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) April 30, 2009

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 April 30, 2009, PMA Capital Corporation (the “Registrant”) issued a news release regarding its First Quarter 2009 results, a copy of which is furnished as Exhibit 99.1 hereto.  Additionally, the Registrant’s First Quarter 2009 Statistical Supplement is furnished as Exhibit 99.2.

The information, including Exhibits 99.1 and 99.2 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 furnished under this Item 2.02 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 April 30, 2009

Exhibit 99.2                                           PMA Capital Corporation First Quarter 2009 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 hereunto duly authorized.

	PMA Capital Corporation
April 30, 2009	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 April 30, 2009
Exhibit 99.2	PMA Capital Corporation First Quarter 2009 Statistical Supplement

EX-99.1

Exhibit 99.1

 

For Immediate Release	Contact:	William E. Hitselberger
		(610) 397-5298
		bhitselberger@pmacapital.com

PMA Capital Reports Continued Improvement in First Quarter 2009 Results

Blue Bell, PA, April 30, 2009 -- PMA Capital Corporation (NASDAQ: PMACA) today reported the following financial results for the first quarter of 2009:

	Three months ended
	March 31,
(in thousands, except per share data)	2009			2008
Operating income	$	7,816		$	6,983
Realized gains after tax		487			2,287
Income from continuing operations		8,303			9,270
Loss from discontinued operations after tax		(86	)		(2,439	)
Net income	$	8,217		$	6,831
Diluted per share amounts:
Operating income	$	0.24		$	0.22
Realized gains after tax		0.02			0.07
Income from continuing operations		0.26			0.29
Loss from discontinued operations after tax		-			(0.08	)
Net income	$	0.26		$	0.21

Vincent T. Donnelly, President and Chief Executive Officer commented, “We are pleased to report stronger operating results for the first quarter of 2009.  The improvements in our operating results demonstrate that we are continuing to successfully execute our strategic plan.  Despite pricing pressures and challenging economic conditions in our marketing territories, the results of our insurance business continued to improve with modest premium production growth and disciplined underwriting and expense management.  Fee-based revenues continued to increase as a result of organic growth and our prior year acquisition of PMA Management Corp. of New England.”

Significant operating highlights at The PMA Insurance Group included:

·   For the first quarter, pre-tax operating income increased 12% to $15.2 million, compared to $13.6 million in the first quarter of 2008;

·   The combined ratio improved to 93.5%, compared to 94.5% for the first quarter last year; and

·  Net premiums earned increased $19.4 million to $105.1 million, compared to the first quarter of 2008, due to the increase in the base of net premiums written

    and a lower amount of return premium adjustments in 2009.

Mr. Donnelly continued, “Revenues from our Fee-based Business increased 18% to $19.7 million during the first quarter of 2009, compared to $16.7 million for the same period of 2008.  Organic revenue growth of claims service revenues was 16% in the quarter.  PMA Management Corp. of New England, which we acquired in June 2008, also added $1.9 million of claims service revenues.”

Mr. Donnelly concluded, “We also took the opportunity in the first quarter to initiate a plan to reduce our current portfolio holdings in Commercial Mortgage Backed Securities.  We recorded impairments of $3.4 million pre-tax on $41.6 million par of CMBS which we subsequently sold in April.  As we had recognized securities gains in the earlier part of the first quarter, the net impact of realized investment activity did not reduce the statutory capital of our insurance operations.”

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.  The closing of the sale and transfer of ownership are pending approval by the Department.  Under the amended terms of the Agreement, the Agreement may be terminated by either the Company or the buyer if the closing of the sale does not occur by June 30, 2009, or such later date as the parties may mutually agree.  The Company continues to work with the buyer and with the Department to conclude the Form A process.

Financial Condition

Total assets were $2.6 billion as of March 31, 2009, compared to $2.5 billion at December 31, 2008.  Assets of discontinued operations represented 9% of total assets at March 31, 2009, compared to 10% at December 31, 2008.  At March 31, 2009, we had $29.1 million in cash and short-term investments at our holding company and non-regulated subsidiaries.

Shareholders’ equity and book value per share changed as follows:

	Three months ended
	March 31, 2009
(in thousands, except per share data)	Shareholders' equity	Book value per share
Balance, beginning of period	$    344,656	$    10.78
Net income	8,217	0.26
Unrealized loss on securities, net of tax	(1,846)	(0.06)
Other	243	0.01
Impact of change in shares outstanding	-	(0.08)
Balance, end of period	$    351,270	$    10.91

The insurance companies within The PMA Insurance Group had statutory capital and surplus of $337.5 million as of March 31, 2009, compared to $332.9 million as of December 31, 2008.  The PMA Insurance Group has the ability to pay $31.8 million in dividends during 2009 without the prior approval of the Pennsylvania Insurance Department.  The statutory capital and surplus of the Company’s run-off reinsurance subsidiary, which is being reported as discontinued operations, was $29.3 million as of March 31, 2009, compared to $34.5 million as of December 31, 2008.

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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.

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

	Three months ended
	March 31,
(dollar amounts in thousands)	2009			2008
Pre-tax operating income (loss):
The PMA Insurance Group	$	15,187		$	13,619
Fee-based Business		2,013			2,186
Corporate & Other		(5,000	)		(5,011	)
Pre-tax operating income		12,200			10,794
Income tax expense		4,384			3,811
Operating income		7,816			6,983
Realized gains after tax		487			2,287
Income from continuing operations		8,303			9,270
Loss from discontinued operations after tax		(86	)		(2,439	)
Net income	$	8,217		$	6,831

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

	Three months ended
	March 31,
(dollar amounts in thousands)	2009			2008
Net realized gains (losses) after tax:
Sales of investments	$	3,028		$	2,305
Other than temporary impairments		(2,541	)		-
Other		-			(18	)
Net realized gains after tax	$	487		$	2,287

We recorded other than temporary impairments of $2.5 million after-tax during the three months ended March 31, 2009.  The impairments included write-downs on $41.6 million par of CMBS, which we subsequently sold in April 2009 in order to reduce our exposure to this asset sector.  These write-downs were measured based on public market prices.  The realized gains from sales of investments were generated in the first quarter to minimize the statutory capital charge associated with this planned reduction of CMBS exposure.  At March 31, 2009, our CMBS had an average credit rating of AAA

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and fair value of $124.9 million, which represented 82% of their amortized cost.  Details of the Company’s investment portfolio at March 31, 2009 and December 31, 2008 are posted on our website at www.pmacapital.com.

The PMA Insurance Group

The PMA Insurance Group reported pre-tax operating income of $15.2 million for the first quarter of 2009, compared to $13.6 million for the first quarter of 2008.  The increase for the first quarter was due primarily to higher net premiums earned and an improved underwriting margin, as reflected in our lower combined ratio.

Direct premium production increased modestly in the first quarter of 2009, compared to the first quarter last year.  We define direct premium production as direct premiums written, excluding fronting premiums and premium adjustments.  The following is a reconciliation of our direct premium production to direct premiums written:

	Three months ended
	March 31,
(dollar amounts in thousands)	2009			2008
Direct premium production	$	147,367		$	146,608
Fronting premiums		19,622			8,143
Premium adjustments		(4,876	)		(14,198	)
Direct premiums written	$	162,113		$	140,553

Fronting premiums increased primarily as a result of the two fronting arrangements we entered into during August 2008.  The decrease in premium adjustments primarily reflected a lower amount of return premium adjustments on loss-sensitive products where the insured shares in the underwriting result of the policy.  We write these retrospective products because we believe they provide us with greater certainty in achieving our targeted underwriting results as the customer shares in the underwriting result of the policy with us.

Excluding fronting business, we wrote $38.0 million of new business in the first quarter of 2009, compared to $34.7 million during the same period last year.  Pricing on our workers’ compensation rate-sensitive business declined 4% during the first three months of 2009, compared to a 6% decrease during the first three months of 2008.  Our renewal retention rate on existing workers’ compensation accounts for the first quarter was 79%, compared to 85% for the same period in 2008.  The decline in the retention rate in 2009 primarily reflected lower retentions on rate-sensitive middle-market business as we continue to maintain disciplined underwriting standards in a price competitive environment.  During 2009, our retention rates for workers’ compensation were higher for business written on a loss-sensitive basis than for business written on a rate-sensitive basis, reflecting our strategy to emphasize loss-sensitive business.

Net premiums written were $118.1 million in the first quarter of 2009, compared to $113.9 million in the same period last year.  The increase in net premiums written primarily reflected the lower impact of premium adjustments, which was partially offset by a decrease in workers’ compensation premium production.

Net premiums earned were $105.1 million in the first quarter of 2009, compared to $85.7 million in the first quarter of 2008.  The increase between periods reflects the increase in direct premium production

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over the past year as well as the impact of lower return premium adjustments in 2009, which reduce earned premiums in the period the adjustment is made.

The combined ratio on a GAAP basis was 93.5% for the first three months of 2009, compared to 94.5% for the same period in 2008.  The improvement in the combined ratio for the first quarter of 2009, compared to the same quarter last year, was primarily the result of a lower expense ratio and, to

a lesser extent, a lower policyholders’ dividend ratio, which was partially offset by an increased loss and LAE ratio.  Given the seasonality of our business, our first quarter combined ratios have historically been lower than the subsequent quarters and full year ratios.

The increase in the loss and LAE ratio in the first quarter of 2009 was due primarily to a reduction in our audit premium accrual.  While payrolls, which declined by less than 1% through March, on our renewal book have been stable overall, this was lower than the rate of growth we experienced in 2008, and as a result we reduced our accrual for additional audit premiums by $3.3 million.  Key loss indicators are in line with our expectations for this business, and we will continue to evaluate loss activity on these accounts as they mature, but we did not reduce our expectation of losses on these policies, which were primarily written in 2007 and 2008.  Although 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 the first quarter of 2009 from changes in the type of workers’ compensation products selected by our insureds.  We estimate our medical cost inflation to be 6.0% in the first quarter of 2009, compared to our estimate of 6.5% in the first quarter of 2008.

The expense ratio for the first quarter of 2009, compared to the same period last year, benefited as the increase in net premiums earned outpaced the increase in our controllable expenses, which include salary, benefits and other employee-related costs.  Commissions earned under our fronting arrangements reduced the first quarter acquisition expense ratio by 0.5 points in 2009, compared to a reduction of 0.9 points for the same period in 2008, as the ceding commissions earned on this business reduce our commission expense.

The policyholders’ dividend ratio was lower in the first three months of 2009, compared to the same period last year.  The current year period reflected slightly higher than expected loss experience, which 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 was $8.5 million in the first quarter of 2009, compared to $9.1 million in the prior year quarter.  The decrease was due primarily to a lower yield of approximately 50 basis points on an average invested asset base that increased modestly.

Fee-based Business

For the first quarter of 2009, total revenues at our Fee-based Business increased to $19.7 million from $16.7 million for the same period last year.  The increase in revenues primarily reflected higher claims service revenues of $3.9 million, partially offset by lower commission income of $806,000.  Organic claims service revenue growth was 16% in the first quarter of 2009, compared to the prior year period.  Claims service revenues also increased by $1.9 million as a result of our June 2008 acquisition of PMA Management Corp. of New England, Inc.  

Our Fee-based Business reported pre-tax operating income of $2.0 million for the first quarter of 2009, compared to $2.2 million for the same quarter last year.  The decline was primarily due to a reduction in the net commissions earned by our agency business.  The decrease in commission income was

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mainly the result of continued soft pricing in excess workers’ compensation business and lower insured payrolls primarily in construction accounts.

Corporate and Other

The Corporate and Other segment, which includes primarily corporate expenses and debt service, recorded net expenses of $5.0 million for both of the first quarters of 2009 and 2008.

Discontinued Operations

Discontinued operations, which consists of our former reinsurance and excess and surplus lines businesses, recorded an after-tax loss of $86,000 for the first three months of 2009, compared to an after-tax loss of $2.4 million for the same period in 2008.  The first quarter loss in 2008 was the result of a $2.6 million after-tax charge for adverse loss development.

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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 1 to review our first quarter 2009 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
888-680-0860(Domestic)	888-286-8010(Domestic)
617-213-4852(International)	617-801-6888(International)
Passcode 92364548	Passcode 63879296

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

www.theconferencingservice.com/prereg/key.process?key=P9VPTL4EE

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 five 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 Friday, May 1 until 11:59 p.m. Eastern Time on Monday, June 1.

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 Securities and Exchange Commission 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

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 with respect to the Company’s financial condition and results of operations and the plans and objectives of its management.  Forward-looking statements can generally be identified by use of forward-looking terminology such as “may,” “will,” “plan,” “expect,” “intend,” “anticipate,” and “believe.”  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.  All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.  The factors that could cause actual results to differ materially from those in the forward-looking statements, include, but are not limited to:

·   adequacy of reserves for claim liabilities, including reserves for potential environmental and asbestos claims;

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

·   adequacy and collectibility of reinsurance that we purchase;

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

·   the effects of emerging claims and coverage issues, including changing judicial interpretations of available coverage for certain insured losses;

·   the success with which our independent agents and brokers sell our products and our ability to collect payments from them;

·   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;

·   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;

·   our concentration in workers’ compensation insurance, which makes us particularly susceptible to adverse changes in that industry segment;

·   our ability to effectively compete in the highly competitive property and casualty insurance industry;

·   adverse economic or regulatory developments in the eastern part of the United States, particularly those affecting Pennsylvania, New York and New Jersey;

·   fluctuations in interest rates and other events that can adversely impact our investment portfolio;

·   disruptions in the financial markets that affect the value of our investment portfolio and our ability to sell our investments;

·   our ability to consummate the sale of our Run-off Operations in a timely and efficient manner;

·   our ability to repay our indebtedness;

·   our ability to raise additional capital on financially favorable terms when required;

·   restrictions on our operations contained in any document governing our indebtedness;

·   the impact of future results on the value of recorded goodwill and other intangible assets and the recoverability of our deferred tax asset;

·   our ability to attract and retain qualified management personnel;

·   the outcome of any litigation against us;

·   provisions in our charter documents that can inhibit a change in control of our company; 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 of this press release 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)	2009			2008
Gross premiums written	$	164,070		$	143,541
Net premiums written	$	117,978		$	113,783
Revenues:
Net premiums earned	$	104,930		$	85,596
Claims service revenues		15,684			11,952
Commission income		3,463			4,281
Net investment income		8,457			9,435
Net realized investment gains		749			3,518
Other revenues		176			146
Total revenues		133,459			114,928
Expenses:
Losses and loss adjustment expenses		75,775			59,922
Acquisition expenses		17,198			14,692
Operating expenses		24,385			22,333
Dividends to policyholders		646			882
Interest expense		2,506			2,787
Total losses and expenses		120,510			100,616
Pre-tax income		12,949			14,312
Income tax expense:
Current		244			-
Deferred		4,402			5,042
Total income tax expense		4,646			5,042
Income from continuing operations		8,303			9,270
Loss from discontinued operations after tax		(86	)		(2,439	)
Net income	$	8,217		$	6,831
Income (loss) per share:
Basic:
Continuing Operations	$	0.26		$	0.29
Discontinued Operations		-			(0.07	)
	$	0.26		$	0.22
Diluted:
Continuing Operations	$	0.26		$	0.29
Discontinued Operations		-			(0.08	)
	$	0.26		$	0.21

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PMA Capital Corporation

GAAP Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
(dollar amounts in thousands, except per share data)	2009			2008
Assets:
Investments:
Fixed maturities available for sale	$	714,202		$	719,048
Short-term investments		58,273			45,066
Other investments		13,832			8,127
Total investments		786,307			772,241
Cash		11,767			10,501
Accrued investment income		6,500			6,513
Premiums receivable		257,380			235,893
Reinsurance receivables		830,962			826,126
Prepaid reinsurance premiums		41,314			29,579
Deferred income taxes, net		135,496			138,514
Deferred acquisition costs		44,857			40,938
Funds held by reinsureds		54,166			51,754
Intangible assets		29,668			30,348
Other assets		119,361			116,646
Assets of discontinued operations		235,265			243,663
Total assets	$	2,553,043		$	2,502,716
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,256,435		$	1,242,258
Unearned premiums		272,200			247,415
Debt		129,380			129,380
Accounts payable, accrued expenses
and other liabilities		219,189			216,266
Reinsurance funds held and balances payable		59,074			44,177
Dividends to policyholders		7,224			6,862
Liabilities of discontinued operations		258,271			271,702
Total liabilities		2,201,773			2,158,060
Shareholders' Equity:
Class A Common Stock		171,090			171,090
Additional paid-in capital		111,953			112,921
Retained earnings		143,291			140,184
Accumulated other comprehensive loss		(51,497	)		(49,876	)
Treasury stock, at cost		(23,567	)		(29,663	)
Total shareholders' equity		351,270			344,656
Total liabilities and shareholders' equity	$	2,553,043		$	2,502,716
Shareholders' equity per share	$	10.91		$	10.78

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EX-99.2

Exhibit 99.2

PMA Capital Corporation
Statistical Supplement
First Quarter - 2009
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 Arrangements;
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 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)
	1st			2nd			3rd			4th			1st			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			1st
	2008			2008			2008			2008			2009			Quarter
Direct Premiums Written	$	140,431		$	99,092		$	148,193		$	129,713		$	161,965			15.3	%
Net Premiums Written	$	113,783		$	79,146		$	123,995		$	97,313		$	117,978			3.7	%
Revenues:
Net premiums earned	$	85,596		$	102,920		$	97,974		$	103,727		$	104,930			22.6	%
Claims service revenues		11,952			12,937			15,696			16,785			15,684			31.2	%
Commission income		4,281			2,631			2,637			2,835			3,463			-19.1	%
Net investment income		9,435			9,040			8,870			8,724			8,457			-10.4	%
Net realized investment gains (losses)		3,518			(572	)		(7,929	)		259			749			-78.7	%
Other revenues		146			2,214			125			356			176			20.5	%
Total revenues	$	114,928		$	129,170		$	117,373		$	132,686		$	133,459			16.1	%
Major Components of Net Income (Loss):
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	13,619		$	11,341		$	13,325		$	8,428		$	15,187			11.5	%
Fee-based Business		2,186			1,201			1,929			1,889			2,013			-7.9	%
Corporate & Other		(5,011	)		(5,424	)		(5,319	)		(4,897	)		(5,000	)		0.2	%
Pre-tax operating income		10,794			7,118			9,935			5,420			12,200			13.0	%
Income tax expense		3,811			2,535			3,530			1,854			4,384			15.0	%
After-tax operating income		6,983			4,583			6,405			3,566			7,816			11.9	%
Net realized investment gains (losses) after tax		2,287			(372	)		(5,154	)		168			487			-78.7	%
Income from continuing operations		9,270			4,211			1,251			3,734			8,303			-10.4	%
Loss from discontinued operations after tax		(2,439	)		(188	)		(2,310	)		(7,840	)		(86	)		96.5	%
Net income (loss)	$	6,831		$	4,023		$	(1,059	)	$	(4,106	)	$	8,217			20.3	%
Diluted Earnings (Loss) Per Share:
After-tax operating income	$	0.22		$	0.14		$	0.20		$	0.11		$	0.24			9.1	%
Realized gains (losses) after tax		0.07			(0.01	)		(0.16	)		0.01			0.02			-71.4	%
Income from continuing operations		0.29			0.13			0.04			0.12			0.26			-10.3	%
Loss from discontinued operations after tax		(0.08	)		-			(0.07	)		(0.25	)		-		NM
Net income (loss)	$	0.21		$	0.13		$	(0.03	)	$	(0.13	)	$	0.26			23.8	%
Capitalization:
Debt	$	129,790		$	129,790		$	129,380		$	129,380		$	129,380			-0.3	%
Shareholders' equity excluding FAS 115 unrealized gain (loss)		381,255			387,761			380,107			365,547			374,007			-1.9	%
Total capitalization excluding FAS 115 unrealized gain (loss)		511,045			517,551			509,487			494,927			503,387			-1.5	%
FAS 115 unrealized gain (loss)		2,464			(7,166	)		(22,113	)		(20,891	)		(22,737	)	NM
Total capitalization including FAS 115 unrealized gain (loss)	$	513,509		$	510,385		$	487,374		$	474,036		$	480,650			-6.4	%
Book Value Per Share:
Excluding FAS 115 unrealized gain (loss)	$	12.00		$	12.14		$	11.89		$	11.44		$	11.61			-3.3	%
Including FAS 115 unrealized gain (loss)	$	12.08		$	11.92		$	11.20		$	10.78		$	10.91			-9.7	%
Debt to Total Capital:
Excluding FAS 115 unrealized gain (loss)		25.4	%		25.1	%		25.4	%		26.1	%		25.7	%		1.2	%
Including FAS 115 unrealized gain (loss)		25.3	%		25.4	%		26.5	%		27.3	%		26.9	%		6.3	%
Interest Coverage:
Income from continuing operations before
interest and income taxes to interest     expense		6.14			3.44			1.73			3.12			6.17			0.5	%
Operating income from continuing operations before interest and income taxes to interest expense		4.87			3.65			4.63			3.03			5.87			20.5	%

1

PMA Capital Corporation
Consolidated Statements of Operations - Per Share Data
	1st			2nd		3rd			4th			1st
	Quarter			Quarter		Quarter			Quarter			Quarter
	2008			2008		2008			2008			2009
Diluted Earnings (Loss) Per Share:
Pre-tax operating income	$	0.34		$	0.22	$	0.31		$	0.17		$	0.38
After-tax operating income	$	0.22		$	0.14	$	0.20		$	0.11		$	0.24
Income from continuing operations	$	0.29		$	0.13	$	0.04		$	0.12		$	0.26
Loss from discontinued operations after tax		(0.08	)		-		(0.07	)		(0.25	)		-
Net income (loss)	$	0.21		$	0.13	$	(0.03	)	$	(0.13	)	$	0.26
Diluted weighted average common
shares outstanding		31,942,896			32,132,576		32,200,554			31,968,555			32,020,346
Dividends declared:
Class A Common Stock	$	-		$	-	$	-		$	-		$	-
Actual common shares issued
and outstanding		31,765,817			31,940,651		31,965,806			31,965,806			32,211,133
Class A Common Stock prices:
High	$	9.14		$	10.23	$	12.00		$	9.47		$	7.20
Low	$	7.45		$	8.24	$	8.00		$	3.46		$	3.50
Close	$	8.54		$	9.21	$	8.82		$	7.08		$	4.17

2

PMA Capital Corporation
Consolidated Statements of Operations
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			1st
	2008			2008			2008			2008			2009			Quarter
Gross Premiums Written	$	143,541		$	101,659		$	151,498		$	132,217		$	164,070			14.3	%
Net Premiums Written	$	113,783		$	79,146		$	123,995		$	97,313		$	117,978			3.7	%
Revenues:
Net premiums earned	$	85,596		$	102,920		$	97,974		$	103,727		$	104,930			22.6	%
Claims service revenues		11,952			12,937			15,696			16,785			15,684			31.2	%
Commission income		4,281			2,631			2,637			2,835			3,463			-19.1	%
Net investment income		9,435			9,040			8,870			8,724			8,457			-10.4	%
Net realized investment gains (losses)		3,518			(572	)		(7,929	)		259			749			-78.7	%
Other revenues		146			2,214			125			356			176			20.5	%
Total revenues		114,928			129,170			117,373			132,686			133,459			16.1	%
Expenses:
Losses and loss adjustment expenses		59,922			71,572			68,660			70,671			75,775			26.5	%
Acquisition expenses		14,692			19,524			15,898			16,521			17,198			17.1	%
Operating expenses		22,333			27,347			26,906			34,379			24,385			9.2	%
Dividends to policyholders		882			1,493			1,169			2,762			646			-26.8	%
Interest expense		2,787			2,688			2,734			2,674			2,506			-10.1	%
Total losses and expenses		100,616			122,624			115,367			127,007			120,510			19.8	%
Pre-tax income		14,312			6,546			2,006			5,679			12,949			-9.5	%
Income tax expense (benefit):
Current		-			151			765			(211	)		244		NM
Deferred		5,042			2,184			(10	)		2,156			4,402			-12.7	%
Total income tax expense		5,042			2,335			755			1,945			4,646			-7.9	%
Income from continuing operations		9,270			4,211			1,251			3,734			8,303			-10.4	%
Loss from discontinued operations after tax		(2,439	)		(188	)		(2,310	)		(7,840	)		(86	)		96.5	%
Net income (loss)	$	6,831		$	4,023		$	(1,059	)	$	(4,106	)	$	8,217			20.3	%
Pre-tax operating income from continuing operations	$	10,794		$	7,118		$	9,935		$	5,420		$	12,200			13.0	%
After-tax operating income from continuing operations	$	6,983		$	4,583		$	6,405		$	3,566		$	7,816			11.9	%

3

PMA Capital Corporation
Consolidated Balance Sheets
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2008			2008			2008			2008			2009
Assets:
Investments in fixed maturities available for sale	$	719,570		$	730,466		$	701,738		$	719,048		$	714,202
Short-term investments		79,184			60,891			89,766			45,066			58,273
Other investments		7,752			8,009			8,247			8,127			13,832
Total investments		806,506			799,366			799,751			772,241			786,307
Cash		14,552			10,557			12,502			10,501			11,767
Accrued investment income		5,462			5,762			6,104			6,513			6,500
Premiums receivable		239,783			215,030			226,709			235,893			257,380
Reinsurance receivables		818,789			817,182			824,512			826,126			830,962
Prepaid reinsurance premiums		28,977			21,414			23,051			29,579			41,314
Deferred income taxes, net		116,342			117,983			131,132			138,514			135,496
Deferred acquisition costs		42,547			38,739			43,317			40,938			44,857
Funds held by reinsureds		44,622			46,980			49,292			51,754			54,166
Intangible assets		22,589			30,013			30,518			30,348			29,668
Other assets		106,405			116,418			142,672			116,646			119,361
Assets of discontinued operations		348,921			317,189			309,607			243,663			235,265
Total assets	$	2,595,495		$	2,536,633		$	2,599,167		$	2,502,716		$	2,553,043
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,227,287		$	1,240,224		$	1,247,069		$	1,242,258		$	1,256,435
Unearned premiums		250,981			219,643			247,302			247,415			272,200
Debt		129,790			129,790			129,380			129,380			129,380
Accounts payable, accrued expenses
and other liabilities		191,029			193,342			247,196			216,266			219,189
Reinsurance funds held and balances payable		39,287			31,947			34,185			44,177			59,074
Dividends to policyholders		5,845			5,459			5,150			6,862			7,224
Liabilities of discontinued operations		367,557			335,633			330,891			271,702			258,271
Total liabilities		2,211,776			2,156,038			2,241,173			2,158,060			2,201,773
Shareholders' Equity:
Class A Common Stock		171,090			171,090			171,090			171,090			171,090
Additional paid-in capital		111,588			111,754			112,427			112,921			111,953
Retained earnings		143,418			145,638			144,286			140,184			143,291
Accumulated other comprehensive loss		(8,917	)		(17,743	)		(40,149	)		(49,876	)		(51,497	)
Treasury stock, at cost		(33,460	)		(30,144	)		(29,660	)		(29,663	)		(23,567	)
Total shareholders' equity		383,719			380,595			357,994			344,656			351,270
Total liabilities and shareholders' equity	$	2,595,495		$	2,536,633		$	2,599,167		$	2,502,716		$	2,553,043

4

PMA Capital Corporation
Assets and Liabilities of Discontinued Operations
(Dollar Amounts in Thousands)
	1st		2nd		3rd		4th		1st
	Quarter		Quarter		Quarter		Quarter		Quarter
	2008		2008		2008		2008		2009
Assets
Investments	$	186,466	$	172,732	$	160,240	$	146,033	$	137,317
Cash		10,305		726		692		1,371		85
Reinsurance receivables		144,994		136,212		134,133		94,956		93,120
Other assets		7,156		7,519		14,542		1,303		4,743
Assets of discontinued operations	$	348,921	$	317,189	$	309,607	$	243,663	$	235,265
Liabilities
Unpaid losses and loss adjustment expenses	$	317,165	$	289,190	$	281,386	$	247,442	$	235,568
Other liabilities		50,392		46,443		49,505		24,260		22,703
Liabilities of discontinued operations	$	367,557	$	335,633	$	330,891	$	271,702	$	258,271

PMA Capital Corporation
Selected Balance Sheet Items - Fronting Arrangements
(Dollar Amounts in Thousands)
	1st		2nd		3rd		4th		1st
	Quarter		Quarter		Quarter		Quarter		Quarter
	2008		2008		2008		2008		2009
Assets
Premiums receivable	$	22,714	$	11,145	$	8,087	$	25,796	$	38,833
Reinsurance receivables		37,711		42,691		44,668		47,280		50,175
Prepaid reinsurance premiums		16,956		8,513		5,020		16,048		24,884
Deferred acquisition costs		189		61		79		748		1,269
Other assets		7,285		6,234		6,315		6,723		6,818
Liabilities
Unpaid losses and loss adjustment expenses	$	38,739	$	44,078	$	46,301	$	49,494	$	53,087
Unearned premiums		18,500		9,555		5,845		19,667		29,430
Reinsurance funds held and balances payable		16,510		8,047		6,126		20,965		31,237
Other liabilities		11,564		8,586		7,459		10,116		11,392

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
	2008			2008			2008			2008			2009
Balance Sheet
Balance, beginning of period	$	37,404		$	42,547		$	38,739		$	43,317		$	40,938
Policy acquisition costs deferred		19,835			15,729			20,501			14,170			21,136
Amortization of policy acquisition costs		(14,692	)		(19,537	)		(15,923	)		(16,549	)		(17,217	)
Net change		5,143			(3,808	)		4,578			(2,379	)		3,919
Balance, end of period	$	42,547		$	38,739		$	43,317		$	40,938		$	44,857

5

PMA Capital Corporation
Invested Assets and Net Investment Income
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2008			2008			2008			2008			2009
Total Investments & Cash
As reported	$	821,058		$	809,923		$	812,253		$	782,742		$	798,074
Less:
Unrealized gain (loss) on
fixed maturities available for sale		4,024			(10,663	)		(33,148	)		(30,758	)		(33,799	)
Unrealized loss on other investments		(233	)		(362	)		(872	)		(1,382	)		(1,181	)
Total adjusted investments & cash	$	817,267		$	820,948		$	846,273		$	814,882		$	833,054
Net Investment Income
As reported	$	9,435		$	9,040		$	8,870		$	8,724		$	8,457
Less:
Interest on funds held		(506	)		(558	)		(616	)		(479	)		(288	)
Total adjusted investment income	$	9,941		$	9,598		$	9,486		$	9,203		$	8,745
Yield
As reported		4.57	%		4.43	%		4.37	%		4.38	%		4.28	%
Investment portfolio		4.84	%		4.69	%		4.55	%		4.43	%		4.25	%
Duration (in years)		3.8			3.8			3.6			3.2			3.5

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 5.21% as of March 31, 2009.
	2	Interest rate on surplus notes is 5.67% as of March 31, 2009.
	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.

6

PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended March 31, 2009
(Dollar Amounts in Thousands)
	PMA
	Insurance		Fee-based		Corporate
	Group		Business		& Other1			Consolidated
Gross Premiums Written	$	164,218	$	-	$	(148	)	$	164,070
Net Premiums Written	$	118,126	$	-	$	(148	)	$	117,978
Revenues:
Net premiums earned	$	105,078	$	-	$	(148	)	$	104,930
Claims service revenues		-		15,995		(311	)		15,684
Commission income		-		3,475		(12	)		3,463
Net investment income		8,466		86		(95	)		8,457
Other revenues		-		170		6			176
Total operating revenues		113,544		19,726		(560	)		132,710
Losses and Expenses:
Losses and loss adjustment expenses		75,775		-		-			75,775
Acquisition expenses		17,217		-		(19	)		17,198
Operating expenses		4,559		17,713		2,113			24,385
Dividends to policyholders		646		-		-			646
Total losses and expenses		98,197		17,713		2,094			118,004
Operating income (loss) before income taxes
and interest expense		15,347		2,013		(2,654	)		14,706
Interest expense		160		-		2,346			2,506
Pre-tax operating income (loss)	$	15,187	$	2,013	$	(5,000	)		12,200
Net realized investment gains									749
Pre-tax income								$	12,949

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, 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
Total 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.

8

PMA Capital Corporation
Statements of Operations - PMA Insurance Group
(Dollar Amounts in Thousands)
	1st		2nd		3rd		4th		1st		% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		1st
	2008		2008		2008		2008		2009		Quarter
Gross Premiums Written	$	143,663	$	101,786	$	151,620	$	132,340	$	164,218		14.3	%
Net Premiums Written	$	113,905	$	79,273	$	124,117	$	97,436	$	118,126		3.7	%
Revenues:
Net premiums earned	$	85,718	$	103,047	$	98,096	$	103,850	$	105,078		22.6	%
Net investment income		9,099		8,943		8,776		8,613		8,466		-7.0	%
Other revenues		-		2,120		-		18		-	NM
Total operating revenues		94,817		114,110		106,872		112,481		113,544		19.8	%
Losses and Expenses:
Losses and loss adjustment expenses		59,922		71,572		68,660		70,671		75,775		26.5	%
Acquisition expenses		14,692		19,537		15,923		16,549		17,217		17.2	%
Operating expenses		5,488		9,979		7,604		13,875		4,559		-16.9	%
Dividends to policyholders		882		1,493		1,169		2,762		646		-26.8	%
Total losses and expenses		80,984		102,581		93,356		103,857		98,197		21.3	%
Operating income before income taxes
and interest expense		13,833		11,529		13,516		8,624		15,347		10.9	%
Interest expense		214		188		191		196		160		-25.2	%
Pre-tax operating income	$	13,619	$	11,341	$	13,325	$	8,428	$	15,187		11.5	%

9

PMA Capital Corporation
Insurance Ratios - PMA Insurance Group
	1st			2nd			3rd			4th			1st			Point Chg.
	Quarter			Quarter			Quarter			Quarter			Quarter			1st Quarter
	2008			2008			2008			2008			2009			Better (Worse)
Ratios - GAAP Basis:
Loss and LAE ratio		69.9	%		69.4	%		70.0	%		68.1	%		72.1	%		(2.2	)
Expense ratio:
Acquisition expenses		17.1	%		19.0	%		16.2	%		15.9	%		16.4	%		0.7
Operating expenses		6.5	%		9.7	%		7.8	%		13.3	%		4.4	%		2.1
Total expense ratio		23.6	%		28.7	%		24.0	%		29.2	%		20.8	%		2.8
Policyholders' dividend ratio		1.0	%		1.4	%		1.2	%		2.7	%		0.6	%		0.4
Combined ratio		94.5	%		99.5	%		95.2	%		100.0	%		93.5	%		1.0
Net investment income ratio		-10.6	%		-8.7	%		-8.9	%		-8.3	%		-8.1	%		(2.5	)
Operating ratio		83.9	%		90.8	%		86.3	%		91.7	%		85.4	%		(1.5	)

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
	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			2nd			3rd			4th			Twelve
	Quarter			Quarter			Quarter			Quarter			Months
	2008			2008			2008			2008			2008
Direct premium production	$	146,608		$	96,736		$	150,547		$	112,296		$	506,187
Fronting premiums		8,143			2,113			2,776			21,800			34,832
Premium adjustments		(14,198	)		370			(5,008	)		(4,261	)		(23,097	)
Direct premiums written	$	140,553		$	99,219		$	148,315		$	129,835		$	517,922
	1st
	Quarter
	2009
Direct premium production	$	147,367
Fronting premiums		19,622
Premium adjustments		(4,876	)
Direct premiums written	$	162,113

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
	2008		2008		2008		2008		2009		Quarter
Revenues:
Claims service revenues	$	12,108	$	13,213	$	15,951	$	17,029	$	15,995		32.1	%
Commission income		4,281		2,644		2,662		2,848		3,475		-18.8	%
Net investment income		161		118		118		143		86		-46.6	%
Other revenues		102		82		91		59		170		66.7	%
Total operating revenues		16,652		16,057		18,822		20,079		19,726		18.5	%
Expenses:
Operating expenses		14,466		14,856		16,893		18,190		17,713		22.4	%
Total expenses		14,466		14,856		16,893		18,190		17,713		22.4	%
Pre-tax operating income	$	2,186	$	1,201	$	1,929	$	1,889	$	2,013		-7.9	%

1 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.

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
	2008			2008			2008			2008			2009			Quarter
Gross Premiums Written	$	(122	)	$	(127	)	$	(122	)	$	(123	)	$	(148	)		-21.3	%
Net Premiums Written	$	(122	)	$	(127	)	$	(122	)	$	(123	)	$	(148	)		-21.3	%
Revenues:
Net premiums earned	$	(122	)	$	(127	)	$	(122	)	$	(123	)	$	(148	)		-21.3	%
Claims service revenues		(156	)		(276	)		(255	)		(244	)		(311	)		-99.4	%
Commission income		-			(13	)		(25	)		(13	)		(12	)	NM
Net investment income		175			(21	)		(24	)		(32	)		(95	)	NM
Other revenues		44			12			34			279			6			-86.4	%
Total operating revenues		(59	)		(425	)		(392	)		(133	)		(560	)	NM
Expenses:
Acquisition expenses		-			(13	)		(25	)		(28	)		(19	)	NM
Operating expenses		2,379			2,512			2,409			2,314			2,113			-11.2	%
Total expenses		2,379			2,499			2,384			2,286			2,094			-12.0	%
Operating loss before income taxes
and interest expense		(2,438	)		(2,924	)		(2,776	)		(2,419	)		(2,654	)		-8.9	%
Interest expense		2,573			2,500			2,543			2,478			2,346			-8.8	%
Pre-tax operating loss	$	(5,011	)	$	(5,424	)	$	(5,319	)	$	(4,897	)	$	(5,000	)		0.2	%

13

PMA Capital Corporation
Statements of Operations - Discontinued Operations
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			1st
	2008			2008			2008			2008			2009			Quarter
Gross Premiums Written	$	2,331		$	(214	)	$	417		$	3		$	466			-80.0	%
Net Premiums Written	$	2,439		$	(227	)	$	167		$	2		$	(87	)	NM
Revenues:
Net premiums earned	$	1,026		$	11		$	517		$	145		$	617			-39.9	%
Net investment income		128			(451	)		(663	)		1,546			(878	)	NM
Total operating revenues		1,154			(440	)		(146	)		1,691			(261	)	NM
Losses and Expenses:
Losses and loss adjustment expenses		9,280			550			10,201			4,226			129			-98.6	%
Acquisition expenses		85			168			(146	)		339			1,199		NM
Operating expenses		2,782			1,952			2,054			2,228			2,577			-7.4	%
Impairment charge / valuation adjustment		(6,480	)		(3,550	)		(8,594	)		8,722			(4,387	)		32.3	%
Total losses and expenses		5,667			(880	)		3,515			15,515			(482	)	NM
Pre-tax operating income (loss) from discontinued operations		(4,513	)		440			(3,661	)		(13,824	)		221		NM
Income tax expense (benefit)		(1,580	)		154			(1,281	)		(4,838	)		77		NM
After-tax operating income (loss) from discontinued operations		(2,933	)		286			(2,380	)		(8,986	)		144		NM
Realized gains (losses) after tax		494			(474	)		70			1,146			(230	)	NM
Loss from discontinued operations	$	(2,439	)	$	(188	)	$	(2,310	)	$	(7,840	)	$	(86	)		96.5	%

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 - Consolidated
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			1st
	Quarter			Quarter			Quarter			Quarter			Quarter
	2008			2008			2008			2008			2009
Receipts:
Premiums collected	$	93,222		$	94,883		$	112,274		$	96,678		$	109,089
Claims service, commissions and other revenues		14,097			16,180			22,643			16,251			22,276
Investment income received		10,623			9,418			9,688			9,172			9,789
Total receipts		117,942			120,481			144,605			122,101			141,154
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		4,991			17,075			25,618			30,952			5,265
Losses and LAE paid - prior years		61,577			54,638			46,851			41,207			61,152
Total losses and LAE paid		66,568			71,713			72,469			72,159			66,417
Operating expenses paid		44,966			43,369			43,785			37,866			46,907
Commissions and premiums paid		922			2,117			3,387			580			1,680
Policyholders' dividends paid		1,138			1,882			1,663			1,592			863
Interest on corporate debt		2,926			2,680			2,700			2,645			2,526
Total disbursements		116,520			121,761			124,004			114,842			118,393
Net other		(5,637	)		12,080			(6,158	)		(691	)		(629	)
Net operating cash flows from continuing operations		(4,215	)		10,800			14,443			6,568			22,132
Net operating cash flows from discontinued operations		(31,345	)		(23,228	)		(13,236	)		(20,948	)		(14,742	)
Net operating cash flows	$	(35,560	)	$	(12,428	)	$	1,207		$	(14,380	)	$	7,390

15

PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group
(Dollar Amounts in Thousands)
	1st			2nd		3rd			4th			1st
	Quarter			Quarter		Quarter			Quarter			Quarter
	2008			2008		2008			2008			2009
Receipts:
Premiums collected	$	93,222		$	94,883	$	112,274		$	96,678		$	109,089
Investment income received		10,462			9,300		9,570			9,029			9,703
Total receipts		103,684			104,183		121,844			105,707			118,792
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		4,991			17,075		25,618			30,952			5,265
Losses and LAE paid - prior years		61,577			54,638		46,851			41,207			61,152
Total losses and LAE paid		66,568			71,713		72,469			72,159			66,417
Operating expenses paid		32,454			28,756		26,531			23,391			30,060
Policyholders' dividends paid		1,138			1,882		1,663			1,592			863
Interest on corporate debt		245			186		192			185			194
Total disbursements		100,405			102,537		100,855			97,327			97,534
Net other		(3,412	)		10,964		(6,659	)		(18,635	)		(1,205	)
Net operating cash flows	$	(133	)	$	12,610	$	14,330		$	(10,255	)	$	20,053

16

PMA Capital Corporation
Operating Cash Flows - Fee-based Business 1
(Dollar Amounts in Thousands)
	1st		2nd			3rd		4th		1st
	Quarter		Quarter			Quarter		Quarter		Quarter
	2008		2008			2008		2008		2009
Receipts:
Claims service, commissions and other revenues	$	14,097	$	16,180		$	22,643	$	16,251	$	22,276
Investment income received		161		118			118		143		86
Total receipts		14,258		16,298			22,761		16,394		22,362
Disbursements:
Operating expenses paid		12,512		14,613			17,254		14,475		16,847
Commissions and premiums paid		922		2,117			3,387		580		1,680
Total disbursements		13,434		16,730			20,641		15,055		18,527
Net other		977		(3,003	)		970		3,850		(242	)
Net operating cash flows	$	1,801	$	(3,435	)	$	3,090	$	5,189	$	3,593

1 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.

17

PMA Capital Corporation
Statutory Surplus
(Dollar Amounts in Thousands)
		1st			2nd			3rd			4th			1st
		Quarter			Quarter			Quarter			Quarter			Quarter
		2008			2008			2008			2008			20091
PMA Pool 2		$	343,582		$	352,096		$	336,368		$	332,915		$	337,495
PMA Capital Insurance Company			41,099			37,838			26,143			34,468			29,252
PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(Dollar Amounts in Thousands)
		1st			2nd			3rd			4th			1st
		Quarter			Quarter			Quarter			Quarter			Quarter
		2008			2008			2008			2008			20091
Net Premiums Written:
	Workers' Compensation	$	103,018		$	71,998		$	107,446		$	87,722		$	101,891
	Other Commercial Lines		10,805			9,079			8,692			8,154			13,487
	Total - PMA Pool	$	113,823		$	81,077		$	116,138		$	95,876		$	115,378
Statutory Ratios:
	Loss and LAE ratio		69.6	%		69.5	%		69.4	%		67.7	%		71.6	%
	Underwriting expense ratio		20.3	%		32.1	%		22.1	%		26.9	%		21.1	%
	Policyholders' dividend ratio		1.4	%		1.5	%		1.4	%		3.3	%		1.2	%
	Combined ratio		91.3	%		103.1	%		92.9	%		97.9	%		93.9	%
	Operating ratio		80.7	%		94.4	%		84.0	%		89.5	%		85.8	%

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

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	email: bhitselberger@pmacapital.com
www.amstock.com
	Investor Relations
Phone Inquiries:	610.397.5298
800.937.5449	email: 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 4/29/2009):
	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	C++  (9th of 16)	Not Rated	Not Rated
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 executed a definitive stock purchase agreement to sell our Run-off Operations to Armour Reinsurance Group Limited.  The closing of the sale and transfer of ownership are currently pending approval by the Pennsylvania Insurance Department.

 19