. At December 31, 2004
the liability for unpaid losses and LAE that the Company recorded reflected the
point estimates of IBNR prepared by the Company's actuaries.

            Generally, North American casualty excess business has the longest
pattern of reported losses and therefore the greatest uncertainty. IBNR for
these classes at December 31, 2004 was $447 million which was 39% of the total
IBNR for the Company at that date. Because North American casualty excess
business has the greatest uncertainty, the Company would not consider a variance
of five percentage points from the initial expected loss ratio to be unusual. As
an example, a change in the initial expected loss ratio from 65% to 70% would
result in an increase of the IBNR for these classes by $37 million. This equates
to approximately 7% of the liability for total unpaid losses and LAE for these
classes at December 31, 2004. As another example, if the estimated pattern of
reported losses was accelerated by 5% the IBNR for these classes would decrease
by $2 million which is less than 1%. Because the Company believes the two most
important inputs to the reserve estimation methodologies described above are the
initial expected loss ratio and the estimated pattern of reported losses, the
Company has selected these two inputs as the basis for the sensitivity analyses
in this paragraph.

            The pattern of reported losses is determined utilizing actuarial
analysis, including management's judgment, and is based on historical patterns
of the recording of paid losses and case reserves to the Company, as well as
industry patterns. Information that may cause historical patterns to differ from
future patterns is considered and reflected in expected patterns as appropriate.
For property and health coverages these patterns indicate that a substantial
portion of the ultimate losses are reported within 2 to 3 years after the
contract is effective. Casualty patterns can vary from 3 years to over 20 years
depending on the type of business.

            While the Company commenced operations in 2002, the business written
is sufficiently similar to the historical business of St. Paul Re that the
Company uses the historical loss experience of this business to estimate its
initial expected ultimate losses and its expected patterns of reported losses.
These patterns can span more than a decade and, given its own limited history,
the availability of the St. Paul Re data is a valuable asset to the Company.

            The Company does not establish liabilities until the occurrence of
an event that may give rise to a loss. When an event of sufficient magnitude
occurs, the Company may establish a specific IBNR reserve. Generally, this
involves a catastrophe occurrence that affects many ceding companies. Ultimate
losses and LAE are based on management's judgment that reflects estimates
gathered from ceding companies, estimates of insurance industry losses gathered
from public sources and estimates from catastrophe modeling software.

            Estimated amounts recoverable from retrocessionaires on unpaid
losses and LAE are determined based on the Company's estimate of ultimate losses
and LAE and the terms and conditions of its retrocessional contracts. These
amounts are reflected as assets.

            Unpaid losses and LAE represent management's best estimates, at a
given point in time, of the ultimate settlement and administration costs of
claims incurred, and it is possible that the ultimate liability may materially
differ from such estimates. Such estimates are not precise due to the fact that,
among other things, they are based on predictions of future developments and
estimates of future trends in claim severity and frequency and other factors.
Because of the degree of reliance that the Company necessarily

                                     - 39 -
<PAGE>

places on ceding companies for claims reporting, the associated time lag, the
low frequency/high severity nature of some of the business that the Company
underwrites and the varying reserving practices among ceding companies, the
Company's reserve estimates are highly dependent on management judgment and are
therefore uncertain.

            In property classes, there can be additional uncertainty in loss
estimation related to large catastrophe events. With wind events, such as
hurricanes, the damage assessment process may take more than a year. The cost of
rebuilding is subject to increase due to supply shortages for construction
materials and labor. In the case of earthquakes, the damage assessment process
may take several years as buildings are discovered to have structural weaknesses
not initially detected. The uncertainty inherent in loss estimation is
particularly pronounced for casualty coverages, such as umbrella liability,
general and product liability, professional liability, directors and officers
liability and automobile liability, where information, such as required medical
treatment and costs for bodily injury claims, only emerges over time. In the
overall loss reserving process, provisions for economic inflation and changes in
the social and legal environment are considered.

            Loss reserve calculations for direct insurance business are not
precise in that they deal with the inherent uncertainty of future developments.
Primary insurers must estimate their own losses, often based on incomplete and
changing information. Reserving for reinsurance business introduces further
uncertainties compared with reserving for direct insurance business. The
uncertainty in the reserving process for reinsurers is due, in part, to the time
lags inherent in reporting from the original claimant to the primary insurer to
the reinsurer. As predominantly a broker market reinsurer for both
excess-of-loss and proportional contracts, the Company is subject to a potential
additional time lag in the receipt of information as the primary insurer reports
to the broker who in turn reports to the Company.

            Since the Company relies on information regarding paid losses, case
reserves, and IBNR reserves provided by ceding companies in order to assist the
Company in estimating its own liability for unpaid losses and LAE, the Company
maintains certain procedures in order to help determine the completeness and
accuracy of such information. Periodically, management assesses the reporting
activities of these companies on the basis of qualitative and quantitative
criteria. In addition to managing reported claims and conferring with ceding
companies on claims matters, the Company's claims personnel conduct periodic
audits of specific claims and the overall claims procedures of its ceding
companies at their offices. The Company relies on its ability to effectively
monitor the claims handling and claims reserving practices of ceding companies
in order to establish the proper reinsurance premium for reinsurance agreements
and to establish proper loss reserves. Disputes with ceding companies have been
rare and generally have been resolved through negotiation.

            Estimates of unpaid losses and LAE are periodically re-estimated and
adjusted as new information becomes available. Any such adjustments are
accounted for as changes in estimates and are reflected in results of operations
in the period in which they are made.

            As of December 31, 2004, the Company did not have any significant
back-log related to its processing of assumed reinsurance information.

      REINSURANCE

            Premiums written, premiums earned and losses and LAE reflect the net
effects of assumed and ceded reinsurance transactions. Reinsurance accounting is
followed for assumed and ceded transactions when risk transfer requirements have
been met. Evaluating risk transfer involves significant assumptions relating to
the amount and timing of expected cash flows, as well as the interpretation of
underlying contract terms. Reinsurance contracts that do not transfer
significant insurance risk are generally

                                     - 40 -
<PAGE>

accounted for as reinsurance deposit liabilities with interest expense charged
to other income and credited to the liability.

      INVESTMENTS

            In accordance with our investment guidelines, our investments
consist largely of high-grade marketable fixed income securities. Fixed
maturities owned that the Company may not have the positive intent to hold until
maturity are classified as available-for-sale and reported at fair value, with
unrealized gains and losses excluded from net income and reported in other
comprehensive income as a separate component of shareholders' equity, net of
deferred taxes. Fixed maturities owned that the Company has the intent to sell
prior to maturity are classified as trading securities and reported at fair
value, with unrealized gains and losses included in other income. Securities
classified as trading securities are generally denominated in foreign currencies
and intended to match foreign net liabilities denominated in foreign currencies
in order to minimize net exposures arising from fluctuations in foreign currency
exchange rates. Realized gains and losses on sales of investments are determined
on a specific identification basis. Investment income is recorded when earned
and includes the amortization of premiums and discounts on investments.

            The Company believes it has the ability to hold any specific
security to maturity. This is based on current and anticipated future positive
cash flow from operations that generates sufficient liquidity in order to meet
our obligations. However, in the course of managing investment credit risk,
asset liability duration or other aspects of the investment portfolio, the
Company may decide to sell any specific security. The Company routinely reviews
its available-for-sale investments to determine whether unrealized losses
represent temporary changes in fair value or are the result of "other than
temporary impairments." The process of determining whether a security is other
than temporarily impaired is subjective and involves analyzing many factors.
These factors include, but are not limited to, the length and magnitude of an
unrealized loss, specific credit events, the overall financial condition of the
issuer, and the Company's intent to hold a security for a sufficient period of
time for the value to recover the unrealized loss. If the Company has determined
that an unrealized loss on a security is other than temporary, the Company
writes down the carrying value of the security to its current fair value and
records a realized loss in the statement of income. During 2004 and as of
December 31, 2004, the Company's investment portfolio does not contain any
securities that were determined to have other than temporary impairments.

      INCOME TAXES

            Platinum Holdings and Platinum Bermuda are domiciled in Bermuda.
Under current Bermuda law, they are not taxed on any Bermuda income or capital
gains and they have received an assurance from the Bermuda Minister of Finance
that if any legislation is enacted in Bermuda that would impose tax computed on
profits or income, or computed on any capital asset, gain or appreciation, or
any tax in the nature of estate duty or inheritance tax, then the imposition of
any such tax will not be applicable to Platinum Holdings or Platinum Bermuda or
any of their respective operations, shares, debentures or other obligations
until March 28, 2016. The Company also has subsidiaries in the United States,
United Kingdom and Ireland that are subject to the tax laws thereof.

            The Company applies the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates applicable to taxable income in
the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax

                                     - 41 -
<PAGE>

rates is recognized in income in the period the change is enacted. A valuation
allowance is established for deferred tax assets where it is more likely than
not that future tax benefits will not be realized.

      STOCK-BASED COMPENSATION

            During 2003, the Company adopted Statement of Financial Accounting
Standards No. 123 "Accounting for Awards of Stock Based Compensation to
Employees" ("SFAS 123") and Statement of Financial Accounting Standards No. 148
"Accounting for Stock-Based Compensation-Transition and Disclosure" ("SFAS
148"). SFAS 123 requires that the fair value of shares granted under the
Company's share option plan subsequent to adoption of SFAS 148 be amortized in
earnings over the vesting periods. The fair value of the share options granted
is determined through the use of an option-pricing model. SFAS 148 amends SFAS
123 and provides transitioning guidance for a voluntary adoption of FAS 123 as
well as amends the disclosure requirements of SFAS 123. For the period from
November 1, 2002 through December 31, 2002, the Company used the intrinsic value
method of accounting for stock-based awards granted to employees established by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"). Under APB 25, if the exercise price of the Company's
employee share options is equal to or greater than the fair market value of the
underlying shares on the date of the grant, no compensation expense is recorded.
For share options granted in 2002, the Company continues to use APB25.

            In December 2004, the Financial Accounting Standards Board issued
the Statement of Financial Accounting Standards No. 123R "Share Based Payment"
("SFAS 123R"). SFAS 123R requires that, prospectively, compensation costs be
recognized for the fair value of all share options, including the costs related
to the unvested portion of all outstanding share options as of December 31,
2004. The share based compensation expense for share options currently
outstanding are to be based on the same cost model used to calculate the pro
forma disclosures under SFAS 123. Consequently, the pro forma share based
compensation expense and pro forma income as disclosed in the consolidated
financial statements are the same as if the Company had adopted SFAS 123R in
2004.

REINSURANCE INDUSTRY CONDITIONS AND TRENDS

            The reinsurance industry historically has been cyclical,
characterized by periods of price competition due to excessive underwriting
capacity as well as periods of favorable pricing due to shortages of
underwriting capacity. Cyclical trends in the industry and the industry's
profitability can also be affected significantly by volatile developments,
including natural and other disasters, such as hurricanes, windstorms,
earthquakes, floods, fires, explosions and other catastrophic events, including
terrorist attacks, the frequency and severity of which are inherently difficult
to predict. Property and casualty reinsurance rates often rise in the aftermath
of significant catastrophe losses. To the extent that actual claim liabilities
are higher than anticipated, the industry's capacity to write new business
diminishes. The industry is also affected by changes in the propensity of courts
to expand insurance coverage and grant large liability awards, as well as
fluctuations in interest rates, inflation and other changes in the economic
environment that affect market prices of investments.

            As a result of favorable loss development and strong investment
returns beginning in the mid-1990's, the reinsurance industry entered a cycle of
increased competition and industry capacity that pushed property and casualty
premium rates down. In 1999, there were several significant worldwide
catastrophic events that resulted in industry insured losses of approximately
$31 billion. These losses, and the subsequent contraction of reinsurance
capacity in the market, resulted in improvements in rates, terms and conditions
beginning with January 2000 renewals. These improvements continued in 2001 as
capacity continued to contract due to a number of catastrophe events,
particularly the terrorist attack of September 11, 2001. With insured losses
currently estimated to be in excess of $30 billion, the terrorist

                                     - 42 -
<PAGE>

attack resulted in the largest insured loss ever experienced by the industry. By
comparison, the largest industry insured catastrophic event prior to the attack
was Hurricane Andrew in 1992 with $16 billion in estimated losses. Shortly after
the property catastrophe events of 1999 and 2001, many reinsurance companies
began to recognize poor results in their casualty business stemming from
business underwritten from 1997 to 2000. The result was substantial loss reserve
charges summing to tens of billions of dollars and a further decrease in
industry capacity. In addition, the capital of a number of large companies was
further reduced by poor investment results. In late 2001 and through 2002
several new companies were started. Some existing companies raised new capital
and others exited the business. The new capital invested in the industry was
substantially less than the capital reductions caused by losses, exiting
companies and poor investment results. As a result, rate increases in 2002 were
significantly higher than 2001. Rates on most lines of business still increased
in 2003 though at a lower rate of increase than in 2002. Recent competition has
led to lower rate increases and/or rate reductions in certain property and
casualty classes in 2004. Despite the Florida and Caribbean catastrophe claims
in the third quarter of 2004, property rate reductions still occurred.
Nonetheless, we believe rates should provide adequate returns.

RESULTS OF OPERATIONS

            Platinum Holdings was incorporated on April 19, 2002 under the laws
of Bermuda to hold subsidiaries that provide property and casualty reinsurance
to insurers and reinsurers on a worldwide basis and, in November 2002, completed
the Initial Public Offering and assumed certain rights and obligations of the
reinsurance business from St. Paul. Consequently, the 2002 consolidated
statements of income and comprehensive income, shareholders' equity and cash
flows include all activity from incorporation on April 19, 2002 through December
31, 2002. The underwriting operations, as well as substantially all other
operations of the Company commenced in November 2002. Generally, the 2002
results of operations reflect the period from November 1, 2002 through December
31, 2002 (the "2002 Period") and are not comparable to the results of operations
for the years ended December 31, 2004 and 2003.

            Year Ended December 31, 2004 as Compared with the Year Ended
December 31, 2003

            Net income for the years ended December 31, 2004 and 2003 was as
follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                   2004        2003       Decrease
                                                               -----------   --------   ------------
<S>                                                            <C>           <C>        <C>
Net income .................................................   $    84,783    144,823   $   (60,040)
</TABLE>

            The decrease in net income in 2004 as compared with 2003 is
attributable to a decline in underwriting income of $115,429,000. The decline in
underwriting income was due primarily to the combination of four significant
named hurricanes, Charley, Frances, Ivan and Jeanne (the "Hurricanes"), causing
severe damage in the Caribbean and the southeast United States in August and
September of 2004, partially offset by growth of profitable business in all
segments and favorable loss development. Net income in 2004 as compared with
2003 was also favorably impacted by an increase in investment income of
$26,887,000 and reductions in corporate expenses of $9,871,000 and income tax
expense of $18,526,000.

            The aggregate adverse impact on net income of the Company in 2004
from the Hurricanes is summarized as follows ($ in thousands):

                                     - 43 -
<PAGE>

<TABLE>
<S>                                                                            <C>
Losses ......................................................................  $  230,475
Less:
   Additional premiums earned ...............................................     (29,265)
   Profit commissions .......................................................     (10,243)
                                                                               ----------
          Net adverse impact before income tax benefit ......................     190,967
Income tax benefit ..........................................................     (14,537)
                                                                               ----------
          Net adverse impact after income tax benefit .......................  $  176,430
                                                                               ----------
</TABLE>

            The impact of the Hurricanes was consistent with our expectations
for storms of this magnitude and location.

            Net premiums written and net premiums earned for the years ended
December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                   2004         2003       Increase
                                                               ------------   ---------   ----------
<S>                                                            <C>            <C>         <C>
Net premiums written .......................................   $  1,646,013   1,172,142   $  473,871
Net premiums earned ........................................   $  1,447,935   1,067,527   $  380,408
</TABLE>

            The increase in net premiums written and earned in 2004 as compared
with 2003 is attributable to growth in all segments, and includes approximately
$29,265,000 of additional premiums related to losses arising from the
Hurricanes. The increase in net premiums earned is related to the growth in
current and prior periods' net premiums written and is affected by changes in
the mix of business and the structure of the underlying reinsurance contracts.

            Net investment income for the years ended December 31, 2004 and 2003
was $84,532,000 and $57,645,000, respectively. Net investment income increased
during 2004 primarily due to increased invested assets attributable to positive
cash flow from operations, excluding trading securities activities, which was
$698,223,000 and $469,168,000 in 2004 and 2003, respectively. Fixed maturities
were $2,240,202,000 and $1,678,138,000 at December 31, 2004 and 2003,
respectively. The book basis yields on fixed maturities were 4.3% and 4.1% at
December 31, 2004 and 2003, respectively. Net investment income included
$2,651,000 and $776,000 of interest earned on funds held for the years ended
December 31, 2004 and 2003, respectively. Net investment income for the year
ended December 31, 2003 included $1,357,000 of interest received from St. Paul
on balances due relating to the Quota Share Retrocession Agreements. Net
realized gains on investments of $1,955,000 and $2,781,000 for the years ended
December 31, 2004 and 2003, respectively, were the result of investment sale
activity to manage the quality, diversity, currency exposure, duration and tax
profile of the investment portfolio.

            Other income for the years ended December 31, 2004 and 2003 was
$3,211,000 and $3,343,000, respectively. Other income in 2004 includes
$1,036,000 of net unrealized gains relating to changes in fair value of fixed
maturities classified as trading, $758,000 of earnings on reinsurance contracts
accounted for as deposits and a gain of $1,000,000 on the sale of assets. Other
income in 2003 includes $1,282,000 of net unrealized losses relating to changes
in fair value of fixed maturities classified as trading and, $4,625,000 of
earnings on reinsurance contracts accounted for as deposits. Earnings on
reinsurance contracts accounted for as deposits decreased in 2004 from 2003 due
to a fewer number of such contracts.

            Net foreign currency exchange gains (losses) for the years ended
December 31, 2004 and 2003 were $725,000 and ($114,000), respectively. The
Company routinely does business in various foreign currencies. The decrease in
net foreign currency exchange losses is due to efforts to better manage
exposures to foreign currency exchange rate fluctuations by holding invested
assets denominated in the foreign currencies in which the related net insurance
liabilities are denominated. The Company

                                     - 44 -
<PAGE>

periodically reviews its largest foreign currency exposures and purchases or
sells foreign currency denominated invested assets to match these exposures.

            Losses and LAE and the resulting loss and LAE ratios for the years
ended December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                   2004          2003        Increase
                                                               ------------   ---------   -------------
<S>                                                            <C>            <C>         <C>
Losses and LAE .............................................   $  1,019,804     584,171   $     435,633
Losses and LAE ratios ......................................           70.4%       54.7%    15.7 points
</TABLE>

            The increase in losses and LAE in 2004 from 2003 is due primarily to
losses of approximately $230,475,000 from the Hurricanes and the growth in
business in all segments. The increase in the loss ratio in 2004 from 2003 is
due primarily to losses from the Hurricanes that contributed 15.9% to the loss
and LAE ratio in 2004. Net favorable development of $57,151,000 reduced the loss
and LAE ratio by 3.9% in 2004 as compared with favorable development of
$50,866,000 that reduced the loss and LAE ratio by 4.8% in 2003.

            Acquisition expenses and resulting acquisition expense ratios for
the years ended December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                                             Increase
                                                                   2004         2003        (decrease)
                                                               ------------   ---------   --------------
<S>                                                            <C>            <C>         <C>
Acquisition expenses .......................................   $    327,821     251,226   $       76,595
Acquisition expense ratios .................................           22.6%       23.5%    (0.9) points
</TABLE>

            The increase in acquisition expenses in 2004 from 2003 is consistent
with the growth in business in all segments, partially offset by reductions of
profit commissions under reinsurance contracts that incurred losses from the
Hurricanes. The decrease in the acquisition expense ratio in 2004 from 2003 is
primarily due to changes in the mix of business as well as reductions of profit
commissions related to losses from the Hurricanes.

            Operating expenses for the years ended December 31, 2004 and 2003
were $66,333,000 and $92,595,000, respectively. Operating expenses include costs
such as salaries, rent and like items related to reinsurance operations as well
as costs associated with Platinum Holdings. The decline of $26,262,000 in
operating expenses in 2004 as compared with 2003 was attributable to a reduction
of $11,408,000 in incentive-based compensation in 2004 as compared with 2003 due
to the decline in the Company's net income, a charge of $9,289,000 in 2003
related to the separation and consulting agreement with the Company's former
chief executive officer, as well as various non-recurring start-up costs of
approximately $9,239,000 incurred in 2003.

            Interest expense for the years ended December 31, 2004 and 2003 was
$9,268,000 and $9,492,000, respectively, and relates to the Company's ESU's,
which are classified as debt obligations on the Company's balance sheet.

                                     - 45 -
<PAGE>

            Income taxes and the effective income tax rate for the years ended
December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                                             Increase
                                                                   2004         2003        (decrease)
                                                               ------------   ---------   --------------
<S>                                                            <C>            <C>         <C>
Income taxes ...............................................   $     30,349      48,875   $      (18,526)
Effective income tax rate ..................................           26.4%       25.2%      1.2 points
</TABLE>

            Income taxes decreased in 2004 from 2003 due to the decline in
income before income taxes. The effective tax rate in any given year is based on
income before taxes of the Company's subsidiaries that operate in several
jurisdictions with varying corporate income tax rates. Platinum Holdings and
Platinum Bermuda are not subject to corporate income tax. While the effective
income tax rates in 2004 and 2003 are comparable, both years include events that
increased the effective income tax rate. In 2004 approximately 80% of the losses
from the Hurricanes were incurred by Platinum Bermuda without tax benefit and in
2003 expenses related to the severance payment to and share option expense of
the Company's former chief executive officer were incurred by Platinum Holdings
without tax benefit.

            Year Ended December 31, 2003 as Compared with the Period Ended
December 31, 2002

            Net income for the year ended December 31, 2003 and the 2002 Period
was as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                   2003       2002 Period    Increase
                                                               ------------   -----------   ----------
<S>                                                            <C>            <C>           <C>
Net income .................................................   $    144,823         6,438   $  138,385
</TABLE>

            The Company's first complete year of operations was 2003 and,
consequently, net income increased significantly as compared with the 2002
Period which represents a two-month period during which the Company had minimal
underwriting activity. Additional factors affecting the comparison include the
growth in the business underwritten in 2003 over 2002, favorable development in
2003 of unpaid losses and LAE of approximately $50,866,000, improved
profitability relating to net premiums earned in 2003, and increased investment
income resulting from growth in invested assets in 2003. The United States
insurance industry incurred some significant catastrophe losses in 2003;
however, catastrophe losses in the Company's portfolio were relatively low as
most catastrophe claims remained at the primary or ceding company level.
Operating expenses for the year ended December 31, 2003 include a charge of
$9,289,000 for expenses related to the separation and consulting agreement with
the Company's former chief executive officer.

            Net premiums written and earned for the year ended December 31, 2003
and the 2002 Period was as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                   2003       2002 Period    Increase
                                                               ------------   -----------   ----------
<S>                                                            <C>            <C>           <C>
Net premiums written .......................................   $  1,172,142       298,114   $  874,028
Net premiums earned ........................................   $  1,067,527       107,098   $  960,429
</TABLE>

            The Company's first complete year of operations was 2003 and, as a
result, net premiums written and earned increased significantly as compared with
the 2002 Period which represents a two-month period during which the Company had
minimal underwriting activity. Generally, the last two months of a year have a
relatively small amount of net premiums written. However, net premiums written
in the 2002

                                     - 46 -
<PAGE>

Period include $244,000,000 of unearned premiums assumed from St. Paul under the
Quota Share Retrocession Agreements representing the remaining unearned premiums
related to contracts written by St. Paul Re during the first ten months of 2002.
Premiums written are based partially on estimates of ultimate premiums from
reinsurance contracts and the estimates are updated quarterly. Reductions in
premiums estimated for the 2002 underwriting year in the Casualty segment, a
portion of which was written and earned by St. Paul Re, reduced the Company's
net premiums written in 2003 by approximately $35,300,000.

            Similar to net premiums written, net premiums earned in 2003
represents twelve months of underwriting activity whereas the 2002 Period
represents two months. Net premiums earned are recognized subsequent to net
premiums written. Net premiums earned in the 2002 Period are relatively low due
to the commencement of operations during 2002. Net premiums earned for 2003
reflect business underwritten in 2003 and 2002 while net premiums earned in the
2002 Period reflect only business underwritten in 2002. The reduction in 2003 of
net premiums written in the Casualty segment resulted in a reduction of net
premiums earned of approximately $16,100,000.

            Net investment income was $57,645,000 and $5,211,000 for the year
ended December 31, 2003 and the 2002 Period, respectively. The increase is
primarily due to the comparison of 2003 with twelve months of investment income
to the 2002 Period. Net investment income increased during 2003 as the Company's
invested assets increased as a result of positive cash flow from operations. Net
realized gains on investments were $2,781,000 and $25,300 in 2003 and the 2002
Period, respectively, and are the result of investment sale activity to manage
the quality, diversity, currency exposure, duration and tax profile of the
investment portfolio.

            Other income was $3,343,000 and $167,000 for the year ended December
31, 2003 and the 2002 Period, respectively, and represents earnings on a small
number of reinsurance contracts in the Finite Risk segment accounted for as
deposits. Other income in 2003 also includes $1,282,000 of net unrealized losses
relating to changes in fair value of fixed maturities classified as trading.

            Net foreign currency exchange gains (losses) for the year ended
December 31, 2003 and the 2002 Period, were ($114,000) and $2,017,000,
respectively. Foreign currency exchange gains and losses arise from the
valuation in U.S. dollars of assets and liabilities denominated in foreign
currencies. During 2003, the Company established procedures to manage exposure
to foreign currency exchange rates by matching foreign currency denominated
assets and liabilities.

            Losses and LAE for the years ended December 31, 2003 and the 2002
Period, respectively were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                                               Increase
                                                                   2003       2002 Period     (decrease)
                                                               ------------   -----------   ---------------
<S>                                                            <C>            <C>           <C>
Losses and LAE .............................................   $    584,171        60,356   $       523,815
Losses and LAE ratio .......................................           54.7%         56.4%     (1.7) points
</TABLE>

            The increase in losses and LAE is primarily due to the comparison of
2003 with twelve months of underwriting operations to the 2002 Period. Losses
and LAE in 2003 were favorably impacted by improved profitability relating to
net premiums earned in 2003 on business underwritten in 2002. While losses and
LAE in 2003 include provisions for various catastrophe losses, the 2002 Period
had no catastrophe losses. The United States insurance industry incurred some
significant catastrophe losses in 2003. However, catastrophe losses in the
Company's portfolio were relatively low as most catastrophe claims remained at
the primary or ceding company level. Losses and LAE in 2003 included a reduction
in the estimated liability as of December 31, 2002 of $63,966,000 of which
$13,100,000 relates to the

                                     - 47 -
<PAGE>

reduction in 2003 of premiums originally estimated and earned in 2002 in the
Casualty segment. The remaining $50,866,000 represents net favorable
development. Unpaid losses and LAE at December 31, 2002 were based largely on
initial expected ultimate loss ratios. Throughout 2003 actual reported losses
were monitored against expected patterns of reported loss. As actual reported
losses continued to be less than expected reported losses, estimates of expected
ultimate losses were reduced. This principally affected property coverages in
the Property and Marine and Finite Risk segments where a substantial portion of
the ultimate losses is expected to be reported to the Company within two years.

            Acquisition expenses, including brokerage, commissions and other
direct underwriting expenses associated with underwriting activities, and
resulting acquisition expense ratios for the year ended December 31, 2003 and
the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                                                Increase
                                                                   2003       2002 Period      (decrease)
                                                               ------------   -----------   ---------------
<S>                                                            <C>            <C>           <C>
Acquisition expenses .......................................   $    251,226        25,474   $       225,752
Acquisition expense ratio ..................................           23.5%         23.8%     (0.3) points
</TABLE>

            The increase in acquisition expenses is primarily due to the
comparison of 2003 with twelve months of underwriting operations to the 2002
Period. Although acquisition ratios in 2003 varied by operating segment and by
type of business, the resulting ratios of acquisition expenses to net premiums
earned for 2003 and the 2002 Period were comparable at 23.5% and 23.8%,
respectively.

            Operating expenses include other underwriting expenses related to
the reinsurance operations as well as costs associated with the holding company
operations of Platinum Holdings and were $92,595,000 and $16,334,000 for the
year ended December 31, 2003 and the 2002 Period, respectively. The increase in
operating expenses is due to the comparison of 2003 with twelve months of
operations to the 2002 Period. Additionally there were increases in staff, fees
relating to the Services and Capacity Reservation Agreement dated November 1,
2002 with RenaissanceRe (the "RenRe Agreement") that provides for a periodic
review of aggregate property catastrophe exposures by RenaissanceRe and office
relocation expenses in 2003. Operating expenses in 2003 include a charge of
$9,289,000 for the expenses related to the separation and consulting agreement
with the Company's former chief executive officer. Operating expenses in the
2002 Period include one-time expenses of $5,353,000 incurred in connection with
the completion of the Initial Public Offering, the formation of the Company and
the assumption of business from St. Paul.

            Interest expense for the year ended December 31, 2003 and the 2002
Period was $9,492,000, and $1,261,000, respectively, and relates to amounts
payable under the Company's ESU's which are classified as debt obligations on
the Company's balance sheet. The increase is due to the comparison of 2003 with
twelve months of interest expense to the 2002 Period.

            Income taxes and the effective income tax rate for the year ended
December 31, 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                                                Increase
                                                                   2003       2002 Period      (decrease)
                                                               ------------   -----------   ---------------
<S>                                                            <C>            <C>           <C>
Income taxes ...............................................   $     48,875         4,655   $        44,220
Effective income tax rate ..................................           25.2%         42.0%    (16.8) points
</TABLE>

            The increase in income tax expense is due to the increase in net
income before taxes in 2003 over the 2002 Period. The effective tax rate for
2003 was affected by a significant amount of income derived from business
underwritten in 2002, which was assumed and retained by Platinum US and subject
to U.S.

                                     - 48 -
<PAGE>

corporate tax. The effective tax rate for 2003 was also affected by expenses
related to the separation and consulting agreement with the Company's former
chief executive officer that were incurred by Platinum Holdings without tax
benefit, thereby increasing the 2003 effective tax rate. The effective tax rate
in the 2002 Period was higher than any tax rate of the taxable jurisdictions in
which the Company operates due to significant start-up expenses incurred by
Platinum Holdings for which no tax benefit was available.

SEGMENT INFORMATION

            The Company conducts its worldwide reinsurance business through
three operating segments: Property and Marine, Casualty and Finite Risk. In
managing the Company's operating segments, management uses measures such as
underwriting income and underwriting ratios to evaluate segment performance.
Management does not allocate by segment its assets or certain income and
expenses such as investment income, interest expense and certain corporate
expenses. Segment underwriting income is reconciled to income before income
taxes. The measures used by management in evaluating the Company's operating
segments should not be used as a substitute for measures determined under U.S.
GAAP. The following table summarizes underwriting activity and ratios for the
three operating segments for the years ended December 31, 2004 and 2003 and the
2002 Period ($ in thousands):

<TABLE>
<CAPTION>
                                                                  Property
                                                                 and Marine     Casualty    Finite Risk      Total
                                                                 -----------    --------    -----------   -----------
<S>                                                              <C>            <C>         <C>           <C>
Year ended December 31, 2004:

Net premiums written ........................................    $  504,439      677,399      464,175     $ 1,646,013
                                                                 ----------      -------      -------     -----------
Net premiums earned .........................................       485,135      611,893      350,907       1,447,935
Losses and LAE ..............................................       349,557      418,355      251,892       1,019,804
Acquisition expenses ........................................        76,360      151,649       99,812         327,821
Other underwriting expenses .................................        27,827       19,086        6,224          53,137
                                                                 ----------      -------      -------     -----------
    Segment underwriting income (loss).......................    $   31,391       22,803       (7,021)    $    47,173
                                                                 ----------      -------      -------

Corporate expenses not allocated to segments ................                                                 (13,196)
Net foreign currency exchange gains .........................                                                     725
Interest expense ............................................                                                  (9,268)
Other income ................................................                                                   3,211
Net investment income and net realized gains on investments .                                                  86,487
                                                                                                          -----------
    Income before income taxes ..............................                                             $   115,132
                                                                                                          -----------

Ratios:
  Losses and LAE ............................................          72.1%        68.4%        71.8%           70.4%
  Acquisition expense .......................................          15.7%        24.8%        28.4%           22.6%
  Other underwriting expense ................................           5.7%         3.1%         1.8%            3.7%
                                                                 ----------      -------      -------     -----------
    Combined ................................................          93.5%        96.3%       102.0%           96.7%
                                                                 ----------      -------      -------     -----------
</TABLE>

                                    - 49 -
<PAGE>

<TABLE>
<CAPTION>
                                                                  Property
                                                                 and Marine     Casualty    Finite Risk      Total
                                                                 ----------     --------    -----------   -----------
<S>                                                              <C>            <C>         <C>           <C>
Year ended December 31, 2003:

Net premiums written ........................................    $  352,908      474,000      345,234     $ 1,172,142
                                                                 ----------      -------      -------     -----------
Net premiums earned .........................................       355,556      391,170      320,801       1,067,527
Losses and LAE ..............................................       169,944      266,836      147,391         584,171
Acquisition expenses ........................................        52,154      101,005       98,067         251,226
Other underwriting expenses .................................        35,598       21,060       12,870          69,528
                                                                 ----------      -------      -------     -----------
    Segment underwriting income .............................    $   97,860        2,269       62,473     $   162,602
                                                                 ----------      -------      -------

Corporate expenses not allocated to segments ................                                                 (23,067)
Net foreign currency exchange losses ........................                                                    (114)
Interest expense ............................................                                                  (9,492)
Other income ................................................                                                   3,343
Net investment income and net realized gains on investments .                                                  60,426
                                                                                                          -----------
    Income before income taxes ..............................                                             $   193,698
                                                                                                          -----------

Ratios:
  Losses and LAE ............................................          47.8%        68.2%        45.9%           54.7%
  Acquisition expense .......................................          14.7%        25.8%        30.6%           23.5%
  Other underwriting expense ................................          10.0%         5.4%         4.0%            6.5%
                                                                 ----------      -------      -------     -----------
    Combined ................................................          72.5%        99.4%        80.5%           84.7%
                                                                 ----------      -------      -------     -----------

2002 Period:

Net premiums written ........................................    $   89,341      164,929       43,844     $   298,114
                                                                 ----------      -------      -------     -----------
Net premiums earned .........................................        43,047       39,320       24,731         107,098
Losses and LAE ..............................................        21,558       29,498        9,300          60,356
Acquisition expenses ........................................         7,798        9,269        8,407          25,474
Other underwriting expenses .................................         5,960        4,136        2,068          12,164
                                                                 ----------      -------      -------     -----------
    Segment underwriting income (loss)                           $    7,731       (3,583)       4,956     $     9,104
                                                                 ----------      -------      -------

Corporate expenses not allocated to segments ................                                                  (4,170)
Net foreign currency exchange gains .........................                                                   2,017
Interest expense ............................................                                                  (1,261)
Other income ................................................                                                     167
Net investment income and net realized gains on
  investments ...............................................                                                   5,236
                                                                                                          -----------
    Income before income taxes ..............................                                             $    11,093
                                                                                                          -----------

Ratios:
  Losses and LAE ............................................          50.1%        75.0%        37.6%           56.4%
  Acquisition expense .......................................          18.1%        23.6%        34.0%           23.8%
  Other underwriting expense ................................          13.8%        10.5%         8.4%           11.4%
                                                                 ----------      -------      -------     -----------
    Combined ................................................          82.0%       109.1%        80.0%           91.6%
                                                                 ----------      -------      -------     -----------
</TABLE>

      PROPERTY AND MARINE

            The Property and Marine operating segment includes principally
property (including crop) and marine reinsurance coverages that are written in
the United States and international markets. This business includes catastrophe
excess-of-loss treaties, per-risk excess-of-loss treaties and proportional

                                    - 50 -
<PAGE>

treaties. This operating segment generated 30.6%, 30.1% and 30.0% of the
Company's net premiums written in 2004, 2003 and the 2002 Period, respectively.

            Year Ended December 31, 2004 as Compared with the Year Ended
December 31, 2003

            Net premiums written and net premiums earned for the years ended
December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                               2004                2003          Increase
                            ----------           -------        ----------
<S>                         <C>                  <C>            <C>
Net premiums written.....   $  504,439           352,908        $  151,531
Net premiums earned......   $  485,135           355,556        $  129,579
</TABLE>

            Net premiums written and earned increased in 2004, as compared with
2003, due to growth across all property classes. The increase in net premiums
written is also the result of a more efficient use of catastrophe capacity
through enhanced modeling capabilities, an increase of property pro-rata
business and a transfer of catastrophe capacity from the Finite Risk segment to
the Property and Marine segment. Net premiums written and earned also include
approximately $16,198,000 of additional premiums from reinsurance contracts that
incurred losses arising from the Hurricanes.

            Losses and LAE and the resulting loss ratios for the years ended
December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                               2004                2003          Increase
                            -----------          --------       -----------
<S>                         <C>                  <C>            <C>
Losses and LAE ........     $  349,557           169,944        $   179,613
Losses and LAE ratio ..           72.1%             47.8%       24.3 points
</TABLE>

            The increase in losses and LAE and the related losses and LAE ratio
in 2004 is due to losses of $169,652,000 from the Hurricanes as compared with
the low level of catastrophe losses in 2003. Also contributing to the increase
in losses and LAE in 2004 as compared with 2003 is the growth in business.
Partially offsetting the increased losses and LAE relating to the Hurricanes is
approximately $50,980,000 of favorable development of prior years' unpaid losses
and LAE in 2004 as compared with approximately $31,600,000 of favorable
development in 2003. During 2004 and 2003, actual reported losses were
significantly less than expected for the short-tailed non-catastrophe property
lines resulting in reductions in estimated ultimate losses.

            Acquisition expenses and resulting acquisition expense ratios for
the years ended December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                  2004             2003          Increase
                               ----------        -------        ----------
<S>                            <C>                <C>           <C>
Acquisition expenses .......   $   76,360         52,154        $   24,206
Acquisition expense ratio ..         15.7%          14.7%        1.0 point
</TABLE>

            The increase in acquisition expenses in 2004 as compared with 2003
is consistent with the growth in business. The increase in the acquisition
expense ratio is primarily due to profit commissions related to the favorable
development of non-catastrophe losses and LAE and changes in the mix of
business.

            Other underwriting expenses for the years ended December 31, 2004
and 2003 were $27,827,000 and $35,598,000, respectively. The decrease in other
underwriting expenses is due to cost reductions in the Property and Marine
segment in 2004, the reduction of incentive based compensation in 2004, as well

                                    - 51 -
<PAGE>

as various non-recurring start-up costs incurred in 2003. Other underwriting
expenses for the years ended December 31, 2004 and 2003 include fees of
$6,396,000 and $5,350,000, respectively, relating to the RenRe Agreement.

            Year Ended December 31, 2003 as Compared with the Period Ended
December 31, 2002

            Net premiums written and net premiums earned for the year ended
December 31, 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                               2003          2002 Period         Increase
                            ----------       -----------        ----------
<S>                         <C>              <C>                <C>
Net premiums written ....   $  352,908          89,341          $  263,567
Net premiums earned .....   $  355,556          43,047          $  312,509
</TABLE>

            The Company's first complete year of operations was 2003 as compared
with the 2002 Period which represents a two-month period during which the
Company had minimal underwriting activity. Consequently, net premiums written
and earned increased by $263,567,000 and $312,509,000, respectively. Net
premiums written in the 2002 Period include $77,049,000 of premiums assumed from
St. Paul under the Quota Share Retrocession Agreements representing unearned
premiums related to contracts written by St. Paul during the first ten months of
2002. Net premiums written in 2003 reflect a growth in business underwritten in
2003 over 2002. Similar to net premiums written, net premiums earned in 2003
represent twelve months of underwriting activity whereas the 2002 Period
represents two months. Net premiums earned are recognized subsequent to net
premiums written. Net premiums earned in the 2002 Period are relatively low due
to the commencement of operations during 2002. Net premiums earned for 2003
reflect business underwritten in 2003 and 2002.

            Losses and LAE and the resulting loss ratios for the year ended
December 31, 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                 Increase
                               2003          2002 Period        (decrease)
                            ----------       -----------      -------------
<S>                         <C>              <C>              <C>
Losses and LAE ..........   $  169,944          21,558        $     148,386
Losses and LAE ratio ....         47.8%           50.1%        (2.3) points
</TABLE>

            The increase in losses and LAE is primarily due to the comparison of
2003 with twelve months of underwriting operations to the 2002 Period. Losses
and LAE in 2003 were favorably affected by a relatively low level of catastrophe
losses while the 2002 Period had no catastrophe losses. Losses and LAE in 2003
also included favorable development in 2003 of losses and LAE as of December 31,
2002 of approximately $31,600,000. Additionally, the losses and LAE in 2003 were
favorably impacted by improved profitability relating to net earned premium in
2003 on business underwritten in 2002.

            Acquisition expenses and resulting acquisition expense ratios for
the year ended December 31, 2003 and the 2002 Period were as follows ($ in
thousands):

<TABLE>
<CAPTION>
                                                                  Increase
                                   2003         2002 Period      (decrease)
                                ----------      -----------     -------------
<S>                             <C>             <C>             <C>
Acquisition expenses .......    $   52,154          7,798       $      44,356
Acquisition expense ratio ..          14.7%          18.1%       (3.4) points
</TABLE>

            The increase in acquisition expenses is primarily due to the
comparison of 2003 with twelve months of underwriting operations to the 2002
Period. The ratios fluctuate as a result of the changes in mix of business and
the contract terms and conditions.

                                    - 52 -
<PAGE>

            Other underwriting expenses for the year ended December 31, 2003 and
the 2002 Period were $35,598,000 and $5,960,000, respectively, and represent
costs such as salaries, rent and like items. The increase is primarily due to
the comparison of 2003 with twelve months of operations to the 2002 Period.
Other underwriting expenses include fees of $5,350,000 in 2003 and $46,000 in
the 2002 Period relating to the RenRe Agreement. Operating expenses for the 2002
Period include one-time expenses incurred in connection with the completion of
the Initial Public Offering, the formation of the Company and the assumption of
business from St. Paul.

      CASUALTY

            The Casualty operating segment includes reinsurance treaties that
principally cover umbrella liability, general and product liability,
professional liability, workers' compensation, casualty clash, automobile
liability, surety and trade credit. This operating segment also includes
accident and health treaties, which are predominantly reinsurance of health
insurance products. This operating segment generated 41.2%, 40.4% and 55.3% of
the Company's net premiums written for the years ended December 31, 2004 and
2003 and the 2002 Period, respectively. The percentage in the 2002 Period was
impacted by the unearned premiums assumed from St. Paul under the Quota Share
Retrocession Agreements which was also included in net premiums written.

            Year Ended December 31, 2004 as Compared with the Year Ended
December 31, 2003

            Net premiums written and net premiums earned for the years ended
December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                               2004              2003            Increase
                            ----------         -------          ----------
<S>                         <C>                <C>              <C>
Net premiums written ....   $  677,399         474,000          $  203,399
Net premiums earned .....   $  611,893         391,170          $  220,723
</TABLE>

            The increase in premiums written and earned is due to the growth in
contracts bound in both 2003 and 2004 and rate increases in certain lines of
business in 2004 that together generate net premiums written in 2004. The
Company continues to expand its treaty participation with existing clients and
form new client relationships. Additionally, in 2004 the Company expanded its
participation in surety and trade credit business. In response to deteriorating
market conditions in 2004 in the directors and officers liability line of
business, the Company has begun to significantly decrease its involvement in
that line. Also, increases in premiums written were offset by revisions of
estimates of Casualty premiums that resulted in reductions of net premiums
written and earned in 2004 of approximately $21,000,000 and $14,300,000,
respectively, as compared with similar reductions of net premiums written and
earned in 2003 of $35,300,000 and $16,100,000, respectively. The revisions to
estimates are based on reported premiums from ceding companies and revised
projections of ultimate premiums written under reinsurance contracts. The net
effect on underwriting income of the revisions of estimates, after related
reductions in losses, LAE and acquisitions expenses, was not significant. The
increase in net premium earned is related to and consistent with the increase in
net premiums written and is affected by changes in the mix of business and the
structure of the underlying reinsurance contracts.

            Losses and LAE and the resulting loss ratios for the years ended
December 31, 2004 and 2003 were as follows ($ in thousands):

                                    - 53 -
<PAGE>

<TABLE>
<CAPTION>
                               2004              2003             Increase
                            ----------         -------          ------------
<S>                         <C>                <C>              <C>
Losses and LAE ..........   $  418,355         266,836          $    151,519
Losses and LAE ratio ....         68.4%           68.2%           0.2 points
</TABLE>

            The increase in losses and LAE in 2004 as compared with 2003 is
consistent with the growth in net premiums earned. The resulting losses and LAE
ratios in 2004 and 2003 are comparable. Improvements in the loss ratio in 2004,
due to increased profitability of the 2004 and 2003 underwriting years over the
2002 underwriting year, were offset by adverse development with respect to
automobile liability reinsurance in the United Kingdom and losses arising from
the partial collapse of the new airport terminal in Paris, France.

            Acquisition expenses and resulting acquisition expense ratios for
the years ended December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                 Increase
                                     2004          2003         (decrease)
                                  ----------      -------      ------------
<S>                               <C>             <C>          <C>
Acquisition expenses .......      $  151,649      101,005      $     50,644
Acquisition expense ratio ..            24.8%        25.8%      (1.0) point
</TABLE>

            The increase in acquisition expenses is due primarily to the
increase in net premiums earned in 2004 as compared with 2003. The decrease in
acquisition expense ratios for the year ended December 31, 2004 as compared with
2003 is due to changes in the mix of business toward lines with higher expected
loss ratios and lower acquisition expense ratios.

            Other underwriting expenses for the years ended December 31, 2004
and 2003 were $19,086,000 and $21,060,000, respectively. The decrease in other
underwriting expenses is due to the reduction of incentive based compensation in
2004, as well as various non-recurring start-up costs incurred in 2003. The
resulting other underwriting expense ratios for the years ended December 31,
2004 and 2003 were 3.1% and 5.4%, respectively. The decrease in the ratio in
2004 as compared with 2003 is due to both the increase in net premiums earned
and the decline in other underwriting expenses.

            Year Ended December 31, 2003 as Compared with the Period Ended
December 31, 2002

            Net premiums written and net premiums earned for the year ended
December 31, 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                               2003            2002 Period       Increase
                            ----------         -----------      ----------
<S>                         <C>                <C>              <C>
Net premiums written ....   $  474,000           164,929        $  309,071
Net premiums earned .....   $  391,170            39,320        $  351,850
</TABLE>

            The Company's first complete year of operations was 2003 as compared
with the 2002 Period which represents a two-month period during which the
Company had minimal underwriting activity. Consequently, net premiums written
and net premiums earned increased by $309,071,000 and $351,850,000,
respectively. Net premiums written in the 2002 Period include $140,386,000 of
premiums assumed from St. Paul under the Quota Share Retrocession Agreements
representing unearned premiums related to contracts written by St. Paul during
the first ten months of 2002. Net premiums written in 2003 reflect a growth in
business underwritten in 2003 over 2002. Premiums written are based partially on
estimates of ultimate premiums from reinsurance contracts and the estimates are
updated quarterly. Net premiums written in 2003 include a reduction in premiums
estimated in the 2002 underwriting year, a

                                    - 54 -
<PAGE>

portion of which were written and earned by St. Paul Re, that reduced net
premiums written in the Company's Casualty segment in 2003 by approximately
$35,300,000.

            Similar to net premiums written, net premiums earned in 2003
represent twelve months of underwriting activity whereas the 2002 Period
represents two months. Net premiums earned for 2003 reflect business
underwritten in 2003 and 2002 while net premiums earned in the 2002 Period
reflect only business underwritten in 2002. The reduction, in 2003, of net
premiums written and earned in the 2002 Period resulted in a reduction of net
premiums earned in 2003 of approximately $16,100,000.

            Losses and LAE and the resulting loss ratios for the year ended
December 31, 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                 Increase
                               2003            2002 Period      (decrease)
                            ----------         -----------    --------------
<S>                         <C>                <C>            <C>
Losses and LAE ..........   $  266,836            29,498      $      237,338
Losses and LAE ratio ....         68.2%             75.0%       (6.8) points
</TABLE>

            The increase in losses and LAE is primarily due to the comparison of
2003 with twelve months of underwriting operations to the 2002 Period. The loss
ratio on business underwritten in 2003 is lower than the loss ratio for business
underwritten in the 2002 Period primarily due to rate increases achieved during
2003. Losses and LAE in 2003 includes amounts from business underwritten in 2003
and business underwritten in 2002 while the 2002 Period includes amounts only
from business underwritten in 2002. Losses and LAE in 2003 included a reduction
in the estimated liability as of December 31, 2002 of $14,500,000, of which
$13,100,000 relates to the reduction in 2003 of net premiums written and earned
in the 2002 Period. The remaining $1,400,000 relates to favorable development.
The decline in the loss ratio was further influenced by a shift in the mix of
business toward contracts that have lower loss ratios and higher expense ratios.

            Acquisition expenses and resulting acquisition expense ratios for
the year ended December 31, 2003 and the 2002 Period were as follows ($ in
thousands):

<TABLE>
<CAPTION>
                                     2003         2002 Period       Increase
                                  ----------      -----------      ----------
<S>                               <C>             <C>              <C>
Acquisition expenses .........    $  101,005          9,269        $   91,736
Acquisition expense ratio ....          25.8%          23.6%       2.2 points
</TABLE>

            The increase in acquisition expenses is due primarily to the
comparison of 2003 with twelve months of underwriting operations to the 2002
Period. The resulting acquisition expense ratios reflect a shift in the mix of
business and effects of differences in contract terms and conditions.

            Other underwriting expenses for the year ended December 31, 2003 and
the 2002 Period were $21,060,000 and $4,136,000, respectively, and represent
costs such as salaries, rent and like items. The increase is primarily due to
the comparison of 2003 with twelve months of operations to the 2002 Period.
Other underwriting expenses in the 2002 Period include one-time expenses
incurred in connection with the completion of the Initial Public Offering, the
formation of the Company and the assumption of business from St. Paul.

      FINITE RISK

            The Finite Risk operating segment includes principally structured
reinsurance contracts with ceding companies whose needs may not be met
efficiently through traditional reinsurance products. The classes of risks
underwritten through finite risk contracts are generally consistent with the
classes covered

                                    - 55 -
<PAGE>

by traditional products. Typically, the amount of claims we might pay is finite
or capped. In return for this limit on claims, we often accept a cap on the
potential profit margin specified in the treaty and return profits above this
margin to the ceding company. The three main categories of finite risk contracts
are finite quota share, multi-year excess-of-loss and whole account aggregate
stop loss. This operating segment generated 28.2%, 29.5% and 14.7% of the
Company's net premiums written for the years ended December 31, 2004 and 2003
and the 2002 Period, respectively. Due to the direct inter-relationship between
losses and commissions for this segment, the Company believes it is important to
evaluate the overall combined ratio, rather than its component parts of loss and
loss adjustment expense ratios.

            Year Ended December 31, 2004 as Compared with the Year Ended
December 31, 2003

            Net premiums written and net premiums earned for the years ended
December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                  2004                2003          Increase
                               ----------           -------        ----------
<S>                            <C>                  <C>            <C>
Net premiums written ......    $  464,175           345,234        $  118,941
Net premiums earned .......    $  350,907           320,801        $   30,106
</TABLE>

            The increase in net premiums written and net premiums earned is
primarily attributable to several large capped quota share contracts that were
written in 2004. Net premiums earned are related to current and prior periods'
net premiums written and are affected by changes in the mix of business and the
structure of the underlying reinsurance contracts. Net premiums written and
earned also include approximately $13,067,000 of additional premiums from
reinsurance contracts that incurred losses arising from the Hurricanes.

            Losses and LAE, acquisition expenses and the resulting ratios for
the years ended December 31, 2004 and 2003 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                       2004            2003           Increase
                                    ----------       -------       -------------
<S>                                 <C>              <C>           <C>
Losses and LAE .................    $  251,892       147,391       $     104,501
Acquisition expenses ...........        99,812        98,067               1,745
Losses, LAE and acquisition ....    $  351,704       245,458       $     106,246
Losses, LAE and acquisition ....         100.2%         76.5%        23.7 points
</TABLE>

            The increase in losses, LAE and acquisition expenses and the losses,
LAE and acquisition expense ratio in 2004 as compared with 2003 is primarily due
to losses of $60,823,000 from the Hurricanes, partially offset by a reduction in
profit commissions of $10,243,000. There were no catastrophe losses in 2003. In
addition, several capped quota share contracts were written in 2004 that
included primarily casualty business as compared with business written in 2003
that included a higher percentage of finite property business with lower loss
ratios. Favorable development impacting both losses and LAE and acquisition
expenses occurred in both 2004 and 2003. Net favorable development in 2004 and
2003 amounted to $9,348,000 and $17,900,000, respectively.

            Other underwriting expenses for the years ended December 31, 2004
and 2003 were $6,224,000 and $12,870,000, respectively. The decrease in other
underwriting expenses is due to cost reductions in the Finite Risk segment in
2004, the reduction of incentive based compensation in 2004, as well as various
non-recurring start-up costs incurred in 2003.

                                    - 56 -
<PAGE>

            Year Ended December 31, 2003 as Compared with the Period Ended
December 31, 2002

            Net premiums written and net premiums earned for the year ended
December 31, 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                               2003            2002 Period       Increase
                            ----------         -----------      ----------
<S>                         <C>                <C>              <C>
Net premiums written ....   $  345,234            43,844        $  301,390
Net premiums earned .....   $  320,801            24,731        $  296,070
</TABLE>

            The Company's first complete year of operations was 2003 as compared
with the 2002 Period which represents a two-month period during which the
Company had minimal underwriting activity. Consequently, net premiums written
and net premiums earned increased by $301,390,000 and $296,070,000,
respectively. The Finite Risk portfolio consists of a small number of contracts
which can be large in premium size and are written on an intermittent basis.
Consequently net premiums written are expected to vary significantly from year
to year. A few significant finite quota share treaties were underwritten in the
latter part of 2002 and early 2003 that together produced net premiums written
of $220,000,000 in 2003.

            Similar to net premiums written, net premiums earned in 2003
includes twelve months of underwriting activity whereas the net premiums earned
in the 2002 Period includes two months. In addition, net premiums earned are
recognized subsequent to net premiums written. The net premiums earned in 2003
reflect premiums from contracts underwritten in 2003 and 2002 whereas the net
premiums earned in the 2002 Period only reflects premiums from contracts
underwritten in 2002 as there was no business underwritten prior to 2002.

            Losses and LAE, acquisition expenses and the resulting ratios year
ended December 31, 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                       2003            2002 Period      Increase
                                    ----------         -----------     -----------
<S>                                 <C>                <C>             <C>
Losses and LAE ..................   $  147,391             9,300       $   138,091
Acquisition expenses ............       98,067             8,407            89,660
Losses, LAE and acquisition .....   $  245,458            17,707       $   227,751
Losses, LAE and acquisition .....         76.5%             71.6%       4.9 points
</TABLE>

            The increase in losses and LAE and acquisition expenses is primarily
due to the comparison of 2003 with twelve months of underwriting operations to
the 2002 Period. Both 2003 and the 2002 Period benefited from the absence of any
catastrophe losses. In 2003 there was a significantly greater amount of finite
quota share contracts that had higher loss ratios. The resulting effect was
partially mitigated by favorable development in 2003 of losses and LAE as of
December 31, 2002 of approximately $17,900,000, which includes the effect of
commutations. The increase in acquisition expenses is related to the increase in
net premiums earned in 2003 over the 2002 Period. The ratios reflect the mix of
business and effects of differences in terms and conditions of various
contracts.

            Other underwriting expenses for the year ended December 31, 2003 and
the 2002 Period were $12,870,000 and $2,068,000, respectively, and represent
costs such as salaries, rent and like items. The increase is due to the
comparison of 2003 with twelve months of operations to the 2002 Period. Other
underwriting expenses in 2002 include one-time expenses incurred in connection
with the completion of the Initial Public Offering, the formation of the Company
and the assumption of business from St. Paul.

                                    - 57 -
<PAGE>

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

      FINANCIAL CONDITION

            Cash and cash equivalents were $209,897,000 and $105,461,000 as of
December 31, 2004 and 2003, respectively. Fixed maturities were $2,240,202,000
and $1,678,138,000 as of December 31, 2004 and 2003 respectively. The investment
portfolio increased due to positive cash flow from operations, excluding trading
securities activities, which was $698,223,000 and $469,168,000 in 2004 and 2003,
respectively. The Company's fixed maturity available-for-sale and trading
portfolios are comprised entirely of publicly traded fixed maturity investments.
The investment portfolio, which includes cash and cash equivalents, had a
weighted average duration of 3.6 years and 3.7 years as of December 31, 2004 and
2003, respectively. Other invested assets currently represent a strategic equity
investment in a privately held reinsurance company. The Company maintains and
periodically updates an overall duration target for the portfolio and routinely
monitors the composition of, and cash flows from, the portfolio to maintain
liquidity necessary to meet the Company's obligations.

            Certain assets and liabilities associated with underwriting have
increased significantly, some of which include significant estimates. Premiums
receivable, deferred acquisition costs, unpaid losses and LAE, unearned premiums
and commissions payable all include significant estimates. Premiums receivable
as of December 31, 2004 of $580,048,000 include $530,066,000 that is based upon
estimates. Premiums receivable as of December 31, 2003 of $487,441,000 include
$396,541,000 that is based upon estimates. Net unpaid losses and LAE, net of
reinsurance recoverable, as of December 31, 2004 of $1,378,950,000 include
$1,151,222,000 of net IBNR. Net unpaid losses and LAE, net of reinsurance
recoverable, as of December 31, 2003 of $731,918,000 include $639,218,000 of net
IBNR. Commissions payable as of December 31, 2004 of $181,925,000 include
$165,050,000 that is based upon estimates. Commissions payable as of December
31, 2003 of $176,310,000 include $146,637,000 that is based upon estimates.

      SOURCES OF LIQUIDITY

            The consolidated sources of funds of the Company consist primarily
of premiums written, investment income, proceeds from sales and redemption of
investments, losses recovered from retrocessionaires, and actual cash and cash
equivalents held by the Company. Net cash flows provided by operations,
excluding trading securities activities, for the years ended December 31, 2004
and 2003 and the 2002 Period were $698,223,000, $469,168,000 and $281,393,000,
respectively, and was used primarily to acquire additional investments.

            Platinum Holdings is a holding company that conducts no reinsurance
operations of its own. All of its reinsurance operations are conducted through
its wholly owned operating subsidiaries Platinum US, Platinum UK and Platinum
Bermuda. As a holding company, the cash flow of Platinum Holdings consists
primarily of dividends, interest and other permissible payments from its
subsidiaries. Platinum Holdings depends on such payments for general corporate
purposes and to meet its obligations, including the contract adjustment payments
related to the ESU's and the payment of any dividends to its shareholders.

            The Company has filed an unallocated universal shelf registration
statement with the Securities and Exchange Commission ("SEC"), which the SEC
declared effective on April 5, 2004. The securities registered under the shelf
registration statement for possible future sales include up to $750,000,000 of
common shares, preferred shares and various types of debt securities. The
registration statement included common shares held by St. Paul and RenaissanceRe
and common shares issuable upon exercise of options owned by St. Paul and
RenaissanceRe. On June 25, 2004, the Company announced St. Paul's

                                    - 58 -
<PAGE>

intent to sell 6,000,000 of the Company's common shares in an underwritten
public offering, which was effected pursuant to a prospectus supplement to the
shelf registration statement dated June 28, 2004 and completed on June 30, 2004.
The 6,000,000 common shares sold by St. Paul amounted to $177,330,000 of the
$750,000,000 securities registered under the shelf registration statement. The
Company did not sell any common shares in the offering and did not receive any
proceeds from the sale of the common shares by St Paul.

            The Company issued the ESUs in November 2002, which consist of a
contract to purchase common shares from the Company in 2005 (the "Purchase
Contracts") and an ownership interest in a senior note due 2007 issued by
Platinum Finance (the "Senior Notes"). During 2005, the Company expects to issue
common shares in accordance with the Purchase Contracts and remarket the Senior
Notes, which the Company expects to generate cash of approximately $137,500,000,
less fees and expenses associated with the remarketing.

      LIQUIDITY REQUIREMENTS

            The principal consolidated cash requirements of the Company are the
payment of losses and LAE, commissions, brokerages, operating expenses,
dividends to its shareholders, the servicing of debt (including interest
payments on the senior notes and contract adjustment payments on the Purchase
Contracts included in the Company's ESU's), the acquisition of and investment in
businesses, capital expenditures, premiums retroceded and taxes. The contract
adjustment payments will cease upon issuance of the common shares in accordance
with the Purchase Contracts.

            Platinum UK and Platinum Bermuda are not licensed, approved or
accredited as reinsurers anywhere in the United States and therefore, under the
terms of most of their contracts with United States ceding companies, they are
required to provide collateral to these ceding companies for unpaid ceded
liabilities in a form acceptable to state insurance commissioners. Typically,
this type of collateral takes the form of a letter of credit issued by an
acceptable bank, the establishment of a trust, or a cash advance. Platinum UK
and Platinum Bermuda expect to obtain letters of credit through commercial banks
and may be required to provide the banks with a security interest in certain of
Platinum UK's and Platinum Bermuda's investments. As of December 31, 2004,
$29,159,000 of unsecured letters of credit were issued to various cedants.

            Platinum US and Platinum Bermuda have reinsurance and other
contracts that require them to provide collateral to ceding companies should
certain events occur, such as a decline in the rating by A.M. Best below
specified levels or a decline in statutory equity below specified amounts, or
when certain levels of assumed liabilities are attained. Some reinsurance
contracts also have special termination provisions that permit early termination
should certain events occur. As of December 31, 2004, investments with a
carrying value of $5,779,000 and cash and cash equivalents of $1,153,000 were
held in trust and an unsecured letter of credit of $8,128,000 was issued to
satisfy these requirements.

            Platinum US is obligated to collateralize the liabilities assumed
from St. Paul under the Quota Share Retrocession Agreements. Investments with a
carrying value of $318,586,000 and cash and cash equivalents of $4,846,000 at
December 31, 2004 were held in trust to collateralize an equivalent amount of
liabilities ceded by St. Paul to the Company under the Quota Share Retrocession
Agreements.

            The payment of dividends and other distributions from the Company's
regulated reinsurance subsidiaries is limited by applicable laws and statutory
requirements of the jurisdictions in which the subsidiaries operate, including
Bermuda, the United States and the United Kingdom. Based on the regulatory
restrictions of the applicable jurisdictions, the maximum amount available for
payment of

                                    - 59 -
<PAGE>

dividends or other distributions by the reinsurance subsidiaries of the Company
in 2005 without prior regulatory approval is estimated to be $139,620,000.

            On August 4, 2004, the board of directors of the Company approved a
plan to purchase up to $50,000,000 of its common shares. During the year ended
December 31, 2004 the Company purchased 349,700 of its common shares in the open
market at an aggregate amount of $9,985,000 at a weighted average price of
$28.55 per share. The shares purchased by the Company were canceled.

            Management believes that the cash flow generated by the operating
activities of the Company's subsidiaries will provide sufficient funds for the
Company to meet its liquidity needs over the next twelve months. Beyond the next
twelve months, cash flow available to the Company may be influenced by a variety
of factors, including economic conditions in general and in the insurance and
reinsurance markets, legal and regulatory changes as well as fluctuations from
year to year in claims experience and the presence or absence of large
catastrophic events. If the Company's liquidity needs accelerate beyond our
ability to fund such obligations from current operating cash flows, the Company
may need to liquidate a portion of its investment portfolio or raise additional
capital in the capital markets. The Company's ability to meet its liquidity
needs by selling investments or raising additional capital is subject to the
timing and pricing risks inherent in the capital markets.

      ECONOMIC CONDITIONS

            Periods of moderate economic recession or inflation tend not to have
a significant direct effect on the Company's underwriting operations.
Significant unexpected inflationary or recessionary periods can, however, impact
the Company's underwriting operations and investment portfolio. Management
considers the potential impact of economic trends in the estimation process for
establishing unpaid losses and LAE.

      CAPITAL EXPENDITURES

            None of Platinum Holdings, Platinum US, Platinum UK or Platinum
Bermuda has any material commitments for capital expenditures.

CONTRACTUAL OBLIGATIONS

The company has the following contractual obligations ($ in thousands):

<TABLE>
<CAPTION>
                                                     Less than        1 - 3          3 - 5       More than
     Contractual Obligations           Total           1 year         years          Years        5 years
---------------------------------   ----------       ---------       -------        -------     ----------
<S>                                 <C>              <C>             <C>            <C>         <C>
Equity Security Units (1) .......   $  137,500        137,500              -              -     $        -
Operating Leases (2) ............       17,255          2,570          4,121          3,794          6,770
Gross unpaid losses and LAE (3)..   $1,380,955        496,189        327,172        164,267     $  393,327
</TABLE>

(1)   See note 6 of the Notes to the Consolidated Financial Statements.

(2)   See note 11 of the Notes to the Consolidated Financial Statements.

(3)   There are generally no stated amounts related to reinsurance contracts.
      Both the amounts and timing of future loss and LAE payments are estimates
      and subject to the inherent variability of legal and market conditions
      affecting the obligations and make the timing of cash outflows uncertain.
      The ultimate amount and timing of unpaid losses and LAE could differ
      materially from the amounts in the table above. Further, the gross unpaid
      losses and LAE do not represent all of the obligations that will arise
      under the contracts, but rather only the estimated liability incurred
      through December 31, 2004. There are reinsurance contracts that have terms
      extending into 2005 under which additional obligations will be incurred.

                                    - 60 -
<PAGE>

OFF BALANCE SHEET ARRANGEMENTS

            The Company does not have any arrangements that are not accounted
for or disclosed in the consolidated financial statements.

CURRENT OUTLOOK

            We expect that terms and conditions on most reinsurance treaties
will remain acceptable to reinsurers, while rate level adequacy will decline
thereby reducing expected profitability. Given our strategy of underwriting for
profitability, not market share, a decline in expected treaty profitability may
eventually result in lower net written premium. We anticipate that our total net
premium written in 2005 will be approximately the same as for 2004. If rates
deteriorate more quickly than we anticipate, then our 2005 net written premium
will likely be lower than the 2004 level.

            For the Property and Marine segment underlying primary rates are
declining at a rapid pace for commercial properties in the US and abroad
rendering some proportional business unattractive in light of the catastrophe
risks assumed. The level of rate increase in Florida that will be allowed by
regulators for residential properties is not currently known and may not be
sufficient to compensate for the perceived riskiness of the business.
Consequently, our level of business written on a proportional basis may decline
as compared to 2004. To the extent that excess-of-loss reinsurance rates adjust
to partially mitigate the negative impact of underlying rate decreases we are
more likely to renew this business and therefore anticipate premium volume for
2005 that is substantially similar to 2004. With selective and disciplined
underwriting, we believe that the business we accept will generate acceptable
profitability.

            For the Casualty segment, we believe that differences of opinion
between primary insurers and reinsurers regarding the profitability of the
casualty business will persist. Accordingly, we anticipate that well capitalized
primary carriers will retain more of their business. Less well capitalized
carriers may seek reinsurance with more restrictions on risk transfer to drive
down costs. Although the overall quantity of casualty reinsurance ceded may
decrease in 2005 versus 2004, we believe that our strong capitalization and
reputation as a lead casualty reinsurer will allow us to write approximately the
same level of premium for 2005 as for 2004 at good levels of expected
profitability provided that rate levels do not deteriorate more rapidly than we
anticipate.

            In the Finite Risk segment, we expect that the ongoing
investigations by the SEC and New York Attorney General will reduce, but not
eliminate, demand for limited risk transfer products in the short term. Although
we cannot predict with certainty the outcome of these investigations, we believe
that once the buyers and sellers of these products perceive that the accounting,
headline and regulatory risk has receded, demand will increase. Accordingly, the
likelihood of writing a significant volume of new finite business is lower for
2005 than for 2004. Our existing portfolio of finite risk contracts is expected
to generate premium volume for 2005 that is substantially the same as for 2004.

            Given our current mix of business by segment and expected
profitability of that business we anticipate continued positive cash flow, and
consequently believe that our 2005 net investment income will exceed that of
2004.

RISK FACTORS

            Numerous factors could cause our actual results to differ materially
from those in the forward-looking statements set forth in this Form 10-K and in
other documents that we file with the Securities and Exchange Commission. Those
factors include the following:

                                    - 61 -
<PAGE>

Increased competition could adversely affect our profitability.

            The property and casualty reinsurance industry is highly
competitive. We compete with reinsurers worldwide, many of which have greater
financial, marketing and management resources than ours. Some of our competitors
are large financial institutions that have reinsurance segments, while others
are specialty reinsurance companies. Financial institutions have also created
alternative capital market products that compete with reinsurance products, such
as reinsurance securitization.

            Following the September 11, 2001 terrorist attack, a number of
individuals and companies in the reinsurance industry established new,
well-capitalized, Bermuda-based reinsurers to benefit from improved market
conditions, and a number of existing competitors raised additional capital. Many
of the reinsurers that entered the reinsurance markets have or could have more
capital than we have. In addition, there may be established companies or new
companies of which we are not aware that may be planning to commit capital to
this market. The full effect of this additional capital on the reinsurance
market and on the terms and conditions of the reinsurance contracts of the types
we expect to underwrite may not be known for some time. Competition in the types
of reinsurance business that we underwrite is based on many factors, including
premium charges and other terms and conditions offered, services provided,
ratings assigned by independent rating agencies, speed of claims payment, claims
experience, perceived financial strength and experience and reputation of the
reinsurer in the line of reinsurance to be underwritten.

            Traditional as well as new capital market participants from time to
time produce alternative products (such as reinsurance securitizations,
catastrophe bonds and various derivatives such as swaps) that may compete with
certain types of reinsurance, such as property catastrophe. Over time, these
numerous initiatives could significantly affect supply, pricing and competition
in our industry.

A downgrade in the rating assigned by Best's to our operating subsidiaries could
adversely affect our ability to write new business.

            Best's has assigned a financial strength rating of "A" (Excellent)
to our operating subsidiaries. This rating is the third highest of sixteen
rating levels. According to Best's, a rating of "A" indicates Best's opinion
that a company has an excellent ability to meet its ongoing obligations to
policyholders. This rating is subject to periodic review by Best's and may be
revised downward or revoked at the sole discretion of Best's. Best's may
increase its scrutiny of rated companies, revise their rating standards or take
other action. If Best's revises the rating standard associated with our current
rating, our rating may be downgraded or we may need to raise additional capital
to maintain our rating.

            Best's is generally considered to be a significant rating agency
with respect to the evaluation of insurance and reinsurance companies. Ratings
are used by ceding companies and reinsurance intermediaries as an important
means of assessing the financial strength and quality of reinsurers. In
addition, a ceding company's own rating may be adversely affected by a downgrade
in the rating of its reinsurer. Therefore, a downgrade of our rating may
dissuade a ceding company from reinsuring with us and may influence a ceding
company to reinsure with a competitor of ours that has a higher insurance
rating.

            It is increasingly common for our reinsurance contracts to contain
terms that would allow the ceding companies to cancel the contract if we are
downgraded below a certain rating level or require collateral to be posted for a
portion of our obligations. Whether a client would exercise this cancellation
right would depend, among other factors, on the reason for such downgrade, the
extent of the downgrade, the prevailing market conditions and the pricing and
availability of replacement reinsurance coverage. Therefore, we cannot predict
in advance the extent to which this cancellation right would be exercised, if

                                    - 62 -
<PAGE>

at all, or what effect such cancellations would have on our financial condition
or future operations, but such effect potentially could be material.

            We may from time to time secure our obligations under our various
reinsurance contracts using trusts and letters of credit. We have entered into
agreements with several ceding companies that require us to provide collateral
for our obligations under certain reinsurance contracts with these ceding
companies under various circumstances, including where our obligations to these
ceding companies exceed negotiated thresholds. These thresholds may vary
depending on our rating from Best's or other rating agencies and a downgrade of
our ratings or a failure to achieve a certain rating may increase the amount of
collateral we are required to provide. We may provide the collateral by
delivering letters of credit to the ceding company, depositing assets into trust
for the benefit of the ceding company or permitting the ceding company to
withhold funds that would otherwise be delivered to us under the reinsurance
contract. The amount of collateral we are required to provide typically
represents a portion of the obligations we may owe the ceding company, often
including estimates of IBNR made by the ceding company. Since we may be required
to provide collateral based on the ceding company's estimate, we may be
obligated to provide collateral that exceeds our estimates of the ultimate
liability to the ceding company.

            We are not currently rated by any rating agencies other than Best's.
We may from time to time obtain ratings from other rating agencies, though we
are unable to predict the impact of any such ratings at this time.

The occurrence of severe catastrophic events could have a material adverse
effect on our financial condition or results of operations.

            Because we underwrite property and casualty reinsurance and have
large aggregate exposures to natural and man-made disasters, we expect that our
loss experience generally will include infrequent events of great severity. The
frequency and severity of catastrophe losses are inherently unpredictable.
Consequently, the occurrence of losses from a severe catastrophe or series of
catastrophes could have a material adverse effect on our results of operations
and financial condition. In addition, catastrophes are an inherent risk of our
business and a severe catastrophe or series of catastrophes could have a
material adverse effect on our ability to write new business, and our financial
condition and results of operations, possibly to the extent of eliminating our
shareholders' equity and statutory surplus (which is the amount remaining after
all liabilities, including liabilities for losses and LAE, are subtracted from
all admitted assets, as determined under statutory accounting principles
prescribed or permitted by U.S. insurance regulatory authorities). Increases in
the values and geographic concentrations of insured property and the effects of
inflation have historically resulted in increased severity of industry losses in
recent years, and, although we seek to limit our overall exposure to risk by
limiting the amount of reinsurance we write by geographic zone, we expect that
those factors will increase the severity of catastrophe losses in the future.

If the loss limitation methods and pricing models we employ are not effective,
our financial condition or results of operations could be materially adversely
affected.

            Our property and casualty reinsurance contracts cover unpredictable
events such as hurricanes, windstorms, hailstorms, earthquakes, volcanic
eruptions, fires, industrial explosions, freezes, riots, floods and other
natural or man-made disasters. We seek to limit our overall exposure to risk by
limiting the amount of reinsurance we write by geographic zone, peril and type
of program or contract. Our risk management uses a variety of means, including
the use of contract terms, diversification criteria, probability analysis and
analysis of comparable historical loss experience. We estimate the impact of
certain catastrophic events using catastrophe modeling software and contract
information to evaluate our exposure to losses from individual contracts and in
the aggregate. For example, the majority of the

                                    - 63 -
<PAGE>

natural peril catastrophe reinsurance we write relates to exposures within the
United States, Europe and Japan. Accordingly, we monitor our exposure to events
that affect these regions, such as hurricanes and earthquakes in the United
States, flood and wind in Europe and typhoons and earthquakes in Japan.

            We take an active role in the evaluation of commercial catastrophe
exposure models, which form the basis for our own proprietary pricing models.
These computer-based loss modeling systems utilize direct exposure information
obtained from our clients and independent external data to assess each client's
potential for catastrophe losses. We believe that modeling is an important part
of the underwriting process for catastrophe exposure pricing. However, these
models depend on the quality of the information obtained from our clients and
the external data we obtain from third parties and may prove inadequate for
determining the pricing for certain catastrophe exposures.

            Many of our reinsurance contracts do not contain an aggregate loss
limit or a loss ratio limit, which means that there is no contractual limit to
the losses that we may be required to pay pursuant to such reinsurance
contracts. Substantially all of our property reinsurance contracts with natural
catastrophe exposure have occurrence limits that limit our exposure.
Substantially all of our high layer property, casualty and marine excess-of-loss
contracts also contain aggregate loss limits, with limited reinstatements of an
occurrence limit, which restore the original limit under the contract after the
limit has been depleted by losses incurred on that treaty.

            Various provisions of our contracts, such as limitations or
exclusions from coverage or choice of forum, may not be enforceable in the
manner we intend, due to, among other things, disputes relating to coverage and
choice of legal forum. Underwriting is a matter of judgment, involving important
assumptions about matters that are inherently difficult to predict and beyond
our control, and for which historical experience and probability analysis may
not provide sufficient guidance. One or more catastrophic or other events could
result in claims that substantially exceed our expectations, which could have a
material adverse effect on our financial condition or our results of operations,
possibly to the extent of eliminating our shareholders' equity and statutory
surplus.

If we are required to increase our liabilities for losses and LAE, our operating
results may be adversely affected.

            We are required by applicable insurance laws and regulations and
U.S. GAAP to establish liabilities on our consolidated balance sheet for payment
of losses and LAE that will arise from our reinsurance products. At any time,
these liabilities may prove to be inadequate to cover our actual losses and LAE.
To the extent these liabilities may be insufficient to cover actual losses or
LAE, we will have to add to these liabilities and incur a charge to our
earnings, which could have a material adverse effect on our financial condition,
results of operations and cash flows.

            The liabilities established on our consolidated balance sheet do not
represent an exact calculation of liability, but rather are estimates of the
expected cost of the ultimate settlement of losses. All of our liability
estimates are based on actuarial and statistical projections at a given time,
facts and circumstances known at that time and estimates of trends in loss
severity and other variable factors, including new concepts of liability and
general economic conditions. Changes in these trends or other variable factors
could result in claims in excess of the liabilities that we have established.

            Unforeseen losses, the type or magnitude of which we cannot predict,
may emerge in the future. These additional losses could arise from changes in
the legal environment, catastrophic events, extraordinary events affecting our
clients such as reorganizations and liquidations or changes in general economic
conditions.

                                    - 64 -
<PAGE>

            In addition, because we, like other reinsurers, do not separately
evaluate each of the individual risks assumed under reinsurance treaties, we are
largely dependent on the original underwriting decisions made by ceding
companies. We are subject to the risk that our ceding companies may not have
adequately evaluated the risks to be reinsured and that the premiums ceded to us
may not adequately compensate us for the risks we assume.

            Under U.S. GAAP, Platinum US, Platinum UK and Platinum Bermuda are
not permitted to establish liabilities until an event occurs which may give rise
to a loss. Once such an event occurs, liabilities are established based upon
estimates of the total losses incurred by the ceding companies and an estimate
of the portion of such loss our three operating subsidiaries have reinsured. As
a result, only liabilities applicable to losses incurred up to the reporting
date may be established, with no allowance for the provision of a contingency
reserve to account for unexpected future losses. Losses arising from future
events will be estimated and recognized at the time the loss is incurred. Such
future losses could be substantial.

Retrocessional reinsurance may become unavailable on acceptable terms.

            In order to limit the effect on our financial condition of large and
multiple losses, we may buy retrocessional reinsurance, which is reinsurance for
our own account. From time to time, market conditions have limited, and in some
cases have prevented, insurers and reinsurers from obtaining the types and
amounts of reinsurance that they consider adequate for their business needs. If
we are unable or unwilling to obtain retrocessional reinsurance, our financial
position and results of operations may be materially adversely affected by
catastrophic losses. Elimination of all or portions of our retrocessional
coverage could subject us to increased, and possibly material, exposure or could
cause us to underwrite less business.

            A retrocessionaire's insolvency or its inability or unwillingness to
make payments under the terms of its reinsurance treaty with us could have a
material adverse effect on us. Therefore, our retrocessions subject us to credit
risk because the ceding of risk to retrocessionaires does not relieve a
reinsurer of its liability to the ceding companies.

We are dependent on the business provided to us by reinsurance brokers and we
may be exposed to liability for brokers' failure to make payments to clients for
their claims.

            We market most of our reinsurance products through reinsurance
brokers. The reinsurance brokerage industry generally, and our sources of
business specifically, are concentrated. The loss of business relationships with
any of our top five brokers could have a material adverse effect on our
business. In addition, some of these brokers have invested in new Bermuda
reinsurance companies that may compete with us.

            In accordance with industry practice, we expect to frequently pay
amounts owing in respect of claims under our policies to reinsurance brokers,
for payment over to the ceding companies. In the event that a broker fails to
make such a payment, depending on the jurisdiction, we may remain liable to the
ceding company for the deficiency. Conversely, in certain jurisdictions, when
premiums for such policies are paid to reinsurance brokers for payment over to
us, such premiums will be deemed to have been paid and the ceding company will
no longer be liable to us for those amounts whether or not actually received by
us. Consequently, we assume a degree of credit risk associated with our brokers
during the payment process.

            In October 2004, the Office of the Attorney General of the State of
New York announced that it had commenced a civil suit against Marsh & McLennan
Companies ("Marsh"), alleging that certain of its

                                    - 65 -
<PAGE>

business practices were fraudulent and violated antitrust and securities laws.
This action resulted from an industry-wide investigation relating to the conduct
of insurance and reinsurance brokers, which is ongoing. Regulatory authorities
in several other states have opened similar investigations. In January 2005,
Marsh agreed to pay $850 million to settle these charges. The Company was not a
party to this litigation and did not receive any subpoena or information
requests with respect to this litigation. We underwrite substantially all of our
reinsurance through brokers, including a substantial portion through Marsh. We
are unable to predict the impact, if any, that these investigations, and any
increased regulatory oversight that might result therefrom, may have on our
business.

The current investigations into certain non-traditional, or loss mitigation,
insurance products could have a material adverse effect on our financial
condition or results of operations.

            In November and December 2004, we received subpoenas from the SEC
and the Office of the Attorney General for the State of New York for documents
and information relating to certain non-traditional, or loss mitigation,
insurance products. We are fully cooperating in responding to all such requests.
Other reinsurance companies have reported receiving similar subpoenas and
requests. This investigation appears to be at a very preliminary stage and,
accordingly, we are unable to predict the direction the investigation will take
and the impact, if any, it may have on our business.

The property and casualty reinsurance business is historically cyclical, and we
expect to experience periods with excess underwriting capacity and unfavorable
pricing.

            Historically, property and casualty reinsurers have experienced
significant fluctuations in operating results. Demand for reinsurance is
influenced significantly by underwriting results of primary insurers and
prevailing general economic and market conditions, all of which affect ceding
companies' decisions as to the amount or portion of risk that they retain for
their own accounts and consequently reinsurance premium rates. The supply of
reinsurance is related to prevailing prices, the levels of insured losses and
levels of industry surplus which, in turn, may fluctuate in response to changes
in rates of return on investments being earned in the reinsurance industry. As a
result, the property and casualty reinsurance business historically has been a
cyclical industry, characterized by periods of intense price competition due to
excessive underwriting capacity as well as periods when shortages of capacity
permitted favorable pricing. We can expect to experience the effects of such
cyclicality.

            The cyclical trends in the industry and the industry's profitability
can also be affected significantly by volatile and unpredictable developments,
including what management believes to be a trend of courts to grant increasingly
larger awards for certain damages, natural disasters (such as catastrophic
hurricanes, windstorms, tornadoes, earthquakes and floods), fluctuations in
interest rates, changes in the investment environment that affect market prices
of and income and returns on investments and inflationary pressures that may
tend to affect the size of losses experienced by primary insurers. We cannot
predict whether market conditions will improve, remain constant or deteriorate.
A return to unfavorable market conditions may affect our ability to write
reinsurance at rates that we consider appropriate relative to the risk assumed.
If we cannot write property and casualty reinsurance at appropriate rates, our
ability to transact reinsurance business would be significantly and adversely
affected.

Our invested assets are subject to market volatility and interest rate and
currency exchange rate fluctuation.

            The Company's principal invested assets are fixed maturities, which
are subject to the market risk of potential losses from adverse changes in
interest rates. Depending on our classification of our investments as
available-for-sale, trading or other assets, changes in the market value of our
securities are

                                    - 66 -
<PAGE>

reflected in either our consolidated balance sheet or statement of income. The
Company's investment portfolio is also subject to credit risk resulting from
adverse changes in the issuer's ability to repay the debt. These risks could
materially adversely affect our results of operations.

            The Company's principal exposure to foreign currency risk is its
obligation to settle claims in foreign currencies. The possibility exists that
the Company may incur foreign currency exchange gains or losses as it ultimately
settles claims required to be paid in foreign currencies. To the extent the
Company does not seek to hedge its foreign currency risk or hedges prove
ineffective, the resulting impact of a movement in foreign currency exchange
rate could materially adversely affect our results of operations.

Platinum Holdings is a holding company and, consequently, its cash flow is
dependent on dividends, interest and other permissible payments from its
subsidiaries.

            Platinum Holdings is a holding company that conducts no reinsurance
operations of its own. All operations are conducted by its wholly owned
operating subsidiaries, Platinum US, Platinum UK and Platinum Bermuda. As a
holding company, Platinum Holdings' cash flow consists primarily of dividends,
interest and other permissible payments from its subsidiaries. Platinum Holdings
depends on such payments for general corporate purposes and to meet its
obligations, including the payment of any dividends to its shareholders.
Additionally, under the Bermuda Companies Act 1981, Platinum Holdings may
declare or pay a dividend only if, among other things, it has reasonable grounds
for believing that it is, or after the payment would be, able to pay its
liabilities as they become due. For a discussion of the legal limitations on our
subsidiaries' ability to pay dividends to Platinum Holdings, see "Business -
Regulation."

The imposition of U.S. corporate income tax on Platinum Holdings and its
non-U.S. subsidiaries could adversely affect our results of operations.

            We believe that Platinum Holdings, Platinum UK, Platinum Bermuda and
Platinum Ireland each operate in such a manner that none of these companies is
subject to U.S. corporate income tax because they are not engaged in a trade or
business in the U.S. Nevertheless, because definitive identification of
activities which constitute being engaged in a trade or business in the U.S. is
not provided by the tax authorities, the U.S. Internal Revenue Service might
contend that any of these companies is engaged in a trade or business in the
U.S., which would subject such company to U.S. tax at regular corporate rates on
the income that is effectively connected with the U.S. trade or business, plus
an additional 30% "branch profits" tax on such income remaining after the
regular tax in certain circumstances. Any such tax could materially adversely
affect our results of operations.

The regulatory system under which we operate, and potential changes thereto,
could significantly and adversely affect our business.

            The business of reinsurance is regulated in most countries, although
the degree and type of regulation varies significantly from one jurisdiction to
another. Reinsurers are generally subject to less direct regulation than primary
insurers. In Bermuda, we operate under relatively less intensive regulatory
requirements. However, in the United States and in the United Kingdom licensed
reinsurers are highly regulated and must comply with financial supervision
standards comparable to those governing primary insurers. For a detailed
discussion of the regulatory requirements to which Platinum Holdings and its
subsidiaries are subject, see "Business -- Regulation." Any failure to comply
with applicable laws could result in the imposition of significant restrictions
on our ability to do business, and could also result in fines and other
sanctions, any or all of which could materially adversely affect our financial
results and operations. In addition, these statutes and regulations may, in
effect, restrict the ability of our subsidiaries to write new business or, as
indicated above, distribute funds to Platinum Holdings. In recent years, some

                                    - 67 -
<PAGE>

state legislatures have considered or enacted laws that may alter or increase
state authority to regulate insurance companies and insurance holding companies.
Moreover, the NAIC and state insurance regulators regularly reexamine existing
laws and regulations, interpretations of existing laws and the development of
new laws that may be more restrictive or may result in higher costs to us than
current statutory requirements.

            Platinum Bermuda is not registered or licensed as an insurance
company in any jurisdiction outside Bermuda. Platinum Bermuda conducts its
business solely through its offices in Bermuda and does not maintain an office,
and its personnel do not conduct any insurance activities, in the U.S. or
elsewhere. Although Platinum Bermuda does not believe it is in violation of
insurance laws of any jurisdiction outside Bermuda, inquiries or challenges to
Platinum Bermuda's insurance activities may still be raised in the future.

            The offshore insurance and reinsurance regulatory framework recently
has become subject to increased scrutiny in many jurisdictions, including U. S.
federal and various state jurisdictions. In the past, there have been
congressional and other proposals in the United States regarding increased
supervision and regulation of the insurance industry, including proposals to
supervise and regulate reinsurers domiciled outside the United States. If
Platinum Bermuda were to become subject to any insurance laws and regulations of
the United States or any U.S. state, which are generally more restrictive than
those applicable to it in Bermuda, Platinum Bermuda might be required to post
deposits or maintain minimum surplus levels and might be prohibited from
engaging in lines of business or from writing specified types of policies or
contracts. Complying with those laws could have a material adverse effect on the
ability of the Company to conduct its business.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET AND CREDIT RISK

            The Company's principal invested assets are fixed maturities, which
are subject to the risk of potential losses from adverse changes in market rates
and prices and credit risk resulting from adverse changes in the borrower's
ability to meet its debt service obligations. The Company's strategy to limit
this risk is to place its investments in high quality credit issues and to limit
the amount of credit exposure with respect to any one issuer or industry. The
Company also selects investments with characteristics such as duration, yield,
currency and liquidity to reflect the underlying characteristics of related
estimated claim liabilities. The Company attempts to minimize the credit risk by
actively monitoring the portfolio and requiring a minimum average credit rating
for its portfolio of A2 as defined by Moody's Investor Service. As of December
31, 2004, the portfolio has a dollar weighted average rating of Aa3.

            The Company has other receivable amounts subject to credit risk. The
most significant of these are reinsurance premiums receivable from ceding
companies. To mitigate credit risk related to premium receivables, we have
established standards for ceding companies and, in most cases, have a
contractual right of offset thereby allowing the Company to settle claims net of
any premium receivable. While credit risk related to amounts recoverable from
retrocessionaires is not material as of December 31, 2004, we consider the
financial strength of retrocessionaires when determining whether to purchase
coverage from them. Retrocessional coverage is generally obtained from companies
rated "A" or better by Best's unless the retrocessionaire's obligations are
fully collateralized. For exposures where losses become known and are paid in a
relatively short period of time, we may obtain retrocessional coverage from
companies rated "A-" or better by Best's. The financial performance and rating
status of all material retrocessionaires is routinely monitored.

                                    - 68 -
<PAGE>

            In accordance with industry practice, the Company frequently pays
amounts in respect of claims under contracts to reinsurance brokers, for payment
over to the ceding companies. In the event that a broker fails to make such a
payment, depending on the jurisdiction, the Company may remain liable to the
ceding company for the payment. Conversely, in certain jurisdictions, when
premiums for such contracts are paid to reinsurance brokers for payment over to
the Company, such premiums will be deemed to have been paid and the ceding
company will no longer be liable to the Company for those amounts whether or not
actually received by the Company. Consequently, the Company assumes a degree of
credit risk associated with its brokers during the payment process. To mitigate
credit risk related to reinsurance brokers, the Company has established
guidelines for brokers and intermediaries.

INTEREST RATE RISK

            The Company is exposed to fluctuations in interest rates. Movements
in rates can result in changes in the market value of our fixed income portfolio
and can cause changes in the actual timing of receipt of certain principal
payments. Rising interest rates result in a decline in the market value of our
fixed income portfolio and can expose our portfolio, in particular our mortgage
backed securities, to extension risk. Conversely, a decline in interest rates
will result in a rise in the market value of our fixed income portfolio and can
expose our portfolio, in particular our mortgage backed securities, to
prepayment risk. The aggregate hypothetical impact on our fixed income
portfolio, generated from an immediate parallel shift in the treasury yield
curve, as of December 31, 2004 is approximately as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                          Interest Rate Shift in Basis Points
                                        ----------------------------------------------------------------------
                                          - 100 bp      - 50 bp       Current      + 50 bp         + 100 bp
                                        ------------   ----------    ---------    -----------    -------------
<S>                                     <C>            <C>           <C>          <C>            <C>
Total market value ..................   $ 2,320,272    2,279,434     2,240,202    2,194,504        2,151,497

Percent change in market value ......           3.6%         1.8%            -         (2.0%)           (4.0%)

Resulting unrealized appreciation /
  (depreciation) ....................   $    93,051       52,213        12,981      (32,717)     $   (75,724)
</TABLE>

FOREIGN CURRENCY RISK

            The Company writes business on a worldwide basis. Consequently, the
Company's principal exposure to foreign currency risk is its transaction of
business in foreign currencies. Changes in foreign currency exchange rates can
impact revenues, costs, receivables and liabilities, as measured in the U.S.
dollar, our financial reporting currency. The Company seeks to minimize its
exposure to its largest foreign currency risks by holding invested assets
denominated in foreign currencies to offset liabilities denominated in foreign
currencies.

SOURCES OF FAIR VALUE

            The following table presents the carrying amounts and estimated fair
values of the Company's financial instruments as of December 31, 2004 ($ in
thousands):

                                    - 69 -
<PAGE>

<TABLE>
<CAPTION>
                                                                Carrying          Fair
                                                                 Amount          Value
                                                             -------------   -------------
<S>                                                          <C>             <C>
Financial assets:
  Fixed maturities available-for-sale ....................   $   2,157,529   $   2,157,529
  Fixed maturity trading securities ......................          82,673          82,673
                                                             -------------   -------------
        Total fixed maturities ...........................       2,240,202       2,240,202
                                                             -------------   -------------
  Other invested asset ...................................           6,769           6,769

Financial liabilities:
  Debt obligations .......................................   $     137,500   $     165,000
</TABLE>

            The fair value of fixed maturities is based on quoted closing market
prices at the reporting date for those or similar investments. The fair values
of debt obligations are based on quoted market prices. Other invested asset
represents a strategic investment in a non-public reinsurance company and is
carried at estimated fair value.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            The consolidated financial statements of the Company as of December
31, 2004 and 2003 and for the years then ended and for the period from April 19,
2002 (date of inception) through December 31, 2002, together with the report
thereon by KPMG LLP, the Company's independent registered public accounting
firm, are set forth on pages F-1 through F-40 hereto. The combined statements of
the reinsurance underwriting segment of St. Paul prior to the Initial Public
Offering (the "Predecessor") for the period from January 1, 2002 through
November 1, 2002, together with the report thereon by KPMG LLP, the
Predecessor's independent registered public accounting firm, are set forth on
pages P-1 through P-14 hereto.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

            None.

ITEM 9A. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

            Our management, including the Chief Executive Officer and Chief
Financial Officer, carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
period covered by this report. Based on that evaluation, our management,
including the Chief Executive Officer and Chief Financial Officer, concluded
that our disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed by us in reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
timely reported as specified in the SEC's rules and forms.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

            Our management, including the Chief Executive Officer and Chief
Financial Officer, is responsible for establishing and maintaining adequate
internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15(d)-15(f) under the Exchange Act). Our management, under the
supervision and with the participation of the Chief Executive Officer and Chief
Financial Officer,

                                    - 70 -
<PAGE>

conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2004 based on the integrated framework
published in September 1992 by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, our management concluded that our
internal control over financial reporting was effective in that it provides
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that provide reasonable assurance that
transactions are recorded as necessary and that expenditures are being made only
with proper authorization.

      Our management, including the Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal control over financial reporting will prevent all error and all fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

      No changes occurred during the quarter ended December 31, 2004 in our
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

                                     - 71 -
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Platinum Underwriters Holdings, Ltd:

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Platinum
Underwriters Holdings, Ltd. maintained effective internal control over financial
reporting as of December 31, 2004, based on criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

                                     - 72 -
<PAGE>

In our opinion, management's assessment that Platinum Underwriters Holdings,
Ltd. maintained effective internal control over financial reporting as of
December 31, 2004, is fairly stated, in all material respects, based on criteria
established in Internal Control -- Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Also in our
opinion, Platinum Underwriters Holdings, Ltd. maintained, in all material
respects, effective internal control over financial reporting as of December 31,
2004, based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
Platinum Underwriters Holdings, Ltd. and subsidiaries as of December 31, 2004
and 2003, and the related consolidated statements of income and comprehensive
income, shareholders' equity, and cash flows for the years ended December 31,
2004 and 2003, and the period from April 19, 2002 (date of inception) to
December 31, 2002, and our report dated February 25, 2005 expressed an
unqualified opinion on these consolidated financial statements.

/s/ KPMG LLP

New York, New York
February 25, 2005

                                     - 73 -
<PAGE>

ITEM 9B.    OTHER INFORMATION

      None.

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The information required by this Item relating to our directors and
executive officers is incorporated herein by reference to "Proposal 1 - Election
of Directors" under the headings "Information Concerning Nominees," "Information
Concerning Executive Officers" and "Section 16(a) Beneficial Ownership Reporting
Compliance" of our definitive proxy statement to be filed pursuant to Regulation
14A of the Exchange Act for our 2005 Annual General Meeting of Shareholders (our
"Proxy Statement"). The Company intends to file the Proxy Statement prior to
April 30, 2005.

CODE OF ETHICS

      We have adopted a Code of Ethics within the meaning of Item 406 of
Regulation S-K of the Exchange Act. Our Code of Ethics applies to all of our
directors and employees including, without limitation, our principal executive
officer, our principal financial officer, our principal accounting officer and
all of our employees performing financial or accounting functions. A copy of our
Code of Ethics is posted on our website at www.platinumre.com and may be found
under the "Investor Relations" section by clicking on "Corporate Governance." In
the event that we make any amendment to, or grant any waiver from, a provision
of our Code of Ethics that requires disclosure under Item 5.05 of Form 8-K, we
will post such information on our website at the location specified above.

ITEM 11.    EXECUTIVE COMPENSATION

      The information required by this Item relating to executive compensation
is incorporated herein by reference to "Proposal 1 - Election of Directors"
under the heading "Executive Compensation" of our Proxy Statement.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            AND RELATED SHAREHOLDER MATTERS

      The information required by this Item relating to security ownership of
certain beneficial owners and management and related shareholder matters is
incorporated herein by reference to "Proposal 1 - Election of Directors" under
the headings "Equity Based Compensation Information," "Security Ownership of
Certain Beneficial Owners" and "Security Ownership of Management" of our Proxy
Statement.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by this Item relating to certain relationships
and related transactions is incorporated herein by reference to "Proposal 1 -
Election of Directors" under the heading "Related Party Transactions" of our
Proxy Statement.

                                     - 74 -
<PAGE>

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The information required by this Item relating to principal accountant
fees and services is incorporated herein by reference to "Proposal 2 -
Ratification of Selection of the Independent Registered Public Accounting Firm"
of our Proxy Statement.

                                     PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

FINANCIAL STATEMENTS

      The consolidated financial statements of the Company as of December 31,
2004 and 2003 and for the years then ended and for the period from April 19,
2002 (date of inception) through December 31, 2002, together with the report
thereon by KPMG LLP, the Company's independent registered public accounting
firm, are set forth on pages F-1 through F-40 hereto. The combined statements of
the Predecessor for the period from January 1, 2002 through November 1, 2002,
together with the report thereon by KPMG LLP, the Predecessor's independent
registered public accounting firm, are set forth on pages P-1 through P-14
hereto.

SCHEDULES SUPPORTING FINANCIAL STATEMENTS

The schedules relating to the consolidated financial statements of the Company
as of December 31, 2004 and 2003 and for the years then ended and for the period
from April 19, 2002 (date of inception) through December 31, 2002, together with
the independent registered public accounting firm's report thereon, are set
forth on pages S-1 through S-8 hereto. Schedules not referred to have been
omitted as inapplicable or not required by Regulation S-X.

EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number                                            Description
-------    ----------------------------------------------------------------------------------------------
<S>        <C>
2.1        Formation and Separation Agreement dated October 28, 2002 between The St. Paul Companies, Inc.
           and Platinum Holdings. (2)

3(i).1     Memorandum of Association of Platinum Holdings. (1)

3(ii).2    Bye-Laws of Platinum Holdings. (8)

4.1        Form of Certificate of the Common Shares of Platinum Holdings. (2)

4.2        Indenture dated October 10, 2002 among Platinum Holdings, Platinum Finance and JPMorgan Chase
           Bank. (2)

4.3        Indenture Supplement dated November 1, 2002 among Platinum Holdings, Platinum Finance and
           JPMorgan Chase Bank. (2)

4.4        Purchase Contract Agreement dated November 1, 2002 between Platinum Holdings and JPMorgan Chase
           Bank. (2)

4.5        Pledge Agreement dated November 1, 2002 among Platinum Holdings, State Street Bank and Trust
           Company and JPMorgan Chase Bank. (2)

4.6        Form of Senior Note of Platinum Finance. (2)

4.7        Form of Guarantee of Platinum Holdings. (2)
</TABLE>

                                     - 75 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
 4.8        Form of Normal Unit. (2)

 4.9        Form of Stripped Unit. (2)

10.1*       Share Unit Plan for Non-Employee Directors. (2)

10.2*       Summary of Director Compensation  (12)

10.3*       2002 Share Incentive Plan. (2)

10.4*       2002 Share Incentive Plan (UK Sub-Plan).  (7)

10.5*       Annual Incentive Plan.  (7)

10.6*       Section 162(m) Performance Incentive Plan.  (7)

10.7*       Executive Retirement Savings Plan.  (7)

10.8*       Executive Bonus Deferral Plan.  (7)

10.9*       Executive Incentive Plan.  (7)

10.10*      First Amendment to the Executive Incentive Plan dated November 5, 2004.  (9)

10.11*      Capital Accumulation Plan. (2)

10.12*      Employment Agreement dated July 5, 2002 between Michael E. Lombardozzi and St. Paul Re, Inc. and
            assumed by Platinum Holdings.  (1)

10.13*      Amendment dated August 15, 2002 to the Employment Agreement dated July 5, 2002 between Michael
            E. Lombardozzi and St. Paul Re, Inc. and assumed by Platinum Holdings.  (1)

10.14*      Amendment dated March 12, 2004 to the Employment Agreement dated July 5, 2002 between Michael E.
            Lombardozzi and St. Paul Re, Inc. and assumed by Platinum Holdings.  (7)

10.15*      Letter Agreement dated March 1, 2002 between Steven H. Newman and The St. Paul Companies, Inc.
            (1)

10.16*      Amendment dated June 14, 2002 to the Letter Agreement dated March 1, 2002 between Steven H.
            Newman and The St. Paul Companies, Inc. (1)

10.17*      Consulting Agreement dated March 1, 2002 between Steven H. Newman and The St. Paul Companies,
            Inc. and assumed by Platinum US.  (1)

10.18*      Amendment dated March 12, 2004 to the Consulting Agreement dated March 1, 2002 between Steven H.
            Newman and The St. Paul Companies, Inc. and assumed by Platinum US.  (7)

10.19*      Employment Agreement dated August 4, 2004 between Michael D. Price and Platinum US.  (8)

10.20*      Employment Agreement dated July 3, 2002 between William A. Robbie and St. Paul Re, Inc. and
            assumed by Platinum Holdings.  (1)

10.21*      Amendment dated August 16, 2002 to the Employment Agreement dated July 3, 2002 between William
            A. Robbie and St. Paul Re, Inc. (1)
</TABLE>

                                     - 76 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
10.22*      Amendment dated March 12, 2004 to the Employment Agreement dated July 3, 2002 between William A.
            Robbie and St. Paul Re, Inc. and assumed by Platinum Holdings.  (7)

10.23*      Separation Agreement dated June 24, 2004 between William A. Robbie and Platinum Holdings.  (8)

10.24*      Letter Agreement dated August 14, 2002 between Neal J. Schmidt and St. Paul Re, Inc. and assumed
            by Platinum US.   (2)

10.25*      Separation and Consulting Agreement dated May 13, 2003 between Jerome T. Fadden and Platinum
            Holdings.  (3)

10.26*      Letter Agreement, dated June 20, 2003 between Gregory E.A. Morrison and Platinum Holdings. (4)

10.27*      Amendment dated January 7, 2004 to the Letter Agreement dated June 20, 2003 between Gregory E.A.
            Morrison and Platinum Holdings.  (6)

10.28       Securities Purchase Agreement dated July 20, 2003 between Gregory E.A. Morrison and Platinum
            Holdings. (4)

10.29*      Employment Agreement dated June 24, 2004 between Joseph F. Fisher and Platinum Holdings.  (8)

10.30*      Letter Agreement dated June 24, 2004 between H. Elizabeth Mitchell and Platinum US.  (8)

10.31       Capital Support Agreement dated November 1, 2002 between Platinum Holdings and Platinum UK. (2)

10.32       Capital Support Agreement dated November 26, 2002 between Platinum Holdings and Platinum US. (2)

10.33       Registration Rights Agreement dated November 1, 2002 between The St. Paul Companies, Inc. and
            Platinum Holdings. (2)

10.34       Option Agreement dated November 1, 2002 among St. Paul Reinsurance Company Limited, Platinum
            Holdings and St. Paul.  (2)

10.35       Option Agreement dated November 1, 2002 between St. Paul and Platinum Holdings. (2)

10.36       Amendment dated January 10, 2005 to the Option Agreement dated November 1, 2002 among St. Paul
            Reinsurance Company Limited, Platinum Holdings and St. Paul.  (11)

10.37       Amendment dated January 10, 2005 to the Option Agreement dated November 1, 2002 between St. Paul
            and Platinum Holdings.  (11)

10.38       Employee Benefits and Compensation Matters Agreement dated November 1, 2002 between St. Paul and
            Platinum US. (2)

10.39       Master Services Agreement dated November 1, 2002 between Platinum Holdings and St. Paul. (2)

10.40       Letter Agreement dated June 30, 2003 extending the Master Services Agreement dated November 1,
            2002 between Platinum Holdings and St. Paul.  (4)
</TABLE>

                                     - 77 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
10.41       Letter Agreement dated May 19, 2004 extending the Master Services Agreement dated November 1,
            2002 between Platinum Holdings and St. Paul.  (8)

10.42       UK Master Services Agreement dated November 1, 2002 between St. Paul Reinsurance Company Limited
            and Platinum UK. (2)

10.43       Addendum dated December 10, 2003 to the UK Master Services Agreement dated November 1, 2002
            between St. Paul Reinsurance Company Limited and Platinum UK.  (6)

10.44       Runoff Services Agreement dated November 1, 2002 among Platinum US, Mountain Ridge Insurance
            Company and St. Paul Fire and Marine Insurance Company. (2)

10.45       U.K. Runoff Services Agreement dated November 1, 2002 between St. Paul Reinsurance Company
            Limited and Platinum UK. (2)

10.46       Underwriting Management Agreement dated November 1, 2002 between St. Paul Fire and Marine
            Insurance Company and Platinum US. (2)

10.47       U.K. Underwriting Agency and Underwriting Management Agreement dated November 1, 2002 between
            St. Paul Reinsurance Company Limited and Platinum US. (2)

10.48       U.K. Business Transfer Agreement dated November 1, 2002 among St. Paul Reinsurance Company
            Limited, Platinum UK and St. Paul Management Limited. (2)

10.49       Intra-Group Asset Transfer Agreement dated November 1, 2002 among Platinum Holdings, St. Paul
            Reinsurance Company Limited and St. Paul Management Limited. (2)

10.50       Form of Transitional Trademark License Agreement between St. Paul and Platinum Holdings. (2)

10.51       Investment Agreement dated September 20, 2002 among Platinum Holdings, St. Paul, and
            RenaissanceRe Holdings Ltd. (2)

10.52       First Amendment dated November 1, 2002 to the Investment Agreement dated September 20, 2002
            among Platinum Holdings, St. Paul, and RenaissanceRe Holdings Ltd. (2)

10.53       Transfer Restrictions, Registration Rights and Standstill Agreement dated November 1, 2002
            between St. Paul and Platinum Holdings. (2)

10.54       Amendment dated March 22, 2004 to Registration Rights Agreement dated November 1, 2002 between
            St. Paul and Platinum Holdings. (7)

10.55       Reimbursement Letter Agreement dated March 25, 2004 between St. Paul and Platinum Holdings. (7)

10.56       Option Agreement dated November 1, 2002 between Platinum Holdings and RenaissanceRe Holdings
            Ltd. (2)

10.57       Amended and Restated Option Agreement dated November 18, 2004 between Platinum Holdings and
            RenaissanceRe Holdings Ltd. (10)
</TABLE>

                                     - 78 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
10.58       Services and Capacity Reservation Agreement dated November 1, 2002 between Platinum Holdings and
            RenaissanceRe Holdings Ltd. (2)

10.59       100% Quota Share Retrocession Agreement (traditional) dated November 1, 2002 between St. Paul
            Fire and Marine Insurance Company and Platinum US. (2)

10.60       100% Quota Share Retrocession Agreement (non-traditional - A) dated November 1, 2002 between St.
            Paul Fire and Marine Insurance Company and Platinum US. (2)

10.61       100% Quota Share Retrocession Agreement (non-traditional - B-1) dated November 1, 2002 between
            St. Paul Fire and Marine Insurance Company and Platinum US. (2)

10.62       100% Quota Share Retrocession Agreement (non-traditional - B-2) dated November 1, 2002 between
            St. Paul Fire and Marine Insurance Company and Platinum US. (2)

10.63       100% Quota Share Retrocession Agreement (non-traditional - C) dated November 1, 2002 between St.
            Paul Fire and Marine Insurance Company and Platinum US. (2)

10.64       100% Quota Share Retrocession Agreement (non-traditional - D-3) dated November 1, 2002 between
            St. Paul Fire and Marine Insurance Company and Platinum US. (2)

10.65       100% Quota Share Retrocession Agreement (non-traditional - D-4) dated November 1, 2002 between
            St. Paul Fire and Marine Insurance Company and Platinum US. (2)

10.66       100% Quota Share Retrocession Agreement (non-traditional - D-1) dated November 1, 2002 between
            Mountain Ridge Insurance Company and Platinum US. (2)

10.67       100% Quota Share Retrocession Agreement (non-traditional - D-2) dated November 1, 2002 between
            Mountain Ridge Insurance Company and Platinum US. (2)

10.68       Commutation and Release Agreement dated June 11, 2003 between Platinum US and Mountain Ridge
            Insurance Company. (4)

10.69       100% Quota Share Retrocession Agreement (non-traditional - D Stop Loss) dated November 1, 2002
            between Mountain Ridge Insurance Company and Platinum US. (2)

10.70       100% Quota Share Retrocession Agreement (non-traditional - D Spread Loss) dated November 1, 2002
            between Mountain Ridge Insurance Company and Platinum US. (2)

10.71       100% Quota Share Retrocession Agreement (non-traditional - E) dated November 1, 2002 between
            Mountain Ridge Insurance Company and Platinum US. (2)

10.72       UK 100% Quota Share Retrocession Agreement (traditional) dated November 1, 2002 between St. Paul
            Reinsurance Company Limited and Platinum US. (2)

10.73       UK 100% Quota Share Retrocession Agreement (non-traditional - A) dated November 1, 2002 between
            St. Paul Reinsurance Company Limited and Platinum US. (2)

10.74       UK 100% Quota Share Retrocession Agreement (non-traditional - B-1) dated November 1, 2002
            between St. Paul Reinsurance Company Limited and Platinum US. (2)

10.75       100% Quota Share Retrocession Agreement dated November 27, 2002 between St. Paul Reinsurance
            Company Limited and Platinum UK. (2)

10.76       Property Catastrophe Excess of Loss Reinsurance Contract dated September 10, 2003 between the
            Glencoe Group of Companies and Platinum US (15% participation). (7)
</TABLE>

                                     - 79 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
10.77       Property Catastrophe Excess of Loss Reinsurance Contract dated September 10, 2003 between the
            Glencoe Group of Companies and Platinum US (5% participation). (7)

10.78       Security Agreement dated November 27, 2002 between Platinum UK and St. Paul Reinsurance Company
            Limited. (2)

10.79       Control Agreement dated November 27, 2002 between Platinum UK, St. Paul Reinsurance Company
            Limited and State Street Bank and Trust Company. (2)

10.80       Discretionary Investment Advisory Agreement dated November 27, 2002 between Platinum UK and
            Alliance Capital Management L.P. (2)

10.81       Revised and Amended Trust Agreement dated November 1, 2002 and amended December 12, 2002, among
            Platinum US, St. Paul Fire and Marine Insurance Company and State Street Bank and Trust Company.
            (2)

10.82       Letter Amendment dated December 12, 2002 to the Revised and Amended Trust Agreement dated
            November 1, 2002 and amended December 12, 2002, among Platinum US, St. Paul Fire and Marine
            Insurance Company, Mountain Ridge Insurance Company, and State Street Bank and Trust Company. (2)

10.83       Discretionary Investment Advisory Agreement dated November 4, 2002 between Platinum US and
            Alliance Capital Management L.P. (2)

10.84       Revised and Amended Trust Agreement dated November 1, 2002 and amended December 12, 2002, among
            Platinum US, Mountain Ridge Insurance Company and State Street Bank and Trust Company. (2)

10.85       Discretionary Investment Advisory Agreement dated November 4, 2002 between Platinum US and
            Alliance Capital Management L.P. (2)

10.86       Quota Share Retrocession Agreement dated November 26, 2002 between Platinum Bermuda and Platinum
            UK. (2)

10.87       Quota Share Retrocession Agreement dated March 27, 2003 between Platinum Bermuda and Platinum
            UK.  (7)

10.88       Addendum No. 1 effective April 1, 2003 to the Quota Share Retrocession Agreement dated March 27,
            2003, between Platinum Bermuda and Platinum UK.  (7)

10.89       Addendum No. 2 effective March 27, 2003 to the Quota Share Retrocession Agreement dated March
            27, 2003, between Platinum Bermuda and Platinum UK.  (7)

10.90       Security Agreement dated November 26, 2002 between Platinum Bermuda and Platinum UK. (2)

10.91       Addendum No. 1 effective January 1, 2004 to the Security Agreement dated November 26, 2002,
            between Platinum Bermuda and Platinum UK. (7)

10.92       Control Agreement dated November 26, 2002 among Platinum Bermuda, Platinum UK and State Street
            Bank and Trust Company. (2)

10.93       Discretionary Investment Advisory Agreement dated November 26, 2002 between Platinum Bermuda and
            Platinum UK. (2)
</TABLE>

                                     - 80 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
10.94       Trust Agreement effective January 1, 2003 among Platinum Bermuda, Platinum US and State Street
            Bank and Trust Company. (4)

10.95       Quota Share Retrocession Agreement dated May 13, 2003 between Platinum Bermuda and Platinum US.
            (4)

10.96       Addendum No. 1 dated December 31, 2003 to the Quota Share Retrocession Agreement dated May 13,
            2003, between Platinum Bermuda and Platinum US.  (6)

10.97       Quota Share Retrocession Agreement dated May 6, 2004 between Platinum Bermuda and Platinum US.
            (8)

10.98       Aggregate Excess of Loss Retrocession Agreement dated June 11, 2003 between Platinum US and
            Mountain Ridge Insurance Company. (4)

10.99       Excess of Loss Retrocession Agreement dated April 15, 2004 between Platinum UK and Platinum US.
            (7)

10.100      Referral Agreement between Platinum Bermuda and Renaissance Underwriting Managers Ltd. (4)

10.101      Referral Agreement between Platinum US and Renaissance Underwriting Managers Ltd. (6)

10.102      Novation and Transfer Agreement for the Multi-Line Excess of Loss Reinsurance Agreement dated
            September 16, 2003, among Platinum US, St. Paul Fire and Marine Insurance Company and Wisconsin
            Mutual Insurance Company, effective as of January 1, 2003. (5)

10.103      Novation and Transfer Agreement for the Casualty Excess of Loss Reinsurance Agreement dated
            September 16, 2003, among Platinum US, St. Paul Fire and Marine Insurance Company and Wisconsin
            Mutual Insurance Company, effective as of January 1, 2003. (5)

10.104      Novation and Transfer Agreement for the First Property Catastrophe Excess of Loss Reinsurance
            Agreement dated September 16, 2003, among Platinum US, St. Paul Fire and Marine Insurance
            Company and Wisconsin Mutual Insurance Company, effective as of January 1, 2003. (5)

10.105      Novation and Transfer Agreement for the Second Property Catastrophe Excess of Loss Reinsurance
            Agreement dated September 16, 2003, among Platinum US, St. Paul Fire and Marine Insurance
            Company and Wisconsin Mutual Insurance Company, effective as of January 1, 2003. (5)

10.106      Novation and Transfer Agreement for the Third Property Catastrophe Excess of Loss Reinsurance
            Agreement dated September 16, 2003, among Platinum US, St. Paul Fire and Marine Insurance
            Company and Wisconsin Mutual Insurance Company, effective as of January 1, 2003. (5)

10.107      Novation and Transfer Agreement for the Casualty Clash Excess of Loss Reinsurance Contract
            effective as of January 1, 2003, among Platinum US, St. Paul Fire and Marine Insurance Company
            and Crusader Insurance Company. (6)
</TABLE>

                                     - 81 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
10.108      Novation and Transfer Agreement for the Property Clash Excess of Loss Reinsurance Contract
            effective as of January 1, 2003, among Platinum US, St. Paul Fire and Marine Insurance Company
            and Crusader Insurance Company. (6)

10.109      Novation and Transfer Agreement for the Multi Line Excess of Loss Reinsurance Contract effective
            as of January 1, 2003, among Platinum US, St. Paul Fire and Marine Insurance Company and
            Crusader Insurance Company. (6)

10.110      Novation and Transfer Agreement for the Property Catastrophe Excess of Loss Reinsurance
            Agreement dated February 19, 2004, among Platinum US, St. Paul Fire and Marine Insurance Company
            and Germantown Mutual Insurance Company, effective as of January 1, 2003.  (7)

10.111      Novation and Transfer Agreement for the Workers' Compensation and Employers' Liability Excess of
            Loss Reinsurance Agreement dated February 19, 2004, among Platinum US, St. Paul Fire and Marine
            Insurance Company and Germantown Mutual Insurance Company, effective as of January 1, 2003.  (7)

10.112      Novation and Transfer Agreement for the Property Per Risk Excess of Loss Reinsurance Agreement
            dated February 19, 2004, among Platinum US, St. Paul Fire and Marine Insurance Company and
            Germantown Mutual Insurance Company, effective as of January 1, 2003.  (7)

10.113      Novation and Transfer Agreement for the Casualty Excess of Loss Reinsurance Agreement dated
            February 19, 2004, among Platinum US, St. Paul Fire and Marine Insurance Company and Germantown
            Mutual Insurance Company, effective as of January 1, 2003.  (7)

10.114      Combined Catastrophe Excess of Loss Reinsurance Contract effective January 1, 2003 for the Alfa
            Insurance Group.  (6)

10.115      Addendum No. 6 to the Interests and Liabilities Agreement with respect to the Combined
            Catastrophe Excess of Loss Reinsurance Contract between members of the Alfa Insurance Group, St.
            Paul Fire and Marine Insurance Company and Platinum US.  (6)

10.116      Guaranty dated December 31, 2003 between Platinum Holdings, as Guarantor, and Platinum US.  (6)

10.117      Guarantee dated December 31, 2003 between Platinum Holdings, as Guarantor, and Platinum UK.  (6)

21.1        Subsidiaries of Platinum Holdings. (12)

23.1        Independent Registered Public Accounting Firm's Consent (New York, New York)

23.2        Independent Registered Public Accounting Firm's Consent (Minneapolis, Minnesota)

31.1        Certification of Gregory E.A. Morrison, Chief Executive Officer of Platinum Holdings, pursuant
            to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2        Certification of Joseph F. Fisher, Chief Financial Officer of Platinum Holdings, pursuant to
            Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
</TABLE>

                                     - 82 -
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                                Description
-------     ------------------------------------------------------------------------------------------------
<S>         <C>
32.1        Certification of Gregory E.A. Morrison, Chief Executive Officer of Platinum Holdings, pursuant
            to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

32.2        Certification of Joseph F. Fisher, Chief Financial Officer of Platinum Holdings, pursuant to 18
            U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

* Items denoted with an asterisk represent management contracts or compensatory
plans or arrangements.

-----------------------
(1)   Incorporated by reference from the Registration Statement on Form S-1
      (Registration No. 333-86906) of Platinum Holdings.

(2)   Incorporated by reference from Platinum Holdings' Annual Report on Form
      10-K for the year ended December 31, 2002, filed with the Commission on
      March 31, 2003.

(3)   Incorporated by reference from Platinum Holdings' Report on Form 8-K,
      filed with the Commission on May 13, 2003.

(4)   Incorporated by reference from Platinum Holdings' Quarterly Report on Form
      10-Q for the quarter ended June 30, 2003, filed with the Commission on
      August 14, 2003.

(5)   Incorporated by reference from Platinum Holdings' Quarterly Report on Form
      10-Q for the quarter ended September 30, 2003, filed with the Commission
      on November 14, 2003.

(6)   Incorporated by reference from Platinum Holdings' Annual Report on Form
      10-K for the year ended December 31, 2003, filed with the Commission on
      March 15, 2004.

(7)   Incorporated by reference from Platinum Holdings' Quarterly Report on Form
      10-Q for the quarter ended March 31, 2004, filed with the Commission on
      May 10, 2004.

(8)   Incorporated by reference from Platinum Holdings' Quarterly Report on Form
      10-Q for the quarter ended June 30, 2004, filed with the Commission on
      August 6, 2004.

(9)   Incorporated by reference from Platinum Holdings' Current Report on Form
      8-K, filed with the Commission on November 9, 2004.

(10)  Incorporated by reference from Platinum Holdings' Current Report on Form
      8-K, filed with the Commission on November 18, 2004.

(11)  Incorporated by reference from Platinum Holdings' Current Report on Form
      8-K, filed with the Commission on January 11, 2005.

(12)  Incorporated by reference from Platinum Holdings' Annual Report on Form
      10-K, filed with the Commission on March 16, 2005

                                     - 83 -
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf of the undersigned, thereunto duly authorized in Pembroke,
Bermuda.

Date: September 20, 2005

                                     PLATINUM UNDERWRITERS HOLDINGS, LTD.

                                     /s/ Gregory E.A. Morrison
                                     --------------------------------------
                                     Gregory E.A. Morrison
                                     President and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
        Signature                           Title                   Date
--------------------------    ----------------------------------    ----
<S>                           <C>                                   <C>
/s/ Gregory E.A. Morrison     President, Chief Executive Officer      *
--------------------------    and Director
Gregory E.A. Morrison         (Principal Executive Officer)

/s/ Joseph F. Fisher          Executive Vice President and Chief      *
--------------------------    Financial Officer (Principal
Joseph F. Fisher              Financial and Accounting Officer)

/s/ Steven H. Newman          Chairman of the Board of Directors      *
--------------------------
Steven H. Newman

                              Director
--------------------------
H. Furlong Baldwin

/s/ Jonathan F. Bank          Director                                *
--------------------------
Jonathan F. Bank

                              Director
--------------------------
Dan R. Carmichael

/s/ Robert V. Deutsch         Director                                *
--------------------------
Robert V. Deutsch

                              Director
--------------------------
Peter T. Pruitt
</TABLE>

* - Signed as of September 20, 2005

                                     - 84 -
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS

                             TABLE OF CONTENTS PAGE

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                  <C>
Report of Independent Registered Public Accounting Firm............................................   F-2

Consolidated Balance Sheets as of December 31, 2004 and 2003.......................................   F-3

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2004
    and 2003 and the period from April 19, 2002 (date of inception) through December 31, 2002......   F-4

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2004 and 2003 and
    the period from April 19, 2002 (date of inception) through December 31, 2002...................   F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003 and the
    period from April 19, 2002 (date of inception) through December 31, 2002.......................   F-6

Notes to Consolidated Financial Statements.........................................................   F-7
</TABLE>

                                       F-1

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Platinum Underwriters Holdings, Ltd:

We have audited the accompanying consolidated balance sheets of Platinum
Underwriters Holdings, Ltd. and subsidiaries as of December 31, 2004 and 2003,
and the related consolidated statements of income and comprehensive income,
shareholders' equity, and cash flows for the years ended December 31, 2004 and
2003 and the period from April 19, 2002 (date of inception) to December 31,
2002. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Platinum
Underwriters Holdings, Ltd. and subsidiaries as of December 31, 2004 and 2003,
and the results of their operations and their cash flows for the years ended
December 31, 2004 and 2003 and the period from April 19, 2002 (date of
inception) to December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Platinum
Underwriters Holdings, Ltd. and subsidiaries' internal control over financial
reporting as of December 31, 2004, based on criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated February
25, 2005 expressed an unqualified opinion on management's assessment of, and the
effective operation of, internal control over financial reporting.

/s/ KPMG LLP

New York, New York
February 25, 2005

                                       F-2

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                           December 31, 2004 and 2003
                    (amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                     2004              2003
                                                                                ---------------   ---------------
<S>                                                                             <C>               <C>
                                   ASSETS
Investments:
  Fixed maturities available-for-sale at fair value
    (amortized cost - $2,144,290 and $1,560,807, respectively)...............   $     2,157,529   $     1,583,505
  Fixed maturity trading securities at fair value
    (amortized cost - $82,931 and $95,926, respectively).....................            82,673            94,633
  Other invested asset.......................................................             6,769             6,910
                                                                                ---------------   ---------------
        Total investments....................................................         2,246,971         1,685,048
Cash and cash equivalents....................................................           209,897           105,461
Accrued investment income....................................................            23,663            17,492
Reinsurance premiums receivable..............................................           580,048           487,441
Reinsurance recoverable on ceded losses and loss adjustment expenses.........             2,005             5,102
Prepaid reinsurance premiums.................................................             2,887             6,129
Funds held by ceding companies...............................................           198,048            65,060
Deferred acquisition costs...................................................           136,038            79,307
Income tax recoverable.......................................................             1,325             9,360
Deferred tax assets..........................................................             8,931             3,711
Other assets.................................................................            12,182            21,461
                                                                                ---------------   ---------------
        Total assets.........................................................   $     3,421,995   $     2,485,572
                                                                                ===============   ===============

                    LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Unpaid losses and loss adjustment expenses.................................   $     1,380,955   $       736,934
  Unearned premiums..........................................................           502,423           305,985
  Reinsurance deposit liabilities............................................            20,189             5,699
  Debt obligations...........................................................           137,500           137,500
  Ceded premiums payable.....................................................             2,384             6,205
  Commissions payable........................................................           181,925           176,310
  Funds withheld.............................................................            11,999                 -
  Deferred tax liabilities...................................................            10,404             5,503
  Other liabilities..........................................................            41,213            44,233
                                                                                ---------------   ---------------
        Total liabilities....................................................         2,288,992         1,418,369
                                                                                ---------------   ---------------

Shareholders' Equity
  Preferred shares, $.01 par value, 25,000,000 shares authorized,
    no shares issued or outstanding..........................................                 -                 -
  Common shares, $.01 par value, 200,000,000 shares authorized, 43,087,407
    and 43,054,125 shares issued and outstanding, respectively...............               430               430
  Additional paid-in capital.................................................           911,851           910,505
  Accumulated other comprehensive income.....................................            12,252            18,774
  Retained earnings..........................................................           208,470           137,494
                                                                                ---------------   ---------------
        Total shareholders' equity...........................................         1,133,003         1,067,203
                                                                                ---------------   ---------------
        Total liabilities and shareholders' equity...........................   $     3,421,995   $     2,485,572
                                                                                ===============   ===============
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-3

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
           Consolidated Statements of Income and Comprehensive Income
           For the years ended December 31, 2004 and 2003 and for the
    period from April 19, 2002 (date of inception) through December 31, 2002
                    (amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                                       2004          2003         2002
                                                                   -------------   ---------   -----------
<S>                                                                <C>             <C>         <C>
Revenue:
  Net premiums earned...........................................   $   1,447,935   1,067,527   $   107,098
  Net investment income.........................................          84,532      57,645         5,211
  Net realized gains on investments.............................           1,955       2,781            25
  Other income..................................................           3,211       3,343           167
                                                                   -------------   ---------   -----------
        Total revenue...........................................       1,537,633   1,131,296       112,501
                                                                   -------------   ---------   -----------

Expenses:
  Losses and loss adjustment expenses...........................       1,019,804     584,171        60,356
  Acquisition expenses..........................................         327,821     251,226        25,474
  Operating expenses............................................          66,333      92,595        16,334
  Net foreign currency exchange losses (gains)..................            (725)        114        (2,017)
  Interest expense..............................................           9,268       9,492         1,261
                                                                   -------------   ---------   -----------
        Total expenses..........................................       1,422,501     937,598       101,408
                                                                   -------------   ---------   -----------
        Income before income tax expense........................         115,132     193,698        11,093
Income tax expense..............................................          30,349      48,875         4,655
                                                                   -------------   ---------   -----------
        Net income..............................................   $      84,783     144,823   $     6,438
                                                                   =============   =========   ===========

Earnings per share:
  Basic earnings per share......................................   $        1.96        3.37   $      0.15
  Diluted earnings per share....................................   $        1.81        3.09   $      0.15

Comprehensive income:
  Net income....................................................   $      84,783     144,823   $     6,438
  Other comprehensive income:
    Unrealized gains on available-for-sale securities, net of
      deferred tax..............................................          (6,910)      7,570        10,581
    Cumulative translation adjustments, net of deferred tax.....             388         623             -
                                                                   -------------   ---------   -----------
        Comprehensive income....................................   $      78,261     153,016   $    17,019
                                                                   =============   =========   ===========

Shareholder dividends:
  Dividends declared............................................   $      13,807      13,767   $         -
  Dividends declared per share..................................   $        0.32        0.32   $         -
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
                 Consolidated Statements of Shareholders' Equity
             For the years ended December 31, 2004 and 2003 and for
  the Period from April 19, 2002 (date of inception) through December 31, 2002
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                    2004             2003        2002
                                                                 -----------      ---------  ------------
<S>                                                              <C>              <C>        <C>
Preferred shares:
  Balances at beginning and end of period.....................   $         -              -  $          -
                                                                 -----------      ---------  ------------

Common shares:
  Balances at beginning of period.............................           430            430
  Initial capitalization......................................             -              -            12
  Redemption of shares issued in initial capitalization.......             -              -           (12)
  Exercise of share options...................................             2              -             -
  Issuance of common shares...................................             1              -           430
  Purchase of common shares...................................            (3)             -             -
                                                                 -----------      ---------  ------------
        Balances at end of period.............................           430            430           430
                                                                 -----------      ---------  ------------

Additional paid-in-capital:
  Balances at beginning of period.............................       910,505        903,797             -
  Initial capitalization......................................             -              -           108
  Redemption of shares issued in initial capitalization.......             -              -          (108)
  Exercise of share options...................................         7,405            678             -
  Share based compensation....................................         2,358          5,510             -
  Issuance of common shares...................................         1,565            520       904,658
  Purchase of common shares...................................        (9,982)             -             -
  Purchase contract adjustment payments.......................             -              -        (6,639)
  Assets contributed by St. Paul..............................             -              -         5,778
                                                                 -----------      ---------  ------------
        Balances at end of period.............................       911,851        910,505       903,797
                                                                 -----------      ---------  ------------

Accumulated other comprehensive income (loss):
  Balances at beginning of period.............................        18,774         10,581             -
  Net change in unrealized (losses) gains and losses on
    available-for-sale securities, net of deferred tax........        (6,910)         7,570        10,581
  Net change in cumulative translation adjustments, net of
    deferred tax..............................................           388            623             -
                                                                 -----------      ---------  ------------
        Balances at end of period.............................        12,252         18,774        10,581
                                                                 -----------      ---------  ------------

Retained earnings:
  Balances at beginning of period.............................       137,494          6,438             -
  Net income..................................................        84,783        144,823         6,438
  Dividends paid to shareholders..............................       (13,807)       (13,767)            -
                                                                 -----------      ---------  ------------
        Balances at end of period.............................       208,470        137,494         6,438
                                                                 -----------      ---------  ------------
        Total shareholders' equity............................   $ 1,133,003      1,067,203  $    921,246
                                                                 ===========      =========  ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
             For the years ended December 31, 2004 and 2003 and for
  the Period from April 19, 2002 (date of inception) through December 31, 2002
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                                       2004           2003           2002
                                                                                    -----------     ----------   ------------
<S>                                                                                 <C>             <C>          <C>
Operating Activities:
  Net income.............................................................           $    84,783        144,823   $      6,438
  Adjustments to reconcile net income to cash used in operations:
    Depreciation and amortization........................................                20,642         23,321          2,469
    Net realized gains on investments....................................                (1,955)        (2,781)           (25)
    Net foreign currency exchange (gains) losses.........................                  (725)           114              -
    Share based compensation.............................................                 2,358          5,510              -
    Trading securities activities........................................                16,510        (85,861)             -
    Changes in assets and liabilities:
      Increase in accrued investment income..............................                (6,171)        (7,499)        (9,993)
      Increase in reinsurance premiums receivable........................               (92,607)      (481,843)        (5,599)
      (Increase) decrease in amounts receivable from St. Paul............                     -         54,096        (39,750)
      Increase in funds held by ceding companies.........................              (132,988)       (10,158)             -
      (Increase) decrease in deferred acquisition costs..................               (56,731)       (29,975)         4,058
      Increase in net unpaid losses and loss adjustment expenses.........               641,062        440,859         60,356
      Increase (decrease) in net unearned premiums.......................               199,680        108,840        (52,984)
      Increase (decrease) in reinsurance deposit liabilities.............                14,490        (17,962)          (167)
      Increase (decrease) in ceded premiums payable......................                (3,821)         6,205              -
      Increase in commissions payable....................................                 5,615        138,749          6,595
      Increase in funds withheld.........................................                11,999              -              -
      Changes in other assets and liabilities............................                12,210        (12,094)        19,152
  Cash from St. Paul related to the November 1, 2002 assumption of
    liabilities on reinsurance contracts becoming effective in 2002......                     -        108,336        288,648
  Other net..............................................................                   382            627          2,195
                                                                                    -----------     ----------   ------------
        Net cash provided by operating activities........................               714,733        383,307        281,393
                                                                                    -----------     ----------   ------------

Investing Activities:
  Proceeds from sale of available-for-sale fixed maturities..............               498,945        393,245        120,421
  Proceeds from maturity or paydown of available-for-sale fixed
    maturities...........................................................               136,472        132,979              -
  Acquisition of available-for-sale fixed maturities.....................            (1,230,895)    (1,066,077)    (1,157,416)
  Other invested asset acquired..........................................                     -         (6,910)             -
                                                                                    -----------     ----------   ------------
        Net cash used in investing activities............................              (595,478)      (546,763)    (1,036,995)
                                                                                    -----------     ----------   ------------

Financing Activities:
  Net proceeds from shares issued in initial capitalization..............                     -              -            120
  Redemption of shares issued in initial capitalization..................                     -              -           (120)
  Dividends paid to shareholders.........................................               (13,807)       (13,767)             -
  Proceeds from exercise of share options................................                 7,406            678              -
  Proceeds from issuance of common shares................................                 1,567            520        905,088
  Net proceeds from issuance of debt securities..........................                     -              -        132,000
  Purchase of common shares..............................................                (9,985)             -              -
                                                                                    -----------     ----------   ------------
        Net cash (used in) provided by  financing activities.............               (14,819)       (12,569)     1,037,088
                                                                                    -----------     ----------   ------------
        Net increase (decrease) in cash and cash equivalents.............               104,436       (176,025)       281,486

Cash and cash equivalents at beginning of period.........................               105,461        281,486              -
                                                                                    -----------     ----------   ------------
Cash and cash equivalents at end of period...............................           $   209,897        105,461   $    281,486
                                                                                    ===========     ==========   ============

Supplemental disclosures of cash flow information:
  Income taxes paid......................................................           $     8,549         65,912   $          -
  Interest paid..........................................................           $     7,442          7,888   $          -
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

1.    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION

      Platinum Underwriters Holdings, Ltd. ("Platinum Holdings") is a Bermuda
holding company organized in 2002. Platinum Holdings and its subsidiaries (the
"Company") operate through three licensed reinsurance subsidiaries: Platinum
Underwriters Reinsurance, Inc. ("Platinum US"), Platinum Re (UK) Limited
("Platinum UK") and Platinum Underwriters Bermuda, Ltd. ("Platinum Bermuda").
The Company provides property and marine, casualty and finite risk reinsurance
coverages, through reinsurance intermediaries, to a diverse clientele of
insurers and select reinsurers on a worldwide basis.

      The consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America
("U.S. GAAP"). These financial statements reflect the consolidated position of
the Company, including Platinum US, Platinum UK, Platinum Bermuda, Platinum
Underwriters Finance, Inc. ("Platinum Finance"), Platinum Regency Holdings and
Platinum Administrative Services, Inc. All material intercompany transactions
have been eliminated in preparing these consolidated financial statements.

      In November 2002, Platinum Holdings completed an initial public offering
of 33,044,000 common shares (the "Initial Public Offering"). Concurrent with the
Initial Public Offering, Platinum Holdings sold 6,000,000 common shares to The
St. Paul Travelers Companies, Inc., formerly The St. Paul Companies, Inc., ("St.
Paul"), and 3,960,000 common shares to RenaissanceRe Holdings Ltd.
("RenaissanceRe") in private placements. St. Paul subsequently sold its
6,000,000 common shares in June 2004. As part of the Initial Public Offering,
St. Paul and RenaissanceRe received options to purchase up to 6,000,000 and
2,500,000 of additional common shares, respectively, at any time during the ten
years following the Initial Public Offering at a price of $27.00 per share.

      In addition to the common shares issued, the Company issued Equity
Security Units ("ESU"). The ESU's consist of a contract to purchase common
shares in 2005 and an ownership interest in a senior note due 2007.

      Concurrent with these transactions, the Company and St. Paul entered into
several agreements for the transfer of continuing reinsurance business and
certain related assets of St. Paul. Among these agreements were quota share
retrocession agreements effective November 2, 2002 under which the Company
assumed from St. Paul unpaid losses and loss adjustment expenses ("LAE"),
unearned premiums and certain other liabilities on reinsurance contracts
becoming effective in 2002 (the "Quota Share Retrocession Agreements").

      The underwriting operations, as well as substantially all other operations
of the Company commenced in November 2002. The 2002 consolidated statements of
income and comprehensive income, shareholders' equity and cash flows include all
activity from incorporation on April 19, 2002 through December 31, 2002 (the
"2002 Period").

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments

      Fixed maturities owned that the Company may not have the positive intent
to hold until maturity

                                      F-7

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

are classified as available-for-sale and reported at fair value, with unrealized
gains and losses excluded from net income and reported in other comprehensive
income as a separate component of shareholders' equity, net of deferred tax.
Fixed maturities owned that the Company has the intent to sell prior to maturity
are classified as trading securities and reported at fair value, with unrealized
gains and losses included in other income. Securities classified as trading
securities are generally foreign currency denominated securities intended to
match net liabilities denominated in foreign currencies in order to minimize net
exposures arising from fluctuations in foreign currency exchange rates. The fair
values of fixed maturities are based on quoted market prices at the reporting
date for those or similar investments.

      Premiums and discounts on fixed maturity securities are amortized into
interest income over the life of the security under the effective yield method.
Premiums and discounts on mortgage and asset-backed securities are amortized
into interest income based on prepayment assumptions obtained from outside
investment managers. These assumptions are consistent with the current interest
rate and economic environment. The retrospective adjustment method is used to
value asset-backed securities.

      Realized gains and losses on sales of investments are determined on the
basis of the specific identification method. If the Company has determined that
an unrealized loss on a security is "other than temporary," the Company writes
down the carrying value of the security and records a realized loss in the
statement of income.

      Other invested asset represents a strategic investment in a non-public
reinsurance company and is carried at estimated fair value.

Short-Term Investments and Cash Equivalents

      Short-term investments are carried at cost, which approximates fair value.
Short-term investments mature within one year from the purchase date. Cash
equivalents are carried at amortized cost, which approximates fair value, and
include all securities that, at their purchase date, have a maturity of less
than 90 days.

Premium Revenues

      Assumed reinsurance premiums are recognized as revenues when premiums
become earned proportionately over the coverage period. Net premiums earned are
recorded in the statement of income, net of the cost of retrocession. Net
premiums written not yet recognized as revenue are recorded in the balance sheet
as unearned premiums, gross of any ceded unearned premiums.

      Due to the nature of reinsurance, ceding companies routinely report and
remit premiums subsequent to the contract coverage period and, consequently,
include estimates of premiums that are written but not reported ("WBNR"). In
addition to estimating WBNR, the Company estimates the portion of premium earned
but not reported ("EBNR"). The estimates of WBNR and EBNR include amounts
reported by the ceding companies, information obtained during audits and other
information received from ceding companies. The Company also estimates the
expenses associated with these premiums in the form of losses, loss adjustment
expenses ("LAE") and commissions. As actual premiums are reported by ceding
companies, management evaluates the appropriateness of the premium estimates and
any adjustments to these estimates are accounted for as changes in estimates and
are reflected in the results of operations in the period in which they are made.
Adjustments to original premium estimates could be material and could
significantly impact earnings in the period they are recorded. Due to the time
lag

                                      F-8

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

inherent in the reporting of premiums by ceding companies, a significant portion
of amounts included as premiums written and receivable represent estimated
premiums, net of commissions, and is not currently due based on the terms of the
underlying contracts.

      Certain of our reinsurance contracts include provisions that adjust
premiums or acquisition expenses based upon the experience under the contracts.
Reinstatement premiums are the premiums charged for the restoration of the
reinsurance limit of a reinsurance contract to its full amount, generally
coinciding with the payment by the reinsurer of losses. These premiums relate to
the future coverage obtained for the remainder of the initial policy term and
are earned over the remaining policy term. Additional premiums are premiums
triggered by losses and are earned immediately. Reinstatement premiums and
additional premiums are recognized in accordance with the provisions of assumed
reinsurance contracts, based on loss experience under such contracts. An
allowance for uncollectible premiums is established for possible non-payment of
such amounts due, as deemed necessary.

Funds Held by Ceding Companies

      The Company writes business on a funds held basis. Under these contractual
arrangements, the ceding company holds the net funds that would otherwise be
remitted to the Company and generally credits the funds held balance with
interest income. The general objective of the funds held balances is to provide
the ceding company with collateral for obligations of the Company. The Company
bears the credit risk in the event that the ceding company fails to remit the
net funds held balances, however, that credit risk is somewhat mitigated by the
contractual ability to offset funds held balances with any loss amounts owed by
the Company.

Deferred Acquisition Costs

      Costs of acquiring business, primarily commissions and other direct
underwriting expenses, which vary with and are directly related to the
production of business, are deferred and amortized over the same period as the
corresponding premiums are recorded as revenues. On a regular basis, an analysis
of the recoverability of deferred acquisition costs is performed based on the
profitability of the underlying reinsurance contracts including anticipated
investment income. Any adjustments are reflected in the results of operations in
the period in which they are made. Should the analysis indicate that the
acquisition costs deferred are not recoverable, further analyses are performed
to determine if a liability is required to provide for losses that may exceed
the related unearned premiums. Deferred acquisition costs amortized in 2004,
2003 and the 2002 Period were $224,307,000, $227,240,000 and $14,449,000,
respectively.

Debt Obligations and Deferred Debt Issuance Costs

      The net proceeds from the sale of the Company's ESU's were allocated
between the purchase contracts and the senior notes based on the underlying fair
value of each instrument. The present value of the purchase contract adjustment
payments were initially charged to shareholders' equity, with an offsetting
credit to liabilities. Subsequent contract adjustment payments are allocated
between this liability account and interest expense based on a constant rate
calculation over the life of the transaction.

      Costs incurred in issuing debt are capitalized and amortized over the life
of the debt. If the effect of the issuance of common shares in exchange for the
senior notes is dilutive to earnings per share, it is included in the
calculation of diluted earnings per share as if the common shares were issued
and the

                                      F-9

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

proceeds received were used to pay down the senior notes at the beginning of the
reporting period.

Unpaid Losses and LAE

      Unpaid losses and LAE are estimated based upon reports received from
ceding companies, supplemented by the Company's estimates of losses for which
ceding company reports have not been received and historical company and
industry experience for unreported claims. Unpaid losses and LAE include
estimates of the cost of claims that were reported, but not yet paid, and the
cost of claims incurred but not yet reported ("IBNR"). Estimated amounts
recoverable from reinsurers on unpaid losses and LAE are reflected as assets.
While the Company commenced operations in 2002, the business written is
sufficiently similar to the historical reinsurance business of St. Paul that the
Company is able to use the historical loss experience of the reinsurance
business of St. Paul to estimate its ultimate losses and LAE.

      Unpaid losses and LAE represent management's best estimate at a given
point in time and are subject to the effects of trends in loss severity and
frequency. These estimates are reviewed regularly and adjusted as experience
develops or new information becomes available. Any such adjustments are
accounted for as changes in estimates and reflected in the results of operations
in the period in which they are made. It is possible that the ultimate liability
may materially differ from such estimates.

Reinsurance Deposit Liabilities

      Reinsurance contracts entered into by the Company which are not deemed to
transfer significant insurance risk are accounted for as deposits, whereby
liabilities are initially recorded at the same amount as assets received. Risk
transfer involves evaluating significant assumptions relating to the amount and
timing of expected cash flows, as well as the interpretation of underlying
contract terms. Interest expense related to the deposit is recognized as
incurred.

Earnings Per Share

      Basic earnings per share is computed by dividing net income by the
weighted average number of shares outstanding for the period. Diluted earnings
per share reflects the basic earnings per share adjusted for the potential
dilution that would occur if the issued options were exercised and considers the
outstanding purchase contracts relating to the ESU. Securities that are
convertible into common shares that are anti-dilutive are not included in the
calculation of diluted earnings per share.

Reinsurance Ceded

      Reinsurance ceded, which transfers risk and the related premiums,
commissions and losses incurred to the reinsurer, is reflected as reductions of
the respective income and expense accounts. Unearned premiums ceded and
estimates of amounts recoverable from reinsurers on paid and unpaid losses are
reflected as assets.

Income Taxes

      The Company applies the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates applicable to taxable income in
the years in which those temporary differences are

                                      F-10

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period the
change is enacted. A valuation allowance is established for deferred tax assets
where it is more likely than not that future tax benefits will not be realized.

Stock-Based Compensation

      During 2003, the Company adopted Statement of Financial Accounting
Standards No. 123 "Accounting for Awards of Stock Based Compensation to
Employees" ("SFAS 123") and Statement of Financial Accounting Standards No. 148
"Accounting for Stock-Based Compensation-Transition and Disclosure" ("SFAS
148"). SFAS 123 requires that the fair value of shares granted under the
Company's share option plan subsequent to the adoption of SFAS 148 be amortized
in earnings over the vesting periods. The fair value of the share options
granted is determined through the use of an option-pricing model. SFAS 148
amends SFAS 123 and provides transitioning guidance for a voluntary adoption of
SFAS 123 as well as amends the disclosure requirements of SFAS 123. For the 2002
Period, the Company used the intrinsic value method of accounting for
stock-based awards granted to employees established by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25").
Under APB 25, if the exercise price of the Company's employee share options is
equal to or greater than the fair market value of the underlying shares on the
date of the grant, no compensation expense is recorded. For share options
granted in 2002, the Company continues to use APB25. The adoption of SFAS 148
did not have a material effect on the Company's financial position or results of
operations.

      Had the Company calculated and recorded compensation expense for share
option grants based on the "fair value" method described in SFAS 123 for options
granted prior to 2003, net income and earnings per share, net of tax, for the
years ended December 31, 2004 and 2003 and the 2002 Period would have been the
pro forma amounts as indicated below ($ in thousands, except per share data):

<TABLE>
<CAPTION>
                                                2004          2003      2002 Period
                                           -------------     -------   -------------
<S>                                        <C>               <C>       <C>
Share based compensation expense:
  As reported...........................   $       2,358       5,510   $           -
  Pro forma.............................           7,026      14,774           1,070

Net income:
  As reported............................         84,783     144,823           6,438
  Pro forma..............................         80,115     135,559           5,368

Basic earnings per share:
  As reported............................           1.96        3.37            0.15
  Pro forma..............................           1.86        3.15            0.12

Diluted earnings per share:
  As reported............................           1.81        3.09            0.15
  Pro forma..............................  $        1.72        2.90   $        0.12
</TABLE>

      In December 2004, the Financial Accounting Standards Board issued the
Statement of Financial Accounting Standards No. 123R "Share Based Payment"
("SFAS 123R"). SFAS 123R establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services and focuses primarily on accounting for transactions in which an entity
obtains employee services in share-based payment transactions. SFAS 123R
requires that, prospectively, compensation

                                      F-11

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

costs be recognized for the fair value of all share options, including the cost
related to the unvested portion of all outstanding share options as of December
31, 2004. The share based compensation expense for share options currently
outstanding are to be based on the same cost model used to calculate the pro
forma disclosures under SFAS 123. Consequently, the pro forma share based
compensation expense and pro forma income above are the same as if the Company
had adopted SFAS 123R in 2004.

Foreign Currency Exchange

      The Company's functional currency is generally the currency of the local
operating environment. Transactions conducted in other than functional
currencies are remeasured to the Company's functional currency, and the
resulting foreign exchange gains and losses are included in net foreign currency
exchange gains or losses. Functional currency based assets and liabilities are
translated into U.S. dollars using current rates of exchange prevailing at the
balance sheet date and the related translation adjustments are recorded as a
separate component of accumulated other comprehensive income, net of applicable
deferred income tax.

Organizational Cost

      Costs incurred by the Company relating to its organization were expensed
as incurred.

Use of Estimates

      The Company's financial statements include estimates and assumptions that
have an effect on the amounts reported. The most significant estimates are those
relating to unpaid losses and LAE. These estimates are continually reviewed and
adjustments made as necessary, but actual results could be significantly
different than expected at the time such estimates are made. Results of changes
in estimates are reflected in results of operations in the period in which the
change is made.

Reclassifications

      Certain reclassifications have been made to the 2003 financial statements
in order to conform to the 2004 presentation.

2.    SEPARATION FROM AND CONTINUING RELATIONSHIP WITH ST. PAUL

      As discussed more fully in Note 8, on November 1, 2002, Platinum Holdings
completed the Initial Public Offering as well as an offering of ESU's.
Concurrently with the Initial Public Offering, Platinum Holdings sold 6,000,000
common shares to St. Paul in a private placement and issued to St. Paul an
option to purchase up to 6,000,000 additional common shares at any time during
the ten years following the Initial Public Offering at a price of $27.00 per
share. St. Paul subsequently sold its 6,000,000 common shares in June 2004.

      Concurrent with the transactions in November 2002, the Company and St.
Paul entered into several agreements for the transfer of continuing reinsurance
business and certain related assets of St. Paul. Among these agreements were
quota share retrocession agreements effective November 2, 2002 under which the
Company assumed from St. Paul unpaid losses and LAE, unearned premiums and
certain other liabilities on reinsurance contracts becoming effective in 2002. A
summary of the liabilities assumed and assets received on November 2, 2002 are
as follows ($ in thousands):

                                      F-12

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<S>                                                              <C>
Liabilities assumed:
  Net unpaid losses and LAE..................................    $     221,303
  Net unearned premiums......................................          244,000
  Reinsurance deposit liabilities............................           23,828
  Profit commission liabilities..............................           16,145
                                                                 -------------
                                                                       505,276
Ceding commission to St. Paul................................          (53,390)
                                                                 -------------
                                                                       451,886
                                                                 -------------

Assets received:
  Cash.......................................................          288,648
  Funds held.................................................           54,902
                                                                 -------------
                                                                       343,550
                                                                 -------------
Amount due from St. Paul.....................................    $     108,336
                                                                 -------------
</TABLE>

      Amounts due from St. Paul at December 31, 2002 were settled during 2003.

      Included in assumed premiums written in the 2002 Period is $292,302,000
assumed from St. Paul. Premiums assumed from St. Paul includes $244,000,000 of
unearned premiums as of November 2, 2002 on reinsurance contracts becoming
effective in 2002 and additional assumed premiums written of approximately
$48,302,000 for the 2002 Period. While the Company did not cede any premiums in
the 2002 Period, it assumed business from St. Paul net of retrocessional
reinsurance and may be subject to the credit risk related to such retrocessional
reinsurance.

      The Company entered into an Employee Benefits and Compensation Matters
Agreement with St. Paul that provided for the transfer of employees from St.
Paul and provided for the allocation of assets and liabilities and certain other
agreements with respect to employee compensation and benefit plans. In addition,
St. Paul reimbursed the Company for the annual bonuses of the Company's
employees prorated for the period from January 1, 2002 through the date of
completion of the Initial Public Offering. The agreement also provided for
reimbursement of a portion of severance and retention payments to the Company's
employees.

3.    INVESTMENTS

      The Company's available-for-sale fixed maturities at December 31, 2004 and
2003 were as follows ($ in thousands):

                                      F-13

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                                           Gross        Gross
                                                          Amortized     Unrealized    Unrealized
                                                             Cost          Gains        Losses       Fair Value
                                                        --------------  ----------    ----------    ------------
<S>                                                     <C>             <C>           <C>           <C>
December 31, 2004:

U.S. Government and U.S. Government agencies.........   $        4,227           -            24    $      4,203
Corporate bonds......................................        1,349,167      14,960         4,775       1,359,352
Mortgage and asset-backed securities.................          508,757       3,898         1,586         511,069
Municipal bonds......................................          214,088       1,751           588         215,251
Foreign governments and states.......................           64,301          57           380          63,978
                                                        --------------  ----------    ----------    ------------
        Total bonds..................................        2,140,540      20,666         7,353       2,153,853

Redeemable preferred stocks..........................            3,750           -            74           3,676
                                                        --------------  ----------    ----------    ------------
        Total available-for-sale fixed maturities....   $    2,144,290      20,666         7,427    $  2,157,529
                                                        --------------  ----------    ----------    ------------

December 31, 2003:

U.S. Government and U.S. Government agencies.........   $        5,065          22            55    $      5,032
Corporate bonds......................................        1,077,399      20,412         1,856       1,095,955
Mortgage and asset-backed securities.................          267,774       1,386           785         268,375
Municipal bonds......................................           91,019       1,130           106          92,043
Foreign governments and states.......................          115,800       2,891           273         118,418
                                                        --------------  ----------    ----------    ------------
        Total bonds..................................        1,557,057      25,841         3,075       1,579,823

Redeemable preferred stocks..........................            3,750           -            68           3,682
                                                        --------------  ----------    ----------    ------------
        Total available-for-sale fixed maturities....   $    1,560,807      25,841         3,143    $  1,583,505
                                                        --------------  ----------    ----------    ------------
</TABLE>

      Amortized cost and fair value of available-for-sale fixed maturities by
contractual maturity at December 31, 2004 are shown below; actual maturities
could differ from contractual maturities due to call or prepayment provisions ($
in thousands):

<TABLE>
<CAPTION>
                                                           Amortized
                                                              Cost          Fair Value
                                                         -------------     -------------
<S>                                                      <C>               <C>
Due in one year or less...............................   $      54,567     $      54,390
Due from one to five years............................         929,647           932,655
Due from five to ten years............................         411,388           415,697
Due in ten or more years..............................         236,181           240,042
Mortgage and asset backed securities..................         508,757           511,069
                                                         -------------     -------------
        Total bonds...................................       2,140,540         2,153,853
Redeemable preferred stocks...........................           3,750             3,676
                                                         -------------     -------------
        Total available-for-sale fixed maturities.....   $   2,144,290     $   2,157,529
                                                         -------------     -------------
</TABLE>

      Investment income for the years ended December 31, 2004 and 2003 and the
2002 Period is summarized as follows ($ in thousands):

                                      F-14

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                   2004          2003     2002 Period
                                                -----------     ------    -----------
<S>                                             <C>             <C>       <C>
Fixed maturities............................    $    82,038     55,727    $     4,389
Cash and cash equivalents...................          2,261      3,133          1,183
Funds held..................................          2,651        776              -
                                                -----------     ------    -----------
                                                     86,950     59,636          5,572
  Less investment expenses..................          2,418      1,991            361
                                                -----------     ------    -----------
Net investment income.......................    $    84,532      57,645   $     5,211
                                                -----------     ------    -----------
</TABLE>

      Net realized gains and losses from investments for the years ended
December 31, 2004 and 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                    2004         2003      2002 Period
                                                -----------     -----      -----------
<S>                                             <C>             <C>        <C>
Gross realized gains........................    $     5,706     4,639      $       423
Gross realized losses.......................          3,751     1,858              398
                                                -----------     -----      -----------
        Net realized gains..................    $     1,955     2,781      $        25
                                                -----------     -----      -----------
</TABLE>

      Proceeds from sales, maturities and calls of available-for-sale fixed
maturities were $635,417,000, $526,224,000 and $120,421,000 for the years ended
December 31, 2004 and 2003 and the 2002 Period, respectively. Proceeds from
sales, maturities and calls of trading securities were $50,542,000 for the year
ended December 31, 2004. There were no sales in the trading securities portfolio
in 2003 or the 2002 Period.

      Net change in unrealized investment gains (losses) for the years ended
December 31, 2004 and 2003 and the 2002 Period were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                    2004               2003       2002 Period
                                                -----------           ------      -----------
<S>                                             <C>                   <C>         <C>
Fixed maturities available for sale.........    $    (9,459)          10,405      $    12,293
Less deferred tax...........................          2,549            2,835            1,712
                                                -----------           ------      -----------
        Net change in unrealized gains......    $    (6,910)           7,570      $    10,581
                                                -----------           ------      -----------
</TABLE>

      Investments with a carrying value of $4,355,000 were on deposit with
regulatory authorities as of December 31, 2004. Investments with a carrying
value of $318,586,000 and cash and cash equivalents of $4,846,000 at December
31, 2004 were held in trust to collateralize liabilities ceded by St. Paul to
the Company under the Quota Share Retrocession Agreements. Investments with a
carrying value of $5,779,000 and cash and cash equivalents of $1,153,000 at
December 31, 2004 were held in trust to collateralize obligations under various
other reinsurance contracts.

      The unrealized losses of fixed maturities available-for-sale aggregated by
investment category and length of time that individual securities have been in a
continuous unrealized loss position are as follows:

                                      F-15

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                                                Unrealized
                                                                Fair Value         Loss
                                                                ----------      ----------
<S>                                                             <C>             <C>
Less than twelve months:

U.S. Government and U.S. Government agencies..............      $    4,203      $       24
Corporate bonds...........................................         526,856           4,396
Mortgage and asset-backed securities......................         150,597           1,131
Municipal bonds...........................................          50,227             588
Foreign governments and states............................          38,574             337
Redeemable preferred stock................................           3,677              74
                                                                ----------      ----------
        Total.............................................      $  774,134      $    6,550
                                                                ----------      ----------

Twelve months or more:

Corporate bonds...........................................      $   13,758      $      422
Mortgage and asset-backed securities......................          29,124             455

                                                                ----------      ----------
        Total.............................................      $   42,882      $      877
                                                                ----------      ----------

Total unrealized losses:

U.S. Government and U.S. Government agencies..............      $    4,203      $       24
Corporate bonds...........................................         540,614           4,818
Mortgage and asset-backed securities......................         179,721           1,586
Municipal bonds...........................................          50,227             588
Foreign governments and states............................          38,574             337
Redeemable preferred stocks...............................           3,677              74
                                                                ----------      ----------
        Total.............................................      $  817,016      $    7,427
                                                                ----------      ----------
</TABLE>

      The Company routinely reviews its available-for-sale investments to
determine whether unrealized losses represent temporary changes in fair value or
are the result of "other than temporary impairments." The process of determining
whether a security is other than temporarily impaired is subjective and involves
analyzing many factors. These factors include but are not limited to: the length
and magnitude of an unrealized loss, specific credit events, overall financial
condition of the issuer; and the Company's intent to hold a security for a
sufficient period of time for the value to recover the unrealized loss. This is
based on current and anticipated future positive cash flow from operations that
generates sufficient liquidity in order to meet our obligations. If the Company
has determined that an unrealized loss on a security is other than temporary,
the Company writes down the carrying value of the security and records a
realized loss in the statement of income. As of December 31, 2004 management
believes that the Company's investment portfolio does not contain any securities
that have other-than-temporary impairments.

      The following table presents the carrying amounts and estimated fair
values of the Company's financial instruments as of December 31, 2004 and 2003
($ in thousands):

                                      F-16

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                            December 31, 2004                 December 31, 2003
                                      -----------------------------        -----------------------
                                        Carrying            Fair           Carrying       Fair
                                         Amount             Value           Amount        Value
                                      -------------       ---------        ---------   -----------
<S>                                   <C>                 <C>              <C>         <C>
Financial assets:
  Fixed maturities.................   $   2,240,202       2,240,202        1,678,138   $ 1,678,138
  Other invested asset.............           6,769           6,769            6,910         6,910

Financial liabilities:
  Debt obligations.................   $     137,500         165,000          137,500   $   170,445
</TABLE>

      The fair values of financial instruments are based on quoted market prices
at the reporting date for those or similar instruments. The fair values of debt
obligations are based on quoted market prices. Other invested asset represents a
strategic investment in a non-public reinsurance company and is carried at
estimated fair value.

4.    UNPAID LOSSES AND LAE

      In late August and September of 2004, there were four significant named
hurricanes, Charley, Frances, Ivan and Jeanne (the "Hurricanes"), that caused
severe damage in the Caribbean and the southeast United States. As a result of
losses arising from these catastrophic events, certain reinsurance contracts
generated additional premiums. Further, previously accrued profit commissions
for certain reinsurance contracts were reduced. The aggregate adverse impact on
net income of the Company for the year ended December 31, 2004 from the
Hurricanes is summarized as follows ($ in thousands):

<TABLE>
<S>                                                                            <C>
Losses.....................................................................    $  230,475
Less:
  Additional premiums earned...............................................       (29,265)
  Profit commissions.......................................................       (10,243)
                                                                               ----------
        Net adverse impact before income tax benefit ......................    $  190,967
                                                                               ----------
</TABLE>

      Activity in the liability for unpaid losses and LAE for the years ended
December 31, 2004, 2003 and the 2002 Period is summarized as follows ($ in
thousands):

<TABLE>
<CAPTION>
                                                                2004                2003      2002 Period
                                                           -------------           -------    -----------
<S>                                                        <C>                     <C>        <C>
Net unpaid losses and LAE as of the beginning of
  period................................................   $     731,918           281,659    $         -
                                                           -------------           -------    -----------

Net incurred related to:
  Current year..........................................       1,101,820           648,137         60,356
  Prior year............................................         (82,016)          (63,966)             -
                                                           -------------           -------    -----------
        Total net incurred losses and LAE...............       1,019,804           584,171         60,356
                                                           -------------           -------    -----------

Unpaid losses and LAE assumed from St. Paul.............               -                 -        221,303
                                                           -------------           -------    -----------

Net paid losses and LAE:
  Current year..........................................         174,870           102,669              -
  Prior year............................................         205,889            41,709              -
                                                           -------------           -------    -----------
        Total net paid losses and LAE...................         380,759           144,378              -
                                                           -------------           -------    -----------
</TABLE>

                                      F-17

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                                2004                2003      2002 Period
                                                           -------------           -------    -----------
<S>                                                        <C>                     <C>        <C>
Effects of foreign currency exchange rate changes.......           8,264            10,466              -
                                                           -------------           -------    -----------
Net unpaid losses and LAE as of the end of period.......       1,379,227           731,918        281,659

Reinsurance recoverable.................................           1,728             5,016              -
                                                           -------------           -------    -----------
Gross unpaid losses and LAE at end of period............   $   1,380,955           736,934    $   281,659
                                                           -------------           -------    -----------
</TABLE>

      The favorable development in 2004 related to the prior year of $82,016,000
includes approximately $57,151,000 of net favorable development on property and
certain other lines of business with relatively short patterns of reported
losses, including approximately $7,700,000 attributable to prior years'
catastrophe losses. In addition, the favorable development in 2004 includes
approximately $24,865,000 of reductions in unpaid losses and LAE associated with
changes in 2004 of estimates of premiums and the patterns of their earnings
across current and prior accident years. Such changes did not have a significant
net effect on the current year's results of operations.

      The lines experiencing favorable development are principally property
coverages provided in both the Property and Marine and Finite Risk segments.
During 2004 and 2003, actual reported losses were significantly less than
expected for these short-tailed property lines resulting in reductions in
estimated ultimate losses.

      The favorable development in 2003 related to the prior year of $63,966,000
includes approximately $50,866,000 of net favorable development on property and
certain other lines of business with relatively short patterns of reported
losses. The favorable development also includes approximately $13,100,000 of
reductions in unpaid losses and LAE associated with changes in 2003 of estimates
of casualty premiums and their patterns of earnings between 2002 and 2003.

      Because many of the reinsurance coverages offered by the Company will
likely involve claims that may not ultimately be settled for many years after
they are incurred, subjective judgments as to ultimate exposure to losses are an
integral and necessary component of the process of estimating unpaid losses and
LAE. The inherent uncertainties of estimating unpaid losses and LAE are further
exacerbated with respect to reinsurers by the significant amount of time that
often elapses between the occurrence of an insured loss, the reporting of that
loss to the primary reinsurer and then to the reinsurer, and the primary
insurer's payment of that loss to the insured and subsequent payment by the
reinsurer to the primary insurer. Unpaid losses and LAE are reviewed quarterly
using a variety of statistical and actuarial techniques to analyze current claim
costs, frequency and severity data and prevailing economic, social and legal
factors. Unpaid losses and LAE established in prior years are adjusted as loss
experience develops and new information becomes available. Adjustments to
previously estimated unpaid losses and LAE are reflected in financial results in
the periods in which they are made.

5.    RETROCESSIONAL REINSURANCE

      Reinsurance is the transfer of risk, by contract, from one insurance
company to another for consideration of premium. Retrocessional reinsurance is
reinsurance ceded by a reinsurer to insure against all or a portion of its
reinsurance written. Retrocessional reinsurance agreements provide the Company
with increased capacity to write larger risks, limit its maximum loss arising
from any one occurrence and maintain its exposure to loss within its capital
resources. Retrocessional reinsurance contracts do not relieve the Company from
its obligations under its contracts. Failure of reinsurers to

                                      F-18

<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

honor their obligations could result in losses to the Company. Consequently, the
Company has a contingent liability to the extent of any unpaid losses and LAE
ceded to another company. The Company evaluates the financial condition of its
reinsurers and monitors concentrations of credit risk arising from similar
geographic regions, activities, or economic characteristics of the reinsurers to
minimize its exposure to significant losses from reinsurer insolvencies.

      The effects of reinsurance on premiums, losses and LAE for the years ended
December 31, 2004 and 2003 and the 2002 Period are as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                              Assumed            Ceded         Net
                                                            ------------        ------     ------------
<S>                                                         <C>                 <C>        <C>
As of and for the year ended December 31, 2004:

  Premiums written......................................    $  1,659,790        13,777     $  1,646,013
  Premiums earned.......................................       1,465,058        17,123        1,447,935
  Losses and LAE........................................       1,018,106        (1,698)       1,019,804
  Unpaid losses and LAE ................................    $  1,380,955         1,728     $  1,379,227

As of and for the year ended December 31, 2003:

  Premiums written......................................    $  1,198,473        26,331     $  1,172,142
  Premiums earned.......................................       1,088,109        20,582        1,067,527
  Losses and LAE........................................         589,656         5,485          584,171
  Unpaid losses and LAE.................................    $    736,934         5,016     $    731,918

As of December 31, 2002 and the 2002 Period:

  Premiums written......................................    $    298,114             -     $    298,114
  Premiums earned.......................................         107,098             -          107,098
  Losses and LAE........................................          60,356             -           60,356
  Unpaid losses and LAE.................................    $    281,659             -     $    281,659
</TABLE>

      Effective January 1, 2004, Platinum US and Platinum UK entered into an
excess-of-loss retrocessional contract, with an unaffiliated reinsurer, that
provided up to $100 million of coverage. Premiums ceded under this contract vary
depending on the amount of the ceded losses under the contract and the severity
of individual loss events on the insurance industry. The Company evaluated the
Hurricane losses and the effect of the contract on the Company's results of
operations and commuted the contract effective November 8, 2004. Results for the
year ended December 31, 2004 do not include any benefit from the contract.

      In 2003, Platinum US and Platinum UK entered into a quota share
retrocession agreements with Platinum Bermuda. Platinum US retrocedes
approximately 70% of its business to Platinum Bermuda and Platinum UK retrocedes
approximately 55% of its business to Platinum Bermuda. Following is a summary of
the premiums earned and losses ceded from Platinum US and Platinum UK to
Platinum Bermuda for the years ended December 31, 2004 and 2003 ($ in
thousands):

                                      F-19
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                         2004        2003
                                                         ----        ----
<S>                                                  <C>          <C>
Retroceded by Platinum US to Platinum Bermuda:
  Premiums earned ................................   $  515,869   $  270,913
  Incurred losses and LAE ........................      562,193      214,796

Retroceded by Platinum UK to Platinum Bermuda:
  Premiums earned ................................       89,394       43,998
  Incurred losses and LAE ........................   $   57,830   $   17,542
</TABLE>

      These transactions had no net effect on underwriting results in the
consolidated financial statements.

6.    EQUITY SECURITY UNITS AND CREDIT AGREEMENTS

      Concurrently with the completion of the Initial Public Offering, Platinum
Holdings completed an offering of 5,500,000 Equity Security Units at a price of
$25 per unit (the "ESU Offering"). Each Equity Security Unit ("ESU") consists of
a contract to purchase common shares of the Company in 2005, and an ownership
interest in a senior note, due 2007, of Platinum Finance. Platinum Holdings
makes quarterly contract adjustment payments under the purchase contracts of
1.75 percent per year of the stated amount of $25 per unit. In addition,
Platinum Finance makes quarterly interest payments on the senior notes at an
annual rate of 5.25 percent. The senior notes are guaranteed by Platinum
Holdings on a senior, unsecured basis and are pledged to collateralize the
holders' obligations to acquire common shares in 2005. As of December 31, 2004,
the fair value of the ESU's was $165,000,000 and was based on quoted market
prices. The Company made interest payments in cash of $7,442,000 and $7,888,000
for the years ended December 31, 2004 and 2003, respectively. There were no cash
payments of interest in the 2002 Period.

      Based on the fair value of the Company's common shares, the Company would
issue 5,008,850 common shares of the Company in exchange for the senior notes if
the contract holders were able to purchase common shares at December 31, 2004. A
decrease in the fair value of the Company's common shares from the fair value at
December 31, 2004 would increase the number of common shares that would be
issued by as much as 1,102,200 additional shares. An increase in the fair value
of the Company's common shares from the fair value at December 31, 2004 would
not alter the number of common shares that would be issued. The maximum number
of common shares that the Company is obligated to issue in exchange for the
senior notes is 6,111,050 should the fair value of the common shares be $22.50
per share or less. The ESU related agreements provides for the issuance of
additional common shares as well as the remarketing of the ESU debt obligations
in 2005.

Credit Agreement

      The Company does not currently have a committed credit facility in place;
however, as of December 31, 2004, the Company had approximately $37,287,000 of
unsecured letters of credit outstanding in favor of various cedants. These
letters of credit are issued, by various banks, on an uncommitted basis, and
subject the Company to certain terms and conditions including the requirement to
collateralize, these currently unsecured obligations, to the extent certain
thresholds or ratings criteria are exceeded.

                                      F-20
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

7.    INCOME TAXES

      The Company provides income taxes based upon amounts reported in the
financial statements and the provisions of currently enacted tax laws. Platinum
Holdings and Platinum Bermuda are incorporated under the laws of Bermuda and are
subject to Bermuda law with respect to taxation. Under current Bermuda law, they
are not taxed on any Bermuda income or capital gains and they have received an
assurance from the Bermuda Minister of Finance that if any legislation is
enacted in Bermuda that would impose tax computed on profits or income, or
computed on any capital asset, gain or appreciation, or any tax in the nature of
estate duty or inheritance tax, then the imposition of any such tax will not be
applicable to Platinum Holdings or Platinum Bermuda or any of their respective
operations, shares, debentures or other obligations until March 28, 2016.
Platinum Holdings has subsidiaries based in the United States, the United
Kingdom and Ireland that are subject to the tax laws thereof.

      Under current United States law, Platinum US will be subject to the 35
percent corporate tax rate. Under current United Kingdom law, Platinum UK is
taxed at the U.K. corporate tax rate (generally 30 percent). There is no
withholding tax on dividends distributed from Platinum UK to Platinum Ireland.
Under current Irish law, Platinum Ireland is taxed at a 25 percent corporate tax
rate on non-trading income and a 12.5 percent corporate tax rate on trading
income. There is no withholding tax on dividends distributed from Platinum
Ireland to Platinum Holdings.

      Income (loss) before income taxes for the years ended December 31, 2004
and 2003 and the 2002 Period by location is as follows ($ in thousands):

<TABLE>
<CAPTION>
                                              2004          2003     2002 Period
                                              ----          ----     -----------
<S>                                        <C>             <C>       <C>
United States ..........................   $   73,020      122,485   $   13,858
Bermuda ................................       19,423       48,191       (1,735)
Other ..................................       22,689       23,022       (1,030)
                                           ----------      -------   ----------
        Income before income taxes .....   $  115,132      193,698   $   11,093
                                           ----------      -------   ----------
</TABLE>

      Income tax expense for the years ended December 31, 2004 and 2003 and the
2002 Period is comprised of current and deferred as follows ($ in thousands):

<TABLE>
<CAPTION>
                                              2004           2003    2002 Period
                                              ----           ----    -----------
<S>                                        <C>             <C>       <C>
Current ................................   $   28,133       56,681   $     (129)
Deferred ...............................        2,216       (7,806)       4,784
                                           ----------      -------   ----------
        Total ..........................   $   30,349       48,875   $    4,655
                                           ----------      -------   ----------
</TABLE>

      A reconciliation of expected income tax expense, computed by applying a 35
percent income tax rate to income before income taxes, to income tax expense for
the years ended December 31, 2004 and 2003 and the 2002 Period is as follows ($
in thousands):

                                      F-21
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                                                 2004            2003     2002 Period
                                                                              ----------       -------    -----------
<S>                                                                           <C>              <C>        <C>
Expected income tax expense at 35% ........................................   $   40,296        67,794    $    3,883
Effect of foreign income or loss subject to tax at rates other than 35% ...       (8,222)      (18,316)          712
Tax exempt investment income ..............................................       (1,084)         (740)            -
Other, net ................................................................         (641)          137            60
                                                                              ----------       -------    ----------
        Income tax expense ................................................   $   30,349        48,875    $    4,655
                                                                              ----------       -------    ----------
</TABLE>

      The tax effects of temporary differences that give rise to the deferred
tax assets and deferred tax liabilities are as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                                 2004          2003
                                                                              ----------   ----------
<S>                                                                           <C>          <C>
Deferred tax assets:
  Unpaid losses and LAE ...................................................   $   31,314   $   27,492
  Unearned premiums .......................................................       15,095       11,142
  Other deferred tax assets ...............................................          188          325
                                                                              ----------   ----------
        Total deferred tax assets .........................................       46,597       38,959
                                                                              ----------   ----------

Deferred tax liabilities:
  Deferred acquisition costs ..............................................       36,892       25,783
  Difference in tax basis carrying value of assets ........................            -        5,337
  Timing differences in recognition of expenses ...........................          558        1,172
  Unrealized net foreign currency exchange losses .........................        7,766        3,625
  Net unrealized gains on investments .....................................        1,999        4,547
  Other deferred tax liabilities ..........................................          855          287
                                                                              ----------   ----------
        Total deferred tax liabilities ....................................       48,070       40,751

                                                                              ----------   ----------
        Total net deferred tax liabilities ................................   $    1,473   $    1,792
                                                                              ----------   ----------
</TABLE>

      Income tax assets and liabilities are recorded by offsetting assets and
liabilities by tax jurisdiction. The deferred tax assets and liabilities at
December 31, 2004 and 2003 are included in the balance sheet as follows ($ in
thousands):

<TABLE>
<CAPTION>
                                                                                 2004         2003
                                                                              ----------   ----------
<S>                                                                           <C>          <C>
Platinum US deferred tax assets ...........................................   $   49,254   $   39,848
Platinum US deferred tax liabilities ......................................       40,323       36,137
                                                                              ----------   ----------
        Net Platinum US deferred tax assets ...............................        8,931        3,711
                                                                              ----------   ----------
Platinum UK deferred tax assets ...........................................            -           28
Platinum UK deferred tax liabilities ......................................       10,404        5,531
                                                                              ----------   ----------
        Net Platinum UK deferred tax liabilities ..........................       10,404        5,503
                                                                              ----------   ----------
        Total net deferred tax liabilities ................................   $    1,473   $    1,792
                                                                              ----------   ----------
</TABLE>

      To evaluate the realization of the deferred tax assets, management
considers the timing of the reversal of deferred income and expense items as
well as the likelihood that the Company will generate

                                      F-22
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

sufficient taxable income to realize the future tax benefits. Management
believes that the Company will generate sufficient taxable income to realize the
deferred assets and, consequently, did not consider a valuation allowance
necessary. The Company has a net operating loss carryforward arising from its
operation in the U.K. The net operating loss carryforward does not have an
expiration date.

      Income taxes paid in 2004 and 2003 were $8,549,000 and $65,912,000,
respectively. There were no cash payments of income taxes in the 2002 Period.

8.    SHAREHOLDERS' EQUITY AND REGULATION

      The Company's initial capitalization of $120,000 was provided by an
organizing trust. On May 29, 2002, Platinum Holdings completed a 100-for-1 split
of its common shares, resulting in 135,000,000 common shares authorized and
1,200,000 common shares issued and outstanding, all with a par value of $0.01
per share. On October 28, 2002, the shareholder of Platinum Holdings increased
the number of common shares authorized to 200,000,000 common shares and
25,000,000 preferred shares. Concurrent with the Initial Public Offering, the
1,200,000 common shares were redeemed and canceled.

      On November 1, 2002, Platinum Holdings completed the Initial Public
Offering of 33,044,000 common shares at a price to the public of $22.50 per
share. Concurrently with the completion of the Initial Public Offering, Platinum
Holdings sold 6,000,000 common shares (or 14 percent of the then outstanding
common shares) to St. Paul at a price of $22.50 per share less the underwriting
discount (the "St. Paul Investment") in a private placement pursuant to a
Formation and Separation Agreement dated as of October 28, 2002 between Platinum
Holdings and St. Paul (the "Formation Agreement"). The Bye-laws of Platinum
Holdings provide that the voting power of St. Paul's common shares is limited to
9.9 percent of the voting power of the outstanding common shares. Pursuant to
the Formation Agreement, St. Paul received an option to purchase up to 6,000,000
additional common shares at any time during the ten years following the Initial
Public Offering at a price of $27.00 per share (the "St. Paul Option"). In
return for the common shares and the St. Paul Option, St. Paul contributed to
the Company cash in the amount of $122 million and substantially all of the
continuing reinsurance business and related assets of the reinsurance segment of
St. Paul, including all of the outstanding capital stock of Platinum US. Among
the fixed assets transferred were furniture, equipment, systems and software,
and intangible assets including broker lists, contract renewal rights and
licenses. These assets were recorded at the values reflected on St. Paul's books
at the time of transfer.

      Concurrent with the completion of the Initial Public Offering, Platinum
Holdings also sold 3,960,000 common shares (or nine percent of the outstanding
common shares) to RenaissanceRe Holdings Ltd. ("RenaissanceRe") at a price of
$22.50 per share less the underwriting discount in a private placement pursuant
to an Investment Agreement dated as of September 20, 2002 by and among Platinum
Holdings, St. Paul and RenaissanceRe (the "Investment Agreement"). Pursuant to
the Investment Agreement, RenaissanceRe received an option to purchase up to
2,500,000 additional common shares at any time during the ten years following
the Initial Public Offering at a purchase price of $27.00 per share (the "RenRe
Option ").

      On November 18, 2004, Platinum Holdings and RenaissanceRe amended the
terms of the RenRe Option. As a result of the amendment, in lieu of paying
$27.00 per share, any exercise by RenaissanceRe of its option will be settled on
a net share basis, which will result in Platinum issuing to RenaissanceRe a
number of common shares equal to the excess of the market price per share,
determined in accordance

                                      F-23
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

with the amendment, over $27.00 less the par value per share multiplied by the
number of common shares issuable upon exercise of the option, divided by that
market price per share. On January 10, 2005, Platinum Holdings and St. Paul
amended the terms of the St. Paul Option. As a result of this amendment, any
exercise by St. Paul of its option will be settled on a net share basis, similar
that of RenaissanceRe. This amendment had no effect on the consolidated
financial statements.

      The Company filed an unallocated universal shelf registration statement
with the Securities and Exchange Commission ("SEC"), which the SEC declared
effective on April 5, 2004. The securities registered under the shelf
registration statement for possible future sales include up to $750,000,000 of
common shares, preferred shares and various types of debt securities. The
registration statement included common shares held by St. Paul and RenaissanceRe
and common shares issuable upon exercise of the St. Paul Option and the RenRe
Option. On June 30, 2004, St. Paul completed the sale of its 6,000,000 common
shares in an underwritten public offering, which was effected pursuant to a
prospectus supplement to the shelf registration statement dated June 28, 2004.
The Company did not sell any common shares in the offering and did not receive
any proceeds from the sale of the common shares by St Paul. The 6,000,000 common
shares sold by St. Paul amounted to $177,330,000 of the securities registered
under the $750,000,000 shelf registration statement.

      On August 4, 2004, the board of directors of the Company approved a plan
to purchase up to $50,000,000 of its common shares. During the year ended
December 31, 2004 the Company purchased 349,700 of its common shares in the open
market at an aggregate amount of $9,985,000 at a weighted average price of
$28.55 per share. The common shares purchased by the Company were canceled.

      The Company's ability to pay dividends is subject to certain regulatory
restrictions on the payment of dividends by its subsidiaries. The payment of
dividends from the Company's regulated reinsurance subsidiaries is limited by
applicable laws and statutory requirements of the jurisdictions in which the
subsidiaries operate, including Bermuda, the United States and the United
Kingdom. Based on the regulatory restrictions of the applicable jurisdictions,
the maximum amount available for payment of dividends or other distributions by
the reinsurance subsidiaries of the Company in 2005 without prior regulatory
approval is estimated to be $139,620,000.

      The combined statutory capital and surplus and statutory net income as
reported to relevant regulatory authorities for the reinsurance subsidiaries of
the Company were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                         2004            2003     2002 Period
                                      -----------     ---------   -----------
<S>                                   <C>             <C>         <C>
Statutory capital and surplus .....   $ 1,124,446     1,096,398   $   965,956
Statutory net income ..............   $    51,803       117,172   $    32,093
</TABLE>

      The Company's insurance subsidiaries file financial statements prepared in
accordance with statutory accounting practices prescribed or permitted by
domestic or foreign insurance regulatory authorities. The differences between
statutory financial statements in the United States and financial statements
prepared in accordance with U.S. GAAP vary between domestic and foreign
jurisdictions. The principal differences are that statutory financial statements
do not reflect deferred acquisition costs, bonds are carried at amortized cost,
deferred income tax is charged or credited directly to equity, subject to
limits, and reinsurance assets and liabilities are presented net of reinsurance.
The Company has not used any statutory accounting practices that are not
prescribed.

                                      F-24
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

9.    EARNINGS PER SHARE

      Following is a reconciliation of the basic and diluted earnings per share
computations for the years ended December 31, 2004 and 2003 and the 2002 Period
($ in thousands, except per share data):

<TABLE>
<CAPTION>
                                                              Weighted
                                                              Average
                                                   Net         Shares     Earnings
                                                  Income    Outstanding   Per Share
                                                  ------    -----------   ---------
<S>                                             <C>         <C>           <C>
Year Ended December 31, 2004:
Basic earnings per share:
  Net income ................................   $  84,783      43,158     $    1.96

Effect of dilutive securities:
  Share options and restricted shares .......           -       2,094
  Interest expense related to ESU's .........       6,097           -
  Common share conversion of ESU's ..........           -       5,009

Diluted earnings per share:
                                                ---------      ------
  Income available to common shareholders ...   $  90,880      50,261     $    1.81
                                                ---------      ------
Year Ended December 31, 2003:
Basic earnings per share:
  Net income ................................   $ 144,823      43,019     $    3.37

Effect of dilutive securities:
  Share options .............................           -         717
  Interest expense related to ESU's .........       6,290           -
  Common share conversion of ESU's ..........           -       5,137

Diluted earnings per share:
                                                ---------      ------
  Income available to common shareholders ...   $ 151,113      48,873     $    3.09
                                                ---------      ------

2002 Period:
Basic earnings per share:
  Net income ................................   $   6,438      43,004     $    0.15

Effect of dilutive securities:
  Share options .............................           -         518

Diluted earnings per share:
                                                ---------      ------
  Income available to common shareholders ...   $   6,438      43,522     $    0.15
                                                ---------      ------
</TABLE>

10.   SHARE INCENTIVE COMPENSATION AND EMPLOYEE BENEFIT PLANS

Share Incentive Compensation

      The Company has a share incentive plan under which key employees and
directors of the Company and its subsidiaries may be granted options, restricted
share awards or share units. An option award under the Company's share incentive
plan allows for the purchase of common shares at a price

                                      F-25
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

equal to the closing price of common shares on the New York Stock Exchange on
the date immediately preceding the date of the grant. Options to purchase common
shares are granted periodically by the Compensation Committee of the Board of
Directors, generally vest over three or four years, and expire ten years from
the date of grant. The following summary sets forth option activity for the
years ended December 31, 2004 and 2003 and the 2002 Period (in thousands, except
per share exercise price):

<TABLE>
<CAPTION>
                                               As and for the      As and for the       As and for the
                                                year ended          year ended           period ended
                                             December 31, 2004    December 31, 2003    December 31, 2002
                                             ------------------   ------------------   -----------------
                                                       Weighted             Weighted            Weighted
                                                       Average              Average             Average
                                                       Exercise             Exercise            Exercise
                                             Options    Price     Options    Price     Options   Price
                                             -------   -------    -------   -------    -------  -------
<S>                                          <C>       <C>        <C>       <C>        <C>      <C>
Outstanding - beginning of the period ....    4,614    $ 22.92     4,347    $ 22.50         -   $     -
  Granted ................................      227      31.43       670      25.41     4,352     22.50
  Exercised ..............................      329      22.50        30      22.50         -         -
  Forfeited ..............................       84      22.50       373      22.50         5     22.50
                                              -----                -----                -----
Outstanding - end of the period ..........    4,428    $ 23.40     4,614    $ 22.92     4,347   $ 22.50
                                              -----                -----                -----

Options exercisable at year-end ..........    3,636                1,834                    -
Weighted average exercise price of
   options exercisable at year-end .......             $ 22.99              $ 22.50
</TABLE>

The following table summarizes information about share options outstanding at
December 31, 2004 (in thousands, except per share exercise price):

<TABLE>
<CAPTION>
                                                                      Exercisable
                                     Weighted                  -------------------------
                                      Average     Weighted                    Weighted
     Range of                        Remaining    Average                     Average
     exercise          Number       Contractual   Exercise        Number      Exercise
      prices        Outstanding        Life        Price       Outstanding     Price
----------------    -----------     -----------   ---------    -----------   -----------
<S>                 <C>             <C>           <C>          <C>           <C>
          $22.50       3,530           7.8        $   22.50       3,198      $   22.50

  22.51 -  25.00         165           8.2            22.79          91          22.76

  25.01 -  30.00         520           8.2            26.32         269          26.31

$ 30.01 - $35.00         213           9.4        $   31.67          78      $   31.74
</TABLE>

      The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions:

<TABLE>
<S>                                          <C>
Dividend yield ....................             1.4%
Risk free interest rate ...........             3.0%
Expected volatility ...............            30.0%
Expected option life ..............          7 years
</TABLE>

      These assumptions would have resulted in the following stock-based
compensation expense, net of tax ($ in thousands):

                                      F-26
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                         2004       2003    2002 Period
                                                        ------     ------   -----------
<S>                                                     <C>        <C>      <C>
Stock-based compensation expense, net of tax ......     $6,640     14,511     $1,070
Stock-based compensation expense, net of tax
   included in financial statements                     $1,814      5,175     $    -
</TABLE>

      The Company's share incentive plan also provides for the issuance of
restricted shares to key employees. During 2004, the Company granted 98,531
restricted shares that vest over a five year period. The fair value of the
shares at the date of grant was $2,750,000. There were no restricted share
awards in 2003 and 2002.

      On May 13, 2003 the Company entered into a Separation and Consulting
Agreement with its former President and Chief Executive Officer pursuant to
which the Company paid him $4,950,000 and on June 1, 2003 fully vested his
option to purchase 975,000 of the Company's common shares with an exercise
period of five years. The differential between the option price and the market
value of 975,000 common shares on May 13, 2003 of $4,339,000 was recognized as
compensation expense with a corresponding credit to additional paid in capital.

Defined Contribution Plan

      In 2003, the Company adopted an employee savings plan as a defined
contribution plan intended to qualify under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and covering substantially all
U.S. employees. The savings plan allows eligible employees to contribute up to
50 percent of their annual compensation on a tax-deferred basis up to limits
under the Code and the Company will match up to the first four percent. In
addition, the Company may, at its discretion, make additional contributions.
Expenses related to the savings plan were $1,255,000 and $1,718,000, for the
years ended December 31, 2004 and 2003, respectively.

11.   LEASE COMMITMENTS

      Future minimum annual lease commitments under various non-cancelable
operating leases for the Company's office facilities are as follows: ($ in
thousands):

<TABLE>
<S>                                <C>
Years Ending December 31,
  2005 .......................     $  2,570
  2006 .......................        2,336
  2007 .......................        1,785
  2008 .......................        1,860
  2009 .......................        1,934
  Thereafter .................        6,770
                                   --------
        Total ................     $ 17,255
                                   --------
</TABLE>

      Rent expense was $3,070,000 and, $3,636,000 for the years ended December
31, 2004 and 2003, respectively.

                                      F-27
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

12.   RELATED PARTY TRANSACTIONS AND AGREEMENTS

      In connection with the Initial Public Offering and the transfer of
business, the Company entered into various agreements with St. Paul and its
affiliates and RenaissanceRe and its affiliates. These agreements include
several quota share retrocession agreements pursuant to which St. Paul's
subsidiaries transferred the liabilities, related assets and rights and risks
under substantially all of the reinsurance contracts entered into by St. Paul's
subsidiaries on or after January 1, 2002 (except for certain liabilities
relating to the flooding in Europe in August 2002, named storms in existence at
the time of the completion of the Initial Public Offering, and business
underwritten in London for certain financial services companies) (the "Quota
Share Retrocession Agreements"). These agreements provided for the transfer to
subsidiaries of the Company of cash and other assets in an amount equal to
substantially all of the existing unpaid losses (excluding reserves relating to
liabilities retained by St. Paul), unpaid allocated LAE, other liabilities
related to non-traditional reinsurance treaties, unearned premium reserves
(subject to agreed upon adjustments) and other related reserves, which relate to
contracts entered into on and after January 1, 2002, as of the date of the
transfer (as determined 90 days after such date) and 100 percent of future
premiums (less any ceding commission under the Quota Share Retrocession
Agreements) associated with the reinsurance contracts relating to periods after
the date of the transfer.

      In connection with the Initial Public Offering and transfer of the
business, certain subsidiaries of the Company entered into several agreements
with St. Paul pursuant to which St. Paul provides various services, including
accounting and administration of the business assumed under the Quota Share
Retrocession Agreements. The Company paid St. Paul a total of $326,000 and
$274,000 and $0 for such services provided in 2004, 2003 and the 2002 Period,
respectively.

      Platinum Holdings also entered into a five-year Services and Capacity
Reservation Agreement with RenaissanceRe, effective October 1, 2002, pursuant to
which RenaissanceRe will provide services to subsidiaries of the Company in
connection with their property catastrophe book of business. At the Company's
request, RenaissanceRe will analyze the Company's property catastrophe treaties
and contracts twice per year and will assist the Company in measuring risk and
managing the Company's property catastrophe treaties and contacts. Based upon
such analysis, RenaissanceRe will provide the Company with quotations for rates
for non-marine non-finite property catastrophe retrocessional coverage with
aggregate limits up to $100 million annually, either on an excess-of-loss or
proportional basis. The Company and RenaissanceRe may then enter into
retrocessional agreements on the basis of the quotations. The fee for the
coverage commitment and the services provided by RenaissanceRe under this
agreement is 3.5 percent of the Company's gross written non-marine non-finite
property catastrophe premium for the contract year, subject to a minimum of $4
million. Either party may terminate this agreement if the other is deemed
impaired or insolvent by applicable regulatory or judicial authorities or is the
subject of conservation, rehabilitation, liquidation, bankruptcy or similar
insolvency proceedings. Fees related to this agreement were $6,395,000,
$5,350,000 and $46,000 for the years ended December 31, 2004 and 2003 and the
2002 Period, respectively. Fees related to this agreement are included in
operating expenses.

      Renaissance Underwriting Managers Ltd. ("RUM"), a subsidiary of
RenaissanceRe, and Platinum Bermuda entered into an agreement whereby RUM will,
from time to time, provide referrals of treaty and facultative reinsurance
contracts to Platinum Bermuda for a fee. The fee is 1.0% of gross premiums
written for all pro-rata business, 2.5% of gross premiums written on all excess
of loss business, and 7.5% of the margin on all finite business. The Company
paid $846,000 and $400,000 in fees for such referrals

                                      F-28
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

for the years ended December 31, 2004 and 2003, respectively. The business
referred is also subject to a profit commission. Included in the fees under this
agreement in 2004 was $727,000 of profit commissions. There were no profit
commissions paid under this agreement in 2003.

      Platinum US is a party to two property catastrophe excess of loss programs
with the Glencoe Group of Companies, which are affiliates of RenaissanceRe.
Platinum US has a 5% participation across four layers of reinsurance on one
program and a 15% participation on the other program. Platinum US is a party to
a quota share retrocession agreement with Glencoe Insurance Ltd., an affiliate
of RenaissanceRe, pursuant to which Platinum US cedes to Glencoe Insurance Ltd.
85% of all liabilities under the subject property facultative certificates.
Premium ceded in 2004 under this agreement was approximately $3,400,000.

      Pursuant to the employment agreement between the Company's chief executive
officer (the "CEO") and the Company, dated as of June 20, 2003, the CEO
purchased 20,000 common shares from the Company on July 30, 2003 for an
aggregate purchase price of $520,000. These common shares were sold to the CEO
at a price of $26.00 per common share, which was the closing price of the common
shares on the date prior to the date that the Company's Board of Directors
approved his employment agreement.

      The Company is a party to an investment management agreement with Alliance
Capital Management L.P. ("Alliance"), pursuant to which Alliance provides
investment advisory services to the Company. The Company pays a fee to Alliance
for these services based on the amount of the Company's assets managed by
Alliance. The Company paid $2,248,000, $1,629,000 and $0 in investment advisory
fees to Alliance for the years ended December 31, 2004, 2003 and the 2002
Period, respectively. A Senior Vice President at AllianceBernstein Institutional
Investment Management, a unit of Alliance, is the wife of a senior officer of
Platinum US.

13.   OPERATING SEGMENT INFORMATION

      The Company has organized its worldwide reinsurance business around three
operating segments: Property and Marine, Casualty and Finite Risk. The Property
and Marine operating segment includes principally property (including crop) and
marine reinsurance coverages that are written in the United States and
international markets. This business includes property per-risk excess-of-loss
treaties, property proportional treaties and catastrophe excess-of-loss
treaties. The Casualty operating segment includes principally reinsurance
treaties that cover umbrella liability, general and product liability,
professional liability, directors and officers liability, workers' compensation,
casualty clash, automobile liability, surety and trade credit. This segment also
includes accident and health reinsurance treaties, which are predominantly
reinsurance of health insurance products. The Finite Risk operating segment
includes principally structured reinsurance contracts with ceding companies
whose needs may not be met efficiently through traditional reinsurance products.

      In managing the Company's operating segments, management uses measures
such as underwriting income and underwriting ratios to evaluate segment
performance. Management does not allocate by segment its assets or certain
income and expenses such as investment income, interest expense and certain
corporate expenses. The measures used by management in evaluating the Company's
operating segments should not be used as a substitute for measures determined
under U.S. GAAP. The following table summarizes underwriting activity and ratios
for the three operating segments together

                                      F-29
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

with a reconciliation of underwriting profit or loss to income before income tax
expense for the years ended December 31, 2004 and 2003 and the 2002 Period ($ in
thousands):

<TABLE>
<CAPTION>
                                                                  Property
                                                                 and Marine      Casualty     Finite Risk    Total
                                                                 ----------      --------     -----------  ----------
<S>                                                              <C>             <C>          <C>          <C>
Year ended December 31, 2004:

Net premiums written ..........................................  $  504,439       677,399       464,175    $1,646,013
                                                                 ----------       -------       -------    ----------
Net premiums earned ...........................................     485,135       611,893       350,907     1,447,935
Losses and LAE ................................................     349,557       418,355       251,892     1,019,804
Acquisition expenses ..........................................      76,360       151,649        99,812       327,821
Other underwriting expenses ...................................      27,827        19,086         6,224        53,137
                                                                 ----------       -------       -------    ----------
    Segment underwriting income (loss) ........................  $   31,391        22,803        (7,021)       47,173
                                                                 ----------       -------       -------
Corporate expenses not allocated to segments ..................                                               (13,196)
Net foreign currency exchange gains ...........................                                                   725
Interest expense ..............................................                                                (9,268)
Other income ..................................................                                                 3,211
Net investment income and net realized gains on investments ...                                                86,487
                                                                                                           ----------
    Income before income taxes ................................                                            $  115,132
                                                                                                           ----------

Ratios:
  Losses and LAE ..............................................        72.1%         68.4%         71.8%         70.4%
  Acquisition expense .........................................        15.7%         24.8%         28.4%         22.6%
  Other underwriting expense ..................................         5.7%          3.1%          1.8%          3.7%
                                                                 ----------       -------       -------    ----------
    Combined ..................................................        93.5%         96.3%        102.0%         96.7%
                                                                 ----------       -------       -------    ----------

Year ended December 31, 2003:

Net premiums written ..........................................  $  352,908       474,000       345,234    $1,172,142
                                                                 ----------       -------       -------    ----------
Net premiums earned ...........................................     355,556       391,170       320,801     1,067,527
Losses and LAE ................................................     169,944       266,836       147,391       584,171
Acquisition expenses ..........................................      52,154       101,005        98,067       251,226
Other underwriting expenses ...................................      35,598        21,060        12,870        69,528
                                                                 ----------       -------       -------    ----------
    Segment underwriting income ...............................  $   97,860         2,269        62,473       162,602
                                                                 ----------       -------       -------
Corporate expenses not allocated to segments ..................                                               (23,067)
Net foreign currency exchange losses ..........................                                                  (114)
Interest expense ..............................................                                                (9,492)
Other income ..................................................                                                 3,343
Net investment income and net realized gains on investments ...                                                60,426
                                                                                                           ----------
        Income before income taxes ............................                                            $  193,698
                                                                                                           ----------

Ratios:
  Losses and LAE ..............................................        47.8%         68.2%         45.9%         54.7%
  Acquisition expense .........................................        14.7%         25.8%         30.6%         23.5%
  Other underwriting expense ..................................        10.0%          5.4%          4.0%          6.5%
                                                                 ----------       -------       -------    ----------
        Combined ..............................................        72.5%         99.4%         80.5%         84.7%
                                                                 ----------       -------       -------    ----------
</TABLE>

                                      F-30
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                                  Property
                                                                 and Marine      Casualty     Finite Risk    Total
                                                                 ----------      --------     -----------  ----------
<S>                                                              <C>             <C>          <C>          <C>
2002 Period:

Net premiums written ..........................................  $   89,341       164,929        43,844    $  298,114
                                                                 ----------       -------        ------    ----------
Net premiums earned ...........................................      43,047        39,320        24,731       107,098
Losses and LAE ................................................      21,558        29,498         9,300        60,356
Acquisition expenses ..........................................       7,798         9,269         8,407        25,474
Other underwriting expenses ...................................       5,960         4,136         2,068        12,164
                                                                 ----------       -------        ------    ----------
    Segment underwriting income (loss) ........................  $    7,731        (3,583)        4,956         9,104
                                                                 ----------       -------        ------
Corporate expenses not allocated to segments ..................                                                (4,170)
Net foreign currency exchange gains ...........................                                                 2,017
Interest expense ..............................................                                                (1,261)
Other income ..................................................                                                   167
Net investment income and net realized gains on investments ...                                                 5,236
                                                                                                           ----------
    Income before income taxes ................................                                            $   11,093
                                                                                                           ----------

Ratios:
  Losses and LAE ..............................................        50.1%         75.0%         37.6%         56.4%
  Acquisition expense .........................................        18.1%         23.6%         34.0%         23.8%
  Other underwriting expense ..................................        13.8%         10.5%          8.4%         11.4%
                                                                 ----------       -------        ------    ----------
    Combined ..................................................        82.0%        109.1%         80.0%         91.6%
                                                                 ----------       -------        ------    ----------
</TABLE>

      Corporate expenses, interest expenses, net investment income, net realized
investment gains and other income or expense items that are not specifically
attributable to operating segments are not allocated.

      The following table sets forth the net premiums written by the Company for
the years ended December 31, 2004 and 2003 and the 2002 Period by geographic
location of the ceding company ($ in thousands):

<TABLE>
<CAPTION>
                                                       2004           2003    2002 Period
                                                    -----------    ---------  -----------
<S>                                                 <C>            <C>        <C>
United States ....................................  $ 1,350,408      912,586  $   153,872
International ....................................      295,605      259,556      144,242
                                                    -----------    ---------  -----------
        Total ....................................  $ 1,646,013    1,172,142  $   298,114
                                                    -----------    ---------  -----------
</TABLE>

14.   COMPREHENSIVE INCOME

      The components of comprehensive income for the years ended December 31,
2004, 2003 and the 2002 Period are as follows ($ in thousands, except per share
data):

                                      F-31
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                                                            2004            2003     2002 Period
                                                                                         ----------        ------    -----------
<S>                                                                                      <C>               <C>       <C>
Before tax amounts:
  Foreign currency translation adjustment ............................................   $      555           890    $        -
  Net unrealized holding gains (losses) arising during the period ....................      (12,054)       13,388        12,293
  Less: reclassification adjustment for net (gains) losses realized in net income ....        2,594        (2,982)            -
                                                                                         ----------        ------    ----------
        Other comprehensive income before tax ........................................       (8,905)       11,296        12,293
                                                                                         ----------        ------    ----------

Deferred income tax expense:
  Foreign currency translation adjustment ............................................         (167)         (267)            -
  Net unrealized holding gains (losses) arising during the period ....................        2,763        (2,983)        1,712
  Less: reclassification adjustment for net (gains) losses realized in net income ....         (213)          147             -
                                                                                         ----------        ------    ----------
        Deferred tax on other comprehensive income (loss) ............................        2,383        (3,103)        1,712
                                                                                         ----------        ------    ----------

Net of tax amounts: ..................................................................            -
  Net foreign currency translation adjustment ........................................          388           623
  Net unrealized holding gains (losses) arising during the period ....................       (9,291)       10,405        10,581
  Less: reclassification adjustment for net (gains) losses realized in net income ....        2,381        (2,835)            -
                                                                                         ----------        ------    ----------
        Other comprehensive income (loss), net of tax ................................   $   (6,522)        8,193    $   10,581
                                                                                         ----------        ------    ----------
</TABLE>

15.   QUARTERLY FINANCIAL DATA (UNAUDITED)

      The following quarterly financial information for each of the three months
ended March 31, June 30, September 30 and December 31, 2004 and 2003 is
unaudited. However, in the opinion of management, all adjustments (consisting of
normal recurring adjustments) necessary to present fairly the results of
operations for such periods, have been made for a fair presentation of the
results shown ($ in thousands, except per share data):

<TABLE>
<CAPTION>
                                                      Three months ended
                                   ---------------------------------------------------------
                                    March 31,        June 30,  September 30,    December 31,
                                      2004             2004       2004             2004
                                   ----------        --------  -------------    ------------
<S>                                <C>               <C>       <C>              <C>
Net premiums earned ..........     $  321,042        310,867     383,090         $  432,936
Net investment income ........         17,484         19,377      21,429             26,242
Losses and LAE ...............        161,969        189,466     384,724            283,645
Acquisition expenses .........         88,921         62,694      81,271             94,935
Operating expenses ...........         18,774         19,262      15,400             12,897

Net income ...................         54,814         49,799     (69,752)            49,922
</TABLE>

                                      F-32
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>
                                                             Three months ended
                                          ---------------------------------------------------------
                                          March 31,      June 30,     September 30,    December 31,
                                            2004           2004           2004            2004
                                          ---------      --------     -------------    ------------
<S>                                       <C>            <C>          <C>              <C>
Net income per share:
    Basic .........................           1.27           1.15          (1.62)           1.16
    Diluted .......................       $   1.10           1.01          (1.62)       $   1.03

Average common shares outstanding:
    Basic .........................         43,143         43,290         43,127          43,073
    Diluted .......................         50,984         50,788         43,127          49,819
</TABLE>

<TABLE>
<CAPTION>
                                                          Three months ended
                                         -------------------------------------------------------
                                         March 31,      June 30,    September 30,   December 31,
                                           2003           2003           2003           2003
                                         ---------      --------    -------------   ------------
<S>                                      <C>            <C>         <C>             <C>
Net premiums earned ..............       $238,069        279,376        272,265       $277,817
Net investment income ............         14,203         13,431         14,780         15,231
Losses and LAE ...................        138,803        156,801        157,208        131,359
Acquisition expenses .............         51,719         60,376         60,408         78,723
Operating expenses ...............         20,169         32,995         18,499         20,932

Net income .......................         30,586         26,605         37,817         49,815

Net income per share:
   Basic .........................           0.71           0.62           0.88           1.16
   Diluted .......................       $   0.66           0.57           0.81       $   1.03

Average common shares outstanding:
   Basic .........................         43,004         43,004         43,022         43,043
   Diluted .......................         49,008         48,871         48,876         49,868
</TABLE>

16.   INVESTIGATIONS BY THE SEC AND THE NEW YORK ATTORNEY GENERAL

      In November and December 2004, the Company received subpoenas from the SEC
and the Office of the Attorney General for the State of New York for documents
and information relating to certain non-traditional, or loss mitigation,
insurance products. The Company is fully cooperating in responding to all such
requests. Other reinsurance companies have reported receiving similar subpoenas
and requests. This investigation appears to be at a very preliminary stage and,
accordingly, we are unable to predict the direction the investigation will take
and the impact, if any, it may have on the consolidated financial statements.

(17)  CONDENSED CONSOLIDATING FINANCIAL INFORMATION

      In November 2002, the Company issued Equity Security Units ("ESUs")
consisting of a contract to purchase common shares of the Company in 2005 and an
ownership interest in a senior note due 2007 issued by Platinum Finance, a U.S.
based intermediate holding company and indirect wholly owned subsidiary of
Platinum Holdings. The senior notes are fully and unconditionally guaranteed by
Platinum Holdings on a senior unsecured basis and are pledged to collateralize
the holders' obligations to acquire common shares in 2005.

                                      F-33
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

      The payment of dividends from the Company's regulated reinsurance
subsidiaries is limited by applicable laws and statutory requirements of the
jurisdictions in which the subsidiaries operate, including Bermuda, the United
States and the United Kingdom. Based on the regulatory restrictions of the
applicable jurisdictions, the maximum amount available for payment of dividends
or other distributions by the reinsurance subsidiary of Platinum Finance in 2005
without prior regulatory approval is $40,312,000. The maximum amount available
for payment of dividends or other distributions by the reinsurance subsidiaries
of Platinum Holdings in 2005, including the reinsurance subsidiary of Platinum
Finance, without prior regulatory approval is estimated to be $139,620,000.

      The tables below present condensed consolidating financial information as
of December 31, 2004 and 2003, for the years ended December 31, 2004 and 2003
and for the period from April 19, 2002 (date of inception) through December 31,
2002 of Platinum Holdings, Platinum Finance and the non-guarantor subsidiaries
of Platinum Holdings ($ in thousands):

CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2004

<TABLE>
<CAPTION>
                                                           Platinum       Platinum     Non-guarantor  Consolidating
                                                           Holdings       Finance      Subsidiaries    Adjustments    Consolidated
                                                           --------       -------      ------------   -------------   ------------
<S>                                                       <C>             <C>          <C>            <C>             <C>
                        ASSETS

Investments:
   Fixed maturities available-for-sale, at fair value     $        -          3,740      2,153,789              -      $2,157,529
   Fixed maturity trading securities at fair value                 -              -         82,673              -          82,673
   Other invested asset                                            -              -          6,769              -           6,769
                                                          ----------        -------      ---------     ----------      ----------
         Total investments                                         -          3,740      2,243,231              -       2,246,971
Investment in subsidiaries                                 1,135,434        414,105        470,776     (2,020,315)              -
Cash and cash equivalents                                      1,945          8,204        199,748              -         209,897
Reinsurance assets                                                 -              -      2,009,245     (1,090,219)        919,026
Other assets                                                   1,648          1,502        142,951       (100,000)         46,101
                                                          ----------        -------      ---------     ----------      ----------
         Total assets                                     $1,139,027        427,551      5,065,951     (3,210,534)     $3,421,995
                                                          ==========        =======      =========     ==========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Reinsurance liabilities                                $        -              -      3,233,233     (1,133,358)     $2,099,875
   Debt obligations                                                -        137,500              -              -         137,500
   Other liabilities                                           6,024            928          1,525         43,140          51,617
                                                          ----------        -------      ---------     ----------      ----------
         Total liabilities                                     6,024        138,428      3,234,758     (1,090,218)      2,288,992
                                                          ----------        -------      ---------     ----------      ----------

Shareholders' Equity:
   Preferred shares                                                -              -              -              -               -
   Common shares                                                 430              -          1,250         (1,250)            430
   Additional paid-in capital                                911,851        147,238      1,417,032     (1,564,270)        911,851
   Accumulated other comprehensive income                     12,252          3,309         17,068        (20,377)         12,252
   Retained earnings                                         208,470        138,576        395,843       (534,419)        208,470
                                                          ----------        -------      ---------     ----------      ----------
         Total shareholders' equity                        1,133,003        289,123      1,831,193     (2,120,316)      1,133,003
                                                          ----------        -------      ---------     ----------      ----------
         Total liabilities and shareholders' equity .     $1,139,027        427,551      5,065,951     (3,210,534)     $3,421,995
                                                          ==========        =======      =========     ==========      ==========
</TABLE>

                                      F-34
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                           Platinum       Platinum     Non-guarantor  Consolidating
                                                           Holdings        Finance     Subsidiaries    Adjustments    Consolidated
                                                           --------        -------     ------------    -----------    ------------
<S>                                                       <C>             <C>          <C>            <C>             <C>
                        ASSETS

Investments:
   Fixed maturities available-for-sale, at fair value     $        -          2,464      1,581,041              -      $1,583,505
   Fixed maturity trading securities at fair value                 -              -         94,633              -          94,633
   Other invested asset                                            -              -          6,910              -           6,910
                                                          ----------        -------      ---------     ----------      ----------
         Total investments                                         -          2,464      1,682,584              -       1,685,048
Investment in subsidiaries                                 1,069,521        363,038        414,511     (1,847,070)              -
Cash and cash equivalents                                      3,413          9,917         92,131              -         105,461
Reinsurance assets                                                 -              -      1,292,394       (649,355)        643,039
Income tax recoverable                                             -          3,757          5,603              -           9,360
Other assets                                                   1,740          3,415        140,416       (102,907)         42,664
                                                          ----------        -------      ---------     ----------      ----------
         Total assets                                     $1,074,674        382,591      3,627,639     (2,599,332)     $2,485,572
                                                          ==========        =======      =========     ==========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Reinsurance liabilities                                $        -              -      1,858,185       (627,052)     $1,231,133
   Debt obligations                                                -        137,500              -              -         137,500
   Other liabilities                                           7,471          1,029         66,745        (25,509)         49,736
                                                          ----------        -------      ---------     ----------      ----------
         Total liabilities                                     7,471        138,529      1,924,930       (652,561)      1,418,369
                                                          ----------        -------      ---------     ----------      ----------

Shareholders' Equity:
   Preferred shares                                                -              -              -              -               -
   Common shares                                                 430              -              -              -             430
   Additional paid-in capital                                910,505        147,238      1,422,482     (1,569,720)        910,505
   Accumulated other comprehensive income                     18,774          7,289         28,140        (35,429)         18,774
   Retained earnings                                         137,494         89,535        252,087       (341,622)        137,494
                                                          ----------        -------      ---------     ----------      ----------
         Total shareholders' equity                        1,067,203        244,062      1,702,709     (1,946,771)      1,067,203
                                                          ----------        -------      ---------     ----------      ----------
         Total liabilities and shareholders' equity       $1,074,674        382,591      3,627,639     (2,599,332)     $2,485,572
                                                          ==========        =======      =========     ==========      ==========
</TABLE>

                                      F-35
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2004

<TABLE>
<CAPTION>
                                                         Platinum       Platinum     Non-guarantor    Consolidating
                                                         Holdings        Finance     Subsidiaries      Adjustments    Consolidated
                                                         --------        -------     ------------      -----------    ------------
<S>                                                     <C>             <C>          <C>              <C>             <C>
Revenue:
   Net premiums earned                                  $         -            -       1,447,935               -       $ 1,447,935
   Net investment income                                         53          164          84,315               -            84,532
   Net realized gains on investments                              -            6           1,949               -             1,955
   Other income                                               2,944            -              48             219             3,211
                                                        -----------       ------       ---------        --------       -----------
         Total revenue                                        2,997          170       1,534,247             219         1,537,633
                                                        -----------       ------       ---------        --------       -----------
Expenses:
   Losses and loss adjustment expenses                            -            -       1,019,804               -         1,019,804
   Acquisition expenses                                           -            -         331,754          (3,933)          327,821
   Operating expenses                                        12,725          288          49,387           3,933            66,333
   Net foreign currency exchange gains                           (3)           -            (722)              -              (725)
   Interest expense                                             207        9,061               -               -             9,268
                                                        -----------       ------       ---------        --------       -----------
         Total expenses                                      12,929        9,349       1,400,223               -         1,422,501
                                                        -----------       ------       ---------        --------       -----------
         Income (loss) before income tax expense             (9,932)      (9,179)        134,024             219           115,132
   Income tax expense (benefit)                                   -       (3,213)         33,562               -            30,349
                                                        -----------       ------       ---------        --------       -----------
         Net income (loss) before equity in earnings
           of subsidiaries                                   (9,932)      (5,966)        100,462             219            84,783
   Equity in earnings of subsidiaries                        94,715       55,006          60,799        (210,520)                -
                                                        -----------       ------       ---------        --------       -----------
         Net income                                     $    84,783       49,040         161,261        (210,301)      $    84,783
                                                        ===========       ======       =========        ========       ===========
</TABLE>

CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                         Platinum       Platinum   Non-guarantor  Consolidating
                                                         Holdings       Finance    Subsidiaries    Adjustments     Consolidated
                                                         --------       -------    ------------    -----------     ------------
<S>                                                     <C>             <C>        <C>            <C>              <C>
Revenue:
   Net premiums earned                                  $        -            -      1,067,527             -       $1,067,527
   Net investment income                                        46          121         57,478             -           57,645
   Net realized gains on investments                             -            -          2,781             -            2,781
   Other income                                                  -            -          3,343             -            3,343
                                                        ----------       ------      ---------      --------       ----------
         Total revenue                                          46          121      1,131,129             -        1,131,296
                                                        ----------       ------      ---------      --------       ----------
Expenses:
   Losses and loss adjustment expenses                           -            -        584,171             -          584,171
   Acquisition expenses                                          -            -        256,248        (5,022)         251,226
   Operating expenses                                       22,657          338         64,373         5,227           92,595
   Net foreign currency exchange losses                          4            -            110             -              114
   Interest expense                                            344        9,148              -             -            9,492
                                                        ----------       ------      ---------      --------       ----------
         Total expenses                                     23,005        9,486        904,902           205          937,598
                                                        ----------       ------      ---------      --------       ----------
         Income (loss) before income tax expense           (22,959)      (9,365)       226,227          (205)         193,698
Income tax expense (benefit)                                     -       (3,278)        52,153             -           48,875
                                                        ----------       ------      ---------      --------       ----------
         Net income (loss) before equity in earnings
           of subsidiaries                                 (22,959)      (6,087)       174,074          (205)         144,823

   Equity in earnings of subsidiaries                      167,782       86,576         92,374      (346,732)               -
                                                        ----------       ------      ---------      --------       ----------
         Net income                                     $  144,823       80,489        266,448      (346,937)      $  144,823
                                                        ==========       ======      =========      ========       ==========
</TABLE>

                                      F-36
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

CONSOLIDATING STATEMENT OF INCOME
FOR THE PERIOD FROM APRIL 19, 2002 (DATE OF
  INCEPTION) THROUGH DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                          Platinum      Platinum      Non-guarantor    Consolidating
                                                          Holdings      Finance       Subsidiaries      Adjustments    Consolidated
                                                          --------      -------       ------------      -----------    ------------
<S>                                                       <C>           <C>           <C>              <C>             <C>
Revenue:
   Net premiums earned                                    $       -           -         107,098               -         $ 107,098
   Net investment income                                        179          36           6,065          (1,069)            5,211
   Net realized gains on investments                              -           -              25               -                25
   Other income                                                   -           -             167               -               167
                                                          ---------      ------         -------         -------         ---------
         Total revenue                                          179          36         113,355          (1,069)          112,501
                                                          ---------      ------         -------         -------         ---------
Expenses:
   Losses and loss adjustment expenses                            -           -          60,356               -            60,356
   Acquisition expenses                                           -           -          25,474               -            25,474
   Operating expenses                                         3,986         204          12,144               -            16,334
   Net foreign currency exchange gains                            -           -          (2,017)              -            (2,017)
   Interest expense                                              58       1,202           1,001          (1,000)            1,261
                                                          ---------      ------         -------         -------         ---------
         Total expenses                                       4,044       1,406          96,958          (1,000)          101,408
                                                          ---------      ------         -------         -------         ---------
         Income (loss) before income tax expense             (3,865)     (1,370)         16,397             (69)           11,093
Income tax expense (benefit)                                      -        (480)          5,135               -             4,655
                                                          ---------      ------         -------         -------         ---------
         Net income (loss) before equity in earnings
           of subsidiaries                                   (3,865)       (890)         11,262             (69)            6,438
Equity in earnings of subsidiaries                           10,303       9,938           7,524         (27,765)                -
                                                          ---------      ------         -------         -------         ---------
         Net income                                       $   6,438       9,048          18,786         (27,834)        $   6,438
                                                          =========      ======         =======         =======         =========
</TABLE>

                                      F-37
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2004

<TABLE>
<CAPTION>
                                                                                 Non-
                                                   Platinum      Platinum       guarantor      Consolidating
                                                   Holdings       Finance     Subsidiaries      Adjustments     Consolidated
                                                 ------------    --------     -------------    -------------    ------------
<S>                                              <C>             <C>          <C>              <C>              <C>
Net cash provided by (used in) operating
  activities                                     $     (8,400)      (436)        723,569               -        $    714,733
                                                 ------------     ------      ----------         -------        ------------

Investing Activities:
  Proceeds from sale of available-for-sale
    fixed maturities                                        -        998         497,947               -             498,945
  Proceeds from maturity or paydown of
    available-for-sale fixed maturities                     -        697         135,775               -             136,472
  Acquisition of available-for-sale fixed
    maturities                                              -     (2,972)     (1,227,923)              -          (1,230,895)
  Dividends from subsidiaries                          22,000          -               -         (22,000)                  -
  Contributions to subsidiaries                          (250)         -               -             250                   -
                                                 ------------     ------      ----------         -------        ------------
Net cash provided by (used in) investing
  activities                                           21,750     (1,277)       (594,201)        (21,750)           (595,478)
                                                 ------------     ------      ----------         -------        ------------

Financing Activities:
  Dividends paid to shareholders                      (13,807)         -         (22,000)         22,000             (13,807)
  Proceeds from exercise of share options               7,406          -               -               -               7,406
  Proceeds from issuance of common shares               1,567          -               -               -               1,567
  Purchase of common shares                            (9,985)         -               -               -              (9,985)
  Capital contribution from parent                          -          -             250            (250)                  -
                                                 ------------     ------      ----------         -------        ------------
Net cash used in financing activities                 (14,819)         -         (21,750)         21,750             (14,819)
                                                 ------------     ------      ----------         -------        ------------
Net increase (decrease) in cash and cash
  equivalents                                          (1,469)    (1,713)        107,618               -             104,436
Cash and cash equivalents at beginning of year          3,413      9,917          92,131               -             105,461
                                                 ------------     ------      ----------         -------        ------------
Cash and cash equivalents at end of year         $      1,944      8,204         199,749               -        $    209,897
                                                 ============     ======      ==========         =======        ============
</TABLE>

                                      F-38
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                                                 Non-
                                                  Platinum        Platinum      guarantor      Consolidating
                                                  Holdings         Finance    Subsidiaries      Adjustments   Consolidated
                                                ------------      --------    -------------    -------------  ------------
<S>                                             <C>               <C>         <C>              <C>            <C>
Net cash provided by (used in) operating
  activities                                    $    (21,103)       (7,571)      411,981               -       $    383,307
                                                ------------        ------    ----------         -------       ------------

Investing Activities:
  Proceeds from sale of available-for-sale
    fixed maturities                                       -             -       393,245               -            393,245
  Proceeds from maturity or paydown of
    available-for-sale fixed maturities                    -         1,624       131,355               -            132,979
  Acquisition of available-for-sale fixed
    maturities                                             -        (4,152)   (1,061,925)              -         (1,066,077)
  Other invested asset acquired                                          -        (6,910)              -             (6,910)
  Dividends from subsidiaries                         33,150             -             -         (33,150)                 -
                                                ------------        ------    ----------         -------       ------------
Net cash provided by (used in) investing
  activities                                          33,150        (2,528)     (544,235)        (33,150)          (546,763)
                                                ------------        ------    ----------         -------       ------------

Financing Activities:
  Dividends paid to shareholders                     (13,767)            -       (33,150)         33,150            (13,767)
  Proceeds from exercise of share options                678             -             -               -                678
  Proceeds from issuance of common shares                520             -             -               -                520
                                                ------------        ------    ----------         -------       ------------
Net cash used in financing activities                (12,569)            -       (33,150)         33,150            (12,569)
                                                ------------        ------    ----------         -------       ------------
Net decrease in cash and cash equivalents              ( 522)      (10,099)     (165,404)              -           (176,025)
Cash and cash equivalents at beginning of year         3,935        20,016       257,535               -            281,486
                                                ------------        ------    ----------         -------       ------------
Cash and cash equivalents at end of year        $      3,413         9,917        92,131               -       $    105,461
                                                ============       =======    ==========         =======       ============
</TABLE>

                                      F-39
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements, continued

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM APRIL 19, 2002 (DATE OF
  INCEPTION) THROUGH DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                                Non-
                                                 Platinum       Platinum      guarantor    Consolidating
                                                 Holdings        Finance    Subsidiaries    Adjustments    Consolidated
                                               ------------     ---------   -------------  -------------   ------------
<S>                                            <C>              <C>         <C>            <C>             <C>
Net cash provided by (used in) operating
  activities                                   $     (5,153)           16       286,530              -     $    281,393
                                               ------------      --------    ----------     ----------     ------------

Investing Activities:
  Proceeds from sale of available-for-sale
    fixed maturities                                      -             -       120,421              -          120,421
  Acquisition of available-for-sale fixed
    maturities                                            -             -    (1,157,416)                     (1,157,416)
  Contributions to subsidiaries                    (896,000)     (250,000)     (296,007)     1,442,007                -
                                               ------------      --------    ----------     ----------     ------------
Net cash used in investing activities              (896,000)     (250,000)   (1,333,002)     1,442,007       (1,036,995)
                                               ------------      --------    ----------     ----------     ------------
Financing Activities:
  Net proceeds from shares issued in initial
    capitalization                                      120             -             -              -              120
  Redemption of shares issued in initial
    capitalization                                     (120)            -             -              -             (120)
  Net proceeds from issuance of common shares       905,088             -             -              -          905,088
  Net proceeds from issuance of debt
    securities                                            -       132,000                                       132,000
  Capital contribution from parent                        -       138,000     1,304,007     (1,442,007)               -
                                               ------------      --------    ----------     ----------     ------------
Net cash provided by financing activities           905,088       270,000     1,304,007     (1,442,007)       1,037,088
                                               ------------      --------    ----------     ----------     ------------
Net increase in cash and cash equivalents             3,935        20,016       257,535              -          281,486

Cash and cash equivalents at beginning of
  period                                                  -             -             -              -                -
                                               ------------      --------    ----------     ----------     ------------
Cash and cash equivalents at end of period     $      3,935        20,016       257,535              -     $    281,486
                                               ============      ========    ==========     ==========     ============
</TABLE>

                                      F-40
<PAGE>

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
             Index to Schedules to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Report of Independent Registered Public Accounting Firm ..........................................   S-2

Schedule I     Summary of Investments - Other Than Investments in Related Parties as of December
               31, 2004 ..........................................................................   S-3

Schedule II    Condensed Financial Information of the Registrant .................................   S-4

Schedule III   Supplementary Insurance Information for the years ended December 31, 2004 and 2003
               and the period from April 19, 2002 (date of inception) to December 31, 2002 .......   S-7

Schedule IV    Reinsurance for the years ended December 31, 2004 and 2003 and the period from
               April 19, 2002 (date of inception) to December 31, 2002 ...........................   S-8
</TABLE>

Schedules other than those listed above are omitted for the reason that they are
not applicable or the information is provided elsewhere in the consolidated
financial statements.

                                      S-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Platinum Underwriters Holdings, Ltd.:

Under date of February 25, 2005, we reported on the consolidated balance sheets
of Platinum Underwriters Holdings, Ltd. and subsidiaries as of December 31, 2004
and 2003, and the related consolidated statements of income and comprehensive
income, shareholders' equity and cash flows for the years ended December 31,
2004 and 2003 and the period from April 19, 2002 (date of inception) to December
31, 2002, which are included in the Form 10-K. In connection with our audits of
the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedules appearing on pages S-3
through S-8 of the Form 10-K. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

/s/ KPMG LLP

New York, New York
February 25, 2005

                                      S-2
<PAGE>

SCHEDULE I

              PLATINUM UNDERWRITERS HOLDINGS, LTD. AND SUBSIDIARIES
       Summary of Investments - Other Than Investments in Related Parties
                             As of December 31, 2004
                                ($ in thousands)

<TABLE>
<CAPTION>
                                                                                              Amount at
                                                                                                which
                                                                                              shown in
                                                                                               Balance
                                                                      Cost      Fair Value     Sheet
                                                                 -------------  ----------  ------------
<S>                                                              <C>            <C>         <C>
Fixed maturities:
  Bonds:
    United States Government and government agencies and
      authorities ............................................   $     124,844     124,954  $    124,954
    State, municipalities and political subdivisions .........         156,427     157,337       157,337
    Foreign governments ......................................          65,285      64,923        64,923
    Foreign corporate ........................................         280,270     282,284       282,284
    Public utilities .........................................         136,173     136,848       136,848
    All other corporate ......................................       1,460,472   1,470,180     1,470,180
                                                                 -------------  ----------  ------------
        Total bonds ..........................................       2,223,471   2,236,526     2,236,526
  Redeemable preferred stock .................................           3,750       3,676         3,676
                                                                 -------------  ----------  ------------
        Total fixed maturities ...............................       2,227,221   2,240,202     2,240,202
Other long term investments ..................................           6,749       6,769         6,769
                                                                 -------------  ----------  ------------
        Total investments ....................................   $   2,233,970   2,246,971  $  2,246,971
                                                                 =============  ==========  ============
</TABLE>

*Original cost of fixed maturities reduced by repayments and adjusted for
amortization of premiums and discounts.

                                      S-3
<PAGE>

SCHEDULE II

                      PLATINUM UNDERWRITERS HOLDINGS, LTD.
                                (Parent Company)
                            Condensed Balance Sheets
                           December 31, 2004 and 2003
                       ($ in thousands, except share data)

<TABLE>
<CAPTION>
                                                                               2004            2003
                                                                          -------------   -------------
<S>                                                                       <C>             <C>
                                ASSETS

Investment in affiliates ..............................................   $   1,135,434   $   1,069,521
Cash ..................................................................           1,945           3,413
Other assets ..........................................................           1,648           1,740
                                                                          -------------   -------------
        Total assets...................................................   $   1,139,027   $   1,074,674
                                                                          =============   =============

                 LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
  Contract adjustment payments ........................................   $       2,335   $       4,535
  Accrued expenses and other liabilities ..............................           3,689           2,936
                                                                          -------------   -------------
        Total liabilities .............................................           6,024           7,471
                                                                          -------------   -------------

Shareholders' equity
  Preferred share, $.01 par value, 25,000,000 shares authorized,
    no shares issued or outstanding ...................................               -               -
  Common shares, $.01 par value, 200,000,000 shares authorized,
    43,087,407 and 43,054,125 shares issued and outstanding
    respectively ......................................................             430             430
  Additional paid-in capital ..........................................         911,851         910,505
  Accumulated other comprehensive income ..............................          12,252          18,774
  Retained earnings ...................................................         208,470         137,494
                                                                          -------------   -------------
        Total shareholders' equity ....................................       1,133,003       1,067,203

                                                                          -------------   -------------
        Total liabilities and shareholders' equity ....................   $   1,139,027   $   1,074,674
                                                                          =============   =============
</TABLE>

                                      S-4
<PAGE>

SCHEDULE II

                      PLATINUM UNDERWRITERS HOLDINGS, LTD.
                                (Parent Company)
                         Condensed Statements of Income
               For the years ended December 31, 2004 and 2003, and
  the period from April 19, 2002 (date of inception) through December 31, 2002
                                ($ in thousands)

<TABLE>
<CAPTION>
                                                                                                     2002
                                                                       2004           2003          Period
                                                                 -------------   -------------   -----------
<S>                                                              <C>             <C>             <C>
Revenues:
  Net investment income ......................................   $          53              46   $       179
  Other income ...............................................           2,944               -             -
                                                                 -------------   -------------   -----------
                                                                         2,997              46           179
                                                                 -------------   -------------   -----------

Expenses:
  Interest expenses ..........................................             207             344            58
  Operating expenses .........................................          12,722          22,661         3,986
                                                                 -------------   -------------   -----------
  Total expenses .............................................          12,929          23,005         4,044
                                                                 -------------   -------------   -----------
Net loss before equity in earnings of affiliate ..............          (9,932)        (22,959)       (3,865)

Equity in earnings of affiliates .............................          94,715         167,782        10,303
                                                                 -------------   -------------   -----------
Net income ...................................................   $      84,783         144,823   $     6,438
                                                                 =============   =============   ===========
</TABLE>

                                      S-5
<PAGE>

SCHEDULE II

                      PLATINUM UNDERWRITERS HOLDINGS, LTD.
                                (Parent Company)
                       Condensed Statements of Cash Flows
               For the years ended December 31, 2004 and 2003 and
            the Period from April 19, 2002 through December 31, 2002
                                ($ in thousands)

<TABLE>
<CAPTION>
                                                                       2004            2003           2002
                                                                  --------------   ------------   ------------
<S>                                                               <C>              <C>            <C>
Operating Activities:
  Net loss before equity in earnings of affiliates                $      (9,932)       (22,959)   $    (3,865)
  Adjustments to reconcile net income to net cash provided in
    operations:
      Share based compensation .................................          1,777          5,510              -
      Depreciation and amortization ............................            125              -              -
      Net increase in other assets and liabilities .............          1,830         (1,550)         2,226
                                                                  -------------    -----------    -----------
        Net cash used in operating activities ..................         (6,200)       (18,999)        (1,639)
                                                                  -------------    -----------    -----------

Investing Activities:
  Dividends and distributions from subsidiaries ................         22,000         33,150              -
  Contributions to subsidiaries ................................           (250)             -       (896,000)
                                                                  -------------    -----------    -----------
        Net cash provided by (used in) investing activities ....         21,750         33,150       (896,000)
                                                                  -------------    -----------    -----------

Financing Activities:
  Net proceeds from shares issued in initial capitalization ....              -              -            120
  Redemption of shares issued in initial capitalization ........              -              -           (120)
  Net proceeds from issuance of common shares ..................          1,566            520        693,314
  Net proceeds from issuance of common shares in private
    placements .................................................              -              -        208,260
  Proceeds from exercise of options ............................          7,406            678              -
  Purchase of common shares ....................................         (9,985)             -              -
  Change in contract adjustment payment liability ..............         (2,199)        (2,104)             -
  Dividends paid to shareholders ...............................        (13,807)       (13,767)             -
                                                                  -------------    -----------    -----------
        Net cash provided by (used in) financing activities ....        (17,019)       (14,673)       901,574
                                                                  -------------    -----------    -----------
        Net increase (decrease) in cash and cash equivalents ...         (1,469)          (522)         3,935
Cash and cash equivalents at beginning of period ...............          3,413          3,935              -
                                                                  -------------    -----------    -----------
Cash and cash equivalents at end of period .....................  $       1,944          3,413    $     3,935
                                                                  =============    ===========    ===========
</TABLE>

                                      S-6
<PAGE>

SCHEDULE III

                      PLATINUM UNDERWRITERS HOLDINGS, LTD.
                       Supplementary Insurance Information
                                ($ in thousands)

<TABLE>
<CAPTION>
                                                Unpaid                  Other
                                  Deferred      losses                  policy
                                   policy      and loss               claims and     Net         Net
                                 acquisition  adjustment   Unearned    benefits    earned    investment
            Period                  costs      expenses    premiums    payable     premium     income
-------------------------------  -----------  ----------  ----------  ----------  ---------  ----------
<S>                              <C>          <C>         <C>         <C>         <C>        <C>
Year ended
  December 31, 2004:

  Property and Marine .........  $    15,747     410,347      64,985                485,135
  Casualty ....................       72,454     715,314     278,634                611,893
  Finite Risk .................       47,837     253,566     155,917                350,907
                                 -----------   ---------     -------              ---------
        Total .................      136,038   1,379,227     499,536           -  1,447,935      84,532
                                 -----------   ---------     -------              ---------

Year ended
  December 31, 2003:

  Property and Marine .........  $     9,076     231,719      44,667                355,556
  Casualty ....................       61,181     320,585     224,611                391,170
  Finite Risk .................        9,050     179,614      30,578                320,801
                                 -----------   ---------     -------              ---------
        Total .................       79,307     731,918     299,856           -  1,067,527      57,645
                                 -----------   ---------     -------              ---------

Period from November 1, 2002
  through December 31, 2002:

  Property and Marine .........       11,307     101,473      46,294                 43,047
  Casualty ....................       33,568     121,586     125,609                 39,320
  Finite Risk .................        4,457      58,600      19,113                 24,731
                                 -----------   ---------     -------              ---------
        Total .................  $    49,332     281,659     191,016           -    107,098       5,211
                                 -----------   ---------     -------              ---------

<CAPTION>
                                   Losses    Amortization
                                  and loss    of deferred
                                 adjustment     policy       Other         Net
                                  expenses    acquisition  operating     written
            Period                incurred       costs      expenses    premiums
-------------------------------  ----------  ------------  ---------  ------------
<S>                              <C>         <C>           <C>        <C>
Year ended
  December 31, 2004:

  Property and Marine .........     349,557        58,792             $    504,439
  Casualty ....................     418,355       118,734                  677,399
  Finite Risk .................     251,892        46,781                  464,175
                                  ---------       -------             ------------
        Total .................   1,019,804       224,307     13,196     1,646,013
                                  ---------       -------             ------------

Year ended
  December 31, 2003:

  Property and Marine .........     169,944        48,756             $    352,908
  Casualty ....................     266,836        87,620                  474,000
  Finite Risk .................     147,391        90,864                  345,234
                                  ---------       -------             ------------
        Total .................     584,171       227,240     92,595     1,172,142
                                  ---------       -------             ------------

Period from November 1, 2002
  through December 31, 2002:

  Property and Marine .........      21,558         6,206                   89,341
  Casualty ....................      29,498         5,699                  164,929
  Finite Risk .................       9,300         2,544                   43,844
                                  ---------       -------             ------------
        Total .................      60,356        14,449     16,334  $    298,114
                                  ---------       -------             ------------
</TABLE>

                                      S-7
<PAGE>

SCHEDULE IV

                      PLATINUM UNDERWRITERS HOLDINGS, LTD.
                                   Reinsurance
                                ($ in thousands)

<TABLE>
<CAPTION>
                                                                  Assumed from              Percentage of
                                          Direct  Ceded to other     other                      amount
                Description               Amount    companies      companies    Net Amount  assumed to net
----------------------------------------  ------  --------------  ------------  ----------  --------------
<S>                                       <C>     <C>             <C>           <C>         <C>
Property and liability premiums written:
  Year ended December 31, 2004:
    Property and Marine                        -  $       13,029       517,468  $  504,439      102.6%
    Casualty                                   -             748       678,147     677,399      100.1%
    Finite Risk                                -               -       464,175     464,175      100.0%
                                                  --------------  ------------  ----------
        Total                                  -          13,777     1,659,790   1,646,013      100.8%
                                                  --------------  ------------  ----------

  Year ended December 31, 2003:
    Property and Marine                        -  $       25,156       378,064  $  352,908      107.1%
    Casualty                                   -           1,175       475,175     474,000      100.2%
    Finite Risk                                -               -       345,234     345,234      100.0%
                                                  --------------  ------------  ----------
        Total                                  -          26,331     1,198,473   1,172,142      102.2%
                                                  --------------  ------------  ----------

  Period ended December 31, 2002:              -
    Property and Marine                        -               -        89,341      89,341      100.0%
    Casualty                                   -               -       164,929     164,929      100.0%
    Finite Risk                                -               -        43,844      43,844      100.0%
                                                  --------------  ------------  ----------
        Total                                  -  $            -       298,114  $  298,114      100.0%
                                                  --------------  ------------  ----------
</TABLE>

                                       S-8
<PAGE>

                            THE PREDECESSOR BUSINESS
                          The St. Paul Companies, Inc.
                        Reinsurance Underwriting Segment

Following is selected historical combined financial data for the period from
January 1, 2002 through November 1, 2002 of the reinsurance underwriting segment
of The St. Paul Companies, Inc. (the "Predecessor") prior to the initial public
offering of Platinum Underwriters Holdings, Ltd. ("Platinum"). The Predecessor
operations include the continuing business and related assets transferred to
Platinum upon completion of its initial public offering as well as the
reinsurance business that remained with The St. Paul Companies, Inc. ("St.
Paul") after the public offering. Accordingly, underwriting results and combined
statements of the Predecessor presented in this report are not indicative of the
actual results of Platinum subsequent to the public offering.

In addition to the effect of the retention of certain portions of the
Predecessor business by St. Paul and the exclusion of the corporate aggregate
excess-of-loss reinsurance program of St. Paul, other factors may cause the
actual results of Platinum to differ materially from the results of the
Predecessor.

On April 1, 2004, Travelers Property Casualty Corp. (TPC) merged with a
subsidiary of St. Paul, as a result of which TPC became a wholly-owned
subsidiary of the St. Paul Travelers Companies, Inc. (STA.) For accounting
purposes, the transaction was accounted for as a reverse acquisition with TPC
treated as the accounting acquirer. Accordingly, the transaction was accounted
for as a purchase business combination, using TPC historical financial
information and applying fair value estimates to the acquired assets,
liabilities, and commitments of St. Paul as of April 1, 2004. Beginning on April
1, 2004, the results of operations and financial condition of St. Paul were
consolidated with TPC's.

                                      P-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders:
The St. Paul Companies, Inc.:

We have audited the accompanying combined statements of underwriting results and
identifiable underwriting cash flows of The St. Paul Companies, Inc. Reinsurance
Underwriting Segment (Predecessor) for the period from January 1, 2002 through
November 1, 2002. The combined statements are the responsibility of the
Predecessor's management. Our responsibility is to express an opinion on these
combined statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the combined
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the combined
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
combined statement presentation. We believe that our audit provide a reasonable
basis for our opinion.

The accompanying combined statements were prepared to present the historical
underwriting results and identifiable cash flows of the Predecessor specifically
attributable to reinsurance underwriting operations of The St. Paul Companies,
Inc. (St. Paul) as described in Note 1. The combined statements do not contain
an allocation of St. Paul's equity structure, investment portfolio assets,
investment income or cash flows from investing and financing activities.
Accordingly, the combined statements are not intended to be a complete
presentation of the Predecessor's or St. Paul's results of operations or cash
flows.

In our opinion, the combined statements referred to above present fairly, in all
material respects, the underwriting results and identifiable underwriting cash
flows of the Predecessor for the period from January 1, 2002 through November 1,
2002 in conformity with accounting principles generally accepted in the United
States of America.

/s/ KPMG LLP

Minneapolis, Minnesota
March 21, 2003

                                      P-2
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)

                   Combined Statement of Underwriting Results
          For the Period From January 1, 2002 through November 1, 2002
                                 ($ in millions)

<TABLE>
<S>                                                             <C>
Net premiums
   Net premiums written                                         $  1,007
   Net change in unearned premiums                                    95
                                                                --------
          Net premiums earned                                      1,102
                                                                --------

Underwriting deductions
   Losses and loss adjustment expenses incurred                      791
   Policy acquisition costs                                          257
   Other underwriting expenses                                        62
                                                                --------
          Total underwriting deductions                            1,110
                                                                --------
          Net underwriting loss                                 $     (8)
                                                                ========
</TABLE>

           Combined Statement of Identifiable Underwriting Cash Flows
          For the Period From January 1, 2002 through November 1, 2002
                                 ($ in millions)

<TABLE>
<S>                                                             <C>
Premiums collected, net                                         $  1,348
Losses and loss adjustment expenses paid                          (1,057)
Policy acquisition expenses paid                                    (275)
Other underwriting expenses paid                                     (62)
                                                                --------
          Net cash used by underwriting                         $    (46)
                                                                ========
</TABLE>

See accompanying notes to combined statements

                                      P-3
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

      The accompanying combined statements pertain to the reinsurance
underwriting segment of The St. Paul Companies, Inc. ("St. Paul"), for the
period from January 1, 2002 through November 1, 2002. The reinsurance
underwriting segment of St. Paul is the predecessor to Platinum Underwriters
Holdings, Ltd. and is hereinafter referred to as the "Predecessor." Predecessor
statements are presented on a combined basis, including certain insurance and
reinsurance subsidiaries within the St. Paul group, as well as the underwriting
results of the reinsurance departments of St. Paul Fire and Marine Insurance
Company ("Fire and Marine") and United States Fidelity and Guarantee Company
("USF&G"), St. Paul's two largest U.S. insurance subsidiaries.

      It is the practice of St. Paul to evaluate the performance of its
property-liability insurance underwriting segments on the basis of underwriting
results. St. Paul manages its property-liability investment portfolio in the
aggregate, as part of a separate segment and does not allocate assets, or
investment income, to its respective underwriting segments. Similarly, the
statements of identifiable underwriting cash flows include only cash flow
activity that is specifically attributable to the underwriting operations of
Predecessor, and does not include any cash flows from investing and financing
activities.

ACCOUNTING PRINCIPLES

      The accompanying combined statements are prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").

      Predecessor's business is written by several of St. Paul's underwriting
subsidiaries, which are required to file financial statements with state and
foreign regulatory authorities. The accounting principles used to prepare these
statutory financial statements follow prescribed or permitted accounting
principles, which differ from U.S. GAAP. Prescribed statutory accounting
practices include state laws, regulations and general administrative rules
issued by the state of domicile as well as a variety of publications and manuals
of the National Association of Insurance Commissioners ("NAIC"). Permitted
statutory accounting practices encompass all accounting practices not so
prescribed, but allowed by the state of domicile.

Use of Estimates

      These combined statements include estimates and assumptions that have an
effect on the amounts reported. The most significant estimates are those
relating to reserves for losses and loss adjustment expenses. These estimates
are continually reviewed and adjustments are made as necessary, but actual
results could be significantly different than expected when estimates were made.

Net Premiums Earned

      Assumed reinsurance premiums are recognized as revenues proportionately
over the coverage period. Net premiums earned are recorded in the statement of
underwriting results, net of Predecessor's cost to purchase reinsurance. Net
premiums not yet recognized as revenue are recorded in the balance sheet as
unearned premiums, gross of any ceded unearned premiums. Written and earned
premiums, and the related costs, which have not yet been reported to Predecessor
are estimated and accrued. Due to the time lag inherent in reporting of premiums
by ceding companies, such estimated premiums written and

                                      P-4
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

earned, as well as related costs, may be significant. Differences between such
estimates and actual amounts are recorded in the period in which the actual
amounts are determined.

      Reinstatement and additional premiums are accrued as provided for in the
provisions of assumed reinsurance contracts and based on experience under such
contracts. Reinstatement premiums are the premiums charged for the restoration
of the reinsurance limit of a catastrophe contract to its full amount after
payment by the reinsurer of losses as a result of an occurrence. These premiums
relate to the future coverage obtained during the remainder of the initial
policy term, and are earned over the remaining policy term. Additional premiums
are premiums charged after coverage has expired, related to experience during
the policy term, which are earned immediately. An allowance for uncollectible
premiums is established for possible non-payment of such amounts due, as deemed
necessary.

Insurance Losses and Loss Adjustment Expenses

      Losses represent the amounts paid, or expected to be paid, to ceding
companies for events that have occurred. The costs of investigating, resolving
and processing these claims are known as loss adjustment expenses ("LAE"). These
items are recorded on the statement of underwriting results net of ceded
reinsurance, meaning that gross losses and LAE incurred are reduced by the
amounts recovered or expected to be recovered under retrocessional contracts.

Insurance Reserves

      The reserves for losses and LAE are estimated based on reports received
from ceding companies, supplemented with analysis by the claims department and
actuaries of Predecessor. These reserves include estimates of the total cost of
claims that were reported, but not yet paid, and the cost of claims incurred but
not yet reported ("IBNR"). Loss reserves are reduced for estimated amounts of
salvage and subrogation recoveries. Estimated amounts recoverable from
reinsurers on unpaid losses and LAE are reflected as assets.

      Because many of the reinsurance coverages offered by Predecessor involve
claims that ultimately may not be settled for many years after they are
incurred, subjective judgments as to ultimate exposure to losses are an integral
and necessary component of the loss reserving process. The inherent
uncertainties of estimating loss reserves are further exacerbated for reinsurers
by the significant amount of time that often elapses between the occurrence of
an insured loss, the reporting of that loss to the primary insurer and,
ultimately, to the reinsurer, and the primary insurer's payment of that loss and
subsequent indemnification by the reinsurer. Reserves are recorded by
considering a range of estimates bounded by a high and low point. Within that
range, management's best estimate is recorded. Reserves are continually
reviewed, using a variety of statistical and actuarial techniques to analyze
current claim costs, frequency and severity data, and prevailing economic,
social and legal factors. Reserves established in prior years are adjusted as
loss experience develops and new information becomes available. Adjustments to
previously estimated reserves are reflected in financial results in the periods
in which they are made.

      While we believe the carried reserves make a reasonable provision for
unpaid loss and LAE obligations, it should be noted that the process of
estimating required reserves does, by its very nature, involve uncertainty. The
level of uncertainty can be influenced by factors such as the existence of
long-tail coverage (when loss payments may not occur for several years) and
changes in claim handling practices, as well as the factors noted above, and
actual claim payments and LAE could be significantly different from the
estimates.

                                      P-5
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

      Liabilities for unpaid losses and LAE related to certain assumed
reinsurance contracts are discounted to the present value of estimated future
payments. The liabilities related to these reinsurance contracts were discounted
using rates up to 7.5 percent, based on our return on invested assets or, in
many cases, on yields contractually guaranteed to us on funds held by the ceding
company, as permitted by the Vermont Department of Banking, Insurance,
Securities and Healthcare Administration.

Reinsurance

      Written premiums, earned premiums, and incurred losses and LAE reflect the
net effects of assumed and ceded reinsurance transactions. Reinsurance
accounting is followed for assumed and ceded transactions when risk transfer
requirements have been met. These requirements involve significant assumptions
being made related to the amount and timing of expected cash flows, as well as
the interpretation of underlying contract terms. Assumed reinsurance contracts
that do not transfer significant insurance risk are required to be accounted for
as deposits. These contract deposits are accounted for as financing
transactions, with interest expense credited to the contract deposit.

Policy Acquisition Expenses

      The costs directly related to the acquisition of reinsurance contracts are
referred to as policy acquisition expenses and consist of commissions and other
direct underwriting expenses. Although these expenses are incurred when a
reinsurance contract is written, such expenses are deferred and amortized over
the same period as the corresponding premiums are recorded as earned revenues.

      On a regular basis, an analysis of the recoverability of the deferred
policy acquisition expenses, in relation to the expected recognition of
revenues, including anticipated investment income is performed. Any adjustments
are reflected as period costs. Should the analysis indicate that the acquisition
costs are unrecoverable, further analyses are completed to determine if a
reserve is required to provide for losses that may exceed the related unearned
premiums.

Foreign Currency Translation

      Functional currencies are assigned to foreign operations, which are
generally the currencies of the local operating environment. Foreign currency
amounts are remeasured to the functional currency, and the resulting foreign
exchange gains or losses are reflected in income, outside of underwriting
results. Functional currency amounts are then translated into U.S. dollars. The
unrealized gain or loss from this translation is recorded in St. Paul's equity.
Both the remeasurement and translation are calculated using current exchange
rates for the balance sheet amounts and average exchange rates for revenues and
expenses.

2.    RELATED PARTY TRANSACTIONS

The following summarizes Predecessor's related party transactions:

REINSURANCE TRANSACTIONS WITH AFFILIATES

      Predecessor cedes certain business to two affiliated special purpose
entities ("SPE") which were established by St. Paul for the purpose of
increasing Predecessor's capacity to write certain excess-of-loss reinsurance,
principally property, marine, and aviation. The most significant of these
agreements is with George Town Re. George Town Re was established by St. Paul in
1996 for the purpose of entering into a

                                      P-6
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

single reinsurance treaty with Predecessor, providing an additional $45.1
million of underwriting capacity over a 10-year period. Premiums ceded under
these agreements were $4.6 million in 2002. Losses ceded under these agreements
totaled ($0.1) million in 2002.

      The agreement with George Town Re was terminated on July 8, 2002, and
George Town Re was liquidated. There was no material impact on Predecessor's
underwriting results from this transaction.

      Predecessor assumed certain primary business from other business segments
of St. Paul. Premiums assumed under these agreements were $12.0 million in 2002.
Losses assumed under these agreements were $22.8 million in 2002. Predecessor
paid commissions of $3.9 million in 2002 related to business assumed under these
agreements.

MANAGEMENT AGREEMENTS WITH AFFILIATES

      St. Paul management has entered into various agreements with affiliated
parties, under arm's-length terms. Under these agreements, the affiliated
parties have agreed to perform investment management services for St. Paul Re
UK, guarantee the performance of St. Paul's obligations, make funds available
under a revolving loan agreement, and provide certain reinsurance coverage.
Included in underwriting expenses are certain expenses allocated to Predecessor
from St. Paul, including costs such as corporate communications and marketing,
corporate finance, corporate actuarial, corporate tax, corporate audit, legal
services, corporate executives, corporate human resources, and employee benefit
costs. These allocated costs totaled $7.8 million in 2002.

3.    SEPTEMBER 11, 2001 TERRORIST ATTACK

      On September 11, 2001, terrorists hijacked four commercial passenger jets
in the United States. Two of the jets were flown into the World Trade Center
towers in New York, NY, causing their collapse. The third jet was flown into the
Pentagon building in Washington, DC, causing severe damage, and the fourth jet
crashed in rural Pennsylvania. This terrorist attack caused significant loss of
life and resulted in unprecedented losses for the property-casualty insurance
industry.

      Estimated gross losses and LAE incurred as a result of the terrorist
attack totaled $967 million. The estimated net underwriting loss of $580 million
from that event included an estimated benefit of $160 million from cessions made
under various reinsurance agreements, a net $136 million benefit from additional
and reinstatement premiums, and a $91 million reduction in contingent commission
expenses.

      The estimated losses were based on a variety of actuarial techniques,
coverage interpretation and claims estimation methodologies, and included an
estimate of losses incurred but not reported, as well as estimated costs related
to the settlement of claims. The estimate of losses was also based on the belief
that property and casualty insurance losses from the terrorist attack will total
between $30 billion and $35 billion for the insurance industry.

      In 2002, Predecessor's estimate of industry losses was supplemented by its
ongoing analysis of both paid and reported claims related to the attack.
Predecessor's estimate of industry losses remains subject to significant
uncertainties and is vulnerable to change over time as additional information
becomes available. Predecessor and other insurers have obtained a summary
judgment ruling that the World Trade Center property loss is a single
occurrence. Certain insureds have appealed that ruling, asking the court to
determine that the property loss constituted two separate occurrences rather
than one.

                                      P-7
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

In addition, through separate litigation, the aviation losses could be deemed
four separate events rather than three, for purposes of insurance and
reinsurance coverage. Even if the courts ultimately rule against Predecessor
regarding the number of occurrences or events, it believes the additional amount
of estimated after-tax losses, net of reinsurance, that it would record would
not be material to Predecessor's results of operations.

      The estimated underwriting loss of $580 million is recorded in the 2002
and 2001 combined statements of underwriting results in the following line items
($ in millions):

<TABLE>
<CAPTION>
                                          Period from January 1,
                                               2002 through            Year Ended
                                             November 1, 2002      December 31, 2001
                                          ---------------------   -------------------
<S>                                       <C>                     <C>
Net premiums earned                       $                (5)                    141
Losses and LAE                                            (19)                   (788)
Other underwriting expenses                                 -                      91
                                          -------------------     -------------------
          Total underwriting loss         $               (24)                   (556)
                                          -------------------     -------------------
</TABLE>

      The estimated underwriting loss of $24 million in 2002 was distributed
among Predecessor's segments as follows ($ in millions):

<TABLE>
<CAPTION>
                                                             Period from January 1,
                                                                  2002 through
                                                                November 1, 2002
                                                             ---------------------
<S>                                                           <C>
North American Property                                       $                18
North American Casualty                                                         2
International                                                                  10
Finite Risk                                                                    (6)
                                                              -------------------
          Total underwriting loss                             $                24
                                                              -------------------
</TABLE>

4.    RESERVES FOR LOSSES AND LAE

RECONCILIATION OF LOSS RESERVES

      The following table represents a reconciliation of beginning and ending
loss and LAE reserves for the period from January 1, 2002 through November 1,
2002 ($ in millions):

                                       P-8
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

<TABLE>
<S>                                                                             <C>
Loss and LAE reserves at beginning of year, as reported                         $   4,949
Less reinsurance recoverables on unpaid losses at beginning of year                (1,256)
                                                                                ---------
Net loss and LAE reserves at beginning of year                                      3,693
                                                                                ---------

Provision for losses and LAE for claims incurred:
   Current period                                                                     736
   Prior years                                                                         55
                                                                                ---------
          Total incurred                                                              791
                                                                                ---------

Losses and LAE payment for claims incurred:
   Current period                                                                    (114)
   Prior years                                                                       (839)
                                                                                ---------
          Total paid                                                                 (953)
                                                                                ---------

Net loss and LAE reserves at end of year                                            3,531
Plus reinsurance recoverables on unpaid losses at end of year                       1,249
                                                                                ---------
Loss and LAE reserves at end of year, as reported                               $   4,780
                                                                                ---------
</TABLE>

      Prior year development in the period from January 1, 2002 through November
1, 2002 was attributable mainly to the bond and credit, surplus lines and
international liability lines of business. Both North American Property and
North American Casualty experienced better than expected loss emergence which
served to mitigate the worse than expected emergence from the lines mentioned
above.

ENVIRONMENTAL AND ASBESTOS RESERVES

      Predecessor continues to have exposure, through its reinsurance of primary
insurance contracts written many years ago, to claims alleging injury or damage
from environmental pollution or seeking payment for the cost to clean up
polluted sites. In addition, Predecessor has received asbestos injury claims
tendered under general casualty policies that it reinsures.

5.    EMPLOYEE BENEFIT PLANS

      Employees of Predecessor participated in various employee benefit, stock
incentive, and retirement plans administered by St. Paul. Predecessor reimbursed
St. Paul for costs associated with these plans. The following summarizes
underwriting expenses recorded by Predecessor in connection with each of these
plans for the period from January 1, 2002 through November 1, 2002 ($ in
millions):

<TABLE>
<S>                                                              <C>
Retirement Plans                                                 $       3.3
Post Retirement Plans                                                   (0.5)
Variable Stock Option Plan                                              (1.4)
                                                                 -----------
          Total                                                  $       1.4
                                                                 -----------
</TABLE>

      In addition, St. Paul sponsored a stock-based incentive program, the
Long-Term Incentive Plan ("LTIP"), which was exclusive to certain employees of
Predecessor. Underwriting expenses (benefits) recorded by Predecessor in
connection with the LTIP totaled $1.3 million in 2002.

                                      P-9
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

6.    COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

      A portion of Predecessor's business activities was conducted in rented
premises. Predecessor also entered into leases for equipment, such as office
machines and computers. Total rental expense was $6.8 million in 2002.

      Certain leases are non-cancelable, and Predecessor would remain
responsible for payment even if the space or equipment were no longer utilized.
On November 1, 2002, the minimum rents for which Predecessor would be liable
under these types of leases are as follows: $5.3 million in 2003, $1.5 million
in 2004, $0.6 million in 2005, $0.6 million in 2006, and $2.8 million
thereafter.

LEGAL MATTERS

      In the ordinary course of conducting business, Predecessor has been named
as a defendant in various lawsuits. Some of these lawsuits attempt to establish
liability under reinsurance contracts issued by Predecessor underwriting
operations. Plaintiffs in these lawsuits are asking for money damages or to have
the court direct the activities of Predecessor's operations in certain ways. It
is possible that the settlement of these lawsuits may be material to
Predecessor's results of operations and liquidity in the period in which they
occur. However, St. Paul believes the total amounts that Predecessor, and its
affiliates, will ultimately have to pay in these matters will have no material
effect on Predecessor's overall financial position.

7.    FOURTH QUARTER 2001 STRATEGIC REVIEW

      In December 2001, St. Paul announced the results of a strategic review of
all of its operations, which included a decision to exit a number of businesses
and countries. These decisions included the narrowing of product offerings and
geographic presence relative to Predecessor's businesses. As part of that
review, it was determined that Predecessor would no longer underwrite aviation
or bond and credit reinsurance, or offer certain financial risk and capital
markets reinsurance products. Predecessor would also substantially reduce the
North American business underwritten in London. Predecessor would focus on
several areas, including property catastrophe reinsurance, excess-of-loss
casualty reinsurance, marine and traditional finite reinsurance.

      The following table presents the net premiums earned and underwriting
results for 2002 for the businesses to be exited under these actions, including
the allocation of St. Paul's corporate excess-of-loss reinsurance programs ($ in
millions):

<TABLE>
<S>                                                                   <C>
Net premiums earned                                                   $  277
Underwriting results                                                     (52)
</TABLE>

8.    REINSURANCE

      The primary purpose of the Predecessor's ceded reinsurance program,
including the aggregate excess-of-loss coverages discussed below, is to protect
its operations from potential losses in excess of acceptable levels. Reinsurers
are expected to honor their obligations under ceded reinsurance contracts. In
the event these companies are unable to honor their obligations, Predecessor
will pay these amounts.

                                      P-10
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

Allowances have been established for possible nonpayment of such amounts due.

      Predecessor's underwriting results in 2002 were impacted by the St. Paul
corporate aggregate excess-of-loss reinsurance program that was entered into
each year effective January 1, 2001, 2000 and 1999 (hereinafter referred to as
the "St. Paul corporate program"). Coverage under the St. Paul corporate program
treaties was triggered when St. Paul's incurred insurance losses and LAE across
all lines of business exceeded accident year attachment loss ratios specified in
the treaty. Predecessor results also benefited from a separate aggregate
excess-of-loss reinsurance treaty, exclusive to Predecessor each year effective
2001, 2000 and 1999 that were unrelated to the St. Paul corporate program. The
combined impact of these treaties (together the "reinsurance treaties") is
included in the following table ($ in millions):

<TABLE>
<CAPTION>
                                                                                Period from
                                                                              January 1, 2002
                                                                            through November 1,
                                                                                    2002
                                                                            -------------------
<S>                                                                         <C>
St. Paul corporate aggregate excess-of-loss reinsurance program:
   Ceded premiums written                                                   $                (4)
                                                                            -------------------
   Ceded losses and LAE                                                                      (9)
   Ceded premiums earned                                                                     (4)
                                                                            -------------------
          Net underwriting (detriment) benefit                              $                (5)
                                                                            -------------------

Predecessor aggregate treaty:
   Ceded premiums written                                                   $                (1)
                                                                            -------------------
   Ceded losses and LAE                                                                     (35)
   Ceded premiums earned                                                                     (2)
                                                                            -------------------
          Net underwriting (detriment) benefit                              $               (33)
                                                                            -------------------

Combined total:
   Ceded premiums written                                                   $                (5)
                                                                            -------------------
   Ceded losses and LAE                                                                     (44)
   Ceded premiums earned                                                                     (6)
                                                                            -------------------
          Net underwriting (detriment) benefit                              $               (38)
                                                                            -------------------
</TABLE>

      The amounts shown above include the impact of a reallocation of
premiums and losses ceded in 2000 and 1999. This reallocation was necessary to
reflect the impact of differences between St. Paul's actual 2002 experience on
losses ceded to the corporate program in 2000 and 1999, by segment, and the
anticipated experience on those losses in 2000 and 1999 when the initial segment
allocation was made.

      St. Paul was not party to a corporate all-lines aggregate excess-of-loss
treaty in 2002. Predecessor was party to a separate aggregate excess-of-loss
reinsurance treaty, unrelated to the corporate treaty, in 2002. Coverage has not
been triggered under that treaty in 2002; however, in 2002, Predecessor recorded
ceded premiums written of $(1) million, ceded earned premiums of $(2) million,
and ceded loss and loss adjustment expenses of $(35) million, for a net
detriment of $33 million as a result of this treaty. Included in the net
detriment for 2002 was a $20 million detriment due to the partial commutation of
the

                                      P-11
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

1999 and 2001 aggregate excess-of-loss reinsurance treaties.

      The effect of assumed and ceded reinsurance on premiums written, premiums
earned and insurance losses and LAE is as follows (including the impact of the
reinsurance treaties) ($ in millions):

<TABLE>
<CAPTION>
                                                               Period from January 1,
                                                                    2002 through
                                                                  November 1, 2002
                                                               ---------------------
<S>                                                            <C>
Premiums written:
Assumed                                                         $             1,056
Ceded                                                                            49
                                                                -------------------
          Net premiums written                                                1,007
                                                                -------------------

Premiums earned:
Assumed                                                         $             1,160
Ceded                                                                            58
                                                                -------------------
          Net premiums earned                                   $             1,102
                                                                -------------------

Insurance losses and LAE:
Assumed                                                         $               903
Ceded                                                                           112
                                                                -------------------
          Total insurance losses and LAE                        $               791
                                                                -------------------
</TABLE>

9.    SEGMENT INFORMATION

      Predecessor has four reportable segments, which consist of North American
Property, North American Casualty, International and Finite Risk. These segments
are consistent with the manner in which Predecessor's business has been managed.

      The North American Property segment consists of property reinsurance
business underwritten for customers domiciled in the United States and Canada.
Coverages offered included proportional, per-risk, excess-of-loss and surplus
lines reinsurance, and catastrophe treaties. This segment also includes
retrocessional reinsurance business and crop and agricultural reinsurance. The
North American surplus lines business center has been aggregated with the North
American Property segment as the aggregation is consistent with Predecessor's
management structure and the business center meets the aggregation criteria
required for external segment reporting.

      The North American Casualty segment consists of casualty reinsurance
underwritten for customers domiciled in the United States and Canada. Casualty
coverages offered included general workers' compensation, medical professional,
non-medical professional, directors and officers, employment practices, umbrella
and environmental impairment. The Accident and Health business center, which
consists predominantly of North American Risks, is aggregated with the North
American Casualty segment as the aggregation is consistent with Predecessor's
management structure and the

                                      P-12
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

business center meets the aggregation criteria required for external reporting.
In addition, Predecessor has one significant account which includes both
property and casualty business, but is managed as a business center within the
North American Casualty segment. For this reason, this business center, which
meets the aggregation criteria for external segment reporting, has been
aggregated with the North American Casualty segment.

      The International segment underwrites wrote property and casualty
reinsurance for customers domiciled outside of North America. This segment also
includes the results from marine and aerospace business due to the global nature
of those exposures.

      The Finite Risk segment underwrites non-traditional reinsurance treaties
for leading insurance companies worldwide. Non-traditional reinsurance combines
limited traditional underwriting risk with financial risk protection and is
generally utilized by large commercial customers who are willing to share in a
portion of their insurance losses. Due to Predecessor's management structure,
the Bond and Credit business center has been aggregated with the Finite Risk
segment. This business center meets the aggregation criteria required for
external segment reporting.

      Predecessor monitors and evaluates the performance of its segments based
principally on their underwriting results. Assets are not specifically
identifiable for these segments. The accounting policies of the segments are the
same as those described in the summary of significant accounting policies.

GEOGRAPHIC AREAS

      The following summary presents financial data of Predecessor's operations
based on their location for the period from January 1, 2002 through November 1,
2002 ($ in millions):

<TABLE>
<S>                                                             <C>
U.S.                                                            $  701
Non-U.S.                                                           401
                                                                ------
      Total net premium earned                                  $1,102
                                                                ------
</TABLE>

SEGMENT INFORMATION

      The summary below presents net premiums earned and underwriting results
for Predecessor's reportable segments for the period January 1, 2002 through
November 1, 2002 ($ in millions):

<TABLE>
<S>                                                             <C>
Premium earned:
   North American Property                                      $     205
   North American Casualty                                            451
   International                                                      206
   Finite Risk                                                        240
                                                                ---------
          Total net premiums earned                             $   1,102
                                                                ---------

Underwriting gain (loss):
   North American Property                                      $      33
   North American Casualty                                            (79)
   International                                                       51
   Finite Risk                                                        (13)
                                                                ---------
          Total Underwriting gain (loss)                        $      (8)
                                                                ---------
</TABLE>

                                      P-13
<PAGE>

                          The St. Paul Companies, Inc.
                 Reinsurance Underwriting Segment (Predecessor)
                     Notes to Combined Statements, continued

      Each of Predecessor's segments generated a significant volume of
reinsurance premiums through two reinsurance brokers. Total premiums written
through these two brokers totaled $548 million for the period from January 1,
2002 through November 1, 2002.

10.   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is an unaudited summary of Predecessor's quarterly results ($ in
millions):

<TABLE>
<CAPTION>
                                    First Quarter  Second Quarter  Third Quarter   Fourth Quarter
                                    -------------  --------------  -------------   --------------
<S>                                 <C>            <C>             <C>             <C>
2002:
   Net premiums written             $         463  $          200            234              110
   Net premiums earned                        377             305            307              113
   Underwriting gain (loss)                    15              (6)           (21)               4
</TABLE>

* Fourth quarter of 2002 represents the period from October 1, 2002 through
November 1, 2002.

11.   SEPTEMBER 11, 2001 TERRORIST ATTACK - LEGAL MATTERS (UNAUDITED)

      As noted in Note 3, Predecessor and other insurers obtained a summary
judgment ruling that the World Trade Center property loss is a single
occurrence. Certain insureds, including the World Trade Center leaseholder,
appealed that ruling, asking the court to determine that the property loss
constituted two separate occurrences rather than one. In September 2003, the
U.S. Circuit Court of Appeals for the Second Circuit ruled that under the terms
of the policy form Predecessor used to underwrite property coverage for the
World Trade Center, the terrorist attack constituted one occurrence.

                                      P-14