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
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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 ========== =========== ========== =========== =========== ==========
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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% ============= ============= ============
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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 ============ ============= ============= ============ =============
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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.
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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.
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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.
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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.
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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% =========== ========== ========== ========== ========== ======== ========== ======= =========
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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.
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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.
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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% ============ ========= ========= ========= =========== ======= ======== ======== =======
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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 ============ ============ ============ ============ ============= ============ ============
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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 ============= ============ ============ ============= ============ =========== ===========
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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.
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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.
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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.
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