John Smithson, the previous chief executive at PMA Capital, had resigned in November 2003 after the company posted a $96.4 million loss for the third quarter as it took a $97.5 million after-tax charge to boost loss reserves in its reinsurance business. PMA has since decided to exit the reinsurance business.

Commenting on his goals for 2004, Mr. Donnelly said his company is focused on "continuing to deliver outstanding service to our customers and producers and to appreciate the numerous customers, agents and brokers who have stood by us."

"The capital position of The PMA Insurance Group remains strong and continues to provide the financial strength and security we have delivered to the market over many years," he said.

Mr. Donnelly also noted that premium production during the 2003 fourth quarter and January 2004 was in line with PMA expectations. "I want to reaffirm that our main objective is to restore the "A-minus" (Excellent) A.M. Best financial strength rating of The PMA Insurance Group. The runoff of our reinsurance business is continuing in an efficient manner, and we will evaluate opportunities to employ the excess capital to be generated as the runoff continues," he said.

Mr. Donnelly also emphasized that PMA didn't need to add to its loss reserves in the 2003 fourth quarter, when internal and external reviews were completed. "During the fourth quarter, we updated our previously completed comprehensive study of PMA Re's loss reserves and have concluded that no additions to PMA Re's loss reserves for prior years were required during the fourth quarter," he said.

But with the completion of these reviews, PMA took a net charge of $4.6 million because of lower underwriting results at The PMA Insurance Group for workers' compensation business written for accident years 2001 and 2002.

The 2003 fourth-quarter results also included a non-cash charge of $25 million to increase the valuation allowance for PMA deferred tax asset, as well as an after-tax charge of $3.7 million related to exiting the reinsurance business, mainly for termination benefits.

Quarterly net premiums written rose on a year-over-year basis, to $265.46 million from $245.00 million during 2002 fourth quarter. Net premiums written for full-year 2003 also increased, to $1.192 billion from $1.105 billion for 2002.