-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IjYHfCr1Qk3TLFfoJu8uWfkctXwWezpeWlI/ZXwM9GNeImzDDWzFSz/DO0QNNjBD jQi+U3540SSSvoQpwZwK1A== 0000950159-99-000171.txt : 19990628 0000950159-99-000171.hdr.sgml : 19990628 ACCESSION NUMBER: 0000950159-99-000171 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PMA CAPITAL CORP CENTRAL INDEX KEY: 0001041665 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 232217932 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-22761 FILM NUMBER: 99652455 BUSINESS ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 CITY: PHILADELPHIA STATE: PA ZIP: 19103-7590 BUSINESS PHONE: 2156655046 MAIL ADDRESS: STREET 1: 1735 MARKET STREET SUITE 2800 CITY: PHILADELPHIA STATE: PA ZIP: 19103-7590 FORMER COMPANY: FORMER CONFORMED NAME: PENNSYLVANIA MANUFACTURERS CORP DATE OF NAME CHANGE: 19970702 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------------------- FORM 11-K (Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 OR |_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 000-22761 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: PMA Capital Corporation 401(k) Plan 380 Sentry Parkway Blue Bell, PA 19422 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: PMA Capital Corporation Mellon Bank Center, Suite 2800 1735 Market Street Philadelphia, PA 19103--7590 REQUIRED INFORMATION Combined financial statements and schedules for PMA Capital Corporation's 401(k) Plan, prepared in accordance with the financial reporting requirements of the Employee Retirement Income Security Act of 1974, appear on pages 1 through 17 of this Annual Report on Form 11-K. (i) PMA CAPITAL CORPORATION 401(k) PLAN COMBINED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES December 31, 1998 and 1997 PMA CAPITAL CORPORATION 401(k) PLAN INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Pages Report of Independent Accountants 2 Financial Statements: Combined Statement of Net Assets Available for Benefits (with Fund Information) as of December 31, 1998 and 1997 3-4 Combined Statement of Changes in Net Assets Available for Benefits (with Fund Information) for the years ended December 31, 1998 and 1997 5-6 Notes to Financial Statements 7-13 Supplemental Schedules: Assets Held for Investment Purposes as of December 31, 1998 14-16 Reportable Transactions for the year ended December 31, 1998 17
1 Report of Independent Accountants To the Employee Benefits Plan Committee of PMA Capital Corporation In our opinion, the accompanying combined statements of net assets available for benefits and the related combined statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the PMA Capital Corporation 401(k) Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for benefits of each fund. These supplemental schedules and fund information are the responsibility of the Plan's management. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York June 15, 1999 2
PMA CAPITAL CORPORATION 401(k) PLAN COMBINED STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (WITH FUND INFORMATION) AS OF DECEMBER 31, 1998 - -------------------------------------------------------------------------------------------------------------------------------- Participant Directed - -------------------------------------------------------------------------------------------------------------------------------- Retirement Morgan 500 Treasury Savings Growth Index Money Mkt. STAR Windsor II Assets Combined Trust Fund Fund Fund Fund Fund Investments: At fair value $61,104,436 $15,651,967 $11,137,756 $11,880,820 $925,995 $5,887,907 $8,514,357 Participant loans receivable 1,714,159 -- -- -- -- -- -- Cash and cash equivalents 165,203 -- -- -- -- -- -- Employer contributions receivable 95,882 9,956 14,356 25,287 2,398 10,535 15,790 Participant contributions receivable 153,450 15,106 22,378 42,034 4,094 16,692 26,412 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total assets 63,233,130 15,677,029 11,174,490 11,948,141 932,487 5,915,134 8,556,559 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Liabilities Forfeitable contributions due employer 91,915 -- -- -- 91,915 -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total liabilities 91,915 -- -- -- 91,915 -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net assets available for benefits $63,141,215 $15,677,029 $11,174,490 $11,948,141 $840,572 $5,915,134 $8,556,559 =========== =========== =========== =========== =========== =========== =========== - -------------------------------------------------------------------------------------------------------------------------------- Participant Directed - -------------------------------------------------------------------------------------------------------------------------------- Life- PMA Capital Inter- Strategy Co. national LifeStrategy Total Bond Moderate Subscri- Stock Self- Growth Growth Mkt. Index Growth ption Directed Participant Assets Fund Fund Fund Fund Fund Fund Loans Investments: At fair value $2,253,970 $1,034,712 $1,358,524 $ 718,184 $ 835,954 $ 904,290 $ -- Participant loans receivable -- -- -- -- -- -- 1,714,159 Cash and cash equivalents -- -- -- -- -- 165,203 -- Employer contributions receivable 3,937 3,252 4,405 2,549 3,417 -- -- Participant contributions receivable 6,543 5,430 5,922 4,327 4,512 -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total assets 2,264,450 1,043,394 1,368,851 725,060 843,883 1,069,493 1,714,159 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Liabilities Forfeitable contributions due employer -- -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total liabilities -- -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net assets available for benefits $2,264,450 $1,043,394 $1,368,851 $ 725,060 $ 843,883 $1,069,493 $1,714,159 ========== ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements. 3
PMA CAPITAL CORPORATION 401(k) PLAN COMBINED STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (WITH FUND INFORMATION) AS OF DECEMBER 31, 1997 - -------------------------------------------------------------------------------------------------------------------------------- Participant Directed - -------------------------------------------------------------------------------------------------------------------------------- PMC Investment Morgan 500 Treasury Contract Growth Index Money Mkt. STAR Windsor II Assets Combined Fund Fund Fund Fund Fund Fund Investments: At fair value $46,929,640 $11,955,388 $ 9,481,997 $ 8,307,710 $ 514,116 $ 5,055,619 $ 6,767,053 At contract value 4,613,697 4,613,697 -- -- -- -- -- Participant loans receivable 1,723,751 -- -- -- -- -- -- Cash and cash equivalents 30,091 -- -- -- -- -- -- Employer contributions receivable 63,677 10,350 10,934 12,874 2,262 7,297 10,655 Participant contributions receivable 94,637 15,382 16,250 19,134 3,362 10,844 15,835 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total assets 53,455,493 16,594,817 9,509,181 8,339,718 519,740 5,073,760 6,793,543 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Liabilities Forfeitable contributions due employer 17,379 -- -- -- 17,379 -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total liabilities 17,379 -- -- -- 17,379 -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net assets available for benefits $53,438,114 $16,594,817 $ 9,509,181 $ 8,339,718 $ 502,361 $ 5,073,760 $ 6,793,543 =========== =========== =========== =========== =========== =========== =========== - -------------------------------------------------------------------------------------------------------------------------------- Participant Directed - -------------------------------------------------------------------------------------------------------------------------------- LifeStrategy International LifeStrategy Total Bond Moderate Self- Growth Growth Mkt. Index Growth Directed Participant Assets Fund Fund Fund Fund Fund Loans Investments: At fair value $2,069,249 $ 519,711 $1,011,556 $ 383,301 $ 863,940 $ -- At contract value -- -- -- -- -- -- Participant loans receivable -- -- -- -- -- 1,723,751 Cash and cash equivalents -- -- -- -- 30,091 -- Employer contributions receivable 4,048 1,616 2,419 1,222 -- -- Participant contributions receivable 6,016 2,402 3,595 1,817 -- -- ---------- ---------- ---------- ---------- ---------- ---------- Total assets 2,079,313 523,729 1,017,570 386,340 894,031 1,723,751 ---------- ---------- ---------- ---------- ---------- ---------- Liabilities Forfeitable contributions due employer -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Total liabilities -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net assets available for benefits $2,079,313 $ 523,729 $1,017,570 $ 386,340 $ 894,031 $1,723,751 ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements. 4
PMA CAPITAL CORPORATION 401(k) PLAN COMBINED STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (WITH FUND INFORMATION) FOR THE YEAR ENDED DECEMBER 31, 1998 PMC Investment Retirement Morgan 500 Contract Savings Growth Index Combined Fund Trust Fund Fund Additions to net assets attributed to: Investment income Net appreciation in fair value of investments $ 4,628,074 $ -- $ -- $ 1,158,662 $ 2,340,628 Interest and dividend income 3,714,666 760,790 232,404 860,562 177,284 ------------ ------------ ------------ ------------ ------------ 8,342,740 760,790 232,404 2,019,224 2,517,912 ------------ ------------ ------------ ------------ ------------ Contributions (forfeitures): Employer 1,711,034 187,655 55,954 313,116 397,997 Participants 4,223,898 317,745 89,748 830,401 962,017 ------------ ------------ ------------ ------------ ------------ 5,934,932 505,400 145,702 1,143,517 1,360,014 ------------ ------------ ------------ ------------ ------------ Total additions 14,277,672 1,266,190 378,106 3,162,741 3,877,926 Deductions to net assets attributed to: Participants' withdrawals (4,574,571) (906,041) (167,570) (870,632) (944,399) ------------ ------------ ------------ ------------ ------------ Total deductions (4,574,571) (906,041) (167,570) (870,632) (944,399) ------------ ------------ ------------ ------------ ------------ Net increase prior to interfund transfers 9,703,101 360,149 210,536 2,292,109 2,933,527 Interfund transfers -- (16,954,966) 15,466,493 (626,800) 674,896 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 9,703,101 (16,594,817) 15,677,029 1,665,309 3,608,423 Net assets available for benefits: Beginning of year 53,438,114 16,594,817 -- 9,509,181 8,339,718 ------------ ------------ ------------ ------------ ------------ End of year $ 63,141,215 $ -- $ 15,677,029 $ 11,174,490 $ 11,948,141 ============ ============ ============ ============ ============ Treasury International LifeStrategy Money Mkt. STAR Windsor II Growth Growth Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment income Net appreciation in fair value of investments $ -- $ 163,890 $ 282,112 $ 309,216 $ 112,274 Interest and dividend income 34,552 476,572 847,958 46,732 34,660 ----------- ----------- ----------- ----------- ----------- 34,552 640,462 1,130,070 355,948 146,934 ----------- ----------- ----------- ----------- ----------- Contributions (forfeitures): Employer (25,366) 199,640 310,247 103,195 50,851 Participants 94,874 549,243 735,011 229,577 164,256 ----------- ----------- ----------- ----------- ----------- 69,508 748,883 1,045,258 332,772 215,107 ----------- ----------- ----------- ----------- ----------- Total additions 104,060 1,389,345 2,175,328 688,720 362,041 Deductions to net assets attributed to: Participants' withdrawals (191,331) (488,589) (567,872) (147,915) (17,578) ----------- ----------- ----------- ----------- ----------- Total deductions (191,331) (488,589) (567,872) (147,915) (17,578) ----------- ----------- ----------- ----------- ----------- Net increase prior to interfund transfers (87,271) 900,756 1,607,456 540,805 344,463 Interfund transfers 425,482 (59,382) 155,560 (355,668) 175,202 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) 338,211 841,374 1,763,016 185,137 519,665 Net assets available for benefits: Beginning of year 502,361 5,073,760 6,793,543 2,079,313 523,729 ----------- ----------- ----------- ----------- ----------- End of year $ 840,572 $ 5,915,134 $ 8,556,559 $ 2,264,450 $ 1,043,394 =========== =========== =========== =========== =========== LifeStrategy PMA Capital Total Bond Moderate Co. Stock Self- Mkt. Index Growth Subscription Directed Participant Fund Fund Fund Fund Loans Additions to net assets attributed to: Investment income Net appreciation in fair value of investments $ 18,448 $ 75,095 $ -- $ 167,749 $ -- Interest and dividend income 75,081 29,970 -- 7,713 130,388 ----------- ----------- ----------- ----------- ----------- 93,529 105,065 -- 175,462 130,388 ----------- ----------- ----------- ----------- ----------- Contributions (forfeitures): Employer 74,728 38,740 4,277 -- -- Participants 138,890 106,470 5,666 -- -- ----------- ----------- ----------- ----------- ----------- 213,618 145,210 9,943 -- -- ----------- ----------- ----------- ----------- ----------- Total additions 307,147 250,275 9,943 175,462 130,388 Deductions to net assets attributed to: Participants' withdrawals (107,406) (27,824) -- -- (137,414) ----------- ----------- ----------- ----------- ----------- Total deductions (107,406) (27,824) -- -- (137,414) ----------- ----------- ----------- ----------- ----------- Net increase prior to interfund transfers 199,741 222,451 9,943 175,462 (7,026) Interfund transfers 151,540 116,269 833,940 -- (2,566) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) 351,281 338,720 843,883 175,462 (9,592) Net assets available for benefits: Beginning of year 1,017,570 386,340 -- 894,031 1,723,751 ----------- ----------- ----------- ----------- ----------- End of year $ 1,368,851 $ 725,060 $ 843,883 $ 1,069,493 $ 1,714,159 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements. 5
PMA CAPITAL CORPORATION 401(k) PLAN COMBINED STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (WITH FUND INFORMATION) FOR THE YEAR ENDED DECEMBER 31, 1997 PMC Intermediate Investment Morgan Term 500 Treasury Contract Growth Treasury Index Money Mkt. Combined Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments $ 4,182,257 $ -- $ 943,105 $ 2 $ 1,686,812 $ -- Interest and dividend income 4,018,455 1,118,214 1,284,298 3 165,352 25,211 ------------ ------------ ------------ ------------ ------------ ------------ 8,200,712 1,118,214 2,227,403 5 1,852,164 25,211 ------------ ------------ ------------ ------------ ------------ ------------ Contributions (forfeitures): Employer 1,794,538 316,426 311,158 -- 331,305 134,665 Participants 3,827,301 696,248 586,708 140 831,512 337,071 ------------ ------------ ------------ ------------ ------------ ------------ 5,621,839 1,012,674 897,866 140 1,162,817 471,736 ------------ ------------ ------------ ------------ ------------ ------------ Total additions 13,822,551 2,130,888 3,125,269 145 3,014,981 496,947 Deductions to net assets attributed to: Participants' withdrawals (7,272,855) (3,367,075) (964,511) -- (706,428) (137,865) ------------ ------------ ------------ ------------ ------------ ------------ Total deductions (7,272,855) (3,367,075) (964,511) -- (706,428) (137,865) ------------ ------------ ------------ ------------ ------------ ------------ Net increase prior to interfund transfers 6,549,696 (1,236,187) 2,160,758 145 2,308,553 359,082 Interfund transfers -- (1,118,078) (99,387) (145) 665,643 (268,019) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 6,549,696 (2,354,265) 2,061,371 -- 2,974,196 91,063 Net assets available for benefits: Beginning of year 46,888,418 18,949,082 7,447,810 -- 5,365,522 411,298 ------------ ------------ ------------ ------------ ------------ ------------ End of year $ 53,438,114 $ 16,594,817 $ 9,509,181 $ -- $ 8,339,718 $ 502,361 ============ ============ ============ ============ ============ ============ International LifeStrategy Total Bond STAR Windsor II Growth Growth Mkt. Index Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments $ 418,283 $ 879,766 $ (27,640) $ 34,979 $ 24,423 Interest and dividend income 476,236 604,324 89,423 19,457 61,940 ----------- ----------- ----------- ----------- ----------- 894,519 1,484,090 61,783 54,436 86,363 ----------- ----------- ----------- ----------- ----------- Contributions (forfeitures): Employer 195,297 264,265 113,451 32,594 67,524 Participants 389,776 646,037 304,461 256,637 127,441 ----------- ----------- ----------- ----------- ----------- 585,073 910,302 417,912 289,231 194,965 ----------- ----------- ----------- ----------- ----------- Total additions 1,479,592 2,394,392 479,695 343,667 281,328 Deductions to net assets attributed to: Participants' withdrawals (716,971) (441,344) (335,434) (81,864) (155,114) ----------- ----------- ----------- ----------- ----------- Total deductions (716,971) (441,344) (335,434) (81,864) (155,114) ----------- ----------- ----------- ----------- ----------- Net increase prior to interfund transfers 762,621 1,953,048 144,261 261,803 126,214 Interfund transfers (93,157) 768,027 117,049 115,954 12,730 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) 669,464 2,721,075 261,310 377,757 138,944 Net assets available for benefits: Beginning of year 4,404,296 4,072,468 1,818,003 145,972 878,626 ----------- ----------- ----------- ----------- ----------- End of year $ 5,073,760 $ 6,793,543 $ 2,079,313 $ 523,729 $ 1,017,570 =========== =========== =========== =========== =========== LifeStrategy Moderate Self- Growth Directed Participant Fund Fund Loans Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments $ 43,171 $ 179,356 $ -- Interest and dividend income 16,942 22,475 134,580 ----------- ----------- ----------- 60,113 201,831 134,580 ----------- ----------- ----------- Contributions (forfeitures): Employer 27,853 -- -- Participants 106,822 (455,552) -- ----------- ----------- ----------- 134,675 (455,552) -- ----------- ----------- ----------- Total additions 194,788 (253,721) 134,580 Deductions to net assets attributed to: Participants' withdrawals (114,144) -- (252,105) ----------- ----------- ----------- Total deductions (114,144) -- (252,105) ----------- ----------- ----------- Net increase prior to interfund transfers 80,644 (253,721) (117,525) Interfund transfers 21,322 -- (121,939) ----------- ----------- ----------- Net increase (decrease) 101,966 (253,721) (239,464) Net assets available for benefits: Beginning of year 284,374 1,147,752 1,963,215 ----------- ----------- ----------- End of year $ 386,340 $ 894,031 $ 1,723,751 =========== =========== ===========
The accompanying notes are an integral part of the financial statements. 6 PMA CAPITAL CORPORATION 401(k) PLAN NOTES TO FINANCIAL STATEMENTS 1. Description of Plan: The following brief description of the PMA Capital Corporation 401(k) Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. General: The Plan is a defined contribution plan and is qualified under Section 401(a) of the Internal Revenue Code ("IRC"), allowing contributions to be made by participants on a before-tax basis under Section 401(k) of the IRC. Effective December 7, 1998, the name of the Plan was changed from The PMC 401(k) Plan to the PMA Capital Corporation 401(k) Plan. Eligibility and Participation: Presently, all active regular employees of PMA Capital Corporation ("the Company"), formerly named Pennsylvania Manufacturers Corporation, and its affiliates are eligible to participate in the Plan upon commencement of their employment. Contributions: Contributions to the Plan are made by eligible employees and the Company. Participants may authorize the Company to withhold up to a maximum of 15% of their compensation each year for employee pretax contributions to the Plan. In addition, participants may elect to have the Company withhold up to 10% of their compensation as a voluntary (after-tax) contribution. The combined maximum of pretax and after-tax contributions is 16%. The Company, in turn, will make employer matching contributions on behalf of participants equal to $1.00 for each $1.00 of employee pretax or after-tax contributions, up to a maximum of 5% of each participant's compensation. Contributions are invested, at the election of the participants, in the following funds which are managed by The Vanguard Group (the "Vanguard Funds"), an unrelated entity: Retirement Savings Trust, Morgan Growth Fund, 500 Index Fund, Treasury Money Market Fund, STAR Fund, Windsor II Fund, International Growth Fund, LifeStrategy Growth Fund, Total Bond Market Index Fund, or the LifeStrategy Moderate Growth Fund. In addition, effective December 7, 1998, the Plan was amended to provide for participant directed investment in an investment fund, managed by The Vanguard Group, which will consist primarily of the Company's Class A Common Stock and cash. 7 PMA CAPITAL CORPORATION 401(k) PLAN NOTES TO FINANCIAL STATEMENTS, continued 1. Description of Plan, continued: Investment Options: During the plan year ending December 31, 1998, participants were able to allocate their contributions among the following options: Vanguard Retirement Savings Trust: Seeks stability of principal and a high level of current income consistent with a two- to three-year average maturity. The trust is a tax-exempt collective trust invested primarily in investment contracts issued by insurance companies and commercial banks, and similar types of fixed-principal investments. Vanguard Morgan Growth Fund: Seeks long-term growth of capital by investing primarily in stocks of large and medium-size domestic companies whose revenue and/or earnings are expected to grow faster than those of the average company in the market. Vanguard 500 Index Fund: Seeks to match the performance of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") by investing in all of the stocks that make up the S&P 500. Vanguard Treasury Money Market Fund: Seeks to provide high income and a stable share price of $1 by investing in direct U.S. government obligations, primarily Treasury bills, as well as other short- term securities that are backed by the full faith and credit of the U.S. government. Vanguard STAR Fund: Seeks to provide long-term growth of capital and some income by investing in nine other Vanguard mutual funds: 60%-70% of its assets in six stock funds; 20%-30% of its assets in two bond funds; and 10%-20% of its assets in one money market fund. Vanguard Windsor II Fund: Primarily seeks to provide long-term growth of capital, and as a secondary objective, to provide some dividend income by investing in stocks of primarily large and medium-size companies considered undervalued by the Fund's advisers. Vanguard International Growth Fund: Seeks to provide long-term growth of capital by investing in stocks of seasoned companies located outside the U.S., with above average potential for growth. Vanguard LifeStrategy Growth Fund: Seeks to provide growth of capital and some current income. The Fund invests in other Vanguard mutual funds according to a fixed formula that typically results in an allocation of about 80% to common stocks and 20% to bonds. 8 PMA CAPITAL CORPORATION 401(k) PLAN NOTES TO FINANCIAL STATEMENTS, continued 1. Description of Plan, continued: Investment Options, continued: Vanguard Total Bond Market Index Fund: Seeks to parallel the investment performance of the entire U.S. bond market as measured by the Lehman Brothers Aggregate Bond Index. Vanguard LifeStrategy Moderate Growth Fund: Seeks to provide growth of capital and a low to moderate level of current income. The Fund invests in other Vanguard funds according to a fixed formula that typically results in an allocation of about 60% of assets to common stock and 40% to bonds. PMA Capital Corporation Stock Subscription Fund: Seeks to provide the potential for long-term growth by investing in the Company's Class A Common Stock and reinvestment of its dividends. The Self-Directed Fund is only available to participants who had balances in self-directed funds as of December 31, 1992. The Self-Directed Fund is no longer available for additional contributions. Vesting: When a participant attains age 65, becomes disabled as defined by the Company's long term disability plan, or dies, the full value of the employer's matching contributions, allocated to the account, plus actual earnings thereon, becomes vested to the participant (or to the participant's beneficiary in the event of death) and is nonforfeitable. Prior to the occurrence of such an event, the value of the employer's matching contributions will vest to a participant based on their years of service, as indicated in the following table: Less than 1 year 0% 1 year 10% 2 years 40% 3 years 60% 4 years 80% 5 years 100% An employee's contributions, plus actual earnings thereon, are always 100% vested and nonforfeitable. Plan participants who cease to be employees are entitled to withdraw participant contributions, including allocated net realized and unrealized gains and losses. In addition, such former employees are entitled to their vested value of allocated Company contributions and earnings thereon, based on years of service. 9 PMA CAPITAL CORPORATION 401(k) PLAN NOTES TO FINANCIAL STATEMENTS, continued 1. Description of Plan, continued: Allocation of Investment Income and Realized Gains & Losses: Invested assets of the Plan are valued at the end of each business day, by adjusting the account of each member to reflect any appreciation or depreciation in the fair market value or income or losses of the funds. Member accounts are adjusted in proportion to the balance in each member's account as compared to the total account balances of all members' accounts. The allocation is also affected by the timing of transfers, loans, repayments and distributions. Member accounts in the self-directed fund are valued based on the gains or losses of the individual member's account. Withdrawals and Distributions: Withdrawals and distributions of vested account balances are made in the following manner upon retirement, termination, death or disability. Generally, the participant's vested account balance will be distributed in the form of a single lump sum cash payment. However, participants may elect to receive payment in the form of an annuity or to leave the money in the plan subject to Internal Revenue Service ("IRS") minimum distribution rules. To the extent amounts are invested in the Company's Common Stock Fund, a participant may elect to receive such amounts in Class A Common Stock or cash. Plan participants may elect to borrow up to the lesser of 50% of their available vested balance or $50,000 minus their highest outstanding loan balance during the prior twelve month period under the Plan. Participants may apply for two loans each plan year, however, no more than two loans may be outstanding at any one time. These interest-bearing loans are secured by the participant's account and are repaid through payroll deductions. The interest rate for all loans is the prime rate in effect on the first business day of the month of the loan application. The maximum loan amounts, repayment terms, and other restrictions are determined in accordance with the IRC. Disposition of Forfeiture: Forfeitures of Company contributions, resulting from the termination of participants with less than fully vested rights under the Plan, shall be applied to reduce future employer matching contributions. The amount applied to reduce future employer matching contributions for the year ended December 31, 1998, was approximately $372,000. Plan Termination: While the Company has not expressed any intent to discontinue the Plan, it may do so at any time. In the event of such discontinuance, Plan participants would receive their contributions, including allocated realized and unrealized gains and losses, and any other vested benefits. 10 PMA CAPITAL CORPORATION 401(k) PLAN NOTES TO FINANCIAL STATEMENTS, continued 2. Summary of Significant Accounting Policies: Basis of Accounting: The financial statements are prepared using the accrual method of accounting. Investments: Investments in the Vanguard Funds are represented by unit shares which are valued at the net asset value of the funds as reported by Vanguard Fiduciary Trust Company. Purchase and sales of securities are reflected on a trade-date basis. Gains and losses on the sale of securities are determined using the average cost of investments. Investments in the self-directed fund (principally equity securities) are carried at quoted market value. Interest and dividend income is recorded as earned on the accrual basis. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains (losses) and the unrealized appreciation (depreciation) on those investments. Participant Loans Receivable: Participant loans receivable are recorded at the original loan amount, plus accrued interest, less subsequent principal and interest repayments. Administrative Expenses: Certain administrative expenses incurred by the Plan are paid by the Company. Use of Estimates: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of investment income during the reporting period. Actual results could differ from those estimates. 11 PMA CAPITAL CORPORATION 401(k) PLAN NOTES TO FINANCIAL STATEMENTS, continued 2. Summary of Significant Accounting Policies, continued: Risks and Uncertainties: The Plan provides various investment options in funds that invest in stocks, bonds, fixed income instruments and other mutual funds. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of the investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits. 3. Investments: Investments at December 31, 1998 and 1997 are as follows:
1998 UNIT/ FAIR SHARE VALUE COST Vanguard Morgan Growth Fund 564,795 $11,137,756* $8,755,111 Vanguard 500 Index Fund 104,263 11,880,820* 7,594,381 Vanguard Treasury Money Market Fund 925,995 925,995 925,995 Vanguard STAR Fund 327,834 5,887,907* 5,294,355 Vanguard Windsor II Fund 285,238 8,514,357* 7,251,066 Vanguard International Growth Fund 120,084 2,253,970 1,965,710 Vanguard LifeStrategy Growth Fund 55,067 1,034,712 902,830 Vanguard Total Bond Market Index Fund 132,281 1,358,524 1,315,273 Vanguard LifeStrategy Moderate Growth Fund 42,597 718,184 617,636 Vanguard Retirement Savings Trust 15,651,967 15,651,967* 15,651,967 PMA Capital Corporation Stock Subscription Fund 835,954 835,954 835,954 Self - Directed Fund: Equity Securities 904,290 570,101 ----------- ----------- Total $61,104,436 $51,680,379 =========== ===========
12 PMA CAPITAL CORPORATION 401(k) PLAN NOTES TO FINANCIAL STATEMENTS, continued 3. Investments, continued:
1997 UNIT/ FAIR COST SHARES VALUE Vanguard Morgan Growth Fund 540,593 $9,481,997* $7,907,640 Vanguard 500 Index Fund 92,236 8,307,710* 5,787,559 Vanguard Treasury Money Market Fund 514,116 514,116 514,116 Vanguard STAR Fund 290,887 5,055,619* 4,482,943 Vanguard Windsor II Fund 236,445 6,767,053* 5,494,447 Vanguard International Growth Fund 126,251 2,069,249 2,013,376 Vanguard LifeStrategy Growth Fund 32,401 519,711 492,532 Vanguard Total Bond Market Index Fund 100,253 1,011,556 978,277 Vanguard LifeStrategy Moderate Growth Fund 25,881 383,301 346,755 Principal Life Insurance Company Investment Contract Account at contract value, which approximates fair value Vanguard PMC Investment Contract Fund 11,955,388 11,955,388* 11,955,388 Self - Directed Fund: Equity Securities 863,940 711,515 ----------- ----------- Total $51,543,337 $45,298,245 =========== ===========
* Indicates that investment is in excess of 5% of net assets available for the plan benefits as of December 31, 1998 and 1997 as applicable. 4. Tax Status: The IRS has determined and informed the Company by a letter dated December 13, 1995, that the Plan is qualified and the trust established under the Plan is tax-exempt, under the appropriate sections of the Code. The Plan has been amended since receiving the determination letter. However, the Plan Administrator and the Plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, they believe that the Plan was qualified and the related trust was tax-exempt as of the financial statement date. 13
Form 5500 Item 27(a) PMA CAPITAL CORPORATION 401(k) PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES as of December 31, 1998 Number of Shares/ Contract/ Face Amount Description of Investment Cost Fair Value Registered Investment Companies 564,795 Vanguard Morgan Growth Fund* $ 8,755,111 $11,137,756 ----------- ----------- 104,263 Vanguard 500 Index Fund* 7,594,381 11,880,820 ----------- ----------- 925,995 Vanguard Treasury Money Market Fund* 925,995 925,995 ----------- ----------- 327,834 Vanguard STAR Fund* 5,294,355 5,887,907 ----------- ----------- 285,238 Vanguard Windsor II Fund* 7,251,066 8,514,357 ----------- ----------- 120,084 Vanguard International Growth Fund* 1,965,710 2,253,970 ----------- ----------- 55,067 Vanguard LifeStrategy Growth Fund* 902,830 1,034,712 ----------- ----------- 132,281 Vanguard Total Bond Market Index Fund* 1,315,273 1,358,524 ----------- ----------- Vanguard LifeStrategy Moderate Growth 42,597 Fund* 617,636 718,184 ----------- ----------- Tax-Exempt Collective Trust 15,651,967 Vanguard Retirement Savings Trust* 15,651,967 15,651,967 ----------- ----------- Company Stock Fund 835,954 PMA Capital Corporation Stock Subscription 835,954 835,954 ----------- ----------- * Indicates a party-in-interest.
14
Form 5500 Item 27(a) PMA CAPITAL CORPORATION 401(k) PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES as of December 31, 1998, continued Number of Shares/ Face Amount Description of Investment Cost Fair Value Self-Directed Fund Equity Securities 400 Automatic Data Processing Inc 10,687 32,075 400 Caterpillar Inc 22,687 18,400 625 Clayton Homes Inc 7,815 8,633 625 Citigroup Inc 5,407 30,938 200 Conseco Inc 6,761 6,113 4,375 Dollar General Corp 95,554 103,359 500 Fortune Brands Inc 17,411 15,813 600 Intel Corp 30,295 71,138 693 MBNA Corp 7,877 17,282 200 Merck & Co Inc 11,167 29,538 300 Merrill Lynch & Co Inc 28,279 20,025 200 Mobil Corp 8,518 17,425 400 New York Times Co-Cl A 13,197 13,875 255 Putnam New Opportunities Fund-Cl B 12,091 14,247 106 Putnam Vista Fund Inc-Cl B 1,221 1,311 600 Raymond James Financial Inc 18,627 12,675 12 Raytheon Co-Cl A - 620 400 Reynolds & Reynolds Co-Cl A 6,612 9,175 900 Roper Industries Inc New 25,267 18,337 4,000 Safeway Inc 95,739 243,752 7,500 Seattle Filmworks Inc 41,438 34,688 1,100 Smith International Inc 30,908 27,707 3,000 Staples Inc 42,250 131,064 400 T Rowe Price Associates Inc 13,707 13,700 400 Travelers Property Casualty Corp 16,586 12,400 ------- ------- Total Equity Securities 570,101 904,290 ------- ------- 15 Form 5500 Item 27(a) THE PMA CAPITAL CORPORATION 401(k) PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES as of December 31, 1998, continued Number of Shares/ Face Amount Description of Investment Cost Fair Value Participant Loans 1,714,159 (interest rates ranging from 6.0 % to 11.8 %) -- 1,714,159 ----------- ----------- Total Investments $51,680,379 $62,818,595 =========== =========== 16
Form 5500 Item 27(d) PMA CAPITAL CORPORATION 401(k) PLAN SCHEDULE OF REPORTABLE TRANSACTIONS for the year ended December 31, 1998 Expense Selling/ Incurred Fair Value of Number of Purchase Maturity With Asset on Net Gain or Description of Assets Transactions Price Price Trans- Cost of Asset Transaction Date (Loss) action Individual Transactions None Series of Transactions PMC Investment Contract Fund 88 $ 1,762,342 -- -- $ 1,762,342 $ 1,762,342 -- PMC Investment Contract Fund 106 -- $ 2,258,917 -- $ 2,258,917 $ 2,258,917 -- Vanguard Retire. Savings Trust 33 $16,594,825 -- -- $16,594,825 $16,594,825 -- Vanguard Retire. Savings Trust 39 -- $ 942,858 -- $ 942,858 $ 942,858 -- Morgan Growth Fund 91 $ 2,470,962 -- -- $ 2,470,962 $ 2,470,962 -- Morgan Growth Fund 131 -- $ 1,973,865 -- $ 1,623,492 $ 1,973,865 $ 350,373 500 Index Fund 116 $ 2,890,297 -- -- $ 2,890,297 $ 2,890,297 -- 500 Index Fund 129 -- $ 1,657,815 -- $ 1,083,475 $ 1,657,815 $ 574,340 Windsor II Fund 120 $ 2,907,161 -- -- $ 2,907,161 $ 2,907,161 -- Windsor II Fund 114 -- $ 1,441,969 -- $ 1,150,542 $ 1,441,969 $ 291,427 STAR Fund 74 $ 1,763,284 -- -- $ 1,763,284 $ 1,763,284 -- STAR Fund 107 -- $ 1,094,886 -- $ 951,871 $ 1,094,886 $ 143,015
17 Exhibits Exhibits are listed in the Index to Exhibits appearing on page E-1. Signatures The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed on their behalf by the undersigned thereunto duly authorized. PMA Capital Corporation 401(k) Plan Date: June 25, 1999 By: /s/ Francis W. McDonnell ------------------------ Francis W. McDonnell, Senior Vice President, Chief Financial Officer and Treasurer of PMA Capital Corporation, and a Plan Trustee Index to Exhibits Method of Number Description Filing ------ ----------- ------ 23 Consent of Filed herewith Independent Accountants -E-1- EX-23 2 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-68855) of PMA Capital Corporation of our report dated June 15, 1999, relating to the combined financial statements, which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP New York, New York June 24, 1999 -E-2- -----END PRIVACY-ENHANCED MESSAGE-----