UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended~~September 30, 2005~~March 31, 2006


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

For the transition period from ~~___to ___~~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 Identification No.)
incorporation or organization)		~~98-0416483~~ ~~(IRS Employer Identification No.)~~


The Belvedere Building
69 Pitts Bay Road
Pembroke, Bermuda		HM 08

(Address of principal executive offices)		~~HM 08~~ (Zip Code)

(441) 295-7195

(Registrant’s telephone number, including area code)

Not Applicable

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

Indicate by check mark whether the ~~registrant~~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. Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer ~~(as defined~~or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange ~~Act). Yes~~þ NoAct. (Check one):


Large accelerated filerþ		Accelerated filero		Non-accelerated filero

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

As of ~~October 21, 2005,~~April 17, 2006, there were outstanding ~~49,604,759~~59,201,800 common shares, par value $0.01 per share, of the registrant.

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Consolidated Balance Sheets
($ in thousands, except share data)


	(Unaudited)					(Unaudited)
	September 30,			December 31,		March 31,			December 31,
	2005			2004		2006			2005
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost — $2,917,948 and $2,144,290, respectively)	$	2,886,969		$	2,157,529
Fixed maturities — trading, at fair value (amortized cost — $96,392 and $82,931, respectively)		96,248			82,673
Fixed maturity available-for-sale securities at fair value (amortized cost – $3,208,066 and $2,936,152, respectively)						$	3,121,500		$	2,888,922
Fixed maturity trading securities at fair value (amortized cost – $101,832 and $99,141, respectively)							99,821			98,781
Preferred stocks (cost – $8,735 and $8,735, respectively)							8,169			8,186
Other invested asset		6,000			6,769		5,000			5,000
Short-term investments							80,609			8,793

Total investments		2,989,217			2,246,971		3,315,099			3,009,682
Cash and cash equivalents		391,637			209,897		570,030			820,746
Accrued investment income		31,013			23,663		29,581			29,230
Reinsurance premiums receivable		557,422			580,048		517,429			567,449
Reinsurance recoverable on ceded losses and loss adjustment expenses		68,276			2,005		61,528			68,210
Prepaid reinsurance premiums		10,745			2,887		30,860			7,899
Funds held by ceding companies		250,324			198,048		266,541			291,629
Deferred acquisition costs		139,158			136,038		105,699			130,800
Income tax recoverable		10,106			1,325		10,600			24,522
Deferred tax assets		27,290			8,931		36,723			31,934
Due from investment broker							187			157,930
Other assets		10,897			12,182		11,940			14,344

Total assets	$	4,486,085		$	3,421,995	$	4,956,217		$	5,154,375


LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Liabilities
Unpaid losses and loss adjustment expenses	$	2,079,668		$	1,380,955	$	2,371,916		$	2,323,990
Unearned premiums		558,881			502,423		474,433			502,018
Reinsurance deposit liabilities		5,932			20,189		6,041			6,048
Debt obligations		387,500			137,500		292,840			292,840
Ceded premiums payable		26,278			2,384		38,106			22,544
Commissions payable		176,036			181,925		142,826			186,654
Funds withheld		—			11,999
Deferred taxes		—			10,404
Deferred tax liabilities							960			118
Due to investment broker							16,902			259,834
Other liabilities		23,973			41,213		34,355			20,080

Total liabilities		3,258,268			2,288,992		3,378,379			3,614,126

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, 49,604,759 and 43,087,407 shares issued and outstanding, respectively		496			430
Shareholders’ Equity
Preferred shares, $.01 par value, 25,000,000 shares authorized, 5,750,000 shares issued and outstanding							57			57
Common shares, $.01 par value, 200,000,000 shares authorized, 59,190,300 and 59,126,675 shares issued and outstanding, respectively							592			590
Additional paid-in capital		1,092,029			911,851		1,528,020			1,527,316
Unearned share grant compensation		(2,108	)		—		–			(2,467	)
Accumulated other comprehensive income (loss)		(25,718	)		12,252
Accumulated other comprehensive loss							(76,029	)		(40,718	)
Retained earnings		163,118			208,470		125,198			55,471

Total shareholders’ equity		1,227,817			1,133,003		1,577,838			1,540,249

Total liabilities and shareholders’ equity	$	4,486,085		$	3,421,995	$	4,956,217		$	5,154,375

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Consolidated Statements of Income and Comprehensive Income (Unaudited)
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

($ in thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenue:
Net premiums earned $ 429,388 383,090 1,271,898 $ 1,014,999
Net investment income 36,441 21,429 92,250 58,290
Net realized gains (losses) on investments (879 ) 2,262 (1,062 ) 1,435
Other income (expense) (433 ) 1,021 (201 ) 2,137

Total revenue 464,517 407,802 1,362,885 1,076,861

Expenses:
Losses and loss adjustment expenses 564,618 384,724 1,043,168 736,159
Acquisition expenses 98,858 81,271 296,035 232,886
Operating expenses 8,080 15,400 51,568 53,436
Net foreign currency exchange (gains) losses (88 ) (628 ) 1,870 (326 )
Interest expense 6,839 2,322 13,186 6,952

Total expenses 678,307 483,089 1,405,827 1,029,107

Income (loss) before income tax expense (213,790 ) (75,287 ) (42,942 ) 47,754
Income tax expense (benefit) (37,766 ) (5,535 ) (7,991 ) 12,893

Net income (loss) $ (176,024 ) (69,752 ) (34,951 ) $ 34,861

Earnings per share:
Basic earnings (loss) per share $ (4.02 ) (1.62 ) (0.80 ) $ 0.81
Diluted earnings (loss) per share $ (4.02 ) (1.62 ) (0.80 ) $ 0.78

Comprehensive income (loss):
Net income (loss) $ (176,024 ) (69,752 ) (34,951 ) $ 34,861
Other comprehensive income (loss):
Net change in unrealized gains and losses on available-for-sale securities, net of deferred taxes (36,414 ) 31,147 (37,992 ) (2,036 )
Cumulative translation adjustments, net of deferred taxes 59 (140 ) 22 (292 )

Comprehensive income (loss) $ (212,379 ) (38,745 ) (72,921 ) $ 32,533

Shareholder dividends:
Dividends declared $ 3,490 3,435 10,401 $ 10,360
Dividends declared per share $ 0.08 0.08 0.24 $ 0.24


	2006			2005
Revenue:
Net premiums earned	$	344,301		$	411,040
Net investment income		43,515			26,905
Net realized gains on investments		65			372
Other income (expense), net		(1,317	)		(356	)

Total revenue		386,564			437,961

Expenses:
Losses and loss adjustment expenses		206,774			237,698
Acquisition expenses		69,239			93,249
Operating expenses		22,988			20,008
Net foreign currency exchange losses (gains)		(275	)		1,798
Interest expense		5,450			2,173

Total expenses		304,176			354,926

Income before income tax expense		82,388			83,035
Income tax expense		5,352			9,947

Net income		77,036			73,088
Preferred dividends		2,576			–

Net income available to common shareholders	$	74,460		$	73,088

Earnings per common share:
Basic earnings per common share	$	1.26		$	1.69
Diluted earnings per common share	$	1.16		$	1.49
Comprehensive income:
Net income	$	77,036		$	73,088
Other comprehensive income:
Net change in unrealized gains and losses on available-for-sale securities, net of deferred tax		(35,315	)		(34,629	)
Cumulative translation adjustments, net of deferred tax		4			9

Comprehensive income	$	41,725		$	38,468

Shareholder dividends:
Preferred dividends declared	$	2,012			–
Preferred dividends declared per share		0.35			–
Common dividends declared		4,733		$	3,449
Common dividends declared per share	$	0.08		$	0.08

See accompanying notes to condensed consolidated financial statements.

~~- 2 -~~-2-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

($ in thousands)

2005 2004
Preferred shares:
Balances at beginning and end of period $ — $ —

Common shares:
Balances at beginning of period 430 430
Exercise of share options 7 2
Issuance of restricted shares and shares for share units 1 1
Issuance of common shares 58 —
Purchase of common shares — (3 )

Balances at end of period 496 430

Additional paid-in-capital:
Balances at beginning of period 911,851 910,505
Exercise of share options 13,063 5,834
Issuance of restricted shares and shares for share units 2,749 1,736
Share based compensation 2,559 1,565
Issuance of common shares 161,807 —
Purchase of common shares — (9,982 )

Balances at end of period 1,092,029 909,658

Unearned share grant compensation :
Balances at beginning of period — —
Shares issued (2,750 ) —
Amortization 642 —

Balances at end of period (2,108 ) —

Accumulated other comprehensive income (loss):
Balances at beginning of period 12,252 18,774
Net change in unrealized gains and losses on available-for-sale securities, net of deferred taxes (37,992 ) (2,036 )
Net change in cumulative translation adjustments, net of deferred tax 22 (292 )

Balances at end of period (25,718 ) 16,446

Retained earnings:
Balances at beginning of period 208,470 137,494
Net income (loss) (34,951 ) 34,861
Dividends paid to shareholders (10,401 ) (10,360 )

Balances at end of period 163,118 161,995

Total shareholders’ equity $ 1,227,817 $ 1,088,529


	2006			2005
Preferred shares:
Balances at beginning of year	$	57		$	–

Balances at end of period		57			–

Common shares:
Balances at beginning of year		590			430
Exercise of share options		1			2
Issuance of restricted shares		1			–

Balances at end of period		592			432

Additional paid-in-capital:
Balances at beginning of year		1,527,316			911,851
Transfer of unearned common share grant compensation		(2,467	)		–
Exercise of common share options		1,435			3,757
Share based compensation		1,736			1,295

Balances at end of period		1,528,020			916,903

Unearned common share grant compensation:
Balances at beginning of year		(2,467	)		–
Transfer of unearned common share grant compensation		2,467			–

Balances at end of period		–			–

Accumulated other comprehensive income (loss):
Balances at beginning of year		(40,718	)		12,252
Net change in unrealized gains and losses on available-for-sale securities, net of deferred tax		(35,315	)		(34,629	)
Net change in cumulative translation adjustments, net of deferred tax		4			9

Balances at end of period		(76,029	)		(22,368	)

Retained earnings:
Balances at beginning of year		55,471			208,470
Net income		77,036			73,088
Preferred share dividends		(2,576	)		–
Common share dividends		(4,733	)		(3,449	)

Balances at end of period		125,198			278,109

Total shareholders’ equity	$	1,577,838		$	1,173,076

See accompanying notes to condensed consolidated financial statements.

~~- 3 -~~-3-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)
For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

($ in thousands)

2005 2004
Operating Activities:
Net income (loss) $ (34,951 ) $ 34,861
Adjustments to reconcile net income (loss) to cash used in operations:
Depreciation and amortization 13,361 15,676
Net realized losses on investments 1,062 (1,435 )
Net foreign currency exchange losses 1,870 (326 )
Share-based compensation 3,301 1,736
Trading securities activities (14,195 ) 13,026
Changes in assets and liabilities:
Increase in accrued investment income (7,350 ) (9,121 )
(Increase) decrease in reinsurance premiums receivable 22,626 (151,022 )
Increase in funds held by ceding companies (52,276 ) (20,720 )
Increase in deferred acquisition costs (3,120 ) (62,693 )
Increase in net unpaid losses and loss adjustment expenses 638,669 488,814
Increase in net unearned premiums 48,600 234,382
Increase (decrease) in reinsurance deposit liabilities (14,257 ) 17,511
Increase (decrease) in ceded premiums payable 23,894 (2,354 )
Increase (decrease) in commissions payable (5,889 ) 44,592
Increase (decrease) in funds withheld (11,999 ) 22,487
Changes in other assets and liabilities (47,927 ) (2,051 )
Other net (2,399 ) (193 )

Net cash provided by operating activities 559,020 623,170

Investing Activities:
Proceeds from sale of available-for-sale fixed maturities 478,134 307,551
Proceeds from maturity or paydown of available-for-sale fixed maturities 97,070 117,117
Acquisition of available-for-sale fixed maturities (1,363,918 ) (916,443 )

Net cash used in investing activities (788,714 ) (491,775 )

Financing Activities:
Dividends paid to shareholders (10,401 ) (10,360 )
Proceeds from exercise of share options 13,070 5,836
Proceeds from issuance of debt 246,900 —
Proceeds from issuance of common shares 161,865 —
Purchase of common shares — (9,985 )

Net cash provided by (used in) financing activities 411,434 (14,509 )

Net increase in cash and cash equivalents 181,740 116,886
Cash and cash equivalents at beginning of period 209,897 105,461

Cash and cash equivalents at end of period $ 391,637 $ 222,347

Supplemental disclosures of cash flow information:
Income taxes paid $ 32,507 $ 2,533
Interest paid $ 7,219 $ 7,219


	2006			2005
Operating Activities:
Net income	$	77,036		$	73,088
Adjustments to reconcile net income to cash used in operations:
Depreciation and amortization		3,803			4,931
Net realized gains on investments		(65	)		(372	)
Net foreign currency exchange (gains) losses		(275	)		1,798
Share based compensation		1,736			1,295
Deferred income tax expense		87			(593	)
Trading securities activities		717			4,527
Changes in assets and liabilities:
Increase in accrued investment income		(351	)		(3,464	)
(Increase) decrease in reinsurance premiums receivable		50,020			(58,235	)
(Increase) decrease in funds held by ceding companies		25,088			(24,743	)
(Increase) decrease in deferred acquisition costs		25,101			(13,517	)
Increase in net unpaid losses and loss adjustment expenses		53,256			119,840
Increase (decrease) in net unearned premiums		(50,546	)		82,486
Decrease in reinsurance deposit liabilities		(7	)		(14,484	)
Increase in ceded premiums payable		15,562			16,361
Decrease in commissions payable		(43,828	)		(9,701	)
Increase in funds withheld		—			1,082
Decrease in income tax recoverable		13,922			10,538
Net changes in other assets and liabilities		15,712			(11,680	)
Other net		(12	)		491

Net cash provided by operating activities		186,956			179,648

Investing Activities:
Proceeds from sale of available-for-sale fixed maturity securities		179,119			72,716
Proceeds from maturity or paydown of available-for-sale fixed maturity securities		32,535			21,155
Acquisition of available-for-sale fixed maturity securities		(572,201	)		(183,709	)
Increase in short-term investments		(71,816	)		—

Net cash used in investing activities		(432,363	)		(89,838	)

Financing Activities:
Dividends paid to preferred shareholders		(2,012	)		—
Dividends paid to common shareholders		(4,733	)		(3,449	)
Proceeds from exercise of share options		1,436			3,759

Net cash provided by (used in) financing activities		(5,309	)		310

Net increase (decrease) in cash and cash equivalents		(250,716	)		90,120
Cash and cash equivalents at beginning of year		820,746			209,897


Cash and cash equivalents at end of period	$	570,030		$	300,017

Supplemental disclosures of cash flow information:
Income taxes paid (recovered)	$	(8,699	)	$	10,200
Interest paid	$	—		$	1,840

See accompanying notes to condensed consolidated financial statements.

~~- 4 -~~-4-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited),
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

(1)Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Platinum Underwriters Holdings, Ltd. (“Platinum Holdings”) and its subsidiaries (collectively, the “Company”), including Platinum Underwriters Bermuda, Ltd. (“Platinum Bermuda”), Platinum Underwriters Reinsurance, Inc. (“Platinum US”), Platinum Re (UK) Limited, ~~(“Platinum UK”),~~ Platinum Underwriters Finance, Inc. (“Platinum Finance”), Platinum Regency Holdings, and Platinum Administrative Services, Inc. All material inter-company transactions have been eliminated in preparing these condensed consolidated financial statements. The condensed consolidated financial statements included in this report as of and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ are unaudited and include adjustments consisting of normal recurring items that management considers necessary for a fair presentation under U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s ~~amended~~ Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2004.~~2005.

The preparation of financial statements requires ~~management~~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 could materially differ from these estimates. The results of operations for any interim period are not necessarily indicative of results for the full year.

In November 2002, Platinum Holdings completed an initial public offering of 33,044,000 common shares (the “Initial Public Offering”). Concurrently 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 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 additional common shares, respectively, at any time during the ten years following the Initial Public Offering at a price of $27.00 per share. Both St. Paul and RenaissanceRe have amended their options to provide that in lieu of paying $27.00 per share, any option exercise will be settled on a net share basis, which will result in Platinum Holdings issuing a number of common shares equal to the excess of the market price per share, determined in accordance with the amendments, 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. Also, concurrently 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. In addition to these transactions the Company issued Equity Security Units (“ESU’s”), consisting of a contract to purchase common shares of the Company in 2005 and an ownership interest in a senior note bearing interest at 5.25%, due 2007 issued by Platinum Finance, a U.S. based intermediate holding company subsidiary of Platinum Holdings, and guaranteed by Platinum Holdings (the “Senior Guaranteed Notes”).

~~- 5 -~~

~~Platinum Underwriters Holdings, Ltd. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements (Unaudited), continued~~
~~For the Three and Nine Months Ended September 30, 2005 and 2004~~

Share-Based Compensation

~~The Company~~We adopted Statement of Financial Accounting Standards No. 123R “Share-Based Payment” (“SFAS 123R”) using the modified prospective method effective January 1, 2006. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. SFAS 123R requires that, prospectively, compensation costs be recognized for the fair value of all share options over their vesting period, including the cost related to the unvested portion of all outstanding share options as of December 31, 2005.

Prior to January 1, 2006, we accounted for share based compensation using 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”) ~~effective January 1, 2003. SFAS 123 requires that~~. In accordance with the ~~fair value of share options granted under the Company’s share option plan subsequent to the adoption~~transition rules of SFAS 148, be amortized into 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 provides transition guidance for a voluntary adoption of SFAS 123 and amends the disclosure requirements of SFAS 123. Prior to the adoption of SFAS 123, the Companywe elected to ~~use~~continue using the intrinsic value method of accounting for ~~its~~our share-based awards granted to employees established by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) ~~and continues to use the intrinsic method~~ for share options granted in 2002. Under APB 25, if the exercise price of ~~the Company’s~~our 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.

Restricted shares awarded are amortized into earnings over the vesting period based on the fair value of the shares at the time of the grant. There are limits on the transferability of the restricted shares and such restricted shares may be forfeited in the event of certain types of termination of the recipient’s employment. The unearned or unvested portion of the restricted shares issued is presented as a separate component of shareholders’ equity.

In December 2004, the Financial Accounting Standards Board issued 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 for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R requires that, prospectively, compensation costs be recognized for the fair value of all share options over the remaining vesting period, 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 below approximates the expense under SFAS 123R.

The following table illustrates the effect on ~~the Company’s~~our net income ~~(loss)~~ and earnings ~~(loss)~~ per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2005 ~~and 2004~~ of applying the “fair value” method to all share option grants ($ in thousands, except per share data):

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Share-based compensation expense:
As reported $ 908 649 2,710 $ 1,736
Pro forma 2,140 1,855 6,256 5,200

~~- 6 -~~-5-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Net income (loss):
As reported $ (176,024 ) (69,752 ) (34,951 ) $ 34,861
Pro forma (177,256 ) (70,958 ) (38,497 ) 31,397
Basic earnings (loss) per share:
As reported (4.02 ) (1.62 ) (0.80 ) 0.81
Pro forma (4.05 ) (1.66 ) (0.89 ) 0.72
Diluted earnings (loss) per share:
As reported (4.02 ) (1.62 ) (0.80 ) 0.78
Pro forma $ (4.05 ) (1.66 ) (0.89 ) $ 0.71

On April 14, 2005, the Securities and Exchange Commission (“SEC”) adopted a new rule that allows SEC registrants to implement SFAS 123R as of January 1, 2006. The SEC’s new rule does not change the accounting required by SFAS 123R; it delays the date for compliance with the standard. Previously under SFAS 123R, the Company would have been required to implement the standard as of July 1, 2005. The Company plans to adopt the provisions of the SFAS 123R in the first quarter of 2006.


	As
	Reported		Pro Forma
Share-based compensation expense	$	1,295		$	2,521
Net income		73,088			71,862
Basic earnings per share		1.69			1.66
Diluted earnings per share	$	1.49		$	1.46

Reclassifications

Certain reclassifications have been made to the ~~2004~~2005 financial statements in order to conform to the ~~2005~~2006 presentation.

(2)Investments

Investments classified as available-for-sale are carried at fair value as of the balance sheet date. Net change in unrealized investment gains and losses on available-for-sale securities, net of deferred taxes for the ~~nine~~three months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ were as follows ($ in thousands):


	2005			2004			2006			2005
Fixed maturities	$	(44,218	)	$	(3,261	)	$	(39,353	)	$	(41,158	)
Less — deferred taxes		6,226			1,225			4,038			6,529

Net change in unrealized investment gains and losses	$	(37,992	)	$	(2,036	)	$	(35,315	)	$	(34,629	)

The unrealized losses on ~~fixed maturities~~securities classified as 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, 2005~~March 31, 2006 were as follows ($ in thousands):


			Unrealized					Unrealized
	Fair Value		Loss			Fair Value		Loss
Less than twelve months:

U.S. Government and U.S. Government agencies	$	129,041	$	(1,156	)	$	180,461	$	3,286
Corporate bonds		1,071,601		(15,578	)		951,215		28,514
Mortgage and asset backed securities		802,091		(9,609	)
Municipal bonds		139,090		(1,177	)
Foreign governments and states		28,044		(401	)
Redeemable preferred stocks		8,375		(360	)

Total		2,178,242		(28,281	)


Twelve months or more:
U.S. Government and U.S. Government agencies		3,429		(7	)
Corporate bonds		154,002		(4,600	)
Mortgage and asset backed securities		67,914		(2,354	)
Mortgage-backed and asset-backed securities							1,032,480		29,807
Municipal bonds		38,218		(878	)		122,219		2,658
Foreign governments and states		11,151		(407	)		13,189		496

Total		274,714		(8,246	)	$	2,299,564	$	64,761


Total of securities with unrealized losses:
U.S. Government and U.S. Government agencies		132,470		(1,163	)
Corporate bonds		1,225,603		(20,178	)
Mortgage and asset backed securities		870,005		(11,963	)
Municipal bonds		177,308		(2,055	)
Foreign governments and states		39,195		(808	)
Redeemable preferred stocks		8,375		(360	)

Total	$	2,452,956	$	(36,527	)

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three Months Ended March 31, 2006 and 2005


			Unrealized
	Fair Value		Loss
Twelve months or more:
Corporate bonds	$	448,833	$	14,404
Mortgage-backed and asset-backed securities		100,364		5,025
Municipal bonds		76,596		1,781
Foreign governments and states		27,158		863
Preferred stocks		8,169		566

Total	$	661,120	$	22,639


Total of securities with unrealized losses:

U.S. Government and U.S. Government agencies	$	180,461	$	3,286
Corporate bonds		1,400,048		42,918
Mortgage-backed and asset-backed securities		1,132,844		34,832
Municipal bonds		198,815		4,439
Foreign governments and states		40,347		1,359
Preferred stocks		8,169		566

Total	$	2,960,684	$	87,400

~~The Company~~We routinely ~~reviews its~~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. These factors include but are not limited toto: the overall financial condition of the issuer, the length and magnitude of an unrealized loss, specific credit events, ~~overall financial condition of the issuer,~~ and ~~the Company’s~~our ability and intent to hold a security for a sufficient period of time for the value to recover the unrealized loss. ~~The Company’s ability to hold a security~~This is based on current and anticipated future positive cash ~~flow~~flows from operations that ~~generates~~generate sufficient liquidity in order to meet ~~its~~our obligations. If ~~the Company has determined~~we determine that an unrealized loss on a security is other than temporary, ~~the Company writes~~we write down the carrying value of the security and ~~records~~record a realized loss in the statement of ~~income.~~operations.

Corporate, mortgage-backed and asset-backed securities represent our largest categories within our available-for-sale portfolio and consequently account for the greatest amount of our overall unrealized loss as of March 31, 2006. Investment holdings within our corporate sector are diversified across approximately 30 sub-sectors, ranging from aerospace to telecommunications, and within each sub-sector across many individual issuers and issues. As of ~~September 30, 2005 management believes that~~March 31, 2006 there were 578 corporate issues in an unrealized loss position, with the ~~Company’s~~single largest unrealized loss being $726,000. Investment holdings within the mortgage-backed and asset-backed sector are diversified across a number of sub-categories. As of March 31, 2006 there were a total of 997 issues in an unrealized loss position in our investment portfolio, ~~does~~with the single largest unrealized loss being $802,000.

Overall our unrealized loss position as of March 31, 2006 was a result of interest rate increases that impacted all investment categories. Given our ability and intent to hold these investments until a recovery of fair value, which may be maturity, we do not ~~contain~~consider any ~~securities that have other-than-temporary impairments.~~of our available-for-sale investments to be other-than-temporarily impaired as of March 31, 2006.

~~- 8 -~~-7-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

Other invested asset represents an investment in Inter-Ocean Holdings, Ltd., a non-public reinsurance company. In June 2005 as a result of the routine evaluation of investments, the Company wrote down the carrying value of the investment in Inter-Ocean Holdings Ltd. to its estimated net realizable value and recorded a realized loss of $769,000. The Company has no ceded or assumed reinsurance business with Inter-Ocean Holdings, Ltd.

(3)~~Hurricane Losses~~

In 2005, two significant named hurricanes, Katrina and Rita (the “2005 Hurricanes”), caused severe damage in Louisiana, Mississippi, Texas and several other states in the Gulf Coast region of the United States. Hurricane Katrina, based on current industry estimates, is the costliest natural disaster in U.S. history. In 2004, four significant named hurricanes, Charley, Frances, Ivan and Jeanne (the “2004 Hurricanes”), caused severe damage in the Caribbean and the southeastern United States, principally Florida. As a result of losses arising from these catastrophic events, certain reinsurance contracts generated additional premiums and accrued profit commissions for certain reinsurance contracts were reduced.

~~The net adverse impact on underwriting results of the Company for the three months ended September 30, 2005 and 2004 from the above mentioned hurricanes is summarized as follows ($ in thousands):~~

2005 2004
Gross losses and LAE $ 396,923 $ 186,457
Retrocessional reinsurance (56,083 ) —

Net losses and LAE 340,840 186,457
Additional premiums earned (19,554 ) (19,895 )
Profit commissions — (10,350 )

Net adverse impact on underwriting results $ 321,286 $ 156,212

Development of the 2004 Hurricanes subsequent to September 30, 2004 increased the adverse impact on underwriting results by approximately $34,754,000 in the fourth quarter of 2004 and $6,081,000 in the first six months of 2005.

~~(4)~~Earnings Per Share

Following ~~is a calculation~~are calculations of the basic and diluted earnings ~~(loss)~~ per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ ($ in thousands, except per share data):

Weighted
Net Average Earnings
Income Shares (Loss)
(loss) Outstanding Per Share
Three Months Ended September 30, 2005:
Basic loss per share:
Loss available to common shareholders $ (176,024 ) 43,785 $ (4.02 )

~~- 9 -~~

Weighted
Net Average Earnings
Income Shares (Loss)
(loss) Outstanding Per Share
Three Months Ended September 30, 2004:
Basic loss per share:
Loss available to common shareholders $ (69,752 ) 43,127 $ (1.62 )

Nine Months Ended September 30, 2005:
Basic loss per share:
Loss available to common shareholders (34,951 ) 43,459 (0.80 )

Nine Months Ended September 30, 2004:
Basic earnings per share
Income available to common shareholders 34,861 43,186 0.81
Diluted earnings per share:
Share options and restricted share units — 2,227
Interest expense related to ESU’s 4,577 —
Common share conversion of ESU’s — 5,009

Diluted earnings per share: $ 39,438 50,422 $ 0.78


			Weighted
			Average
	Net		Shares		Earnings
	Income		Outstanding		Per Share
Three months ended March 31, 2006:

Basic earnings per share:
Net income available to common shareholders	$	74,460		59,097	$	1.26
Effect of dilutive securities:
Common share options, restricted common shares and common share units		–		1,810
Conversion of preferred shares		–		5,690
Preferred share dividends		2,576		–

Adjusted net income for diluted earnings per share	$	77,036		66,597	$	1.16


Three months ended March 31, 2005:

Basic earnings per share
Net income available to common shareholders	$	73,088		43,163	$	1.69
Effect of dilutive securities:
Common share options and restricted common share units		–		1,860
Conversion of Equity Security Units		–		5,009
Interest expense related to Equity Share Units, net of income tax benefit		1,423		–

Adjusted net income for diluted earnings per share	$	74,511		50,032	$	1.49

~~(5)~~(4)Operating Segment Information

~~The Company conducts its~~We conduct our worldwide reinsurance business through 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~~catastrophe excess-of-loss treaties, per-risk excess-of-loss treaties ~~property~~and proportional ~~treaties and catastrophe excess-of-loss reinsurance~~ 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 and surety.~~credit. This operating 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. The classes of risks underwritten through finite risk contracts are generally consistent with the classes covered by

-8-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three Months Ended March 31, 2006 and 2005

traditional products. Typically, the amount of losses we might pay is finite or capped. In return for this limit on losses, 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 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 finite quota share, multi-year excess-of-loss and whole account aggregate stop loss.

In managing ~~the Company’s~~our operating segments, ~~management uses~~we use measures such as underwriting income and underwriting ratios to evaluate segment performance. ~~Management does~~We do not allocate by segment ~~its~~our assets or certain income and expenses such as investment income, interest expense and certain corporate expenses. ~~Segment~~Total underwriting income is reconciled to income before income tax expense. The measures ~~used by management~~we use in evaluating ~~the Company’s~~our 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 operating segments together with a reconciliation of total underwriting income to income before income tax expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ ($ in thousands):


	Property
	and Marine			Casualty			Finite Risk			Total
Three months ended March 31, 2006:

Net premiums written	$	165,264			182,350			(54,336	)	$	293,278

Net premiums earned		131,544			173,668			39,089			344,301
Losses and LAE		59,828			116,565			30,381			206,774
Acquisition expenses		19,649			41,354			8,236			69,239
Other underwriting expenses		10,028			6,335			925			17,288

Segment underwriting income (loss)	$	42,039			9,414			(453	)		51,000

Net investment income and net realized gains on investments											43,580
Net foreign currency exchange gains											275
Other expense											(1,317	)
Corporate expenses not allocated to segments											(5,700	)
Interest expense											(5,450	)

Income before income tax expense										$	82,388

Ratios:
Losses and LAE		45.5	%		67.1	%		77.7	%		60.1	%
Acquisition expense		14.9	%		23.8	%		21.1	%		20.1	%
Other underwriting expense		7.6	%		3.6	%		2.4	%		5.0	%

Combined		68.0	%		94.5	%		101.2	%		85.2	%

~~- 10 -~~-9-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

Property
and Marine Casualty Finite Risk Total
Three months ended September 30, 2005:

Net premiums written $ 133,350 216,659 60,177 $ 410,186

Net premiums earned 145,853 205,050 78,485 429,388
Losses and LAE 373,761 129,218 61,639 564,618
Acquisition expenses 17,753 50,097 31,008 98,858
Other underwriting expenses 3,632 1,894 524 6,050

Segment underwriting income (loss) $ (249,293 ) 23,841 (14,686 ) (240,138 )

Net investment income and net realized losses on investments 35,562
Net foreign currency exchange gains 88
Other expense (433 )
Corporate expenses not allocated to segments (2,030 )
Interest expense (6,839 )

Loss before income tax benefit $ (213,790 )

Ratios:
Losses and LAE 256.3 % 63.0 % 78.5 % 131.5 %
Acquisition expense 12.2 % 24.4 % 39.5 % 23.0 %
Other underwriting expense 2.5 % 0.9 % 0.7 % 1.4 %

Combined 271.0 % 88.3 % 118.7 % 155.9 %

Three months ended September 30, 2004:
Net premiums written $ 120,629 171,967 147,899 $ 440,495

Net premiums earned 135,430 156,512 91,148 383,090
Losses and LAE 195,495 105,559 83,670 384,724
Acquisition expenses 20,834 38,935 21,502 81,271
Other underwriting expenses 5,956 5,617 661 12,234

Segment underwriting income (loss) $ (86,855 ) 6,401 (14,685 ) (95,139 )

Net investment income and net realized gains on investments 23,691
Net foreign currency exchange gains 628
Other income 1,021
Corporate expenses not allocated to segments (3,166 )
Interest expense (2,322 )

Loss before income tax benefit $ (75,287 )

Ratios:
Losses and LAE 144.4 % 67.4 % 91.8 % 100.4 %
Acquisition expense 15.4 % 24.9 % 23.6 % 21.2 %
Other underwriting expense 4.4 % 3.6 % 0.7 % 3.2 %

Combined 164.2 % 95.9 % 116.1 % 124.8 %

~~- 11 -~~

Property
and Marine Casualty Finite Risk Total
Nine months ended September 30, 2005:

Net premiums written $ 453,352 621,218 252,374 $ 1,326,944

Net premiums earned 414,719 588,541 268,638 1,271,898
Losses and LAE 492,300 375,187 175,681 1,043,168
Acquisition expenses 69,437 143,262 83,336 296,035
Other underwriting expenses 19,595 18,179 3,428 41,202

Segment underwriting income (loss) $ (166,613 ) 51,913 6,193 (108,507 )

Net investment income and net realized losses on investments 91,188
Net foreign currency exchange losses (1,870 )
Other expense (201 )
Corporate expenses not allocated to segments (10,366 )
Interest expense (13,186 )

Loss before income tax benefit $ (42,942 )

Ratios:
Losses and LAE 118.7 % 63.7 % 65.4 % 82.0 %
Acquisition expense 16.7 % 24.3 % 31.0 % 23.3 %
Other underwriting expense 4.7 % 3.1 % 1.3 % 3.2 %

Combined 140.1 % 91.1 % 97.7 % 108.5 %

Nine months ended September 30, 2004:
Net premiums written $ 393,764 508,693 348,671 $ 1,251,128

Net premiums earned 353,423 424,964 236,612 1,014,999
Losses and LAE 285,047 293,734 157,378 736,159
Acquisition expenses 57,491 105,765 69,630 232,886
Other underwriting expenses 21,280 15,979 5,825 43,084

Segment underwriting income (loss) $ (10,395 ) 9,486 3,779 2,870

Net investment income and net realized gains on investments 59,725
Net foreign currency exchange gains 326
Other income 2,137
Corporate expenses not allocated to segments (10,352 )
Interest expense (6,952 )

Income before income tax expense $ 47,754

Ratios:
Losses and LAE 80.7 % 69.1 % 66.5 % 72.5 %
Acquisition expense 16.3 % 24.9 % 29.4 % 22.9 %
Other underwriting expense 6.0 % 3.8 % 2.5 % 4.2 %

Combined 103.0 % 97.8 % 98.4 % 99.6 %

~~- 12 -~~


	Property
	and Marine			Casualty			Finite Risk			Total
Three months ended March 31, 2005:
Net premiums written	$	185,049			215,669			93,081		$	493,799

Net premiums earned		128,197			184,768			98,075			411,040
Losses and LAE		60,040			118,438			59,220			237,698
Acquisition expenses		21,989			45,202			26,058			93,249
Other underwriting expenses		7,723			7,313			1,571			16,607

Segment underwriting income	$	38,445			13,815			11,226			63,486

Net investment income and net realized gains on investments											27,277
Net foreign currency exchange losses											(1,798	)
Other expense											(356	)
Corporate expenses not allocated to segments											(3,401	)
Interest expense											(2,173	)

Income before income tax expense										$	83,035

Ratios:
Losses and LAE		46.8	%		64.1	%		60.4	%		57.8	%
Acquisition expense		17.2	%		24.5	%		26.6	%		22.7	%
Other underwriting expense		6.0	%		4.0	%		1.6	%		4.0	%

Combined		70.0	%		92.6	%		88.6	%		84.5	%

~~(6)~~(5)Income Taxes

~~The Company provides~~We provide for income taxes based upon amounts reported in the consolidated financial statements and the provisions of currently enacted tax laws. Platinum Holdings and Platinum Bermuda are incorporated in Bermuda. Under current Bermuda law, they are not taxed on any Bermuda income or capital gains and they have received an assurance 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~~We also ~~has~~have subsidiaries in the United States, United Kingdom and Ireland that are subject to the tax laws thereof.

A reconciliation of expected income tax expense, ~~(benefit),~~ computed by applying a 35% income tax rate to income ~~(loss)~~ before income taxes, to actual income tax expense ~~(benefit)~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ is as follows ($ in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Expected income tax expense (benefit) at 35% $ (74,827 ) (26,350 ) (15,030 ) $ 16,714
Effect of foreign income subject to tax at rates other than 35% 38,528 21,299 270 (3,042 )
Tax exempt investment (income) loss (1,047 ) 360 (2,011 ) (601 )
U.S. withholding tax on deemed taxable transfer to foreign affiliate (1,000 ) — 8,150 —
Other, net 580 (844 ) 630 (178 )

Income tax expense (benefit) $ (37,766 ) (5,535 ) (7,991 ) $ 12,893

The Company incurred approximately $8,150,000 of income taxes associated with the transfer from Platinum Finance to Platinum Holdings of $183,350,000 of the proceeds from the issuance of the Series A Notes in May 2005. This transaction is deemed to be a taxable distribution under U.S. tax law and subject to U.S. withholding tax. During the three months ended September 30, 2005, the estimated amount deemed to be a taxable distribution under U.S. tax law and subject to withholding tax was revised as a result of the net loss for the nine months ended September 30, 2005. Consequently, the estimate of withholding tax was reduced by $1,000,000.

~~(7)~~~~Debt and Equity Transactions~~

~~Debt Offering~~

In May 2005, Platinum Finance issued $250,000,000 aggregate principal amount of Series A 7.5% Notes due June 1, 2017 (the “Series A Notes”), unconditionally guaranteed by Platinum Holdings. The Series A Notes were issued in a transaction exempt from the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”). The proceeds of the Series A Notes were used primarily to increase the capital of Platinum Bermuda and Platinum US. Interest at a per annum rate of 7.5% is payable on the Series A Notes on each June 1 and December 1 commencing on December 1,


	2006			2005
Expected income tax expense at 35%	$	28,836		$	29,062
Effect of foreign income subject to tax at rates other than 35%		(23,226	)		(18,623	)
Tax exempt investment income		(553	)		(526	)
Other, net		295			34

Income tax expense	$	5,352		$	9,947

~~- 13 -~~-10-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

~~2005.~~(6)Condensed Consolidating Financial Information

Platinum Finance ~~may redeem the~~is a U.S. based intermediate holding company and a wholly owned subsidiary of Platinum Regency. The outstanding Series AB 7.5% Notes, at its option, at any time in whole, or from time to time in part, prior to maturity. The redemption price will be equal to the greater of: (i) 100 percent of the principal amount of the Series A Notes and (ii) the sum of the present values of the remaining scheduled payments of principal and interest, discounted to the redemption date on a semiannual basis at a comparable U.S. Treasury rate plus 50 basis points, plus in each case, interest accrued but not paid to the date of redemption.

~~On September 27, 2005, Platinum Holdings and~~due June 1, 2017 issued by Platinum Finance ~~launched an exchange offer through which they offered to exchange up to $250,000,000 aggregate principal amount of the~~are fully and unconditionally guaranteed by Platinum Holdings. The outstanding Series ~~A Notes for up to $250,000,000 aggregate principal amount of Series~~ B Notes which have substantially the same terms as the Series A Notes and which have been registered under the Securities Act (the “Series B Notes”), pursuant to a separate prospectus. The exchange offer period ended on October 28, 2005, 100% of the Series A Notes were tendered for Series B Notes. The exchange is scheduled to close on November 2, 2005.

~~ESU remarketing~~

In November 2002, the Company issued ESU’s, consisting of a contract to purchase common shares of the Company in 2005 and an ownership interest in Senior Guaranteed Notes. On August 16, 2005, Platinum Finance successfully completed the remarketing of $137,500,000 aggregate principal amount of the6.371% Remarketed Senior Guaranteed Notes, due November 16, 2007, at a price of 100.7738% with a reset interest rate of 6.371% (the “Remarketed Senior Guaranteed Notes”). Interest is payable on the Remarketed Senior Guaranteed Notes on May 16 and November 16 of each year, commencing November 16, 2005. The Remarketed Senior Guaranteed Notes are unconditionally guaranteed by Platinum Holdings. The remarketing was conducted on behalf of holders of the ESU’s and neither Platinum Holdings nor Platinum Finance received any cash proceeds from the remarketing. Proceeds from the remarketing were used to purchase a portfolio of U.S. Treasury securities to secure the obligations of the holders of the ESU’s under the related common share purchase contract and to pay the remarketing fee. There were no excess proceeds to be distributed to holders of the ESU’s in connection with the remarketing.

~~Common Share Offering~~

On September 22, 2005, Platinum Holdings completed an offering of 5,839,286 common shares at a price to the public of $28.00 per share, less related expenses. All shares were offered by Platinum Holdings and were sold pursuant to its effective shelf registration statement. The proceeds were $161,865,000, net of expenses, and are expected to be used to make contributions to the capital and surplus of the reinsurance subsidiaries and for general corporate purposes.

~~(8)~~~~Regulatory Examination~~

In connection with its examination of the statutory financial statements of Platinum US as of December 31, 2003, the Maryland Insurance Administration (the “Administration”) reached a different conclusion from that of the Company regarding the accounting for one health reinsurance contract written by Platinum US, which was effective from January 1 to December 31, 2003. Platinum US accounted for this contract as reinsurance under statutory accounting principles and U.S. GAAP. While the examination report has not been issued, the Administration has advised Platinum US that due to the immaterial effect, no changes or adjustments would be required with respect to its previously filed statutory financial

~~- 14 -~~

~~statements nor would the financial statements in the examination report be adjusted for the accounting for this contract.~~

~~(9)~~~~Condensed Consolidating Financial Information~~

~~In November 2002, the Company issued ESU’s consisting of a contract to purchase common shares of the Company in 2005 and an ownership interest in Senior Guaranteed Notes due 2007~~ issued by Platinum Finance a U.S. based intermediate holding company and indirect wholly owned subsidiary of Platinum Holdings. The Senior Guaranteed 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. In May 2005, Platinum Finance issued $250,000,000 aggregate principal amount of Series A Notes. The Series A Notes are also fully and unconditionally guaranteed by Platinum Holdings.

The payment of dividends from ~~the Company’s~~our 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 ~~Platinum US to~~the reinsurance subsidiary of Platinum Finance in ~~2005~~2006 without prior regulatory approval is ~~$40,312,000. As of September 30, 2005, the~~approximately $44,000,000. The maximum amount available for payment of dividends or other distributions by the reinsurance subsidiaries of Platinum Holdings in 2006, including the reinsurance subsidiary of Platinum ~~US,~~Finance, without prior regulatory approval is estimated to be ~~$114,637,000.~~approximately $197,000,000.

The tables below present condensed consolidating financial information of Platinum Holdings, Platinum Finance and the non-guarantor subsidiaries of Platinum Holdings as of ~~September 30, 2005~~March 31, 2006 and December 31, ~~2004~~2005 and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ ($ in thousands):

~~- 15 -~~-11-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~


							Non-															Non-
Condensed Consolidating Balance Sheet	Platinum			Platinum			guarantor			Consolidating						Platinum			Platinum			guarantor			Consolidating
September 30, 2005	Holdings			Finance			Subsidiaries			Adjustments			Consolidated
March 31, 2006																Holdings			Finance			Subsidiaries			Adjustments			Consolidated
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value	$	—			12,652			2,874,317			—		$	2,886,969
Fixed maturity trading securities at fair value		—			—			96,248			—			96,248
Other invested asset		—			—			6,000			—			6,000

Total investments		—			12,652			2,976,565			—			2,989,217		$	–			13,074			3,302,025			–		$	3,315,099
Investment in subsidiaries		1,051,375			428,112			330,235			(1,809,722	)		—			1,455,307			453,398			439,328			(2,348,033	)		–
Cash and cash equivalents		176,593			23,184			191,860			—			391,637			121,333			9,881			438,816			–			570,030
Reinsurance assets		—			—			2,706,714			(1,680,789	)		1,025,925			–			–			2,900,793			(1,918,736	)		982,057
Income tax recoverable																	–			1,920			8,680			–			10,600
Other assets		2,015			7,581			169,710			(100,000	)		79,306			4,497			4,049			169,885			(100,000	)		78,431

Total assets	$	1,229,983			471,529			6,375,084			(3,590,511	)	$	4,486,085		$	1,581,137			482,322			7,259,527			(4,366,769	)	$	4,956,217


LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Reinsurance liabilities	$	—			—			4,527,024			(1,680,229	)	$	2,846,795		$	–			–			4,947,661			(1,914,339	)	$	3,033,322
Debt obligations		—			387,500			—			—			387,500			–			292,840			–			–			292,840
Other liabilities		2,330			7,521			14,842			(720	)		23,973			3,299			7,394			45,921			(4,397	)		52,217

Total liabilities		2,330			395,021			4,541,866			(1,680,949	)		3,258,268			3,299			300,234			4,993,582			(1,918,736	)		3,378,379

Shareholders’ Equity:
Preferred shares		—			—			—			—			—			57			–			–			–			57
Common shares		496			—			1,250			(1,250	)		496			592			–			6,250			(6,250	)		592
Additional paid-in capital		1,092,027			51,533			1,442,134			(1,493,665	)		1,092,029			1,528,020			192,036			2,150,834			(2,342,870	)		1,528,020
Unearned share based comp		(2,108	)		—			—			—			(2,108	)
Accumulated other comprehensive income		(25,718	)		(6,728	)		(32,759	)		39,487			(25,718	)
Accumulated other comprehensive loss																	(76,029	)		(16,181	)		(95,956	)		112,137			(76,029	)
Retained earnings		162,956			31,703			422,593			(454,134	)		163,118			125,198			6,233			204,817			(211,050	)		125,198

Total shareholders’ equity		1,227,653			76,508			1,833,218			(1,909,562	)		1,227,817			1,577,838			182,088			2,265,945			(2,448,033	)		1,577,838

Total liabilities and shareholders’ equity	$	1,229,983			471,529			6,375,084			(3,590,511	)	$	4,486,085		$	1,581,137			482,322			7,259,527			(4,366,769	)	$	4,956,217

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~


																		Non-
Condensed Consolidating Balance Sheet	Platinum		Platinum		Non-guarantor		Consolidating					Platinum			Platinum			guarantor			Consolidating
December 31, 2004	Holdings		Finance		Subsidiaries		Adjustments			Consolidated
December 31, 2005												Holdings			Finance			Subsidiaries			Adjustments			Consolidated
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	$	–			12,448			2,997,234			–		$	3,009,682
Investment in subsidiaries		1,135,434		414,105		470,776		(2,020,315	)		—		1,410,794			448,839			436,368			(2,296,001	)		–
Cash and cash equivalents		1,945		8,204		199,748		—			209,897		129,962			5,010			685,774			–			820,746
Reinsurance assets		—		—		2,009,245		(1,090,219	)		919,026		–			–			2,969,880			(1,903,893	)		1,065,987
Income tax recoverable													–			5,874			18,648			–			24,522
Other assets		1,648		1,502		142,951		(100,000	)		46,101		2,963			4,086			326,389			(100,000	)		233,438

Total assets	$	1,139,027		427,551		5,065,951		(3,210,534	)	$	3,421,995	$	1,543,719			476,257			7,434,293			(4,299,894	)	$	5,154,375


LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Reinsurance liabilities	$	—		—		3,233,233		(1,133,358	)	$	2,099,875	$	–			–			4,868,470			(1,827,216	)	$	3,041,254
Debt obligations		—		137,500		—		—			137,500		–			292,840			–			–			292,840
Other liabilities		6,024		928		1,525		43,140			51,617		3,470			2,243			350,996			(76,677	)		280,032

Total liabilities		6,024		138,428		3,234,758		(1,090,218	)		2,288,992		3,470			295,083			5,219,466			(1,903,893	)		3,614,126

Shareholders’ Equity:
Preferred shares		—		—		—		—			—		57			–			–			–			57
Common shares		430		—		1,250		(1,250	)		430		590			–			6,250			(6,250	)		590
Unearned share grant compensation													(2,467	)		–			–			–			(2,467	)
Additional paid-in capital		911,851		147,238		1,417,032		(1,564,270	)		911,851		1,527,316			192,036			2,150,834			(2,342,870	)		1,527,316
Accumulated other comprehensive income		12,252		3,309		17,068		(20,377	)		12,252
Accumulated other comprehensive loss													(40,718	)		(10,199	)		(52,840	)		63,039			(40,718	)
Retained earnings		208,470		138,576		395,843		(534,419	)		208,470		55,471			(663	)		110,583			(109,920	)		55,471

Total shareholders’ equity		1,133,003		289,123		1,831,193		(2,120,316	)		1,133,003		1,540,249			181,174			2,214,827			(2,396,001	)		1,540,249

Total liabilities and shareholders’ equity	$	1,139,027		427,551		5,065,951		(3,210,534	)	$	3,421,995	$	1,543,719			476,257			7,434,293			(4,299,894	)	$	5,154,375

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~


Consolidating Statement of Income							Non-															Non-
For the Nine Months Ended	Platinum			Platinum			guarantor			Consolidating
September 30, 2005	Holdings			Finance			Subsidiaries			Adjustments			Consolidated

For the Three Months Ended																Platinum			Platinum			guarantor			Consolidating
March 31, 2006																Holdings			Finance			Subsidiaries			Adjustments			Consolidated
Revenue:
Net premiums earned	$	—			—			1,271,739			159		$	1,271,898		$	–			–			344,301			–		$	344,301
Net investment income		225			551			91,558			(84	)		92,250			1,434			220			41,861			–			43,515
Net realized gains (losses) on investments		—			8			(1,070	)		—			(1,062	)
Other income (expense)		3,500			—			93,595			(97,296	)		(201	)
Net realized gains on investments																	–			–			65			–			65
Other income (expense), net																	1,100			–			(2,417	)		–			(1,317	)

Total revenue		3,725			559			1,455,822			(97,221	)		1,362,885			2,534			220			383,810			–			386,564

Expenses:
Losses and loss adjustment expenses		—			—			1,043,168			—			1,043,168			–			–			206,774			–			206,774
Acquisition expenses		—			—			299,559			(3,524	)		296,035			–			–			70,682			(1,443	)		69,239
Operating expenses		9,668			439			38,020			3,441			51,568			5,321			258			15,966			1,443			22,988
Net foreign currency exchange losses		2			—			1,868			—			1,870
Net foreign currency exchange gains																	–			–			(275	)		–			(275	)
Interest expense		66			13,120			—			—			13,186			–			5,450			–			–			5,450

Total expenses		9,736			13,559			1,382,615			(83	)		1,405,827			5,321			5,708			293,147			–			304,176

Loss before income tax benefit		(6,011	)		(13,000	)		73,207			(97,138	)		(42,942	)
Income tax benefit		—			(4,550	)		(3,441	)		—			(7,991	)
Income (loss) before income tax expense (benefit)																	(2,787	)		(5,488	)		90,663			–			82,388
Income tax expense (benefit)																	–			(1,920	)		7,272			–			5,352

Net loss before equity in loss of subsidiaries		(6,011	)		(8,450	)		76,648			(97,138	)		(34,951	)
Equity in loss of subsidiaries		(28,940	)		(1,128	)		(32,898	)		62,966			—
Net income (loss) before equity in earnings of subsidiaries																	(2,787	)		(3,568	)		83,391			–			77,036
Equity in income of subsidiaries																	79,823			10,464			10,837			(101,124	)		–

Net loss	$	(34,951	)		(9,578	)		43,750			(34,172	)	$	(34,951	)
Net income																	77,036			6,896			94,228			(101,124	)		77,036
Preferred dividends																	2,576			–			–			–			2,576

Net income available to common shareholders																$	74,460			6,896			94,228			(101,124	)	$	74,460

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~


Consolidating Statement of Income							Non-
For the Nine Months Ended	Platinum			Platinum			guarantor			Consolidating
September 30, 2004	Holdings			Finance			Subsidiaries			Adjustments			Consolidated

Consolidating Statement of Income For the Three Months Ended March 31, 2005																						Non-
																Platinum			Platinum			guarantor			Consolidating
																Holdings			Finance			Subsidiaries			Adjustments			Consolidated
Revenue:
Net premiums earned	$	—			—			1,014,799			200		$	1,014,999		$	—			—			411,040			—		$	411,040
Net investment income		40			122			58,128			—			58,290			25			77			26,803			—			26,905
Net realized gains on investments		—			—			1,435			—			1,435			—			1			371			—			372
Other income (expense)		4,500			—			(2,582	)		219			2,137
Other income (expense), net																	—			—			(356	)		—			( 356	)

Total revenue		4,540			122			1,071,780			419			1,076,861			25			78			437,858			—			437,961

Expenses:
Losses and loss adjustment expenses		—			—			736,159			—			736,159			—			—			237,698			—			237,698
Acquisition expenses		—			—			236,179			(3,293	)		232,886			—			—			94,781			(1,532	)		93,249
Operating expenses		9,921			214			40,008			3,293			53,436			3,241			78			15,157			1,532			20,008
Net foreign currency exchange gains		(1	)		—			(325	)		—			(326	)
Net foreign currency exchange losses																	1			—			1,797			—			1,798
Interest expense		167			6,785			—			—			6,952			31			2,142			—			—			2,173

Total expenses		10,087			6,999			1,012,021			—			1,029,107			3,273			2,220			349,433			—			354,926

Income (loss) before income tax expense		(5,547	)		(6,877	)		59,759			419			47,754
Income (loss) before income tax expense (benefit)																	(3,248	)		(2,142	)		88,425			—			83,035
Income tax expense (benefit)		—			(2,407	)		15,300			—			12,893			—			(750	)		10,697			—			9,947

Net income (loss) before equity in earnings of subsidiaries		(5,547	)		(4,470	)		44,459			419			34,861			(3,248	)		(1,392	)		77,728			—			73,088
Equity in earnings of subsidiaries		40,408			34,176			46,266			(120,850	)		—			76,336			17,953			19,889			(114,178	)		—

Net income	$	34,861			29,706			90,725			(120,431	)	$	34,861		$	73,088			16,561			97,617			(114,178	)	$	73,088

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

Consolidating Statement of Income Non-
For the Three Months Ended Platinum Platinum guarantor Consolidating
September 30, 2005 Holdings Finance Subsidiaries Adjustments Consolidated

Revenue:
Net premiums earned $ — — 429,229 159 $ 429,388
Net investment income 153 295 36,077 (84 ) 36,441
Net realized gains (losses) on investments — 7 (886 ) — (879 )
Other income (expense) 3,500 — (3,933 ) — (433 )

Total revenue 3,653 302 460,487 75 464,517

Expenses:
Losses and loss adjustment expenses — — 564,618 — 564,618
Acquisition expenses — — 99,345 (487 ) 98,858
Operating expenses 1,795 131 5,751 403 8,080
Net foreign currency exchange gains — — (88 ) — (88 )
Interest expense 13 6,826 — — 6,839

Total expenses 1,808 6,957 669,626 (84 ) 678,307

Loss before income tax benefit 1,845 (6,655 ) (209,139 ) 159 (213,790 )
Income tax benefit — (2,329 ) (35,437 ) — (37,766 )

Net income (loss) before equity in loss of subsidiaries 1,845 (4,326 ) (173,702 ) 159 (176,024 )
Equity in loss of subsidiaries (177,869 ) (37,728 ) (74,343 ) 289,940 —

Net loss $ (176,024 ) (42,054 ) (248,045 ) 290,099 $ (176,024 )


Condensed Consolidating Statement of Cash Flows For the Three Months Ended March 31, 2006							Non-
	Platinum			Platinum			guarantor			Consolidating
	Holdings			Finance			Subsidiaries			Adjustments		Consolidated

Net cash provided by (used in) operating activities	$	(3,320	)		5,621			184,655			–	$	186,956


Investing Activities:
Proceeds from sale of available-for-sale fixed maturities		–			–			179,119			–		179,119
Proceeds from maturity or paydown of available-for-sale fixed maturities		–			302			32,233			–		32,535
Acquisition of available-for-sale fixed maturities		–			(498	)		(571,703	)		–		(572,201	)
Increase in short-term investments		–			(554	)		(71,262	)		–		(71,816	)

Net cash used in investing activities		–			( 750	)		(431,613	)		–		(432,363	)


Financing Activities:
Dividends paid to preferred shareholders		(2,012	)		–			–			–		(2,012	)
Dividends paid to common shareholders		(4,733	)		–			–			–		(4,733	)
Proceeds from exercise of share options		1,436			–			–			–		1,436

Net cash used in financing activities		(5,309	)		–			–			–		(5,309	)


Net increase (decrease) in cash and cash equivalents		(8,629	)		4,871			(246,958	)		–		(250,716	)
Cash and cash equivalents at beginning of period		129,962			5,010			685,774			–		820,746

Cash and cash equivalents at end of period	$	121,333			9,881			438,816			–	$	570,030

~~- 20 -~~-16-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

Consolidating Statement of Income Non-
For the Three Months Ended Platinum Platinum guarantor Consolidating
September 30, 2004 Holdings Finance Subsidiaries Adjustments Consolidated

Revenue:
Net premiums earned $ — — 382,892 198 $ 383,090
Net investment income 8 43 21,378 — 21,429
Net realized gains on investments — — 2,262 — 2,262
Other income — — 1,021 — 1,021

Total revenue 8 43 407,553 198 407,802

Expenses:
Losses and loss adjustment expenses — — 384,724 — 384,724
Acquisition expenses — — 82,089 (818 ) 81,271
Operating expenses 2,972 76 11,533 819 15,400
Net foreign currency exchange gains — — (628 ) — (628 )
Interest expense 48 2,274 — — 2,322

Total expenses 3,020 2,350 477,718 1 483,089

Loss before income tax benefit (3,012 ) (2,307 ) (70,165 ) 197 (75,287 )
Income tax benefit — (808 ) (4,727 ) — (5,535 )

Net loss before equity in earnings of subsidiaries (3,012 ) (1,499 ) (65,438 ) 197 (69,752 )
Equity in earnings of subsidiaries (66,740 ) 1,530 11,768 53,442 —

Net income $ (69,752 ) 31 (53,670 ) 53,639 $ (69,752 )


Condensed Consolidating Statement of Cash Flows For the Three Months Ended March 31, 2005							Non-
	Platinum			Platinum			guarantor			Consolidating
	Holdings			Finance			Subsidiaries			Adjustments			Consolidated

Net cash provided by (used in) operating activities	$	(3,084	)		(1,834	)		184,566			–		$	179,648


Investing Activities:
Proceeds from sale of available-for-sale fixed maturities		–			–			72,716			–			72,716
Proceeds from maturity or paydown of available-for-sale fixed maturities		–			118			21,037			–			21,155
Acquisition of available-for-sale fixed maturities		–			–			(183,709	)		–			(183,709	)
Dividends from subsidiaries		7,000			–			–			(7,000	)		–

Net cash provided by (used in) investing activities		7,000			118			(89,956	)		(7,000	)		(89,838	)


Financing Activities:
Dividends paid to shareholders		(3,449	)		–			(7,000	)		7,000			(3,449	)
Proceeds from exercise of share options		3,759			–			–			–			3,759

Net cash provided by (used in) financing activities		310			–			(7,000	)		7,000			310


Net increase (decrease) in cash and cash equivalents		4,226			(1,716	)		87,610			–			90,120
Cash and cash equivalents at beginning of period		1,945			8,204			199,748			–			209,897

Cash and cash equivalents at end of period	$	6,171			6,488			287,358			–		$	300,017

(7) Share Based Compensation

We adopted SFAS 123R using the modified prospective method effective January 1, 2006. The cumulative effect of the adoption of SFAS 123R was not material.

The fair value of each option grant in 2006 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


Dividend yield		1.06	%
Risk free interest rate		4.57	%
Expected option life	5.3 years

The outstanding options are banded into groups for future forfeiture rate assumptions that ranged from 0% to 25%. The following summary sets forth option activity for the three months ended March 31, 2006 (amounts in thousands, except per share exercise price):

~~- 21 -~~-17-

Platinum Underwriters Holdings, Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited), continued
For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~

Condensed Consolidating Statement of Cash Flows Non-
For the Nine Months Ended Platinum Platinum guarantor Consolidating
September 30, 2005 Holdings Finance Subsidiaries Adjustments Consolidated

Net cash provided by (used in) operating activities $ (6,885 ) (4,872 ) 570,777 — $ 559,020

Investing Activities:
Proceeds from sale of available-for-sale fixed maturities — 2,983 475,151 — 478,134
Proceeds from maturity or paydown of available-for-sale fixed maturities — 316 96,754 — 97,070
Acquisition of available-for-sale fixed maturities — (12,347 ) (1,351,571 ) — (1,363,918 )
Dividends from subsidiaries 202,000 — — (202,000 ) —
Contributions to subsidiaries (185,000 ) (25,000 ) — 210,000 —
Proceeds from sale of subsidiary shares — — 193,000 (193,000 ) —

Net cash provided by (used in) investing activities 17,000 (34,048 ) (586,666 ) (185,000 ) (788,714 )

Financing Activities:
Dividends paid to shareholders (10,401 ) — (202,000 ) 202,000 (10,401 )
Proceeds from exercise of share options 13,070 — — — 13,070
Proceeds from issuance of debt — 246,900 — — 246,900
Purchase of common shares — (193,000 ) — 193,000 —
Proceeds from issuance of common shares 161,865 — — — 161,865

Capital contribution from parent — — 210,000 (210,000 ) —

Net cash provided by financing activities 164,534 53,900 8,000 185,000 411,434

Net increase (decrease) in cash and cash equivalents 174,649 14,980 (7,889 ) — 181,740
Cash and cash equivalents at beginning of period 1,945 8,204 199,748 — 209,897

Cash and cash equivalents at end of period $ 176,594 23,184 191,859 — $ 391,637


			Weighted
			Average
			Exercise
	Options		Price
Outstanding – beginning of period		3,918	$	23.93
Granted		238		30.54
Exercised		73		22.56
Forfeited		25		27.67

Outstanding — end of period		4,058	$	24.32


Options exercisable at end of period		2,893	$	23.18

The following table summarizes information about share options outstanding at March 31, 2006 (amounts in thousands, except per share exercise price):


			Weighted				Exercisable
			Average		Weighted				Weighted
			Remaining		Average				Average
Range of	Number		Contractual		Exercise		Number		Exercise
exercise prices	Outstanding		Life		Price		Outstanding		Price
$22.50		2,813		6.59	$	22.50		2,485	$	22.50
22.51 - 25.00		54		6.91		22.64		42		22.60
25.01 - 30.00		660		6.85		26.92		252		26.23
$30.01 - $35.00		531		9.00	$	30.87		114	$	31.33

~~- 22 -~~-18-

Condensed Consolidating Statement of Cash Flows Non-
For the Nine Months Ended Platinum Platinum guarantor Consolidating
September 30, 2004 Holdings Finance Subsidiaries Adjustments Consolidated

Net cash provided by (used in) operating activities $ (2,319 ) (5,617 ) 631,106 — $ 623,170

Investing Activities:
Proceeds from sale of available-for-sale fixed maturities — — 307,551 — 307,551
Proceeds from maturity or paydown of available-for-sale fixed maturities — 572 116,545 — 117,117
Acquisition of available-for-sale fixed maturities — (2,973 ) (913,470 ) — (916,443 )
Dividends from subsidiaries 14,500 — — (14,500 ) —
Contributions to subsidiaries (250 ) — — 250 —

Net cash provided by (used in) investing activities 14,250 (2,401 ) (489,374 ) (14,250 ) (491,775 )

Financing Activities:
Dividends paid to shareholders (10,360 ) — (14,500 ) 14,500 (10,360 )
Proceeds from exercise of share options 5,836 — — — 5,836
Purchase of common shares (9,985 ) — — — (9,985 )
Capital contribution from parent — — 250 (250 ) —

Net cash used in financing activities (14,509 ) — (14,250 ) 14,250 (14,509 )

Net increase (decrease) in cash and cash equivalents (2,578 ) (8,018 ) 127,482 — 116,886
Cash and cash equivalents at beginning of period 3,414 9,917 92,130 — 105,461

Cash and cash equivalents at end of period $ 836 1,899 219,612 — $ 222,347

~~(10)~~~~Subsequent Events~~

On October 26, 2005, Platinum Holdings and Platinum Finance launched an exchange offer through which they offered to exchange the outstanding Remarketed Senior Guaranteed Notes for Series B Remarketed Senior Guaranteed Notes having substantially the same terms as the Remarketed Senior Guaranteed Notes and which have been registered under the Securities Act. This exchange offer is currently scheduled to remain open through November 29, 2005 .

On October 24, 2005, the Company filed an unallocated universal shelf registration statement with the SEC. Once the universal shelf registration statement becomes effective, the Company may issue and sell, in one or more offerings, up to $750,000,000 of debt, equity and other types of securities or a combination of the above, including debt securities of Platinum Finance, unconditionally guaranteed by the Company. To effect any such sales from time to time, Platinum Holdings and/or Platinum Finance will file one or more supplements to the prospectus forming a part of such registration statement, which will provide details of any proposed offering.

~~On October 21, 2005 the Company entered into a three-year $200,000,000 credit agreement with~~

~~- 23 -~~


ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


		FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2006 AND 2005 ~~AND 2004~~

Business Overview

Platinum Underwriters Holdings, Ltd. (“Platinum Holdings”) is a Bermuda holding company organized in 2002. Platinum Holdings and its subsidiaries (collectively, the “Company”) operate through three licensed reinsurance subsidiaries: Platinum Underwriters Bermuda, Ltd. (“Platinum Bermuda”), Platinum Underwriters Reinsurance, Inc. (“Platinum US”) and Platinum Re (UK) Limited (“Platinum UK”). 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 following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations included in ~~the Company’s amended~~our Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2004. The Company’s~~2005. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

In November 2002, Platinum Holdings completed an initial public offering of 33,044,000 common shares (“the Initial Public Offering”). Concurrently 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 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. Both St. Paul and RenaissanceRe have amended their options to provide that in lieu of paying $27.00 per share, any option exercise will be settled on a net share basis, which will result in Platinum Holdings issuing a number of common shares equal to the excess of the market price per share, determined in accordance with the amendments, 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. Also, concurrently 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. In addition to these transactions the Company issued Equity Security Units (“ESU’s”), consisting of a contract to purchase common shares of the Company in 2005 and an ownership interest in a senior note bearing interest at 5.25%, due 2007 issued by Platinum Underwriters Finance, Inc. (“Platinum Finance”), a U.S. based intermediate holding company subsidiary of Platinum Holdings, and guaranteed by Platinum Holdings (the “Senior Guaranteed Notes”).

In May 2005, Platinum Finance issued $250,000,000 aggregate principal amount of the Series A 7.5% Notes due June 1, 2017 (the “Series A Notes”) unconditionally guaranteed by Platinum Holdings. The proceeds of the Series A Notes were used primarily to increase the capital of Platinum Bermuda and Platinum US.

In September 2005, Platinum Holdings completed an offering of 5,839,286 of its common shares at a price to the public of $28.00 per share, less related expenses. The net proceeds to Platinum Holdings were approximately $161,865,000, and are expected to be used to make contributions to the capital and surplus of the reinsurance subsidiaries and for general corporate purposes. All shares were offered by Platinum Holdings and were sold pursuant to its effective shelf registration statement.

~~- 25 -~~

~~The Company writes~~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 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. Casualty reinsurance also includes accident and health reinsurance treaties, which are predominantly reinsurance of health insurance products.

The property and casualty reinsurance industry is highly competitive. The Company competes with reinsurers worldwide, many of which have greater financial, marketing and management resources. The Company’s competitors can vary by type of business. Large multi-national and multi-line reinsurers represent some of the Company’s competitors in all lines and classes, while other specialty reinsurance companies in the United States compete in selective lines. Financial institutions have also created alternative capital market products that compete with reinsurance products, such as reinsurance securitization. Bermuda-based reinsurers tend to be the significant competitors on property catastrophe business. Lloyd’s of London syndicates are significant competitors on marine business. For casualty and other international classes of business, the large U.S. and European reinsurers are significant competitors.

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 significantly affected ~~significantly~~ by volatile developments, including natural and other ~~disasters,~~catastrophes, 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. AsTo the extent that actual claim liabilities are ~~established to cover expected claims,~~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 by fluctuations in interest rates, inflation and other changes in the economic environment that affect market prices of investments.

-19-

Both insurers and reinsurers experienced record losses in 2005 from three significant named hurricanes, Katrina, Rita and Wilma (the “2005 Hurricanes”). These record catastrophe losses placed a significant strain on the capital of a number of companies. Rating agencies have increased capital requirement measures. As a result, a number of our competitors were downgraded. Following these events, some insurers and reinsurers raised capital through equity and debt offerings. Several new Bermuda based reinsurers have been formed. The competitive landscape is still evolving and the depth and breadth of market changes in reaction to the size of the hurricane losses is uncertain. The full effect of this activity 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.

Results of Operations

~~Three Months Ended September 30, 2005 as Compared with the Three Months Ended September 30, 2004~~

Net ~~loss~~income for the three months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ was as follows ($ in thousands):

2005 2004 Increase
Net loss $ (176,024 ) (69,752 ) $ (106,272 )


	2006		2005		Increase
Net income	$	77,036		73,088	$	3,948

The increase in net ~~loss~~income in 2006 as compared with net income in 2005 ~~and 2004 are due~~is primarily attributable to ~~losses arising from severe hurricanes~~an increase in the southeastern United States and the Caribbean. In 2005, two significant named hurricanes, Katrina and Rita (the “2005 Hurricanes”), caused severe damage in Louisiana, Mississippi, Texas and several other states in the Gulf Coast region of the United States. Hurricane Katrina, based on current industry estimates, is the costliest natural disaster in U.S. history. In 2004, four significant named hurricanes, Charley, Frances, Ivan and Jeanne (the “2004 Hurricanes”), caused severe damage in the Caribbean and the southeastern United States, principally Florida.

~~- 26 -~~

As a result of losses arising from these catastrophic events, certain reinsurance contracts generated additional premiums and accrued profit commissions for certain reinsurance contracts were reduced. The aggregate adverse impact on netinvestment income of ~~the Company for the three months ended September 30, 2005 and 2004 from the above mentioned hurricanes is summarized as follows ($ in thousands):~~

~~Development of the 2004 Hurricanes subsequent to September 30, 2004 increased the net adverse impact on net income~~$16,610,000, partially offset by ~~approximately $31,666,000, in the fourth quarter of 2004 and $5,575,000 in the first six months of 2005. The 2005 Hurricanes were the primary cause of~~ a ~~decline~~decrease in underwriting income of ~~$144,999,000 in 2005 as compared with 2004. Partially offsetting the losses from the 2005 Hurricanes was profitable business in the Property and Marine segment as well as the Casualty segment.~~$12,486,000. Underwriting income in 2006 and 2005 ~~and 2004~~ was ~~also~~ impacted by net ~~favorable~~ development that includes the net development of prior years unpaid losses and LAE and the related impact on premiums and profit commissions. Net unfavorable development was $1,246,000 in 2006, including $8,608,000 of net unfavorable development relating to the 2005 Hurricanes. Net favorable development was ~~$31,580,000 and $16,124,000~~$20,477,000 in 2005, ~~and~~including $3,279,000 of net unfavorable development relating to 2004 ~~respectively. The net loss~~hurricane losses. Net income in ~~2005 as compared with 2004 is~~2006 also ~~impacted by~~includes an increase ~~in investment income of $15,012,000, a decrease~~ in operating expenses of ~~$7,320,000,~~$2,980,000, an increase in interest expense of ~~$4,517,000~~$3,277,000 and a decrease in income tax expense of ~~$32,231,000.~~$4,595,000.

Net premiums written and net premiums earned for the three months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ were as follows ($ in thousands):


					Increase
	2005		2004		(decrease)			2006		2005		Decrease
Net premiums written	$	410,186		440,495	$	(30,309	)	$	293,278		493,799	$	(200,521	)
Net premiums earned	$	429,388		383,090	$	46,298		$	344,301		411,040	$	(66,739	)

The decrease in net premiums written in ~~2005~~2006 is primarily attributable to ~~a decline~~the reduction in business written in the Finite Risk segment ~~partially offset by growth~~as well as reductions of lesser magnitudes in business written in both the Property and Marine and Casualty segments. The ~~increase~~decrease in net premiums written in the Finite Risk segment is primarily due to the expiration of two significant quota share contracts. The decrease in net premiums earned is ~~related~~due to the ~~growth~~decrease in ~~current and prior periods’~~ net premiums written ~~in the Property and Marine and Casualty segments~~ and is also affected by changes in the mix of business and the structure of the underlying reinsurance contracts. ~~In 2005, favorable~~Net premiums written and earned in 2006 include $1,562,000 of net additional premiums relating to loss development of ~~losses~~prior years. Net premiums written and ~~LAE from the 2004 Hurricanes of approximately $6,100,000 offset a reduction of~~earned in 2006 also include additional premiums of ~~approximately~~$2,027,000 relating to the ~~same amount.~~2005 Hurricanes. Net premiums written and earned in 2005 include $1,536,000 of net additional premiums relating to loss development of prior years. Net premiums written and earned in 2005 also include additional premiums of $1,504,000 relating to 2004 hurricane losses.

Other ~~income (expense)~~expense for the three months ended ~~September 30,~~March 31, 2006 and 2005 was $1,317,000 and ~~2004 was ($433,000) and $1,021,000,~~$356,000, respectively. Other ~~income~~expense is comprised primarily of changes in fair value of fixed maturities classified as trading and net earnings or expense on several reinsurance contracts in the Finite Risk segment that are accounted for as ~~deposits and interest~~deposits. Other expense ~~related to funds withheld. Other income~~ for the three months ended ~~September 30, 2005~~March 31, 2006 includes ~~$400,000~~$1,673,000 of net unrealized losses relating to fixed maturities classified as trading ~~$98,000~~and $355,000 of net income on reinsurance contracts accounted for as ~~deposits and $66,000 of interest~~deposits. Other expense ~~related to funds withheld. Other income~~ for the three months ended ~~September 30, 2004~~March 31, 2005 includes ~~$629,000~~$333,000 of net unrealized ~~gains~~losses relating to fixed maturities classified as trading and ~~$306,000~~$23,000 of net ~~income~~expense on reinsurance contracts accounted for as deposits.

~~Net foreign currency exchange gains~~Losses and LAE and the resulting ratios for the three months ended ~~September 30,~~March 31, 2006 and 2005 were as follows ($ in thousands):


							Increase
	2006			2005			(decrease)
Losses and LAE	$	206,774			237,698		$	(30,924	)
Loss and LAE ratios		60.1	%		57.8	%	2.3 points

The decrease in losses and LAE in 2006 as compared with 2005 is due primarily to the decrease in net premiums earned in the Finite Risk and Casualty segments. The increase in the loss and LAE ratio is due primarily to net unfavorable loss development in 2006 as compared with net favorable loss development in 2005. Net unfavorable loss development was $4,359,000 representing 1.3% of net premiums earned in 2006 and net favorable loss development was approximately $15,862,000 representing 3.9% of net premiums earned in 2005. Net unfavorable loss development in 2006 includes $10,635,000 of net unfavorable development relating to the 2005 Hurricanes. Net favorable loss development in 2005 includes $4,784,000 of net unfavorable development relating to 2004 hurricane losses. Exclusive of loss development, the loss and LAE ratio is favorably affected by a shift in the mix of business. Net premiums earned and related losses and LAE have decreased predominantly in classes of business such as finite casualty, crop, trade credit and accident and health, which have loss ratios higher than our overall book of business. Additionally, net premiums earned have increased in catastrophe exposed classes that, in the absence of catastrophes, have lower loss ratios than our overall book of business.

Acquisition expenses and resulting ratios for the three months ended March 31, 2006 and 2005 were ~~$88,000~~as follows ($ in thousands):


	2006			2005			Decrease
Acquisition expenses	$	69,239			93,249		$	(24,010	)
Acquisition expense ratios		20.1	%		22.7	%	(2.6) points

The decrease in acquisition expenses is due primarily to the decrease in net premiums earned in 2006 as compared with 2005. The decrease in the acquisition expense ratio in 2006 as compared with 2005 is primarily in the Finite Risk segment and ~~$628,000,~~is due to the decrease in finite casualty net premiums earned that had higher commission ratios. The decrease is also due to lower commissions on property contracts that were in force in 2005, have adjustable commissions and prior year catastrophe losses experience. Unfavorable development in prior year losses resulted in the reduction of profit commissions of $1,551,000 in 2006, representing 0.5% of net premiums earned. This compares with $3,078,000 of net reductions in profit commissions in 2005, representing 0.7% of net premiums earned.

Operating expenses for the three months ended March 31, 2006 and 2005 were $22,988,000 and $20,008,000, respectively. Operating expenses include costs such as salaries, rent and like items related to reinsurance operations as well as costs associated with Platinum Holdings. Operating expenses in 2006 increased as compared with 2005 due to increased salaries and benefits, increased regulatory compliance costs and an increase in incentive-based compensation resulting from the adoption of the new share based compensation accounting standard.

-21-

Net foreign currency exchange (gains) losses for the three months ended March 31, 2006 and 2005 were ($275,000) and $1,798,000, respectively. The Company routinely does business in ~~various~~multiple foreign currencies. Foreign currency exchange gains and losses result from the re-valuation into U.S. dollars of assets and liabilities denominated in foreign currencies. ~~The Company~~We periodically ~~monitors its~~monitor our largest foreign currency exposures and ~~purchases~~purchase or ~~sells~~sell foreign currency denominated ~~invested assets~~cash and investments to match these exposures. Net foreign currency exchange gains and losses arise as a result of fluctuations in the amounts of assets and liabilities denominated in foreign currencies as well as fluctuations in the currency exchange rates.

~~Losses and LAE and the resulting loss ratios for the three months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Losses and LAE $ 564,618 384,724 $ 179,894
Losses and LAE ratios 131.5 % 100.4 % 31.1 points

The increase in losses and LAE in 2005 as compared with 2004 is due primarily to losses from the 2005 Hurricanes. Losses and LAE in 2005 includes $154,383,000 more in losses and LAE from hurricanes as compared with 2004. The increase in losses and LAE in 2005 as compared with 2004 is also due to the increase in net premiums earned. The losses and LAE from the hurricanes in 2005 and 2004 were partially offset by favorable loss development of $42,066,000, representing 9.8% of net premiums earned in 2005 and $16,124,000, representing 4.2% of net premiums earned in 2004.

~~Acquisition expenses and resulting acquisition expense ratios for the three months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Acquisition expenses $ 98,858 81,271 $ 17,587
Acquisition expense ratios 23.0 % 21.2 % 1.8 points

The increase in acquisition expenses is due primarily to the increase in net premiums earned in 2005 as compared with 2004 as well as shifts in the mix of business. The increase in the acquisition expense ratio in 2005 as compared with 2004 is primarily in the Finite Risk segment and is due to shifts in the mix of business in the segment toward proportional casualty business that generally has higher acquisition costs. Acquisition costs include profit commissions of $4,423,000 in 2005, representing 1.0% of net premiums earned related to favorable loss development from prior years primarily in the Finite Risk segment. Profit commissions in 2004 related to favorable loss development from prior years were insignificant.

Operating expenses for the three months ended September 30, 2005 and 2004 were $8,080,000 and $15,400,000, respectively. Operating expenses include costs such as salaries, rent and like items related to reinsurance operations as well as costs associated with Platinum Holdings. Operating expenses in 2005 decreased as compared with 2004 primarily due to greater reductions in incentive-based compensation accruals in 2005 as compared with 2004 due primarily to the 2005 Hurricanes.

~~- 28 -~~

Interest expense for the three months ended ~~September 30,~~March 31, 2006 and 2005 was $5,450,000 and ~~2004 was $6,839,000 and $2,322,000, respectively, and includes interest related to the ESU’s as well as the Series A Notes.~~$2,173,000, respectively. The increase in ~~2005~~2006 as compared with ~~2004 is due to interest on the Series A Notes issued in May 2005.~~

~~Income tax benefit and the effective income tax rates for the three months ended September 30,~~ 2005 ~~and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Income tax benefit $ (37,766 ) (5,535 ) $ (32,231 )
Effective income tax rates 17.7 % 7.4 % 10.3 points

~~The increase in income tax benefit in 2005 as compared with 2004~~ is due to the increase in net loss before income tax expense. The effective tax rate in 2004 was affected by an increase in the estimated annual effective tax rate in the three months ended September 30, 2004 due to the 2004 Hurricanes. A significant percentage of the losses and LAE from the 2004 Hurricanes was ceded by Platinum US to Platinum Bermuda where no income tax benefit was available. The effective income tax benefit rate in 2005 is higher as compared with 2004 as a result of two factors. Under existing internal reinsurance contracts, a lower percentage of losses and LAE from the 2005 Hurricanes was ceded in 2005 by Platinum US to Platinum Bermuda as compared with the percentage of losses and LAE from the 2004 Hurricanes ceded in 2004 and Platinum Bermuda retroceded $55,000,000 of its assumed losses and LAE in 2005 to Platinum UK. In addition,debt outstanding during the ~~three months ended September 30,~~comparable periods. Interest expense in 2006 includes interest on the $250,000,000 of Series B 7.5% Notes due June 1, 2017, issued in May 2005 as well as interest on the ~~estimated amount~~remaining balance of ~~withholding tax related to the transfer from Platinum Finance to Platinum Holdings of the net proceeds from the issuance~~$42,840,000 of the Series AB 6.371% Remarketed Senior Guaranteed Notes, ~~was decreased as a result of the net loss. Consequently, the estimate of the withholding tax was reduced by $1,000,000.~~

~~Nine Months Ended September 30, 2005 as Compared with the Nine Months Ended September 30, 2004~~

~~Net income (loss) for the nine months ended September 30, 2005 and 2004 was as follows ($ in thousands):~~

2005 2004 Decrease
Net income (loss) $ (34,951 ) 34,861 $ (69,812 )

The net loss in 2005 as compared with net income in 2004 is attributable to the 2005 Hurricanes, which caused significantly more damage than the 2004 Hurricanes. The 2005 Hurricanes were the primary cause of a decline of $111,377,000 in underwriting income in 2005 as compared with 2004. The aggregate adverse impact, net of tax, on net loss for the nine months ended September 30, 2005 from the 2005 Hurricanes was approximately $274,786,000 as compared with $144,809,000 from the 2004 Hurricanes. Partially offsetting the losses from the 2005 Hurricanes was profitable business in the Property and Marine segment as well as the Casualty segment. Underwriting income in 2005 and 2004 was impacted by net favorable development that includes the development of prior years unpaid losses and LAE and the related impact on premiums and profit commissions. Net favorable development was $67,212,000, representing 5.3% of net premiums earned in 2005, and $40,084,000, representing 3.9% of net premiums earned in 2004. Net income in 2005 as compared with 2004 was also impacted by an increase in investment income of $33,960,000, a decrease in operating expenses of $1,868,000, an increase in interest expense of $6,234,000, and a decrease in income tax expense of $20,884,000.

~~Net premiums written and net premiums earned for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Net premiums written $ 1,326,944 1,251,128 $ 75,816
Net premiums earned $ 1,271,898 1,014,999 $ 256,899

~~- 29 -~~

The increase in net premiums written in 2005 as compared with 2004 is primarily attributable to growth in the Property and Marine and Casualty segments. The increases in Property and Marine and Casualty segments are partially offset by a decline in net premiums written in the Finite Risk segment. 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. In addition, net premiums written and earned in 2005 include $3,334,000 of net additional premiums relating to prior years.

~~Net investment income for the nine months ended September 30, 2005 and 2004 was $92,250,000 and $58,290,000, respectively. Net investment income increased during 2005 primarily~~ due to increased invested assets. The increase in invested assets is attributable to positive cash flow from operations in 2005 and 2004 and the proceeds from the issuance of the Series A Notes. Net cash flow from operations, excluding trading securities activities, was $573,215,000 and $610,144,000 for the nine months ended September 30, 2005 and 2004, respectively. Net investment income includes interest earned on funds held of $8,235,000 and $449,000 in 2005 and 2004, respectively. Net realized gains (losses) on investments were ($1,062,000) and $1,435,000 for the nine months ended September 30, 2005 and 2004, respectively. Net realized losses on investments in 2005 also include a provision of $769,000 for the permanent impairment of an investment in Inter-Ocean Holdings Ltd. included in other invested asset. Exclusive of this provision, net realized gains and losses on investments were the result of the Company’s efforts to manage the quality, diversity, currency exposure, duration and tax profile of the investment portfolio.

Other income (expense) for the nine months ended September 30, 2005 and 2004 was ($201,000) and $2,137,000, respectively. Other income is comprised primarily of changes in fair value of fixed maturities classified as trading, net earnings on several reinsurance contracts in the Finite Risk segment that are accounted for as deposits and interest expense related to funds withheld. Other income for the nine months ended September 30, 2005 includes $128,000 of net unrealized gains relating to changes in fair value of fixed maturities classified as trading, $105,000 of earnings on reinsurance contracts accounted for as deposits and $434,000 of interest expense related to funds withheld. Other income for the nine months ended September 30, 2004 includes $220,000 of net unrealized gains relating to fixed maturities classified as trading, $565,000 of earnings on reinsurance contracts accounted for as deposits and a gain of $1,000,000 on the sale of assets.

Net foreign currency exchange gains (losses) for the nine months ended September 30, 2005 and 2004 were ($1,870,000) and $326,000, respectively. Net foreign currency exchange gains and losses arise as a result of fluctuations in the amounts of assets and liabilities denominated in foreign currencies as well as fluctuations in the currency exchange rates.

~~Losses and LAE and the resulting loss ratios for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Losses and LAE $ 1,043,168 736,159 $ 307,009
Loss and LAE ratios 82.0 % 72.5 % 9.5 points

The increase in losses and LAE in 2005 as compared with 2004 is due primarily to losses from the 2005 Hurricanes that incurred losses and LAE of $154,383,000 more than the 2004 Hurricanes. The increase in losses and LAE in 2005 as compared with 2004 is also due to the increased net premiums earned. The losses and LAE from the hurricanes in 2005 and 2004 were partially offset by favorable loss development of $75,184,000, representing 5.9% of net premiums earned in 2005 and $44,653,000, representing 4.4% of net premiums earned in 2004.

~~- 30 -~~

~~Acquisition expenses and resulting acquisition expense ratios for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Acquisition expenses $ 296,035 232,886 $ 63,149
Acquisition expense ratios 23.3 % 22.9 % 0.4 points

The increase in acquisition expenses is due primarily to the increase in net premiums earned in 2005 as compared with 2004. While the ratios in 2005 and 2004 are comparable, the ratios are affected by profit commissions, including approximately $4,638,000, representing .4% of net premiums earned in 2005 and $4,569,000, representing .5% of net premiums earned in 2004 relating to favorable loss development from prior years primarily in the Finite Risk segment.

Operating expenses for the nine months ended September 30, 2005 and 2004 were $51,568,000 and $53,436,000, respectively. Operating expenses include costs such as salaries, rent and like items related to reinsurance operations as well as costs associated with Platinum Holdings. Operating expenses in 2005 decreased as compared with 2004 primarily due to greater reductions in incentive-based compensation accruals in 2005 as compared with 2004 due primarily to the 2005 Hurricanes.

November 16, 2007. Interest expense ~~for the nine months ended September 30,~~in 2005 ~~and 2004 was $13,186,000 and $6,952,000, respectively, and~~ includes interest related to $137,500,000 of Senior Guaranteed Notes that were part of the ~~ESU’s as well as the Series A Notes. The increase in 2005 as compared with 2004 is due to interest on the Series A Notes~~Equity Security Units issued in ~~May 2005.~~November 2002. The Senior Guaranteed Notes were remarketed in August 2005 and then subsequently partially repurchased.

Income tax expense and the effective income tax rates for the ~~nine~~three months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ were as follows ($ in thousands):


	2005			2004			Decrease			2006			2005			Decrease
Income tax expense (benefit)	$	(7,991	)		12,893		$	(20,884	)
Income tax expense										$	5,352			9,947		$	(4,595	)
Effective income tax rates		18.6	%		27.0	%	(8.4) points				6.5	%		12.0	%	(5.5) points

The ~~income tax benefit~~decrease in ~~2005 as compared with~~ income tax expense in ~~2004~~2006 as compared with 2005 is due to ~~the loss before income tax benefit in 2005. The~~a lower effective income tax rate in ~~2005 is lower~~2006 as compared with ~~2004 as~~2005. The decrease in the effective tax rate is due primarily to a ~~result of several factors. Under existing internal reinsurance contracts, a lower~~higher percentage of ~~losses and LAE from~~ the ~~2005 Hurricanes was ceded in 2005~~Company’s income before income taxes being generated by Platinum USBermuda, which is not subject to corporate income tax. In 2006, the combined net income derived from Platinum Holdings and Platinum Bermuda was approximately 79% of the total net income before tax expense as compared with ~~the percentage of losses and LAE from the 2004 Hurricanes ceded~~approximately 63% in 2004 and Platinum Bermuda retroceded $55,000,000 of its assumed losses and LAE in 2005 to Platinum UK. Partially offsetting these factors is approximately $8,150,000 of income tax expense in 2005 associated with the transfer from Platinum Finance to Platinum Holdings of the proceeds from the issuance of the Series A Notes. This transaction is deemed to be a taxable distribution under U.S. tax law and subject to U.S. withholding tax.2005.

Property
and Marine Casualty Finite Risk Total
Three months ended September 30, 2005:
Net premiums written $ 133,350 216,659 60,177 $ 410,186

Net premiums earned 145,853 205,050 78,485 429,388
Losses and LAE 373,761 129,218 61,639 564,618
Acquisition expenses 17,753 50,097 31,008 98,858
Other underwriting expenses 3,632 1,894 524 6,050
��
Segment underwriting income (loss) $ (249,293 ) 23,841 (14,686 ) (240,138 )

Net investment income and net realized losses on investments 35,562
Net foreign currency exchange gains 88
Other expense (433 )
Corporate expenses not allocated to segments (2,030 )
Interest expense (6,839 )

Loss before income tax benefit $ (213,790 )

Ratios:
Losses and LAE 256.3 % 63.0 % 78.5 % 131.5 %
Acquisition expense 12.2 % 24.4 % 39.5 % 23.0 %
Other underwriting expense 2.5 % 0.9 % 0.7 % 1.4 %

Combined 271.0 % 88.3 % 118.7 % 155.9 %

Three months ended September 30, 2004:
Net premiums written $ 120,629 171,967 147,899 $ 440,495

Net premiums earned 135,430 156,512 91,148 383,090
Losses and LAE 195,495 105,559 83,670 384,724
Acquisition expenses 20,834 38,935 21,502 81,271
Other underwriting expenses 5,956 5,617 661 12,234

Segment underwriting income (loss) $ (86,855 ) 6,401 (14,685 ) (95,139 )

Net investment income and net realized gains on investments 23,691
Net foreign currency exchange gains 628
Other income 1,021
Corporate expenses not allocated to segments (3,166 )
Interest expense (2,322 )

Loss before income tax benefit $ (75,287 )

Ratios:
Losses and LAE 144.4 % 67.4 % 91.8 % 100.4 %
Acquisition expense 15.4 % 24.9 % 23.6 % 21.2 %
Other underwriting expense 4.4 % 3.6 % 0.7 % 3.2 %

Combined 164.2 % 95.9 % 116.1 % 124.8 %

~~- 32 -~~


	Property												Property
	and Marine			Casualty			Finite Risk			Total			and Marine			Casualty			Finite Risk			Total
Nine months ended September 30, 2005:
Net premiums written	$	453,352			621,218			252,374		$	1,326,944

Net premiums earned		414,719			588,541			268,638			1,271,898
Losses and LAE		492,300			375,187			175,681			1,043,168
Acquisition expenses		69,437			143,262			83,336			296,035
Other underwriting expenses		19,595			18,179			3,428			41,202

Segment underwriting income (loss)	$	(166,613	)		51,913			6,193			(108,507	)

Net investment income and net realized losses on investments											91,188
Net foreign currency exchange losses											(1,870	)
Other expense											(201	)
Corporate expenses not allocated to segments											(10,366	)
Interest expense											(13,186	)

Loss before income tax benefit										$	(42,942	)

Ratios:
Losses and LAE		118.7	%		63.7	%		65.4	%		82.0	%
Acquisition expense		16.7	%		24.3	%		31.0	%		23.3	%
Other underwriting expense		4.7	%		3.1	%		1.3	%		3.2	%

Combined		140.1	%		91.1	%		97.7	%		108.5	%


Nine months ended September 30, 2004:
Three months ended March 31, 2006:
Net premiums written	$	393,764			508,693			348,671		$	1,251,128		$	165,264			182,350			(54,336	)	$	293,278

Net premiums earned		353,423			424,964			236,612			1,014,999			131,544			173,668			39,089			344,301
Losses and LAE		285,047			293,734			157,378			736,159			59,828			116,565			30,381			206,774
Acquisition expenses		57,491			105,765			69,630			232,886			19,649			41,354			8,236			69,239
Other underwriting expenses		21,280			15,979			5,825			43,084			10,028			6,335			925			17,288

Segment underwriting income (loss)	$	(10,395	)		9,486			3,779			2,870		$	42,039			9,414			( 453	)		51,000

Net investment income and net realized gains on investments											59,725												43,580
Net foreign currency exchange gains											326												275
Other income											2,137
Other expense																							(1,317	)
Corporate expenses not allocated to segments											(10,352	)											(5,700	)
Interest expense											(6,952	)											(5,450	)

Income before income tax expense										$	47,754											$	82,388


Ratios:
Losses and LAE		80.7	%		69.1	%		66.5	%		72.5	%		45.5	%		67.1	%		77.7	%		60.1	%
Acquisition expense		16.3	%		24.9	%		29.4	%		22.9	%		14.9	%		23.8	%		21.1	%		20.1	%
Other underwriting expense		6.0	%		3.8	%		2.5	%		4.2	%		7.6	%		3.6	%		2.4	%		5.0	%

Combined		103.0	%		97.8	%		98.4	%		99.6	%		68.0	%		94.5	%		101.2	%		85.2	%


Three months ended March 31, 2005:
Net premiums written													$	185,049			215,669			93,081		$	493,799

Net premiums earned														128,197			184,768			98,075			411,040
Losses and LAE														60,040			118,438			59,220			237,698
Acquisition expenses														21,989			45,202			26,058			93,249
Other underwriting expenses														7,723			7,313			1,571			16,607

Segment underwriting income													$	38,445			13,815			11,226			63,486


Net investment income and net realized gains on investments																							27,277
Net foreign currency exchange losses																							(1,798	)
Other expense																							(356	)
Corporate expenses not allocated to segments																							(3,401	)
Interest expense																							(2,173	)

Income before income tax expense																						$	83,035


Ratios:
Losses and LAE														46.8	%		64.1	%		60.4	%		57.8	%
Acquisition expense														17.2	%		24.5	%		26.6	%		22.7	%
Other underwriting expense														6.0	%		4.0	%		1.6	%		4.0	%

Combined														70.0	%		92.6	%		88.6	%		84.5	%

~~Net premiums written and earned increased~~The decrease in 2005 as compared with 2004 across most property classes. Net premiums written and net premiums earned in 2005 include additional premiums of $25,555,000 and $17,599,000, respectively, relating to the 2005 Hurricanes. The most significant increase was in the property pro-rata class where the Company increased its net premiums written in 2006 as compared with 2005 is primarily due to the crop pro-rata class in which one significant pro-rata contract expired. Net premiums earned increased in 2006 as compared with 2005 due to increases in net premiums written in 2005. In addition, in order to reduce our overall net exposure to catastrophe ~~exposed~~losses, Platinum US and Platinum UK commenced ceding, on a quota share basis, 30% of new and renewal property catastrophe business ~~in Florida.~~effective on or after January 1, 2006. Net premiums written and earned in ~~2004~~2006 include $1,439,000 of net additional premiums relating to loss development of prior years. Net premiums written and earned in 2006 also include additional premiums of ~~$14,203,000~~$1,903,000 relating to the 2005 Hurricanes. Net premiums written and earned in 2005 include $1,536,000 of net additional premiums relating to loss development of prior years. Net premiums written and earned in 2005 also include $1,446,000 of net additional premiums relating to 2004 ~~Hurricanes.~~hurricane losses.

~~The increases in~~While the losses and LAE and the related ~~loss~~ratios in 2006 and ~~LAE ratio in~~ 2005 ~~as compared with 2004~~ are ~~due to the more significant 2005 Hurricanes with losses and LAE~~relatively comparable, they are impacted by a number of ~~$316,840,000 as compared with the 2004 Hurricanes with losses and LAE of $153,078,000. The increase in losses and LAE in 2005 as compared with 2004 is also due to the increased net premiums earned.~~offsetting factors. The losses and LAE ~~from~~and related ratios are favorably impacted by the ~~hurricanes~~absence of catastrophes in ~~2005~~both periods as well as a decrease in 2006 in net premiums earned in the crop class that generally has a higher loss ratio. The losses and ~~2004 were partially offset~~LAE and related ratios are adversely affected by ~~favorable~~net loss development. Net unfavorable loss development ~~of $18,441,000,~~in 2006 was $2,616,000 representing ~~12.6%~~2.0% of net premiums earned in ~~2005 and $14,988,000,~~2006 as compared with $3,849,000 of net favorable loss development representing ~~11.1%~~3.0% of net premiums earned in ~~2004.~~2005. Net unfavorable loss development in 2006 includes $10,255,000 of net unfavorable development relating to the 2005 Hurricanes. Net favorable loss development in 2005 includes $8,604,000 of net unfavorable development relating to 2004 hurricane losses.

~~“RenRe~~ “RenRe Agreement”) that provides for a periodic review of aggregate property catastrophe exposures by RenaissanceRe. The increase in other underwriting expenses is due, in part, to an increase in fees relating to the RenRe Agreement which were $3,675,000 and $2,787,000 for the three months ended March 31, 2006 and 2005, respectively. The increase in the fee in ~~2005~~2006 as compared with ~~2004~~2005 is due to an increase in ~~net~~gross premiums written in the catastrophe classes of business subject to the fee, due primarily to ~~catastrophe related reinstatement premiums.~~

~~Nine Months Ended September 30, 2005 as Compared with the Nine Months Ended September 30, 2004~~

~~Net premiums written~~significantly improved rates, terms and ~~net premiums earned for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Net premiums written $ 453,352 393,764 $ 59,588
Net premiums earned $ 414,719 353,423 $ 61,296

~~Net premiums written and earned increased in 2005 as compared with 2004 across most property classes. The most significant increase was~~conditions in the property ~~pro-rata class where the Company increased its net premiums written in~~ catastrophe ~~exposed business in Florida. The increases in the property~~ classes ~~were partially offset by a decrease in the marine class, primarily attributable to one significant contract that was not renewed. In addition, net premiums written and earned includes $2,744,000~~ of ~~additional premiums relating to prior years.~~

~~Losses and LAE and the resulting loss ratios for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Losses and LAE $ 492,300 285,047 $ 207,253
Loss and LAE ratios 118.7 % 80.7 % 38.0 points

business. The increase in losses and LAE and the related loss and LAE ratio in 2005 as compared with 2004 is due to the more significant 2005 Hurricanes with losses and LAE of $316,840,000 as compared with the 2004 Hurricanes with losses and LAE of $153,078,000. The increase in losses and LAE in 2005 as compared with 2004 is also due to the increased net premiums earned. The losses and LAE from the hurricanes in 2005 and 2004 were partially offset by favorable loss development of $27,527,000 representing 6.6% of net premiums earned in 2005 and approximately $38,199,000 representing 10.8% of net premiums earned in 2004.

~~Acquisition expenses and resulting acquisition expense ratios for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Acquisition expenses $ 69,437 57,491 $ 11,946
Acquisition expense ratios 16.7 % 16.3 % 0.4 points

~~The increase in acquisition expenses in 2005 as compared with 2004 is due to the growth in business in the segment. The resulting acquisition expense ratios are comparable.~~

~~Other underwriting expenses for the nine months ended September 30, 2005 and 2004 were $19,595,000 and $21,280,000, respectively. The decrease~~ in other underwriting expenses is also due, in part, to the allocation of a greater percentage of our common operating and administrative costs to the Property and Marine segment due to ~~greater reductions~~a decline in ~~incentive-based compensation accruals in 2005 as compared with 2004 due primarily to the 2005 Hurricanes. Other~~ underwriting ~~expenses for the nine months ended September 30, 2005 and 2004 include fees of $5,092,000 and $4,641,000, respectively, relating to the RenRe Agreement. The increase~~activity in the ~~fee in 2005 as compared with 2004 is due to an increase in net premiums written in the catastrophe classes of business subject to the fee, due primarily to catastrophe related reinstatement premiums.~~Finite Risk segment.

~~- 35 -~~

Casualty

The Casualty operating segment principally 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 operating segment also includes accident and health ~~reinsurance~~ treaties, which are predominantly reinsurance of health insurance products. This operating segment generated ~~52.8%~~62.2% and ~~39.0%~~43.7% of ~~the Company’s~~our net premiums written for the three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004, respectively, and 46.8% and 40.6% of the Company’s net premiums written for the nine months ended September 30, 2005 and 2004,~~ respectively.

~~Three Months Ended September 30, 2005 as Compared with the Three Months Ended September 30, 2004~~

Net premiums written and net premiums earned for the three months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ were as follows ($ in thousands):


	2005		2004		Increase		2006		2005		Decrease
Net premiums written	$	216,659		171,967	$	44,692	$	182,350		215,669	$	(33,319	)
Net premiums earned	$	205,050		156,512	$	48,538	$	173,668		184,768	$	(11,100	)

Other underwriting expenses for the three months ended ~~September 30,~~March 31, 2006 and 2005 were $6,335,000 and ~~2004 were $1,894,000 and $5,617,000,~~$7,313,000, respectively, and represent costs such as salaries, rent and like items. The resulting other underwriting expense ratios for the three months ended ~~September 30,~~March 31, 2006 and 2005 were 3.6% and ~~2004 were 0.9% and 3.6%~~4.0%, respectively. The decrease in operating costs and resulting other underwriting expense ratios is due to ~~greater reductions in incentive-based compensation accruals in 2005 as compared with 2004 due primarily to the 2005 Hurricanes.~~

~~Nine Months Ended September 30, 2005 as Compared with the Nine Months Ended September 30, 2004~~

~~Net premiums written and net premiums earned for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

2005 2004 Increase
Net premiums written $ 621,218 508,693 $ 112,525
Net premiums earned $ 588,541 424,964 $ 163,577

This increase is due to growth in the casualty business and increased ultimate premiums from prior underwriting years’ excess-of-loss classes due to greater than expected premiums being reported from ceding companies. 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.

~~Losses and LAE and the resulting loss ratios for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

Increase
2005 2004 (decrease)
Losses and LAE $ 375,187 293,734 $ 81,453
Loss and LAE ratios 63.7 % 69.1 % (5.4) points

The increase in losses and LAE in 2005 as compared with 2004 is consistent with the growth in business. Losses and LAE included net favorable loss development of approximately $17,355,000 representing 2.9% of net premiums earned in 2005 and approximately $4,871,000 of net unfavorable loss development representing 1.1% of net premiums earned in 2004. The decrease in the loss and LAE ratio in 2005 is primarily due to the net favorable loss development in 2005 that relates primarily to casualty classes with short loss development periods in the 2002 and 2003 underwriting years’ experience. The decrease in the loss and LAE ratio in 2005 is also due, in part, to changes in the mix of business toward classes with lower loss ratios such as workers compensation catastrophe.

~~Acquisition expenses and resulting acquisition expense ratios for the nine months ended September 30, 2005 and 2004 were as follows ($ in thousands):~~

Increase
2005 2004 (decrease)
Acquisition expenses $ 143,262 105,765 $ 37,497
Acquisition expense ratios 24.3 % 24.9 % (0.6) points

~~The increase in acquisition expenses is due primarily to the increase in net premiums earned in 2005 as compared with 2004. The resulting acquisition expense ratios are comparable.~~

Other underwriting expenses for the nine months ended September 30, 2005 and 2004 were $18,179,000 and $15,979,000, respectively. Other underwriting expenses include costs such as salaries, rent and like items related to casualty underwriting operations. The resulting other underwriting expense ratios

~~- 37 -~~

for the nine months ended September 30, 2005 and 2004 were 3.1% and 3.8%, respectively. The increases in operating costs and resulting other underwriting expense ratios are due to the increase in business as well as the allocation of a greater percentage ofless common operating and administrative costs allocated to the Casualty ~~segment due to a decline in the underwriting activity in the Finite Risk~~ segment. ~~Partially offsetting these increases are greater reductions in incentive-based compensation accruals in 2005 as compared with 2004 due primarily to the 2005 Hurricanes.~~

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~~generally consistent with the classes covered by traditional products. Typically, the ~~potential~~ amount of losses ~~paid~~we might pay is finite or capped. In return for this limit on losses, ~~there is typically~~we often accept a cap on the potential profit margin specified in the ~~treaty. Profits~~treaty and return profits above this margin ~~are returned~~ to the ceding company. Due to the significant inverse relationship between losses and commissions for this segment, we believe it is important to evaluate the overall combined ratio, rather than its component parts of loss and loss adjustment expense ratios. 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 our finite risk contracts are quota share, multi-year excess-of-loss and whole account aggregate stop loss. We believe that the ongoing investigations by the SEC, the office of the Attorney General for the State of New York and the U.S. Attorney for the Southern District of New York and non-U.S. regulatory authorities such as the Bermuda Monetary Authority and the U.K. Financial Services Authority have significantly diminished demand for finite risk products. During the six months ended September 30, 2005 we did not write any new or renewal contracts in the segment. This operating segment ~~generated 14.7%~~represented (18.5%) and ~~33.6%~~18.8% of ~~the Company’s~~our net premiums written for the three months ended ~~September 30,~~March 31, 2006 and 2005, respectively. The ongoing investigations by legal and ~~2004, respectively,~~regulatory authorities have curtailed demand for finite risk products in 2006 and 19.0% and 27.9% of the Company’s net premiums written for the nine months ended September 30, 2005 and 2004, respectively. For this segment, because of the inter-relationship between losses and expenses, the Company believes it is more meaningful to evaluate the overall combined ratio, rather than its component parts of loss and acquisition expense ratios.

~~Three Months Ended September 30, 2005 as Compared with the Three Months Ended September 30, 2004~~2005.

Net premiums written and net premiums earned for the three months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ were as follows ($ in thousands):


	2005		2004		Decrease			2006			2005		Decrease
Net premiums written	$	60,177		147,899	$	(87,722	)	$	(54,336	)		93,081	$	(147,417	)
Net premiums earned	$	78,485		91,148	$	(12,663	)	$	39,089			98,075	$	(58,986	)

The Finite Risk portfolio consists of a small number of contracts that can be large in premium size and, consequently, overall premium volume may vary significantly from year to year. Net premiums written decreased significantly in ~~2005~~2006 as compared with ~~2004 as fewer~~2005 primarily due to the termination of two significant quota share contracts. One of the quota share contracts ~~are in force. In 2005, favorable net development from the 2004 Hurricanes~~was terminated effective January 1, 2006 on a cut-off basis, which resulted in ~~a reduction~~the return of ~~additional~~$56,589,000 of previously written but unearned premium. Net premiums ~~of approximately $6,100,000. In 2005, one significant contract had a reduction in net premiums written~~earned decreased as a result of ~~reduced reported~~the decrease in net premiums from the ceding company. The mix of finite business in 2005 has shifted significantly toward casualty. Net premiums written and earned in 2005 are derived primarily from several casualty capped quota share contracts underwritten in 2004 and January 2005. Net premiums written and earned in 2005 include additional premiums of $1,955,000 related to the 2005 Hurricanes.written.

The decrease in losses, LAE and acquisition expenses in ~~2005~~2006 as compared with ~~2004~~2005 is due primarily to the decrease in net ~~favorable development. Losses,~~premiums earned. The increase in the losses, LAE and acquisition ~~expenses~~expense ratio is primarily due to net unfavorable development of approximately of $2,186,000, representing 5.3% of net premiums earned in 2006, as compared with net favorable development of $8,217,000, representing 8.4% of net premiums earned in 2005. Net unfavorable development in 2006 relating to the 2005 Hurricanes ~~were $24,000,000 as compared with $23,029,000 relating to the 2004 Hurricanes. Losses, LAE~~was not material and ~~acquisition expenses also include net favorable development of approximately of $11,364,000 representing 14.5% of net premiums earned in 2005 as compared with insignificant~~ net favorable development in ~~2004. The increase in the loss, LAE and acquisition expense ratio in~~ 2005 ~~as compared with~~includes $3,821,000 relating to 2004 ~~is due to~~ hurricane ~~losses representing a greater percentage of net premiums earned in 2005 and the continued shift in the mix of business toward finite casualty that has a higher combined ratio.~~losses.

Increase
2005 2004 (decrease)
Losses and LAE $ 175,681 157,378 $ 18,303
Loss and LAE ratios 65.4 % 66.5 % (1.1) points
Acquisition expenses $ 83,336 69,630 $ 13,706
Acquisition expense ratios 31.0 % 29.4 % 1.6 points
Losses, LAE and acquisition expenses $ 259,017 227,008 $ 32,009
Loss, LAE and acquisition expense ratios 96.4 % 95.9 % 0.5 points

The increase in losses, LAE and acquisition expenses in 2005 as compared with 2004 is primarily due to the increase in net premiums earned. Losses, LAE and acquisition expenses relating to the 2005 Hurricanes were $24,000,000 as compared with $23,029,000 relating to the 2004 Hurricanes. Net favorable development impacted losses, LAE and acquisition expenses and the related ratios in both 2005 and 2004. Net favorable development amounted to $25,813,000 representing 9.6% of net premiums earned in 2005 and $6,756,000 representing 2.9% of net premiums earned in 2004. Exclusive of net favorable development, the overall loss, LAE and acquisition expense ratio increased in 2005 as compared with 2004 due to the shift toward casualty business that generally has a higher combined ratio.

Other underwriting expenses for the nine months ended September 30, 2005 and 2004 were $3,428,000 and $5,825,000, respectively, and represent costs such as salaries, rent and like items. The decrease in other underwriting expenses is due to cost reductions in the segment as a result of the decline in underwriting activity in the segment. In addition, due to the decline in underwriting activity in the segment, the percentage of common operating and administrative costs that are allocated to the Finite Risk segment has also declined.decreased .

Financial Condition, Liquidity and Capital Resources

Financial Condition

Cash and cash equivalents ~~were $ 391,637 ,000~~ and ~~$209,897,000~~investments as of ~~September 30, 2005~~March 31, 2006 and December 31, ~~2004, respectively. Fixed maturities~~2005 were ~~$2,983,217,000 and $2,240,202,000~~ as ~~of September 30, 2005 and December 31, 2004, respectively. Cash~~follows ($ in thousands):


	March 31,		December 31,		Increase
	2006		2005		(decrease)
Cash and cash equivalents	$	570,030		820,746	$	(250,716	)
Fixed maturity securities		3,221,321		2,987,703		233,618
Preferred stocks		8,169		8,186		(17	)
Short-term investments		80,609		8,793		71,816

Total	$	3,880,129		3,825,428	$	54,701

The increase in total cash and cash equivalents and ~~the investment portfolio increased~~investments is due to positive cash flow from operations, excluding trading securities activities, which was $186,239,000 in the ~~issuance~~three months ended March 31, 2006. This increase was partially offset by the decline in fair value of ~~the Series A Notes in May 2005 and the issuance of common shares in September 2005. The Company’s fixed maturity~~our investments. Our available-for-sale and trading portfolios are ~~comprised~~ primarily composed of diversified, high quality, predominantly publicly traded fixed maturity ~~investments. The~~securities. Our investment portfolio, ~~including~~excluding cash and cash equivalents, had a weighted average duration of ~~3.2 years and 3.6~~3.3 years as of ~~September 30, 2005~~March 31, 2006. We maintain and ~~December 31, 2004, respectively. Management monitors~~periodically update our overall duration target for the portfolio and routinely monitor the composition of, ~~the investment portfolio~~ and cash flows from, the portfolio to maintain ~~the~~ liquidity necessary to meet ~~the Company’s~~our obligations.

~~Certain assets and liabilities associated with underwriting~~Premiums receivable include significant estimates. Premiums receivable as of ~~September 30, 2005~~March 31, 2006 of
~~$557,422 ,000~~ $517,429,000 include ~~$513,833,000~~$483,313,000 that is based upon estimates. Premiums receivable as of December 31, ~~2004~~2005 of ~~$580,048,000~~$567,449,000 include ~~$530,066,000~~$496,603,000 that is based upon estimates. An allowance for uncollectible premiums is established for possible non-payment of such amounts due, as deemed necessary. As of ~~September 30, 2005,~~

-27-

March 31, 2006, 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 offset premiums receivable with losses and ~~loss adjustment expense~~LAE or other amounts payable to the same parties.

Unpaid losses and LAE as of ~~September 30, 2005~~March 31, 2006 of ~~$2,079,668,000~~$2,371,916,000 include ~~$1,780,117,000~~$1,676,545,000 of estimates of claims that were incurred but not reported (“IBNR”). Unpaid losses and LAE as of December 31, ~~2004~~2005 of ~~$1,380,955,000~~$2,323,990,000 includes ~~$1,151,500,000~~$1,812,245,000 of IBNR. IBNR decreased during the three months ended March 31, 2006 as losses related the 2004 Hurricanes and 2005 Hurricanes were reported and paid. Paid losses related to the 2004 Hurricanes and 2005 Hurricanes during the three months ended March 31, 2006 were approximately $66,685,000.

Commissions payable as of ~~September 30, 2005~~March 31, 2006 of ~~$ 176,036 ,000~~$142,826,000 include ~~$151,516,000~~$134,052,000 that isrepresent estimates that are primarily based upon premium estimates. Commissions

~~- 40 -~~

payable as of December 31, ~~2004~~2005 of ~~$181,925,000~~$186,654,000 include ~~$165,050,000~~$167,949,000 that is ~~based upon estimates. Deferred acquisition costs and unearned premiums are also~~ based upon estimates.

Sources of Liquidity

The consolidated sources of funds of the Company consist of premiums written, investment income, proceeds from sales and redemption of investments, losses recovered from retrocessionaires, and cash and cash equivalents held by the Company as well as the sale of debt or equity securities. Net cash flow provided by operations, excluding trading securities activities, for the ~~nine~~three months ended ~~September 30, 2005~~March 31, 2006 was ~~$573,215,000 and was used primarily to acquire additional investments.~~$186,239,000.

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,~~subsidiaries: Platinum Bermuda, Platinum US and Platinum UK. As a holding company, the cash flow of Platinum Holdings consists primarily of dividends, interest and other permissible payments from its ~~subsidiaries.~~subsidiaries and issuances of securities. 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. Platinum Finance is dependent on dividends from its subsidiary, Platinum US, to make interest~~preferred and ~~principal payments on the Senior Guaranteed Notes and Series A Notes.~~common shareholders.

The Company ~~has~~ filed an allocated 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 included up to $750,000,000 of common shares, preferred shares and various types of debt securities. Common shares held by St. Paul and RenaissanceRe and common shares issuable upon exercise of options owned by St. Paul and RenaissanceRe accounted for $586,381,900 of the $750,000,000 of securities registered under the registration statement. On June 25, 2004, the Company announced St. Paul’s 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.

On September 22, 2005, Platinum Holdings completed the offering of 5,839,286 common shares at a price to the public of $28.00 per share, less related expenses. The proceeds were $161,865,000, net of expenses, and are expected to be used to make contributions to the capital and surplus of the reinsurance subsidiaries and for general corporate purposes. This common share offering utilized substantially all of the remaining capacity allocated to the Company under the allocated shelf registration statement.

~~On October 24, 2005, Platinum Holdings and Platinum Finance filed an additional~~ unallocated universal shelf registration statement with the ~~SEC. Once~~SEC, which the ~~universal~~SEC declared effective on November 8, 2005. Under this shelf registration statement ~~becomes effective,~~ the Company may issue and sell, in one or more offerings, up to $750,000,000 of debt, equity and other types of securities or a combination of the above, including debt securities of Platinum Finance, unconditionally guaranteed by ~~the Company.~~Platinum Holdings. To ~~effect~~affect any such sales from time to time, Platinum Holdings and/or Platinum Finance will file one or more supplements to the prospectus forming a part of such registration statement, which will provide details of any proposed offering.

In November 2002, the Company issued the ESU’s consisting of a contract to purchase common shares of the Company in 2005 and an ownership interest in a Senior Guaranteed Note. On August 16, 2005, Platinum Finance successfully completed the remarketing of $137,500,000 aggregate principal amount of the Senior Guaranteed Notes due November 16, 2007 at a price of 100.7738% with a reset interest rate of 6.371% (the “Remarketed Senior Guaranteed Notes”). Interest is payable on the Remarketed Senior Guaranteed Notes on May 16 and November 16 of each year, commencing November 16, 2005. The

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Remarketed Senior Guaranteed Notes are unconditionally guaranteed by Platinum Holdings. The remarketing was conducted on behalf of holders of the ESU’s and neither Platinum Holdings nor Platinum Finance received any cash proceeds from the remarketing. Proceeds from the remarketing were used to purchase a portfolio of U.S. Treasury securities to secure the obligations of the holders of the ESU’s under the related common share purchase contract and to pay the remarketing fee. There were no excess proceeds to be distributed to holders of the ESU’s in connection with the remarketing. On October 26,December 2005, Platinum Holdings issued $132,909,000 of Common Shares and ~~Platinum Finance launched an exchange offer through which they offered to exchange~~$173,363,000 of mandatory convertible preferred shares under this unallocated shelf registration statement.

On December 1, 2005, certain reform measures simplifying the ~~outstanding Remarketed Senior Guaranteed Notes~~process for ~~Series B Remarketed Senior Guaranteed Notes having substantially the same terms and which have been~~conducting registered securities offerings under the Securities Act of 1933 (the "Securities Act") came into effect. The new rules provide that shelf registration statements of certain well-known seasoned issuers, such as ~~amended (the “Securities Act”). This exchange offer is currently scheduled to remain open through November 29, 2005.~~

~~During the fourth quarter of 2005, the Company expects~~Platinum Holdings, are eligible for effectiveness automatically upon filing. Should Platinum Holdings seek to issue ~~common shares pursuant to~~securities in the ~~ESU’s, which is expected to generate cash proceeds to the Company of approximately $137,500,000, less related fees and expenses.~~

In May 2005, Platinum Finance issued $250,000,000 aggregate principal amount of Series A Notes, unconditionally guaranteed by Platinum Holdings. The Series A Notes were issued in a transaction exempt from the registration requirements under the Securities Act. The proceedsfuture, it may make use of the Series A Notes were used primarily to increase the capital of Platinum Bermuda and Platinum US. Interest at a per annum rate of 7.5% is payable on the Series A Notes on each June 1 and December 1 commencing on December 1, 2005. Platinum Finance may redeem the Series A Notes, at its option, at any time in whole, or from time to time in part, prior to maturity. The redemption price will be equal to the greater of: (i) 100 percent of the principal amount of the Series A Notes and (ii) the sum of the present values of the remaining scheduled payments of principal and interest, discounted to the redemption date on a semiannual basis at a comparable treasury rate plus 50 basis points, plus in each case, interest accrued but not paid to the date of redemption. On September 27, 2005, Platinum Holdings and Platinum Finance launched an exchange offer through which they offered to exchange up to $250,000,000 aggregate principal amount of the outstanding Series A Notes for up to $250,000,000 aggregate principal amount of Series B Notes which have the substantially the same terms and which have been registered under the Securities Act (the “Series B Notes”) pursuant to a separate prospectus. This exchange offer is currently scheduled to remain open through October 28, 2005.new rules.

On October 21, 2005 the Company entered into a three-year $200,000,000 credit agreement with a syndicate of lenders. The credit agreement consists of a $100,000,000 senior unsecured credit facility available for revolving borrowings and letters of credit, and a $100,000,000 senior secured credit facility available for letters of credit. The revolving line of credit will be available for the working capital, liquidity and general corporate requirements of the Company. The interest rate on borrowings under the credit facility is based on the election of the Company ~~and its subsidiaries.~~of either: (1) LIBOR plus 50 basis points or (2) the higher of: (a) the prime interest rate of the lead bank providing the credit facility, or (b) the federal funds rate plus 50 basis

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points. The interest rate based on LIBOR rate would decrease by up to 10 basis points or increase by up to 12.5 basis points should our senior unsecured debt credit rating increase or decrease.

Liquidity Requirements

The principal consolidated cash requirements of the Company are the payment of losses and LAE, commissions, ~~brokerages,~~brokerage, operating expenses, dividends to its preferred and common shareholders, the servicing of debt, ~~(including contract adjustment payments related to the Company’s ESU’s),~~ the acquisition of and investment in businesses, capital expenditures, ~~premiums retroceded~~purchase of retrocessional contracts and payment of taxes. The ~~contract adjustment~~catastrophe losses of 2005 and, to a lesser extent, the catastrophe losses in 2004, will create an unusually large amount of loss and LAE payments ~~will cease upon issuance~~over the next year that could adversely affect net cash flows from operations.

Platinum Bermuda and Platinum UK are not licensed, approved or accredited as reinsurers anywhere in the United States and therefore, under the terms of ~~the common shares in November 2005.~~

~~It is increasingly common for the Company’s reinsurance~~most of their contracts ~~to contain terms that allow~~with United States ceding companies, they are required to ~~cancel the contract or require~~provide collateral to ~~be posted~~their ceding companies for unpaid ceded liabilities in a ~~portion~~form acceptable to state insurance commissioners. Typically, this type of collateral takes the ~~Company’s obligations if~~form of a letter of credit issued by a bank, the ~~Company’s reinsurance subsidiaries are downgraded below~~establishment of 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 conditionstrust, or funds withheld. Platinum Bermuda and ~~the pricing and availability of replacement reinsurance coverage. Therefore, it is not possible to predict in advance the extent to which this~~

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~~cancellation right would be exercised, if at all, or what effect such cancellations would~~Platinum UK have ~~on the financial condition or future operations, but such effect potentially could be material.~~

~~The Company may from time to time secure its obligations under its various reinsurance contracts using trusts,~~obtained letters of credit or funds held. The Company has entered into agreements with several ceding companies that require it to provide collateral for its 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 the Company’s rating from A.M. Best Company, Inc. (“A.M. Best”) or other rating agenciesthrough commercial banks and a downgrade of the ratings or a failure to achieve a certain rating may increase the amount of collateral the Company is required to provide. The Company may provide the collateral by delivering letters of credit to the ceding company, depositing assets into trusts for the benefit of the ceding companies or permitting the ceding companies to withhold funds that would otherwise be delivered to us under the reinsurance contract. The amount of collateral the Company is required to provide typically represents a portion of the obligations the Company may owe the ceding company, often including estimates of IBNR made by the ceding company. Since the Company may be required to provide ~~collateral based on~~ the ~~ceding company’s estimate,~~banks with a security interest in certain investments of Platinum Bermuda and Platinum UK.

In 2002, the Company ~~may be~~and The St. Paul Travelers Companies, Inc., formerly The St. Paul Companies, Inc., (“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 unearned premiums, unpaid losses and LAE and certain other liabilities on reinsurance contracts becoming effective in 2002 (the “Quota Share Retrocession Agreements”). Platinum US is obligated to collateralize the liabilities assumed from St. Paul under the Quota Share Retrocession Agreements. Platinum Bermuda and Platinum US have reinsurance and other contracts that also require them to provide collateral ~~that exceeds its estimates of the ultimate liability~~ to ~~the ceding company.~~

~~A.M. Best 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~~should certain events occur, such as ~~an important means of assessing the financial strength and quality of reinsurers. In addition, the rating of~~ a ~~ceding company may be adversely affected by a downgrade~~decline 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.

by A.M. Best ~~has assigned~~Company (“A.M. Best”) below specified levels or a ~~financial strength rating~~decline in statutory equity below specified amounts, or when certain levels of ~~“A” (Excellent) to the Company. The Company does not~~liabilities assumed from ceding companies are attained. Some reinsurance contracts also have a financial strength rating issued by any rating agency other than A.M. Best. In the future the Company may obtain financial strength ratings from other rating agencies, though it is not possible to predict the impact of any such ratings at this time. The Company has a senior unsecured debt rating of BBB from Standard & Poor’s.

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 dividends or other distributions by the reinsurance subsidiaries of the Company as of September 30, 2005 without prior regulatory approval is estimated to be $114,637,000. While the Company’s reinsurance subsidiaries could legally pay such an aggregate amount, management believesspecial termination provisions that dividends in such an amount would reduce the capital of its reinsurance subsidiaries to a level that may result in a downgrade of its various ratings. Management also believes that Platinum Holdings can receive dividends from its reinsurance subsidiaries in sufficient amounts necessary to meet the obligations of Platinum Holdings without significantly increasing the risk of a downgrade.

~~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, of which $40,015,000 remains available under the plan.~~permit early termination should certain events occur.

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 ~~expected~~ 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

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Current Outlook

~~Both~~Hurricanes Katrina, Rita and Wilma (the “2005 Hurricanes”) caused significant losses to insurers and reinsurers ~~experienced large losses from Hurricanes Katrina and Rita~~ during the third ~~quarter~~and fourth quarters of ~~this year. In the weeks following~~2005. Following these events, ~~some insurers and~~rating agencies strengthened the capital requirements for companies with catastrophe exposures. Many reinsurers ~~raised~~added capital through ~~a number of~~ equity and debt ~~offerings. Rating agencies have placed a~~offerings, but some saw their financial strength ratings downgraded in any case. In contrast, our A.M. Best rating of “A” (Excellent) was affirmed, which we believe strengthened our relative position in the marketplace.

A number of new Bermuda-based reinsurance companies were formed after the 2005 Hurricanes. We believe that most of these companies were in the process of assembling their underwriting staff and establishing their market presence during the renewal season for contracts effective on January 1, 2006 (the “January 1 Renewal Season”). The January 1 Renewal Season is generally considered the most significant underwriting period of the year for the reinsurance industry.

We believe 2006 renewal negotiations have been more contentious than usual. We experienced account turnover across all lines of business. However, terms and conditions on most of our ~~competitors~~renewed treaties improved or remained substantially unchanged depending on ~~negative watch~~the line of business. For reinsurance with exposures to North American hurricanes capacity has continued to shrink and rates have increased further since the ~~potential for a ratings downgrade. The~~January 1 Renewal Season. We expect these conditions to continue during the remainder of 2006, but the competitive landscape is still evolving and the depth and breadth of market changes ~~in reaction to~~for the ~~size~~balance of ~~the hurricane losses is~~2006 remain uncertain. We expect that terms and conditions on most reinsurance treaties will improve or remain at the status quo and the degree of improvement will vary by line of business. The fourth quarter has the fewest number of contracts renewed of any quarter and has little impact on the premium recorded in the current year. We anticipate that our total net premiums written in 2005 will be approximately the same as in 2004.

For the Property and Marine segment, underlying primary rates and reinsurance rates are expected to increase, particularly for risks exposed to Atlantic hurricanes. During 2006 we have achieved average rate increases of over 50% on our U.S. ~~wind-exposed risks.~~property renewal business and nearly 10% on our non-U.S. property renewal business, as well as average rate increases of approximately 65% on our marine renewal business. Despite having increased our assumptions for the frequency and severity of U.S. windstorm catastrophe exposures, we believe these rate increases result in a portfolio of catastrophe exposed business with expected profitability that is higher than the expected profitability of last year’s portfolio.

During 2006 we wrote more property catastrophe excess-of-loss business and less property risk excess-of-loss and pro-rata business. Property risk excess-of-loss and pro-rata business typically generates relatively more premium than property catastrophe excess-of-loss business having a similar risk level. However, we believe property catastrophe excess-of-loss business generally provides more quantifiable catastrophe exposure and is currently priced more attractively.

For 2006, we have targeted our net probable maximum loss from catastrophe exposures at various occurrence levels to be, relatively lower as a percentage of our expected total capital than prior years. For example, we expect our net probable maximum loss from catastrophe exposures at the one in 250 year occurrence level to be approximately 20% of total capital for 2006 versus approximately 30% of total capital for 2005. For the balance of the year we will seek to write business that does not significantly contribute to our largest probable maximum loss exposures. We believe this lower level of net catastrophe exposure will reduce the expected volatility of our operating results.

Given the magnitude of recent hurricane losses for the insurance and reinsurance industry in general and expectations for an active Atlantic hurricane season in 2006, we believe there is a heightened perception of risk among ceding companies, reinsurers and rating agencies. Accordingly, demand for property catastrophe risk transfer may increase beyond current levels. We expect that, ~~given the large size of the Hurricane Katrina loss many reinsurers~~as revisions to catastrophe models are released and new rating agency capital requirements are better understood, there will be reevaluating the adequacy of their pricing models. We also believe that reinsurance buyers will consider securing more coverage in the future, especially if the losses from Hurricane Katrina have exceeded the limits of their in-force programs. We further believe that the reduction in supplycontinued U.S. market hardening for property and increased demand means higher market pricing will result despite the significant post-event capital raising. We believe that other catastrophe-exposed lines of business will also experience rate increases though to a smaller degree. We anticipate that our net premiums written in 2005 in this segment will be approximately the same as in 2004.marine business.

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For the Casualty segment, we believe that losses from the ~~size of the Hurricane Katrina losses~~2005 Hurricanes and enhanced rating agency capital requirements will cause ~~the primary~~certain insurance and reinsurance companies ~~and reinsurers~~ to review their strategies for business which is not generally exposed to catastrophes. During 2006, ceding companies were willing to increase retentions and ~~their appetite~~reinsurers competed for ~~growth~~participation on the best treaties. However, rates stabilized in ~~these~~certain lines of business ~~resulting~~where they had been declining. As a result, we believe that the business underwritten during 2006 has approximately the same level of expected profitability as the business we wrote during the comparable period in ~~a stabilizing effect on profitability.~~2005. We have written more commercial liability and less professional liability, trade credit, accident and health and clash business. We have written approximately the same amount of surety, political risk, medical malpractice and regional business as we did during the comparable period in 2005. We believe that financial security remains a significant concern for buyers of long-tailed reinsurance protection, who typically seek reinsurers with strong balance sheets, quality ratings, and a proven claims-paying record. We believe that our rating, capitalization and reputation as a lead casualty reinsurer positions us well to write profitable ~~opportunities~~business as ~~they~~the opportunities arise. We expect these conditions to persist through 2006 and that the casualty market will remain attractive. However, two areas where pricing has generally fallen below our standards are accident and health and trade credit and accordingly we anticipate ~~that~~significantly cutting back our ~~net premiums written~~writings in ~~2005 in this segment will be higher than in 2004.~~these lines.

In the Finite Risk segment, we ~~expect~~believe that the ongoing investigations by the SEC, the office of the Attorney General for the State of New York, ~~and~~ the U.S. Attorney for the Southern District of New York and non-U.S. regulatory authorities such as the Bermuda Monetary Authority and the U.K. Financial Services Authority ~~will~~resulted in significantly ~~diminish~~diminished demand for limited risk transfer products in 2005. We believe we can deploy our human and financial capital more profitably in other lines of business. As a result, we are devoting fewer underwriting and pricing resources to this segment than in prior years and wrote a relatively small amount of finite business during 2006 relative to the ~~short term.~~comparable period last year. Although we ~~cannot predict~~expect the ~~ultimate outcome~~relatively low level of ~~these investigations, we believe that if the buyers and sellers of these products perceive that the accounting, headline and regulatory risk has receded,~~ demand will ~~return. Also, improved or stabilized pricing in traditional lines of business may mean fewer companies devoting significant resources~~continue during 2006, there are signs that buyers are, once again, considering finite reinsurance as a solution to finite lines. Accordingly, we expect to write significantly less finite business in 2005 than in 2004. During the six months ended September 30, 2005 we did not write any new or renewal contracts in our Finite Risk segment and we anticipate that our net premiums written in 2005 in this segment will be significantly lower than in 2004. Our existing portfolio of finitetheir risk ~~contracts is expected to generate net premiums earned in 2005 that is substantially the same as in 2004.~~management needs.

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Critical Accounting Policies, Estimates and Judgments

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 valuation 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.~~disclosures. Certain of the estimates and assumptions result from judgments that ~~can be~~are necessarily subjective ~~and complex,~~ and consequently actual results may differ from these estimates. The Company’s ~~most~~ critical accounting policies involve premiums written and ~~unearned premium,~~earned, unpaid losses and LAE, reinsurance, investments, income ~~tax expense~~taxes and ~~share-based~~stock-based compensation. The critical accounting policies presented herein are also discussed ~~in more detail~~ in the notes to the consolidated financial statements included in the Company’s ~~amended~~ Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2004.~~2005.

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,~~operations, 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”). The premium estimation process considers the terms and conditions of the reinsurance contracts and assumes that the contracts will remain in force until expiration. The estimation of written premiums could be affected by early cancellation, election of contract provisions for cut-off and return of unearned premiums or other

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contract disruptions. In addition to estimating WBNR, the Company estimates the portion of ~~premium~~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~~our 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’’~~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~~our 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 net impact on the results of operations of changes in estimated premiums earned is reduced by the losses and acquisition expenses related to such premiums earned.

Premiums receivable include premiums billed and in the course of collection as well as WBNR. WBNR is the component of premiums receivable that is subject to judgment and uncertainty. Premiums receivable as of March 31, 2006 of $517,429,000 include $483,313,000 of WBNR that is based upon estimates. The appropriateness of ~~the premium estimates~~WBNR is evaluated in light of the actual premium reported by the ceding companies and any adjustments to ~~these estimates~~WBNR and EBNR that represent premiums earned 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~~our underwriting function in respect of the ~~nine~~three months ~~ending September 30, 2005~~ended March 31, 2006 were ~~reviewed based upon the foregoing considerations.~~evaluated. The cumulative impact of ~~this review~~our evaluation in respect of premiums receivable as of March 31, 2006 was to reduce ~~the estimate~~WBNR by approximately ~~$43,841,000~~$60 million or ~~7.9%~~12%. WBNR premium receivable in our North American casualty claims-made excess of ~~premiums receivable at September 30, 2005. At September 30, 2005,~~loss reinsurance class was $61 million of the ~~Company recorded premiums receivable~~$483,313,000 as of ~~$ 557,422 ,000. As an illustration, the Company had one contract~~March 31, 2006 and reflects a $30 million reduction from initial premium estimates. We believe that at September 30, 2005, represented approximately $49,255,000 in premiums receivable. With respect to that contract, the Company reduced premiums receivable by approximately $3,600,000 because it did not expect the ceding company to meet its production estimates or to achieve its estimated rate increases. The Company believes that itwe reasonably could have made an adjustment of between $0 and ~~$3,600,000~~$30 million with respect to ~~that contract~~this reinsurance class at ~~September 30, 2005.~~March 31, 2006. Had itwe not made ~~a $0~~this adjustment, the reinsurance premiums receivable for ~~that contract at September 30, 2005~~this class would have been $52,855,000. It made the $3,600,000 adjustment, resulting in premiums receivable for that contract of $49,255,000. While an adjustment of greater than $3,600,000 is possible with respect to that contract, the Company does not consider such circumstance to be reasonably$91 million at March 31, 2006.

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likely. 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,~~Premiums earned, 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. An allowance for uncollectible premiums is established for possible non-payment of such amounts due, as deemed necessary. As of March 31, 2006, we did not establish an allowance based on our historical experience, the general profile of our ceding companies and our ability in most cases to contractually offset those premium receivables against losses and loss adjustment expense or other amounts payable to the same parties.

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. Any unearned premium existing at the time a contract limit is exhausted or reinstated is immediately earned. Additional premiums are those premiums triggered by losses and not related to reinstatement of limits and are ~~earned immediately.~~immediately earned. An allowance for uncollectible premiums is established for possible non-payment of such amounts due, as deemed necessary.

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Unpaid Losses and LAE

~~The~~One of the most significant ~~judgment~~judgments made by management in the preparation of financial statements is the estimation of unpaid losses and LAE, also referred to as “loss reserves.” 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. These liabilities are balance sheet estimates of future amounts required to pay losses and LAE for reinsured claims for which we are liable and that 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 the quantitative techniques used to estimate these amounts are enhanced by professional and managerial judgment. ~~The Company’s~~Company management reviews these estimates and determines its best estimate of the liabilities to record in the Company’s financial statements.

While the Company commenced operations in 2002, the business written is sufficiently similar to the historical business of St. Paul Re such that the Company uses the historical loss experience of this business, which is periodically updated by St. Paul Re, 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 of 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 is done following a catastrophe that affects many ceding companies. Ultimate losses and LAE are based on management’s judgment and reflect estimates gathered from ceding companies, estimates of insurance industry losses gathered from public sources and estimates derived from catastrophe modeling software.

Unpaid losses and LAE ~~include~~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 ~~cost~~degree of reliance that the Company necessarily places on ceding companies for claims reporting, the associated time lag, the low frequency/high severity nature of some of the business that ~~were reported but not yet paid (“case reserves”)~~the Company underwrites and the ~~cost~~varying reserving practices among ceding companies, the Company’s reserve estimates are highly dependent on management judgment and are therefore uncertain. Estimates of ~~claims that~~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.

The gross liabilities recorded on the Company’s balance sheet as of March 31, 2006 for unpaid losses and LAE were ~~incurred but not reported (“IBNR”).~~$2,371,916,000. The following table sets forth a breakdown between case reserves and IBNR by segment at March 31, 2006 ($ in thousands):


	Property
	and Marine		Casualty		Finite Risk		Total
Case reserves	$	425,284		188,709		81,378	$	695,371
IBNR		407,842		994,019		274,684		1,676,545

Total unpaid losses and LAE	$	833,126		1,182,728		356,062	$	2,371,916

Case reserves are usually based upon claim reports received from ceding companies. The information ~~the Company receives~~we receive 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~~our claims personnel based on receipt of additional information, including information received from ceding companies.

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Property
and Marine Casualty Finite Risk Total
Case reserves $ 130,159 139,835 29,557 $ 299,551
IBNR 620,617 868,619 290,881 1,780,117

Total unpaid losses and LAE $ 750,776 1,008,454 320,438 $ 2,079,668

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~~our pricing process, and (ii) historical loss ratios of the Company and ~~of the reinsurance underwriting segment of~~ St. Paul ~~(“St. Paul Re”) prior to the Initial Public Offering~~Re adjusted for rate changes and trends. These judgments will take into account management’s view of past, current and ~~future~~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.

When estimating unpaid losses and LAE, each of our 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 Underwriting Year, starting with 2002.

Multiple point estimates using a variety of actuarial techniques are calculated for many, but not all, of ~~the Company’s~~our 80 classes of coverage for each Underwriting Year. ~~The Company does~~We do not believe that these multiple point estimates are or should be considered a range. ~~The Company’s~~Our actuaries ~~look at~~consider 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 not yet resulted in reported losses. For some classes of business ~~the Company’s~~our 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~~accident and ~~Health~~health class within the Casualty segment. Once ~~the~~our actuaries make their determinations of the most appropriate point estimate for each class, this information is aggregated and ~~presented to~~reviewed and approved by executive ~~management for review and approval.~~management. At ~~September 30, 2005~~March 31, 2006 the liability for unpaid losses and LAE that ~~the Company~~we recorded ~~reflected~~includes the point estimates of IBNR prepared by ~~the Company’s~~our actuaries.

Generally, North American casualty excess business has the longest pattern of reported losses and, therefore, ~~the greatest uncertainty.~~loss estimates have a higher degree of uncertainty than other reinsurance classes. IBNR for these classes at ~~September 30, 2005~~March 31, 2006 was ~~$643,000,000~~$749 million which was ~~36%~~47% of the total IBNR ~~for the Company~~ at that date. Because estimates of unpaid losses and LAE related to North American casualty excess business ~~has the greatest~~have a higher degree of uncertainty, ~~the Company~~we 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 ~~of $56,000,000.~~by $68.5 million. This equates to approximately 8% of the liability for total unpaid losses and LAE for these classes at ~~September 30, 2005.~~March 31, 2006. As another example, if the estimated pattern of reported losses was accelerated by 5% the IBNR for these classes would decrease by ~~$3,000,000~~$3 million which is less than 1%. ~~Because the Company believes~~We have selected these two inputs as examples of sensitivity analyses because we believe that 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.~~losses.

~~- 47 -~~-34-

The pattern of reported losses is determined utilizing actuarial analysis, including management’s judgment, and is based on historical patterns of paid losses and reporting of case reserves ~~reported~~ 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, such as the judicial interpretations of what constitutes a covered loss under insurance and reinsurance contracts. Because of the degree of reliance that the Company necessarily 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’s judgment.

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.

The losses caused by Hurricane Katrina include significant flood damage, most of which are not covered by the Company’s reinsurance contracts or its ceding companies’ insurance policies. The Company’s estimate of losses from the hurricanes does not include losses excluded from coverage. There are a number of challenges to flood loss exclusions, including actions taken by the Mississippi attorney general and class action litigation. While flood coverage exclusions have generally been upheld by courts, there can be no assurance that significant additional losses will not arise as a result of claims for losses excluded from coverage by contract.

~~- 48 -~~

Loss reserve calculations for ~~direct~~primary 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~~primary 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 and then to the reinsurer. As a 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. As of March 31, 2006, we did not have any significant back-log related to our processing of assumed reinsurance information.

Since ~~the Company relies~~we rely on information regarding paid losses, case reserves and IBNR ~~reserves~~ provided by ceding companies in order to assist ~~the Company~~us in estimating ~~its own~~our liability for unpaid losses and LAE, ~~the Company maintains~~we maintain 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 or brokers on claims matters, ~~the Company’s~~our claims personnel conduct periodic audits of specific claims and the overall claims procedures of ~~its~~our ceding companies at their offices. ~~The Company relies~~We rely on ~~its~~our ability to effectively monitor the claims handling and claims reserving practices of ceding companies in order to help 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~~In addition to the inherent uncertainty of estimating unpaid losses and LAE, our estimates with respect to the 2005 Hurricanes are ~~periodically re-estimated~~subject to an unusually high level of uncertainty arising out of complex and ~~adjusted~~unique causation and coverage issues associated with the attribution of losses to wind or flood damage or other perils such as ~~new information becomes available. Any such adjustments are accounted~~fire, business interruption or riot and civil commotion. For example, the underlying policies generally do not cover flood damage; however, water damage caused by wind may be covered. Our actual losses from the 2005 Hurricanes may exceed our estimates as a result of, among other things, the attribution of losses to coverages that for ~~as changes in~~the purpose of our estimates we assumed would not be exposed, which may be affected by class action lawsuits or state regulatory actions. We expect that these issues will not be resolved for a considerable period of time and ~~are reflected in results of operations in the period in which they are made.~~may be influenced by evolving legal and regulatory developments.

-35-

In accordance with ~~the Company’s~~our investment guidelines, ~~investments consist largely~~our investment portfolio consists of ~~high-grade marketable~~diversified, high quality, predominantly publicly traded fixed ~~income~~maturity securities. Fixed ~~maturities owned that the Company~~maturity securities for which we 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~~maturity securities for which we have 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.~~income and the related deferred income tax included in income tax expense. Securities classified as trading securities are generally denominated in foreign currencies and are 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 accretion of discounts on investments.

~~The Company believes it has~~We believe we have the ability to hold any specific security to maturity. This is based on current and anticipated future positive cash flow from operations that ~~generates~~is expected to generate sufficient liquidity in order to meet ~~its~~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~~“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~~overall financial condition of the issuer, 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. 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.~~operations.

Income ~~Tax Expense~~Taxes

Platinum Holdings and Platinum Bermuda are ~~incorporated~~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~~We apply 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~~values of existing assets and liabilities and their ~~respective~~corresponding tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which the taxes related to those temporary differences are expected to be

-36-

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.

Share-Based Compensation

~~Effective~~We adopted Statement of Financial Accounting Standards No. 123R “Share-Based Payment” (“SFAS 123R”) on the modified prospective method effective January 1, ~~2003,~~2006. SFAS 123R establishes standards for the ~~Company adopted~~accounting for transactions in which an entity exchanges its equity instruments for goods or services. SFAS 123R requires that, prospectively, compensation costs be recognized for the fair value of all share options over their vesting period, including the cost related to the unvested portion of all outstanding share options as of December 31, 2005.

Prior to January 1, 2006, we accounted for share based compensation using 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~~In accordance with the ~~fair value of shares granted under the Company’s share option plan subsequent to adoption~~transition rules 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 transition 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 usedwe elected to continue using the intrinsic value method of accounting for ~~stock-based~~our share-based awards granted to employees established by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). for share options granted in 2002. Under APB 25, if the exercise price of ~~the Company’s~~our 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 APB 25.~~

~~- 50 -~~

SFAS 123R requires that, prospectively, compensation costs be recognized for the fair value of all share options over the remaining vesting period, 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.

On April 14, 2005, the SEC adopted a new rule that allows SEC registrants to implement SFAS 123R as of January 1, 2006. The SEC’s new rule does not change the accounting required by SFAS 123R; it delays the date for compliance with the standard. Previously under SFAS 123R, the Company would have been required to implement the standard as of July 1, 2005. Consequently, the Company’s consolidated financial statements filed with the SEC do not need to comply with SFAS 123R until January 1, 2006. The Company plans to adopt the provisions of the SFAS 123R in the first quarter of 2006.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market and Credit Risk

The Company’s principal invested assets are fixed ~~maturities,~~maturity securities, which are subject to ~~fluctuations~~the risk of potential losses from adverse changes in market ~~value associated with changes in interest~~ 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 ~~limit its credit risk by placing~~place its investments in high quality credit issues and to limit the amount of credit exposure with respect to any one issuer or ~~industry.~~asset class. The Company also selects investments with characteristics such as duration, yield, currency and liquidity to reflect, in the ~~amount and payment timing risk~~aggregate, the underlying characteristics of ~~its~~our unpaid losses and ~~LAE and its expected cash flow from operations.~~LAE. The Company attempts to ~~manage its~~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 (“Moody’s”). As of ~~September 30, 2005,~~March 31, 2006, the portfolio, excluding cash and short-term investments, has a dollar weighted average credit rating of Aa2 as defined by Moody’s.

The Company has other receivable amounts subject to credit risk. The most significant of these are reinsurance premiums receivable from ceding companies. We also have reinsurance recoverable amounts from our retrocessionaires. To mitigate credit risk related to ~~premiums receivable,~~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 ~~premiums~~premium receivable. ~~Management does not consider~~To mitigate credit risk related to ~~its retrocessionaires to be material as of September 30, 2005. Management considers~~our reinsurance recoverable amounts, we consider the financial strength of our retrocessionaires when determining whether to purchase coverage from them. Retrocessional coverage is generally obtained from companies rated ~~“A”~~“A-” or better by A. M. Best unless the ~~retrocessionaires’~~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 A. M. Best.~~ The financial performance and rating status of all material retrocessionaires is routinely monitored.

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. ~~Further,~~Conversely, in certain jurisdictions, when ceding companies remit premiums ~~for such contracts are paid~~ to reinsurance brokers, ~~for payment over to the Company,~~ such premiums ~~will be~~are deemed to have been paid to the Company and the ceding company ~~will~~

-37-

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~~maturity portfolio and can cause changes in the actual timing of receipt of certain principal payments. Rising interest rates result in a ~~decline~~decrease in the market value of our fixed ~~income~~maturity portfolio and can expose our portfolio, in particular our mortgage backed securities, to extension risk. Conversely, a decrease in interest rates will result in an increase in the market value of our fixed maturity 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 fixed income portfolio and can expose the portfolio, in particular our mortgage-backed securities, to prepayment risk. The ~~approximate~~ aggregate hypothetical impact on ~~the~~our fixed ~~income~~maturity portfolio, generated from an immediate parallel shift in the treasury yield curve, as of ~~September 30, 2005~~March 31, 2006 is as follows ($ in thousands) :


	Interest Rate Shift in Basis Points															Interest Rate Shift in Basis Points
	- 100 bp			- 50 bp			Current			+ 50 bp			+ 100 bp			- 100 bp			- 50 bp			Current			+ 50 bp			+ 100 bp
Total market value	$	3,091,148			3,037,684			2,983,217			2,928,139		$	2,872,933		$	3,327,750			3,275,149			3,221,321			3,166,980		$	3,112,748
Percent change in market value		3.6	%		1.8	%		—			(1.8	%)		(3.7	%)		3.3	%		1.7	%		–			(1.7	%)		(3.4	%)
Resulting unrealized appreciation / (depreciation)	$	76,803			23,339			(31,128	)		(86,206	)	$	(141,412	)	$	17,852			(34,749	)		(88,577	)		(142,918	)	$	(197,150	)

Item 4. 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~~as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (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~~ensure 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.

Changes in Internal Control over Financial Reporting

NoOur management, including the chief executive officer and the chief financial officer, in connection with the evaluation required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, concluded that no changes occurred during the quarter ended ~~September 30, 2005~~March 31, 2006 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of 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-Q 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-Q 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)		conducting operations in a competitive environment;

	(2)		our ability to maintain our ~~rating from~~ A.M. ~~Best;~~Best Company, Inc. rating;

	(3)		significant weather-related or other natural or man-made disasters over which the Company has no ~~control, including, without limitation, Hurricanes Katrina and Rita, and the possibility that estimates of losses and LAE from Hurricanes Katrina and Rita will prove to be materially different;~~control;

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

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

	(8)		general political and economic conditions, including the effects of civil unrest, acts of terrorism, 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~~Item 1A – “Risk Factors” in the Company’s ~~amended~~ Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2004~~2005 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.

PART II —– OTHER INFORMATION

~~Item 1. LEGAL PROCEEDINGS~~

As previously disclosed, 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 an early stage and, accordingly, it is not possible to predict the direction the investigation will take and the impact, if any, it may have on the Company’s business. In view of the ongoing industry investigations, the Company retained the law firm of Dewey Ballantine LLP to conduct a review of its finite reinsurance practices. They informed the Company that they identified no evidence of improprieties.

On June 14, 2005, we received a grand jury subpoena from the United States Attorney for the Southern District of New York requesting documents relating to our finite reinsurance products. We have been informed that other companies in the industry have received similar subpoenas. We are fully cooperating in responding to this request.

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

~~Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

During the third quarter of 2005, there were no sales of equity securities of the Company not registered under the Securities Act. Also, during the third quarter of 2005, neither the Company nor any affiliated purchaser purchased any of the Company’s common shares.

~~- 54 -~~


	Page
PART I – FINANCIAL INFORMATION
	~~Page~~

~~PART I — FINANCIAL INFORMATION~~

Item 1. Condensed Consolidated Financial Statements

Consolidated Balance Sheets as of ~~September 30, 2005~~March 31, 2006 (Unaudited) and December 31, ~~2004~~2005		1

Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2006 and ~~Nine months ended September 30,~~ 2005 ~~and 2004~~ (Unaudited)		2

Consolidated Statements of Changes in Shareholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ (Unaudited)		3

Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ (Unaudited)		4

Notes to Condensed Consolidated Financial Statements (Unaudited) for the Three Months ended March 31, 2006 and ~~Nine Months Ended September 30,~~ 2005 ~~and 2004~~		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~		25	19

Item 3. Quantitative and Qualitative Disclosures about Market Risk		51	37

Item 4. Controls and Procedures		53	39

PART II —– OTHER INFORMATION

~~Item 1. Legal Proceedings~~		54

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~		54

Item 6. Exhibits		55	40

SIGNATURES	41
55EX-3.II.1: BY-LAWS OF PLATINUM HOLDINGS
EX-10.1: AMENDED AND RESTATED QUOTA SHARE RETROCESSION AGREEMENT
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Revenue:
Net premiums earned	$	429,388			383,090			1,271,898		$	1,014,999
Net investment income		36,441			21,429			92,250			58,290
Net realized gains (losses) on investments		(879	)		2,262			(1,062	)		1,435
Other income (expense)		(433	)		1,021			(201	)		2,137

Total revenue		464,517			407,802			1,362,885			1,076,861


Expenses:
Losses and loss adjustment expenses		564,618			384,724			1,043,168			736,159
Acquisition expenses		98,858			81,271			296,035			232,886
Operating expenses		8,080			15,400			51,568			53,436
Net foreign currency exchange (gains) losses		(88	)		(628	)		1,870			(326	)
Interest expense		6,839			2,322			13,186			6,952

Total expenses		678,307			483,089			1,405,827			1,029,107

Income (loss) before income tax expense		(213,790	)		(75,287	)		(42,942	)		47,754
Income tax expense (benefit)		(37,766	)		(5,535	)		(7,991	)		12,893

Net income (loss)	$	(176,024	)		(69,752	)		(34,951	)	$	34,861


Earnings per share:
Basic earnings (loss) per share	$	(4.02	)		(1.62	)		(0.80	)	$	0.81
Diluted earnings (loss) per share	$	(4.02	)		(1.62	)		(0.80	)	$	0.78

Comprehensive income (loss):
Net income (loss)	$	(176,024	)		(69,752	)		(34,951	)	$	34,861
Other comprehensive income (loss):
Net change in unrealized gains and losses on available-for-sale securities, net of deferred taxes		(36,414	)		31,147			(37,992	)		(2,036	)
Cumulative translation adjustments, net of deferred taxes		59			(140	)		22			(292	)

Comprehensive income (loss)	$	(212,379	)		(38,745	)		(72,921	)	$	32,533


Shareholder dividends:
Dividends declared	$	3,490			3,435			10,401		$	10,360
Dividends declared per share	$	0.08			0.08			0.24		$	0.24


	2005			2004
Gross losses and LAE	$	396,923		$	186,457
Retrocessional reinsurance		(56,083	)		—

Net losses and LAE		340,840			186,457
Additional premiums earned		(19,554	)		(19,895	)
Profit commissions		—			(10,350	)

Net adverse impact on underwriting results	$	321,286		$	156,212


	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Fixed maturities	$	2,983,217	$	2,983,217
Fixed maturity securities					$	3,221,321	$	3,221,321
Preferred stocks						8,169		8,169
Other invested asset		6,000		6,000		5,000		5,000

Short-term investments						80,609		80,609
Financial liabilities:
Debt obligations	$	387,500	$	399,125	$	292,840	$	290,725

	(5)		the adequacy of the Company’s liability for unpaid losses and loss adjustment ~~expenses;~~expenses, including, but not limited to, losses from Hurricanes Katrina, Rita and Wilma and the possibility that estimates of losses and LAE from Hurricanes Katrina, Rita and Wilma may prove to be materially different from estimates made to date;

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


Exhibit
Number		Description
3(ii).1		Bye-Laws of Platinum Holdings.

10.1		Amended and Restated Quota Share Retrocession Agreement dated April 11, 2006 between Platinum Bermuda and Platinum US.

31.1		Certification of Michael D. Price, Chief Executive Officer of Platinum Holdings, pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

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 Exchange Act.

32.1		Certification of Michael D. Price, 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.

	~~(b)~~		~~Reports on Form 8-K~~

			On October 24 2005, Platinum Holdings filed with the SEC a report on Form 8-K containing a press release, issued on October 21, 2005, reporting that (1) the Company entered into a three-year $200,000,000 credit agreement dated as of October 21, 2005 consisting of a $100,000,000 unsecured senior credit facility available for revolving borrowings and letters of credit and a $100,000,000 secured senior credit facility available for letters of credit, and (2) Platinum Holdings and Platinum Finance filed an additional unallocated universal shelf registration statement with the SEC.

			On October 28, 2005, Platinum Holdings filed with the SEC a report on Form 8-K containing a press release, issued on October 27, 2005, reporting the appointment of Michael D. Price as President and Chief Executive Officer, succeeding Gregory E.A. Morrison, who has been named Vice Chairman of the Board of Directors.


		~~Platinum Underwriters Holdings, Ltd~~

~~Date: October 31, 2005~~		~~/s/Michael D. Price~~
Platinum Underwriters Holdings, Ltd

Date: April 27, 2006		/s/Michael D. Price
		By: Michael D. Price
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~October 31, 2005~~April 27, 2006		/s/ Joseph F. Fisher

		By: Joseph F. Fisher
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)