Fitch Upgrades PMA's Ratings.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has upgraded the Insurer Financial Strength (IFS) ratings of the three active primary insurance subsidiaries (referred to as PMA PMA (papillary-marginal-attached), n a system of epidemiologic scoring of periodontal disease devised by Schour and Massler in which the symbols denote the areas involved in gingival inflammation. PMA Progressive muscular atrophy Insurance Group (PMAIG): Pennsylvania Manufacturers Association Insurance Company (PMAIC); Pennsylvania Manufacturers Indemnity Company (PMIC PMIC Practice Management Information Corporation PMIC Power Management Integrated Circuit PMIC Precious Metals Indicator Code PMIC Psychiatric Medical Institute for Children (Glenwood, IA) ); and Manufacturers Alliance Insurance Company (MAIC MAIC Mine Action Information Center MAIC Mycobacterium Avium Intracellulare Complex MAIC Mid Atlantic Impreza Club MAIC Measure, Analyse, Improve, Control (Six Sigma breakthrough strategy) ), to 'BBB-' from 'BB+.' Fitch has also upgraded the senior debt and long-term issuer rating of PMA Capital Corp. (PMA) to 'B+' from 'B.' Lastly, Fitch has affirmed the 'B-' IFS rating of PMA Capital Insurance Company's (PMA Re) run-off reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. subsidiary. All Rating Outlooks are Stable. PMAIG's favorable rating action reflects the company's improving operating franchise. While 70% renewals for first-half 2005 were modestly below historical averages of 75%-85%, they are up from 61% for first-half 2004. Fitch notes it will take time for management to prudently restore the competitive position of PMAIG. PMA Re has had $5 million in commutations year to date and has $215 million in statutory surplus at June 30, 2005. As part of its run-off agreement with the Pennsylvania Dept. of Insurance (PA DOI (Digital Object Identifier) A method of applying a persistent name to documents, publications and other resources on the Internet rather than using a URL, which can change over time. ), PMA Re was not allowed to pay dividends in 2004 and 2005 but may pay an ordinary dividend or return capital in 2006 only if risk-based capital (RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). ) is greater than 225% of authorized control level RBC. An extraordinary dividend in excess of 10% of PMA Re's prior year ending surplus may not requested unless, immediately after paying such dividend PMA Re's RBC is greater than 225% of authorized control level RBC, and any extraordinary dividend would require regulatory approval. Fitch anticipates that PMA will ask the PA DOI for an extraordinary dividend in 2006. Fitch anticipates commutations to increase in 2006 if the PA DOI) allows an extraordinary dividend from PMA Re to PMA. Half of any extraordinary dividend that PMA receives from PMA Re, up to $37.5 million, must be used to purchase the convertible debt at 110% of par value. Fitch anticipates that management will retire the majority of the convertible debt prior to its first put date in 2009 through careful use of dividends from PMA Re and PMAIG. As of June 30, 2005, PMAIG had net premiums written of $188 million, compared with $217 million for the same period in the prior year and a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio of 103.5%, compared with a 104.2% prior year. Fitch has upgraded the following, with a Stable Outlook: PMA Capital Insurance Company --Insurer financial strength affirmed at 'B-'. Manufacturers Alliance Insurance Co. --Insurer financial strength upgraded to 'BBB-' from 'BB+'. Pennsylvania Manufacturers Association Insurance Co. --Insurer financial strength upgraded to 'BBB-' from 'BB+'. Pennsylvania Manufacturers Indemnity Co. --Insurer financial strength upgraded to 'BBB-' from 'BB+'. PMA Capital Corp. --Long-term issuer upgraded to 'B+' from 'B'; --$57.5 million senior notes, 8.5% due June 15, 2018; --$84.1 million convertible debt, 6.5% due Sept. 30, 2022; --$15 million convertible debt, 6.5%, due Sept. 30, 2022. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria, and methodologies are available from this site, at all times. 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