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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Pma Capital Corp. (MM) | NASDAQ:PMACA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 7.54 | 0 | 01:00:00 |
PMA Capital Corporation (NASDAQ: PMACA) today reported the following financial results for the first quarter of 2010:
Three months ended March 31, (in thousands, except per share data) 2010 2009 Operating income $ 7,817 $ 7,816 Net realized investment gains after tax 277 487 Income from continuing operations 8,094 8,303 Loss from discontinued operations after tax - (86 ) Net income $ 8,094 $ 8,217Diluted per share amounts:
Operating income $ 0.24 $ 0.24 Realized gains after tax 0.01 0.02 Income from continuing operations 0.25 0.26 Loss from discontinued operations after tax - - Net income $ 0.25 $ 0.26Vincent T. Donnelly, President and Chief Executive Officer, commented, “Despite very competitive marketplace conditions and continued challenges in the economy and labor markets, I am pleased to report a positive start to 2010. We continued to successfully execute our strategy of increasing the proportion of loss-sensitive workers’ compensation business, which was the primary driver of our 7% increase in direct premium production, and achieved a combined ratio of 95%. Our Fee-based Business, which now represents 16% of our consolidated revenues, had a solid quarter with continued revenue and operating income growth. Our book value increased for the fifth consecutive quarter to $12.96 per share due primarily to our earnings combined with improved values in our investment portfolio.”
At The PMA Insurance Group, Mr. Donnelly noted the following operating highlights:
Fee-based Business operating highlights included:
Financial Condition
Total assets were $2.4 billion as of March 31, 2010 and December 31, 2009. At March 31, 2010, we had $25.6 million in cash and short-term investments at our holding company and non-regulated subsidiaries.
Shareholders’ equity and book value per share changed as follows:
Three months ended March 31, 2010 Shareholders' Book value(in thousands, except per share data)
equity per share Balance, beginning of period $ 401,797 $ 12.46 Net income 8,094 0.25 Unrealized gain on securities, net of tax 7,989 0.25 Other 250 - Balance, end of period $ 418,130 $ 12.96Segment Operating Results
Operating income, which we define as net income under accounting principles generally accepted in the United States (GAAP) excluding net realized investment gains 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 as the GAAP measure of our consolidated results of operations.
The following is a reconciliation of our operating results to GAAP net income:
Three months ended March 31, (dollar amounts in thousands) 2010 2009 Pre-tax operating income (loss): The PMA Insurance Group $ 14,267 $ 15,187 Fee-based Business 2,305 2,013 Corporate & Other (4,366 ) (5,000 ) Pre-tax operating income 12,206 12,200 Income tax expense 4,389 4,384 Operating income 7,817 7,816 Net realized investment gains after tax 277 487 Income from continuing operations 8,094 8,303 Loss from discontinued operations after tax - (86 ) Net income $ 8,094 $ 8,217Income from continuing operations included the following after-tax net realized investment gains:
Three months ended March 31, (dollar amounts in thousands) 2010 2009 Net realized investment gains after tax: Sales of investments $ 277 $ 3,028 Other than temporary impairments - (2,541 ) Net realized investment gains after tax $ 277 $ 487Details of the Company’s investment portfolio at March 31, 2010 and December 31, 2009 are posted on our website at www.pmacapital.com.
The PMA Insurance Group
The PMA Insurance Group had pre-tax operating income of $14.3 million for the first quarter of 2010, compared to $15.2 million for the first quarter of 2009.
We define direct premium production as direct premiums written, excluding fronting premiums and premium adjustments. The following is a reconciliation of our direct premium production to consolidated gross premiums written:
Three months ended March 31, (dollar amounts in thousands) 2010 2009 Direct premium production $ 157,092 $ 147,367 Fronting premiums 15,795 19,622 Premium adjustments (2,019 ) (4,876 ) Direct premiums written 170,868 162,113 Assumed premiums and other 1,037 1,957 Gross premiums written $ 171,905 $ 164,070Direct premium production included new business of $34.5 million in the first quarter of 2010, compared to $38.0 million during the same period last year. Pricing on our rate-sensitive workers’ compensation business increased 2% during the first three months of 2010, compared to a 4% decrease during the first three months of 2009. Our renewal retention rate on existing workers’ compensation accounts for the first quarter improved to 83% in 2010, compared to 79% in 2009. During 2010, our retention rates and new business for workers’ compensation were higher for business written on a loss-sensitive basis than for business written on a rate-sensitive basis, as we continue to emphasize loss-sensitive business. The increase in the retention rate in 2010 also reflected a higher retention rate on large account business.
Net premiums written increased to $128.4 million in the first quarter of 2010, compared to $118.1 million for the same quarter last year. The increase for the quarter primarily reflected the increase in direct premium production for the period.
The combined ratio on a GAAP basis was 95.0% for the first quarter of 2010, compared to 93.5% in the first quarter last year. The higher combined ratio in the first quarter of 2010 was primarily the result of an increase in the expense ratio, which reflected higher state based assessments. Given the seasonality of our business, our first quarter combined ratios have historically been lower than the subsequent quarters and full year ratios.
The loss and LAE ratio in the first quarter of 2010 was modestly higher than the prior year period. Pricing increases coupled with payroll changes for rate-sensitive workers’ compensation business were slightly below overall estimated loss trends. Losses and LAE in 2010 also included expenses incurred on a new claims system which has been implemented in both our insurance and fee-based businesses. We estimated our medical cost inflation to be 6.0% in the first quarters of 2010 and 2009.
Net investment income was $9.2 million in the first quarter of 2010, compared to $8.5 million in the same period last year. The increase was due primarily to an increase in average invested assets.
Fee-based Business
For the first quarter of 2010, total revenues at our Fee-based Business increased to $21.5 million from $19.7 million for the same period last year. The increase in revenues primarily reflected claims service revenue growth of $1.9 million, or 12%, which was partially offset by a decrease in commission income of $316,000. Commission income was impacted by the continued softness in the labor markets. Pre-tax operating income increased to $2.3 million for the first quarter of 2010, compared to $2.0 million for the same quarter last year.
Corporate and Other
The Corporate and Other segment, which includes primarily corporate expenses and debt service, had net expenses of $4.4 million during the first quarter of 2010, compared to $5.0 million in the first quarter of 2009. The decrease in net expenses for the first quarter of 2010 related primarily to lower stock-based compensation expense and certain 2009 intercompany transactions with our former run-off operations which were eliminated in the Corporate and Other segment.
Conference Call with Investors
As a reminder, the Company will hold a conference call with investors beginning at 8:30 a.m. Eastern Time on Friday, April 30th to review its first quarter 2010 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
888-713-4217 (Domestic) 888-286-8010 (Domestic) 617-213-4869 (International) 617-801-6888 (International) Passcode 96118078 Passcode 52027414You may pre-register for the conference call using the following link: www.theconferencingservice.com/prereg/key.process?key=P8PQBBEMM
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 call. 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 Friday, April 30th until 11:59 p.m. Eastern Time on Monday, May 31st.
Quarterly Statistical Supplement
Our First 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 RelationsAlternatively, 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.
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, strategy 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:
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.
PMA Capital Corporation GAAP Consolidated Statements of Operations (Unaudited) Three months ended March 31, (dollar amounts in thousands, except per share data) 2010 2009 Gross premiums written $ 171,905 $ 164,070 Net premiums written $ 128,245 $ 117,978 Revenues: Net premiums earned $ 103,496 $ 104,930 Claims service revenues 17,883 15,684 Commission income 3,092 3,463 Net investment income 9,120 8,457 Net realized investment gains 426 749 Other revenues 392 176 Total revenues 134,409 133,459 Expenses: Losses and loss adjustment expenses 75,070 75,775 Acquisition expenses 18,047 17,198 Operating expenses 25,632 24,385 Dividends to policyholders 524 646 Interest expense 2,504 2,506 Total losses and expenses 121,777 120,510 Pre-tax income 12,632 12,949 Income tax expense: Current 254 244 Deferred 4,284 4,402 Total income tax expense 4,538 4,646 Income from continuing operations 8,094 8,303 Loss from discontinued operations after tax - (86 ) Net income $ 8,094 $ 8,217 Income per share: Basic: Continuing Operations $ 0.25 $ 0.26 Discontinued Operations - - $ 0.25 $ 0.26 Diluted: Continuing Operations $ 0.25 $ 0.26 Discontinued Operations - - $ 0.25 $ 0.26 PMA Capital Corporation GAAP Consolidated Balance Sheets (Unaudited) March 31, December 31, (dollar amounts in thousands, except per share data) 2010 2009 Assets: Investments: Fixed maturities available for sale $ 800,612 $ 791,355 Short-term investments 25,921 41,072 Other investments 31,205 30,226 Total investments 857,738 862,653 Cash 13,583 11,059 Accrued investment income 7,663 7,352 Premiums receivable 275,122 238,650 Reinsurance receivables 839,723 827,458 Prepaid reinsurance premiums 40,363 35,788 Deferred income taxes, net 131,097 139,782 Deferred acquisition costs 44,820 39,124 Funds held by reinsureds 61,573 58,935 Intangible assets 29,553 29,757 Other assets 108,476 112,181 Total assets $ 2,409,711 $ 2,362,739 Liabilities: Unpaid losses and loss adjustment expenses $ 1,274,006 $ 1,269,685 Unearned premiums 270,083 240,759 Debt 137,445 143,380Accounts payable, accrued expenses and other liabilities
238,493 249,787 Reinsurance funds held and balances payable 65,610 51,331 Dividends to policyholders 5,944 6,000 Total liabilities 1,991,581 1,960,942 Shareholders' Equity: Class A Common Stock 171,090 171,090 Additional paid-in capital 111,906 111,841 Retained earnings 163,841 155,747 Accumulated other comprehensive loss (5,886 ) (14,060 ) Treasury stock, at cost (22,821 ) (22,821 ) Total shareholders' equity 418,130 401,797 Total liabilities and shareholders' equity $ 2,409,711 $ 2,362,739 Shareholders' equity per share $ 12.96 $ 12.46
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