EX-99.2 3 ex99-2.htm EXHIBIT 99.2 Exhibit 99.2
Exhibit 99.2
 
 
PMA Logo
 
Statistical Supplement
First Quarter
2007
 
 

PMA Capital Corporation
Statistical Supplement
First Quarter - 2007
       
Table of Contents
 
 Page
Consolidated Highlights:
      
   
1
   
2
   
3
   
4
   
5
       
Segment Information:
      
6
-
7
   
8
   
9
   
10
   
11
 
      
Operating Cash Flow Information:
      
   
12
   
13
   
14
       
Statutory Financial Information:
      
   
15
       
Other 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
 
a reconciliation of operating results by segment to GAAP net income (loss).

 

Selected Financial Data  
(Dollar Amounts in Thousands, Except Per Share Data)  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
 
 Quarter
  
                            
Gross Premiums Written by Segment:
                                      
PMA Insurance Group
  
$
133,737
  
$
99,328
  
$
133,903
  
$
89,484
  
$
164,720
    
23.2
%
Run-off Operations
   
398
   
960
   
526
   
102
   
1,507
   
NM
  
Corporate & Other
    
(168
)
  
(213
)
  
(158
)
  
(157
)
  
(156
)
  
7.1
%
Gross premiums written
  
$
133,967
  
$
100,075
  
$
134,271
  
$
89,429
  
$
166,071
    
24.0
%
                                       
Net Premiums Written by Segment:
                                      
PMA Insurance Group
  
$
113,390
  
$
85,639
  
$
107,795
  
$
66,873
  
$
125,893
    
11.0
%
Run-off Operations
   
606
   
527
   
701
   
309
   
1,495
   
NM
  
Corporate & Other
    
(168
)
  
(213
)
  
(158
)
  
(157
)
  
(156
)
  
7.1
%
Net premiums written
  
$
113,828
  
$
85,953
  
$
108,338
  
$
67,025
  
$
127,232
    
11.8
%
                                       
Major Components of Net Income (Loss):
                                     
Pre-tax operating income (loss) by segment:
                                      
PMA Insurance Group
  
$
8,141
  
$
6,671
  
$
8,351
  
$
5,721
  
$
11,723
    
44.0
%
Run-off Operations 
    
161
   
428
   
174
   
485
   
(738
)
  
NM
  
Corporate & Other
    
(6,139
)
  
(6,128
)
  
(5,016
)
  
(5,282
)
  
(5,309
)
  
13.5
%
Pre-tax operating income
    
2,163
   
971
   
3,509
   
924
   
5,676
   
NM
  
Net realized investment gains (losses)
    
1,818
   
(1,978
)
  
(799
)
  
(26
)
  
(430
)
  
NM
  
Pre-tax income (loss)
    
3,981
   
(1,007
)
  
2,710
   
898
   
5,246
   
31.8
%
Income tax expense (benefit)
    
1,500
   
(245
)
  
1,209
   
67
   
1,900
   
26.7
%
Net income (loss)
  
$
2,481
  
$
(762
)
$
1,501
  
$
831
  
$
3,346
    
34.9
%
After-tax operating income
  
$
1,299
  
$
524
  
$
2,020
  
$
848
  
$
3,626
    
NM
  
                                       
Diluted Earnings (Loss) Per Share:
                                      
Net income (loss)
  
$
0.08
  
$
(0.02
)
$
0.05
  
$
0.03
  
$
0.10
    
25.0
%
Less the impact of:
                                      
Realized gains (losses) after tax
    
0.04
   
(0.04
)
  
(0.01
)
  
-
   
(0.01
)
  
NM
  
After-tax operating income
  
$
0.04
  
$
0.02
  
$
0.06
  
$
0.03
  
$
0.11
    
NM
  
                                       
Capitalization:
                                      
Debt
  
$
189,181
  
$
148,303
  
$
131,561
  
$
131,211
  
$
130,822
    
-30.8
%
Shareholders' equity excluding FAS 115 unrealized loss
    
413,516
   
417,064
   
418,372
   
425,132
   
424,894
   
2.8
%
Total capitalization excluding FAS 115 unrealized loss
    
602,697
   
565,367
   
549,933
   
556,343
   
555,716
   
-7.8
%
FAS 115 unrealized loss
    
(13,941
)
  
(18,733
)
  
(6,169
)
  
(6,039
)
  
(1,084
)
  
92.2
%
Total capitalization including FAS 115 unrealized loss
  
$
588,756
  
$
546,634
  
$
543,764
  
$
550,304
  
$
554,632
    
-5.8
%
                                       
Book Value Per Share:
                                      
Excluding FAS 115 unrealized loss
  
$
12.83
  
$
12.79
  
$
12.82
  
$
13.02
  
$
13.02
    
1.5
%
Including FAS 115 unrealized loss
  
$
12.39
  
$
12.21
  
$
12.63
  
$
12.83
  
$
12.99
    
4.8
%
                                       
Debt to Total Capital:
                                      
Excluding FAS 115 unrealized loss
    
31.4
%
  
26.2
%
  
23.9
%
  
23.6
%
  
23.5
%
  
-25.2
%
Including FAS 115 unrealized loss
    
32.1
%
  
27.1
%
  
24.2
%
  
23.8
%
  
23.6
%
  
-26.5
%
                                       
Interest Coverage:
                                      
Income before interest and income taxes
                                      
to interest expense
    
2.03
   
0.73
   
1.89
   
1.32
   
2.86
   
40.9
%
                                       
Operating income before interest and income taxes
                                      
to interest expense
    
1.56
   
1.26
   
2.15
   
1.33
   
3.02
   
93.6
%
                                       
 
1

 
Consolidated Statements of Operations - Per Share Data
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
  
                       
Diluted Earnings (Loss) Per Share:
                                
                                 
Net income (loss)
  
$
0.08
  
$
(0.02
)
$
0.05
  
$
0.03
  
$
0.10
  
                                 
Pre-tax operating income
  
$
0.07
  
$
0.03
  
$
0.11
  
$
0.03
  
$
0.17
  
                                 
After-tax operating income
  
$
0.04
  
$
0.02
  
$
0.06
  
$
0.03
  
$
0.11
  
                                 
Diluted weighted average common
                                
shares outstanding
    
32,405,934
   
32,132,618
   
32,922,643
   
32,916,423
   
32,900,397
 
                                 
                                 
Dividends declared:
                                
Class A Common Stock
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
                                 
Actual common shares issued
                                
and outstanding
    
32,239,288
   
32,613,234
   
32,646,689
   
32,659,194
   
32,630,669
 
                                 
                                 
Class A Common Stock prices:
                                
High
  
$
10.43
  
$
10.49
  
$
10.75
  
$
10.15
  
$
9.77
  
Low
  
$
8.68
  
$
9.24
  
$
8.60
  
$
8.60
  
$
8.40
  
Close
  
$
10.18
  
$
10.30
  
$
8.82
  
$
9.22
  
$
9.39
  
 
 
2

 
Consolidated Statements of Operations  
  
(Dollar Amounts in Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
 
 Quarter
  
                            
Gross Premiums Written
  
$
133,967
  
$
100,075
  
$
134,271
  
$
89,429
  
$
166,071
    
24.0
%
                                       
Net Premiums Written
  
$
113,828
  
$
85,953
  
$
108,338
  
$
67,025
  
$
127,232
    
11.8
%
                                       
Revenues:
                                      
Net premiums earned
  
$
91,659
  
$
94,922
  
$
95,284
  
$
88,316
  
$
95,032
    
3.7
%
Net investment income
    
11,400
   
11,058
   
10,747
   
10,333
   
10,525
   
-7.7
%
Net realized investment gains (losses)
    
1,818
   
(1,978
)
  
(799
)
  
(26
)
  
(430
)
  
NM
  
Other revenues
    
7,104
   
7,286
   
6,624
   
7,107
   
7,787
   
9.6
%
Total revenues
    
111,981
   
111,288
   
111,856
   
105,730
   
112,914
   
0.8
%
                                       
Expenses:
                                      
Losses and loss adjustment expenses
    
65,393
   
66,379
   
66,754
   
60,695
   
67,026
   
2.5
%
Acquisition expenses
    
17,325
   
19,552
   
19,811
   
17,825
   
19,138
   
10.5
%
Operating expenses
    
19,987
   
21,580
   
18,953
   
22,966
   
17,066
   
-14.6
%
Dividends to policyholders
    
1,422
   
1,011
   
589
   
510
   
1,622
   
14.1
%
Interest expense
    
3,873
   
3,773
   
3,039
   
2,836
   
2,816
   
-27.3
%
Total losses and expenses
    
108,000
   
112,295
   
109,146
   
104,832
   
107,668
   
-0.3
%
                                       
Pre-tax income (loss)
    
3,981
   
(1,007
)
  
2,710
   
898
   
5,246
   
31.8
%
                                       
Income tax expense (benefit):
                                      
Current
    
-
   
-
   
-
   
-
   
-
   
NM
  
Deferred
    
1,500
   
(245
)
  
1,209
   
67
   
1,900
   
26.7
%
                                       
Total income tax expense (benefit)
    
1,500
   
(245
)
  
1,209
   
67
   
1,900
   
26.7
%
                                       
Net income (loss)
  
$
2,481
  
$
(762
)
$
1,501
  
$
831
  
$
3,346
    
34.9
%
                                       
Pre-tax operating income
  
$
2,163
  
$
971
  
$
3,509
  
$
924
  
$
5,676
    
NM
  
                                       
After-tax operating income
  
$
1,299
  
$
524
  
$
2,020
  
$
848
  
$
3,626
    
NM
  
 
 
3

 
Consolidated Balance Sheets
  
(Dollar Amounts in Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
   
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
   
2006
   
2006
  
2006
  
2006
  
2007
  
                       
Assets:
                      
Investments in fixed maturities available for sale
  
$
994,972
  
$
913,376
  
$
904,074
  
$
871,951
  
$
735,048
  
Investments in fixed maturities trading
    
-
   
-
   
-
   
-
   
122,669
 
Short-term investments
    
63,641
   
70,994
   
59,227
   
86,448
   
93,385
 
Short-term investments, loaned securities collateral
    
9,991
   
4,771
   
-
   
-
   
-
 
Total investments
    
1,068,604
   
989,141
   
963,301
   
958,399
   
951,102
 
                                 
Cash
    
13,667
   
26,004
   
30,387
   
14,105
   
9,924
 
Accrued investment income
    
11,395
   
9,312
   
10,993
   
9,351
   
5,407
 
Premiums receivable
    
209,354
   
205,825
   
218,126
   
207,771
   
257,445
 
Reinsurance receivables
    
1,086,830
   
1,071,332
   
1,069,153
   
1,039,979
   
1,042,478
 
Deferred income taxes, net
    
107,908
   
110,452
   
102,986
   
100,019
   
97,565
 
Deferred acquisition costs
    
39,308
   
37,336
   
40,384
   
36,239
   
41,726
 
Funds held by reinsureds
    
148,512
   
151,873
   
133,222
   
130,214
   
132,926
 
Other assets
    
179,061
   
171,713
   
184,904
   
170,330
   
189,432
 
Total assets
  
$
2,864,639
  
$
2,772,988
  
$
2,753,456
  
$
2,666,407
  
$
2,728,005
  
                                 
Liabilities:
                                
Unpaid losses and loss adjustment expenses
  
$
1,776,822
  
$
1,727,369
  
$
1,690,483
  
$
1,634,865
  
$
1,620,952
  
Unearned premiums
    
199,129
   
189,140
   
217,506
   
202,973
   
249,689
 
Debt
    
189,181
   
148,303
   
131,561
   
131,211
   
130,822
 
Accounts payable, accrued expenses
                                
and other liabilities
    
205,114
   
220,350
   
219,146
   
210,740
   
234,901
 
Funds held under reinsurance treaties
    
79,815
   
79,966
   
77,813
   
63,075
   
63,348
 
Dividends to policyholders
    
4,998
   
4,725
   
4,744
   
4,450
   
4,483
 
Payable under securities loan agreements
    
10,005
   
4,804
   
-
   
-
   
-
 
Total liabilities
    
2,465,064
   
2,374,657
   
2,341,253
   
2,247,314
   
2,304,195
 
                                 
Shareholders' Equity:
                                
Class A Common Stock
    
171,090
   
171,090
   
171,090
   
171,090
   
171,090
 
Additional paid-in capital
    
110,042
   
110,552
   
111,116
   
109,922
   
110,527
 
Retained earnings
    
185,393
   
180,626
   
181,719
   
184,216
   
183,611
 
Accumulated other comprehensive loss
    
(33,358
)
  
(37,630
)
  
(26,010
)
  
(20,624
)
  
(15,675
)
Treasury stock, at cost
    
(33,592
)
  
(26,307
)
  
(25,712
)
  
(25,511
)
  
(25,743
)
Total shareholders' equity
    
399,575
   
398,331
   
412,203
   
419,093
   
423,810
 
Total liabilities and shareholders' equity
  
$
2,864,639
  
$
2,772,988
  
$
2,753,456
  
$
2,666,407
  
$
2,728,005
  
 
 
4

 
Invested Assets and Net Investment Income
  
(Dollar Amounts in Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
  
                       
Total Investments & Cash
                                
As reported
  
$
1,082,271
  
$
1,015,145
  
$
993,688
  
$
972,504
  
$
961,026
  
Less:
                                
Securities lending activity
    
10,005
   
4,804
   
-
   
-
   
-
 
Unrealized loss
    
(21,448
)
  
(28,820
)
  
(9,490
)
  
(9,291
)
  
(1,668
)
Unrealized loss and accrued income - trading
    
-
   
-
   
-
   
-
   
(5,858
)
Total adjusted investments & cash
  
$
1,093,714
  
$
1,039,161
  
$
1,003,178
  
$
981,795
  
$
968,552
  
                                 
Net Investment Income
                                
As reported
  
$
11,400
  
$
11,058
  
$
10,747
  
$
10,333
  
$
10,525
  
Funds held:
                                
Assumed
   
335
   
537
   
185
   
160
   
246
 
Ceded
   
(1,519
)
  
(1,643
)
  
(1,482
)
  
(1,374
)
  
(1,560
)
Total funds held
    
(1,184
)
  
(1,106
)
  
(1,297
)
  
(1,214
)
  
(1,314
)
                                 
Total adjusted investment income
  
$
12,584
  
$
12,164
  
$
12,044
  
$
11,547
  
$
11,839
  
                                 
Yield
                                
As reported
    
4.11
%
  
4.22
%
  
4.28
%
  
4.20
%
  
4.35
%
Investment portfolio
    
4.50
%
  
4.56
%
  
4.72
%
  
4.65
%
  
4.86
%
                                 
Duration (in years)
    
3.7
   
3.5
   
3.4
   
3.3
   
3.3
 
   
                                 
PMA Capital Corporation
Debt
(Dollar Amounts in Thousands)
                                 
 
  
 Amount 
                          
 
  
 Outstanding 
  
 Maturity
                    
6.50% convertible debt 
  
$
19,326
    
20221
                    
Derivative component of 6.50% convertible debt
    
2,686
                         
4.25% convertible debt 
    
455
   
20222
                    
8.50% senior notes
    
54,900
   
2018
                    
Junior subordinated debt 3
    
43,816
   
2033
                    
Surplus notes 4
    
10,000
   
2035
                    
Unamortized debt discount
    
(361
)
                        
Total long-term debt
  
$
130,822
                          
                                 
 
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.
2
Holders of this debt, at their option, may require us to repurchase all or a portion of their debentures on September 30, 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 9.48% as of March 31, 2007.
4
Interest rate on surplus notes is 9.86% as of March 31, 2007.
 
 
5

 
Statements of Operations - Consolidating
  
Three Months Ended March 31, 2007
  
(Dollar Amounts in Thousands)
  
                   
   
PMA
             
   
Insurance
 
Corporate
 
Run-off
 
 
 
 
 
Group
& Other1
Operations
Consolidated
  
                   
Gross Premiums Written
  
$
164,720
  
$
(156
)
$
1,507
  
$
166,071
  
                           
Net Premiums Written
  
$
125,893
  
$
(156
)
$
1,495
  
$
127,232
  
                           
Revenues:
                          
Net premiums earned
  
$
93,995
  
$
(156
)
$
1,193
  
$
95,032
  
Net investment income
    
9,704
   
(179
)
  
1,000
   
10,525
 
Other revenues
    
7,680
   
107
   
-
   
7,787
 
Operating revenues
    
111,379
   
(228
)
  
2,193
   
113,344
 
                           
Losses and Expenses:
                          
Losses and loss adjustment expenses
    
65,919
   
-
   
1,107
   
67,026
 
Acquisition expenses
    
18,779
   
-
   
359
   
19,138
 
Operating expenses
    
13,087
   
2,514
   
1,465
   
17,066
 
Dividends to policyholders
    
1,622
   
-
   
-
   
1,622
 
Total losses and expenses
    
99,407
   
2,514
   
2,931
   
104,852
 
                           
Operating income (loss) before income taxes
                          
and interest expense
    
11,972
   
(2,742
)
  
(738
)
  
8,492
 
                           
Interest expense
    
249
   
2,567
   
-
   
2,816
 
                           
Pre-tax operating income (loss)
  
$
11,723
  
$
(5,309
)
$
(738
)
  
5,676
 
                           
Net realized investment losses
                      
(430
)
                           
Pre-tax income
                    
$
5,246
  
 
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, 2006
  
(Dollar Amounts 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.
 
 
7

 
Statements of Operations - PMA Insurance Group  
  
(Dollar Amounts in Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
 
 Quarter
  
                            
Gross Premiums Written
  
$
133,737
  
$
99,328
  
$
133,903
  
$
89,484
  
$
164,720
    
23.2
%
                                       
Net Premiums Written
  
$
113,390
  
$
85,639
  
$
107,795
  
$
66,873
  
$
125,893
    
11.0
%
                                       
Revenues:
                                      
Net premiums earned
  
$
91,221
  
$
94,803
  
$
94,696
  
$
87,379
  
$
93,995
    
3.0
%
Net investment income
    
8,559
   
8,753
   
8,998
   
9,190
   
9,704
   
13.4
%
Other revenues
    
7,074
   
7,165
   
6,573
   
7,065
   
7,680
   
8.6
%
Total revenues
    
106,854
   
110,721
   
110,267
   
103,634
   
111,379
   
4.2
%
                                       
Losses and Expenses:
                                      
Losses and loss adjustment expenses
    
64,519
   
67,682
   
68,255
   
61,841
   
65,919
   
2.2
%
Acquisition expenses
    
18,219
   
18,923
   
19,098
   
17,486
   
18,779
   
3.1
%
Operating expenses
    
14,325
   
16,193
   
13,720
   
17,821
   
13,087
   
-8.6
%
Dividends to policyholders
    
1,422
   
1,011
   
589
   
510
   
1,622
   
14.1
%
Total losses and expenses
    
98,485
   
103,809
   
101,662
   
97,658
   
99,407
   
0.9
%
                                       
Operating income before income taxes
                                      
and interest expense
    
8,369
   
6,912
   
8,605
   
5,976
   
11,972
   
43.1
%
                                       
Interest expense
    
228
   
241
   
254
   
255
   
249
   
9.2
%
                                       
Pre-tax operating income
 
$
8,141
  
$
6,671
  
$
8,351
  
$
5,721
  
$
11,723
    
44.0
%
 
 
8

Insurance Ratios - PMA Insurance Group  
                            
 
 
1st
Quarter
2006
 
2nd
Quarter
2006
 
3rd
Quarter
2006
 
4th
Quarter
2006
 
1st
Quarter
2007
 
Point Chg.
1st Quarter
Better (Worse)
  
                            
Ratios - GAAP Basis:
                                      
                                       
                                       
Loss and LAE ratio
    
70.7
%
  
71.4
%
  
72.1
%
  
70.8
%
  
70.1
%
  
0.6
 
                                       
Expense ratio:
                                      
Acquisition expenses
    
20.0
%
  
20.0
%
  
20.2
%
  
20.0
%
  
20.0
%
  
-
 
Operating expenses 1
    
8.6
%2
  
10.0
%2
  
8.1
%2
  
12.9
%2
  
6.4
%
  
2.2
 
Total expense ratio
    
28.6
%
  
30.0
%
  
28.3
%
  
32.9
%
  
26.4
%
  
2.2
 
                                       
Policyholders' dividend ratio
    
1.6
%
  
1.1
%
  
0.6
%
  
0.6
%
  
1.7
%
  
(0.1
)
Combined ratio
    
100.9
%2
  
102.5
%2
  
101.0
%2
  
104.3
%2
  
98.2
%
  
2.7
 
                                       
Net investment income ratio
    
-9.4
%
  
-9.2
%
  
-9.5
%
  
-10.5
%
  
-10.3
%
  
0.9
 
Operating ratio
    
91.5
%
  
93.3
%
  
91.5
%
  
93.8
%
  
87.9
%
  
3.6
 
 
1
The operating expense ratio equals insurance-related operating expenses divided by net premiums earned. Insurance-related operating expenses were $7.9 million, $9.5 million, $7.7 million, $11.3 million and $6.0 million for the first, second, third and fourth quarters of 2006 and the first quarter of 2007, respectively.
                           
2
 Certain reclassifications between insurance-related and non-insurance related expenses of prior period amounts have been made to conform to the current year presentation. These reclassifications had no impact on the previously reported full year 2006 ratios.
 
 
9

 
Statements of Operations - Run-off Operations  
  
(Dollar Amounts in Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
 
 Quarter
  
                            
Gross Premiums Written
  
$
398
  
$
960
  
$
526
  
$
102
  
$
1,507
    
NM
  
                                       
Net Premiums Written
  
$
606
  
$
527
  
$
701
  
$
309
  
$
1,495
    
NM
  
                                       
Revenues:
                                      
Net premiums earned
  
$
606
  
$
332
  
$
746
  
$
1,094
  
$
1,193
    
96.9
%
Net investment income
    
3,201
   
2,408
   
1,695
   
1,392
   
1,000
   
-68.8
%
Total revenues
    
3,807
   
2,740
   
2,441
   
2,486
   
2,193
   
-42.4
%
                                       
Losses and Expenses:
                                      
Losses and loss adjustment expenses
    
874
   
(1,303
)
  
(1,501
)
  
(1,146
)
  
1,107
   
26.7
%
Acquisition expenses
    
(894
)
  
629
   
713
   
339
   
359
   
NM
  
Operating expenses
    
3,666
   
2,986
   
3,055
   
2,808
   
1,465
   
-60.0
%
Total losses and expenses
    
3,646
   
2,312
   
2,267
   
2,001
   
2,931
   
-19.6
%
                                       
Pre-tax operating income (loss)
  
$
161
  
$
428
  
$
174
  
$
485
  
$
(738
)
  
NM
  
 
 
10

 
Statements of Operations - Corporate & Other  
  
(Dollar Amounts in Thousands)  
  
                            
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 % Change
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 1st
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
 
 Quarter
  
                            
Gross Premiums Written
 
$
(168
)
$
(213
)
$
(158
)
$
(157
)
$
(156
)
  
7.1
%
                                       
Net Premiums Written
 
$
(168
)
$
(213
)
$
(158
)
$
(157
)
$
(156
)
  
7.1
%
                                       
Revenues:
                                      
Net premiums earned
  
$
(168
)
$
(213
)
$
(158
)
$
(157
)
$
(156
)
  
7.1
%
Net investment income
    
(360
)
  
(103
)
  
54
   
(249
)
  
(179
)
  
50.3
%
Other revenues
    
30
   
121
   
51
   
42
   
107
   
NM
  
Total revenues
    
(498
)
  
(195
)
  
(53
)
  
(364
)
  
(228
)
  
54.2
%
                                       
Losses and Expenses:
                                      
Operating expenses
    
1,996
   
2,401
   
2,178
   
2,337
   
2,514
   
26.0
%
Total losses and expenses
    
1,996
   
2,401
   
2,178
   
2,337
   
2,514
   
26.0
%
                                       
Operating loss before income taxes
                                      
and interest expense
    
(2,494
)
  
(2,596
)
  
(2,231
)
  
(2,701
)
  
(2,742
)
  
-9.9
%
                                       
Interest expense
    
3,645
   
3,532
   
2,785
   
2,581
   
2,567
   
-29.6
%
                                       
Pre-tax operating loss
  
$
(6,139
)
$
(6,128
)
$
(5,016
)
$
(5,282
)
$
(5,309
)
  
13.5
%
 
 
11

 
Operating Cash Flows - Consolidated
  
(Dollar Amounts in Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
  
                       
Receipts:
                                
Premiums and other revenues collected
  
$
104,991
  
$
96,652
  
$
108,027
  
$
93,253
  
$
102,505
  
Investment income received
    
15,368
   
14,890
   
11,795
   
13,730
   
13,251
 
Total receipts
    
120,359
   
111,542
   
119,822
   
106,983
   
115,756
 
                                 
Disbursements:
                                
Losses and LAE paid:
                                
Losses and LAE paid - current year
    
3,496
   
17,337
   
17,034
   
22,696
   
4,605
 
Losses and LAE paid - prior years
    
92,597
   
92,004
   
65,455
   
90,825
   
85,995
 
Total losses and LAE paid
    
96,093
   
109,341
   
82,489
   
113,521
   
90,600
 
Insurance operating expenses paid
    
46,203
   
39,618
   
26,899
   
30,327
   
38,826
 
Policyholders' dividends paid
    
246
   
397
   
451
   
812
   
499
 
Interest on corporate debt
    
4,791
   
2,965
   
3,470
   
2,461
   
3,082
 
Total disbursements
    
147,333
   
152,321
   
113,309
   
147,121
   
133,007
 
                                 
Net other
    
(12,368
)
  
7,406
   
(9,204
)
  
19,380
   
1,024
 
                                 
Net operating cash flows
  
$
(39,342
)
$
(33,373
)
$
(2,691
)
$
(20,758
)
$
(16,227
)
 
12

 
Operating Cash Flows - PMA Insurance Group
  
(Dollar Amounts in Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
  
                       
Receipts:
                      
Premiums and other revenues collected
  
$
99,740
  
$
94,320
  
$
107,102
  
$
92,720
  
$
99,923
  
Investment income received
    
10,479
   
10,598
   
8,831
   
10,564
   
10,504
 
Total receipts
    
110,219
   
104,918
   
115,933
   
103,284
   
110,427
 
                                 
Disbursements:
                                
Losses and LAE paid:
                                
Losses and LAE paid - current year
    
3,496
   
17,337
   
17,034
   
22,696
   
4,605
 
Losses and LAE paid - prior years
    
65,113
   
57,537
   
45,463
   
44,787
   
62,815
 
Total losses and LAE paid
    
68,609
   
74,874
   
62,497
   
67,483
   
67,420
 
Insurance operating expenses paid
    
42,110
   
35,129
   
24,446
   
26,521
   
35,766
 
Policyholders' dividends paid
    
246
   
397
   
451
   
812
   
499
 
Interest on corporate debt
    
224
   
227
   
246
   
255
   
252
 
Total disbursements
    
111,189
   
110,627
   
87,640
   
95,071
   
103,937
 
                                 
Net other
    
(6,376
)
  
1,955
   
(1,939
)
  
4,615
   
(4,189
)
                                 
Net operating cash flows
  
$
(7,346
)
$
(3,754
)
$
26,354
  
$
12,828
  
$
2,301
  
 
 
13

 
Operating Cash Flows - Run-off Operations
  
(Dollar Amounts in Thousands)
  
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2006
 
2006
 
2006
 
2006
 
2007
  
                       
Receipts:
                                
Premiums collected
  
$
5,251
  
$
2,332
  
$
925
  
$
533
  
$
2,582
  
Investment income received
    
4,889
   
4,292
   
2,964
   
3,166
   
2,747
 
Total receipts
    
10,140
   
6,624
   
3,889
   
3,699
   
5,329
 
                                 
Disbursements:
                                
Losses and LAE paid:
                                
Losses and LAE paid - prior years
    
27,484
   
34,467
   
19,992
   
46,038
   
23,180
 
Total losses and LAE paid
    
27,484
   
34,467
   
19,992
   
46,038
   
23,180
 
Insurance operating expenses paid
    
4,093
   
4,489
   
2,453
   
3,806
   
3,060
 
Total disbursements
    
31,577
   
38,956
   
22,445
   
49,844
   
26,240
 
                                 
Net other
    
1,083
   
1,775
   
(5,500
)
  
8,071
   
(1,382
)
                                 
Net operating cash flows
  
$
(20,354
)
$
(30,557
)
$
(24,056
)
$
(38,074
)
$
(22,293
)
 
 
14

Statutory Surplus
(Dollar Amounts in Thousands)
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2006
 
2006
 
2006
 
2006
 
20071
  
                       
                       
PMA Pool 2
  
$
316,726
  
$
321,114
  
$
325,242
  
$
321,245
  
$
327,379 4
  
PMA Capital Insurance Company 3
    
203,261
   
125,989
 5
  
123,428
   
121,566
   
117,098 4
  
 
PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(Dollar Amounts in Thousands)
                       
   
1st
 
2nd
 
3rd
 
4th
 
1st
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
 
2006
 
2006
 
2006
 
2006
 
20071
  
                       
Net Premiums Written:
                                
Workers' Compensation
 
$
100,096
  
$
76,602
  
$
95,437
  
$
58,731
  
$
113,732
  
Other Commercial Lines
    
11,048
   
6,687
   
6,067
   
4,637
   
10,258
 
Total - PMA Pool
  
$
111,144
  
$
83,289
  
$
101,504
  
$
63,368
  
$
123,990
  
                                 
Statutory Ratios:
                                
Loss and LAE ratio
    
71.5
%
  
72.5
%
  
72.1
%
  
71.3
%
  
71.2
%
Underwriting expense ratio
    
24.6
%
  
31.6
%
  
26.3
%
  
37.5
%
  
21.1
%
Policyholders' dividend ratio
    
0.9
%
  
0.1
%
  
0.5
%
  
0.6
%
  
0.6
%
Combined ratio
    
97.0
%
  
104.2
%
  
98.9
%
  
109.4
%
  
92.9
%
Operating ratio
    
88.4
%
  
96.0
%
  
90.5
%
  
99.8
%
  
83.3
%
 
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 (deficit) of $148.1 million and ($3.0) million for the PMA Pool and PMA Capital Insurance Company, respectively.
5
In May 2006, PMA Capital Insurance Company paid an extraordinary dividend in the amount of $73.5 million to its parent, PMA Capital Corporation.
 
 
15
 

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
 
610.397.5083
New York, NY 10038
 
e-mail: bhitselberger@pmacapital.com
www.amstock.com
 
 
 
 
 
 
 
 
Investor Relations
Phone Inquiries:
 
610.397.5298
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 5/2/2007):
            
             
   
A.M. Best
  
Moody's
PMA Pool 1
  
A- (4th of 16)
  
Baa3 (10th 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