EX-99 4 exhibit99-2.txt EXHIBIT 99.2 -------------------------------------------------------------------------------- PMA Capital Corporation Statistical Supplement Third Quarter - 2003 -------------------------------------------------------------------------------- Table of Contents ----------------- Page Consolidated Highlights: Selected Financial Data 1 Selected Financial Data - YTD 2 Consolidated Statements of Operations - Per Share Data 3 Consolidated Statements of Operations 4 Consolidated Statements of Operations - YTD 5 Consolidated Balance Sheets 6 Invested Assets & Net Investment Income 7 Debt 7 Segment Information: Statements of Operations - Consolidating - YTD 8 - 9 Insurance Ratios - Consolidating - YTD 10 - 11 Statements of Operations - Consolidating - Third Quarter 12 - 13 Insurance Ratios - Consolidating - Third Quarter 14 - 15 Statements of Operations - PMA Re 16 Insurance Ratios - PMA Re 17 Statements of Operations - PMA Insurance Group 18 Insurance Ratios - PMA Insurance Group 19 Statements of Operations - Run-off Operations 20 Statements of Operations - Corporate & Other 21 Operating Cash Flow Information: Operating Cash Flows - Consolidated 22 Operating Cash Flows - PMA Re 23 Operating Cash Flows - PMA Insurance Group 24 Operating Cash Flows - Run-off Operations 25 Statutory Financial Information: Statutory Financial Information 27 Statutory Net Premiums Written by Product 28 Statutory Surplus 29 Other Information: Industry Ratings and Market Information 30 Legend: NM - Not Meaningful NA - Not Applicable Note: Operating income (loss), which we define as net income (loss) under GAAP excluding net realized investment gains and losses, is the financial performance measure used by our management and Board of Directors to evaluate and assess the results of our insurance businesses. Accordingly, we report operating income by segment in the disclosures required under SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." Our management and Board of Directors use operating income (loss) as the measure of financial performance for our insurance operations because (i) net realized investment gains and losses are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments 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 and losses that do not relate to the operations of the individual segments. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations. See page 1 and 2 for reconciliations of operating results by segment to GAAP net income (loss).
PMA Capital Corporation Selected Financial Data (Dollar Amounts in Thousands, Except Per Share Data) 3rd 4th 1st 2nd 3rd % Change Quarter Quarter Quarter Quarter Quarter 3rd 2002 2002 2003 2003 2003 Quarter ------------------------------------------------------------------------- Net Premiums Written by Segment: PMA Re $ 153,862 $ 185,870 $ 158,579 $ 172,464 $ 139,770 -9.2% PMA Insurance Group 118,627 73,549 194,239 119,440 149,130 25.7% Run-off Operations 1 (3,418) (14,189) (1,704) (1,124) (3,389) 0.8% Corporate & Other (220) (228) (256) (124) (228) -3.6% --------- --------- --------- --------- --------- ------ Net premiums written $ 268,851 $ 245,002 $ 350,858 $ 290,656 $ 285,283 6.1% ========= ========= ========= ========= ========= ====== Major Components of Net Income (Loss): Pre-tax operating income (loss) by segment: PMA Re $ 15,196 $ (28,480) $ 8,577 $ 13,107 $(113,673) NM PMA Insurance Group 6,714 5,838 8,340 6,838 7,345 9.4% Run-off Operations 1 (2) (4) 1 (3) 3 NM Corporate & Other (3,211) (3,148) (4,674) (5,564) (6,259) -94.9% --------- --------- --------- --------- --------- ------ Pre-tax operating income (loss) 18,697 (25,794) 12,244 14,378 (112,584) NM Net realized investment gains (losses) (3,868) 3,943 4,355 4,451 1,392 NM --------- --------- --------- --------- --------- ------ Pre-tax income (loss) 14,829 (21,851) 16,599 18,829 (111,192) NM Income tax expense (benefit) 5,454 (11,448) 5,897 6,662 (14,786) NM --------- --------- --------- --------- --------- ------ Net income (loss) $ 9,375 $ (10,403) $ 10,702 $ 12,167 $ (96,406) NM ========= ========= ========= ========= ========= ------ After-tax operating income (loss) $ 11,889 $ (12,966) $ 7,871 $ 9,274 $ (97,311) NM ========= ========= ========= ========= ========= ====== Diluted Earnings (Loss) Per Share: Net income (loss) $ 0.30 $ (0.33) $ 0.34 $ 0.39 $ (3.08) NM Less the impact of: Realized gains (losses) after tax (0.08) 0.08 0.09 0.09 0.03 NM --------- --------- --------- --------- --------- ------ After-tax operating income (loss) $ 0.38 $ (0.41) $ 0.25 $ 0.30 $ (3.11) NM ========= ========= ========= ========= ========= ====== Capitalization: Debt $ 55,000 $ 151,250 $ 131,250 $ 176,250 $ 186,250 238.6% Shareholders' equity excluding FAS 115 unrealized gain 561,089 548,128 555,198 565,081 465,943 -17.0% --------- --------- --------- --------- --------- ------ Total capitalization excluding FAS 115 unrealized gain 616,089 699,378 686,448 741,331 652,193 5.9% FAS 115 unrealized gain 32,784 33,262 33,170 52,666 37,830 15.4% --------- --------- --------- --------- --------- ------ Total capitalization including FAS 115 unrealized gain $ 648,873 $ 732,640 $ 719,618 $ 793,997 $ 690,023 6.3% ========= ========= ========= ========= ========= ====== Book Value Per Share: Excluding FAS 115 unrealized gain $ 17.91 $ 17.50 $ 17.72 $ 18.04 $ 14.87 -17.0% Including FAS 115 unrealized gain $ 18.96 $ 18.56 $ 18.78 $ 19.72 $ 16.08 -15.2% Debt to Total Capital: Excluding FAS 115 unrealized gain 8.9% 21.6% 19.1% 23.8% 28.6% 221.3% Including FAS 115 unrealized gain 8.5% 20.6% 18.2% 22.2% 27.0% 217.6% Interest Coverage: Income before interest and income taxes to interest expense 29.57 NM 10.44 9.46 NM NM Operating income before interest and income taxes to interest expense 37.03 NM 7.96 7.46 NM NM 1 Formerly known as Caliber One. 1
PMA Capital Corporation Selected Financial Data (Dollar Amounts in Thousands, Except Per Share Data) Nine Nine % Change Months Months Nine 2003 2002 Months ----------------------------------- Net Premiums Written by Segment: PMA Re $ 470,813 $ 453,169 3.9% PMA Insurance Group 462,809 378,727 22.2% Run-off Operations 1 (6,217) 28,752 NM Corporate & Other (608) (653) 6.9% --------- --------- ------ Net premiums written $ 926,797 $ 859,995 7.8% ========= ========= ====== Major Components of Net Income (Loss): Pre-tax operating income (loss) by segment: PMA Re $ (91,989) $ 41,902 NM PMA Insurance Group 22,523 19,508 15.5% Run-off Operations 1 1 (87,497) NM Corporate & Other (16,497) (11,191) -47.4% --------- --------- ------ Pre-tax operating loss (85,962) (37,278) NM Net realized investment gains (losses) 10,198 (20,028) NM --------- --------- ------ Pre-tax loss (75,764) (57,306) -32.2% Income tax benefit (2,227) (19,685) 88.7% --------- --------- ------ Net loss $ (73,537) $ (37,621) -95.5% ========= ========= ====== After-tax operating loss $ (80,166) $ (24,603) NM ========= ========= ====== Diluted Earnings (Loss) Per Share: Net loss $ (2.35) $ (1.20) -95.8% Less the impact of: Realized gains (losses) after tax 0.21 (0.41) NM --------- --------- ------ After-tax operating loss $ (2.56) $ (0.79) NM ========= ========= ====== 1 Formerly known as Caliber One. 2
PMA Capital Corporation Consolidated Statements of Operations - Per Share Data 3rd 4th 1st 2nd Quarter Quarter Quarter Quarter 2002 2002 2003 2003 --------------------------------------------------------------------------- Diluted Earnings (Loss) Per Share: Net income (loss) $ 0.30 $ (0.33) $ 0.34 $ 0.39 =============== =============== =============== =============== Pre-tax operating income (loss) $ 0.59 $ (0.82) $ 0.39 $ 0.46 =============== =============== =============== =============== After-tax operating income (loss) $ 0.38 $ (0.41) $ 0.25 $ 0.30 =============== =============== =============== =============== Diluted weighted average common shares outstanding 31,621,993 31,328,922 31,328,922 31,331,197 =============== =============== =============== =============== -------------------------------------------------------------------------------------------------------------------------------- Dividends declared: Class A Common stock $ 0.105 $ 0.105 $ 0.105 $ 0.105 Actual common shares issued and outstanding 31,328,922 31,328,922 31,328,922 31,328,922 =============== =============== =============== =============== -------------------------------------------------------------------------------------------------------------------------------- Class A Common Stock prices: High $ 20.50 $ 15.30 $ 15.00 $ 12.30 Low $ 13.05 $ 12.37 $ 6.67 $ 6.44 Close $ 15.00 $ 14.33 $ 6.77 $ 12.12
3rd Nine Nine Quarter Months Months 2003 2003 2002 -------------------------------------------------------- Diluted Earnings (Loss) Per Share: Net income (loss) $ (3.08) $ (2.35) $ (1.20) =============== =============== =============== Pre-tax operating income (loss) $ (3.59) $ (2.74) $ (1.19) =============== =============== =============== After-tax operating income (loss) $ (3.11) $ (2.56) $ (0.79) =============== =============== =============== Diluted weighted average common shares outstanding 31,328,965 31,328,936 31,269,995 =============== =============== =============== -------------------------------------------------------------------------------------------------------------- Dividends declared: Class A Common stock $ 0.105 $ 0.315 $ 0.315 Actual common shares issued and outstanding 31,329,063 31,329,063 31,328,922 =============== =============== =============== -------------------------------------------------------------------------------------------------------------- Class A Common Stock prices: High $ 12.85 $ 15.00 $ 25.99 Low $ 11.71 $ 6.44 $ 13.05 Close $ 12.53 $ 12.53 $ 15.00 3
PMA Capital Corporation Consolidated Statements of Operations (In Thousands) 3rd 4th 1st 2nd 3rd % Change Quarter Quarter Quarter Quarter Quarter 3rd 2002 2002 2003 2003 2003 Quarter -------------------------------------------------------------------------------------------------------------------- Gross Premiums Written $ 322,306 $ 283,303 $ 419,694 $ 361,899 $ 352,380 9.3% ========= ========= ========= ========= ========= ==== Net Premiums Written $ 268,851 $ 245,002 $ 350,858 $ 290,656 $ 285,283 6.1% ========= ========= ========= ========= ========= ==== Revenues: Net premiums earned $ 252,731 $ 263,806 $ 274,070 $ 285,622 $ 293,482 16.1% Net investment income 18,087 21,008 17,645 17,780 17,167 -5.1% Net realized investment gains (losses) (3,868) 3,943 4,355 4,451 1,392 NM Other revenues 4,057 3,859 7,000 4,766 4,147 2.2% --------- --------- --------- --------- --------- ---- Total revenues 271,007 292,616 303,070 312,619 316,188 16.7% --------- --------- --------- --------- --------- ---- Expenses: Losses and loss adjustment expenses 180,733 250,698 202,585 193,074 335,789 85.8% Acquisition expenses 55,390 55,782 56,220 72,215 63,221 14.1% Operating expenses 18,067 6,237 23,872 24,222 23,327 29.1% Dividends to policyholders 1,469 111 2,036 2,054 2,090 42.3% Interest expense 519 1,639 1,758 2,225 2,953 NM --------- --------- --------- --------- --------- ---- Total losses and expenses 256,178 314,467 286,471 293,790 427,380 66.8% --------- --------- --------- --------- --------- ---- Pre-tax income (loss) 14,829 (21,851) 16,599 18,829 (111,192) NM --------- --------- --------- --------- --------- ---- Income tax expense (benefit): Current -- (3,606) -- 221 (221) NM Deferred 5,454 (7,842) 5,897 6,441 (14,565) NM --------- --------- --------- --------- --------- ---- Total income tax expense (benefit) 5,454 (11,448) 5,897 6,662 (14,786) NM --------- --------- --------- --------- --------- ---- Net income (loss) $ 9,375 $ (10,403) $ 10,702 $ 12,167 $ (96,406) NM ========= ========= ========= ========= ========= ==== Pre-tax operating income (loss) $ 18,697 $ (25,794) $ 12,244 $ 14,378 $(112,584) NM ========= ========= ========= ========= ========= ==== After-tax operating income (loss) $ 11,889 $ (12,966) $ 7,871 $ 9,274 $ (97,311) NM ========= ========= ========= ========= ========= ==== 4
PMA Capital Corporation Consolidated Statements of Operations (In Thousands) Nine Nine % Change Months Months Nine 2003 2002 Months ----------------------------------------- Gross Premiums Written $ 1,133,973 $ 1,103,243 2.8% =========== =========== ===== Net Premiums Written $ 926,797 $ 859,995 7.8% =========== =========== ===== Revenues: Net premiums earned $ 853,174 $ 727,205 17.3% Net investment income 52,592 63,873 -17.7% Net realized investment gains (losses) 10,198 (20,028) NM Other revenues 15,913 11,471 38.7% ----------- ----------- ----- Total revenues 931,877 782,521 19.1% ----------- ----------- ----- Expenses: Losses and loss adjustment expenses 731,448 572,960 27.7% Acquisition expenses 191,656 161,202 18.9% Operating expenses 71,421 96,571 -26.0% Dividends to policyholders 6,180 7,476 -17.3% Interest expense 6,936 1,618 NM ----------- ----------- ----- Total losses and expenses 1,007,641 839,827 20.0% ----------- ----------- ----- Pre-tax loss (75,764) (57,306) -32.2% ----------- ----------- ----- Income tax benefit: Current -- -- NM Deferred (2,227) (19,685) 88.7% ----------- ----------- ----- Total income tax benefit (2,227) (19,685) 88.7% ----------- ----------- ----- Net loss $ (73,537) $ (37,621) -95.5% ----------- ----------- ----- Pre-tax operating loss $ (85,962) $ (37,278) NM =========== =========== ===== After-tax operating loss $ (80,166) $ (24,603) NM =========== =========== ===== 5
PMA Capital Corporation Consolidated Balance Sheets (In Thousands) 3rd 4th 1st 2nd 3rd Quarter Quarter Quarter Quarter Quarter 2002 2002 2003 2003 2003 ------------------------------------------------------------------- Assets: Investments in fixed maturities available for sale $ 1,509,862 $ 1,529,924 $ 1,641,593 $ 1,741,879 $ 1,807,977 Short-term investments 200,403 298,686 199,782 282,366 187,320 Short-term investments, loaned securities collateral 214,087 -- 108,513 185,566 113,978 Cash 14,404 43,853 4,635 12,556 34,954 ----------- ----------- ----------- ----------- ----------- Total investments and cash 1,938,756 1,872,463 1,954,523 2,222,367 2,144,229 Accrued investment income 21,405 18,600 22,426 19,357 23,764 Premiums receivable 376,293 363,675 457,528 394,065 379,041 Reinsurance receivables 1,260,399 1,295,083 1,314,103 1,307,506 1,252,928 Deferred income taxes 86,672 94,074 88,410 70,928 93,181 Deferred acquisition costs 87,236 89,222 103,275 108,740 105,089 Funds held by reinsureds 159,750 157,479 168,597 165,533 153,263 Other assets 185,943 215,198 222,595 249,110 255,292 ----------- ----------- ----------- ----------- ----------- Total assets $ 4,116,454 $ 4,105,794 $ 4,331,457 $ 4,537,606 $ 4,406,787 =========== =========== =========== =========== =========== Liabilities: Unpaid losses and loss adjustment expenses $ 2,304,309 $ 2,449,890 $ 2,448,147 $ 2,430,276 $ 2,486,776 Unearned premiums 442,485 405,379 484,789 499,960 490,461 Debt 55,000 151,250 131,250 176,250 186,250 Accounts payable, accrued expenses and other liabilities 232,688 253,175 281,920 301,049 297,028 Funds held under reinsurance treaties 255,950 249,670 273,469 311,081 313,688 Dividends to policyholders 16,755 14,998 14,981 15,669 14,851 Payable under securities loan agreements 215,394 42 108,533 185,574 113,960 ----------- ----------- ----------- ----------- ----------- Total liabilities 3,522,581 3,524,404 3,743,089 3,919,859 3,903,014 ----------- ----------- ----------- ----------- ----------- Shareholders' Equity: Class A Common stock 171,090 171,090 171,090 171,090 171,090 Additional paid-in capital 109,331 109,331 109,331 109,331 109,331 Retained earnings 332,566 319,014 326,425 335,304 235,607 Accumulated other comprehensive income 33,483 34,552 34,119 54,621 40,341 Notes receivable from officers (62) (62) (62) (64) (64) Treasury stock, at cost (52,535) (52,535) (52,535) (52,535) (52,532) ----------- ----------- ----------- ----------- ----------- Total shareholders' equity 593,873 581,390 588,368 617,747 503,773 ----------- ----------- ----------- ----------- ----------- Total liabilities and shareholders' equity $ 4,116,454 $ 4,105,794 $ 4,331,457 $ 4,537,606 $ 4,406,787 =========== =========== =========== =========== =========== 6
PMA Capital Corporation Invested Assets & Net Investment Income (Dollars in Thousands) 3rd 4th 1st 2nd 3rd Quarter Quarter Quarter Quarter Quarter 2002 2002 2003 2003 2003 ---------------------------------------------------------------------------------- Total Investments & Cash As Reported $ 1,938,756 $ 1,872,463 $ 1,954,523 $ 2,222,367 $ 2,144,229 Less: Securities Lending Activity 215,394 42 108,533 185,574 113,960 Unrealized Gain 50,437 51,172 51,031 81,025 58,200 ----------- ----------- ----------- ----------- ----------- Total Adjusted Investments & Cash $ 1,672,925 $ 1,821,249 $ 1,794,959 $ 1,955,768 $ 1,972,069 =========== =========== =========== =========== =========== Net Investment Income As Reported $ 18,087 $ 21,008 $ 17,645 $ 17,780 $ 17,167 Funds Held: Assumed 16 5,997 1,036 1,940 1,316 Ceded (3,492) (5,740) (3,859) (3,567) (3,551) ----------- ----------- ----------- ----------- ----------- Total Funds Held (3,476) 257 (2,823) (1,627) (2,235) ----------- ----------- ----------- ----------- ----------- Total Adjusted Investment Income $ 21,563 $ 20,751 $ 20,468 $ 19,407 $ 19,402 =========== =========== =========== =========== =========== Yield As Reported 3.75% 4.49% 3.69% 3.41% 3.15% Investment Portfolio 5.18% 4.56% 4.53% 4.14% 3.95% Duration (in years) 3.8 3.5 3.8 3.8 3.9 Nine Nine Months Months 2003 2002 ---------------------------- Total Investments & Cash As Reported $ 2,144,229 $ 1,938,756 Less: Securities Lending Activity 113,960 215,394 Unrealized Gain 58,200 50,437 ----------- ----------- Total Adjusted Investments & Cash $ 1,972,069 $ 1,672,925 =========== =========== Net Investment Income As Reported $ 52,592 $ 63,873 Funds Held: Assumed 4,292 8,876 Ceded (10,977) (12,022) ----------- ----------- Total Funds Held (6,685) (3,146) ----------- ----------- Total Adjusted Investment Income $ 59,277 $ 67,019 =========== =========== Yield As Reported 3.42% 4.51% Investment Portfolio 4.19% 5.24% Duration (in years) 3.9 3.8
-------------------------------------------------------------------------------- PMA Capital Corporation Debt (Dollars in Thousands) Amount Outstanding Maturity ------------------------ 4.25% convertible debt $ 86,250 2022 1 Trust preferred securities 42,500 2033 8.50% senior notes 57,500 2018 -------- Total long-term debt $186,250 ======== 1 Holders of the Convertible Debt, at their option, may require us to repurchase all or a portion of their debentures on September 30, 2006, 2008, 2010, 2012 and 2017. 7
PMA Capital Corporation Statements of Operations - Consolidating Nine Months Ended September 30, 2003 (In Thousands) PMA Insurance Corporate Run-off PMA Re Group & Other 1 Operations 2 Consolidated ----------------------------------------------------------------------- Gross Premiums Written $ 617,090 $ 516,947 $ (608) $ 544 $ 1,133,973 =========== =========== =========== =========== =========== Net Premiums Written $ 470,813 $ 462,809 $ (608) $ (6,217) $ 926,797 =========== =========== =========== =========== =========== Revenues: Net premiums earned $ 455,603 $ 392,558 $ (608) $ 5,621 $ 853,174 Net investment income 25,032 24,608 1,512 1,440 52,592 Other revenues -- 13,086 327 2,500 15,913 ----------- ----------- ----------- ----------- ----------- Operating revenues 480,635 430,252 1,231 9,561 921,679 ----------- ----------- ----------- ----------- ----------- Losses and Expenses: Losses and loss adjustment expenses 437,358 288,433 -- 5,657 731,448 Acquisition expenses 124,508 66,221 -- 927 191,656 Operating expenses 10,758 46,895 10,792 2,976 71,421 Dividends to policyholders -- 6,180 -- -- 6,180 ----------- ----------- ----------- ----------- ----------- Total losses and expenses 572,624 407,729 10,792 9,560 1,000,705 ----------- ----------- ----------- ----------- ----------- Operating income (loss) before income taxes and interest expense (91,989) 22,523 (9,561) 1 (79,026) Interest expense -- -- 6,936 -- 6,936 ----------- ----------- ----------- ----------- ----------- Pre-tax operating income (loss) $ (91,989) $ 22,523 $ (16,497) $ 1 (85,962) =========== =========== =========== =========== Net realized investment gains 10,198 ----------- Pre-tax loss $ (75,764) =========== 1 Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. 2 Formerly known as Caliber One. 8
PMA Capital Corporation Statements of Operations - Consolidating Nine Months Ended September 30, 2002 (In Thousands) PMA Insurance Corporate Run-off PMA Re Group & Other 1 Operations 2 Consolidated ----------------------------------------------------------------------- Gross Premiums Written $ 574,973 $ 423,446 $ (653) $ 105,477 $ 1,103,243 =========== =========== =========== =========== =========== Net Premiums Written $ 453,169 $ 378,727 $ (653) $ 28,752 $ 859,995 =========== =========== =========== =========== =========== Revenues: Net premiums earned $ 386,543 $ 309,530 $ (653) $ 31,785 $ 727,205 Net investment income 37,148 27,002 (853) 576 63,873 Other revenues -- 10,887 584 -- 11,471 ----------- ----------- ----------- ----------- ----------- Operating revenues 423,691 347,419 (922) 32,361 802,549 ----------- ----------- ----------- ----------- ----------- Losses and Expenses: Losses and loss adjustment expenses 271,430 230,549 -- 70,981 572,960 Acquisition expenses 98,137 54,121 -- 8,944 161,202 Operating expenses 12,222 35,765 8,651 39,933 96,571 Dividends to policyholders -- 7,476 -- -- 7,476 ----------- ----------- ----------- ----------- ----------- Total losses and expenses 381,789 327,911 8,651 119,858 838,209 ----------- ----------- ----------- ----------- ----------- Operating income (loss) before income taxes and interest expense 41,902 19,508 (9,573) (87,497) (35,660) Interest expense -- -- 1,618 -- 1,618 ----------- ----------- ----------- ----------- ----------- Pre-tax operating income (loss) $ 41,902 $ 19,508 $ (11,191) $ (87,497) (37,278) =========== =========== =========== =========== Net realized investment losses (20,028) ----------- Pre-tax loss $ (57,306) =========== 1 Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. 2 Formerly known as Caliber One. 9
PMA Capital Corporation Insurance Ratios Nine Months Ended September 30, 2003 PMA Insurance PMA Re Group 1 --------------------- Ratios - GAAP Basis: Loss and LAE ratio 96.0% 73.5% -------- -------- Expense ratio: Acquisition expenses 27.3% 16.9% Operating expenses 2.4% 9.5% -------- -------- Total expense ratio 29.7% 26.4% -------- -------- Policyholders' dividend ratio NA 1.6% -------- -------- Combined ratio 125.7% 101.5% ======== ======== Net investment income ratio -5.5% -6.3% -------- -------- Operating ratio 120.2% 95.2% ======== ======== 1 The operating expense ratio and the combined ratio are computed based on $37.6 million of insurance-related operating expenses. 10
PMA Capital Corporation Insurance Ratios Nine Months Ended September 30, 2002 PMA Insurance PMA Re Group 1 -------------------- Ratios - GAAP Basis: Loss and LAE ratio 70.2% 74.5% -------- -------- Expense ratio: Acquisition expenses 25.4% 17.5% Operating expenses 3.2% 8.9% -------- -------- Total expense ratio 28.6% 26.4% -------- -------- Policyholders' dividend ratio NA 2.4% -------- -------- Combined ratio 98.8% 103.3% ======== ======== Net investment income ratio -9.6% -8.7% -------- -------- Operating ratio 89.2% 94.6% ======== ======== 1 The operating expense ratio and the combined ratio are computed based on $27.5 million of insurance-related operating expenses. 11
PMA Capital Corporation Statements of Operations - Consolidating Three Months Ended September 30, 2003 (In Thousands) PMA Insurance Corporate Run-off PMA Re Group & Other 1 Operations 2 Consolidated -------------------------------------------------------------- Gross Premiums Written $ 183,111 $ 169,258 $ (228) $ 239 $ 352,380 ========= ========= ========= ========= ========= Net Premiums Written $ 139,770 $ 149,130 $ (228) $ (3,389) $ 285,283 ========= ========= ========= ========= ========= Revenues: Net premiums earned $ 153,360 $ 141,967 $ (228) $ (1,617) $ 293,482 Net investment income 7,990 8,134 492 551 17,167 Other revenues -- 4,078 69 -- 4,147 --------- --------- --------- --------- --------- Operating revenues 161,350 154,179 333 (1,066) 314,796 --------- --------- --------- --------- --------- Losses and Expenses: Losses and loss adjustment expenses 231,403 105,197 -- (811) 335,789 Acquisition expenses 39,406 23,815 -- -- 63,221 Operating expenses 4,214 15,732 3,639 (258) 23,327 Dividends to policyholders -- 2,090 -- -- 2,090 --------- --------- --------- --------- --------- Total losses and expenses 275,023 146,834 3,639 (1,069) 424,427 --------- --------- --------- --------- --------- Operating income (loss) before income taxes and interest expense (113,673) 7,345 (3,306) 3 (109,631) Interest expense -- -- 2,953 -- 2,953 --------- --------- --------- --------- --------- Pre-tax operating income (loss) $(113,673) $ 7,345 $ (6,259) $ 3 (112,584) ========= ========= ========= ========= Net realized investment gains 1,392 --------- Pre-tax loss $(111,192) ========= 1 Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. 2 Formerly known as Caliber One. 12
PMA Capital Corporation Statements of Operations - Consolidating Three Months Ended September 30, 2002 (In Thousands) PMA Insurance Corporate Run-off PMA Re Group & Other 1 Operations 2 Consolidated -------------------------------------------------------------- Gross Premiums Written $ 186,499 $ 130,510 $ (220) $ 5,517 $ 322,306 ========= ========= ========= ========= ========= Net Premiums Written $ 153,862 $ 118,627 $ (220) $ (3,418) $ 268,851 ========= ========= ========= ========= ========= Revenues: Net premiums earned $ 135,511 $ 103,190 $ (220) $ 14,250 $ 252,731 Net investment income 9,239 8,971 (237) 114 18,087 Other revenues -- 3,989 68 -- 4,057 --------- --------- --------- --------- --------- Operating revenues 144,750 116,150 (389) 14,364 274,875 --------- --------- --------- --------- --------- Losses and Expenses: Losses and loss adjustment expenses 92,574 78,121 -- 10,038 180,733 Acquisition expenses 33,679 18,039 -- 3,672 55,390 Operating expenses 3,301 11,807 2,303 656 18,067 Dividends to policyholders -- 1,469 -- -- 1,469 --------- --------- --------- --------- --------- Total losses and expenses 129,554 109,436 2,303 14,366 255,659 --------- --------- --------- --------- --------- Operating income (loss) before income taxes and interest expense 15,196 6,714 (2,692) (2) 19,216 Interest expense -- -- 519 -- 519 --------- --------- --------- --------- --------- Pre-tax operating income (loss) $ 15,196 $ 6,714 $ (3,211) $ (2) 18,697 ========= ========= ========= ========= Net realized investment losses (3,868) --------- Pre-tax income $ 14,829 ========= 1 Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. 2 Formerly known as Caliber One. 13
PMA Capital Corporation Insurance Ratios Three Months Ended September 30, 2003 PMA Insurance PMA Re Group 1 ------------------------ Ratios - GAAP Basis: Loss and LAE ratio 150.9% 74.1% -------- -------- Expense ratio: Acquisition expenses 25.7% 16.8% Operating expenses 2.7% 8.9% -------- -------- Total expense ratio 28.4% 25.7% -------- -------- Policyholders' dividend ratio NA 1.5% -------- -------- Combined ratio 179.3% 101.3% ======== ======== Net investment income ratio -5.2% -5.7% -------- -------- Operating ratio 174.1% 95.6% ======== ======== 1 The operating expense ratio and the combined ratio are computed based on $12.7 million of insurance-related operating expenses. 14 PMA Capital Corporation Insurance Ratios Three Months Ended September 30, 2002 PMA Insurance PMA Re Group 1 --------------------- Ratios - GAAP Basis: Loss and LAE ratio 68.3% 75.7% -------- -------- Expense ratio: Acquisition expenses 24.9% 17.5% Operating expenses 2.4% 8.4% -------- -------- Total expense ratio 27.3% 25.9% -------- -------- Policyholders' dividend ratio NA 1.4% -------- -------- Combined ratio 95.6% 103.0% ======== ======== Net investment income ratio -6.8% -8.7% -------- -------- Operating ratio 88.8% 94.3% ======== ======== 1 The operating expense ratio and the combined ratio are computed based on $8.7 million of insurance-related operating expenses. 15
PMA Capital Corporation Statements of Operations - PMA Re (Dollar Amounts in Thousands) 3rd 4th 1st 2nd 3rd Nine Nine % Change % Change Quarter Quarter Quarter Quarter Quarter Months Months 3rd Nine 2002 2002 2003 2003 2003 2003 2002 Quarter Months ------------------------------------------------------------------------------------------------------- Gross Premiums Written $ 186,499 $ 201,814 $ 206,119 $ 227,860 $ 183,111 $ 617,090 $ 574,973 -1.8% 7.3% ======== ========= ======= ======== ========== ========= ========= ====== ====== Net Premiums Written $ 153,862 $ 185,870 $ 158,579 $ 172,464 $ 139,770 $ 470,813 $ 453,169 -9.2% 3.9% ======== ========= ======= ======== ========== ========= ========= ====== ====== Revenues: Net premiums earned $ 135,511 $ 164,970 $ 151,239 $ 151,004 $ 153,360 $ 455,603 $ 386,543 13.2% 17.9% Net investment income 9,239 11,588 8,431 8,611 7,990 25,032 37,148 -13.5% -32.6% -------- --------- ------- -------- ---------- --------- --------- ------ ------ Operating revenues 144,750 176,558 159,670 159,615 161,350 480,635 423,691 11.5% 13.4% -------- --------- ------- -------- ---------- --------- --------- ------ ------ Losses and Expenses: Losses and loss adjustment expenses 92,574 167,798 112,675 93,280 231,403 437,358 271,430 150.0% 61.1% Acquisition expenses 33,679 36,009 35,773 49,329 39,406 124,508 98,137 17.0% 26.9% Operating expenses 3,301 1,231 2,645 3,899 4,214 10,758 12,222 27.7% -12.0% -------- --------- ------- -------- ---------- --------- --------- ------ ------ Total losses and expenses 129,554 205,038 151,093 146,508 275,023 572,624 381,789 112.3% 50.0% -------- --------- ------- -------- ---------- --------- --------- ------ ------ Pre-tax operating income (loss) $ 15,196 $ (28,480) $ 8,577 $ 13,107 $ (113,673) (91,989) 41,902 NM NM ======== ========= ======= ======== ========== ========= ========= ====== ======
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PMA Capital Corporation Insurance Ratios - PMA Re 3rd 4th 1st 2nd 3rd Nine Nine Point Chg. Point Chg. Quarter Quarter Quarter Quarter Quarter Months Months 3rd Quarter Nine Months 2002 2002 2003 2003 2003 2003 2002 Better (Worse) Better (Worse) ------------------------------------------------------------------------------------------------------- Ratios - GAAP Basis: Loss and LAE ratio 68.3% 101.7% 74.5% 61.8% 150.9% 96.0% 70.2% (82.6) (25.8) ---- ----- ---- ---- ----- ----- ---- ----- ----- Expense ratio: Acquisition expenses 24.9% 21.8% 23.7% 32.7% 25.7% 27.3% 25.4% (0.8) (1.9) Operating expenses 2.4% 0.8% 1.7% 2.5% 2.7% 2.4% 3.2% (0.3) 0.8 ---- ----- ---- ---- ----- ----- ---- ----- ----- Total expense ratio 27.3% 22.6% 25.4% 35.2% 28.4% 29.7% 28.6% (1.1) (1.1) ---- ----- ---- ---- ----- ----- ---- ----- ----- Combined ratio 95.6% 124.3% 99.9% 97.0% 179.3% 125.7% 98.8% (83.7) (26.9) ==== ===== ==== ==== ===== ===== ==== ===== ===== Net investment income ratio -6.8% -7.0% -5.6% -5.7% -5.2% -5.5% -9.6% (1.6) (4.1) ---- ----- ---- ---- ----- ----- ---- ----- ----- Operating ratio 88.8% 117.3% 94.3% 91.3% 174.1% 120.2% 89.2% (85.3) (31.0) ==== ===== ==== ==== ===== ===== ==== ===== =====
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PMA Capital Corporation Statements of Operations - PMA Insurance Group (Dollar Amounts in Thousands) 3rd 4th 1st 2nd 3rd Nine Nine % Change % Change Quarter Quarter Quarter Quarter Quarter Months Months 3rd Nine 2002 2002 2003 2003 2003 2003 2002 Quarter Months ---------------------------------------------------------------------------------------------------- Gross Premiums Written $130,510 $ 91,886 $213,721 $133,968 $169,258 $516,947 $423,446 29.7% 22.1% ======== ======== ======== ======== ======== ======== ======== ======== ======= Net Premiums Written $118,627 $ 73,549 $194,239 $119,440 $149,130 $462,809 $378,727 25.7% 22.2% ======== ======== ======== ======== ======== ======== ======== ========= ====== Revenues: Net premiums earned $103,190 $100,736 $116,241 $134,350 141,967 $392,558 $309,530 37.6% 26.8% Net investment income 8,971 8,611 8,271 8,203 8,134 24,608 27,002 -9.3% -8.9% Other revenues 3,989 3,807 4,431 4,577 4,078 13,086 10,887 2.2% 20.2% -------- -------- -------- -------- -------- -------- -------- ------ ---- Operating revenues 116,150 113,154 128,943 147,130 154,179 430,252 347,419 32.7% 23.8% -------- -------- -------- -------- -------- -------- -------- ------ ---- Losses and Expenses: Losses and loss adjustment expenses 78,121 77,185 84,035 99,201 105,197 288,433 230,549 34.7% 25.1% Acquisition expenses 18,039 17,753 19,582 22,824 23,815 66,221 54,121 32.0% 22.4% Operating expenses 11,807 12,267 14,950 16,213 15,732 46,895 35,765 33.2% 31.1% Dividends to policyholders 1,469 111 2,036 2,054 2,090 6,180 7,476 42.3% -17.3% -------- -------- -------- -------- -------- -------- -------- ------ ---- Total losses and expenses 109,436 107,316 120,603 140,292 146,834 407,729 327,911 34.2% 24.3% -------- -------- -------- -------- -------- -------- -------- ------ ---- Pre-tax operating income $ 6,714 $ 5,838 $ 8,340 $ 6,838 $ 7,345 $ 22,523 $ 19,508 9.4% 15.5% ======== ======== ======== ======== ======== ======== ======== ========= ====== 18
PMA Capital Corporation Insurance Ratios - PMA Insurance Group 3rd 4th 1st 2nd 3rd Nine Nine Point Chg. Point Chg. Quarter Quarter Quarter Quarter Quarter Months Months 3rd Quarter Nine Months 2002 2002 2003 2003 2003 2003 2002 Better Better (Worse) (Worse) --------------------------------------------------------------------------------------------------- Ratios - GAAP Basis: Loss and LAE ratio 75.7% 76.6% 72.3% 73.8% 74.1% 73.5% 74.5% 1.6 1.0 ------ ------ ------ ------ ------ ------ ------ ------ ------ Expense ratio: Acquisition expenses 17.5% 17.6% 16.8% 17.0% 16.8% 16.9% 17.5% 0.7 0.6 Operating expenses 8.4% 9.2% 10.4% 9.6% 8.9% 9.5% 8.9% (0.5) (0.6) ------ ------ ------ ------ ------ ------ ------ ------ ------ Total expense ratio 25.9% 26.8% 27.2% 26.6% 25.7% 26.4% 26.4% 0.2 -- ------ ------ ------ ------ ------ ------ ------ ------ ------ Policyholders' dividend ratio 1.4% 0.1% 1.8% 1.5% 1.5% 1.6% 2.4% (0.1) 0.8 ------ ------ ------ ------ ------ ------ ------ ------ ------ Combined ratio 103.0% 103.5% 101.3% 101.9% 101.3% 101.5% 103.3% 1.7 1.8 ====== ====== ====== ====== ====== ====== ====== ====== ====== Net investment income ratio -8.7% -8.5% -7.1% -6.1% -5.7% -6.3% -8.7% (3.0) (2.4) ------ ------ ------ ------ ------ ------ ------ ------ ------ Operating ratio 94.3% 95.0% 94.2% 95.8% 95.6% 95.2% 94.6% (1.3) (0.6) ====== ====== ====== ====== ====== ====== ====== ====== ====== 1 The operating expense ratio equals insurance-related operating expenses divided by net premiums earned. Insurance-related operating expenses were $8.7 million, $9.3 million, $12.1 million, $12.9 million and $12.7 million for the third and fourth quarters of 2002 and the first, second and third quarters of 2003, respectively.
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PMA Capital Corporation Statements of Operations - Run-off Operations 1 (Dollar Amounts in Thousands) 3rd 4th 1st 2nd 3rd Nine Nine % Change % Change Quarter Quarter Quarter Quarter Quarter Months Months 3rd Nine 2002 2002 2003 2003 2003 2003 2002 Quarter Months ---------------------------------------------------------------------------------------------------- Gross Premiums Written $ 5,517 $ (169) $ 110 $ 195 $ 239 $ 544 $ 105,477 -95.7% -99.5% ========= ========= ========= ========= ========= ========= ========= ====== ====== Net Premiums Written $ (3,418) $ (14,189) $ (1,704) $ (1,124) $ (3,389) $ (6,217) $ 28,752 0.8% NM ========= ========= ========= ========= ========= ========= ========= ====== ====== Revenues: Net premiums earned $ 14,250 $ (1,672) $ 6,846 $ 392 $ (1,617) $ 5,621 $ 31,785 NM -82.3% Net investment income 114 564 361 528 551 1,440 576 NM 150.0% Other revenues -- -- 2,500 -- -- 2,500 -- NM NM --------- --------- --------- --------- --------- --------- --------- ------ ------ Operating revenues 14,364 (1,108) 9,707 920 (1,066) 9,561 32,361 NM -70.5% --------- --------- --------- --------- --------- --------- --------- ------ ------ Losses and Expenses: Losses and loss adjustment expenses 10,038 5,715 5,875 593 (811) 5,657 70,981 NM -92.0% Acquisition expenses 3,672 2,020 865 62 -- 927 8,944 NM -89.6% Operating expenses 656 (8,839) 2,966 268 (258) 2,976 39,933 NM -92.5% --------- --------- --------- --------- --------- --------- --------- ------ ------ Total losses and expenses 14,366 (1,104) 9,706 923 (1,069) 9,560 119,858 NM -92.0% --------- --------- --------- --------- --------- --------- --------- ------ ------ Pre-tax operating income (loss) $ (2) $ (4) $ 1 $ (3) $ 3 $ 1 $ (87,497) NM NM ========= ========= ========= ========= ========= ========= ========= ====== ====== 1 Formerly known as Caliber One.
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PMA Capital Corporation Statements of Operations - Corporate & Other (Dollar Amounts in Thousands) 3rd 4th 1st 2nd 3rd Nine Nine % Change % Change Quarter Quarter Quarter Quarter Quarter Months Months 3rd Nine 2002 2002 2003 2003 2003 2003 2002 Quarter Months ------------------------------------------------------------------------------------------------------ Gross Premiums Written $ (220) $ (10,228) $ (256) $ (124) $ (228) $ (608) $ (653) -3.6% 6.9% ======== ======== ======== ======== ====== ======= ======= ==== ==== Net Premiums Written $ (220) $ (228) $ (256) $ (124) $ (228) $ (608) $ (653) -3.6% 6.9% ======== ======== ======== ======== ====== ======= ======= ==== ==== Revenues: Net premiums earned $ (220) $ (228) $ (256) $ (124) $ (228) $ (608) $ (653) -3.6% 6.9% Net investment income (237) 245 582 438 492 1,512 (853) NM NM Other revenues 68 52 69 189 69 327 584 1.5% -44.0% -------- -------- -------- -------- ------ ------- ------- ---- ---- Operating revenues (389) 69 395 503 333 1,231 (922) NM NM -------- -------- -------- -------- ------ ------- ------- ---- ---- Losses and Expenses: Operating expenses 2,303 1,578 3,311 3,842 3,639 10,792 8,651 58.0% 24.7% -------- -------- -------- -------- ------ ------- ------- ---- ---- Total losses and expenses 2,303 1,578 3,311 3,842 3,639 10,792 8,651 58.0% 24.7% -------- -------- -------- -------- ------ ------- ------- ---- ---- Operating loss before income taxes and interest expense (2,692) (1,509) (2,916) (3,339) (3,306) (9,561) (9,573) -22.8% 0.1% Interest expense 519 1,639 1,758 2,225 2,953 6,936 1,618 NM NM -------- -------- -------- -------- ------ ------- ------- ---- ---- Pre-tax operating loss $ (3,211) $ (3,148) $ (4,674) $ (5,564) (6,259) (16,497) (11,191) -94.9% -47.4% ======== ======== ======== ======== ====== ======= ======= ==== ====
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PMA Capital Corporation Operating Cash Flows - Consolidated (In Thousands) 3rd 4th 1st 2nd 3rd Nine Nine Quarter Quarter Quarter Quarter Quarter Months Months 2002 2002 2003 2003 2003 2003 2002 ---------------------------------------------------------------------------------- Receipts: Premiums and other revenues collected $ 274,892 $ 272,335 $ 274,221 $ 393,639 $ 319,594 $ 987,454 $ 807,967 Investment income received 19,367 24,706 20,108 27,434 20,079 67,621 67,501 --------- --------- --------- --------- --------- --------- --------- Total receipts 294,259 297,041 294,329 421,073 339,673 1,055,075 875,468 --------- --------- --------- --------- --------- --------- --------- Disbursements: Losses and LAE paid: Losses and LAE paid - current year 39,288 59,147 6,787 35,305 83,436 125,528 78,980 Losses and LAE paid - prior year 145,222 113,417 210,892 183,345 139,352 533,589 513,894 --------- --------- --------- --------- --------- --------- --------- Total losses and LAE paid 184,510 172,564 217,679 218,650 222,788 659,117 592,874 Insurance operating expenses paid 70,963 67,197 78,957 100,177 64,223 243,357 230,436 Policyholders' dividends paid 3,826 1,868 1,627 1,439 2,880 5,946 7,484 Interest on corporate debt 989 239 2,484 502 3,582 6,568 1,852 --------- --------- --------- --------- --------- --------- --------- Total disbursements 260,288 241,868 300,747 320,768 293,473 914,988 832,646 --------- --------- --------- --------- --------- --------- --------- Net other (13,914) 9,042 (4,358) 3,373 (6,092) (7,077) (34,870) --------- --------- --------- --------- --------- --------- --------- Net operating cash flows $ 20,057 $ 64,215 $ (10,776) $ 103,678 $ 40,108 $ 133,010 $ 7,952 ========= ========= ========= ========= ========= ========= =========
22 PMA Capital Corporation Operating Cash Flows - PMA Re (In Thousands)
3rd 4th 1st 2nd 3rd Nine Nine Quarter Quarter Quarter Quarter Quarter Months Months 2002 2002 2003 2003 2003 2003 2002 ---------------------------------------------------------------------------------- Receipts: Premiums collected $ 151,233 $ 144,418 $ 154,610 $ 256,727 $ 170,802 $ 582,139 $ 415,388 Investment income received 8,847 13,740 9,162 16,007 9,107 34,276 35,451 --------- --------- --------- --------- --------- --------- --------- Total receipts 160,080 158,158 163,772 272,734 179,909 616,415 450,839 --------- --------- --------- --------- --------- --------- --------- Disbursements: Losses and LAE paid: Losses and LAE paid - current year 14,813 17,895 865 9,701 45,427 55,993 21,304 Losses and LAE paid - prior year 73,100 58,008 115,870 104,331 73,694 293,895 261,322 --------- --------- --------- --------- --------- --------- --------- Total losses and LAE paid 87,913 75,903 116,735 114,032 119,121 349,888 282,626 Insurance operating expenses paid 46,030 40,788 39,418 61,197 40,686 141,301 123,772 --------- --------- --------- --------- --------- --------- --------- Total disbursements 133,943 116,691 156,153 175,229 159,807 491,189 406,398 --------- --------- --------- --------- --------- --------- --------- Net other (3,017) 13,613 660 8,572 1,501 10,733 (26,301) --------- --------- --------- --------- --------- --------- --------- Net operating cash flows $ 23,120 $ 55,080 $ 8,279 $ 106,077 $ 21,603 $ 135,959 $ 18,140 ========= ========= ========= ========= ========= ========= =========
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PMA Capital Corporation Operating Cash Flows - PMA Insurance Group (In Thousands) 3rd 4th 1st 2nd 3rd Nine Nine Quarter Quarter Quarter Quarter Quarter Months Months 2002 2002 2003 2003 2003 2003 2002 -------------------------------------------------------------------------------- Receipts: Premiums and other revenues collected $ 128,822 $ 129,911 $ 120,589 $ 138,915 $ 150,684 $ 410,188 $ 342,275 Investment income received 9,600 9,859 9,340 9,772 9,523 28,635 28,902 --------- --------- --------- --------- --------- --------- --------- Total receipts 138,422 139,770 129,929 148,687 160,207 438,823 371,177 --------- --------- --------- --------- --------- --------- --------- Disbursements: Losses and LAE paid: Losses and LAE paid - current year 20,323 38,742 5,226 24,316 37,387 66,929 48,675 Losses and LAE paid - prior year 60,234 40,901 83,269 60,049 57,474 200,792 209,317 --------- --------- --------- --------- --------- --------- --------- Losses and LAE 80,557 79,643 88,495 84,365 94,861 267,721 257,992 Insurance operating expenses paid 22,970 21,637 37,212 37,214 22,578 97,004 90,849 Policyholders' dividends paid 3,826 1,868 1,627 1,439 2,880 5,946 7,484 --------- --------- --------- --------- --------- --------- --------- Total disbursements 107,353 103,148 127,334 123,018 120,319 370,671 356,325 --------- --------- --------- --------- --------- --------- --------- Net other (6,244) 4,338 (5,052) (1,795) (8,839) (15,686) (5,555) --------- --------- --------- --------- --------- --------- --------- Net operating cash flows $ 24,825 $ 40,960 $ (2,457) $ 23,874 $ 31,049 $ 52,466 $ 9,297 ========= ========= ========= ========= ========= ========= ========= 24
PMA Capital Corporation Operating Cash Flows - Run-off Operations 1 (In Thousands) 3rd 4th 1st 2nd 3rd Nine Nine Quarter Quarter Quarter Quarter Quarter Months Months 2002 2002 2003 2003 2003 2003 2002 -------------------------------------------------------------------------- Receipts: Net premiums collected (paid) $ (5,163) $ (1,994) $ (978) $ (2,003) $ (1,892) $ (4,873) $ 50,304 Investment income received 920 1,107 1,606 1,655 1,449 4,710 3,148 -------- -------- -------- -------- -------- -------- -------- Total receipts (4,243) (887) 628 (348) (443) (163) 53,452 -------- -------- -------- -------- -------- -------- -------- Disbursements: Losses and LAE paid: Losses and LAE paid - current year 4,152 2,510 696 1,288 622 2,606 9,001 Losses and LAE paid - prior year 11,888 14,508 11,753 18,965 8,184 38,902 43,255 -------- -------- -------- -------- -------- -------- -------- Total losses and LAE paid 16,040 17,018 12,449 20,253 8,806 41,508 52,256 Insurance operating expenses paid 1,963 4,772 2,327 1,766 959 5,052 15,815 -------- -------- -------- -------- -------- -------- -------- Total disbursements 18,003 21,790 14,776 22,019 9,765 46,560 68,071 -------- -------- -------- -------- -------- -------- -------- Net other (9,407) 5,784 74 (20) (2,279) (2,225) (11,171) -------- -------- -------- -------- -------- -------- -------- Net operating cash flows $(31,653) $(16,893) $(14,074) $(22,387) $(12,487) $(48,948) $(25,790) ======== ======== ======== ======== ======== ======== ======== 1 Formerly known as Caliber One. 25
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PMA Capital Corporation Statutory Financial Information (Dollars in Thousands) 3rd 4th 1st 2nd 3rd Nine Nine Quarter Quarter Quarter Quarter Quarter Months Months 2002 2002 2003 2003 2003 1 2003 1 2002 ---------------------------------------------------------------------------------------- PMA Capital Insurance Company: Net premiums written $ 151,262 $ 164,377 $ 147,687 $ 160,985 $ 127,460 $ 436,132 $ 477,103 ========== ========== ========== ========== ========== ========== ========== Statutory Ratios: Loss and LAE ratio 68.7% 100.2% 74.0% 58.3% 153.6% 95.5% 70.6% Underwriting expense ratio 27.4% 22.6% 25.2% 38.1% 29.0% 31.1% 28.2% ---------- ---------- ---------- ---------- ---------- ---------- ---------- Combined ratio 96.1% 122.8% 99.2% 96.4% 182.6% 126.6% 98.8% ========== ========== ========== ========== ========== ========== ========== Operating ratio 93.3% 115.7% 89.2% 86.8% 173.1% 116.9% 95.4% ========== ========== ========== ========== ========== ========== ========== ---------------------------------------------------------------------------------------------------------------------------- PMA Pool 2: Net premiums written $ 104,516 $ 59,472 $ 175,680 $ 117,183 $ 133,821 $ 426,684 $ 351,478 ========== ========== ========== ========== ========== ========== ========== Statutory Ratios: Loss and LAE ratio 74.6% 77.5% 73.3% 73.6% 74.4% 73.8% 74.7% Underwriting expense ratio 22.4% 39.6% 21.5% 28.5% 24.9% 24.5% 23.4% Policyholders' dividend ratio 2.8% 0.1% 1.6% 1.6% 1.7% 1.6% 2.6% ---------- ---------- ---------- ---------- ---------- ---------- ---------- Combined ratio 99.8% 117.2% 96.4% 103.7% 101.0% 99.9% 100.7% ========== ========== ========== ========== ========== ========== ========== Operating ratio 88.7% 107.1% 83.0% 97.9% 94.9% 91.9% 90.6% ========== ========== ========== ========== ========== ========== ========== 1 Estimated. 2 The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company. 27
PMA Capital Corporation Statutory Net Premiums Written by Product (In Thousands) 3rd 4th 1st 2nd 3rd Nine Nine Quarter Quarter Quarter Quarter Quarter Months Months 2002 2002 2003 2003 2003 1 2003 1 2002 --------------------------------------------------------------------- PMA Capital Insurance Company: Finite Risk and Financial Products: Property $ 22,995 $ 12,223 $ 19,746 $ 33,063 $ 17,394 $ 70,203 $ 87,448 Casualty 6,437 28,697 19,560 43,688 12,246 75,494 83,345 Other 4,738 4,778 1,806 1,977 2,132 5,915 14,229 -------- -------- -------- -------- -------- -------- -------- Subtotal - Finite Risk and Financial Products 34,170 45,698 41,112 78,728 31,772 151,612 185,022 -------- -------- -------- -------- -------- -------- -------- Treaty Excess of Loss: Property 23,717 23,199 14,864 9,883 15,624 40,371 35,944 Casualty 39,208 33,203 36,674 25,560 39,151 101,385 124,733 Other 1,555 3,021 2,833 5,067 4,003 11,903 2,503 -------- -------- -------- -------- -------- -------- -------- Subtotal - Treaty Excess of Loss 64,480 59,423 54,371 40,510 58,778 153,659 163,180 -------- -------- -------- -------- -------- -------- -------- Treaty Pro-Rata: Property 10,853 21,259 6,203 7,957 5,871 20,031 30,995 Casualty 37,026 34,637 39,378 27,319 23,545 90,242 82,390 Other 138 83 97 67 92 256 116 -------- -------- -------- -------- -------- -------- -------- Subtotal - Treaty Pro-Rata 48,017 55,979 45,678 35,343 29,508 110,529 113,501 -------- -------- -------- -------- -------- -------- -------- Facultative: Property 2,472 986 1,365 1,381 3,145 5,891 5,657 Casualty 2,123 2,291 5,161 5,023 4,257 14,441 9,743 -------- -------- -------- -------- -------- -------- -------- Subtotal - Facultative 4,595 3,277 6,526 6,404 7,402 20,332 15,400 -------- -------- -------- -------- -------- -------- -------- Total - PMA Capital Insurance Company $151,262 $164,377 $147,687 $160,985 $127,460 $436,132 $477,103 ======== ======== ======== ======== ======== ======== ======== ----------------------------------------------------------------------------------------------------------------------- PMA Pool 2: Workers Compensation & Integrated Disability $ 95,943 $ 44,594 $147,425 $ 91,269 $116,397 $355,091 $293,351 Other Commercial Lines 8,573 14,878 28,255 25,914 17,424 71,593 58,127 -------- -------- -------- -------- -------- -------- -------- Total - PMA Pool $104,516 $ 59,472 $175,680 $117,183 $133,821 $426,684 $351,478 ======== ======== ======== ======== ======== ======== ======== 1 Estimated. 2 The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company. 28
PMA Capital Corporation Statutory Surplus (In Thousands) 3rd 4th 1st 2nd 3rd Quarter Quarter Quarter Quarter Quarter 2002 2002 2003 2003 2003 1 ----------------------------------------------------------------- PMA Capital Insurance Company $ 518,604 $ 580,151 $ 554,611 $ 581,821 $ 477,391 PMA Pool 2 255,572 305,533 302,646 304,109 301,684 Caliber One Indemnity Company 26,735 26,844 -- -- -- Eliminations 3 (282,307) (332,377) (302,646) (304,109) (301,684) --------- --------- --------- --------- --------- Total $ 518,604 $ 580,151 $ 554,611 $ 581,821 $ 477,391 ========= ========= ========= ========= ========= 1 Estimated. 2 The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company. 3 Surplus for PMA Pool and Caliber One Indemnity Company is eliminated as it is included in the statutory surplus of PMA Capital Insurance Company. 29
PMA Capital Corporation Industry Ratings and Market Information Transfer Agent and Registrar: Securities Listing: Certificate Transfers and Conversions: The Corporation's Class A Common Stock is listed The Bank of New York on the NASDAQ Stock Market?. It trades under Receive and Deliver Department - 11 W the stock symbol: PMACA. P.O. Box 11002 Church Street Station Inquiries: New York, NY 10286 William E. Hitselberger Chief Financial Officer Written Inquiries: 215.665.5070 The Bank of New York e-mail: bhitselberger@pmacapital.com Shareholder Relations Department - 11 E P.O. Box 11258 Investor Relations Church Street Station 215.665.5046 New York, NY 10286 investorrelations@pmacapital.com Phone Inquiries: Company Website: 800.524.4458 http://www.pmacapital.com Email Inquiries: shareowner-svcs@bankofny.com -----------------------------------------------------------------------------------------------------------------
Financial Strength Ratings (as of 11/6/2003):
A.M. Best S&P Moody's ---------------- ----------------- ----------------- PMA Capital Insurance Company B++ (5th of 16) BBB- (10th of 21) Ba1 (11th of 21) PMA Pool 1 B++ (5th of 16) BBB (9th of 21) Baa2 (9th of 21) 1 The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company.
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