Executes amended and restated stock purchase agreement with Armour Reinsurance Group
PMA Capital has received regulatory approval from the Pennsylvania Insurance Department for the sale of PMA Capital Insurance Company, its former reinsurance and excess and surplus lines company, which was placed in run-off in 2003 (Run-off Operations).
The company said that it executed an amended and restated stock purchase agreement (amended agreement) with Armour Reinsurance Group, for the sale of the run-off operations and closed on that sale.
Under the terms of the amended agreement, the company received $100,000 for the shares of the run-off operations and agreed to contribute $13m to the run-off operations and enter into two capital support agreements.
The capital contribution included cash of $3m and a note payable in two equal installments of $5m in 2010 and 2011. The capital support agreements may require the company to make payments to the run-off operations in the event its payments on claims in the excess workers’ compensation and certain excess liability (occurrence) lines of business exceed certain pre-established limits.
Vincent Donnelly, president and CEO, said: “We are pleased with the Department’s approval and the completion of the sale of our Run-off Operations. The divestiture of this business removes a source of the volatility and uncertainty that negatively affected our results over the past several years. We believe we are well positioned for the future and look forward to the continued growth of our insurance and fee-based businesses.”
Headquartered in Blue Bell, Pennsylvania PMA Capital 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.