EXHIBIT 99.1
PMA CAPITAL [LOGO]
Mellon Bank Center Suite 2800
1735 Market Street
Philadelphia, PA 19103-7590
PRESS RELEASE
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For Release: Immediate
Contact: William Hitselberger
(215) 665-5070
PMA Capital Announces Reserve Charge and Suspension of Common Stock Dividend
Philadelphia, PA, November 4, 2003- Following a comprehensive review of its loss
reserves, PMA Capital (NASDAQ: PMACA) announced today that it will record a
pre-tax charge of approximately $150 million primarily to strengthen PMA Re's
loss reserves at September 30, 2003. As a result of this charge, the Company has
decided to suspend its common stock dividends at the current time. The Company
is exploring strategic alternatives and has announced that it has engaged Banc
of America Securities LLC to assist it in this activity.
During the third quarter, the Company's internal actuaries conducted their
periodic comprehensive reserve review, which included an extensive review of
carried reserves for accident years 1997-2000. The Company also had an
independent actuarial firm conduct an evaluation of PMA Re's traditional
property and casualty loss reserves, which supported the Company's conclusion.
PMA Re's reserve charge relates to higher than expected underwriting losses in
the reinsurance operations, primarily from casualty business written in accident
years 1997 through 2000. The Company also completed its review of the loss
reserves at The PMA Insurance Group, and determined that no reserve adjustments
were necessary. The statutory capital of The PMA Insurance Group will not be
affected by the charge.
As a result of this charge, the Company will evaluate the recoverability of its
deferred tax asset at September 30, 2003. The Company will also be evaluating
the effect of this action, including any ratings actions, on its ongoing
businesses, liquidity and capital resources. The Company is currently engaged in
discussions with the Pennsylvania Insurance Department regarding the operations
of its insurance subsidiaries.
As it has previously announced, the Company will release its earnings for the
third quarter of 2003 on Thursday, November 6, 2003, after the market closes. At
that time, a copy of the Company's earnings release and quarterly statistical
supplement will be available on the Company's website at www.pmacapital.com in
the Investor Information section (choose Current Investor Information) and then
click on News Releases to access the release; from Current Investor Information,
you can click on Financial Reports to access the quarterly statistical
supplement.
The Company will hold a conference call with investors beginning at 8:30 a.m.
Eastern Time on Friday, November 7th to review the third quarter 2003 results.
The conference call will be available via a live webcast over the Internet at
www.pmacapital.com. To access the webcast, enter the Investor Information
section (choose Current Investor Information), click on News Releases to find
this announcement and then click on the microphone next to this release. Please
note that by accessing the conference call via the Internet, you will be in a
listen-only mode.
The call-in numbers for the conference call are as follows:
Live Call Replay
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800-201-1151 (Domestic) 800-615-3210 (Domestic)
952-556-1576 (International) 703-326-3020 (International)
A replay of the conference call will be available over the Internet or by
dialing the call-in number for the replay and using the passcode 286830. The
replay will be available from approximately 11:30 a.m. Eastern Time on Friday,
November 7th until 11:59 p.m. Eastern Time on Friday, November 14th.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this press release, including those made by
individuals authorized to speak on behalf of PMA Capital Corporation ("we",
"our" or the "Company") that are not historical facts are forward-looking
statements and are based on estimates, assumptions and projections. Actual
results may differ materially from those projected in the forward-looking
statements.
These forward-looking statements are based on currently available financial,
competitive and economic data and the Company's current operating plans based on
assumptions regarding future events. The Company's actual results could differ
materially from those expected by the Company's management. The factors that
could cause actual results to vary materially, some of which are described with
the forward-looking statements, include, but are not limited to:
o the actual amount of the reserve charge related to PMA Re's loss
reserves;
o the amount by which the Company must write down its current deferred
tax asset;
o a downgrade in the current financial strength ratings of the Company's
insurance subsidiaries by A.M. Best would result in a material loss of
business as policyholders move to other companies with higher
financial strength ratings;
o the ability of the Company to continue to receive dividends from its
insurance subsidiaries in an amount sufficient to meet its debt
service obligations;
o the lowering or loss of one or more of the Company's debt ratings, and
the adverse impact that any such downgrade may have on our ability to
raise capital and our liquidity and financial condition;
o adequacy of reserves for claim liabilities;
o adverse property and casualty loss development for events that we
insured in prior years;
o adequacy and collectibility of reinsurance that we purchased;
o regulatory or tax changes, including changes in risk-based capital or
other regulatory standards that affect the cost of, or demand for, our
products or otherwise affect our ability to conduct business,
including the outcome of discussions with the Pennsylvania Insurance
Department;
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o competitive conditions that may affect the level of rate adequacy
related to the amount of risk undertaken and that may influence the
sustainability of adequate rate changes;
o ability to implement and maintain rate increases;
o the effect of changes in workers' compensation statutes and their
administration, which may affect the rates that we can charge and the
manner in which we administer claims;
o our ability to predict and effectively manage claims related to
insurance and reinsurance policies;
o the uncertain nature of damage theories and loss amounts and the
development of additional facts related to the attack on the World
Trade Center;
o uncertainty as to the price and availability of reinsurance on
business we intend to write in the future, including reinsurance for
terrorist acts;
o severity of natural disasters and other catastrophes, including the
impact of future acts of terrorism, in connection with insurance and
reinsurance policies;
o changes in general economic conditions, including the performance of
financial markets, interest rates and the level of unemployment;
o uncertainties related to possible terrorist activities or
international hostilities; and
o other factors disclosed from time to time in our most recent Forms
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.
Investors should not place undue reliance on any forward-looking statements.
Unless otherwise stated, the Company disclaims any current intention to update
forward-looking information and to release publicly the results of any future
revisions we may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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