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[LIBERTY BELL GRAPHIC]
PHILADELPHIA CONSOLIDATED
HOLDING CORP.
FOUNDED 1962
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[LIBERTY BELL GRAPHIC]
Certain information included in this presentation and other statements or
materials published or to be published by the Company are not historical facts
but are forward-looking statements relating to such matters as anticipated
financial performance, business prospects,technological developments,new and
existing products, expectations for market segment and growth, the impact of
Year 2000 issues, and similar matters. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, the Company
provides the following cautionary remarks regarding important factors which,
among others, could cause the Company's actual results and experience to differ
materially from the anticipated results or other expectations expressed in the
Company's forward-looking statements. The risks and uncertainties that may
affect the operations, performance, development, results of the Company's
business, and the other matters referred to above include, but are not limited
to: (i) changes in the business environment in which the Company operates,
including inflation and interest rates;(ii) changes in taxes, governmental laws,
and regulations; (iii) competitive product and pricing activity; (iv)
difficulties of managing growth profitably; (v) catastrophe losses; and (vi) the
impact of Year 2000 issues.
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EXPERIENCED AND MOTIVATED MANAGEMENT
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<TABLE>
<CAPTION>
Years in
Name Position Industry
<S> <C> <C>
James J. Maguire Chairman & CEO 40
James J. Maguire, Jr. President & COO 15
Sean S. Sweeney Executive Vice President 21
Craig P. Keller Senior Vice President & CFO 15
P. Daniel Eldridge President & CEO-Liberty AmericanGroup 24
Christopher J. Maguire Senior Vice President & Chief Underwriting 13
Officer
</TABLE>
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PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
ORGANIZATIONAL CHART
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<TABLE>
<CAPTION>
PHILADELPHIA CONSOLIDATED
HOLDING CORP.
|
--------------------------------------------------------------------------|
| | | |
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
PHILADELPHIA LIBERTY
INDEMNITY MAGUIRE PHILADELPHIA AMERICAN
INSURANCE INSURANCE INSURANCE INSURANCE
COMPANY AGENCY, INC. COMPANY GROUP, INC.
------------ ----------- ------------ ----------
| | |
------------- --------- -----------
MOBILE LIBERTY
HOMEOWNERS AMERICAN MOBILE USA
INSURANCE INSURANCE INSURANCE
AGENCIES, INC. COMPANY COMPANY
------------- --------- -----------
</TABLE>
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HISTORY OF PHLY
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62 Founded Maguire Insurance Agency, Inc.
78 Entered insurance risk bearing with front company
86 Obtained $18 million of mezzanine financing
86 Chartered Philadelphia Insurance Company
87 Purchased Philadelphia Indemnity Insurance Company
93 Completed IPO for $41 million at $6.50* per share
97 Received "A" claims-paying ability rating from Standard & Poor's
98 Received A+ (Superior) rating from A.M. Best
98 $103.5 million FELINE PRIDES offering
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99 ACQUISITION OF THE JERGER COMPANY, INC./LIBERTY AMERICAN GROUP
99 A.M. BEST AFFIRMS A+ POOLED RATING
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* $6.50 adjusted for 2 for 1 stock split on 11/05/97.
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SUMMARY OF THE OFFERING
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ISSUER: Philadelphia Consolidated Holding Corp.
SECURITIES
OFFERED: FELINE PRIDES
OFFERING SIZE: $103.5 million (includes 15% over-allotment option)
ISSUE PRICE: $10.00 per FELINE PRIDES
CALL PROTECTION: 3 Years - May 2001
USE OF PROCEEDS: Strategic acquisitions
Internal growth
General corporate purposes
RATING: "BBB" (S&P)
LEAD
UNDERWRITER: Merrill Lynch & Co.
--------------------------------------------------------------------------------
Common Share Conversion
-----------------------
Per Pride - .4706 to .3858
Max 4,870,710 to 3,993,030
less than or equal to $21.25 greater than or equal to $25.92
--------------------------------------------------------------------------------
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INVESTMENT HIGHLIGHTS
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<TABLE>
<S> <C>
SPECIALIST - Focus on specialty niche commercial and personal insurance products
MIXED MARKETERS - Direct sales (20%), preferred agents (20%) andindependent brokers (60%)
UNDERWRITERS - 9-year weighted average statutory combined ratio of <90%
INNOVATORS - Proven product innovator
MOTIVATED - Highly motivated and experienced management team
- Beneficially own 46% of the Company
GROWING - Excellent historical earnings growth and future growth prospects
- 1995 to 1999 net income CAGR of 17.7%
STRONG - "A+" (Superior) from A.M. Best; "A" from Standard & Poor's
</TABLE>
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BUSINESS STRATEGY
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- Differentiation through VALUE-ADDED COVERAGE and service
- Multiple Channels of Distribution
- Extensive network of independent brokers
- Specialized force of preferred agents
- Direct sales organization
- Select wholesalers
- Internet
- SOUND UNDERWRITING AND PRICING discipline
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GROSS WRITTEN PREMIUMS
($ in millions)
CAGR = 27.4% *
[LIBERTY BELL GRAPHIC]
[BAR GRAPH OMITTED]
<TABLE>
<S> <C>
1995 $104.2
1996 $136.9
1997 $159.1
1998 $197.4
1999 $274.9
YTD 9/30/00 $271.1
</TABLE>
* CAGR Calculated on Years 1995 - 1999
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NET INCOME
($ in millions)
CAGR = 17.7% *
[LIBERTY BELL GRAPHIC]
[BAR GRAPH OMITTED]
<TABLE>
<S> <C>
1995 $ 9.8
1996 $13.4
1997 $16.9
1998 $20.0
1999 $18.8
YTD 9/30/00 $19.6
</TABLE>
1995 1996 1997 1998 1998 YTD 9/30/00
------------------------------------------------------------------------------
EPS $0.72 $0.94 $1.13 $1.34 $1.25 $1.34
------------------------------------------------------------------------------
* CAGR Calculated on Years 1995 - 1999
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SUPERIOR RETURN ON EQUITY
Return on Average Adjusted Equity*
5 Year Average = 17.4%
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[BAR GRAPH OMITTED]
<TABLE>
<S> <C>
1995 16.8%
1996 18.8%
1997 19.5%
1998 18.8%
1999 13.0%
YTD 9/30/00 17.1%
</TABLE>
* Based on average equity adjusted to exclude unrealized gains or losses and
goodwill.
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NINE MONTHS ENDED SEPTEMBER 30TH HIGHLIGHTS
($ in millions, except per share data)
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<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
30, 2000 30, 1999 CHANGE
-------- -------- ------
<S> <C> <C> <C>
Gross Written Premiums $ 271.1 $ 204.4 32.6%
Net Earned Premiums $ 162.2 $ 121.1 33.9%
Net Investment Income $ 18.1 $ 15.3 18.3%
Net Operating Income $ 17.0 $ 11.4 49.1%
Loss & LAE Ratio 58.1% 61.5%
Expense Ratio 33.0% 32.1%
------- -------
Combined Ratio 91.1% 93.6%
======= =======
===================================================================================
OPERATING EPS $ 1.16 $ 0.75 54.7%
===================================================================================
</TABLE>
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THE LIBERTY AMERICAN INSURANCE GROUP, INC.
INVESTMENT HIGHLIGHTS
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- Extensive experience - founded in 1946
- Specialization in underwriting and reinsurance
- State of the art system / Internet enabled
- 130 full time experienced employees
- Business in 3 states
- Florida
- Arizona
- Nevada
- Filings in 12 Additional States
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THE LIBERTY AMERICAN INSURANCE GROUP, INC.
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--------------------------------------------------------------------------------
INSURANCE AGENCY
--------------------------------------------------------------------------------
- 1999 brokered gross written premium
- Manufactured Homeowners $16.7 MM
- Homeowners 22.3 MM
-----
- Total Brokered Premium $39.0 MM
=====
--------------------------------------------------------------------------------
INSURANCE COMPANY
--------------------------------------------------------------------------------
- 1999 gross written premium
- Manufactured Homeowners $32.6 MM
- National Flood Program 9.4 MM
-----
- Total gross written premium $42.0 MM
=====
- Statutory combined ratio 4 year
weighted average 84.6 %
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- 1999 Gross Written Premium Produced
$81.0 MM
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HIGH QUALITY INVESTMENT PORTFOLIO
As of September 30, 2000
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[PIE CHART OMITTED]
<TABLE>
<S> <C>
Government/Corporate Bonds 63.1%
Common Stock 13.9%
Preferred Stock 0.6%
Cash Equivalents 3.3%
Municipal Bonds 19.1%
</TABLE>
- Portfolio market value - $451.6mm
- Fixed income securities
- 91.7% A- or better
- Portfolio duration 4.3 years
- 7.36% taxable equivalent yield
- Quality long-term growth stocks
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CONSISTENTLY REDUNDANT RESERVES
PHLY UNDERWRITES AND RESERVES CONSERVATIVELY
[LIBERTY BELL GRAPHIC]
<TABLE>
<CAPTION>
CALENDAR YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATED RESERVES $ 15.9 $ 22.2 $ 32.0 $ 38.7 $ 53.6 $ 68.2 $ 85.7 $108.9 $136.2
RE-ESTIMATED RESERVES $ 14.5 $ 20.9 $ 28.0 $ 34.5 $ 47.4 $ 59.1 $ 76.3 $103.5 $136.0
------ ------ ------ ------ ------ ------ ------ ------ ------
REDUNDANCY $ 1.4 $ 1.3 $ 4.0 $ 4.2 $ 6.2 $ 9.1 $ 9.4 $ 5.4 $ 0.2
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
Source: Company 1999 10-K
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REINSURANCE
- Treaty Reinsurance x $1.0 mm per Occurrence - All Lines
- CAT Retention - $2.0 mm per Occurrence
- CAT Cover - $168.0 mm
- Aggregate Stop Loss Reinsurance @ 60%
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YTD 12/31/1999 GROSS WRITTEN PREMIUMS
($ in millions)
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GWP BY LINE
[PIE CHART OMITTED]
<TABLE>
<CAPTION>
$ AMOUNT PERCENTAGES
<S> <C> <C>
Commercial Automobile $ 24.4 8.9%
Excess Liability $ 65.0 23.7%
New Programs $ 3.1 1.1%
Commercial Package $ 86.9 31.6%
Professional Liability $ 48.5 17.6%
Specialty Property $ 21.6 7.9%
Personal Lines $ 25.4 9.2%
</TABLE>
Total GWP = $ 274.9
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YTD 9/30/2000 GROSS WRITTEN PREMIUMS
($ in millions)
[LIBERTY BELL GRAPHIC]
GWP BY LINE
[PIE CHART OMITTED]
<TABLE>
<CAPTION>
$ Amount Percentages
<S> <C> <C>
Commercial Automobile $ 11.0 4.1%
Excess Liability $ 50.1 18.5%
New Programs $ 11.7 4.3%
Nat'l Flood $ 7.9 2.9%
Commercial Package $ 88.2 32.5%
Professional Liability $ 51.7 19.1%
Specialty Property $ 17.3 6.4%
Personal Lines $ 33.2 12.2%
</TABLE>
Total GWP = $271.1
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COMMERCIAL AUTOMOBILE AND EXCESS LIABILITY
$ in millions
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GROSS WRITTEN PREMIUMS
CAGR = 6.6% *
[BAR GRAPH OMITTED]
<TABLE>
$ AMOUNT
<S> <C>
1995 $ 69.2
1996 $ 74.9
1997 $ 77.7
1998 $ 85.7
1999 $ 89.4
YTD 9/30/00 $ 61.1
</TABLE>
* CAGR Calculated on Years 1995 - 1999
- 5% market share
- 33% of 1999 GWP
- Leasing, rent-a-car and financial institutions
- Providing products for over 35 years
- Multiple products with numerous special features
- 50% 5-year organic growth potential
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COMMERCIAL PACKAGE
$ in millions
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GROSS WRITTEN PREMIUMS
CAGR = 36.4% *
[BAR GRAPH OMITTED]
<TABLE>
$ AMOUNT
<S> <C>
1995 $ 25.1
1996 $ 43.7
1997 $ 60.0
1998 $ 78.1
1999 $ 86.9
YTD 9/30/00 $ 88.2
</TABLE>
* CAGR Calculated on Years 1995 - 1999
- 3% market share
- 32% of 1999 GWP
- Targets non-profits, social and human services, health and fitness, schools
and condominiums
- General and professional liability, property, automobile & D&O coverages
- Providing products for over 14 years
- 100% 5-year organic growth potential
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SPECIALTY LINES
$ in millions
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GROSS WRITTEN PREMIUMS
CAGR =54.6% *
[BAR GRAPH OMITTED]
<TABLE>
$ AMOUNT
<S> <C>
1995 $ 8.5
1996 $ 16.6
1997 $ 20.8
1998 $ 30.4
1999 $ 48.5
YTD 9/30/00 $ 51.7
</TABLE>
* CAGR Calculated on Years 1995 - 1999
- Market share of <1%
- 18% of 1999 GWP
- Targets non-profit and for-profits and an array of professionals
- D&O liability and miscellaneous professional liability coverages
- Introduced EXECUTIVE SAFEGUARD (SM) policy in 1996
- 200% 5-year organic growth potential
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SPECIALTY PROPERTY AND INLAND MARINE
$ in millions
[LIBERTY BELL GRAPHIC]
[BAR GRAPH OMITTED]
<TABLE>
<CAPTION>
$ AMOUNT
<S> <C>
1998 $ 1.1
1999 21.6
YTD 9/30/00 17.3
</TABLE>
- Market Share <1%
- 8% of 1999 GWP
- Targets larger, superior property accounts and specific classes of inland
marine
- Provides point-of-sale expertise, underwriting and service
- New Agency partnerships
- $30M GWP potential (over 5 years)
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SUPERIOR UNDERWRITING RESULTS
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Statutory Combined Ratios
[BAR GRAPH OMITTED]
<TABLE>
<CAPTION>
PHLY Industry
<S> <C> <C>
1991 92.8% 108.7%
1992 95.8% 115.6%
1993 91.0% 106.8%
1994 89.4% 108.3%
1995 86.7% 106.3%
1996 86.8% 105.8%
1997 84.4% 101.1%
1998 85.1% 105.0%
1999 93.8% 107.5%E
YTD 9/30/00 91.0%
</TABLE>
--------------------------------------------------------------------------------
PHLY Industry
9 YEAR WTD AVERAGE = 88.9% 9 YEAR AVERAGE = 107.0%
--------------------------------------------------------------------------------
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LOOKING AHEAD
DRIVERS OF THE FUTURE
[LIBERTY BELL GRAPHIC]
- Organic growth
- Personal Lines/Manufactured Housing
- E-Commerce/Systems Initiatives
- Partnership with preferred agents
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ORGANIC GROWTH
- DIRECT MARKETING
- CROSS SELLING
[LIBERTY BELL GRAPHIC]
36 OFFICES IN 8 REGIONS COVERING THE U.S.
[UNITED STATES GRAPH WITH OFFICES AND REGIONS MARKED OMITTED]
2000 est. gross written premium growth-15%
- Direct account solicitation
- 4000 Broker relationships
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PERSONAL LINES/MANUFACTURED HOUSING
- National Expansion - 13 Additional States
- Internet Capability for Agents (www.accessphly.com)
- Rate, quote, issue, bill online
- View entire account history and submit claims online
- Manufactured Housing Parks - Internet Access for Residents
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E-COMMERCE/SYSTEMS INITIATIVES
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- Web Site--apps, forms, affiliated links program, company info
- Intranet Development--secure portal for employees
- Run proprietary applications and e-mail
- E-PHLY--access data warehouse reports
- Order supplies & printed materials
- Online document sharing
- Extranet Development--secure portal for third parties
- Agent access to billing and loss information
- Rate, quote, issue and bill for select products
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E-COMMERCE/SYSTEMS INITIATIVES
[LIBERTY BELL GRAPHIC]
- Portals and Partnerships
- VerticalNet (Private Company D&O)
- Consultantlocator.com (Consultants E&O)
- IWIX.net (All Specialty Lines products)
- "Hot links" from many industry sites
- Secured URL's
- www.accessphly.com (online quotes)
- www.877getphly.com (customer service and bill paying)
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PARTNERSHIPS WITH PREFERRED AGENTS
($ in millions)
[LIBERTY BELL GRAPHIC]
<TABLE>
<CAPTION>
1999 2000E GOAL
---- ----- ----
<S> <C> <C> <C>
Preferred Agents 69 80 100
Gross Written Premiums $40.0 $50.0 $200.0
</TABLE>
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[LIBERTY BELL GRAPHIC]
PHILADELPHIA CONSOLIDATED HOLDING CORP.
FOUNDED 1962
