Form 10-Q PLATINUM UNDERWRITERS For: Sep 30

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

o	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)

(441) 295-7195

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(Registrant's telephone number, including area code)

Not Applicable

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�(Former name, former address and former fiscal year, if changed since last report)

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (�232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).� Yes x�No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.� See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

�����Yes � o�� No� x

The registrant had 24,827,245 common shares, par value $0.01 per share, outstanding as of October 16, 2014.

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PLATINUM UNDERWRITERS HOLDINGS, LTD.

TABLE OF CONTENTS

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PART I - FINANCIAL INFORMATION

Item 1.�

Financial Statements

Platinum Underwriters Holdings, Ltd. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

September 30, 2014 and December 31, 2013

($ in thousands, except share data)

�See accompanying notes to consolidated financial statements.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

($ in thousands, except per share data)

See accompanying notes to consolidated financial statements.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

($ in thousands)

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (UNAUDITED)

For the Nine Months Ended September 30, 2014 and 2013

($ in thousands)

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Nine Months Ended September 30, 2014 and 2013

($ in thousands)

See accompanying notes to consolidated financial statements.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

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1.	Basis of Presentation and Significant Accounting Policies

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Basis of Presentation and Consolidation

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Platinum Underwriters Holdings, Ltd. (Platinum Holdings) is a holding company domiciled in Bermuda.� Through our reinsurance subsidiaries, we provide property and marine, casualty and finite risk reinsurance coverages, through reinsurance brokers, to a diverse clientele of insurers and select reinsurers on a worldwide basis.

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Platinum Holdings and its consolidated subsidiaries (collectively, the Company) include Platinum Holdings, Platinum Underwriters Bermuda, Ltd. (Platinum Bermuda), Platinum Underwriters Reinsurance, Inc. (Platinum US), Platinum Regency Holdings (Platinum Regency), Platinum Underwriters Finance, Inc. (Platinum Finance) and Platinum Administrative Services, Inc.� The terms we, us, and our refer to the Company, unless the context otherwise indicates.

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We operate through our licensed reinsurance subsidiaries, Platinum Bermuda, a Bermuda reinsurance company, and Platinum US, a U.S. reinsurance company.� Platinum Regency is an intermediate holding company based in Ireland and a wholly owned subsidiary of Platinum Holdings.� Platinum Finance is an intermediate holding company based in the U.S. and a wholly owned subsidiary of Platinum Regency.� Platinum Bermuda is a wholly owned subsidiary of Platinum Holdings and Platinum US is a wholly owned subsidiary of Platinum Finance.� Platinum Administrative Services, Inc. is a wholly owned subsidiary of Platinum Finance that provides administrative support services to the Company.

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The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information.� Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements.� All material inter-company transactions and accounts have been eliminated in preparing these consolidated financial statements.� The consolidated financial statements as of September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013 are unaudited and include all adjustments consisting of normal recurring items that management considers necessary for a fair presentation under U.S. GAAP.� These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

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The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.� Actual results may differ materially from these estimates.� The major estimates used in the preparation of the Company's consolidated financial statements, and therefore considered to be critical accounting estimates, include, but are not limited to, premiums written and earned, unpaid losses and loss adjustment expenses (LAE), valuation of investments and income taxes.� In addition, estimates are used in our risk transfer analysis for assumed and ceded reinsurance transactions.� Results of changes in estimates are reflected in results of operations in the period in which the change is made.� The results of operations for any interim period are not necessarily indicative of results for the full year.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

2.	Investments

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Fixed Maturity Available-for-sale Securities

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Our fixed maturity available-for-sale securities are U.S. dollar denominated securities. The following table sets forth our fixed maturity available-for-sale securities as of September 30, 2014 and December 31, 2013 ($ in thousands):

(1)

The non-credit portion of other than temporary impairments ("OTTI") represents the amount of unrealized losses on impaired securities that were not recorded in the consolidated statements of operations as of the reporting date.� These unrealized losses are included in gross unrealized losses as of September 30, 2014 and December 31, 2013.

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Fixed Maturity Trading Securities

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Our fixed maturity trading securities are non-U.S. dollar denominated securities that, along with our non-U.S. dollar short-term trading investments and non-U.S. dollar cash and cash equivalents, are generally held for the purposes of hedging our net non-U.S. dollar denominated reinsurance liabilities.� These investments were all non-U.S. governments and the fair value was $95.2 million and $103.4 million as of September 30, 2014 and December 31, 2013, respectively.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

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Maturities

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The following table sets forth the amortized cost and fair value of our fixed maturity available-for-sale and trading securities by stated maturity as of September 30, 2014 ($ in thousands):

The actual maturities of our fixed maturity available-for-sale and trading securities could differ from stated maturities due to call or prepayment provisions.

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Short-term Investments

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We account for short-term investments as trading in accordance with the fair value option and include them in investing activities on the statements of cash flows.� These investments were all non-U.S. governments and the fair value was $26.3 million and $66.7 million as of September 30, 2014 and December 31, 2013, respectively.

Other-Than-Temporary Impairments

We analyze the creditworthiness of our available-for-sale securities by reviewing various performance metrics of the issuer.� We determined that none of our government bonds, government agencies, municipal bonds, corporate bonds or commercial mortgage-backed securities (CMBS) were other-than-temporarily impaired for the three and nine months ended September 30, 2014 and 2013.

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The following table sets forth the net impairment losses on investments for the three and nine months ended September 30, 2014 and 2013 ($ in thousands):

Residential mortgage-backed securities (RMBS) include U.S. Government agency RMBS and non-agency RMBS.� Asset-backed securities (ABS) include securities with underlying sub-prime mortgages as collateral.� We determined that none of our U.S. Government agency RMBS were other-than-temporarily impaired for the three and nine months ended September 30, 2014 and 2013.� We analyze our non-agency RMBS and sub-prime ABS on a periodic basis using default loss models based on the performance of the underlying loans.� Performance metrics include delinquencies, defaults, foreclosures, prepayment speeds and cumulative losses incurred.� The expected losses for a mortgage pool are compared with the current level of credit support, which generally represents the point at which our security would experience losses.� We evaluate projected cash flows as well as other factors in order to determine if a credit impairment has occurred.� As of September 30, 2014, the single largest unrealized loss within our RMBS portfolio was $0.2 million related to a non-agency RMBS security with an amortized cost of $0.3 million.� As of September 30, 2014, securities in our sub-prime ABS portfolio are all in an unrealized gain position.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

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The following table sets forth a summary of the cumulative credit losses recognized on our fixed maturity available-for-sale securities for the three and nine months ended September 30, 2014 and 2013 ($ in thousands):

For the three and nine months ended September 30, 2014, total cumulative credit losses decreased primarily due to principal paydowns. As of September 30, 2014, total cumulative credit losses were related to CMBS, non-agency RMBS and sub-prime ABS.� The cumulative credit loss we recorded on CMBS of $0.1 million was on one security issued in 2007.� As of September 30, 2014, 1.1% of the mortgages backing this security were 90 days or more past due and 3.2% of the mortgages had incurred cumulative losses.� The cumulative credit losses we recorded on non-agency RMBS and sub-prime ABS of $26.9 million were on sixteen securities issued from 2004 to 2007.� As of September 30, 2014, 16.2% of the mortgages backing these securities were 90 days or more past due and 9.3% of the mortgages had incurred cumulative losses.� For these securities, the expected losses for the underlying mortgages were greater than the remaining average credit support of 3.0%.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

Gross Unrealized Losses

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The following table sets forth our gross unrealized losses on securities classified as fixed maturity available-for-sale aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2014 and December 31, 2013 ($ in thousands):

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We believe that the gross unrealized losses in our fixed maturity available-for-sale securities portfolio of $2.9 million represent temporary declines in fair value.� We believe that the unrealized losses are not necessarily predictive of ultimate performance and that the provisions we have made for net impairment losses are adequate.� However, economic conditions may deteriorate more than expected and may adversely affect the expected cash flows of our securities, which in turn may lead to impairment losses being recorded in future periods.� Conversely, economic conditions may improve more than expected and favorably increase the expected cash flows of our impaired securities, which would be earned through net investment income over the remaining life of the security.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

Net Investment Income

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The following table sets forth our net investment income for the three and nine months ended September 30, 2014 and 2013 ($ in thousands):

Net Realized Gains (Losses) on Investments

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The following table sets forth our net realized gains (losses) on investments for the three and nine months ended September 30, 2014 and 2013 ($ in thousands):

3.	Fair Value Measurements

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The accounting guidance related to fair value measurements addresses the recognition and disclosure of fair value measurements where those measurements are either required or permitted by the guidance.� The fair values of our financial assets and liabilities addressed by this guidance are determined primarily through the use of observable inputs.� Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from external independent sources.� Unobservable inputs reflect managements assumptions about what market participants assumptions would be in pricing the asset or liability based on the best information available.� We classify our financial assets and liabilities in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.� This classification requires judgment in assessing the market and pricing methodologies for a particular security.� The fair value hierarchy is comprised of the following three levels:

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Level 1:

Valuations are based on unadjusted quoted prices in active markets for identical financial assets or liabilities;

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Level 2:

Valuations are based on prices obtained from index providers, independent pricing vendors or broker-dealers using observable inputs for financial assets and liabilities; and

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Level 3:

Valuations are based on unobservable inputs for assets and liabilities where there is little or no market activity.� Unadjusted third party pricing sources or managements assumptions and internal valuation models may be used to determine the fair value of financial assets or liabilities.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

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Level 1, 2 and 3 Financial Assets Carried at Fair Value

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The fair values of our fixed maturity securities, short-term investments and cash and cash equivalents are based on prices primarily obtained from index providers, pricing vendors or broker-dealers using observable inputs.� The fair value measurements of all of our securities were based on unadjusted prices provided by third party pricing sources. We validate the prices we obtain from third party pricing sources by performing price comparisons against multiple pricing sources, if available, periodically back-testing sales to the previously reported fair value, performing an in-depth review of specific securities when evaluating stale prices and large price movements, as well as performing other validation procedures.� We also continuously monitor market data that relates to our investment portfolio and review pricing documentation that describes the methodologies used by various pricing sources.� If we determine that a price appears unreasonable, we investigate and assess whether the price should be adjusted.� The fair value measurements of our reinsurance deposit assets were based upon our internal valuation model, which utilizes certain characteristics of both the market and income valuation approaches. Our fixed maturity securities, short-term investments, cash and cash equivalents and reinsurance deposit assets are classified in the fair value hierarchy as follows:

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Level 1 - The fair values of U.S. Government securities were based on quoted prices in active markets for identical assets.

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Level 2 - The fair values of U.S. Government agencies were based on observable inputs that may include the spread above the risk-free yield curve, reported trades and broker-dealer quotes.

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Level 2 - The fair values of municipal bonds were determined based on observable inputs that may include the spread above the risk-free yield curve, reported trades, broker-dealer quotes, benchmark securities, bids, credit risks and economic indicators.

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Level 1 or 2 - The fair values of non-U.S. government securities classified as Level 1 were based on quoted prices in active markets for identical assets.� Non-U.S. government securities classified as Level 2 were based on observable inputs that may include the spread above the risk-free yield curve, reported trades and broker-dealer quotes.� Our non-U.S. government bond portfolio consisted of securities issued primarily by governments, provinces, agencies and supranationals.

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Level 2 - The fair values of corporate bonds were determined based on observable inputs that may include the spread above the risk-free yield curve, reported trades, broker-dealer quotes, benchmark securities, bids, credit risks and industry and economic indicators.

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Level 2 or 3 - The fair values of CMBS classified as Level 2 were determined based on observable inputs that may include the spread above the risk-free yield curve, reported trades, broker-dealer quotes, bids, security cash flows and structures, delinquencies, loss severities and default rates.� CMBS classified as Level 3 used unobservable inputs that may include the probability of default and loss severity in the event of default.

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Level 2 or 3 - Our RMBS portfolio was comprised of securities issued by U.S. Government agencies and by non-agency institutions.� The fair values of RMBS classified as Level 2 were determined based on observable inputs that may include the spread above the risk-free yield curve, reported trades, broker-dealer quotes, bids, loan level information, security cash flows and structures, prepayment speeds, delinquencies, loss severities and default rates.� Non-agency RMBS classified as Level 3 used unobservable inputs that may include the probability of default, loss severity in the event of default and prepayment speeds.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

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Level 2 or 3 - The fair values of ABS classified as Level 2 were determined based on observable inputs that may include the spread above the risk-free yield curve, reported trades, broker-dealer quotes, bids, security cash flows and structures, type of collateral, prepayment speeds, delinquencies, loss severities and default rates.� Sub-prime ABS classified as Level 3 used unobservable inputs that may include the probability of default, loss severity in the event of default and prepayment speeds.

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Level 1 or 2 - The fair values of short-term investments classified as Level 1 were based on quoted prices in active markets for identical assets.� The fair values of short-term investments classified as Level 2 were determined based on observable inputs that may include the risk-free yield curve, reported trades and broker-dealer quotes.

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Level 1 or 2 - The fair values of cash and cash equivalents classified as Level 1 were determined based on quoted prices in active markets for identical assets.� The fair values of cash and cash equivalents classified as Level 2 were determined based on observable inputs that may include the risk-free yield curve, reported trades and broker-dealer quotes.� Cash and cash equivalents include demand deposits, time deposits, money market instruments and both U.S. Government and non-U.S. government obligations.

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Level 3 - The fair values of our reinsurance deposit assets were determined by management primarily using unobservable inputs through the application of our own assumptions and internal valuation model. See further discussion on reinsurance deposit assets below.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

Fair Value Levels

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The following table presents the fair value hierarchy for those financial assets measured at fair value on a recurring basis by the Company as of September 30, 2014 and December 31, 2013 ($ in thousands):

Cash and cash equivalents included demand deposits and time deposits totaling $192.8 million as of September 30, 2014 and totaling $120.7 million as of December 31, 2013.

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Transfers of assets into or out of levels are recorded at their fair values as of the end of each reporting period, consistent with the date of the determination of fair value.� There were no transfers between Levels 1 and 2 for the three and nine months ended September 30, 2014 and 2013.� The transfers into and out of Level 3 were based on the level of evidence available to corroborate significant observable inputs with market observable information.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

Changes in Level 3 Financial Assets

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The following table reconciles the beginning and ending balance for our Level 3 financial assets measured at fair value on a recurring basis for the three and nine months ended September 30, 2014 and 2013 ($ in thousands):

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

Quantitative Information of Level 3 Fair Value Measurements

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The fair value measurements of our CMBS, non-agency RMBS and sub-prime ABS classified as Level 3 were based on unadjusted third party pricing sources.

The fair value measurements of our reinsurance deposit assets used significant unobservable inputs through the application of our own assumptions and internal valuation model and were classified as Level 3.� The most significant unobservable inputs used in our internal valuation model are the estimated contract period remaining, credit spread above the risk-free rate and net losses and LAE ceded.� The credit spread above the risk-free rate is determined by reviewing the credit spreads of fixed income securities through observable market data, as well as considering illiquidity and the structure of these contracts.� The fair value of the reinsurance deposit assets may increase or decrease due to changes in the estimated contract period remaining, the credit spread and net losses and LAE ceded.� Generally, a decrease in the credit spread or a decrease in net losses and LAE ceded would result in an increase in the fair value of the reinsurance deposit assets.� Conversely, an increase in the credit spread or an increase in net losses and LAE ceded would result in a decrease in the fair value of the reinsurance deposit assets.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

The following table sets forth the weighted average of the significant unobservable quantitative information used for the fair value measurement of our reinsurance deposit assets as of September 30, 2014 and December 31, 2013:

Other Financial Assets and Liabilities Not Carried at Fair Value

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Accounting guidance requires note disclosure of the fair value of other financial assets and liabilities not carried at fair value, excluding balances related to insurance contracts.

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The debt obligations on our consolidated balance sheets were recorded at cost with a carrying value of $250.0 million as of September 30, 2014 and December 31, 2013, and had a fair value of $281.6 million and $271.5 million as of September 30, 2014 and December 31, 2013, respectively.� The fair value measurements were based on observable inputs and therefore would be considered to be Level 2.

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Our remaining financial assets and liabilities were generally carried at cost or amortized cost, which approximates fair value, as of September 30, 2014 and December 31, 2013.� The fair value measurements were based on observable inputs and therefore would be considered to be Level 1 or Level 2.

4.	Credit Facilities

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Syndicated Credit Facility

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On April 9, 2014, we entered into an amended and restated credit facility with various financial institutions (the Syndicated Credit Facility).� The Syndicated Credit Facility is a four-year, $300.0 million secured senior credit facility available for letters of credit (LOC), with a sublimit of $100.0 million for revolving borrowings.� LOC and borrowings under the Syndicated Credit Facility are available for the working capital, liquidity and general corporate requirements of Platinum Holdings, Platinum Finance and our reinsurance subsidiaries.� The Syndicated Credit Facility contains customary representations, warranties and covenants.� Platinum Holdings and Platinum Finance have unconditionally guaranteed the obligations of each Platinum entity under the Syndicated Credit Facility.

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Other Letter of Credit Facilities

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We have an LOC facility with a financial institution in the aggregate amount of $100.0 million available for the issuance of LOC to support reinsurance obligations of our reinsurance subsidiaries.� We also have the ability to request an uncommitted LOC facility of up to $150.0 million subject to agreement with the lender.

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Platinum Bermuda has an uncommitted LOC facility of $125.0 million available for the issuance of LOC to support reinsurance obligations of Platinum Bermuda.� There was $15.9 million committed under this facility as of September 30, 2014.� Platinum Holdings has unconditionally guaranteed the obligations of Platinum Bermuda under this facility.

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Platinum Underwriters Holdings, Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, 2014 and 2013

We had no revolving borrowings under the Syndicated Credit Facility during the nine months ended September 30, 2014 and the year ended December 31, 2013.� The following table summarizes the outstanding LOC as of September 30, 2014 ($ in thousands):

⁽¹⁾�Cash and cash equivalents of $141.7 million were held to collateralize LOC issued as of September 30, 2014.

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