-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SZ44gfSJTJIn+jFwYKgu6xAW4kGP2GfwWjlpG5aIwiDU2DZUbtdQWlgPI8RHGuoy uKK+6H5HFg6oAylNKjJxRQ== 0000950159-04-000711.txt : 20040729 0000950159-04-000711.hdr.sgml : 20040729 20040729171341 ACCESSION NUMBER: 0000950159-04-000711 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040729 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PMA CAPITAL CORP CENTRAL INDEX KEY: 0001041665 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 232217932 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31706 FILM NUMBER: 04939814 BUSINESS ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 CITY: PHILADELPHIA STATE: PA ZIP: 19103-7590 BUSINESS PHONE: 2156655046 MAIL ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 CITY: PHILADELPHIA STATE: PA ZIP: 19103-7590 FORMER COMPANY: FORMER CONFORMED NAME: PENNSYLVANIA MANUFACTURERS CORP DATE OF NAME CHANGE: 19970702 8-K 1 pma8k.htm PMA CAPITAL CORPORATION FORM 8K

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): July 29, 2004

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 7. Financial Statements and Exhibits.

        (c) The exhibits accompanying this report are listed in the Index to Exhibits on page E-1, which is incorporated herein by reference.

Item 12. Disclosure of Results of Operations and Financial Condition.

        On July 29, 2004, the registrant issued a news release regarding its Second Quarter 2004 results, a copy of which is furnished as Exhibit 99.1 hereto and is incorporated herein by reference, and the Company’s Second Quarter 2004 Statistical Supplement is furnished as Exhibit 99.2 and is incorporated herein by reference.

        The information, including exhibits attached hereto, furnished under this Item 12 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.







2

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: July 29, 2004 By: /s/ William E. Hitselberger
        William E. Hitselberger
        Executive Vice President, Chief Financial
      Officer and Treasurer



3

Index to Exhibits

   
     
Number Description Method of Filing
 
99.1 PMA Capital Corporation
news release dated
July 29, 2004		 Filed herewith
 
99.2 PMA Capital Corporation
Second Quarter 2004 Statistical
Supplement		 Filed herewith
 



E-1

EX-99 2 exhibit99.htm EXHIBIT 99.1 PMA Capital Exhibit 99.1

PMA Capital
A Specialty Risk Management Company

[GRAPHIC OMITTED]

Mellon Bank Center Suite 2800
1735 Market Street
Philadelphia, PA 19103-7590

PRESS RELEASE

For Release:     Immediate
      Contact:     William Hitselberger
                          (215) 665-5046

PMA Capital Announces Second Quarter 2004 Results

Philadelphia, PA, July 29, 2004 — PMA Capital (NASDAQ: PMACA) today announced a modest profit for the second quarter of 2004, compared with net income of $12.2 million, or 39 cents per diluted share, for the second quarter of 2003. For the six months ended June 30, 2004, we had net income of $12.2 million, or 36 cents per diluted share, compared to net income of $22.9 million, or 73 cents per diluted share, for the same period last year. The dilutive effect of our convertible debt reduced net income by 3 cents per share for the first six months of 2004, while not affecting earnings for the second quarter of 2004 and the three and six months ended June 30, 2003.

Included in net income for the second quarter and the first six months of 2004 were after-tax net realized investment gains of $1.5 million, or 4 cents per diluted share, and $7.1 million, or 19 cents per diluted share, compared to $2.9 million, or 9 cents per diluted share, and $5.7 million, or 18 cents per diluted share, for the same periods last year. Net income for the second quarter and first six months of 2004 includes an after-tax charge of $2.6 million ($4 million pre-tax) to purchase reinsurance covering potential adverse loss development at the Run-off Operations.

Consolidated revenues for the second quarter of 2004 and 2003 were $140.1 million and $312.6 million, respectively. For the first six months of 2004, revenues were $377.4 million, compared to $615.7 million for the same period in 2003. The decreases in revenues for the quarter and year-to-date periods reflect lower net premiums earned due to our fourth quarter 2003 withdrawal from the reinsurance business.

Vincent T. Donnelly, President and Chief Executive Officer commented, “In the second quarter, we successfully separated the ownership of The PMA Insurance Group from the Run-Off Operations and made The PMA Insurance Group companies direct subsidiaries of PMA Capital. This unstacking gives PMA Capital two independent sources of capital. The Order by the Pennsylvania Insurance Department approving the unstacking does not limit The PMA Insurance Group’s ability to pay dividends. However, it requires us to wait until 2006 to obtain capital from the Run-off Operations. We believe that our available holding company cash and other capital sources will continue to provide us with adequate sources to service our holding company obligations. Additionally, we put into place a reinsurance agreement that covers potential adverse loss development at our Run-off Operations. Although we believe the reserves of our Run-off Operations are adequate, this reinsurance provides protection to our statutory capital in the



event that these loss reserves do not develop as currently anticipated. We continue to be satisfied with the progress that we have made in our Run-Off Operations.”

Mr. Donnelly continued, “The PMA Insurance Group’s premium writings in 2004 have been constrained by our A.M. Best rating. We continue to work towards our primary goal of restoring The PMA Insurance Group’s ‘A-’ rating.”

Financial Condition
Total assets were $3.7 billion as of June 30, 2004, compared to $4.2 billion as of December 31, 2003. Shareholders’ equity was $443.7 million as of June 30, 2004, compared to $463.7 million as of December 31, 2003. Book value per share was $14.00 as of June 30, 2004, compared with $14.80 as of December 31, 2003. The decreases in shareholders’ equity and book value per share are primarily due to lower net unrealized holding gains on fixed maturities. Net unrealized holding gains were negligible as of June 30, 2004, compared to $31.4 million, or $1.00 per share, at year-end 2003, mainly due to higher market interest rates. Total outstanding debt was $187.6 million as of June 30, 2004 and December 31, 2003. At June 30, 2004, we had $9.2 million in cash and short-term investments at the holding company.

The statutory surplus of The PMA Insurance Group increased to $305.1 million at June 30, 2004, from $296.8 million at December 31, 2003. The PMA Insurance Group has the ability to pay $23 million in dividends in 2004 without the prior approval of the Pennsylvania Insurance Commissioner. The statutory surplus of PMA Capital Insurance Company (“PMACIC”), PMA Capital Corporation’s directly held reinsurance subsidiary, was $236.2 million at June 30, 2004, compared to $500.6 million at December 31, 2003. The statutory surplus of PMACIC at December 31, 2003 included $296.8 million of statutory surplus from the insurance subsidiaries comprising The PMA Insurance Group.



2

Segment Operating Results
Operating income (loss), which we define as net income (loss) under accounting principles generally accepted in the United States of America (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 results 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 results 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 as the GAAP measure of our consolidated results of operations. A reconciliation of our segment operating results as discussed below to GAAP net income is provided below.

    Three months ended
    June 30,		       Six months ended
      June 30,
(Dollars in thousands)   2004   2003   2004   2003  
Pre-tax operating income (loss):                    
   The PMA Insurance Group   $ 2,809   $ 6,838   $ 9,368   $ 15,178  
   Run-off Operations (1)    624    13,072    9,570    21,619  
   Corporate & Other    (5,506 )  (5,532 )  (10,818 )  (10,175 )
Net realized investment gains    2,248    4,451    10,848    8,806  
Pre-tax income    175    18,829    18,968    35,428  
Income tax expense    111    6,662    6,751    12,559  
Net income   $ 64   $ 12,167   $ 12,217   $ 22,869  
(1)  

In November 2003, we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are now reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.


The PMA Insurance Group
The PMA Insurance Group reported pre-tax operating income of $2.8 million and $9.4 million for the second quarter and first six months of 2004, compared to $6.8 million and $15.2 million for the same periods last year, primarily reflecting lower underwriting results.

Net premiums written were $82.0 million for the second quarter of 2004, compared with $119.4 million for the second quarter of 2003. Net premiums written were $217.2 million for the first six months of 2004, compared with $313.7 million for the comparable period last year. The lower net premiums written reflect the impact of our B++A.M. Best financial strength rating. Our renewal retention rate on existing workers’ compensation accounts was 61% in the first six months of 2004. New business production continued in 2004, although at a lower rate than in 2003. The PMA Insurance Group continues to obtain price increases in all of its commercial lines of business, although at lower rates of increase than in 2003. Average rate increases for workers’ compensation business were approximately 7% so far in 2004.

The combined ratio on a GAAP basis in 2004 was 105.6% for the second quarter and 104.2% for the first six months of 2004, compared to 101.9% and 101.6% for the same periods last year. The increases in the combined ratio primarily reflect a higher total expense ratio and a higher current accident year loss ratio. We have not significantly reduced our level of operating expenses in order to remain in position to be able to write a level of business more consistent with The PMA Insurance Group’s past, if its A- rating is restored. Overall loss trends in workers’ compensation are rising modestly ahead

3



of price increases, with medical inflation being the largest driver of these loss trends. We estimate medical cost inflation, which is the primary reason for increasing loss costs in 2004, to be approximately 11%.

Net investment income was $8.4 million and $16.4 million for the second quarter and first six months of 2004, compared to $8.2 million and $16.5 million for the comparable periods of 2003, reflecting a higher invested asset base, offset by lower invested asset yields.

Run-off Operations
Results of the Run-off Operations are driven principally by underwriting results from our former PMA Re operating segment. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.

The Run-off Operations reported pre-tax operating income of $624,000 and $9.6 million for the second quarter and first six months of 2004, compared to $13.1 million and $21.6 million for the same periods last year. Pre-tax operating income for the three and six months ended June 30, 2004 includes the $4 million charge for the reinsurance agreement covering potential adverse loss development and a $1 million lease amendment fee. We amended our Philadelphia office lease in the second quarter of 2004, shortening the term from fifteen years to seven and reducing the leased space by approximately 75% effective October 1, 2004. We expect that this amendment will result in annual savings of approximately $1.5 million. Also included in 2004 results is a $1.2 million gain on the sale of 63% of our ownership in Cathedral Capital PLC, a Lloyd’s of London managing general agency. Subsequent to June 30, 2004, we have sold our remaining interest in this agency.

Results for the Run-off Operations for the first six months of 2004 will not be indicative of results for the remainder of 2004 due to our expectation that earned premiums will decrease significantly in the second half of 2004, compared to the first six months, and due to the unpredictability of the impact of future commutations.

Corporate and Other
The Corporate and Other segment includes unallocated investment income and expenses, including debt service. Corporate & Other recorded pre-tax operating losses of $5.5 million and $10.8 million for the three and six months ended June 30, 2004, respectively, compared to $5.5 million and $10.2 million for the same periods last year. Interest expense for three and six months ended June 30, 2004 increased by $735,000 and $1.9 million over the comparable periods last year, primarily due to a higher average amount of debt outstanding in 2004, compared with last year.

Conference Call with Investors
As a reminder, we will hold a conference call with investors beginning at 8:30 a.m. Eastern Time on Friday, July 30th to review our second quarter 2004 results. The conference call will be available via a live webcast over the Internet at www.pmacapital.com by entering the Investor Information section, clicking on News Releases and then clicking on the microphone icon. Please note that by accessing the conference call via the Internet, you will be in a listen-only mode. The call-in numbers and passcodes for the conference call are as follows:

     Live Call      Replay
866-800-8649 (Domestic) 888-286-8010 (Domestic)
617-614-2703 (International) 617-801-6888 (International)
Passcode 90723036 Passcode 18858421

4

A replay of the conference call will be available over the Internet or by dialing the call-in number for the replay and using the passcode. The replay will be available from approximately 11:30 a.m. Eastern Time on Friday, July 30th until 11:59 p.m. Eastern Time on Friday, August 6th.

Quarterly Statistical Supplement
Our Second Quarter Statistical Supplement, which provides more detailed historical information about us, 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 by sending your request to:

      PMA Capital Corporation
      1735 Market Street
      Philadelphia, PA 19103
      Attention: Investor Relations

Alternatively, you may submit your request by telephone (215.665.5046) or by e-mail to InvestorRelations@pmacapital.com. We have also furnished a copy of this news release and the Statistical Supplement to the SEC under cover of Form 8-K dated July 29, 2004. A copy of the Form 8-K is available on the SEC’s website at www.sec.gov.





5

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 individuals authorized to speak on behalf of PMA Capital Corporation (“we”, “our” or 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:

•  

our ability to effect an efficient withdrawal from the reinsurance business, including the commutation of reinsurance business with certain large ceding companies, without incurring any significant liabilities;

•  

regulatory or tax changes in risk-based capital or other regulatory standards that affect the cost of, or demand for, our products or otherwise affect our ability to conduct business, including any future action with respect to our business taken by the Pennsylvania Insurance Department or any other state insurance department;

•  

The PMA Insurance Group’s ability to have its A- A.M. Best financial strength rating restored and the effect of its B++ A.M. Best rating on its premium writings and profitability as well as the adverse impact of any potential future downgrade of its rating;

•  

the ability of the Company to have sufficient cash at the holding company to meet its debt service and other obligations, including any restrictions such as those imposed by the Pennsylvania Insurance Department on receiving dividends from its insurance subsidiaries in an amount sufficient to meet such obligations;

•  

the lowering or loss of one or more of the Company’s debt ratings, and the adverse impact that any such downgrade may have on our ability to raise capital and our liquidity and financial condition;

•  

adequacy of reserves for claim liabilities;

•  

adverse property and casualty loss development for events that we insured in prior years, including unforeseen increases in medical costs;

•  

the impact of future results on the recoverability of our deferred tax asset;

•  

adequacy and collectibility of reinsurance that we purchased;

•  

the outcome of any litigation against the Company, including the outcome of the purported class action lawsuits;

•  

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;

•  

our ability to predict and effectively manage claims related to insurance and reinsurance policies;

•  

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;

•  

severity of natural disasters and other catastrophes, including the impact of future acts of terrorism, in connection with insurance and reinsurance policies;

•  

changes in general economic conditions, including the performance of financial markets, interest rates and the level of unemployment;

•  

uncertainties related to possible terrorist activities or international hostilities; and

•  

other factors disclosed from time to time in our most recent Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.


You should not place undue reliance on any such forward-looking statements. Unless otherwise stated, we disclaim 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.

6


PMA Capital Corporation
Selected Financial Data
(Unaudited)

         
   Three months ended June 30,  
(Dollars in thousands)     2004    2003  
Net premiums written:            
       The PMA Insurance Group   $ 81,962   $ 119,440  
       Run-off Operations (1)    (78,864 )  171,340  
       Corporate and Other    (225 )  (124 )
Consolidated   $ 2,873   $ 290,656  
 
Revenues:  
Net premiums earned:  
       The PMA Insurance Group   $ 118,288   $ 134,350  
       Run-off Operations (1)    285    151,396  
       Corporate and Other    (225 )  (124 )
Consolidated net premiums earned    118,348    285,622  
Net investment income    14,807    17,780  
Realized gains    2,248    4,451  
Other revenues    4,680    4,766  
Consolidated revenues   $ 140,083   $ 312,619  
 
Components of net income:  
 
Pre-tax operating income (loss) (2):  
       The PMA Insurance Group   $ 2,809   $ 6,838  
       Run-off Operations (1)    624    13,072  
       Corporate and Other    (5,506 )  (5,532 )
Realized gains    2,248    4,451  
Pre-tax income    175    18,829  
Income tax expense    111    6,662  
Net income   $ 64   $ 12,167  
 
Weighted average common shares outstanding:  
       Basic    31,343,246    31,328,922  
       Diluted    31,741,827    31,331,197  
 

(1)  

In November 2003, we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are now reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.

(2)  

Operating income (loss), which is GAAP net income (loss) excluding net realized investments gains and losses, is the financial performance measure used by our management and our Board of Directors to evaluate and assess the results of our insurance businesses. As a result, we report operating income by segment in our segment footnote disclosures as required by SFAS No. 131 “Disclosure About Segments of and Enterprise and Related Information.” We use operating income (loss) as the measure of financial performance 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. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations.


7

PMA Capital Corporation
Selected Financial Data
(Unaudited)

         
   Six months ended June 30,  
(Dollars in thousands)    2004    2003  
Net premiums written:            
       The PMA Insurance Group   $ 217,248   $ 313,679  
       Run-off Operations (1)    (55,502 )  328,215  
       Corporate and Other    (375 )  (380 )
Consolidated   $ 161,371   $ 641,514  
 
Revenues:  
Net premiums earned:  
       The PMA Insurance Group   $ 249,938   $ 250,591  
       Run-off Operations (1)    75,054    309,481  
       Corporate and Other    (375 )  (380 )
Consolidated net premiums earned    324,617    559,692  
Net investment income    31,565    35,425  
Realized gains    10,848    8,806  
Other revenues    10,418    11,766  
Consolidated revenues   $ 377,448   $ 615,689  
 
Components of net income:  
Pre-tax operating income (loss) (2):  
       The PMA Insurance Group   $ 9,368   $ 15,178  
       Run-off Operations (1)    9,570    21,619  
       Corporate and Other    (10,818 )  (10,175 )
Realized gains    10,848    8,806  
Pre-tax income    18,968    35,428  
Income tax expense    6,751    12,559  
Net income   $ 12,217   $ 22,869  
 
Weighted average common shares outstanding:  
       Basic    31,338,824    31,328,922  
       Diluted    36,798,188    31,340,482  
 

(1)  

In November 2003, we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are now reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.


(2)  

Operating income (loss), which is GAAP net income (loss) excluding net realized investments gains and losses, is the financial performance measure used by our management and our Board of Directors to evaluate and assess the results of our insurance businesses. As a result, we report operating income by segment in our segment footnote disclosures as required by SFAS No. 131 “Disclosure About Segments of and Enterprise and Related Information.” We use operating income (loss) as the measure of financial performance 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. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations.



8

PMA Capital Corporation
GAAP Consolidated Balance Sheets
(Unaudited)

         
(Dollars in thousands, except per share data)    June 30,
2004    		    December 31,
2003		  
 Assets:  
 Investments and cash:  
       Fixed maturities available for sale   $ 1,469,027   $ 1,854,555  
       Short-term investments    88,664    151,332  
       Short-term investments, loaned securities collateral    129,999    6,300  
       Cash    66,100    28,963  
       Total investments and cash    1,753,790    2,041,150  
 
 Accrued investment income    17,913    20,870  
 Premiums receivable    249,112    364,125  
 Reinsurance receivables    1,210,765    1,220,320  
 Deferred income taxes    88,250    76,962  
 Deferred acquisition costs    41,321    83,975  
 Funds held by reinsureds    84,487    124,695  
 Other assets    248,578    255,861  
       Total assets   $ 3,694,216   $ 4,187,958  
 Liabilities:  
 Unpaid losses and loss adjustment expenses   $ 2,292,281   $ 2,541,318  
 Unearned premiums    216,155    403,708  
 Debt    187,566    187,566  
 Accounts payable, accrued expenses  
       and other liabilities    277,457    314,830  
 Funds held under reinsurance treaties    138,976    262,105  
 Dividends to policyholders    8,121    8,479  
 Payable under securities loan agreements    129,997    6,285  
       Total liabilities    3,250,553    3,724,291  
 Shareholders' Equity:  
 Class A Common stock    171,090    171,090  
 Additional paid-in capital    109,331    109,331  
 Retained earnings    223,442    216,115  
 Accumulated other comprehensive income (loss)    (13,160 )  19,622  
 Notes receivable from officers    (59 )  (65 )
 Treasury stock, at cost    (45,261 )  (52,426 )
 Unearned restricted stock compensation    (1,720 )  --  
       Total shareholders' equity    443,663    463,667  
       Total liabilities and shareholders' equity   $ 3,694,216   $ 4,187,958  
 Shareholders' equity per share   $ 14.00   $ 14.80  
 

9

PMA Capital Corporation
GAAP Consolidated Statements of Operations
(Unaudited)

         
   Three months ended June 30,  
(Dollars in thousands, except per share data)    2004    2003  
Gross premiums written     $ 24,449   $ 361,899  
 
Net premiums written   $ 2,873   $ 290,656  
Revenues:  
Net premiums earned   $ 118,348   $ 285,622  
Net investment income    14,807    17,780  
Net realized investment gains    2,248    4,451  
Other revenues    4,680    4,766  
      Total revenues    140,083    312,619  
 
Expenses:  
Losses and loss adjustment expenses    87,471    193,074  
Acquisition expenses    24,968    72,215  
Operating expenses    23,563    24,222  
Dividends to policyholders    946    2,054  
Interest expense    2,960    2,225  
      Total losses and expenses    139,908    293,790  
 
Pre-tax income    175    18,829  
 
Income tax expense:  
      Current    64    221  
      Deferred    47    6,441  
Total income tax expense    111    6,662  
 
Net income   $ 64   $ 12,167  
 
Net income per share:  
 
Basic   $ --   $ 0.39  
 
Diluted   $ --   $ 0.39  
 

10

PMA Capital Corporation
GAAP Consolidated Statements of Operations
(Unaudited)

         
   Six months ended June 30,  
(Dollars in thousands, except per share data)    2004    2003  
Gross premiums written     $ 182,309   $ 781,593  
 
Net premiums written   $ 161,371   $ 641,514  
 
Revenues:  
Net premiums earned   $ 324,617   $ 559,692  
Net investment income    31,565    35,425  
Net realized investment gains    10,848    8,806  
Other revenues    10,418    11,766  
      Total revenues    377,448    615,689  
 
Expenses:  
Losses and loss adjustment expenses    229,661    395,659  
Acquisition expenses    72,203    128,435  
Operating expenses    48,342    48,094  
Dividends to policyholders    2,375    4,090  
Interest expense    5,899    3,983  
      Total losses and expenses    358,480    580,261  
 
Pre-tax income    18,968    35,428  
 
Income tax expense:  
      Current    389    221  
      Deferred    6,362    12,338  
Total income tax expense    6,751    12,559  
 
Net income   $ 12,217   $ 22,869  
 
Net income per share:  
 
Basic   $ 0.39   $ 0.73  
Diluted   $ 0.36   $ 0.73  
 

11

EX-99 3 exhibit99-2.txt EXHIBIT 99.2 - -------------------------------------------------------------------------------- PMA Capital Corporation Statistical Supplement Second Quarter - 2004 - -------------------------------------------------------------------------------- Table of Contents ----------------- Page Consolidated Highlights: Selected Financial Data - Second Quarter 1 Selected Financial Data - Year-to-date 2 Consolidated Statements of Operations - Per Share Data 3 Consolidated Statements of Operations - Second Quarter 5 Consolidated Statements of Operations - Year-to-date 6 Consolidated Balance Sheets 7 Invested Assets and Net Investment Income; Debt 8 Other Assets and Liabilities; Balance Sheet Impact of Commutations & Novations - Run-off Operations 9 Segment Information: Statements of Operations - Consolidating - Year-to-date 11 - 12 Statements of Operations - Consolidating - Second Quarter 13 - 14 Statements of Operations - PMA Insurance Group 15 Insurance Ratios - PMA Insurance Group 16 Statements of Operations - Run-off Operations 17 Statements of Operations - Corporate & Other 18 Operating Cash Flow Information: Operating Cash Flows - Consolidated 19 Operating Cash Flows - PMA Insurance Group 20 Operating Cash Flows - Run-off Operations 21 Statutory Financial Information: Statutory Surplus; Statutory Financial Information - PMA Pool 22 Other Information: Industry Ratings and Market Information 23 Legend: NM - Not Meaningful NA - Not Applicable Note: Operating income (loss), which we define as GAAP net income (loss) 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 business segments. 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 business segments 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 pages 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) 2nd 3rd 4th 1st 2nd % Change Quarter Quarter Quarter Quarter Quarter 2nd 2003 2003 2003 2004 2004 Quarter ------------------------------------------------------------------------ Net Premiums Written by Segment: PMA Insurance Group $ 119,440 $ 149,130 $ 140,784 $ 135,286 $ 81,962 -31.4% Run-off Operations 1 171,340 136,381 124,853 23,362 (78,864) NM Corporate & Other (124) (228) (180) (150) (225) -81.5% ---------- ---------- ---------- ---------- ---------- ----------- Net premiums written $ 290,656 $ 285,283 $ 265,457 $ 158,498 $ 2,873 -99.0% ========== ========== ========== ========== ========== =========== Major Components of Net Income (Loss): Pre-tax operating income (loss) by segment: PMA Insurance Group $ 6,838 $ 7,345 $ (982) $ 6,559 $ 2,809 -58.9% Run-off Operations 1 13,072 (113,701) 11,706 8,946 624 -95.2% Corporate & Other (5,532) (6,228) (6,288) (5,312) (5,506) 0.5% ---------- ---------- ---------- ---------- ---------- ----------- Pre-tax operating income (loss) 14,378 (112,584) 4,436 10,193 (2,073) NM Net realized investment gains 4,451 1,392 3,582 8,600 2,248 -49.5% ---------- ---------- ---------- ---------- ---------- ----------- Pre-tax income (loss) 18,829 (111,192) 8,018 18,793 175 -99.1% Income tax expense (benefit) 6,662 (14,786) 28,050 6,640 111 -98.3% ---------- ---------- ---------- ---------- ---------- ----------- Net income (loss) $ 12,167 $ (96,406) $ (20,032) $ 12,153 $ 64 -99.5% ========== ========== ========== ========== ========== ----------- After-tax operating income (loss) $ 9,274 $ (97,311) $ (22,360) $ 6,563 $ (1,397) NM ========== ========== ========== ========== ========== =========== Diluted Earnings (Loss) Per Share: Net income (loss) $ 0.39 $ (3.08) $ (0.64) $ 0.35 $ - -100.0% Less the impact of: Realized gains after tax 0.09 0.03 0.07 0.15 0.04 -55.6% ---------- ---------- ---------- ---------- ---------- ----------- After-tax operating income (loss) $ 0.30 $ (3.11) $ (0.71) $ 0.20 $ (0.04) NM ========== ========== ========== ========== ========== =========== Capitalization: Debt $ 176,250 $ 186,250 $ 187,566 $ 187,566 $ 187,566 6.4% Shareholders' equity excluding FAS 115 unrealized gain 565,081 465,943 432,284 445,273 443,634 -21.5% ---------- ---------- ---------- ---------- ---------- ----------- Total capitalization excluding FAS 115 unrealized gain 741,331 652,193 619,850 632,839 631,200 -14.9% FAS 115 unrealized gain 52,666 37,830 31,383 40,818 29 -99.9% ---------- ---------- ---------- ---------- ---------- ----------- Total capitalization including FAS 115 unrealized gain $ 793,997 $ 690,023 $ 651,233 $ 673,657 $ 631,229 -20.5% ========== ========== ========== ========== ========== =========== Book Value Per Share: Excluding FAS 115 unrealized gain $ 18.04 $ 14.87 $ 13.80 $ 14.21 $ 14.00 -22.4% Including FAS 115 unrealized gain $ 19.72 $ 16.08 $ 14.80 $ 15.51 $ 14.00 -29.0% Debt to Total Capital: Excluding FAS 115 unrealized gain 23.8% 28.6% 30.2% 29.6% 29.7% 24.8% Including FAS 115 unrealized gain 22.2% 27.0% 28.8% 27.8% 29.7% 33.8% Interest Coverage: Income before interest and income taxes to interest expense 9.46 NM NM 7.39 1.06 -88.8% Operating income before interest and income taxes to interest expense 7.46 NM NM 4.47 0.30 -96.0%
1 In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One. 1
PMA Capital Corporation Selected Financial Data (Dollar Amounts in Thousands, Except Per Share Data) Six Six % Change Months Months Six 2004 2003 Months ---------------------------------------------- Net Premiums Written by Segment: PMA Insurance Group $ 217,248 $ 313,679 -30.7% Run-off Operations 1 (55,502) 328,215 NM Corporate & Other (375) (380) 1.3% ------------- -------------- -------------- Net premiums written $ 161,371 $ 641,514 -74.8% ============= ============== ============== Major Components of Net Income: Pre-tax operating income (loss) by segment: PMA Insurance Group $ 9,368 $ 15,178 -38.3% Run-off Operations 1 9,570 21,619 -55.7% Corporate & Other (10,818) (10,175) -6.3% ------------- -------------- -------------- Pre-tax operating income 8,120 26,622 -69.5% Net realized investment gains 10,848 8,806 23.2% ------------- -------------- -------------- Pre-tax income 18,968 35,428 -46.5% Income tax expense 6,751 12,559 -46.2% ------------- -------------- -------------- Net income $ 12,217 $ 22,869 -46.6% ============= ============== ============== After-tax operating income $ 5,166 $ 17,145 -69.9% ============= ============== ============== Diluted Earnings Per Share: Net income $ 0.36 $ 0.73 -50.7% Less the impact of: Realized gains after tax 0.19 0.18 5.6% ------------- -------------- -------------- After-tax operating income $ 0.17 $ 0.55 -69.1% ============= ============== ==============
1 In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One. 2
PMA Capital Corporation Consolidated Statements of Operations - Per Share Data 2nd 3rd 4th 1st 2nd Six Six Quarter Quarter Quarter Quarter Quarter Months Months 2003 2003 2003 2004 2004 2004 2003 --------------------------------------------------------------------------------------------- Diluted Earnings (Loss) Per Share: Net income (loss) $ 0.39 $ (3.08) $ (0.64) $ 0.35 $ - $ 0.36 $ 0.73 ============ ============= ============= ============ ============ ============ ============ Pre-tax operating income (loss) $ 0.46 $ (3.59) $ 0.14 $ 0.30 $ (0.07) $ 0.27 $ 0.85 ============ ============= ============= ============ ============ ============ ============ After-tax operating income (loss) $ 0.30 $ (3.11) $ (0.71) $ 0.20 $ (0.04) $ 0.17 $ 0.55 ============ ============= ============= ============ ============ ============ ============ Diluted weighted average common shares outstanding 31,331,197 31,328,965 31,333,881 36,644,561 31,741,827 36,798,188 31,340,482 ============ ============= ============= ============ ============ ============ ============ - ---------------------------------------------------------------------------------------------------------------------------------- Dividends declared: Class A Common stock $ 0.105 $ 0.105 $ - $ - $ - $ - $ 0.21 Actual common shares issued and outstanding 31,328,922 31,329,063 31,334,403 31,334,403 31,692,351 31,692,351 31,328,922 ============ ============= ============= ============= ============ ============ ============ - ---------------------------------------------------------------------------------------------------------------------------------- Class A Common Stock prices: High $ 12.30 $ 12.85 $ 14.17 $ 6.66 $ 9.00 $ 9.00 $ 15.00 Low $ 6.44 $ 11.71 $ 3.97 $ 4.78 $ 6.26 $ 4.78 $ 6.44 Close $ 12.12 $ 12.53 $ 5.12 $ 6.07 $ 9.00 $ 9.00 $ 12.12
3 THIS PAGE INTENTIONALLY LEFT BLANK
PMA Capital Corporation Consolidated Statements of Operations (In Thousands) 2nd 3rd 4th 1st 2nd % Change Quarter Quarter Quarter Quarter Quarter 2nd 2003 2003 2003 2004 2004 Quarter -------------------------------------------------------------------------- Gross Premiums Written $ 361,899 $ 352,380 $ 295,671 $ 157,860 $ 24,449 -93.2% ========== =========== ========== =========== =========== ========== Net Premiums Written $ 290,656 $ 285,283 $ 265,457 $ 158,498 $ 2,873 -99.0% ========== =========== ========== =========== =========== ========== Revenues: Net premiums earned $ 285,622 $293,482 $ 344,991 $206,269 $ 118,348 -58.6% Net investment income 17,780 17,167 16,331 16,758 14,807 -16.7% Net realized investment gains 4,451 1,392 3,582 8,600 2,248 -49.5% Other revenues 4,766 4,147 4,466 5,738 4,680 -1.8% ---------- ----------- ---------- ----------- ----------- ---------- Total revenues 312,619 316,188 369,370 237,365 140,083 -55.2% ---------- ----------- ---------- ----------- ----------- ---------- Expenses: Losses and loss adjustment expenses 193,074 335,789 266,899 142,190 87,471 -54.7% Acquisition expenses 72,215 63,221 64,790 47,235 24,968 -65.4% Operating expenses 24,222 23,327 32,251 24,779 23,563 -2.7% Dividends to policyholders 2,054 2,090 (5,539) 1,429 946 -53.9% Interest expense 2,225 2,953 2,951 2,939 2,960 33.0% ---------- ----------- ---------- ----------- ----------- ---------- Total losses and expenses 293,790 427,380 361,352 218,572 139,908 -52.4% ---------- ----------- ---------- ----------- ----------- ---------- Pre-tax income (loss) 18,829 (111,192) 8,018 18,793 175 -99.1% ---------- ----------- ---------- ----------- ----------- ---------- Income tax expense (benefit): Current 221 (221) - 325 64 -71.0% Deferred 6,441 (14,565) 28,050 6,315 47 -99.3% ---------- ----------- ---------- ----------- ----------- ---------- Total income tax expense (benefit) 6,662 (14,786) 28,050 6,640 111 -98.3% ---------- ----------- ---------- ----------- ----------- ---------- Net income (loss) $ 12,167 $(96,406) $(20,032) $ 12,153 $ 64 -99.5% ========== =========== ========== =========== =========== ========== Pre-tax operating income (loss) $ 14,378 $(112,584) $ 4,436 $ 10,193 $ (2,073) NM ========== =========== ========== =========== =========== ========== After-tax operating income (loss) $ 9,274 $ (97,311) $(22,360) $ 6,563 $ (1,397) NM ========== =========== ========== =========== =========== ==========
5
PMA Capital Corporation Consolidated Statements of Operations (In Thousands) Six Six % Change Months Months Six 2004 2003 Months --------------------------------------------- Gross Premiums Written $ 182,309 $ 781,593 -76.7% ============= ============= ============ Net Premiums Written $ 161,371 $ 641,514 -74.8% ============= ============= ============ Revenues: Net premiums earned $ 324,617 $ 559,692 -42.0% Net investment income 31,565 35,425 -10.9% Net realized investment gains 10,848 8,806 23.2% Other revenues 10,418 11,766 -11.5% ------------- ------------- ------------ Total revenues 377,448 615,689 -38.7% ------------- ------------- ------------ Expenses: Losses and loss adjustment expenses 229,661 395,659 -42.0% Acquisition expenses 72,203 128,435 -43.8% Operating expenses 48,342 48,094 0.5% Dividends to policyholders 2,375 4,090 -41.9% Interest expense 5,899 3,983 48.1% ------------- ------------- ------------ Total losses and expenses 358,480 580,261 -38.2% ------------- ------------- ------------ Pre-tax income 18,968 35,428 -46.5% ------------- ------------- ------------ Income tax expense: Current 389 221 76.0% Deferred 6,362 12,338 -48.4% ------------- ------------- ------------ Total income tax expense 6,751 12,559 -46.2% ------------- ------------- ------------ Net income $ 12,217 $ 22,869 -46.6% ============= ============= ============ Pre-tax operating income $ 8,120 $ 26,622 -69.5% ============= ============= ============ After-tax operating income $ 5,166 $ 17,145 -69.9% ============= ============= ============
6
PMA Capital Corporation Consolidated Balance Sheets (In Thousands) 2nd 3rd 4th 1st 2nd Quarter Quarter Quarter Quarter Quarter 2003 2003 2003 2004 2004 ----------------------------------------------------------------------- Assets: Investments in fixed maturities available for sale $ 1,741,879 $ 1,807,977 $ 1,854,555 $ 1,825,076 $ 1,469,027 Short-term investments 282,366 187,320 151,332 98,385 88,664 Short-term investments, loaned securities collateral 185,566 113,978 6,300 112,689 129,999 Cash 12,556 34,954 28,963 22,311 66,100 -------------------------------------------------------- ------------- Total investments and cash 2,222,367 2,144,229 2,041,150 2,058,461 1,753,790 Accrued investment income 19,357 23,764 20,870 22,820 17,913 Premiums receivable 394,065 379,041 364,125 316,771 249,112 Reinsurance receivables 1,307,506 1,252,928 1,220,320 1,145,314 1,210,765 Deferred income taxes 70,928 93,181 76,962 65,114 88,250 Deferred acquisition costs 108,740 105,089 83,975 71,631 41,321 Funds held by reinsureds 165,533 153,263 124,695 96,147 84,487 Other assets 249,110 255,292 255,861 231,600 248,578 ------------ ------------- ------------- ------------ ------------- Total assets $ 4,537,606 $ 4,406,787 $ 4,187,958 $ 4,007,858 $ 3,694,216 ============ ============= ============= ============ ============= Liabilities: Unpaid losses and loss adjustment expenses $ 2,430,276 $ 2,486,776 $ 2,541,318 $ 2,438,509 $ 2,292,281 Unearned premiums 499,960 490,461 403,708 332,391 216,155 Debt 176,250 186,250 187,566 187,566 187,566 Accounts payable, accrued expenses and other liabilities 301,049 297,028 314,830 282,422 277,457 Funds held under reinsurance treaties 311,081 313,688 262,105 159,913 138,976 Dividends to policyholders 15,669 14,851 8,479 8,292 8,121 Payable under securities loan agreements 185,574 113,960 6,285 112,674 129,997 ------------ ------------- ------------- ------------ ------------- Total liabilities 3,919,859 3,903,014 3,724,291 3,521,767 3,250,553 ------------ ------------- ------------- ------------ ------------- 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 335,304 235,607 216,115 228,268 223,442 Accumulated other comprehensive income (loss) 54,621 40,341 19,622 29,894 (13,160) Notes receivable from officers (64) (64) (65) (66) (59) Treasury stock, at cost (52,535) (52,532) (52,426) (52,426) (45,261) Unearned restricted stock compensation - - - - (1,720) ------------ ------------- ------------- ------------ ------------- Total shareholders' equity 617,747 503,773 463,667 486,091 443,663 ------------ ------------- ------------- ------------ ------------- Total liabilities and shareholders' equity $ 4,537,606 $ 4,406,787 $ 4,187,958 $ 4,007,858 $ 3,694,216 ============ ============= ============= ============ =============
7
PMA Capital Corporation Invested Assets and Net Investment Income (Dollars in Thousands) 2nd 3rd 4th 1st 2nd Six Six Quarter Quarter Quarter Quarter Quarter Months Months 2003 2003 2003 2004 2004 2004 2003 -------------------------------------------------------------------------------------- Total Investments & Cash As reported $ 2,222,367 $ 2,144,229 $ 2,041,150 $ 2,058,461 $1,753,790 $ 1,753,790 $ 2,222,367 Less: Securities lending activity 185,574 113,960 6,285 112,674 129,997 129,997 185,574 Unrealized gain 81,025 58,200 48,282 62,797 45 45 81,025 ----------- ----------- ----------- ----------- ----------- ----------- ---------- Total adjusted investments & cash $ 1,955,768 $ 1,972,069 $ 1,986,583 $ 1,882,990 $1,623,748 $ 1,623,748 $ 1,955,768 =========== =========== =========== =========== =========== =========== ========== Net Investment Income As reported $ 17,780 $ 17,167 $ 16,331 $ 16,758 $ 14,807 $ 31,565 $ 35,425 Funds held: Assumed 1,940 1,316 (296) (13) 109 96 2,976 Ceded (3,567) (3,551) (3,427) (2,222) (3,962) (6,184) (7,426) ----------- ----------- ----------- ----------- ----------- ----------- ---------- Total funds held (1,627) (2,235) (3,723) (2,235) (3,853) (6,088) (4,450) ----------- ----------- ----------- ----------- ----------- ----------- ---------- Total adjusted investment income $ 19,407 $ 19,402 $ 20,054 $ 18,993 $ 18,660 $ 37,653 $ 39,875 =========== =========== =========== =========== =========== =========== ========== Yield As reported 3.41% 3.15% 3.12% 3.27% 3.11% 3.24% 3.51% Investment portfolio 4.14% 3.95% 4.05% 3.93% 4.10% 4.02% 4.29% Duration (in years) 3.8 3.9 3.9 3.7 3.4 3.4 3.8 - ----------------------------------------------------------------------------------------------------------------------------------- PMA Capital Corporation Debt (Dollars in Thousands) Amount Outstanding Maturity ----------- -------- 4.25% convertible debt $ 86,250 2022 (1) Trust preferred debt (2) 43,816 2033 8.50% senior notes 57,500 2018 ---------- Total longterm debt $ 187,566 =========== (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. This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share. (2) Weighted average interest rate on trust preferred debt is 5.47% as of June 30, 2004. 8
PMA Capital Corporation Other Assets and Liabilities (Dollars in Millions) Other Assets 6/30/2004 Other Liabilities 6/30/2004 ------------ --------- ----------------- --------- Deposit assets (FASB #113) $ 49.2 Deposit liabilities (FASB #113) $ 68.5 Return premiums receivable 39.5 Escrow liabilities 32.3 Receivables selfinsured & Pension liabilities 31.1 large deductible clients 29.1 Premium surcharges 30.3 PP&E 28.8 Ceded premiums payable 29.3 Prepaid pension asset 20.1 Premium taxes and other assessments 18.1 Escrow 19.6 Accrued postretirement benefits 13.6 Investment in Cathedral 11.5 (1) Accrued commissions 9.2 Other 50.8 Accounts payable and other liabilities 45.1 --------- --------- Total: $ 248.6 Total: $ 277.5 ========= =========
PMA Capital Corporation Balance Sheet Impact of Commutations & Novations Runoff Operations (1) (Dollars in Thousands) 2nd Quarter 2004 Assets Assumed Ceded Total ------ ------- ----- ----- Reinsurance receivables $ - $ - $ - Funds held by reinsureds (5,134) - (5,134) Other assets 813 - 813 Liabilities ----------- Unpaid loss and loss adjustment expenses $ (60,261) $ - $ (60,261) Unearned premiums (668) - (668) Funds held under reinsurance treaties (555) - (555) Six Months 2004 Assets Assumed Ceded Total ------ ------- ----- ----- Reinsurance receivables $ - $ (58,926) $ (58,926) Funds held by reinsureds (32,267) (32,267) Other assets 813 (22,170) (21,357) Liabilities ----------- Unpaid loss and loss adjustment expenses $ (155,965) $ - $ (155,965) Unearned premiums (28,858) - (28,858) Funds held under reinsurance treaties (2,737) (70,438) (73,175) (1)In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Runoff Operations. Runoff Operations also includes the results of our former excess and surplus lines segment, Caliber One.
9 This Page Intentionally Left Blank
PMA Capital Corporation Statements of Operations - Consolidating Six Months Ended June 30, 2004 (In Thousands) PMA Insurance Corporate Run-off Group & Other (1) Operations (2) Consolidated ---------------------------------------------------------------------------- Gross Premiums Written $ 240,886 $ (375) $ (58,202) $ 182,309 ================= ================= ================ ==================== Net Premiums Written $ 217,248 $ (375) $ (55,502) $ 161,371 ================= ================= ================ ==================== Revenues: Net premiums earned $ 249,938 $ (375) $ 75,054 $ 324,617 Net investment income 16,392 617 14,556 31,565 Other revenues 10,124 294 - 10,418 ----------------- ----------------- ---------------- -------------------- Operating revenues 276,454 536 89,610 366,600 ----------------- ----------------- ---------------- -------------------- Losses and Expenses: Losses and loss adjustment expenses 186,903 - 42,758 229,661 Acquisition expenses 45,652 - 26,551 72,203 Operating expenses 32,156 5,455 10,731 48,342 Dividends to policyholders 2,375 - - 2,375 ----------------- ----------------- ---------------- -------------------- Total losses and expenses 267,086 5,455 80,040 352,581 ----------------- ----------------- ---------------- -------------------- Operating income (loss) before income taxes and interest expense 9,368 (4,919) 9,570 14,019 Interest expense - 5,899 - 5,899 ----------------- ----------------- ---------------- -------------------- Pre-tax operating income (loss) $ 9,368 $ (10,818) $ 9,570 8,120 ================= ================= ================ Net realized investment gains 10,848 -------------------- Pre-tax income $ 18,968 ==================== (1) Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. (2) In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One. 11
PMA Capital Corporation Statements of Operations - Consolidating Six Months Ended June 30, 2003 (In Thousands) PMA Insurance Corporate Run-off Group & Other (1) Operations (2) Consolidated ---------------------------------------------------------------------------- Gross Premiums Written $ 347,689 $ (380) $ 434,284 $ 781,593 ================ ================= ================ ===================== Net Premiums Written $ 313,679 $ (380) $ 328,215 $ 641,514 ================ ================= ================ ===================== Revenues: Net premiums earned $ 250,591 $ (380) $ 309,481 $ 559,692 Net investment income 16,474 1,083 17,868 35,425 Other revenues 9,008 258 2,500 11,766 ---------------- ----------------- ---------------- --------------------- Operating revenues 276,073 961 329,849 606,883 ---------------- ----------------- ---------------- --------------------- Losses and Expenses: Losses and loss adjustment expenses 183,236 - 212,423 395,659 Acquisition expenses 42,406 - 86,029 128,435 Operating expenses 31,163 7,153 9,778 48,094 Dividends to policyholders 4,090 - - 4,090 ---------------- ----------------- ---------------- --------------------- Total losses and expenses 260,895 7,153 308,230 576,278 ---------------- ----------------- ---------------- --------------------- Operating income (loss) before income taxes and interest expense 15,178 (6,192) 21,619 30,605 Interest expense - 3,983 - 3,983 ---------------- ----------------- ---------------- --------------------- Pre-tax operating income (loss) $ 15,178 $ (10,175) $ 21,619 26,622 ================ ================= ================ Net realized investment gains 8,806 --------------------- Pre-tax income $ 35,428 ===================== (1) Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. (2) In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.
12
PMA Capital Corporation Statements of Operations - Consolidating Three Months Ended June 30, 2004 (In Thousands) PMA Insurance Corporate Run-off Group & Other (1) Operations (2) Consolidated -------------------------------------------------------------------- Gross Premiums Written $ 94,400 $ (225) $ (69,726) $ 24,449 =============== ================ =============== ================ Net Premiums Written $ 81,962 $ (225) $ (78,864) $ 2,873 =============== ================ =============== ================ Revenues: Net premiums earned $ 118,288 $ (225) $ 285 $ 118,348 Net investment income 8,364 273 6,170 14,807 Other revenues 4,389 291 - 4,680 --------------- ---------------- --------------- ---------------- Operating revenues 131,041 339 6,455 137,835 --------------- ---------------- --------------- ---------------- Losses and Expenses: Losses and loss adjustment expenses 88,072 - (601) 87,471 Acquisition expenses 22,620 - 2,348 24,968 Operating expenses 16,594 2,885 4,084 23,563 Dividends to policyholders 946 - - 946 --------------- ---------------- --------------- ---------------- Total losses and expenses 128,232 2,885 5,831 136,948 --------------- ---------------- --------------- ---------------- Operating income (loss) before income taxes and interest expense 2,809 (2,546) 624 887 Interest expense - 2,960 - 2,960 --------------- ---------------- --------------- ---------------- Pre-tax operating income (loss) $ 2,809 $ (5,506) $ 624 (2,073) =============== ================ =============== Net realized investment gains 2,248 ---------------- Pre-tax income $ 175 ================ (1) Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. (2) In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.
13
PMA Capital Corporation Statements of Operations - Consolidating Three Months Ended June 30, 2003 (In Thousands) PMA Insurance Corporate Run-off Group & Other (1) Operations (2) Consolidated -------------------------------------------------------------------- Gross Premiums Written $ 133,968 $ (124) $ 228,055 $ 361,899 =============== ================ =============== ================ Net Premiums Written $ 119,440 $ (124) $ 171,340 $ 290,656 =============== ================ =============== ================ Revenues: Net premiums earned $ 134,350 $ (124) $ 151,396 $ 285,622 Net investment income 8,203 470 9,107 17,780 Other revenues 4,577 189 - 4,766 --------------- ---------------- --------------- ---------------- Operating revenues 147,130 535 160,503 308,168 --------------- ---------------- --------------- ---------------- Losses and Expenses: Losses and loss adjustment expenses 99,201 - 93,873 193,074 Acquisition expenses 22,824 - 49,391 72,215 Operating expenses 16,213 3,842 4,167 24,222 Dividends to policyholders 2,054 - - 2,054 --------------- ---------------- --------------- ---------------- Total losses and expenses 140,292 3,842 147,431 291,565 --------------- ---------------- --------------- ---------------- Operating income (loss) before income taxes and interest expense 6,838 (3,307) 13,072 16,603 Interest expense - 2,225 - 2,225 --------------- ---------------- --------------- ---------------- Pre-tax operating income (loss) $ 6,838 $ (5,532) $ 13,072 14,378 =============== ================ =============== Net realized investment gains 4,451 ---------------- Pre-tax income $ 18,829 ================ (1) Corporate & Other includes the effect of eliminating transactions between the various Insurance Operations. (2) In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.
14
PMA Capital Corporation Statements of Operations - PMA Insurance Group (Dollar Amounts in Thousands) ----------- -------- --------- 2nd 3rd 4th 1st 2nd Six Six % Change % Change Quarter Quarter Quarter Quarter Quarter Months Months 2nd Six 2003 2003 2003 2004 2004 2004 2003 Quarter Months ------------------------------------------------------------------------------------------------ Gross Premiums Written $ 133,968 $ 169,258 $ 161,487 $ 146,486 $ 94,400 $ 240,886 $ 347,689 -29.5% -30.7% =========== ========== ========== ========== ========== ========== ========= ======= ========= Net Premiums Written $ 119,440 $ 149,130 $ 140,784 $ 135,286 $ 81,962 $ 217,248 $ 313,679 -31.4% -30.7% =========== ========== ========== ========== ========== ========== ========= ======= ========= Revenues: Net premiums earned $ 134,350 $ 141,967 $ 177,474 $ 131,650 $ 118,288 $ 249,938 250,591 -12.0% -0.3% Net investment income 8,203 8,134 8,299 8,028 8,364 16,392 16,474 2.0% -0.5% Other revenues 4,577 4,078 4,407 5,735 4,389 10,124 9,008 -4.1% 12.4% ----------- ---------- ---------- ---------- ---------- ---------- --------- ------- --------- Total revenues 147,130 154,179 190,180 145,413 131,041 276,454 276,073 -10.9% 0.1% ----------- ---------- ---------- ---------- ---------- ---------- --------- ------- --------- Losses and Expenses: Losses and loss adjustment expenses 99,201 105,197 154,069 98,831 88,072 186,903 183,236 -11.2% 2.0% Acquisition expenses 22,824 23,815 24,354 23,032 22,620 45,652 42,406 -0.9% 7.7% Operating expenses 16,213 15,732 18,278 15,562 16,594 32,156 31,163 2.3% 3.2% Dividends to policyholders 2,054 2,090 (5,539) 1,429 946 2,375 4,090 -53.9% -41.9% ----------- ---------- ---------- ---------- ---------- ---------- --------- ------- --------- Total losses and expenses 140,292 146,834 191,162 138,854 128,232 267,086 260,895 -8.6% 2.4% ----------- ---------- ---------- ---------- ---------- ---------- --------- ------- --------- Pre-tax operating income (loss) $ 6,838 $ 7,345 $ (982) $ 6,559 $ 2,809 $ 9,368 $ 15,178 -58.9% -38.3% =========== ========== ========== ========== ========== ======== ========== ======= =========
15
PMA Capital Corporation Insurance Ratios - PMA Insurance Group 2nd 3rd 4th 1st 2nd Six Six Point Chg. Point Chg. Quarter Quarter Quarter Quarter Quarter Months Months 2nd Quarter Six Months 2003 2003 2003 2004 2004 2004 2003 Better (Worse) Better (Worse) -------------------------------------------------------------------------------------------------- Ratios - GAAP Basis: Loss and LAE ratio 73.8% 74.1% 86.8% 75.1% 74.5% 74.8% 73.1% (0.7) (1.7) --------- --------- --------- --------- --------- --------- -------- -------------- ----------- Expense ratio: Acquisition expenses 17.0% 16.8% 13.7% 17.5% 19.1% 18.3% 16.9% (2.1) (1.4) Operating expenses (1) 9.6% 8.9% 8.2% 9.2% 11.2% 10.1% 10.0% (1.6) (0.1) --------- --------- --------- --------- --------- --------- -------- -------------- ----------- Total expense ratio 26.6% 25.7% 21.9% 26.7% 30.3% 28.4% 26.9% (3.7) (1.5) --------- --------- --------- --------- --------- --------- -------- -------------- ----------- Policyholders' dividend ratio 1.5% 1.5% -3.1% 1.1% 0.8% 1.0% 1.6% 0.7 0.6 --------- --------- --------- --------- --------- --------- -------- -------------- ----------- Combined ratio 101.9% 101.3% 105.6% 102.9% 105.6% 104.2% 101.6% (3.7) (2.6) ========= ========= ========= ========= ========= ========= ======== ========== =========== Net investment income ratio -6.1% -5.7% -4.7% -6.1% -7.1% -6.6% -6.6% 1.0 0.0 --------- --------- --------- --------- --------- --------- -------- -------------- ----------- Operating ratio 95.8% 95.6% 100.9% 96.8% 98.5% 97.6% 95.0% (2.7) (2.6) ========= ========= ========= ========= ========= ========= ======== ========== =========== (1) The operating expense ratio equals insurance-related operating expenses divided by net premiums earned. Insurance-related operating expenses were $12.9 million, $12.7 million, $14.5 million, $12.1 million and $13.5 million for the second, third and fourth quarters of 2003 and the first and second quarters of 2004, respectively.
16
PMA Capital Corporation Statements of Operations - Run-off Operations (1) (Dollar Amounts in Thousands) 2nd 3rd 4th 1st 2nd Six Six % Change % Change Quarter Quarter Quarter Quarter Quarter Months Months 2nd Six 2003 2003 2003 2004 2004 2004 2003 Quarter Months ------------------------------------------------------------------------------------------------ Gross Premiums Written $ 228,055 $ 183,350 $ 134,364 $ 11,524 $ (69,726) $ (58,202) $434,284 NM NM ========== ========== ========== ========= ========= ======== ========= ======= ========= Net Premiums Written $ 171,340 $ 136,381 $ 124,853 $ 23,362 $ (78,864) $ (55,502) $328,215 NM NM ========== ========== ========== ========= ========= ======== ========= ======= ========= Revenues: Net premiums earned $ 151,396 $ 151,743 $ 167,697 $ 74,769 $ 285 $ 75,054 $309,481 -99.8% -75.7% Net investment income 9,107 8,510 7,984 8,386 6,170 14,556 17,868 -32.2% -18.5% Other revenues - - - - - - 2,500 NM -100.0% ----------- --------- ---------- --------- --------- --------- ----------------- ---------- Total revenues 160,503 160,253 175,681 83,155 6,455 89,610 329,849 -96.0% -72.8% ----------- --------- ---------- --------- --------- -------- --------- ------- --------- Losses and Expenses: Losses and loss adjustment expenses 93,873 230,592 112,830 43,359 (601) 42,758 212,423 NM -79.9% Acquisition expenses 49,391 39,406 40,436 24,203 2,348 26,551 86,029 -95.2% -69.1% Operating expenses 4,167 3,956 10,709 6,647 4,084 10,731 9,778 -2.0% 9.7% ----------- --------- ---------- --------- ---------- --------- ----------------- ---------- Total losses and expenses 147,431 273,954 163,975 74,209 5,831 80,040 308,230 -96.0% -74.0% ----------- --------- ---------- --------- --------- -------- --------- ------- --------- Pre-tax operating income (loss) $ 13,072 $(113,701) $ 11,706 $ 8,946 $ 624 $ 9,570 21,619 -95.2% -55.7% =========== ========= ========== ========= ========= ======== ========= ======= ========= (1) In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.
17
PMA Capital Corporation Statements of Operations - Corporate & Other (Dollar Amounts in Thousands) 2nd 3rd 4th 1st 2nd Six Six % Change % Change Quarter Quarter Quarter Quarter Quarter Months Months 2nd Six 2003 2003 2003 2004 2004 2004 2003 Quarter Months --------------------------------------------------------------------------------------------- Gross Premiums Written $ (124) $ (228) $ (180) $ (150) $ (225) $ (375) $ (380) -81.5% 1.3% ============ ========= ========= ========= =========== ======= ====== ======== ======= Net Premiums Written $ (124) $ (228) $ (180) $ (150) $ (225) $ (375) $ (380) -81.5% 1.3% ============ ========= ========= ========= =========== ======= ====== ======== ======= Revenues: Net premiums earned $ (124) $ (228) $ (180) $ (150) $ (225) $ (375) $ (380) -81.5% 1.3% Net investment income 470 523 48 344 273 617 1,083 -41.9% -43.0% Other revenues 189 69 59 3 291 294 258 54.0% 14.0% ------------ --------- --------- --------- ---------- --------- -------- -------- -------- Total revenues 535 364 (73) 197 339 536 961 -36.6% -44.2% ------------ --------- --------- --------- ---------- --------- -------- -------- -------- Losses and Expenses: Operating expenses 3,842 3,639 3,264 2,570 2,885 5,455 7,153 -24.9% -23.7% ------------ --------- --------- --------- ---------- --------- -------- -------- -------- Total losses and expenses 3,842 3,639 3,264 2,570 2,885 5,455 7,153 -24.9% -23.7% ------------ --------- --------- --------- ---------- --------- -------- -------- -------- Operating loss before income taxes and interest expense (3,307) (3,275) (3,337) (2,373) (2,546) (4,919) (6,192) 23.0% 20.6% Interest expense 2,225 2,953 2,951 2,939 2,960 5,899 3,983 33.0% 48.1% ------------ --------- --------- --------- ---------- --------- -------- -------- -------- Pre-tax operating loss $ (5,532) $ (6,228) $ (6,288) $ (5,312) $ (5,506) $(10,818) (10,175) 0.5% -6.3% ============ ========= ========= ========= =========== ======= ======== ======== =======
18
PMA Capital Corporation Operating Cash Flows - Consolidated (In Thousands) 2nd 3rd 4th 1st 2nd Six Six Quarter Quarter Quarter Quarter Quarter Months Months 2003 2003 2003 2004 2004 2004 2003 ------------------------------------------------------------------------------------------- Receipts: Premiums and other revenues collected $ 393,639 $ 319,594 $ 243,436 $ 186,561 $ 103,266 $ 289,827 $ 667,860 Investment income received 27,434 20,079 27,690 22,141 26,520 48,661 47,542 ------------ ------------ ------------ ------------ ------------- ------------ ------------ Total receipts 421,073 339,673 271,126 208,702 129,786 338,488 715,402 ------------ ------------ ------------ ------------ ------------- ------------ ------------ Disbursements: Losses and LAE paid: Losses and LAE paid - current year 35,305 83,436 60,322 6,491 37,839 44,330 42,092 Losses and LAE paid - prior years 183,345 139,352 124,280 217,746 272,164 489,910 394,237 ------------ ------------ ------------ ------------ ------------- ------------ ------------ Total losses and LAE paid 218,650 222,788 184,602 224,237 310,003 534,240 436,329 Insurance operating expenses paid 100,177 64,223 68,280 73,845 54,695 128,540 179,134 Policyholders' dividends paid 1,439 2,880 773 1,573 873 2,446 3,066 Interest on corporate debt 502 3,582 1,798 3,686 1,856 5,542 2,986 ------------ ------------ ------------ ------------ ------------- ------------ ------------ Total disbursements 320,768 293,473 255,453 303,341 367,427 670,768 621,515 ------------ ------------ ------------ ------------ ------------- ------------ ------------ Net other 3,373 (6,092) 947 (7,511) (22,894) (30,405) (985) ------------ ------------ ------------ ------------ ------------- ------------ ------------ Net operating cash flows $ 103,678 $ 40,108 $ 16,620 $ (102,150) $ (260,535) $ (362,685) $ 92,902 ============ ============ ============ ============ ============= ============ ============
19
PMA Capital Corporation Operating Cash Flows - PMA Insurance Group (In Thousands) 2nd 3rd 4th 1st 2nd Six Six Quarter Quarter Quarter Quarter Quarter Months Months 2003 2003 2003 2004 2004 2004 2003 ------------------------------------------------------------------------------------------ Receipts: Premiums and other revenues collected $ 138,915 $ 150,684 $ 147,111 $ 128,216 $ 123,944 $ 252,160 $ 259,504 Investment income received 9,772 9,523 9,433 10,246 9,869 20,115 19,112 ------------- ------------ ------------ ------------- ------------ ----------- ----------- Total receipts 148,687 160,207 156,544 138,462 133,813 272,275 278,616 ------------- ------------ ------------ ------------- ------------ ----------- ----------- Disbursements: Losses and LAE paid: Losses and LAE paid - current year 24,316 37,387 35,923 6,157 19,158 25,315 29,542 Losses and LAE paid - prior years 60,049 57,474 56,739 75,447 63,116 138,563 143,318 ------------- ------------ ------------ ------------- ------------ ----------- ----------- Losses and LAE 84,365 94,861 92,662 81,604 82,274 163,878 172,860 Insurance operating expenses paid 37,214 22,578 35,721 52,645 38,931 91,576 74,426 Policyholders' dividends paid 1,439 2,880 773 1,573 873 2,446 3,066 ------------- ------------ ------------ ------------- ------------ ----------- ----------- Total disbursements 123,018 120,319 129,156 135,822 122,078 257,900 250,352 ------------- ------------ ------------ ------------- ------------ ----------- ----------- Net other (1,795) (8,839) (7,150) (8,306) (8,535) (16,841) (6,847) ------------- ------------ ------------ ------------- ------------ ----------- ----------- Net operating cash flows $ 23,874 $ 31,049 $ 20,238 $ (5,666) $ 3,200 $ (2,466) $ 21,417 ============= ============ ============ ============= ============ =========== ===========
20
PMA Capital Corporation Operating Cash Flows - Run-off Operations (1) (In Thousands) 2nd 3rd 4th 1st 2nd Six Six Quarter Quarter Quarter Quarter Quarter Months Months 2003 2003 2003 2004 2004 2004 2003 --------------------------------------------------------------------------------------------- Receipts: Premiums collected $ 254,724 $ 168,910 $ 96,325 $ 58,345 $ (20,678) $ 37,667 $ 408,356 Investment income received 17,662 10,556 18,257 11,895 16,651 28,546 28,430 ------------ ------------ ------------ ------------ ----------- ------------ -------------- Total receipts 272,386 179,466 114,582 70,240 (4,027) 66,213 436,786 ------------ ------------ ------------ ------------ ----------- ------------ -------------- Disbursements: Losses and LAE paid: Losses and LAE paid - current year 10,989 46,049 24,399 334 18,681 19,015 12,550 Losses and LAE paid - prior years 123,296 81,878 67,541 142,299 209,048 351,347 250,919 ------------ ------------ ------------ ------------ ----------- ------------ -------------- Total losses and LAE paid 134,285 127,927 91,940 142,633 227,729 370,362 263,469 Insurance operating expenses paid 62,963 41,645 32,559 21,200 15,764 36,964 104,708 ------------ ------------ ------------ ------------ ----------- ------------ -------------- Total disbursements 197,248 169,572 124,499 163,833 243,493 407,326 368,177 ------------ ------------ ------------ ------------ ----------- ------------ -------------- Net other 8,552 (778) 12,494 1,860 (13,311) (11,451) 9,286 ------------ ------------ ------------ ------------ ----------- ------------ -------------- Net operating cash flows $ 83,690 $ 9,116 $ 2,577 $ (91,733) $(260,831) $(352,564) $ 77,895 ============ ============ ============ ============ =========== ============ ============== (1) In November 2003 we announced our decision to withdraw from the reinsurance business previously served by our PMA Re operating segment. As a result of this decision, the results of PMA Re are reported as Run-off Operations. Run-off Operations also includes the results of our former excess and surplus lines segment, Caliber One.
21
PMA Capital Corporation Statutory Surplus (In Thousands) 2nd 3rd 4th 1st 2nd Quarter Quarter Quarter Quarter Quarter 2003 2003 2003 2004 2004 (1) ----------------------------------------------------------------------- PMA Pool (2) $ 304,109 $ 301,684 $ 296,777 $ 296,785 $ 305,074 PMA Capital Insurance Company (3) 581,821 (4) 477,391 (4) 500,617 (4) 517,143 (4) 236,247
PMA Capital Corporation Statutory Financial Information - PMA Pool (2) (In Thousands) 2nd 3rd 4th 1st 2nd Six Six Quarter Quarter Quarter Quarter Quarter Months Months 2003 2003 2003 2004 2004 (1) 2004 (1) 2003 ----------------------------------------------------------------------------------------------- Net Premiums Written: Workers Compensation & Integrated Disability $ 91,269 $ 116,397 $ 77,362 $ 106,190 $ 56,764 $ 162,954 $ 238,694 Other Commercial Lines 25,914 17,424 14,386 11,915 8,275 20,190 54,169 ------------ ----------- ----------- -------------- ------------- ----------- ------------ Total - PMA Pool $ 117,183 $ 133,821 $ 91,748 $ 118,105 $ 65,039 $ 183,144 $ 292,863 ============ =========== =========== ============== ============= =========== ============ Statutory Ratios: Loss and LAE ratio 73.6% 74.4% 87.2% 74.9% 75.2% 75.0% 73.4% Underwriting expense ratio 28.5% 24.9% 34.6% 27.1% 39.0% 31.4% 24.3% Policyholders' dividend ratio 1.6% 1.7% -3.4% 1.2% 0.7% 1.0% 1.6% ------------ ----------- ----------- -------------- ------------- ----------- ------------ Combined ratio 103.7% 101.0% 118.4% 103.2% 114.9% 107.4% 99.3% ============ =========== =========== ============== ============= =========== ============ Operating ratio 97.9% 94.9% 113.9% 96.5% 107.4% 100.3% 90.2% ============ =========== =========== ============== ============= =========== ============ (1) Estimated. (2) The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company. (3) In November 2003, we announced our decision to withdraw from the reinsurance business previously served by PMA Capital Insurance Company. The reinsurance business is currently in run-off. (4) Includes the statutory surplus of the PMA Pool.
22
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(R). 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 7/28/2004): A.M. Best Moody's ------------------ -------------------- PMA Pool 1 B++ (5th of 16) Ba1 (11th of 21) PMA Capital Insurance Company 2 B++ (5th of 16) B1 (14th of 21) 1 The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company. 2 In November 2003, we announced our decision to withdraw from the reinsurance business previously served by PMA Capital Insurance Company. The reinsurance business is currently in run-off.
23 -----END PRIVACY-ENHANCED MESSAGE-----