- ---------------------------------------------------------------------------------------------------------------------------
PMA Capital Corporation
Statistical Supplement
Third Quarter - 2004
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Table of Contents
-----------------
Page
Consolidated Highlights:
Selected Financial Data - Third Quarter 1
Selected Financial Data - Year-to-date 2
Consolidated Statements of Operations - Per Share Data 3
Consolidated Statements of Operations - Third Quarter 5
Consolidated Statements of Operations - Year-to-date 6
Consolidated Balance Sheets 7
Invested Assets and Net Investment Income; Debt 8
Other Assets and Liabilities; Balance Sheet Impact of Commutations & Novations - Run-off Operations 9
Segment Information:
Statements of Operations - Consolidating - Year-to-date 11 - 12
Statements of Operations - Consolidating - Third Quarter 13 - 14
Statements of Operations - PMA Insurance Group 15
Insurance Ratios - PMA Insurance Group 16
Statements of Operations - Run-off Operations 17
Statements of Operations - Corporate & Other 18
Operating Cash Flow Information:
Operating Cash Flows - Consolidated 19
Operating Cash Flows - PMA Insurance Group 20
Operating Cash Flows - Run-off Operations 21
Statutory Financial Information:
Statutory Surplus; Statutory Financial Information - PMA Pool 22
Other Information:
Industry Ratings and Market Information 23
Legend:
NM - Not Meaningful
NA - Not Applicable
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. Accordingly, we report operating income (loss) 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
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 pages 1 and 2 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)
---------- ----------
3rd 4th 1st 2nd 3rd % Change
Quarter Quarter Quarter Quarter Quarter 3rd
2003 2003 2004 2004 2004 Quarter
------------------------------------------------------------------------
Net Premiums Written by Segment:
PMA Insurance Group $ 149,130 $ 140,784 $ 135,286 $ 81,962 $ 97,637 -34.5%
Run-off Operations 1 136,381 124,853 23,362 (78,864) (13,884) NM
Corporate & Other (228) (180) (150) (225) (186) 18.4%
---------- ---------- ---------- ----------- ---------- -----------
Net premiums written $ 285,283 $ 265,457 $ 158,498 $ 2,873 $ 83,567 -70.7%
========== ========== ========== =========== ========== ===========
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group $ 7,345 $ (982) $ 6,559 $ 2,809 $ 3,537 -51.8%
Run-off Operations 1 (113,701) 11,706 8,946 624 (2,115) 98.1%
Corporate & Other (6,228) (6,288) (5,312) (5,506) (4,982) 20.0%
---------- ---------- ---------- ----------- ---------- -----------
Pre-tax operating income (loss) (112,584) 4,436 10,193 (2,073) (3,560) 96.8%
Net realized investment gains 1,392 3,582 8,600 2,248 3,515 152.5%
---------- ---------- ---------- ----------- ---------- -----------
Pre-tax income (loss) (111,192) 8,018 18,793 175 (45) 100.0%
Income tax expense (benefit) (14,786) 28,050 6,640 111 29 NM
---------- ---------- ---------- ----------- ---------- -----------
Net income (loss) $ (96,406) $ (20,032) $ 12,153 $ 64 $ (74) 99.9%
========== ========== ========== =========== ========== -----------
After-tax operating income (loss) $ (97,311) $ (22,360) $ 6,563 $ (1,397) $ (2,359) 97.6%
========== ========== ========== =========== ========== ===========
Diluted Earnings (Loss) Per Share:
Net income (loss) $ (3.08) $ (0.64) $ 0.35 $ - $ - 100.0%
Less the impact of:
Realized gains after tax 0.03 0.07 0.15 0.04 0.08 166.7%
---------- ---------- ---------- ----------- ---------- -----------
After-tax operating income (loss) $ (3.11) $ (0.71) $ 0.20 $ (0.04) $ (0.08) 97.4%
========== ========== ========== =========== ========== ===========
Capitalization:
Debt $ 186,250 $ 187,566 $ 187,566 $ 187,566 $ 187,566 0.7%
Shareholders' equity excluding FAS 115
unrealized gain 465,943 432,284 445,273 443,634 442,797 -5.0%
---------- ---------- ---------- ----------- ---------- -----------
Total capitalization excluding FAS 115
unrealized gain 652,193 619,850 632,839 631,200 630,363 -3.3%
FAS 115 unrealized gain 37,830 31,383 40,818 29 15,350 -59.4%
---------- ---------- ---------- ----------- ---------- -----------
Total capitalization including FAS 115
unrealized gain $ 690,023 $ 651,233 $ 673,657 $ 631,229 $ 645,713 -6.4%
========== ========== ========== =========== ========== ===========
Book Value Per Share:
Excluding FAS 115 unrealized gain $ 14.87 $ 13.80 $ 14.21 $ 14.00 $ 13.98 -6.0%
Including FAS 115 unrealized gain $ 16.08 $ 14.80 $ 15.51 $ 14.00 $ 14.46 -10.1%
Debt to Total Capital:
Excluding FAS 115 unrealized gain 28.6% 30.2% 29.6% 29.7% 29.8% 4.2%
Including FAS 115 unrealized gain 27.0% 28.8% 27.8% 29.7% 29.0% 7.4%
Interest Coverage:
Income before interest and income taxes
to interest expense NM NM 7.39 1.06 0.98 NM
Operating income before interest and income taxes
to interest expense NM NM 4.47 0.30 NM NM
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.
1
PMA Capital Corporation
Selected Financial Data
(Dollar Amounts in Thousands, Except Per Share Data)
Nine Nine % Change
Months Months Nine
2004 2003 Months
----------------------------------------------
Net Premiums Written by Segment:
PMA Insurance Group $ 314,885 $ 462,809 -32.0%
Run-off Operations 1 (69,386) 464,596 NM
Corporate & Other (561) (608) 7.7%
------------- -------------- --------------
Net premiums written $ 244,938 $ 926,797 -73.6%
============= ============== ==============
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group $ 12,905 $ 22,523 -42.7%
Run-off Operations 1 7,455 (92,082) NM
Corporate & Other (15,800) (16,403) 3.7%
------------- -------------- --------------
Pre-tax operating income (loss) 4,560 (85,962) NM
Net realized investment gains 14,363 10,198 40.8%
------------- -------------- --------------
Pre-tax income (loss) 18,923 (75,764) NM
Income tax expense (benefit) 6,780 (2,227) NM
------------- -------------- --------------
Net income (loss) $ 12,143 $ (73,537) NM
============= ============== ==============
After-tax operating income (loss) $ 2,807 $ (80,166) NM
============= ============== ==============
Diluted Earnings (Loss) Per Share:
Net income (loss) $ 0.38 $ (2.35) NM
Less the impact of:
Realized gains after tax 0.26 0.21 23.8%
------------- -------------- --------------
After-tax operating income (loss) $ 0.12 $ (2.56) NM
============= ============== ==============
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.
2
PMA Capital Corporation
Consolidated Statements of Operations - Per Share Data
3rd 4th 1st 2nd 3rd Nine Nine
Quarter Quarter Quarter Quarter Quarter Months Months
2003 2003 2004 2004 2004 2004 2003
----------------------------------------------------------------------------------------------
Diluted Earnings (Loss) Per Share:
Net income (loss) $ (3.08) $ (0.64) $ 0.35 $ - $ - $ 0.38 $ (2.35)
=========== =========== =========== =========== =========== =========== ===========
Pre-tax operating income (loss) $ (3.59) $ 0.14 $ 0.30 $ (0.07) $ (0.11) $ 0.20 $ (2.74)
=========== =========== =========== =========== =========== =========== ===========
After-tax operating income (loss) $ (3.11) $ (0.71) $ 0.20 $ (0.04) $ (0.08) $ 0.12 $ (2.56)
=========== =========== =========== =========== =========== =========== ===========
Diluted weighted average common
shares outstanding 31,328,965 31,333,881 36,644,561 31,741,827 31,350,825 36,903,965 31,328,936
=========== =========== =========== =========== =========== =========== ===========
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends declared:
Class A Common stock $ 0.105 $ - $ - $ - $ - $ - $ 0.315
Actual common shares issued
and outstanding 31,329,063 31,334,403 31,334,403 31,692,351 31,681,751 31,681,751 31,329,063
=========== =========== =========== =========== =========== =========== ===========
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Common Stock prices:
High $ 12.85 $ 14.17 $ 6.66 $ 9.00 $ 8.95 $ 9.00 $ 15.00
Low $ 11.71 $ 3.97 $ 4.78 $ 6.26 $ 5.98 $ 4.78 $ 6.44
Close $ 12.53 $ 5.12 $ 6.07 $ 9.00 $ 7.55 $ 7.55 $ 12.53
3
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PMA Capital Corporation
Consolidated Statements of Operations
(In Thousands)
3rd 4th 1st 2nd 3rd % Change
Quarter Quarter Quarter Quarter Quarter 3rd
2003 2003 2004 2004 2004 Quarter
--------------------------------------------------------------------------
Gross Premiums Written $ 352,380 $ 295,671 $ 157,860 $ 24,449 $ 100,013 -71.6%
========== =========== ========== ========== =========== ==========
Net Premiums Written $ 285,283 $ 265,457 $ 158,498 $ 2,873 $ 83,567 -70.7%
========== =========== ========== ========== =========== ==========
Revenues:
Net premiums earned $293,482 $ 344,991 $206,269 $ 118,348 $ 104,210 -64.5%
Net investment income 17,167 16,331 16,758 14,807 13,238 -22.9%
Net realized investment gains 1,392 3,582 8,600 2,248 3,515 152.5%
Other revenues 4,147 4,466 5,738 4,680 4,505 8.6%
---------- ----------- ---------- ---------- ----------- ----------
Total revenues 316,188 369,370 237,365 140,083 125,468 -60.3%
---------- ----------- ---------- ---------- ----------- ----------
Expenses:
Losses and loss adjustment expenses 335,789 266,899 142,190 87,471 80,706 -76.0%
Acquisition expenses 63,221 64,790 47,235 24,968 24,087 -61.9%
Operating expenses 23,327 32,251 24,779 23,563 16,942 -27.4%
Dividends to policyholders 2,090 (5,539) 1,429 946 805 -61.5%
Interest expense 2,953 2,951 2,939 2,960 2,973 0.7%
---------- ----------- ---------- ---------- ----------- ----------
Total losses and expenses 427,380 361,352 218,572 139,908 125,513 -70.6%
---------- ----------- ---------- ---------- ----------- ----------
Pre-tax income (loss) (111,192) 8,018 18,793 175 (45) 100.0%
---------- ----------- ---------- ---------- ----------- ----------
Income tax expense (benefit):
Current (221) - 325 64 (117) 47.1%
Deferred (14,565) 28,050 6,315 47 146 NM
---------- ----------- ---------- ---------- ----------- ----------
Total income tax expense (benefit) (14,786) 28,050 6,640 111 29 NM
---------- ----------- ---------- ---------- ----------- ----------
Net income (loss) $(96,406) $(20,032) $ 12,153 $ 64 $ (74) 99.9%
========== =========== ========== ========== =========== ==========
Pre-tax operating income (loss) $(112,584) $ 4,436 $ 10,193 $ (2,073) $ (3,560) 96.8%
========== =========== ========== ========== =========== ==========
After-tax operating income (loss) $ (97,311) $(22,360) $ 6,563 $ (1,397) $ (2,359) 97.6%
========== =========== ========== ========== =========== ==========
5
PMA Capital Corporation
Consolidated Statements of Operations
(In Thousands)
Nine Nine % Change
Months Months Nine
2004 2003 Months
---------------------------------------------
Gross Premiums Written $ 282,322 $ 1,133,973 -75.1%
============= ============= ============
Net Premiums Written $ 244,938 $ 926,797 -73.6%
============= ============= ============
Revenues:
Net premiums earned $ 428,827 $ 853,174 -49.7%
Net investment income 44,803 52,592 -14.8%
Net realized investment gains 14,363 10,198 40.8%
Other revenues 14,923 15,913 -6.2%
------------- ------------- ------------
Total revenues 502,916 931,877 -46.0%
------------- ------------- ------------
Expenses:
Losses and loss adjustment expenses 310,367 731,448 -57.6%
Acquisition expenses 96,290 191,656 -49.8%
Operating expenses 65,284 71,421 -8.6%
Dividends to policyholders 3,180 6,180 -48.5%
Interest expense 8,872 6,936 27.9%
------------- ------------- ------------
Total losses and expenses 483,993 1,007,641 -52.0%
------------- ------------- ------------
Pre-tax income (loss) 18,923 (75,764) NM
------------- ------------- ------------
Income tax expense (benefit):
Current 272 - NM
Deferred 6,508 (2,227) NM
------------- ------------- ------------
Total income tax expense (benefit) 6,780 (2,227) NM
------------- ------------- ------------
Net income (loss) $ 12,143 $ (73,537) NM
============= ============= ============
Pre-tax operating income (loss) $ 4,560 $ (85,962) NM
============= ============= ============
After-tax operating income (loss) $ 2,807 $ (80,166) NM
============= ============= ============
6
PMA Capital Corporation
Consolidated Balance Sheets
(In Thousands)
3rd 4th 1st 2nd 3rd
Quarter Quarter Quarter Quarter Quarter
2003 2003 2004 2004 2004
-----------------------------------------------------------------------
Assets:
Investments in fixed maturities available for sale $ 1,807,977 $ 1,854,555 $ 1,825,076 $ 1,469,027 $ 1,381,788
Short-term investments 187,320 151,332 98,385 88,664 98,761
Short-term investments, loaned securities collateral 113,978 6,300 112,689 129,999 96,606
Cash 34,954 28,963 22,311 66,100 48,046
------------------------------------------ ------------- ------------
Total investments and cash 2,144,229 2,041,150 2,058,461 1,753,790 1,625,201
Accrued investment income 23,764 20,870 22,820 17,913 16,407
Premiums receivable 379,041 364,125 316,771 249,112 219,111
Reinsurance receivables 1,252,928 1,220,320 1,145,314 1,210,765 1,170,004
Deferred income taxes 93,181 76,962 65,114 88,250 80,541
Deferred acquisition costs 105,089 83,975 71,631 41,321 37,800
Funds held by reinsureds 153,263 124,695 96,147 84,487 111,840
Other assets 255,292 255,861 231,600 248,578 219,536
------------ ------------- ------------- ------------- ------------
Total assets $ 4,406,787 $ 4,187,958 $ 4,007,858 $ 3,694,216 $ 3,480,440
============ ============= ============= ============= ============
Liabilities:
Unpaid losses and loss adjustment expenses $ 2,486,776 $ 2,541,318 $ 2,438,509 $ 2,292,281 $ 2,179,900
Unearned premiums 490,461 403,708 332,391 216,155 193,221
Debt 186,250 187,566 187,566 187,566 187,566
Accounts payable, accrued expenses
and other liabilities 297,028 314,830 282,422 277,457 254,467
Funds held under reinsurance treaties 313,688 262,105 159,913 138,976 104,101
Dividends to policyholders 14,851 8,479 8,292 8,121 6,424
Payable under securities loan agreements 113,960 6,285 112,674 129,997 96,614
------------ ------------- ------------- ------------- ------------
Total liabilities 3,903,014 3,724,291 3,521,767 3,250,553 3,022,293
------------ ------------- ------------- ------------- ------------
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 235,607 216,115 228,268 223,442 223,519
Accumulated other comprehensive income (loss) 40,341 19,622 29,894 (13,160) 885
Notes receivable from officers (64) (65) (66) (59) -
Treasury stock, at cost (52,532) (52,426) (52,426) (45,261) (45,474)
Unearned restricted stock compensation - - - (1,720) (1,204)
------------ ------------- ------------- ------------- ------------
Total shareholders' equity 503,773 463,667 486,091 443,663 458,147
------------ ------------- ------------- ------------- ------------
Total liabilities and shareholders' equity $ 4,406,787 $ 4,187,958 $ 4,007,858 $ 3,694,216 $ 3,480,440
============ ============= ============= ============= ============
7
PMA Capital Corporation
Invested Assets and Net Investment Income
(Dollars in Thousands)
3rd 4th 1st 2nd 3rd Nine Nine
Quarter Quarter Quarter Quarter Quarter Months Months
2003 2003 2004 2004 2004 2004 2003
--------------------------------------------------------- ---------- ----------
Total Investments & Cash
As reported $ 2,144,229 $ 2,041,150 $ 2,058,461 $1,753,790 $ 1,625,201 $ 1,625,201 $ 2,144,229
Less:
Securities lending activity 113,960 6,285 112,674 129,997 96,614 96,614 113,960
Unrealized gain 58,200 48,282 62,797 45 23,615 23,615 58,200
---------- ---------- ----------- ---------- ---------- ---------- ----------
Total adjusted investments & cash $1,972,069 $ 1,986,583 $ 1,882,990 $1,623,748 $ 1,504,972 $ 1,504,972 $ 1,972,069
========== ========== =========== ========== ========== ========== ==========
Net Investment Income
As reported $ 17,167 $ 16,331 $ 16,758 $ 14,807 $ 13,238 $ 44,803 $ 52,592
Funds held:
Assumed 1,316 (296) (13) 109 73 169 4,292
Ceded (3,551) (3,427) (2,222) (3,962) (2,140) (8,324) (10,977)
---------- ---------- ----------- ---------- ---------- ---------- ----------
Total funds held (2,235) (3,723) (2,235) (3,853) (2,067) (8,155) (6,685)
---------- ---------- ----------- ---------- ---------- ---------- ----------
Total adjusted investment income $ 19,402 $ 20,054 $ 18,993 $ 18,660 $ 15,305 $ 52,958 $ 59,277
========== ========== =========== ========== ========== ========== ==========
Yield
As reported 3.15% 3.12% 3.27% 3.11% 3.13% 3.20% 3.42%
Investment portfolio 3.95% 4.05% 3.93% 4.10% 3.91% 4.04% 4.19%
Duration (in years) 3.9 3.9 3.7 3.4 3.6 3.6 3.9
- -------------------------------------------------------------------------------------------------------------------------
PMA Capital Corporation
Debt
(Dollars in Thousands)
Amount
Outstanding Maturity
----------- -----------
4.25% convertible debt $ 86,250 2022(1)
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 5.92% as of
September 30, 2004.
8
PMA Capital Corporation
Other Assets and Liabilities
(Dollars in Millions)
Other Assets 9/30/2004 Other Liabilities 9/30/2004
------------ --------- ----------------- ---------
Deposit assets (FASB #113) $ 49.2 Deposit liabilities (FASB #113) $ 68.9
Return premiums receivable 38.3 Pension liabilities 34.1
Receivables- self-insured & Escrow liabilities 33.1
large deductible clients 29.0 Premium surcharges 31.0
PP&E 27.6 Premium taxes and other assessments 17.1
Escrow 22.5 Accrued postretirement benefits 13.5
Prepaid pension asset 22.3 Accrued commissions 8.4
Other 30.6 Accounts payable and other liabilities 48.4
------------- ---------------
Total: $ 219.5 Total: $ 254.5
============= ===============
PMA Capital Corporation
Balance Sheet Impact of Commutations & Novations - Run-off Operations 1
(Dollars in Thousands)
3rd Quarter 2004
Assets Assumed Ceded Total
------ ------- ----- -----
Reinsurance receivables $ - $ (4,736) $ (4,736)
Funds held by reinsureds (5,735) - (5,735)
Liabilities
-----------
Unpaid loss and loss adjustment expenses $ (46,281) $ - $ (46,281)
Unearned premiums (1,157) - (1,157)
Funds held under reinsurance treaties (3,777) (4,736) (8,513)
Other liabilities (1,408) - (1,408)
Nine Months 2004
Assets Assumed Ceded Total
------ ------- ----- -----
Reinsurance receivables $ - $ (63,662) $ (63,662)
Funds held by reinsureds (38,002) - (38,002)
Other assets 813 (22,170) (21,357)
Liabilities
-----------
Unpaid loss and loss adjustment expenses $ (202,246) $ - $ (202,246)
Unearned premiums (30,015) - (30,015)
Funds held under reinsurance treaties (6,514) (75,174) (81,688)
Other liabilities (1,408) - (1,408)
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.
9
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PMA Capital Corporation
Statements of Operations - Consolidating
Nine Months Ended September 30, 2004
(In Thousands)
PMA
Insurance Corporate Run-off
Group & Other1 Operations2 Consolidated
----------------------------------------------------------------------------
Gross Premiums Written $ 350,674 $ (561) $ (67,791) $ 282,322
================= ================= ================= ===================
Net Premiums Written $ 314,885 $ (561) $ (69,386) $ 244,938
================= ================= ================= ===================
Revenues:
Net premiums earned $ 352,970 $ (561) $ 76,418 $ 428,827
Net investment income 24,475 888 19,440 44,803
Other revenues 14,604 319 - 14,923
----------------- ----------------- ----------------- -------------------
Operating revenues 392,049 646 95,858 488,553
----------------- ----------------- ----------------- -------------------
Losses and Expenses:
Losses and loss adjustment expenses 264,897 - 45,470 310,367
Acquisition expenses 67,528 - 28,762 96,290
Operating expenses 43,539 7,574 14,171 65,284
Dividends to policyholders 3,180 - - 3,180
----------------- ----------------- ----------------- -------------------
Total losses and expenses 379,144 7,574 88,403 475,121
----------------- ----------------- ----------------- -------------------
Operating income (loss) before income taxes
and interest expense 12,905 (6,928) 7,455 13,432
Interest expense - 8,872 - 8,872
----------------- ----------------- ----------------- -------------------
Pre-tax operating income (loss) $ 12,905 $ (15,800) $ 7,455 4,560
================= ================= =================
Net realized investment gains 14,363
-------------------
Pre-tax income $ 18,923
===================
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.
11
PMA Capital Corporation
Statements of Operations - Consolidating
Nine Months Ended September 30, 2003
(In Thousands)
PMA
Insurance Corporate Run-off
Group & Other (1) Operations (2) Consolidated
----------------------------------------------------------------------------
Gross Premiums Written $ 516,947 $ (608) $ 617,634 $ 1,133,973
================ ================= ================ =====================
Net Premiums Written $ 462,809 $ (608) $ 464,596 $ 926,797
================ ================= ================ =====================
Revenues:
Net premiums earned $ 392,558 $ (608) $ 461,224 $ 853,174
Net investment income 24,608 1,606 26,378 52,592
Other revenues 13,086 327 2,500 15,913
---------------- ----------------- ---------------- ---------------------
Operating revenues 430,252 1,325 490,102 921,679
---------------- ----------------- ---------------- ---------------------
Losses and Expenses:
Losses and loss adjustment expenses 288,433 - 443,015 731,448
Acquisition expenses 66,221 - 125,435 191,656
Operating expenses 46,895 10,792 13,734 71,421
Dividends to policyholders 6,180 - - 6,180
---------------- ----------------- ---------------- ---------------------
Total losses and expenses 407,729 10,792 582,184 1,000,705
---------------- ----------------- ---------------- ---------------------
Operating income (loss) before income taxes
and interest expense 22,523 (9,467) (92,082) (79,026)
Interest expense - 6,936 - 6,936
---------------- ----------------- ---------------- ---------------------
Pre-tax operating income (loss) $ 22,523 $ (16,403) $ (92,082) (85,962)
================ ================= ================
Net realized investment gains 10,198
---------------------
Pre-tax loss $ (75,764)
=====================
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.
12
PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended September 30, 2004
(In Thousands)
PMA
Insurance Corporate Run-off
Group & Other (1) Operations (2) Consolidated
------------------------------------------------------
Gross Premiums Written $ 109,788 $ (186) $ (9,589) $ 100,013
========= ========= ========= =========
Net Premiums Written $ 97,637 $ (186) $ (13,884) $ 83,567
========= ========= ========= =========
Revenues:
Net premiums earned $ 103,032 $ (186) $ 1,364 $ 104,210
Net investment income 8,083 271 4,884 13,238
Other revenues 4,480 25 -- 4,505
--------- --------- --------- ---------
Operating revenues 115,595 110 6,248 121,953
--------- --------- --------- ---------
Losses and Expenses:
Losses and loss adjustment expenses 77,994 -- 2,712 80,706
Acquisition expenses 21,876 -- 2,211 24,087
Operating expenses 11,383 2,119 3,440 16,942
Dividends to policyholders 805 -- -- 805
--------- --------- --------- ---------
Total losses and expenses 112,058 2,119 8,363 122,540
--------- --------- --------- ---------
Operating income (loss) before income taxes
and interest expense 3,537 (2,009) (2,115) (587)
Interest expense -- 2,973 -- 2,973
--------- --------- --------- ---------
Pre-tax operating income (loss) $ 3,537 $ (4,982) $ (2,115) (3,560)
========= ========= =========
Net realized investment gains 3,515
---------
Pre-tax loss $ (45)
=========
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.
13
PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended September 30, 2003
(In Thousands)
PMA
Insurance Corporate Run-off
Group & Other (1) Operations(2) Consolidated
------------------------------------------------------
Gross Premiums Written $ 169,258 $ (228) $ 183,350 $ 352,380
========= ========= ========= =========
Net Premiums Written $ 149,130 $ (228) $ 136,381 $ 285,283
========= ========= ========= =========
Revenues:
Net premiums earned $ 141,967 $ (228) $ 151,743 $ 293,482
Net investment income 8,134 523 8,510 17,167
Other revenues 4,078 69 -- 4,147
--------- --------- --------- ---------
Operating revenues 154,179 364 160,253 314,796
--------- --------- --------- ---------
Losses and Expenses:
Losses and loss adjustment expenses 105,197 -- 230,592 335,789
Acquisition expenses 23,815 -- 39,406 63,221
Operating expenses 15,732 3,639 3,956 23,327
Dividends to policyholders 2,090 -- -- 2,090
--------- --------- --------- ---------
Total losses and expenses 146,834 3,639 273,954 424,427
--------- --------- --------- ---------
Operating income (loss) before income taxes
and interest expense 7,345 (3,275) (113,701) (109,631)
Interest expense -- 2,953 -- 2,953
--------- --------- --------- ---------
Pre-tax operating income (loss) $ 7,345 $ (6,228) $(113,701) (112,584)
========= ========= =========
Net realized investment gains 1,392
---------
Pre-tax loss $(111,192)
=========
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.
14
PMA Capital Corporation
Statements of Operations - PMA Insurance Group
(Dollar Amounts in Thousands)
3rd 4th 1st 2nd 3rd Nine Nine % Change % Change
Quarter Quarter Quarter Quarter Quarter Months Months 3rd Nine
2003 2003 2004 2004 2004 2004 2003 Quarter Months
---------------------------------------------------------------------------------------------------
Gross Premiums Written $ 169,258 $ 161,487 $ 146,486 $ 94,400 $ 109,788 $ 350,674 $ 516,947 -35.1% -32.2%
========= ========= ========= ========= ========= ========= ========= ====== ======
Net Premiums Written $ 149,130 $ 140,784 $ 135,286 $ 81,962 $ 97,637 $ 314,885 $ 462,809 -34.5% -32.0%
========= ========= ========= ========= ========= ========= ========= ====== ======
Revenues:
Net premiums earned $ 141,967 $ 177,474 $ 131,650 $ 118,288 $ 103,032 $ 352,970 $ 392,558 -27.4% -10.1%
Net investment income 8,134 8,299 8,028 8,364 8,083 24,475 24,608 -0.6% -0.5%
Other revenues 4,078 4,407 5,735 4,389 4,480 14,604 13,086 9.9% 11.6%
--------- --------- --------- --------- --------- --------- --------- ------ ------
Total revenues 154,179 190,180 145,413 131,041 115,595 392,049 430,252 -25.0% -8.9%
--------- --------- --------- --------- --------- --------- --------- ------ ------
Losses and Expenses:
Losses and loss adjustment
expenses 105,197 154,069 98,831 88,072 77,994 264,897 288,433 -25.9% -8.2%
Acquisition expenses 23,815 24,354 23,032 22,620 21,876 67,528 66,221 -8.1% 2.0%
Operating expenses 15,732 18,278 15,562 16,594 11,383 43,539 46,895 -27.6% -7.2%
Dividends to policyholders 2,090 (5,539) 1,429 946 805 3,180 6,180 -61.5% -48.5%
--------- --------- --------- --------- --------- --------- --------- ------ ------
Total losses and expenses 146,834 191,162 138,854 128,232 112,058 379,144 407,729 -23.7% -7.0%
--------- --------- --------- --------- --------- --------- --------- ------ ------
Pre-tax operating income (loss) $ 7,345 $ (982) $ 6,559 $ 2,809 $ 3,537 $ 12,905 $ 22,523 -51.8% -42.7%
========= ========= ========= ========= ========= ========= ========= ====== ======
15
PMA Capital Corporation
Insurance Ratios - PMA Insurance Group
3rd 4th 1st 2nd 3rd Nine Nine Point Chg. Point Chg.
Quarter Quarter Quarter Quarter Quarter Months Months 3rd Quarter Nine Months
2003 2003 2004 2004 2004 2004 2003 Better (Worse) Better (Worse)
--------------------------------------------------------------------------------------------------
Ratios - GAAP Basis:
Loss and LAE ratio 74.1% 86.8% 75.1% 74.5% 75.7% 75.0% 73.5% (1.6) (1.5)
------- ------- ------- ------- ------- ------- ------- ------- -------
Expense ratio:
Acquisition expenses 16.8% 13.7% 17.5% 19.1% 21.2% 19.1% 16.9% (4.4) (2.2)
Operating expenses (1) 8.9% 8.2% 9.2% 11.2% 7.8% 9.5% 9.5% 1.1 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total expense ratio 25.7% 21.9% 26.7% 30.3% 29.0% 28.6% 26.4% (3.3) (2.2)
------- ------- ------- ------- ------- ------- ------- ------- -------
Policyholders' dividend ratio 1.5% -3.1% 1.1% 0.8% 0.8% 0.9% 1.6% 0.7 0.7
------- ------- ------- ------- ------- ------- ------- ------- -------
Combined ratio 101.3% 105.6% 102.9% 105.6% 105.5% 104.5% 101.5% (4.2) (3.0)
======= ======= ======= ======= ======= ======= ======= ======= =======
Net investment income ratio -5.7% -4.7% -6.1% -7.1% -7.8% -6.9% -6.3% 2.1 0.6
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating ratio 95.6% 100.9% 96.8% 98.5% 97.7% 97.6% 95.2% (2.1) (2.4)
======= ======= ======= ======= ======= ======= ======= ======= =======
1 The operating expense ratio equals insurance-related operating expenses
divided by net premiums earned. Insurance-related operating expenses were
$12.6 million, $14.5 million, $12.1 million, $13.2 million and $8.1 million
for the third and fourth quarters of 2003 and the first, second and third
quarters of 2004, respectively.
16
PMA Capital Corporation
Statements of Operations - Run-off Operations (1)
(Dollar Amounts in Thousands)
3rd 4th 1st 2nd 3rd Nine Nine % Change % Change
Quarter Quarter Quarter Quarter Quarter Months Months 3rd Nine
2003 2003 2004 2004 2004 2004 2003 Quarter Months
--------------------------------------------------------------------------------------------------------
Gross Premiums Written $ 183,350 $ 134,364 $ 11,524 $ (69,726) $ (9,589) $ (67,791) $ 617,634 NM NM
========= ========= ========= ========= ========= ========= ========= ====== =======
Net Premiums Written $ 136,381 $ 124,853 $ 23,362 $ (78,864) $ (13,884) $ (69,386) $ 464,596 NM NM
========= ========= ========= ========= ========= ========= ========= ====== =======
Revenues:
Net premiums earned $ 151,743 $ 167,697 $ 74,769 $ 285 $ 1,364 $ 76,418 $ 461,224 -99.1% -83.4%
Net investment income 8,510 7,984 8,386 6,170 4,884 19,440 26,378 -42.6% -26.3%
Other revenues -- -- -- -- -- -- 2,500 NM -100.0%
--------- --------- --------- --------- --------- --------- --------- ------ -------
Total revenues 160,253 175,681 83,155 6,455 6,248 95,858 490,102 -96.1% -80.4%
--------- --------- --------- --------- --------- --------- --------- ------ -------
Losses and Expenses:
Losses and loss adjustment
expenses 230,592 112,830 43,359 (601) 2,712 45,470 443,015 -98.8% -89.7%
Acquisition expenses 39,406 40,436 24,203 2,348 2,211 28,762 125,435 -94.4% -77.1%
Operating expenses 3,956 10,709 6,647 4,084 3,440 14,171 13,734 -13.0% 3.2%
--------- --------- --------- --------- --------- --------- --------- ------ -------
Total losses and
expenses 273,954 163,975 74,209 5,831 8,363 88,403 582,184 -96.9% -84.8%
--------- --------- --------- --------- --------- --------- --------- ------ -------
Pre-tax operating income
(loss) $(113,701) $ 11,706 $ 8,946 $ 624 $ (2,115) $ 7,455 (92,082) 98.1% NM
========= ========= ========= ========= ========= ========= ========= ====== =======
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.
17
PMA Capital Corporation
Statements of Operations - Corporate & Other
(Dollar Amounts in Thousands)
3rd 4th 1st 2nd 3rd Nine Nine % Change % Change
Quarter Quarter Quarter Quarter Quarter Months Months 3rd Nine
2003 2003 2004 2004 2004 2004 2003 Quarter Months
------------------------------------------------------------------------------------------------------
Gross Premiums Written $ (228) $ (180) $ (150) $ (225) $ (186) $ (561) $ (608) 18.4% 7.7%
======== ======== ======== ======== ======== ======== ======== ======== ========
Net Premiums Written $ (228) $ (180) $ (150) $ (225) $ (186) $ (561) $ (608) 18.4% 7.7%
======== ======== ======== ======== ======== ======== ======== ======== ========
Revenues:
Net premiums earned $ (228) $ (180) $ (150) $ (225) $ (186) $ (561) $ (608) 18.4% 7.7%
Net investment income 523 48 344 273 271 888 1,606 -48.2% -44.7%
Other revenues 69 59 3 291 25 319 327 63.8% -2.4%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total revenues 364 (73) 197 339 110 646 1,325 69.8% -51.2%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Losses and Expenses:
Operating expenses 3,639 3,264 2,570 2,885 2,119 7,574 10,792 -41.8% -29.8%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total losses and
expenses 3,639 3,264 2,570 2,885 2,119 7,574 10,792 -41.8% -29.8%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Operating loss before income
taxes
and interest expense (3,275) (3,337) (2,373) (2,546) (2,009) (6,928) (9,467) 38.7% 26.8%
Interest expense 2,953 2,951 2,939 2,960 2,973 8,872 6,936 0.7% 27.9%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Pre-tax operating loss $ (6,228) $ (6,288) $ (5,312) $ (5,506) $ (4,982) $(15,800) (16,403) 20.0% 3.7%
======== ======== ======== ======== ======== ======== ======== ======== ========
18
PMA Capital Corporation
Operating Cash Flows - Consolidated
(In Thousands)
3rd 4th 1st 2nd 3rd Nine Nine
Quarter Quarter Quarter Quarter Quarter Months Months
2003 2003 2004 2004 2004 2004 2003
-----------------------------------------------------------------------------------------
Receipts:
Premiums and other revenues collected $ 319,594 $ 243,436 $ 186,561 $ 103,266 $ 91,121 $ 380,948 $ 987,454
Investment income received 20,079 27,690 22,141 26,520 20,627 69,288 67,621
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total receipts 339,673 271,126 208,702 129,786 111,748 450,236 1,055,075
----------- ----------- ----------- ----------- ----------- ----------- -----------
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year 83,436 60,322 6,491 37,839 43,406 87,736 125,528
Losses and LAE paid - prior years 139,352 124,280 217,746 272,164 178,193 668,103 533,589
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total losses and LAE paid 222,788 184,602 224,237 310,003 221,599 755,839 659,117
Insurance operating expenses paid 64,223 68,280 73,845 54,695 43,228 171,768 243,357
Policyholders' dividends paid 2,880 773 1,573 873 2,145 4,591 5,946
Interest on corporate debt 3,582 1,798 3,686 1,856 3,694 9,236 6,568
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total disbursements 293,473 255,453 303,341 367,427 270,666 941,434 914,988
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net other (6,092) 947 (7,511) (22,894) 6,997 (23,408) (7,077)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net operating cash flows $ 40,108 $ 16,620 $ (102,150) $ (260,535) $ (151,921) $ (514,606) $ 133,010
=========== =========== =========== =========== =========== =========== ===========
19
PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group
(In Thousands)
3rd 4th 1st 2nd 3rd Nine Nine
Quarter Quarter Quarter Quarter Quarter Months Months
2003 2003 2004 2004 2004 2004 2003
------------------------------------------------------------------------------------------
Receipts:
Premiums and other revenues collected $ 150,684 $ 147,111 $ 128,216 $ 123,944 $ 97,543 $ 349,703 $ 410,188
Investment income received 9,523 9,433 10,246 9,869 9,574 29,689 28,635
--------- --------- --------- --------- --------- --------- ---------
Total receipts 160,207 156,544 138,462 133,813 107,117 379,392 438,823
--------- --------- --------- --------- --------- --------- ---------
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year 37,387 35,923 6,157 19,158 29,827 55,142 66,929
Losses and LAE paid - prior years 57,474 56,739 75,447 63,116 57,160 195,723 200,792
--------- --------- --------- --------- --------- --------- ---------
Losses and LAE 94,861 92,662 81,604 82,274 86,987 250,865 267,721
Insurance operating expenses paid 22,578 35,721 52,645 38,931 34,600 126,176 97,004
Policyholders' dividends paid 2,880 773 1,573 873 2,145 4,591 5,946
--------- --------- --------- --------- --------- --------- ---------
Total disbursements 120,319 129,156 135,822 122,078 123,732 381,632 370,671
--------- --------- --------- --------- --------- --------- ---------
Net other (8,839) (7,150) (8,306) (8,535) 8,102 (8,739) (15,686)
--------- --------- --------- --------- --------- --------- ---------
Net operating cash flows $ 31,049 $ 20,238 $ (5,666) $ 3,200 $ (8,513) $ (10,979) $ 52,466
========= ========= ========= ========= ========= ========= =========
20
PMA Capital Corporation
Operating Cash Flows - Run-off Operations(1)
(In Thousands)
3rd 4th 1st 2nd 3rd Nine Nine
Quarter Quarter Quarter Quarter Quarter Months Months
2003 2003 2004 2004 2004 2004 2003
----------------------------------------------------------------------------------------
Receipts:
Premiums collected $ 168,910 $ 96,325 $ 58,345 $ (20,678) $ (6,422) $ 31,245 $ 577,266
Investment income received 10,556 18,257 11,895 16,651 11,053 39,599 38,986
--------- --------- --------- --------- --------- --------- ---------
Total receipts 179,466 114,582 70,240 (4,027) 4,631 70,844 616,252
--------- --------- --------- --------- --------- --------- ---------
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year 46,049 24,399 334 18,681 13,579 32,594 58,599
Losses and LAE paid - prior years 81,878 67,541 142,299 209,048 121,033 472,380 332,797
--------- --------- --------- --------- --------- --------- ---------
Total losses and LAE paid 127,927 91,940 142,633 227,729 134,612 504,974 391,396
Insurance operating expenses paid 41,645 32,559 21,200 15,764 8,628 45,592 146,353
--------- --------- --------- --------- --------- --------- ---------
Total disbursements 169,572 124,499 163,833 243,493 143,240 550,566 537,749
--------- --------- --------- --------- --------- --------- ---------
Net other (778) 12,494 1,860 (13,311) 282 (11,169) 8,508
--------- --------- --------- --------- --------- --------- ---------
Net operating cash flows $ 9,116 $ 2,577 $ (91,733) $(260,831) $(138,327) $(490,891) $ 87,011
========= ========= ========= ========= ========= ========= =========
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.
21
PMA Capital Corporation
Statutory Surplus
(In Thousands)
3rd 4th 1st 2nd 3rd
Quarter Quarter Quarter Quarter Quarter
2003 2003 2004 2004 2004(1)
-----------------------------------------------------------------------------------------
PMA Pool(2) $301,684 $296,777 $296,785 $305,074 $ 294,587 (5)
PMA Capital Insurance Company(3) 477,391 500,617 517,143 236,247 236,443 (5)
PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(In Thousands)
3rd 4th 1st 2nd 3rd Nine Nine
Quarter Quarter Quarter Quarter Quarter Months Months
2003 2003 2004 2004 2004 (1) 2004 (1) 2003
------------------------------------------------------------------------------------------
Net Premiums Written:
Workers Compensation & Integrated
Disability $ 116,397 $ 77,362 $ 106,190 $ 56,764 $ 88,814 $ 251,768 $ 355,091
Other Commercial Lines 17,424 14,386 11,915 8,275 8,962 29,152 71,593
---------- --------- ---------- --------- --------- ---------- ----------
Total - PMA Pool $ 133,821 $ 91,748 $ 118,105 $ 65,039 $ 97,776 $ 280,920 $ 426,684
========== ========= ========== ========= ========= ========== ==========
Statutory Ratios:
Loss and LAE ratio 74.4% 87.2% 74.9% 75.2% 75.9% 75.3% 73.8%
Underwriting expense ratio 24.9% 34.6% 27.1% 39.0% 29.5% 30.7% 24.5%
Policyholders' dividend ratio 1.7% -3.4% 1.2% 0.7% 0.4% 0.8% 1.6%
---------- --------- ---------- --------- --------- ---------- ----------
Combined ratio 101.0% 118.4% 103.2% 114.9% 105.8% 106.8% 99.9%
========== ========= ========== ========= ========= ========== ==========
Operating ratio 94.9% 113.9% 96.5% 107.4% 98.9% 99.8% 91.9%
========== ========= ========== ========= ========= ========== ==========
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 the statutory surplus of the PMA Pool.
5 Includes unassigned surplus of $125.3 million and $42.9 million for the PMA
Pool and PMA Capital Insurance Company, respectively.
22
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 (r). 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 10/27/2004):
A.M. Best Moody's
----------------------------- --------------------------
PMA Pool (1) B++ (5th of 16) Ba1 (11th of 21)
PMA Capital Insurance Company (2) B+ (6th of 16) B1 (14th of 21)
1 The PMA Pool is comprised of Pennsylvania Manufacturers' Association
Insurance Company, Manufacturers Alliance Insurance Company and
Pennsylvania Manufacturers Indemnity Company.
2 In November 2003, we announced our decision to withdraw from the
reinsurance business previously served by PMA Capital Insurance Company.
The reinsurance business is currently in run-off.
23