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): September 20, 2001
PMA Capital Corporation
(Exact name of registrant as specified in its charter)
|
Pennsylvania (State or other jurisdiction of incorporation) |
000-22761 (Commission File Number) |
23-2217932 (IRS Employer Identification No.) |
| 1735 Market Street, Suite 2800 Philadelphia, Pennsylvania (Address of principal executive offices) |
19103-7590 (Zip Code) |
Registrant's telephone number, including area code:
(215) 665-5046
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events and Regulation FD Disclosure.
A. Business Outlook. As a result of its preliminary estimate of the net effects from claims from the World Trade Center attacks, the Company is revising its business outlook. The public should not continue to rely on the Company’s previous business outlook, which is historical and speaks as of a date prior to the Company’s September 18, 2001 press release. Based on management’s current expectations, the Company expects consolidated after-tax operating earnings for 2001 to be in the breakeven range, assuming no changes in its World Trade Center loss estimates or its loss estimates related to its other insurance business.
B. On September 20, 2001, Standard & Poor’s announced that as a result of the insurance industry’s potential losses resulting from the World Trade Center attacks, it was placing a number of companies on CreditWatch with negative implications, pending its review of their World Trade Center losses. The Company’s reinsurance subsidiary, PMA Capital Insurance Company, was included in the list of such companies. A Company press release regarding Standard & Poor’s action is attached as Exhibit 99.1.
C. On September 21, 2001, the registrant sent a letter to its shareholders from John W. Smithson, the Company’s President and Chief Executive Officer, a copy of which is filed as Exhibit 99.2 hereto and is incorporated herein by reference.
CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE
HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained above in this Form 8-K and the exhibits
attached hereto, 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, interest rates and the level of unemployment; |
| • | regulatory or tax changes, including changes in risk-based capital or other regulatory standards that affect the cost of or demand for the Company’s products or otherwise affect the ability of the Company to conduct its business; |
| • | competitive conditions resulting from the significant amount of capital in the property and casualty insurance marketplace that may affect the level of rate adequacy related to the amount of risk undertaken and that may influence the sustainability of adequate rate changes; |
| • | 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; |
| • | the lowering or loss of one or more of the financial strength or claims paying ratings of the Company’s insurance subsidiaries; |
| • | 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; |
| • | reliance on key management; and |
| • | other factors disclosed from time to time in the Company’s most recent Forms 10-K, 10-Q and 8-K filed by the Company with the Securities and Exchange Commission. |
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Investors should not place undue reliance on any forward-looking statements. Unless otherwise stated, the Company disclaims any current intention to update forward-looking information and to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Item 7. Financial Statements and Exhibits.
(c) The exhibit accompanying this report is listed in the Index to Exhibits on page E-1.
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SIGNATURES
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: September 21, 2001 | By: /s/Francis W. McDonnell |
| Francis W. McDonnell | |
| Senior Vice President, Chief Financial | |
| Officer and Treasurer | |
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Index to Exhibits
| Number | Description | Method of Filing |
| 99.1 | PMA Capital Corporation Press Release dated September 20, 2001 |
Filed herewith |
| 99.2 | PMA Capital Corporation Letter to Shareholders dated September 21, 2001 |
Filed herewith |
E-1
| Exhibit 99.1 |
PMA CAPITAL [LOGO]
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 Confirms Estimate of Loss Exposure
Philadelphia, PA, September 20, 2001 – PMA Capital (NASDAQ: PMACA) announced earlier this week that its initial and preliminary estimate of the potential exposure to the losses caused by the attacks on the World Trade Center last Tuesday to be in the range of $30 million pre-tax ($20 million after-tax), which is approximately 4 percent of consolidated statutory surplus. “Our estimate is based upon our analysis of the underwriting exposures in all of our businesses, and I am confident in the reasonableness of our estimate. Upon further review, today, we reaffirm our earlier estimate,” stated John W. Smithson, President and Chief Executive Officer of PMA Capital.
In response to the industry’s exposure to last week’s events, Standard & Poor’s (S&P) is reviewing the ratings of many insurance companies, including PMA Capital Insurance Company. Commenting on S&P’s announcement, Smithson said, “The rating agencies play an important role in the insurance marketplace. We are pleased to have reaffirmed our initial loss estimate today, and we look forward to sharing the details of our analyses with S&P. Finally, I believe that PMA Capital’s financial condition remains strong even after considering these exposures and that our ratings should remain strong as well.”
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, 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. For additional information about PMA Capital and its specialty insurance businesses, please visit us at www.pmacapital.com.
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| Exhibit 99.1 |
CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE
HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this press release, including those made
by John W. Smithson, 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, interest rates and the level of unemployment; |
| • | regulatory or tax changes, including changes in risk-based capital or other regulatory standards that affect the cost of or demand for the Company’s products or otherwise affect the ability of the Company to conduct its business; |
| • | competitive conditions resulting from the significant amount of capital in the property and casualty insurance marketplace that may affect the level of rate adequacy related to the amount of risk undertaken and that may influence the sustainability of adequate rate changes; |
| • | 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; |
| • | the lowering or loss of one or more of the financial strength or claims paying ratings of the Company’s insurance subsidiaries; |
| • | 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; |
| • | reliance on key management; and |
| • | other factors disclosed from time to time in the Company’s most recent Forms 10-K, 10-Q and 8-K filed by the Company with the Securities and Exchange Commission. |
Investors should not place undue reliance on any forward-looking statements. Unless otherwise stated, the Company disclaims any current intention to update forward-looking information and to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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| Exhibit 99.2 |
| PMA CAPITAL [LOGO] A Specialty Risk Management Company | |
| John W. Smithson President and Chief Executive Officer Tel: 215.665.5110 Fax: 215.665.5009 Internet: jsmithson@pmare.com |
September 21, 2001
Dear Shareholder:
Although many of you may have already seen our press release on last week’s World Trade Center attacks, I wanted to personally write to assure you that PMA Capital continues to be financially strong and stable.
Based upon our analysis of the facts presently available to us, our net loss estimate from the September 11th events is in the range of $30 million pre-tax ($20 million after-tax). We believe that neither the PMA Insurance Group nor Caliber One will have meaningful losses from these events. Our largest exposure is from property business written at PMA Re. However, our net loss estimate takes appropriate credit for the various outgoing reinsurance protections that we purchase. Our actual net results can only be determined as claims begin to be reported, but I’m confident in the reasonableness of our estimates.
Analysts and rating agencies are viewing the industry loss as a test of financial stability rather than as an earnings issue. As a result, Standard and Poor’s is reviewing the claims paying rating of many insurance companies, including PMA Capital Insurance Company. We remain confident in our financial strength and have contacted Standard & Poor’s to initiate this review so that our present rating can be affirmed on a timely basis.
We are presently forecasting that the Company will have year-end earnings in the breakeven range on an after-tax basis, assuming no changes in our World Trade Center losses and other reserve estimates in each of our operating companies.
There will be many challenges for our country in the days and years ahead, but I know that PMA Capital and the insurance industry as a whole will admirably fulfill our responsibilities to our customers. The tragic losses of last Tuesday will also lead to further market tightening, which will test our underwriting abilities as we evaluate substantial opportunities for our business. I am pleased that we have the skills and dedication to respond to these new conditions, and I thank you for your continuing commitment to our Company.
| Sincerely yours, | |
| /s/ John |
All forward-looking statements are subject to the “Cautionary Statements” contained in Form 8-K filed with the Securities and Exchange Commission on the date hereof.
| Mellon Bank Center 1735 Market Street Philadelphia, Pennsylvania 19103-7590 |
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