PMA Capital (NASDAQ:PMACA) in Philadelphia announced net income of $12.2 million, or 35 cents per diluted share, for the first quarter of 2004, compared with net income of $10.7 million, or 34 cents per diluted share, for the first quarter of 2003. Included in net income were after-tax net realized investment gains of $5.6 million, or 15 cents per diluted share, for the first quarter of 2004, compared to $2.8 million, or 9 cents per diluted share, for the same period last year. The dilutive effect of convertible debt reduced net income by 4 cents per share in 2004, while not affecting earnings in 2003.
Consolidated revenues were $237.4 million for the first quarter of 2004, compared to $303.1 million for the first quarter of 2003. The decrease reflects lower net premiums earned due to the company’s fourth quarter 2003 withdrawal from the reinsurance business.
“While our premium writings in the first quarter were constrained by the fourth quarter change in The PMA Insurance Group’s A.M. Best rating, we are pleased with the support we received from our customers who continue to recognize the Group’s financial strength and superior service,” commented Vincent T. Donnelly, president and chief executive officer.
“We continue to work on restoring our A- rating. In that regard, we have requested the approval of the Pennsylvania Insurance Department to ‘unstack’ The PMA Insurance Group from PMA Re, which would make the companies that comprise The PMA Insurance Group direct subsidiaries of PMA Capital Corporation. While the department’s approval of our request will not assure a rating change, we believe this is an important step towards restoring The PMA Insurance Group’s A- rating.”
The company also announced today that William E. Hitselberger has been promoted to executive vice president and chief financial officer of PMA Capital Corporation. In addition to retaining his duties as the company’s CFO, Hitselberger will also be responsible for the management of the run-off operations.
Financial Condition
Total assets were $4.0 billion as of March 31, 2004, compared to $4.2 billion as of December 31, 2003. Shareholders’ equity increased to $486.1 million as of March 31, 2004, compared to $463.7 million as of December 31, 2003.
Book value per share increased to $15.51 as of March 31, 2004, compared to $14.80 as of December 31, 2003. Net unrealized gains on fixed maturities increased to $40.8 million after-tax, or $1.30 per share, as of March 31, 2004, compared to $31.4 million after-tax, or $1.00 per share, at year-end 2003. Total outstanding debt was $187.6 million as of both March 31, 2004 and December 31, 2003. At March 31, 2004, we had $11.8 million in cash and short-term investments at the holding company.
The statutory surplus of PMA Capital Insurance Company (“PMACIC”), PMA Capital Corporation’s directly held reinsurance subsidiary, increased to $517.1 million at March 31, 2004, compared to $500.6 million at December 31, 2003. The statutory surplus of PMACIC includes $296.8 million at March 31, 2004 and at December 31, 2003 from its insurance subsidiaries comprising The PMA Insurance Group. Unassigned surplus at PMACIC grew by $16.5 million from December 31, 2003, to $33.5 million at March 31, 2004.
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