Philadelphia-based PMA Capital announced strong premium growth and a significant increase in operating income in its core businesses for the second quarter of 2002.
Excluding run-off operations, after-tax operating income was $10.5 million, or $0.34 per diluted share, for the second quarter of 2002, compared with $5.0 million, or $0.23 per diluted share, for the same period last year. PMA Capital had previously announced on May 1 its decision to withdraw from the excess and surplus lines (E&S) marketplace previously served by its Caliber One operating segment. As a result of the decision to exit this business, the results of this segment are now reported as run-off operations. Including run-off operations the company had an after-tax operating loss of $18.3 million, or $0.59 per diluted share, for the quarter. These second quarter results reflect the previously announced after-tax charge of $28 million, or $0.90 per diluted share, associated with our exit from and run-off of the E&S business.
“I am very pleased with the execution we are getting from both of our well- established specialty insurance businesses,” John Smithson, president and CEO, commented. “PMA Re and The PMA Insurance Group continue to enjoy excellent growth in premiums and operating earnings in an exceptionally strong underwriting environment. Business flow is quite strong with record levels of submissions affording our underwriters the opportunity to select the better risks, with better terms and conditions.
“Our outlook for the remainder of 2002 is for continued favorable underwriting conditions, which we expect will enable us to achieve our full year plan for PMA Re and The PMA Insurance Group. Given the strength of the current underwriting environment and our outlook for continued growth into 2003, we intend to remain disciplined in our underwriting and continue to seek out profitable growth opportunities in our markets. Our effective $250 million universal shelf registration statement should provide PMA Capital with the financial flexibility and capital raising capacity necessary to continue to provide excellent support to our insurance businesses.”
Excluding run-off operations, for the first six months of 2002, PMA Capital reported after-tax operating income of $20.4 million, or $0.65 per diluted share, compared to pro forma after-tax operating income of $8.7 million, or $0.40 per diluted share, for the same period last year.
Including run-off operations, the company had after-tax operating losses of $36.5 million, or $1.17 per diluted share, in the first six months of 2002. For the six months ended June 30, 2001 after-tax operating income was $10.7 million, or $0.49 per diluted share.
Results for the first six months of 2001 include an after-tax gain of $6.3 million, or $0.29 per diluted share, from the sale of real estate, as well as a tax benefit of $10.1 million, or $0.46 per diluted share, resulting from the completion of an IRS examination. Partially offsetting the favorable impact on earnings from these events were after-tax operating losses of $14.4 million, or $0.66 per diluted share, for the run-off operations. Pro forma 2001 after-tax operating income excludes the effects of these non-recurring events.
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