| Company: | PMA Capital Corporation |
| Ticker Symbol: | NASD: PMACA |
| Class Period: | November 13, 1998 to November 3, 2003 |
| Court: | Eastern District, PA |
| Date Filed: | Nov-07-03 |
| Lead Plaintiff Deadline: | Jan-05-04 |
| Allegations: |
A class action lawsuit was filed on November 7, 2003, on behalf of purchasers of the securities of PMA Capital Corporation ("PMA" or the "Company") (Nasdaq:PMACA - News) between November 13, 1998 and November 3, 2003, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act").
The action is pending in the United States District Court for the Eastern District of Pennsylvania, against defendants PMA, John W. Smithson, PMA's former President and Chief Executive Officer, Francis W. McDonnell, PMA's former Chief Financial Officer, and William E. Hitselberger, PMA's current Chief Financial Officer. According to the complaint, defendants violated sections 10(b) and 20(a) of the securities exchange act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between November 13, 1998 and November 3, 2003.
The complaint alleges that during the Class Period, the Company represented that it had established adequate loss reserves to pay or settle losses arising from insurance claims made by PMA policy holders, and that any estimated claims were revised according to the availability of new information. Defendants painted this portrait of success to create favorable conditions for PMA to complete two offerings of convertible senior debentures and monthly income senior notes during the Class Period, valued at $75 million and $50 million, respectively. In addition, defendants sought to obtain positive ratings from insurance industry rating agencies which would enable them to underwrite insurance policies and negotiate reinsurance treaties, worth millions of dollars in premiums, to purchasers who relied on such ratings as a measurement of PMA's capital structure. Unbeknownst to plaintiff and other members of the Class, however, the Company's seeming success was the product of defendants' failure to properly account for PMA's liabilities and expenses arising from insurance claims reported by policy holders for which PMA failed to establish adequate reserves. As a result, during the Class Period, defendants understated PMA's liabilities and expenses, thereby artificially inflating PMA's reported results and causing injury to plaintiff and other members of the Class.
On November 4, 2003, before the market opened, PMA disclosed in a press release and a concurrent SEC filing on Form 8-K, that it would record a pre-tax charge of $150 million primarily to compensate for its subsidiary, PMA Re's inadequate loss reserves. Defendants stated that an internal review of the Company's reserves revealed that the material charge "relates to higher than expected underwriting losses in PMA Re's reinsurance operations, primarily from casualty business written in accident years 1997 to 2000." As a result of this charge, the Company suspended its common stock dividend, and has engaged Banc of America Securities LLC to explore "strategic alternatives." On the same day, PMA announced that it was in discussions with the Pennsylvania Insurance Department over the Company's insurance operations. Immediately following this announcement, the price of PMA common stock plummeted $8.11, or 61.7 percent, from its previous day's trading, to close at $5.03 per share. On November 6, 2003, PMA revealed that the write down will effectively force the Company to withdraw from the reinsurance business, and that defendant John W. Smithson had resigned as President and Chief Executive Officer of PMA.
If you acquired the securities of the defendants during the Class Period you may, no later than Jan-05-04, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
The action is pending in the United States District Court for the Eastern District of Pennsylvania, against defendants PMA, John W. Smithson, PMA's former President and Chief Executive Officer, Francis W. McDonnell, PMA's former Chief Financial Officer, and William E. Hitselberger, PMA's current Chief Financial Officer. According to the complaint, defendants violated sections 10(b) and 20(a) of the securities exchange act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between November 13, 1998 and November 3, 2003.
The complaint alleges that during the Class Period, the Company represented that it had established adequate loss reserves to pay or settle losses arising from insurance claims made by PMA policy holders, and that any estimated claims were revised according to the availability of new information. Defendants painted this portrait of success to create favorable conditions for PMA to complete two offerings of convertible senior debentures and monthly income senior notes during the Class Period, valued at $75 million and $50 million, respectively. In addition, defendants sought to obtain positive ratings from insurance industry rating agencies which would enable them to underwrite insurance policies and negotiate reinsurance treaties, worth millions of dollars in premiums, to purchasers who relied on such ratings as a measurement of PMA's capital structure. Unbeknownst to plaintiff and other members of the Class, however, the Company's seeming success was the product of defendants' failure to properly account for PMA's liabilities and expenses arising from insurance claims reported by policy holders for which PMA failed to establish adequate reserves. As a result, during the Class Period, defendants understated PMA's liabilities and expenses, thereby artificially inflating PMA's reported results and causing injury to plaintiff and other members of the Class.
On November 4, 2003, before the market opened, PMA disclosed in a press release and a concurrent SEC filing on Form 8-K, that it would record a pre-tax charge of $150 million primarily to compensate for its subsidiary, PMA Re's inadequate loss reserves. Defendants stated that an internal review of the Company's reserves revealed that the material charge "relates to higher than expected underwriting losses in PMA Re's reinsurance operations, primarily from casualty business written in accident years 1997 to 2000." As a result of this charge, the Company suspended its common stock dividend, and has engaged Banc of America Securities LLC to explore "strategic alternatives." On the same day, PMA announced that it was in discussions with the Pennsylvania Insurance Department over the Company's insurance operations. Immediately following this announcement, the price of PMA common stock plummeted $8.11, or 61.7 percent, from its previous day's trading, to close at $5.03 per share. On November 6, 2003, PMA revealed that the write down will effectively force the Company to withdraw from the reinsurance business, and that defendant John W. Smithson had resigned as President and Chief Executive Officer of PMA.
If you acquired the securities of the defendants during the Class Period you may, no later than Jan-05-04, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
If you feel you qualify for damages or remedies that might be awarded in this class action please fill in our form on the right to submit your complaint.
If your injustice does not match the complaint described above, please use this form to register your complaint. Thank you.
