-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I1/UOtNRtRIS8kRXCONLjSJJ59j+xJh732r+0gv4kmR5Zq+pjvV92ZGf23/jyKQ1 Mst0hez3APbUoVPRwNZHZQ== 0000950159-99-000119.txt : 19990507 0000950159-99-000119.hdr.sgml : 19990507 ACCESSION NUMBER: 0000950159-99-000119 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990505 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PMA CAPITAL CORP CENTRAL INDEX KEY: 0001041665 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 232217932 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22761 FILM NUMBER: 99612578 BUSINESS ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 CITY: PHILADELPHIA STATE: PA ZIP: 19103-7590 BUSINESS PHONE: 2156655046 MAIL ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 CITY: PHILADELPHIA STATE: PA ZIP: 19103-7590 FORMER COMPANY: FORMER CONFORMED NAME: PENNSYLVANIA MANUFACTURERS CORP DATE OF NAME CHANGE: 19970702 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 5, 1999 ----------- PMA Capital Corporation ----------------------- (Exact name of registrant as specified in its charter) Pennsylvania 000-22761 23-2217932 ------------ --------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1735 Market Street, Suite 2800 Philadelphia, Pennsylvania 19103-7590 -------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (215) 665-5046 -------------- Not Applicable -------------- (Former name or former address, if changed since last report) 5. Other Events. A. On May 5, 1999, the registrant issued a news release, a copy of which is filed as Exhibit 99 hereto and is incorporated herein by reference. Item 7. Financial Statements and Exhibits. (c) The exhibit accompanying this report is listed in the Index to Exhibits on the following page. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PMA Capital Corporation Date: May 6, 1999 By: /s/ Francis W. McDonnell ------------------------ Francis W. McDonnell, Senior Vice President, Chief Financial Officer and Treasurer Index to Exhibits ----------------- Number Description Method of Filing ------ ----------- ---------------- 99 PMA Capital Corporation Filed herewith news release dated May 5, 1999 EX-99 2 [PMA CAPITAL LETTERHEAD] 1735 Market Street Suite 2800 Philadelphia, PA 19103-7590 PRESS RELEASE ================================================================================ For Release: Immediate Contact: Albert D. Ciavardelli (215) 665-5063 PMA Capital Corporation Reports First Quarter 1999 Results And Declares Quarterly Dividend Operating Income Rises 14% to $0.33 per share; 10% Growth in Net Premiums Written Philadelphia, PA, May 5, 1999 -- PMA Capital Corporation (NASDAQ: PMACA) today reported first quarter 1999 after-tax operating income (net income excluding after-tax net realized investment gains) of $7.9 million, or $0.33 per diluted share, compared with $7.2 million, or $0.29 per diluted share, for the same period last year. This 14% increase in after-tax operating earnings per share primarily reflects solid growth in net premiums written, improved underwriting results and the effect of share repurchases, partially offset by a higher effective tax rate in the first quarter of 1999. Net income for the first quarter of 1999 was $5.7 million, or $0.24 per diluted share, compared with $12.1 million, or $0.49 per diluted share, for the first quarter of 1998. Included in net income for the first quarter of 1999 were after-tax net realized investment gains of $0.6 million, compared with $4.9 million for the same period last year. Net income for 1999 was also impacted by an after-tax charge of $2.8 million, or $0.11 per diluted share, for the required implementation of a new accounting pronouncement for property and casualty insurance companies regarding insurance-related assessments. "Our first quarter results showed a solid improvement in net premiums written, which, along with continued solid underwriting performance and the effect of our share repurchase program, contributed to the 14% growth in operating earnings per share this quarter," said John W. Smithson, President and Chief Executive Officer. "Our three specialty insurance businesses - PMA Re, The PMA Insurance Group and Caliber One -- continue to execute on our overall strategy to grow organically as we further our relationships with existing customers and establish relationships with new customers. Our growth reflects focused and targeted efforts to capitalize on opportunities, including expanding our product offerings in areas such as finite and financial products, to meet the risk management needs of our customers. In addition, our balance sheet remains strong, and we are committed to a philosophy of strict underwriting discipline, which is enabling us to achieve our profitability objectives." 1 PMA Re - ------ PMA Capital's reinsurance operations, PMA Re, reported pre-tax operating income of $12.7 million for the first quarter of 1999, compared with $11.4 million for the same period last year. The increase in operating results reflects improved underwriting results due primarily to a lower expense ratio. Net premiums written for PMA Re increased 11% to $78.3 million in the first quarter of 1999, compared with $70.8 million for the same period last year. This increase is primarily due to expanding relationships with PMA Re's existing clients, as well as contracts with new clients, which primarily reflect the successful expansion of finite and financial product offerings. PMA Re's combined ratio, as computed using generally accepted accounting principles ("GAAP"), was 101.7% for the first quarter of 1999, compared with 104.6% for the same period last year. The improvement in the combined ratio primarily reflects a lower expense ratio. The PMA Insurance Group - ----------------------- The PMA Insurance Group reported pre-tax operating income of $5.0 million for the first quarter of 1999, compared with $2.7 million for the same period last year. The improvement in pre-tax operating results for 1999 was primarily attributable to improved loss experience, reduced exposures and lower operating expenses resulting from ongoing cost reduction initiatives. The PMA Insurance Group's net premiums written increased 1% to $83.0 million for the first quarter of 1999, compared with $82.5 million for the same period last year. The improvement in net premiums written reflects a $3.3 million increase in direct premiums written, substantially offset by a $3.1 million increase in ceded premiums. Direct written premiums for workers' compensation increased 6% to $71.3 million in the first quarter of 1999, compared with $67.2 million for the same period last year, reflecting focused marketing efforts on workers' compensation business. The PMA Insurance Group's GAAP combined ratio, excluding Run-off Operations (see discussion below), was 114.3% for the first quarter of 1999, compared with 116.8% for the same period last year. The improvement primarily reflects a lower expense ratio and continued underwriting discipline. The PMA Insurance Group previously established run-off operations for the purpose of reinsuring certain obligations primarily associated with workers' compensation claims for the years 1991 and prior (the "Run-off Operations"). For the first quarter of 1999, Run-off Operations had pre-tax operating income of $66,000, compared with $135,000 for the same period last year. Investment income declined significantly in the first quarter of 1999, compared with the first quarter of 1998, primarily due to lower invested assets as a result of the sale of PMA Insurance, Cayman Ltd. in the third quarter of 1998. The sale of this entity also resulted in a reduction of losses and loss adjustment expenses commensurate with the decline in net investment income. 2 Caliber One - ----------- For the first quarter of 1999, Caliber One, which commenced writing business in January 1998, recorded a pre-tax operating loss of $696,000, compared with a loss of $389,000 for the same period last year. These losses primarily related to the start-up nature of this operation. Caliber One's net premiums written for the first quarter of 1999 were $7.3 million, compared with $212,000 for the same period last year. Corporate and Other - ------------------- The Corporate and Other segment includes unallocated investment income; expenses, including debt service; and taxes, as well as the results of certain of PMA Capital's real estate properties. For the first quarter of 1999, pre-tax operating losses for this segment were $4.8 million, compared with $6.5 million for the first quarter of 1998. The reduction in losses for the first quarter of 1999 primarily reflects lower interest expense and higher net revenues from non-core real estate properties. Financial Position - ------------------ Total assets were $3.5 billion as of March 31, 1999 and December 31, 1998. Shareholders' equity was $483.3 million, or $20.90 per share, as of March 31, 1999, compared with $511.5 million, or $21.90 per share, as of December 31, 1998. This decrease reflects a $25 million reduction in after-tax unrealized appreciation on fixed maturities due to an increase in interest rates. Excluding unrealized appreciation on fixed maturities, book value per share increased to $20.68 as of March 31, 1999, from $20.61 as of December 31, 1998. Share Repurchase Plan - --------------------- During the first quarter of 1999, PMA Capital repurchased 577,000 shares of its Class A Common Stock at a cost of $11.3 million (average per share price was $19.53). Since the inception of its share repurchase program in early 1998, PMA Capital has repurchased a total of 1.6 million shares at a total cost of $30.1 million (average per share price was $19.13), with remaining share repurchase authorization of $14.9 million. Quarterly Dividends - ------------------- On May 5, 1999, PMA Capital's Board of Directors declared regular quarterly dividends on its Class A Common Stock of $0.09 per share and on its Common Stock of $0.08 per share to shareholders of record on June 10, 1999. The dividends will be paid on July 1, 1999. PMA Capital has paid a quarterly dividend to shareholders for the past 82 years. 3 PMA Capital Corporation, headquartered in Philadelphia, Pennsylvania, is an insurance holding company, whose operating subsidiaries provide specialty risk management products and services to customers throughout the United States. The primary product lines of PMA Capital's subsidiaries include: 1) property and casualty reinsurance, underwritten and marketed through PMA Re; 2) workers' compensation and other commercial property and casualty lines of insurance in the Mid-Atlantic and Southern regions of the United States, underwritten and marketed under the trade name The PMA Insurance Group; and 3) excess and surplus lines coverages, underwritten and marketed by Caliber One. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The statements contained in this release and oral statements made by individuals authorized to speak on behalf of PMA Capital Corporation (the "Company") that are not historical facts are forward-looking statements and are based on estimates, assumptions and projections. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements are based on currently available financial, competitive and economic data and the Company's current operating plans based on assumptions regarding future events. The Company's actual results could differ materially from those expected by the Company's management. The factors that could cause actual results to vary materially, some of which are described with the forward-looking statements, include, but are not limited to, changes in general economic conditions, including the performance of financial markets and interest rates; regulatory or tax changes, including changes in risk-based capital or other regulatory standards that affect the ability of the Company to conduct its business; competitive or regulatory changes that affect the cost of or demand for the Company's products; the Company's ability to meet its marketing objectives; the effect of changes in workers' compensation statutes and their administration; the Company's ability to predict and effectively manage claims related to insurance and reinsurance policies; reliance on key management; adequacy of reserves for claim liabilities; adverse property and casualty loss development for events the Company insured in prior years; adequacy and collectibility of reinsurance purchased by the Company; severity of natural disasters and other catastrophes; and other factors disclosed from time to time in reports filed by the Company with the Securities and Exchange Commission. Investors should not place undue reliance on any such forward-looking statements. 4 PMA Capital Corporation Financial Data (Dollars in thousands, except per share amounts)
Three months ended March 31, - ----------------------------------------------------------------------------------- Income Statement Data: 1999 1998 Net premiums written: PMA Re $ 78,327 $ 70,819 The PMA Insurance Group 83,021 82,542 Caliber One 7,322 212 Corporate and other (153) -- ------------------------------ Consolidated $ 168,517 $ 153,573 ============================== Net premiums earned: PMA Re $ 52,433 $ 46,098 The PMA Insurance Group 54,399 60,798 Caliber One 2,643 26 Corporate and other (153) -- ------------------------------ Consolidated $ 109,322 $ 106,922 ============================== Components of operating income (loss) (1): PMA Re $ 12,749 $ 11,372 The PMA Insurance Group 4,985 2,736 Caliber One (696) (389) Corporate and other (1,755) (2,791) ------------------------------ Pre-tax operating income before interest expense 15,283 10,928 Interest expense 3,013 3,701 ------------------------------ Pre-tax operating income $ 12,270 $ 7,227 ============================== After-tax operating income $ 7,898 $ 7,204 ============================== Weighted Average Common Shares Outstanding: Basic 23,317,630 23,850,631 Diluted 24,103,452 24,582,335 After-tax Operating Income Per Share: Basic $ 0.34 $ 0.30 ============================== Diluted $ 0.33 $ 0.29 ============================== Balance Sheet Data: March 31, 1999 Dec. 31, 1998 - ------------------------------------------------------------------------------------ Total assets $ 3,508,714 $ 3,460,718 Shareholders' equity $ 483,348 $ 511,480 Shareholders' equity per share $ 20.90 $ 21.90
(1) Pre-tax operating income (loss) represents pre-tax income (loss) before the cumulative effect of accounting change and excluding pre-tax net realized investment gains. After-tax operating income (loss) is net income (loss) before the cumulative effect of accounting change and excluding after-tax net realized investment gains. 5 -----END PRIVACY-ENHANCED MESSAGE-----