Exhibit 10.3

                                                                                                                            Exhibit
    10.3
    SECOND
      AMENDMENT

     

    TO
      THE

     

    PMA
      CAPITAL CORPORATION EXECUTIVE MANAGEMENT PENSION PLAN 

     

    (as
      amended and restated effective january 1, 2000)

     

    


     

    WHEREAS,
      some
      executives hired in mid-career by PMA
      Capital Corporation
      (the
“Company”) are not able to be credited under the PMA Capital Corporation Pension
      Plan (the “Pension Plan”) with the maximum number of years of benefit service
      allowable under the Pension Plan (“Short Service Reduction”); and

     

    WHEREAS,
      the
      Company maintains the PMA
      Capital Corporation Executive Management Pension Plan
      (the
“Plan”) to provide the Short Service Reduction benefits to a select group of
      management and highly compensated employees; and

     

    WHEREAS,
      the
      Plan was most recently amended and restated effective January 1, 2000 and has
      since been modified by the First Amendment thereto effective January 1, 2003;
      and

     

    WHEREAS,
      the
      Company now desires to close participation in the Plan to new eligible
      executives and to modify the method by which Plan benefits are calculated by
      (1)
      freezing the accrual of benefits under the current Plan formula effective
      December 31, 2005 (but not freezing future reductions to accrued benefits as
      may
      result from future service with the Company), and (2) supplementing such frozen
      accruals with benefits derived from future “Contribution Credits” to be made to
      the Plan for plan years beginning on or after January 1, 2006; and

     

    WHEREAS,
      under
      Sections 7.2(a) and 8.4 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.  A
      new
      Section 1.4 is added to read as follows, and all following sections of Article
      I
      (and all applicable cross-references) are renumbered as necessary:

     

    “1.4 Beneficiary.
      The
      person or persons, or legal entity or entities, designated by a Participant
      or
      otherwise eligible under Section 6.3 to receive benefits (with respect to the
      Participant’s Post-2005 Service Retirement Benefit) after the Participant’s
      death.”

     

    2.  A
      new
      Section 1.9 is added to read as follows, and all following sections of Article
      I
      (and all applicable cross-references) are renumbered as necessary:

     

    “1.9 Compensation.
      With
      respect to any Participant, his or her “Compensation” (as such term is defined
      in Article II of the Retirement Savings Plan) equal to his or her annual rate
      of
      pay as in effect on the date that he or she first performed an Hour of
      Service.”

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.  A
      new
      Section 1.10 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.10 Contribution
      Account.
      With
      respect to any Participant, the recordkeeping entry maintained on the books
      and
      records of the Plan Sponsor to reflect Contribution Credits made on the
      Participant’s behalf (reduced by the value of any Expired Contribution
      Subaccounts), and adjustments thereto, pursuant to Article III.”

     

    4.  A
      new
      Section 1.11 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.11 Contribution
      Credits.
      Those
      amounts which are credited to a Participant’s Contribution Account pursuant to
      Section 3.1.”

     

    5.  A
      new
      Section 1.12 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.12 Contribution
      Subaccount.
      A
      subaccount maintained within a Participant’s Contribution Account, with respect
      to Contribution Credits for a given Plan Year, and adjustments
      thereto.”

     

    6.  A
      new
      Section 1.13 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.13 Determination
      Date.
      March
      31, June 30, September 30 and December 31 of each Plan Year.”

     

    7.  A
      new
      Section 1.15 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.15 Expired
      Contribution Subaccount.
      Solely
      with respect to a Participant whose Past Service Credit under the Plan has
      been
      reduced to zero in accordance with Section 2.1, the oldest Contribution
      Subaccount of any Participant shall become an Expired Contribution Subaccount
      on
      the date as of which two times the Participant’s Years of Service after
      December 31, 2005 under the Retirement Savings Plan exceeds
      twenty-five (25). An example of the conversion of Contribution Subaccounts
      to
      Expired Contribution Subaccounts is set forth in Section 2.1(c). Upon his
      or her completion of each subsequent Year of Service under the Retirement
      Savings Plan, the Participant’s next oldest Contribution Subaccount shall become
      an additional Expired Contribution Subaccount.”

     

     

    
      
         

      

      
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    8.  A
      new
      Section 1.17 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.17 Grandfathered
      Participant.
      A
      Participant who, as of December 31, 2005, was an Eligible Executive who had
      both
      attained age 50 and was credited with 5 or more actual Years of Vesting Service
      under the Pension Plan (excluding any additional years of service that are
      recognized under this Plan).

     

    9.  Section
      1.18 (renumbered from 1.10) is amended to read as follows:

     

    “1.18 Participant.
      An
      Eligible Executive or Former Eligible Executive who accrues, or has accrued,
      benefits under this Plan on and after January 1, 1999. No Eligible Executive
      shall become a Participant after December 31, 2005.”

     

    10.  Section
      1.21 (renumbered from 1.13) is amended to read as follows:

     

    “1.21 Past
      Service Retirement Benefit.
      That
      portion of a Participant’s Retirement Benefit that is attributable to his past
      service retirement benefit under this Plan on and after January 1, 1999 (and
      frozen with respect to future accruals effective December 31, 2005), and under
      the PMA SERP before January 1, 1999, both as determined in accordance with
      Section 2.2 hereof.”

     

    11.  A
      new
      Section 1.27 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.27 Post-2005
      Service Retirement Benefit.
      That
      portion of a Participant’s Retirement Benefit that is attributable to
      Contribution Credits credited on his or her behalf pursuant to Section
      3.1.”

     

    12.  A
      new
      Section 1.29 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.29 Retirement
      Benefit.
      For any
      Participant, the sum of his or her Past Service Retirement Benefit and Post-2005
      Service Retirement Benefit.”

     

    13.  A
      new
      Section 1.30 is added to read as follows, and all following sections of Article
      I (and all applicable cross-references) are renumbered as
      necessary:

     

    “1.30 Retirement
      Savings Plan.
      The PMA
      Capital Corporation Retirement Savings Plan (formerly known as the PMA Capital
      Corporation 401(k) Plan) as in effect on January 1, 2006 and as such plan may
      be
      further amended and/or restated from time to time and each successor or
      replacement tax-qualified retirement plan.”

     

     

    
      
         

      

      
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    14.  A
      new
      Section 1.36 is added to read as follows:

     

    “1.36 Valuation
      Date.
      Each
      day on which the NYSE is open for business and such other dates(s), if any,
      as
      the Administrator shall determine.”

     

    15.  Section
      2.1 is amended to read as follows:

     

    “2.1 Past
      Service Credit.
      

     

    (a) A
      Participant’s Past Service Credit under the Plan on and after
      January 1, 1999, and under the PMA SERP before
      January 1, 1999, shall be determined as follows. A Participant who is
      or was an Eligible Executive shall be credited with one additional year of
      Benefit Service (as such term is defined in Article I of the Pension Plan)
      under
      this Plan on and after January 1, 1999, and under the PMA SERP before
      January 1, 1999, for each year of Benefit Service credited under the
      Pension Plan through December 31, 2005 until the sum of the
      Participant’s years of Benefit Service credited under this Plan on and after
      January 1, 1999, and under the PMA SERP before
      January 1, 1999 (i.e. the Participant’s Past Service Credit under the
      Plan on and after January 1, 1999 and under the PMA SERP before
      January 1, 1999) and the Participant’s years of Benefit Service
      credited under the Pension Plan through December 31, 2005 equals
      twenty-five (25). A Participant’s Past Service Credit shall not increase after
      December 31, 2005.

     

    (b) If:
      

     

    (1) before
      January 1, 2006, the sum of a Participant’s Past Service Credit under
      the Plan on and after January 1, 1999, the PMA SERP before
      January 1, 1999, and such Participant’s years of Benefit Service under
      the Pension Plan is greater than twenty-five (25); or

     

    (2) after
      December 31, 2005, the sum of a Participant’s Past Service Credit
      under the Plan on and after January 1, 1999 through
      December 31, 2005 and the PMA SERP before January 1, 1999,
      the Participant’s years of Benefit Service under the Pension Plan through
      December 31, 2005, and two times the Participant’s Years of Service
      after December 31, 2005 under the Retirement Savings Plan is greater
      than twenty-five (25); 

     

    such
      Participant’s Past Service Credit under the Plan and under the PMA SERP shall be
      reduced so that such sum does not exceed twenty-five (25). For each succeeding
      year in which the Participant earns a Year of Service under the Retirement
      Savings Plan, his Past Service Credit shall be reduced by one year (but not
      below zero). Any such reduction shall be made first under the PMA SERP and
      then
      under this Plan. Once a Participant’s Past Service Credit is reduced to zero
      under this Section 2.1, 

     

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    his
      Contribution Subaccounts shall begin to be converted into Expired Contribution
      Subaccounts as he accumulates additional Years of Service under the Retirement
      Savings Plan, as described in Section 1.15 (definition of Expired Contribution
      Subaccount).

     

    (c) Example.
      Assume
      that, as of December 31, 2005, a Participant has 10 years of Past Service Credit
      (including such credit under this Plan and the PMA SERP) and 10 years of Benefit
      Service under the Pension Plan. In 2006, the Participant begins to accumulate
      Contribution Credits which are allocated to his Contribution Subaccounts for
      each year. In 2008, the sum of his Past Service Credit (10 years), his Benefit
      Service under the Pension Plan (10 years) and two times his Years of Service
      under the Retirement Savings Plan (2 x 3 years = 6 years) exceeds the 25-year
      limit. At that point, he will no longer receive Contribution Credits and his
      Past Service Credit will begin to be reduced (starting with his Past Service
      Credit under the PMA SERP). If he continues to earn Years of Service under
      the
      Retirement Savings Plan, his Past Service Credit will be reduced to zero by
      2018. At that point, two times his Years of Service under the Retirement Savings
      Plan (2 x 13 years = 26 years) will exceed the 25-year limit and his oldest
      Contribution Subaccount (from 2006) will be converted into an Expired
      Contribution Subaccount. If he continues to earn Years of Service under the
      Retirement Savings Plan, his last Contribution Subaccount will be converted
      into
      an Expired Contribution Subaccount in 2020, and he will cease to be entitled
      to
      any benefit under this Plan.”

     

    16.  Section
      2.2 is amended to read as follows:

     

    “2.2 Past
      Service Retirement Benefit.
      Subject
      to Sections 2.3 and 8.2 hereof, a Participant’s Past Service Retirement Benefit,
      if any, shall be an amount equal to the amount that would be payable under
      the
      benefit formula actually used in determining such Participant’s benefit under
      Article V of the Pension Plan at the time such benefit becomes payable but
      using
      only the Participant’s Past Service Credit determined under Section 2.1 as
      his/her Years of Benefit Service (as defined in Article I of the Pension Plan)
      under the Pension Plan and the following additional assumptions:

     

    (a) The
      Participant shall be deemed to receive Compensation (as such term is defined
      in
      Article I of the Pension Plan) during each year of past service equal to such
      Participant’s annual rate of pay as in effect on the Participant’s Employment
      Commencement Date (as such term is defined in Article I of the Pension Plan)
      without taking into account the Section 401(a)(17) Limitation or any salary
      reduction contributions by such Participant to the PMA Capital Corporation
      Excess Retirement Savings Plan or to the PMA Capital Corporation Executive
      Deferred Compensation Plan; and

     

     

     

    
      
         

      

      
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    (b) The
      Section 415 Limitation contained in Article XI of the Pension Plan shall not
      be
      taken into account.”

     

    17.  Section
      2.3 is amended to read as follows:

     

    “2.3 Reemployment.
      If a
      Participant whose employment with a Participating Company was terminated at
      a
      time when such Participant had a Past Service Retirement Benefit and whose
      benefit had commenced to be paid under this Plan or under the PMA SERP becomes
      reemployed by the Participating Company, payment of such Past Service Retirement
      Benefit shall be suspended until such individual again ceases to be employed
      by
      the Participating Company. Thereupon, payment of such Past Service Retirement
      Benefit shall recommence.”

     

    18.  A
      new
      Article III is added to read as follows, and all following Articles and Sections
      (and all applicable cross-references) are renumbered as necessary:

     

    “ARTICLE
      III - POST-2005 RETIREMENT SERVICE BENEFITS

     

    3.1 Contribution
      Credits.
      With
      respect to each calendar quarter in each Plan Year beginning on or after January
      1, 2006, the Plan Sponsor shall credit the Contribution Account of each
      Participant described in Section (a) hereof with a Contribution Credit in the
      amount described in Section (b) hereof.

     

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

     

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

     

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

     

    (iii) was
      an
      Eligible Executive of a Participating Company as of the last day of the calendar
      quarter; provided however, that this requirement shall be deemed to be satisfied
      if the Participant had retired from the Participating Company during the
      calendar quarter after having satisfied the requirements for a normal, early
      or
      late retirement under the terms of the Pension Plan.

     

    Notwithstanding
      the foregoing, no further Contribution Credits shall be credited on behalf
      of a
      Participant where the sum of (x) the Participant’s years of Past Service Credit
      as determined under Section 2.1, plus (y) the Participant’s years of Benefit
      Service credited under the Pension Plan, plus two (2) times the Participant’s
      Years of Service credited after 

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

     

    December 31, 2005
      under the Retirement Savings Plan, exceeds twenty-five (25).

     

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

     

    (i) for
      any
      Participant who is not a Grandfathered Participant, one fourth (1/4) of a
      percentage of his or her Compensation 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 one fourth (1/4) of his or her
      Compensation, 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

               

            
	
              At
                least 50 but less than 55

               

            	
              6%

               

            
	
              At
                least 55 but less than 60

               

            	
              8%

               

            
	
              60
                or older

               

            	
              10%

               

            


    

     

    3.2 Establishment
      of Plan Accounts.
      The
      Plan Sponsor shall establish and maintain on its books and records, solely
      as a
      bookkeeping entry, a Contribution Account for each Participant. Within such
      Contribution Account, the Plan Sponsor shall maintain an individual Contribution
      Subaccount with respect to each Plan Year for which Contribution Credits are
      credited on behalf of a Participant. Each Contribution Subaccount will be used
      to record:

     

    (a) The
      Contribution Credits credited under this Plan on behalf of the Participant
      pursuant to Section 3.1 for the Plan Year for which the Contribution Subaccount
      was established;

     

     

    
      
         

      

      
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    (b) The
      related credits or debits for investment earnings or losses under Section 3.3;
      and

     

    (c) The
      payments of benefits to the Participant or the Participant’s Spouse under
      Articles V or VI from such Subaccount.

     

    3.3 Allocation
      among Investment Options.
      A
      Participant may direct that the Contribution Credits credited to his or her
      Contribution Account be valued, in accordance with Section 3.5 as if the balance
      credited to the Contribution Account were invested in one or more Vanguard
      Funds
      or other investments selected by the Participant. The Participant may select
      any
      of the investment options set forth in Appendix A in multiples of 5% (or such
      smaller percentage as the Administrator may determine). The designation of
      one
      or more investment options, whether a Vanguard Fund or otherwise, by a
      Participant under this Section 3.3 shall be used solely to measure the amounts
      of investment earnings or losses that will be credited or debited to each of
      the
      Participant’s Contribution Subaccounts on the Plan Sponsor’s books and records,
      and the Plan Sponsor shall not be required under the Plan to establish any
      account in the Vanguard Funds or to purchase any Vanguard Fund shares or other
      investment on the Participant’s behalf. The designation by a Participant of any
      investment option under this Section 3.3 shall be made in accordance with the
      rules and procedures prescribed by the Administrator.

     

    3.4 Administration
      of Investments.
      The
      investment gain or loss with respect to Contributions Credits credited to the
      Participant’s Contribution Account on behalf of such Participant shall continue
      to be determined in the manner selected by the Participant pursuant to Section
      3.3 until a new designation is filed with the Administrator or its appointee.
      If
      any Participant fails to file a designation, he or she shall be deemed to have
      elected to continue to follow the investment designation, if any, in effect
      for
      the immediately preceding Plan Year. A designation filed by a Participant
      changing his or her investment option selection shall apply to either future
      contributions, amounts already accumulated in his or her Contribution Account,
      or both. A Participant may change his or her investment selection on any
      Valuation Date and such change shall be effected as soon as administratively
      practicable.

     

    3.5 Valuation
      of Contribution Accounts.
      The
      Contribution Account of each Participant shall be valued on each Valuation
      Date
      based upon the performance of the investment option or options selected by
      the
      Participant. Such valuation shall reflect the net asset value expressed per
      share of each designated investment option. Each Contribution Account shall
      be
      valued separately. A valuation summary shall be prepared on each Determination
      Date and/or such other dates as may be determined by the
      Administrator.

     

     

     

    
      
         

      

      
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    3.6 Calculation
      of Post-2005 Service Retirement Benefit.
      As of
      any date of determination, the value of a Participant’s Post-2005 Service
      Retirement Benefit, when expressed as a lump sum value, shall equal the sum
      of
      the balances in each of his or her Contribution Subaccounts, other than Expired
      Contribution Subaccounts. Solely with respect to a Participant whose Past
      Service Credit under the Plan has been reduced to zero in accordance with
      Section 2.1, the oldest Contribution Subaccount of any Participant for any
      Plan
      Year for which Contribution Credits were credited on his or her behalf shall
      become an Expired Contribution Subaccount on the date as of which two times
      the
      Participant’s Years of Service credited after December 31, 2005 under the
      Retirement Savings Plan, exceeds twenty-five (25). Upon his or her completion
      of
      each subsequent Year of Service under the Retirement Savings Plan, the
      Participant’s next oldest Contribution Subaccount shall become an additional
      Expired Contribution Subaccount. Upon becoming an Expired Contribution
      Subaccount, any Contribution Subaccount shall be permanently forfeited by the
      Participant. An example of the conversion of Contribution Subaccounts to Expired
      Contribution Subaccounts set forth in Section 2.1(c).

     

    3.7 Reemployment.
      If a
      Participant whose employment with a Participating Company was terminated at
      a
      time when such Participant had a Post-2005 Service Retirement Benefit and whose
      benefit had commenced to be paid under this Plan or under the PMA SERP becomes
      reemployed by the Participating Company, payment of such Post-2005 Service
      Retirement Benefit shall be suspended until such individual again ceases to
      be
      employed by the Participating Company. Thereupon, payment of such Post-2005
      Service Retirement Benefit shall recommence.”

     

    19.  Article
      IV (renumbered from Article III) is renamed as “VESTING OF RETIREMENT
      BENEFITS.”

     

    20.  Section
      4.1 (renumbered from 3.1) is amended to read as follows:

     

    “4.1 Full
      Vesting.
      Except
      as otherwise provided in this Section 4.1 and in Section 8.2 hereof, a
      Participant shall have a fully (100%) vested and nonforfeitable interest in
      his/her Retirement Benefit, if any, once he/she has satisfied the age and
      service requirements for early or normal retirement under the Pension Plan,
      as
      amended effective June 1, 1999, whichever occurs first. Notwithstanding the
      foregoing: 

     

    (a) a
      Participant shall forfeit his/her vested interest, if any, in his/her Retirement
      Benefit if his/her employment is terminated for Cause; and

     

    (b) a
      Participant shall have no vested interest in any Expired Contribution
      Subaccount.”

     

     

    
      
         

      

      
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    21.  Article
      V
      (renumbered from Article IV) is renamed as “FORM OF PAYMENT OF RETIREMENT
      BENEFITS.”

     

    22.  Section
      5.1 (renumbered from 4.1) is amended to read as follows:

     

    “5.1 Payment
      of Retirement Benefit.
      Except
      as otherwise provided in Sections 5.3 and 8.2 hereof, a Participant’s vested
      Retirement Benefit, if any, shall commence to be paid at the time retirement
      income payments commence being made to the Participant under the Pension Plan.
      If a Participant elects early retirement under the Pension Plan then the
      Participant’s Retirement Benefit shall commence at the same time as payments
      from the Pension Plan and shall be reduced by the same early retirement
      reduction factors, if any, applicable to his/her retirement income from the
      Pension Plan, as amended effective June 1, 1999.”

     

    23.  Section
      5.2 (renumbered from 4.2) is amended to read as follows:

     

    “5.2 Form
      of Payment.
      The
      normal form of payment of a Participant’s Retirement Benefit shall be the same
      as that provided under the Pension Plan. Subject to Section 5.5 hereof, a
      Participant’s Retirement Benefit shall be paid, however, in the same form which
      the Participant has elected, or is deemed to have elected, pursuant to the
      Pension Plan. The Participant’s election under the Pension Plan (with the valid
      consent of his/her Spouse where required under the Pension Plan) shall also
      be
      applicable to the payment of his/her Retirement Benefit. Notwithstanding the
      foregoing, any Participant who elects a Social Security level income option
      to
      augment his/her benefit under the Pension Plan, on account of his/her retirement
      before he/she is eligible for retirement benefits under the Federal Social
      Security system (as such optional form is described in Section 7.2 of the
      Pension Plan) shall receive his/her Retirement Benefit in the form of a single
      life annuity, as reduced, if necessary, in the manner set forth in Section
      5.1
      hereof. The Administrator shall have the sole and absolute discretion and
      authority to approve or reject a Participant’s request for a different method of
      payment than specified herein.”

     

    24.  Section
      5.3 (renumbered from 4.3) is amended to read as follows:

     

    “5.3 Change
      of Control during Employment.
      Upon a
      Change of Control, or within two years thereafter, regardless of whether or
      not
      the Plan has been terminated during such period, if the Participating Company
      (or any successor corporation) shall terminate the Participant’s employment for
      other than Cause or if the Participant shall terminate employment for Good
      Reason or retirement, death, or Total Disability, then the Participant shall
      become eligible for, and entitled to receive, the Participant’s Retirement
      Benefit. The Participant’s Retirement Benefit under this provision shall be paid
      out in a lump sum upon such termination of employment. Such benefit shall be
      paid by the Participating Company 

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (or
      any
      successor corporation) to the Participant in a lump sum, in cash, within ninety
      days following the date of termination. Such amount will be calculated as the
      sum of (a) the Actuarial Equivalent of the Participant’s Past Service Retirement
      Benefit using
      the assumptions for determining Actuarial Equivalence provided under the Pension
      Plan for determining lump sum distributions,
      plus
      (b) the balance of his Contribution Account. Any Participant who remains
      employed by the Participating Company (or any successor corporation) for two
      or
      more years after a Change of Control shall receive the Retirement Benefit in
      accordance with Sections 5.1 and 5.2 hereof.”

     

    25.  Section
      5.4 (renumbered from 4.4) is amended to read as follows:

     

    “5.4 Change
      of Control during Retirement.
      In the
      event of a Change of Control of the Plan Sponsor, any Participant who has
      previously retired from the Participating Company and is receiving payment
      of
      the Participant’s Retirement Benefit shall receive, within ninety days following
      such Change of Control, a single payment in cash which is the Actuarial
      Equivalent of the Participant’s remaining benefit under this Plan using the
      assumptions for determining Actuarial Equivalence provided under the Pension
      Plan for determining lump sum distributions.”

     

    26.  Section
      5.5 (renumbered from 4.5) is amended to read as follows:

     

    “5.5 Failure
      to Assume Plan upon Change of Control.
      In the
      event the Plan is not assumed by a successor upon a Change of Control of the
      Plan Sponsor, then all Participants shall become eligible for, and entitled
      to
      receive, their Retirement Benefit. Such Retirement Benefit shall be paid out
      in
      a lump sum upon such failure to assume the Plan. Such benefit shall be paid
      by
      the Participating Company (or any successor corporation) to the Participant
      in a
      lump sum, in cash, within ninety days following the date of the failure to
      assume the Plan. Such amount will be calculated as the sum of (a) the Actuarial
      Equivalent of the Participant’s Past Service Retirement Benefit, plus (b) the
      balance of his Contribution Account.”

     

    27.  Section
      5.6 (renumbered from 4.6) is amended to read as follows:

     

    “5.6 Actuarial
      Equivalent.
      A
      Retirement Benefit which is payable in any form other than the normal form
      under
      the Pension Plan, i.e., a straight life annuity over the lifetime of the
      Participant, or which commences at any time prior to the Participant’s Normal
      Retirement Date, shall be the Actuarial Equivalent of the Retirement Benefit
      payable hereunder using
      the assumptions for determining Actuarial Equivalence provided under the Pension
      Plan for making a comparable determination.”

     

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    28.  Article
      VI (renumbered from V) is amended to read as follows:

     

    “ARTICLE
      VI - DEATH BENEFITS

     

    6.1 Death
      Benefit - Past Service Retirement Benefit.
      Except
      as otherwise provided herein, a death benefit shall be payable to the surviving
      Spouse of a Participant who dies before commencement of his/her Past Service
      Retirement Benefit, if the Spouse is entitled to a qualified pre-retirement
      survivor annuity under Article VI of the Pension Plan. The amount of the death
      benefit hereunder shall be based on the amount of the Participant’s Past Service
      Retirement Benefit determined using the date of death as the date of retirement
      or separation from service and, for purposes of converting the Past Service
      Retirement Benefit to a spousal survivor death benefit, using the rules
      contained in Article VI of the Pension Plan. The death benefit under this
      Section 6.1 shall be administered and distributed in accordance with the
      provisions of Article VI of the Pension Plan.

     

    In
      the
      event of a Change of Control of the Plan Sponsor, any surviving Spouse who
      is
      receiving payment of a death benefit pursuant to this Section 6.1 shall receive
      a single lump sum cash payment which is the Actuarial Equivalent of the
      surviving Spouse’s remaining death benefit. Such benefit shall be paid by the
      Participating Company (or any successor corporation) to the surviving Spouse
      within ninety days following the date of the Change of Control.

     

    6.2 Death
      Benefit - Post-2005 Service Retirement Benefit.
      The
      payment of death benefits with respect to a Participant’s Post-2005 Service
      Retirement Benefit shall be governed by the following rules:

     

    (a) Death
      After Commencement of Benefit Payments.
      If the
      Participant dies after commencing to receive his or her Post-2005 Service
      Retirement Benefit, any death benefit with respect thereto shall be determined
      solely in accordance with the form of payment that the Participant had elected
      for his or her Post-2005 Service Retirement Benefit.

     

    (b) Death
      Prior to Commencement of Benefit Payments.
      If the
      Participant dies before commencing to receive his or her Post-2005 Service
      Retirement Benefit, the then current balance of his or her Contribution Account
      shall be paid to his or her Beneficiary(ies) in a single sum payment as soon
      as
      administratively practicable following the Participant’s death.

     

    6.3 Beneficiary
      Designations.
      Each
      Participant may designate, in a signed writing delivered to the Administrator
      in
      a form approved by the Administrator, one or more Beneficiaries to receive
      any
      distribution of a 

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    Post-2005
      Service Retirement Benefit which may become payable as the result of the
      Participant’s death.

     

    (a) Changes
      and Failed Designations.
      A
      Participant may designate different Beneficiaries at any time by delivering
      a
      new designation. Any designation shall become effective only upon its receipt
      by
      the Administrator, and the last effective designation received by the
      Administrator shall supersede all prior designations. If a Participant dies
      without having designated a Beneficiary, or if no Beneficiary survives the
      Participant, the Participant’s Contribution Account shall be payable (i) to his
      or her surviving Spouse, (ii) if the Participant is not survived by a Spouse,
      to
      the Participant’s Beneficiary under his or her Participating Company’s basic
      group-term life insurance program (if any), or (iii) if neither (i) nor (ii)
      is
      applicable, to the executors and/or administrators of his or her
      estate.

     

    (b) Divorced
      Participant.
      Notwithstanding the foregoing or any other provision of the Plan to the
      contrary, in the case of a divorced Participant who named his or her former
      Spouse as his or her Beneficiary prior to his or her divorce and who dies
      without changing such Beneficiary designation, such deceased Participant’s
      former Spouse shall be deemed to have predeceased the Participant. In that
      event, (i) the deceased Participant’s current surviving Spouse shall be deemed
      to replace his or her former Spouse as his or her Beneficiary in accordance
      with
      the terms of his or her Beneficiary designation form and the remainder of his
      or
      her Beneficiary designation form shall continue in effect in accordance with
      its
      terms, or (ii) if there is no current surviving Spouse, the deceased
      Participant’s Beneficiary shall be the deceased Participant’s surviving primary
      Beneficiary (ies) as designated on, and in accordance with the terms of, his
      or
      her Beneficiary designation form, or (iii) if there is no current surviving
      primary Beneficiary, the deceased Participant’s Beneficiary shall be the
      deceased Participant’s surviving secondary Beneficiary (ies) as designated on,
      and in accordance with the terms of, his Beneficiary designation form, or (iv)
      if there is no surviving secondary Beneficiary, the deceased Participant’s
      Beneficiary shall be the executor of the deceased Participant’s will or the
      administrator of his or her estate.

     

    (c) Documentary
      Proof.
      The
      Administrator may require the execution and delivery of any documents, papers,
      and receipts that the Administrator deems reasonably necessary in order to
      be
      assured that the payment of any death benefit is made to the person or persons
      entitled to payment.

     

    6.4 Payments
      to Incompetents.
      If any
      individual to whom a benefit is payable under the Plan is a minor, or if the
      Administrator determines that any individual to whom a benefit is payable under
      the Plan is incompetent to receive such payment or to give a valid release
      therefor, payment shall be made to the guardian, committee or other
      representative of the estate of such individual which has been duly appointed
      by
      a court of competent jurisdiction. If no guardian, committee or other
      representative has been appointed, payment may be made to any person as
      custodian for such individual under any Uniform Transfer to Minors Act or may
      be
      made to or applied to or for the benefit of the minor or incompetent, the
      incompetent’s spouse, children or other dependents, the institution or persons
      maintaining the minor or incompetent, or any of them, in such proportions as
      the
      Administrator from time to time shall determine; and the release of the person
      or institution receiving the payment shall 

     

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    be
      a
      valid and complete discharge of any liability of the Plan with respect to any
      benefit so paid. 

     

    6.5 Simultaneous
      Death.
      In the
      event of the simultaneous death of a Participant eligible for a death benefit
      under this Article VI and his/her Spouse or other Beneficiary so that it is
      not
      possible to determine which one was the survivor, it shall be presumed for
      purposes of this Article VI that the Spouse or other Beneficiary predeceased
      the
      Participant.”

     

    29.  Section
      8.2 (renumbered from 7.2) is amended to read as follows:

     

    “8.2 Amendment
      or Termination.

     

    (a) The
      Board
      of Directors reserves the right to alter, amend or terminate the Plan, or any
      part thereof, through the adoption of a written resolution; provided, however,
      that no such action by the Board of Directors shall reduce a Participant’s
      Retirement Benefit accrued as of the time thereof and no such amendment or
      termination may occur as a result of a Change of Control, within two years
      after
      a Change of Control, or as part of any plan to effect a Change of Control.
      Each
      amendment shall be set forth in a written instrument.

     

    (b) If
      the
      Plan is terminated, a determination shall be made of each Participant’s
      Retirement Benefit as of the Plan termination date. The amount of a
      Participant’s benefit or benefits shall be payable to the Participant at the
      time it would have been payable under Article V hereof if the Plan had not
      been
      terminated. If a Participant dies after termination of the Plan, but prior
      to
      his/her Termination of Employment, his/her surviving Spouse shall receive a
      distribution of his/her death benefit, determined in accordance with Article
      VI
      hereof, but based on the Participant’s Retirement Benefit as of the Plan
      termination date.”

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    30.  An
      “Appendix B” is added to the Plan to read as follows:

     

    “APPENDIX
      B - INVESTMENT OPTIONS AVAILABLE FOR MEASUREMENT OF INVESTMENT EARNINGS OR
      LOSSES IN CONTRIBUTION ACCOUNTS UNDER PLAN

     

    (a) Morgan
      Growth Fund

     

    (b) Total
      Bond Market Index Fund

     

    (c) 500
      Index
      Fund

     

    (d) Treasury
      Money Market Fund

     

    (e) STAR
      Fund

     

    (f) Windsor
      II Fund

     

    (g) International
      Growth Fund

     

    (h) Explorer
      Fund

     

    (i) Extended
      Market Index Fund

     

    (j) Total
      International Stock Index Fund

     

    (k) Any
      other
      investment options selected by the Administrator”

     

    


     

    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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