FIRST AMENDMENT

THIS FIRST AMENDMENT (this Amendment) is made as of
this 14th 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
(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 $55,000,000 (the
Commitment). (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 Commitment by an additional $12,500,000 (the Additional
Commitment) thereby increasing the total Commitment available under
the Credit Agreement to $67,500,000.

C.   Allfirst Bank
(Allfirst) has agreed to join in the Credit Agreement and
accept the Additional Commitments as its Commitment Amount and Allfirst, the
Applicant, the Co-Applicants, the Banks and the Agent have agreed to enter into
this Amendment to effect the foregoing increase and joinder 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 18, 2000, the Credit Agreement is
hereby amended as follows:

(a)
   The definition of Commitment in Section 1.1 is hereby amended and restated to read in
full as follows:

| | Commitment means
the commitment of PNC, as Issuing Bank, to issue Letters of Credit having an aggregate
outstanding Dollar Equivalent face amount up to $67,500,000 (as reduced from time to time
pursuant to Section 2.4), and with respect to the Banks shall mean their commitment to
participate in the Letter of Credit Exposure in an amount equal to their respective
Commitment Percentages as set forth in Section 2.2 in an aggregate amount up to their
respective Commitment Amounts.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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(b)
   Section 2 of the Credit Agreement is hereby amended by adding the following new
subsection 2.19 thereto:

"2.19.
Release of Co-Applicant

| | Each
Co-Applicant under the Credit Documents may request the Agent to release such
Co-Applicant as a party to the Credit Documents, provided that at the time any such
Co-Applicant makes the request for such release there are (i) no outstanding Letters of
Credit issued for the account of such Co-Applicant, and (ii) no Default or Event of
Default has occurred and is continuing. If the conditions of this Section 2.19 are met by
such Co-Applicant, the Agent shall execute all documents necessary to confirm and effect
the release of such Co-Applicant as a party to the Credit Documents.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(c)
Exhibit A and Schedule 10.2 attached hereto shall be substituted for Exhibit A and
Schedule 10.2 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.

(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.

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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.   Joinder. By
signing this Amendment, Allfirst acknowledges that it has received a copy of the Credit
Agreement and the parties hereto acknowledge and agree that from and after the date
hereof, Allfirst shall be a party to the Credit Agreement and the other Credit Documents
as a Bank with all the rights and obligations of a Bank under the Credit Agreement and
the Credit Documents, including, but not limited to, the Commitment Percentage and the
Commitment Amount as set forth opposite Allfirsts name in Exhibit A, and that each
and every reference in the Credit Agreement and in any other Credit Document to Bankor
Banksshall mean and/or be a reference to include Allfirst. Allfirst
represents and warrants that the execution of this Amendment by Allfirst constitutes a
legal, valid and binding obligation of Allfirst enforceable in accordance with the terms
of the Credit Agreement, as amended hereby, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting
creditorsrights generally or by general equitable principles.

5.   
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.

6.   
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,

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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. 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.

7.   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, Chief Financial Officerand Treasurer
|
| | PMA CAPITAL INSURANCE COMPANY                            
|
| | By:                                                       | /s/ Albert D. Ciavardelli                                  
| | Name:                                                     | Albert D. Ciavardelli                                      
| | Title:                                                    | Treasurer                                                  
|
| | 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 & Assistant 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/ Lawrence Davis         
| | Name:                                                                      | Lawrence Davis             
| | Title:                                                                     | Associate Portfolio Manager
|
| | CREDIT LYONNAIS NEW YORK BRANCH                                           
|
| | By:                                                                        | /s/ Peter Rasmussen        
| | Name:                                                                      | Peter Rasmussen            
| | Title:                                                                     | First Vice President       
|
| | SOVEREIGN BANK                                                            
|
| | By:                                                                        | /s/ Michael J. Hassett     
| | Name:                                                                      | Michael J. Hassett         
| | Title:                                                                     | Vice President             
|
| | ALLFIRST BANK                                                             
|
| | By:                                                                        | /s/ Coney Burgess          
| | Name:                                                                      | Coney Burgess              
| | Title:                                                                     | Vice President             
|

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PMA CAPITAL CORPORATION EXHIBIT A

COMMITMENT PERCENTAGES

|Bank                            | CommitmentPercentage |            | CommitmentAmount |            
|------------------------------- | -------------------- | ---------- | ---------------- | -----------
|                               
|PNC Bank, National Association  |                      | 22.22222%  |                  | $15,000,000
|                               
|Fleet National Bank             |                      | 18.51852%  |                  | 12,500,000 
|                               
|Credit Lyonnais New York Branch |                      | 22.22222%  |                  | 15,000,000 
|                               
|Sovereign Bank                  |                      | 18.51852%  |                  | 12,500,000 
|                               
|Allfirst Bank                   |                      | 18.51852%  |                  | 12,500,000 
|                                |                      |            |                 
|                               
|Total                           |                      | 100.00000% |                  | $67,500,000
|                                |                      |            |                  |            

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SCHEDULE 10.2TO SECOND AMENDED AND RESTATED LETTER OF CREDIT AGREEMENT
DATED AS OF NOVEMBER 22, 2000

LIST OF BANKS

|   |                                                                                                                                                                                                                       |  |    |                                                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | Mr. Kirk Seagers PNC Bank, N.A.1600 Market St., 22nd FloorPhiladelphia, PA 19103Phone: (215) 585-5393
          Fax:  (215) 585-7615e-mail: david.seagers@pncbank.com                                                 |  | 4. | Mr. Michael J. HassettSovereign Bank20-6431-CM2Three Radnor Corporate Center, Ste.210100 Matsonford Road
          Radnor, PA  19087Phone:  (610) 526-6302Fax:  (610) 526-6214e-mail:mhassett@sovereignbank.com
|  
|2. | Mr. Anson T. Harris Vice President, Financial InstitutionsFleet National Bank 777 Main Street, CT MO 0250 
          Hartford, CT 06115-2001Phone: (860) 986-7518Fax:  (860) 986-1264 e-mail:anson_t_harris@fleet.com |  | 5. | Mr. C. Coney BurgessAllfirst BankMail Code 101-74525 South Charles StreetBaltimore, MD  21201
          Phone: (410) 244-4203Fax: (410) 545-2047e-mail: C.Coney.Burgess@allfirst.com                           
|  
|3. | Mr. Peter RasmussenCredit Lyonnais1301 Avenue of the Americas, 17th FloorNew York, NY 10019-6022
          Phone:  (212) 261-7718Fax:  (212) 261-3401e-mail:rasmussen@clamericas.com                                  |  |    |                                                                                                                                                                                                                

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