SECOND AMENDMENT

THIS SECOND AMENDMENT (this Amendment) is made as of
this 28th day of December, 2000, by and among PMA CAPITAL
CORPORATION, a Pennsylvania corporation (the Applicant), each
subsidiary of the Applicant which is a party hereto (each a
Co-Applicant), the banks or other lending institutions party
hereto ( the Banks, and each a Bank) and
PNC BANK, NATIONAL ASSOCIATION, as agent for itself and the other Banks (in such
capacity, the Agent), and as issuing bank (in such capacity, the
Issuing Bank).

RECITALS

A.   The
Applicant, the Co-Applicants, the Banks and the Agent are parties to a Second
Amended and Restated Letter of Credit Agreement dated as of November 22, 2000,
as amended by a First Amendment to the Second Amended and Restated Letter of
Credit Agreement dated as of December 14, 2000 (collectively, the
Credit Agreement), pursuant to which the Agent agreed to
issue Letters of Credit to the Applicant and Co-Applicants in an aggregate
outstanding face amount of up to $67,500,000. (All terms used in this Amendment
shall have the meanings set forth in the Credit Agreement, unless otherwise
defined herein.)

B.   The Applicant
and the Co-Applicants have requested and the Banks and the Agent have agreed to
increase the maximum Letter of Credit Exposure in respect of Letters of Credit
issued for the account of Subsidiaries of the Applicant which are not Material
Insurance Subsidiaries by an additional $10,000,000 thereby increasing such
maximum Letter of Credit Exposure to $25,000,000 in the aggregate and to make
certain other modifications to the Credit Agreement.

NOW, THEREFORE,
in consideration of the premises and the agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:

1.   Amendments to the
Credit Agreement. Effective as of December 28, 2000, the Credit Agreement is hereby
amended as follows:

(a)
   Subsection 2.1(a) of the Credit Agreement is hereby amended by deleting the third
sentence of such subsection in its entirety and inserting the following sentence in lieu
thereof:

| | In
addition, the Letter of Credit Exposure in respect of Letters of Credit issued during the
Commitment Period for the account of Subsidiaries of the Applicant which are not Material
Insurance Subsidiaries shall not at any time exceed $25,000,000 in the aggregate.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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(b)
   Subsection 2.5(a)(ii) of the Credit Agreement is hereby amended by deleting clause (2) of
such subsection in its entirety and inserting the following new clause (2) in lieu
thereof:

| | (2)
the Letter of Credit Exposure with respect to Letters of Credit issued for the account of
Subsidiaries of the Applicant which are not Material Insurance Subsidiaries does not
exceed $25,000,000 in the aggregate, the Agent shall promptly request that the Issuing
Bank amend such Letter of Credit to give effect to such increase, reduction, extension
and/or other requested amendment, and the Issuing Bank shall either amend such Letter of
Credit or issue a substitute Letter of Credit containing such amended terms.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(c)
   Subsection 3.2(a) of the Credit is hereby amended by deleting clause (iv) of such
subsection in its entirety and inserting the following new clause (iv) in lieu thereof:

| | (iv)
the aggregate Letter of Credit Exposure with respect to Letters of Credit issued for the
account of Subsidiaries of the Applicant which are not Material Insurance Subsidiaries
will not exceed $25,000,000 and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(d)
   Exhibit C attached hereto shall be substituted for Exhibit C attached to the Credit
Agreement.

2.   Representations and
Warranties. Applicant and each Co-Applicant hereby represent and warrant to the Agent and
the Banks that:

(a)
   The representations and warranties contained in Section 4 of the Credit Agreement are
true and correct in all material respects on and as of the date of this Amendment (except
to the extent any such representation or warranty is expressly stated to have been made
on a specific date, in which case such representation or warranty shall be true and
correct in all material respects as of such date).

(b)
   No Default or Event of Default exists under the Credit Agreement as of the date of this
Amendment.

(c)
   This Amendment has been duly authorized by all requisite action on behalf of the
Applicant and each Co-Applicant and, assuming the due execution of the other parties
hereto, constitutes the legal, valid and binding obligation of the Applicant and each
Co-Applicant enforceable in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors rights generally and general principles of equity.

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(d)
   The execution, delivery and performance of this Amendment will not violate any applicable
Requirement of Law nor conflict with or constitute a breach of or a default under any
material instrument to which any of the Applicant and each Co-Applicant is a party or by
which the Applicant and each Co-Applicant or any of their respective properties is bound.

(e)
   No approval, consent or authorization of, or registration, declaration or filing with,
any Governmental Authority or other Person is required in connection with the valid
execution, delivery and performance by the Applicant and each Co-Applicant of this
Amendment, except such as have been obtained.

3. Conditions Precedent.
The effectiveness of the amendments set forth herein is subject to the fulfillment, to
the satisfaction of the Agent and its counsel, of the following conditions precedent:

(a)
   The Applicant shall have delivered to the Agent the following, all of which shall be in
form and substance satisfactory to the Agent and shall be duly completed and executed:

(i)   This Amendment; and

(ii)   
Such additional documents, certificates and information as the Agent may require pursuant
to the terms hereof or otherwise reasonably request.

(b)
   The representations and warranties set forth in the Credit Agreement shall be true and
correct in all material respects on and as of the date hereof (except to the extent any
such representation or warranty is expressly stated to have been made on a specific date,
in which case such representation or warranty shall be true and correct in all material
respects as of such date).

4.   
Ratification; References; No Waiver. Except as expressly amended by this
Amendment, the Credit Agreement shall continue to be, and shall remain,
unaltered and in full force and effect in accordance with its terms. All
references in the Credit Agreement to this Agreement,
hereof, hereto and hereunder shall be deemed
to be references to the Credit Agreement as amended hereby, and all references
in any of the Credit Documents to the Credit Agreement shall be deemed to be to
the Credit Agreement as amended hereby. This Amendment does not and shall not be
deemed to constitute a waiver by the Agent or the Banks of any Default or Event
of Default or of any of the Agents or the Banks other rights or
remedies.

5.   
Release. In consideration of the execution of this Amendment by the Agent
and the Banks, the Applicant and each Co-Applicant hereby release the Agent and
the Banks and their respective officers, attorneys, agents and employees from
any liability, suit, damage, claim, loss or expense of any kind or nature
whatsoever and howsoever arising that the Applicant had since the date of the
Credit Agreement or now has as of the date of this Amendment against the Agent
or the Banks or any of them arising out of or relating solely to the Credit
Agreement and the other Credit Documents or the Agents or the Banks
acts or omissions with respect thereto.

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The Applicant and each Co-Applicant further state that they have
carefully read the foregoing release, know the contents thereof and grant the same as
their own free act and deed.

6.   Miscellaneous.

(a)
   Counterparts. This Amendment may be executed by one or more of the parties to this
Amendment in any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.

(b)
   Severability. Any provision of this Amendment which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof or
of the Credit Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction.

(c)
   GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE COMMONWEALTH OF PENNSYLVANIA.

(d)
   Successors; Assigns. Each and every one of the terms and provisions of this
Amendment shall be binding upon and shall inure to the benefit of the Applicant, the
Co-Applicants, the Agent and the Banks and their respective successors and assigns. No
rights are intended to be created hereunder for the benefit of any third party donee,
creditor or incidental beneficiary.

(e)
   Headings. The paragraph headings of this Amendment are for convenience only and shall not
be used to interpret any provision hereof.

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IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their proper and duly authorized officers as of the day and year
first above written.

| |                                                           |                                              
| | --------------------------------------------------------- | ---------------------------------------------
| | PMA CAPITAL CORPORATION                                  
|
| | By:                                                       | /s/ Francis W. McDonnell                     
| | Name:                                                     | Francis W. McDonnell                         
| | Title:                                                    | Senior Vice President, CFO & Treasurer       
|
| | PMA CAPITAL INSURANCE COMPANY                            
|
| | By:                                                       | /s/ Francis W. McDonnell                     
| | Name:                                                     | Francis W. McDonnell                         
| | Title:                                                    | Vice President & Chief Financial Officer     
|
| | PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY
|
| | By:                                                       | /s/ Francis W. McDonnell                     
| | Name:                                                     | Francis W. McDonnell                         
| | Title:                                                    | Vice President                               
|
| | HIGH MOUNTAIN REINSURANCE LTD.                           
|
| | By:                                                       | /s/ Francis W. McDonnell                     
| | Name:                                                     | Francis W. McDonnell                         
| | Title:                                                    | Vice President & CFO                         
|
| | WALPROP, INC.                                            
|
| | By:                                                       | /s/ Francis W. McDonnell                     
| | Name:                                                     | Francis W. McDonnell                         
| | Title:                                                    | Vice President, Treasurer and Asst. Secretary
|

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| |                                                                            |                       
| | -------------------------------------------------------------------------- | ----------------------
| | PNC BANK, NATIONAL ASSOCIATION, Individually and as Agent and Issuing Bank
|
| | By:                                                                        | /s/ Kirk Seagers      
| | Name:                                                                      | Kirk Seagers          
| | Title:                                                                     | Vice President        
|
| | FLEET NATIONAL BANK                                                       
|
| | By:                                                                        | /s/ Anson T. Harris   
| | Name:                                                                      | Anson T. Harris       
| | Title:                                                                     | Director              
|
| | CREDIT LYONNAIS NEW YORK BRANCH                                           
|
| | By:                                                                        | /s/ Sebastian Rocco   
| | Name:                                                                      | Sebastian Rocco       
| | Title:                                                                     | Senior Vice President 
|
| | SOVEREIGN BANK                                                            
|
| | By:                                                                        | /s/ Michael J. Hassett
| | Name:                                                                      | Michael J. Hassett    
| | Title:                                                                     | Vice President        
|
| | ALLFIRST BANK                                                             
|
| | By:                                                                        | /s/ C. Coney Burgess  
| | Name:                                                                      | C. Coney Burgess      
| | Title:                                                                     | Vice President        
|

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PMA CAPITAL CORPORATION EXHIBIT C

FORM OF LETTER OF CREDIT REQUEST

|_________________, 200_
|-----------------------

PNC Bank, National Association, as Agent
249 Fifth Street
Pittsburgh, PA 15222
Attention: Arlene Ohler
PNC Bank, National Association, as Issuing Bank
237 Fifth Avenue
Third Floor, Annex Building
Pittsburgh, PA 15222
Attention: Letter of Credit Department

Gentlemen:

Reference is
made to the Second Amended and Restated Letter of Credit Agreement, dated as of
November 22, 2000, by and among PMA CAPITAL CORPORATION (the
Applicant), each Subsidiary of the Applicant which is or may
become a party thereto (each, a Co-Applicant), the Banks
party thereto and PNC BANK, NATIONAL ASSOCIATION, as Agent and Issuing Bank (as
from time to time amended, the Agreement).

Capitalized
terms used herein that are defined in the Agreement shall have the meanings
therein defined.

1. Pursuant to
Section 2.1 and 3.2(c) of the Agreement, the undersigned Applicant [and, if
applicable, ____________________ (the Co-Applicant(s))]
hereby requests that the Issuing Bank issue the Letter(s) of Credit in
accordance with the information annexed hereto which contains the verbatim text
of the proposed letter(s) of credit including the proposed terms and conditions
and a precise description of the documentation required to be complied with and
submitted by the beneficiary, which, if complied with by the beneficiary on or
prior to the Stated Expiration Date, would require the Issuing Bank to make
payment under the Letter of Credit.

2. The Applicant
hereby certifies that on the date hereof and on the Date of Issuance set forth
in Annex A, and after giving effect to the Letter(s) of Credit requested hereby:

(a)
The Applicant is and shall be in compliance with all of the terms, covenants and
conditions of the Credit Documents.

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(b)
There exists and there shall exist no Default or Event of Default under the Agreement.

(c)
Each of the representations and warranties contained in the Agreement which is required
to be made on such Date of Issuance is and shall be true and correct in all material
respects.

(d)
After giving effect to the Letter(s) of Credit requested to be issued hereby, the
aggregate Letters of Credit Exposure will not exceed the Commitment and the aggregate
Letter of Credit Exposure with respect to Letters of Credit issued for the account of
Subsidiaries of the Applicant which are not Material Insurance Subsidiaries will not
exceed $25,000,000.

[3. Each
Co-Applicant which signs this Letter of Credit Request acknowledges that it has
received a copy of the Agreement and acknowledges and agrees that from and after
the Date of Issuance of the Letter(s) of Credit requested hereby, the
undersigned shall be jointly and severally liable with the Applicant for all
obligations with respect to the Letter(s) of Credit requested hereby and that
the undersigned shall be a party to the Agreement and the other Credit Documents
as a Co-Applicant with all the rights and obligations of a Co-Applicant under
the Agreement and Credit Documents with respect to the Letter(s) of Credit
requested hereby, and each and every reference in the Agreement and in any other
Credit Document to Co-Applicant shall mean and be a reference to
include the undersigned. The undersigned will, at the request of the Agent,
execute a copy of the Agreement and such other Credit Documents as may be
required.]1

[4. Each
Co-Applicant which signs this Letter of Credit Request represents and warrants
that the Agreement and each Credit Document executed by the undersigned
Co-Applicant constitutes a legal, valid and binding obligation of the
undersigned Co-Applicant in each case enforceable in accordance with its terms.]

[5. Each
Co-Applicant which signs this Letter of Credit Request specifically acknowledges
that certain provisions of the Agreement, including, without limitation, Section
10.1 (Amendments and Waivers), 10.3 (No Waiver; Cumulative Remedies), 10.6
(Assignments and Participants), 10.7 (Counterparts), 10.11 (Governing Law),
10.13 (Severability), 10.14 (Integration), 10.15 (Consent to Jurisdiction),
10.16 (Service of Process), 10.17 (No Limitation on Service or Suit) and 10.18
(Waiver of Trial by Jury) thereof, are made applicable to the Co-Applicant.]

__________________ 1 Delete Items 3 through 5 if inapplicable

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IN WITNESS
WHEREOF, the Applicant [and Co-Applicant, if applicable] has caused this
certificate to be executed by its duly authorized-officer(s) as of the date and
year first written above.

| |                         | 
| | ----------------------- | 
| | PMA CAPITAL CORPORATION
|
| | By:                     | 
| | Name:                   | 
| | Title:                  | 
|
| | [CO-APPLICANT]         
|
| | By:                     | 
| | Name:                   | 
| | Title:                  | 
|
| | [CO-APPLICANT]         
|
| | By:                     | 
| | Name:                   | 
| | Title:                  | 
|

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