EXHIBIT 10.10

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made as
of the first day Of May, 1995, by and between PENNSYLVANIA MANUFACTURERS CORPORATION, a
Pennsylvania corporation, whose principal office is located at Blue Bell, Pennsylvania
(hereinafter PMC) and JOHN W. SMITHSON of Newtown, Pennsylvania (hereinafter Smithson) to set forth the
terms and conditions upon which PMC shall employ Smithson.

JOHN W. SMITHSON of
Newtown, Pennsylvania (hereinafter "Smithson") to set forth the terms and conditions upon
which PMC shall employ Smithson.

1. The Employment Term.

During the period
beginning April 1, 1995 and ending March 31, 1998 (hereinafter Employment Term)
PMC shall employ Smithson as its chief operating officer and Smithson agrees to be so
employed. If, at the annual organizational meeting of the Board of Directors of PMC held
in 1996 and in any subsequent year, Smithson is elected President of PMC, the Employment
Term shall be automatically extended for a further period of one year without the need
for further action by the Board of Directors of PMC or the execution of a formal
amendment to this Agreement.

2. Duties During the
Employment Term.

During the Employment
Term, Smithson shall serve as the chief operating officer of PMC, and, if so elected by
the Board of Directors, shall serve as President of PMC. Smithson shall at all times
throughout the Employment Term devote his full time and his best efforts to the business
of PMC and its subsidiaries and affiliates.

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3. Salary During the
Employment Term.

During the
Employment Term, PMC shall pay Smithson on a bi-weekly basis a salary of not
less than $670,000 per year. Smithsons annual salary may be increased but
not decreased by PMC in its discretion at any time and from time to time. In
addition, Smithson shall be entitled to receive such bonus compensation, if any,
as he may be awarded from time to time by PMC.

4. Inability to Perform.

If for any reason during
the Employment Term, Smithson shall at any time or from time to time be unable to perform
the services required of him pursuant to Paragraph 2 hereof, he shall nevertheless be
entitled to receive the salary payments and other benefits provided by this Agreement
until the end of the Employment Term or until the date of his death, whichever first
occurs.

5. Total Disability.

If Smithson becomes
totally disabled during the Employment Term, commencing upon the expiration of the
Employment Term and for a period of 180 months thereafter, or until the termination of
his total disability or the date of his death, whichever first occurs (the Disability
Period), PMC shall pay to Smithson on a monthly basis an amount equal to 25% of
Smithsons monthly salary as of the date such total disability commenced without
reduction for any amounts that may be paid to Smithson pursuant to any disability or
other insured benefit program or programs in effect for executives of PMC at the time
such total disability commenced. For purposes of this Agreement, the term totally
disabledshall mean a mental

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or physical condition which in the reasonable opinion of the Board of
Directors Of PMC renders Smithson unable or incompetent to carry out the job
responsibilities he held at the time the disability was incurred.

6. Death.

If Smithson shall die at
any time during the Employment Term or during the Disability Period described in
Paragraph 5 hereof, PMC shall each month thereafter for 180 consecutive months, reduced
by the number of months during the Disability Period in which Smith,,, received salary
payments in accordance with Paragraph 5 hereof, pay an amount equal to 25% of Smithsons
monthly salary as of the date of his death to:

(a)
Smithsons spouse at the time of his death if she survives him and for as long as
she survives him, but if Smithson shall die leaving no surviving spouse or if Smithsons
surviving spouse shall die during the aforesaid 180 month period, as reduced, then to

(b)
Smithsons surviving natural or adopted children in equal shares. Upon the death of
Smithsons surviving spouse and any surviving natural or adopted children, PMC shall
have no further obligation to make any payments pursuant to this Paragraph.

7. Expenses.

PMC shall pay the
ordinary and necessary business expenses incurred by Smithson in connection with the
performance of his duties on behalf of PMC.

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8. Restrictive Covenant.

Smithson shall not during
the Employment Term, directly or indirectly, either as a principal, agent, employee,
director, officer or in any other capacity, engage in or have a material financial
interest in any business which competes with the business of PMC or any of its affiliates
as then conducted.

9. Employee Benefit Plans.

No provision of this
Agreement shall in any way abrogate or impair any rights or privileges of Smithson as an
employee of PMC under any qualified or unqualified retirement, pension, profit sharing,
disability, life insurance, hospitalization or other employee plan or plans which are now
in effect or which may hereafter be adopted by PMC.

10. Provision for Life
Insurance.

In accordance with
Smithsons Employment Agreement with PMA Reinsurance Corporation (PMA Re),
a wholly owned subsidiary of PMC, dated April 1, 1992, PMA Re and the trustee named by
Smithson (the trustee) has secured from The Metropolitan Life Insurance
Company (the Insurer), a life insurance policy in the face amount of
$1,000,000 on the life of Smithson. In furtherance thereof, the trustee has entered into
a split-Dollar Life insurance Agreement with PMA Re (the Split-Dollar Agreement)
which requires PMA Re to pay the annual premiums due on such policy through Smithsons
lifetime and which provides for the eventual recovery by PMA Re of its interest in the
policy, which is as follows:

(a)
if the Policy matures as a death claim, PMA Re shall receive an amount equal to the total
premiums paid by PMA Re during Smithsons lifetime

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less an amount equal to that portion of the premiums paid by PMA Re
during Smithsons lifetime which conferred an economic benefit upon Smithson which
shall be determined by the use of the lesser of (i) the one-year term life insurance
rates published by the Insurer or (ii) the uniform One-Year Term Premiums Table published
by the U.S. Treasury Department known as the P.S. 58 cost; and

(b)
if the Policy is surrendered, PMA Re shall receive an amount equal to the lesser of (i)
the total cash surrender value of the Policy or (ii) the cumulative total of the premiums
on the Policy that PMA RE has paid less an amount equal to that portion of the premiums
paid by PMA Re during Smithsons lifetime which conferred an economic benefit upon
Smithson which shall be determined by the use of the lesser of (A) the one-year term life
insurance rates published by the Insurer or (B) the Uniform One-Year Term Premiums Table
published by the U.S. Treasury Department known as the P.S. 58 cost.

The trustee and PMA Re
have entered into a Collateral Assignment Agreement with respect to the Policy in order
to secure PMA Res interest in the Policy.

The
rights and undertakings of PMA Re and Smithson in connection with the Split-Dollar
Agreement and related documentation, as originally set forth in the Employment Agreement
between PMA Re and Smithson dated April 1, 1992, shall continue in full force and effect,
but, as soon as may be practicable, PMC shall be substituted for PMA Re and shall assume
its obligations and become entitled to PMA Res rights in connection with the
Split-Dollar Agreement and the Collateral Assignment Agreement.

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11. Successors and
Assigns; Replacement of Prior Agreement.

This Agreement shall
inure to the benefit of and be binding upon the parties hereto, their respective
successors and assigns, and shall supersede and replace the Employment Agreement between
PMA Re and Smithson dated as of April 1, 1993, as amended by an Amendment and Supplement
dated as of April 1, 1994, which Agreement and the Amendment thereto shall have no
further force or effect.

IN WITNESS WHEREOF, PMC
and Smithson have executed this Agreement the day and year first above written, and PMA
Re has approved the provisions of Paragraph 10 which apply to it.

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|                                                        |  |                                       
|                                                        |  | PENNSYLVANIA MANUFACTURERS CORPORATION
|ATTEST:                                                 |  |                                       
|/s/ Robert Pratter                                      |  | By /s/ Frederick W. Anton             
|Secretary                                               |  | Chairman of the Board of Directors    
|                                                        |  | /s/ John W. Smithson                  
|APPROVED AS TO PARAGRAPH 10:PMA REINSURANCE CORPORATION |  |                                       
|By: /s/ John W. Smithson                                |  |                                       

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