Exhibit 10.2

Exhibit 10.2

    SECOND
      AMENDMENT

    TO
      THE

    PMA
      CAPITAL CORPORATION 401(k) PLAN

    (As
      Amended and Restated Effective January 1, 1999)

     

    


     

    WHEREAS,
      PMA
      Capital Corporation
      (the
“Company”) maintains the PMA
      Capital Corporation 401(k) Plan (the
      “Plan”) for the benefit of certain of its employees, and the eligible employees
      of certain participating affiliates; and

     

    WHEREAS,
      the
      Plan was most recently amended and restated effective January 1, 1999 and
      has since been modified by the First Amendment thereto effective January 1,
      2003; and

     

    WHEREAS,
      the
      Company wishes to amend the Plan to implement a non-matching, age-based employer
      contribution, and to rename the Plan; and

     

    WHEREAS,
      under
      Sections 12.2 and 15.4 of the Plan, the Company has reserved the right to amend
      the Plan with respect to all Participating Companies at any time, subject to
      certain inapplicable limitations;

     

    NOW,
      THEREFORE,
      effective January 1, 2006, except as otherwise specifically provided herein,
      the
      Company hereby amends the Plan as follows:

     

    1. Section
      2.6 is amended to read as follows:

     

    “2.6 Annual
      Addition
      shall
      mean the sum of the following amounts credited to a Participant’s account for a
      Limitation Year:

     

    (a) Employer
      contributions (e.g., Pre-Tax, Employer Matching, and Retirement
      Contributions);

     

    (b) Forfeitures
      (if any) (excluding amounts necessary to reinstate previously forfeited Account
      balances in accordance with Section 7.4(g));

     

    (c) Employee
      Contributions (i.e., After-Tax Contributions), if any;

     

    (d) Any
      amount allocated to the Participant’s individual medical account (within the
      meaning of Section 415(l) of the Code) under any Defined Benefit Plan maintained
      by the Employer;

     

    (e) Any
      amount attributable to post-retirement medical benefits which is allocated
      pursuant to Section 419A(d) of the Code to the separate account of a Key
      Employee under a welfare benefit fund (within the meaning of Section 419(e)
      of
      the Code) maintained by the Employer;

     

    (f) Allocations
      under a simplified employee pension; and

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (g) Any
      Excess Amount applied under Section 5.1, 5.2, or 5.3 (if applicable), in the
      Limitation Year to reduce Employer or Affiliated Employer contributions for
      such
      Limitation Year.”

     

    2. A
      new
      Section 2.48 is added to read as follows, and all following sections of Article
      II (and all applicable cross-references) are renumbered as
      necessary:

     

    “2.48 Grandfathered
      Participant
      means a
      Participant who, as of December 31, 2005, was an Eligible Employee who had
      both
      attained age 50 and was credited with 5 or more Years of Service.”

     

    3. Section
      2.64 (renumbered from 2.63) is amended to read as follows:

     

    “2.64 Participant’s
      Account
      or
Account
      shall
      mean, as to any Participant, the separate account maintained in order to reflect
      his or her interest in the Plan. Each Participant’s Account shall be comprised
      of one or more separate subaccounts, as follows:

     

    (a) After-Tax
      Contribution Account
      shall
      mean the subaccount maintained to record the After-Tax Contributions allocated
      to a Participant’s Account and the adjustments relating thereto.

     

    (b) Employer
      Account
      shall
      mean the subaccount maintained to record any required Employer contributions
      made to the Plan on behalf of Participants who are not Key Employees under
      Section XIV with respect to any Plan Year in which the Plan is a Top-Heavy
      Plan.

     

    (c) Employer
      Matching Contribution Account (After-Tax Contributions)
      shall
      mean the subaccount maintained to record the Employer Matching Contributions
      allocated to a Participant’s Account with respect to the After-Tax Contributions
      made by such Participant and the adjustments relating thereto.

     

    (d) Employer
      Matching Contribution Account (Pre-Tax Contributions)
      shall
      mean the subaccount maintained to record the Employer Matching Contributions
      allocated to a Participant’s Account with respect to the Pre-Tax Contributions
      made on behalf of such Participant and the adjustments relating
      thereto.

     

    (e) Loan
      Account
      shall
      mean the subaccount maintained to record a Participant’s outstanding loan
      balance.

     

    (f) Pre-Tax
      Contribution Account
      shall
      mean the subaccount maintained to record the Pre-Tax Contributions made on
      behalf of a Participant and the adjustments relating thereto.

     

    (g) Qualified
      Matching Contribution Account
      shall
      mean the subaccount maintained to record the Qualified Matching Contributions
      made on behalf of a Participant and the adjustments relating
      thereto.

     


    
      
        
        

      

      
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    (h) Qualified
      Non-Elective Contribution Account
      shall
      mean the subaccount maintained to record the Qualified Non-Elective
      Contributions made on behalf of a Participant and the adjustments relating
      thereto.

     

    (i) Retirement
      Contribution Account
      shall
      mean the subaccount maintained to record the Retirement Contributions allocated
      to the Participant’s Account under Section 4.6 and the adjustments relating
      thereto.

     

    (j) Rollover
      Account
      shall
      mean the subaccount maintained to record the Rollover Contributions made by
      a
      Participant and the adjustments relating thereto.

     

    (k) Transfer
      Account
      shall
      mean the subaccount maintained to record the amounts transferred to this Plan
      in
      a plan-to-plan transfer from any other tax-qualified retirement plan and the
      adjustments relating thereto.”

     

    4. Section
      2.70 (renumbered from 2.69) is amended to read as follows:

     

    “2.70 Plan
      shall
      mean The PMA
      Capital Corporation Retirement Savings Plan,
      as set
      forth herein and as it may be amended hereafter from time to time. Prior to
      December 7, 1998, the Plan was known as The PMA 401(k) Plan. From December
      7,
      1998 through December 31, 2005, the Plan was known as The PMA Capital
      Corporation 401(k) Plan. The Plan is intended to qualify as a
      Section 401(k) profit sharing plan for all purposes under the
      Code.”

     

    5. A
      new
      Section 2.84 is added to read as follows, and all following sections of Article
      II (and all applicable cross-references) are renumbered as
      necessary:

     

    “2.84 Retirement
      Contributions
      shall
      mean the amounts contributed under the Plan by the Employer on behalf of
      Participants in accordance with Section 4.6.”

     

    6. Section
      2.97 (renumbered from 2.95) is amended to read as follows:

     

    “2.97 Vested
      Interest
      shall
      mean the sum of the vested balances in a Participant’s Pre-Tax Contribution
      Account, Retirement Contribution Account, Employer Account, if any, Rollover
      Account, if any, Transfer Account, if any, Loan Account, if any, Employer
      Matching Contribution Account (Pre-Tax Contributions), Employer Matching
      Contribution Account (After-Tax Contributions), if any, and After-Tax
      Contribution Account, if any.”

     

    7. A
      new
      Section 4.6 is added to read as follows, and all following sections of Article
      IV (and all applicable cross-references) are renumbered as
      necessary:

     


    
      
        
        

      

      
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    “4.6 Retirement
      Contributions.
      With
      respect to each calendar quarter beginning on or after January 1, 2006, the
      Employer shall make a Retirement Contribution on behalf of each Participant
      described in Section (a) hereof, in an amount described in Section (b)
      hereof.

     

    (a) Eligibility.
      A
      Participant shall have a Retirement Contribution made on his or her behalf
      for
      any calendar quarter if he or she:

     

    (i) had
      been
      credited with at least one Year of Service as of the day before the beginning
      of
      the calendar quarter;

     

    (ii) was
      a
      Participant at any time during such calendar quarter;

     

    (iii) had
      Compensation for such calendar quarter; and

     

    (iv) was
      an
      Eligible Employee of the Employer as of the last day of the calendar quarter;
      provided however, that this requirement shall be deemed to be satisfied if
      the
      Participant had a Separation from Service during the calendar quarter by reason
      of his or her death, Total Disability, or after having satisfied the
      requirements for a normal, early or late retirement under the terms of the
      PMA
      Capital Corporation Pension Plan.

     

    (b) Amount.
      For any
      Participant described in Subsection (a) hereof, the Retirement Contribution
      with
      respect to any calendar quarter shall equal:

     

    (i) for
      any
      Participant who is not a Grandfathered Participant, a percentage of his or
      her
      Compensation for the calendar quarter to be determined under the following
      table, based on the Participant’s attained age as of the last day of the Plan
      Year in which the calendar quarter occurs:

    

      
        	
                Participant’s
                  Age

              	
                Percentage
                  of Compensation

              
	
                Less
                  than 30

              	
                2%

              
	
                At
                  least 30 but less than 45

              	
                3%

              
	
                At
                  least 45 but less than 55

              	
                4%

              
	
                55
                  or older

              	
                5%

              


      

       

    

    (ii) for
      any
      Grandfathered Participant, a percentage of his or her Compensation for the
      calendar quarter to be determined under the following table, based on the
      Participant’s attained age as of the last day of the Plan Year in which the
      calendar quarter occurs:

     


    
      
        
        

      

      
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                Participant’s
                  Age

              	
                Percentage
                  of Compensation

              
	
                At
                  least 50 but less than 55

              	
                6%

              
	
                At
                  least 55 but less than 60

              	
                8%

              
	
                60
                  or older

              	
                10%”

              


      

    

     

    8. Section
      4.10(a) (renumbered from 4.9(a)) is amended to read as follows:

     

    “(a) Investment
      Elections.
      Each
      Participant shall be given the option to direct the investment of the balance
      in
      his or her Account among alternative Investment Media established as part of
      the
      overall Trust Fund. Such Investment Media may be under the full control and
      management of the Trustee, an insurance company or an Investment Manager. A
      Participant’s right to direct the investment of any contribution shall apply
      only to the selection of the desired Investment Medium or Media and shall be
      subject to such restrictions and limitations as may be imposed by each of the
      Investment Media or by the Administrator. The following rules shall apply to
      the
      administration of such Investment Media:

     

    (i) At
      the
      time an Employee becomes eligible for the Plan, he or she shall complete an
      Appropriate Form stating the percentage of his or her contributions to be
      invested in the available Investment Media. Allocations to an Investment Medium
      shall be made in such minimum percentage, as the Administrator shall determine
      from time to time.

     

    (ii) A
      Participant may change the investment of his or her future contributions on
      each
      Valuation Date.

     

    (iii) A
      Participant may elect to transfer balances from one or more Investment Media
      to
      another on each Valuation Date.

     

    (iv) All
      investment elections and changes shall be made in such manner, at such times
      and
      in such form as the Administrator may from time to time prescribe through
      uniform and nondiscriminatory rules.

     

    (v) The
      amounts contributed by all Participants to each Investment Medium shall be
      commingled for investment purposes.

     

    (vi) The
      Trustee may hold assets of the Trust Fund and make contributions therefrom
      in
      the form of cash without liability for interest, if for administrative purposes
      it becomes necessary or practical to do so.

     

    (vii) Notwithstanding
      any other provision of this Section 4.10(a) to the contrary, a Participant
      may
      direct the investment of his or her Account (exclusive of his or her Retirement
      Contribution Account) into and out of the PMA Capital Corporation Class A Common
      Stock Fund subject to the following guidelines:

     


    
      
        
        

      

      
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    (1) A
      Participant may elect, pursuant to procedures established by the Administrator,
      to have up to twenty-five (25) percent or such other percentage, up to one
      hundred (100) percent, as determined by the Administrator on a uniform and
      non-discriminatory basis of his or her Pre-Tax Contributions, After-Tax
      Contributions and Employer Matching Contributions invested in the PMA Capital
      Corporation Class A Common Stock Fund;

     

    (2) Once
      each
      ninety (90) days or at such other times as determined by the Administrator
      on a
      uniform and non-discriminatory basis, a Participant may elect to transfer,
      pursuant to procedures established by the Administrator, up to twenty-five
      (25)
      percent or such other percentage, up to one hundred (100) percent, as determined
      by the Administrator on a uniform and non-discriminatory basis of the balance
      in
      his or her Account (excluding the outstanding balance of any Plan loans to
      such
      Participant and excluding his or her Retirement Contribution Account) from
      any
      other Investment Media in which his or her Account is invested to the PMA
      Capital Corporation Class A Common Stock Fund;

     

    (3) Once
      each
      ninety (90) days or at such other times as determined by the Administrator
      on a
      uniform and non-discriminatory basis, a Participant may elect to transfer,
      pursuant to procedures established by the Administrator, up to twenty-five
      (25)
      percent or such other percentage, up to one hundred (100) percent, as determined
      by the Administrator on a uniform and non-discriminatory basis of the portion
      of
      his or her Account invested in the PMA Capital Corporation Class A Common Stock
      Fund to one or more of the other Investment Media.”

     

    9. A
      new
      Section 4.10(c) is added to read as follows:

     

    “(c) Default
      Elections.
      If a
      Participant fails to make an investment election in accordance with Section
      4.10(a) that is expressly applicable to his or her Retirement Contribution
      Account, his or her Retirement Contribution Account shall be invested as
      follows:

     

    (i) If
      the
      Participant has made a currently effective investment election with respect
      to
      all subaccounts other than his or her Retirement Contribution Account, then
      his
      or her Retirement Contribution Account shall be invested among the selected
      Investment Media (other than the PMA Capital Corporation Class A Common Stock
      Fund) in the same proportions as the percentage that has been directed to each
      selected Investment Medium (other than the PMA Capital Corporation Class A
      Common Stock Fund) bears to the sum of the percentages that have been directed
      to all such other Investment Media. For example, if a Participant has elected
      to
      invest his Account as follows - 25% to Fund A, 25% to Fund B, 25% to Fund C,
      and
      25% to the PMA Capital Corporation Class A Common Stock Fund - but he has not
      made a currently effective investment election with respect to his Retirement
      Contribution Account, his Retirement Contribution Account shall be invested
      as
      follows - 331⁄3% to Fund A, 331⁄3% to Fund B and 331⁄3% to Fund C. 

     


    
      
        
        

      

      
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    (ii) If
      the
      Participant has no currently effective investment election under the Plan at
      the
      time a Retirement Contribution is made, his or her Retirement Contribution
      Account shall be invested in such Investment Medium or Media as is determined
      by
      the Administrator, in its sole discretion.”

     

    10. Section
      4.12 (renumbered from 4.11) is amended to read as follows:

     

    “4.12 Adjustments
      to Pre-Tax, After-Tax, Employer Matching Contribution and Retirement
      Contribution Rates.
      Notwithstanding the foregoing provisions of this Article IV, to the extent
      necessary to comply with applicable law, the maximum Pre-Tax and After-Tax
      Contribution percentage and the amount of Employer Matching Contributions or
      Retirement Contributions may be increased or decreased in the absolute
      discretion of the Administrator, provided that no such adjustment may be made
      without at least thirty (30) days prior written notice to all
      Participants.”

     

    11. Section
      4.13 (renumbered from 4.12) is amended to read as follows:

     

    “4.13 No
      Profits Limitation.
      Pre-Tax
      Contributions, Employer Matching Contributions and Retirement Contributions
      hereunder shall be made without regard to whether an Employer has current or
      accumulated net earnings.”

     

    12. Section
      6.1(a) is amended to read as follows:

     

    “6.1 Participants’
      Accounts.
      At the
      direction of the Administrator, there shall be established and maintained for
      each Participant the following subaccounts:

     

    (a) An
      After-Tax Contribution Account to which shall be credited all After-Tax
      Contributions paid to the Trust Fund at the Participant’s election pursuant to
      Section 4.2;

     

    (b) An
      Employer Account to which shall be credited any Employer contributions required
      to be made under Article XIV of the Plan on behalf of Participants who are
      not
      Key Employees for any Plan Year in which the Plan is a Top-Heavy
      Plan;

     

    
      
        
        

      

      
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    (c) An
      Employer Matching Contribution Account (After-Tax Contributions) to which shall
      be credited the Employer Matching Contributions made in respect of his or her
      After-Tax Contributions pursuant to Section 4.3;

     

    (d) An
      Employer Matching Contribution Account (Pre-Tax Contributions) to which shall
      be
      credited the Employer Matching Contributions made in respect of his or her
      Pre-Tax Contributions pursuant to Section 4.3;

     

    (e) A
      Loan
      Account to which shall be credited the outstanding balance of a Participant’s
      loan;

     

    (f) A
      Pre-Tax
      Contribution Account to which shall be credited all Pre-Tax Contributions paid
      to the Trust Fund at his or her election;

     

    (g) A
      Qualified Matching Contribution Account to which shall be credited the Qualified
      Matching Contributions made on behalf of the Participant pursuant to Section
      4.5;

     

    (h) A
      Qualified Non-Elective Contribution Account to which shall be credited the
      Qualified Non-Elective Contributions made on behalf of the Participant pursuant
      to Section 4.5;

     

    (i) A
      Retirement Contribution Account to which shall be credited the Retirement
      Contributions made on behalf of the Participant pursuant to Section
      4.6.

     

    (j) A
      Rollover Account to which shall be credited the Rollover Contributions made
      by,
      or on behalf of, a Participant or other Eligible Employee pursuant to Section
      4.7; and

     

    (k) A
      Transfer Account to which shall be credited any amounts transferred to this
      Plan
      from another tax-qualified plan pursuant to Section 4.8.”

     

    13. Section
      7.2(b) is amended to read as follows:

     

    “(b) Vesting
      in Other Employer Contributions and Retirement
      Contributions. 

     

    (i) Employer
      Matching Contributions.
      A
      Participant’s interest in his or her Employer Matching Contribution Account
      (After-Tax Contributions) and in his or her Employer Matching Contribution
      Account (Pre-Tax Contributions) shall be vested and nonforfeitable in accordance
      with the following schedule:

     

    
      
        
        

      

      
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              Number
                of Years of Service

            	
              Account’s
                Vested Percentage

            
	
              Less
                than 1

            	
              0%

            
	
              1
                but less than 2

            	
              10%

            
	
              2
                but less than 3

            	
              40%

            
	
              3
                but less than 4

            	
              60%

            
	
              4
                but less than 5

            	
              80%

            
	
              5
                or more

            	
              100%

            


    

    


    (ii) Retirement
      Contributions.
      A
      Participant’s interest in his or her Retirement Contribution Account shall be
      vested and nonforfeitable in accordance with the following schedule:


     

    
      	
              Number
                of Years of Service

            	
              Account’s
                Vested Percentage

            
	
              Less
                than 5

            	
              0%

            
	
              5
                or more

            	
              100%

            


    

    


    Upon
      termination of the Participant’s employment with the Employer and all Affiliated
      Employers for any reason at any time, the vested portion of his or her Employer
      Matching Contribution Account (After-Tax Contributions), his or her Employer
      Matching Contribution Account (Pre-Tax Contributions), and his or her Retirement
      Contribution Account shall be distributable to him or her in the manner and
      at
      the time set forth in this Article VII. If a Participant receives a
      cash-out pursuant to Section 7.4(f), the nonvested portion of such
      Participant’s Account, if any, shall be forfeited in accordance with
      Section 7.4(f) at the time of distribution. If a Participant has a
      Separation from Service and does not receive a cash-out pursuant to
      Section 7.4(f) or otherwise receive a distribution, then the non-vested
      portion of such Participant’s Account will be forfeited after such Participant
      incurs five (5) consecutive one year Breaks in Service (i.e.,
      a
      Period of Severance of five (5) years). All forfeitures shall be utilized to
      reduce Employer Matching Contributions and/or Retirement Contributions for
      the
      then current or succeeding Plan Years.

     

    Notwithstanding
      the foregoing, a Participant’s interest in his or her Account shall be 100%
      vested and nonforfeitable upon such Participant’s death or Total Disability or
      attaining of Normal Retirement Age and shall be distributable in the manner
      and
      at the time set forth in this Article VII.

     

    If
      a
      Rehired Employee becomes a Participant after having incurred five (5)
      consecutive one year Breaks in Service (i.e., a Period of Severance of five
      (5)
      years), such Rehired Employee’s service earned after such five consecutive one
      year Breaks in Service (i.e., a Period of Severance of five (5) years) will
      be
      disregarded for the purpose of determining the vested percentage in his/her
      Account which accrued before such five consecutive one year Breaks in Service
      (i.e.,
      a
      Period of Severance of five (5) years). However, as to such a Rehired Employee,
      both pre-Break and post-Break service will count for purposes of determining
      the
      vested percentage in his or her Account that accrued after such
      Break.”

     

    
      
        
        

      

      
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    14. A
      new
      Section 7.4(f)(v) is added, effective for distributions made on and after March
      28, 2005 (including distributions to Participants who terminate employment
      prior
      to such date), to read as follows:

     

    “(v) In
      the
      event of a mandatory distribution greater than $1,000 in accordance with the
      provisions of Section 7.4(f)(i), if the Participant does not elect to have
      such
      distribution paid directly to an eligible retirement plan specified by the
      Participant in a direct rollover in accordance with Section 7.13 or to receive
      the distribution directly, then the Administrator will pay the distribution
      in a
      direct rollover to an individual retirement account designated by the
      Administrator.”

     

    15. Section
      8.1(a) is amended to read as follows:

     

    “(a) General.
      Subject
      to the provisions of this Section 8.1 and once the Participant’s After-Tax
      Contribution Account has been withdrawn in full pursuant to Section 8.2(a),
      a
      Participant, other than a Participant who is no longer an Employee, may make
      a
“Hardship” (as defined below) withdrawal (with the approval of the
      Administrator) from the Participant’s Account (exclusive of his or her
      Retirement Contribution Account), in order to satisfy an immediate and heavy
      financial need specified in Section 8.1(d), in the following order of priority:
      (i) Rollover Account balance, (ii) Transfer Account balance, (iii) Pre-Tax
      Contribution Account balance, (iv) Employer Matching Contribution Account
      (After-Tax Contributions) balance, to the extent vested, and (v) Employer
      Matching Contribution Account (Pre-Tax Contributions) balance, to the extent
      vested. As required by Section 8.1(d), no Hardship withdrawal pursuant to this
      Section 8.1 shall be permitted until the Participant elects to withdraw, or
      has
      withdrawn, the entire balance in his or her After-Tax Contribution Account
      in
      accordance with Section 8.2(a). For purposes of this Section 8.1, “Hardship” is
      defined as an immediate and heavy financial need, as specified in Section
      8.1(d), of the Participant where such Participant lacks other available
      resources.”

     

    16. Section
      8.2(b) is amended to read as follows:

     

    “(b) Upon
      and After Attaining Age 591⁄2.
      Upon
      attaining age 591⁄2, a Participant, by filing an Appropriate Form, may elect to
      withdraw up to the total value of his or her Account (exclusive of his or her
      Retirement Contribution Account), determined as of the Valuation Date coinciding
      with, or if the Valuation Date does not coincide with the benefit commencement
      date, the Valuation Date immediately preceding the benefit commencement date.
      Withdrawals pursuant to this Section 8.2(b) may be elected no more frequently
      than once per Plan Year.”

     

    
      
        
        

      

      
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    17. Section
      9.3 is amended to read as follows:

     

    “9.3 Amount
      of Loan.
      The
      amount an eligible Participant may borrow may not be:

     

    (a) Less
      than
      $200, and

     

    (b) More
      than
      the amount which (when added to the outstanding balance of any other loan made
      from the Plan or any other quantified retirement plan maintained by the Employer
      or an Affiliated Employer) is the lesser of:

     

    (i) $50,000,
      reduced by the excess of

     

    (1) The
      highest outstanding balance of loans from the Plan during the 12 months ending
      on the day before the date a new loan is made over

     

    (2) The
      outstanding loan balance on the date of the new loan, or

     

    (ii) Fifty
      percent (50%) of the value of the eligible Participant’s Vested Interest
      (exclusive of any Vested Interest in his or her Retirement Contribution
      Account).”

     

    18. Section
      9.4(b) is amended to read as follows:

     

    “(b) Allocation
      between Accounts.
      All
      loans shall first be made from the Participant’s Rollover Account, then from the
      Transfer Account, then from the Employer Matching Contribution Account (Pre-Tax
      Contributions), to the extent vested, then from the Employer Matching
      Contribution Account (After-Tax Contributions), to the extent vested, then
      from
      the Pre-Tax Contribution Account and finally from the After-Tax Contribution
      Account. No loans shall be made from a Participant’s Retirement Contribution
      Account. Repayments of principal and interest shall be invested in accordance
      with the investment election then in effect with respect to the Participant’s
      Pre-Tax Contributions. If no Pre-Tax Contributions are being made to the Plan
      by
      the Participant or if there is no valid investment election in effect, the
      principal and interest repayments shall be invested in such Investment Medium
      or
      Media as is determined by the Administrator, in its sole
      discretion.”

     

    19. Section
      11.3 is amended to read as follows:

     

    “11.3 Continuing
      Conditions with Respect to Contributions.
      Any
      obligation to contribute Pre-Tax Contributions and/or to make Employer Matching
      Contributions or Retirement Contributions to the Trust Fund is hereby
      conditioned upon the continued qualification of the Plan under Section 401(a)
      of
      the Code and the exempt status of the Trust Fund under Section 501(a) of the
      Code and upon the deductibility of such contributions under Section 404(a)
      of
      the Code. That portion of any Pre-Tax Contributions, Employer Matching
      Contributions, or Retirement Contributions which is contributed or made by
      reason of a good faith mistake of fact, or by reason of a good faith mistake
      in
      determining the deductibility of such contribution, shall be returned to the
      Employer as promptly as practicable, but not later than one year after the
      contribution was made or the deduction was disallowed (as the case may be).
      The
      amount returned pursuant to the preceding sentence shall he an amount equal
      to
      the excess of the amount actually contributed over the amount that would have
      been contributed if the mistake had not been made; provided, however, that
      gains
      attributable to the returnable portion shall be retained in the Trust Fund;
      and
      provided, further, that the returnable portion shall be reduced (a) by any
      losses attributable thereto and (b) to avoid a reduction in the balance of
      any
      Participant’s Account below the balance that would have resulted if the mistake
      had not been made.”

     


    
      
        
        

      

      
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    20. Section
      11.4 is amended to read as follows:

     

    “11.4 Status
      as Eligible Individual Account Plan.
      Pursuant to Section 407 of ERISA, up to one hundred (100) percent of the Plan’s
      assets (exclusive of those assets which are attributable to Retirement
      Contributions) may be invested in Qualifying Employer Securities that are PMA
      Capital Corporation Class A Common Stock.”

     

    21. Section
      12.1 is amended to read as follows:

     

    “12.1 Employer’s
      Obligations Limited.
      The
      Plan is voluntary on the part of each Employer, and except as required by
      applicable law, each Employer shall have no responsibility to satisfy any
      liabilities under the Plan. Furthermore, the Employer and Plan Sponsor do not
      guarantee to continue the Plan, and the Plan Sponsor at any time may, by
      appropriate amendment of the Plan, suspend or discontinue Employer Matching
      Contributions and/or Retirement Contributions, with or without cause. Complete
      discontinuance of all Pre-Tax Contributions, Employer Matching Contributions
      and
      Retirement Contributions shall be deemed a termination of the Plan. If Employer
      Matching Contributions are suspended, each Eligible Employee shall be notified
      of the suspension and each Eligible Employee may thereupon elect to suspend
      his
      or her Pre-Tax Contributions for the period during which Employer Matching
      Contributions are suspended.”

     

    22. Section
      12.3 is amended to read as follows:

     

    “12.3 Effect
      of Termination.
      If the
      Plan is completely or partially terminated, or if there is a complete
      discontinuance of Pre-Tax, Employer Matching, and Retirement Contributions,
      then
      the interests of all Participants affected by such termination or discontinuance
      in their Accounts shall be 100% vested and nonforfeitable. The balances credited
      to the Accounts of the affected Participants may be distributed to them in
      the
      manner set forth in Article VII hereof, as if a distribution event described
      in
      Section 7.1 hereof had occurred with respect to each affected Participant on
      the
      date of the termination; or the Administrator (in its sole discretion) may
      direct that the following sentence shall apply to their Accounts.
      Notwithstanding the foregoing, the balances credited to the Pre-Tax Contribution
      Accounts of the affected Participants may be distributed prior to the occurrence
      of a distribution event described in Section 7.1 only to the extent permitted
      by
      the Code.”

     


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, PMA CAPITAL CORPORATION
      has
      caused these presents to be duly executed, under seal, this 24th day
      of  October, 2005.

     

    
      	
              Attest:

            	
              PMA
                CAPITAL CORPORATION

            
	
              [SEAL]

            	 


    

    


    
      	
              /s/
                Robert L. Pratter

            	
              /s/
                William E. Hitselberger

            
	
              Robert
                L. Pratter, Secretary

            	
              William
                E. Hitselberger, Executive Vice President and Chief Financial
                Officer

            


    

    
 

     

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