1999 JOHN HANCOCK
                        SPLIT-DOLLAR INSURANCE AGREEMENT



         This SPLIT-DOLLAR  INSURANCE AGREEMENT (the "Agreement") made as of the
12th day of May,  1999 by and among PMA  Capital  Corporation  (the  "Company"),
Frederick W. Anton,  III, an employee of the Company (the  "Employee"),  and the
Irrevocable  Deed of Trust of Frederick W. Anton,  III,  dated May 11, 1999 (the
"Owner").


                                R E C I T A L S
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         WHEREAS, the Employee has rendered loyal and valuable service to the
Company; and

         WHEREAS,  in the Employment  Agreement  dated as of May 1, 1999 between
the Company and the Employee (the "Employment Agreement"), the Company agreed to
provide life insurance protection for the Employee by advancing a portion of the
annual  premiums for such protection  pursuant to a split-dollar  life insurance
arrangement on the terms and conditions contained herein; and

         WHEREAS,  the Owner has applied for the policy insuring the life of the
Employee  listed on Schedule A attached to this  Agreement  (the  "Policy") and,
upon its issuance, will possess all incidents of ownership in and to the Policy;
and

         WHEREAS,  the parties desire to enter into this split-dollar  agreement
with respect to the Policy to provide that the Company will advance a portion of
the annual  premiums due on the Policy on the terms and  conditions  hereinafter
set forth,  the Owner  will  collaterally  assign  the Policy to the  Company to
secure the  repayment  of the  amounts  advanced,  and the  Company  will have a
security interest in the aggregate cash surrender value of the Policy and in the
proceeds thereof;

         NOW THEREFORE, in consideration of the premises and the mutual promises
contained  herein and intending to be legally bound, the parties hereby agree as
follows:

        1. Policy.  The parties  have taken the actions  necessary  to cause the
insurance  company  identified on Schedule A (the "Insurer") to issue the Policy
to the Owner,  and shall take any further  action that may be necessary to cause
the Policy to conform to the  provisions  of this  Agreement.  The parties agree
that the Policy shall be subject to the terms and  conditions of this  Agreement
and of the collateral assignment filed with the Insurer relating to the Policy.

        2. Ownership Rights. Except as otherwise provided herein, the Owner
shall be the sole and absolute owner of the Policy and may exercise all
ownership rights granted to the Owner thereunder.

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        3. Payment of Annual Premiums.

                  3.1 The Owner  shall pay each  annual  premium  for the Policy
(the  "Premium")  on or before its due date or within the grace period  provided
therefor under the Policy (the "Premium Due Date") as follows:

                           3.1.1 At least ten (10) days before the Premium Due
Date, the Owner shall pay the portion of the Premium that would be includable in
the gross income of the insured for federal income tax purposes if not paid by
the Insured (the "Taxable Portion") and shall send evidence of its payment to
the Company.

                           3.1.2 Upon receipt of the Owner's evidence of
payment, the Company promptly shall advance to the Owner the remaining portion
of the Premium (the "Remaining Portion"), or in its discretion the Company may
pay its advance directly to the Insurer.

                           3.1.3 The obligation of the Company to advance the
Remaining Portion of the Premium under Section 3.1.2 is conditioned upon the
Owner's payment of the Taxable Portion of the Premium under Section 3.1.1.

                  3.2 The obligation of the Company to make the annual  payments
provided in Section 3.1 hereof shall be governed by the Employment Agreement.

        4. Proof of Payment of Advances. The Company shall, upon request,
promptly furnish the Owner evidence of timely payment of each advance paid
directly to the Insurer under Section 3.1.2.

        5.  Collateral  Assignment  of Policies.  To secure the repayment to the
Company of the amounts it advances to the Owner under Section  3.1.2,  the Owner
has,  contemporaneously   herewith,  assigned  the  Policy  to  the  Company  as
collateral,  under the instrument which in all material  respects is the same as
the form attached hereto as Addendum 1. The collateral  assignment of the Policy
to the  Company  hereunder  shall not be  terminated,  altered or amended by the
Owner,  without the express written  consent of the Company.  The parties hereto
agree to take all action necessary to cause the collateral assignment to conform
to the provisions of this Agreement.  In the event of any inconsistency  between
the terms of this  Agreement  and the terms of the  collateral  assignment,  the
terms of this Agreement shall control.

        6.  Limitation  on  Policy  Disposition.  During  the  period  that  the
collateral  assignment  of the Policy is in effect,  the Owner  shall not borrow
from,  pledge,  transfer or assign the Policy and shall not sell,  surrender  or
cancel the Policy, change the beneficiary designation provision or terminate the
dividend  election  without the express  written  consent of the Company,  which
consent shall not be unreasonably withheld.

        7. Policy Proceeds.

                  7.1 Upon the death of the Employee,  the Company and the Owner
shall  promptly take all action  necessary to obtain the death benefit  provided
under the Policy.


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                  7.2 The Company shall have the unqualified  right to receive a
portion of the Policy's death benefit equal to the total amount that it advanced
with  respect  to the  Policy  under  Section  3.1.2.  The  balance of the death
benefit,  if any,  shall be paid directly to the  beneficiary  or  beneficiaries
designated by the Owner, in the manner and the amount or amounts provided in the
beneficiary  designation  provision of the Policy.  In no event shall the amount
payable to the Company hereunder with respect to the Policy exceed the amount of
the Policy's death benefit.  The parties agree that the beneficiary  designation
provision of the Policy shall conform to the provisions hereof.

        8. Termination.

                  8.1 This Agreement shall terminate,  without notice,  upon the
surrender of the Policy by the Owner with the written  consent of the Company as
provided in Section 6.

                  8.2  In  addition,  either  the  Owner  or  the  Employee  may
terminate  this  Agreement by written  notice to the other parties hereto at any
time  that the cash  surrender  value of the  Policy at least  equals  the total
amount that the Company has advanced  with  respect to the Policy under  Section
3.1.2.  Such termination  shall be effective as of the date of such notice.  The
Company may not terminate this Agreement.

        9. Release of Policy Collateral.

                  9.1 For sixty (60) days after the date of  termination of this
Agreement,  the Owner  shall have the  option of  obtaining  the  release of the
collateral  assignment of the Policy to the Company. To obtain such release, the
Owner  shall  pay or  cause to be paid to the  Company  an  amount  equal to the
Policy's then cash surrender  value.  Upon receipt of that payment,  the Company
promptly shall release the collateral assignment of the Policy.

                  9.2 If the Owner  fails to exercise  such  option  within such
sixty (60) day period with respect to the Policy,  then the Owner shall transfer
the Policy to the Company.  Thereafter,  neither the Owner,  the  Employee,  nor
their respective heirs, assigns or beneficiaries shall have any further interest
in and to the Policy, either under the terms thereof or under this Agreement.

       10. Insurer.  The Insurer shall be fully  discharged from its obligations
under the Policy by payment of the Policy death  benefit to the  beneficiary  or
beneficiaries  named in the Policy,  subject to the terms and  conditions of the
Policy.  In no event shall the Insurer be considered a party to this  Agreement,
or any modification or amendment hereof. No provision of this Agreement,  nor of
any  modification  or  amendment  hereof,  shall  in  any  way be  construed  as
enlarging,  changing,  varying, or in any other way affecting the obligations of
the  Insurer  as  expressly  provided  in  the  Policy,  except  insofar  as the
provisions  hereof  are made a part of the Policy by the  collateral  assignment
executed by the Owner and filed with the Insurer in connection herewith.


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       11. Amendment. This Agreement may not be amended, altered or modified,
except by a written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as provided
herein.

       12. Succession. This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns, and the Employee, the
Owner and their respective successors, assigns, heirs, executors, administrators
and beneficiaries.

       13. Notices.  Any notice,  consent or demand  required or permitted to be
given under the provisions of this Agreement  shall be in writing,  and shall be
signed by the party giving or making the same. If such notice, consent or demand
is mailed to a party hereto,  it shall be sent by United States  certified mail,
postage  prepaid,  addressed to such party's last known  address as shown on the
records of the  Company.  The date of such  mailing  shall be deemed the date of
notice, consent or demand.

       14. Captions. The captions of the Sections herein are inserted as a
matter of convenience of reference only and in no way define, limit or describe
the scope of this Agreement or any provisions hereof.

       15. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Pennsylvania and shall be enforced in the
Commonwealth of Pennsylvania.

       16. Trust Agreement. Recognizing that the Owner is a trustee and that the
Policy is held in trust, the parties agree that the terms of this Agreement
shall control in the event of any inconsistencies between the terms of this
Agreement and the terms of the trust agreement.


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         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Employee and the Owner have
hereunto set their hands and seals on the dates set forth below.


Attest:                                  PMA CAPITAL CORPORATION



/s/  Robert L. Pratter                   /s/ John W. Smithson
------------------------                 -----------------------------

                                         /s/ Frederick W. Anton, III
                                         -----------------------------
                                         FREDERICK W. ANTON, III


                                         IRREVOCABLE DEED OF TRUST
                                         OF FREDERICK W. ANTON, III,
                                         DATED MAY 11, 1999



                                         By: /s/ Frank G. Cooper, Trustee
                                             -----------------------------
                                             Frank G. Cooper, Trustee







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                                   Schedule A

         The  following  life  insurance  policy  is  subject  to this 1999 John
Hancock Split-Dollar Life Insurance Agreement:

                                                              Approximate
         Insurer                                          Initial Face Amount
         -------                                          -------------------

John Hancock Mutual Life Insurance Company                    $2,144,457













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                                  ADDENDUM "1"

                              COLLATERAL ASSIGNMENT


         A . FOR VALUE RECEIVED the undersigned hereby assigns, transfers and
sets over to PMA Capital Corporation, a Pennsylvania Corporation, its successors
and assigns (the "Assignee") the Policy issued by John Hancock Mutual Life
Insurance Company & Affiliated Companies (the "Insurer") and any supplementary
contracts issued in connection therewith (together, the "Policy"), upon the life
of Frederick W. Anton, III, a resident of the Commonwealth of Pennsylvania, and
all claims, options, privileges, rights, titles and interests therein and
thereunder (except as provided in Paragraph B. hereof), subject to all the terms
and conditions of the Policy and to all superior liens, if any, which the
Insurer may have against the Policy. The undersigned by this instrument agrees
and the Assignee by the acceptance of this assignment agrees to the conditions
and provisions herein set forth.

         B . It is expressly understood and agreed that the Assignee shall have
the sole right to collect from the Insurer the net proceeds of the Policy when
it becomes a claim by death or maturity and that all other rights under the
Policy, including, by way of illustration and not limitation, the right to
surrender the Policy, the right to obtain loans or advances on the Policy, the
right to designate and change the beneficiary, and the right to elect and to
receive dividends, are reserved exclusively to the undersigned and are excluded
from this assignment and do not pass by virtue hereof and may be exercised by
the undersigned on its sole signature. Nothing herein shall affect funds, if
any, now or hereafter held by the Insurer for the purpose of paying premiums
under the Policy.

         C . This assignment is made and the Policy is to be held as collateral
security for any and all liabilities of the undersigned to the Assignee, either
now existing or that may hereafter arise under the Insurance Agreement
(collectively, the "Liabilities").

         D . The Assignee covenants and agrees with the undersigned as follows:



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               D1 . That any balance of sums received hereunder from the Insurer
remaining after payment of the then existing Liabilities, matured or unmatured,
shall be paid by the Assignee to the persons entitled thereto under the terms of
the Policy had this assignment not been executed; and

               D2 . That the Assignee shall upon request forward without
unreasonable delay to the Insurer the Policy for endorsement for any designation
or change of beneficiary or any election of an optional mode of settlement.

         E . The Insurer is hereby authorized to recognize the Assignee's claims
to rights hereunder without investigating the reason for any action taken by the
Assignee after the Policy becomes a claim by death or maturity, including the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The sole signature of the Assignee shall be sufficient for the
exercise of the rights under the Policy assigned hereby and the sole receipt of
the Assignee for any sums received shall be a full discharge and release
therefor to the Insurer. Checks for all or any part of the sums payable under
the Policy and assigned herein, shall be drawn to the exclusive order of the
Assignee if, when, and in such amounts as may be, requested by the Assignee.

         F . The exercise of any right, option, privilege or power given herein
to the Assignee shall be at the option of the Assignee; the Assignee may
exercise any such right, option, privilege, or power without notice to, or
assent by, or without affecting the liability of, or releasing any interest
hereby assigned by, the undersigned.

         G . The Assignee may take or release other security, may release any
party primarily or secondarily liable for any of the Liabilities, may grant
extensions, renewals or indulgences with respect to the Liabilities, or may
apply to the Liabilities in such order as the Assignee shall determine, the
proceeds of the Policy hereby assigned or any amount received on account of the
Policy by the exercise of any right permitted under this assignment, without
resorting to other security.



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         H . The undersigned declares that no proceedings in bankruptcy are
pending against it and that its property is not subject to any assignment for
the benefit of creditors.

         Signed and sealed as of the ___ day of _________________, 1999.

Witness:                             IRREVOCABLE DEED OF TRUST OF
                                     FREDERICK W. ANTON, III, DATED
                                     MAY 11, 1999



_________________________            By: _____________________________
                                     Frank G. Cooper, Trustee
                                     Owner


















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                              CORPORATION'S CONSENT

         As of the day of ___________, 1999, PMA Capital Corporation, having
reviewed the foregoing collateral assignment, does hereby consent and agree to
the terms and conditions therein set forth.

Attest:                              PMA CAPITAL CORPORATION


By:______________________            By: _____________________________
Title:  Secretary                    Title:


















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