SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 30, 1999
PENN-AMERICA GROUP, INC.
(Exact name of registration as specified in this charter)
Pennsylvania 0-22316 23-2731409
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
420 S. York Road, Hatboro, Pennsylvania 19040
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 443-3612
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Item 5. Other Events
On September 30, 1999, the Company issued a press release (the "Press
Release") announcing reserve strengthening of $3.6 million after taxes to
increase net reserves and a $1.3 million charge after taxes for property losses
incurred during the third quarter. As a result of these actions, the third
quarter estimate is expected to be an operating loss of $0.38 to $0.40 per
share. The Company also announced that the Company's board approved the increase
of the stock buyback authorization by 500,000 shares to 2.5 million.
A copy of the Press Release is attached as Exhibit 1.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
PENN-AMERICA GROUP, INC.
Date: September 30, 1999
BY: /s/ Rosemary Ferrero
Rosemary Ferrero
(Principal Accounting Officer)
Exhibit 1 -- Penn-America Group, Inc. Press Release dated September 30, 1998.
News
For Release: September 30, 1999
Contact: Financial: Rosemary Ferrero, CPA
Chief Financial Officer
(215) 443-3612 or mailto:[email protected]
Media: David Kirk, APR
(610) 792-3329 or mailto:[email protected]
Summary: Penn-America Group, Inc. (NYSE:PNG) announces reserve
strengthening; third quarter results to fall short of
consensus estimate; stock buyback authorization increased by
500,000 shares to 2.5 million
HATBORO PA (September 30, 1999) - Penn-America Group, Inc. (NYSE:PNG)
announced today that the company will record an after-tax charge of $3.6 million
to increase its net unpaid loss and loss adjustment expenses (reserves) in the
third quarter. The action reflects continuing loss developments in the company's
non-standard personal automobile insurance line, which was discontinued in the
second quarter of this year, as well as developments in the company's other
liability line of business.
In addition, the company will record a third quarter after-tax charge
of $1.3 million in its property lines. As a result of the reserve strengthening
and this charge, the company expects to report a third quarter loss between
$0.38 and $0.40 per share, below the consensus estimate of equity analysts. The
company will report third quarter earnings on October 14.
The decision to increase reserves was made following a routine review
at August 31, of all company lines of business by the company's outside
actuarial firm and an independent assessment by a third-party claims examiner.
Jon S. Saltzman, president and chief executive officer said, "Of course
we don't like to take steps that disappoint our investors. By the same token, we
take the actions that serve their long-term interests without fail. This is one
of them. We have taken a difficult but prudent action, in response to
developments in a business we already have decided to run-off. After last year's
decline in our annual commercial growth rate to 3.8%, we now see a return to
growth levels more akin to our previous four year's compounded average growth
rate of 24.5%. Through the first nine months of this year, our annualized
commercial growth rate will be greater than 15%. This upturn that we are seeing
in our commercial growth rate leads us to believe that the soft market at our
premium level is coming to an end. The actions we have taken today give us a
strong base from which to grow."
The company also announced that its board of directors has authorized
the buyback of an additional 500,000 shares of stock, in addition to the 2
million shares currently authorized. As of today, the company has acquired
approximately 1.6 million shares of treasury stock. Saltzman added, "This step
reflects our continuing belief in the future of Penn-America."
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<PAGE>
Page Two/Penn-America Group (NYSE:PNG) Strengthens Reserves
Saltzman and Rosemary Ferrero, the company's chief financial officer,
will conduct a teleconference for equity analysts and fund managers today at
10:00 a.m. Eastern Daylight Savings Time. To participate, telephone (888)
273-9889 a few minutes before 10:00 a.m. and request the Penn-America Group,
Inc. conference call. A digital recording of the teleconference also will be
available immediately following the live conference through 11:59 a.m.
Wednesday, October 6. To hear the recording, telephone (800) 475-6701 at any
time during that period and use access code 474675.
Forward-Looking Information
Certain information included in this news release and other statements
or materials published or to be published by the company are not historical
facts but are forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments, new and
existing products, expectations for market segment and growth, the impact of
Year 2000 issues and similar matters. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, the company
provides the following cautionary remarks regarding important factors which,
among others, could cause the company's actual results and experience to differ
materially from the anticipated results or other expectations expressed in the
company's forward-looking statements. The risks and uncertainties that may
affect the operations, performance, development, results of the company's
business, and the other matters referred to above include, but are not limited
to: (1) changes in the business environment in which the company operates,
including inflation and interest rates; (2) changes in taxes, governmental laws
and regulations; (3) competitive product and pricing activity; (4) difficulties
of managing growth profitably; and (5) the impact of Year 2000 issues.
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