UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-K
(MARK ONE)
/X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

             FOR THE TRANSITION PERIOD FROM __________ TO __________

                        Commission File Number 000-22761

                             PMA Capital Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Pennsylvania                                    23-2217932
    -------------------------------                      -------------------
    (State or other jurisdiction of                         (IRS Employer
      incorporation or organization)                      Identification No.)

   1735 Market Street, Suite 2800
     Philadelphia, Pennsylvania                              19103-7590
----------------------------------------                     ----------
(Address of principal executive offices)                     (Zip Code)

       Registrant's telephone number, including area code: (215) 665-5046
                                                           --------------

           Securities to be registered pursuant to Section 12(b): None

        Securities to be registered pursuant to Section 12(g) of the Act:

                 Class A Common Stock, par value $5.00 per share
                 -----------------------------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of February 29, 2000, was $230,352,954.

There were 12,425,268 shares outstanding of the registrant's Common Stock, $5
par value per share, and 9,846,499 shares outstanding of the registrant's Class
A Common Stock, $5 par value per share, as of the close of business on February
29, 2000.

DOCUMENTS INCORPORATED BY REFERENCE:

(1)  Parts I, II and IV of this Form 10-K incorporate by reference portions of
     the Annual Report to Shareholders for the year ended December 31, 1999, as
     indicated herein.
(2)  Part III of this Form 10-K incorporates by reference portions of the
     registrant's proxy statement dated March 23, 2000 for the 2000 Annual
     Meeting of Shareholders.
<PAGE>

<TABLE>
<CAPTION>
                                      INDEX
---------------------------------------------------------------------------------------------
<S>                                                                                     <C>
PART I                                                                                   Page

Item 1.   Business......................................................................   1
            Company Overview............................................................   1
            PMA Re......................................................................   3
            The PMA Insurance Group.....................................................   7
            Caliber One.................................................................  13
            Reinsurance and Retrocessional Protection...................................  14
            Loss Reserves...............................................................  15
            Investments.................................................................  20
            Competition.................................................................  21
            Regulatory Matters..........................................................  22
            Employees...................................................................  25
            Glossary of Selected Insurance Terms........................................  26
Item 2.   Properties....................................................................  30
Item 3.   Legal Proceedings.............................................................  30
Item 4.   Submission of Matters to a Vote of Security Holders...........................  30
          Executive Officers of the Registrant..........................................  30

PART II

Item 5.   Market for the Registrant's Common Equity and Related Shareholder Matters.....  31
Item 6.   Selected Financial Data.......................................................  31
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations.....................................................  31
Item 7A.  Quantitative and Qualitative Disclosure About Market Risk.....................  32
Item 8.   Financial Statements and Supplementary Data...................................  32
Item 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure...........................................  32

PART III

Item 10.  Directors and Executive Officers of the Registrant............................  32
Item 11.  Executive Compensation........................................................  32
Item 12.  Security Ownership of Certain Beneficial Owners and Management................  32
Item 13.  Certain Relationships and Related Transactions................................  32

PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K..............  33

Signatures..............................................................................  34
Index to Financial Statement Schedules.................................................. FS-1
Index to Exhibits....................................................................... E-1
</TABLE>


<PAGE>
                                     PART I

The Business Section and other parts of this Form 10-K contain forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such differences include, but are not
limited to, those discussed in the "Cautionary Statements" on page 43 of the
Company's Management's Discussion and Analysis ("MD&A") section of its 1999
Annual Report to Shareholders ("Annual Report") that has been incorporated by
reference into Part II, Item 7 of this Form 10-K.

Item 1.  Business

                                COMPANY OVERVIEW

PMA Capital Corporation (the "Company" or "PMA Capital"), headquartered in
Philadelphia, Pennsylvania, is an insurance holding company with total assets of
approximately $3.2 billion and shareholders' equity of $429.1 million at
December 31, 1999. The Company was organized under the laws of the Commonwealth
of Pennsylvania as Pennsylvania Manufacturers Corporation in 1982, and changed
its name to PMA Capital Corporation in 1998. The Company's operating
subsidiaries conduct business in the property and casualty insurance industry.

The Company has three operating segments: (i) PMA Re, which provides property
and casualty reinsurance products and services; (ii) The PMA Insurance Group,
which writes workers' compensation, integrated disability and, to a lesser
extent, other standard lines of commercial property and casualty insurance; and
(iii) Caliber One, which writes specialty insurance focusing on excess and
surplus lines. In addition, the Company's Corporate and Other segment includes
unallocated investment income and expenses, including debt service, as well as
the results of certain of the Company's real estate properties.

Financial information in the tables that follow is presented in conformity with
generally accepted accounting principles ("GAAP"), unless otherwise indicated.
Certain reclassifications have been made to prior periods' financial information
to conform to the 1999 presentation. Revenues, pre-tax operating income and
assets attributable to each of the Company's operating segments and its
Corporate and Other segment for the last three years are set forth in Note 16 to
the Company's consolidated financial statements for the year ended December 31,
1999 ("Financial Statements") included in its Annual Report.

The Company's net premiums written by operating segment were as follows:

                                           (dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                              1999 as
                                                  1999            1998            1997      % of total
                                                  ----            ----            ----      ----------
<S>                                            <C>             <C>             <C>                 <C>
PMA Re                                         $ 278,998       $ 234,010       $ 177,934           49%
The PMA Insurance Group:
      Excluding Run-off Operations               233,713         244,237         254,970           42%
      Run-off Operations                               -          (9,400)        (51,622)            -
                                          -------------------------------------------------------------
      Total                                      233,713         234,837         203,348           42%
                                          -------------------------------------------------------------
Caliber One                                       51,237           6,436               -            9%
Corporate and Other                                 (438)           (522)              -            -
                                          -------------------------------------------------------------
Total                                          $ 563,510       $ 474,761       $ 381,282          100%
                                          =============================================================
</TABLE>



                                       1
<PAGE>
Property and casualty insurance and reinsurance companies provide loss
protection to insureds in exchange for premiums. If earned premiums exceed the
sum of losses and loss adjustment expenses ("LAE"), commissions to agents or
brokers, premium taxes, other operating expenses and policyholders' dividends,
then underwriting profits are realized. When earned premiums do not exceed the
sum of these items, the result is an underwriting loss. Because time normally
elapses between the receipt of premiums and the payment of claims and certain
related expenses, the Company invests the available premiums. Underwriting
results do not reflect investment income from these funds, investment gains and
losses, results of non-insurance business or federal income taxes. These items,
when added to underwriting profits or losses, produce net income or loss. For
information concerning investment income, see pages 40 and 41 of the MD&A in the
Annual Report.

The "combined ratio" is a frequently used measure of property and casualty
underwriting performance. The combined ratio computed on a GAAP basis is equal
to losses and LAE, plus acquisition expenses, operating expenses and
policyholders' dividends, where applicable, all divided by net premiums earned.
Thus, a combined ratio of under 100% reflects an underwriting profit.

The combined ratios of the Company's operating segments were as follows:

<TABLE>
<CAPTION>
                                               1999        1998         1997
                                               ----        ----         ----
<S>                                            <C>         <C>          <C>
PMA Re                                         102.5%      103.7%       103.8%
The PMA Insurance Group:
        Excluding Run-off Operations           113.3%      116.4%       122.2%
        Including Run-off Operations           115.4%      122.6%       140.8%
Caliber One                                    109.6%          -            -
</TABLE>

(1) The results of operations of Caliber One for 1998 and 1997 are not material
to the underwriting ratios of the Company; accordingly, the ratios for Caliber
One are not presented for those years.

                                       2
<PAGE>
                                     PMA Re

                                   Background

PMA Re writes a broad range of property and casualty reinsurance products within
the broker market, with an emphasis on risk-exposed casualty excess of loss
reinsurance. PMA Re competes on the basis of its ability to offer specialized
products to its clients, its long-term relationships with brokers and insurance
companies, and its prompt and responsive service. According to data provided by
the Reinsurance Association of America (the "RAA"), as of December 31, 1999, PMA
Reinsurance Corporation was the 17th largest broker market reinsurer in the
United States in terms of statutory capital and surplus and 13th largest in
terms of net premiums written.

In the broker reinsurance market, the products (reinsurance coverages) are
distributed to the ultimate customer (ceding companies) through reinsurance
intermediaries, known as brokers. In exchange for providing such distribution
services, the brokers are paid commissions, known as brokerage, which are
typically based upon a percentage of the premiums ceded under a particular
contract. The broker reinsurance market differs from the direct reinsurance
market in that direct reinsurers maintain their own sales forces and distribute
their products directly to their ceding company clients.

                                    Products

Reinsurance is an arrangement in which an insurance company, the reinsurer,
agrees to indemnify another insurance company, the ceding company, against all
or a portion of the insurance risks underwritten by the ceding company under one
or more insurance contracts. Reinsurance provides ceding companies with several
benefits: reducing exposure on individual risks, protecting against catastrophic
losses, and stabilizing underwriting results and maintaining acceptable capital
ratios. PMA Re provides reinsurance coverage primarily under two arrangements:
treaty and facultative. Typically, in treaty reinsurance, the primary insurer or
ceding company is obligated to cede and the reinsurer is obligated to accept a
specified portion of all agreed upon types or categories of risks originally
written by the primary insurer or ceding company. Facultative reinsurance is a
form of reinsurance coverage that is placed on a risk-by-risk basis, and the
reinsurer retains the right to accept or reject each individual risk submitted
by the ceding company. Of PMA Re's total net premiums written in 1999, 99% were
treaty, and 1% was facultative.

To better serve its brokers and ceding companies, PMA Re has established four
distinct underwriting units, organized by class of business, which provide more
specialized expertise in each area. The Traditional, Specialty, and Finite Risk
and Financial Products units provide treaty reinsurance coverage. The fourth
unit, Facultative, provides reinsurance on a facultative basis.

o Traditional-Treaty: This underwriting unit writes general property and
casualty business and emphasizes risk-exposed programs where PMA Re can leverage
its actuarial and underwriting expertise. Included in the client base for the
Traditional unit are standard lines companies, some excess and surplus lines
companies, and, to a lesser extent, non-traditional sources of business. The
Traditional casualty portfolio includes umbrella, commercial automobile and
workers' compensation. In addition, there are more excess of loss contracts than
pro rata contracts.

o Specialty-Treaty: This unit's underwriters write business that falls outside
the confines of traditional property and casualty risks. These risks include
environmental impairment, directors and officers liability, and medical
malpractice, as well as all other forms of professional liability. Doctors and
lawyers constitute the two largest groups of insureds in the Specialty unit's
portfolio.

o Finite Risk and Financial Products: This unit was introduced in late 1998 as
an additional product line to provide PMA Re opportunity for growth. This
underwriting unit is charged with providing PMA Re's clients with creative
solutions to their complex financial and risk management needs. Many insurance
companies have some form of finite protection as a permanent part of their
reinsurance program. Examples of finite risk and financial risk products are
aggregate stop loss covers, spread loss mechanisms, funded catastrophe
coverages, financial quota shares and loss portfolio transfers. While those are
the general categories, virtually every contract is individually structured, and
PMA Re's approach to product design reflects the complicated nature of this line
of business. Although most of the Finite Risk and Financial Products unit's
business is related to domestic insurers, approximately 5% of the unit's
premiums were generated from international business.

                                       3
<PAGE>

o Facultative: This unit writes property and casualty reinsurance on an
individual risk basis, and on a program/semi-automatic basis. In addition to
serving the facultative brokerage community, this unit strengthens PMA Re's
reputation as a full service reinsurer. The facultative property book has grown
as this unit leverages its capacity and emphasizes program/semi-automatic
business. The facultative casualty focus is on general liability, umbrella and
commercial automobile lines. Facultative's emphasis in commercial automobile
continues to be on manufacturing, contracting and service fleets. This unit
continues to underwrite a broad range of professional liability business, with
an emphasis in directors and officers liability, and medical
malpractice/hospital professional liability.

PMA Re's gross and net premiums written by business unit and major category of
business are as follows:

                                                  (dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                   1999                          1998                          1997
                                                   ----                          ----                          ----
                                            Gross         Net             Gross         Net            Gross         Net
                                            -----         ---             -----         ---            -----         ---
Traditional - Treaty
<S>                                        <C>           <C>             <C>           <C>            <C>           <C>
   Casualty                                $ 106,756     $ 80,762        $ 115,483     $ 95,900       $ 110,723     $ 84,208
   Property                                   72,209       56,098           74,222       62,725          70,197       56,577
   Other                                       1,510        1,488            1,044        1,061             795          788
                                         ------------ ------------     ------------ ------------     ----------- ------------
Total Traditional                            180,475      138,348          190,749      159,686         181,715      141,573
                                         ------------ ------------     ------------ ------------     ----------- ------------

Specialty - Treaty
   Casualty                                   88,433       68,818           79,711       64,625          37,838       33,846
                                         ------------ ------------     ------------ ------------     ----------- ------------
Total Specialty                               88,433       68,818           79,711       64,625          37,838       33,846
                                         ------------ ------------     ------------ ------------     ----------- ------------

Finite Risk and Financial Products
   Casualty                                   49,881       49,154            7,300        6,971               -            -
   Property                                   19,854       19,486                -            -               -            -
   Other                                         254          249                -            -               -            -
                                         ------------ ------------     ------------ ------------     ----------- ------------
Total Finite Risk and Financial Products      69,989       68,889            7,300        6,971               -            -
                                         ------------ ------------     ------------ ------------     ----------- ------------

Facultative
   Casualty                                    1,590          380            3,823          956           3,339          835
   Property                                    3,120        2,563            2,753        1,772           2,429        1,680
                                         ------------ ------------     ------------ ------------     ----------- ------------
Total Facultative                              4,710        2,943            6,576        2,728           5,768        2,515
                                         ------------ ------------     ------------ ------------     ----------- ------------

Total Casualty                               246,660      199,114          206,317      168,452         151,900      118,889
Total Property                                95,183       78,147           76,975       64,497          72,626       58,257
Total Other                                    1,764        1,737            1,044        1,061             795          788
                                         ------------ ------------     ------------ ------------     ----------- ------------
Total Premiums Written                     $ 343,607    $ 278,998        $ 284,336    $ 234,010       $ 225,321    $ 177,934
                                         ============ ============     ============ ============     =========== ============

</TABLE>

In the three years ended December 31, 1999, PMA Re reported premium growth that
exceeded that of the overall reinsurance industry. During such period, PMA Re's
compound annual growth rate for net premiums written was 19%, while the
reinsurance industry's compound annual growth rate was 4% for the same period
based upon information published by the RAA. The increase in gross and net
premiums written in 1999 primarily reflects the expansion of the Finite Risk and
Financial Products unit, which was formed in late 1998. In 1999, PMA Re wrote
$122 million of new business with more than 70% of such new business generated
from existing ceding company relationships, and the balance attributable to
business written with new ceding company clients. PMA Re formed relationships
with 27 new ceding companies during 1999. In 1998 and 1997, PMA Re achieved its
premium growth through its Traditional and Specialty units, primarily reflecting
increased participation levels on ceding company clients' existing programs and
writing additional layers and programs for current ceding company clients.

PMA Re has pursued additional or new business from certain existing accounts and
new accounts as part of a targeted marketing program. PMA Re targets selected
ceding companies, primarily small- to medium-sized insurers (those with surplus
of up to $500 million), where PMA Re's level of service and experience will add
value to their operations. PMA Re then embarks on a broker visitation plan to
give PMA Re the opportunity to lead the reinsurance programs of the targeted
ceding companies.


                                       4
<PAGE>

PMA Re's efforts to increase premium writings have more than offset the effects
of highly competitive conditions in the U.S. reinsurance market and certain
situations where ceding companies retain more of their business, and therefore
require less reinsurance. PMA Re has sought to maintain its underwriting and
pricing discipline, which has prompted PMA Re to decline to participate on
business rather than write it at inadequate rates or with terms and conditions
that do not meet PMA Re's underwriting standards. As a result, PMA Re did not
renew $51 million, $47 million and $40 million of existing business during 1999,
1998 and 1997, respectively.

Casualty business has contributed significantly to PMA Re's premium growth since
1997. Casualty business has increased at a compound annual growth rate of 18% in
the three-year period ended December 31, 1999, and casualty premiums accounted
for approximately 72%, 72% and 67% of net premiums written in 1999, 1998 and
1997, respectively. PMA Re has generally focused on umbrella, commercial
automobile, medical malpractice, professional liability and other more
specialized liability coverages.

Property business accounted for approximately 28%, 28% and 33% of net premiums
written for 1999, 1998 and 1997, respectively. In the three-year period ended
December 31, 1999, property business has increased at a compound annual growth
rate of 24%. Substantially all of the growth in the property business since 1997
has been derived from the recently formed Finite Risk and Financial Products
unit.

PMA Re has generally de-emphasized property catastrophe excess of loss
coverages. As of December 31, 1999, catastrophe business accounted for 3% of net
property premiums written. The property programs written by PMA Re generally
contain per occurrence limits or are not considered to be significantly exposed
to catastrophes, either because of the locations of the insured values or the
nature of the underlying properties insured. However, as is common in property
reinsurance, PMA Re is exposed to the possibility of loss from catastrophes due
to the aggregation of losses with per occurrence limits. PMA Re actively manages
this exposure through zonal management, minimizing writings of catastrophe
business, and the purchase of retrocessional protection. As of December 31,
1999, PMA Re maintained catastrophe retrocessional protection of $48 million
excess of $2 million per occurrence. Although the Company believes that it has
adequate reinsurance to protect against the estimated probable maximum gross
loss from a catastrophe, an especially severe catastrophe or series of
catastrophes could exceed the Company's reinsurance and/or retrocessional
protection and may have a material adverse impact on the Company's financial
condition, results of operations and liquidity.

                                  Distribution

PMA Re operates primarily through the domestic broker reinsurance market in
which it has developed relationships with the major reinsurance brokers enabling
it to gain access to a wide range of ceding companies with varying reinsurance
and related service needs. PMA Re's brokers that accounted for more than 10% of
the gross premiums written in 1999 were as follows:

                          (dollar amounts in thousands)
<TABLE>
<CAPTION>
Broker                            Gross premiums written      % of total
------                            ----------------------      ----------
<S>                                   <C>                       <C>
AON Reinsurance                       $99,680                     29%
Guy Carpenter & Company                86,003                     25%
E.W. Blanch                            66,351                     19%
</TABLE>

As of December 31, 1999, PMA Re had approximately 200 unaffiliated clients, with
no individual client accounting for more than 10% of gross premiums written in
1999, except for one ceding company that accounts for 14% of gross premiums
written. Approximately 68% of PMA Re's gross premiums written in 1999 were from
small- to medium-sized insurers (those with surplus of up to $500 million).

                                       5
<PAGE>

                                  Underwriting

In reinsurance, underwriting involves the selection of risks and determining an
adequate price given expected losses and estimated volatility of such losses.
Maintaining underwriting and pricing discipline is critical to the maintenance
of acceptable operating results.

PMA Re's underwriting process has two principal aspects - underwriting the
specific program/risk submission and underwriting the ceding company.
Underwriting the specific program/risk to be reinsured involves, in addition to
pricing, a review of the type of account, the total risk and the ceding
company's policy forms. Underwriting the ceding company involves an evaluation
of the expected future performance of the ceding company through an examination
of that company's management, financial strength, claims handling and
underwriting abilities. PMA Re may conduct underwriting and claim reviews at the
offices of prospective ceding companies before entering into a major treaty, as
well as throughout the life of the reinsurance contract.

PMA Re's underwriters and actuaries work closely together to evaluate the
particular reinsurance program. Using the information provided by the broker,
the actuaries employ pricing models to estimate the ultimate exposure to the
treaty. The pricing models that are utilized employ various experience-rating
and exposure-rating techniques and are tailored in each case to the risk
exposures underlying each treaty. The underwriters then analyze the results of
the pricing models with the terms and conditions being offered to determine PMA
Re's selected price.

In underwriting excess-of-loss business, PMA Re has typically sought to write
treaties that are risk exposed within the original policy limits of the ceding
company. Management believes these layers generally lend themselves more
effectively to actuarial pricing techniques.

                              Claims Administration

PMA Re's claims department analyzes reported claims, establishes individual
claim reserves, pays claims, provides claims-related services to clients, audits
the claims activities of selected current clients and assists in the
underwriting process by evaluating the claims departments of selected
prospective clients. The claims department's evaluation of claims activity
includes reviewing loss reports received from ceding companies to confirm that
claims are covered under the terms of the relevant reinsurance contract,
establishing reserves on an individual case basis and monitoring the adequacy of
those reserves. The claims department monitors the progress and ultimate outcome
of the claims to determine that subrogation, salvage and other cost recovery
opportunities have been adequately explored. The claims department performs
these functions in coordination with the actuarial and underwriting departments.

In addition to evaluating and adjusting claims, the claims department conducts
claims audits at the offices of selected prospective ceding companies.
Satisfactory audit results are required in order for reinsurance coverage to be
written or continued by PMA Re. Also, the claims department conducts annual
claims audits for many current and former client ceding companies.

PMA Re's service initiatives in the area of claims administration, including
electronic data interchange, have improved the timeliness of claims remittances
and increased processing efficiency. Electronic data interchange involves the
electronic transmission of data associated with transactions between PMA Re and
the client.


                                       6
<PAGE>
                             THE PMA INSURANCE GROUP

                                   Background

The PMA Insurance Group provides workers' compensation and integrated disability
insurance coverages and related services in its ten-state marketing territory
concentrated in the Mid-Atlantic and Southern regions of the United States. In
addition, The PMA Insurance Group provides other commercial property and
casualty insurance coverages, including commercial general liability, commercial
automobile and commercial multi-peril, and related services. The domestic
insurance subsidiaries through which The PMA Insurance Group writes its
insurance products and who share results through an intercompany pooling
agreement are referred to herein as the "Pooled Companies."

The PMA Insurance Group emphasizes its traditional core business, workers'
compensation. The Company believes that it can attract additional business based
upon its expertise in workers' compensation and integrated disability, and its
reputation as a high quality service provider to middle market and risk
management clients. In addition, The PMA Insurance Group has aligned itself with
network health care providers to offer medical cost containment services to its
insureds. The PMA Insurance Group is one of the leading providers of integrated
disability with $23 million in combined workers' compensation and integrated
disability premium in 1999, and 88 accounts as of December 31, 1999. The PMA
Insurance Group has also enhanced its ability to handle multi-state clients
based in its operating territory through its initiative to license several of
its insurance companies in 50 states to write workers' compensation, integrated
disability and other commercial lines. As of February 29, 2000, The PMA
Insurance Group was operational in 39 states for workers' compensation, general
liability and commercial automobile. The PMA Insurance Group intends to continue
writing other lines of property and casualty insurance, but generally only if
such writings are supported by its core workers' compensation business.

                                    Products

The PMA Insurance Group's premiums written were as follows:

                                   (dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                      1999                1998                1997
                                                      ----                ----                ----
<S>                                                  <C>                 <C>                 <C>
Gross premiums written:
Workers' Compensation                                $208,159            $198,099            $201,104
Commercial Multi-Peril                                 38,483              42,668              61,141
Commercial Automobile                                  33,372              36,568              43,703
Other                                                  15,427              16,760              20,053
Run-off Operations                                          -              (9,400)            (51,622)
                                                  ------------        ------------        ------------
Total                                                $295,441            $284,695            $274,379
                                                  ============        ============        ============

Net premiums written:
Workers' Compensation                                $179,096            $187,033            $175,301
Commercial Multi-Peril                                 26,322              28,043              41,713
Commercial Automobile                                  21,610              23,288              28,938
Other                                                   6,685               5,873               9,018
Run-off Operations                                          -              (9,400)            (51,622)
                                                  ------------        ------------        ------------
Total                                                $233,713            $234,837            $203,348
                                                  ============        ============        ============
</TABLE>

Workers' Compensation Insurance

All states require employers to provide workers' compensation benefits to their
employees for injuries and occupational diseases arising out of employment,
regardless of whether such injuries result from the employer's or the employee's
negligence. Employers may insure their workers' compensation obligations or,
subject to regulatory approval, self-insure such liabilities. State workers'
compensation statutes require that a policy cover three types of benefits:
medical expenses, disability (indemnity) benefits and death benefits. The
amounts of disability and death

                                       7
<PAGE>

benefits payable for various types of claims are set and limited by statute, but
no maximum dollar limitation exists for medical benefits. Workers' compensation
benefits vary among states, and insurance rates are subject to differing forms
of state regulation.

Statutory direct workers' compensation business written by jurisdiction was as
follows:

                          (dollar amounts in thousands)

<TABLE>
<CAPTION>
                                1999             1998             1997
                                ----             ----             ----
<S>                          <C>               <C>              <C>
Pennsylvania                 $ 108,692         $ 85,923         $ 91,126
New Jersey                      29,177           29,098           26,327
Virginia                        17,382           19,958           19,552
New York                        15,185            7,796            3,143
Maryland                        11,787           16,108           16,538
North Carolina                  10,711            8,988            9,501
Delaware                         7,501            8,372            7,041
Georgia                          4,174              353                -
Other                           10,962           10,317            8,327
                          -------------    -------------    -------------
Total                        $ 215,571        $ 186,913        $ 181,555
                          =============    =============    =============
</TABLE>

Based upon direct written premium information published by A.M. Best for the
most recently available year (1998), The PMA Insurance Group is the 2nd largest
writer of workers' compensation insurance in Pennsylvania and ranks among the 12
largest writers of workers' compensation insurance in Delaware, Maryland,
Virginia, New Jersey and the District of Columbia. The PMA Insurance Group has
focused on these jurisdictions based upon its knowledge of their workers'
compensation systems and The PMA Insurance Group's assessment of each state's
respective business, economic and regulatory climates. Rate adequacy, regulatory
climate, economic conditions and other factors in each state are closely
monitored and taken into consideration in the underwriting process. The PMA
Insurance Group intends to employ similar analyses in determining whether and to
what extent The PMA Insurance Group will offer its products in additional
jurisdictions.

The PMA Insurance Group seeks to expand and retain more of its premium base in
territories that meet The PMA Insurance Group's underwriting and actuarial
criteria. Regulatory reforms in Pennsylvania have made workers' compensation
business more attractive from an underwriting perspective than it had been in
the early 1990's. To date, these reforms have had a favorable impact on medical
loss costs and indemnity loss costs in Pennsylvania. Accordingly, The PMA
Insurance Group has expanded its writings of workers' compensation in
Pennsylvania.

The workers' compensation systems in certain other states in which The PMA
Insurance Group does business (specifically New Jersey, North Carolina and
Virginia) have also improved in recent years. As a result, The PMA Insurance
Group is attempting to recapture a portion of the workers' compensation market
share in those states where it has relinquished market share since the early
1990's. Further, in 1999, The PMA Insurance Group achieved profitable business
growth in its most recent expansion states, New York and Georgia. The PMA
Insurance Group continues to evaluate expansion into other states.

The PMA Insurance Group has continued to balance its workers' compensation
portfolio by increasing writings in lower hazard classes of business and
reducing writings in higher hazard classes of business. For example, lower
hazard classes of business such as health care, educational institutions and
retail represented 33%, 26% and 21% of total direct workers' compensation
premiums written in 1999, 1998 and 1997, respectively, compared to higher hazard
classes of business such as construction, which represented 15%, 21% and 26% of
total direct workers' compensation premiums written in 1999, 1998 and 1997,
respectively.

The PMA Insurance Group believes that conditions in the workers' compensation
market have been improving in the last several years with respect to the ability
to manage and control loss costs, although pricing for workers' compensation
products continues to be competitive.

Workers' compensation insurers doing business in certain states are required to
provide insurance for risks that are

                                        8
<PAGE>

not otherwise written on a voluntary basis by the private market ("residual
market business"). This system exists in all of the states in which The PMA
Insurance Group does business, except Pennsylvania and Maryland. In these two
states, separate governmental entities write all of the workers' compensation
residual market business. In 1999, The PMA Insurance Group wrote $2.6 million of
residual market business, which constituted approximately 1.2% of its direct
workers' compensation premiums written. Based upon data for policy year 1998
reported by the National Council on Compensation Insurance, the percentage of
residual market business for the industry as a whole, in all states, was 5.5% of
direct workers' compensation premiums written.

The PMA Insurance Group offers a variety of workers' compensation products to
its customers. Certain of these products are based on manual rates filed and
approved by state insurance departments ("rate-sensitive products"), while
others are priced to a certain extent on the basis of the insured's own loss
experience ("loss-sensitive products"). In the last five years, The PMA
Insurance Group has also developed and sold alternative market products, such as
large deductible products and other programs and services to customers who agree
to assume even greater exposure to loss than under more traditional
loss-sensitive products. The PMA Insurance Group decides which type of product
to offer a customer based upon the customer's needs and an underwriting review.

The PMA Insurance Group's voluntary workers' compensation direct premiums
written by product type were as follows:

<TABLE>
<CAPTION>
                                         1999             1998            1997
                                         ----             ----            ----
<S>                                       <C>              <C>             <C>
Rate-sensitive products                   59%              63%             62%
Loss-sensitive products                   34%              28%             27%
Alternative market products                7%               9%             11%
                                 -------------    -------------   -------------
Total                                    100%             100%            100%
                                 =============    =============   =============
</TABLE>

o Rate-sensitive products include fixed-cost policies and dividend paying
policies. The premium charged on a fixed-cost policy is based upon the manual
rates filed with and approved by the state insurance department and does not
increase or decrease based upon the losses incurred during the policy period.
Under policies that are subject to dividend plans, the customer may receive a
dividend based upon loss experience during the policy period. With the enactment
of regulatory reform in several states in which The PMA Insurance Group does
business, The PMA Insurance Group believes that it is better able to evaluate
the expected losses on this type of business.

o The PMA Insurance Group's loss-sensitive products adjust the amount of the
insured's premiums after the policy period expires based upon the insured's
actual losses incurred during the policy period. These loss-sensitive products
are generally subject to less price regulation than rate-sensitive products and
reduce, but do not eliminate, risk to the insurer. Under these types of
policies, claims professionals and actuaries periodically evaluate the reserves
on losses after the policy period expires to determine whether additional
premiums or refunds are owed under the policy. These policies are typically
subject to adjustment for an average of five years after policy expiration. The
PMA Insurance Group generally restricts loss-sensitive products to accounts
developing minimum annual premiums in excess of $100,000.

o The PMA Insurance Group offers a variety of alternative market products for
larger accounts, including large deductible policies and off-shore captive
programs. Typically, The PMA Insurance Group receives a lower up-front premium
for these types of alternative market product plans. However, under this type of
business, the insured retains a greater share of the underwriting risk than
under rate-sensitive or loss-sensitive products, which reduces the potential for
unfavorable claim activity on the accounts and encourages loss control on the
part of the insured. For example, under a large deductible policy, the customer
is responsible for paying its own losses up to the amount of the deductible for
each occurrence. The deductibles under these policies generally range from
$250,000 to $1.0 million. In addition to these products, The PMA Insurance Group
offers its clients certain workers' compensation services such as claims, risk
management and other services. See "PMA Management Corp." below for an
additional discussion of such products.

The PMA Insurance Group has developed a product for group integrated
occupational and non-occupational disability coverages, named PMA One(R), which
it began marketing in 1998. PMA One leverages one of The PMA Insurance Group's
most important core competencies: managing employee disabilities. PMA One offers
employers the benefits of coordinated workers' compensation and disability
administration, reduced costs, faster return to work and heightened employee
productivity. In 1999, The PMA Insurance Group wrote 41 new PMA One clients,

                                        9
<PAGE>

bringing the total of PMA One accounts to 88, and generated $23 million of
combined workers' compensation and integrated disability written premiums. PMA
One clients include health care systems, educational institutions, manufacturers
and financial institutions.

Through The PMA Insurance Group's workers' compensation product offerings, the
Company offers a comprehensive array of managed care services to control loss
costs. These include:

o Disability Management Coordinators, who are all registered nurses, employing
an early intervention model to proactively manage medical treatment and length
of disability in concert with the claims professional and employer. There are
also case management nurses who manage more serious claims via on-site visits
with injured workers and medical providers.

o Access to First Health Corp's workers' compensation preferred provider
network. The First Health(R) Network includes doctors, hospitals, physical
therapists, outpatient clinics and imaging centers. The PMA Insurance Group's
customers that utilize the network generally recognize lower costs than those
that do not utilize the network.

o Utilization of an automated medical bill review system to detect duplicate
billings, unrelated charges and coding discrepancies. Complex bills are
forwarded to The PMA Insurance Group's cost containment unit, which is staffed
by registered nurses and other medical professionals, to resolve questions of
causal relationship and overutilization.

o Use of Paradigm Corporation for the medical management of certain catastrophic
injuries. Paradigm adds a team of catastrophic case management experts to assist
in achieving enhanced clinical and financial outcomes on these catastrophic
injuries.

PMA Management Corp.

PMA Management Corp. offers claims, risk management and related services
primarily to self-insureds on an unbundled basis. In addition, PMA Management
Corp. offers "rent-a-captive" products for certain insureds and associations.
The purpose of a rent-a-captive program is to offer a customer an alternative
method of managing its loss exposures by obtaining many of the benefits of a
captive insurer without establishing and capitalizing its own captive; in
effect, the insured is "renting" a captive facility that the Company has already
established.

Under this arrangement, the client purchases an insurance policy from the Pooled
Companies and chooses a participation level. The Pooled Companies then cede this
portion of the premium and loss exposures to a Bermuda or Cayman based
subsidiary of the Company. The client participates in the loss and investment
experience of the portion ceded to the Bermuda or Cayman based subsidiary
through a dividend mechanism. The client is responsible for any loss that may
arise within its participation level, and such potential obligation is typically
secured through a letter of credit or similar arrangement. The Company's
principal sources of income from its rent-a-captive program are the premium
income on the risk retained by the Pooled Companies and captive management fees
earned by PMA Management Corp.

Commercial Lines

The PMA Insurance Group writes property and liability coverages for larger and
middle market accounts that satisfy its underwriting standards. See
"Underwriting" below. These coverages feature commercial multi-peril, general
liability and umbrella, and commercial automobile business. The PMA Insurance
Group offers these products, but generally only if they complement the core
workers' compensation business. In the present market, prices for commercial
coverages have been particularly competitive. As a result, The PMA Insurance
Group has been selectively non-renewing accounts that do not meet its
underwriting standards.


                                       10
<PAGE>
                                  Distribution

The PMA Insurance Group distributes its products through multiple channels,
including national, regional and local brokers and agents, as well as direct
sales representatives.

The PMA Insurance Group employs 14 direct sales representatives and uses
approximately 250 independent brokers and agents. The direct sales
representatives are generally responsible for certain business located in
Pennsylvania and Delaware. For the year ended December 31, 1999, these employees
produced approximately $39.1 million in direct premiums written, constituting
13% of The PMA Insurance Group's direct written premiums.

The brokers and agents write business throughout the marketing territory. The
current distribution network generally consists of large regional agents and
brokers, local agents and national brokers that specialize in larger to middle
market accounts that require the variety of workers' compensation, commercial
lines and alternative market products offered by The PMA Insurance Group. In
1999, brokers and agents accounted for 87% of The PMA Insurance Group's direct
written premiums. The top ten brokers and agents accounted for 26% of The PMA
Insurance Group's direct written premiums, the largest of which accounted for
approximately 7.5% of its direct written premiums. The PMA Insurance Group's
underwriters review all business from brokers and agents before it is accepted.
The PMA Insurance Group monitors several statistics with respect to its brokers
and agents, including a complete profile of the broker/agent, the number of
years the broker/agent has been associated with The PMA Insurance Group, the
percentage of the broker/agent's business that is underwritten by The PMA
Insurance Group, the ranking of The PMA Insurance Group within the
broker/agent's business and the profitability of the broker/agent's business.

The field organization currently consists of 16 branch and satellite offices
throughout the ten-state marketing territory. These offices deliver a full range
of services directly to customers located in their service territory, and
smaller satellite offices primarily offer underwriting and claim adjustment
services.

                                  Underwriting

The PMA Insurance Group's underwriters, in consultation with actuaries,
determine the general type of business to be written using a number of criteria,
including past performance, relative exposure to hazard, premium size, type of
business and other indicators of potential loss. Specific types of business are
referred to underwriting specialists and actuaries for individual pricing. The
underwriting team also establishes classes of business that The PMA Insurance
Group generally will not write, such as certain property exposures, certain
hazardous products and activities, and certain environmental coverages.
Underwriters and risk-control professionals in the field report functionally to
the Chief Underwriting Officer and locally to branch vice presidents that are
accountable for territorial operating results. Underwriters also work with the
field marketing force to identify business that meets prescribed underwriting
standards and to develop specific strategies to write the desired business. In
performing this assessment, the field office professionals also consult with
actuaries who have been assigned to the specific field office regarding loss
trends and pricing and utilize actuarial loss rating models to assess the
projected underwriting results of accounts.

The PMA Insurance Group also employs credit analysts. These employees review the
financial strength and stability of customers whose business is written on
loss-sensitive and alternative market products and specify the type and amount
of collateral that customers must provide under these arrangements.

                              Claims Administration

Claims services are delivered to customers primarily through employees in the
field offices. The PMA Insurance Group maintains a centralized call center for
loss reporting and has automated and centralized the processing of claims
payments, which allows the claims adjusters to substantially reduce the time
that they spend with clerical and repetitive functions. The PMA Insurance Group
also employs in-house attorneys who represent customers in workers' compensation
cases and other insurance matters. The PMA Insurance Group has a separate,
anti-fraud unit that investigates suspected false claims and other
irregularities. Certain specialized matters, such as asbestos and environmental
claims, are referred to a special claims unit in the home office.


                                       11
<PAGE>



                               Run-off Operations

As a part of The PMA Insurance Group's 1996 restructuring plan, the Run-off
Operations were established principally to manage the capital supporting
workers' compensation loss reserves for accident years 1992 and prior. The
reserves primarily relate to the period of time from 1987 to 1991 when The PMA
Insurance Group wrote a much higher volume of business and experienced poor
underwriting results. The reserves are mainly indemnity related and are
relatively mature. At December 31, 1999, the Run-off Operations had $79.0
million of total assets and $70.8 million in total reserves. See page 35 of the
MD&A and Notes 16 and 18 to the Financial Statements in the Annual Report.














                                       12
<PAGE>
                                   CALIBER ONE

                                   Background

In January 1998, the Company's specialty insurance unit, Caliber One, commenced
writing business. Caliber One's gross and net premiums written for 1999 were
$93.4 million and $51.2 million, respectively. Caliber One writes business
through surplus lines brokers and managing general agents on a national basis.
Caliber One Indemnity Company, Caliber One's statutory insurance affiliate, is a
licensed carrier in Delaware, its state of domicile, and is presently eligible
as an excess and surplus lines carrier in 41 states, the District of Columbia
and Puerto Rico, with applications pending in two other states.


                     Products, Distribution and Underwriting

Caliber One currently focuses on excess and surplus lines of insurance for
difficult risks that are typically declined by the standard market. Caliber One
offers liability coverages for low frequency/high severity classes, including
pharmaceuticals, chemicals, auto parts, machinery manufacturers, toy makers,
medical product manufacturers and other difficult-to-insure product liability
risks, as well as property coverages for risks declined by admitted insurers. In
addition, Caliber One has written environmental impairment liability coverages,
clinical trials coverage for emerging biotechnology products, intellectual
property rights liability coverages, intermediate and skilled long-term care
coverages. Caliber One's policy forms contain various endorsements and
exclusions, and in some cases, include defense costs within the policy limits
rather than offering such coverage on an unlimited basis. Caliber One also
evaluates the diversity of its product offerings in an effort to obtain a
balance in coverages being offered.

For 1999, casualty business represented $68.9 million, or 74%, of Caliber One's
gross premiums written, while property business represented $24.5 million, or
26% of gross premiums written. For 1998, the mix of business on a percentage
basis was the same as that for 1999, with $8.7 million of gross premiums written
represented by casualty business and $3.1 million by property business. For
1999, casualty business represented $48.2 million, or 94%, of Caliber One's net
premiums written, while property business represented $3.0 million, or 6% of net
premiums written. For 1998, casualty business represented $5.9 million, or 92%,
of net premiums written and property business represented $0.5 million, or 8%,
of net premiums written.

Caliber One currently operates through three internal underwriting units based
on classes of business and distribution channels: casualty brokerage, property
brokerage and programs. Gross premiums written by the casualty brokerage unit
represented $57.1 million, or 61%, of total gross premiums written in 1999,
compared to $8.6 million, or 73%, of gross premiums written in 1998. Gross
premiums written by the property brokerage unit represented $16.7 million, or
18% of total gross premiums written in 1999 compared to $2.5 million, or 21%, of
gross premiums written in 1998. The programs unit represented $19.6 million, or
21%, of gross premiums written in 1999 compared to $0.7 million, or 6%, for the
programs unit in 1998.

The underwriting of excess and surplus lines involves a significant amount of
judgment. The underwriting process involves reviewing the claims experience of
an account, if any, and the claims experience of the particular class or similar
classes. The underwriters respond to any special risks of an account through the
use of policy features that can be changed in light of the circumstances, such
as different levels of retentions, exclusions and endorsements.

Caliber One distributes its excess and surplus lines products on a nationwide
basis through approximately 45 appointed surplus lines brokers, and, to a lesser
extent, through managing general agents for program business. For most product
offerings, Caliber One does not grant underwriting or binding authority to its
brokers. For its program business, Caliber One currently operates through
approximately six managing general agents. Managing general agents are selected
based on their specialized areas of expertise and typically have quoting,
underwriting and binding authority within pre-approved guidelines. Examples of
business written by Caliber One through managing general agents include mobile
homeowners, hazardous materials hauling, medical malpractice, excess
habitational, crane rental liability and loggers equipment.

                                       13
<PAGE>
                  Acquisition of Caliber One Indemnity Company

PMA Reinsurance Corporation acquired 100% of the outstanding common stock of
Caliber One Indemnity Company, domiciled in Delaware and formerly known as
Lincoln Insurance Company, for approximately $16.0 million in late 1997 and made
a capital contribution of approximately $11.3 million to Caliber One Indemnity
Company. All of Caliber One Indemnity Company's acquired loss reserves were
reinsured with an affiliate of its former parent for adverse development and
uncollectible reinsurance (the "Reserve Guarantee") in the amount of the
recorded reserves plus $68.5 million. Management believes that the Reserve
Guarantee will be adequate to cover any future adverse reserve development or
uncollectible reinsurance on the acquired reserves. PMA Reinsurance Corporation
intends to maintain Caliber One Indemnity Company's surplus at not less than
$25.0 million.

                    REINSURANCE AND RETROCESSIONAL PROTECTION

The Company follows the customary insurance practice of reinsuring with other
insurance companies a portion of the risks under the policies written by its
insurance subsidiaries. This reinsurance is maintained to protect the insurance
subsidiaries against the severity of losses on individual claims and unusually
serious occurrences in which a number of claims produce an aggregate
extraordinary loss. Although reinsurance does not discharge the insurance
subsidiaries from their primary liabilities to their policyholders for losses
insured under the insurance policies, it does make the assuming reinsurer liable
to the insurance subsidiaries for the reinsured portion of the risk.

The ceded reinsurance agreements of the Company's insurance subsidiaries
generally may be terminated at their annual anniversary by either party upon 30
to 90 days notice. In general, the reinsurance agreements are of the treaty
variety, which cover all underwritten risks of the types specified in the
treaties.

At December 31, 1999, the Company's reinsurance and retrocessional protections
were as follows:

<TABLE>
<CAPTION>
                                               Retention              Limits(1)
                                               ---------              ---------
PMA Re
   Per Occurrence:
<S>                                          <C>                  <C>
               Casualty lines                $  2.8 million         $  17.5 million
               Workers' compensation         $  2.0 million         $  98.0 million
               Property lines                $  2.0 million         $  48.0 million
   Per Risk:
               Property lines                $      750,000         $   4.3 million
               Casualty lines                $  1.5 million         $   6.0 million

The PMA Insurance Group
   Per Occurrence:
               Workers' compensation         $      150,000         $ 103.5 million
   Per Risk:
               Property lines                $      500,000         $  19.5 million(2)
               Auto physical damage          $      500,000         $   2.0 million
               Other casualty lines          $      175,000         $   4.8 million(3)

Caliber One
   Per Occurrence and Per Risk:
               Property lines                $      500,000         $   4.5 million
               Casualty lines                $      500,000         $   5.5 million

</TABLE>

(1)  Represents the amount of loss protection above the Company's level of loss
     retention.
(2)  This coverage also provides protection of $48.5 million per occurrence over
     the combined net retention of $500,000.
(3)  This coverage also provides protection of $49.8 million per occurrence over
     the combined net retention of $175,000.

                                       14
<PAGE>
As of December 31, 1999, the maximum gross limits that PMA Re will write are
$7.5 million for casualty covers, $5.0 million for property covers and $1.0
million for property catastrophe covers.

The Company actively manages its exposure to catastrophes through its
underwriting process, where the Company generally monitors the accumulation of
insurable values in catastrophe prone regions. Also, in writing property
reinsurance coverages, PMA Re typically requires per occurrence loss limitations
for contracts that could have catastrophe exposure. Through per risk
reinsurance, the Company also manages its net retention in each exposure. As a
result, the Company's loss and LAE ratios have not been significantly impacted
by catastrophes in the past three years. Although the Company believes it has
adequate reinsurance to protect against the estimated probable maximum gross
loss from a catastrophe, an especially severe catastrophe or series of
catastrophes could exceed the Company's reinsurance and/or retrocessional
protection and may have a material adverse impact on the Company's financial
condition, results of operations and liquidity.

The collectibility of reinsurance is largely a function of the solvency of
reinsurers. At December 31, 1999, the Company had reinsurance recoverables due
from the following unaffiliated reinsurers in excess of 5% of shareholders'
equity:

<TABLE>
<CAPTION>
                          (dollar amounts in thousands)

                                                    Reinsurance       A.M. Best
Reinsurer                                           Recoverables      Rating (1)
---------                                         ----------------    ----------
<S>                                                  <C>              <C>
London Life & Casualty Reinsurance Corp.             $ 240,753             A
United States Fidelity and Guaranty Company             98,940             A
American Re-Insurance Company                           29,599             A++
Essex Insurance Company                                 26,554             A
SCOR Reinsurance Company                                22,724             A+
Houston Casualty Company                                22,574             A+
</TABLE>

(1) Ratings are as of March 21, 2000, at which time the rating for Essex
Insurance Company was under review. A.M. Best ratings are as follows: A++,
Superior, 1st of 15; A+, Superior, 2nd of 15; and A, Excellent, 3rd of 15.

The Company performs extensive credit reviews on its reinsurers, focusing on,
among other things, financial capacity, stability, trends and commitment to the
reinsurance business. Prospective and existing reinsurers failing to meet the
Company's standards are excluded from the Company's reinsurance programs. In
addition, the Company requires letters of credit or other acceptable collateral
to support balances due from reinsurers not authorized to transact business in
the applicable jurisdictions. As of December 31, 1999, approximately 98% of the
Company's reinsurance receivables related to unpaid reported claims and incurred
but not reported claims, and the remaining 2% related to paid losses. The timing
and collectibility of reinsurance receivables have not had, and are not expected
to have, a material adverse effect on the Company's liquidity. See pages 36-38
of the MD&A and Note 5 to the Financial Statements included in the Annual Report
for additional information on reinsurance.

                                  LOSS RESERVES

Insurers establish reserves representing estimates of future amounts needed to
pay claims with respect to insured events that have occurred, including events
that have not been reported to the insurer. Reserves are also established for
LAE representing the estimated expenses of settling claims, including legal and
other fees, and general expenses of administering the claims adjustment process.

After a claim is reported, claims personnel establish a "case reserve" for the
estimated amount of the ultimate payment. The estimate reflects the informed
judgment of management based on reserving practices and management's experience
and knowledge regarding the nature and value of the specific type of claim.
Claims personnel review and update their estimates as additional information
becomes available and claims proceed towards resolution. In addition, "bulk
reserves" are also established on an aggregate basis (i) to provide for losses
incurred but not yet reported to the insurer; (ii) to provide for the estimated
expenses of settling claims, including legal and other fees and general expenses
of administering the claims adjustment process; and (iii) to adjust for the

                                       15
<PAGE>
fact that, in the aggregate, case reserves may not accurately estimate the
ultimate liability for reported claims. Reserves are estimated using various
generally accepted actuarial techniques.

As part of the reserving process, historical data is reviewed and consideration
is given to the anticipated impact of various factors such as legal
developments, changes in social attitudes and economic conditions, including the
effects of inflation. This process relies on the basic assumption that past
experience, adjusted for the effect of current developments and likely trends,
is an appropriate basis for predicting future events. The reserving process
provides implicit recognition of the impact of inflation and other factors
affecting claims payments by taking into account changes in historic payment
patterns and perceived probable trends. There is generally no precise method,
however, for subsequently evaluating the adequacy of the consideration given to
inflation or to any other specific factor, since the eventual deficiency or
redundancy of reserves is affected by many factors, some of which are
interdependent.

In many cases significant periods of time, ranging up to several years or more,
may elapse between the occurrence of an insured loss, the reporting of the loss
to the insurer and the insurer's payment of that loss. Liabilities for
reinsurers generally become known more slowly than for primary insurers and are
generally subject to more unforeseen development.

Estimating the Company's ultimate claims liability is necessarily a complex and
judgmental process as the amounts are based on management's informed estimates
and judgments using data currently available. As additional experience and data
become available regarding claims payment and reporting patterns, legislative
developments, regulatory trends on benefit levels for both medical and indemnity
payments, and economic conditions, the estimates are revised accordingly. If the
Company's ultimate net losses prove to be substantially greater than the amounts
recorded in the financial statements, the related adjustments could have a
material adverse impact on the Company's financial condition and results of
operations.

The table on the next page presents the subsequent development of the estimated
year-end property and casualty reserves, net of reinsurance ("net reserves"),
for the ten years prior to 1999. The first section of the table shows the
estimated net reserves that were recorded at the end of each respective year for
all current and prior year unpaid losses and LAE. The second section shows the
cumulative amounts of such previously recorded net reserves paid in succeeding
years. The third section shows the re-estimates of the net reserves made in each
succeeding year.

The cumulative deficiency (redundancy) as shown in the table represents the
aggregate change in the reserve estimates from the original balance sheet dates
through December 31, 1999; an increase in a loss estimate that related to a
prior year occurrence generates a deficiency in each intervening year. For
example, a deficiency first recognized in 1997 relating to losses incurred in
1990 would be included in the cumulative deficiency amount for each of the years
1990 through 1996. However, the deficiency would be reflected in operating
results in 1997 only.

Conditions and trends that have affected the reserve development reflected in
the table may change, and care should be exercised in extrapolating future
reserve redundancies or deficiencies from such development.

                                       16
<PAGE>
<TABLE>
<CAPTION>
                                     Consolidated Loss and Loss Adjustment Expense Development
                                                           December 31,
                                                   (dollar amounts in millions)
<S>                  <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>

                        1989     1990      1991      1992      1993      1994      1995      1996     1997       1998      1999

Initial estimated
liability for
unpaid losses
and LAE, net of
reinsurance          $1,632.2  $1,734.6  $1,824.3  $1,941.0  $1,932.0  $1,855.9  $1,808.5  $1,834.5  $1,670.9  $1,347.2  $1,284.4
                     ========  ========  ========  ========  ========  ========  ========  ========  ========  ========  ========

Amount of reserve
paid, net of
reinsurance,
through:
- one year later      $ 444.6   $ 470.8   $ 490.5   $ 442.4   $ 407.8    $ 398.9  $ 437.6   $ 398.8   $ 360.7   $ 351.5        --
- two years later       771.5     842.0     848.8     779.1     746.1      763.7    780.0     669.6     646.0
- three years later   1,042.6   1,133.8   1,127.0   1,066.8   1,055.9    1,072.9    999.0     894.8
- four years later    1,258.0   1,353.1   1,364.9   1,329.2   1,330.6    1,252.2  1,183.5
- five years later    1,421.4   1,539.4   1,585.4   1,573.8   1,472.7    1,405.9
- six years later     1,553.1   1,715.1   1,788.9   1,688.7   1,605.4
- seven years later   1,684.6   1,882.1   1,882.2   1,805.4
- eight years later   1,817.3   1,962.6   1,986.5
- nine years later    1,887.4   2,048.9
- ten years later     1,956.4


Re-estimated
liability,
net of reinsurance,
as of:
- one year later     $1,696.0  $1,795.3  $1,966.8  $1,998.1  $1,932.3   $1,907.4 $1,964.6  $1,748.5  $1,624.3  $1,314.7
- two years later     1,742.5   1,949.9   2,067.5   2,006.5   1,982.5    2,073.4  1,866.8   1,700.5   1,557.6
- three years later   1,876.0   2,034.1   2,081.5   2,060.6   2,163.9    1,986.7  1,819.2   1,611.1
- four years later    1,938.2   2,040.8   2,134.8   2,258.2   2,078.3    1,942.0  1,742.1
- five years later    1,935.1   2,123.0   2,302.0   2,170.3   2,030.5    1,880.3
- six years later     1,985.3   2,273.3   2,209.3   2,126.6   1,973.2
- seven years later   2,098.2   2,205.4   2,169.5   2,079.9
- eight years later   2,052.2   2,168.4   2,133.7
- nine years later    2,020.1   2,138.6
- ten years later     1,999.8


Indicated deficiency
(redundancy)          $ 367.6   $ 404.0   $ 309.4   $ 138.9    $ 41.2     $ 24.4   $(66.4)  $(223.4)  $(113.3)  $ (32.5)
                     ========  ========  ========  ========  ========  ========  ========  ========  ========  ========


Net liability                                                $1,932.0   $1,855.9 $1,808.5  $1,834.5  $1,670.9  $1,347.2  $1,284.4

Reinsurance recoverables                                        218.7      247.9    261.5     256.6     332.3     593.7     648.2
                                                             --------   -------- --------  --------  --------  --------  --------

Gross liability                                              $2,150.7   $2,103.8 $2,070.0  $2,091.1  $2,003.2  $1,940.9  $1,932.6
                                                             ========   ======== ========  ========  ========  ========  ========


Re-estimated net liability                                   $1,973.2   $1,880.3 $1,742.1  $1,611.1  $1,557.6  $1,314.7

Re-estimated reinsurance recoverables                           197.6      241.9    274.5     271.3     353.0     606.6
                                                             --------   -------- --------  --------  --------  --------

Re-estimated gross liability                                 $2,170.8   $2,122.2 $2,016.6  $1,882.4  $1,910.6  $1,921.3
                                                             ========   ======== ========  ========  ========  ========
</TABLE>


                                       17
<PAGE>
Unpaid losses and LAE on a GAAP basis were $1,932.6 million and $1,940.1 million
at December 31, 1999 and 1998, respectively. Unpaid losses and LAE on a
statutory basis were $1,282.0 million and $1,347.2 million at December 31, 1999
and 1998, respectively. Substantially all of the difference between GAAP and
statutory loss reserves is due to reinsurance recoverables on unpaid losses and
LAE, which are recorded as assets for GAAP but netted against statutory loss
reserves.

 At December 31, 1999 and 1998, the Company's GAAP loss reserves were stated net
of discount of $180.4 million and $194.6 million, respectively, primarily
related to workers' compensation business. Pre-tax income is negatively impacted
by accretion of discount on prior year reserves and favorably impacted by
setting up discount for current year reserves. The net of these amounts is
referred to as net discount accretion. Net discount accretion decreased pre-tax
income by $2.7 million and $14.5 million in 1999 and 1998, respectively.

The components of the Company's (favorable) unfavorable development of reserves
for losses and LAE for prior accident years, excluding accretion of discount,
are as follows:

                                    (dollar amounts in millions)

<TABLE>
<CAPTION>
                                          1999             1998              1997
                                          ----             ----              ----
<S>                                      <C>              <C>               <C>
PMA Re                                   $ (23.5)         $ (31.5)          $ (32.1)
The PMA Insurance Group:
        Workers' compensation               (7.1)           (17.3)            (44.1)
        Other                               (1.9)             2.3              (9.8)
                                     ------------     ------------     -------------
Total PMA Insurance Group                   (9.0)           (15.0)            (53.9)
                                     ------------     ------------     -------------
Total                                    $ (32.5)         $ (46.5)          $ (86.0)
                                     ============     ============     =============
</TABLE>

During 1999, 1998 and 1997, PMA Re recorded favorable reserve development on
prior accident years ("prior year development") of $23.5 million, $31.5 million
and $32.1 million, respectively. The favorable reserve development reflects
development on prior accident years due to re-estimated loss trends for such
years that were lower than previous expectations.

During 1999, 1998 and 1997, The PMA Insurance Group recorded favorable prior
year development of $9.0 million, $15.0 million and $53.9 million. The favorable
reserve development in 1999 reflects better than expected loss experience from
loss-sensitive and rent-a-captive workers' compensation business. This favorable
development has been substantially offset by premium adjustments for
loss-sensitive business and policyholders' dividends for rent-a-captive
business. Rent-a-captives are used by customers as an alternative method to
manage their loss exposure without establishing and capitalizing their own
captive insurance company. The favorable reserve development during 1998
primarily relates to the formal commutation programs, which resulted in early
liability settlements made during 1998 to reduce future claim payments.
Favorable loss development in 1997 is attributable to the following: favorable
reserve development of approximately $37.0 million related to retrospectively
rated policies for Run-off Operations; the cession of prior year reserves of
$14.8 million from Run-off Operations to a third party reinsurer; and favorable
reserve development of $7.1 million on guaranteed cost workers' compensation
reserves, partially offset by reserve strengthening of $5.0 million in
commercial multi-peril business.

The PMA Insurance Group has been executing programs under which it commuted, or
settled, a large number of workers' compensation claims. Commutations are
agreements whereby the claimants, in exchange for a lump sum payment, release
their rights to future indemnity payments from The PMA Insurance Group. The PMA
Insurance Group paid approximately $38 million, $65 million and $113 million in
1999, 1998 and 1997, respectively, to commute workers' compensation
claims. The commutation programs resulted in payments that were less than the
corresponding carried reserves. Savings associated with these claims were
consistent with management's expectations.

At December 31, 1999, the Company's loss reserves were stated net of $43.8
million of salvage and subrogation. The Company's policy with respect to
estimating the amounts and realizability of salvage and subrogation is to
develop accident year schedules of historic paid salvage and subrogation by line
of business, which are then

                                       18
<PAGE>

projected to an ultimate basis using actuarial projection techniques. The
anticipated salvage and subrogation is the estimated ultimate salvage and
subrogation less any amounts received by the Company. The realizability of
anticipated salvage and subrogation is reflected in the historical data that is
used to complete the projection, as historical paid data implicitly considers
realization and collectibility.

Asbestos and Environmental Reserves

The Company's asbestos-related losses were as follows:

                          (dollar amounts in thousands)

<TABLE>
<CAPTION>
                                          1999          1998           1997
                                          ----          ----           ----
Gross of reinsurance:
<S>                                      <C>           <C>            <C>
       Beginning reserves                $ 67,857      $ 76,726       $ 80,055
       Incurred losses and LAE              1,910        (1,976)         2,435
       Paid losses and LAE                 (8,490)       (6,893)        (5,764)
                                     -------------  ------------   ------------
       Ending reserves                   $ 61,277      $ 67,857       $ 76,726
                                     =============  ============   ============

Net of reinsurance:
       Beginning reserves                $ 43,556      $ 48,578       $ 53,300
       Incurred losses and LAE               (341)       (2,754)           (36)
       Paid losses and LAE                 (4,364)       (2,268)        (4,686)
                                     -------------  ------------   ------------
       Ending reserves                   $ 38,851      $ 43,556       $ 48,578
                                     =============  ============   ============
</TABLE>

The Company's environmental-related losses were as follows:

                                    (dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                1999           1998           1997
                                                                ----           ----           ----
Gross of reinsurance:
<S>                                                           <C>            <C>            <C>
       Beginning reserves                                     $ 47,036       $ 45,108       $ 35,626
       Incurred losses and LAE                                   5,081         11,895          1,130
       Reserves acquired through purchase of Caliber
              One Indemnity Company(1)                               -              -         13,060
       Paid losses and LAE                                     (10,758)        (9,967)        (4,708)
                                                           ------------   ------------  -------------
       Ending reserves                                        $ 41,359       $ 47,036       $ 45,108
                                                           ============   ============  =============

Net of reinsurance:
       Beginning reserves                                     $ 29,356       $ 31,695       $ 34,592
       Incurred losses and LAE                                      82          3,644          1,068
       Paid losses and LAE                                      (4,916)        (5,983)        (3,965)
                                                           ------------   ------------  -------------
       Ending reserves                                        $ 24,522       $ 29,356       $ 31,695
                                                           ============   ============  =============
</TABLE>

(1)  Such acquired reserves have been reinsured by an affiliate of the former
     parent (see "Caliber One" for further discussion).

Of the total net asbestos reserves, approximately $32.0 million, $34.2 million
and $41.9 million related to IBNR losses at December 31, 1999, 1998 and 1997,
respectively. Of the total net environmental reserves, approximately $18.0
million, $20.3 million and $20.5 million related to IBNR losses at December 31,
1999, 1998 and 1997, respectively. All incurred asbestos and environmental
losses were for accident years 1986 and prior.

Estimating reserves for asbestos and environmental exposures continues to be
difficult because of several factors, including: (i) evolving methodologies for
the estimation of the liabilities; (ii) lack of reliable historical claim data;
(iii) uncertainties with respect to insurance and reinsurance coverage related
to these obligations; (iv) changing judicial interpretations; and (v) changing
government standards. To reserve for environmental claims, the Company currently
utilizes a calendar year development technique known as aggregate loss
development. This technique

                                       19
<PAGE>
focuses on the aggregate losses paid as of a particular date and aggregate
payment patterns associated with such claims. Several elements including
remediation studies, remediation, defense, declaratory judgment and third party
bodily injury claims were considered in estimating the costs and payment
patterns of the environmental and toxic tort losses. Prior to the development of
these techniques, there was a substantial range in the nature of reserving for
environmental and toxic tort liabilities.

Management believes that its reserves for asbestos and environmental claims are
appropriately established based upon known facts, existing case law and
generally accepted actuarial methodologies. However, due to changing
interpretations by courts involving coverage issues, the potential for changes
in federal and state standards for clean-up and liability, as well as issues
involving policy provisions, allocation of liability among participating
insurers, proof of coverage and other factors, the Company's ultimate exposure
for these claims may vary significantly from the amounts currently recorded,
resulting in a potential future adjustment that could be material to the
Company's financial condition and results of operations.

                                   INVESTMENTS

An important component of the financial results of the Company is the return on
invested assets. The Company's investment objectives are to (i) seek competitive
after-tax income and total return, (ii) maintain medium to high investment grade
asset quality and high marketability, (iii) maintain maturity distribution
commensurate with the Company's business objectives, (iv) provide portfolio
flexibility for changing business and investment climates and (v) provide
liquidity to meet operating objectives. The Company's investment strategy
includes guidelines for asset quality standards, asset allocations and other
relevant criteria for its portfolio. In addition, maturities are structured
after projecting liability cash flows with actuarial models of loss reserve
payouts. Property and casualty claim demands are somewhat unpredictable in
nature and require liquidity from the underlying invested assets, which are
structured to emphasize current investment income to the extent consistent with
maintaining appropriate portfolio quality and diversity. The liquidity
requirements are met primarily through publicly traded fixed maturities as well
as operating cash flows and short-term investments.

The Executive and Finance Committees of the Company's Board of Directors are
responsible for the Company's investment objectives. The Company retains outside
investment advisers to provide investment advice and guidance, supervise the
Company's portfolio and arrange securities transactions through brokers and
dealers. The Executive and Finance Committees of the Company's Board of
Directors meet periodically with the investment advisers to review the
performance of the investment portfolio and to determine what actions should be
taken with respect to the Company's investments. Investments by the Pooled
Companies, MASCCO and PMA Reinsurance Corporation must comply with the insurance
laws and regulations of the Commonwealth of Pennsylvania and investments for
Caliber One Indemnity Company must comply with the insurance laws and
regulations of Delaware.

The Company currently has only one derivative financial instrument outstanding,
an interest rate swap on its Credit Facility, which is used as a hedge in
accordance with the Company's investment strategy. Derivatives are not used for
speculative purposes. The Company's portfolio does not contain any significant
concentrations in single issuers (other than U.S. Treasury and agency
obligations), industry segments or geographic regions.

For additional information on the Company's investments, including carrying
values by category, quality ratings and net investment income, see pages 40-41
of the MD&A as well as Notes 2(B) and 3 to the Financial Statements in the
Annual Report.

                                       20
<PAGE>
                                   COMPETITION

The domestic property and casualty insurance and reinsurance industries are very
competitive and consist of many companies, with no one company dominating the
market. In addition, the degree and nature of competition varies from state to
state for a variety of reasons, including the regulatory climate and other
market participants in each state. PMA Re competes with other reinsurers in the
broker market as well as reinsurers that underwrite reinsurance business on a
direct basis. In addition to competition from other insurance companies, The PMA
Insurance Group and Caliber One compete with certain alternative market
arrangements, such as captive insurers, risk-sharing pools and associations,
risk retention groups, and self-insurance programs. Many of the Company's
competitors are larger and have greater financial resources than the Company.

The main factors upon which entities in the Company's markets compete are price,
service, product capabilities and financial security. PMA Re, The PMA Insurance
Group and Caliber One attempt to price their products in such a way that the
prices charged to their clients are commensurate with the overall marketplace
while still meeting the Company's rate of return targets. The present soft
pricing environment has made competing solely on the basis of price increasingly
difficult. PMA Re, The PMA Insurance Group and Caliber One have rejected and/or
non-renewed certain accounts in recent years, as the market rates for such risks
did not provide the opportunity to achieve an acceptable rate of return.

In terms of service, the Company maintains service standards concerning
turn-around time for underwriting submissions, information flow, claims handling
and the quality of other services. These standards help ensure that clients are
satisfied with the Company's products and services. The Company periodically
participates in surveys of intermediaries and clients to gain an understanding
of the perceptions of its service as compared to its competitors.

The Company attempts to design products that meet the needs of clients in its
markets. PMA Re has expanded its product line in recent years to satisfy the
needs of its client base. Products introduced by PMA Re in the last four years
include finite risk and financial products reinsurance and facultative
reinsurance. See "PMA Re--Products" for additional discussion. In recent years,
The PMA Insurance Group has developed products that reflect the evolving nature
of the workers' compensation market. Specifically, it has developed PMA One, a
product that provides for group integrated occupational and non-occupational
disability coverages. The PMA Insurance Group has also increased its focus on
rehabilitation and managed care to control workers' compensation costs for the
employers. In addition, The PMA Insurance Group has introduced and refined
alternative market products, as well as unbundled risk management and claims
administration services. See "The PMA Insurance Group--Products" for additional
discussion. Caliber One intends to design products that meet the needs of new
classes of business and that cover emerging risks. The Company continually
evaluates new product opportunities for PMA Re, The PMA Insurance Group and
Caliber One.

For many intermediaries and clients, financial security is measured by the
ratings assigned by independent rating agencies. Certain of the Company's
insurance subsidiaries are rated by independent rating agencies. The ratings
represent the opinions of the rating agencies on the insurance company's
financial strength and its ability to pay obligations to its policyholders.
Management believes that the ratings assigned by nationally recognized,
independent rating agencies, particularly A.M. Best, are material to the
Company's operations.

The rating scales of the principal agencies that rate the Company's insurance
subsidiaries are characterized as follows:

o    A.M. Best Company, Inc. ("A.M. Best"), A++ to F ("Superior" to "In
     Liquidation")

o    Moody's Investors Service ("Moody's"), Aaa to C ("Exceptional" to "Lowest")

As of March 15, 2000, A.M. Best had assigned an A+ ("Superior," 2nd of 15)
rating to PMA Reinsurance Corporation, an A- ("Excellent," 4th of 15) rating to
the Pooled Companies and an A ("Excellent," 3rd of 15) rating to Caliber One
Indemnity Company. In addition, Moody's had rated PMA Reinsurance Corporation A3
("Good," 7th of 21) and the Pooled Companies Baa2 ("Adequate," 9th of 21). These
ratings are subject to revision or withdrawal at any time by the rating
agencies, and therefore, no assurance can be given that PMA Reinsurance

                                       21
<PAGE>


Corporation, the Pooled Companies and/or Caliber One Indemnity Company can
maintain these ratings. Each rating should be evaluated independently of any
other rating.

                               REGULATORY MATTERS

                                     General

PMA Reinsurance Corporation is licensed or accredited to transact its
reinsurance business in, and is subject to regulation and supervision by, 50
states and the District of Columbia. The Pooled Companies are licensed to
transact insurance business in, and are subject to regulation and supervision
by, 44 states and the District of Columbia. Caliber One Indemnity Company is
licensed in one state and is an eligible excess and surplus lines carrier in 41
states, the District of Columbia and Puerto Rico. The Company's insurance
subsidiaries are authorized and regulated in all jurisdictions where they
conduct insurance business. In supervising and regulating insurance and
reinsurance companies, state insurance departments, charged primarily with
protecting policyholders and the public rather than investors, enjoy broad
authority and discretion in applying applicable insurance laws and regulations
for that purpose. PMA Reinsurance Corporation and the Pooled Companies are
domiciled in Pennsylvania, and the Pennsylvania Insurance Department exercises
principal regulatory jurisdiction over them. Caliber One Indemnity Company is
domiciled in Delaware, and the Delaware Insurance Department exercises principal
jurisdiction over Caliber One Indemnity Company. The extent of regulation by the
states varies, but in general, most jurisdictions have laws and regulations
governing standards of solvency, adequacy of reserves, reinsurance, capital
adequacy and standards of business conduct.

In addition, statutes and regulations usually require the licensing of insurers
and their agents, the approval of policy forms and related material and, for
certain lines of insurance, including rate-sensitive workers' compensation, the
approval of rates. Property and casualty reinsurers, and excess and surplus
lines carriers are generally not subject to filing or other regulatory
requirements applicable to primary standard lines insurers with respect to
rates, policy forms or contract wording. The form and content of statutory
financial statements are regulated.

The U.S. federal government does not directly regulate the insurance industry;
however, federal initiatives from time to time can impact the insurance
industry. On November 12, 1999, the President of the United States signed into
law the "Gramm-Leach-Bliley Financial Modernization Act," which removed many of
the restrictions on affiliations among firms in different financial services
businesses, notably banking, securities and insurance. The Act also contains
provisions to protect the privacy of certain information on individuals held by
insurance companies and financial institutions. Several governmental agencies
are expected to propose standards to implement these privacy provisions.
Although it is too early to assess the effects of this legislation on the
Company, the Act could result in additional costs to the Company and additional
competition in one or more of the markets in which the Company sells its
products and services.

Further, although the Company does not write health insurance, federal and state
rules and regulations affecting health care services can affect the workers'
compensation and integrated disability services the Company provides. Pending
initiatives to increase health care regulation at the federal level include
managed care reform and a patient's bill of rights. The Company cannot predict
what health care reform legislation will be adopted by Congress or by state
legislatures where the Company does business or the effect, if any, that the
adoption of health care legislation or regulations at the federal or state level
will have on the Company's results of operations.

State insurance departments in jurisdictions in which the Company's insurance
subsidiaries do business also conduct periodic examinations of their respective
operations and accounts and require the filing of annual and other reports
relating to their financial condition. The Pennsylvania Department of Insurance
last conducted examinations of the Pooled Companies as of December 31, 1997. No
material adjustments to previously filed statutory financial statements were
required as a result of such examinations. In addition, there were no material
qualitative matters indicated in the examination reports that had or are
expected to have a material adverse effect on the operations of the Pooled
Companies. The Pennsylvania Department of Insurance recently completed
examinations of PMA Reinsurance Corporation and MASCCO as of December 31, 1997.
Although the Company has not received the final reports of examination, the
Company does not expect the results of the examinations to have a material
adverse effect on results of operations of PMA Reinsurance Corporation or
MASCCO. Caliber One Indemnity Company


                                       22
<PAGE>
has not been subjected to an Insurance Department examination in the two years
that the company has been writing business as Caliber One Indemnity Company.

                      Insurance Holding Company Regulation

The Company and its insurance subsidiaries are subject to regulation pursuant to
the insurance holding company laws of Pennsylvania and Delaware. These state
insurance holding company laws generally require an insurance holding company
and insurers and reinsurers that are members of such insurance holding company's
system to register with the state regulatory authorities, to file with those
authorities certain reports disclosing information including their capital
structure, ownership, management, financial condition, certain intercompany
transactions including material transfers of assets and intercompany business
agreements and to report material changes in such information. These laws also
require that intercompany transactions be fair and reasonable and that an
insurer's policyholders' surplus following any dividends or distributions to
shareholder affiliates be reasonable in relation to the insurer's outstanding
liabilities and adequate for its financial needs.

Under Pennsylvania and Delaware law, no person may acquire, directly or
indirectly, a controlling interest in the capital stock of the Company unless
such person, corporation or other entity has obtained prior approval from the
respective Commissioner for such acquisition of control. Pursuant to the
Pennsylvania and Delaware law, any person acquiring, controlling or holding the
power to vote, directly or indirectly, ten percent or more of the voting
securities of an insurance company, is presumed to have "control" of such
company. This presumption may be rebutted by a showing that control does not
exist in fact. The respective Commissioner, however, may find that "control"
exists in circumstances in which a person owns or controls a smaller amount of
voting securities. To obtain approval from the Commissioner of any acquisition
of control of an insurance company, the proposed acquirer must file with the
Commissioner an application containing information regarding: the identity and
background of the acquirer and its affiliates; the nature, source and amount of
funds to be used to carry out the acquisition; the financial statements of the
acquirer and its affiliates; any potential plans for disposition of the
securities or business of the insurer; the number and type of securities to be
acquired; any contracts with respect to the securities to be acquired; any
agreements with broker-dealers; and other matters.

Other jurisdictions in which the Company's insurance subsidiaries are licensed
to transact business may have requirements for prior approval of any acquisition
of control of an insurance or reinsurance company licensed or authorized to
transact business in those jurisdictions. Additional requirements in those
jurisdictions may include re-licensing or subsequent approval for renewal of
existing licenses upon an acquisition of control. As further described below,
laws that govern the holding company structure also govern payment of dividends
by the Company's insurance subsidiaries to the Company.

           Restrictions on Subsidiaries' Dividends and Other Payments

PMA Capital is an insurance holding company whose assets consist principally of
all of the outstanding common stock of its insurance subsidiaries. PMA Capital's
ongoing ability to pay dividends to its shareholders and meet its other
obligations, including operating expenses and any principal and interest on
debt, is primarily dependent on the receipt of sufficient funds from its
insurance subsidiaries in the form of dividends, net payments under a
tax-sharing agreement between PMA Capital and its subsidiaries, and borrowings.
The Company's domestic insurance subsidiaries' ability to pay dividends to PMA
Capital is regulated under the insurance laws and regulations of Pennsylvania
and Delaware (the laws of which are substantially similar with respect to
dividends). In addition, to the extent tax-sharing payments and loans exceed
certain threshold amounts, notice to and non-disapproval by the Pennsylvania
Insurance Commissioner would be required.

Under Pennsylvania laws and regulations, PMA Capital's significant
Pennsylvania-domiciled insurance subsidiaries (PMA Reinsurance Corporation and
the Pooled Companies) may pay dividends only from unassigned surplus and future
earnings arising from their businesses and must receive prior approval of the
Pennsylvania Insurance Commissioner to pay a dividend if such dividend would
exceed the statutory limitation. The current statutory limitation is the greater
of (i) 10% of the insurer's policyholders' surplus, as shown on its last annual
statement on file with the Pennsylvania Insurance Commissioner or (ii) the
insurer's statutory net income for the previous calendar year. Pennsylvania law
gives the Pennsylvania Insurance Commissioner broad discretion to disapprove
requests for dividends in excess of these limits.


                                       23
<PAGE>
Based upon this limitation, these companies have the legal capacity to pay
approximately $55 million in dividends to PMA Capital in 2000 without obtaining
the prior approval of the Pennsylvania Insurance Commissioner. Pennsylvania law
also provides that following the payment of any dividend, the insurer's
policyholders' surplus must be reasonable in relation to its outstanding
liabilities and adequate for its financial needs, and permits the Pennsylvania
Insurance Commissioner to bring an action to rescind a dividend which violates
these standards.

During 1999, $41.9 million of dividends were paid by PMA Reinsurance Corporation
and the Pooled Companies to PMA Capital Corporation.

Caliber One Indemnity Company is a Delaware-domiciled insurance subsidiary of
PMA Reinsurance Corporation. As a subsidiary of PMA Reinsurance Corporation,
Caliber One Indemnity Company's dividends are not directly available to PMA
Capital. As noted above, the Delaware insurance law provisions restricting
dividends by insurers are substantially similar to such provisions under
Pennsylvania insurance laws. During 2000, Caliber One Indemnity Company may pay
up to $3.3 million of dividends to PMA Reinsurance Corporation without the prior
approval of the Delaware Insurance Commissioner. During 1999, no dividends were
declared or paid by Caliber One Indemnity Company.

In the event that the ability of either the Pooled Companies or PMA Reinsurance
Corporation to pay dividends or make other payments to PMA Capital in the future
is reduced or eliminated, PMA Capital's ability to pay dividends to its
shareholders and meet its other obligations, including operating expenses and
any principal and interest on debt, could be materially and adversely affected,
depending upon the extent of such reduction. The Pennsylvania Insurance
Commissioner could use his or her broad discretionary authority to seek to
require PMA Capital to apply payments received from one insurance subsidiary for
the benefit of another insurance subsidiary of PMA Capital.

In addition to regulatory restrictions on dividends, the Company's Revolving
Credit Facility and Letter of Credit Facility also impose restrictions on the
ability of the Company's insurance subsidiaries to pay dividends. Under these
restrictions, the statutory surplus of PMA Capital's insurance subsidiaries (as
measured each calendar quarter) must not be less than $450 million and such
subsidiaries must annually maintain certain minimum ratios of adjusted surplus
to risk-based capital (300% for PMA Reinsurance Corporation and 240% for the
Pooled Companies in 1999). As of December 31, 1999, the Company's insurance
subsidiaries reported combined statutory surplus of $552.8 million, and, as of
December 31, 1999, PMA Reinsurance Corporation's risk-based capital ratio was
323% and the Pooled Companies' ratios ranged from 380% to 521%. Under the most
restrictive debt covenant of the Facilities, PMA Capital would be able to pay
approximately $10 million in dividends in 2000.

                               Risk-Based Capital

The National Association of Insurance Commissioners (the "NAIC") has adopted
risk-based capital ("RBC") requirements for property/casualty insurance
companies to evaluate the adequacy of statutory capital and surplus in relation
to investment and insurance risks such as asset quality, asset and liability
matching, loss reserve adequacy and other business factors. Under RBC
requirements, regulatory compliance is determined by the ratio of a company's
total adjusted capital, as defined by the NAIC, to its authorized control level
of RBC("RBC ratio"), also as defined by the NAIC.

Four levels of regulatory attention may be triggered if the RBC ratio is
insufficient:

     o    "Company action level" - If the RBC ratio is between 150% and 200%,
          then the company must submit a plan to the regulator detailing
          corrective action it proposes to undertake.

     o    "Regulatory action level" - If the RBC ratio is between 100% and 150%,
          then the company must also submit a plan, but a regulator may also
          issue a corrective order requiring the insurer to comply within a
          specified period.

     o    "Authorized control level" - If the RBC ratio is between 70% and 100%,
          then the regulatory response is the same as at the "Regulatory action
          level," but in addition, the regulator may take action to rehabilitate
          or liquidate the insurer.

     o    "Mandatory control level" - If the RBC ratio is less than 70%, then
          the regulator must rehabilitate or liquidate the insurer.


                                       24
<PAGE>
At December 31, 1999, the RBC ratios of the Pooled Companies ranged from 380% to
521%, and the RBC ratio of MASCCO, The PMA Insurance Group's domestic run-off
subsidiary was 275%. PMA Reinsurance Corporation's RBC ratio was 323% and
Caliber One Indemnity Company's RBC ratio was 732%.

The Company believes that it will be able to maintain the RBC ratios of its
insurance subsidiaries in excess of the "Company action level" through prudent
underwriting, claims handling, investing and capital management.

However, no assurances can be given that developments affecting the insurance
subsidiaries, many of which could be outside of management's control, including
but not limited to changes in the regulatory environment, economic conditions
and competitive conditions in the jurisdictions in which the insurance
subsidiaries write business, will not cause the RBC ratios to fall below
required levels resulting in a corresponding regulatory response.

The NAIC has also developed a series of twelve ratios (the "IRIS ratios")
designed to further assist regulators in assessing the financial condition of
insurers. These ratio results are computed annually and reported to the NAIC and
the insurer's state of domicile. In 1999, PMA Reinsurance Corporation reported
an unusual value in one ratio, relating to reserve development due to the change
in mix of business and growth in earned premiums. In 1999, two of the Pooled
Companies reported an unusual value in one ratio, relating to reserve
development due to the paydown of loss reserves. In 1999, Caliber One Indemnity
Company reported three unusual values, relating to the change in net premiums
written, agent's balances to surplus, and surplus aid (i.e., reinsurance) to
surplus. The unusual value relating to the change in net premiums written was
attributable to the continued growth of Caliber One during its first full year
of operations. The unusual value relating to agent's balances to surplus was
also attributable to the continued growth of Caliber One. The third unusual
value for Caliber One, relating to surplus aid to surplus, is the result of
management's intentional strategy to purchase certain types and amounts of
reinsurance during the initial growth period of Caliber One to protect its
surplus.


                                    EMPLOYEES

As of February 29, 2000, the Company had approximately 1000 full-time employees.
None of the employees of the Company is represented by a labor union and the
Company is not a party to any collective bargaining agreements. The Company
considers its employee relations to be good.















                                       25
<PAGE>
                      GLOSSARY OF SELECTED INSURANCE TERMS

Aggregate stop loss .................A form of excess of loss treaty reinsurance
                                     whereby the reinsurer responds when a
                                     ceding insurer incurs losses on a
                                     particular line of business during a
                                     specific period in excess of a stated
                                     dollar amount.

Broker ..............................One who negotiates contracts of reinsurance
                                     between a primary insurer or other
                                     reinsured and a reinsurer on behalf of the
                                     primary insurer or other reinsured. The
                                     broker receives from the reinsurer a
                                     commission for placement and other services
                                     rendered.

Bulk reserves .......................Reserves established on an aggregate basis
                                     to provide for losses incurred but not yet
                                     reported to the insurer; to provide for the
                                     estimated expenses of settling claims,
                                     including legal and other fees and general
                                     expenses of administering the claims
                                     adjustment process; and to adjust for the
                                     fact that, in the aggregate, case reserves
                                     may not accurately estimate the ultimate
                                     liability for reported claims.

Case reserves........................Loss reserves established with respect to
                                     individual reported claims.

Casualty insurance and/or
 reinsurance ........................Insurance and/or reinsurance that is
                                     concerned primarily with the losses caused
                                     by injuries to third persons (in other
                                     words, persons other than the policyholder)
                                     and the legal liability imposed on the
                                     insured resulting therefrom.

Catastrophe reinsurance .............A form of excess of loss property
                                     reinsurance that, subject to a specified
                                     limit, indemnifies the ceding company for
                                     the amount of loss in excess of a specified
                                     retention with respect to an accumulation
                                     of losses resulting from a catastrophic
                                     event. The actual reinsurance document is
                                     called a "catastrophe cover."

Cede; ceding company;
 cedent .............................When a company reinsures its risk with
                                     another, it "cedes" business and is
                                     referred to as the "ceding company" or the
                                     "cedent."

Combined ratio (GAAP)................The sum of losses and LAE, acquisition
                                     expenses, operating expenses and
                                     policyholders' dividends, where applicable,
                                     all divided by net premiums earned.

Direct reinsurer, direct
 underwriter, direct writer......... A reinsurer that markets and sells
                                     reinsurance directly to its reinsureds
                                     without the assistance of brokers.

Excess and surplus lines ............Surplus lines risks are those risks not
                                     fitting normal underwriting patterns,
                                     involving a degree of risk that is not
                                     commensurate with standard rates and/or
                                     policy forms, or that will not be written
                                     by standard carriers because of general
                                     market conditions. Excess insurance refers
                                     to coverage that attaches for an insured
                                     over the limits of a primary policy or a
                                     stipulated self-insured retention. Policies
                                     are bound or accepted by carriers not
                                     licensed in the jurisdiction where the risk
                                     is located, and generally are not subject
                                     to regulations governing premium rates or
                                     policy language.

Excess of loss reinsurance ..........The generic term describing reinsurance
                                     that indemnifies the reinsured against all
                                     or a specified portion of losses on
                                     underlying insurance policies in excess of
                                     a specified dollar amount, called a "layer"
                                     or "retention." Also known as
                                     nonproportional reinsurance or stop loss
                                     coverage.

Facultative reinsurance..............The reinsurance of all or a portion of the
                                     insurance provided by a single policy. Each
                                     policy reinsured is separately negotiated.



                                       26
<PAGE>

Financial quota share
 reinsurance.........................A form of finite risk reinsurance wherein
                                     the cedent transfers some of its premiums
                                     to a finite risk provider and achieves, by
                                     virtue of an individual arrangement for
                                     reinsurance commission, the required
                                     financial effects, such as a stabilization
                                     of net claims costs.

Finite risk reinsurance..............The reinsurance of potential losses in a
                                     transaction in which the primary element of
                                     risk is financial rather than underwriting.

Gross premiums written...............Total premiums for direct insurance and
                                     reinsurance assumed during a given period.

Incurred but not reported
 ("IBNR") reserves...................Loss reserves for estimated losses that
                                     have been incurred but not yet reported to
                                     the insurer or reinsurer.

Incurred losses......................The total losses sustained by an insurance
                                     company under a policy or policies, whether
                                     paid or unpaid. Incurred losses include a
                                     provision for claims that have occurred but
                                     have not yet been reported to the insurer
                                     ("IBNR").

IRIS ratios..........................Financial ratios annually calculated by the
                                     NAIC to assist state insurance departments
                                     in monitoring the financial condition of
                                     insurance companies.

Layers...............................The division of a particular reinsurance
                                     program delineated by an attachment point
                                     and a maximum limit. Often, a reinsurance
                                     program will be divided into several
                                     layers, with the lower layers typically
                                     having higher premiums and higher claim
                                     frequency and the higher layers typically
                                     having lower premiums and claim frequency.

Loss adjustment expenses
 ("LAE").............................The expenses of settling claims, including
                                     legal and other fees and the portion of
                                     general expenses allocated to claim
                                     settlement costs.

Loss and LAE ratio (GAAP) ...........Loss and LAE ratio is equal to losses and
                                     LAE divided by earned premiums.

Loss reserves........................Liabilities established by insurers and
                                     reinsurers to reflect the estimated cost of
                                     claims payments that the insurer or
                                     reinsurer ultimately will be required to
                                     pay in respect of insurance or reinsurance
                                     it has written. Reserves are established
                                     for losses and for LAE and consist of case
                                     reserves, bulk reserves and IBNR reserves.

Manual rates.........................Insurance rates for lines and classes of
                                     business that are approved and published by
                                     state insurance departments.

Net premiums earned..................The portion of net premiums written that is
                                     earned during a period and recognized for
                                     accounting purposes as revenue.

Net premiums written.................Gross premiums written for a given period
                                     less premiums ceded to reinsurers during
                                     such period.

Operating ratio .....................The combined ratio, reduced by the net
                                     investment income ratio. The ratio measures
                                     a company's operating profitability,
                                     exclusive of realized gains and federal
                                     income taxes.

Per occurrence ......................A form of insurance or reinsurance under
                                     which the date of the loss event is deemed
                                     to be the date of the occurrence,
                                     regardless of when reported and permits all
                                     losses arising out of one event to be
                                     aggregated instead of being handled on a
                                     risk-by-risk basis.


                                       27

<PAGE>
Policyholders' dividend ratio .......The ratio of policyholders' dividends to
                                     earned premiums.

Primary insurer .....................An insurance company that issues insurance
                                     policies to the general public or to
                                     certain non-insurance entities.

Pro rata reinsurance ................Forms of reinsurance in which the reinsurer
                                     shares a proportional part of the original
                                     premiums and losses of the reinsured. Pro
                                     rata reinsurance also is known as
                                     proportional reinsurance, quota share
                                     reinsurance and participating reinsurance.

Property insurance
  and/or reinsurance ................Insurance and/or reinsurance that
                                     indemnifies a person with an insurable
                                     interest in tangible property for his
                                     property loss, damage or loss of use.

Reinsurance .........................The practice whereby one party, called the
                                     reinsurer, in consideration of a premium
                                     paid to it, agrees to indemnify another
                                     party, called the reinsured, for part or
                                     all of the liability assumed by the
                                     reinsured under a policy or policies of
                                     insurance that it has issued. The reinsured
                                     may be referred to as the original or
                                     primary insurer, the direct writing company
                                     or the ceding company.

Retention, retention layer ..........The amount or portion of risk that an
                                     insurer or reinsurer retains for its own
                                     account. Losses in excess of the retention
                                     layer are paid by the reinsurer or
                                     retrocessionaire. In proportional treaties,
                                     the retention may be a percentage of the
                                     original policy's limit. In excess of loss
                                     business, the retention is a dollar amount
                                     of loss, a loss ratio or a percentage.

Retrocession;
 retrocessionaire....................A transaction whereby a reinsurer cedes to
                                     another reinsurer (the "retrocessionaire")
                                     all or part of the reinsurance it has
                                     assumed. Retrocession does not legally
                                     discharge the ceding reinsurer from its
                                     liability with respect to its obligations
                                     to the reinsured.

Statutory accounting
 principles ("SAP")..................Recording transactions and preparing
                                     financial statements in accordance with the
                                     rules and procedures prescribed or
                                     permitted by state insurance regulatory
                                     authorities including the NAIC.

Statutory or policyholders'
 surplus; statutory capital
 & surplus ..........................The excess of admitted assets over total
                                     liabilities (including loss reserves),
                                     determined in accordance with SAP.

Stop loss ...........................See "Excess of loss reinsurance."

Treaty reinsurance ..................The reinsurance of a specified type or
                                     category of risks defined in a reinsurance
                                     agreement (a "treaty") between a primary
                                     insurer or other reinsured and a reinsurer.
                                     Typically, in treaty reinsurance, the
                                     primary insurer or reinsured is obligated
                                     to offer and the reinsurer is obligated to
                                     accept a specified portion of all agreed
                                     upon types or categories of risks
                                     originally written by the primary insurer
                                     or reinsured.

Underwriting ........................The reinsurer's process of reviewing
                                     applications submitted for insurance
                                     coverage, deciding whether to accept all or
                                     part of the coverage requested and
                                     determining the applicable premiums.

Underwriting expenses ...............The aggregate of policy acquisition costs,
                                     including commissions, and the portion of
                                     administrative, general and other expenses
                                     attributable to underwriting operations.

                                       28
<PAGE>

Unearned premiums ...................The portion of a premium representing the
                                     unexpired portion of the exposure period as
                                     of a certain date.

Unearned premium reserve ............Liabilities established by insurers and
                                     reinsurers to reflect unearned premiums
                                     which are refundable to policyholders if an
                                     insurance or reinsurance contract is
                                     canceled prior to expiration of the
                                     contract term.











                                       29
<PAGE>
Item 2. Properties

The Company's and PMA Re's headquarters are located in 78,000 square feet of
leased space in center city Philadelphia, Pennsylvania. The PMA Insurance
Group's headquarters are located in a four story, 110,000 square foot building
in Blue Bell, Pennsylvania. Caliber One's headquarters are located in 20,000
square feet of leased office space in Yardley, Pennsylvania.

Through various wholly owned subsidiaries, the Company also owns and occupies
additional office facilities in three other locations and rents additional
office space for its insurance operations in 15 other locations. The Company
believes that such owned properties are suitable and adequate for its current
business operations.

Item 3. Legal Proceedings

The Company is continuously involved in numerous lawsuits arising, for the most
part, in the ordinary course of business, either as a liability insurer
defending third-party claims brought against its insureds, or as an insurer
defending coverage claims brought against it by its policyholders or other
insurers. While the outcome of all litigation involving the Company, including
insurance-related litigation, cannot be determined, litigation is not expected
to result in losses that differ from recorded reserves by amounts that would be
material to financial condition, results of operations or liquidity. In
addition, reinsurance recoveries related to claims in litigation, net of the
allowance for uncollectible reinsurance, are not expected to result in
recoveries that differ from recorded recoverables by amounts that would be
material to the Company's financial condition, results of operations or
liquidity.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth
quarter of 1999.

Executive Officers of the Registrant

The executive officers of the Company are as follows:

    Name                 Age           Position
    ----                 ---           --------
John W. Smithson .........54       President and Chief Executive Officer
Frederick W. Anton III....66       Chairman of the Board
Ronald S. Austin .........42       President and Chief Operating Officer
                                    - Caliber One Management Company
Vincent T. Donnelly ......47       President and Chief Operating Officer -
                                    The PMA Insurance Group
Francis W. McDonnell .....43       Senior Vice President, Chief Financial
                                    Officer and Treasurer
Robert L. Pratter.........55       Senior Vice President, General Counsel
                                    and Secretary
Stephen G. Tirney ........46       President and Chief Operating Officer - PMA
                                    Reinsurance Corporation

John W. Smithson has served as President and Chief Executive Officer of the
Company since May 1997, and as a director of the Company since 1987. Mr.
Smithson served as President and Chief Operating Officer of the Company from
1995 to May 1997, as Chairman and Chief Executive Officer of PMA Reinsurance
Corporation since 1984, as Chairman and Chief Executive Officer of The PMA
Insurance Group since April 1995, and as Chairman and Chief Executive Officer of
Caliber One Management Company since April 1997.

Frederick W. Anton III has served as Chairman of the Board since 1995 and as a
director of the Company since 1972. Mr. Anton served as Chairman of the Board
and Chief Executive Officer from 1995 to May 1997, and as President and Chief
Executive Officer from 1981 to 1995.

                                       30
<PAGE>

Ronald S. Austin has served as the President and Chief Operating Officer of
Caliber One Management Company since 1997. From 1988 to 1997, Mr. Austin served
as an officer and director of General Star Management Company, a member of the
General Re Group.

Vincent T. Donnelly has served as President and Chief Operating Officer of The
PMA Insurance Group since February 1997. Mr. Donnelly served as Senior Vice
President - Finance and Chief Actuary of The PMA Insurance Group from 1995 to
1997.

Francis W. McDonnell has served as Senior Vice President and Chief Financial
Officer of the Company since 1995 and as Treasurer since 1997, and has served as
Senior Vice President and Chief Financial Officer of PMA Reinsurance Corporation
since 1995.

Robert L. Pratter has served as Senior Vice President, General Counsel and
Secretary since 1999. From 1969 to 1999, Mr. Pratter was an attorney and partner
in the law firm of Duane, Morris & Heckscher LLP.

Stephen G. Tirney has served as President and Chief Operating Officer of PMA
Reinsurance Corporation since 1997. Mr. Tirney served as Executive Vice
President of PMA Reinsurance Corporation from 1993 to 1997.


                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Shareholder
        Matters

The "Class A Common Stock Prices" under the caption "Quarterly Financial
Information" and the last paragraph on page 69 of the Annual Report, as well as
the information under the captions "Securities Listing" and "Dividends" on page
72 of the Annual Report are incorporated herein by reference. Further, the
information in Note 14 to the Financial Statements in the Annual Report and
under the caption "Regulation--Restrictions on Subsidiaries' Dividends and Other
Payments" in Item 1 of this Form 10-K is incorporated herein by reference.

Recent Sales of Unregistered Securities

During the year ended December 31, 1997, the Company sold shares of Class A
Common Stock in connection with the exercise of employee stock options pursuant
to the terms of the Company's stock option plans. In 1997, an aggregate of
162,248 shares were sold to fourteen officers and employees of the Company
pursuant to such options at exercise prices ranging from $8.00 to $15.00 per
share for an aggregate price of $1,424,349. Additionally, in 1997, the Company
sold 1,000 shares to employees at $18.00 per share. The Company believes that
these sales were made pursuant to the exemption afforded by Section 4(2) of the
Securities Act inasmuch as the sales were made to a limited number of
sophisticated investors in transactions not involving a public offering. No
unregistered sales of Company securities were made in 1999 or 1998.

Item 6. Selected Financial Data

The information under the caption "Selected Financial Data" on pages 26 and 27
of the Annual Report is incorporated herein by reference.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 28 through 43 of the Annual Report is incorporated herein by
reference.


                                       31
<PAGE>

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

The information under the caption "Market Risk of Financial Instruments" on page
41 of the Annual Report is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The Company's Consolidated Financial Statements and Notes to Consolidated
Financial Statements on pages 44 through 67 and the Report of Independent
Accountants on page 68 of the Annual Report are incorporated herein by
reference, as is the unaudited "Income Statement Data" and "Per Share Data"
under the caption "Quarterly Financial Information" on page 69 of the Annual
Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

See "Executive Officers of the Registrant" under Item 4 above. The information
under the captions "Nominees For Election" and "Directors Continuing in Office"
on pages 5 and 6 of the Company's 2000 Proxy Statement dated March 23, 2000
("Proxy Statement") is incorporated herein by reference, as is the information
under the caption "Section 16(a) Beneficial Reporting Compliance" on page 33 of
the Proxy Statement.

Item 11. Executive Compensation

The information under the caption "Compensation of Executive Officers" on pages
8 through 11 and under the caption "Director Compensation" on page 7 of the
Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information under the caption "Beneficial Ownership of Common Stock and
Class A Common Stock" on pages 2 through 4 of the Proxy Statement is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

The information under the captions "Certain Transactions" on pages 15 and 16 as
well as "Compensation Committee Interlocks and Insider Participation" on page 11
of the Proxy Statement is incorporated herein by reference.



                                       32
<PAGE>
                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

FINANCIAL STATEMENTS AND SCHEDULES
(a)      (1) The following consolidated financial statements of PMA Capital and
         its subsidiary companies and Report of Independent Accountants,
         included on pages 44 through 68 of the Annual Report are incorporated
         herein by reference:

     o    Consolidated Balance Sheets at December 31, 1999 and 1998

     o    Consolidated Statements of Operations for the years ended December 31,
          1999, 1998 and 1997

     o    Consolidated Statements of Cash Flows for the years ended December 31,
          1999, 1998 and 1997

     o    Consolidated Statements of Shareholders' Equity for the years ended
          December 31, 1999, 1998 and 1997

     o    Consolidated Statements of Comprehensive Income (Loss) for the years
          ended December 31, 1999, 1998 and 1997

     o    Notes to Consolidated Financial Statements

     o    Report of Independent Accountants

(a) (2) The Financial Statement Schedules are listed in the Index to Financial
Statement Schedules on page FS-1

All other schedules specified by Article 7 of Regulation S-X are not required
pursuant to the related instructions or are inapplicable and, therefore, have
been omitted.


(a) (3) The Exhibits are listed in the Index to Exhibits on pages E-1 through
E-4.


(b)      Reports on Form 8-K filed during the quarter ended December 31, 1999:

         During the quarterly period ended December 31, 1999, the Company filed
          the following report on Form 8-K:

         - dated November 3, 1999, Item 5 - containing a news release regarding
         its third quarter 1999 results










                                       33
<PAGE>

                                   Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf, and in the capacities indicated, by the undersigned, thereunto duly
authorized.

                                   PMA CAPITAL CORPORATION

Date:   March 29, 2000             By: /s/ Francis W. McDonnell
     -----------------                -------------------------
                                   Francis W. McDonnell
                                   Senior Vice President,
                                   Chief Financial Officer and Treasurer
                                   (Principal Financial and Accounting Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 29, 2000.

Signature*                           Title
----------                           -----
John W. Smithson                     President and Chief Executive Officer and
                                     a Director (Principal Executive Officer)

Frederick W. Anton III               Chairman of the Board and a Director
Paul I. Detwiler, Jr.                Director
Joseph H. Foster                     Director
Anne S. Genter                       Director
James F. Malone III                  Director
A. John May                          Director
Louis N. McCarter III                Director
John W. Miller, Jr.                  Director
Edward H. Owlett                     Director
Louis I. Pollock                     Director
Roderic H. Ross                      Director
L. J. Rowell, Jr.                    Director

*  By: /s/  Charles A. Brawley, III
       ----------------------------
           Charles A. Brawley, III
                 Attorney-in-Fact














                                       34
<PAGE>
                             PMA Capital Corporation
                     Index to Financial Statement Schedules

Schedule No.            Description                                       Page

    II          Condensed Financial Information of                 FS-2 to FS-4
                Registrant as of December 31, 1999 and
                1998 and for the years ended December 31,
                1999, 1998 and 1997

    III         Supplementary Insurance Information for the               FS-5
                years ended December 31, 1999, 1998 and 1997

    IV          Reinsurance for the years ended December 31,              FS-6
                1999, 1998 and 1997

    V           Valuation and Qualifying Accounts for the                 FS-7
                years ended December 31, 1999, 1998 and 1997

    VI          Supplemental Information Concerning                       FS-8
                Property and Casualty Insurance Operations
                for the years ended December 31, 1999, 1998 and 1997

                Report of Independent Accountants on Financial            FS-9
                Statement Schedules


Certain financial statement schedules have been omitted because they are either
not applicable or the required financial information is contained in the
Company's 1999 consolidated financial statements and notes thereto.








                                      FS-1
<PAGE>
                                            PMA Capital Corporation
                              Schedule II - Registrant Only Financial Statements
                                                Balance Sheets
                                             (Parent Company Only)

<TABLE>
<CAPTION>
                                                                                          December 31,
(dollar amounts in thousands)                                                          1999          1998
-----------------------------------------------------------------------------------------------------------------------------
Assets
<S>                                                                                 <C>            <C>
     Cash                                                                           $     605      $      --
     Investment in subsidiaries                                                       620,788        700,772
     Deferred income taxes, net                                                         2,527          8,078
     Other assets                                                                         316            420
                                                                                    ------------------------
              Total assets                                                          $ 624,236      $ 709,270
                                                                                    ========================


Liabilities
     Long-term debt                                                                 $ 163,000      $ 163,000
     Related party payables                                                            15,294         14,354
     Other liabilities                                                                 16,799         20,436
                                                                                    ------------------------
              Total liabilities                                                       195,093        197,790


Stockholders' Equity
     Common stock, $5 par value (40,000,000 shares authorized;
          1999 - 13,084,665 shares issued and 12,648,658 outstanding
          1998 - 13,956,268 shares issued and 13,520,261 outstanding)                  65,423         69,781
     Class A Common stock, $5 par value (40,000,000 shares authorized;
          1999 - 11,358,280 shares issued and 9,692,854 outstanding
          1998 - 10,486,677 shares issued and 9,837,963 outstanding)                   56,791         52,433
     Additional paid-in capital - Class A Common stock                                    339            339
     Retained earnings                                                                391,981        377,601
     Accumulated other comprehensive income (loss)                                    (46,844)        30,016
     Notes receivable from officers                                                       (56)          (498)
     Treasury stock, at cost:
          Common stock (1999 - 436,007 shares; 1998 - 436,007 shares)                  (5,582)        (5,582)
          Class A Common stock (1999 - 1,665,426 shares; 1998 - 648,714 shares)       (32,909)       (12,610)
                                                                                    ------------------------
              Total shareholders' equity                                              429,143        511,480
                                                                                    ------------------------
              Total liabilities and shareholders' equity                            $ 624,236      $ 709,270
                                                                                    ========================

</TABLE>


        These financial statements should be read in conjunction with the
            Consolidated Financial Statements and the notes thereto.

                                      FS-2
<PAGE>
<TABLE>
<CAPTION>
                                                     PMA Capital Corporation
                                       Schedule II - Registrant Only Financial Statements
                                                    Statements of Operations
                                                      (Parent Company Only)

                                                                                        Years ended December 31,
(dollar amounts in thousands)                                                 1999                 1998                1997
------------------------------------------------------------------------------------------------------------------------------
Revenues:
<S>                                                                   <C>                   <C>                 <C>
     Net investment income (expense)                                  $           (14)      $         (18)      $          70
     Net realized investment loss                                                   -              (1,740)                  -
     Other revenues                                                                98               1,089                 193
                                                                      --------------------------------------------------------
                Total revenues                                                     84                (669)                263
                                                                      --------------------------------------------------------


Expenses:
     General expenses                                                           8,012              10,834               6,911
     Interest expense                                                          12,434              15,221              15,764
                                                                      --------------------------------------------------------
                Total expenses                                                 20,446              26,055              22,675
                                                                      --------------------------------------------------------


     Loss before income taxes, equity in earnings of subsidiaries
          and extraordinary loss                                              (20,362)            (26,724)            (22,412)

     Income tax expense (benefit)                                              (6,426)              1,256             (14,271)
                                                                      --------------------------------------------------------

     Loss before equity in earnings of subsidiaries and
          extraordinary loss                                                  (13,936)            (27,980)             (8,141)

     Equity in earnings of subsidiaries                                        39,530              72,714              27,894
                                                                      --------------------------------------------------------

     Income before extraordinary loss                                          25,594              44,734              19,753

     Extraordinary loss from early extinguishment of debt
          (net of income tax benefit of $2,549)                                     -                   -              (4,734)
                                                                      --------------------------------------------------------

Net income                                                            $        25,594       $      44,734       $      15,019
                                                                      ========================================================

                                These financial statements should be read in conjunction with the
                                    Consolidated Financial Statements and the notes thereto.
</TABLE>

                                                              FS-3
<PAGE>
<TABLE>
<CAPTION>
                                                   PMA Capital Corporation
                                     Schedule II - Registrant Only Financial Statements
                                                  Statements of Cash Flows
                                                    (Parent Company Only)

                                                                                             Years ended December 31,
(dollar amounts in thousands)                                                           1999          1998           1997
-----------------------------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities:
<S>                                                                                 <C>            <C>           <C>
     Net income                                                                     $   25,594     $  44,734     $  15,019
     Adjustments to reconcile net income to net cash flows provided
       by operating activities:
          Equity in earnings of subsidiaries                                           (39,530)      (72,714)      (27,894)
          Dividends received from subsidiaries                                          43,206        35,502        22,500
          Net tax sharing payments received from subsidiaries                           21,798        29,728        19,950
          Net realized investment losses                                                     -         1,740             -
          Deferred income tax expense                                                    5,926        21,085         9,614
          Extraordinary loss from early extinguishment of debt                               -             -         4,734
          Other, net                                                                    (5,173)       17,771        (3,426)
                                                                                   ----------------------------------------
     Net cash flows provided by operating activities                                    51,821        77,846        40,497

Cash Flows From Investing Activities:
     Cash contributions to subsidiaries                                                 (7,100)         (480)      (11,000)
                                                                                   ----------------------------------------
     Net cash flows used by investing activities                                        (7,100)         (480)      (11,000)
                                                                                   ----------------------------------------

Cash Flows From Financing Activities:
     Dividends paid to shareholders                                                     (7,795)       (7,939)       (7,965)
     Purchase of treasury stock                                                        (30,241)      (18,850)         (597)
     Proceeds from exercised stock options and issuance of Class A
       Common stock                                                                      6,035         4,283         1,442
     Change in related party receivables and payables                                  (12,557)      (14,813)      (21,389)
     Repayments of long-term debt                                                            -       (40,000)     (211,699)
     Proceeds from issuance of long-term debt                                                -             -       210,000
     Net repayments (issuance) of notes receivable from officers                           442          (300)          964
                                                                                   ----------------------------------------
     Net cash flows used by financing activities                                       (44,116)      (77,619)      (29,244)
                                                                                   ----------------------------------------

Net increase (decrease) in cash                                                            605          (253)          253
Cash - beginning of year                                                                     -           253             -
                                                                                   ----------------------------------------
Cash - end of year                                                                  $      605     $       -     $     253
                                                                                   ========================================


Supplementary cash flow information:
    Income taxes paid (refunded)                                                    $   12,352     $ (15,170)    $ (19,112)
    Interest paid                                                                   $   12,263     $  15,107     $  19,776


                              These financial statements should be read in conjunction with the
                                  Consolidated Financial Statements and the notes thereto.
</TABLE>

                                                            FS-4
<PAGE>
<TABLE>
<CAPTION>
                                                       PMA Capital Corporation
                                                            Schedule III
                                                 Supplementary Insurance Information

                                       Unpaid
                         Deferred      losses                                           Losses
                         policy       and loss                  Net          Net       and loss                               Net
(dollar amounts         acquisition  adjustment   Unearned    premiums    investment  adjustment Acquisition  Operating    premiums
 in thousands)            costs       expenses    premiums     earned      income(1)   expenses    expenses   expenses      written

 Year ended
 December 31, 1999:
<S>                       <C>        <C>           <C>         <C>          <C>        <C>          <C>        <C>         <C>
The PMA Insurance Group   $20,558    $1,144,087    $120,928    $221,934     $50,282    $166,674     $39,378    $38,909     $233,713
PMA Re                     23,446       743,528      88,183     293,862      57,686     206,891      80,749     13,589      278,998
Caliber One                 4,945        54,809      51,241      24,729       2,459      18,908       4,241      3,956       51,237
Corporate and Other            --        (9,823)         --        (438)       (370)         --          --     10,368         (438)
                         -----------------------------------------------------------------------------------------------------------
          Total           $48,949    $1,932,601    $260,352    $540,087    $110,057    $392,473    $124,368    $66,822     $563,510
                         ===========================================================================================================

 Year ended
 December 31, 1998:
The PMA Insurance Group   $18,660    $1,250,694    $109,766    $241,928     $64,580    $197,525     $45,190    $45,309     $234,837
PMA Re                     30,446       668,604     109,675     223,559      54,734     154,062      64,689     13,134      234,010
Caliber One                 2,009        33,147       8,504       1,750       1,453       1,402         958      2,449        6,436
Corporate and Other            --       (11,550)         --        (522)       (642)       (318)         --     11,267         (522)
                         -----------------------------------------------------------------------------------------------------------
          Total           $51,115    $1,940,895    $227,945    $466,715    $120,125    $352,671    $110,837    $72,159     $474,761
                         ===========================================================================================================

 Year ended
 December 31, 1997:
The PMA Insurance Group   $20,010    $1,353,917    $115,998    $212,348     $81,927    $193,530     $48,343    $51,848     $203,348
PMA Re                     25,278       622,484      95,457     163,603      52,270     113,931      45,158     10,827      177,934
Corporate and Other            --        26,786          --          --        (805)       (180)         --     12,464           --
                         -----------------------------------------------------------------------------------------------------------
          Total           $45,288    $2,003,187    $211,455    $375,951    $133,392    $307,281     $93,501    $75,139     $381,282
                         ===========================================================================================================
</TABLE>

(1) Net investment income is based on each segment's invested assets.

                                                                FS-5
<PAGE>


                             PMA Capital Corporation
                                   Schedule IV
                                   Reinsurance

<TABLE>
<CAPTION>
                                                                        Assumed
                                                          Ceded to       from                   Percentage of
                                               Direct      other         other                 amount assumed
(dollar amounts in thousands)                  amount     companies    companies    Net amount     to net
--------------------------------------------------------------------------------------------------------------

Year Ended December 31, 1999:

<S>                                           <C>          <C>          <C>          <C>         <C>
Property and liability insurance premiums     $328,590     $154,532     $366,029     $540,087        68%
                                              ========     ========     ========     ========     ========

Year Ended December 31, 1998:

Property and liability insurance premiums     $286,987     $ 96,961     $276,689     $466,715        59%
                                              ========     ========     ========     ========     ========

Year Ended December 31, 1997:

Property and liability insurance premiums     $277,871     $118,277     $216,357     $375,951        58%
                                              ========     ========     ========     ========     ========

</TABLE>

                                      FS-6
<PAGE>
                                              PMA Capital Corporation
                                                     Schedule V
                                         Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                                                                    Deductions -
                                                  Balance at        Charged to      write-offs of         Balance at
(dollar amounts in thousands)                    beginning of       costs and       uncollectible           end of
       Description                                  period           expenses         accounts              period
Year ended December 31, 1999:
 Allowance for uncollectible accounts:
<S>                                                 <C>                <C>            <C>                  <C>
    Premiums receivable                             $19,874            $275           $2,061               $18,088
    Reinsurance receivables                           2,178           3,350               --                 5,528

Year ended December 31, 1998:
 Allowance for uncollectible accounts:
    Premiums receivable                             $18,406          $1,488              $20               $19,874
    Reinsurance receivables                           2,096             108               26                 2,178

Year ended December 31, 1997:
 Allowance for uncollectible accounts:
    Premiums receivable                             $18,877              --             $471               $18,406
    Reinsurance receivables                           2,603              --              507                 2,096

</TABLE>

                                                        FS-7
<PAGE>
<TABLE>
<CAPTION>
                                                      PMA Capital Corporation
                                                            Schedule VI
                          Supplemental Information Concerning Property and Casualty Insurance Operations


                                                                                Discount on
                                                                               reserves for
                                          Deferred      Reserves for unpaid    unpaid claims
(dollar amounts in thousands)              policy        claims and claim        and claim
                                         acquisition        adjustment          adjustment           Unearned             Earned
 Affiliation with registrant               costs             expenses           expenses (1)         premiums            premiums

Consolidated property-casualty
subsidiaries:
<S>                                    <C>              <C>                   <C>                 <C>                 <C>
Year Ended December 31, 1999              $48,949          $1,932,601            $180,379            $260,352            $540,087

Year Ended December 31, 1998               51,115           1,940,895             194,624             227,945             466,715

Year Ended December 31, 1997               45,288           2,003,187             460,230             211,455             375,951





                                                         Claims and claim
                                                       adjustment expenses
                                                       incurred related to
(dollar amounts in thousands)          Net           -------------------------                      Paid claims         Net
                                    investment       Current          Prior         Acquisition    and adjustment     premiums
 Affiliation with registrant         income            year          years (2)        expenses        expenses        written


Consolidated property-casualty
subsidiaries:

Year Ended December 31, 1999         $110,057        $409,554        $(32,514)        $124,368        $455,293        $563,510

Year Ended December 31, 1998          120,125         373,098         (46,515)         110,837         458,844         474,761

Year Ended December 31, 1997          133,392         341,880         (86,006)          93,501         470,874         381,282
</TABLE>

(1)  Workers' compensation reserves discounted at approximately 5%.
(2)  Excludes accretion of loss reserve discount of $15,433, $26,088 and $51,407
     in 1999, 1998 and 1997, respectively.







                                                               FS-8
<PAGE>




PricewaterhouseCoopers LLP  [Letterhead]



                      Report of Independent Accountants on
                          Financial Statement Schedules

To the Board of Directors and Shareholders
of PMA Capital Corporation:

Our audits of the consolidated financial statements referred to in our report
dated February 2, 2000 appearing in the 1999 Annual Report to Shareholders of
PMA Capital Corporations (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedules listed in Item 14(a)(2) of this Form
10-K. In our opinion, these financial statement schedules present fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.


/s/ PricewaterhouseCoopers LLP

February 2, 2000



                                      FS-9
<PAGE>
<TABLE>
<CAPTION>
                                                     INDEX TO EXHIBITS

Exhibit
 No.      Description of Exhibit                             Method of Filing
-----------------------------------------------------       ----------------
<S>     <C>                                                <C>
(3)     Articles of incorporation and bylaws:

3.1     Amended and Restated Articles of                    Filed herewith.
        Incorporation of the Company as last amended
        December 7, 1998.

3.2     Amended and Restated Bylaws of the Company.         Filed herewith.

(10)    Material Contracts: Exhibits 10.1 through 10.21 are management contracts
        or compensatory plans.

10.1    Deferred Compensation Plan for Non-Employee         Filed herewith.
        Directors of the Company.

10.2    Amended and Restated Employment Agreement,          Filed as Exhibit 10.6 to the Company's Quarterly Report on
        dated May 1, 1999, between PMA Capital              Form 10-Q/A, No. 1 for the quarter ended June 30, 1999 and
        Corporation and Frederick W. Anton III.             incorporated herein by reference.

10.3    Amended and Restated Split-Dollar Insurance         Filed as Exhibit 10.7 to the Company's Quarterly Report on
        Agreement, dated May 12, 1999, among PMA            Form 10-Q/A, No. 1 for the quarter ended June 30, 1999 and
        Capital Corporation, Frederick W. Anton III         incorporated herein by reference.
        and Irrevocable Deed and Trust of Frederick
        W. Anton III.

10.4    Split-Dollar Insurance Agreement, dated May         Filed as Exhibit 10.8 to the Company's Quarterly Report on
        12, 1999, among PMA Capital Corporation,            Form 10-Q/A, No. 1 for the quarter ended June 30, 1999 and
        Frederick W. Anton III and Irrevocable Deed         incorporated herein by reference.
        of Trust of Frederick W. Anton III.

10.5    Split-Dollar Insurance Agreement, dated May         Filed as Exhibit 10.9 to the Company's Quarterly Report on
        12, 1999, among PMA Capital Corporation,            Form 10-Q/A, No. 1 for the quarter ended June 30, 1999 and
        Frederick W. Anton III and Irrevocable Deed         incorporated herein by reference.
        of Trust of Frederick W. Anton III.

10.6    Employment Agreement dated May 1, 1995              Filed as Exhibit 10.2 to the Company's Registration
        between the Company and John W. Smithson.           Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.7    Company's EDC Plan Trust Agreement dated as         Filed as Exhibit 10.3 to the Company's Registration
        of 1994.                                            Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.8    Company's Amended and Restated Executive            Filed as Exhibit 10.4 to the Company's Annual Report on Form
        Deferred Compensation Plan.                         10-K for the year ended December 31, 1998 and incorporated
                                                            herein by reference.



                                                          E-1
<PAGE>

10.9    Company's Supplemental Executive Retirement         Filed as Exhibit 10.4 to the Company's Registration
        Plan (SERP) dated July 1995.                        Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.10   Company's Amended and Restated 1987                 Filed as Exhibit 10.5 to the Company's Registration
        Incentive Stock Option Plan.                        Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.11   Company's Amended and Restated 1991 Equity          Filed as Exhibit 10.6 to the Company's Registration
        Incentive Plan.                                     Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.12   Amendment No. 1 to the Amended and Restated         Filed as Exhibit 10.1 to the Company's Quarterly Report on
        1991 Equity Incentive Plan dated May 5,             Form 10-Q for the quarter ended June 30, 1999 and
        1999.                                               incorporated herein by reference.

10.13   Company's Amended and Restated 1993 Equity          Filed as Exhibit 10.7 to the Company's Registration
        Incentive Plan.                                     Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.14   Amendment No. 1 to the Amended and Restated         Filed as Exhibit 10.2 to the Company's Quarterly Report on
        1993 Equity Incentive Plan dated May 5,             Form 10-Q for the quarter ended June 30, 1999 and
        1999.                                               incorporated herein by reference.

10.15   Company's Amended and Restated 1994 Equity          Filed as Exhibit 10.8 to the Company's Registration
        Incentive Plan.                                     Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.16   Amendment No. 1 to the Amended and Restated         Filed as Exhibit 10.3 to the Company's Quarterly Report on
        1994 Equity Incentive Plan dated May 5,             Form 10-Q for the quarter ended June 30, 1999 and
        1999.                                               incorporated herein by reference.

10.17   Company's 1995 Equity Incentive Plan.               Filed as Exhibit 10.9 to the Company's Registration
                                                            Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.18   Amendment No. 1 to the 1995 Equity Incentive        Filed as Exhibit 10.4 to the Company's Quarterly Report on
        Plan dated May 5, 1999.                             Form 10-Q for the quarter ended June 30, 1999 and
                                                            incorporated herein by reference.

10.19   Company's 1996 Equity Incentive Plan.               Filed as Exhibit 10.10 to the Company's Registration
                                                            Statement on Form 10 dated June 26, 1997 and incorporated
                                                            herein by reference.

10.20   Amendment No. 1 to the 1996 Equity Incentive        Filed as Exhibit 10.5 to the Company's Quarterly Report on
        Plan dated May 5, 1999.                             Form 10-Q for the quarter ended June 30, 1999 and
                                                            incorporated herein by reference.

10.21   Company's 1999 Equity Incentive Plan.               Filed as Annex A to the Company's Definitive Proxy Statement
                                                            on Schedule 14A dated March 26, 1999 and incorporated
                                                            herein by reference.


                                                          E-2
<PAGE>
10.22   Credit Agreement dated as of March 14, 1997         Filed as Exhibit 10.13 to the Company's Registration
        by and among the Company, The Bank of New           Statement on Form 10 dated June 26, 1997 and incorporated
        York, First Union National Bank of North            herein by reference.
        Carolina, Fleet National Bank, PNC Bank,
        National Association, Mellon Bank, N.A.,
        CoreStates Bank, N.A. and Dresdener Bank AG,
        New York Branch and Grand Cayman Branch.

10.23   Master Agreement dated as of February 7,            Filed as Exhibit 10.14 to the Company's Registration
        1997 between the Company and First Union            Statement on Form 10 dated June 26, 1997 and incorporated
        National Bank of North Carolina.                    herein by reference.

10.24   First Amended and Restated Letter of Credit         Filed as Exhibit 10.15 to the Company's Registration
        Agreement, dated March 14, 1997, by and             Statement on Form 10 dated June 26, 1997 and incorporated
        among the Company, the Bank of New York,            herein by reference.
        Mellon Bank, N.A., Fleet Bank, National
        Association, PNC Bank, National Association
        and First Union Bank of North Carolina.

10.25   Amendment No. 1 and Restatement, dated              Filed as Exhibit 10.15 to the Company's Annual Report on
        September 29, 1997, to the First Amended and        Form 10-K for the year ended December 31, 1998 and
        Restated Letter of Credit Agreement, dated          incorporated herein by reference.
        March 14, 1997.

10.26   Amendment No. 2, dated September 28, 1998,          Filed as Exhibit 10.16 to the Company's Annual Report on
        to the First Amended and Restated Letter of         Form 10-K for the year ended December 31, 1998 and
        Credit Agreement, dated March 14, 1997.             incorporated herein by reference.

10.27   Amendment No. 3, dated October 2, 1998, to          Filed as Exhibit 10.17 to the Company's Annual Report on
        the First Amended and Restated Letter of            Form 10-K for the year ended December 31, 1998 and
        Credit Agreement, dated March 14, 1997.             incorporated herein by reference.

10.28   Amended No. 4, dated as of September 27,            Filed as Exhibit 10 to the Company's Quarterly Report on
        1999, to First Amendment and Restated Letter        Form 10-Q for the quarter ended September 30, 1999 and
        of Credit Agreement, dated March 14, 1997.          incorporated herein by reference.

10.29   Caliber One Indemnity Company Purchase              Filed as Exhibit 10.17 to the Company's Annual Report on
        Agreement dated December 15, 1997.                  Form 10-K for the year ended December 31, 1997 and
                                                            incorporated herein by reference.

(12)    Computation of Ratio of Earnings to Fixed           Filed herewith.
        Charges.

(13)    Portions of the Company's 1999 Annual Report        Filed herewith.
        to Shareholders, which are expressly
        incorporated by reference in this Form 10-K,
        are "filed" as part of this Form 10-K.

(21)    Subsidiaries of the Company.                        Filed herewith.

(23)    Consent of independent accountant.                  Filed herewith.




                                                          E-3
<PAGE>
(24)    Power of attorney.

24.1    Powers of attorney.                                 Filed herewith.

24.2    Certified resolutions.                              Filed herewith.

(27)    Financial Data Schedule.                            Filed herewith (EDGAR version only).

</TABLE>


Shareholders may obtain copies of exhibits by writing to the Company at PMA
Capital Corporation, 1735 Market Street, Suite 2800, Philadelphia, PA.
19103-7590, Attn: Secretary















                                                          E-4