Fitch Affirms Platinum Underwriters Senior Notes at 'BBB+' and Insurer Financial Strength at 'A'

Fitch Ratings has affirmed the ratings of Platinum Underwriters Holding Ltd. (PTP) and subsidiaries as follows:

--Senior unsecured notes at 'BBB+';

--Insurer financial strength (IFS) rating at 'A';

--Issuer default rating (IDR) at 'A-'.

A full list of ratings is included at the end of this release. The Rating Outlook is Stable.

The company reported a 200.4% calendar year basis combined ratio in the first quarter of 2011 representing the company's worst quarterly underwriting performance in 10 years, as a result of unusually large catastrophe losses around the world. PTP reported catastrophe losses of $248 million related to earthquakes in Japan and New Zealand as well as Cyclone Yasi and flooding in Australia, which represented 135.6 percentage points of the combined ratio. PTP did benefit modestly from $33 million of favorable reserve development during the quarter.

The affirmations reflect PTP's solid capitalization, moderate financial and operating leverage, high-quality and liquid investment portfolio, and history of strong underwriting results. The ratings also reflect challenges in maintaining profitability in a continued competitive (re)insurance pricing environment, however Fitch believes that recent events may promote moderate rate improvement in upcoming renewals.

Fitch views PTP's use of financial leverage as moderate and its historical operating earnings-based interest coverage as good. At March 31, 2011, the company's debt-to-capital ratio was 13.1% and from 2006 through 2010 the company's operating earnings-based interest coverage averaged a strong 14.6 times (x).

Fitch views PTP's investment portfolio as high-quality with good liquidity characteristics. The company invests almost entirely in fixed income and cash and short-term investments, although at 5.8 years at 3/31/11, the duration of the company's overall investment portfolio is somewhat higher than many of its peers, which could expose the company to significant unrealized investment losses if interest rates were to rise rapidly.

Fitch believes that PTP's reserves are exposed to potential adverse development but that this exposure is reasonably well-managed. PTP's reserves grew modestly in recent years after growing rapidly in the early 2000's. Fitch believes that this moderating growth reduces the potential for reserve deficiencies, and thus the agency views it favorably. Fitch also notes that in recent years PTP's reserves have consistently developed favorably, averaging 4.7% of beginning-of-the-year reserves between 2006 and 2010.

Given PTP's current business mix and balance sheet it is unlikely that anything other than a transformative shift in the company's fundamentals would result in a ratings upgrade in the near term. However, growth in capitalization above levels at year-end 2010 and sustained superior profitability relative to peers, if observed over a prolonged time period, would generate upward pressure on ratings.

Items that could cause a downgrade to PTP's ratings include the following:

--Protracted declines in PTP's underwriting results (on both an accident and calendar year basis);

--Additional material declines in capitalization;

--Adverse prior-year reserve development that caused Fitch to question PTP's reserve adequacy.

Fitch has affirmed the following ratings with a Stable Outlook:

Platinum Underwriters Holdings, Ltd.

--Issuer Default Rating (IDR) at 'A-';

Platinum Underwriters Finance, Inc.

--IDR at 'A-';

--7.50% series B senior unsecured notes at 'BBB+'.

Platinum Underwriters Bermuda Ltd.

--IFS at 'A'.

Platinum Underwriters Reinsurance, Inc.

--IFS at 'A'.

Additional information is available at 'www.fitchratings.com'. The issuer did not participate in the rating process other than through the medium of its public disclosure.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (March 31, 2011);

--'Non-Life Insurance Rating Methodology' (March 31, 2011);

--'Reinsurers' First-Quarter 2011 Financial Results' (May 19, 2011);

--'Property/Casualty Insurers' Year-End 2010 Financial Results' (March 16, 2011);

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=614266

Non-Life Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=604366

Continuing Pressure on Reinsurers' Financial Strength-Fitch

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=79060

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Contacts:

Fitch Ratings
Primary Analyst
Christopher A. Grimes, CFA, [phone]
Associate Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Gregory W. Dickerson, [phone]
Director
or
Committee Chairperson
Douglas L. Meyer, CFA, [phone]
Managing Director
or
Media Relations
Brian Bertsch, [phone]
[e-mail]