PMACA Pma Capital Corp. (MM)

PMA Capital Corporation (NASDAQ:PMACA) today announced financial results for the second quarter of 2007. PMA Capital reported net income of $491,000, or one cent per diluted share, for the second quarter of 2007, compared to a net loss of $762,000, or two cents per share, for the same period in 2006. Operating income, which the Company defines as net income excluding realized gains and losses, increased to $1.6 million, or 5 cents per diluted share, from $524,000, or 2 cents per share, in the second quarter of 2006. For the six months ended June 30, 2007, the Company reported net income of $3.8 million, or 12 cents per diluted share, compared to net income of $1.7 million, or 5 cents per diluted share, for the same period last year. Operating income for the first six months of 2007 increased to $5.3 million, or 16 cents per diluted share, compared to operating income of $1.8 million, or 6 cents per diluted share, in the first half of 2006. �Our positive momentum at PMA Capital continued through the second quarter and we are pleased to report another consecutive quarter of revenue growth and improving operating results,� said Vincent T. Donnelly, President and Chief Executive Officer. �The PMA Insurance Group�s pre-tax operating income increased to $8.4 million for the second quarter of 2007, compared to $6.7 million in the second quarter of 2006, as we increased our premiums while improving our loss and expense ratios. In spite of a challenging pricing environment, our year-to-date direct premiums written, excluding business produced for Midwest Insurance Companies under our partnership, were up 9% to $239.3 million and our second quarter premiums increased 5% to $96.8 million, compared to the same periods a year ago. Our new business written, excluding business produced for Midwest, increased by $15.2 million to $65.3 million year-to-date and by $6.1 million to $26.2 million in the second quarter, compared to the same periods last year. For the first six months of 2007, our workers� compensation renewal retention rate improved to 85%, compared to 83% for the same period of 2006,� Mr. Donnelly added. Mr. Donnelly continued, �During the quarter, our holding company financial flexibility improved as a result of the $37.5 million extraordinary dividend received from our Run-off Operations. In May, our Board authorized us to repurchase up to $10 million of our Class A Common Stock, and to date we have purchased 581,556 shares at a total cost of $6.3 million. In June, we issued $20.6 million of new junior subordinated debt, and so far have used a portion of the proceeds to retire $14.7 million principal amount of our 6.50% Convertible Debt, including $8.1 million subsequent to June 30, 2007. We currently have less than $5 million principal amount of the convertible debt outstanding.� �We continue to execute our plan of reducing the insurance liabilities at our Run-off Operations. Our insurance liabilities have decreased by $100.2 million, or 19%, since year end 2006, which includes $28.2 million as a result of commutation activity,� Mr. Donnelly concluded. Net income (loss) included the following after-tax net realized gains (losses): Three months ended June 30, Six months ended June 30, (dollar amounts in thousands) � � 2007 � � � 2006 � � � 2007 � � � 2006 � Net realized gains (losses) after tax: Sales of investments $ (593 ) $ (1,285 ) $ (638 ) $ (717 ) Change in fair value of debt derivative (507 ) 6 (228 ) 620 Change in fair value of trading securities 59 - (455 ) - Other � (99 ) � � (7 ) � (99 ) � � (7 ) Net realized losses after tax $ (1,140 ) � $ (1,286 ) $ (1,420 ) � $ (104 ) Consolidated revenues for the second quarter and first six months of 2007 increased to $114.5 million and $227.4 million, compared to $111.3 million and $223.3 million for the same periods in 2006. Direct premiums written for the second quarter of 2007 improved to $111.0 million, up from $92.3 million in the second quarter last year, while year-to-date premiums written increased by $52.1 million to $271.7 million, compared to the same period a year ago. Included in the increases in direct premiums written were $14.3 million and $32.7 million for the second quarter and first six months of 2007 related to business produced for Midwest Insurance Companies (�Midwest�) under our partnership. Net premiums earned for the second quarter and first six months of 2007 increased 3% during each period to $97.5 million and $192.6 million, respectively, compared to the same periods last year. Segment Operating Results Operating income, which we define as net income (loss) under accounting principles generally accepted in the United States (GAAP) excluding net realized investment gains and losses, is the financial performance measure used by our management and Board of Directors to evaluate and assess the results of our insurance businesses 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. The following is a reconciliation of our segment operating results and operating income to GAAP net income (loss). Three months ended June 30, Six months ended June 30, (dollar amounts in thousands) � � 2007 � � � 2006 � � � 2007 � � � 2006 � Pre-tax operating income (loss): The PMA Insurance Group $ 8,400 $ 6,671 $ 20,123 $ 14,812 Run-off Operations (707 ) 428 (1,445 ) 589 Corporate & Other � (5,129 ) � � (6,128 ) � (10,438 ) � � (12,267 ) Pre-tax operating income 2,564 971 8,240 3,134 Income tax expense � 933 � � � 447 � � 2,983 � � � 1,311 � Operating income 1,631 524 5,257 1,823 Realized losses after tax � (1,140 ) � � (1,286 ) � (1,420 ) � � (104 ) Net income (loss) $ 491 � � $ (762 ) $ 3,837 � � $ 1,719 � The PMA Insurance Group The PMA Insurance Group reported pre-tax operating income of $8.4 million for the second quarter, compared to $6.7 million for the same period last year. Year-to-date pre-tax operating income was $20.1 million, compared to $14.8 million for the first half of 2006. The increases in both periods were due to improved underwriting results and increased investment income. Direct premiums written were $111.1 million for the second quarter of 2007, up from $92.4 million for the second quarter of 2006. For the six months ended June 30, 2007, direct premiums written increased to $272.0 million, compared to $220.0 million for the same period last year. We wrote $40.5 million of new business in the second quarter of 2007, compared to $20.1 million during the same period last year. Our year-to-date new business increased to $98.0 million, compared to $50.1 million in the first half of 2006. Included in direct premiums written and new business for the second quarter and first six months of 2007 were $14.3 million and $32.7 million of California workers� compensation business produced for Midwest under our partnership. Our renewal retention rate on existing workers� compensation accounts was 84% for the second quarter of 2007, consistent with that retained for the same period in 2006, while our renewal retention rate for the first six months of 2007 improved to 85%, up from 83% for the comparable period last year. Net premiums written were $81.8 million and $207.7 million for the second quarter and first six months of 2007, compared to $85.6 million and $199.0 million during the same periods in 2006. Ceded premiums written increased for the second quarter and first six months of 2007 primarily due to our cession of the California workers� compensation premiums written under our partnership with Midwest and increases in the amount of workers� compensation business sold to captive accounts, where a substantial portion of the direct premiums are ceded. Effective April 1, 2007, the Company began retaining 5% of the Midwest business. For the second quarter and first six months of 2007, the combined ratios on a GAAP basis were 101.6% and 99.9%, compared to 102.5% and 101.7% for the same periods last year. The improvements in the combined ratios for the second quarter and first six months of 2007, compared to the same periods last year, primarily reflected lower loss and LAE and acquisition expense ratios, partially offset by higher policyholders� dividend ratios. The year-to-date combined ratio was also impacted by an improved operating expense ratio. The improved loss and LAE ratios for both periods were primarily due to lower current accident year loss and LAE ratios, compared to 2006. While our underwriting criteria remained consistent in 2007, our current accident year loss and LAE ratios benefited from changes in workers� compensation products selected by our insureds and a reduced amount of integrated disability and assumed premiums in 2007. Pricing changes coupled with payroll inflation for rate sensitive workers� compensation business were slightly below overall estimated loss trends. We estimated our medical cost inflation to be 8% during the first six months of 2007, compared to our estimate of 8.5% through the first six months of 2006. We expect that medical cost inflation will continue to be a significant component of our overall loss experience. The policyholders� dividend ratios were higher in the second quarter and first six months of 2007 than in the prior year periods. The prior year periods reflected slightly higher than expected losses which resulted in lower than expected dividends on participating products where the policyholders may receive a dividend based, to a large extent, on their loss experience. Fees earned under our partnership with Midwest reduced the 2007 acquisition expense ratios by 70 and 60 basis points for the quarter and year-to-date periods. The improved operating expense ratio in the first six months of 2007 reflected lower loss based state assessments, compared to the same period last year. Controllable expenses, which we define as salaries, benefits and other headcount related expenses, grew by 3% in the first six months of 2007, compared to the 9% growth rate in direct premiums written. Revenues from our third party administrator (�TPA�) business, which are included in other revenues, increased to $7.5 million for the three months ended June 30, 2007, from $7.1 million in the same period last year. On a year-to-date basis, TPA revenues increased $1.0 million to $15.2 million compared to the first half of 2006. Net investment income increased to $9.7 million in the second quarter of 2007, compared to $8.8 million in the prior year quarter. For the first six months of 2007, net investment income increased $2.1 million to $19.4 million, compared to the first half of 2006. The improvement in 2007 was due primarily to higher yields on an increased invested asset base. Run-off Operations Our Run-off Operations, consisting of our former reinsurance and excess and surplus lines businesses, had pre-tax operating losses of $707,000 and $1.4 million for the three and six months ended June 30, 2007, compared to pre-tax operating income of $428,000 and $589,000 for the same periods last year. Net investment income and operating expenses continue to decline as we run-off this business. Net investment income decreased to $2.5 million for the first six months of 2007, from $5.6 million during the same period last year, due to a reduction in average invested assets of approximately $184 million, or 53%. Corporate and Other The Corporate and Other segment, which includes primarily corporate expenses, including debt service, recorded net expenses of $5.1 million during the second quarter of 2007, down from $6.1 million during the same period last year. Net expenses were $10.4 million during the first six months of 2007, which decreased from $12.3 million for the same period in 2006. The improvements for both the second quarter and first six months were primarily due to lower interest expense. The lower interest expense resulted from a lower level of debt outstanding in 2007, compared to last year. Financial Condition Total assets were $2.7 billion as of June 30, 2007 and December 31, 2006. Shareholders� equity was $411.0 million as of June 30, 2007, compared with $419.1 million as of December 31, 2006. Book value per share was $12.78 as of June 30, 2007, compared to $12.83 at year end 2006. The decrease in book value per share was primarily due to a decline in the unrealized position on our invested asset portfolio, partially offset by net income and the positive impact of the share repurchases. During the first six months of 2007, the net unrealized holding position on our available for sale asset portfolio decreased by $7.1 million, or 22 cents per share, due to an increase in market interest rates. Share repurchases made during the second quarter contributed to the decline in shareholders� equity. In May 2007, our Board of Directors authorized the repurchase of up to $10 million of our Class A Common Stock. During the second quarter, we repurchased 581,556 shares at a total cost of $6.3 million. Decisions regarding share repurchases are subject to prevailing market conditions and an evaluation of the costs and benefits associated with alternative uses of capital. At June 30, 2007, we had $66.8 million in cash and investments at the holding company and its non-regulated subsidiaries. The components of our debt as of June 30, 2007 were as follows: � (dollar amounts in thousands) � Amount � Maturity 6.50% Convertible Debt 1 $ 12,693 2022 Derivative component of 6.50% Convertible Debt 2,356 4.25% Convertible Debt 2 455 2022 8.50% Senior Notes 54,900 2018 Junior subordinated debt 64,435 2033-2037 Surplus Notes 10,000 2035 Unamortized debt discount � (210 ) Total long-term debt $ 144,629 � � (1)��Holders, at their option, may require us to repurchase all or a portion of their debentures on June 30, 2009 at 114% of the principal amount. This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share. (2)��This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share. As of June 30, 2007, our total outstanding debt was $144.6 million, compared to $131.2 million at December 31, 2006. The increase was primarily due to the issuance of $20.6 million principal amount of junior subordinated debt, partially offset by open market purchases of our 6.50% Convertible Debt. In June 2007, we issued $20.6 million of 30-year floating rate junior subordinated securities to a wholly-owned statutory trust subsidiary. A portion of the net proceeds of $20.0 million have been used to purchase, in the open market, our 6.50% Convertible Debt. During the second quarter of 2007, we retired $6.6 million principal amount of our 6.50% Convertible Debt through open market purchases by PMA Capital Corporation. We paid $7.7 million for these bond purchases, exclusive of accrued interest. In July 2007, we retired another $8.1 million principal amount of our 6.50% Convertible Debt for which we paid $9.6 million, exclusive of accrued interest. Our debt-to-capital ratio following this debt activity was 25%. The PMA Insurance Group had statutory capital and surplus of $333.1 million as of June 30, 2007, compared to $321.2 million as of December 31, 2006. The PMA Insurance Group has the ability to pay $26.5 million in dividends during 2007 without the prior approval of the Pennsylvania Insurance Department. The statutory capital and surplus of PMA Capital Insurance Company (�PMACIC�), PMA Capital Corporation�s wholly-owned run-off reinsurance subsidiary, was $75.6 million as of June 30, 2007, compared to $121.6 million as of December 31, 2006. The reduction in PMACIC�s statutory capital and surplus was due primarily to its extraordinary dividend payment of $37.5 million to PMA Capital in April 2007. Conference Call with Investors As a reminder, we will hold a conference call with investors beginning at 8:30 a.m. Eastern Time on Friday, August 3rd to review our second quarter 2007 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 866-314-4865 (Domestic) 888-286-8010 (Domestic) 617-213-8050 (International) 617-801-6888 (International) Passcode 15281988 Passcode 11798665 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 10:30 a.m. Eastern Time on Friday, August 3rd until 11:59 p.m. Eastern Time on Friday, September 7th. Quarterly Statistical Supplement Our Second Quarter Statistical Supplement, which provides more detailed historical information about us, 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 SEC 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 The statements contained in this press release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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. Although the Company�s management believes that its expectations are reasonable, there can be no assurance that the Company�s actual results will not differ materially from those expected. The factors that could cause actual results to differ materially from those in the forward-looking statements, include, but are not limited to: our ability to effect an efficient withdrawal from the reinsurance business, including the commutation of reinsurance business with certain large ceding companies, without incurring any significant additional liabilities; adverse property and casualty loss development for events that we insured in prior years, including unforeseen increases in medical costs and changing judicial interpretations of available coverage for certain insured losses; our ability to increase the amount of new and renewal business written by The PMA Insurance Group at adequate prices or service revenues of our TPA operations; our ability to have sufficient cash at the holding company to meet our debt service and other obligations, including any restrictions such as those imposed by the Pennsylvania Insurance Department on receiving dividends from our insurance subsidiaries in an amount sufficient to meet such obligations; 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 purchased; adequacy of reserves for claim liabilities; whether state or federal asbestos liability legislation is enacted and the impact of such legislation on us; regulatory changes in risk-based capital or other regulatory standards 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 or any other state insurance department; the impact of future results on the recoverability of our deferred tax asset; the outcome of any litigation against us; competitive conditions that may affect the level of rate adequacy related to the amount of risk undertaken and that may influence the sustainability of adequate rate changes; ability to implement and maintain rate increases; the effect of changes in workers� compensation statutes and their administration, which may affect the rates that we can charge and the manner in which we administer claims; our ability to predict and effectively manage claims related to insurance and reinsurance policies; uncertainty as to the price and availability of reinsurance on business we intend to write in the future, including reinsurance for terrorist acts; severity of natural disasters and other catastrophes, including the impact of future acts of terrorism, in connection with insurance and reinsurance policies; changes in general economic conditions, including the performance of financial markets, interest rates and the level of unemployment; uncertainties related to possible terrorist activities or international hostilities and whether TRIEA is extended beyond its December 31, 2007 termination date; 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 hereof or to reflect the occurrence of unanticipated events. PMA Capital Corporation Selected Financial Data (Unaudited) � Three months ended June 30, (dollars amounts in thousands) � 2007 � � � 2006 � Direct premiums written: The PMA Insurance Group $ 111,118 $ 92,434 Run-off Operations - 47 Corporate and Other � (160 ) � (213 ) Consolidated direct premiums written $ 110,958 � $ 92,268 � � Net premiums written: The PMA Insurance Group $ 81,816 $ 85,639 Run-off Operations 1,994 527 Corporate and Other � (160 ) � (213 ) Consolidated net premiums written $ 83,650 � $ 85,953 � � Revenues: Net premiums earned: The PMA Insurance Group $ 97,174 $ 94,803 Run-off Operations 517 332 Corporate and Other � (160 ) � (213 ) Consolidated net premiums earned 97,531 94,922 Net investment income 11,125 11,058 Realized losses (1,754 ) (1,978 ) Other revenues � 7,614 � 7,286 Consolidated revenues $ 114,516 � $ 111,288 � � Components of net income (loss): Pre-tax operating income (loss) (1): The PMA Insurance Group $ 8,400 $ 6,671 Run-off Operations (707 ) 428 Corporate and Other � (5,129 ) � (6,128 ) Pre-tax operating income 2,564 971 Income tax expense � 933 � � 447 � Operating income 1,631 524 Realized losses after tax � (1,140 ) � (1,286 ) Net income (loss) $ 491 � $ (762 ) � Weighted average common shares outstanding: Basic 32,418,525 32,132,618 Diluted 32,838,046 32,132,618 � � � � � � � � � (1)��Operating income, which is GAAP net income (loss) excluding net realized investment gains and losses, is the financial performance measure used by our management and our Board of Directors to evaluate and assess the results of our insurance businesses because (i) net realized investment gains and losses are unpredictable and not necessarily indicative of current operating fundamentals or future performance 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. PMA Capital Corporation Selected Financial Data (Unaudited) � Six months ended June 30, (dollars amounts in thousands) � � 2007 � � � 2006 � Direct premiums written: The PMA Insurance Group $ 272,049 $ 220,007 Run-off Operations - 47 Corporate and Other � � (316 ) � (381 ) Consolidated direct premiums written � $ 271,733 � $ 219,673 � � Net premiums written: The PMA Insurance Group $ 207,709 $ 199,029 Run-off Operations 3,489 1,133 Corporate and Other � � (316 ) � (381 ) Consolidated net premiums written � $ 210,882 � $ 199,781 � � Revenues: Net premiums earned: The PMA Insurance Group $ 191,169 $ 186,024 Run-off Operations 1,710 938 Corporate and Other � (316 ) � (381 ) Consolidated net premiums earned 192,563 186,581 Net investment income 21,650 22,458 Realized losses (2,184 ) (160 ) Other revenues � � 15,401 � 14,390 � Consolidated revenues � $ 227,430 � $ 223,269 � � Components of net income: Pre-tax operating income (loss) (1): The PMA Insurance Group $ 20,123 $ 14,812 Run-off Operations (1,445 ) 589 Corporate and Other � � (10,438 ) � (12,267 ) Pre-tax operating income 8,240 3,134 Income tax expense � � 2,983 � � 1,311 � Operating income 5,257 1,823 Realized losses after-tax � � (1,420 ) � (104 ) Net income � $ 3,837 � $ 1,719 � � Weighted average common shares outstanding: Basic 32,458,259 32,014,150 Diluted 32,872,801 32,540,905 � (1)��Operating income, which is GAAP net income excluding net realized investment gains and losses, is the financial performance measure used by our management and our Board of Directors to evaluate and assess the results of our insurance businesses because (i) net realized investment gains and losses are unpredictable and not necessarily indicative of current operating fundamentals or future performance 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. PMA Capital Corporation GAAP Consolidated Balance Sheets (Unaudited) � June 30, 2007 � December 31, 2006 (dollar amounts in thousands, except per share data) Assets: Investments: Fixed maturities available for sale $ 733,083 $ 871,951 Fixed maturities trading 84,714 - Short-term investments � 100,788 � � 86,448 � Total investments 918,585 958,399 � Cash 8,494 14,105 Accrued investment income 5,469 9,351 Premiums receivable 253,215 207,771 Reinsurance receivables 1,051,269 1,039,979 Prepaid reinsurance premiums 42,435 26,730 Deferred income taxes, net 101,696 100,019 Deferred acquisition costs 37,889 36,239 Funds held by reinsureds 102,519 130,214 Other assets � 157,416 � � 143,600 � Total assets $ 2,678,987 � $ 2,666,407 � Liabilities: Unpaid losses and loss adjustment expenses $ 1,563,324 $ 1,634,865 Unearned premiums 235,356 202,973 Debt 144,629 131,211 Accounts payable, accrued expenses and other liabilities 214,240 191,540 Reinsurance funds held and balances payable 106,288 82,275 Dividends to policyholders � 4,179 � � 4,450 � Total liabilities � 2,268,016 � � 2,247,314 � � Shareholders' Equity: Class A Common Stock 171,090 171,090 Additional paid-in capital 110,318 109,922 Retained earnings 183,019 184,216 Accumulated other comprehensive loss (23,569 ) (20,624 ) Treasury stock, at cost � (29,887 ) � (25,511 ) Total shareholders' equity � 410,971 � � 419,093 � Total liabilities and shareholders' equity $ 2,678,987 � $ 2,666,407 � � Shareholders' equity per share $ 12.78 � $ 12.83 � PMA Capital Corporation GAAP Consolidated Statements of Operations (Unaudited) � � Three months ended June 30, (dollar amounts in thousands, except per share data) � 2007 � 2006 � � Gross premiums written $ 117,252 � $ 100,075 � � Net premiums written $ 83,650 � $ 85,953 � � Revenues: Net premiums earned $ 97,531 $ 94,922 Net investment income 11,125 11,058 Net realized investment losses (1,754 ) (1,978 ) Other revenues � 7,614 � � 7,286 � Total revenues � 114,516 � � 111,288 � � Expenses: Losses and loss adjustment expenses 68,150 66,379 Acquisition expenses 19,013 19,552 Operating expenses 21,653 21,580 Dividends to policyholders 2,047 1,011 Interest expense � 2,843 � � 3,773 � Total losses and expenses � 113,706 � � 112,295 � � Pre-tax income (loss) � 810 � � (1,007 ) � Income tax expense (benefit): Current 200 - Deferred � 119 � � (245 ) Total income tax expense (benefit) � 319 � � (245 ) � Net income (loss) $ 491 � $ (762 ) � Net income (loss) per share: � Basic $ 0.02 � $ (0.02 ) Diluted $ 0.01 � $ (0.02 ) PMA Capital Corporation GAAP Consolidated Statements of Operations (Unaudited) � Six months ended June 30, (dollar amounts in thousands, except per share data) � 2007 � � 2006 � � Gross premiums written $ 283,323 � $ 234,042 � � Net premiums written $ 210,882 � $ 199,781 � � Revenues: Net premiums earned $ 192,563 $ 186,581 Net investment income 21,650 22,458 Net realized investment losses (2,184 ) (160 ) Other revenues � 15,401 � � 14,390 � Total revenues � 227,430 � � 223,269 � � Expenses: Losses and loss adjustment expenses 135,176 131,772 Acquisition expenses 38,151 36,877 Operating expenses 38,719 41,567 Dividends to policyholders 3,669 2,433 Interest expense � 5,659 � � 7,646 � Total losses and expenses � 221,374 � � 220,295 � � Pre-tax income � 6,056 � � 2,974 � � Income tax expense: Current 200 - Deferred � 2,019 � � 1,255 � Total income tax expense � 2,219 � � 1,255 � � Net income $ 3,837 � $ 1,719 � � Net income per share: � Basic $ 0.12 � $ 0.05 � Diluted $ 0.12 � $ 0.05 �