PMA Capital announced a net loss of $96.4 million, or $3.08 per diluted share, for the third quarter of 2003, compared with net income of $9.4 million, or 30 cents per diluted share, for the third quarter of 2002.
For the nine months ended Sept. 30, 2003, the company recorded a net loss of $73.5 million, or $2.35 per diluted share, compared to a net loss of $37.6 million, or $1.20 per diluted share for the same period last year. The news confirms earlier loss reports, which led to rating agency downgrades. (See IJ Web site Nov. 5)
The bulletin also said: “On November 6, 2003, John W. Smithson resigned as our President and Chief Executive Officer. In addition, Frederick W. Anton has decided to step down as Chairman of our Board of Directors. Our Board of Directors has appointed Neal C. Schneider, our Lead Director, as non-executive Chairman of the Board of Directors and has created an interim-Office of the President, to be headed by Vincent T. Donnelly, the current President of The PMA Insurance Group.”
PMA announced the losses after an internal review for accident years 1997-2000 revealed the need to strengthen reserves by $97.5 million after tax. The company also indicated that an “independent actuarial firm also conducted a comprehensive review of PMA Re’s traditional property and casualty loss reserves and concluded that such carried loss reserves are reasonable at September 30, 2003. These studies indicated that PMA Re’s higher than expected underwriting losses in the reinsurance operations, primarily from casualty business written in accident years 1997 through 2000, necessitated the reserve charge.”
The bulletin said the company believes “that this reserve charge recognizes our exposure to future adverse loss development at PMA Re.” It indicated, however, that, “as a result of this charge and PMA Re’s ratings downgrade, we have decided to withdraw from the reinsurance business.”
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