-----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, Fg536I1yW1/rKzrKl0UztEImntsDIudTYnqNPLOU8/C+34Kkf+ckLtaMkrfIgRxC gRL75ItppVLWbFeSDvASiQ== 0000950159-00-000023.txt : 20000210 0000950159-00-000023.hdr.sgml : 20000210 ACCESSION NUMBER: 0000950159-00-000023 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000202 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PMA CAPITAL CORP CENTRAL INDEX KEY: 0001041665 STANDARD INDUSTRIAL CLASSIFICATION: 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: 520697 BUSINESS ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 STREET 2: 380 SENTRY PKWY CITY: PHILADELPHIA STATE: PA ZIP: 19103-7590 BUSINESS PHONE: 2156655046 MAIL ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 STREET 2: 380 SENTRY PARKWAY 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): February 2, 2000 ---------------- 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 February 2, 2000, the registrant issued a news release, a copy of which is filed as Exhibit 99.1 hereto and is incorporated herein by reference. B. On February 2, 2000, the registrant issued a news release, a copy of which is filed as Exhibit 99.2 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: February 2, 2000 By: /s/ Francis W. McDonnell ------------------------ Francis W. McDonnell, Senior Vice President, Chief Financial Officer and Treasurer 2 Index to Exhibits ----------------- Number Description Method of Filing ------ ----------- ---------------- 99.1 PMA Capital Corporation Filed herewith news release dated February 2, 2000 99.2 PMA Capital Corporation Filed herewith news release dated February 2, 2000 EX-99.1 2 PMA Capital A Specialty Risk Management Company Mellon Bank Center Suite 2800 1735 Market Street Philadelphia, PA 19103-7590 PRESS RELEASE - - -------------------------------------------------------------------------------- For Release: Immediate Contact: Albert D. Ciavardelli (215) 665-5063 PMA Capital Announces Fourth Quarter and Full Year 1999 Results --------------------------------------------------------------- Full Year 1999 Operating EPS Rose 12% ------------------------------------- Fourth Quarter 1999 Operating EPS Increased Over Fourth Quarter 1998 -------------------------------------------------------------------- Marking the Eighth Consecutive Quarter of Year-over-Year Improvement -------------------------------------------------------------------- Philadelphia, PA, February 2, 2000 -- PMA Capital (NASDAQ: PMACA) today announced that fourth quarter 1999 after-tax operating income (net income excluding after-tax net realized investment gains and losses) increased 4% to $9.0 million, compared with $8.6 million for the fourth quarter of 1998. On a per share basis, operating income improved 6% to $0.38 per diluted share, compared with $0.36 per diluted share for the same period last year. For the full year 1999, after-tax operating income increased 9% to $33.4 million, compared with $30.6 million for the same period last year. Operating income per share for the full year 1999 improved 12% to $1.40 per diluted share up from $1.25 per diluted share for the same period last year. The increases in operating income for the quarter and full year 1999 reflect solid improvement in pre-tax operating income due to better underwriting results, as evidenced by the decline in the combined ratio. This improvement was partially offset by a higher effective tax rate in 1999, compared with 1998. In addition, after-tax operating income per share benefited from the favorable effect of share repurchase activities over the past two years. Net premiums written for the full year 1999 increased 19% to $563.5 million, compared with $474.8 million for the same period last year. "PMA Capital's strong financial performance in 1999 was underscored by continued premium growth and solid underwriting performance in the fourth quarter. The quarter's operating results improved compared with the same period last year which marked the eighth consecutive quarter of such higher operating earnings," stated John W. Smithson, President and Chief Executive Officer of PMA Capital. "I am very satisfied with the performance of each of PMA Capital's three specialty insurance businesses. Each performed well in 1999 achieving their operating goals despite the continued market challenges in their respective specialty businesses. PMA Re's solid contribution to our premiums and operating results reflects their successful product expansion during 1999, as well as their solid underwriting discipline. The improvement in operating results at The PMA Insurance Group favorably reflects their continued strong focus on underwriting and expense discipline. Caliber One also met with success in 1999 by achieving significant market penetration in only their second year of operation in the excess and surplus lines business." Net Income - - ---------- Net income for the fourth quarter of 1999 was $6.6 million, or $0.28 per diluted share, compared with $12.7 million, or $0.52 per diluted share, for the comparable period of 1998. Net income for full year 1999 was $25.6 million, or $1.08 per diluted share, compared with $44.7 million, or $1.82 per diluted share, for the same period last year. Included in net income for the quarter and full year of 1999 were after-tax net realized investment losses of $2.3 million and $5.0 million, respectively, compared with after-tax gains of $4.1 million and $14.1 million for the same periods last year. Net realized investment losses in 1999 principally resulted from sales of investments in 1999 in order to capitalize on higher yielding investment opportunities. Net income for the full year of 1999 was also impacted by an after-tax charge of $2.8 million for the implementation of the new accounting rule for insurance-related assessments. PMA Re - - ------ PMA Re reported pre-tax operating income of $12.5 million for the fourth quarter of 1999, compared with $11.5 million for the same period last year. For the full year of 1999, pre-tax operating income was $50.3 million, compared with $46.4 million for the same period last year. The increase in operating results for the fourth quarter and full year of 1999 reflects an increase in investment income, and to a lesser extent, slower growth in operating expenses relative to premium growth. Net premiums written were $96.4 million and $279.0 million in the fourth quarter and full year of 1999, respectively, compared with $61.4 million and $234.0 million, respectively, for the same periods last year. Net written premiums for the full year of 1999 reflect the expansion of finite and financial product offerings, expanding relationships with PMA Re's existing clients, and contracts with new clients. This increase was partially offset by the effects of the highly competitive conditions in the U.S. reinsurance market, which has caused PMA Re to non-renew certain accounts largely due to inadequate rates and/or other underwriting issues. The combined ratio, as computed using generally accepted accounting principles (GAAP), was 102.5% for the fourth quarter of 1999, compared with 103.5% for the same period last year. For the full year of 1999, the GAAP combined ratio was 102.5%, compared with 103.7% for the same period last year. Net investment income was $15.1 million and $57.7 million for the fourth quarter and full year 1999, respectively, compared with $13.8 million and $54.7 million for the same periods last year. The 9% and 5% increases for the quarter and full year, respectively, reflect a higher average invested asset base and higher yields on the invested assets in 1999. 2 The PMA Insurance Group - - ----------------------- The PMA Insurance Group reported pre-tax operating income of $4.8 million for the fourth quarter of 1999, compared with $2.1 million for the same period last year. For the full year of 1999, pre-tax operating income was $18.2 million, compared with $10.5 million for the same period last year. These improvements reflect improved loss experience, reduced net exposures and lower operating expenses, partially offset by lower investment income. For the full year of 1999, direct workers' compensation premiums written by The PMA Insurance Group increased 10.7% to $203.6 million, compared with $183.9 million for 1998. This increase principally reflects the successful execution of focused marketing efforts, including efforts to shift the workers' compensation book to relatively lower hazard classes of business. Net premiums written were $51.2 million for the fourth quarter of 1999 and $233.7 million for the full year of 1999, respectively, compared with $40.5 million and $234.8 million for the same periods last year. The slight decrease in net premiums written for the full year of 1999, compared with 1998 levels, reflects higher ceded premiums on workers' compensation business and lower direct premiums for commercial lines other than workers' compensation, partially offset by growth in direct workers' compensation premiums. The GAAP combined ratio, excluding Run-off Operations (see discussion below), was 112.3% and 113.3% for the fourth quarter and full year of 1999, respectively, compared with 114.4% and 116.4% for the comparable periods last year. Net investment income, excluding Run-off Operations, decreased by $1.0 million and $4.5 million for the fourth quarter and full year of 1999, compared with the same periods last year, due largely to a lower invested asset base. 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 fourth quarter and full year of 1999, Run-off Operations had pre-tax operating income of $131,000 and pre-tax operating losses of $189,000, respectively, compared with pre-tax operating income of $411,000 and $452,000 for the same periods last year. Caliber One - - ----------- Caliber One commenced writing excess and surplus lines business in January 1998. As a result of the start-up nature of this operation, losses and expenses have exceeded revenues throughout much of the company's first two years of existence. However, throughout 1999, Caliber One's premium base and investment income increased, which contributed to its $83,000 pre-tax operating profit for the full year of 1999. Caliber One had a pre-tax operating loss of $1.6 million for the full year of 1998. Caliber One's net premiums written have grown each quarter in 1999 culminating in $51.2 million of net written premiums for the full year of 1999, with $20.6 million generated in the fourth quarter. Net written premiums were $3.9 million and $6.4 million for the fourth quarter and full year of 1998, respectively. Caliber One's GAAP combined ratio for 1999 was 109.6%. 3 Corporate and Other - - ------------------- The Corporate and Other segment includes unallocated investment income and expenses, including debt service, as well as the results of certain of the Company's real estate properties. For the fourth quarters of 1999 and 1998, pre-tax operating losses for this segment were $4.5 million and $2.7 million, respectively. For the years 1999 and 1998, pre-tax operating losses were $20.8 million and $21.9 million, respectively. The fourth quarter and full year of 1998 benefited from lower net losses from non-core real estate operations. This was more than offset by lower interest expense for the full year of 1999 due to the $40 million reduction in outstanding debt in the fourth quarter of 1998. Financial Position - - ------------------ Total assets were $3.2 billion as of December 31, 1999, compared with $3.5 billion as of December 31, 1998. Shareholders' equity was $429.1 million as of December 31, 1999, compared with $511.5 million as of December 31, 1998. The decrease in shareholders' equity reflects a $76.9 million reduction in after-tax unrealized appreciation on invested assets primarily resulting from an increase in interest rates since year-end 1998, which has decreased the fair value of fixed maturity investments. Book value per share, excluding unrealized gains and losses, was $21.22 as of December 31, 1999, compared with $20.61 as of December 31, 1998. Share Repurchase Plan - - --------------------- During 1999, PMA Capital repurchased 1.5 million shares of its Class A Common Stock at a cost of approximately $30.2 million (average per share price was $19.81). Since the inception of its share repurchase program in February 1998, PMA Capital has repurchased a total of 2.5 million shares at a total cost of $49.1 million (average per share price was $19.45). As of February 2, 2000, the remaining share repurchase authorization is approximately $25.9 million. Quarterly Dividends - - ------------------- On February 2, 2000, 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 March 13, 2000. The dividends will be paid on April 1, 2000. PMA Capital has paid consecutive quarterly dividends to its shareholders for the past 83 years. 4 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) managed care workers' compensation, integrated disability 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. The Company disclaims any obligation to update forward-looking information. 5 PMA Capital Corporation Financial Data (Dollars in thousands, except per share amounts)
Three months ended Dec. 31, Twelve months ended Dec. 31, Income Statement Data: 1999 1998 1999 1998 - - ---------------------------------------------------------------------------------------------------------------------------- Net premiums written: PMA Re $ 96,370 $ 61,415 $ 278,998 $ 234,010 The PMA Insurance Group 51,241 40,506 233,713 234,837 Caliber One 20,556 3,859 51,237 6,436 Corporate and other (75) (153) (438) (522) ------------------------------------------------------------------------ Consolidated $ 168,092 $ 105,627 $ 563,510 $ 474,761 ======================================================================== Revenues: Net premiums earned: PMA Re (1) $ 102,573 $ 66,206 $ 293,862 $ 223,559 The PMA Insurance Group 60,518 63,950 221,934 241,928 Caliber One 10,189 1,119 24,729 1,750 Corporate and other (75) (153) (438) (522) ------------------------------------------------------------------------ Consolidated Net premiums earned 173,205 131,122 540,087 466,715 Net Investment Income 27,958 27,865 110,057 120,125 Realized Gains (Losses) (3,584) 6,383 (7,745) 21,745 Other Revenues 3,890 5,511 12,718 14,896 ------------------------------------------------------------------------ Consolidated Revenues $ 201,469 $ 170,881 $ 655,117 $ 623,481 ======================================================================== Components of operating income (loss) (2): PMA Re $ 12,529 $ 11,526 $ 50,319 $ 46,408 The PMA Insurance Group 4,801 2,086 18,200 10,470 Caliber One 922 (289) 83 (1,606) Corporate and other (4,473) (2,737) (20,765) (21,948) ------------------------------------------------------------------------ Pre-tax operating income $ 13,779 $ 10,586 $ 47,837 $ 33,324 ======================================================================== After-tax operating income $ 8,956 $ 8,588 $ 33,387 $ 30,600 ======================================================================== Net income $ 6,627 $ 12,737 $ 25,594 $ 44,734 ======================================================================== Weighted Average Common Shares Outstanding: Basic 22,611,354 23,324,466 22,975,613 23,608,618 Diluted 23,388,741 24,178,280 23,785,203 24,524,888 After-tax Operating Income Per Share: Basic $ 0.40 $ 0.37 $ 1.45 $ 1.30 ======================================================================== Diluted $ 0.38 $ 0.36 $ 1.40 $ 1.25 ======================================================================== Net Income Per Share: Basic $ 0.29 $ 0.54 $ 1.11 $ 1.89 ======================================================================== Diluted $ 0.28 $ 0.52 $ 1.08 $ 1.82 ======================================================================== Balance Sheet Data: December 31, 1999 December 31, 1998 ------------------------------------------------- ----------------- ----------------- Total Assets $ 3,245,372 $ 3,460,718 Shareholders' Equity $ 429,143 $ 511,480 Shareholders' Equity per Share (including FAS 115) $ 19.21 $ 21.90 Shareholders' Equity per Share (excluding FAS 115) $ 21.22 $ 20.61 (1) PMA Re's earned premiums for the full year of 1999 include approximately $32 million, reflecting a revision in the estimate of unearned premiums on in-force contracts. (2) Pre-tax operating income (loss) represents pre-tax income (loss) from continuing operations, but excluding net realized investment gains (losses). After-tax operating income (loss) is net income (loss) excluding after-tax net realized investment gains (losses).
6 EX-99.2 3 PMA Capital A Specialty Risk Management Company Mellon Bank Center Suite 2800 1735 Market Street Philadelphia, PA 19103-7590 PRESS RELEASE - - -------------------------------------------------------------------------------- For Release: Immediate Contact: Albert D. Ciavardelli (215) 665-5063 PMA Capital Corporation Announces --------------------------------- Date of Annual Shareholders Meeting and --------------------------------------- Proposals for Shareholder Action -------------------------------- Philadelphia, PA, February 2, 2000 - PMA Capital Corporation (NASDAQ: PMACA) today announced that the 2000 Annual Meeting of Shareholders will be held at 9:00 a.m. Eastern Standard Time on Monday, April 24, 2000, at 380 Sentry Parkway, Blue Bell, PA. The record date for determining shareholders entitled to vote at the Annual Meeting will be March 6, 2000. The Board of Directors approved the following proposals to be presented to the shareholders at the Annual Meeting: 1. Election of four directors (Messrs. Frederick W. Anton III, Joseph H. Foster, James F. Malone III and L.J. Rowell, Jr.) to serve until 2003. 2. Approval of an amendment to the Company's Amended and Restated Articles of Incorporation to reclassify and convert each issued share of the Company's Common Stock into one share of Class A Common Stock. 3. Approval of an amendment to the Company's Amended and Restated Articles of Incorporation to authorize two million shares of undesignated Preferred Stock, $0.01 par value per share, and to authorize the Board, without further shareholder approval, to designate one or more series of Preferred Stock, with rights and privileges as the Board may determine. 4. Approval of the PMA Capital Corporation Annual Incentive Plan. 5. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors for the year ending December 31, 2000. The Board's approval of Proposals 2 and 3 is conditioned upon shareholder approval of both of the Proposals at the Annual Meeting. Proposal 2 will require the affirmative class vote of two-thirds of the outstanding shares of Common Stock, and the combined vote of a majority of the outstanding shares of Common and Class A Common Stock. Proposal 3 will require the affirmative vote of a majority of the outstanding shares of Common and Class A Common Stock, each voting separately as a class. Members of the Board of Directors, executive officers and PMA Foundation own in the aggregate approximately 7.30 million shares of Common Stock and approximately 2.49 million shares of Class A Common Stock as of December 31, 1999, representing 55% of the voting power of the Company's outstanding capital stock and intend to vote in favor of all of the above proposals. As of December 31, 1999, the Company had outstanding approximately 12.65 million shares of Common Stock and approximately 9.69 million shares of Class A Common Stock. If the proposals are adopted, members of the Board of Directors, executive officers and PMA Foundation will continue to own in the aggregate approximately 9.79 million shares of Class A Common Stock representing 44% of the outstanding shares and voting power of the Company's capital stock. The Company believes that the reclassification and conversion of Common Stock to Class A Common Stock will simplify the Company's capital structure and may, among other things, create a more liquid trading market for the Class A Common Stock. However, the Company cannot predict what effect the reclassification amendment will have on the trading volume or market price of the Class A Common Stock. The Company has no present plan to issue any shares of preferred stock if Proposals 2 and 3 are approved. If these proposals are approved, the Board of Directors intends to adopt a shareholder rights plan at its next regularly scheduled meeting in May 2000. This press release contains forward-looking statements. In addition to the cautionary statements set forth with the forward-looking statements, readers should evaluate the forward-looking statements in this press release with the cautionary statements contained in the Company's 1998 Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, which are incorporated by reference in this press release. The Company disclaims any obligation to update forward-looking information. Important Notice: - - ----------------- All shareholders of the Company are urged to read the Company's proxy statement relating to the 2000 Annual Meeting when it is available because it will contain important information about the proposals described in this press release. The Company intends to mail its definitive proxy statement to holders of record sometime during the last two weeks of March. At the same time, the Company's preliminary and definitive proxy statements, and any other relevant documents, will be available for free at the Securities and Exchange Commission's website (www.sec.gov). Further, when they are available, the Company's notice of meeting, proxy statement and 1999 Annual Report will be available for free from the Company by contacting Albert D. Ciavardelli, Vice President--Finance at 215-665-5063. The proposals described in this press release are management proposals, and the participants in the solicitation relating to these proposals include the current directors, nominees for director at the 2000 Annual Meeting and certain officers of the Company. The officers of the Company who are participants in this solicitation include: Frederick W. Anton III, Chairman of the Board, John W. Smithson, President and Chief Executive Officer, Francis W. McDonnell, Senior Vice President and Chief Financial Officer, and Albert D. Ciavardelli, Vice President-Finance. Certain Information Concerning Participants - - ------------------------------------------- The security holdings of the directors, director nominees and officers who are participating in this solicitation are available from the Company at the above telephone number. 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) managed care workers' compensation, integrated disability 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. -----END PRIVACY-ENHANCED MESSAGE-----