PMA Units Lowered

Standard & Poor’s lowered its counterparty credit and financial strength ratings on U.S.-based reinsurer PMA Capital Insurance Co. (PMACIC) and regional primary writers Pennsylvania Manufacturers’ Assoc. Insurance Co., Pennsylvania Manufacturers Indemnity Co., and Manufacturers Alliance Insurance Co. (collectively, PMAIG) to “A-” from “A.” Simultaneously, the ratings were removed from CreditWatch negative, where they were placed on May 3, 2002.

Concurrently, S&P’s issued its “BBB-” counterparty credit rating to the holding company, PMA Capital Corp. (PMACC), in addition to its preliminary “BBB-” senior debt, “BB+” subordinated debt, and “BB” preferred stock ratings on PMACC’s $250 million universal shelf, which was filed on July 18, 2002. The outlook is negative.

The negative outlook reflects uncertainty related to PMACC’s execution of its capital raising initiatives to pay down maturing debt and support strong projected premium growth at the operating companies, as well as the expectation that earnings improvements will not materialize until 2003.