8-K

UNITED STATES

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) May 1, 2008

PMA Capital Corporation

(Exact name of registrant as specified in its charter)

Pennsylvania	001-31706	23-2217932
(State or other jurisdiction of incorporation)	(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 May 1, 2008, PMA Capital Corporation (the “Registrant”) issued a news release regarding its First Quarter 2008 results, a copy of which is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.  Additionally, the Registrant’s First Quarter 2008 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 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.

(d)  Exhibits.

Exhibit 99.1	PMA Capital Corporation News Release, dated May 1, 2008
Exhibit 99.2	PMA Capital Corporation First Quarter 2008 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
May 1, 2008	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 May 1, 2008
Exhibit 99.2	PMA Capital Corporation First Quarter 2008 Statistical Supplement

EX-99.1

Exhibit 99.1

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

PMA Capital Reports Improved First Quarter 2008 Results

Blue Bell, PA, May 1, 2008 -- PMA Capital Corporation (NASDAQ: PMACA) today reported the following financial results for the first quarter of 2008:

	Three months ended
	March 31,
(in thousands, except per share data)	2008			2007
Operating income	$	6,983		$	4,244
Realized gains after tax		2,287			636
Income from continuing operations		9,270			4,880
Loss from discontinued operations after tax		(2,439	)		(1,534	)
Net income	$	6,831		$	3,346
Diluted per share amounts:
Operating income	$	0.22		$	0.13
Realized gains after tax		0.07			0.02
Income from continuing operations		0.29			0.15
Loss from discontinued operations after tax		(0.08	)		(0.05	)
Net income	$	0.21		$	0.10

Vincent T. Donnelly, President and Chief Executive Officer commented, “We are pleased with our results in the first quarter of 2008, especially in relation to the current challenges in the insurance sector.  We have made continued progress in profitably growing our insurance business in an increasingly competitive environment, and are excited about the continuing robust growth and improved profitability of our fee-based business.”

Significant operating achievements at The PMA Insurance Group included:

·   For the first quarter, pre-tax operating income increased 25% to $13.6 million, compared to $10.9 million in the same period last year;

·   Direct premium production, excluding premium adjustments and fronting premiums, increased 2% to $146.6 million, compared to $143.4 million in the first quarter of 2007; and

·   The combined ratio improved to 94.5%, compared to 98.2% for the first quarter last year.

Mr. Donnelly continued, “As we continue to execute our strategy to grow our service business, we are pleased that revenues from our fee-based businesses increased $8.8 million to $16.7 million, which represented 14% of our total revenues in the first quarter of 2008, compared to 7% in the first quarter of 2007.  Organic growth at PMA Management Corp. was 16% in the quarter and Midlands’ profitability was in line with our expectations.  In April, we entered into an agreement to acquire Webster Risk Services, a Connecticut-based TPA with $6 million in annual revenues.  We expect to complete this transaction in the second quarter, and on an annual basis, we expect per share earnings to increase by two cents as a result of this acquisition.”

On April 1, 2008, the Company announced the execution of a definitive stock purchase agreement to sell its Run-off Operations.  PMA will continue to work with the buyer to deliver all of the required information to the regulators to obtain approval of the transaction.

Income from continuing operations included the following after-tax net realized gains:

	Three months ended
	March 31,
(dollar amounts in thousands)	2008			2007
Net realized gains (losses) after tax:
Sales of investments	$	2,305		$	357
Change in fair value of debt derivative		-			279
Other		(18	)		-
Net realized gains after tax	$	2,287		$	636

Segment Operating Results

Operating income, which we define as net income under accounting principles generally accepted in the United States (GAAP) excluding net realized investment gains and results from discontinued operations, is the financial performance measure used by our management and Board of Directors to evaluate and assess the results of our businesses.  Net realized investment activity is excluded 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 does not replace net income as the GAAP measure of our consolidated results of operations.

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The following is a reconciliation of our operating results to GAAP net income.

	Three months ended
	March 31,
(dollar amounts in thousands)	2008			2007
Pre-tax operating income (loss):
The PMA Insurance Group	$	13,619		$	10,930
Fee-based Business		2,186			793
Corporate & Other		(5,011	)		(5,095	)
Pre-tax operating income		10,794			6,628
Income tax expense		3,811			2,384
Operating income		6,983			4,244
Realized gains after tax		2,287			636
Income from continuing operations		9,270			4,880
Loss from discontinued operations after tax 1		(2,439	)		(1,534	)
Net income	$	6,831		$	3,346

1)   Effective in the fourth quarter of 2007, the Company reported the results of its former Run-off Operations segment as discontinued operations.

The PMA Insurance Group

The PMA Insurance Group reported pre-tax operating income of $13.6 million for the first quarter of 2008, compared to $10.9 million for the first quarter of 2007.

Direct premium production was up 2% for the first quarter, compared to the same period last year; however, direct premiums written for the first quarter of 2008 were down due to higher return premium adjustments of $13.3 million and a reduction in fronting premiums of $10.3 million.  Direct premiums written were $140.6 million for the first quarter of 2008, compared to $160.9 million for the first quarter of 2007.  The premium adjustments primarily related to favorable loss experience on loss-sensitive products where the insured shares in the underwriting result of the policy.  Fronting premiums were $8.1 million in the first quarter of 2008, compared to $18.4 million for the same period a year ago, which decreased due to the termination of our agreement with Midwest Insurance Companies (“Midwest”) in March 2008.  We continue to earn fees from the Midwest agreement and service the business previously written, but no additional business has been written or renewed since the termination date.  Excluding fronting business, we wrote $34.7 million of new business in the first quarter of 2008, compared to $39.1 million during the same period last year.  Pricing on our workers’ compensation rate-sensitive business declined 6% during the first three months of 2008, compared to a 5% decrease during the first three months of 2007.  Our renewal retention rate on existing workers’ compensation accounts for the first quarter was 85%, compared to 86% for the same period in 2007.

Net premiums written were $113.9 million in the first quarter of 2008, compared to $125.9 million in the same period last year.  Ceded premiums written decreased in the first quarter of 2008, compared to the first quarter of 2007.  The decline was primarily due to lower premiums ceded under the Midwest agreement, which was partially offset by an increase in the amount of workers’ compensation business sold to captive accounts, where a substantial portion of the direct premiums are ceded.

The combined ratio on a GAAP basis was 94.5% for the first three months of 2008, compared to 98.2% for the same period in 2007.  The improvement in the combined ratio for the first quarter of 2008, compared to the same quarter last year, was primarily the result of a lower expense ratio, and to  

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a lesser extent, lower loss and LAE and policyholders’ dividend ratios.  Given the seasonality of our business, our first quarter combined ratios have historically been lower than the subsequent quarters and full year ratios.

The improved loss and LAE ratio was primarily due to favorable development in our loss-sensitive business which resulted in the retrospective premium adjustments.  Pricing changes coupled with payroll inflation for rate-sensitive workers’ compensation business were below overall estimated loss trends.  Our current accident year loss and LAE ratio remained consistent between periods as we continued to benefit in 2008 from changes in the type of workers’ compensation products selected by our insureds.  We estimated our medical cost inflation to be 6.5% in the first quarter of 2008, compared to our estimate of 8% in the first quarter of 2007.  The medical cost inflation rate has declined due to our enhanced network and managed care initiatives.  

The policyholders’ dividend ratio was lower in the first three months of 2008, compared to the same period last year.  The prior year period reflected better loss experience, which resulted in larger dividends on participating products where the policyholders may receive a dividend based, to a large extent, on their loss experience.

Fees earned under our fronting agreements reduced the first quarter expense ratio by 90 basis points, compared to 50 basis points for the same period in 2007.  Although our agreement with Midwest was terminated, we continue to earn fee income on this business until the underlying policies expire.  Our expense ratio also benefited from a reduction in premium-based state assessments.

Net investment income was $9.1 million in the first quarter of 2008, compared to $9.6 million in the prior year quarter.  The decrease was due primarily to a lower yield of approximately 20 basis points.

Fee-based Business

Our Fee-based Business reported pre-tax operating income of $2.2 million for the first quarter of 2008, compared to $793,000 for the same quarter last year.  The increase primarily related to the inclusion of Midlands Management Corporation’s (“Midlands”) results in 2008, which we acquired on October 1, 2007.

For the first quarter of 2008, total revenues increased to $16.7 million, up $8.8 million from the same period last year.  Revenues resulting from our acquisition of Midlands accounted for $7.6 million of this growth.  Revenues from PMA Management Corp. increased 16% in the first quarter of 2008, compared to the same period last year.  The total increase in revenues primarily reflected higher claims service revenues of $4.4 million and commission income of $4.3 million.

Corporate and Other

The Corporate and Other segment, which includes primarily corporate expenses and debt service, recorded net expenses of $5.0 million during the first quarter of 2008, compared to $5.1 million in the first quarter of 2007.

Discontinued Operations

Discontinued operations, formerly our Run-off Operations which consists of our former reinsurance and excess and surplus lines businesses, recorded an after-tax loss of $2.4 million for the first three months of 2008, compared to an after-tax loss of $1.5 million for the same period in 2007.  The first quarter loss in 2008 was the result of a $2.6 million after-tax charge for adverse loss development at

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our discontinued operations, which contractually reduces the amount of cash and contingent consideration that we will receive at closing. The expected cash to be received has been reduced to $6 million and the value of the contingent consideration has been reduced to a face amount of $6 million.  We have recorded only the expected cash amount in our financials.

Financial Condition

Total assets were $2.6 billion as of March 31, 2008 and December 31, 2007.  Assets of discontinued operations represented 13% of total assets at March 31, 2008, compared to 15% at December 31, 2007.  Shareholders’ equity was $383.7 million as of March 31, 2008, compared to $378.6 million as of December 31, 2007.  Book value per share was $12.08 as of March 31, 2008, compared to $11.92 as of December 31, 2007.  The increases in shareholders’ equity and book value per share were primarily due to net income, which was partially offset by a change in the net unrealized position on our investment portfolio.  During the first three months of 2008, the unrealized position on our available for sale asset portfolio decreased by $1.6 million, or 5 cents per share.  The unrealized position on our portfolio decreased due to gains that we realized in the quarter which were partially offset by an increase as a result of lower market interest rates.  At March 31, 2008, we had $26.9 million in cash and short-term investments at the holding company.

The PMA Insurance Group had statutory capital and surplus of $343.6 million as of March 31, 2008, compared to $335.4 million as of December 31, 2007.  The PMA Insurance Group has the ability to pay $29.2 million in dividends during 2008 without the prior approval of the Pennsylvania Insurance Department.  The statutory capital and surplus of PMA Capital Insurance Company, PMA Capital Corporation’s wholly-owned run-off reinsurance subsidiary which is being reported as discontinued operations, was $41.1 million as of March 31, 2008, compared to $47.6 million as of December 31, 2007.

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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, May 2 to review our first quarter 2008 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
888-680-0869(Domestic)	888-286-8010(Domestic)
617-213-4854(International)	617-801-6888(International)
Passcode 44466556	Passcode 60179419

You may pre-register for the conference call using the following link:

www.theconferencingservice.com/prereg/key.process?key=PKYXHV6QY

Pre-registering is not mandatory but is recommended as it will provide you immediate entry into the call and will facilitate the timely start of the conference.  Pre-registration only takes a few moments and you may pre-register at anytime, including up to and after the call start time.  Alternatively, if you would rather be placed into the call by an operator, please use the dial-in information above at least 5 minutes prior to the call start time.

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, May 2 until 11:59 p.m. Eastern Time on Monday, June 2.

Quarterly Statistical Supplement

Our First 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 make a request by telephone (610-397-5298) or by e-mail to InvestorRelations@pmacapital.com.  We will also furnish a copy of this news release and the Statistical Supplement to the SEC on a Form 8-K.  A copy of the Form 8-K will be 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 that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include estimates, assumptions or projections and are based on currently available financial, competitive and economic data and the Company’s current operating plans.  Although the Company’s management believes that its expectations are reasonable, there can be no assurance that the Company’s actual results will not differ materially from those expected.  The factors that could cause actual results to differ materially from those in the forward-looking statements, include, but are not limited to:

·   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 or revenues of our fee-based businesses;

·   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;

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

·   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 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;

·   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;

·   our 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 TRIPRA is extended beyond its December 31, 2014 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 forward-looking statements in this press release.  Forward-looking statements are not generally required to be publicly revised as circumstances change and we do not intend to update the forward-looking statements in this press release to reflect circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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PMA Capital Corporation

GAAP Consolidated Statements of Operations

(Unaudited)

	Three months ended March 31,
(dollar amounts in thousands, except per share data)	2008			2007
Gross premiums written	$	143,541		$	164,564
Net premiums written	$	113,783		$	125,737
Revenues:
Net premiums earned	$	85,596		$	93,839
Claims service revenues		11,952			7,665
Commission income		4,281			-
Net investment income		9,435			9,754
Net realized investment gains		3,518			978
Other revenues		146			107
Total revenues		114,928			112,343
Expenses:
Losses and loss adjustment expenses		59,922			65,919
Acquisition expenses		14,692			18,779
Operating expenses		22,333			15,601
Dividends to policyholders		882			1,622
Interest expense		2,787			2,816
Total losses and expenses		100,616			104,737
Pre-tax income		14,312			7,606
Income tax expense:
Current		-			-
Deferred		5,042			2,726
Total income tax expense		5,042			2,726
Income from continuing operations		9,270			4,880
Loss from discontinued operations after tax		(2,439	)		(1,534	)
Net income	$	6,831		$	3,346
Net income (loss) per share:
Basic:
Continuing Operations	$	0.29		$	0.15
Discontinued Operations		(0.07	)		(0.05	)
	$	0.22		$	0.10
Diluted:
Continuing Operations	$	0.29		$	0.15
Discontinued Operations		(0.08	)		(0.05	)
	$	0.21		$	0.10

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PMA Capital Corporation

GAAP Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
(dollar amounts in thousands, except per share data)	2008			2007
Assets:
Investments:
Fixed maturities available for sale	$	719,570		$	728,725
Short-term investments		78,086			78,426
Total investments		797,656			807,151
Cash		14,552			15,828
Accrued investment income		5,462			5,768
Premiums receivable		239,783			222,140
Reinsurance receivables		818,789			795,938
Prepaid reinsurance premiums		28,977			32,361
Deferred income taxes, net		116,342			118,857
Deferred acquisition costs		42,547			37,404
Funds held by reinsureds		44,622			42,418
Intangible assets		22,589			22,779
Other assets		115,255			105,341
Assets of discontinued operations		348,921			375,656
Total assets	$	2,595,495		$	2,581,641
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,227,287		$	1,212,956
Unearned premiums		250,981			226,178
Debt		129,790			131,262
Accounts payable, accrued expenses
and other liabilities		191,029			195,895
Reinsurance funds held and balances payable		39,287			39,324
Dividends to policyholders		5,845			5,839
Liabilities of discontinued operations		367,557			391,603
Total liabilities		2,211,776			2,203,057
Shareholders' Equity:
Class A Common Stock		171,090			171,090
Additional paid-in capital		111,588			111,088
Retained earnings		143,418			136,627
Accumulated other comprehensive loss		(8,917	)		(6,663	)
Treasury stock, at cost		(33,460	)		(33,558	)
Total shareholders' equity		383,719			378,584
Total liabilities and shareholders' equity	$	2,595,495		$	2,581,641
Shareholders' equity per share	$	12.08		$	11.92

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EX-99.2

Exhibit 99.2

PMA Capital Corporation
Statistical Supplement
First Quarter - 2008
Table of Contents
		Page
Consolidated Highlights:
Selected Financial Data				1
Consolidated Statements of Operations - Per Share Data				2
Consolidated Statements of Operations				3
Consolidated Balance Sheets				4
Assets and Liabilities of Discontinued Operations; Selected Balance Sheet Items - Fronting Agreements;
Rollforward of Deferred Policy Acquisition Costs - PMA Insurance Group				5
Invested Assets and Net Investment Income; Debt				6
Segment Information:
Statements of Operations - Consolidating			7 - 8
Statements of Operations - PMA Insurance Group				9
Insurance Ratios - PMA Insurance Group				10
Components of Direct Premiums Written - PMA Insurance Group				11
Statements of Operations - Fee-based Business				12
Statements of Operations - Corporate & Other				13
Statements of Operations - Discontinued Operations				14
Operating Cash Flow Information:
Operating Cash Flows - Consolidated				15
Operating Cash Flows - PMA Insurance Group				16
Operating Cash Flows - Fee-based Business				17
Statutory Financial Information:
Statutory Surplus; Statutory Financial Information - PMA Pool				18
Other Information:
Industry Ratings and Market Information				19
Legend:
NM - Not Meaningful
	Operating income, which we define as GAAP net income (loss) excluding net realized investment gains and losses and the results from discontinued operations, is the financial performance measure used by our management and Board of Directors to evaluate and assess the results of our businesses.  Net realized investment activity is excluded 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 does not replace net income (loss) as the GAAP measure of our consolidated results of operations.  See page 1 for a reconciliation of operating results by segment to GAAP net income (loss).

This Page Intentionally Left Blank

PMA Capital Corporation

Selected Financial Data

(Dollar Amounts in Thousands, Except Per Share Data)

	1st			2nd			3rd			4th			1st			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			1st
	2007			2007			2007			2007			2008			Quarter
Direct Premiums Written	$	160,775		$	110,958		$	146,547		$	91,416		$	140,431			-12.7	%
Net Premiums Written	$	125,737		$	81,656		$	116,116		$	71,189		$	113,783			-9.5	%
Revenues:
Net premiums earned	$	93,839		$	97,014		$	93,773		$	93,617		$	85,596			-8.8	%
Claims service revenues		7,665			7,535			7,595			11,239			11,952			55.9	%
Commission income		-			-			-			3,005			4,281		NM
Net investment income		9,754			9,951			9,914			9,973			9,435			-3.3	%
Net realized investment gains (losses)		978			(1,134	)		153			566			3,518		NM
Other revenues		107			32			33			168			146			36.4	%
Total revenues	$	112,343		$	113,398		$	111,468		$	118,568		$	114,928			2.3	%
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	10,930		$	7,799		$	11,702		$	7,614		$	13,619			24.6	%
Fee-based Business		793			601			661			1,669			2,186		NM
Corporate & Other		(5,095	)		(4,893	)		(4,573	)		(5,003	)		(5,011	)		1.6	%
Pre-tax operating income		6,628			3,507			7,790			4,280			10,794			62.9	%
Income tax expense		2,384			1,263			2,711			1,464			3,811			59.9	%
After-tax operating income		4,244			2,244			5,079			2,816			6,983			64.5	%
Net realized investment gains (losses) after tax		636			(737	)		99			368			2,287		NM
Income from continuing operations		4,880			1,507			5,178			3,184			9,270			90.0	%
Loss from discontinued operations after tax		(1,534	)		(1,016	)		(13,981	)		(40,746	)		(2,439	)		-59.0	%
Net income (loss)	$	3,346		$	491		$	(8,803	)	$	(37,562	)	$	6,831		NM
Diluted Earnings (Loss) Per Share:
After-tax operating income	$	0.13		$	0.07		$	0.16		$	0.09		$	0.22			69.2	%
Realized gains (losses) after tax		0.02			(0.03	)		-			0.01			0.07		NM
Income from continuing operations		0.15			0.04			0.16			0.10			0.29			93.3	%
Loss from discontinued operations after tax		(0.05	)		(0.03	)		(0.43	)		(1.27	)		(0.08	)		-60.0	%
Net income (loss)	$	0.10		$	0.01		$	(0.27	)	$	(1.17	)	$	0.21		NM
Capitalization:
Debt	$	130,822		$	144,629		$	135,072		$	131,262		$	129,790			-0.8	%
Shareholders' equity excluding FAS 115    unrealized gain (loss)		424,894			420,150			409,263			374,603			381,255			-10.3	%
Total capitalization excluding FAS 115    unrealized gain (loss)		555,716			564,779			544,335			505,865			511,045			-8.0	%
FAS 115 unrealized gain (loss)		(1,084	)		(9,179	)		(2,138	)		3,981			2,464		NM
Total capitalization including FAS 115    unrealized gain (loss)	$	554,632		$	555,600		$	542,197		$	509,846		$	513,509			-7.4	%
Book Value Per Share:
Excluding FAS 115 unrealized gain (loss)	$	13.02		$	13.06		$	12.82		$	11.79		$	12.00			-7.8	%
Including FAS 115 unrealized gain (loss)	$	12.99		$	12.78		$	12.75		$	11.92		$	12.08			-7.0	%
Debt to Total Capital:
Excluding FAS 115 unrealized gain (loss)		23.5	%		25.6	%		24.8	%		25.9	%		25.4	%		8.1	%
Including FAS 115 unrealized gain (loss)		23.6	%		26.0	%		24.9	%		25.7	%		25.3	%		7.2	%
Interest Coverage:
Income from continuing operations before interest
and income taxes to interest expense		3.70			1.83			3.58			2.62			6.14			65.9	%
Operating income from continuing operations before
interest and income taxes to interest expense		3.35			2.23			3.53			2.43			4.87			45.4	%

1

PMA Capital Corporation

Consolidated Statements of Operations - Per Share Data

	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			2008
Diluted Earnings (Loss) Per Share:
Pre-tax operating income	$	0.20		$	0.11		$	0.24		$	0.13		$	0.34
After-tax operating income	$	0.13		$	0.07		$	0.16		$	0.09		$	0.22
Income from continuing operations	$	0.15		$	0.04		$	0.16		$	0.10		$	0.29
Loss from discontinued operations after tax		(0.05	)		(0.03	)		(0.43	)		(1.27	)		(0.08	)
Net income (loss)	$	0.10		$	0.01		$	(0.27	)	$	(1.17	)	$	0.21
Diluted weighted average common
shares outstanding		32,928,195			32,838,046			32,412,070			32,079,673			31,942,896
Dividends declared:
Class A Common Stock	$	-		$	-		$	-		$	-		$	-
Actual common shares issued
and outstanding		32,630,669			32,163,072			31,920,486			31,761,106			31,765,817
Class A Common Stock prices:
High	$	9.77		$	11.40		$	11.17		$	10.69		$	9.14
Low	$	8.40		$	9.12		$	8.63		$	8.05		$	7.45
Close	$	9.39		$	10.69		$	9.50		$	8.22		$	8.54

2

PMA Capital Corporation

Consolidated Statements of Operations

(Dollar Amounts in Thousands)

	1st			2nd			3rd			4th			1st			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			1st
	2007			2007			2007			2007			2008			Quarter
Gross Premiums Written	$	164,564		$	115,258		$	149,436		$	94,914		$	143,541			-12.8	%
Net Premiums Written	$	125,737		$	81,656		$	116,116		$	71,189		$	113,783			-9.5	%
Revenues:
Net premiums earned	$	93,839		$	97,014		$	93,773		$	93,617		$	85,596			-8.8	%
Claims service revenues		7,665			7,535			7,595			11,239			11,952			55.9	%
Commission income		-			-			-			3,005			4,281		NM
Net investment income		9,754			9,951			9,914			9,973			9,435			-3.3	%
Net realized investment gains (losses)		978			(1,134	)		153			566			3,518		NM
Other revenues		107			32			33			168			146			36.4	%
Total revenues		112,343			113,398			111,468			118,568			114,928			2.3	%
Expenses:
Losses and loss adjustment expenses		65,919			67,965			63,163			66,152			59,922			-9.1	%
Acquisition expenses		18,779			18,759			18,182			18,027			14,692			-21.8	%
Operating expenses		15,601			19,411			16,900			24,629			22,333			43.2	%
Dividends to policyholders		1,622			2,047			2,205			1,916			882			-45.6	%
Interest expense		2,816			2,843			3,075			2,998			2,787			-1.0	%
Total losses and expenses		104,737			111,025			103,525			113,722			100,616			-3.9	%
Pre-tax income		7,606			2,373			7,943			4,846			14,312			88.2	%
Income tax expense (benefit):
Current		-			200			537			(321	)		-		NM
Deferred		2,726			666			2,228			1,983			5,042			85.0	%
Total income tax expense		2,726			866			2,765			1,662			5,042			85.0	%
Income from continuing operations		4,880			1,507			5,178			3,184			9,270			90.0	%
Loss from discontinued operations after tax		(1,534	)		(1,016	)		(13,981	)		(40,746	)		(2,439	)		-59.0	%
Net income (loss)	$	3,346		$	491		$	(8,803	)	$	(37,562	)	$	6,831		NM
Pre-tax operating income from continuing operations	$	6,628		$	3,507		$	7,790		$	4,280		$	10,794			62.9	%
After-tax operating income from continuing operations	$	4,244		$	2,244		$	5,079		$	2,816		$	6,983			64.5	%

3

PMA Capital Corporation

Consolidated Balance Sheets

(Dollar Amounts in Thousands)

	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			2008
Assets:
Investments in fixed maturities available for sale	$	735,048		$	733,083		$	725,637		$	728,725		$	719,570
Investments in fixed maturities trading		-			16,760			-			-			-
Short-term investments		57,675			79,632			83,618			78,426			78,086
Total investments		792,723			829,475			809,255			807,151			797,656
Cash		5,028			5,228			4,164			15,828			14,552
Accrued investment income		5,400			5,438			5,789			5,768			5,462
Premiums receivable		251,073			248,049			254,804			222,140			239,783
Reinsurance receivables		730,854			745,269			795,118			795,938			818,789
Prepaid reinsurance premiums		40,430			41,455			41,354			32,361			28,977
Deferred income taxes, net		97,565			101,696			103,284			118,857			116,342
Deferred acquisition costs		41,726			37,889			42,626			37,404			42,547
Funds held by reinsureds		35,610			37,879			40,150			42,418			44,622
Intangible assets		-			-			-			22,779			22,589
Other assets		84,981			92,518			92,176			105,341			115,255
Assets of discontinued operations		642,615			534,091			525,710			375,656			348,921
Total assets	$	2,728,005		$	2,678,987		$	2,714,430		$	2,581,641		$	2,595,495
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,168,457		$	1,181,143		$	1,206,550		$	1,212,956		$	1,227,287
Unearned premiums		249,689			235,356			257,598			226,178			250,981
Debt		130,822			144,629			135,072			131,262			129,790
Accounts payable, accrued expenses
and other liabilities		161,596			181,532			173,242			195,895			191,029
Reinsurance funds held and balances payable		47,836			52,629			44,884			39,324			39,287
Dividends to policyholders		4,483			4,179			4,730			5,839			5,845
Liabilities of discontinued operations		541,312			468,548			485,229			391,603			367,557
Total liabilities		2,304,195			2,268,016			2,307,305			2,203,057			2,211,776
Shareholders' Equity:
Class A Common Stock		171,090			171,090			171,090			171,090			171,090
Additional paid-in capital		110,527			110,318			110,687			111,088			111,588
Retained earnings		183,611			183,019			174,190			136,627			143,418
Accumulated other comprehensive loss		(15,675	)		(23,569	)		(16,673	)		(6,663	)		(8,917	)
Treasury stock, at cost		(25,743	)		(29,887	)		(32,169	)		(33,558	)		(33,460	)
Total shareholders' equity		423,810			410,971			407,125			378,584			383,719
Total liabilities and shareholders' equity	$	2,728,005		$	2,678,987		$	2,714,430		$	2,581,641		$	2,595,495

4

PMA Capital Corporation

Assets and Liabilities of Discontinued Operations

(Dollar Amounts in Thousands)

	1st		2nd		3rd		4th			1st
	Quarter		Quarter		Quarter		Quarter			Quarter
	2007		2007		2007		2007			2008
Assets
Investments	$	158,379	$	89,109	$	71,486	$	219,678		$	186,466
Cash		4,896		3,266		4,524		5,665			10,305
Reinsurance receivables		311,624		306,000		312,175		150,097			144,994
Other assets		167,716		135,716		137,525		216	1		7,156	1
Assets of discontinued operations	$	642,615	$	534,091	$	525,710	$	375,656		$	348,921
Liabilities
Unpaid losses and loss adjustment expenses	$	452,495	$	382,182	$	379,920	$	339,077		$	317,165
Other liabilities		88,817		86,366		105,309		52,526			50,392
Liabilities of discontinued operations	$	541,312	$	468,548	$	485,229	$	391,603		$	367,557

1  Includes write-down of net assets of Run-off Operations to fair value less cost to sell.

PMA Capital Corporation
Selected Balance Sheet Items - Fronting Agreements
(Dollar Amounts in Thousands)
	1st		2nd		3rd		4th		1st
	Quarter		Quarter		Quarter		Quarter		Quarter
	2007		2007		2007		2007		2008
Assets
Premiums receivable	$	25,810	$	28,418	$	31,136	$	27,847	$	22,714
Reinsurance receivables		6,200		13,035		21,799		30,377		37,711
Prepaid reinsurance premiums		23,724		27,307		26,188		22,665		16,956
Deferred acquisition costs		-		140		231		254		189
Other assets		561		3,108		3,375		7,332		7,285
Liabilities
Unpaid losses and loss adjustment expenses	$	6,200	$	13,064	$	21,855	$	30,978	$	38,739
Unearned premiums		23,724		27,897		27,338		24,413		18,500
Reinsurance funds held and balances payable		22,209		23,224		24,652		21,333		16,510
Other liabilities		3,730		6,890		7,435		11,511		11,564

PMA Capital Corporation

Rollforward of Deferred Policy Acquisition Costs - PMA Insurance Group

(Dollar Amounts in Thousands)

	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			2008
Balance Sheet
Balance, beginning of period	$	36,239		$	41,726		$	37,889		$	42,626		$	37,404
Policy acquisition costs deferred		24,266			14,922			22,919			12,805			19,835
Amortization of policy acquisition costs		(18,779	)		(18,759	)		(18,182	)		(18,027	)		(14,692	)
Net change		5,487			(3,837	)		4,737			(5,222	)		5,143
Balance, end of period	$	41,726		$	37,889		$	42,626		$	37,404		$	42,547

5

PMA Capital Corporation

Invested Assets and Net Investment Income

(Dollar Amounts in Thousands)

	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			2008
Total Investments & Cash
As reported	$	797,751		$	834,703		$	813,419		$	822,979		$	812,208
Less:
Unrealized gain (loss)		(1,668	)		(14,121	)		(3,289	)		6,125			3,791
Unrealized loss and accrued income - trading		-			(3,240	)		-			-			-
Total adjusted investments & cash	$	799,419		$	852,064		$	816,708		$	816,854		$	808,417
Net Investment Income
As reported	$	9,754		$	9,951		$	9,914		$	9,973		$	9,435
Less:
Ceded funds held		(393	)		(596	)		(529	)		(676	)		(506	)
Total adjusted investment income	$	10,147		$	10,547		$	10,443		$	10,649		$	9,941
Yield
As reported		4.92	%		4.88	%		4.81	%		4.88	%		4.62	%
Investment portfolio		5.10	%		5.11	%		5.01	%		5.22	%		4.89	%
Duration (in years)		3.6			3.9			3.8			3.7			3.8

PMA Capital Corporation

Debt

(Dollar Amounts in Thousands)

	Amount
	Outstanding		Maturity
Junior subordinated debt 1	$	64,435	2033 - 2037
8.50% senior notes		54,900	2018
Surplus notes 2		10,000	2035
4.25% convertible debt		455	20223
Total long-term debt	$	129,790

1	Weighted average interest rate on junior subordinated debt is 6.86% as of March 31, 2008.
2	Interest rate on surplus notes is 7.61% as of March 31, 2008.
3	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.  This debt may be converted at any time, at the holder's option, at a current price of $16.368 per share.

6

PMA Capital Corporation

Statements of Operations - Consolidating

Three Months Ended March 31, 2008

(Dollar Amounts in Thousands)

	PMA
	Insurance		Fee-based		Corporate
	Group		Business		& Other1			Consolidated
Gross Premiums Written	$	143,663	$	-	$	(122	)	$	143,541
Net Premiums Written	$	113,905	$	-	$	(122	)	$	113,783
Revenues:
Net premiums earned	$	85,718	$	-	$	(122	)	$	85,596
Claims service revenues		-		12,108		(156	)		11,952
Commission income		-		4,281		-			4,281
Net investment income		9,099		161		175			9,435
Other revenues		-		102		44			146
Operating revenues		94,817		16,652		(59	)		111,410
Losses and Expenses:
Losses and loss adjustment expenses		59,922		-		-			59,922
Acquisition expenses		14,692		-		-			14,692
Operating expenses		5,488		14,466		2,379			22,333
Dividends to policyholders		882		-		-			882
Total losses and expenses		80,984		14,466		2,379			97,829
Operating income (loss) before income taxes
and interest expense		13,833		2,186		(2,438	)		13,581
Interest expense		214		-		2,573			2,787
Pre-tax operating income (loss)	$	13,619	$	2,186	$	(5,011	)		10,794
Net realized investment gains									3,518
Pre-tax income								$	14,312

1 Corporate & Other includes the effect of eliminating transactions between the operating segments.  

7

PMA Capital Corporation

Statements of Operations - Consolidating

Three Months Ended March 31, 2007

(Dollar Amounts in Thousands)

	PMA
	Insurance		Fee-based		Corporate
	Group		Business		& Other1			Consolidated
Gross Premiums Written	$	164,720	$	-	$	(156	)	$	164,564
Net Premiums Written	$	125,893	$	-	$	(156	)	$	125,737
Revenues:
Net premiums earned	$	93,995	$	-	$	(156	)	$	93,839
Claims service revenues		-		7,665		-			7,665
Net investment income		9,555		164		35			9,754
Other revenues		-		-		107			107
Operating revenues		103,550		7,829		(14	)		111,365
Losses and Expenses:
Losses and loss adjustment expenses		65,919		-		-			65,919
Acquisition expenses		18,779		-		-			18,779
Operating expenses		6,051		7,036		2,514			15,601
Dividends to policyholders		1,622		-		-			1,622
Total losses and expenses		92,371		7,036		2,514			101,921
Operating income (loss) before income taxes
and interest expense		11,179		793		(2,528	)		9,444
Interest expense		249		-		2,567			2,816
Pre-tax operating income (loss)	$	10,930	$	793	$	(5,095	)		6,628
Net realized investment gains									978
Pre-tax income								$	7,606

1 Corporate & Other includes the effect of eliminating transactions between the operating segments.  Effective in the fourth quarter of 2007, the Company reported the results of its former Run-off Operations segment as discontinued operations.  As a result of this change, the Corporate & Other segment was impacted by investment income previously eliminated in the Corporate & Other segment.  For comparative purposes, all prior periods have been reclassified to reflect this change.

8

PMA Capital Corporation
Statements of Operations - PMA Insurance Group 1
(Dollar Amounts in Thousands)
	1st		2nd		3rd		4th		1st		% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		1st
	2007		2007		2007		2007		2008		Quarter
Gross Premiums Written	$	164,720	$	115,418	$	149,591	$	95,070	$	143,663		-12.8	%
Net Premiums Written	$	125,893	$	81,816	$	116,271	$	71,345	$	113,905		-9.5	%
Revenues:
Net premiums earned	$	93,995	$	97,174	$	93,928	$	93,773	$	85,718		-8.8	%
Net investment income		9,555		9,578		9,397		9,406		9,099		-4.8	%
Total revenues		103,550		106,752		103,325		103,179		94,817		-8.4	%
Losses and Expenses:
Losses and loss adjustment expenses		65,919		67,965		63,163		66,152		59,922		-9.1	%
Acquisition expenses		18,779		18,759		18,182		18,027		14,692		-21.8	%
Operating expenses		6,051		9,931		7,819		9,223		5,488		-9.3	%
Dividends to policyholders		1,622		2,047		2,205		1,916		882		-45.6	%
Total losses and expenses		92,371		98,702		91,369		95,318		80,984		-12.3	%
Operating income before income taxes
and interest expense		11,179		8,050		11,956		7,861		13,833		23.7	%
Interest expense		249		251		254		247		214		-14.1	%
Pre-tax operating income	$	10,930	$	7,799	$	11,702	$	7,614	$	13,619		24.6	%

1 Beginning in the fourth quarter of 2007, the results of PMA Insurance Group no longer include those of PMA Management Corp.  The results of PMA Management Corp. are currently included within the segment results of the Company's Fee-based Business.  For comparative purposes, the financial results of PMA Insurance Group and PMA Management Corp. have been reclassified in all prior periods to reflect this change.

9

PMA Capital Corporation
Insurance Ratios - PMA Insurance Group
	1st			2nd			3rd			4th			1st			Point Chg.
	Quarter			Quarter			Quarter			Quarter			Quarter			1st Quarter
	2007			2007			2007			2007			2008			Better (Worse)
Ratios - GAAP Basis:
Loss and LAE ratio		70.1	%		69.9	%		67.2	%		70.5	%		69.9	%		0.2
Expense ratio:
Acquisition expenses		20.0	%		19.3	%		19.4	%		19.2	%		17.1	%		2.9
Operating expenses		6.4	%		10.3	%		8.4	%		9.9	%		6.5	%		(0.1	)
Total expense ratio		26.4	%		29.6	%		27.8	%		29.1	%		23.6	%		2.8
Policyholders' dividend ratio		1.7	%		2.1	%		2.3	%		2.0	%		1.0	%		0.7
Combined ratio		98.2	%		101.6	%		97.3	%		101.6	%		94.5	%		3.7
Net investment income ratio		-10.2	%		-9.9	%		-10.0	%		-10.0	%		-10.6	%		0.4
Operating ratio		88.0	%		91.7	%		87.3	%		91.6	%		83.9	%		4.1

10

PMA Capital Corporation

Components of Direct Premiums Written - PMA Insurance Group

(Dollar Amounts in Thousands)

	1st			2nd			3rd			4th			Twelve
	Quarter			Quarter			Quarter			Quarter			Months
	2006			2006			2006			2006			2006
Direct premium production	$	127,138		$	92,932		$	126,858		$	78,751		$	425,679
Fronting premiums		-			-			2,086			12,704			14,790
Premium adjustments		435			(498	)		(1,452	)		(7,327	)		(8,842	)
Direct premiums written	$	127,573		$	92,434		$	127,492		$	84,128		$	431,627
	1st			2nd			3rd			4th			Twelve
	Quarter			Quarter			Quarter			Quarter			Months
	2007			2007			2007			2007			2007
Direct premium production	$	143,389		$	96,316		$	137,144		$	83,103		$	459,952
Fronting premiums		18,401			14,936			13,707			12,796			59,840
Premium adjustments		(859	)		(134	)		(4,149	)		(4,327	)		(9,469	)
Direct premiums written	$	160,931		$	111,118		$	146,702		$	91,572		$	510,323
	1st
	Quarter
	2008
Direct premium production	$	146,608
Fronting premiums		8,143
Premium adjustments		(14,198	)
Direct premiums written	$	140,553

11

PMA Capital Corporation

Statements of Operations - Fee-based Business 1

(Dollar Amounts in Thousands)

	1st		2nd		3rd		4th		1st		% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		1st
	2007		2007		2007		2007		2008		Quarter
Revenues:
Claims service revenues	$	7,665	$	7,535	$	7,595	$	11,239	$	12,108		58.0	%
Commission income		-		-		-		3,005		4,281	NM
Net investment income		164		180		193		435		161		-1.8	%
Other revenues		-		-		-		113		102	NM
Total revenues		7,829		7,715		7,788		14,792		16,652	NM
Expenses:
Operating expenses		7,036		7,114		7,127		13,123		14,466	NM
Total expenses		7,036		7,114		7,127		13,123		14,466	NM
Pre-tax operating income	$	793	$	601	$	661	$	1,669	$	2,186	NM

1 As a result of the Company's acquisition of Midlands at the beginning of the fourth quarter of 2007, the combined operating results of PMA Management Corp. and Midlands have been reported in a new reporting segment, Fee-based Business.  For comparative purposes, all prior periods have been reclassified to reflect this change.  Fee-based Business operating results include only the operating results of Midlands from the date of acquisition.

12

PMA Capital Corporation
Statements of Operations - Corporate & Other
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			1st
	2007			2007			2007			2007			2008			Quarter
Gross Premiums Written	$	(156	)	$	(160	)	$	(155	)	$	(156	)	$	(122	)		21.8	%
Net Premiums Written	$	(156	)	$	(160	)	$	(155	)	$	(156	)	$	(122	)		21.8	%
Revenues:
Net premiums earned	$	(156	)	$	(160	)	$	(155	)	$	(156	)	$	(122	)		21.8	%
Claims service revenues		-			-			-			-			(156	)	NM
Net investment income 1		35			193			324			132			175		NM
Other revenues		107			32			33			55			44			-58.9	%
Total revenues		(14	)		65			202			31			(59	)	NM
Expenses:
Operating expenses		2,514			2,366			1,954			2,283			2,379			-5.4	%
Total expenses		2,514			2,366			1,954			2,283			2,379			-5.4	%
Operating loss before income taxes
and interest expense		(2,528	)		(2,301	)		(1,752	)		(2,252	)		(2,438	)		3.6	%
Interest expense		2,567			2,592			2,821			2,751			2,573			0.2	%
Pre-tax operating loss	$	(5,095	)	$	(4,893	)	$	(4,573	)	$	(5,003	)	$	(5,011	)		1.6	%

1 Effective in the fourth quarter of 2007, the Company reported the results of its former Run-off Operations segment as discontinued operations.  As a result of this change, the Corporate & Other segment was impacted by investment income previously eliminated in the Corporate & Other segment.  For comparative purposes, all prior periods have been reclassified to reflect this change.

13

PMA Capital Corporation
Statements of Operations - Discontinued Operations 1
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			1st
	2007			2007			2007			2007			2008			Quarter
Gross Premiums Written	$	1,507		$	1,994		$	1,603		$	(301	)	$	2,331			54.7	%
Net Premiums Written	$	1,495		$	1,994		$	1,216		$	680		$	2,439			63.1	%
Revenues:
Net premiums earned	$	1,193		$	517		$	1,105		$	656		$	1,026			-14.0	%
Net investment income 1		786			1,221			777			60			128			-83.7	%
Total revenues		1,979			1,738			1,882			716			1,154			-41.7	%
Losses and Expenses:
Losses and loss adjustment expenses		1,107			185			22,447			274			9,280		NM
Acquisition expenses		359			254			39			239			85			-76.3	%
Operating expenses		1,465			2,242			1,689			2,111			2,782			89.9	%
Impairment charge / valuation adjustment		-			-			-			61,482			(6,480	)	NM
Total losses and expenses		2,931			2,681			24,175			64,106			5,667			93.3	%
Pre-tax operating loss from discontinued operations		(952	)		(943	)		(22,293	)		(63,390	)		(4,513	)	NM
Income tax benefit		(333	)		(330	)		(7,803	)		(22,187	)		(1,580	)	NM
After-tax operating loss from discontinued operations		(619	)		(613	)		(14,490	)		(41,203	)		(2,933	)	NM
Realized gains (losses) after tax		(915	)		(403	)		509			457			494		NM
Loss from discontinued operations	$	(1,534	)	$	(1,016	)	$	(13,981	)	$	(40,746	)	$	(2,439	)		-59.0	%

1	Effective in the fourth quarter of 2007, the Company reported the results of its former Run-off Operations segment as discontinued operations.  As a result of this change, the discontinued operations were impacted by investment income previously eliminated in the Corporate & Other segment.  For comparative purposes, all prior periods have been reclassified to reflect this change.
	Note: The net results from discontinued operations are reported as a separate line item below "Income from continuing operations" in the consolidated statements of operations.

14

PMA Capital Corporation
Operating Cash Flows - Consolidated1
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			2008
Receipts:
Premiums collected	$	92,259		$	87,468		$	99,713		$	95,709		$	93,222
Claims service, commissions and other revenues		8,047			6,588			8,097			19,473			14,097
Investment income received		10,504			10,605			9,981			10,730			10,623
Total receipts		110,810			104,661			117,791			125,912			117,942
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		4,605			15,005			20,704			24,466			4,991
Losses and LAE paid - prior years		62,815			51,295			61,340			34,968			61,577
Total losses and LAE paid		67,420			66,300			82,044			59,434			66,568
Operating expenses paid		37,393			28,060			32,950			36,995			44,966
Commissions and premiums paid		-			-			-			7,792			922
Policyholders' dividends paid		499			1,878			690			791			1,138
Interest on corporate debt		3,082			2,446			2,888			3,396			2,926
Total disbursements		108,394			98,684			118,572			108,408			116,520
Net other		3,650			(5,728	)		(4,183	)		793			(5,637	)
Net operating cash flows from continuing operations		6,066			249			(4,964	)		18,297			(4,215	)
Net operating cash flows from discontinued operations		(22,293	)		(35,532	)		(18,174	)		143,177	2		(31,345	)
Net operating cash flows	$	(16,227	)	$	(35,283	)	$	(23,138	)	$	161,474		$	(35,560	)

1	Effective in the fourth quarter of 2007, the Company reported the operating cash flows of its former Run-off Operations segment as discontinued operations.  For comparative purposes, all prior periods have been reclassified to reflect this change.
2	Includes $172 million received for commutation of adverse development cover reinsurance.

15

PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group1
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			2008
Receipts:
Premiums collected	$	92,259		$	87,468		$	99,713		$	95,709		$	93,222
Investment income received		10,339			10,426			9,788			10,292			10,462
Total receipts		102,598			97,894			109,501			106,001			103,684
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		4,605			15,005			20,704			24,466			4,991
Losses and LAE paid - prior years		62,815			51,295			61,340			34,968			61,577
Total losses and LAE paid		67,420			66,300			82,044			59,434			66,568
Operating expenses paid		30,207			20,985			25,806			22,146			32,454
Policyholders' dividends paid		499			1,878			690			791			1,138
Interest on corporate debt		252			244			252			252			245
Total disbursements		98,378			89,407			108,792			82,623			100,405
Net other		(1,795	)		(7,701	)		(6,333	)		(15,631	)		(3,412	)
Net operating cash flows	$	2,425		$	786		$	(5,624	)	$	7,747		$	(133	)

1 Beginning in the fourth quarter of 2007, the operating cash flows of PMA Insurance Group no longer include those of PMA Management Corp.  The operating cash flows of PMA Management Corp. are currently included within the segment operating cash flows of the Company's Fee-based Business.  For comparative purposes, all prior periods have been reclassified to reflect this change.

16

PMA Capital Corporation
Operating Cash Flows - Fee-based Business1
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			2008
Receipts:
Claims service, commissions and other revenues	$	8,047		$	6,588		$	8,097		$	19,473		$	14,097
Investment income received		165			179			193			438			161
Total receipts		8,212			6,767			8,290			19,911			14,258
Disbursements:
Operating expenses paid		7,186			7,075			7,144			14,849			12,512
Commissions and premiums paid		-			-			-			7,792			922
Total disbursements		7,186			7,075			7,144			22,641			13,434
Net other		(1,150	)		(2,326	)		(105	)		(48	)		977
Net operating cash flows	$	(124	)	$	(2,634	)	$	1,041		$	(2,778	)	$	1,801

1 As a result of the Company's acquisition of Midlands at the beginning of the fourth quarter of 2007, the combined operating cash flows of PMA Management Corp. and Midlands have been reported in a new reporting segment, Fee-based Business.  For comparative purposes, all prior periods have been reclassified to reflect this change.  Fee-based Business operating cash flows include only the operating cash flows of Midlands from the date of acquisition.

17

PMA Capital Corporation
Statutory Surplus
(Dollar Amounts in Thousands)
	1st		2nd			3rd		4th		1st
	Quarter		Quarter			Quarter		Quarter		Quarter
	2007		2007			2007		2007		20081
PMA Pool 2	$	327,379	$	333,118		$	339,800	$	335,394	$	343,582
PMA Capital Insurance Company		117,098		75,585	3		58,040		47,580		41,099

PMA Capital Corporation

Statutory Financial Information - PMA Pool  2

(Dollar Amounts in Thousands)

	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2007			2007			20081
Net Premiums Written:
Workers' Compensation	$	113,732		$	75,976		$	98,459		$	64,477		$	103,018
Other Commercial Lines		10,258			7,359			9,900			6,139			10,805
Total - PMA Pool	$	123,990		$	83,335		$	108,359		$	70,616		$	113,823
Statutory Ratios:
Loss and LAE ratio		71.2	%		70.3	%		68.0	%		70.4	%		69.6	%
Underwriting expense ratio		21.1	%		30.2	%		25.9	%		34.6	%		20.3	%
Policyholders' dividend ratio		0.6	%		1.7	%		1.4	%		2.1	%		1.4	%
Combined ratio		92.9	%		102.2	%		95.3	%		107.1	%		91.3	%
Operating ratio		83.3	%		92.4	%		85.7	%		97.2	%		80.7	%

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 April 2007, PMA Capital Insurance Company paid an extraordinary dividend in the amount of $37.5 million to its parent, PMA Capital Corporation.

18

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	610.397.5083
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 4/30/2008):
	A.M. Best	Fitch	Moody's
PMA Pool 1	A-   (4th of 16)	BBB+  (8th of 21)	Baa3  (10th of 21)
PMA Capital Insurance Company 2	B  (7th of 16)	B-    (16th of 21)	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.  On April 1, 2008, we announced that we have
executed a definitive stock purchase agreement to sell our Run-off Operations to Armour Reinsurance Group Limited.

19