EX-99.2 3 ex99-2.htm EXHIBIT 99.2
Exhibit 99.2
 
 
PMA Logo
 
Statistical Supplement
First Quarter
2006
 
 

PMA Capital Corporation
Statistical Supplement
First Quarter - 2006
                   
Table of Contents
             
Page
Consolidated Highlights:
        
Selected Financial Data
    
1
Consolidated Statements of Operations - Per Share Data
  
2
Consolidated Statements of Operations
     
3
Consolidated Balance Sheets
    
4
Invested Assets and Net Investment Income; Debt
  
5
                   
Segment Information:
          
Statements of Operations - Consolidating
  
 
6 - 
7
Statements of Operations - PMA Insurance Group
  
8
Insurance Ratios - PMA Insurance Group
      
9
Statements of Operations - Run-off Operations
        
10
Statements of Operations - Corporate & Other
        
11
 
                  
Operating Cash Flow Information:
      
Operating Cash Flows - Consolidated
    
12
Operating Cash Flows - PMA Insurance Group
    
13
Operating Cash Flows - Run-off Operations
      
14
                   
Statutory Financial Information:
        
Statutory Surplus; Statutory Financial Information - PMA Pool
      
15
                   
Other Information:
      
Industry Ratings and Market Information
      
16
                   
Legend:
              
NM - Not Meaningful
        
 
        
 
 
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 because (i) net realized investment gains and losses are unpredictable and
 
not necessarily indicative of current operating fundamentals or future performance of the business segments and (ii) in
 
many instances, decisions to buy and sell securities are made at the holding company level, and such decisions result
 
in net realized gains and losses that do not relate to the operations of the individual segments. Operating income (loss)
 
does not replace net income (loss) as the GAAP measure of our consolidated results of operations. See page 1 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)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
 
 Quarter
  
Net Premiums Written by Segment:
                           
PMA Insurance Group
  
$
105,474
  
$
82,103
  
$
116,877
  
$
71,339
  
$
113,390
    
7.5
%
Run-off Operations
   
4,929
   
1,504
   
789
   
3,028
   
606
   
-87.7
%
Corporate & Other
    
(194
)
  
(220
)
  
(195
)
  
(209
)
  
(168
)
  
13.4
%
Net premiums written
  
$
110,209
  
$
83,387
  
$
117,471
  
$
74,158
  
$
113,828
    
3.3
%
                                       
Major Components of Net Income (Loss):
                                     
Pre-tax operating income (loss) by segment:
                                      
PMA Insurance Group
  
$
6,612
  
$
4,941
  
$
6,600
  
$
3,867
  
$
8,141
    
23.1
%
Run-off Operations 
    
(29,646
)
  
1,133
   
(258
)
  
1,838
   
161
   
NM
  
Corporate & Other
    
(6,167
)
  
(5,721
)
  
(5,609
)
  
(6,722
)
  
(6,139
)
  
0.5
%
Pre-tax operating income (loss)
    
(29,201
)
  
353
   
733
   
(1,017
)
  
2,163
   
NM
  
Net realized investment gains (losses)
    
2,983
   
(265
)
  
483
   
(1,084
)
  
1,818
   
-39.1
%
Pre-tax income (loss)
    
(26,218
)
  
88
   
1,216
   
(2,101
)
  
3,981
   
NM
  
Income tax expense (benefit)
    
(5,667
)
  
71
   
476
   
(875
)
  
1,500
   
NM
  
Net income (loss)
  
$
(20,551
)
$
17
  
$
740
  
$
(1,226
)
$
2,481
    
NM
  
After-tax operating income (loss)
  
$
(22,490
)
$
189
  
$
426
  
$
(521
)
$
1,299
    
NM
  
                                       
Diluted Earnings (Loss) Per Share:
                                      
Net income (loss)
  
$
(0.65
)
$
-
  
$
0.02
  
$
(0.04
)
$
0.08
    
NM
  
Less the impact of:
                                      
Realized gains (losses) after tax
    
0.06
   
(0.01
)
  
0.01
   
(0.02
)
  
0.04
   
-33.3
%
After-tax operating income (loss)
  
$
(0.71
)
$
0.01
  
$
0.01
  
$
(0.02
)
$
0.04
    
NM
  
                                       
Capitalization:
                                      
Debt
  
$
208,294
  
$
208,586
  
$
216,808
  
$
196,181
  
$
189,181
    
-9.2
%
Shareholders' equity excluding FAS 115
    unrealized gain (loss)
    
412,349
   
412,330
   
413,513
   
409,019
   
413,516
   
0.3
%
Total capitalization excluding FAS 115
    unrealized gain (loss)
    
620,643
   
620,916
   
630,321
   
605,200
   
602,697
   
-2.9
%
FAS 115 unrealized gain (loss)
    
1,539
   
17,266
   
1,151
   
(2,796
)
  
(13,941
)
  
NM
  
Total capitalization including FAS 115
    unrealized gain (loss)
  
$
622,182
  
$
638,182
  
$
631,472
  
$
602,404
  
$
588,756
    
-5.4
%
                                       
Book Value Per Share:
                                      
Excluding FAS 115 unrealized gain (loss)
  
$
12.95
  
$
12.93
  
$
12.94
  
$
12.79
  
$
12.83
    
-0.9
%
Including FAS 115 unrealized gain (loss)
  
$
13.00
  
$
13.47
  
$
12.98
  
$
12.70
  
$
12.39
    
-4.7
%
                                       
Debt to Total Capital:
                                      
Excluding FAS 115 unrealized gain (loss)
    
33.6
%
  
33.6
%
  
34.4
%
  
32.4
%
  
31.4
%
  
-6.5
%
Including FAS 115 unrealized gain (loss)
    
33.5
%
  
32.7
%
  
34.3
%
  
32.6
%
  
32.1
%
  
-4.2
%
                                       
Interest Coverage:
                                      
Income before interest and income taxes
                                      
    to interest expense
    
NM
   
1.02
   
1.30
   
0.47
   
2.03
   
NM
  
                                       
Operating income before interest and income taxes
                                      
    to interest expense
    
NM
   
1.09
   
1.18
   
0.75
   
1.56
   
NM
  
 
1
 
 
PMA Capital Corporation
  
Consolidated Statements of Operations - Per Share Data
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
  
                       
Diluted Earnings (Loss) Per Share:
                      
                       
Net income (loss)
  
$
(0.65
)
$
-
  
$
0.02
  
$
(0.04
)
$
0.08
  
                                 
Pre-tax operating income (loss)
  
$
(0.93
)
$
0.01
  
$
0.02
  
$
(0.03
)
$
0.07
  
                                 
After-tax operating income (loss)
  
$
(0.71
)
$
0.01
  
$
0.01
  
$
(0.02
)
$
0.04
  
                                 
Diluted weighted average common
                                
shares outstanding
    
31,393,684
   
32,015,127
   
32,244,295
   
31,833,384
   
32,405,934
 
                                 
                                 
Dividends declared:
                                
Class A Common stock
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
                                 
Actual common shares issued
                                
and outstanding
    
31,835,136
   
31,885,541
   
31,956,983
   
31,983,283
   
32,239,288
 
                                 
                                 
Class A Common Stock prices:
                                
High
  
$
10.65
  
$
9.00
  
$
9.50
  
$
9.73
  
$
10.43
  
Low
  
$
7.05
  
$
5.91
  
$
7.83
  
$
7.99
  
$
8.68
  
Close
  
$
8.00
  
$
8.83
  
$
8.78
  
$
9.13
  
$
10.18
  
 
 
 
2
 

PMA Capital Corporation  
  
Consolidated Statements of Operations  
  
(In Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
 
 Quarter
  
                            
Gross Premiums Written
  
$
121,313
  
$
95,069
  
$
130,106
  
$
87,240
  
$
133,967
    
10.4
%
                                       
Net Premiums Written
  
$
110,209
  
$
83,387
  
$
117,471
  
$
74,158
  
$
113,828
    
3.3
%
                                       
Revenues:
                                      
Net premiums earned
  
$
87,723
  
$
88,720
  
$
92,223
  
$
99,364
  
$
91,659
    
4.5
%
Net investment income
    
11,712
   
12,542
   
12,648
   
11,761
   
11,400
   
-2.7
%
Net realized investment gains (losses)
    
2,983
   
(265
)
  
483
   
(1,084
)
  
1,818
   
-39.1
%
Other revenues
    
6,192
   
4,939
   
6,209
   
6,946
   
7,104
   
14.7
%
Total revenues
    
108,610
   
105,936
   
111,563
   
116,987
   
111,981
   
3.1
%
                                       
Expenses:
                                      
Losses and loss adjustment expenses
    
93,988
   
63,261
   
68,112
   
69,713
   
65,393
   
-30.4
%
Acquisition expenses
    
18,671
   
17,983
   
19,691
   
19,536
   
17,325
   
-7.2
%
Operating expenses
    
17,698
   
18,802
   
17,872
   
23,499
   
19,987
   
12.9
%
Dividends to policyholders
    
502
   
1,762
   
567
   
2,343
   
1,422
   
NM
  
Interest expense
    
3,969
   
4,040
   
4,105
   
3,997
   
3,873
   
-2.4
%
Total losses and expenses
    
134,828
   
105,848
   
110,347
   
119,088
   
108,000
   
-19.9
%
                                       
Pre-tax income (loss)
    
(26,218
)
  
88
   
1,216
   
(2,101
)
  
3,981
   
NM
  
                                       
Income tax expense (benefit):
                                      
Current
    
-
   
-
   
-
   
-
   
-
   
NM
 
Deferred
    
(5,667
)
  
71
   
476
   
(875
)
  
1,500
   
NM
  
                                       
Total income tax expense (benefit)
    
(5,667
)
  
71
   
476
   
(875
)
  
1,500
   
NM
  
                                       
Net income (loss)
  
$
(20,551
)
$
17
  
$
740
  
$
(1,226
)
$
2,481
    
NM
  
                                       
Pre-tax operating income (loss)
  
$
(29,201
)
$
353
  
$
733
  
$
(1,017
)
$
2,163
    
NM
  
                                       
After-tax operating income (loss)
  
$
(22,490
)
$
189
  
$
426
  
$
(521
)
$
1,299
    
NM
  
 
 
 
3
 

PMA Capital Corporation
  
Consolidated Balance Sheets
  
(In Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
   
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
   
2005
  
2005
  
2005
  
2005
  
2006
  
                       
Assets:
                      
Investments in fixed maturities available for sale
  
$
1,283,406
  
$
1,256,169
  
$
1,184,301
  
$
1,049,254
  
$
994,972
  
Short-term investments
    
60,325
   
61,058
   
67,636
   
57,997
   
63,641
 
Short-term investments, loaned securities collateral
    
102,620
   
90,114
   
63,751
   
-
   
9,991
 
Total investments
    
1,446,351
   
1,407,341
   
1,315,688
   
1,107,251
   
1,068,604
 
                                 
Cash
    
49,921
   
30,464
   
43,282
   
30,239
   
13,667
 
Accrued investment income
    
15,188
   
14,147
   
13,703
   
11,528
   
11,395
 
Premiums receivable
    
208,748
   
183,713
   
212,847
   
197,582
   
209,354
 
Reinsurance receivables
    
1,129,507
   
1,129,857
   
1,115,953
   
1,094,674
   
1,086,830
 
Deferred income taxes
    
98,714
   
90,301
   
98,568
   
103,656
   
107,908
 
Deferred acquisition costs
    
35,138
   
34,655
   
39,432
   
34,236
   
39,308
 
Funds held by reinsureds
    
146,674
   
150,078
   
153,064
   
146,374
   
148,512
 
Other assets
    
167,200
   
169,028
   
167,192
   
162,505
   
179,061
 
Total assets
  
$
3,297,441
  
$
3,209,584
  
$
3,159,729
  
$
2,888,045
  
$
2,864,639
  
                                 
Liabilities:
                                
Unpaid losses and loss adjustment expenses
  
$
2,077,599
  
$
2,005,386
  
$
1,966,907
  
$
1,820,043
  
$
1,776,822
  
Unearned premiums
    
177,415
   
175,025
   
199,153
   
173,432
   
199,129
 
Debt
    
208,294
   
208,586
   
216,808
   
196,181
   
189,181
 
Accounts payable, accrued expenses
                                
and other liabilities
    
200,350
   
191,309
   
198,441
   
209,654
   
205,114
 
Funds held under reinsurance treaties
    
112,712
   
105,572
   
96,067
   
78,058
   
79,815
 
Dividends to policyholders
    
4,580
   
3,992
   
3,931
   
4,452
   
4,998
 
Payable under securities loan agreements
    
102,603
   
90,118
   
63,758
   
2
   
10,005
 
Total liabilities
    
2,883,553
   
2,779,988
   
2,745,065
   
2,481,822
   
2,465,064
 
                                 
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
   
110,042
 
Retained earnings
    
189,335
   
188,532
   
188,409
   
187,265
   
185,393
 
Accumulated other comprehensive income (loss)
    
(14,116
)
  
1,377
   
(14,861
)
  
(22,684
)
  
(33,358
)
Treasury stock, at cost
    
(41,752
)
  
(40,734
)
  
(39,305
)
  
(38,779
)
  
(33,592
)
Total shareholders' equity
    
413,888
   
429,596
   
414,664
   
406,223
   
399,575
 
Total liabilities and shareholders' equity
  
$
3,297,441
  
$
3,209,584
  
$
3,159,729
  
$
2,888,045
  
$
2,864,639
  
 
 
 
4
 
PMA Capital Corporation
  
Invested Assets and Net Investment Income
  
(Dollars in Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
   
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
   
2005
  
2005
  
2005
  
2005
  
2006
  
                       
Total Investments & Cash
                      
As reported
  
$
1,496,272
  
$
1,437,805
  
$
1,358,970
  
$
1,137,490
  
$
1,082,271
  
Less:
                                
Securities lending activity
    
102,603
   
90,118
   
63,758
   
2
   
10,005
 
Unrealized gain (loss)
    
2,368
   
26,563
   
1,771
   
(4,302
)
  
(21,448
)
Total adjusted investments & cash
  
$
1,391,301
  
$
1,321,124
  
$
1,293,441
  
$
1,141,790
  
$
1,093,714
  
                                 
Net Investment Income
                                
As reported
  
$
11,712
  
$
12,542
  
$
12,648
  
$
11,761
  
$
11,400
  
Funds held:
                                
Assumed
   
187
   
129
   
535
   
545
   
335
 
Ceded
   
(2,437
)
  
(1,871
)
  
(1,694
)
  
(1,897
)
  
(1,519
)
Total funds held
    
(2,250
)
  
(1,742
)
  
(1,159
)
  
(1,352
)
  
(1,184
)
                                 
Total adjusted investment income
  
$
13,962
  
$
14,284
  
$
13,807
  
$
13,113
  
$
12,584
  
                                 
Yield
                                
As reported
    
3.17
%
  
3.42
%
  
3.62
%
  
3.77
%
  
4.11
%
Investment portfolio
    
3.94
%
  
4.21
%
  
4.22
%
  
4.31
%
  
4.50
%
                                 
Duration (in years)
    
3.8
   
3.9
   
3.7
   
3.7
   
3.7
 
 
PMA Capital Corporation
  
Debt
  
(Dollars in Thousands)
  
           
   
Amount
      
   
Outstanding
  
Maturity
  
6.50% convertible debt 
  
$
68,047
    
20221
  
Derivative component of 6.50% convertible debt
    
10,973
       
4.25% convertible debt 
    
655
   
20222
  
8.50% senior notes
    
57,500
   
2018
  
Junior subordinated debt 3
    
43,816
   
2033
  
Surplus notes 4
    
10,000
   
2035
  
Unamortized debt discount
    
(1,810
)
      
Total long-term debt
  
$
189,181
        
 
1
Holders of this debt, at their option, may require us to repurchase all or a portion of their debentures on June 30, 2009 at 114% of the principal amount. This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share for $64.1 million principal amount and $15.891 per share for $3.9 million principal amount.
2
Holders of this 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.
3
Weighted average interest rate on junior subordinated debt is 8.95% as of March 31, 2006.
4
Interest rate on surplus notes is 9.18% as of March 31, 2006.
 
5
 
PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended March 31, 2006
(In Thousands)
                   
   
PMA
             
   
Insurance
 
Corporate
 
Run-off
     
   
Group
 
& Other1
  
Operations
  
Consolidated
  
                   
Gross Premiums Written
  
$
133,737
  
$
(168
)
$
398
  
$
133,967
  
                           
Net Premiums Written
  
$
113,390
  
$
(168
)
$
606
  
$
113,828
  
                           
Revenues:
                          
Net premiums earned
  
$
91,221
  
$
(168
)
$
606
  
$
91,659
  
Net investment income
    
8,559
   
(360
)
  
3,201
   
11,400
 
Other revenues
    
7,074
   
30
   
-
   
7,104
 
Operating revenues
    
106,854
   
(498
)
  
3,807
   
110,163
 
                           
Losses and Expenses:
                          
Losses and loss adjustment expenses
    
64,519
   
-
   
874
   
65,393
 
Acquisition expenses
    
18,219
   
-
   
(894
)
  
17,325
 
Operating expenses
    
14,325
   
1,996
   
3,666
   
19,987
 
Dividends to policyholders
    
1,422
   
-
   
-
   
1,422
 
Total losses and expenses
    
98,485
   
1,996
   
3,646
   
104,127
 
                           
Operating income (loss) before income taxes
                          
and interest expense
    
8,369
   
(2,494
)
  
161
   
6,036
 
                           
Interest expense
    
228
   
3,645
   
-
   
3,873
 
                           
Pre-tax operating income (loss)
  
$
8,141
  
$
(6,139
)
$
161
    
2,163
 
                           
Net realized investment gains
                      
1,818
 
                           
Pre-tax income
                    
$
3,981
  
 
1
Corporate & Other includes the effect of eliminating transactions between the Insurance Operations.
                   
 
 
6
 
 
PMA Capital Corporation
  
Statements of Operations - Consolidating
  
Three Months Ended March 31, 2005
  
(In Thousands)
  
                   
   
PMA
             
   
Insurance
 
Corporate
 
Run-off
 
 
 
 
 
Group
 
& Other1
 
Operations
 
Consolidated
  
                   
Gross Premiums Written
  
$
116,272
  
$
(194
)
$
5,235
  
$
121,313
  
                           
Net Premiums Written
  
$
105,474
  
$
(194
)
$
4,929
  
$
110,209
  
                           
Revenues:
                          
Net premiums earned
  
$
84,700
  
$
(194
)
$
3,217
  
$
87,723
  
Net investment income
    
7,541
   
271
   
3,900
   
11,712
 
Other revenues
    
5,965
   
227
   
-
   
6,192
 
Operating revenues
    
98,206
   
304
   
7,117
   
105,627
 
                           
Losses and Expenses:
                          
Losses and loss adjustment expenses
    
62,218
   
-
   
31,770
   
93,988
 
Acquisition expenses
    
16,767
   
-
   
1,904
   
18,671
 
Operating expenses
    
12,107
   
2,502
   
3,089
   
17,698
 
Dividends to policyholders
    
502
   
-
   
-
   
502
 
Total losses and expenses
    
91,594
   
2,502
   
36,763
   
130,859
 
                           
Operating income (loss) before income taxes
                          
and interest expense
    
6,612
   
(2,198
)
  
(29,646
)
  
(25,232
)
                           
Interest expense
    
-
   
3,969
   
-
   
3,969
 
                           
Pre-tax operating income (loss)
  
$
6,612
  
$
(6,167
)
$
(29,646
)
  
(29,201
)
                           
Net realized investment gains
                      
2,983
 
                           
Pre-tax loss
                    
$
(26,218
)
 
1
Corporate & Other includes the effect of eliminating transactions between the Insurance Operations.
 
 
7
 
PMA Capital Corporation  
  
Statements of Operations - PMA Insurance Group  
  
(Dollar Amounts in Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
 
 Quarter
  
                            
Gross Premiums Written
  
$
116,272
  
$
93,680
  
$
129,163
  
$
82,490
  
$
133,737
    
15.0
%
                                       
Net Premiums Written
  
$
105,474
  
$
82,103
  
$
116,877
  
$
71,339
  
$
113,390
    
7.5
%
                                       
Revenues:
                                      
Net premiums earned
  
$
84,700
  
$
85,541
  
$
92,214
  
$
96,187
  
$
91,221
    
7.7
%
Net investment income
    
7,541
   
7,716
   
8,160
   
8,328
   
8,559
   
13.5
%
Other revenues
    
5,965
   
4,906
   
6,172
   
6,837
   
7,074
   
18.6
%
Total revenues
    
98,206
   
98,163
   
106,546
   
111,352
   
106,854
   
8.8
%
                                       
Losses and Expenses:
                                      
Losses and loss adjustment expenses
    
62,218
   
61,331
   
67,995
   
68,732
   
64,519
   
3.7
%
Acquisition expenses
    
16,767
   
17,254
   
18,279
   
18,998
   
18,219
   
8.7
%
Operating expenses
    
12,107
   
12,875
   
13,100
   
17,191
   
14,325
   
18.3
%
Dividends to policyholders
    
502
   
1,762
   
567
   
2,343
   
1,422
   
NM
  
Total losses and expenses
    
91,594
   
93,222
   
99,941
   
107,264
   
98,485
   
7.5
%
                                       
Operating income before income taxes
                                      
and interest expense
    
6,612
   
4,941
   
6,605
   
4,088
   
8,369
   
26.6
%
                                       
Interest expense
    
-
   
-
   
5
   
221
   
228
   
NM
  
                                       
Pre-tax operating income
 
$
6,612
  
$
4,941
  
$
6,600
  
$
3,867
  
$
8,141
    
23.1
%
 
 
 
8
 

PMA Capital Corporation  
  
Insurance Ratios - PMA Insurance Group  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 Point Chg.
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st Quarter
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
 
 Better (Worse)
  
                            
Ratios - GAAP Basis:
                           
                            
Loss and LAE ratio
    
73.5
%
  
71.7
%
  
73.7
%
  
71.5
%
  
70.7
%
  
2.8
 
                                       
Expense ratio:
                                      
Acquisition expenses
    
19.8
%
  
20.2
%
  
19.8
%
  
19.8
%
  
20.0
%
  
(0.2
)
Operating expenses 1
    
9.5
%
  
10.3
%
  
9.2
%
  
12.5
%
  
9.8
%
  
(0.3
)
Total expense ratio
    
29.3
%
  
30.5
%
  
29.0
%
  
32.3
%
  
29.8
%
  
(0.5
)
                                       
Policyholders' dividend ratio
    
0.6
%
  
2.1
%
  
0.6
%
  
2.4
%
  
1.6
%
  
(1.0
)
Combined ratio
    
103.4
%
  
104.3
%
  
103.3
%
  
106.2
%
  
102.1
%
  
1.3
 
                                       
Net investment income ratio
    
-8.9
%
  
-9.0
%
  
-8.8
%
  
-8.7
%
  
-9.4
%
  
0.5
 
Operating ratio
    
94.5
%
  
95.3
%
  
94.5
%
  
97.5
%
  
92.7
%
  
1.8
 
 
1 The operating expense ratio equals insurance-related operating expenses divided by net premiums earned. Insurance-related operating expenses were $8.0 million, $8.9 million, $8.4 million, $12.1 million and $8.9 million for the first, second, third and fourth quarters of 2005 and the first quarter of 2006, respectively.
 
 
 
 
9
 

PMA Capital Corporation  
  
Statements of Operations - Run-off Operations  
  
(Dollar Amounts in Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
 
 Quarter
  
                            
Gross Premiums Written
 
$
5,235
  
$
1,609
  
$
1,138
  
$
4,959
  
$
398
    
-92.4
%
                                       
Net Premiums Written
 
$
4,929
  
$
1,504
  
$
789
  
$
3,028
  
$
606
    
-87.7
%
                                       
Revenues:
                                      
Net premiums earned
  
$
3,217
  
$
3,399
  
$
204
  
$
3,386
  
$
606
    
-81.2
%
Net investment income
    
3,900
   
4,569
   
4,217
   
3,652
   
3,201
   
-17.9
%
Total revenues
    
7,117
   
7,968
   
4,421
   
7,038
   
3,807
   
-46.5
%
                                       
Losses and Expenses:
                                      
Losses and loss adjustment expenses
    
31,770
   
1,930
   
117
   
981
   
874
   
-97.2
%
Acquisition expenses
    
1,904
   
729
   
1,412
   
538
   
(894
)
  
NM
  
Operating expenses
    
3,089
   
4,176
   
3,150
   
3,681
   
3,666
   
18.7
%
Total losses and expenses
    
36,763
   
6,835
   
4,679
   
5,200
   
3,646
   
-90.1
%
                                       
Pre-tax operating income (loss)
  
$
(29,646
)
$
1,133
  
$
(258
)
$
1,838
  
$
161
    
NM
  
                                       
 
 
 
10
 

PMA Capital Corporation  
  
Statements of Operations - Corporate & Other  
  
(Dollar Amounts in Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
 
 Quarter
  
                            
Gross Premiums Written
 
$
(194
)
$
(220
)
$
(195
)
$
(209
)
$
(168
)
  
13.4
%
                                       
Net Premiums Written
 
$
(194
)
$
(220
)
$
(195
)
$
(209
)
$
(168
)
  
13.4
%
                                       
Revenues:
                                      
Net premiums earned
  
$
(194
)
$
(220
)
$
(195
)
$
(209
)
$
(168
)
  
13.4
%
Net investment income
    
271
   
257
   
271
   
(219
)
  
(360
)
  
NM
  
Other revenues
    
227
   
33
   
37
   
109
   
30
   
-86.8
%
Total revenues
    
304
   
70
   
113
   
(319
)
  
(498
)
  
NM
  
                                       
Losses and Expenses:
                                      
Operating expenses
    
2,502
   
1,751
   
1,622
   
2,627
   
1,996
   
-20.2
%
Total losses and expenses
    
2,502
   
1,751
   
1,622
   
2,627
   
1,996
   
-20.2
%
                                       
Operating loss before income taxes,
                                      
and interest expense
    
(2,198
)
  
(1,681
)
  
(1,509
)
  
(2,946
)
  
(2,494
)
  
-13.5
%
                                       
Interest expense
    
3,969
   
4,040
   
4,100
   
3,776
   
3,645
   
-8.2
%
                                       
Pre-tax operating loss
  
$
(6,167
)
$
(5,721
)
$
(5,609
)
$
(6,722
)
$
(6,139
)
  
0.5
%
                                       
 
 
11
 
 
PMA Capital Corporation
  
Operating Cash Flows - Consolidated
  
(In Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
  
                       
Receipts:
                      
Premiums and other revenues collected
  
$
96,675
  
$
108,706
  
$
90,858
  
$
98,661
  
$
104,991
  
Investment income received
    
14,814
   
14,656
   
15,942
   
16,393
   
15,368
 
Total receipts
    
111,489
   
123,362
   
106,800
   
115,054
   
120,359
 
                                 
Disbursements:
                                
Losses and LAE paid:
                                
Losses and LAE paid - current year
    
3,812
   
14,240
   
16,593
   
20,720
   
3,496
 
Losses and LAE paid - prior years
    
112,312
   
134,182
   
86,329
   
174,212
   
92,597
 
Total losses and LAE paid
    
116,124
   
148,422
   
102,922
   
194,932
   
96,093
 
Insurance operating expenses paid
    
38,632
   
39,585
   
39,009
   
27,271
   
46,203
 
Policyholders' dividends paid
    
2,115
   
1,284
   
820
   
531
   
246
 
Interest on corporate debt
    
4,387
   
1,987
   
5,327
   
2,197
   
4,791
 
Total disbursements
    
161,258
   
191,278
   
148,078
   
224,931
   
147,333
 
                                 
Net other
    
7,258
   
1,046
   
3,564
   
(15,349
)
  
(12,368
)
                                 
Net operating cash flows
  
$
(42,511
)
$
(66,870
)
$
(37,714
)
$
(125,226
)
$
(39,342
)
                                 
 
 
12
 
 

PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group
(In Thousands)
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2005
 
2005
 
2005
 
2005
 
2006
  
                       
Receipts:
                      
Premiums and other revenues collected
  
$
93,148
  
$
100,170
  
$
91,212
  
$
97,910
  
$
99,740
  
Investment income received
    
9,404
   
9,682
   
10,262
   
10,606
   
10,479
 
Total receipts
    
102,552
   
109,852
   
101,474
   
108,516
   
110,219
 
                                 
Disbursements:
                                
Losses and LAE paid:
                                
Losses and LAE paid - current year
    
3,810
   
14,233
   
16,584
   
20,720
   
3,496
 
Losses and LAE paid - prior years
    
72,999
   
69,276
   
55,520
   
43,853
   
65,113
 
Losses and LAE
    
76,809
   
83,509
   
72,104
   
64,573
   
68,609
 
Insurance operating expenses paid
    
34,238
   
36,988
   
33,988
   
23,305
   
42,110
 
Policyholders' dividends paid
    
2,115
   
1,284
   
820
   
531
   
246
 
Total disbursements
    
113,162
   
121,781
   
106,912
   
88,409
   
110,965
 
                                 
Net other
    
13,760
   
2,002
   
6,012
   
(18,822
)
  
(6,600
)
                                 
Net operating cash flows
  
$
3,150
  
$
(9,927
)
$
574
  
$
1,285
  
$
(7,346
)
                                 
 
 
13
 

PMA Capital Corporation
  
Operating Cash Flows - Run-off Operations
  
(In Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
  
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
  
2005
  
2005
  
2005
  
2005
  
2006
  
                       
Receipts:
                      
Premiums collected
  
$
3,527
  
$
8,536
  
$
(354
)
$
751
  
$
5,251
  
Investment income received
    
5,410
   
4,974
   
5,680
   
5,787
   
4,889
 
Total receipts
    
8,937
   
13,510
   
5,326
   
6,538
   
10,140
 
                                 
Disbursements:
                                
Losses and LAE paid:
                                
Losses and LAE paid - current year
    
2
   
7
   
9
   
-
   
-
 
Losses and LAE paid - prior years
    
39,313
   
64,906
   
30,809
   
130,359
   
27,484
 
Total losses and LAE paid
    
39,315
   
64,913
   
30,818
   
130,359
   
27,484
 
Insurance operating expenses paid
    
4,394
   
2,597
   
5,021
   
3,966
   
4,093
 
Total disbursements
    
43,709
   
67,510
   
35,839
   
134,325
   
31,577
 
                                 
Net other
    
(74
)
  
(4,890
)
  
(1,912
)
  
4,004
   
1,083
 
                                 
Net operating cash flows
  
$
(34,846
)
$
(58,890
)
$
(32,425
)
$
(123,783
)
$
(20,354
)
                                 
                                 
 
 
 
14
 

PMA Capital Corporation
Statutory Surplus
(In Thousands)
                           
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
 
 
2005
 
2005
 
2005
 
2005
 
20061
      
                           
                           
PMA Pool 2
  
$
298,686
  
$
299,219
  
$
311,802
 5 
$
315,056
 5 
$
316,726
4, 5
 
  
PMA Capital Insurance Company 3
    
218,322
   
215,348
   
210,663
   
204,920
   
203,261
4 
  
                                       
 
PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(In Thousands)


   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2005
 
2005
 
2005
 
2005
 
20061
  
                       
Net Premiums Written:
                      
   Workers' Compensation & Integrated
    Disability
  
$
94,737
  
$
70,944
  
$
101,435
  
$
63,086
  
$
100,096
  
Other Commercial Lines
    
10,787
   
10,998
   
13,487
   
4,723
   
11,048
 
Total - PMA Pool
  
$
105,524
  
$
81,942
  
$
114,922
  
$
67,809
  
$
111,144
  
                                 
Statutory Ratios:
                                
Loss and LAE ratio
    
73.3
%
  
73.0
%
  
73.3
%
  
73.0
%
  
71.5
%
Underwriting expense ratio
    
25.2
%
  
30.2
%
  
25.1
%
  
32.5
%
  
24.6
%
Policyholders' dividend ratio
    
0.9
%
  
0.8
%
  
0.8
%
  
1.1
%
  
0.9
%
Combined ratio
    
99.4
%
  
104.0
%
  
99.2
%
  
106.6
%
  
97.0
%
Operating ratio
    
91.2
%
  
95.2
%
  
91.2
%
  
98.6
%
  
88.4
%
                                 
 
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 unassigned surplus of $137.4 million and $9.7 million for the PMA Pool and PMA Capital Insurance Company, respectively.
5
Includes $10 million related to surplus notes.
 
 
15
 

PMA Capital Corporation
Industry Ratings and Market Information
 
Transfer Agent and Registrar:
    
Inquiries:
American Stock Transfer & Trust Company
    
William E. Hitselberger
Shareholder Relations
    
Chief Financial Officer
59 Maiden Lane – Plaza Level
    
215.665.5070
New York, NY 10038
    
e-mail: bhitselberger@pmacapital.com
www.amstock.com
              
     
Investor Relations
Phone Inquiries:
    
215.665.5046
800.937.5449
   
investorrelations@pmacapital.com
               
Email Inquiries:
  
Company Website:
info@amstock.com
 
www.pmacapital.com
             
             
Securities Listing:
            
The Corporation's Class A Common Stock is listed on the NASDAQ Stock
Market ®. It trades under the stock symbol: PMACA.
            
 

Financial Strength Ratings (as of 5/05/2006):
          
           
   
A.M. Best
  
Moody's
  
PMA Pool 1
    
A- (4th of 16
)
  
Ba1 (11th of 21
)
PMA Capital Insurance Company 2
    
B+ (6th 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 in run-off.
 
  16