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) July 29, 2010

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 July 29, 2010, PMA Capital Corporation (the “Registrant”) issued a news release regarding its Second Quarter 2010 results, a copy of which is furnished as Exhibit 99.1 hereto.  Additionally, the Registrant’s Second Quarter 2010 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 July 29, 2010

Exhibit 99.2                                PMA Capital Corporation Second Quarter 2010 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
July 29, 2010	By:	/s/ John M. Cochrane
	Name:		John M. Cochrane
	Title:		Senior Vice President and Interim Chief Financial Officer

EXHIBIT INDEX

Exhibit No.                                           Description

Exhibit 99.1                                           PMA Capital Corporation News Release, dated July 29, 2010

Exhibit 99.2                                           PMA Capital Corporation Second Quarter 2010 Statistical Supplement

EX-99.1

Exhibit 99.1

For Immediate Release	Contact:	John M. Cochrane
		(610) 397-5298
		john_cochrane@pmagroup.com

PMA Capital Reports Second Quarter 2010 Results

Blue Bell, PA, July 29, 2010 -- PMA Capital Corporation (NASDAQ: PMACA) today reported the following financial results for the second quarter and first six months of 2010:

	Three months ended					Six months ended
	June 30,					June 30,
(in thousands, except per share data)	2010		2009			2010		2009
Operating income	$	1,386	$	4,074		$	9,203	$	11,890
Net realized investment gains (losses) after tax		737		(307	)		1,014		180
Income from continuing operations		2,123		3,767			10,217		12,070
Loss from discontinued operations after tax		-		(1,165	)		-		(1,251	)
Net income	$	2,123	$	2,602		$	10,217	$	10,819
Diluted per share amounts:
Operating income	$	0.05	$	0.13		$	0.29	$	0.37
Realized gains (losses) after tax		0.02		(0.01	)		0.03		0.01
Income from continuing operations		0.07		0.12			0.32		0.38
Loss from discontinued operations after tax		-		(0.04	)		-		(0.04	)
Net income	$	0.07	$	0.08		$	0.32	$	0.34

Vincent T. Donnelly, President and Chief Executive Officer, commented, “We had another quarter of positive earnings results despite the prolonged challenges in the marketplace.  However, our operating results in the second quarter were adversely impacted by return premium adjustments, primarily from audits, and costs incurred in connection with our pending merger, which contributed to the decline in our earnings from the prior year.  Although our 2010 insured payrolls on renewal business are up 1%, payrolls on expiring workers’ compensation policies were less than expected, resulting in audit return premiums.  Return premium adjustments reduced our operating income by $1.7 million after-tax, or five cents per diluted share, in the quarter.  Costs incurred in connection with our pending m erger with Old Republic reduced operating income by $1.1 million after-tax, or three cents per diluted share.”

At The PMA Insurance Group, Mr. Donnelly noted the following operating highlights:

·   Pre-tax operating income was $7.0 million in the quarter and $21.3 million for the first six months of 2010, compared to $10.0 million and $25.2 million in the same periods last year;

·   The combined ratio was 101.7% in the quarter and 98.3% year-to-date, compared to 99.4% and 96.5% in the prior year periods;

·   Pricing on our rate-sensitive workers’ compensation business increased 1%, compared to a decline of 3% during the first six months of 2009; and

·   Direct premium production, which excludes fronting premiums and premium adjustments, increased 5% in the quarter to $107 million and increased 6% for the first six months of 2010 to $264 million.

Fee-based Business operating highlights included:

·   Total revenues increased 9% to $43 million, which represented 16% of our consolidated revenues for the first half of 2010, compared to 15% during the same period in 2009;

·   Claims service revenues grew 7% in the quarter to $18 million and 10% during the first six months of 2010 to $36 million; and

·   Pre-tax operating income was $1.2 million in the second quarter, compared to $1.5 million in the second quarter of 2009.  Year-to-date pre-tax operating income was $3.5 million for both periods.

As previously announced on June 10, 2010, Old Republic International Corporation and PMA Capital Corporation entered into a merger agreement pursuant to which Old Republic will acquire all of PMA’s outstanding common stock.  The transaction is expected to close near the end of the third quarter, subject to approval by PMA’s shareholders, regulatory approvals and other customary closing conditions.

Financial Condition

Total assets were $2.4 billion as of June 30, 2010 and December 31, 2009.  At June 30, 2010, we had $23.8 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				Six months ended
	June 30, 2010				June 30, 2010
(in thousands, except per share data)	Shareholders' equity		Book value per share		Shareholders' equity		Book value per share
Balance, beginning of period	$	418,130	$	12.96	$	401,797	$	12.46
Net income		2,123		0.07		10,217		0.32
Unrealized gain on securities, net of tax		8,619		0.26		16,608		0.51
Other		329		0.01		579		0.01
Balance, end of period	$	429,201	$	13.30	$	429,201	$	13.30

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 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

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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						Six months ended
	June 30,						June 30,
(dollar amounts in thousands)	2010			2009			2010			2009
Pre-tax operating income (loss):
The PMA Insurance Group	$	6,998		$	9,965		$	21,265		$	25,152
Fee-based Business		1,209			1,525			3,514			3,538
Corporate & Other		(6,023	)		(5,167	)		(10,389	)		(10,167	)
Pre-tax operating income		2,184			6,323			14,390			18,523
Income tax expense		798			2,249			5,187			6,633
Operating income		1,386			4,074			9,203			11,890
Net realized investment gains (losses) after tax		737			(307	)		1,014			180
Income from continuing operations		2,123			3,767			10,217			12,070
Loss from discontinued operations after tax		-			(1,165	)		-			(1,251	)
Net income	$	2,123		$	2,602		$	10,217		$	10,819

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

	Three months ended					Six months ended
	June 30,					June 30,
(dollar amounts in thousands)	2010		2009			2010		2009
Net realized investment gains (losses) after tax:
Sales of investments	$	737	$	362		$	1,014	$	3,390
Other than temporary impairments		-		(669	)		-		(3,210	)
Net realized investment gains (losses) after tax	$	737	$	(307	)	$	1,014	$	180

Details of the Company’s investment portfolio at June 30, 2010 and December 31, 2009 are posted on our website at www.pmacapital.com.

The PMA Insurance Group

The PMA Insurance Group had pre-tax operating income of $7.0 million for the second quarter of 2010, compared to $10.0 million for the second quarter of 2009.  Year-to-date pre-tax operating income was $21.3 million, compared to $25.2 million for the first half of 2009.  Pre-tax operating income was reduced by $2.5 million in 2010 for the net impact of the second quarter return premium adjustments.

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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 consolidated gross premiums written:

	Three months ended						Six months ended
	June 30,						June 30,
(dollar amounts in thousands)	2010			2009			2010			2009
Direct premium production	$	107,038		$	102,212		$	264,130		$	249,579
Fronting premiums		9,457			9,677			25,252			29,299
Premium adjustments		(8,105	)		(2,753	)		(10,124	)		(7,629	)
Direct premiums written		108,390			109,136			279,258			271,249
Assumed premiums and other		1,468			4,288			2,505			6,245
Gross premiums written	$	109,858		$	113,424		$	281,763		$	277,494

Direct premium production included new business of $25.0 million in the second quarter and $59.5 million for the first half of 2010, compared to $33.4 million and $71.4 million during the same periods last year.  Pricing on our rate-sensitive workers’ compensation business increased 1% during the first six months of 2010, compared to a 3% decrease during the same period a year ago.  Our renewal retention rates on existing workers’ compensation accounts increased to 79% for the second quarter and 81% for the first six months of 2010, compared to 78% and 79% for the same periods in 2009.  During the first six months of 2010, our retention rates and new business for workers’ compensation were higher for business written on a loss-sensitive basis than for business written on a rate-sensitive bas is, as we continue to emphasize loss-sensitive business.

The increases in premium adjustments for both periods in 2010 primarily reflected increases in audit return premiums as payrolls on expiring workers’ compensation policies were less than expected.

Net premiums written were $75.6 million in the second quarter of 2010, compared to $80.4 million in the second quarter of 2009.  The decrease for the quarter is mainly due to the impact of return premium adjustments and, to a lesser extent, lower assumed premiums.  For the first six months of 2010, net premiums written increased to $203.9 million, compared to $198.6 million during the same period last year.  The increase in the first half of 2010 primarily reflected the increase in direct premium production for the period, partially offset by the impact of return premium adjustments and lower assumed premiums.

Net premiums earned were $100.2 million in the second quarter of 2010, compared to $107.1 million in the second quarter of 2009.  For the first six months of 2010, net premiums earned were $203.8 million, compared to $212.2 million for the first half of 2009.  The decreases for both periods primarily reflect the impact of return premium adjustments and lower assumed premiums.

The combined ratio on a GAAP basis was 101.7% for the second quarter of 2010, compared to 99.4% in the second quarter last year.  On a year-to-date basis, the combined ratio was 98.3% in 2010, compared to 96.5% for the same period in 2009.  The higher combined ratios in both periods were primarily the result of increases in the loss and LAE and operating expense ratios.

The loss and LAE ratios increased by 1.6 points in the second quarter and 0.9 points in the first six months of 2010, compared to the same prior year periods.  Pricing and payroll increases for rate-sensitive workers’ compensation business were slightly below overall estimated loss trends.  Losses and LAE in 2010 also included expenses incurred on a new claims system which was implemented in

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both our insurance and fee-based businesses.  We estimate our medical cost inflation to be 6.0% in the first six months of 2010 and 2009.

Operating expenses increased $718,000 in the second quarter and $921,000 in the first six months of 2010, compared to the same periods last year, primarily due to higher consulting and employee-related costs.

Net investment income was $8.8 million in the second quarter of 2010, compared to $9.5 million in the same period last year.  The decrease in the quarter was due primarily to lower yields on our investment portfolio, which were partially offset by an increase in average invested assets.  Year-to-date net investment income was $18.0 million for both 2010 and 2009.

Fee-based Business

For the second quarter of 2010, total revenues at our Fee-based Business increased to $21.2 million, up from $19.5 million for the same period last year.  For the first six months of 2010, total revenues increased to $42.7 million, compared to $39.2 million for the first half of 2009.  The increases in revenues primarily reflected claims service revenue growth of $1.3 million and $3.2 million for the second quarter and first six months of 2010.  Pre-tax operating income was $1.2 million for the second quarter of 2010, compared to $1.5 million for the same quarter last year, and was $3.5 million for the first six months in both years.  The decline in return on revenue in 2010 was primarily due to higher expenses at our agency business.

Corporate and Other

The Corporate and Other segment, which includes primarily corporate expenses and debt service, had net expenses of $6.0 million during the second quarter of 2010, compared to $5.2 million in the second quarter of 2009.  Net expenses were $10.4 million during the first six months of 2010, compared to $10.2 million for the same period in 2009.  The increases in net expenses for both periods in 2010 were mainly due to costs incurred related to the pending merger transaction with Old Republic that were partially offset by lower stock-based compensation expense and certain 2009 intercompany transactions with our former run-off operations which were eliminated in the Corporate and Other segment.  The costs incurred during the second quarter of 2010 related to the merger were $1.6 million.

Quarterly Statistical Supplement

Our Second Quarter Statistical Supplement, which provides more detailed information about our results, 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, strategy 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,” “should” 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 r isks 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;

·   judicial, legislative and regulatory changes that affect the cost of, or demand for, our products or otherwise affect our ability to conduct business, including any action with respect to our industry or business taken by state insurance departments or the federal government;

·   regulatory actions by state insurance departments affecting the operation of our business or our financial condition, including actions relating to licensing, examinations, reserving, rate changes, investments, insurance policy terms and conditions and state based assessments;

·   if the merger with Old Republic is not completed, the Company’s ability to reach a resolution with the Pennsylvania Insurance Department with respect to the Department’s examination of the Company’s insurance subsidiaries will be adversely impacted;

·   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;

·   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 modified or extended beyond its December 31, 2014 termination date;

·   cyclical changes in the insurance industry;

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

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

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

·   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 attract and retain qualified management personnel;

·   our ability to repay our indebtedness and meet our other contractual and financial obligations;

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

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

·   statutory requirements and rating agency expectations that limit our ability to receive dividends from our insurance subsidiaries;

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

·   limitations on our ability to use our deferred tax assets in the event we experience an ownership change;

·   the outcome of any litigation against us;

·   provisions in our charter documents that can inhibit a change in control of our company; and

·   other risks or uncertainties disclosed from time to time in our filings with the Securities and Exchange Commission and, in particular, our Annual Report on Form 10-K for the year ended December 31, 2009.

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 June 30,
(dollar amounts in thousands, except per share data)	2010		2009
Gross premiums written	$	109,858	$	113,424
Net premiums written	$	75,401	$	80,302
Revenues:
Net premiums earned	$	100,031	$	106,949
Claims service revenues		18,374		16,835
Commission income		2,345		2,117
Net investment income		8,734		9,561
Net realized investment gains (losses)		1,134		(472	)
Other revenues		394		190
Total revenues		131,012		135,180
Expenses:
Losses and loss adjustment expenses		70,340		73,494
Acquisition expenses		17,595		19,508
Operating expenses		35,206		31,540
Dividends to policyholders		2,051		2,311
Interest expense		2,502		2,476
Total losses and expenses		127,694		129,329
Pre-tax income		3,318		5,851
Income tax expense:
Current		263		265
Deferred		932		1,819
Total income tax expense		1,195		2,084
Income from continuing operations		2,123		3,767
Loss from discontinued operations after tax		-		(1,165	)
Net income	$	2,123	$	2,602
Income (loss) per share:
Basic:
Continuing Operations	$	0.07	$	0.12
Discontinued Operations		-		(0.04	)
	$	0.07	$	0.08
Diluted:
Continuing Operations	$	0.07	$	0.12
Discontinued Operations		-		(0.04	)
	$	0.07	$	0.08

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PMA Capital Corporation

GAAP Consolidated Statements of Operations

(Unaudited)

	Six months ended June 30,
(dollar amounts in thousands, except per share data)	2010		2009
Gross premiums written	$	281,763	$	277,494
Net premiums written	$	203,646	$	198,280
Revenues:
Net premiums earned	$	203,527	$	211,879
Claims service revenues		36,257		32,519
Commission income		5,437		5,580
Net investment income		17,854		18,018
Net realized investment gains		1,560		277
Other revenues		786		366
Total revenues		265,421		268,639
Expenses:
Losses and loss adjustment expenses		145,410		149,269
Acquisition expenses		35,642		36,706
Operating expenses		60,838		55,925
Dividends to policyholders		2,575		2,957
Interest expense		5,006		4,982
Total losses and expenses		249,471		249,839
Pre-tax income		15,950		18,800
Income tax expense:
Current		517		509
Deferred		5,216		6,221
Total income tax expense		5,733		6,730
Income from continuing operations		10,217		12,070
Loss from discontinued operations after tax		-		(1,251	)
Net income	$	10,217	$	10,819
Income (loss) per share:
Basic:
Continuing Operations	$	0.32	$	0.38
Discontinued Operations		-		(0.04	)
	$	0.32	$	0.34
Diluted:
Continuing Operations	$	0.32	$	0.38
Discontinued Operations		-		(0.04	)
	$	0.32	$	0.34

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PMA Capital Corporation

GAAP Consolidated Balance Sheets

(Unaudited)

	June 30,			December 31,
(dollar amounts in thousands, except per share data)	2010			2009
Assets:
Investments:
Fixed maturities available for sale	$	778,747		$	791,355
Short-term investments		25,854			41,072
Other investments		33,701			30,226
Total investments		838,302			862,653
Cash		15,933			11,059
Accrued investment income		6,852			7,352
Premiums receivable		251,566			238,650
Reinsurance receivables		854,522			827,458
Prepaid reinsurance premiums		36,351			35,788
Deferred income taxes, net		125,381			139,782
Deferred acquisition costs		40,677			39,124
Funds held by reinsureds		64,299			58,935
Intangible assets		29,349			29,757
Other assets		108,776			112,181
Total assets	$	2,372,008		$	2,362,739
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,267,408		$	1,269,685
Unearned premiums		241,441			240,759
Debt		132,445			143,380
Accounts payable, accrued expenses
and other liabilities		243,759			249,787
Reinsurance funds held and balances payable		51,905			51,331
Dividends to policyholders		5,849			6,000
Total liabilities		1,942,807			1,960,942
Shareholders' Equity:
Class A Common Stock		171,090			171,090
Additional paid-in capital		111,759			111,841
Retained earnings		165,614			155,747
Accumulated other comprehensive income (loss)		3,001			(14,060	)
Treasury stock, at cost		(22,263	)		(22,821	)
Total shareholders' equity		429,201			401,797
Total liabilities and shareholders' equity	$	2,372,008		$	2,362,739
Shareholders' equity per share	$	13.30		$	12.46

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EX-99.2

Exhibit 99.2

PMA Capital Corporation
Statistical Supplement
Second Quarter - 2010
Table of Contents
		Page
Consolidated Highlights:
Selected Financial Data - Second Quarter			1
Selected Financial Data - Year-to-date			2
Consolidated Statements of Operations - Per Share Data			3
Consolidated Statements of Operations - Second Quarter			5
Consolidated Statements of Operations - Year-to-date			6
Consolidated Balance Sheets			7
Selected Balance Sheet Items - Fronting Arrangements; Rollforward of Deferred Policy
Acquisition Costs - PMA Insurance Group; Assets and Liabilities of Discontinued Operations			8
Invested Assets and Net Investment Income; Debt			9
Segment Information:
Statements of Operations - Consolidating - Year-to-date		11 - 12
Statements of Operations - Consolidating - Second 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 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 as the GAAP measure o f our consolidated results of operations.  See pages 1 and 2  for reconciliations of operating results by segment to GAAP net income.

PMA Capital Corporation
Selected Financial Data
(Dollar Amounts in Thousands, Except Per Share Data)
	2nd			3rd			4th			1st			2nd			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			2nd
	2009			2009			2009			2010			2010			Quarter
Direct Premiums Written	$	108,994		$	161,965		$	118,272		$	170,730		$	108,236			-0.7	%
Net Premiums Written	$	80,302		$	119,259		$	84,366		$	128,245		$	75,401			-6.1	%
Revenues:
Net premiums earned	$	106,949		$	102,428		$	100,464		$	103,496		$	100,031			-6.5	%
Claims service revenues		16,835			17,112			17,998			17,883			18,374			9.1	%
Commission income		2,117			2,747			2,515			3,092			2,345			10.8	%
Net investment income		9,561			9,522			9,336			9,120			8,734			-8.6	%
Net realized investment gains (losses)		(472	)		795			(558	)		426			1,134		NM
Other revenues		190			259			458			392			394		NM
Total revenues	$	135,180		$	132,863		$	130,213		$	134,409		$	131,012			-3.1	%
Major Components of Net Income:
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	9,965		$	13,616		$	4,282		$	14,267		$	6,998			-29.8	%
Fee-based Business		1,525			1,574			2,096			2,305			1,209			-20.7	%
Corporate & Other		(5,167	)		(4,768	)		(4,192	)		(4,366	)		(6,023	)		-16.6	%
Pre-tax operating income		6,323			10,422			2,186			12,206			2,184			-65.5	%
Income tax expense (benefit)		2,249			3,690			(19,680	)		4,389			798			-64.5	%
After-tax operating income		4,074			6,732			21,866			7,817			1,386			-66.0	%
Net realized investment gains (losses) after tax		(307	)		517			(363	)		277			737		NM
Income from continuing operations		3,767			7,249			21,503			8,094			2,123			-43.6	%
Loss from discontinued operations after tax		(1,165	)		(40	)		(18,318	)		-			-		NM
Net income	$	2,602		$	7,209		$	3,185		$	8,094		$	2,123			-18.4	%
Diluted Earnings (Loss) Per Share:
After-tax operating income	$	0.13		$	0.21		$	0.68		$	0.24		$	0.05			-61.5	%
Realized gains (losses) after tax		(0.01	)		0.01			(0.01	)		0.01			0.02		NM
Income from continuing operations		0.12			0.22			0.67			0.25			0.07			-41.7	%
Loss from discontinued operations after tax		(0.04	)		-			(0.57	)		-			-		NM
Net income	$	0.08		$	0.22		$	0.10		$	0.25		$	0.07			-12.5	%
Capitalization:
Debt	$	129,380		$	129,380		$	143,380		$	137,445		$	132,445			2.4	%
Shareholders' equity excluding FAS 115 unrealized gain (loss)		377,505			384,958			392,005			400,349			402,801			6.7	%
Total capitalization excluding FAS 115 unrealized gain (loss)		506,885			514,338			535,385			537,794			535,246			5.6	%
FAS 115 unrealized gain (loss)		(8,507	)		14,214			9,792			17,781			26,400		NM
Total capitalization including FAS 115 unrealized gain (loss)	$	498,378		$	528,552		$	545,177		$	555,575		$	561,646			12.7	%
Book Value Per Share:
Excluding FAS 115 unrealized gain (loss)	$	11.71		$	11.94		$	12.15		$	12.41		$	12.48			6.6	%
Including FAS 115 unrealized gain (loss)	$	11.45		$	12.38		$	12.46		$	12.96		$	13.30			16.2	%
Debt to Total Capital:
Excluding FAS 115 unrealized gain (loss)		25.5	%		25.2	%		26.8	%		25.6	%		24.7	%		-3.1	%
Including FAS 115 unrealized gain (loss)		26.0	%		24.5	%		26.3	%		24.7	%		23.6	%		-9.2	%
Interest Coverage:
Income from continuing operations before interest
and income taxes to interest expense		3.36			5.63			1.68			6.04			2.33			-30.7	%
Operating income from continuing operations before
interest and income taxes to interest expense		3.55			5.30			1.92			5.87			1.87			-47.3	%

1

PMA Capital Corporation
Selected Financial Data
(Dollar Amounts in Thousands, Except Per Share Data)
	Six			Six			% Change
	Months			Months			Six
	2010			2009			Months
Direct Premiums Written	$	278,966		$	270,959			3.0	%
Net Premiums Written	$	203,646		$	198,280			2.7	%
Revenues:
Net premiums earned	$	203,527		$	211,879			-3.9	%
Claims service revenues		36,257			32,519			11.5	%
Commission income		5,437			5,580			-2.6	%
Net investment income		17,854			18,018			-0.9	%
Net realized investment gains		1,560			277		NM
Other revenues		786			366		NM
Total revenues	$	265,421		$	268,639			-1.2	%
Major Components of Net Income:
Pre-tax operating income (loss) by segment:
PMA Insurance Group	$	21,265		$	25,152			-15.5	%
Fee-based Business		3,514			3,538			-0.7	%
Corporate & Other		(10,389	)		(10,167	)		-2.2	%
Pre-tax operating income		14,390			18,523			-22.3	%
Income tax expense		5,187			6,633			-21.8	%
After-tax operating income		9,203			11,890			-22.6	%
Net realized investment gains after tax		1,014			180		NM
Income from continuing operations		10,217			12,070			-15.4	%
Loss from discontinued operations after tax		-			(1,251	)	NM
Net income	$	10,217		$	10,819			-5.6	%
Diluted Earnings (Loss) Per Share:
After-tax operating income	$	0.29		$	0.37			-21.6	%
Realized gains after tax		0.03			0.01		NM
Income from continuing operations		0.32			0.38			-15.8	%
Loss from discontinued operations after tax		-			(0.04	)	NM
Net income	$	0.32		$	0.34			-5.9	%

2

PMA Capital Corporation
Consolidated Statements of Operations - Per Share Data
	2nd			3rd		4th			1st		2nd		Six		Six
	Quarter			Quarter		Quarter			Quarter		Quarter		Months		Months
	2009			2009		2009			2010		2010		2010		2009
Diluted Earnings (Loss) Per Share:
Pre-tax operating income	$	0.20		$	0.32	$	0.07		$	0.38	$	0.07	$	0.45	$	0.58
After-tax operating income	$	0.13		$	0.21	$	0.68		$	0.24	$	0.05	$	0.29	$	0.37
Income from continuing operations	$	0.12		$	0.22	$	0.67		$	0.25	$	0.07	$	0.32	$	0.38
Loss from discontinued operations after tax		(0.04	)		-		(0.57	)		-		-		-		(0.04	)
Net income	$	0.08		$	0.22	$	0.10		$	0.25	$	0.07	$	0.32	$	0.34
Diluted weighted average common
shares outstanding		32,231,391			32,244,469		32,250,573			32,260,938		32,288,566		32,276,300		32,126,451
Dividends declared:
Class A Common Stock	$	-		$	-	$	-		$	-	$	-	$	-	$	-
Actual common shares issued
and outstanding		32,238,944			32,241,620		32,251,120			32,251,120		32,281,576		32,281,576		32,238,944
Class A Common Stock prices:
High	$	5.35		$	6.33	$	7.44		$	6.89	$	7.65	$	7.65	$	7.20
Low	$	3.70		$	4.27	$	4.64		$	5.60	$	6.02	$	5.60	$	3.50
Close	$	4.55		$	5.69	$	6.30		$	6.14	$	6.55	$	6.55	$	4.55

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4

PMA Capital Corporation
Consolidated Statements of Operations
(Dollar Amounts in Thousands)
		2nd			3rd			4th			1st		2nd		% Change
		Quarter			Quarter			Quarter			Quarter		Quarter		2nd
		2009			2009			2009			2010		2010		Quarter
Gross Premiums Written		$	113,424		$	164,339		$	119,433		$	171,905	$	109,858		-3.1	%
Net Premiums Written		$	80,302		$	119,259		$	84,366		$	128,245	$	75,401		-6.1	%
Revenues:
Net premiums earned		$	106,949		$	102,428		$	100,464		$	103,496	$	100,031		-6.5	%
Claims service revenues			16,835			17,112			17,998			17,883		18,374		9.1	%
Commission income			2,117			2,747			2,515			3,092		2,345		10.8	%
Net investment income			9,561			9,522			9,336			9,120		8,734		-8.6	%
Net realized investment gains (losses)			(472	)		795			(558	)		426		1,134	NM
Other revenues			190			259			458			392		394	NM
	Total revenues		135,180			132,863			130,213			134,409		131,012		-3.1	%
Expenses:
Losses and loss adjustment expenses			73,494			70,158			71,783			75,070		70,340		-4.3	%
Acquisition expenses			19,508			16,046			17,282			18,047		17,595		-9.8	%
Operating expenses			31,540			30,235			34,213			25,632		35,206		11.6	%
Dividends to policyholders			2,311			2,786			2,918			524		2,051		-11.3	%
Interest expense			2,476			2,421			2,389			2,504		2,502		1.1	%
	Total losses and expenses		129,329			121,646			128,585			121,777		127,694		-1.3	%
Pre-tax income			5,851			11,217			1,628			12,632		3,318		-43.3	%
Income tax expense (benefit):
	Current		265			220			(412	)		254		263		-0.8	%
	Deferred		1,819			3,748			(19,463	)		4,284		932		-48.8	%
Total income tax expense (benefit)			2,084			3,968			(19,875	)		4,538		1,195		-42.7	%
Income from continuing operations			3,767			7,249			21,503			8,094		2,123		-43.6	%
Loss from discontinued operations after tax			(1,165	)		(40	)		(18,318	)		-		-	NM
Net income		$	2,602		$	7,209		$	3,185		$	8,094	$	2,123		-18.4	%
Pre-tax operating income from continuing operations		$	6,323		$	10,422		$	2,186		$	12,206	$	2,184		-65.5	%
After-tax operating income from continuing operations		$	4,074		$	6,732		$	21,866		$	7,817	$	1,386		-66.0	%

5

PMA Capital Corporation
Consolidated Statements of Operations
(Dollar Amounts in Thousands)
	Six		Six			% Change
	Months		Months			Six
	2010		2009			Months
Gross Premiums Written	$	281,763	$	277,494			1.5	%
Net Premiums Written	$	203,646	$	198,280			2.7	%
Revenues:
Net premiums earned	$	203,527	$	211,879			-3.9	%
Claims service revenues		36,257		32,519			11.5	%
Commission income		5,437		5,580			-2.6	%
Net investment income		17,854		18,018			-0.9	%
Net realized investment gains		1,560		277		NM
Other revenues		786		366		NM
Total revenues		265,421		268,639			-1.2	%
Expenses:
Losses and loss adjustment expenses		145,410		149,269			-2.6	%
Acquisition expenses		35,642		36,706			-2.9	%
Operating expenses		60,838		55,925			8.8	%
Dividends to policyholders		2,575		2,957			-12.9	%
Interest expense		5,006		4,982			0.5	%
Total losses and expenses		249,471		249,839			-0.1	%
Pre-tax income		15,950		18,800			-15.2	%
Income tax expense:
Current		517		509			1.6	%
Deferred		5,216		6,221			-16.2	%
Total income tax expense		5,733		6,730			-14.8	%
Income from continuing operations		10,217		12,070			-15.4	%
Loss from discontinued operations after tax		-		(1,251	)	NM
Net income	$	10,217	$	10,819			-5.6	%
Pre-tax operating income from continuing operations	$	14,390	$	18,523			-22.3	%
After-tax operating income from continuing operations	$	9,203	$	11,890			-22.6	%

6

PMA Capital Corporation
Consolidated Balance Sheets
(Dollar Amounts in Thousands)
	2nd			3rd			4th			1st			2nd
	Quarter			Quarter			Quarter			Quarter			Quarter
	2009			2009			2009			2010			2010
Assets:
Investments in fixed maturities available for sale	$	737,606		$	817,089		$	791,355		$	800,612		$	778,747
Short-term investments		38,103			62,004			41,072			25,921			25,854
Other investments		21,073			22,669			30,226			31,205			33,701
Total investments		796,782			901,762			862,653			857,738			838,302
Cash		10,163			13,887			11,059			13,583			15,933
Accrued investment income		7,221			6,918			7,352			7,663			6,852
Premiums receivable		236,663			246,871			238,650			275,122			251,566
Reinsurance receivables		855,161			807,245			827,458			839,723			854,522
Prepaid reinsurance premiums		37,271			40,883			35,788			40,363			36,351
Deferred income taxes, net		126,397			110,358			139,782			131,097			125,381
Deferred acquisition costs		39,364			42,583			39,124			44,820			40,677
Funds held by reinsureds		54,312			56,623			58,935			61,573			64,299
Intangible assets		30,165			29,961			29,757			29,553			29,349
Other assets		123,460			126,015			112,181			108,476			108,776
Assets of discontinued operations		208,272			192,431			-			-			-
Total assets	$	2,525,231		$	2,575,537		$	2,362,739		$	2,409,711		$	2,372,008
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,271,089		$	1,259,940		$	1,269,685		$	1,274,006		$	1,267,408
Unearned premiums		241,508			261,952			240,759			270,083			241,441
Debt		129,380			129,380			143,380			137,445			132,445
Accounts payable, accrued expenses
and other liabilities		222,359			250,304			249,787			238,493			243,759
Reinsurance funds held and balances payable		53,327			52,914			51,331			65,610			51,905
Dividends to policyholders		6,022			6,177			6,000			5,944			5,849
Liabilities of discontinued operations		232,548			215,698			-			-			-
Total liabilities		2,156,233			2,176,365			1,960,942			1,991,581			1,942,807
Shareholders' Equity:
Class A Common Stock		171,090			171,090			171,090			171,090			171,090
Additional paid-in capital		112,264			112,349			111,841			111,906			111,759
Retained earnings		145,500			152,670			155,747			163,841			165,614
Accumulated other comprehensive income (loss)		(36,814	)		(13,947	)		(14,060	)		(5,886	)		3,001
Treasury stock, at cost		(23,042	)		(22,990	)		(22,821	)		(22,821	)		(22,263	)
Total shareholders' equity		368,998			399,172			401,797			418,130			429,201
Total liabilities and shareholders' equity	$	2,525,231		$	2,575,537		$	2,362,739		$	2,409,711		$	2,372,008

7

PMA Capital Corporation
Selected Balance Sheet Items - Fronting Arrangements
(Dollar Amounts in Thousands)
	2nd		3rd		4th		1st		2nd
	Quarter		Quarter		Quarter		Quarter		Quarter
	2009		2009		2009		2010		2010
Assets
Premiums receivable	$	36,670	$	33,337	$	38,756	$	46,005	$	41,673
Reinsurance receivables		53,675		58,107		59,579		61,431		71,811
Prepaid reinsurance premiums		23,072		20,346		20,685		23,778		21,810
Deferred acquisition costs		1,081		902		964		1,109		1,002
Other assets		7,269		6,684		7,161		4,031		3,904
Liabilities
Unpaid losses and loss adjustment expenses	$	57,367	$	62,642	$	65,165	$	67,440	$	79,150
Unearned premiums		26,866		23,512		24,073		27,794		25,458
Reinsurance funds held and balances payable		26,951		23,138		27,176		31,663		27,751
Other liabilities		12,081		12,620		14,481		11,879		13,176

PMA Capital Corporation
Rollforward of Deferred Policy Acquisition Costs - PMA Insurance Group
(Dollar Amounts in Thousands)
	2nd			3rd			4th			1st			2nd
	Quarter			Quarter			Quarter			Quarter			Quarter
	2009			2009			2009			2010			2010
Balance Sheet
Balance, beginning of period	$	44,857		$	39,364		$	42,583		$	39,124		$	44,820
Policy acquisition costs deferred		14,036			19,312			13,849			23,810			13,484
Amortization of policy acquisition costs		(19,529	)		(16,093	)		(17,308	)		(18,114	)		(17,627	)
Net change		(5,493	)		3,219			(3,459	)		5,696			(4,143	)
Balance, end of period	$	39,364		$	42,583		$	39,124		$	44,820		$	40,677

PMA Capital Corporation
Assets and Liabilities of Discontinued Operations
(Dollar Amounts in Thousands)
	2nd		3rd		4th		1st		2nd
	Quarter		Quarter		Quarter		Quarter		Quarter
	2009		2009		2009		2010		2010
Assets
Investments	$	110,736	$	100,296	$	-	$	-	$	-
Cash		1,271		494		-		-		-
Reinsurance receivables		89,361		81,887		-		-		-
Other assets		6,904		9,754		-		-		-
Assets of discontinued operations	$	208,272	$	192,431	$	-	$	-	$	-
Liabilities
Unpaid losses and loss adjustment expenses	$	206,743	$	193,051	$	-	$	-	$	-
Other liabilities		25,805		22,647		-		-		-
Liabilities of discontinued operations	$	232,548	$	215,698	$	-	$	-	$	-

8

PMA Capital Corporation
Invested Assets and Net Investment Income
(Dollar Amounts in Thousands)
		2nd			3rd			4th			1st			2nd			Six			Six
		Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
		2009			2009			2009			2010			2010			2010			2009
Total Investments & Cash
As reported		$	806,945		$	915,649		$	873,712		$	871,321		$	854,235		$	854,235		$	806,945
Less:
	Unrealized gain (loss) on
	fixed maturities available for sale		(13,563	)		19,501			12,201			23,873			37,356			37,356			(13,563	)
	Unrealized gain on other investments		475			2,367			2,863			3,483			3,259			3,259			475
	Total adjusted investments & cash	$	820,033		$	893,781		$	858,648		$	843,965		$	813,620		$	813,620		$	820,033
Net Investment Income
As reported		$	9,561		$	9,522		$	9,336		$	9,120		$	8,734		$	17,854		$	18,018
Less:
	Interest on funds held and other		(511	)		(463	)		(406	)		(361	)		(482	)		(843	)		(1,130	)
	Total adjusted investment income	$	10,072		$	9,985		$	9,742		$	9,481		$	9,216		$	18,697		$	19,148
Yield
As reported			4.77	%		4.42	%		4.17	%		4.18	%		4.05	%		4.12	%		4.53	%
Investment portfolio			4.87	%		4.66	%		4.45	%		4.45	%		4.45	%		4.46	%		4.66	%
Duration (in years)			4.3			4.2			4.3			4.2			3.9			3.9			4.3
PMA Capital Corporation
Debt
(Dollar Amounts in Thousands)
		Amount
		Outstanding			Maturity
	Trust preferred debt 1	$	62,500			2033 - 2037
	8.50% senior notes		54,900			2018
	Notes payable		5,000			20113
	Surplus notes 2		10,000			2035
	4.25% convertible debt		45			20224
	Total long-term debt	$	132,445
1	Weighted average interest rate on trust preferred debt is 4.45% as of June 30, 2010.
2	Interest rate on surplus notes is 4.84% as of June 30, 2010.
3	Notes payable are for capital contributions to our former run-off operations, the last installment of which is payable in June 2011.
4	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.

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10

PMA Capital Corporation
Statements of Operations - Consolidating
Six Months Ended June 30, 2010
(Dollar Amounts in Thousands)
		PMA
		Insurance		Fee-based		Corporate
		Group		Business		& Other1			Consolidated
Gross Premiums Written		$	282,055	$	-	$	(292	)	$	281,763
Net Premiums Written		$	203,938	$	-	$	(292	)	$	203,646
Revenues:
Net premiums earned		$	203,819	$	-	$	(292	)	$	203,527
Claims service revenues			-		36,289		(32	)		36,257
Commission income			-		5,536		(99	)		5,437
Net investment income			18,049		104		(299	)		17,854
Other revenues			-		773		13			786
	Total operating revenues		221,868		42,702		(709	)		263,861
Losses and Expenses:
Losses and loss adjustment expenses			145,410		-		-			145,410
Acquisition expenses			35,741		-		(99	)		35,642
Operating expenses			16,631		39,188		5,019			60,838
Dividends to policyholders			2,575		-		-			2,575
	Total losses and expenses		200,357		39,188		4,920			244,465
Operating income (loss) before income taxes
	and interest expense		21,511		3,514		(5,629	)		19,396
Interest expense			246		-		4,760			5,006
Pre-tax operating income (loss)		$	21,265	$	3,514	$	(10,389	)		14,390
Net realized investment gains										1,560
Pre-tax income									$	15,950
1	Corporate & Other includes the effect of eliminating transactions between the operating segments.

11

PMA Capital Corporation
Statements of Operations - Consolidating
Six Months Ended June 30, 2009
(Dollar Amounts in Thousands)
		PMA
		Insurance		Fee-based		Corporate
		Group		Business		& Other1			Consolidated
Gross Premiums Written		$	277,784	$	-	$	(290	)	$	277,494
Net Premiums Written		$	198,570	$	-	$	(290	)	$	198,280
Revenues:
Net premiums earned		$	212,169	$	-	$	(290	)	$	211,879
Claims service revenues			-		33,117		(598	)		32,519
Commission income			-		5,607		(27	)		5,580
Net investment income			17,968		187		(137	)		18,018
Other revenues			-		337		29			366
	Total operating revenues		230,137		39,248		(1,023	)		268,362
Losses and Expenses:
Losses and loss adjustment expenses			149,269		-		-			149,269
Acquisition expenses			36,746		-		(40	)		36,706
Operating expenses			15,710		35,710		4,505			55,925
Dividends to policyholders			2,957		-		-			2,957
	Total losses and expenses		204,682		35,710		4,465			244,857
Operating income (loss) before income taxes
	and interest expense		25,455		3,538		(5,488	)		23,505
Interest expense			303		-		4,679			4,982
Pre-tax operating income (loss)		$	25,152	$	3,538	$	(10,167	)		18,523
Net realized investment gains										277
Pre-tax income									$	18,800
1	Corporate & Other includes the effect of eliminating transactions between the operating segments.

12

PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended June 30, 2010
(Dollar Amounts in Thousands)
		PMA
		Insurance		Fee-based		Corporate
		Group		Business		& Other1			Consolidated
Gross Premiums Written		$	110,012	$	-	$	(154	)	$	109,858
Net Premiums Written		$	75,555	$	-	$	(154	)	$	75,401
Revenues:
Net premiums earned		$	100,185	$	-	$	(154	)	$	100,031
Claims service revenues			-		18,394		(20	)		18,374
Commission income			-		2,377		(32	)		2,345
Net investment income			8,824		61		(151	)		8,734
Other revenues			-		385		9			394
	Total operating revenues		109,009		21,217		(348	)		129,878
Losses and Expenses:
Losses and loss adjustment expenses			70,340		-		-			70,340
Acquisition expenses			17,627		-		(32	)		17,595
Operating expenses			11,869		20,008		3,329			35,206
Dividends to policyholders			2,051		-		-			2,051
	Total losses and expenses		101,887		20,008		3,297			125,192
Operating income (loss) before income taxes
	and interest expense		7,122		1,209		(3,645	)		4,686
Interest expense			124		-		2,378			2,502
Pre-tax operating income (loss)		$	6,998	$	1,209	$	(6,023	)		2,184
Net realized investment gains										1,134
Pre-tax income									$	3,318
1	Corporate & Other includes the effect of eliminating transactions between the operating segments.

13

PMA Capital Corporation
Statements of Operations - Consolidating
Three Months Ended June 30, 2009
(Dollar Amounts in Thousands)
		PMA
		Insurance		Fee-based		Corporate
		Group		Business		& Other1			Consolidated
Gross Premiums Written		$	113,566	$	-	$	(142	)	$	113,424
Net Premiums Written		$	80,444	$	-	$	(142	)	$	80,302
Revenues:
Net premiums earned		$	107,091	$	-	$	(142	)	$	106,949
Claims service revenues			-		17,122		(287	)		16,835
Commission income			-		2,132		(15	)		2,117
Net investment income			9,502		101		(42	)		9,561
Other revenues			-		167		23			190
	Total operating revenues		116,593		19,522		(463	)		135,652
Losses and Expenses:
Losses and loss adjustment expenses			73,494		-		-			73,494
Acquisition expenses			19,529		-		(21	)		19,508
Operating expenses			11,151		17,997		2,392			31,540
Dividends to policyholders			2,311		-		-			2,311
	Total losses and expenses		106,485		17,997		2,371			126,853
Operating income (loss) before income taxes
	and interest expense		10,108		1,525		(2,834	)		8,799
Interest expense			143		-		2,333			2,476
Pre-tax operating income (loss)		$	9,965	$	1,525	$	(5,167	)		6,323
Net realized investment losses										(472	)
Pre-tax income									$	5,851
1	Corporate & Other includes the effect of eliminating transactions between the operating segments.

14

PMA Capital Corporation
Statements of Operations - PMA Insurance Group
(Dollar Amounts in Thousands)
	2nd		3rd		4th		1st		2nd		Six		Six		% Change			% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		Months		Months		2nd			Six
	2009		2009		2009		2010		2010		2010		2009		Quarter			Months
Gross Premiums Written	$	113,566	$	164,497	$	119,575	$	172,043	$	110,012	$	282,055	$	277,784		-3.1	%		1.5	%
Net Premiums Written	$	80,444	$	119,417	$	84,508	$	128,383	$	75,555	$	203,938	$	198,570		-6.1	%		2.7	%
Revenues:
Net premiums earned	$	107,091	$	102,586	$	100,606	$	103,634	$	100,185	$	203,819	$	212,169		-6.4	%		-3.9	%
Net investment income		9,502		9,415		9,307		9,225		8,824		18,049		17,968		-7.1	%		0.5	%
Other revenues		-		-		166		-		-		-		-	NM			NM
Total operating revenues		116,593		112,001		110,079		112,859		109,009		221,868		230,137		-6.5	%		-3.6	%
Losses and Expenses:
Losses and loss adjustment expenses		73,494		70,158		71,783		75,070		70,340		145,410		149,269		-4.3	%		-2.6	%
Acquisition expenses		19,529		16,093		17,308		18,114		17,627		35,741		36,746		-9.7	%		-2.7	%
Operating expenses		11,151		9,213		13,662		4,762		11,869		16,631		15,710		6.4	%		5.9	%
Dividends to policyholders		2,311		2,786		2,918		524		2,051		2,575		2,957		-11.3	%		-12.9	%
Total losses and expenses		106,485		98,250		105,671		98,470		101,887		200,357		204,682		-4.3	%		-2.1	%
Operating income before income taxes
and interest expense		10,108		13,751		4,408		14,389		7,122		21,511		25,455		-29.5	%		-15.5	%
Interest expense		143		135		126		122		124		246		303		-13.3	%		-18.8	%
Pre-tax operating income	$	9,965	$	13,616	$	4,282	$	14,267	$	6,998	$	21,265	$	25,152		-29.8	%		-15.5	%

15

PMA Capital Corporation
Insurance Ratios - PMA Insurance Group
	2nd			3rd			4th			1st			2nd			Six			Six			Point Chg.			Point Chg.
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months			2nd Quarter			Six Months
	2009			2009			2009			2010			2010			2010			2009			Better (Worse)			Better (Worse)
Ratios - GAAP Basis:
Loss and LAE ratio		68.6	%		68.4	%		71.4	%		72.4	%		70.2	%		71.3	%		70.4	%		(1.6	)		(0.9	)
Expense ratio:
Acquisition expenses		18.2	%		15.7	%		17.2	%		17.5	%		17.6	%		17.5	%		17.3	%		0.6			(0.2	)
Operating expenses		10.4	%		9.0	%		13.5	%		4.6	%		11.9	%		8.2	%		7.4	%		(1.5	)		(0.8	)
Total expense ratio		28.6	%		24.7	%		30.7	%		22.1	%		29.5	%		25.7	%		24.7	%		(0.9	)		(1.0	)
Policyholders' dividend ratio		2.2	%		2.7	%		2.9	%		0.5	%		2.0	%		1.3	%		1.4	%		0.2			0.1
Combined ratio		99.4	%		95.8	%		105.0	%		95.0	%		101.7	%		98.3	%		96.5	%		(2.3	)		(1.8	)
Net investment income ratio		-8.9	%		-9.2	%		-9.3	%		-8.9	%		-8.8	%		-8.9	%		-8.5	%		(0.1	)		0.4
Operating ratio		90.5	%		86.6	%		95.7	%		86.1	%		92.9	%		89.4	%		88.0	%		(2.4	)		(1.4	)

16

PMA Capital Corporation
Components of Direct Premiums Written - PMA Insurance Group
(Dollar Amounts in Thousands)
	1st			2nd			3rd			4th			Six			Twelve
	Quarter			Quarter			Quarter			Quarter			Months			Months
	2008			2008			2008			2008			2008			2008
Direct premium production	$	146,608		$	96,736		$	150,547		$	112,296		$	243,344		$	506,187
Fronting premiums		8,143			2,113			2,776			21,800			10,256			34,832
Premium adjustments		(14,198	)		370			(5,008	)		(4,261	)		(13,828	)		(23,097	)
Direct premiums written	$	140,553		$	99,219		$	148,315		$	129,835		$	239,772		$	517,922
	1st			2nd			3rd			4th			Six			Twelve
	Quarter			Quarter			Quarter			Quarter			Months			Months
	2009			2009			2009			2009			2009			2009
Direct premium production	$	147,367		$	102,212		$	154,754		$	108,169		$	249,579		$	512,502
Fronting premiums		19,622			9,677			10,890			14,497			29,299			54,686
Premium adjustments		(4,876	)		(2,753	)		(3,521	)		(4,252	)		(7,629	)		(15,402	)
Direct premiums written	$	162,113		$	109,136		$	162,123		$	118,414		$	271,249		$	551,786
	1st			2nd									Six
	Quarter			Quarter									Months
	2010			2010									2010
Direct premium production	$	157,092		$	107,038								$	264,130
Fronting premiums		15,795			9,457									25,252
Premium adjustments		(2,019	)		(8,105	)								(10,124	)
Direct premiums written	$	170,868		$	108,390								$	279,258

17

PMA Capital Corporation
Statements of Operations - Fee-based Business
(Dollar Amounts in Thousands)
	2nd		3rd		4th		1st		2nd		Six		Six		% Change			% Change
	Quarter		Quarter		Quarter		Quarter		Quarter		Months		Months		2nd			Six
	2009		2009		2009		2010		2010		2010		2009		Quarter			Months
Revenues:
Claims service revenues	$	17,122	$	17,398	$	18,236	$	17,895	$	18,394	$	36,289	$	33,117		7.4	%		9.6	%
Commission income		2,132		2,777		2,572		3,159		2,377		5,536		5,607		11.5	%		-1.3	%
Net investment income		101		142		15		43		61		104		187		-39.6	%		-44.4	%
Other revenues		167		236		208		388		385		773		337	NM			NM
Total operating revenues		19,522		20,553		21,031		21,485		21,217		42,702		39,248		8.7	%		8.8	%
Expenses:
Operating expenses		17,997		18,979		18,935		19,180		20,008		39,188		35,710		11.2	%		9.7	%
Total expenses		17,997		18,979		18,935		19,180		20,008		39,188		35,710		11.2	%		9.7	%
Pre-tax operating income	$	1,525	$	1,574	$	2,096	$	2,305	$	1,209	$	3,514	$	3,538		-20.7	%		-0.7	%

18

PMA Capital Corporation
Statements of Operations - Corporate & Other
(Dollar Amounts in Thousands)
	2nd			3rd			4th			1st			2nd			Six			Six			% Change			% Change
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months			2nd			Six
	2009			2009			2009			2010			2010			2010			2009			Quarter			Months
Gross Premiums Written	$	(142	)	$	(158	)	$	(142	)	$	(138	)	$	(154	)	$	(292	)	$	(290	)		-8.5	%		-0.7	%
Net Premiums Written	$	(142	)	$	(158	)	$	(142	)	$	(138	)	$	(154	)	$	(292	)	$	(290	)		-8.5	%		-0.7	%
Revenues:
Net premiums earned	$	(142	)	$	(158	)	$	(142	)	$	(138	)	$	(154	)	$	(292	)	$	(290	)		-8.5	%		-0.7	%
Claims service revenues		(287	)		(286	)		(238	)		(12	)		(20	)		(32	)		(598	)		93.0	%		94.6	%
Commission income		(15	)		(30	)		(57	)		(67	)		(32	)		(99	)		(27	)	NM			NM
Net investment income		(42	)		(35	)		14			(148	)		(151	)		(299	)		(137	)	NM			NM
Other revenues		23			23			84			4			9			13			29			-60.9	%		-55.2	%
Total operating revenues		(463	)		(486	)		(339	)		(361	)		(348	)		(709	)		(1,023	)		24.8	%		30.7	%
Expenses:
Acquisition expenses		(21	)		(47	)		(26	)		(67	)		(32	)		(99	)		(40	)		-52.4	%	NM
Operating expenses		2,392			2,043			1,616			1,690			3,329			5,019			4,505			39.2	%		11.4	%
Total expenses		2,371			1,996			1,590			1,623			3,297			4,920			4,465			39.1	%		10.2	%
Operating loss before income taxes
and interest expense		(2,834	)		(2,482	)		(1,929	)		(1,984	)		(3,645	)		(5,629	)		(5,488	)		-28.6	%		-2.6	%
Interest expense		2,333			2,286			2,263			2,382			2,378			4,760			4,679			1.9	%		1.7	%
Pre-tax operating loss	$	(5,167	)	$	(4,768	)	$	(4,192	)	$	(4,366	)	$	(6,023	)	$	(10,389	)	$	(10,167	)		-16.6	%		-2.2	%

19

PMA Capital Corporation

Statements of Operations - Discontinued Operations

(Dollar Amounts in Thousands)

	2nd			3rd			4th			1st		2nd		Six		Six			% Change	% Change
	Quarter			Quarter			Quarter			Quarter		Quarter		Months		Months			2nd	Six
	2009			2009			2009			2010		2010		2010		2009			Quarter	Months
Gross Premiums Written	$	2,093		$	384		$	(485	)	$	-	$	-	$	-	$	2,559		NM	NM
Net Premiums Written	$	1,798		$	360		$	(755	)	$	-	$	-	$	-	$	1,711		NM	NM
Revenues:
Net premiums earned	$	1,673		$	(2	)	$	-		$	-	$	-	$	-	$	2,290		NM	NM
Net investment income		(937	)		(1,066	)		6,908			-		-		-		(1,815	)	NM	NM
Total operating revenues		736			(1,068	)		6,908			-		-		-		475		NM	NM
Losses and Expenses:
Losses and loss adjustment expenses		1,910			(175	)		33			-		-		-		2,039		NM	NM
Acquisition expenses		120			104			14			-		-		-		1,319		NM	NM
Operating expenses		2,397			2,101			4,945			-		-		-		4,974		NM	NM
Impairment charge / valuation adjustment		(2,172	)		(2,722	)		29,673			-		-		-		(6,559	)	NM	NM
Total losses and expenses		2,255			(692	)		34,665			-		-		-		1,773		NM	NM
Pre-tax operating loss from discontinued operations		(1,519	)		(376	)		(27,757	)		-		-		-		(1,298	)	NM	NM
Income tax benefit		(530	)		(133	)		(9,715	)		-		-		-		(453	)	NM	NM
After-tax operating loss from discontinued operations		(989	)		(243	)		(18,042	)		-		-		-		(845	)	NM	NM
Realized gains (losses) after tax		(176	)		203			(276	)		-		-		-		(406	)	NM	NM
Loss from discontinued operations	$	(1,165	)	$	(40	)	$	(18,318	)	$	-	$	-	$	-	$	(1,251	)	NM	NM

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.

20

PMA Capital Corporation
Operating Cash Flows - Consolidated
(Dollar Amounts in Thousands)
	2nd			3rd			4th			1st			2nd			Six			Six
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2009			2009			2009			2010			2010			2010			2009
Receipts:
Premiums collected	$	96,214		$	105,816		$	89,289		$	103,512		$	82,574		$	186,086		$	205,303
Claims service, commissions and other revenues		18,203			21,658			15,909			24,398			21,432			45,830			40,479
Investment income received		9,164			10,124			9,430			10,057			10,414			20,471			18,953
Total receipts		123,581			137,598			114,628			137,967			114,420			252,387			264,735
Disbursements:
Losses and LAE paid:
Losses and LAE paid - current year		18,874			25,500			35,347			6,556			19,352			25,908			24,139
Losses and LAE paid - prior years		63,486			6,931			49,219			77,515			69,894			147,409			124,638
Total losses and LAE paid		82,360			32,431			84,566			84,071			89,246			173,317			148,777
Operating expenses paid		41,332			43,129			42,596			53,419			45,476			98,895			88,239
Commissions and premiums paid		2,090			3,270			(4,117	)		3,939			991			4,930			3,770
Policyholders' dividends paid		2,401			1,264			1,633			1,279			1,291			2,570			3,264
Interest on corporate debt		2,437			2,388			2,344			2,460			2,457			4,917			4,963
Total disbursements		130,620			82,482			127,022			145,168			139,461			284,629			249,013
Net other		(1,459	)		4,976			3,262			(559	)		2,688			2,129			(2,088	)
Net operating cash flows from continuing operations		(8,498	)		60,092			(9,132	)		(7,760	)		(22,353	)		(30,113	)		13,634
Net operating cash flows from discontinued operations		(25,656	)		(12,549	)		(15,799	)		-			-			-			(40,398	)
Net operating cash flows	$	(34,154	)	$	47,543		$	(24,931	)	$	(7,760	)	$	(22,353	)	$	(30,113	)	$	(26,764	)

21

PMA Capital Corporation
Operating Cash Flows - PMA Insurance Group
(Dollar Amounts in Thousands)
		2nd			3rd			4th			1st			2nd			Six			Six
		Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
		2009			2009			2009			2010			2010			2010			2009
Receipts:
Premiums collected		$	96,214		$	105,816		$	89,289		$	103,512		$	82,574		$	186,086		$	205,303
Investment income received			9,062			9,985			9,417			10,017			10,350			20,367			18,765
	Total receipts		105,276			115,801			98,706			113,529			92,924			206,453			224,068
Disbursements:
Losses and LAE paid:
	Losses and LAE paid - current year		18,874			25,500			35,347			6,556			19,352			25,908			24,139
	Losses and LAE paid - prior years		63,486			6,931	1		49,219			77,515			69,894			147,409			124,638
Total losses and LAE paid			82,360			32,431			84,566			84,071			89,246			173,317			148,777
Operating expenses paid			27,192			24,079			27,792			32,676			27,664			60,340			57,252
Policyholders' dividends paid			2,401			1,264			1,633			1,279			1,291			2,570			3,264
Interest on corporate debt			144			139			126			122			119			241			338
	Total disbursements		112,097			57,913			114,117			118,148			118,320			236,468			209,631
	Net other		501			(3,712	)		(11,932	)		1,005			(2,349	)		(1,344	)		(704	)
Net operating cash flows		$	(6,320	)	$	54,176		$	(27,343	)	$	(3,614	)	$	(27,745	)	$	(31,359	)	$	13,733
1	Reduced by $43.9 million received for a commutation with Houston Casualty Company.

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PMA Capital Corporation
Operating Cash Flows - Fee-based Business
(Dollar Amounts in Thousands)
	2nd			3rd		4th			1st		2nd		Six		Six
	Quarter			Quarter		Quarter			Quarter		Quarter		Months		Months
	2009			2009		2009			2010		2010		2010		2009
Receipts:
Claims service, commissions and other revenues	$	18,203		$	21,658	$	15,909		$	24,398	$	21,432	$	45,830	$	40,479
Investment income received		102			139		13			40		64		104		188
Total receipts		18,305			21,797		15,922			24,438		21,496		45,934		40,667
Disbursements:
Operating expenses paid		14,140			19,050		14,804			20,743		17,812		38,555		30,987
Commissions and premiums paid		2,090			3,270		(4,117	)		3,939		991		4,930		3,770
Total disbursements		16,230			22,320		10,687			24,682		18,803		43,485		34,757
Net other		(3,644	)		4,453		(2,690	)		723		183		906		(3,886	)
Net operating cash flows	$	(1,569	)	$	3,930	$	2,545		$	479	$	2,876	$	3,355	$	2,024

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PMA Capital Corporation
Statutory Surplus
(Dollar Amounts in Thousands)
	2nd		3rd		4th			1st		2nd
	Quarter		Quarter		Quarter			Quarter		Quarter
	2009		2009		2009			2010		20101
PMA Pool 2	$	373,654	$	385,111	$	417,330	3	$	422,377	$	430,806
PMA Capital Insurance Company 4		26,446		30,202		-			-		-

PMA Capital Corporation
Statutory Financial Information - PMA Pool 2
(Dollar Amounts in Thousands)
	2nd			3rd			4th			1st			2nd			Six			Six
	Quarter			Quarter			Quarter			Quarter			Quarter			Months			Months
	2009			2009			2009			2010			20101			20101			2009
Net Premiums Written:
Workers' Compensation	$	72,181		$	102,329		$	72,373		$	110,709		$	63,491		$	174,200		$	174,072
Other Commercial Lines		8,403			8,965			8,167			13,040			9,339			22,379			21,890
Total - PMA Pool	$	80,584		$	111,294		$	80,540		$	123,749		$	72,830		$	196,579		$	195,962
Statutory Ratios:
Loss and LAE ratio		51.8	%		68.9	%		72.8	%		71.4	%		70.8	%		71.1	%		61.5	%
Underwriting expense ratio		30.7	%		22.0	%		31.3	%		21.4	%		33.2	%		25.8	%		25.1	%
Policyholders' dividend ratio		1.2	%		1.4	%		1.5	%		1.2	%		1.2	%		1.2	%		1.2	%
Combined ratio		83.7	%		92.3	%		105.6	%		94.0	%		105.2	%		98.1	%		87.8	%
Operating ratio		75.0	%		83.5	%		96.3	%		85.0	%		96.3	%		89.1	%		79.4	%

1	Estimated.
2	The PMA  Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company.
3	Includes impact of adoption of Statement of Statutory Accounting Principles No. 10R, "Income Taxes - Revised, A Temporary Replacement of SSAP No. 10."
4	Sold December 24, 2009.

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PMA Capital Corporation
Industry Ratings and Market Information
Transfer Agent and Registrar:		Inquiries:
American Stock Transfer & Trust Company		John M. Cochrane
Shareholder Relations		Interim Chief Financial Officer
59 Maiden Lane – Plaza Level		610.397.5076
New York, NY 10038		email: john_cochrane@pmagroup.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 7/28/2010):
	A.M. Best		Fitch	Moody's
PMA Pool 1	A-   (4th of 16)		BBB+  (8th of 21)	Baa3  (10th of 21)
1 The PMA Pool is comprised of Pennsylvania Manufacturers' Association Insurance Company, Manufacturers Alliance Insurance Company and Pennsylvania Manufacturers Indemnity Company.

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