A.M. Best Takes Various Rating Actions on PMA Capital Corp; Removes All Ratings from Under Review.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength ratings to A- (Excellent) from B++ (Very Good) of PMA Insurance Group (Blue Bell, PA). The ratings have been removed from under review with developing implications. At the same time, A.M. Best has affirmed the financial strength rating of B+ (Very Good) of PMA Capital Insurance Company (PMACIC a/k/a PMA Re) (Philadelphia, PA). This rating has been removed from under review with negative implications.

Concurrently, A.M. Best has assigned debt ratings of "bb" to the newly issued senior secured convertible debentures of PMA Capital Corp (PMA Capital) (NASDAQ: PMACA) (Philadelphia, PA) and assigned issuer credit ratings of "bb" and "bbb-" to PMA Capital and PMACIC, respectively.

Additionally, A.M. Best has affirmed the remaining debt and indicative ratings of PMA Capital and PMA Capital Trust I and II. All debt ratings have been removed from under review with developing implications. All ratings have been assigned a stable outlook. (See link below for complete rating detail.)

These rating actions follow A.M. Best's review of PMA Capital's operations and the successful completion of its senior convertible debentures exchange offer and issuance of an additional $15 million in debentures, the proceeds of which will be maintained at PMA Capital.

By restructuring the convertible debt to extend the first put date to 2009 rather than 2006, PMA Capital alleviated much of A.M. Best's concerns regarding its near-term liquidity and cash flow needs. By allowing the run-off operations to further develop, the additional time also reduces the uncertainty of PMACIC's ability to fund the holding company's cash obligations.

The upgrade of PMA Insurance Group's financial strength ratings reflects the reduced potential impact of holding company capital requirements in the near term. The ratings also recognize PMA Insurance Group's strong stand-alone statutory capitalization, good regional market presence and stable, although not strong, operating profitability. Given the potential adverse selection at PMA Insurance Group over the last year as well as a possible decline in industry market conditions over the mid term, A.M. Best does have concerns about PMA Insurance Group's ability to improve upon its current operating performance, which is needed to support its A- (Excellent) rating.

The affirmation of PMACIC's financial strength rating reflects its good stand-alone statutory capitalization and, given the additional protection of an adverse development cover recently put into place, A.M. Best's expectation that its operations will run-off adequately. However, the rating also acknowledges the execution risk of PMACIC's run-off plan and its reduced financial flexibility given the revised corporate structure.

The debt ratings of PMA Capital reflect its improved financial flexibility following the recent corporate restructuring and successful senior convertible debentures exchange offer. By restructuring the convertible debt, the company significantly reduced the level of dividend dependence in 2006.

For a complete listing of PMA Capital Corp's debt and financial strength ratings, please visit..http://www.ambest.com/press/111503pma.pdf.

For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/debt.

For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies, groups and industry composites, please visit http://www.ambest.com/pc.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.