<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
COMMISSION FILE NUMBER 0-22280
PHILADELPHIA CONSOLIDATED HOLDING CORP.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2202671
(State of Incorporation) (IRS Employer Identification No.)
ONE BALA PLAZA, SUITE 100
BALA CYNWYD, PENNSYLVANIA 19004
(610) 617-7900
(Address, including zip code and telephone number, including area
code, of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES /x/ NO / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of May 8, 1998.
Preferred Stock, $.01 par value, no shares outstanding
Common Stock, no par value, 12,290,770 shares outstanding
<PAGE> 2
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
INDEX
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Part I - Financial Information
<S> <C>
Consolidated Balance Sheets - March 31, 1998 and
December 31, 1997 3
Consolidated Statements of Operations - For the three
months ended March 31, 1998 and 1997 4
Consolidated Statements of Comprehensive Income - For
the three months ended March 31, 1998 and 1997 5
Consolidated Statements of Changes in Shareholders' Equity - For the
three months ended March 31, 1998 and year ended
December 31, 1997 6
Consolidated Statements of Cash Flows - For the three
months ended March 31, 1998 and 1997 7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Results of Operations and
Financial Condition 9-10
Part II - Other Information 11
Signatures 12
Exhibits 13
</TABLE>
2
<PAGE> 3
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
As of
--------------------------------
March 31, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
INVESTMENTS:
FIXED MATURITIES AVAILABLE FOR SALE AT MARKET
(AMORTIZED COST $181,518 AND $165,052) ......... $ 186,847 $ 170,678
EQUITY SECURITIES AT MARKET (COST $29,836
AND $29,501) ................................... 53,205 46,988
--------- ---------
TOTAL INVESTMENTS ............................ 240,052 217,666
CASH AND CASH EQUIVALENTS ........................ 8,337 11,933
ACCRUED INVESTMENT INCOME ........................ 2,488 2,786
PREMIUMS RECEIVABLE .............................. 16,753 15,269
PREPAID REINSURANCE PREMIUMS AND REINSURANCE
RECEIVABLES .................................... 18,432 18,573
DEFERRED ACQUISITION COSTS ....................... 11,932 10,970
PROPERTY AND EQUIPMENT ........................... 5,901 5,797
OTHER ASSETS ..................................... 7,250 5,132
--------- ---------
TOTAL ASSETS ................................ $ 311,145 $ 288,126
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
POLICY LIABILITIES AND ACCRUALS:
UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES ......... $ 128,081 $ 122,430
UNEARNED PREMIUMS ................................ 44,964 42,116
--------- ---------
TOTAL POLICY LIABILITIES AND ACCRUALS ........ 173,045 164,546
PAYABLE FOR SECURITY PURCHASES ................... 4,895 --
OTHER LIABILITIES ................................ 5,803 7,948
DEFERRED INCOME TAXES ............................ 6,130 4,348
INCOME TAXES PAYABLE ............................. 1,571 --
--------- ---------
TOTAL LIABILITIES ............................ 191,444 176,842
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
PREFERRED STOCK, $.01 PAR VALUE,
10,000,000 SHARES AUTHORIZED,
NONE ISSUED AND OUTSTANDING
COMMON STOCK, NO PAR VALUE,
50,000,000 SHARES AUTHORIZED, 12,284,870 AND
12,242,431 SHARES ISSUED AND OUTSTANDING ....... 43,386 42,788
NOTES RECEIVABLE FROM SHAREHOLDERS ............... (1,752) (1,422)
UNREALIZED INVESTMENT APPRECIATION
(DEPRECIATION), NET OF DEFERRED INCOME TAXES .. 18,654 15,023
RETAINED EARNINGS ................................ 59,413 54,895
--------- ---------
TOTAL SHAREHOLDERS' EQUITY ................... 119,701 111,284
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ... $ 311,145 $ 288,126
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 4
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------------------
1998 1997
---- ----
<S> <C> <C>
REVENUE:
GROSS EARNED PREMIUMS .................. $ 37,466 $ 32,617
CEDED EARNED PREMIUMS .................. (10,551) (10,229)
------------ ------------
NET EARNED PREMIUMS .................... 26,915 22,388
NET INVESTMENT INCOME .................. 2,700 2,211
NET REALIZED INVESTMENT GAIN ........... 3 28
OTHER INCOME ........................... 57 57
------------ ------------
TOTAL REVENUE ........................ 29,675 24,684
------------ ------------
LOSSES AND EXPENSES:
LOSS AND LOSS ADJUSTMENT EXPENSES ...... 16,064 13,385
NET REINSURANCE RECOVERIES ............. (1,206) (904)
------------ ------------
NET LOSS AND LOSS ADJUSTMENT EXPENSES .. 14,858 12,481
ACQUISITION COSTS AND OTHER UNDERWRITING
EXPENSES ............................. 8,219 6,946
OTHER OPERATING EXPENSES ............... 533 523
------------ ------------
TOTAL LOSSES AND EXPENSES ............ 23,610 19,950
------------ ------------
INCOME BEFORE INCOME TAXES ................ 6,065 4,734
------------ ------------
INCOME TAX EXPENSE (BENEFIT):
CURRENT ................................ 1,720 1,562
DEFERRED ............................... (173) (450)
------------ ------------
TOTAL INCOME TAX EXPENSE ............. 1,547 1,112
------------ ------------
NET INCOME ........................... $ 4,518 $ 3,622
============ ============
PER SHARE DATA:
BASIC EARNINGS PER SHARE(1) ............ $ 0.37 $ 0.30
============ ============
DILUTED EARNINGS PER SHARE(1) .......... $ 0.30 $ 0.25
============ ============
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING(1) ......................... 12,262,983 12,133,216
WEIGHTED-AVERAGE SHARE EQUIVALENTS
OUTSTANDING(1) ......................... 2,790,988 2,570,174
------------ ------------
WEIGHTED-AVERAGE SHARES AND SHARE
EQUIVALENTS OUTSTANDING(1) ............. 15,053,971 14,703,390
============ ============
</TABLE>
(1) 1997 share information restated to reflect a two-for-one split of the
Company's common stock distributed in November 1997.
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 5
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
----------------------
1998 1997
---- ----
<S> <C> <C>
NET INCOME ................................ $ 4,518 $ 3,622
------- -------
OTHER COMPREHENSIVE INCOME, NET OF DEFERRED
INCOME TAXES:
UNREALIZED GAINS (LOSSES) ON SECURITIES:
UNREALIZED HOLDING GAINS ARISING DURING
PERIOD ............................... 3,741 7,649
LESS: RECLASSIFICATION ADJUSTMENT ..... (2) --
------- -------
OTHER COMPREHENSIVE INCOME ................ 3,739 7,649
------- -------
COMPREHENSIVE INCOME ...................... $ 8,257 $11,271
------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE> 6
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
For the Three Months For the Year Ended
Ended March 31, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
COMMON SHARES:
BALANCE AT BEGINNING OF PERIOD(1) .............. 12,242,431 12,079,612
ISSUANCE OF SHARES
PURSUANT TO EMPLOYEE STOCK PURCHASE PLAN ..... 34,339 78,569
PURSUANT TO EMPLOYEE STOCK OPTION PLAN ....... 8,100 84,250
------------ ------------
BALANCE AT END OF PERIOD ................... 12,284,870 12,242,431
============ ============
COMMON STOCK:
BALANCE AT BEGINNING OF PERIOD ................. $ 42,788 $ 41,167
ISSUANCE OF SHARES PURSUANT TO EMPLOYEE
STOCK PURCHASE PLAN .......................... 571 898
EXERCISE OF EMPLOYEE STOCK OPTIONS, NET OF
TAX BENEFIT .................................. 27 723
------------ ------------
BALANCE AT END OF PERIOD ................... 43,386 42,788
------------ ------------
NOTES RECEIVABLE FROM SHAREHOLDERS:
BALANCE AT BEGINNING OF PERIOD ................. (1,422) (924)
NOTES RECEIVABLE ISSUED PURSUANT TO
EMPLOYEE STOCK PURCHASE PLAN ................. (558) (873)
COLLECTION OF NOTES RECEIVABLE ................. 228 375
------------ ------------
BALANCE AT END OF PERIOD ................... (1,752) (1,422)
------------ ------------
UNREALIZED INVESTMENT APPRECIATION (DEPRECIATION),
NET OF DEFERRED INCOME TAXES:
BALANCE AT BEGINNING OF PERIOD ............... 15,023 7,374
CHANGE IN UNREALIZED INVESTMENT APPRECIATION
(DEPRECIATION), NET OF DEFERRED INCOME TAXES 3,631 7,649
------------ ------------
BALANCE AT END OF PERIOD ................... 18,654 15,023
------------ ------------
RETAINED EARNINGS:
BALANCE AT BEGINNING OF PERIOD ................. 54,895 38,025
NET INCOME ..................................... 4,518 16,870
------------ ------------
BALANCE AT END OF PERIOD ................... 59,413 54,895
------------ ------------
TOTAL SHAREHOLDERS' EQUITY ................. $ 119,701 $ 111,284
============ ============
</TABLE>
(1) 1997 share information restated to reflect a two for one split of the
Company's common stock distributed in November 1997.
The accompanying notes are an integral part of the consolidated
financial statements.
6
<PAGE> 7
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME ...................................... $ 4,518 $ 3,622
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
NET REALIZED INVESTMENT GAIN .................... (3) (28)
DEPRECIATION AND AMORTIZATION EXPENSE ........... 338 336
DEFERRED INCOME TAX BENEFIT ..................... (173) (450)
CHANGE IN PREMIUMS RECEIVABLE ................... (1,484) (2,885)
CHANGE IN OTHER RECEIVABLES ..................... 439 3,234
CHANGE IN DEFERRED ACQUISITION COSTS ............ (962) (829)
CHANGE IN OTHER ASSETS .......................... (45) (782)
CHANGE IN UNPAID LOSS AND LOSS ADJUSTMENT
EXPENSES ...................................... 5,651 5,429
CHANGE IN UNEARNED PREMIUMS ..................... 2,848 1,999
CHANGE IN OTHER LIABILITIES ..................... (1,934) (2,629)
CHANGE IN INCOME TAXES PAYABLE .................. 1,571 977
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES ... 10,764 7,994
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALES OF INVESTMENTS IN FIXED
MATURITIES AVAILABLE FOR SALE ................. 5,314 1,208
PROCEEDS FROM MATURITY OF INVESTMENTS IN FIXED
MATURITIES AVAILABLE FOR SALE ................. 3,805 660
PROCEEDS FROM SALES OF INVESTMENTS IN EQUITY
SECURITIES .................................... 2,040 2,224
COST OF FIXED MATURITIES SECURITIES AVAILABLE FOR
SALE ACQUIRED ................................. (22,793) (10,538)
COST OF EQUITY SECURITIES ACQUIRED .............. (2,565) (4,055)
PURCHASE OF PROPERTY AND EQUIPMENT .............. (429) (594)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES ....... (14,628) (11,095)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
EXERCISE OF EMPLOYEE STOCK OPTIONS, NET
OF TAX BENEFIT ................................ 27 137
COLLECTION OF NOTES RECEIVABLE .................. 228 66
PROCEEDS FROM SHARES PURSUANT TO
EMPLOYEE STOCK PURCHASE PLAN .................. 13 --
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES ... 268 203
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS .......... (3,596) (2,898)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ... 11,933 11,483
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......... $ 8,337 $ 8,585
======== ========
CASH PAID DURING THE PERIOD FOR:
INCOME TAXES .................................... $ -- $ 599
NON-CASH TRANSACTIONS:
ISSUANCE OF SHARES PURSUANT TO EMPLOYEE
STOCK PURCHASE PLAN IN EXCHANGE FOR
NOTES RECEIVABLE .............................. $ 558 $ 599
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
7
<PAGE> 8
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The consolidated financial statements as of and for the three months
ended March 31, 1998 and 1997 are unaudited, but in the opinion of
management, have been prepared on the same basis as the annual audited
consolidated financial statements and reflect all adjustments,
consisting of normal recurring accruals, necessary for a fair
presentation of the information set forth therein. The results of
operations for the three months ended March 31, 1998 are not
necessarily indicative of the operating results to be expected for the
full year or any other period. Certain prior year amounts have been
reclassified for comparative purposes.
These financial statements should be read in conjunction with the
financial statements and notes as of and for the year ended December
31, 1997 included in the Company's Annual Report on Form 10-K.
2. Earnings Per Share
Earnings per common share has been calculated by dividing net income
for the period by the weighted average number of common shares and
common share equivalents outstanding during the period.
3. Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," which is effective for years beginning after
December 15, 1997. This statement establishes standards for the
reporting and display of comprehensive income and its components.
Comprehensive income includes all changes in equity during a period,
except those resulting from investments by owners and distributions to
owners.
4. Income Taxes
The effective tax rate differs from the 35% marginal tax rate
principally as a result of interest exempt from tax, the dividend
received deduction and other differences in the recognition of revenues
and expenses for tax and financial reporting purposes.
5. Subsequent Event - FELINE PRIDES(SM) and Trust Preferred Securities
Offering
The Company closed on its FELINE PRIDES(SM) and Trust Preferred
Securities offering on May 4, 1998. FELINE PRIDES(SM) are units
consisting of a contract under which the holder is obligated to
purchase common stock from the Company approximately three years
following the May 4, 1998 closing date and beneficial ownership of
either (1) interest bearing preferred securities issued by a business
trust subsidiary of the Company or (2) U.S. Treasury securities.
Proceeds to the Company, net of underwriting commission, from the sales
of 10,350,000 FELINE PRIDES(SM) and 1,000,000 7.00% Trust Originated
Preferred Securities were $100.1 million. These amounts include
1,350,000 Income Prides, a component of the FELINE PRIDES(SM),
purchased pursuant to the exercise of the underwriters' over
allotment option.
8
<PAGE> 9
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
GENERAL
Although the Company's financial performance is dependent upon its own specific
business characteristics, certain risk factors can affect the profitability of
the Company. These include:
- Industry factors - Historically the financial performance of the
commercial property and casualty insurance industry has tended to
fluctuate in cyclical patterns of soft markets followed by hard
markets. In the current environment, insurance industry pricing in
general continues to be soft; however, the Company's strategy is to
focus on underwriting profits and accordingly the Company's marketing
organization is being directed into those niche businesses that exhibit
the greatest potential for underwriting profits.
- Competition - The Company competes in the commercial property and
casualty business with other domestic and international insurers having
greater financial and other resources than the Company.
- Regulation - The Company's insurance subsidiaries are subject to a
substantial degree of regulatory oversight, which generally is designed
to protect the interests of policyholders, as opposed to shareholders.
- Inflation - Commercial property and casualty insurance premiums are
established before the amount of losses and loss adjustment expenses,
or the extent to which inflation may effect such amounts is known.
- Investment Risk - Substantial future increases in interest rates could
result in a decline in the market value of the Company's investment
portfolio and resulting losses and/or reduction in shareholders'
equity.
RESULTS OF OPERATIONS (THREE MONTHS ENDED MARCH 31, 1998 VS MARCH 31, 1997)
Premiums: Gross written premiums grew $5.7 million (16.5%) to $40.3
million for the three months ended March 31, 1998 from $34.6 million for the
same period of 1997; gross earned premiums grew $4.9 million (15.0%) to $37.5
million for the three months ended March 31, 1998 from $32.6 million for the
same period of 1997; net written premiums increased $2.8 million (10.3%) to
$30.0 million for the three months ended March 31, 1998 from $27.2 million for
the same period of 1997; and net earned premiums grew $4.5 million (20.1%) to
$26.9 million in 1998 from $22.4 million in 1997. The overall growth in premiums
and the varying growth rates for gross written premiums, gross earned premiums,
net written premiums, and net earned premiums are attributable to a number of
factors:
- - Overall premium growth is primarily attributable to: expanded marketing
efforts relating to commercial auto, commercial package, and specialty
lines products through the increase in the Company's proprietary field
organization to a total of 100 professionals, production underwriters
and customer service representatives and the Company maintaining a 90%
retention of policies renewing in the quarter; the continued
development of the Company's Preferred Agent Program, initiated in
1996, wherein business relationships are formed with brokers
specializing in certain of the Company's business niches, thereby
increasing the distribution of the Company's niche products.
- - Net earned premiums grew at a higher rate than gross written and gross
earned premiums primarily due to the renegotiation of the Company's
reinsurance program effective January 1, 1997 whereby more favorable
reinsurance rates were realized while substantially the same retentions
and coverages were maintained; net written premiums for the three
months ended March 31, 1998 grew at a lower rate than gross written and
gross earned premiums due to returned unearned reinsurance premiums
recorded in the first quarter of 1997 as a result of the renegotiation
of the Company's reinsurance program.
Net Investment Income: Net investment income approximated $2.7 million
for the three months ended March 31, 1998 and $2.2 million for the same period
of 1997. Total investments grew to $240.1 million at March 31, 1998 from $177.9
million at March 31, 1997, primarily due to cash flows provided from operating
activities.
9
<PAGE> 10
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
(continued)
Net Loss and Loss Adjustment Expenses: Net loss and loss adjustment
expenses increased $2.4 million (19.2%) to $14.9 million in the first quarter of
1998 from $12.5 million in the first quarter of 1997 and the loss ratio
decreased to 55.2% in 1998 from 55.7% in 1997. The increase in net loss and loss
adjustment expenses was due primarily to the 20.1% growth in net earned
premiums.
Acquisition Costs and Other Underwriting Expenses: Acquisition costs
and other underwriting expenses increased $1.3 million (18.8%) to $8.2 million
for the three months ended March 31, 1998 from $6.9 million for the same period
of 1997. This increase was due primarily to the 20.1% growth in net earned
premiums.
Income Tax Expense: The Company's effective tax rate for the three
months ended March 31, 1998 and 1997 was 25.5% and 23.5%, respectively. The
effective rates differed from the 35% statutory rate principally due to
investments in tax-exempt securities. The increase in the effective tax rate is
principally due to a greater investment in taxable securities relative to tax
exempt securities during 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1998 the Company's investments
experienced unrealized investment appreciation of $3.6 million, net of the
related deferred tax expense of $2.0 million. At March 31, 1998, 100% of the
Company's fixed maturity securities consisted of U.S. Government securities or
securities rated "1" or "2" by the NAIC, 96.3% were rated "A-" or better (with
no security rated lower than "BBB-") by Standard & Poor's Corporation.
The Company produced net cash from operations of $10.8 million and $8.0
million, respectively, for the three months ended March 31, 1998 and 1997.
Management believes that the Company has adequate ability to pay all claims and
meet all other cash needs.
On May 4, 1998, the Company realized proceeds of $100.1 million, net of
underwriting commission, from its FELINE PRIDES(SM) and Trust Preferred
securities offering. Of these proceeds, $20.0 million was contributed to the
Company's insurance subsidiaries and the remaining proceeds are presently being
retained for general corporate purposes, which may include acquisitions,
including acquisitions of programs or books of business, capital expenditures,
additional capital contributions to its subsidiaries and the repurchase of its
common stock. The investment of the proceeds by the Company and the insurance
subsidiaries is being made in accordance with prevailing investment policies.
Risk-based capital is designed to measure the acceptable amount of
capital an insurer should have based on the inherent specific risks of each
insurer. Insurers failing to meet this benchmark capital level may be subject to
scrutiny by the insurer's domiciliary insurance department and ultimately
rehabilitation or liquidation. Based on the standards currently adopted, the
Company's insurance subsidiaries' capital and surplus is in excess of the
prescribed risk-based capital requirements.
10
<PAGE> 11
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Page No. Description
----------- -------- -----------
<S> <C> <C>
11.0 13 Computation of Earnings Per Share
</TABLE>
b. The Company has not filed any reports on Form 8-K during the
quarter for which this report is filed.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHILADELPHIA CONSOLIDATED HOLDING CORP.
Registrant
Date May 8, 1998 /s/ James J. Maguire
------------ ---------------------
James J. Maguire
Chairman of the Board of Directors, President
and Chief Executive Officer
(Principal Executive Officer)
Date May 8, 1998 /s/ Craig P. Keller
------------- --------------------
Craig P. Keller
Vice President, Secretary, Treasurer and
Chief Financial Officer (Principal Financial
and Accounting Officer)
12
<PAGE> 1
PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Dollars and Share Data in Thousands, except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
As of and For the Three Months Ended March 31,
1998 1997(1)
---- -------
<S> <C> <C>
Weighted Average Common Shares Outstanding 12,263 12,133
Weighted Average Share Equivalents Outstanding 2,791 2,570
------- -------
Weighted Average Shares and Share
Equivalents Outstanding 15,054 14,703
======= =======
Net Income $ 4,518 $ 3,622
======= =======
Basic Earnings per Share $ 0.37 $ 0.30
======= =======
Diluted Earnings per Share $ 0.30 $ 0.25
======= =======
</TABLE>
(1) 1997 share information restated to reflect a two-for-one split of the
Company's common stock distributed in November 1997.
13
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<DEBT-HELD-FOR-SALE> 186,847
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 53,205
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 240,052
<CASH> 8,337
<RECOVER-REINSURE> 1,833
<DEFERRED-ACQUISITION> 11,932
<TOTAL-ASSETS> 311,145
<POLICY-LOSSES> 128,081
<UNEARNED-PREMIUMS> 44,964
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 43,386
<OTHER-SE> 76,315
<TOTAL-LIABILITY-AND-EQUITY> 311,145
26,915
<INVESTMENT-INCOME> 2,700
<INVESTMENT-GAINS> 3
<OTHER-INCOME> 57
<BENEFITS> 14,858
<UNDERWRITING-AMORTIZATION> 8,219
<UNDERWRITING-OTHER> 533
<INCOME-PRETAX> 6,065
<INCOME-TAX> 1,547
<INCOME-CONTINUING> 4,518
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,518
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.30
<RESERVE-OPEN> 108,928<F1>
<PROVISION-CURRENT> 14,858
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 1,560
<PAYMENTS-PRIOR> 7,487
<RESERVE-CLOSE> 114,739<F1>
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES DIFFER FROM THE AMOUNTS REPORTED IN
THE CONSOLIDATED FINANCIAL STATEMENTS BECAUSE OF THE INCLUSION HEREIN OF
REINSURANCE RECEIVABLES OF $13,342 AND $13,502 AT MARCH 31, 1998 AND DECEMBER
31, 1997.
</FN>
</TABLE>
