Attached files
| file | filename |
|---|---|
| EX-10.2 - EXHIBIT 10.2 - PMA CAPITAL CORP | ex10-2.htm |
| EX-2.1 - EXHIBIT 2.1 - PMA CAPITAL CORP | ex2-1.htm |
| EX-10.1 - EXHIBIT 10.1 - PMA CAPITAL CORP | ex10-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): December 24, 2009
PMA
Capital Corporation
(Exact
name of registrant as specified in its charter)
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Pennsylvania
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001-31706
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23-2217932
|
||
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
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380
Sentry Parkway
Blue
Bell, Pennsylvania
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19422
|
|
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(Address
of principal executive offices)
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(Zip
Code)
|
|
Registrant’s
telephone number, including area code:
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(610)
397-5298
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(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement.
On
December 24, 2009, PMA Capital Corporation (the “Company”) closed the sale of
PMA Capital Insurance Company (“PMACIC”), PMA Re Management Company and High
Mountain Reinsurance, Ltd. (collectively, the “Run-off Operations”) pursuant to
an Amended and Restated Stock Purchase Agreement (the “Amended Agreement”)
between the Company and Armour Reinsurance Group Limited (the
“Buyer”). The Amended Agreement reduced the purchase price for the
Run-off Operations to $100,000. The terms of the Amended Agreement
required the Company to make a capital contribution to the Run-off Operations of
$13.1 million dollars. The capital contribution included cash of $3.1
million and a note payable in two equal installments of $5 million in June 2010
and June 2011. The Amended Agreement also required the Buyer to make
a capital contribution to the Run-off Operations in the amount of $2
million. PMACIC issued a surplus note to the Company and the Buyer in
an amount equal to their cash capital contributions. In addition, the
Amended Agreement reduced the maximum indemnification amount that the Company
and the Buyer would provide for breaches of certain representations and
warranties from $20 million (for the Company) and $4 million (for the Buyer) to
$2.5 million.
In
connection with the closing of the sale, the Company entered into two Support
Agreements with PMACIC, which require the Company to provide capital support to
PMACIC in the event payments on claims in its excess workers’ compensation and
certain excess liability (occurrence) lines of business exceed certain
pre-established limits. The Support Agreement with respect to excess
workers’ compensation business requires the Company to reimburse PMACIC in the
event that claims on the reinsurance agreements covered under the Support
Agreement exceed $33.3 million. The maximum amount of support that
the Company can be required to provide under this Support Agreement is $34.3
million. The Support Agreement with respect to excess liability
(occurrence) business requires the Company to reimburse PMACIC in the event that
claims on the reinsurance agreements covered under the Support Agreement exceed
$33.2 million. The maximum amount of support that the Company can be
required to provide under this Support Agreement is $11.6
million. Both Support Agreements provide a dispute resolution
procedure with respect to disputes over allocations of commutations and loss
settlements.
Generally
Accepted Accounting Principles require guarantees to be recorded at fair value
at inception, which the Company estimates is approximately $13 million for the
capital support agreements. As previously disclosed, the Company
expects to record an after-tax charge of approximately $17 million, or $0.52 per
share, with the closing of the sale.
A copy of
the Amended Agreement and the Support Agreements are attached as Exhibits 2.1,
10.1 and 10.2 to this report and are incorporated herein by
reference.
Item 9.01. Financial Statements
and Exhibits.
(d)
Exhibit
Exhibit
No. Description
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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PMA
Capital Corporation
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December
29, 2009
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By:
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/s/ Stephen L.
Kibblehouse
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Name:
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Stephen
L. Kibblehouse
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Title:
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Executive
Vice President and
General
Counsel
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Exhibit
Index
Exhibit
No. Description