8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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) May 30, 2006

PMA Capital Corporation

___________

(Exact name of Registrant as specified in its charter)

Pennsylvania	000-22761	22-2217932
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

380 Sentry Parkway Blue Bell, Pennsylvania	19422
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (215) 665-5046

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant

under any of the following provisions (see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01. Regulation FD Disclosure.

During June 2006 the Chief Executive Officer and Chief Financial Officer of PMA Capital Corporation (the “Company”) will be delivering a presentation to certain existing and potential investors of the Company. A copy of the presentation is being furnished as a part of this Current Report on Form 8-K as Exhibit 99.1 and is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(c)   Exhibits.

99.1PMA Capital Corporation Investor Presentation.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PMA Capital Corporation
May 30, 2006	By:	/s/ William E. Hitselberger
	Name:	William E. Hitselberger
	Title:	Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit	No.
PMA Capital Corporation Investor Presentation	99.1

EX-99.1

SM

®

Investor Meetings

First Quarter 2006 Results

Forward-looking

statements

p

This presentation and our discussion contain

forward-looking  information and statements
including, but not limited to, such matters as
business strategies, market trends, future
financial performance, and other matters which
inherently  involve risks and uncertainties which
could cause actual results to differ from those
projected or implied in the forward-looking
statements.  Please refer to the Company’s SEC
filings including its most recent Annual Report on
Form 10-K for risk factors which could cause
actual performance to differ from these
forward-looking statements.

Background

p

Prior to November 2003, two distinct revenue

segments- PMA Re and PMA Insurance Group

p

November 2003- PMA Re incurs material reserve

charge, resulting in a downgrade to its ratings
and also those of PMA Insurance Group (B++).
As a consequence, PMA Re is put into run-off

p

2004- PMACA “unstacks” PMA Insurance Group

(via stock dividend) and restructures convertible
debt, extending put date from 2006 to 2009.
  Best rating for PMA Insurance Group restored to
“A-” in November 2004

p

PMA Insurance Group enters 2005 with rating

restored and revitalized business platform

®

SM

Business

Overview

p

Primary Insurance Operations: 

The PMA Insurance Group

n

Solid presence in Atlantic Coast workers’ compensation

market

n

Disciplined underwriting standards

n

Superior long-term client relationships

n

Statutory capital level of about $315 million

n

Also provides TPA (claims and risk control) services to

non-insurance and larger account customers

p

Run-off Operations: 

n

Formerly wrote US based reinsurance and surplus lines

business

n

Statutory capital level of about $130 million, after payment

of dividend in May (RBC level of 350%)

n

Extraordinary dividend of $73.5 million received in May

2006 from Run-off operations

®

SM

Highlights

p

New management team November 2003

p

 2005 Focus:

ü

Profitable, measured growth at PMA Insurance Group

ü

Protect statutory capital at run-off operation

ü

Position Company for 2006 and beyond

p

2005 Results

n

Statutory capital at run-off protected, which permitted

payment of $73.5 million extraordinary dividend

n

Franchise at PMA Insurance Group revitalized for 2006

®

SM

Highlights

p

 2006 Focus:

ü

Profitable, measured growth at Primary Insurance

Operations, with a growth rate that will outpace

expense increases

ü

Continue client retention and incremental expansion at

TPA, we believe there are opportunities for continued
growth for us in this space

ü

Continue to reduce size of run-off balance sheet to

enhance possibility of further capital withdrawal

ü

Utilize excess capital to reduce balance sheet leverage

of consolidated operation

®

SM

Leadership

p

Management team is experienced, stable

and focused

p

Focus on Board governance (8 of 13

Board members are new since January
2003)

p

Significant financial and industry

expertise at the Board level

($ Millions, except per share)	3 Mos. 3/06	3 Mos. 3/05
Net premiums written	$113.8	$110.2
Net premiums earned	91.7	87.7
Net income (loss)	2.5	(20.6)
Diluted earnings per share	.08	(.65)

Consolidated First Quarter Results

p

Improved retention and increased new business at PMA

Insurance Group:

n

Workers’ compensation retention ratio increased from 62%

QTD March 2005 to 83% QTD March 2006

n

New business increased to $30 million in quarter ended

March 31, 2006, up 25% from first quarter 2005

p

No adjustment required to carried reserves in 1Q 2006

Primary Insurance Operations

Business

Overview

p

Specializes in workers’ compensation and other

commercial lines

p

Focus on mid-size to large accounts

n

Commercial Markets

n

Risk Management Services

n

Groups

p

Reputation for excellent customer service and

execution

p

6% share of Pennsylvania workers’

compensation market

Proven Platform

p

Disciplined underwriting à Consistent operating returns

p

The PMA Insurance Group - Workers’ Compensation

Estimated Undiscounted Accident Year Net Loss and LAE
Ratio (Measured at December 2005- 2003 adjusted for
retro premium)

Restore competitive advantage

in workers’ compensation line

p

Long-term strategy of Insurance Group is to write workers

compensation business at a combined ratio of 100% through
underwriting cycle

p

Measured steps to improve expense ratio, while not impacting

service levels to customer

n

Approximately 5% of staff eliminated in January 2005

n

Current headcount down about 18% from year-end 2003

p

2005 Targeted/Measured Revenue Growth

n

Restoration of rating provided measured growth opportunities in

2005

p

Claims Strategic Alliances assist in managing loss costs

n

medical network

n

bill review

n

catastrophic claims

Managing the Loss

and LAE Ratio

p

Price increases for workers’ compensation have

been keeping pace with overall loss trends

p

Diversification among classes of business

p

Loss containment ranges in loss sensitive

business (about 45% of 2005 business) reduce
risk to Company

p

Outcome focused claims philosophy

n

Full integration of nurse professionals into claims

process

n

In-house counsel in select jurisdictions

Managing the Loss

and LAE Ratio

p

Strategic alliances:

n

First Health – preferred provider network

n

TMESYS –pharmacy benefit management

program

n

Corp. Systems – medical bill review

n

Paradigm – catastrophic claim management

$millions	3 Mos. 3/06	3 Mos. 3/05
Net premiums written	$113.4	$105.5
Net premiums earned	91.2	84.7
Pre-tax operating income	8.1	6.6

First Quarter Results

p

New business written $30.0 million, up 25%

from first quarter 2005

p

Retention ratio of 83%, up 21 points from first

quarter 2005

TPA Operations

p

Third–Party Administrator (TPA) producing fee based revenues

p

2005 fee revenues of $23.8 million, including managed care

p

Broad service capabilities:

p

Claims administration/TPA

p

Managed care

p

Disability management

p

Risk control

p

Solid portfolio of loss and LAE reduction tools that are shared with Insurance

Operations

p

Three year client retention of over 90%

p

CAGR in Revenues of 17% since 2000

SM

®

Holding Company Review

$millions	3/31/06	12/31/05
Shareholders' Equity ( Including SFAS #115)	$399.6	$406.2
Shareholders' Equity ( Excluding SFAS #115)	$413.5	$409.0
Debt*	$189.2	$196.2
Debt to Capital ( Including SFAS #115)	32.1%	32.6%

* From 1/1 to 3/31, $5.4 million par of debt,

($6 million in value) retired through open market

purchases.

Capitalization

$millions	3/31/06
Convertible Debt
Par, Matures 20221	$   68.0
Derivative Element	11.0
Monthly Notes, Matures 2018	57.5
Other	0.7
Trust Preferred and Surplus Notes, Mature 2033-35	53.8
Unamortized discount	(1.8)
Total	$189.2

1) Holders may require us to repurchase this debt at 114% of principal amount on June 30, 2009

Debt Structure

Debt

p

Assuming put of convertible debt in 2009

and no refinancing

Ø

PMA Capital will have $111 million in

outstanding debt

Ø

Debt/capital ratio should be around

20%; no maturities until 2018

p

Interest costs after 2009 should be about

$9 million per year

Run-Off Operations

$millions	Mar 2006	Dec 2005
Statutory Capital*	$203.3	$204.9
Unassigned Surplus	$9.7	$11.4

* Reduced by $73.5 million extraordinary

dividend paid May 2006

Statutory Highlights

p

PMA Capital Insurance Company

Run-off Operations

p

Adverse development cover substantially

protects statutory capital at Run-off
operations

n

Cover designed to protect against $105 million

of future adverse development ($75 million in
cover remaining at March 31, 2006)

n

Protection to surplus in this event would be

$70 million

n

$30 million of protection used in first quarter

2005, no net reserve adjustments since first
quarter 2005

2006 Plan

p

Focus points:

n

Continued execution of run-off plan

n

Work with cedants to expedite commutations

n

Continued staff reductions, commensurate

with reduced claims volume

n

Return capital to parent as soon as

permissible ($73.5 million extraordinary
dividend paid in May 2006)

Expense

Management

p

Lease renegotiated October 2004:

n

Term reduced from 15 to 7 years

n

Space reduced approximately 75%

n

Annual savings approximately $1.5 million

p

Consistent, disciplined headcount reduction:

n

12/31/05:  38 FTE’s employed

n

12/31/04: 60 FTE’s employed

n

12/31/03: 165 FTE’s employed

n

Further reductions expected as business winds down

$millions	3 Mos. 3/06	3 Mos. 3/05
Net premiums written	$0.6	$4.9
Net premiums earned	0.6	3.2
Pre-tax operating income (loss)	0.2	(29.6)

Run-off Operations

First Quarter GAAP Results

p

First quarter 2005 adverse development in two

lines of business:  construction defects and
pro-rata professional liability

p

Statutory capital substantially protected by

reinsurance cover

Total = $1,080 million    

(excludes cash and gross up for securities lending)

March 31, 2006

Asset Type

n

Conservative

investment posture

n

No derivatives

n

No equity exposure

n

Pre-tax net

unrealized loss of

$21 million at March

31, 2006

n

Outside professional managers

High-Quality, Liquid

Investment Portfolio

Total = $1,017 million    

(excludes short-term investments and

gross up for securities lending)

March 31, 2006

Asset Quality

n

99% Investment

Grade bonds

n

AA+ average credit

quality

n

75% AAA Rated or

Government bonds

n

Duration - 3.9 years

    (3.7 yrs including
cash & short-term)

n

Current portfolio

yield 4.7%

High-Quality, Liquid

Investment Portfolio

# Table shows pro forma impact of receipt

of $73.5 million dividend distributed May 2006

from Run-off Operations

$0.00

$2.28

($2.28)#

$0.00

Pro Forma dividend impact

$12.39

($3.48)

$4.36

$11.51

Pro Forma for Dividend

$12.39

($5.76)

$6.64

$11.51

Pre-dividend book value

Consolidated

Corporate

and Other

Run-Off

Operations

PMA

Insurance
Group

PMA Capital Book Value

Summary

p

Execution of a three-pronged plan:

n

Maintain and prudently grow workers’ compensation

operation

n

Continued opportunistic growth of TPA business

n

Reduce run-off exposures and redeploy capital currently

invested in run-off operations

p

3/31/2006 Book value $12.39 per share, compared to a

current stock price (April 30) of $9.78

p

Expecting profitable growth in workers’ compensation in

2006

p

Execution of three-pronged plan should enhance our

ability to deliver reasonable returns