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8-K - PMA CAPITAL CORPORATION FORM 8-K - PMA CAPITAL CORP | pma8k.htm |
EX-99.2 - EXHIBIT 99.2 - PMA CAPITAL CORP | ex99-2.htm |
Exhibit 99.1
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For
Immediate Release
|
Contact: |
William
E. Hitselberger
|
|
(610) 397-5298 | |
bhitselberger@pmacapital.com |
PMA Capital Reports Improved
Third Quarter 2009 Results
Blue Bell, PA, November 3, 2009 -- PMA Capital
Corporation (NASDAQ:
PMACA) today reported the following financial results for the third
quarter and first nine months of 2009:
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months ended
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months ended
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September
30,
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September
30,
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|||||||||||||||
(in
thousands, except per share data)
|
2009
|
2008
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2009
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2008
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||||||||||||
Operating
income before gain on sale of real estate
|
$ | 6,732 | $ | 6,405 | $ | 18,622 | $ | 16,593 | ||||||||
Gain
on sale of real estate after tax
|
- | - | - | 1,378 | ||||||||||||
Operating
income
|
6,732 | 6,405 | 18,622 | 17,971 | ||||||||||||
Realized
investment gains (losses) after tax
|
517 | (5,154 | ) | 697 | (3,239 | ) | ||||||||||
Income
from continuing operations
|
7,249 | 1,251 | 19,319 | 14,732 | ||||||||||||
Loss
from discontinued operations after tax
|
(40 | ) | (2,310 | ) | (1,291 | ) | (4,937 | ) | ||||||||
Net
income (loss)
|
$ | 7,209 | $ | (1,059 | ) | $ | 18,028 | $ | 9,795 | |||||||
Diluted per share amounts:
|
||||||||||||||||
Operating
income
|
$ | 0.21 | $ | 0.20 | $ | 0.58 | $ | 0.56 | ||||||||
Realized
investment gains (losses) after tax
|
0.01 | (0.16 | ) | 0.02 | (0.10 | ) | ||||||||||
Income
from continuing operations
|
0.22 | 0.04 | 0.60 | 0.46 | ||||||||||||
Loss
from discontinued operations after tax
|
- | (0.07 | ) | (0.04 | ) | (0.15 | ) | |||||||||
Net
income (loss)
|
$ | 0.22 | $ | (0.03 | ) | $ | 0.56 | $ | 0.31 | |||||||
Vincent T. Donnelly, President and Chief Executive Officer commented, “PMA Capital produced improved operating results and book value growth in the quarter. We continued to grow our core insurance business, while maintaining disciplined underwriting standards in a price competitive environment, and had significant growth in the revenues of our Fee-based Business. Our combined ratio remained below 97% and for the first quarter since early 2006 our pricing on rate-sensitive workers’ compensation business increased. The Company’s book value grew by 8% in the quarter and 15% in the first nine months of 2009 to $12.38 per share, reflecting improved values in our investment portfolio combined with our earnings.”
At The
PMA Insurance Group, Mr. Donnelly noted the following significant operating
highlights:
·
|
Pre-tax
operating income increased to $13.6 million in the quarter, from $13.3
million in the third quarter of 2008, and increased to $38.8 million for
the first nine months of 2009,
|
380
Sentry Parkway * Blue Bell, PA 19422-0754 * www.pmacapital.com
compared to $38.3 million in the same period last year. The prior year-to-date results included a gain of $2.1 million from the sale of real estate; | ||
·
|
The
combined ratio was 95.8% in the quarter, which improved the year-to-date
ratio to 96.2%;
|
|
· | Net investment income increased 7% in the quarter and 2% year-to-date, compared to the same periods last year, as the increase in investment portfolio assets more than offset the decrease in investment yields; and | |
·
|
Direct
premium production, which excludes fronting premiums and premium
adjustments, increased 3% in the third quarter to $154.8 million, and
increased 3% during the first nine months of 2009 to $404.3
million.
|
Mr.
Donnelly added, “We are continuing to grow our Fee-based Business, with revenues
increasing 9% in the quarter and 16% for the first nine months of 2009 as a
result of organic growth and our prior year acquisition of PMA Management Corp.
of New England. Organic growth of claims service revenues was 9% in
the quarter and 12% during the first nine months of 2009. Our
Fee-based Business revenues of $59.8 million represent 15% of our total revenues
in 2009. Pre-tax
operating income for our Fee-based Business was $1.6 million in the quarter,
compared to $1.9 million for the same period last year, and $5.1 million for the
first nine months of 2009, compared to $5.3 million for the same period in
2008.”
The
Company previously announced the execution of a definitive stock purchase
agreement (the “Agreement”) to sell its Run-off Operations and the filing of a
Form A with the Pennsylvania Insurance Department. On November 3,
2009, additional information regarding the Form A was filed with the
Department. Subject to the approval of the transaction by the
Pennsylvania Insurance Department under the revised terms, the Company would
make a capital contribution of $13 million at the closing of the
sale. This contribution will include cash of $3 million and a note
payable in two equal installments of $5 million in 2010 and 2011. The
revised terms also include capital support agreements provided by the Company to
the Run-off Operations in the event that its payments on claims in the excess
workers’ compensation and certain excess liability (occurrence) lines of
business exceed certain pre-established limits. Such support is
limited to an amount not to exceed $46 million and any payments with respect to
the supported lines of business are not expected to commence until 2018 and may
extend to 2052. Under Generally Accepted Accounting Principles
guidance for Guarantees, which requires guarantees to be recorded at fair value
at inception, the Company estimates that the fair value of the capital support
is approximately $13 million. Upon the closing of the transaction,
the Company expects to record an after-tax charge of approximately $17 million,
or $0.52 per share, to record the impact of the capital contribution and the
additional capital support. The Company and the buyer have mutually
agreed to extend the Agreement termination date to December 31,
2009.
Financial
Condition
Total
assets were $2.6 billion as of September 30, 2009, compared to $2.5 billion as
of December 31, 2008. Assets of discontinued operations represented
7% of total assets at September 30, 2009, compared to 10% at December 31,
2008. At September 30, 2009, we had $33.7 million in cash and
short-term investments at our holding company and non-regulated
subsidiaries.
2
Shareholders’
equity and book value per share changed as follows:
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months ended
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months ended
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September
30, 2009
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September
30, 2009
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|||||||||||||||
(in
thousands, except per share data)
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Shareholders'
equity
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Book
value
per
share
|
Shareholders'
equity
|
Book
value
per
share
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||||||||||||
Balance,
beginning of period
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$ | 368,998 | $ | 11.45 | $ | 344,656 | $ | 10.78 | ||||||||
Net
income
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7,209 | 0.22 | 18,028 | 0.56 | ||||||||||||
Unrealized
gain on securities, net of tax
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22,721 | 0.71 | 35,105 | 1.09 | ||||||||||||
Other
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244 | - | 1,383 | 0.04 | ||||||||||||
Impact
of change in shares outstanding
|
- | - | - | (0.09 | ) | |||||||||||
Balance,
end of period
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$ | 399,172 | $ | 12.38 | $ | 399,172 | $ | 12.38 | ||||||||
The
insurance companies within The PMA Insurance Group had statutory capital and
surplus of $385.1 million as of September 30, 2009, compared to $332.9 million
as of December 31, 2008. The increase in capital and surplus during
2009 related primarily to statutory net income, which included a benefit from
the second quarter commutation of a reinsurance agreement with an affiliated
entity. The PMA Insurance Group has the ability to pay $31.8 million
in dividends during 2009 without the prior approval of the Pennsylvania
Insurance Department.
Segment Operating Results
Segment Operating Results
Operating
income, which we define as net income (loss) under GAAP excluding net realized
investment gains and losses and results from discontinued operations, is the
financial performance measure used by our management and Board of Directors to
evaluate and assess the results of our businesses. Net realized
investment activity is excluded because (i) net realized investment gains and
losses are unpredictable and not necessarily indicative of current operating
fundamentals or future performance of the business segments and (ii) in many
instances, decisions to buy and sell securities are made at the holding company
level, and such decisions result in net realized gains and losses that do not
relate to the operations of the individual segments. Operating income
does not replace net income (loss) as the GAAP measure of our consolidated
results of operations.
3
The
following is a reconciliation of our operating results to GAAP net income
(loss):
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months ended
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months ended
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30,
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September
30,
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(dollar
amounts in thousands)
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2009
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2008
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2009
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2008
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Pre-tax
operating income (loss):
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||||||||||||||||
The
PMA Insurance Group
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$ | 13,616 | $ | 13,325 | $ | 38,768 | $ | 38,285 | ||||||||
Fee-based
Business
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1,574 | 1,929 | 5,112 | 5,316 | ||||||||||||
Corporate
& Other
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(4,768 | ) | (5,319 | ) | (14,935 | ) | (15,754 | ) | ||||||||
Pre-tax
operating income
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10,422 | 9,935 | 28,945 | 27,847 | ||||||||||||
Income
tax expense
|
3,690 | 3,530 | 10,323 | 9,876 | ||||||||||||
Operating
income
|
6,732 | 6,405 | 18,622 | 17,971 | ||||||||||||
Realized
investment gains (losses) after tax
|
517 | (5,154 | ) | 697 | (3,239 | ) | ||||||||||
Income
from continuing operations
|
7,249 | 1,251 | 19,319 | 14,732 | ||||||||||||
Loss
from discontinued operations after tax
|
(40 | ) | (2,310 | ) | (1,291 | ) | (4,937 | ) | ||||||||
Net
income (loss)
|
$ | 7,209 | $ | (1,059 | ) | $ | 18,028 | $ | 9,795 | |||||||
Income from continuing operations included the following after-tax net realized gains (losses):
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months ended
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months ended
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30,
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September
30,
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(dollar
amounts in thousands)
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2009
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2008
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2009
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2008
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Net
realized investment gains (losses) after tax:
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||||||||||||||||
Sales
of investments
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$ | 517 | $ | 792 | $ | 3,907 | $ | 2,725 | ||||||||
Other
than temporary impairments
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- | (5,946 | ) | (3,210 | ) | (5,946 | ) | |||||||||
Other
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- | - | - | (18 | ) | |||||||||||
Net
realized investment gains (losses) after tax
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$ | 517 | $ | (5,154 | ) | $ | 697 | $ | (3,239 | ) | ||||||
We recorded other than temporary impairments of $3.2 million after-tax during the nine months ended September 30, 2009. The impairments in the first nine months of 2009 related primarily to write-downs of $2.9 million on $45.9 million par of commercial mortgage-backed securities (CMBS) that we sold in order to reduce our exposure to this asset sector. These write-downs were measured based on public market prices. At September 30, 2009, our CMBS had an average credit rating of AAA and fair value of $81.4 million, which represented 93% of their amortized cost. The prior year other than temporary impairments resulted from writing down our investments of Lehman Brothers senior debt and Fannie Mae preferred stock. Details of the Company’s investment portfolio at September 30, 2009 and December 31, 2008 are posted on our website at www.pmacapital.com.
The PMA Insurance
Group
The PMA
Insurance Group reported pre-tax operating income of $13.6 million for the third
quarter of 2009, compared to $13.3 million for the same period last
year. Year-to-date pre-tax operating income increased to $38.8
million, compared to $38.3 million for the first nine months of
2008. The results for the first nine months of 2008 included a gain
of $2.1 million from the sale of a property that housed one of our branch
offices.
Direct
premium production increased during the third quarter and first nine months of
2009, compared to the same periods last year. We define direct
premium production as direct premiums written,
4
excluding
fronting premiums and premium adjustments. The following is a
reconciliation of our direct premium production to consolidated gross premiums
written:
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months ended
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months ended
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September
30,
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September
30,
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(dollar
amounts in thousands)
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2009
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2008
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2009
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2008
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Direct
premium production
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$ | 154,754 | $ | 150,547 | $ | 404,333 | $ | 393,891 | ||||||||
Fronting
premiums
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10,890 | 2,776 | 40,189 | 13,032 | ||||||||||||
Premium
adjustments
|
(3,521 | ) | (5,008 | ) | (11,150 | ) | (18,836 | ) | ||||||||
Direct
premiums written
|
162,123 | 148,315 | 433,372 | 388,087 | ||||||||||||
Assumed
premiums and other
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2,216 | 3,183 | 8,461 | 8,611 | ||||||||||||
Gross
premiums written
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$ | 164,339 | $ | 151,498 | $ | 441,833 | $ | 396,698 | ||||||||
Fronting premiums increased in 2009 primarily as a result of the two fronting arrangements we entered into during August 2008. The decrease in premium adjustments in 2009 primarily reflected a lower amount of return premium adjustments on loss-sensitive products where the insured shares in the underwriting result of the policy. We write these retrospective products because we believe they provide us with greater certainty in achieving our targeted underwriting results as the customer shares in the underwriting result of the policy with us.
Excluding
fronting business, we wrote $28.2 million and $99.7 million of new business in
the third quarter and first nine months of 2009, compared to $39.4 million and
$99.8 million during the same periods last year. Pricing on our
workers’ compensation rate-sensitive business increased 1% during the third
quarter of 2009, compared to a 7% decrease during the third quarter last year,
and on a year-to-date basis, it declined 1% during 2009, compared to a 7%
decrease during 2008. Payrolls on our renewal customer base decreased
by 1% in the first nine months of 2009, compared to the same period in
2008. Our renewal retention rates on existing workers’ compensation
accounts were 84% for the third quarter and 81% for the first nine months of
2009, compared to 88% and 86% for the same periods last year. The
decline in the retention rates in 2009 primarily reflected lower retentions on
rate-sensitive middle-market business as we continue to maintain disciplined
underwriting standards in a price competitive environment. While
retention rates were also down on loss-sensitive workers’ compensation business,
the decrease was lower than that on rate-sensitive business and retention rates
remained higher for business written on a loss-sensitive basis than for business
written on a rate-sensitive basis, reflecting our strategy to emphasize
loss-sensitive business.
Net
premiums earned were $102.6 million in the third quarter of 2009, compared to
$98.1 million in the third quarter of 2008. For the first nine months
of 2009, net premiums earned increased to $314.8 million, from $286.9 million
for the first nine months of 2008. The increases in both periods
reflect the increase in direct premiums written over the past year.
The
combined ratio on a GAAP basis was 95.8% for the third quarter of 2009, compared
to 95.2% in the third quarter last year. The higher combined ratio in
the third quarter of 2009 was the result of increases in the policyholders’
dividend and expense ratios, which were partially offset by a decrease in the
loss and LAE ratio. The decrease between periods in the loss and LAE
ratio primarily reflected the impact of the Company’s managed care initiatives,
and also related to modest favorable prior year development in our captive
business. The higher policyholders’ dividend ratio was primarily in
our captive business and reflected better than anticipated underwriting and
investment results in many of the captive programs. In this business,
the policyholders may receive a dividend based, to a large
5
extent,
on their program’s underwriting and investment results. The increase
in the expense ratio reflected higher state based assessments.
On a
year-to-date basis, the combined ratio was 96.2% in 2009, compared to 96.5% for
the same period in 2008. The improvement in the combined ratio for
the first nine months of 2009, compared to the first nine months of last year,
was primarily the result of a lower expense ratio, which was partially offset by
an increased policyholders’ dividend ratio.
The loss
and LAE ratio remained relatively flat in the first nine months of 2009,
compared to the prior year period, as the lower loss experience on our captive
accounts business was offset by the first quarter reduction in audit
premiums. While payrolls on our renewal book have been stable
overall, the 1% decrease was lower than the rate of growth we experienced in
2008. As a result of the decrease, we reduced our accrual for additional
audit premiums by $3.3 million during the first quarter of 2009. Key
loss indicators are in line with our expectations for this business, and we will
continue to evaluate loss activity on these accounts as they mature, but we did
not reduce our expectation of losses on these policies, which were primarily
written in 2007 and 2008. Although pricing changes coupled with
payroll inflation for rate-sensitive workers’ compensation business were below
overall estimated loss trends, our current accident year loss and LAE ratio
remained consistent between periods as we continued to benefit in the first nine
months of 2009 from changes in the type of workers’ compensation products
selected by our insureds and from our managed care initiatives. We
estimate our medical cost inflation to be 6.0% in the first nine months of 2009,
compared to our estimate of 6.5% in the first nine months of 2008.
The
expense ratio for the first nine months of 2009, compared to the same period
last year, benefited as the increase in net premiums earned outpaced the 2%
increase in our controllable expenses, which include salary, benefits and other
employee-related costs. Commissions earned under our fronting
arrangements reduced the acquisition expense ratios by 0.7 points for the third
quarter and 0.6 points for the first nine months of 2009, compared to 0.4 points
and 0.7 points for the same periods in 2008, as the ceding commissions earned on
this business reduce our commission expense.
Net
investment income increased to $9.4 million in the third quarter of 2009,
compared to $8.8 million in the prior year quarter. Net investment
income was $27.4 million for the first nine months of 2009, compared to $26.8
million for the first nine months of 2008. The increases in the third
quarter and first nine months of 2009 were due primarily to increases in average
invested assets, which were partially offset by lower investment
yields.
6
Fee-based
Business
For the
third quarter of 2009, total revenues at our Fee-based Business increased to
$20.6 million, from $18.8 million for the same period in 2008. For
the nine months ended September 30, 2009, total revenues increased to $59.8
million, compared to $51.5 million for the first nine months of
2008. The increases in revenues primarily reflected increases in
claims service revenues of $1.4 million and $9.2 million for the third quarter
and first nine months of 2009. The year-to-date increase in claims
service revenues was partially offset by a decline in commission income of $1.2
million. Organic claims service revenue growth was 9% in the quarter
and 12% in the first nine months of 2009, compared to the same periods a year
ago. Claims service revenues also increased as a result of our June
2008 acquisition of PMA Management Corp. of New England, Inc.
Our
Fee-based Business reported pre-tax operating income of $5.1 million for the
first nine months of 2009, compared to $5.3 million for the same period last
year. The year-to-date results were reduced by lower net commissions
earned by our agency business. The decline in net commissions was
partially offset by claims service revenues that increased at a faster rate than
operating expenses. For the third quarter, pre-tax operating income
was $1.6 million, compared to $1.9 million for the same period last
year. The decline in the quarter was due to operating expenses
increasing at a higher rate than the increase in revenues.
Corporate and
Other
The
Corporate and Other segment, which includes primarily corporate expenses and
debt service, reported net expenses of $4.8 million during the third quarter of
2009, compared to $5.3 million in the third quarter of 2008. Net
expenses were $14.9 million during the first nine months of 2009, compared to
$15.8 million for the same period in 2008. The decreases in net
expenses in 2009 related primarily to lower stock-based compensation expense and
lower interest expense on variable rate debt.
Discontinued
Operations
Discontinued
operations, which consists of our former reinsurance and excess and surplus
lines businesses, had after-tax losses of $40,000 and $1.3 million for the
three and nine months ended September 30, 2009, compared to after-tax losses of
$2.3 million and $4.9 million for the same periods in 2008. The loss
for the first nine months of 2009 reflects the write-down of our carrying value
of the discontinued operations to zero. The loss for the first nine
months of 2008 was due to an after-tax charge of $4.9 million for adverse loss
development, including $2.3 million recorded in the third quarter.
7
Conference Call with
Investors
As a
reminder, we will hold a conference call with investors beginning at 8:30 a.m.
Eastern Time on Wednesday, November 4th to
review our third quarter 2009 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, click on News
Releases and then click on the microphone icon. Please note that by
accessing the conference call via the Internet, you will be in a listen-only
mode.
The
call-in numbers and passcodes for the conference call are as
follows:
Live Call
|
Replay
|
888-679-8038
(Domestic)
|
888-286-8010
(Domestic)
|
617-213-4850
(International)
|
617-801-6888
(International)
|
Passcode
48446807
|
Passcode
51517488
|
You may
pre-register for the conference call using the following link:
www.theconferencingservice.com/prereg/key.process?key=PM4JGCJTD
Pre-registering
is not mandatory but is recommended as it will provide you immediate entry into
the call and will facilitate the timely start of the conference.
Pre-registration only takes a few moments and you may pre-register at
anytime, including up to and after the call start
time. Alternatively, if you would rather be placed into the call by
an operator, please use the dial-in information above at least five minutes
prior to the call start time.
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. The replay will
be available from approximately 11:30 a.m. Eastern Time on Wednesday, November
4th
until 11:59 p.m. Eastern Time on Friday, December 4th.
Quarterly Statistical
Supplement
Our Third
Quarter Statistical Supplement, which provides more detailed information about
our results, is available on our website. Please see the Investor
Information section of our website at www.pmacapital.com. You
may also obtain a copy of this supplement by sending your request
to:
PMA
Capital Corporation
|
|
380
Sentry Parkway
|
|
Blue
Bell, PA 19422
|
|
Attention:
Investor Relations
|
Alternatively,
you may make a request by telephone (610-397-5298) or by e-mail to InvestorRelations@pmacapital.com. We
will also furnish a copy of this news release and the Statistical Supplement to
the Securities and Exchange Commission on a Form 8-K. A copy of the
Form 8-K will be available on the SEC’s website at www.sec.gov.
8
CAUTIONARY
STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This
press release contains forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995 with respect to the Company’s financial
condition and results of operations and the plans and objectives of its
management. Forward-looking statements can generally be identified by
use of forward-looking terminology such as “may,” “will,” “plan,” “expect,”
“intend,” “anticipate,” “should” and “believe.” These forward-looking
statements may include estimates, assumptions or projections and are based on
currently available financial, competitive and economic data and the Company’s
current operating plans. All forward-looking statements are subject
to risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by the forward-looking
statements. The factors that could cause actual results to differ
materially from those in the forward-looking statements, include, but are not
limited to:
|
·
|
adequacy
of reserves for claim liabilities, including reserves for potential
environmental and asbestos claims;
|
|
·
|
any
future lowering or loss of one or more of our financial strength and debt
ratings, and the adverse impact that any such downgrade may have on our
ability to compete and to raise capital, and our liquidity and financial
condition;
|
|
·
|
adequacy
and collectibility of reinsurance that we
purchase;
|
|
·
|
uncertainty
as to the price and availability of reinsurance on business we intend to
write in the future, including reinsurance for terrorist
acts;
|
|
·
|
the
effects of emerging claims and coverage issues, including changing
judicial interpretations of available coverage for certain insured
losses;
|
|
·
|
the
success with which our independent agents and brokers sell our products
and our ability to collect payments from
them;
|
|
·
|
legislative
and regulatory changes that affect the cost of, or demand for, our
products or otherwise affect our ability to conduct business, including
any future action with respect to our business taken by the Pennsylvania
Insurance Department and any future action taken by the federal government
with respect to regulation of the insurance
industry;
|
|
·
|
our
concentration in workers’ compensation insurance, which makes us
particularly susceptible to adverse changes in that industry
segment;
|
|
·
|
our
ability to consummate the sale of our Run-off Operations as described
above in a timely manner;
|
|
·
|
severity
of natural disasters and other catastrophes, including the impact of
future acts of terrorism, in connection with insurance and reinsurance
policies;
|
|
·
|
uncertainties
related to possible terrorist activities or international hostilities and
whether the Terrorism Risk Insurance Program Reauthorization Act of 2007
is extended beyond its December 31, 2014 termination
date;
|
|
·
|
our
ability to effectively compete in the highly competitive property and
casualty insurance industry;
|
|
·
|
adverse
economic or regulatory developments in the eastern part of the United
States, particularly those affecting Pennsylvania, New York and New
Jersey;
|
|
·
|
fluctuations
in interest rates and other events that can adversely impact our
investment portfolio;
|
|
·
|
disruptions
in the financial markets that affect the value of our investment portfolio
and our ability to sell our
investments;
|
|
·
|
our
ability to repay our indebtedness;
|
|
·
|
our
ability to raise additional capital on financially favorable terms when
required;
|
|
·
|
restrictions
on our operations contained in any document governing our
indebtedness;
|
|
·
|
the
impact of future results on the value of recorded goodwill and other
intangible assets and the recoverability of our deferred tax
asset;
|
|
·
|
our
ability to attract and retain qualified management
personnel;
|
|
·
|
the
outcome of any litigation against
us;
|
|
·
|
provisions
in our charter documents that can inhibit a change in control of our
company; and
|
|
·
|
other
factors or uncertainties disclosed from time to time in our filings with
the Securities and Exchange
Commission.
|
You
should not place undue reliance on any forward-looking statements in this press
release. Forward-looking statements are not generally required to be
publicly revised as circumstances change and we do not intend to update the
forward-looking statements in this press release to reflect circumstances after
the date of this press release or to reflect the occurrence of unanticipated
events.
9
PMA
Capital Corporation
GAAP
Consolidated Statements of Operations
(Unaudited)
Three
months ended September 30,
|
||||||||
(dollar
amounts in thousands, except per share data)
|
2009
|
2008
|
||||||
Gross
premiums written
|
$ | 164,339 | $ | 151,498 | ||||
Net
premiums written
|
$ | 119,259 | $ | 123,995 | ||||
Revenues:
|
||||||||
Net
premiums earned
|
$ | 102,428 | $ | 97,974 | ||||
Claims
service revenues
|
17,112 | 15,696 | ||||||
Commission
income
|
2,747 | 2,637 | ||||||
Net
investment income
|
9,522 | 8,870 | ||||||
Net
realized investment gains (losses)
|
795 | (7,929 | ) | |||||
Other
revenues
|
259 | 125 | ||||||
Total
revenues
|
132,863 | 117,373 | ||||||
Expenses:
|
||||||||
Losses
and loss adjustment expenses
|
70,158 | 68,660 | ||||||
Acquisition
expenses
|
16,046 | 15,898 | ||||||
Operating
expenses
|
30,235 | 26,906 | ||||||
Dividends
to policyholders
|
2,786 | 1,169 | ||||||
Interest
expense
|
2,421 | 2,734 | ||||||
Total
losses and expenses
|
121,646 | 115,367 | ||||||
Pre-tax
income
|
11,217 | 2,006 | ||||||
Income
tax expense (benefit):
|
||||||||
Current
|
220 | 765 | ||||||
Deferred
|
3,748 | (10 | ) | |||||
Total
income tax expense
|
3,968 | 755 | ||||||
Income
from continuing operations
|
7,249 | 1,251 | ||||||
Loss
from discontinued operations after tax
|
(40 | ) | (2,310 | ) | ||||
Net
income (loss)
|
$ | 7,209 | $ | (1,059 | ) | |||
Income
(loss) per share:
|
||||||||
Basic:
|
||||||||
Continuing
Operations
|
$ | 0.22 | $ | 0.04 | ||||
Discontinued
Operations
|
- | (0.07 | ) | |||||
$ | 0.22 | $ | (0.03 | ) | ||||
Diluted:
|
||||||||
Continuing
Operations
|
$ | 0.22 | $ | 0.04 | ||||
Discontinued
Operations
|
- | (0.07 | ) | |||||
$ | 0.22 | $ | (0.03 | ) | ||||
10
PMA
Capital Corporation
GAAP
Consolidated Statements of Operations
(Unaudited)
Nine
months ended September 30,
|
||||||||
(dollar
amounts in thousands, except per share data)
|
2009
|
2008
|
||||||
Gross
premiums written
|
$ | 441,833 | $ | 396,698 | ||||
Net
premiums written
|
$ | 317,539 | $ | 316,924 | ||||
Revenues:
|
||||||||
Net
premiums earned
|
$ | 314,307 | $ | 286,490 | ||||
Claims
service revenues
|
49,631 | 40,585 | ||||||
Commission
income
|
8,327 | 9,549 | ||||||
Net
investment income
|
27,540 | 27,345 | ||||||
Net
realized investment gains (losses)
|
1,072 | (4,983 | ) | |||||
Other
revenues
|
625 | 2,485 | ||||||
Total
revenues
|
401,502 | 361,471 | ||||||
Expenses:
|
||||||||
Losses
and loss adjustment expenses
|
219,427 | 200,154 | ||||||
Acquisition
expenses
|
52,752 | 50,114 | ||||||
Operating
expenses
|
86,160 | 76,586 | ||||||
Dividends
to policyholders
|
5,743 | 3,544 | ||||||
Interest
expense
|
7,403 | 8,209 | ||||||
Total
losses and expenses
|
371,485 | 338,607 | ||||||
Pre-tax
income
|
30,017 | 22,864 | ||||||
Income
tax expense:
|
||||||||
Current
|
729 | 916 | ||||||
Deferred
|
9,969 | 7,216 | ||||||
Total
income tax expense
|
10,698 | 8,132 | ||||||
Income
from continuing operations
|
19,319 | 14,732 | ||||||
Loss
from discontinued operations after tax
|
(1,291 | ) | (4,937 | ) | ||||
Net
income
|
$ | 18,028 | $ | 9,795 | ||||
Income
(loss) per share:
|
||||||||
Basic:
|
||||||||
Continuing
Operations
|
$ | 0.60 | $ | 0.46 | ||||
Discontinued
Operations
|
(0.04 | ) | (0.15 | ) | ||||
$ | 0.56 | $ | 0.31 | |||||
Diluted:
|
||||||||
Continuing
Operations
|
$ | 0.60 | $ | 0.46 | ||||
Discontinued
Operations
|
(0.04 | ) | (0.15 | ) | ||||
$ | 0.56 | $ | 0.31 | |||||
11
PMA
Capital Corporation
GAAP
Consolidated Balance Sheets
(Unaudited)
September
30,
|
December
31,
|
|||||||
(dollar
amounts in thousands, except per share data)
|
2009
|
2008
|
||||||
Assets:
|
||||||||
Investments:
|
||||||||
Fixed
maturities available for sale
|
$ | 817,089 | $ | 719,048 | ||||
Short-term
investments
|
62,004 | 45,066 | ||||||
Other
investments
|
22,669 | 8,127 | ||||||
Total
investments
|
901,762 | 772,241 | ||||||
Cash
|
13,887 | 10,501 | ||||||
Accrued
investment income
|
6,918 | 6,513 | ||||||
Premiums
receivable
|
246,871 | 235,893 | ||||||
Reinsurance
receivables
|
807,245 | 826,126 | ||||||
Prepaid
reinsurance premiums
|
40,883 | 29,579 | ||||||
Deferred
income taxes, net
|
110,358 | 138,514 | ||||||
Deferred
acquisition costs
|
42,583 | 40,938 | ||||||
Funds
held by reinsureds
|
56,623 | 51,754 | ||||||
Intangible
assets
|
29,961 | 30,348 | ||||||
Other
assets
|
126,015 | 116,646 | ||||||
Assets
of discontinued operations
|
192,431 | 243,663 | ||||||
Total
assets
|
$ | 2,575,537 | $ | 2,502,716 | ||||
Liabilities:
|
||||||||
Unpaid
losses and loss adjustment expenses
|
$ | 1,259,940 | $ | 1,242,258 | ||||
Unearned
premiums
|
261,952 | 247,415 | ||||||
Debt
|
129,380 | 129,380 | ||||||
Accounts
payable, accrued expenses
|
||||||||
and
other liabilities
|
250,304 | 216,266 | ||||||
Reinsurance
funds held and balances payable
|
52,914 | 44,177 | ||||||
Dividends
to policyholders
|
6,177 | 6,862 | ||||||
Liabilities
of discontinued operations
|
215,698 | 271,702 | ||||||
Total
liabilities
|
2,176,365 | 2,158,060 | ||||||
Shareholders'
Equity:
|
||||||||
Class
A Common Stock
|
171,090 | 171,090 | ||||||
Additional
paid-in capital
|
112,349 | 112,921 | ||||||
Retained
earnings
|
152,670 | 140,184 | ||||||
Accumulated
other comprehensive loss
|
(13,947 | ) | (49,876 | ) | ||||
Treasury
stock, at cost
|
(22,990 | ) | (29,663 | ) | ||||
Total
shareholders' equity
|
399,172 | 344,656 | ||||||
Total
liabilities and shareholders' equity
|
$ | 2,575,537 | $ | 2,502,716 | ||||
Shareholders'
equity per share
|
$ | 12.38 | $ | 10.78 | ||||
12