**Exhibit
      10.34**




AGREEMENT
      AND RELEASE





THIS
      AGREEMENT is made on the 31st day of January, 2007, by and among Richard DeCoux
      (hereinafter called “Employee”) and PMA Capital Insurance Company and PMA Re
      Management Company all former and present parents, direct and indirect
      subsidiaries and affiliates of PMA Capital Insurance Company and PMA Re
      Management Company and its former and present employees, officers, directors,
      shareholders, agents, successors and assigns (hereinafter called
“Employer”).





RECITAL





WHEREAS,
      Employer has determined to eliminate Employee’s position; and





WHEREAS,
      Employee and Employer have agreed to enter into this Agreement and Release
      (“Agreement”) to resolve any and all issues that may exist between them
      concerning Employee’s employment and separation from employment.





NOW
      THEREFORE, Employer and Employee, for good and valuable consideration, and
      intending to be legally bound, agree as follows:





**1.**  **Termination
      Date** .
      Employee’s employment with Employer and its affiliates shall terminate effective
      at the close of business on January 31, 2007 (“Termination Date”).




**2.**  **Severance
      Pay** .




a)  Employer
      shall provide severance pay to Employee in an amount equal to the greater of
      (i)
      four (4) weeks of pay; or (ii) two (2) weeks of pay for each year of service
      up
      to a maximum of 26 weeks plus two weeks of severance for each year of service
      after January 1, 2006 (“Severance Period”) as provided in the PMA Capital
      Corporation and PMA Capital Insurance Company Severance Pay Plan (the “Severance
      Plan”).




b)  Based
      on
      the foregoing, Employer shall provide severance pay to Employee in the sum
      of
      $124,384.61 less all applicable withholding taxes and other deductions
      (“Severance Pay”). The Severance Pay shall be payable in a lump sum within the
      next normal pay period following the Effective Date of this Agreement as
      provided in paragraph 21, provided Employee signs and returns this Agreement
      on
      or before March 17, 2007, and does not revoke the same as provided in paragraph
      21. Employee shall also receive an amount equal to Employee’s non-vested account
      balance as of January 31, 2007, if any, under the PMA Capital 401 (k) Plan
      less
      all applicable withholding taxes.




c)  If
      Employee dies before all amounts due Employee under this paragraph 2 have been
      paid to Employee, then Employer will pay any remaining amounts due Employee
      to
      Employee’s surviving spouse, or if there is no surviving spouse, to Employee’s
      estate, in a lump sum within 90 calendar days after the date of
      death.






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**3.**  **Benefits** .
      Except
      as otherwise set forth in sub-paragraphs a) through c) below, all of Employee’s
      employee benefits, including, but not limited to, health, welfare and disability
      benefits, shall terminate as of the Termination Date.




a)  Employee’s
      Group Term Life Insurance, Dependent Child Life Insurance and Spousal Life
      Insurance group coverages will terminate on the Termination Date. Employee
      may
      convert all or part of these group coverages to non-group coverages provided
      that Employee shall be responsible for the payment of all premiums after the
      Termination Date.




b)  In
      the
      event Employee elects to continue health insurance coverage through the
      Consolidated Omnibus Budget Reconciliation Act, as amended (“COBRA”), and
      returns this executed Agreement, and further does not revoke this Agreement
      within the revocation period, as provided under the Severance Plan, Employer
      will, during the Severance Period (“Continuation Period”), continue to pay the
      same monthly subsidy of the premiums for such insurance continuation as was
      being paid by Employer prior to the Termination Date. Thereafter, Employee
      must
      make timely premium payments under COBRA for such health insurance coverage
      in
      order to maintain the health insurance at 102% of Employer’s cost of coverage.
      Notwithstanding the foregoing, Employer has no obligation to pay the premiums
      for such health insurance coverage in the event that Employee is eligible to
      receive and/or obtain alternative health insurance coverage after the
      Termination Date.




c)  The
      Continuation Period for payment of health insurance premiums under this
      Agreement shall be deemed to run concurrently with the continuation period
      federally mandated by COBRA (generally 18 months), or any other legally mandated
      federal, state, or local coverage period for benefits provided to terminated
      employees under the health care plan. The COBRA continuation period will be
      deemed to commence on February 1, 2007, whether or not COBRA coverage is
      actually elected at such time or deferred until the expiration of the
      Continuation Period. Notwithstanding the foregoing, COBRA coverage will only
      be
      available if Employee is eligible for COBRA coverage elected in the time and
      manner prescribed, and Employee timely remits Employee’s payments of the
      premiums, as required, for COBRA coverage.




d)  Nothing
      in this paragraph 3 will affect the Employee’s vested benefits, if any, under
      PMA Capital Corporation’s qualified and non-qualified employee plans; the
      existence, amount, and payment of such benefits shall be determined pursuant
      to
      the applicable provisions of the applicable plans, which are described on the
      Summary of Benefits, attached as Exhibit “B.”




**4.**  **Vacation
      Pay** .
      Payment
      for accrued unused, vacation days will be made as soon as practicable after
      the
      Termination Date. Employees who participate in the Paid Personal Time program
      will be reimbursed for any amounts paid for days not used. Employee agrees
      that
      the amount of Severance Pay defined in paragraph 2(a) to which the Employee
      would be eligible will be reduced by any amounts due from the Employee for
      days
      used, but not fully paid for, under the Paid Personal Time program.




**5.**  **Unemployment
      Compensation** .
      If
      Employee elects to file a claim for unemployment compensation benefits and
      a
      determination is made in Employee’s favor,




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Employer
      will not contest Employee’s eligibility.
      Employer will, upon request, confirm the termination of Employee’s
      employment.




**6.**  **Business
      Expenses** .
      Employer agrees to reimburse Employee for normal, pre-approved, business
      expenses incurred prior to the Termination Date; provided that Employee submits
      appropriate and complete documentation that is satisfactory to Employer to
      support Employee’s claim for such reimbursement and requests such reimbursement
      upon acceptance of this Agreement. Employee warrants that Employee has
      surrendered any and all credit cards issued to Employee through Employer on
      or
      prior to the date hereof, and shall not incur any additional expenses on behalf
      of Employer nor seek reimbursement therefore after the date of this
      Agreement.




7.  **Referrals
      of Employment** .
      All
      referrals for verification of employment should be directed solely to Andrew
      J.
      McGill, Vice President, PMA Insurance Group. In keeping with Employer policy,
      no
      details relating to Employee’s past employment with Employer beyond title, dates
      of employment and verification of annual salary will be discussed with any
      potential employer.




8.  **Agreements
      and Covenants** .
      Employee agrees that:




a)  Employee
      has no claim to, nor will Employee seek or receive, any other money or
      consideration from Employer or its parent, PMA Capital Corporation, its past
      or
      present direct or indirect subsidiaries or its related corporations, companies,
      or divisions (hereinafter collectively referred to as “Affiliates”) except as
      provided in this Agreement.




b)  Employee
      will return to Employer on or before the Termination Date any company property
      including, but not limited to, company-provided automobile, cell telephones,
      identification cards, access cards, personal laptop computers, company manuals,
      equipment, records and files, including any and all copies of same, as well
      as
      electronic and paper records whether or not they are stored on the Employer’s
      premises.




c)  Employee
      will not disclose or make known to anyone (other than in the good faith
      performance of Employee’s services to Employer or its Affiliates before the
      Termination Date) other than employees of Employer or its Affiliates, or use
      for
      Employee’s benefit, or the benefit of any corporation, firm, entity or person
      unrelated to Employer or its Affiliates any knowledge, information or materials
      belonging to Employer or its Affiliates about their products, services,
      know-how, customers, business plans or financial, marketing, pricing,
      compensation and other proprietary matters (“Confidential Information”), whether
      or not subject to trademark, copyright, trade secret or other protection, which
      was made known to Employee (whether or not with the knowledge and permission
      of
      Employer or its Affiliates, whether or not developed, devised or otherwise
      created in whole or in part by the efforts of Employee and whether or not a
      matter of public knowledge unless as a result of authorized disclosure) by
      reason of Employee’s employment by Employer or its Affiliates. However, after
      such Confidential Information has become public knowledge, Employee shall have
      no further obligation under this paragraph regarding that publicly known
      Confidential Information so long as Employee was in no manner responsible,
      directly or indirectly, for permitting such Confidential Information to become
      public knowledge without the consent of Employer or the applicable
      Affiliate.






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d)  Employee
      will not make any public or private statements or other utterances, written
      or
      oral, or act in any manner that is intended to, or does in fact disparage or
      damage the goodwill of the business of Employer or its Affiliates, or the
      business or personal reputation of any of its directors, officers, agents or
      employees, clients or suppliers.




e)  A
      violation on the part of the Employee of the covenants contained in paragraphs
      (c) or (d) above will cause irreparable damage to Employer and its Affiliates
      such that it is and will be impossible to estimate or determine the damage
      that
      will be suffered by Employer or its Affiliates in the event of a breach by
      the
      Employee of such covenants. Therefore, the Employee further agrees that Employer
      shall be entitled, as a matter of course, to an injunction out of any court
      of
      competent jurisdiction, restraining any further violation of such covenant
      or
      covenants by the Employee. This right to an injunction shall be in addition
      to
      all other rights and remedies afforded by law and under this
      Agreement.




9.  **Release** .
      Employee, for him or her self, and Employee’s executors, administrators, heirs
      and assigns:




a)  For
      and
      in consideration of the monies and benefits provided to Employee by Employer,
      as
      more fully described in this Agreement, and for other good and valuable
      consideration, Employee hereby fully waives, releases, and forever discharges
      Employer, PMA Capital Insurance Company and PMA Re Management Company and each
      and all of their past and present subsidiaries, parent and related corporations,
      companies and divisions, and their past and present respective officers,
      directors, shareholders, trustees, employees, attorneys, agents and affiliates,
      and their predecessors, successors and assigns (hereinafter collectively
      referred to as “Releasees”) of and from any and all rights, debts, claims,
      actions, liabilities, agreements, damages, or causes of action (hereinafter
      collectively referred to as “claims”), of whatsoever kind or nature, whether in
      law or equity, whether known or unknown, that Employee ever had or now has
      in
      any capacity, either individually, or as a director, officer, representative,
      agent or employee of Releasees against any or all of the Releasees, for, upon,
      or by reason of any cause, matter, thing or event whatsoever occurring at any
      time up to and including the date Employee signs this Agreement. Employee
      acknowledges and understands that the claims and rights being released in this
      paragraph include, but are not limited to, all claims and rights arising from
      or
      in connection with any agreement of any kind Employee may have had with any
      of
      the Releasees, or in connection with Employee’s employment or termination of
      employment, all claims and rights for wrongful discharge, breach of contract,
      either express or implied, interference with contract, emotional distress,
      back
      pay, front pay, benefits, fraud, misrepresentation, defamation, claims and
      rights arising under the Civil Rights Acts of 1964 and 1991, as amended, (which
      prohibits the discrimination in employment based on race, color, national
      origin, religion or sex), the Americans with Disabilities Act (ADA), as amended
      (which prohibits discrimination in employment based on disability), the Age
      Discrimination in Employment Act (ADEA), as amended (which prohibits age
      discrimination in employment), Worker Adjustment and Retraining Notification
      Act
      (WARN), the National Labor Relations Act, the Fair Labor Standards Act, the
      Employee Retirement Income Act of 1974 (ERISA), as amended, the Family and
      Medical Leave Act (FMLA), as amended, the Pennsylvania Wage and Hour Laws, the
      Pennsylvania Wage Payment and Collection Law, the Pennsylvania Human Relations
      Act, the Health Insurance




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Portability
      and Accountability Act (HIPPA), and any
      and all other claims or rights whether arising under federal, state, or local
      law, rule, regulation, constitution, ordinance or public policy. Employees
      agree
      that Employee will not initiate any civil complaint or institute any civil
      lawsuit, or file any arbitration against Releasees, or any one of them, based
      on
      the fact or circumstance occurring up to and including the date of the execution
      by Employee of this Agreement. This Release does not cover claims relating
      to
      the validity or enforcement of this Agreement.




b)  Employee
      hereby agrees to waive any provisions of state or federal law that explicitly
      or
      implicitly would prevent the application of this Agreement to claims which
      Employee does not know of or expect to exist in Employee’s favor at the time of
      executing this Agreement which, if known by Employee, would have materially
      affected his decision to execute this Agreement. In addition, Employee hereby
      agrees to waive any provisions of state or federal law which might require
      a
      more detailed specification of the claims being released pursuant to the
      provisions of this Agreement.




c)
      Notwithstanding anything to the contrary set forth herein, Employee does not
      hereby release Employer from any obligation to indemnify Employee for
      third-party claims to which he may be entitled in the future in accordance
      with
      Employer’s Bylaws or pursuant to any insurance policies of the Employer covering
      directors and officers of the Employer.




10.  **No
      Lawsuits** .
      Employee understands and acknowledges that Employer’s purpose for entering into
      this Agreement is to avoid any civil litigation or filing of arbitration by
      Employee. Therefore, in the event the Employee has filed or files any civil
      complaint, institutes any civil lawsuit, or initiates or continues any civil
      action whatsoever, for a claim that is being released under paragraph 9
      (excepting only an action to compel compliance by Employer with this Agreement)
      against any of the Releasees, the Employee shall pay back to Employer
      Seventy-Five percent (75%) of all monies received or paid out under paragraphs
      2
      and 3(b), and any other thing of value received under this Agreement to that
      date, with the maximum amount of interest allowed by law compounded annually,
      and to pay Releasees their costs and attorney’s fees in such action. With
      respect to the Employee’s obligations to the Releasees under paragraph 9, the
      Releasees shall also have the right of set-off against any obligation to the
      Employee whether or not under this Agreement. **The
      provisions of this paragraph 10 shall be inapplicable in any matters regarding
      the ADEA.**




11.  **Cooperation** .
      Employee agrees to cooperate fully with Employer, its legal counsel and/or
      insurance carrier in the defense of any claim, suit, action, charge, complaint
      or controversy arising out of the Employee’s employment or area of
      responsibility (including depositions, hearings and judicial proceedings, if
      necessary); provided that such cooperation does not interfere with the
      Employee’s normal work hours with a subsequent employer and the Employer
      reimburses Employee for reasonable out-of-pocket travel expenses incurred by
      Employee in fulfilling his obligations under this paragraph 11. Such cooperation
      includes, but is not limited to, meeting with Employer personnel and/or its
      attorneys in order to prepare for any such deposition, hearing or judicial
      proceeding. Employee acknowledges that Employee has advised Employer’s legal
      counsel completely and candidly of all facts that Employee is personally aware
      of that constitutes or might






5


reasonably
      constitute violations of Employer’s
      ethical standards, legal or regulatory obligations.




12.  **No
      Contract of Employment** .
      This
      Agreement does not create and is not evidence of a contract of employment
      between Employee and Employer. Employee understands, as does Employer, that
      the
      employment relationship has at all times been one of employment-at-will, with
      either party having the right to terminate the employment relationship at any
      time with or without cause. Such mutual right of termination has been in full
      force and effect throughout the entire period of Employee’s employment with
      Employer.




13.  **Reemployment.** If
      the
      Employee is rehired by the Employer or any of its affiliates prior to the
      Employee’s receipt of his/her Severance Pay, all rights to amounts payable under
      this Agreement and Release shall cease and this Agreement and Release shall
      automatically terminate and be of no force or effect.




14.  **No
      Legal Liability** .
      Employee agrees that the payments made and other consideration received pursuant
      to this Agreement are not to be construed as an admission of legal liability
      by
      Releasees or any one of them and that no person or entity shall utilize this
      Agreement or the consideration received pursuant to this Agreement as evidence
      of any admission of liability since Releasees expressly deny liability. Employer
      is entering into this Agreement solely for the purpose of effectuating a
      mutually satisfactory severance of Employee’s employment.




15.  **Confidential
      Agreement** .
      Employee agrees that the terms of this Agreement shall remain confidential
      and
      shall not be disclosed or publicized under any circumstances to any other person
      or entity (other than appropriate governmental officials, or Employee’s spouse,
      counsel and accountant) unless authorized, in writing, by Employer or as
      otherwise ordered by a court of competent jurisdiction or permitted by law.




16.  **Severability** .
      Should
      any clause of this Agreement be found to be in violation of law, or ineffective
      or barred for any reason whatsoever, the remainder of the Agreement shall
      continue in full force and effect; provided however, that if any release, waiver
      or agreement set forth or referred to in this Agreement, including, but not
      limited to, those set forth in paragraphs 8, 9 and 10, is declared to be
      invalid, illegal or unenforceable, in whole or in part, Employer shall have
      the
      right to elect to consider its obligations under this Agreement to be null
      and
      void as of the date of execution of this Agreement and, in such case, any
      payments or benefits that had been afforded under this Agreement shall be
      returned to Employer with the maximum amount of interest permitted by law,
      compounded annually, **except to the extent inconsistent with the ADEA** .




17.  **Remedies
      Cumulative** .
      The
      Employee agrees that the remedies under paragraphs 8, 10 and 16 shall not
      constitute or be construed to constitute liquidated damages and shall not in
      any
      way cancel or impair any right or remedy at law or equity which Employer may
      otherwise have.




18.  **No
      Assignment** .
      The
      rights and obligations conferred hereunder shall not be subject to assignment
      without the prior consent of both Employee and Employer.






6




19.  **Exclusive
      Agreement** .
      Employee affirms that the only consideration for the signing of this Agreement
      is the terms stated herein and that no other representations, promises or
      agreements of any kind have been made to Employee by any person or entity
      whatsoever to cause Employee to sign this Agreement. Employee and Employer
      affirm that this Agreement sets forth the entire agreement between the parties
      with respect to the subject matter contained herein and supersedes all prior
      or
      contemporaneous agreements or understandings between the parties with respect
      to
      employment and/or the subject matter contained herein. No alteration or other
      modification of this Agreement shall be effective unless made in writing and
      signed by both parties.




20.  **Acknowledgement** .
      Employee acknowledges that Employee has read this Agreement and that Employer
      has recommended and advised Employee to consult with an attorney prior to
      executing this Agreement. Employee further acknowledges that Employee has been
      given a period of forty-five (45) days within which to consider this Agreement
      before executing it, and that if Employee does so before the end of such period,
      Employee does so of Employee’s own free will and with the full knowledge that
      Employee could have taken the full period. In the event Employee desires to
      execute this Agreement prior to the end of the forty-five (45) day period,
      Employee shall also execute and provide to the Employer an endorsement as
      provided in Exhibit “A”. If Employee does not execute the Agreement on or before
      March 17, 2007, the offer by Employer to enter into this Agreement shall
      automatically be withdrawn, and this Agreement shall be deemed null and void
      without any further action by Employer.




21.  **Effective
      Date** .
      This
      Agreement will not become effective or enforceable until after seven (7) days
      after Employee executes it without revocation. Employee may revoke this
      Agreement within the seven (7) day period by sending written notice to Employer,
      Attention: Andrew J. McGill, Vice President, PMA Insurance Group, but such
      notice must be received within that seven (7) day period to be valid. If the
      Employee so revokes this Agreement, the offer of the terms contained herein
      shall be automatically withdrawn, and this Agreement shall be deemed null and
      void without any further action by Employer. If revocation is not received
      within the seven (7) day period referred to above, this Agreement will go into
      effect on the first business day immediately following the expiration of that
      seven (7) day period (“Effective Date”).




22.  **Affirmation** .
      Employee affirms that (a) Employee has carefully read the foregoing Agreement,
      (b) Employee fully understands the meaning, intent, and consequences of this
      document, (c) Employee has signed the Agreement voluntarily, knowingly and
      without any force and coercion, and (d) Employee intends to be bound by the
      promises contained in this Agreement for the consideration stated in the
      Agreement and (e) Employee agrees that the total compensation provided under
      this Agreement and Release includes compensation and consideration that is
      not
      required by the policies and procedures of Employer, its past or present parent,
      direct and indirect subsidiaries or affiliates and such compensation and
      consideration are not something to which Employee was or is indisputably
      entitled, but is solely being provided to Employee in consideration of
      Employee’s full, final and complete release of any and all rights and claims
      under this Agreement and Release and Employee’s complete and timely performance
      of all of the Employee’s obligations that are contained within this Agreement
      and Release.






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23.  **Withholding
      Taxes.** All
      applicable federal, state and local withholding taxes shall be withheld from
      the
      payments made to Employee under and in connection with this
      Agreement.




24.  **Counterparts** .
      This
      Agreement may be executed simultaneously in two or more counterparts, each
      of
      which shall be deemed an original, and it shall not be necessary in making
      proof
      of this Agreement to produce or account for more than one such
      counterpart.




25.  **Successors
      and Assigns** .
      All
      covenants and other agreements in this Agreement contained by or on behalf
      of
      the parties hereto shall bind and inure to the benefit of their respective
      successors, heirs and assigns.




26.  **Governing
      Law** .
      This
      Agreement shall be interpreted and enforced pursuant to the internal laws of
      the
      Commonwealth of Pennsylvania.




27.  **Waiver** .
      No term
      or provision of this Agreement may be changed, waived, discharged, or terminated
      orally, but only by an instrument in writing signed by all parties
      hereto.




28.  **Notices** .
      All
      notices or other communications hereunder shall be in writing and addressed
      as
      follows:





To
      Employer:





PMA
      Capital Insurance Company and


PMA
      Re
      Management Company


380
      Sentry Parkway


P.O.
      Box
      3031


Blue
      Bell, PA 19422


Attention:
      Andrew J. McGill





To
      Employee:





Richard
      DeCoux


133
      Sheldrake Drive


Paoli,
      PA
      19031





or
      to
      such other addresses or persons as the parties, from time to time, may furnish
      one another by notice given in accordance with this paragraph. All notices
      or
      other communications addressed pursuant to this paragraph 27 and sent: (i)
      via
      facsimile or personal delivery shall be effective when received; and (ii) via
      first-class mail, postage pre-paid or overnight mail shall be effective when
      properly deposited.


8


TAKE
      THIS
      AGREEMENT AND RELEASE HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS
      PROVISIONS BEFORE SIGNING IT: IT INCLUDES A


RELEASE
      OF KNOWN AND UNKNOWN CLAIMS.




**BY
      SIGNING THIS AGREEMENT AND RELEASE, YOU ACKNOWLEDGE THAT YOU HAVE READ THIS
      AGREEMENT AND RELEASE, UNDERSTAND IT AND ARE VOLUNTARILY ENTERING INTO
      IT.**




**PLEASE
      RETAIN A COPY OF THIS AGREEMENT AND RELEASE FOR YOUR
      RECORDS.**




**AGREED
      TO AND ACCEPTED BY:**




**EMPLOYEE**







/s/
      Richard De Coux


Employee’s
      Signature





Richard
      De Coux


Employee’s
      Name (Print)





February
      1, 2007


Date












**PMA
                Re MANAGEMENT COMPANY**
              
              By
                its:/s/
                William E. Hitselberger
              Officer’s
                Signature
              
              William
                E. Hitselberger
              Officer’s
                Name (Print)
              
              Sr.
                Vice President and CFO
              Officer’s
                Title
              
              1/31/2007
              Date
            **PMA
                CAPITAL INSURANCE COMPANY**
              
              By
                its:/s/
                Vincent T. Donnelly
              Officer’s
                Signature
              
              Vincent
                T. Donnelly
              Officer’s
                Name (Print)
              
              President
                and Chief Executive Officer
              Officer’s
                Title
              
              1/31/2007
              Date










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