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) November 2, 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: (610) 397-5298

(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 2.02. Results of Operations and Financial Condition.

On November 2, 2006, PMA Capital Corporation (the “Registrant”) issued a news release regarding its Third Quarter 2006 results, a copy of which is furnished as Exhibit 99.1 hereto and is incorporated herein by reference. Additionally, the Registrant’s Third Quarter 2006 Statistical Supplement is furnished as Exhibit 99.2 and is incorporated herein by reference.

The information, including exhibits attached hereto, furnished under this Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit 99.1PMA Capital Corporation News Release, dated November 2, 2006

Exhibit 99.2PMA Capital Corporation Third Quarter 2006 Statistical Supplement

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
November 2, 2006	By:	/s/ William E. Hitselberger
	Name:	William E. Hitselberger
	Title:	Executive Vice President and Chief Financial Officer

INDEX TO EXHIBITS

Exhibit No.	Description
Exhibit 99.1	PMA Capital Corporation News Release, dated November 2, 2006
Exhibit 99.2	PMA Capital Corporation Third Quarter 2006 Statistical Supplement

EX-99.1

380 Sentry Parkway Blue Bell, PA 19422-0754
	PRESS RELEASE
For Release: Immediate Contact: William Hitselberger (610) 397-5298

PMA Capital Announces Third Quarter 2006 Results

Blue Bell, PA, November 2, 2006 -- PMA Capital Corporation (NASDAQ: PMACA) today announced financial results for the third quarter of 2006. PMA Capital reported net income of $1.5 million, or five cents per diluted share, for the third quarter of 2006, compared to net income of $740,000, or two cents per diluted share, for the same period in 2005. Operating income, which the Company defines as net income excluding realized gains (losses), for the quarter increased to $2.0 million from $426,000 in the third quarter of 2005.

For the nine months ended September 30, 2006, the Company reported net income of $3.2 million, or ten cents per diluted share, compared to a net loss of $19.8 million, or 63 cents per share, for the same period last year. Operating income for the first nine months of 2006 increased to $3.8 million compared to an operating loss of $21.9 million for the same period in 2005. The net loss and operating loss for the first nine months of 2005 included an after-tax charge of $23 million ($30 million pre-tax), or 73 cents per share, for prior year loss development at the Company’s Run-off Operations.

“We are pleased with another quarter of improving operating performance,” said Vincent T. Donnelly, President and Chief Executive Officer. “The PMA Insurance Group’s pre-tax operating income increased to $8.4 million for the third quarter of 2006, compared to $6.6 million in the third quarter of 2005, and year to date, pre-tax operating income increased $5.0 million to $23.2 million. Our year to date direct premiums written increased 8% from the same period a year ago and direct premiums written for the quarter improved by 4%, compared to the same period last year. For the first nine months of 2006, our workers’ compensation renewal retention rate improved to 85%, compared to 74% for the same period of 2005.”

Mr. Donnelly added, “Although we continue to grow our premiums while maintaining underwriting discipline in the current competitive market, we have challenged ourselves to develop complementary and alternative strategies to more fully utilize our existing infrastructure. Our TPA business, PMA Management Corp., continues to grow and we expect to see growth in the fourth quarter from our previously announced agreement with Midwest Insurance Companies.  We intend to continue to seek ways to grow our service platform and evaluate alternative opportunities which we believe would improve our operating performance.” 

Mr. Donnelly noted, “We continued to reduce our outstanding debt during the quarter by purchasing $12.8 million principal amount of our 6.50% Convertible Debt and $2.6 million of our 8.50% Senior Notes through open market purchases. During the first nine months of 2006, we reduced our total debt outstanding by 33%. We also continued to make progress in our Run-off Operations and are pleased to note that the insurance liabilities related to this business are down 17%, or $119 million, since December 31, 2005.”

Net income for the three and nine months ended September 30, 2006 included after-tax net realized investment losses of $519,000, or one cent per diluted share, and $623,000, or two cents per diluted share, compared to after-tax net realized investment gains of $314,000, or one cent per diluted share, and $2.1 million, or six cents per share, for the same periods last year. Included in after-tax net realized investment losses for the third quarter of 2006 were losses of $570,000, compared to losses of $1.9 million for the same period in 2005, resulting from increases in the fair value of the derivative component of our 6.50% Convertible Debt.

Consolidated revenues for the first nine months of 2006 increased to $335.1 million, compared to $326.1 million for the same period in 2005, while consolidated revenues for the third quarter of 2006 improved modestly to $111.9 million, compared to the prior year quarter. Direct premiums written for the third quarter of 2006 improved to $127.3 million, up from $122.2 million for the same period of 2005 and year to date direct premiums written increased 8% to $347.0 million in 2006, compared to the same period last year. Net premiums earned for the third quarter and first nine months of 2006 increased 3% and 5%, respectively, to $95.3 million and $281.9 million, compared to the same periods last year.

Segment Operating Results

Operating income (loss), which we define as net income (loss) under accounting principles generally accepted in the United States (GAAP) excluding net realized investment gains and losses, is the financial performance measure used by our management and Board of Directors to evaluate and assess the results of our insurance businesses because (i) net realized investment gains and losses are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments and (ii) in many instances, decisions to buy and sell securities are made at the holding company level, and such decisions result in net realized gains and losses that do not relate to the operations of the individual segments. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations.

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The following is a reconciliation of our segment operating results and operating income (loss) to GAAP net income (loss).

	Three months ended						Nine months ended
	September 30,						September 30,
(in thousands)	2006			2005			2006			2005
Pre-tax operating income (loss):
The PMA Insurance Group	$	8,351		$	6,600		$	23,163		$	18,153
Run-off Operations		174			(258	)		763			(28,771	)
Corporate & Other		(5,016	)		(5,609	)		(17,283	)		(17,497	)
Pre-tax operating income (loss)		3,509			733			6,643			(28,115	)
Income tax expense (benefit)		1,489			307			2,800			(6,240	)
Operating income (loss)		2,020			426			3,843			(21,875	)
Net realized gains (losses) after tax		(519	)		314			(623	)		2,081
Net income (loss)	$	1,501		$	740		$	3,220		$	(19,794	)

The PMA Insurance Group

The PMA Insurance Group reported pre-tax operating income of $8.4 million and $23.2 million for the third quarter and first nine months of 2006, compared to $6.6 million and $18.2 million for the same periods last year. The 2006 increases for both the third quarter and year to date periods were due to improved underwriting results and increased investment income.

Direct premiums written were $127.5 million for the third quarter of 2006, up from $122.3 million for the third quarter of 2005. For the nine months ended September 30, 2006, direct premiums written increased to $347.5 million, compared to $321.5 million for the same period last year. Our renewal retention rate on existing workers’ compensation accounts improved to 88% for the third quarter of 2006, compared to 83% for the same period in 2005, while our renewal retention rate for the first nine months of 2006 improved to 85%, up from 74% for the comparable period last year. We wrote $23.3 million and $73.5 million of new business in the third quarter and first nine months of 2006, compared to $40.2 million and $90.0 million for the same periods in 2005. Included in new business for the three and nine months ended September 30, 2006 was $2.1 million of California workers’ compensation business written under our agreement with Midwest Insurance Companies.

Net premiums written were $107.8 million and $306.8 million in the third quarter and first nine months of 2006, compared to $116.9 million and $304.5 million during the same periods a year ago.  Net premiums in the third quarter trailed the increase in direct premiums, due to an increase in premiums ceded on our commercial property business, where we changed our reinsurance program from an excess of loss to a pro rata basis, and to an increase in the amount of workers’ compensation business sold to captive accounts, where a substantial portion of the direct business is ceded.

For the third quarter and first nine months of 2006, the combined ratio on a GAAP basis was 101.4% and 102.1%, compared to 103.3% and 103.6% for the same periods last year. The improvements in the combined ratio for the third quarter and first nine months of 2006, compared to the same periods last year, primarily reflected an improved loss and LAE ratio.

The improved loss and LAE ratio was primarily due to a lower current accident year loss and LAE ratio in 2006, compared to 2005. Pricing changes coupled with payroll inflation for rate sensitive workers’ compensation business were slightly below overall estimated loss trends. Our loss and LAE ratio

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benefited from changes in workers’ compensation products selected by our insureds, modest changes in our geographic mix and a reduction in our estimate of medical cost inflation. We estimated our medical cost inflation to be 8.5% during the first nine months of 2006, compared to our estimate of 11% through the first nine months of 2005. We expect that medical cost inflation will remain a significant component of our overall loss experience.

Our TPA service revenues, which are included in other revenues, were $6.6 million for the third quarter of 2006, up 6% as compared to the third quarter of 2005.  For the first nine months of 2006, our service revenues were $20.8 million, up 22% from the same period last year. 

Net investment income increased to $9.0 million in the third quarter of 2006 compared to $8.2 million in the prior year quarter. For the first nine months of 2006, net investment income increased $2.9 million to $26.3 million, compared to the first nine months of 2005. The improvements in both periods were due primarily to higher yields on our investment portfolio, which had a book yield of 5.1% at September 30, 2006.

Run-off Operations

Our Run-off Operations includes the results of our former reinsurance and excess and surplus lines businesses. The Run-off Operations had pre-tax operating income of $174,000 and $763,000 for the three and nine months ended September 30, 2006, compared to pre-tax operating losses of $258,000 and $28.8 million for the same periods last year. The pre-tax operating loss for the first nine months of 2005 included the first quarter charge of $30 million for prior year loss development.

Corporate and Other

The Corporate and Other segment primarily includes corporate expenses, including debt service. Corporate and Other had a pre-tax operating loss of $5.0 million during the third quarter of 2006, compared to $5.6 million during the same period last year. The improvement in the quarter was due primarily to lower interest expense, which was partially offset by higher stock-based compensation expense. Pre-tax operating losses were $17.3 million during the first nine months of 2006, compared to $17.5 million for the same period in 2005. For segment reporting purposes, we allocate interest income for the bonds owned by our operating companies back to their respective segments and reduce investment income in the Corporate and Other segment. Although the Corporate and Other segment does not benefit from the reduced level of consolidated interest expense on the $19.4 million principal amount of its 6.50% Convertible Debt held by its operating segments, it does benefit from the reduced level of its outstanding 6.50% Convertible Debt due to the $35.0 million mandatory redemption which occurred in June 2006, as well as the $25.4 million of open market purchases made by PMA Capital Corporation in 2006.

Financial Condition

Total assets were $2.8 billion as of September 30, 2006, compared to $2.9 billion as of December 31, 2005. Shareholders’ equity was $412.2 million as of September 30, 2006, compared with $406.2 million as of December 31, 2005. Book value per share was $12.63 as of September 30, 2006, compared to $12.70 at year end 2005. The increase in shareholders’ equity was primarily due to net income and the impact of shares issued in lieu of cash for the mandatory debt redemption, partially offset by an increase in unrealized losses on our invested asset portfolio. Net unrealized holding losses increased on our invested asset portfolio to $6.2 million, or 19 cents per share, as of September 30, 2006, compared to $2.8 million, or nine cents per share, at year end 2005, mainly due to higher market interest rates. The

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decrease in book value per share was due primarily to the increase in shares outstanding, largely resulting from the shares issued during the mandatory debt redemption. At September 30, 2006, we had $17.1 million in cash and short-term investments at the holding company and its non-regulated subsidiaries.

The components of our debt were as follows:

(dollar amounts in thousands)	As of  September 30, 2006			As of December 31, 2005			Maturity
6.50% Convertible Debt	$	19,326	1	$	73,435			2022
Derivative component of 6.50% Convertible Debt		3,506			12,881
4.25% Convertible Debt2		455			655			2022
8.50% Senior Notes		54,900			57,500			2018
Junior subordinated debt		43,816			43,816			2033
Surplus Notes		10,000			10,000			2035
Unamortized debt discount		(442	)		(2,106	)
Total long-term debt	$	131,561		$	196,181

(1)   Holders, at their option, may require us to repurchase all or a portion of their debentures on June 30, 2009 at 114% of the principal amount. This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share for $18.4 million principal amount and $15.891 per share for $941,000 principal amount.

(2)   Holders required us to repurchase $200,000 of this debt in the third quarter of 2006. This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share.

As of September 30, 2006, our total outstanding debt was $131.6 million, compared to $196.2 million at December 31, 2005. The decrease was primarily due to the mandatory redemption and open market purchases of our 6.50% Convertible Debt. As a result of this activity, our debt-to-capital ratio has decreased to 24% as of September 30, 2006, compared to 33% as of December 31, 2005.

During the first nine months of 2006, we repurchased $28.7 million principal amount of our 6.50% Convertible Debt, including $12.8 million in the third quarter, through open market purchases. All of the open market purchases were made by PMA Capital Corporation, except for $3.3 million which were made by one of its consolidated operating companies. We paid $32.3 million for these bond purchases, including $14.6 million for the third quarter purchases, exclusive of accrued interest. As the derivative component of the bonds was already reflected in our debt balance, the repurchase activity did not result in any significant realized gain or loss.

In the third quarter of 2006, we also retired $2.6 million principal amount of our 8.50% Senior Notes through open market purchases by PMA Capital Corporation. We paid $2.6 million for these bond purchases, exclusive of accrued interest.

Also in 2006, the Company completed the redemption of $35 million principal amount, including $9.6 million held by its consolidated operating companies, of its 6.50% Convertible Debt. This redemption reduced the par value of our consolidated convertible debt by $25.4 million. The mandatory redemption was triggered by the extraordinary dividend the Company received from PMA Capital Insurance Company (“PMACIC”). In conjunction with the redemption, PMA Capital Corporation paid $36.0 million, including $10.6 million to its consolidated operating companies, and issued 307,990 shares of its Class A Common stock from its treasury. As the derivative component of the bonds was already reflected in our debt balance, the redemption activity did not result in any significant realized gain or loss.

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The PMA Insurance Group had statutory capital and surplus of $325.2 million as of September 30, 2006, compared to $315.1 million as of December 31, 2005. The PMA Insurance Group has the ability to pay $25.1 million in dividends during 2006 without the prior approval of the Pennsylvania Insurance Department. The statutory capital and surplus of PMACIC, PMA Capital Corporation’s wholly-owned run-off reinsurance subsidiary, was $123.4 million as of September 30, 2006, compared to $204.9 million as of December 31, 2005. The reduction in PMACIC’s statutory capital and surplus was due primarily to its extraordinary dividend payment of $73.5 million to PMA Capital in May 2006.

Conference Call with Investors

As a reminder, we will hold a conference call with investors beginning at 8:30 a.m. Eastern Time on Friday, November 3^rd to review our third quarter 2006 results. The conference call will be available via a live webcast over the Internet at www.pmacapital.com. To access the webcast, enter the Investor Information section, click on News Releases and then click on the microphone icon. Please note that by accessing the conference call via the Internet, you will be in a listen-only mode. The call-in numbers and passcodes for the conference call are as follows:

Live Call	Replay
866-362-4666(Domestic)	888-286-8010(Domestic)
617-597-5313(International)	617-801-6888(International)
Passcode 76270368	Passcode 55560025

A replay of the conference call will be available over the Internet or by dialing the call-in number for the replay and using the passcode. The replay will be available from approximately 10:30 a.m. Eastern Time on Friday, November 3^rd until 11:59 p.m. Eastern Time on Friday, December 1^st.

Quarterly Statistical Supplement

Our Third Quarter Statistical Supplement, which provides more detailed historical information about us, is available on our website. Please see the Investor Information section of our website at www.pmacapital.com. You may also obtain a copy of this supplement by sending your request to:

PMA Capital Corporation

380 Sentry Parkway

Blue Bell, PA 19422

Attention: Investor Relations

Alternatively, you may submit your request by telephone (610-397-5298) or by e-mail to InvestorRelations@pmacapital.com. We have also furnished a copy of this news release and the Statistical Supplement to the SEC under cover of Form 8-K dated Thursday, November 2, 2006. A copy of the Form 8-K is available on the SEC’s website at www.sec.gov.

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CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The statements contained in this press release, including those made by individuals authorized to speak on behalf of PMA Capital Corporation (“we”, “our” or the “Company”) that are not historical facts are forward-looking statements and are based on estimates, assumptions and projections.Actual results may differ materially from those projected in the forward-looking statements.

These forward-looking statements are based on currently available financial, competitive and economic data and the Company’s current operating plans based on assumptions regarding future events. The Company’s actual results could differ materially from those expected by the Company’s management. The factors that could cause actual results to vary materially, some of which are described with the forward-looking statements, include, but are not limited to:

·   our ability to effect an efficient withdrawal from the reinsurance business, including the commutation of reinsurance business with certain large ceding companies, without incurring any significant additional liabilities;

·   adverse property and casualty loss development for events that we insured in prior years, including unforeseen increases in medical costs and changing judicial interpretations of available coverage for certain insured losses;

·   our ability to increase the amount of new and renewal business written by The PMA Insurance Group at adequate prices;

·   our ability to have sufficient cash at the holding company to meet our debt service and other obligations, including any restrictions such as those imposed by the Pennsylvania Insurance Department on receiving dividends from our insurance subsidiaries in an amount sufficient to meet such obligations;

·   any future lowering or loss of one or more of our financial strength and debt ratings, and the adverse impact that any such downgrade may have on our ability to compete and to raise capital, and our liquidity and financial condition;

·   adequacy and collectibility of reinsurance that we purchased;

·   adequacy of reserves for claim liabilities;

·   whether state or federal asbestos liability legislation is enacted and the impact of such legislation on us;

·   regulatory changes in risk-based capital or other regulatory standards that affect the cost of, or demand for, our products or otherwise affect our ability to conduct business, including any future action with respect to our business taken by the Pennsylvania Insurance Department or any other state insurance department;

·   the impact of future results on the recoverability of our deferred tax asset;

·   the outcome of any litigation against us, including the outcome of the purported class action lawsuits;

·   competitive conditions that may affect the level of rate adequacy related to the amount of risk undertaken and that may influence the sustainability of adequate rate changes;

·   ability to implement and maintain rate increases;

·   the effect of changes in workers’ compensation statutes and their administration, which may affect the rates that we can charge and the manner in which we administer claims;

·   our ability to predict and effectively manage claims related to insurance and reinsurance policies;

·   uncertainty as to the price and availability of reinsurance on business we intend to write in the future, including reinsurance for terrorist acts;

·   severity of natural disasters and other catastrophes, including the impact of future acts of terrorism, in connection with insurance and reinsurance policies;

·   changes in general economic conditions, including the performance of financial markets, interest rates and the level of unemployment;

·   uncertainties related to possible terrorist activities or international hostilities and whether TRIEA is extended beyond its December 31, 2007 termination date; and

·   other factors or uncertainties disclosed from time to time in our filings with the Securities and Exchange Commission.

You should not place undue reliance on any such forward-looking statements. Unless otherwise stated, we disclaim any current intention to update forward-looking information and to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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PMA Capital Corporation

Selected Financial Data

(Unaudited)

	Three months ended September 30,
(dollars in thousands)	2006			2005
Direct premiums written:
The PMA Insurance Group	$	127,492		$	122,346
Run-off Operations		-			-
Corporate and Other		(158	)		(195	)
Consolidated direct premiums written	$	127,334		$	122,151
Net premiums written:
The PMA Insurance Group	$	107,795		$	116,877
Run-off Operations		701			789
Corporate and Other		(158	)		(195	)
Consolidated net premiums written	$	108,338		$	117,471
Revenues:
Net premiums earned:
The PMA Insurance Group	$	94,696		$	92,214
Run-off Operations		746			204
Corporate and Other		(158	)		(195	)
Consolidated net premiums earned		95,284			92,223
Net investment income		10,747			12,648
Realized gains (losses)		(799	)		483
Other revenues		6,624			6,209
Consolidated revenues	$	111,856		$	111,563
Components of net income:
Pre-tax operating income (loss) (1):
The PMA Insurance Group	$	8,351		$	6,600
Run-off Operations		174			(258	)
Corporate and Other		(5,016	)		(5,609	)
Pre-tax operating income		3,509			733
Income tax expense		1,489			307
Operating income		2,020			426
Realized gains (losses) after-tax		(519	)		314
Net income	$	1,501		$	740
Weighted average common shares outstanding:
Basic		32,444,916			31,774,255
Diluted		32,922,643			32,244,295

(1)   Operating income (loss), which is GAAP net income (loss) excluding net realized investment gains and losses, is the financial performance measure used by our management and our Board of Directors to evaluate and assess the results of our insurance businesses because (i) net realized investment gains (losses) are unpredictable and not necessarily indicative of current operating fundamentals or future performance and (ii) in many instances, decisions to buy and sell securities are made at the holding company level, and such decisions result in net realized gains (losses) that do not relate to the operations of the individual segments. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations.

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PMA Capital Corporation

Selected Financial Data

(Unaudited)

	Nine months ended September 30,
(dollars in thousands)	2006			2005
Direct premiums written:
The PMA Insurance Group	$	347,499		$	321,540
Run-off Operations		47			213
Corporate and Other		(539	)		(609	)
Consolidated direct premiums written	$	347,007		$	321,144
Net premiums written:
The PMA Insurance Group	$	306,824		$	304,454
Run-off Operations		1,834			7,222
Corporate and Other		(539	)		(609	)
Consolidated net premiums written	$	308,119		$	311,067
Revenues:
Net premiums earned:
The PMA Insurance Group	$	280,720		$	262,455
Run-off Operations		1,684			6,820
Corporate and Other		(539	)		(609	)
Consolidated net premiums earned		281,865			268,666
Net investment income		33,205			36,902
Realized gains (losses)		(959	)		3,201
Other revenues		21,014			17,340
Consolidated revenues	$	335,125		$	326,109
Components of net income (loss):
Pre-tax operating income (loss) (1):
The PMA Insurance Group	$	23,163		$	18,153
Run-off Operations		763			(28,771	)
Corporate and Other		(17,283	)		(17,497	)
Pre-tax operating income (loss)		6,643			(28,115	)
Income tax expense (benefit)		2,800			(6,240	)
Operating income (loss)		3,843			(21,875	)
Realized gains (losses) after-tax		(623	)		2,081
Net income (loss)	$	3,220		$	(19,794	)
Weighted average common shares outstanding:
Basic		32,159,316			31,631,850
Diluted		32,669,303			31,631,850

(1)   Operating income (loss), which is GAAP net income (loss) excluding net realized investment gains and losses, is the financial performance measure used by our management and our Board of Directors to evaluate and assess the results of our insurance businesses because (i) net realized investment gains (losses) are unpredictable and not necessarily indicative of current operating fundamentals or future performance and (ii) in many instances, decisions to buy and sell securities are made at the holding company level, and such decisions result in net realized gains (losses) that do not relate to the operations of the individual segments. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations.

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PMA Capital Corporation

GAAP Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
(in thousands, except per share data)	2006			2005
Assets:
Investments:
Fixed maturities available for sale	$	904,074		$	1,049,254
Short-term investments		59,227			57,997
Total investments		963,301			1,107,251
Cash		30,387			30,239
Accrued investment income		10,993			11,528
Premiums receivable		218,126			197,582
Reinsurance receivables		1,069,153			1,094,674
Deferred income taxes		102,986			103,656
Deferred acquisition costs		40,384			34,236
Funds held by reinsureds		133,222			146,374
Other assets		184,904			162,505
Total assets	$	2,753,456		$	2,888,045
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,690,483		$	1,820,043
Unearned premiums		217,506			173,432
Debt		131,561			196,181
Accounts payable, accrued expenses
and other liabilities		219,146			209,656
Funds held under reinsurance treaties		77,813			78,058
Dividends to policyholders		4,744			4,452
Total liabilities		2,341,253			2,481,822
Shareholders' Equity:
Class A Common stock		171,090			171,090
Additional paid-in capital		111,116			109,331
Retained earnings		181,719			187,265
Accumulated other comprehensive loss		(26,010	)		(22,684	)
Treasury stock, at cost		(25,712	)		(38,779	)
Total shareholders' equity		412,203			406,223
Total liabilities and shareholders' equity	$	2,753,456		$	2,888,045
Shareholders' equity per share	$	12.63		$	12.70

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PMA Capital Corporation

GAAP Consolidated Statements of Operations

(Unaudited)

	Three months ended September 30,
(in thousands, except per share data)	2006			2005
Gross premiums written	$	134,271		$	130,106
Net premiums written	$	108,338		$	117,471
Revenues:
Net premiums earned	$	95,284		$	92,223
Net investment income		10,747			12,648
Net realized investment gains (losses)		(799	)		483
Other revenues		6,624			6,209
Total revenues		111,856			111,563
Expenses:
Losses and loss adjustment expenses		66,754			68,112
Acquisition expenses		19,811			19,691
Operating expenses		18,953			17,872
Dividends to policyholders		589			567
Interest expense		3,039			4,105
Total losses and expenses		109,146			110,347
Pre-tax income		2,710			1,216
Income tax expense:
Current		-			-
Deferred		1,209			476
Total income tax expense		1,209			476
Net income	$	1,501		$	740
Net income per share:
Basic	$	0.05		$	0.02
Diluted	$	0.05		$	0.02

11

PMA Capital Corporation

GAAP Consolidated Statements of Operations

(Unaudited)

	Nine months ended September 30,
(in thousands, except per share data)	2006			2005
Gross premiums written	$	368,313		$	346,488
Net premiums written	$	308,119		$	311,067
Revenues:
Net premiums earned	$	281,865		$	268,666
Net investment income		33,205			36,902
Net realized investment gains (losses)		(959	)		3,201
Other revenues		21,014			17,340
Total revenues		335,125			326,109
Expenses:
Losses and loss adjustment expenses		198,526			225,361
Acquisition expenses		56,688			56,345
Operating expenses		60,520			54,372
Dividends to policyholders		3,022			2,831
Interest expense		10,685			12,114
Total losses and expenses		329,441			351,023
Pre-tax income (loss)		5,684			(24,914	)
Income tax expense (benefit):
Current		-			-
Deferred		2,464			(5,120	)
Total income tax expense (benefit)		2,464			(5,120	)
Net income (loss)	$	3,220		$	(19,794	)
Net income (loss) per share:
Basic	$	0.10		$	(0.63	)
Diluted	$	0.10		$	(0.63	)

12

EX-99.2

PMA Capital Corporation
Statistical Supplement
Third Quarter - 2006
Table of Contents
	Page
Consolidated Highlights:
Selected Financial Data - Third Quarter	1
Selected Financial Data - Year-to-date	2
Consolidated Statements of Operations - Per Share Data	3
Consolidated Statements of Operations - Third Quarter	5
Consolidated Statements of Operations - Year-to-date	6
Consolidated Balance Sheets	7
Invested Assets and Net Investment Income; Debt; Balance Sheet Impact of Commutations - Run-off Operations	8
Segment Information:
Statements of Operations - Consolidating - Year-to-date	9-10
Statements of Operations - Consolidating - Third Quarter	11-12
Statements of Operations - PMA Insurance Group	13
Insurance Ratios - PMA Insurance Group	14
Statements of Operations - Run-off Operations	15
Statements of Operations - Corporate & Other	16
Operating Cash Flow Information:
Operating Cash Flows - Consolidated	17
Operating Cash Flows - PMA Insurance Group	18
Operating Cash Flows - Run-off Operations	19
Statutory Financial Information:
Statutory Surplus; Statutory Financial Information - PMA Pool	20
Other Information:
Industry Ratings and Market Information	21
Legend:
NM - Not Meaningful

Note: Operating income (loss), which we define as GAAP net income (loss) excluding net realized investment gains and losses, is the financial performance measure used by our management and Board of Directors to evaluate and assess the results of our business segments because (i) net realized investment gains and losses are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments and (ii) in many instances, decisions to buy and sell securities are made at the holding company level, and such decisions result in net realized gains and losses that do not relate to the operations of the individual segments. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations. See pages 1 and 2 for reconciliations of operating results by segment to GAAP net income (loss).

PMA Capital Corporation
Selected Financial Data
(Dollar Amounts in Thousands, Except Per Share Data)
	3rd			4th			1st			2nd			3rd			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			3rd
	2005			2005			2006			2006			2006			Quarter
Gross Premiums Written by Segment:
PMA Insurance Group	$	129,163		$	82,490		$	133,737		$	99,328		$	133,903			3.7	%
Run-off Operations		1,138			4,959			398			960			526			-53.8	%
Corporate & Other		(195	)		(209	)		(168	)		(213	)		(158	)		19.0	%
Gross premiums written	$	130,106		$	87,240		$	133,967		$	100,075		$	134,271			3.2	%
Net Premiums Written by Segment:
PMA Insurance Group	$	116,877		$	71,339		$	113,390		$	85,639		$	107,795			-7.8	%
Run-off Operations		789			3,028			606			527			701			-11.2	%
Corporate & Other		(195	)		(209	)		(168	)		(213	)		(158	)		19.0	%
Net premiums written	$	117,471		$	74,158		$	113,828		$	85,953		$	108,338			-7.8	%
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	6,600		$	3,867		$	8,141		$	6,671		$	8,351			26.5	%
Run-off Operations		(258	)		1,838			161			428			174			NM
Corporate & Other		(5,609	)		(6,722	)		(6,139	)		(6,128	)		(5,016	)		10.6	%
Pre-tax operating income (loss)		733			(1,017	)		2,163			971			3,509			NM
Net realized investment gains (losses)		483			(1,084	)		1,818			(1,978	)		(799	)		NM
Pre-tax income (loss)		1,216			(2,101	)		3,981			(1,007	)		2,710			NM
Income tax expense (benefit)		476			(875	)		1,500			(245	)		1,209			NM
Net income (loss)	$	740		$	(1,226	)	$	2,481		$	(762	)	$	1,501			NM
After-tax operating income (loss)	$	426		$	(521	)	$	1,299		$	524		$	2,020			NM
Diluted Earnings (Loss) Per Share:
Net income (loss)	$	0.02		$	(0.04	)	$	0.08		$	(0.02	)	$	0.05			NM
Less the impact of:
Realized gains (losses) after tax		0.01			(0.02	)		0.04			(0.04	)		(0.01	)		NM
After-tax operating income (loss)	$	0.01		$	(0.02	)	$	0.04		$	0.02		$	0.06			NM
Capitalization:
Debt	$	216,808		$	196,181		$	189,181		$	148,303		$	131,561			-39.3	%
Shareholders' equity excluding FAS 115 unrealized gain (loss)		413,513			409,019			413,516			417,064			418,372			1.2	%
Total capitalization excluding FAS 115 unrealized gain (loss)		630,321			605,200			602,697			565,367			549,933			-12.8	%
FAS 115 unrealized gain (loss)		1,151			(2,796	)		(13,941	)		(18,733	)		(6,169	)		NM
Total capitalization including FAS 115 unrealized gain (loss)	$	631,472		$	602,404		$	588,756		$	546,634		$	543,764			-13.9	%
Book Value Per Share:
Excluding FAS 115 unrealized gain (loss)	$	12.94		$	12.79		$	12.83		$	12.79		$	12.82			-0.9	%
Including FAS 115 unrealized gain (loss)	$	12.98		$	12.70		$	12.39		$	12.21		$	12.63			-2.7	%
Debt to Total Capital:
Excluding FAS 115 unrealized gain (loss)		34.4	%		32.4	%		31.4	%		26.2	%		23.9	%		-30.5	%
Including FAS 115 unrealized gain (loss)		34.3	%		32.6	%		32.1	%		27.1	%		24.2	%		-29.4	%
Interest Coverage:
Income before interest and income taxes
to interest expense		1.30			0.47			2.03			0.73			1.89			45.4	%
Operating income before interest and income taxes
to interest expense		1.18			0.75			1.56			1.26			2.15			82.2	%

1

PMA Capital Corporation
Selected Financial Data
(Dollar Amounts in Thousands, Except Per Share Data)
	Nine			Nine			% Change
	Months			Months			Nine
	2006			2005			Months
Gross Premiums Written by Segment:
PMA Insurance Group	$	366,968		$	339,115			8.2	%
Run-off Operations		1,884			7,982			-76.4	%
Corporate & Other		(539	)		(609	)		11.5	%
Gross premiums written	$	368,313		$	346,488			6.3	%
Net Premiums Written by Segment:
PMA Insurance Group	$	306,824		$	304,454			0.8	%
Run-off Operations		1,834			7,222			-74.6	%
Corporate & Other		(539	)		(609	)		11.5	%
Net premiums written	$	308,119		$	311,067			-0.9	%
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	23,163		$	18,153			27.6	%
Run-off Operations		763			(28,771	)		NM
Corporate & Other		(17,283	)		(17,497	)		1.2	%
Pre-tax operating income (loss)		6,643			(28,115	)		NM
Net realized investment gains (losses)		(959	)		3,201			NM
Pre-tax income (loss)		5,684			(24,914	)		NM
Income tax expense (benefit)		2,464			(5,120	)		NM
Net income (loss)	$	3,220		$	(19,794	)		NM
After-tax operating income (loss)	$	3,843		$	(21,875	)		NM
Diluted Earnings (Loss) Per Share:
Net income (loss)	$	0.10		$	(0.63	)		NM
Less the impact of:
Realized gains (losses) after tax		(0.02	)		0.06			NM
After-tax operating income (loss)	$	0.12		$	(0.69	)		NM

2

PMA Capital Corporation
Consolidated Statements of Operations - Per Share Data
	3rd		4th			1st		2nd			3rd		Nine		Nine
	Quarter		Quarter			Quarter		Quarter			Quarter		Months		Months
	2005		2005			2006		2006			2006		2006		2005
Diluted Earnings (Loss) Per Share:
Net income (loss)	$	0.02	$	(0.04	)	$	0.08	$	(0.02	)	$	0.05	$	0.10	$	(0.63	)
Pre-tax operating income (loss)	$	0.02	$	(0.03	)	$	0.07	$	0.03		$	0.11	$	0.20	$	(0.89	)
After-tax operating income (loss)	$	0.01	$	(0.02	)	$	0.04	$	0.02		$	0.06	$	0.12	$	(0.69	)
Diluted weighted average common
shares outstanding		32,244,295		31,833,384			32,405,934		32,132,618			32,922,643		32,669,303		31,631,850
Dividends declared:
Class A Common stock	$	-	$	-		$	-	$	-		$	-	$	-	$	-
Actual common shares issued
and outstanding		31,956,983		31,983,283			32,239,288		32,613,234			32,646,689		32,646,689		31,956,983
Class A Common Stock prices:
High	$	9.50	$	9.73		$	10.43	$	10.49		$	10.75	$	10.75	$	10.65
Low	$	7.83	$	7.99		$	8.68	$	9.24		$	8.60	$	8.60	$	5.91
Close	$	8.78	$	9.13		$	10.18	$	10.30		$	8.82	$	8.82	$	8.78

3

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4

PMA Capital Corporation
Consolidated Statements of Operations
(In Thousands)
	3rd		4th			1st		2nd			3rd			% Change
	Quarter		Quarter			Quarter		Quarter			Quarter			3rd
	2005		2005			2006		2006			2006			Quarter
Gross Premiums Written	$	130,106	$	87,240		$	133,967	$	100,075		$	134,271			3.2	%
Net Premiums Written	$	117,471	$	74,158		$	113,828	$	85,953		$	108,338			-7.8	%
Revenues:
Net premiums earned	$	92,223	$	99,364		$	91,659	$	94,922		$	95,284			3.3	%
Net investment income		12,648		11,761			11,400		11,058			10,747			-15.0	%
Net realized investment gains (losses)		483		(1,084	)		1,818		(1,978	)		(799	)		NM
Other revenues		6,209		6,946			7,104		7,286			6,624			6.7	%
Total revenues		111,563		116,987			111,981		111,288			111,856			0.3	%
Expenses:
Losses and loss adjustment expenses		68,112		69,713			65,393		66,379			66,754			-2.0	%
Acquisition expenses		19,691		19,536			17,325		19,552			19,811			0.6	%
Operating expenses		17,872		23,499			19,987		21,580			18,953			6.0	%
Dividends to policyholders		567		2,343			1,422		1,011			589			3.9	%
Interest expense		4,105		3,997			3,873		3,773			3,039			-26.0	%
Total losses and expenses		110,347		119,088			108,000		112,295			109,146			-1.1	%
Pre-tax income (loss)		1,216		(2,101	)		3,981		(1,007	)		2,710			NM
Income tax expense (benefit):
Current		-		-			-		-			-			NM
Deferred		476		(875	)		1,500		(245	)		1,209			NM
Total income tax expense (benefit)		476		(875	)		1,500		(245	)		1,209			NM
Net income (loss)	$	740	$	(1,226	)	$	2,481	$	(762	)	$	1,501			NM
Pre-tax operating income (loss)	$	733	$	(1,017	)	$	2,163	$	971		$	3,509			NM
After-tax operating income (loss)	$	426	$	(521	)	$	1,299	$	524		$	2,020			NM

5

PMA Capital Corporation
Consolidated Statements of Operations
(In Thousands)
	Nine			Nine			% Change
	Months			Months			Nine
	2006			2005			Months
Gross Premiums Written	$	368,313		$	346,488			6.3	%
Net Premiums Written	$	308,119		$	311,067			-0.9	%
Revenues:
Net premiums earned	$	281,865		$	268,666			4.9	%
Net investment income		33,205			36,902			-10.0	%
Net realized investment gains (losses)		(959	)		3,201			NM
Other revenues		21,014			17,340			21.2	%
Total revenues		335,125			326,109			2.8	%
Expenses:
Losses and loss adjustment expenses		198,526			225,361			-11.9	%
Acquisition expenses		56,688			56,345			0.6	%
Operating expenses		60,520			54,372			11.3	%
Dividends to policyholders		3,022			2,831			6.7	%
Interest expense		10,685			12,114			-11.8	%
Total losses and expenses		329,441			351,023			-6.1	%
Pre-tax income (loss)		5,684			(24,914	)		NM
Income tax expense (benefit):
Current		-			-			NM
Deferred		2,464			(5,120	)		NM
Total income tax expense (benefit)		2,464			(5,120	)		NM
Net income (loss)	$	3,220		$	(19,794	)		NM
Pre-tax operating income (loss)	$	6,643		$	(28,115	)		NM
After-tax operating income (loss)	$	3,843		$	(21,875	)		NM

6

PMA Capital Corporation
Consolidated Balance Sheets
(In Thousands)
	3rd			4th			1st			2nd			3rd
	Quarter			Quarter			Quarter			Quarter			Quarter
	2005			2005			2006			2006			2006
Assets:
Investments in fixed maturities available for sale	$	1,184,301		$	1,049,254		$	994,972		$	913,376		$	904,074
Short-term investments		67,636			57,997			63,641			70,994			59,227
Short-term investments, loaned securities collateral		63,751			-			9,991			4,771			-
Total investments		1,315,688			1,107,251			1,068,604			989,141			963,301
Cash		43,282			30,239			13,667			26,004			30,387
Accrued investment income		13,703			11,528			11,395			9,312			10,993
Premiums receivable		212,847			197,582			209,354			205,825			218,126
Reinsurance receivables		1,115,953			1,094,674			1,086,830			1,071,332			1,069,153
Deferred income taxes		98,568			103,656			107,908			110,452			102,986
Deferred acquisition costs		39,432			34,236			39,308			37,336			40,384
Funds held by reinsureds		153,064			146,374			148,512			151,873			133,222
Other assets		167,192			162,505			179,061			171,713			184,904
Total assets	$	3,159,729		$	2,888,045		$	2,864,639		$	2,772,988		$	2,753,456
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,966,907		$	1,820,043		$	1,776,822		$	1,727,369		$	1,690,483
Unearned premiums		199,153			173,432			199,129			189,140			217,506
Debt		216,808			196,181			189,181			148,303			131,561
Accounts payable, accrued expenses
and other liabilities		198,441			209,654			205,114			220,350			219,146
Funds held under reinsurance treaties		96,067			78,058			79,815			79,966			77,813
Dividends to policyholders		3,931			4,452			4,998			4,725			4,744
Payable under securities loan agreements		63,758			2			10,005			4,804			-
Total liabilities		2,745,065			2,481,822			2,465,064			2,374,657			2,341,253
Shareholders' Equity:
Class A Common stock		171,090			171,090			171,090			171,090			171,090
Additional paid-in capital		109,331			109,331			110,042			110,552			111,116
Retained earnings		188,409			187,265			185,393			180,626			181,719
Accumulated other comprehensive loss		(14,861	)		(22,684	)		(33,358	)		(37,630	)		(26,010	)
Treasury stock, at cost		(39,305	)		(38,779	)		(33,592	)		(26,307	)		(25,712	)
Total shareholders' equity		414,664			406,223			399,575			398,331			412,203
Total liabilities and shareholders' equity	$	3,159,729		$	2,888,045		$	2,864,639		$	2,772,988		$	2,753,456

7

PMA Capital Corporation
Invested Assets and Net Investment Income
(Dollars in Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2005			2005			2006			2006			2006			2006			2005
Total Investments & Cash
As reported	$	1,358,970		$	1,137,490		$	1,082,271		$	1,015,145		$	993,688		$	993,688		$	1,358,970
Less:
Securities lending activity		63,758			2			10,005			4,804			-			-			63,758
Unrealized gain (loss)		1,771			(4,302	)		(21,448	)		(28,820	)		(9,490	)		(9,490	)		1,771
Total adjusted investments & cash	$	1,293,441		$	1,141,790		$	1,093,714		$	1,039,161		$	1,003,178		$	1,003,178		$	1,293,441
Net Investment Income
As reported	$	12,648		$	11,761		$	11,400		$	11,058		$	10,747		$	33,205		$	36,902
Funds held:
Assumed		535			545			335			537			185			1,057			851
Ceded		(1,694	)		(1,897	)		(1,519	)		(1,643	)		(1,482	)		(4,644	)		(6,002	)
Total funds held		(1,159	)		(1,352	)		(1,184	)		(1,106	)		(1,297	)		(3,587	)		(5,151	)
Total adjusted investment income	$	13,807		$	13,113		$	12,584		$	12,164		$	12,044		$	36,792		$	42,053
Yield
As reported		3.62	%		3.77	%		4.11	%		4.22	%		4.28	%		4.19	%		3.42	%
Investment portfolio		4.22	%		4.31	%		4.50	%		4.56	%		4.72	%		4.59	%		4.12	%
Duration (in years)		3.7			3.7			3.7			3.5			3.4			3.4			3.7

PMA Capital Corporation
Debt
(Dollars in Thousands)
	Amount
	Outstanding			Maturity
6.50% convertible debt	$	19,326			20221
Derivative component of 6.50% convertible debt		3,506
4.25% convertible debt		455			20222
8.50% senior notes		54,900			2018
Junior subordinated debt 3		43,816			2033
Surplus notes 4		10,000			2035
Unamortized debt discount		(442	)
Total long-term debt	$	131,561

1	Holders of this debt, at their option, may require us to repurchase all or a portion of their debentures on June 30, 2009 at 114% of the principal amount. This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share for $18.4 million principal amount and $15.891 per share for $941,000 principal amount.
2	Holders of this debt, at their option, may require us to repurchase all or a portion of their debentures on September 30, 2008, 2010, 2012 and 2017.  Holders required us to repurchase $200,000 of this debt on September 30, 2006. This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share.
3	Weighted average interest rate on junior subordinated debt is 9.52% as of September 30, 2006.
4	Interest rate on surplus notes is 9.97% as of September 30, 2006.

PMA Capital Corporation
Balance Sheet Impact of Commutations - Run-off Operations
(Dollars in Thousands)
	3rd Quarter and Nine Months 2006
Assets	Assumed			Ceded		Total
Funds held by reinsureds	$	(20,248	)	$	-	$	(20,248	)
Liabilities		Assumed			Ceded		Total
Unpaid losses and loss adjustment expenses	$	(23,013	)	$	-	$	(23,013	)

8

PMA Capital Corporation
Statements of Operations - Consolidating
Nine Months Ended September 30, 2006
(In Thousands)
	PMA
	Insurance		Corporate			Run-off
	Group		& Other1			Operations			Consolidated
Gross Premiums Written	$	366,968	$	(539	)	$	1,884		$	368,313
Net Premiums Written	$	306,824	$	(539	)	$	1,834		$	308,119
Revenues:
Net premiums earned	$	280,720	$	(539	)	$	1,684		$	281,865
Net investment income		26,310		(409	)		7,304			33,205
Other revenues		20,812		202			-			21,014
Operating revenues		327,842		(746	)		8,988			336,084
Losses and Expenses:
Losses and loss adjustment expenses		200,456		-			(1,930	)		198,526
Acquisition expenses		56,240		-			448			56,688
Operating expenses		44,238		6,575			9,707			60,520
Dividends to policyholders		3,022		-			-			3,022
Total losses and expenses		303,956		6,575			8,225			318,756
Operating income (loss) before income taxes
and interest expense		23,886		(7,321	)		763			17,328
Interest expense		723		9,962			-			10,685
Pre-tax operating income (loss)	$	23,163	$	(17,283	)	$	763			6,643
Net realized investment losses										(959	)
Pre-tax income									$	5,684
1Corporate & Other includes the effect of eliminating transactions between the Insurance Operations.

9

PMA Capital Corporation
Statements of Operations - Consolidating
Nine Months Ended September 30, 2005
(In Thousands)
	PMA
	Insurance		Corporate			Run-off
	Group		& Other1			Operations			Consolidated
Gross Premiums Written	$	339,115	$	(609	)	$	7,982		$	346,488
Net Premiums Written	$	304,454	$	(609	)	$	7,222		$	311,067
Revenues:
Net premiums earned	$	262,455	$	(609	)	$	6,820		$	268,666
Net investment income		23,417		799			12,686			36,902
Other revenues		17,043		297			-			17,340
Operating revenues		302,915		487			19,506			322,908
Losses and Expenses:
Losses and loss adjustment expenses		191,544		-			33,817			225,361
Acquisition expenses		52,300		-			4,045			56,345
Operating expenses		38,082		5,875			10,415			54,372
Dividends to policyholders		2,831		-			-			2,831
Total losses and expenses		284,757		5,875			48,277			338,909
Operating income (loss) before income taxes
and interest expense		18,158		(5,388	)		(28,771	)		(16,001	)
Interest expense		5		12,109			-			12,114
Pre-tax operating income (loss)	$	18,153	$	(17,497	)	$	(28,771	)		(28,115	)
Net realized investment gains										3,201
Pre-tax loss									$	(24,914	)
1Corporate & Other includes the effect of eliminating transactions between the Insurance Operations.

10

PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended September 30, 2006
(In Thousands)
	PMA
	Insurance		Corporate			Run-off
	Group		& Other1			Operations			Consolidated
Gross Premiums Written	$	133,903	$	(158	)	$	526		$	134,271
Net Premiums Written	$	107,795	$	(158	)	$	701		$	108,338
Revenues:
Net premiums earned	$	94,696	$	(158	)	$	746		$	95,284
Net investment income		8,998		54			1,695			10,747
Other revenues		6,573		51			-			6,624
Operating revenues		110,267		(53	)		2,441			112,655
Losses and Expenses:
Losses and loss adjustment expenses		68,255		-			(1,501	)		66,754
Acquisition expenses		19,098		-			713			19,811
Operating expenses		13,720		2,178			3,055			18,953
Dividends to policyholders		589		-			-			589
Total losses and expenses		101,662		2,178			2,267			106,107
Operating income (loss) before income taxes
and interest expense		8,605		(2,231	)		174			6,548
Interest expense		254		2,785			-			3,039
Pre-tax operating income (loss)	$	8,351	$	(5,016	)	$	174			3,509
Net realized investment losses										(799	)
Pre-tax income									$	2,710
1Corporate & Other includes the effect of eliminating transactions between the Insurance Operations.

11

PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended September 30, 2005
(In Thousands)
	PMA
	Insurance		Corporate			Run-off
	Group		& Other1			Operations			Consolidated
Gross Premiums Written	$	129,163	$	(195	)	$	1,138		$	130,106
Net Premiums Written	$	116,877	$	(195	)	$	789		$	117,471
Revenues:
Net premiums earned	$	92,214	$	(195	)	$	204		$	92,223
Net investment income		8,160		271			4,217			12,648
Other revenues		6,172		37			-			6,209
Operating revenues		106,546		113			4,421			111,080
Losses and Expenses:
Losses and loss adjustment expenses		67,995		-			117			68,112
Acquisition expenses		18,279		-			1,412			19,691
Operating expenses		13,100		1,622			3,150			17,872
Dividends to policyholders		567		-			-			567
Total losses and expenses		99,941		1,622			4,679			106,242
Operating income (loss) before income taxes
and interest expense		6,605		(1,509	)		(258	)		4,838
Interest expense		5		4,100			-			4,105
Pre-tax operating income (loss)	$	6,600	$	(5,609	)	$	(258	)		733
Net realized investment gains										483
Pre-tax income									$	1,216
1Corporate & Other includes the effect of eliminating transactions between the Insurance Operations.

12

PMA Capital Corporation
Statements of Operations - PMA Insurance Group
(Dollar Amounts in Thousands)
	3rd		4th		1st		2nd		3rd		Nine		Nine		% Change			% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		Months		Months		3rd			Nine
	2005		2005		2006		2006		2006		2006		2005		Quarter			Months
Gross Premiums Written	$	129,163	$	82,490	$	133,737	$	99,328	$	133,903	$	366,968	$	339,115		3.7	%		8.2	%
Net Premiums Written	$	116,877	$	71,339	$	113,390	$	85,639	$	107,795	$	306,824	$	304,454		-7.8	%		0.8	%
Revenues:
Net premiums earned	$	92,214	$	96,187	$	91,221	$	94,803	$	94,696	$	280,720	$	262,455		2.7	%		7.0	%
Net investment income		8,160		8,328		8,559		8,753		8,998		26,310		23,417		10.3	%		12.4	%
Other revenues		6,172		6,837		7,074		7,165		6,573		20,812		17,043		6.5	%		22.1	%
Total revenues		106,546		111,352		106,854		110,721		110,267		327,842		302,915		3.5	%		8.2	%
Losses and Expenses:
Losses and loss adjustment expenses		67,995		68,732		64,519		67,682		68,255		200,456		191,544		0.4	%		4.7	%
Acquisition expenses		18,279		18,998		18,219		18,923		19,098		56,240		52,300		4.5	%		7.5	%
Operating expenses		13,100		17,191		14,325		16,193		13,720		44,238		38,082		4.7	%		16.2	%
Dividends to policyholders		567		2,343		1,422		1,011		589		3,022		2,831		3.9	%		6.7	%
Total losses and expenses		99,941		107,264		98,485		103,809		101,662		303,956		284,757		1.7	%		6.7	%
Operating income before income taxes
and interest expense		6,605		4,088		8,369		6,912		8,605		23,886		18,158		30.3	%		31.5	%
Interest expense		5		221		228		241		254		723		5		NM			NM
Pre-tax operating income	$	6,600	$	3,867	$	8,141	$	6,671	$	8,351	$	23,163	$	18,153		26.5	%		27.6	%

13

PMA Capital Corporation
Insurance Ratios - PMA Insurance Group
	3rd			4th			1st			2nd			3rd			Nine			Nine			Point Chg.			Point Chg.
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months			3rd Quarter			Nine Months
	2005			2005			2006			2006			2006			2006			2005			Better Worse)			Better (Worse)
Ratios - GAAP Basis:
Loss and LAE ratio		73.7	%		71.5	%		70.7	%		71.4	%		72.1	%		71.4	%		73.0	%		1.6			1.6
Expense ratio:
Acquisition expenses		19.8	%		19.8	%		20.0	%		20.0	%		20.2	%		20.0	%		19.9	%		(0.4	)		(0.1	)
Operating expenses 1		9.2	%		12.5	%		9.8	%		10.4	%		8.5	%		9.6	%		9.6	%		0.7			-
Total expense ratio		29.0	%		32.3	%		29.8	%		30.4	%		28.7	%		29.6	%		29.5	%		0.3			(0.1	)
Policyholders' dividend ratio		0.6	%		2.4	%		1.6	%		1.1	%		0.6	%		1.1	%		1.1	%		-			-
Combined ratio		103.3	%		106.2	%		102.1	%		102.9	%		101.4	%		102.1	%		103.6	%		1.9			1.5
Net investment income ratio		-8.8	%		-8.7	%		-9.4	%		-9.2	%		-9.5	%		-9.4	%		-8.9	%		0.7			0.5
Operating ratio		94.5	%		97.5	%		92.7	%		93.7	%		91.9	%		92.7	%		94.7	%		2.6			2.0
1 The operating expense ratio equals insurance-related operating expenses divided by net premiums earned. Insurance-related operating expenses were $8.4 million, $12.1 million, $8.9 million, $10.0 million and $8.1 million for the third and fourth quarters of 2005 and the first, second and third quarters of 2006, respectively.

14

PMA Capital Corporation
Statements of Operations - Run-off Operations
(Dollar Amounts in Thousands)
	3rd			4th		1st			2nd			3rd			Nine			Nine			% Change			% Change
	Quarter			Quarter		Quarter			Quarter			Quarter			Months			Months			3rd			Nine
	2005			2005		2006			2006			2006			2006			2005			Quarter			Months
Gross Premiums Written	$	1,138		$	4,959	$	398		$	960		$	526		$	1,884		$	7,982			-53.8	%		-76.4	%
Net Premiums Written	$	789		$	3,028	$	606		$	527		$	701		$	1,834		$	7,222			-11.2	%		-74.6	%
Revenues:
Net premiums earned	$	204		$	3,386	$	606		$	332		$	746		$	1,684		$	6,820			NM			-75.3	%
Net investment income		4,217			3,652		3,201			2,408			1,695			7,304			12,686			-59.8	%		-42.4	%
Total revenues		4,421			7,038		3,807			2,740			2,441			8,988			19,506			-44.8	%		-53.9	%
Losses and Expenses:
Losses and loss adjustment expenses		117			981		874			(1,303	)		(1,501	)		(1,930	)		33,817			NM			NM
Acquisition expenses		1,412			538		(894	)		629			713			448			4,045			-49.5	%		-88.9	%
Operating expenses		3,150			3,681		3,666			2,986			3,055			9,707			10,415			-3.0	%		-6.8	%
Total losses and expenses		4,679			5,200		3,646			2,312			2,267			8,225			48,277			-51.5	%		-83.0	%
Pre-tax operating income (loss)	$	(258	)	$	1,838	$	161		$	428		$	174		$	763		$	(28,771	)		NM			NM

15

PMA Capital Corporation
Statements of Operations - Corporate & Other
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine			% Change			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months			3rd			Nine
	2005			2005			2006			2006			2006			2006			2005			Quarter			Months
Gross Premiums Written	$	(195	)	$	(209	)	$	(168	)	$	(213	)	$	(158	)	$	(539	)	$	(609	)		19.0	%		11.5	%
Net Premiums Written	$	(195	)	$	(209	)	$	(168	)	$	(213	)	$	(158	)	$	(539	)	$	(609	)		19.0	%		11.5	%
Revenues:
Net premiums earned	$	(195	)	$	(209	)	$	(168	)	$	(213	)	$	(158	)	$	(539	)	$	(609	)		19.0	%		11.5	%
Net investment income		271			(219	)		(360	)		(103	)		54			(409	)		799			-80.1	%		NM
Other revenues		37			109			30			121			51			202			297			37.8	%		-32.0	%
Total revenues		113			(319	)		(498	)		(195	)		(53	)		(746	)		487			NM			NM
Losses and Expenses:
Operating expenses		1,622			2,627			1,996			2,401			2,178			6,575			5,875			34.3	%		11.9	%
Total losses and expenses		1,622			2,627			1,996			2,401			2,178			6,575			5,875			34.3	%		11.9	%
Operating loss before income taxes
and interest expense		(1,509	)		(2,946	)		(2,494	)		(2,596	)		(2,231	)		(7,321	)		(5,388	)		-47.8	%		-35.9	%
Interest expense		4,100			3,776			3,645			3,532			2,785			9,962			12,109			-32.1	%		-17.7	%
Pre-tax operating loss	$	(5,609	)	$	(6,722	)	$	(6,139	)	$	(6,128	)	$	(5,016	)	$	(17,283	)	$	(17,497	)		10.6	%		1.2	%

16

PMA Capital Corporation
Operating Cash Flows - Consolidated
(In Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2005			2005			2006			2006			2006			2006			2005
Receipts:
Premiums and other revenues collected	$	90,858		$	98,661		$	104,991		$	96,652		$	108,027		$	309,670		$	296,239
Investment income received		15,942			16,393			15,368			14,890			11,795			42,053			45,412
Total receipts		106,800			115,054			120,359			111,542			119,822			351,723			341,651
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		16,593			20,720			3,496			17,337			17,034			37,867			34,645
Losses and LAE paid - prior years		86,329			174,212			92,597			92,004			65,455			250,056			332,823
Total losses and LAE paid		102,922			194,932			96,093			109,341			82,489			287,923			367,468
Insurance operating expenses paid		39,009			27,271			46,203			39,618			26,899			112,720			117,226
Policyholders' dividends paid		820			531			246			397			451			1,094			4,219
Interest on corporate debt		5,327			2,197			4,791			2,965			3,470			11,226			11,701
Total disbursements		148,078			224,931			147,333			152,321			113,309			412,963			500,614
Net other		3,564			(15,349	)		(12,368	)		7,406			(9,204	)		(14,166	)		11,868
Net operating cash flows	$	(37,714	)	$	(125,226	)	$	(39,342	)	$	(33,373	)	$	(2,691	)	$	(75,406	)	$	(147,095	)

17

PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group
(In Thousands)
	3rd		4th			1st			2nd			3rd			Nine			Nine
	Quarter		Quarter			Quarter			Quarter			Quarter			Months			Months
	2005		2005			2006			2006			2006			2006			2005
Receipts:
Premiums and other revenues collected	$	91,212	$	97,910		$	99,740		$	94,320		$	107,102		$	301,162		$	284,530
Investment income received		10,262		10,606			10,479			10,598			8,831			29,908			29,348
Total receipts		101,474		108,516			110,219			104,918			115,933			331,070			313,878
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		16,584		20,720			3,496			17,337			17,034			37,867			34,627
Losses and LAE paid - prior years		55,520		43,853			65,113			57,537			45,463			168,113			197,795
Total losses and LAE paid		72,104		64,573			68,609			74,874			62,497			205,980			232,422
Insurance operating expenses paid		33,988		23,305			42,110			35,129			24,446			101,685			105,214
Policyholders' dividends paid		820		531			246			397			451			1,094			4,219
Interest on corporate debt		-		80			224			227			246			697			-
Total disbursements		106,912		88,489			111,189			110,627			87,640			309,456			341,855
Net other		6,012		(18,742	)		(6,376	)		1,955			(1,939	)		(6,360	)		21,774
Net operating cash flows	$	574	$	1,285		$	(7,346	)	$	(3,754	)	$	26,354		$	15,254		$	(6,203	)

18

PMA Capital Corporation
Operating Cash Flows - Run-off Operations
(In Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2005			2005			2006			2006			2006			2006			2005
Receipts:
Premiums collected	$	(354	)	$	751		$	5,251		$	2,332		$	925		$	8,508		$	11,709
Investment income received		5,680			5,787			4,889			4,292			2,964			12,145			16,064
Total receipts		5,326			6,538			10,140			6,624			3,889			20,653			27,773
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		9			-			-			-			-			-			18
Losses and LAE paid - prior years		30,809			130,359			27,484			34,467			19,992			81,943			135,028
Total losses and LAE paid		30,818			130,359			27,484			34,467			19,992			81,943			135,046
Insurance operating expenses paid		5,021			3,966			4,093			4,489			2,453			11,035			12,012
Total disbursements		35,839			134,325			31,577			38,956			22,445			92,978			147,058
Net other		(1,912	)		4,004			1,083			1,775			(5,500	)		(2,642	)		(6,876	)
Net operating cash flows	$	(32,425	)	$	(123,783	)	$	(20,354	)	$	(30,557	)	$	(24,056	)	$	(74,967	)	$	(126,161	)

19

PMA Capital Corporation
Statutory Surplus
(In Thousands)
	3rd		4th		1st		2nd			3rd
	Quarter		Quarter		Quarter		Quarter			Quarter
	2005		2005		2006		2006			20061
PMA Pool 2	$	311,802	$	315,056	$	316,726	$	321,114		$	325,242	4
PMA Capital Insurance Company 3		210,663		204,920		203,261		125,989	5		123,428	4,5

PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(In Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2005			2005			2006			2006			20061			20061			2005
Net Premiums Written:
Workers' Compensation & Integrated
Disability	$	101,435		$	63,086		$	100,096		$	76,602		$	95,437		$	272,135		$	267,116
Other Commercial Lines		13,487			4,723			11,048			6,687			6,067			23,802			35,272
Total - PMA Pool	$	114,922		$	67,809		$	111,144		$	83,289		$	101,504		$	295,937		$	302,388
Statutory Ratios:
Loss and LAE ratio		73.3	%		73.0	%		71.5	%		72.5	%		72.1	%		72.0	%		73.2	%
Underwriting expense ratio		25.1	%		32.5	%		24.6	%		31.6	%		26.3	%		27.2	%		26.5	%
Policyholders' dividend ratio		0.8	%		1.1	%		0.9	%		0.1	%		0.5	%		0.5	%		0.9	%
Combined ratio		99.2	%		106.6	%		97.0	%		104.2	%		98.9	%		99.7	%		100.6	%
Operating ratio		91.2	%		98.6	%		88.4	%		96.0	%		90.5	%		91.3	%		92.3	%

1	Estimated.
2	The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company.
3	In November 2003, we announced our decision to withdraw from the reinsurance business previously served by PMA Capital Insurance Company. The reinsurance business is currently in run-off.
4	Includes unassigned surplus of $146.0 million and $3.4 million for the PMA Pool and PMA Capital Insurance Company, respectively.
5	In May 2006, PMA Capital Insurance Company paid an extraordinary dividend in the amount of $73.5 million to its parent, PMA Capital Corporation.

20

PMA Capital Corporation
Industry Ratings and Market Information
Transfer Agent and Registrar:	Inquiries:
American Stock Transfer & Trust Company	William E. Hitselberger
Shareholder Relations	Chief Financial Officer
59 Maiden Lane – Plaza Level	215.665.5070
New York, NY 10038	e-mail: bhitselberger@pmacapital.com
www.amstock.com
	Investor Relations
Phone Inquiries:	610.397.5298
800.937.5449	investorrelations@pmacapital.com
Email Inquiries:	Company Website:
info@amstock.com	www.pmacapital.com
Securities Listing:
The Corporation's Class A Common Stock is listed
on the NASDAQ Stock Market ®. It trades under
the stock symbol: PMACA.

Financial Strength Ratings (as of 11/01/2006):
	A.M. Best			Moody's
PMA Pool 1		A- (4th of 16	)		Ba1 (11th of 21	)
PMA Capital Insurance Company 2		B+ (6th of 16	)		B1 (14th of 21	)
1 The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company.
2 In November 2003, we announced our decision to withdraw from the reinsurance business previously served by PMA Capital Insurance Company. The reinsurance business is in run-off.

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