DEFERRED COMPENSATION PLANFOR NON-EMPLOYEE DIRECTORS OFPMA CAPITAL
CORPORATION(Amended and Restated November 1, 2000)

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ARTICLE I.   DEFINITIONS

The following are defined terms wherever they appear in the
Plan.

1.1   "Administrator" shall
mean the person, or committee, appointed by the President and Chief Executive Officer of
PMA Capital, and charged with responsibility for administration of the Plan.

1.2   "Board of Directors"
or "Board" shall mean the Board of Directors of PMA Capital.

1.3   "Business Day" shall
mean any day during which trades occur on the Nasdaq Stock Market.

1.4   "Change of Control"
means a change of control of PMA Capital of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") whether or not PMA Capital is then
subject to such reporting requirements; provided that, without limitation, such a Change
of Control shall be deemed to occur if:

(a)   Any "person" (as such
term is used in Section 13(d) and 14(d) of the Exchange Act) is or first becomes the
"beneficial owner" (as determined for purposes of Regulation 13D-G under the Exchange Act
as currently in effect), directly or indirectly, in a transaction or series of
transactions, of securities of PMA Capital representing more than 50% of the combined
voting power of PMA Capital's voting stock (the "Voting Stock"); or

(b)   The consummation of a
merger, or other business combination after which the holders of the Voting Stock do not
collectively own 50% or more of the voting capital stock of the entity surviving such
merger or other business combination, or the sale, lease, exchange or other transfer in a
transaction or series of transactions of all or substantially all of the assets of PMA
Capital; or

(c)   At any time
individuals who were either nominated for election by PMA Capital's Board of Directors or
were elected by PMA Capital's Board of Directors cease for any reason to constitute at
least a majority of the members of the Board of Directors of PMA Capital.

1.5   "PMA Capital
Common Stock" or "Common Stock"or "Stock" shall mean the Class A Common
Stock of PMA Capital, par value of five dollar ($5.00) per share.

1.6   "Committee" shall
mean the Compensation Committee of the Board of Directors of PMA Capital, or the
successor to such committee.

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1.7   "Deferral Election" shall
mean the instrument executed by a Participant which specifies amounts and items of
compensation to be deferred into the Deferred Compensation Account.

1.8   "Deferred
Compensation Account" shall mean the separate bookkeeping account established under
the Plan for each Participant, as described in Section 3.1.

1.9   "Director"
shall mean any individual serving on the Board who is not an employee of PMA Capital or
any of its subsidiaries or affiliates.

1.10  "Participant" shall
mean each individual who as a Director of PMA Capital participates in the Plan in
accordance with the terms and conditions of the Plan.

1.11  "Payment Election"
shall mean the instrument executed by a Participant which specifies the method of payment
of deferred compensation.

1.12  "PMA Capital" shall
mean PMA Capital Corporation.

1.13  "Plan" shall
mean the Deferred Compensation Plan for Non-Employee Directors of PMA Capital, as it may
be amended or restated from time to time by the Board of Directors.

1.14  "Termination of
Service" shall mean termination of services as a Director of PMA Capital, including
but not limited to termination by retirement, death or disability.

1.15  "Unforeseeable
Emergency" shall mean a severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or of a dependent (as
defined in section 152(a) of the Internal Revenue Code of 1986, as amended) of the
Participant, loss of the Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant.

1.16  "Valuation Date" shall
mean the close of business on the last business day of each month.

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ARTICLE II.   PARTICIPATION

2.1   Eligibility to
Participate in the Plan.

The individuals who are
eligible to participate in the Plan are those persons who serve as Directors of PMA
Capital and who are not also employees of PMA Capital.

2.2   Participation in the
Plan.

(a)   A
Participant may elect to defer receipt of all or a portion of the annual Board retainer
fee and Board and Board committee attendance fees, and such other compensation for
services as a Director as are specified by the Administrator.

(b)   The
election to defer is made by delivering a properly executed Deferral Election to the
Administrator. The Deferral Election shall specify the item or items of compensation to
be deferred, and the amount of such compensation to be deferred. The election for payment
of compensation deferred is made by delivering a properly executed Payment Election to
the Administrator. The Payment Election shall specify the method by which such deferred
compensation is to be paid, and the date or dates for payment of such deferred
compensation.

(c)   An
election to defer compensation must be filed by the Participant prior to the commencement
of a calendar year during which such compensation will be paid.

(d)   Notwithstanding
Section 2.2(c), an election to defer compensation made by an individual who subsequently
begins active service as a Director of PMA Capital that is filed prior to the date upon
which such active service begins, shall be effective according to Section 2.2(e)(2),
below.

(e)   An
election to defer compensation is effective: (1) for the calendar year beginning after
the election, and for subsequent calendar years, unless modified or revoked; or, (2) if
Section 2.2(d) applies, for the remainder of the first year of active service, as of the
first day of active service, and for subsequent calendar years, unless modified or
revoked.

2.3   Elections Pertaining
to Payments.

(a)   
No payments may be made or commence under the Plan until the later of (1) at least six
(6) months elapses after a Termination of Service occurs or (2) the first day of the
first calendar year following the date the Payment Election is filed with the
Administrator, except as provided in Sections 4.2, 4.3 and 4.4 below.

(b)   
In executing a Payment Election, the Participant shall elect among the following methods
of payment:

(1)   Lump
sum payment, or

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(2)
   Periodic Payments the payments shall be made at least annually,
(but no more frequently than monthly) over a period not to exceed fifteen (15) years.

(c)   
The balance of a Participant's Deferred Compensation Account shall be paid, in all
events, no later than January of the fifteenth year following Termination of Service.

(d)   
If there is not in effect as of Participant's Termination of Service a valid Payment
Election, the Participant's Deferred Compensation Account shall be paid in a lump sum.

All payments under the
Plan shall be in cash only and no Participant shall have any right to obtain payment in
any other form.

2.4   Modification of
Elections Pertaining to Payments.

A Participant may request
modification of his existing Payment Election at any time before a Termination of
Service. The Board shall consider any such modification request and may grant or deny the
request, in its discretion, which decision shall be final and binding on the Participant.
In determining whether the request should be allowed, the Board may consider the
Participant's financial needs, including any changed circumstances, as well as the
projected financial needs of PMA Capital. If the Board determines that the request should
be allowed, the requested modifications shall be made. The Participant shall effect the
modifications through execution of a new Payment Election, which shall constitute the
only Payment Election which is outstanding and effective.

2.5   Reduction or
Termination of Future Deferral.

(a)   
A Participant may elect to reduce or to revoke his deferral of compensation into his
Deferred Compensation Account, but such election shall have effect only prospectively. A
Participant shall effect an election to reduce his deferral of compensation by execution
of a new Deferral Election, which shall constitute the only Deferral Election which is
outstanding and effective on a prospective basis. A Participant shall effect an election
to revoke his deferral of compensation into his Deferred Compensation Account by
informing the Administrator in writing. Only one election to reduce and one election to
revoke may be made under this Section 2.5 by each Participant in a calendar year.

(b)   
An election to reduce or to revoke deferral of compensation under Section 2.5(a) above
shall become effective on the later of (1) the first day of the first calendar year
following the date on which the election to reduce or revoke is made or (2) on the first
day of the calendar month following receipt of such election by the Administrator except
in the case of an Unforeseeable Emergency under the circumstances described below in
Section 4.2.

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ARTICLE III.  COMPENSATION DEFERRED

3.1   Deferred Compensation
Account.

A Deferred Compensation
Account shall be established as a bookkeeping account for each Director when the Director
becomes a Participant. Compensation deferred by a Participant under the Plan shall be
credited to the Deferred Compensation Account on the date such compensation would
otherwise have been paid to the Participant. Hypothetical income on deferred compensation
shall be credited to the Deferred Compensation Account as provided in Section 3.3, below.

3.2   Balance of Deferred
Compensation Account.

The balance credited to
each Participant's Deferred Compensation Account shall include compensation deferred by
the Participant, plus hypothetical income, dividends and gains credited with respect to
hypothetical investments. Losses from hypothetical investments shall reduce the amount
credited to the Participant's Deferred Compensation Account balance. The balance credited
to each Participant's Deferred Compensation Account shall be determined as of each
Valuation Date.

3.3   Hypothetical
Investment.

(a)
   Compensation deferred under the Plan which would have been paid in cash
shall be assumed to be invested, without charge, in one or more hypothetical investment
vehicles. The hypothetical investment vehicles shall be specified from time to time by
the Administrator, except that a hypothetical Common Stock investment vehicle shall be
available. With respect to such hypothetical investments other than the hypothetical
Common Stock investment vehicle, which is discussed in Section 3.3(b) below:

(1)
   Cash compensation deferred shall be deemed to earn investment returns under the
hypothetical investment vehicle. The Administrator shall credit such income to the
Participant's Deferred Compensation Account, pursuant to Section 3.4 below.

(2)
   The Committee, in its sole discretion, may provide Plan Participants with options for one
or more additional hypothetical investment vehicles for investment of cash compensation
deferred under the Plan, with respect to which:

(A)
A Participant may modify his election of a hypothetical investment and may make any
transfers between and among hypothetical investments, through a written request to the
Administrator, provided that,

(B)
Only one such modification or transfer shall be allowed during any calendar quarter;

(C)
Any such modification or transfer shall be effective in the second calendar month
following receipt of the request by the Administrator; and

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(D)
Such modifications and transfers will be in accordance with rules and procedures adopted
by the Administrator.

(b)
   Compensation deferred under the Plan and credited as a bookkeeping
entry to the Participant's Deferred Compensation Account may be deemed to be invested,
hypothetically and without charge, in shares of hypothetical Common Stock. Shares of
hypothetical Common Stock shall be subject to adjustment in order to reflect Common Stock
dividends, splits, and reclassifications. Except in the event of a Change of Control,
amounts credited to the Participant's Deferred Compensation Account and deemed invested
in hypothetical Common Stock must remain so invested, and no other hypothetical
investment vehicle available hereunder may be substituted therefor until the January
following the Participant's Termination of Service. Thereafter, changes to the deemed
hypothetical investment in Common Stock may be made only in accordance with Section
3.3(a) above; provided that all such changes occurring within six months after the
Participant's Termination of Service shall be subject to approval by the Administrator to
ensure compliance with Section 16 of the Securities Exchange Act of 1934.

(c)
   Amounts equal to cash dividends which would have been paid on shares of
Common Stock shall be deemed paid on whole shares of hypothetical Common Stock in the
Participant's Deferred Compensation Account. Such amounts shall be deemed reinvested in
shares of hypothetical Common Stock in the Participant's Deferred Compensation Account.

(d)
   In the event of a Change of Control, the Committee shall provide
Participants with the option for investment in at least one hypothetical investment
vehicle, the annual income earned on which must be not less than 50 basis points over the
Ten-Year Constant Treasury Maturity Yield as reported by the Federal Reserve Board, based
upon the November averages for the preceding year.

3.4   Time of Hypothetical
Investment.

(a)
   The balance of each Participant's Deferred Compensation Account shall be deemed
hypothetically invested on each Valuation Date, and income shall accrue on such balance
upon such date, from the previous Valuation Date.

(b)
   Compensation which would have been paid in cash shall be deemed invested in the
Participant's Deferred Compensation Account on the Valuation Date next following such
hypothetical investment or credit.

(c)
   Compensation hypothetically invested in Common Stock shall be deemed invested in shares
of Common Stock as of the date such compensation otherwise would have been payable to the
Participant. The number of shares of Common Stock in which compensation is deemed
hypothetically invested in the Deferred Compensation Account shall be determined by
reference to the average of the high and low price as reported on the Nasdaq Stock Market
for the day that the said compensation otherwise would have been payable to the
Participant (or the next Business Day, if such day is not a Business Day) provided, that
in absence of such information, the Common Stock value shall be determined by the
Committee.

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3.5   Statement of Account.

The Administrator shall
provide each Participant a statement of his Deferred Compensation Account at least
annually.

ARTICLE IV.   PAYMENT OF DEFERRED COMPENSATION

4.1   Payment of Deferred
Compensation.

(a)
   The Administrator shall make payments measured by the hypothetical amounts credited to
the Participant's Deferred Compensation Account in accordance with the Participant's
Payment Election.

(b)
   Compensation deferred under the Plan shall be paid to the Participant in cash pursuant to
Section 4.1(a).

4.2.   Unforeseeable
Emergency Payment.

Notwithstanding any other
provision of the Plan, if the Board, after consideration of a Participant's application,
determines that the Participant has an Unforeseeable Emergency of such a substantial
nature that immediate payment of compensation deferred under the Plan is warranted, the
Board in its sole and absolute discretion may direct that a payment equal to all or a
portion of the balance of the Participant's Deferred Compensation Account be paid to the
Participant in cash. The amount of any such distribution shall be limited to the amount
deemed necessary by the Board to alleviate or remedy the Unforeseeable Emergency. The
payment shall be made in a manner and at the time specified by the Board. A Participant
receiving an Unforeseeable Emergency payment is deemed to have revoked his election for
deferral of compensation under the Plan, as of the time of Unforeseeable Emergency
payment. Any subsequent deferral of compensation under the Plan shall require that the
Participant execute a new Deferral Election, subject to terms of Section 2.2(e)(1)
hereof. The circumstances that will constitute an Unforeseeable Emergency will depend
upon the facts of each case, but, in any case, payment may not be made to the extent that
such hardship is or may be relieved:

(a)
   Through reimbursement or compensation by insurance or otherwise;

(b)
   By liquidation of the Participant's assets, to the extent the liquidation of such assets
would not itself cause severe financial hardship; or

(c)
   By cessation of deferrals under the Plan.

Examples of what are not
considered to be Unforeseeable Emergencies include the need to send a Participant's child
to college or the desire to purchase a home.

4.3   Certain Accelerated
Payments.

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(a)
   If a Participant terminates service as a Director under circumstances which are such that
the Board deems it in the best interest of PMA Capital that payment of the Participant's
Deferred Compensation Account be accelerated, then the Board, upon its own motion and in
its sole discretion, may direct that the Participant's Deferred Compensation Account be
paid to him immediately in a lump sum.

(b)
   If, as a result of substantial and unforeseen changes affecting (1) the business of PMA
Capital, or (2) the operation or administration of the Plan, the Board, upon its own
motion and sole discretion, determines that the interests of the Participant and of PMA
Capital are best served through accelerated payment of the Participant's Deferred
Compensation Account, the Board on its own motion and in its sole discretion may direct
that the Participant's Deferred Compensation Account balances be paid to him immediately
in a lump sum.

(c)
   A Participant who is not entitled to payment of his Deferred Compensation Account under
any other provision of Article IV may make a written request to the Board for an
accelerated payment of his entire Deferred Compensation Account balance. If the Board
receives such a request, it shall make a final valuation of the Participant's Deferred
Compensation Account and pay ninety percent (90%) of the Deferred Compensation Account
balance to the Participant. The Participant shall forfeit the remaining ten percent (10%)
of his Deferred Compensation Account balance to PMA Capital.

4.4   Payments of a
Deceased Participant's Account

(a)
   If a Participant dies before his entire Deferred Compensation Account has been paid to
him, the Administrator shall pay an amount equal to the amount credited to the Deferred
Compensation Account in a single lump sum payment to the person(s) or trust(s) designated
in writing by the Participant as his beneficiary(ies) under the Plan. The Administrator
is authorized to establish rules and procedures for designations of beneficiaries and
shall have the sole discretion to make determinations regarding the existence and
identity of beneficiaries and the validity of beneficiary designations.

(b)
   Notwithstanding Section 4.4(a), the Administrator shall make payment pursuant to Section
4.4(a), as soon as administratively feasible, in a single lump sum payment to the
Participant's estate if:

(1)
   The Participant dies without having a valid beneficiary designation in effect;

(2)
   The Participant's designated beneficiary has predeceased him;

(3)
   The Participant's designated beneficiary cannot be found after what the Administrator
determines, in his sole discretion, has been a reasonably diligent search; or

(4)
   The Administrator determines, in his sole discretion, that a payment in such form is in
the best interest of PMA Capital.

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ARTICLE V.   GENERAL PROVISIONS

5.1   Participant
Requests

A Participant shall take
no part in any decision pertaining to a request by such Participant under Sections 2.4,
4.2, and 4.3 hereof.

5.2   Participant's Rights
Unsecured.

This Plan is intended to
be an unfunded plan for the benefit of Participants. No Participant shall have any
property interest whatsoever in any specific assets of PMA Capital. No action taken
pursuant to the provisions of this Plan shall create or be construed to create a trust of
any kind or a fiduciary relationship between PMA Capital and the Participant, the
Participant's designated beneficiaries, or any other person. To the extent that any
person acquires a right to receive payments from PMA Capital under this Plan, such right
shall be no greater than the right of any unsecured general creditor of PMA Capital or of
any successor company which assumes the liabilities of PMA Capital. The Board may,
however, in the event of a Change of Control of PMA Capital or for administrative
reasons, fully fund the Plan by means of a contribution to a "rabbi" trust selected by
the Administrator.

5.3   Assignability.

(a)
   No right to receive payments hereunder shall be transferable or assignable by a
Participant. Any attempted assignment or alienation of payments hereunder shall be void
and of no force or effect. No such payment, prior to receipt thereof pursuant to the
provisions of the Plan, shall be in any manner liable for, or subject to, the debts,
contracts, liabilities, engagements or torts of the Participant.

(b)
   Notwithstanding Section 5.3(a), if a Participant is indebted to PMA Capital at any time
when payments are to be made by PMA Capital to the Participant under the provisions of
the Plan, PMA Capital shall have the right to reduce the amount of payment to be made to
the Participant (or the Participant's beneficiary) to the extent of such indebtedness.
Any election by PMA Capital not to reduce such payment shall not constitute a waiver of
its claim for such indebtedness.

5.4   Administration.

Except as otherwise
provided herein, the Plan shall be administered by the Administrator who shall have the
authority to adopt rules and regulations for carrying out the Plan, and who shall
interpret, construe and implement the provisions of the Plan.

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5.5   Amendment.

The Plan may be amended,
restated, modified, or terminated by the Board of Directors, except that Section 3.3(d)
of the Plan may not be amended or modified following a Change of Control without the
consent of the Participant. No amendment, restatement, modification, or termination shall
reduce the dollar value of a Participant's Deferred Compensation Account balance as of
the Valuation Date immediately preceding such action.

5.6   Correction of Errors
and Inconsistencies.

The Committee upon its
own motion, or at the request of the Administrator or of a Participant, shall have the
authority to effect consistency among deferral elections, payment elections, or
hypothetical investment with respect to amounts deferred by a Participant under the Plan,
so as to avoid or rectify difficulties in Plan administration. In no event shall such
action by the Committee reduce the dollar value of a Participant's Deferred Compensation
Account balance as of the Valuation Date immediately preceding such action, nor shall the
Committee take any action inconsistent with Section 3.3(b) hereof. The Committee may take
such action with respect to a Participant's Deferred Compensation Account, regardless of
whether such Participant may continue as a Director of PMA Capital, or whether he may
have terminated service as a Director of PMA Capital.

5.7   Compliance with
Section 16.

If the Administrator
determines that, in order to comply with Section 16 of the Securities Exchange Act of
1934, as amended, it is necessary for the Board rather than the Committee to take any
action which the Plan authorizes the Committee to take, the Administrator shall request
the Board to do so.

5.8   
Withholding/Employment Taxes.

As required by applicable
tax law, PMA Capital may withhold, deduct and adjust a Participant's Deferred
Compensation Account for all amounts necessary to satisfy any federal, state or other
governmental withholding taxes arising directly or indirectly in connection with the Plan
or any deferral hereunder whether under current or future tax laws.

5.9   No Liability for
Interpretation and Administration of Plan.

No officer, director, or
member of PMA Capital shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this Plan unless attributable to
willful misconduct or fraud. To the extent coverage is not provided by any applicable
insurance policy, PMA Capital hereby agrees to indemnify the Administrator and to hold
him harmless against any and all liability for his acts, omissions and conduct and for
the acts, omissions and conduct of his duly appointed agents made in good faith pursuant
to the provisions of the Plan, including, without limitation, any out-of-pocket expenses
reasonably incurred in the defense of any claim relating thereto; provided, however, that
he shall not voluntarily assume or admit any liability, nor, except at his own cost,
shall he make any payment, assume any obligations or incur any expense without the prior
written consent of PMA Capital.

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5.10   Incapacity of
Recipient.

If PMA Capital finds that
any person to whom any payment is payable under this Plan is unable to take care of his
or her affairs because of illness or accident, any payment due (unless a prior claim
therefor has been made by a duly appointed guardian, committee or other legal
representative) may be paid to the intended recipient's spouse, child, parent, brother or
sister, or any other person deemed by PMA Capital to have incurred expense for the person
otherwise entitled to payment, in such manner and proportions as PMA Capital may
determine. Any such payments, to the extent thereof, shall be a complete discharge of PMA
Capital's obligation under this Plan.

5.11   Construction.

The masculine gender
where appearing in the Plan shall be deemed to include the feminine gender. The singular
shall be deemed to include the plural and the plural the singular.

5.12   Successors and Heirs.

The Plan and any properly
executed elections hereunder shall be binding upon PMA Capital and the Participants, and
upon any assignee or successor in interest to PMA Capital and upon the heirs, legal
representatives and beneficiaries of any Participant

5.13   Governing Law.

This Plan shall be
governed by the laws of the Commonwealth of Pennsylvania and by applicable Federal law.

Adopted by Board of Directors:     November 3, 1999
Amended by Board of Directors:   November 1, 2000

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