PMA Capital Corporation
Statistical Supplement
First Quarter - 2004
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
Other Assets and Liabilities; Balance Sheet Impact of Commutations &
Novations - Run-off Operations 6
Segment Information:
Statements of Operations - Consolidating - First Quarter 7 - 8
Statements of Operations - PMA Insurance Group 9
Insurance Ratios - PMA Insurance Group 10
Statements of Operations - Run-off Operations 11
Statements of Operations - Corporate & Other 12
Operating Cash Flow Information:
Operating Cash Flows - Consolidated 13
Operating Cash Flows - PMA Insurance Group 14
Operating Cash Flows - Run-off Operations 15
Statutory Financial Information:
Statutory Surplus and Statutory Financial Information 16
Other Information:
Industry Ratings and Market Information 17
Legend:
NM - Not Meaningful
NA - Not Applicable
Note: Operating income (loss), which we define as net income (loss) under
GAAP 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 insurance businesses. Accordingly,
we report operating income by segment in the disclosures required under
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information." Our management and Board of Directors use operating income
(loss) as the measure of financial performance for our insurance operations
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
2003 2003 2003 2003 2004 Quarter
--------- --------- --------- --------- --------- -----
Net Premiums Written by Segment:
PMA Insurance Group $ 194,239 $ 119,440 $ 149,130 $ 140,784 $ 135,286 -30.4%
Run-off Operations 1 156,875 171,340 136,381 124,853 23,362 -85.1%
Corporate & Other (256) (124) (228) (180) (150) 41.4%
--------- --------- --------- --------- --------- -----
Net premiums written $ 350,858 $ 290,656 $ 285,283 $ 265,457 $ 158,498 -54.8%
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group $ 8,340 $ 6,838 $ 7,345 $ (982) $ 6,559 -21.4%
Run-off Operations 1 8,547 13,072 (113,701) 11,706 8,946 4.7%
Corporate & Other (4,643) (5,532) (6,228) (6,288) (5,312) -14.4%
--------- --------- --------- --------- --------- -----
Pre-tax operating income (loss) 12,244 14,378 (112,584) 4,436 10,193 -16.8%
Net realized investment gains 4,355 4,451 1,392 3,582 8,600 97.5%
--------- --------- --------- --------- --------- -----
Pre-tax income (loss) 16,599 18,829 (111,192) 8,018 18,793 13.2%
Income tax expense (benefit) 5,897 6,662 (14,786) 28,050 6,640 12.6%
--------- --------- --------- --------- --------- -----
Net income (loss) $ 10,702 $ 12,167 $ (96,406) $ (20,032) $ 12,153 13.6%
--------- --------- --------- --------- --------- -----
After-tax operating income (loss) $ 7,871 $ 9,274 $ (97,311) $ (22,360) $ 6,563 -16.6%
========= ========= ========= ========= ========= =====
Diluted Earnings (Loss) Per Share:
Net income (loss) $ 0.34 $ 0.39 $ (3.08) $ (0.64) $ 0.35 2.9%
Less the impact of:
Realized gains after tax 0.09 0.09 0.03 0.07 0.15 66.7%
--------- --------- --------- --------- --------- -----
After-tax operating income (loss) $ 0.25 $ 0.30 $ (3.11) $ (0.71) $ 0.20 -20.0%
========= ========= ========= ========= ========= =====
Capitalization:
Debt $ 131,250 $ 176,250 $ 186,250 $ 187,566 $ 187,566 42.9%
Shareholders' equity excluding
FAS 115 unrealized gain 555,198 565,081 465,943 432,284 445,273 -19.8%
--------- --------- --------- --------- --------- -----
Total capitalization excluding
FAS 115 unrealized gain 686,448 741,331 652,193 619,850 632,839 -7.8%
FAS 115 unrealized gain 33,170 52,666 37,830 31,383 40,818 23.1%
--------- --------- --------- --------- --------- -----
Total capitalization including
FAS 115 unrealized gain $ 719,618 $ 793,997 $ 690,023 $ 651,233 $ 673,657 -6.4%
========= ========= ========= ========= ========= =====
Book Value Per Share:
Excluding FAS 115 unrealized gain $ 17.72 $ 18.04 $ 14.87 $ 13.80 $ 14.21 -19.8%
Including FAS 115 unrealized gain $ 18.78 $ 19.72 $ 16.08 $ 14.80 $ 15.51 -17.4%
Debt to Total Capital:
Excluding FAS 115 unrealized gain 19.1% 23.8% 28.6% 30.2% 29.6% 55.0%
Including FAS 115 unrealized gain 18.2% 22.2% 27.0% 28.8% 27.8% 52.7%
Interest Coverage:
Income before interest and income taxes
to interest expense 10.44 9.46 NM NM 7.39 -29.2%
Operating income before interest and income taxes
to interest expense 7.96 7.46 NM NM 4.47 -43.8%
<FN>
1 In November 2003 we announced our decision to withdraw from the reinsurance
business previously served by our PMA Re operating segment. As a result of
this decision, the results of PMA Re are reported as Run-off Operations.
Run-off Operations also includes the results of our former excess and
surplus lines segment, Caliber One.
</FN>
1
PMA Capital Corporation
Consolidated Statements of Operations - Per Share Data
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004
---------- ---------- ---------- ---------- ----------
Diluted Earnings (Loss) Per Share:
Net income (loss) $ 0.34 $ 0.39 $ (3.08) $ (0.64) $ 0.35
========== ========== ========== ========== ==========
Pre-tax operating income (loss) $ 0.39 $ 0.46 $ (3.59) $ 0.14 $ 0.30
========== ========== ========== ========== ==========
After-tax operating income (loss) $ 0.25 $ 0.30 $ (3.11) $ (0.71) $ 0.20
========== ========== ========== ========== ==========
Diluted weighted average common
shares outstanding 31,328,922 31,331,197 31,328,965 31,333,881 36,644,561
========== ========== ========== ========== ==========
Dividends declared:
Class A Common stock $ 0.105 $ 0.105 $ 0.105 $ - $ -
Actual common shares issued
and outstanding 31,328,922 31,328,922 31,329,063 31,334,403 31,334,403
========== ========== ========== ========== ==========
Class A Common Stock prices:
High $ 15.00 $ 12.30 $ 12.85 $ 14.17 $ 6.66
Low $ 6.67 $ 6.44 $ 11.71 $ 3.97 $ 4.78
Close $ 6.77 $ 12.12 $ 12.53 $ 5.12 $ 6.07
2
PMA Capital Corporation
Consolidated Statements of Operations
(In Thousands)
1st 2nd 3rd 4th 1st % Change
Quarter Quarter Quarter Quarter Quarter 1st
2003 2003 2003 2003 2004 Quarter
Gross Premiums Written $ 419,694 $ 361,899 $ 352,380 $ 295,671 $ 157,860 -62.4%
========= ========= ======== ========= ======== ======
Net Premiums Written $ 350,858 $ 290,656 $ 285,283 $ 265,457 $ 158,498 -54.8%
========= ========= ======== ========= ======== ======
Revenues:
Net premiums earned $ 274,070 $ 285,622 $293,482 $ 344,991 $206,269 -24.7%
Net investment income 17,645 17,780 17,167 16,331 16,758 -5.0%
Net realized investment gains 4,355 4,451 1,392 3,582 8,600 97.5%
Other revenues 7,000 4,766 4,147 4,466 5,738 -18.0%
--------- --------- -------- --------- -------- -----
Total revenues 303,070 312,619 316,188 369,370 237,365 -21.7%
--------- --------- -------- --------- -------- -----
Expenses:
Losses and loss adjustment expenses 202,585 193,074 335,789 266,899 142,190 -29.8%
Acquisition expenses 56,220 72,215 63,221 64,790 47,235 -16.0%
Operating expenses 23,872 24,222 23,327 32,251 24,779 3.8%
Dividends to policyholders 2,036 2,054 2,090 (5,539) 1,429 -29.8%
Interest expense 1,758 2,225 2,953 2,951 2,939 67.2%
--------- --------- -------- --------- -------- -----
Total losses and expenses 286,471 293,790 427,380 361,352 218,572 -23.7%
--------- --------- -------- --------- -------- -----
Pre-tax income (loss) 16,599 18,829 (111,192) 8,018 18,793 13.2%
--------- --------- -------- --------- -------- -----
Income tax expense (benefit):
Current - 221 (221) - 325 NM
Deferred 5,897 6,441 (14,565) 28,050 6,315 7.1%
--------- --------- -------- --------- -------- -----
Total income tax expense (benefit) 5,897 6,662 (14,786) 28,050 6,640 12.6%
--------- --------- -------- --------- -------- -----
Net income (loss) $ 10,702 $ 12,167 $ (96,406) $ (20,032) $ 12,153 13.6%
========= ========= ======== ========= ======== ======
Pre-tax operating income (loss) $ 12,244 $ 14,378 $ (112,584) $ 4,436 $ 10,193 -16.8%
========= ========= ======== ========= ======== ======
After-tax operating income (loss) $ 7,871 $ 9,274 $ (97,311) $ (22,360) $ 6,563 -16.6%
========= ========= ======== ========= ======== ======
3
PMA Capital Corporation
Consolidated Balance Sheets
(In Thousands)
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004
Assets:
Investments in fixed maturities available for sale $ 1,641,593 $ 1,741,879 $ 1,807,977 $1,854,555 $ 1,825,076
Short-term investments 199,782 282,366 187,320 151,332 98,385
Short-term investments, loaned securities collateral 108,513 185,566 113,978 6,300 112,689
Cash 4,635 12,556 34,954 28,963 22,311
---------- ---------- ---------- ---------- ----------
Total investments and cash 1,954,523 2,222,367 2,144,229 2,041,150 2,058,461
Accrued investment income 22,426 19,357 23,764 20,870 22,820
Premiums receivable 457,528 394,065 379,041 364,125 316,771
Reinsurance receivables 1,314,103 1,307,506 1,252,928 1,220,320 1,145,314
Deferred income taxes 88,410 70,928 93,181 76,962 65,114
Deferred acquisition costs 103,275 108,740 105,089 83,975 71,631
Funds held by reinsureds 168,597 165,533 153,263 124,695 96,147
Other assets 222,595 249,110 255,292 255,861 231,600
---------- ---------- ---------- ---------- ----------
Total assets $4,331,457 $4,537,606 $4,406,787 $4,187,958 $4,007,858
========== ========== ========== ========== ==========
Liabilities:
Unpaid losses and loss adjustment expenses $2,448,147 $2,430,276 $2,486,776 $ 2,541,318 $2,438,509
Unearned premiums 484,789 499,960 490,461 403,708 332,391
Debt 131,250 176,250 186,250 187,566 187,566
Accounts payable, accrued expenses
and other liabilities 281,920 301,049 297,028 314,830 282,422
Funds held under reinsurance treaties 273,469 311,081 313,688 262,105 159,913
Dividends to policyholders 14,981 15,669 14,851 8,479 8,292
Payable under securities loan agreements 108,533 185,574 113,960 6,285 112,674
---------- ---------- ---------- ---------- ----------
Total liabilities 3,743,089 3,919,859 3,903,014 3,724,291 3,521,767
---------- ---------- ---------- ---------- ----------
Shareholders' Equity:
Class A Common stock 171,090 171,090 171,090 171,090 171,090
Additional paid-in capital 109,331 109,331 109,331 109,331 109,331
Retained earnings 326,425 335,304 235,607 216,115 228,268
Accumulated other comprehensive income 34,119 54,621 40,341 19,622 29,894
Notes receivable from officers (62) (64) (64) (65) (66)
Treasury stock, at cost (52,535) (52,535) (52,532) (52,426) (52,426)
---------- ---------- ---------- ---------- ----------
Total shareholders' equity 588,368 617,747 503,773 463,667 486,091
---------- ---------- ---------- ---------- ----------
Total liabilities and shareholders' equity $4,331,457 $4,537,606 $4,406,787 $4,187,958 $4,007,858
========== ========== ========== ========== ==========
4
PMA Capital Corporation
Invested Assets and Net Investment Income
(Dollars in Thousands)
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004
----------- ----------- ----------- ----------- -----------
Total Investments & Cash
As Reported $ 1,954,523 $ 2,222,367 $ 2,144,229 $ 2,041,150 $ 2,058,461
Less:
Securities Lending Activity 108,533 185,574 113,960 6,285 112,674
Unrealized Gain 51,031 81,025 58,200 48,282 62,797
----------- ----------- ----------- ----------- -----------
Total Adjusted Investments & Cash $ 1,794,959 $ 1,955,768 $ 1,972,069 $ 1,986,583 $ 1,882,990
=========== =========== =========== =========== ===========
Net Investment Income
As Reported $ 17,645 $ 17,780 $ 17,167 $ 16,331 $ 16,758
Funds Held:
Assumed 1,036 1,940 1,316 (296) (13)
Ceded (3,859) (3,567) (3,551) (3,427) (2,222)
----------- ----------- ----------- ----------- -----------
Total Funds Held (2,823) (1,627) (2,235) (3,723) (2,235)
----------- ----------- ----------- ----------- -----------
Total Adjusted Investment Income $ 20,468 $ 19,407 $ 19,402 $ 20,054 $ 18,993
=========== =========== =========== =========== ===========
Yield
As Reported 3.69% 3.41% 3.15% 3.12% 3.27%
Investment Portfolio 4.53% 4.14% 3.95% 4.05% 3.93%
Duration (in years) 3.8 3.8 3.9 3.9 3.7
PMA Capital Corporation
Debt
(Dollars in Thousands)
Amount
Outstanding Maturity
4.25% convertible debt $ 86,250 20221
Trust preferred debt 2 43,816 2033
8.50% senior notes 57,500 2018
---------
Total long-term debt $ 187,566
=========
1 Holders of the Convertible Debt, at their option, may require us to
repurchase all or a portion of their debentures on September 30, 2006,
2008, 2010, 2012 and 2017. This debt may be converted at any time, at the
holder's option, at a current price of $16.368 per share.
2 Weighted average interest rate on trust preferred debt is 5.25% as of March
31, 2004.
5
PMA Capital Corporation
Other Assets and Liabilities
(Dollars in Millions)
Other Assets 3/31/2004 Other Liabilities 3/31/2004
------------ -----------------
Deposit assets (FASB #113) $ 49.2 Deposit liabilities (FASB #113) $ 68.0
Investment in Cathedral 35.3 Premium surcharges 34.3
Receivables- self-insured & Escrow liabilities 31.3
large deductible clients 31.3 Pension liabilities 30.9
PP&E 29.6 Premium taxes and other assessments 21.8
Escrow 22.3 Accrued postretirement benefits 13.6
Prepaid pension asset 21.2 Accrued commissions 7.9
Prepaid reinsurance premiums 6.8 Ceded premiums payable 5.8
Other 35.9 Accounts payable and other liabilities 68.8
------- -------
Total: $ 231.6 Total: $ 282.4
======= =======
PMA Capital Corporation
Balance Sheet Impact of Commutations & Novations - Run-off Operations 1
(Dollars in Thousands)
1st Quarter 2004
Assets Assumed Ceded Total
------ ------- ----- -----
Reinsurance receivables $ - $ (58,926) $ (58,926)
Funds held by reinsureds (27,133) - (27,133)
Other assets - (22,170) (22,170)
Liabilities
Unpaid loss and loss adjustment expenses $ (95,704) $ - $ (95,704)
Unearned premiums (28,190) - (28,190)
Funds held under reinsurance treaties (2,182) (70,438) (72,620)
<FN>
1 In November 2003 we announced our decision to withdraw from the reinsurance
business previously served by our PMA Re operating segment. As a result of
this decision, the results of PMA Re are reported as Run-off Operations.
Run-off Operations also includes the results of our former excess and
surplus lines segment, Caliber One.
</FN>
6
PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended March 31, 2004
(In Thousands)
PMA
Insurance Corporate Run-off
Group & Other1 Operations2 Consolidated
Gross Premiums Written $ 146,486 $ (150) $ 11,524 $ 157,860
========= ====== ======== =========
Net Premiums Written $ 135,286 $ (150) $ 23,362 $ 158,498
========= ====== ======== =========
Revenues:
Net premiums earned $ 131,650 $ (150) $ 74,769 $206,269
Net investment income 8,028 344 8,386 16,758
Other revenues 5,735 3 - 5,738
--------- ------ -------- ---------
Operating revenues 145,413 197 83,155 228,765
--------- ------ -------- ---------
Losses and Expenses:
Losses and loss adjustment expenses 98,831 - 43,359 142,190
Acquisition expenses 23,032 - 24,203 47,235
Operating expenses 15,562 2,570 6,647 24,779
Dividends to policyholders 1,429 - - 1,429
--------- ------ -------- ---------
Total losses and expenses 138,854 2,570 74,209 215,633
--------- ------ -------- ---------
Operating income (loss) before income taxes
and interest expense 6,559 (2,373) 8,946 13,132
Interest expense - 2,939 - 2,939
--------- ------ -------- ---------
Pre-tax operating income (loss) $ 6,559 $ (5,312) $ 8,946 10,193
========= ====== ========
Net realized investment gains 8,600
--------
Pre-tax income $ 18,793
========
<FN>
1 Corporate & Other includes the effect of eliminating transactions
between the various Insurance Operations.
2 In November 2003 we announced our decision to withdraw from the
reinsurance business previously served by our PMA Re operating
segment. As a result of this decision, the results of PMA Re are
reported as Run-off Operations. Run-off Operations also includes the
results of our former excess and surplus lines segment, Caliber One.
</FN>
7
PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended March 31, 2003
(In Thousands)
PMA
Insurance Corporate Run-off
Group & Other1 Operations2 Consolidated
Gross Premiums Written $ 213,721 $ (256) $ 206,229 $ 419,694
========= ====== ========= =========
Net Premiums Written $ 194,239 $ (256) $ 156,875 $ 350,858
========= ====== ========= =========
Revenues:
Net premiums earned $ 116,241 $ (256) $ 158,085 $ 274,070
Net investment income 8,271 613 8,761 17,645
Other revenues 4,431 69 2,500 7,000
--------- ------ --------- ---------
Operating revenues 128,943 426 169,346 298,715
--------- ------ --------- ---------
Losses and Expenses:
Losses and loss adjustment expenses 84,035 - 118,550 202,585
Acquisition expenses 19,582 - 36,638 56,220
Operating expenses 14,950 3,311 5,611 23,872
Dividends to policyholders 2,036 - - 2,036
--------- ------ --------- ---------
Total losses and expenses 120,603 3,311 160,799 284,713
--------- ------ --------- ---------
Operating income (loss) before income taxes
and interest expense 8,340 (2,885) 8,547 14,002
Interest expense - 1,758 - 1,758
--------- ------ --------- ---------
Pre-tax operating income (loss) $ 8,340 $ (4,643) $ 8,547 12,244
========= ====== =========
Net realized investment gains 4,355
--------
Pre-tax income $ 16,599
========
<FN>
1 Corporate & Other includes the effect of eliminating transactions
between the various Insurance Operations.
2 In November 2003 we announced our decision to withdraw from the
reinsurance business previously served by our PMA Re operating
segment. As a result of this decision, the results of PMA Re are
reported as Run-off Operations. Run-off Operations also includes the
results of our former excess and surplus lines segment, Caliber One.
</FN>
8
PMA Capital Corporation
Statements of Operations - PMA Insurance Group
(Dollar Amounts in Thousands)
1st 2nd 3rd 4th 1st Six % Change
Quarter Quarter Quarter Quarter Quarter Months 1st
2003 2003 2003 2003 2004 2004 Quarter
--------- --------- --------- --------- --------- --------- ------
Gross Premiums Written $ 213,721 $ 133,968 1 $ 169,258 $ 161,487 $ 146,486 $ 146,486 -31.5%
========= ========= ========= ========= ========= ========= ======
Net Premiums Written $ 194,239 $ 119,440 $ 149,130 $ 140,784 $ 135,286 $ 135,286 -30.4%
========= ========= ========= ========= ========= ========= ======
Revenues:
Net premiums earned $ 116,241 $ 134,350 $ 141,967 $177,474 $ 131,650 $ 131,650 13.3%
Net investment income 8,271 8,203 8,134 8,299 8,028 8,028 -2.9%
Other revenues 4,431 4,577 4,078 4,407 5,735 5,735 29.4%
--------- --------- --------- --------- --------- --------- ------
Total revenues 128,943 147,130 154,179 190,180 145,413 145,413 12.8%
--------- --------- --------- --------- --------- --------- ------
Losses and Expenses:
Losses and loss adjustment expenses 84,035 99,201 105,197 154,069 98,831 98,831 17.6%
Acquisition expenses 19,582 22,824 23,815 24,354 23,032 23,032 17.6%
Operating expenses 14,950 16,213 15,732 18,278 15,562 15,562 4.1%
Dividends to policyholders 2,036 2,054 2,090 (5,539) 1,429 1,429 -29.8%
--------- --------- --------- --------- --------- --------- ------
Total losses and expenses 120,603 140,292 146,834 191,162 138,854 138,854 15.1%
--------- --------- --------- --------- --------- --------- ------
Pre-tax operating income (loss) $ 8,340 $ 6,838 $ 7,345 $ (982) $ 6,559 $ 6,559 -21.4%
========= ========= ========= ========= ========= ========= ======
PMA Capital Corporation
Insurance Ratios - PMA Insurance Group
1st 2nd 3rd 4th 1st Six Point Chg.
Quarter Quarter Quarter Quarter Quarter Months 1st Quarter
2003 2003 2003 2003 2004 2004 Better (Worse)
--------- --------- --------- --------- --------- --------- ------
Ratios - GAAP Basis:
Loss and LAE ratio 72.3% 73.8% 74.1% 86.8% 75.1% 75.1% (2.8)
--------- --------- --------- --------- --------- --------- ------
Expense ratio:
Acquisition expenses 16.8% 17.0% 16.8% 13.7% 17.5% 17.5% (0.7)
Operating expenses 1 10.4% 9.6% 8.9% 8.2% 9.2% 9.2% 1.2
--------- --------- --------- --------- --------- --------- ------
Total expense ratio 27.2% 26.6% 25.7% 21.9% 26.7% 26.7% 0.5
--------- --------- --------- --------- --------- --------- ------
Policyholders' dividend ratio 1.8% 1.5% 1.5% -3.1% 1.1% 1.1% 0.7
--------- --------- --------- --------- --------- --------- ------
Combined ratio 101.3% 101.9% 101.3% 105.6% 102.9% 102.9% (1.6)
========= ========= ========= ========= ========= ========= ======
Net investment income ratio -7.1% -6.1% -5.7% -4.7% -6.1% -6.1% (1.0)
--------- --------- --------- --------- --------- --------- ------
Operating ratio 94.2% 95.8% 95.6% 100.9% 96.8% 96.8% (2.6)
========= ========= ========= ========= ========= ========= ======
<FN>
1 The operating expense ratio equals insurance-related operating expenses
divided by net premiums earned. Insurance-related operating expenses were
$12.1 million, $12.9 million, $12.7 million, $14.5 million and $12.1
million for the first, second, third and fourth quarters of 2003 and the
first quarter of 2004, respectively.
</FN>
10
PMA Capital Corporation
Statements of Operations - Run-off Operations1
(Dollar Amounts in Thousands)
1st 2nd 3rd 4th 1st Six % Change
Quarter Quarter Quarter Quarter Quarter Months 1st
2003 2003 2003 2003 2004 2004 Quarter
Gross Premiums Written $ 206,229 $ 228,055 $ 183,350 $ 134,364 $ 11,524 $ 11,524 -94.4%
========= ========= ========= ========= ======== ======== =======
Net Premiums Written $ 156,875 $ 171,340 $ 136,381 $ 124,853 $ 23,362 $ 23,362 -85.1%
========= ========= ========= ========= ======== ======== =======
Revenues:
Net premiums earned $ 158,085 $ 151,396 $ 151,743 $ 167,697 $ 74,769 $ 74,769 -52.7%
Net investment income 8,761 9,107 8,510 7,984 8,386 8,354 -4.3%
Other revenues 2,500 - - - - - -100.0%
--------- --------- --------- --------- -------- -------- -------
Total revenues 169,346 160,503 160,253 175,681 83,155 83,123 -50.9%
--------- --------- --------- --------- -------- -------- -------
\
Losses and Expenses:
Losses and loss adjustment expenses 118,550 93,873 230,592 112,830 43,359 43,359 -63.4%
Acquisition expenses 36,638 49,391 39,406 40,436 24,203 24,203 -33.9%
Operating expenses 5,611 4,167 3,956 10,709 6,647 6,647 18.5%
--------- --------- --------- --------- -------- -------- -------
Total losses and expenses 160,799 147,431 273,954 163,975 74,209 74,209 -53.8%
--------- --------- --------- --------- -------- -------- -------
Pre-tax operating income (loss) $ 8,547 $ 13,072 $ (113,701) $ 11,706 $ 8,946 $ 8,914 4.7%
========= ========= ========= ========= ======== ======== =======
<FN>
1 In November 2003 we announced our decision to withdraw from the
reinsurance business previously served by our PMA Re operating
segment. As a result of this decision, the results of PMA Re are
reported as Run-off Operations. Run-off Operations also includes the
results of our former excess and surplus lines segment, Caliber One.
</FN>
11
PMA Capital Corporation
Statements of Operations - Corporate & Other
(Dollar Amounts in Thousands)
1st 2nd 3rd 4th 1st Six % Change
Quarter Quarter Quarter Quarter Quarter Months 1st
2003 2003 2003 2003 2004 2004 Quarter
-------- -------- -------- -------- -------- -------- -----
Gross Premiums Written $ (256) $ (124) $ (228) $ (180) $ (150) $ (150) 41.4%
======== ======== ======== ======== ======== ======== =====
Net Premiums Written $ (256) $ (124) $ (228) $ (180) $ (150) $ (150) 41.4%
======== ======== ======== ======== ======== ======== =====
Revenues:
Net premiums earned $ (256) $ (124) $ (228) $ (180) $ (150) $ (150) 41.4%
Net investment income 613 470 523 48 344 376 -43.9%
Other revenues 69 189 69 59 3 3 -95.7%
-------- -------- -------- -------- -------- -------- -----
Total revenues 426 535 364 (73) 197 229 -53.8%
-------- -------- -------- -------- -------- -------- -----
Losses and Expenses:
Operating expenses 3,311 3,842 3,639 3,264 2,570 2,570 -22.4%
-------- -------- -------- -------- -------- -------- -----
Total losses and expenses 3,311 3,842 3,639 3,264 2,570 2,570 -22.4%
-------- -------- -------- -------- -------- -------- -----
Operating loss before income taxes
and interest expense (2,885) (3,307) (3,275) (3,337) (2,373) (2,341) 17.7%
Interest expense 1,758 2,225 2,953 2,951 2,939 2,939 67.2%
-------- -------- -------- -------- -------- -------- -----
Pre-tax operating loss $ (4,643) $ (5,532) $ (6,228) $ (6,288) $ (5,312) $ (5,280) -14.4%
======== ======== ======== ======== ======== ======== =====
12
PMA Capital Corporation
Operating Cash Flows - Consolidated
(In Thousands)
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004
--------- --------- -------- -------- ----------
Receipts:
Premiums and other revenues collected $ 274,221 $ 393,639 $ 319,594 $ 243,436 $ 186,561
Investment income received 20,108 27,434 20,079 27,690 22,141
--------- --------- -------- -------- ----------
Total receipts 294,329 421,073 339,673 271,126 208,702
--------- --------- -------- -------- ----------
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year 6,787 35,305 83,436 60,322 6,491
Losses and LAE paid - prior years 210,892 183,345 139,352 124,280 217,746
--------- --------- -------- -------- ----------
Total losses and LAE paid 217,679 218,650 222,788 184,602 224,237
Insurance operating expenses paid 78,957 100,177 64,223 68,280 73,845
Policyholders' dividends paid 1,627 1,439 2,880 773 1,573
Interest on corporate debt 2,484 502 3,582 1,798 3,686
--------- --------- -------- -------- ----------
Total disbursements 300,747 320,768 293,473 255,453 303,341
--------- --------- -------- -------- ----------
Net other (4,358) 3,373 (6,092) 947 (7,511)
--------- --------- -------- -------- ----------
Net operating cash flows $ (10,776) $ 103,678 $ 40,108 $ 16,620 $ (102,150)
========= ========= ======== ======== ==========
13
PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group
(In Thousands)
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004
Receipts:
Premiums and other revenues collected $ 120,589 $ 138,915 $ 150,684 $ 147,111 $ 128,216
Investment income received 9,340 9,772 9,523 9,433 10,246
--------- --------- --------- --------- ---------
Total receipts 129,929 148,687 160,207 156,544 138,462
--------- --------- --------- --------- ---------
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year 5,226 24,316 37,387 35,923 6,157
Losses and LAE paid - prior years 83,269 60,049 57,474 56,739 75,447
--------- --------- --------- --------- ---------
Losses and LAE 88,495 84,365 94,861 92,662 81,604
Insurance operating expenses paid 37,212 37,214 22,578 35,721 52,645
Policyholders' dividends paid 1,627 1,439 2,880 773 1,573
--------- --------- --------- --------- ---------
Total disbursements 127,334 123,018 120,319 129,156 135,822
--------- --------- --------- --------- ---------
Net other (5,052) (1,795) (8,839) (7,150) (8,306)
--------- --------- --------- --------- ---------
Net operating cash flows $ (2,457) $ 23,874 $ 31,049 $ 20,238 $ (5,666)
========= ========= ========= ========= =========
14
PMA Capital Corporation
Operating Cash Flows - Run-off Operations1
(In Thousands)
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004
Receipts:
Premiums collected $ 153,632 $ 254,724 $ 168,910 $ 96,325 $ 58,345
Investment income received 10,768 17,662 10,556 18,257 11,895
--------- --------- --------- -------- --------
Total receipts 164,400 272,386 179,466 114,582 70,240
--------- --------- --------- -------- --------
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year 1,561 10,989 46,049 24,399 334
Losses and LAE paid - prior years 127,623 123,296 81,878 67,541 142,299
--------- --------- --------- -------- --------
Total losses and LAE paid 129,184 134,285 127,927 91,940 142,633
Insurance operating expenses paid 41,745 62,963 41,645 32,559 21,200
--------- --------- --------- -------- --------
Total disbursements 170,929 197,248 169,572 124,499 163,833
--------- --------- --------- -------- --------
Net other 734 8,552 (778) 12,494 1,860
--------- --------- --------- -------- --------
Net operating cash flows $ (5,795) $ 83,690 $ 9,116 $ 2,577 $ (91,733)
========= ========= ========= ======== ========
<FN>
1 In November 2003 we announced our decision to withdraw from the reinsurance
business previously served by our PMA Re operating segment. As a result of
this decision, the results of PMA Re are reported as Run-off Operations.
Run-off Operations also includes the results of our former excess and
surplus lines segment, Caliber One.
</FN>
15
PMA Capital Corporation
Statutory Surplus
(In Thousands)
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004 1
PMA Pool 2 $ 302,646 $ 304,109 $ 301,684 $ 296,777 $ 296,785
PMA Capital Insurance Company 3 554,611 581,821 477,391 500,617 517,143
Eliminations 4 (302,646) (304,109) (301,684) (296,777) (296,785)
--------- --------- --------- --------- ---------
Total $ 554,611 $ 581,821 $ 477,391 $ 500,617 $ 517,143
========= ========= ========= ========= =========
PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(In Thousands)
1st 2nd 3rd 4th 1st
Quarter Quarter Quarter Quarter Quarter
2003 2003 2003 2003 2004 1
Net Premiums Written:
Workers Compensation & Integrated
Disability $ 147,425 $ 91,269 $ 116,397 $ 77,362 $ 106,190
Other Commercial Lines 28,255 25,914 17,424 14,386 11,915
--------- --------- --------- -------- ---------
Total - PMA Pool $ 175,680 $ 117,183 $ 133,821 $ 91,748 $ 118,105
========= ========= ========= ======== =========
Statutory Ratios:
Loss and LAE ratio 73.3% 73.6% 74.4% 87.2% 74.9%
Underwriting expense ratio 21.5% 28.5% 24.9% 34.6% 27.1%
Policyholders' dividend ratio 1.6% 1.6% 1.7% -3.4% 1.2%
--------- --------- --------- -------- ---------
Combined ratio 96.4% 103.7% 101.0% 118.4% 103.2%
========= ========= ========= ======== =========
Operating ratio 83.0% 97.9% 94.9% 113.9% 96.5%
========= ========= ========= ======== =========
<FN>
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 Surplus for PMA Pool is
eliminated as it is included in the statutory surplus of PMA Capital
Insurance Company.
4 Surplus for PMA Pool is eliminated as it is included in the statutory
surplus of PMA Capital Insurance Company.
</FN>
16
PMA Capital Corporation
Industry Ratings and Market Information
Transfer Agent and Registrar: Securities Listing:
Certificate Transfers and Conversions: The Corporation's Class A Common Stock is listed
The Bank of New York on the NASDAQ Stock Market. It trades under
Receive and Deliver Department - 11 W the stock symbol: PMACA.
P.O. Box 11002
Church Street Station Inquiries:
New York, NY 10286 William E. Hitselberger
Chief Financial Officer
Written Inquiries: 215.665.5070
The Bank of New York e-mail: bhitselberger@pmacapital.com
Shareholder Relations Department - 11 E
P.O. Box 11258 Investor Relations
Church Street Station 215.665.5046
New York, NY 10286 investorrelations@pmacapital.com
Phone Inquiries: Company Website:
800.524.4458 http://www.pmacapital.com
Email Inquiries:
shareowner-svcs@bankofny.com
Financial Strength Ratings (as of 4/28/2004):
A.M. Best Moody's
PMA Pool 1 B++ (5th of 16) Ba1 (11th of 21)
PMA Capital Insurance Company 2 B++ (5th of 16) B1 (14th of 21)
<FN>
1 The PMA Pool is comprised of Pennsylvania Manufacturers' Association
Insurance Company, Manufacturers Alliance Insurance Company and
Pennsylvania Manufacturers Indemnity Company.
2 In November 2003, we announced our decision to withdraw from the
reinsurance business previously served by PMA Capital Insurance Company.
The reinsurance business is currently in run-off.
</FN>
17