EX-99 3 pmaex-99.htm EXHIBIT 99

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) 665-5046

PMA Capital Reports Fourth Quarter 2001 Results

Philadelphia, PA, February 6, 2002 -- PMA Capital Corporation (NASDAQ: PMACA) today announced that it had fourth quarter after-tax operating income (net income excluding after-tax net realized investment gains and losses) of $5.8 million, or $0.25 per diluted share, compared with $7.0 million, or $0.32 per diluted share, for the same period last year. Results for the fourth quarter of 2000 benefited by approximately $1 million, or $0.04 per share, from a lower effective tax rate, compared with fourth quarter of 2001.

“I am very pleased with our performance this quarter. Current underwriting fundamentals are very strong. Rate increases across the board in each of our segments will strengthen margins as we head into 2002. During the fourth quarter of 2001, our specialty insurance businesses experienced acceleration in the already improving trends impacting the property/casualty insurance and reinsurance markets. More new business was available at stronger prices, which contributed to the 46% increase in our gross written premiums for the fourth quarter. The surge in premiums this quarter served to boost our full year writings up 24% to just over $1 billion in 2001. This is a significant achievement for PMA Capital, and is a direct reflection of our market vitality and the franchise value that we enjoy in our insurance businesses,” stated John W. Smithson, President and Chief Executive Officer of PMA Capital.

“In addition to the favorable premium trends we are seeing throughout our insurance businesses, we were successful in our effort to raise capital to support continued growth. Our December 2001 equity offering netted close to $160 million in proceeds, and added to our already strong financial condition. We expect to deploy most of this new capital in 2002 to take further advantage of the current hard market where favorable trends such as significant price increases and tighter terms and conditions continued through the fourth quarter and into the January 1 renewal season.”

1

For full year 2001, PMA Capital recorded after-tax operating income of $1.9 million, or $0.09 per share. These results include losses of approximately $20 million after-tax (approximately $30 million pre-tax), or $0.90 per share, from the September 11th terrorist attack on the World Trade Center, and after-tax losses of $17.0 million, or $0.77 per share, in PMA Capital’s excess and surplus lines segment, Caliber One. Partially offsetting these losses were an after-tax gain of $6.3 million, or $0.28 per share, from the first quarter sale of real estate, as well as a first quarter tax benefit of $10.1 million, or $0.45 per share, resulting from the completion of an IRS examination.

For full year 2000, PMA Capital reported after-tax operating losses of $6.5 million, or $0.29 per share, including a third quarter charge of approximately $40 million after-tax (approximately $60 million pre-tax) due to higher than expected loss activity in our reinsurance operations.

Operating Revenues

Operating revenues include net premiums earned, net investment income and other service revenue. For the fourth quarter of 2001, operating revenues were $227.8 million, up 35% from the same period last year. For full year 2001, operating revenues were $842.0 million, up 30% from 2000. The increases in operating revenues in 2001, compared to 2000, reflect higher premiums in all segments of PMA Capital’s specialty insurance businesses primarily due to price increases and new business.

Net Income

PMA Capital recorded net income of $6.6 million, or $0.29 per share, for the fourth quarter of 2001, compared with net income of $12.2 million, or $0.56 per share, for the same period last year. Net income was $7.1 million, or $0.32 per share, for full year 2001, compared with net income of $1.3 million, or $0.06 per share, for 2000. Included in net income for the fourth quarter and full year 2001 were after-tax net realized investment gains of $864,000 and $5.2 million, compared with after-tax net realized gains of $5.1 million and $7.8 million for the same periods last year.

Financial Condition

Total assets were $3.8 billion as of December 31, 2001, compared with $3.5 billion as of December 31, 2000. Shareholders’ equity increased to $612.0 million as of December 31, 2001, compared with $440.0 million as of December 31, 2000. The increase in shareholders’ equity primarily reflects the sale of 9,775,000 shares of Class A Common stock under the Company’s equity offering in December 2001, which netted the Company proceeds of approximately $160 million.

Book value per share, including unrealized gains and losses, was $19.64 as of December 31, 2001, compared with $20.40 as of December 31, 2000. Excluding unrealized gains and losses, book value per share was $19.46 as of December 31, 2001, compared with $21.07 as of December 31, 2000.

As of December 31, 2001, long-term debt was $62.5 million, compared with $163.0 million as of December 31, 2000. The $100.5 million reduction in long-term debt during 2001 included a payment of $62.5 million made in the fourth quarter of 2001 from the proceeds from the equity offering.

2

PMA Re

PMA Re’s pre-tax operating income was $9.1 million for the fourth quarter of 2001, compared to $6.3 million for the same period last year. The higher operating income reflects improved underwriting results, partially offset by lower net investment income. For full year 2001, PMA Re reported a pre-tax operating loss of $3.1 million, compared to a pre-tax operating loss of $7.3 million in 2000. Included in the 2001 pre-tax results are approximately $30 million of net losses from the September 11th terrorist attack on the World Trade Center. The results for 2000 include a charge of approximately $60 million, which represented the net impact of higher than expected losses for treaties covering certain lines of business for accident years 1999 and 1998.

Gross premiums written in 2001 were $124.5 million for the fourth quarter and $476.6 million for the year, compared to $94.2 million and $394.8 million for the same periods last year. PMA Re’s net premiums written in 2001 were $106.6 million for the quarter and $360.6 million for the year, compared with $68.8 million and $261.5 million for the same periods last year. In addition to rate increases, the improvement in gross and net premiums written in full year 2001 reflects higher premium volume for the Finite Risk & Financial Products unit due primarily to increased demand for these coverages. Partially offsetting this growth was slightly lower premium volume in PMA Re’s Specialty and Traditional treaty reinsurance units reflecting PMA Re’s commitment to its established pricing guidelines and its unwillingness to underwrite accounts that do not meet these guidelines. Despite the full year decline in writings for PMA Re’s Traditional and Specialty treaty coverages, the environment for writing these coverages on acceptable terms became increasingly more favorable as the year progressed. This resulted in an increase in premiums written for the Traditional and Specialty treaty coverages for the second half of 2001, compared with the first half of the year.

The combined ratio, as computed using generally accepted accounting principles (GAAP), improved to 101.6% for the fourth quarter of 2001, compared with 109.4% for the same period last year. The improvement in the combined ratio is primarily due to a lower loss ratio. For full year 2001, the combined ratio was 114.2%, compared to 123.3% in 2000. Excluding the effect of losses from the September 11th attack, PMA Re’s combined ratio was approximately 105% for 2001.

Net investment income was $10.6 million and $45.4 million for the fourth quarter and full year 2001, compared with $13.0 million and $51.1 million for the same periods last year. The decline in investment income is primarily due to lower invested asset yields.

3

The PMA Insurance Group

The PMA Insurance Group reported pre-tax operating income of $5.7 million for the fourth quarter of 2001, up 8% from $5.2 million for the same period last year. For full year 2001, pre-tax operating income was $23.1 million, an increase of 7% from $21.6 million in 2000. These increases are primarily due to improved underwriting results, as premium growth in 2001 outpaced the growth in losses and expenses. Partially offsetting the improvement in underwriting results was lower investment income.

Net premiums written were $76.7 million for the fourth quarter of 2001, an increase of 67% over net premiums written of $45.9 million for the same period last year. For the year, net premiums written were $355.5 million, an increase of 32% compared to 2000. The increase reflects improved pricing in workers’ compensation as well as all other commercial lines of business underwritten by The PMA Insurance Group. In addition, premium growth was aided by an increase in the number of accounts written in response to The PMA Insurance Group’s focused marketing efforts in selected territories.

The GAAP combined ratio in 2001 was 104.8% for the fourth quarter and 105.5% for the full year, both of which improved from the corresponding periods last year when the GAAP combined ratio was 113.2% and 111.7%, respectively.

Net investment income decreased by $2.6 million and $8.5 million in the fourth quarter and full year 2001, compared with the same periods last year. These declines reflect a lower invested asset base resulting from the paydown of prior years’ losses, as well as a reduction in invested assets late in 2000 due to the transfer of substantially all of the assets and liabilities of The PMA Insurance Group’s former run-off operations to a third party under a reinsurance agreement.

Caliber One

Caliber One reported a pre-tax operating loss of $4.0 million for the fourth quarter of 2001, compared to operating income of $16,000 for the same period last year. For full year 2001, Caliber One had a pre-tax operating loss of $26.2 million, compared with a pre-tax operating loss of $7.0 million in 2000. The fourth quarter and full year 2001 results include losses of approximately $4 million and $22 million, respectively, resulting from higher than anticipated claims frequency and severity in certain casualty and property lines of business, primarily professional liability coverages for the nursing home class of business, for policies written in the latter part of 1999 and early 2000.

Caliber One’s gross premiums written in 2001 were $35.4 million for the fourth quarter and $124.3 million for the year, compared with $16.8 million and $93.4 million for the same periods in 2000. The increases in gross premiums written reflect growth in property and certain classes of liability lines of business due to rate increases as well as growth in policy volume. Caliber One’s net premiums written in 2001 were $13.6 million for the fourth quarter and $53.7 million for the year, compared with $3.3 million and $16.0 million for the comparable periods in 2000. The increases in net premiums written also reflect rate increases and growth in policy volume. In addition, net premiums written in 2000 reflected higher levels of ceded premiums, related primarily to the nursing home class of business.

4

Net investment income in 2001 was $1.1 million for the fourth quarter and $3.1 million for the year, compared to $1.4 million and $4.4 million in 2000. The declines in investment income reflect lower invested asset yields. For full year 2001, the decrease in net investment income also reflects additional interest on funds held reinsurance contracts.

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 quarter of 2001 and 2000, pre-tax operating losses for this segment were $2.7 million and $2.9 million, respectively. For full year 2001 and 2000, pre-tax operating losses in Corporate and Other were $6.3 million and $19.1 million, respectively.

Interest expense is the single largest expense item in the Corporate and Other segment. Interest expense in 2001 declined $1.9 million for the fourth quarter and $5.3 million for the year due to a lower average balance of debt outstanding and lower interest rates. The full year 2001 results for the Corporate and Other segment also include a pre-tax gain of $9.8 million from the sale of certain real estate properties, which netted PMA Capital $14.4 million of cash proceeds in the first quarter.

Share Repurchase Plan

During 2001, PMA Capital repurchased 299,000 shares of its Class A Common Stock at a cost of $5.3 million (average per share price was $17.78), including 90,000 shares at a total cost of $1.6 million (average per share cost of $17.71) during the fourth quarter of 2001. Since the inception of its share repurchase program in February 1998, PMA Capital has repurchased a total of 3.8 million shares at a total cost of $72.8 million (average per share price was $19.11). As of December 31, 2001, the remaining share repurchase authorization was $17.2 million.

Quarterly Dividends

PMA Capital also announced today that its Board of Directors declared a regular quarterly dividend on its Class A Common Stock of $0.105 per share to shareholders of record on March 11, 2002. The dividends will be paid on April 1, 2002. PMA Capital has paid a dividend to shareholders for the past 84 years.

Business Outlook

Based on management’s current expectations, the estimated range of consolidated after-tax operating earnings for 2002, a key performance measure, is between $1.40 and $1.55 per diluted share. In 2002, we expect price increases across all of our businesses to contribute to strong growth in premiums with the most significant growth coming from PMA Re, our reinsurance business. Based on current market trends, we expect rate increases in that business to average between 30-50% in 2002. At The PMA Insurance Group, we expect price increases for workers’ compensation business to average 15%, with higher rate increases for the other commercial lines. At Caliber One, we expect premium rates to rise significantly for excess and surplus lines coverages. As the favorable effects of both price increases and improved terms and conditions are earned into our results over the next 12 to 18 months, we expect to achieve our combined ratio goal of 100% or better for PMA Re and Caliber One, and 104% or better for The PMA Insurance Group.

5

These statements are forward-looking, and actual results may differ materially. Please see the Cautionary Statements that follow for the factors that may cause actual results to differ materially from our current expectations.

Status of Business Outlook

PMA Capital’s corporate representatives authorized to speak on behalf of the Company may meet privately with investors, the media, investment analysts and others. At these meetings, PMA Capital’s spokespersons may reiterate the Business Outlook published in this press release. At the same time, PMA Capital will keep this press release, including this Business Outlook publicly available on its website at http://www.pmacapital.com. Prior to the start of the Quiet Period (described below), the public can continue to rely on this Business Outlook as still being PMA Capital’s current expectations on matters covered, unless PMA Capital publishes a press release stating otherwise.

Beginning April 17, 2002, PMA Capital will observe a “Quiet Period” during which the Business Outlook as provided in this press release and the Company’s periodic filing on Form 10-Q may no longer constitute management’s current expectations. During the Quiet Period, the Business Outlook in these documents should be considered historical, speaking as of prior to the beginning of the Quiet Period only and should not be relied upon. The Company expressly disclaims any current intention to update its Business Outlook during the Quiet Period. During the Quiet Period, unless otherwise publicly announced, PMA Capital spokespersons will not comment on the Business Outlook or PMA Capital’s financial results or expectations. The Quiet Period will last until PMA Capital’s next Earnings Release is published, tentatively scheduled for May 1, 2002.

6

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 in the Business Outlook section and 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 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;
  • ability to implement and maintain rate increases;
  • the effect of changes in workers’ compensation statutes and their administration, which may affect the rates that we can charge and the manner in which we administer claims;
  • 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;
  • the uncertain nature of damage theories and loss amounts and the development of additional facts related to the attack on the World Trade Center;
  • uncertainty as to the price and availability of reinsurance on business we intend to write in the future, including reinsurance for terrorist acts;
  • 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.

7

PMA Capital’s 4th quarter Statistical Supplement, which provides more detailed historical information about PMA Capital and its insurance businesses, is available on our website. Please see the Investor Information section of our website at http://www.pmacapital.com. You may also obtain a copy of this supplement from the Company by sending your request to:

          Albert Ciavardelli
          Vice President - Finance
          PMA Capital Corporation
          1735 Market Street
          Philadelphia, PA 19103

Alternatively, you may submit your request by telephone (215.665.5046) or by e-mail to aciavardelli@pmare.com.

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.

8

PMA Capital Corporation
Financial Highlights
(Dollars in thousands, except per share amounts)

Three months ended December 31,         Year ended December 31,     
Income Statement Data:      2001    2000    2001    2000  
 Net premiums written:  
        PMA Re   $ 106,579   $ 68,758   $ 360,604   $ 261,505  
       The PMA Insurance Group    76,745    45,884    355,547    268,839  
        Caliber One    13,619    3,285    53,674    16,043  
        Corporate and Other    (180 )  (163 )  (767 )  (832 )
 
 Consolidated   $ 196,763   $ 117,764   $ 769,058   $ 545,555  
 
 Revenues:  
 Net premiums earned:  
        PMA Re   $ 97,123   $ 70,920   $ 340,401   $ 251,109  
       The PMA Insurance Group    93,697    59,438    346,574    252,348  
        Caliber One    12,967    8,177    46,232    28,799  
        Corporate and Other    (180 )  (163 )  (767 )  (832 )
 
 Consolidated net premiums earned    203,607    138,372    732,440    531,424  
 Net investment income    21,231    26,530    86,945    102,591  
 Realized gains    1,329    7,907    7,988    11,975  
 Other revenues    2,976    4,252    22,599    14,000  
 
 Consolidated revenues   $ 229,143   $ 177,061   $ 849,972   $ 659,990  
 
 Components of operating income (loss) (1):  
        PMA Re   $ 9,061   $ 6,318   $ (3,062 ) $ (7,297 )
       The PMA Insurance Group    5,657    5,235    23,148    21,601  
        Caliber One    (3,962 )  16    (26,168 )  (7,014 )
        Corporate and Other    (2,744 )  (2,910 )  (6,322 )  (19,142 )
 
 Pre-tax operating income (loss)   $ 8,012   $ 8,659   $ (12,404 ) $ (11,852 )
 
 After-tax operating income (loss)   $ 5,758   $ 7,029   $ 1,910   $ (6,459 )
 
 Net income   $ 6,622   $ 12,169   $ 7,103   $ 1,325  
 
 Weighted average common shares outstanding:  
        Basic    22,774,115    21,541,644    21,831,725    21,898,967  
        Diluted    23,180,429    21,858,033    22,216,695    22,353,622  
 After-tax operating income (loss) per share:  
        Basic   $ 0.25   $ 0.33   $ 0.09   $ (0.29 )
 
        Diluted   $ 0.25   $ 0.32   $ 0.09   $ (0.29 )
 
 Net income per share:  
        Basic   $ 0.29   $ 0.56   $ 0.33   $ 0.06  
 
        Diluted   $ 0.29   $ 0.56   $ 0.32   $ 0.06  
 
 Balance Sheet Data: December 31, 2001     December 31, 2000
Total assets     $       3,802,979   $       3,469,406  
Shareholders' equity   $       612,006   $       440,046  
Shareholders' equity per share (including FAS 115)   $       19.64   $      20.40
Shareholders' equity per share (excluding FAS 115)   $       19.46   $      21.07


(1)  

Operating income (loss) differs from net income under generally accepted accounting principles (“GAAP”) because operating income excludes net realized investment gains and losses. Pre-tax operating income (loss) is defined as income (loss) from continuing operations before income taxes, excluding net realized investment gains and losses. The Company excludes net realized investment gains (losses) from the profit and loss measure it utilizes to assess the performance of its operating segments because (i) net realized investment gains (losses) are unpredictable and not necessarily indicative of current operating fundamentals or future performance and (ii) in many instances, decisions to buy and sell securities are made at the holding company level, and such decisions result in net realized gains (losses) that do not relate to the operations of the individual segments.


9

PMA Capital Corporation
Consolidated Balance Sheets
(Dollars in thousands)

  December 31,
2001		 December 31,
2000
Assets:            
Investments and cash:            
      Fixed maturities available for sale   $ 1,425,281   $ 1,485,308  
      Short-term investments    350,054    341,641  
      Cash    20,656    5,604  
      Total investments and cash    1,795,991    1,832,553  
Accrued investment income    19,121    20,867  
Premiums receivable    301,104    299,342  
Reinsurance receivable    1,210,764    933,889  
Deferred income taxes    82,120    89,011  
Deferred acquisition costs    64,350    48,522  
Funds held by reinsureds    145,239    73,999  
Other assets    184,290    171,223  
      Total assets   $ 3,802,979   $ 3,469,406  
Liabilities:  
Unpaid losses and loss adjustment expenses   $ 2,324,439   $ 2,053,138  
Unearned premiums    308,292    269,734  
Long-term debt    62,500    163,000  
Accounts payable, accrued expenses  
      and other liabilities    217,490    207,211  
Funds held under reinsurance treaties    227,892    173,762  
Dividends to policyholders    17,132    17,246  
Payable under securities loan agreements    33,228    145,269  
      Total liabilities    3,190,973    3,029,360  
Shareholders' Equity:  
Class A Common stock    171,090    122,214  
Additional paid-in capital    109,331    339  
Retained earnings    382,165    384,694  
Accumulated other comprehensive income (loss)    5,375    (14,373 )
Notes receivable from officers    (158 )  (56 )
Treasury stock, at cost    (55,797 )  (52,772 )
      Total shareholders' equity    612,006    440,046  
      Total liabilities and shareholders' equity   $ 3,802,979   $ 3,469,406  

10

PMA Capital Corporation
Consolidated Statements of Operations
(Dollars in thousands)

Three months ended
December 31,		 Year ended
December 31,
  2001 2000 2001 2000
 
                   
Gross premiums written   $ 254,252   $ 174,313   $ 1,016,854   $ 821,263  
Net premiums written   $ 196,763   $ 117,764   $ 769,058   $ 545,555  
Revenues:  
Net premiums earned   $ 203,607   $ 138,372   $ 732,440   $ 531,424  
Net investment income    21,231    26,530    86,945    102,591  
Net realized investment gains    1,329    7,907    7,988    11,975  
Other revenues    2,976    4,252    22,599    14,000  
      Total revenues    229,143    177,061    849,972    659,990  
Expenses:  
Losses and loss adjustment expenses    159,193    109,222    616,763    449,388  
Acquisition expenses    37,512    29,272    138,982    112,654  
Operating expenses    18,248    15,022    78,015    67,081  
Dividends to policyholders    3,674    3,948    14,087    18,855  
Interest expense    1,175    3,031    6,541    11,889  
      Total losses and expenses    219,802    160,495    854,388    659,867  
Pre-tax income (loss)    9,341    16,566    (4,416 )  123  
Income tax expense (benefit):  
      Current    (1,435 )  (1,737 )  (8,372 )  (1,120 )
      Deferred    4,154    6,134    (3,147 )  (82 )
Total income tax expense (benefit)    2,719    4,397    (11,519 )  (1,202 )
Net income   $ 6,622   $ 12,169   $ 7,103   $ 1,325  
Pre-tax operating income (loss)   $ 8,012   $ 8,659   $ (12,404 ) $ (11,852 )
After-tax operating income (loss)   $ 5,758   $ 7,029   $ 1,910   $ (6,459 )

11

PMA Capital Corporation
Consolidating Statements of Operations
(Dollars in thousands)

For the three months ended
December 31, 2001
PMA Re		 PMA Insurance
Group
Caliber One
Corp & Other
Consolidated
Gross premiums written     $ 124,467   $ 94,526   $ 35,439   $ (180 ) $ 254,252  
Net premiums written   $ 106,579   $ 76,745   $ 13,619   $ (180 ) $ 196,763  
Revenues:  
Net premiums earned   $ 97,123   $ 93,697   $ 12,967   $ (180 ) $ 203,607  
Net investment income    10,638    9,773    1,085    (265 )  21,231  
Other revenues    --    2,724    --    252    2,976  
      Total operating revenues    107,761    106,194    14,052    (193 )  227,814  
Expenses:  
Losses and LAE    74,325    71,151    13,717    --    159,193  
Acquisition expenses    19,303    15,973    2,236    --    37,512  
Operating expenses    5,072    9,739    2,061    1,376    18,248  
Dividends to policyholders    --    3,674    --    --    3,674  
Interest expense    --    --    --    1,175    1,175  
      Total losses and expenses    98,700    100,537    18,014    2,551    219,802  
Pre-tax operating income (loss)    9,061    5,657    (3,962 )  (2,744 )  8,012  
Net realized investment gains (losses)    (412 )  1,541    200    --    1,329  
Pre-tax income (loss)   $ 8,649   $ 7,198   $ (3,762 ) $ (2,744 ) $ 9,341  

Ratios - GAAP basis:		                     Insurance
Operations
Loss and LAE ratio     76.5%   75.9%  105.8%     78.1%
Expense ratio:  
Acquisition expenses    19.9%   17.0%   17.2%       18.4% 
Operating expenses    5.2%   8.0%   15.9%       7.2% 
Total expense ratio    25.1%   25.0%   33.1%       25.6% 
Policyholders' dividend ratio    NA   3.9%   NA       1.8% 
Combined ratio    101.6%   104.8%   138.9%       105.5% 
Net investment income ratio    -11.0%  -10.4%  -8.4%     -10.5%
Operating ratio    90.6%  94.4%  130.5%     95.0%

12

PMA Capital Corporation
Consolidating Statements of Operations
(Dollars in thousands)

For the three months ended
December 31, 2000
PMA Re		 PMA Insurance
Group
Caliber One
Corp & Other
Consolidated
Gross premiums written     $ 94,165   $ 63,552   $ 16,759   $ (163 ) $ 174,313  
Net premiums written   $ 68,758   $ 45,884   $ 3,285   $ (163 ) $ 117,764  
Revenues:  
Net premiums earned   $ 70,920   $ 59,438   $ 8,177   $ (163 ) $ 138,372  
Net investment income    13,008    12,405    1,354    (237 )  26,530  
Other revenues    --    2,367    --    1,885    4,252  
      Total operating revenues    83,928    74,210    9,531    1,485    169,154  
Expenses:  
Losses and LAE    58,221    44,611    6,390    --    109,222  
Acquisition expenses    16,514    11,848    910    --    29,272  
Operating expenses    2,875    8,568    2,215    1,364    15,022  
Dividends to policyholders    --    3,948    --    --    3,948  
Interest expense    --    --    --    3,031    3,031  
      Total losses and expenses    77,610    68,975    9,515    4,395    160,495  
Pre-tax operating income (loss)    6,318    5,235    16    (2,910 )  8,659  
Net realized investment gains    7,051    179    446    231    7,907  
Pre-tax income (loss)   $ 13,369   $ 5,414   $ 462   $ (2,679 ) $ 16,566  



Ratios - GAAP basis:		                     Insurance
Operations,
Excluding
run-off
Loss and LAE ratio    82.1%  74.0%  78.1%      78.4%
Expense ratio:  
Acquisition expenses    23.3%  19.9%  11.1%      21.1%
Operating expenses    4.0%  11.5%  27.1%      8.6%
Total expense ratio    27.3%  31.4%  38.2%      29.7%
Policyholders' dividend ratio    NA  6.6%  NA      2.8%
Combined ratio    109.4%  112.0%  116.3%      110.9%
Net investment income ratio    -18.3%  -19.4%  -16.6%      -18.7%
Operating ratio    91.1%  92.6%  99.7%      92.2%

13

PMA Capital Corporation
Consolidating Statements of Operations
(Dollars in thousands)

For the year ended
December 31, 2001
PMA Re		 PMA Insurance
Group
Caliber One
Corp & Other
Consolidated
Gross premiums written     $ 476,591   $ 416,695   $ 124,335   $ (767 ) $ 1,016,854  
 Net premiums written   $ 360,604   $ 355,547   $ 53,674   $ (767 ) $ 769,058  
 Revenues:  
 Net premiums earned   $ 340,401   $ 346,574   $ 46,232   $ (767 ) $ 732,440  
 Net investment income    45,361    39,444    3,124    (984 )  86,945  
 Other revenues    --    11,240    --    11,359    22,599  
       Total operating revenues    385,762    397,258    49,356    9,608    841,984  
 Expenses:  
 Losses and LAE    297,623    258,933    60,207    --    616,763  
 Acquisition expenses    71,013    60,909    7,060    --    138,982  
 Operating expenses    20,188    40,181    8,257    9,389    78,015  
 Dividends to policyholders    --    14,087    --    --    14,087  
 Interest expense    --    --    --    6,541    6,541  
       Total losses and expenses    388,824    374,110    75,524    15,930    854,388  
 Pre-tax operating income (loss)    (3,062 )  23,148    (26,168 )  (6,322 )  (12,404 )
 Net realized investment gains    4,927    782    2,279    --    7,988  
 Pre-tax income (loss)   $ 1,865   $ 23,930   $ (23,889 ) $ (6,322 ) $ (4,416 )

Ratios - GAAP basis:		                     Insurance
Operations
 Loss and LAE ratio    87.4 %  74.7 %  130.2 %    84.1 %
 Expense ratio:  
 Acquisition expenses    20.9 %  17.6 %  15.3 %    19.0 %
 Operating expenses    5.9 %  9.1 %  17.8 %    8.2 %
 Total expense ratio    26.8 %  26.7 %  33.1 %    27.2 %
 Policyholders' dividend ratio    NA    4.1 %  NA      1.9 %
 Combined ratio    114.2 %  105.5 %  163.3 %    113.2 %
 Net investment income ratio    -13.3 %  -11.4 %  -6.8 %    -12.0 %
 Operating ratio    100.9 %  94.1 %  156.5 %    101.2 %

14

PMA Capital Corporation
Consolidating Statements of Operations
(Dollars in thousands)

For the year ended
December 31, 2000
PMA Re		 PMA Insurance
Group
Caliber One
Corp & Other
Consolidated
Gross premiums written     $ 394,823   $ 335,466   $ 93,405   $ (2,431 ) $ 821,263  
Net premiums written   $ 261,505   $ 268,839   $ 16,043   $ (832 ) $ 545,555  
Revenues:  
Net premiums earned   $ 251,109   $ 252,348   $ 28,799   $ (832 ) $ 531,424  
Net investment income    51,125    47,969    4,424    (927 )  102,591  
Other revenues    -    10,099    -    3,901    14,000  
      Total operating revenues    302,234    310,416    33,223    2,142    648,015  
Expenses:  
Losses and LAE    229,925    189,001    30,462    -    449,388  
Acquisition expenses    65,522    46,464    668    -    112,654  
Operating expenses    14,084    34,495    9,107    9,395    67,081  
Dividends to policyholders    -    18,855    -    -    18,855  
Interest expense    -    -    -    11,889    11,889  
      Total losses and expenses    309,531    288,815    40,237    21,284    659,867  
Pre-tax operating income (loss)    (7,297 )  21,601    (7,014 )  (19,142 )  (11,852 )
Net realized investment gains (losses)    13,405    (1,407 )  (246 )  223    11,975  
Pre-tax income (loss)   $ 6,108   $ 20,194   $ (7,260 ) $ (18,919 ) $ 123  



Ratios - GAAP basis:		                     Insurance
Operations,
Excluding
run-off
Loss and LAE ratio    91.6 %  73.8 %  105.8 %      83.9 %
Expense ratio:  
Acquisition expenses    26.1 %  18.4 %  2.3 %      21.2 %
Operating expenses    5.6 %  10.3 %  31.6 %      9.3 %
Total expense ratio    31.7 %  28.7 %  33.9 %      30.5 %
Policyholders' dividend ratio    NA    7.5 %  NA        3.5 %
Combined ratio    123.3 %  110.0 %  139.7 %      117.9 %
Net investment income ratio    -20.4 %  -17.4 %  -15.4 %      -18.7 %
Operating ratio    102.9 %  92.6 %  124.3 %      99.2 %

15