PMA Capital Expects to Report Improved Operating Results from Ongoing Operations, Charge for Anticipated Sale of Run-off Operati
February 12 2008 - 4:01PM
Business Wire
PMA Capital Corporation (NASDAQ:PMACA) today announced that it
intends to release its fourth quarter and year end 2007 financial
results on Thursday, February 21, 2008, after the market closes.
The Company expects to report the following results: � � Three
months ended Year ended December 31, December 31, (diluted per
share amounts, except book value) � 2007 � 2006 � 2007 � 2006
Operating income $ 0.09 � $ 0.02 $ 0.45 � $ 0.14 Realized gains
after tax � 0.01 � � � 0.01 � 0.01 � � � 0.02 � Income from
continuing operations 0.10 0.03 0.46 0.16 Income (loss) from
discontinued operations after tax � (1.28 ) � � - � (1.78 ) � �
(0.04 ) Net income (loss) $ (1.18 ) � $ 0.03 $ (1.32 ) � $ 0.12 � �
Book value per share, end of period � � � � � $ 11.92 � � $ 12.83 �
� As the Company previously announced, it has been actively
pursuing the sale of its Run-off Operations. The Company has
entered into a non-binding letter of intent with a third party and
expects to execute a definitive sales agreement in the first
quarter of 2008; the transfer of ownership will be subject to
regulatory approval. Because of the expected divestiture, the
Company has determined that these operations should be reflected as
discontinued operations. As such, the Company expects to record an
after-tax impairment loss of $40.0 million, or $1.26 per share, in
the fourth quarter of 2007, as the book value of its Run-off
Operations was greater than the net proceeds it expects to receive
in a sale. The components of the impairment loss were as follows: �
(in millions) � � Estimated sales proceeds $ 10.0 � Less: Book
value of Run-off Operations (71.0 ) Estimated transaction costs
(0.5 ) Add: Income tax benefit � 21.5 � Impairment loss, net of tax
$ (40.0 ) � � � � � � The Company reviewed its consolidated
investment portfolios in light of recent changing market conditions
and determined that no write-offs were necessary for its sub-prime
or credit enhanced securities. At December 31, 2007, the investment
portfolio of the Company�s Continuing Operations had a fair value
of $807 million. Of the $807 million, $22 million, or 3%, were
residential mortgage-backed securities whose underlying collateral
was either a sub-prime or alternative A mortgage. The portfolio
also held securities with a fair value of $23 million, or 3%, whose
credit ratings were enhanced by various financial guaranty
insurers. Of the credit enhanced securities, $18 million were
asset-backed securities whose underlying collateral had an imputed
internal rating of �A�. None of these securities were wrapped ABS
CDO exposures. At the time the Company releases its results, a copy
of its earnings release and quarterly statistical supplement will
be available on the Company�s website at www.pmacapital.com in the
Investor Information section (choose Current Investor Information).
Click on News Releases to access the release; from Current Investor
Information, you can click on Financial Reports to access the
quarterly statistical supplement. Management will hold a conference
call with investors beginning at 8:30 a.m. Eastern Time on Friday,
February 22nd to review the Company's financial results in detail.
To listen to the conference call, please dial 888-679-8033
(domestic) or 617-213-4846 (international) approximately five
minutes before start time and use passcode 44681894. You may
pre-register for the conference call using the following link:
www.theconferencingservice.com/prereg/key.process?key=PVVMKUX3T
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. 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 15 minutes prior to the call start time.
To access the webcast, enter the Investor Information section
(choose Current Investor Information). Click on News Releases to
find this announcement and then click on the microphone next to
this release. Please allow approximately 15 minutes prior to the
call to visit the site and download the necessary software to
listen to the webcast. Please note that by accessing the conference
call via the Internet, you will be in a listen-only mode. A replay
of the conference call will be available through Friday, March 21st
by dialing 888-286-8010 (domestic) or 617-801-6888 (international)
using passcode 86606624. Operating income, which the Company
defines as net income (loss) under accounting principles generally
accepted in the United States (GAAP) excluding net realized
investment gains (losses) and results from discontinued operations,
is the financial performance measure used by its management and
Board of Directors to evaluate and assess the results of its
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
(loss) as the GAAP measure of the Company�s consolidated results of
operations. This press release includes 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 current operating plans of
the Company. Although the Company�s management believes that its
expectations are reasonable, there can be no assurance that actual
results will not differ materially from such expectations. Factors
that could cause actual results to differ materially from those in
the forward-looking statements include, without limitation, the
Company�s ability to negotiate a definitive sales agreement with a
third party and obtain regulatory approval in a reasonable period
of time in order to transfer ownership of its Run-off Operations,
and changes in developments or trends in business and the markets
in which the Company operates. Accordingly, 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 the Company does
not intend to update the forward-looking statements in this press
release. PMA Capital Corporation, headquartered in Blue Bell,
Pennsylvania, is a holding company whose operating subsidiaries
provide insurance and fee-based services. Insurance products
include workers� compensation and other commercial property and
casualty lines of insurance, primarily in the eastern part of the
United States, underwritten and marketed under the trade name The
PMA Insurance Group. Fee-based services include third party
administrator, managing general agent and program administrator
services. For additional information, visit www.pmacapital.com.
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