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) November 3, 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 November 3, 2008, PMA Capital Corporation (the “Registrant”) issued a news release regarding its Third Quarter 2008 results, a copy of which is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.  Additionally, the Registrant’s Third 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 November 3, 2008
Exhibit 99.2	PMA Capital Corporation Third 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
November 3, 2008	By:	/s/ William E. Hitselberger
	Name:		William E. Hitselberger
	Title:		Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
Exhibit 99.1	PMA Capital Corporation News Release, dated November 3, 2008
Exhibit 99.2	PMA Capital Corporation Third 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 Continued Improvement in Operating Results

Blue Bell, PA, November 3, 2008 -- PMA Capital Corporation (NASDAQ: PMACA) today reported the following financial results for the third quarter and first nine months of 2008:

	Three months ended						Nine months ended
	September 30,						September 30,
(in thousands, except per share data)	2008			2007			2008			2007
Operating income	$	6,405		$	5,079		$	17,971		$	11,567
Realized investment gains (losses) after tax		(5,154	)		99			(3,239	)		(2	)
Income from continuing operations		1,251			5,178			14,732			11,565
Loss from discontinued operations after tax		(2,310	)		(13,981	)		(4,937	)		(16,531	)
Net income (loss)	$	(1,059	)	$	(8,803	)	$	9,795		$	(4,966	)
Diluted per share amounts:
Operating income	$	0.20		$	0.16		$	0.56		$	0.35
Realized investment gains (losses) after tax		(0.16	)		-			(0.10	)		-
Income from continuing operations		0.04			0.16			0.46			0.35
Loss from discontinued operations after tax		(0.07	)		(0.43	)		(0.15	)		(0.50	)
Net income (loss)	$	(0.03	)	$	(0.27	)	$	0.31		$	(0.15	)

Vincent T. Donnelly, President and Chief Executive Officer commented, “PMA Capital produced another quarter of improved operating results, with profitable growth in both our insurance and fee-based businesses, while continuing to maintain our underwriting standards.  Our focus on outstanding customer service and continued diversification of products and services has contributed to our financial performance.”

Significant operating highlights at The PMA Insurance Group included:

·   The combined ratio improved by 2.1 points to 95.2% in the quarter and by 2.5 points to 96.5% year-to-date;

·   Pre-tax operating income increased $1.6 million to $13.3 million in the quarter and increased $7.9 million to $38.3 million for the first nine months of 2008;

·   Direct premium production, excluding premium adjustments and fronting premiums, increased 10% in the third quarter to $150.5 million and increased 5% during the first nine months of 2008 to $393.9 million, due to increases in larger account business, primarily captive accounts; and

·   The execution of two fronting arrangements, which we expect will generate fees that will fully replace those from the expiring agreement with Midwest Insurance Companies.

“Our fee-based business revenue increased by $28.2 million to $51.5 million, which represented 14% of our total operating revenues for the first nine months of 2008, compared to 7% during the same period in 2007.  Organic revenue growth at PMA Management Corp. was 34% during the third quarter and 25% year-to-date.  Our current year growth was also due to the inclusion of Midlands Management Corporation, which contributed $6.7 million and $20.6 million of revenue growth for the third quarter and first nine months of 2008, and PMA Management Corp. of New England, which we acquired in June 2008, added $1.7 million in revenues.”

Mr. Donnelly concluded, “Despite the recent volatility and uncertainty in the financial markets, our operating returns continued to improve and our financial condition remains strong.  Our conservative investment strategy helped mitigate the impact of market disruptions on our investment portfolio.  During the third quarter, we recorded after-tax realized losses for other than temporary impairment investment losses of $5.9 million, or 19 cents per diluted share.”

PMA Capital Corporation (the “Company”) previously announced the execution of a definitive stock purchase agreement to sell its Run-off Operations and the filing of the Form A with the Pennsylvania Insurance Department.  PMA is assisting the buyer to ensure the Pennsylvania Insurance Department has the information it needs to review the transaction.  The Company and the buyer agreed to extend the termination date in the stock purchase agreement to December 15, 2008 or such later date as may be mutually agreed.  During the third quarter, the Company reduced the amount of cash it expects to receive at closing by $3.5 million, to $2.5 million, to reflect development of loss reserves at the Run-off Operations.

Financial Condition

Total assets were $2.6 billion as of September 30, 2008 and December 31, 2007.  Assets of discontinued operations represented 12% of total assets at September 30, 2008, compared to 15% at December 31, 2007.  At September 30, 2008, we had $29.5 million in cash and short-term investments at our holding company and non-regulated subsidiaries.

Shareholders’ equity was $358.0 million as of September 30, 2008, compared to $378.6 million as of December 31, 2007.  Book value per share was $11.20 at September 30, 2008, compared to $11.92 at December 31, 2007.  The decreases in both shareholders’ equity and book value per share were primarily due to a decline of $26.1 million, or 82 cents per share, related to the change in the unrealized position on our available for sale fixed income portfolio, of which $14.9 million, or 57% of this decrease, occurred in the third quarter of 2008.  The unrealized position on our investment portfolio decreased largely due to widening credit spreads on fixed income securities.  Shareholders’ equity and book value per share were also reduced by $7.4 million, or 23 cents per share, as a result of a decrease in value of the investments in our pension plan.  The impact of the decline in the unrealized position of our portfolio and pension investments was partially offset by net income.  Details of the Company’s investment portfolio at September 30, 2008 and December 31, 2007 are posted on our website at www.pmacapital.com.

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The insurance companies within The PMA Insurance Group had statutory capital and surplus of $336.4 million as of September 30, 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, the Company’s wholly-owned run-off reinsurance subsidiary which is being reported as discontinued operations, was $26.1 million as of September 30, 2008, compared to $47.6 million as of December 31, 2007.

Segment Operating Results

Operating income, which we define as net income (loss) under accounting principles generally accepted in the United States (“GAAP”) excluding net realized investment gains (losses) 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 (loss) as the GAAP measure of our consolidated results of operations.

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

	Three months ended						Nine months ended
	September 30,						September 30,
(dollar amounts in thousands)	2008			2007			2008			2007
Pre-tax operating income (loss):
The PMA Insurance Group	$	13,325		$	11,702		$	38,285		$	30,431
Fee-based Business		1,929			661			5,316			2,055
Corporate & Other		(5,319	)		(4,573	)		(15,754	)		(14,561	)
Pre-tax operating income		9,935			7,790			27,847			17,925
Income tax expense		3,530			2,711			9,876			6,358
Operating income		6,405			5,079			17,971			11,567
Realized investment gains (losses) after tax		(5,154	)		99			(3,239	)		(2	)
Income from continuing operations		1,251			5,178			14,732			11,565
Loss from discontinued operations after tax 1		(2,310	)		(13,981	)		(4,937	)		(16,531	)
Net income (loss)	$	(1,059	)	$	(8,803	)	$	9,795		$	(4,966	)

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

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

	Three months ended						Nine months ended
	September 30,						September 30,
(dollar amounts in thousands)	2008			2007			2008			2007
Net realized gains (losses) after tax:
Sales of investments	$	792		$	(1,899	)	$	2,725		$	(1,661	)
Other than temporary impairments		(5,946	)		-			(5,946	)		-
Change in fair value of trading securities		-			2,106			-			2,093
Other		-			(108	)		(18	)		(434	)
Net realized gains (losses) after tax	$	(5,154	)	$	99		$	(3,239	)	$	(2	)

The other than temporary impairment charges resulted from writing down our investments of Lehman Brothers senior debt and Fannie Mae preferred stock.

The PMA Insurance Group

The PMA Insurance Group reported pre-tax operating income of $13.3 million for the third quarter of 2008, compared to $11.7 million for the same period last year.  Year-to-date pre-tax operating income increased to $38.3 million, compared to $30.4 million for the first nine months of 2007.  The year-to-date increase included a gain of $2.1 million for the sale of a property that previously housed one of our branch offices, which now leases a more modern facility.

Direct premium production increased during the third quarter and first nine months of 2008, compared to the same periods last year.  We define direct premium production as direct premiums written, excluding fronting premiums and premium adjustments.  The increase in direct premium production for both periods primarily reflected increases in larger account business, primarily captive accounts. Captive account business provides us with a greater degree of certainty in achieving our profit margin on an account by account basis as opposed to traditional first dollar business.  The following is a reconciliation of our direct premium production to direct premiums written:

	Three months ended						Nine months ended
	September 30,						September 30,
(dollar amounts in thousands)	2008			2007			2008			2007
Direct premium production	$	150,547		$	137,144		$	393,891		$	376,849
Fronting premiums		2,776			13,707			13,032			47,044
Premium adjustments		(5,008	)		(4,149	)		(18,836	)		(5,142	)
Direct premiums written	$	148,315		$	146,702		$	388,087		$	418,751

The declines in fronting premiums are the result of the termination of our agreement with Midwest Insurance Companies (“Midwest”) in March 2008.  We continue to earn commissions 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 $39.4 million of new business in the third quarter of 2008, up from $26.9 million in the third quarter of 2007, and $99.8 million for the first nine months of 2008, up from $91.5 million during the same period last year.  The year-to-date increase in premium adjustments relates primarily to higher return premium adjustments which occurred in the first quarter of 2008.  These premium adjustments primarily reflect favorable loss experience on loss-sensitive products where the insured shares in the underwriting result of the

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policy.  Pricing on our workers’ compensation rate-sensitive business declined 7% during the first nine months of 2008, compared to a 4% decrease during the first nine months of 2007.  Our renewal retention rate on existing workers’ compensation accounts was 88% in the third quarter of 2008, compared to 89% for the same period last year, while our renewal retention rate for the first nine months of 2008 was 86%, compared to 87% for the same period in 2007.

During the third quarter of 2008, we entered into fronting arrangements with Appalachian Underwriters (“Appalachian”) and Arrowhead General Insurance Agency (“Arrowhead”), who underwrite and service workers’ compensation policies using our approved forms and guidelines.  The business produced with Appalachian is primarily located in the southeastern part of the United States, while the production with Arrowhead is limited to California.  We retain approximately 10% of the underwriting results on the business written with Appalachian and 20% of underwriting results on the business produced with Arrowhead.  We also earn an administrative fee based upon the direct premiums earned under each agreement as well as fees for providing claims services on the business placed through Appalachian.  Total direct premiums written under these agreements were $2.0 million during the third quarter of 2008.  We expect that direct premiums written under these arrangements will be between $70 million and $100 million on an annualized basis.

Net premiums written were $124.1 million and $317.3 million for the third quarter and first nine months of 2008, compared to $116.3 million and $324.0 million during the same periods last year.  Ceded premiums written decreased in the third quarter and first nine months of 2008, compared to the same periods in 2007, primarily due to lower premiums ceded under the Midwest agreement.  The declines were 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, and an increase in premiums ceded under other fronting arrangements.

For the third quarter and first nine months of 2008, the combined ratios on a GAAP basis were 95.2% and 96.5%, compared to 97.3% and 99.0% for the same periods in 2007.  These improvements primarily reflected lower acquisition expense and policyholders’ dividend ratios, partially offset by higher loss and LAE ratios.

The loss and LAE ratios increased for both periods as 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 benefited in 2008 from changes in the type of workers’ compensation products selected by our insureds.  We estimate our medical cost inflation to be 6.5% in the first nine months of 2008, compared to our estimate of 8% in the first nine months of 2007.  This decline reflects a decrease in utilization as well as our enhanced network and managed care initiatives.  The year-to-date loss and LAE ratio benefited from favorable development in our loss-sensitive business which resulted in the first quarter retrospective premium adjustments. We write these retrospective products because we believe they provide us with greater certainty of achieving our targeted underwriting results.

Commissions earned under our fronting agreements reduced the current year acquisition expense ratios by 0.4 points for the quarter and 0.7 points for the first nine months, compared to 0.8 points and 0.7 points for the same periods in 2007.  Although our agreement with Midwest was terminated, we continue to earn commissions on this business until the underlying policies expire.  The 2008 acquisition expense ratios also benefited by 2.5 points in the quarter and 1.9 points year-to-date from reductions in premium-based state assessments.

The policyholders’ dividend ratios were lower in the third quarter and first nine months of 2008 than in the prior year periods.  The current year periods reflected slightly higher than expected losses which

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resulted in lower dividends on captive accounts business where the policyholders may receive a dividend based, to a large extent, on their loss experience.

Net investment income for the third quarter and first nine months of 2008 was $8.8 million and $26.8 million, compared to $9.4 million and $28.5 million for the same periods last year.  The decreases were due primarily to lower yields of approximately 40 basis points for the quarter and 30 basis points year-to-date.  The declines for both periods were partially offset by an increased invested asset base.

Fee-based Business

Our Fee-based Business reported pre-tax operating income of $1.9 million for the third quarter of 2008, compared to $661,000 for the same period last year.  Year-to-date pre-tax operating income increased to $5.3 million, compared to $2.1 million for the first nine months of 2007.  The increases related primarily to the inclusion of the results of Midlands Management Corporation (“Midlands”), which we acquired on October 1, 2007.

For the third quarter of 2008, total revenues increased to $18.8 million, up $11.0 million from the same period last year.  For the nine months ended September 30, 2008, total revenues increased to $51.5 million, compared to $23.3 million for the first nine months of 2007.  The growth in revenues for both periods was primarily due to revenues resulting from our acquisition of Midlands.  Also contributing to the increase were revenues from PMA Management Corp., which increased 34% in the third quarter and 25% in the first nine months of 2008, compared to the same periods last year.  The total increase in revenues in the third quarter of 2008 primarily reflected an $8.4 million increase in claims service revenues and a $2.7 million increase in commission income, compared to the third quarter of last year.  The total increase in revenues during the first nine months of 2008 primarily reflected an $18.5 million increase in claims service revenues and a $9.6 million increase in commission income, compared to the same period last year.  The segment’s operating results for the third quarter of 2008 also reflect those of PMA Management Corp. of New England, Inc. (formerly Webster Risk Services), which we acquired on June 30, 2008.

Corporate and Other

The Corporate and Other segment, which includes primarily corporate expenses and debt service, recorded net expenses of $5.3 million during the third quarter of 2008, compared to $4.6 million in the third quarter of 2007.  Net expenses were $15.8 million during the first nine months of 2008, compared to $14.6 million for the same period in 2007.  We incurred $655,000 in contract severance costs associated with the March 2008 retirement of an executive officer.  The increase in net expenses in both periods also relates to certain intercompany transactions which are eliminated in the Corporate and Other segment.

Discontinued Operations

Discontinued operations, formerly our Run-off Operations which consists of our former reinsurance and excess and surplus lines businesses, recorded after-tax losses of $2.3 million and $4.9 million for the three and nine months ended September 30, 2008, compared to after-tax losses of $14.0 million and $16.5 million for the same periods in 2007.  The loss for the first nine months of 2008 was due to an after-tax charge of $4.9 million for adverse loss development, including $2.3 million recorded in the third quarter, 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 $2.5 million and the value of the contingent consideration has been reduced to a face amount of $2.5 million.  We have reflected

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only the expected cash amount in our financials.  Results in the third quarter and first nine months of 2007 included an after-tax charge of $14.3 million for adverse loss development.

Conference Call with Investors

As a reminder, we will hold a conference call with investors beginning at 10:30 a.m. Eastern Time on Monday, November 3rd to review our third 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 Current Investor Information 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 50017836	Passcode 63060887

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

www.theconferencingservice.com/prereg/key.process?key=P73EV3BNU

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 11:30 a.m. Eastern Time on Monday, November 3rd until 11:59 p.m. Eastern Time on Wednesday, December 3rd.

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 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;

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

·   disruptions in the financial markets which may affect our ability to sell our investments;

·   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 adequate rates on our insurance products;

·   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;

·   uncertainties related to possible terrorist activities or international hostilities and whether the Terrorism Risk Insurance Program Reauthorization Act of 2007 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 September 30,
(dollar amounts in thousands, except per share data)	2008			2007
Gross premiums written	$	151,498		$	149,436
Net premiums written	$	123,995		$	116,116
Revenues:
Net premiums earned	$	97,974		$	93,773
Claims service revenues		15,696			7,595
Commission income		2,637			-
Net investment income		8,870			9,914
Net realized investment gains (losses)		(7,929	)		153
Other revenues		125			33
Total revenues		117,373			111,468
Expenses:
Losses and loss adjustment expenses		68,660			63,163
Acquisition expenses		15,898			18,182
Operating expenses		26,906			16,900
Dividends to policyholders		1,169			2,205
Interest expense		2,734			3,075
Total losses and expenses		115,367			103,525
Pre-tax income		2,006			7,943
Income tax expense (benefit):
Current		765			537
Deferred		(10	)		2,228
Total income tax expense		755			2,765
Income from continuing operations		1,251			5,178
Loss from discontinued operations after tax		(2,310	)		(13,981	)
Net loss	$	(1,059	)	$	(8,803	)
Earnings (loss) per share:
Basic:
Continuing Operations	$	0.04		$	0.16
Discontinued Operations		(0.07	)		(0.44	)
	$	(0.03	)	$	(0.28	)
Diluted:
Continuing Operations	$	0.04		$	0.16
Discontinued Operations		(0.07	)		(0.43	)
	$	(0.03	)	$	(0.27	)

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PMA Capital Corporation

GAAP Consolidated Statements of Operations

(Unaudited)

	Nine months ended September 30,
(dollar amounts in thousands, except per share data)	2008			2007
Gross premiums written	$	396,698		$	429,258
Net premiums written	$	316,924		$	323,509
Revenues:
Net premiums earned	$	286,490		$	284,626
Claims service revenues		40,585			22,795
Commission income		9,549			-
Net investment income		27,345			29,619
Net realized investment losses		(4,983	)		(3	)
Other revenues		2,485			172
Total revenues		361,471			337,209
Expenses:
Losses and loss adjustment expenses		200,154			197,047
Acquisition expenses		50,114			55,720
Operating expenses		76,586			51,912
Dividends to policyholders		3,544			5,874
Interest expense		8,209			8,734
Total losses and expenses		338,607			319,287
Pre-tax income		22,864			17,922
Income tax expense:
Current		916			737
Deferred		7,216			5,620
Total income tax expense		8,132			6,357
Income from continuing operations		14,732			11,565
Loss from discontinued operations after tax		(4,937	)		(16,531	)
Net income (loss)	$	9,795		$	(4,966	)
Earnings (loss) per share:
Basic:
Continuing Operations	$	0.46		$	0.36
Discontinued Operations		(0.15	)		(0.51	)
	$	0.31		$	(0.15	)
Diluted:
Continuing Operations	$	0.46		$	0.35
Discontinued Operations		(0.15	)		(0.50	)
	$	0.31		$	(0.15	)

10

PMA Capital Corporation

GAAP Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
(dollar amounts in thousands, except per share data)	2008			2007
Assets:
Investments:
Fixed maturities available for sale	$	701,738		$	728,725
Short-term investments		88,358			78,426
Total investments		790,096			807,151
Cash		12,502			15,828
Accrued investment income		6,104			5,768
Premiums receivable		226,709			222,140
Reinsurance receivables		824,512			795,938
Prepaid reinsurance premiums		23,051			32,361
Deferred income taxes, net		131,132			118,857
Deferred acquisition costs		43,317			37,404
Funds held by reinsureds		49,292			42,418
Intangible assets		30,518			22,779
Other assets		152,327			105,341
Assets of discontinued operations		309,607			375,656
Total assets	$	2,599,167		$	2,581,641
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,247,069		$	1,212,956
Unearned premiums		247,302			226,178
Debt		129,380			131,262
Accounts payable, accrued expenses
and other liabilities		247,196			195,895
Reinsurance funds held and balances payable		34,185			39,324
Dividends to policyholders		5,150			5,839
Liabilities of discontinued operations		330,891			391,603
Total liabilities		2,241,173			2,203,057
Shareholders' Equity:
Class A Common Stock		171,090			171,090
Additional paid-in capital		112,427			111,088
Retained earnings		144,286			136,627
Accumulated other comprehensive loss		(40,149	)		(6,663	)
Treasury stock, at cost		(29,660	)		(33,558	)
Total shareholders' equity		357,994			378,584
Total liabilities and shareholders' equity	$	2,599,167		$	2,581,641
Shareholders' equity per share	$	11.20		$	11.92

 11

EX-99.2

Exhibit 99.2

PMA Capital Corporation
Statistical Supplement
Third Quarter - 2008
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
Assets and Liabilities of Discontinued Operations; Selected Balance Sheet Items - Fronting Agreements;
Rollforward of Deferred Policy Acquisition Costs - PMA Insurance Group			8
Invested Assets and Net Investment Income; Debt			9
Segment Information:
Statements of Operations - Consolidating - Year-to-date		11 - 12
Statements of Operations - Consolidating - Third Quarter		13 - 14
Statements of Operations - PMA Insurance Group			15
Insurance Ratios - PMA Insurance Group			16
Components of Direct Premiums Written - PMA Insurance Group			17
Statements of Operations - Fee-based Business			18
Statements of Operations - Corporate & Other			19
Statements of Operations - Discontinued Operations			20
Operating Cash Flow Information:
Operating Cash Flows - Consolidated			21
Operating Cash Flows - PMA Insurance Group			22
Operating Cash Flows - Fee-based Business			23
Statutory Financial Information:
Statutory Surplus; Statutory Financial Information - PMA Pool			24
Other Information:
Industry Ratings and Market Information			25
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 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
	2007			2007			2008			2008			2008			Quarter
Direct Premiums Written	$	146,547		$	91,416		$	140,431		$	99,092		$	148,193			1.1	%
Net Premiums Written	$	116,116		$	71,189		$	113,783		$	79,146		$	123,995			6.8	%
Revenues:
Net premiums earned	$	93,773		$	93,617		$	85,596		$	102,920		$	97,974			4.5	%
Claims service revenues		7,595			11,239			11,952			12,937			15,696		NM
Commission income		-			3,005			4,281			2,631			2,637		NM
Net investment income		9,914			9,973			9,435			9,040			8,870			-10.5	%
Net realized investment gains (losses)		153			566			3,518			(572	)		(7,929	)	NM
Other revenues		33			168			146			2,214			125		NM
Total revenues	$	111,468		$	118,568		$	114,928		$	129,170		$	117,373			5.3	%
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	11,702		$	7,614		$	13,619		$	11,341		$	13,325			13.9	%
Fee-based Business		661			1,669			2,186			1,201			1,929		NM
Corporate & Other		(4,573	)		(5,003	)		(5,011	)		(5,424	)		(5,319	)		-16.3	%
Pre-tax operating income		7,790			4,280			10,794			7,118			9,935			27.5	%
Income tax expense		2,711			1,464			3,811			2,535			3,530			30.2	%
After-tax operating income		5,079			2,816			6,983			4,583			6,405			26.1	%
Net realized investment gains (losses) after tax		99			368			2,287			(372	)		(5,154	)	NM
Income from continuing operations		5,178			3,184			9,270			4,211			1,251			-75.8	%
Loss from discontinued operations after tax		(13,981	)		(40,746	)		(2,439	)		(188	)		(2,310	)		83.5	%
Net income (loss)	$	(8,803	)	$	(37,562	)	$	6,831		$	4,023		$	(1,059	)		88.0	%
Diluted Earnings (Loss) Per Share:
After-tax operating income	$	0.16		$	0.09		$	0.22		$	0.14		$	0.20			25.0	%
Realized gains (losses) after tax		-			0.01			0.07			(0.01	)		(0.16	)	NM
Income from continuing operations		0.16			0.10			0.29			0.13			0.04			-75.0	%
Loss from discontinued operations after tax		(0.43	)		(1.27	)		(0.08	)		-			(0.07	)		83.7	%
Net income (loss)	$	(0.27	)	$	(1.17	)	$	0.21		$	0.13		$	(0.03	)		88.9	%
Capitalization:
Debt	$	135,072		$	131,262		$	129,790		$	129,790		$	129,380			-4.2	%
Shareholders' equity excluding FAS 115 unrealized gain (loss)		409,263			374,603			381,255			387,761			380,107			-7.1	%
Total capitalization excluding FAS 115 unrealized gain (loss)		544,335			505,865			511,045			517,551			509,487			-6.4	%
FAS 115 unrealized gain (loss)		(2,138	)		3,981			2,464			(7,166	)		(22,113	)	NM
Total capitalization including FAS 115 unrealized gain (loss)	$	542,197		$	509,846		$	513,509		$	510,385		$	487,374			-10.1	%
Book Value Per Share:
Excluding FAS 115 unrealized gain (loss)	$	12.82		$	11.79		$	12.00		$	12.14		$	11.89			-7.3	%
Including FAS 115 unrealized gain (loss)	$	12.75		$	11.92		$	12.08		$	11.92		$	11.20			-12.2	%
Debt to Total Capital:
Excluding FAS 115 unrealized gain (loss)		24.8	%		25.9	%		25.4	%		25.1	%		25.4	%		2.4	%
Including FAS 115 unrealized gain (loss)		24.9	%		25.7	%		25.3	%		25.4	%		26.5	%		6.4	%
Interest Coverage:
Income from continuing operations before interest
and income taxes to interest expense		3.58			2.62			6.14			3.44			1.73			-51.7	%
Operating income from continuing operations before
interest and income taxes to interest expense		3.53			2.43			4.87			3.65			4.63			31.2	%

1

PMA Capital Corporation
Selected Financial Data
(Dollar Amounts in Thousands, Except Per Share Data)
	Nine			Nine			% Change
	Months			Months			Nine
	2008			2007			Months
Direct Premiums Written	$	387,716		$	418,280			-7.3	%
Net Premiums Written	$	316,924		$	323,509			-2.0	%
Revenues:
Net premiums earned	$	286,490		$	284,626			0.7	%
Claims service revenues		40,585			22,795			78.0	%
Commission income		9,549			-		NM
Net investment income		27,345			29,619			-7.7	%
Net realized investment losses		(4,983	)		(3	)	NM
Other revenues		2,485			172		NM
Total revenues	$	361,471		$	337,209			7.2	%
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	38,285		$	30,431			25.8	%
Fee-based Business		5,316			2,055		NM
Corporate & Other		(15,754	)		(14,561	)		-8.2	%
Pre-tax operating income		27,847			17,925			55.4	%
Income tax expense		9,876			6,358			55.3	%
After-tax operating income		17,971			11,567			55.4	%
Net realized investment losses after tax		(3,239	)		(2	)	NM
Income from continuing operations		14,732			11,565			27.4	%
Loss from discontinued operations after tax		(4,937	)		(16,531	)		70.1	%
Net income (loss)	$	9,795		$	(4,966	)	NM
Diluted Earnings (Loss) Per Share:
After-tax operating income	$	0.56		$	0.35			60.0	%
Realized losses after tax		(0.10	)		-		NM
Income from continuing operations		0.46			0.35			31.4	%
Loss from discontinued operations after tax		(0.15	)		(0.50	)		70.0	%
Net income (loss)	$	0.31		$	(0.15	)	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
	2007			2007			2008			2008		2008			2008			2007
Diluted Earnings (Loss) Per Share:
Pre-tax operating income	$	0.24		$	0.13		$	0.34		$	0.22	$	0.31		$	0.87		$	0.55
After-tax operating income	$	0.16		$	0.09		$	0.22		$	0.14	$	0.20		$	0.56		$	0.35
Income from continuing operations	$	0.16		$	0.10		$	0.29		$	0.13	$	0.04		$	0.46		$	0.35
Loss from discontinued operations after tax		(0.43	)		(1.27	)		(0.08	)		-		(0.07	)		(0.15	)		(0.50	)
Net income (loss)	$	(0.27	)	$	(1.17	)	$	0.21		$	0.13	$	(0.03	)	$	0.31		$	(0.15	)
Diluted weighted average common
shares outstanding		32,412,070			32,079,673			31,942,896			32,132,576		32,200,554			32,102,465			32,736,340
Dividends declared:
Class A Common Stock	$	-		$	-		$	-		$	-	$	-		$	-		$	-
Actual common shares issued
and outstanding		31,920,486			31,761,106			31,765,817			31,940,651		31,965,806			31,965,806			31,920,486
Class A Common Stock prices:
High	$	11.17		$	10.69		$	9.14		$	10.23	$	12.00		$	12.00		$	11.40
Low	$	8.63		$	8.05		$	7.45		$	8.24	$	8.00		$	7.45		$	8.40
Close	$	9.50		$	8.22		$	8.54		$	9.21	$	8.82		$	8.82		$	9.50

3

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4

PMA Capital Corporation
Consolidated Statements of Operations
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd			3rd			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			3rd
	2007			2007			2008			2008			2008			Quarter
Gross Premiums Written	$	149,436		$	94,914		$	143,541		$	101,659		$	151,498			1.4	%
Net Premiums Written	$	116,116		$	71,189		$	113,783		$	79,146		$	123,995			6.8	%
Revenues:
Net premiums earned	$	93,773		$	93,617		$	85,596		$	102,920		$	97,974			4.5	%
Claims service revenues		7,595			11,239			11,952			12,937			15,696		NM
Commission income		-			3,005			4,281			2,631			2,637		NM
Net investment income		9,914			9,973			9,435			9,040			8,870			-10.5	%
Net realized investment gains (losses)		153			566			3,518			(572	)		(7,929	)	NM
Other revenues		33			168			146			2,214			125		NM
Total revenues		111,468			118,568			114,928			129,170			117,373			5.3	%
Expenses:
Losses and loss adjustment expenses		63,163			66,152			59,922			71,572			68,660			8.7	%
Acquisition expenses		18,182			18,027			14,692			19,524			15,898			-12.6	%
Operating expenses		16,900			24,629			22,333			27,347			26,906			59.2	%
Dividends to policyholders		2,205			1,916			882			1,493			1,169			-47.0	%
Interest expense		3,075			2,998			2,787			2,688			2,734			-11.1	%
Total losses and expenses		103,525			113,722			100,616			122,624			115,367			11.4	%
Pre-tax income		7,943			4,846			14,312			6,546			2,006			-74.7	%
Income tax expense (benefit):
Current		537			(321	)		-			151			765			42.5	%
Deferred		2,228			1,983			5,042			2,184			(10	)	NM
Total income tax expense		2,765			1,662			5,042			2,335			755			-72.7	%
Income from continuing operations		5,178			3,184			9,270			4,211			1,251			-75.8	%
Loss from discontinued operations after tax		(13,981	)		(40,746	)		(2,439	)		(188	)		(2,310	)		83.5	%
Net income (loss)	$	(8,803	)	$	(37,562	)	$	6,831		$	4,023		$	(1,059	)		88.0	%
Pre-tax operating income from continuing operations	$	7,790		$	4,280		$	10,794		$	7,118		$	9,935			27.5	%
After-tax operating income from continuing operations	$	5,079		$	2,816		$	6,983		$	4,583		$	6,405			26.1	%

5

PMA Capital Corporation
Consolidated Statements of Operations
(Dollar Amounts in Thousands)
	Nine			Nine			% Change
	Months			Months			Nine
	2008			2007			Months
Gross Premiums Written	$	396,698		$	429,258			-7.6	%
Net Premiums Written	$	316,924		$	323,509			-2.0	%
Revenues:
Net premiums earned	$	286,490		$	284,626			0.7	%
Claims service revenues		40,585			22,795			78.0	%
Commission income		9,549			-		NM
Net investment income		27,345			29,619			-7.7	%
Net realized investment losses		(4,983	)		(3	)	NM
Other revenues		2,485			172		NM
Total revenues		361,471			337,209			7.2	%
Expenses:
Losses and loss adjustment expenses		200,154			197,047			1.6	%
Acquisition expenses		50,114			55,720			-10.1	%
Operating expenses		76,586			51,912			47.5	%
Dividends to policyholders		3,544			5,874			-39.7	%
Interest expense		8,209			8,734			-6.0	%
Total losses and expenses		338,607			319,287			6.1	%
Pre-tax income		22,864			17,922			27.6	%
Income tax expense:
Current		916			737			24.3	%
Deferred		7,216			5,620			28.4	%
Total income tax expense		8,132			6,357			27.9	%
Income from continuing operations		14,732			11,565			27.4	%
Loss from discontinued operations after tax		(4,937	)		(16,531	)		70.1	%
Net income (loss)	$	9,795		$	(4,966	)	NM
Pre-tax operating income from continuing operations	$	27,847		$	17,925			55.4	%
After-tax operating income from continuing operations	$	17,971		$	11,567			55.4	%

6

PMA Capital Corporation
Consolidated Balance Sheets
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd			3rd
	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2008			2008			2008
Assets:
Investments in fixed maturities available for sale	$	725,637		$	728,725		$	719,570		$	730,466		$	701,738
Short-term investments		83,618			78,426			78,086			59,785			88,358
Total investments		809,255			807,151			797,656			790,251			790,096
Cash		4,164			15,828			14,552			10,557			12,502
Accrued investment income		5,789			5,768			5,462			5,762			6,104
Premiums receivable		254,804			222,140			239,783			215,030			226,709
Reinsurance receivables		795,118			795,938			818,789			817,182			824,512
Prepaid reinsurance premiums		41,354			32,361			28,977			21,414			23,051
Deferred income taxes, net		103,284			118,857			116,342			117,983			131,132
Deferred acquisition costs		42,626			37,404			42,547			38,739			43,317
Funds held by reinsureds		40,150			42,418			44,622			46,980			49,292
Intangible assets		-			22,779			22,589			30,013			30,518
Other assets		92,176			105,341			115,255			125,533			152,327
Assets of discontinued operations		525,710			375,656			348,921			317,189			309,607
Total assets	$	2,714,430		$	2,581,641		$	2,595,495		$	2,536,633		$	2,599,167
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,206,550		$	1,212,956		$	1,227,287		$	1,240,224		$	1,247,069
Unearned premiums		257,598			226,178			250,981			219,643			247,302
Debt		135,072			131,262			129,790			129,790			129,380
Accounts payable, accrued expenses
and other liabilities		173,242			195,895			191,029			193,342			247,196
Reinsurance funds held and balances payable		44,884			39,324			39,287			31,947			34,185
Dividends to policyholders		4,730			5,839			5,845			5,459			5,150
Liabilities of discontinued operations		485,229			391,603			367,557			335,633			330,891
Total liabilities		2,307,305			2,203,057			2,211,776			2,156,038			2,241,173
Shareholders' Equity:
Class A Common Stock		171,090			171,090			171,090			171,090			171,090
Additional paid-in capital		110,687			111,088			111,588			111,754			112,427
Retained earnings		174,190			136,627			143,418			145,638			144,286
Accumulated other comprehensive loss		(16,673	)		(6,663	)		(8,917	)		(17,743	)		(40,149	)
Treasury stock, at cost		(32,169	)		(33,558	)		(33,460	)		(30,144	)		(29,660	)
Total shareholders' equity		407,125			378,584			383,719			380,595			357,994
Total liabilities and shareholders' equity	$	2,714,430		$	2,581,641		$	2,595,495		$	2,536,633		$	2,599,167

7

PMA Capital Corporation
Assets and Liabilities of Discontinued Operations
(Dollar Amounts in Thousands)
	3rd	4th		1st		2nd		3rd
	Quarter	Quarter		Quarter		Quarter		Quarter
	2007	2007		2008		2008		2008
Assets
Investments	$       71,486	$     219,678		$     186,466		$     172,732		$     160,240
Cash	4,524	5,665		10,305		726		692
Reinsurance receivables	312,175	150,097		144,994		136,212		134,133
Other assets	137,525	216	1	7,156	1	7,519	1	14,542	1
Assets of discontinued operations	$     525,710	$     375,656		$     348,921		$     317,189		$     309,607
Liabilities
Unpaid losses and loss adjustment expenses	$     379,920	$     339,077		$     317,165		$     289,190		$     281,386
Other liabilities	105,309	52,526		50,392		46,443		49,505
Liabilities of discontinued operations	$     485,229	$     391,603		$     367,557		$     335,633		$     330,891
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)
	3rd	4th	1st	2nd	3rd
	Quarter	Quarter	Quarter	Quarter	Quarter
	2007	2007	2008	2008	2008
Assets
Premiums receivable	$       31,136	$       27,847	$       22,714	$       11,145	$         8,087
Reinsurance receivables	21,799	30,377	37,711	42,691	44,668
Prepaid reinsurance premiums	26,188	22,665	16,956	8,513	5,020
Deferred acquisition costs	231	254	189	61	79
Other assets	3,375	7,332	7,285	6,234	6,315
Liabilities
Unpaid losses and loss adjustment expenses	$       21,855	$       30,978	$       38,739	$       44,078	$       46,301
Unearned premiums	27,338	24,413	18,500	9,555	5,845
Reinsurance funds held and balances payable	24,652	21,333	16,510	8,047	6,126
Other liabilities	7,435	11,511	11,564	8,586	7,459

PMA Capital Corporation
Rollforward of Deferred Policy Acquisition Costs - PMA Insurance Group
(Dollar Amounts in Thousands)
	3rd	4th	1st	2nd	3rd
	Quarter	Quarter	Quarter	Quarter	Quarter
	2007	2007	2008	2008	2008
Balance Sheet
Balance, beginning of period	$       37,889	$       42,626	$       37,404	$       42,547	$       38,739
Policy acquisition costs deferred	22,919	12,805	19,835	15,729	20,501
Amortization of policy acquisition costs	(18,182)	(18,027)	(14,692)	(19,537)	(15,923)
Net change	4,737	(5,222)	5,143	(3,808)	4,578
Balance, end of period	$       42,626	$       37,404	$       42,547	$       38,739	$       43,317

8

PMA Capital Corporation
Invested Assets and Net Investment Income
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2007			2007			2008			2008			2008			2008			2007
Total Investments & Cash
As reported	$	813,419		$	822,979		$	812,208		$	800,808		$	802,598		$	802,598		$	813,419
Less:
Unrealized gain (loss) on
fixed maturities available for sale		(3,315	)		6,138			4,024			(10,663	)		(33,148	)		(33,148	)		(3,315	)
Total adjusted investments & cash	$	816,734		$	816,841		$	808,184		$	811,471		$	835,746		$	835,746		$	816,734
Net Investment Income
As reported	$	9,914		$	9,973		$	9,435		$	9,040		$	8,870		$	27,345		$	29,619
Less:
Interest on funds held		(529	)		(676	)		(506	)		(558	)		(616	)		(1,680	)		(1,518	)
Total adjusted investment income	$	10,443		$	10,649		$	9,941		$	9,598		$	9,486		$	29,025		$	31,137
Yield
As reported		4.81	%		4.88	%		4.62	%		4.48	%		4.43	%		4.50	%		4.88	%
Investment portfolio		5.01	%		5.22	%		4.89	%		4.74	%		4.61	%		4.73	%		5.09	%
Duration (in years)		3.8			3.7			3.8			3.8			3.6			3.6			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		45		20223
Total long-term debt	$	129,380

1	Weighted average interest rate on junior subordinated debt is 6.90% as of September 30, 2008.
2	Interest rate on surplus notes is 7.29% as of September 30, 2008.
3	Holders of this debt, at their option, may require us to repurchase all or a portion of their debentures on September 30, 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.

9

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10

PMA Capital Corporation
Statements of Operations - Consolidating
Nine Months Ended September 30, 2008
(Dollar Amounts in Thousands)
	PMA
	Insurance		Fee-based		Corporate
	Group		Business		& Other1			Consolidated
Gross Premiums Written	$	397,069	$	-	$	(371	)	$	396,698
Net Premiums Written	$	317,295	$	-	$	(371	)	$	316,924
Revenues:
Net premiums earned	$	286,861	$	-	$	(371	)	$	286,490
Claims service revenues		-		41,272		(687	)		40,585
Commission income		-		9,587		(38	)		9,549
Net investment income		26,818		397		130			27,345
Other revenues		2,120		275		90			2,485
Operating revenues		315,799		51,531		(876	)		366,454
Losses and Expenses:
Losses and loss adjustment expenses		200,154		-		-			200,154
Acquisition expenses		50,152		-		(38	)		50,114
Operating expenses		23,071		46,215		7,300			76,586
Dividends to policyholders		3,544		-		-			3,544
Total losses and expenses		276,921		46,215		7,262			330,398
Operating income (loss) before income taxes
and interest expense		38,878		5,316		(8,138	)		36,056
Interest expense		593		-		7,616			8,209
Pre-tax operating income (loss)	$	38,285	$	5,316	$	(15,754	)		27,847
Net realized investment losses									(4,983	)
Pre-tax income								$	22,864
1  Corporate & Other includes the effect of eliminating transactions between the operating segments.

11

PMA Capital Corporation
Statements of Operations - Consolidating
Nine Months Ended September 30, 2007
(Dollar Amounts in Thousands)
	PMA
	Insurance		Fee-based		Corporate
	Group		Business		& Other1			Consolidated
Gross Premiums Written	$	429,729	$	-	$	(471	)	$	429,258
Net Premiums Written	$	323,980	$	-	$	(471	)	$	323,509
Revenues:
Net premiums earned	$	285,097	$	-	$	(471	)	$	284,626
Claims service revenues		-		22,795		-			22,795
Net investment income		28,530		537		552			29,619
Other revenues		-		-		172			172
Operating revenues		313,627		23,332		253			337,212
Losses and Expenses:
Losses and loss adjustment expenses		197,047		-		-			197,047
Acquisition expenses		55,720		-		-			55,720
Operating expenses		23,801		21,277		6,834			51,912
Dividends to policyholders		5,874		-		-			5,874
Total losses and expenses		282,442		21,277		6,834			310,553
Operating income (loss) before income taxes
and interest expense		31,185		2,055		(6,581	)		26,659
Interest expense		754		-		7,980			8,734
Pre-tax operating income (loss)	$	30,431	$	2,055	$	(14,561	)		17,925
Net realized investment losses									(3	)
Pre-tax income								$	17,922

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.

12

PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended September 30, 2008
(Dollar Amounts in Thousands)
	PMA
	Insurance		Fee-based		Corporate
	Group		Business		& Other1			Consolidated
Gross Premiums Written	$	151,620	$	-	$	(122	)	$	151,498
Net Premiums Written	$	124,117	$	-	$	(122	)	$	123,995
Revenues:
Net premiums earned	$	98,096	$	-	$	(122	)	$	97,974
Claims service revenues		-		15,951		(255	)		15,696
Commission income		-		2,662		(25	)		2,637
Net investment income		8,776		118		(24	)		8,870
Other revenues		-		91		34			125
Operating revenues		106,872		18,822		(392	)		125,302
Losses and Expenses:
Losses and loss adjustment expenses		68,660		-		-			68,660
Acquisition expenses		15,923		-		(25	)		15,898
Operating expenses		7,604		16,893		2,409			26,906
Dividends to policyholders		1,169		-		-			1,169
Total losses and expenses		93,356		16,893		2,384			112,633
Operating income (loss) before income taxes
and interest expense		13,516		1,929		(2,776	)		12,669
Interest expense		191		-		2,543			2,734
Pre-tax operating income (loss)	$	13,325	$	1,929	$	(5,319	)		9,935
Net realized investment losses									(7,929	)
Pre-tax income								$	2,006

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

13

PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended September 30, 2007
(Dollar Amounts in Thousands)
	PMA
	Insurance		Fee-based		Corporate
	Group		Business		& Other1			Consolidated
Gross Premiums Written	$	149,591	$	-	$	(155	)	$	149,436
Net Premiums Written	$	116,271	$	-	$	(155	)	$	116,116
Revenues:
Net premiums earned	$	93,928	$	-	$	(155	)	$	93,773
Claims service revenues		-		7,595		-			7,595
Net investment income		9,397		193		324			9,914
Other revenues		-		-		33			33
Operating revenues		103,325		7,788		202			111,315
Losses and Expenses:
Losses and loss adjustment expenses		63,163		-		-			63,163
Acquisition expenses		18,182		-		-			18,182
Operating expenses		7,819		7,127		1,954			16,900
Dividends to policyholders		2,205		-		-			2,205
Total losses and expenses		91,369		7,127		1,954			100,450
Operating income (loss) before income taxes
and interest expense		11,956		661		(1,752	)		10,865
Interest expense		254		-		2,821			3,075
Pre-tax operating income (loss)	$	11,702	$	661	$	(4,573	)		7,790
Net realized investment gains									153
Pre-tax income								$	7,943

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.

14

PMA Capital Corporation
Statements of Operations - PMA Insurance Group 1
(Dollar Amounts in Thousands)
	3rd		4th		1st		2nd		3rd		Nine		Nine		% Change			% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		Months		Months		3rd			Nine
	2007		2007		2008		2008		2008		2008		2007		Quarter			Months
Gross Premiums Written	$	149,591	$	95,070	$	143,663	$	101,786	$	151,620	$	397,069	$	429,729		1.4	%		-7.6	%
Net Premiums Written	$	116,271	$	71,345	$	113,905	$	79,273	$	124,117	$	317,295	$	323,980		6.7	%		-2.1	%
Revenues:
Net premiums earned	$	93,928	$	93,773	$	85,718	$	103,047	$	98,096	$	286,861	$	285,097		4.4	%		0.6	%
Net investment income		9,397		9,406		9,099		8,943		8,776		26,818		28,530		-6.6	%		-6.0	%
Other revenues		-		-		-		2,120		-		2,120		-	NM			NM
Total revenues		103,325		103,179		94,817		114,110		106,872		315,799		313,627		3.4	%		0.7	%
Losses and Expenses:
Losses and loss adjustment expenses		63,163		66,152		59,922		71,572		68,660		200,154		197,047		8.7	%		1.6	%
Acquisition expenses		18,182		18,027		14,692		19,537		15,923		50,152		55,720		-12.4	%		-10.0	%
Operating expenses		7,819		9,223		5,488		9,979		7,604		23,071		23,801		-2.7	%		-3.1	%
Dividends to policyholders		2,205		1,916		882		1,493		1,169		3,544		5,874		-47.0	%		-39.7	%
Total losses and expenses		91,369		95,318		80,984		102,581		93,356		276,921		282,442		2.2	%		-2.0	%
Operating income before
income taxes and interest expense		11,956		7,861		13,833		11,529		13,516		38,878		31,185		13.0	%		24.7	%
Interest expense		254		247		214		188		191		593		754		-24.8	%		-21.4	%
Pre-tax operating income	$	11,702	$	7,614	$	13,619	$	11,341	$	13,325	$	38,285	$	30,431		13.9	%		25.8	%

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.

15

PMA Capital Corporation
Insurance Ratios - PMA Insurance Group
																						Point Chg.			Point Chg.
																						3rd			Nine
	3rd			4th			1st			2nd			3rd			Nine			Nine			Quarter			Months
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months			Better			Better
	2007			2007			2008			2008			2008			2008			2007			(Worse)			(Worse)
Ratios - GAAP Basis:
Loss and LAE ratio		67.2	%		70.5	%		69.9	%		69.4	%		70.0	%		69.8	%		69.1	%		(2.8	)		(0.7	)
Expense ratio:
Acquisition expenses		19.4	%		19.2	%		17.1	%		19.0	%		16.2	%		17.5	%		19.5	%		3.2			2.0
Operating expenses		8.4	%		9.9	%		6.5	%		9.7	%		7.8	%		8.0	%		8.3	%		0.6			0.3
Total expense ratio		27.8	%		29.1	%		23.6	%		28.7	%		24.0	%		25.5	%		27.8	%		3.8			2.3
Policyholders' dividend ratio		2.3	%		2.0	%		1.0	%		1.4	%		1.2	%		1.2	%		2.1	%		1.1			0.9
Combined ratio		97.3	%		101.6	%		94.5	%		99.5	%		95.2	%		96.5	%		99.0	%		2.1			2.5
Net investment income ratio		-10.0	%		-10.0	%		-10.6	%		-8.7	%		-8.9	%		-9.3	%		-10.0	%		(1.1	)		(0.7	)
Operating ratio		87.3	%		91.6	%		83.9	%		90.8	%		86.3	%		87.2	%		89.0	%		1.0			1.8

16

PMA Capital Corporation
Components of Direct Premiums Written - PMA Insurance Group
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			Nine			Twelve
	Quarter			Quarter			Quarter			Quarter			Months			Months
	2006			2006			2006			2006			2006			2006
Direct premium production	$	127,138		$	92,932		$	126,858		$	78,751		$	346,928		$	425,679
Fronting premiums		-			-			2,086			12,704			2,086			14,790
Premium adjustments		435			(498	)		(1,452	)		(7,327	)		(1,515	)		(8,842	)
Direct premiums written	$	127,573		$	92,434		$	127,492		$	84,128		$	347,499		$	431,627
	1st			2nd			3rd			4th			Nine			Twelve
	Quarter			Quarter			Quarter			Quarter			Months			Months
	2007			2007			2007			2007			2007			2007
Direct premium production	$	143,389		$	96,316		$	137,144		$	83,103		$	376,849		$	459,952
Fronting premiums		18,401			14,936			13,707			12,796			47,044			59,840
Premium adjustments		(859	)		(134	)		(4,149	)		(4,327	)		(5,142	)		(9,469	)
Direct premiums written	$	160,931		$	111,118		$	146,702		$	91,572		$	418,751		$	510,323
	1st			2nd			3rd						Nine
	Quarter			Quarter			Quarter						Months
	2008			2008			2008						2008
Direct premium production	$	146,608		$	96,736		$	150,547					$	393,891
Fronting premiums		8,143			2,113			2,776						13,032
Premium adjustments		(14,198	)		370			(5,008	)					(18,836	)
Direct premiums written	$	140,553		$	99,219		$	148,315					$	388,087

17

PMA Capital Corporation
Statements of Operations - Fee-based Business 1
(Dollar Amounts in Thousands)
	3rd		4th		1st		2nd		3rd		Nine		Nine		% Change			% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		Months		Months		3rd			Nine
	2007		2007		2008		2008		2008		2008		2007		Quarter			Months
Revenues:
Claims service revenues	$	7,595	$	11,239	$	12,108	$	13,213	$	15,951	$	41,272	$	22,795	NM				81.1	%
Commission income		-		3,005		4,281		2,644		2,662		9,587		-	NM			NM
Net investment income		193		435		161		118		118		397		537		-38.9	%		-26.1	%
Other revenues		-		113		102		82		91		275		-	NM			NM
Total revenues		7,788		14,792		16,652		16,057		18,822		51,531		23,332	NM			NM
Expenses:
Operating expenses		7,127		13,123		14,466		14,856		16,893		46,215		21,277	NM			NM
Total expenses		7,127		13,123		14,466		14,856		16,893		46,215		21,277	NM			NM
Pre-tax operating income	$	661	$	1,669	$	2,186	$	1,201	$	1,929	$	5,316	$	2,055	NM			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.  Beginning in the third quarter of 2008, the operating results for this segment also include those of PMA Management Corp. of New England, which was acquired by the Company on June 30, 2008.

18

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
	2007			2007			2008			2008			2008			2008			2007			Quarter			Months
Gross Premiums Written	$	(155	)	$	(156	)	$	(122	)	$	(127	)	$	(122	)	$	(371	)	$	(471	)		21.3	%		21.2	%
Net Premiums Written	$	(155	)	$	(156	)	$	(122	)	$	(127	)	$	(122	)	$	(371	)	$	(471	)		21.3	%		21.2	%
Revenues:
Net premiums earned	$	(155	)	$	(156	)	$	(122	)	$	(127	)	$	(122	)	$	(371	)	$	(471	)		21.3	%		21.2	%
Claims service revenues		-			-			(156	)		(276	)		(255	)		(687	)		-		NM			NM
Commission income		-			-			-			(13	)		(25	)		(38	)		-		NM			NM
Net investment income 1		324			132			175			(21	)		(24	)		130			552		NM				-76.4	%
Other revenues		33			55			44			12			34			90			172			3.0	%		-47.7	%
Total revenues		202			31			(59	)		(425	)		(392	)		(876	)		253		NM			NM
Expenses:
Acquisition expenses		-			-			-			(13	)		(25	)		(38	)		-		NM			NM
Operating expenses		1,954			2,283			2,379			2,512			2,409			7,300			6,834			23.3	%		6.8	%
Total expenses		1,954			2,283			2,379			2,499			2,384			7,262			6,834			22.0	%		6.3	%
Operating loss before income
taxes and interest expense		(1,752	)		(2,252	)		(2,438	)		(2,924	)		(2,776	)		(8,138	)		(6,581	)		-58.4	%		-23.7	%
Interest expense		2,821			2,751			2,573			2,500			2,543			7,616			7,980			-9.9	%		-4.6	%
Pre-tax operating loss	$	(4,573	)	$	(5,003	)	$	(5,011	)	$	(5,424	)	$	(5,319	)	$	(15,754	)	$	(14,561	)		-16.3	%		-8.2	%

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.

19

PMA Capital Corporation
Statements of Operations - Discontinued Operations 1
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine			% Change			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months			3rd			Nine
	2007			2007			2008			2008			2008			2008			2007			Quarter			Months
Gross Premiums Written	$	1,603		$	(301	)	$	2,331		$	(214	)	$	417		$	2,534		$	5,104			-74.0	%		-50.4	%
Net Premiums Written	$	1,216		$	680		$	2,439		$	(227	)	$	167		$	2,379		$	4,705			-86.3	%		-49.4	%
Revenues:
Net premiums earned	$	1,105		$	656		$	1,026		$	11		$	517		$	1,554		$	2,815			-53.2	%		-44.8	%
Net investment income 1		777			60			128			(451	)		(663	)		(986	)		2,784		NM			NM
Total revenues		1,882			716			1,154			(440	)		(146	)		568			5,599		NM				-89.9	%
Losses and Expenses:
Losses and loss adjustment expenses		22,447			274			9,280			550			10,201			20,031			23,739			-54.6	%		-15.6	%
Acquisition expenses		39			239			85			168			(146	)		107			652		NM				-83.6	%
Operating expenses		1,689			2,111			2,782			1,952			2,054			6,788			5,396			21.6	%		25.8	%
Impairment charge / valuation adjustment		-			61,482			(6,480	)		(3,550	)		(8,594	)		(18,624	)		-		NM			NM
Total losses and expenses		24,175			64,106			5,667			(880	)		3,515			8,302			29,787			-85.5	%		-72.1	%
Pre-tax operating income (loss) from discontinued operations		(22,293	)		(63,390	)		(4,513	)		440			(3,661	)		(7,734	)		(24,188	)		83.6	%		68.0	%
Income tax expense (benefit)		(7,803	)		(22,187	)		(1,580	)		154			(1,281	)		(2,707	)		(8,466	)		83.6	%		68.0	%
After-tax operating income (loss) from discontinued operations		(14,490)			(41,203)			(2,933)			286			(2,380)			(5,027)			(15,722)			83.6	%		68.0	%
Realized gains (losses) after tax		509			457			494			(474	)		70			90			(809	)		-86.2	%	NM
Loss from discontinued operations	$	(13,981	)	$	(40,746	)	$	(2,439	)	$	(188	)	$	(2,310	)	$	(4,937	)	$	(16,531	)		83.5	%		70.1	%

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.

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PMA Capital Corporation
Operating Cash Flows - Consolidated 1
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2007			2007			2008			2008			2008			2008			2007
Receipts:
Premiums collected	$	99,713		$	95,709		$	93,222		$	94,883		$	112,274		$	300,379		$	279,440
Claims service, commissions and other revenues		8,097			19,473			14,097			16,180			22,643			52,920			22,732
Investment income received		9,981			10,730			10,623			9,418			9,688			29,729			31,090
Total receipts		117,791			125,912			117,942			120,481			144,605			383,028			333,262
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		20,704			24,466			4,991			17,075			25,618			47,684			40,314
Losses and LAE paid - prior years		61,340			34,968			61,577			54,638			46,851			163,066			175,450
Total losses and LAE paid		82,044			59,434			66,568			71,713			72,469			210,750			215,764
Operating expenses paid		32,950			36,995			44,966			43,369			43,785			132,120			98,403
Commissions and premiums paid		-			7,792			922			2,117			3,387			6,426			-
Policyholders' dividends paid		690			791			1,138			1,882			1,663			4,683			3,067
Interest on corporate debt		2,888			3,396			2,926			2,680			2,700			8,306			8,416
Total disbursements		118,572			108,408			116,520			121,761			124,004			362,285			325,650
Net other		(4,183	)		793			(5,637	)		12,080			(6,158	)		285			(6,261	)
Net operating cash flows from continuing operations		(4,964	)		18,297			(4,215	)		10,800			14,443			21,028			1,351
Net operating cash flows from discontinued operations		(18,174	)		143,177	2		(31,345	)		(23,228	)		(13,236	)		(67,809	)		(75,999	)
Net operating cash flows	$	(23,138	)	$	161,474		$	(35,560	)	$	(12,428	)	$	1,207		$	(46,781	)	$	(74,648	)

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.

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PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group 1
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd		3rd			Nine		Nine
	Quarter			Quarter			Quarter			Quarter		Quarter			Months		Months
	2007			2007			2008			2008		2008			2008		2007
Receipts:
Premiums collected	$	99,713		$	95,709		$	93,222		$	94,883	$	112,274		$	300,379	$	279,440
Investment income received		9,788			10,292			10,462			9,300		9,570			29,332		30,553
Total receipts		109,501			106,001			103,684			104,183		121,844			329,711		309,993
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		20,704			24,466			4,991			17,075		25,618			47,684		40,314
Losses and LAE paid - prior years		61,340			34,968			61,577			54,638		46,851			163,066		175,450
Total losses and LAE paid		82,044			59,434			66,568			71,713		72,469			210,750		215,764
Operating expenses paid		25,806			22,146			32,454			28,756		26,531			87,741		76,998
Policyholders' dividends paid		690			791			1,138			1,882		1,663			4,683		3,067
Interest on corporate debt		252			252			245			186		192			623		748
Total disbursements		108,792			82,623			100,405			102,537		100,855			303,797		296,577
Net other		(6,333	)		(15,631	)		(3,412	)		10,964		(6,659	)		893		(15,829	)
Net operating cash flows	$	(5,624	)	$	7,747		$	(133	)	$	12,610	$	14,330		$	26,807	$	(2,413	)

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.

22

PMA Capital Corporation
Operating Cash Flows - Fee-based Business 1
(Dollar Amounts in Thousands)
	3rd			4th			1st		2nd			3rd		Nine			Nine
	Quarter			Quarter			Quarter		Quarter			Quarter		Months			Months
	2007			2007			2008		2008			2008		2008			2007
Receipts:
Claims service, commissions and other revenues	$	8,097		$	19,473		$	14,097	$	16,180		$	22,643	$	52,920		$	22,732
Investment income received		193			438			161		118			118		397			537
Total receipts		8,290			19,911			14,258		16,298			22,761		53,317			23,269
Disbursements:
Operating expenses paid		7,144			14,849			12,512		14,613			17,254		44,379			21,405
Commissions and premiums paid		-			7,792			922		2,117			3,387		6,426			-
Total disbursements		7,144			22,641			13,434		16,730			20,641		50,805			21,405
Net other		(105	)		(48	)		977		(3,003	)		970		(1,056	)		(3,581	)
Net operating cash flows	$	1,041		$	(2,778	)	$	1,801	$	(3,435	)	$	3,090	$	1,456		$	(1,717	)

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.  Beginning in the third quarter of 2008, the operating cash flows for this segment also include those of PMA Management Corp. of New England, which was acquired by the Company on June 30, 2008.

23

PMA Capital Corporation
Statutory Surplus
(Dollar Amounts in Thousands)
	3rd		4th		1st		2nd		3rd
	Quarter		Quarter		Quarter		Quarter		Quarter
	2007		2007		2008		2008			20081
PMA Pool 2	$	339,800	$	335,394	$	343,582	$	352,096	$	336,368
PMA Capital Insurance Company		58,040		47,580		41,099		37,838		26,143

PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(Dollar Amounts in Thousands)
	3rd			4th			1st			2nd			3rd			Nine			Nine
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2007			2007			2008			2008			20081			20081			2007
Net Premiums Written:
Workers' Compensation	$	98,459		$	64,477		$	103,018		$	71,998		$	107,446		$	282,462		$	288,167
Other Commercial Lines		9,900			6,139			10,805			9,079			8,692			28,576			27,517
Total - PMA Pool	$	108,359		$	70,616		$	113,823		$	81,077		$	116,138		$	311,038		$	315,684
Statutory Ratios:
Loss and LAE ratio		68.0	%		70.4	%		69.6	%		69.5	%		69.4	%		69.5	%		69.8	%
Underwriting expense ratio		25.9	%		34.6	%		20.3	%		32.1	%		22.1	%		24.1	%		25.2	%
Policyholders' dividend ratio		1.4	%		2.1	%		1.4	%		1.5	%		1.4	%		1.4	%		1.2	%
Combined ratio		95.3	%		107.1	%		91.3	%		103.1	%		92.9	%		95.0	%		96.2	%
Operating ratio		85.7	%		97.2	%		80.7	%		94.4	%		84.0	%		85.7	%		86.5	%

1	Estimated.
2	The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company.

24

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 10/30/2008):
	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)	NR 3	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 ("PMACIC").  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.
3 NR - No Rating; On July 21, 2008, Fitch withdrew its financial strength rating of PMACIC.
Prior to the rating withdrawal, PMACIC had a financial strength rating of "B-" (16th of 21).

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