PMA Capital Reacts to Moody’s Ratings Moves

March 6, 2003

Philadelphia-based PMA Capital announced that Moody’s Investors Service issued a release stating that it has lowered the long-term debt ratings of PMA Capital Corporation (PMACC) to Ba1 from Baa3 and the insurance financial strength rating of PMA Capital Insurance Company (PMACIC) to Baa1 from A3.

Separately, the rating agency affirmed the Baa1 insurance financial strength ratings on the members of The PMA Insurance Group. Moody’s has a negative outlook on the ratings of PMACC, PMACIC and The PMA Insurance Group.

John Smithson, president and CEO of PMA Capital Corporation noted, “We value our relationship with Moody’s. However, we continue to believe that we will ultimately be successful in executing on various aspects of our capital plan, which we believe will provide us with the capital necessary to refinance our $45 million of outstanding bank debt and accomplish our business plan. We do not believe that Moody’s concern regarding the recent performance of our share price will prevent us from accomplishing our objectives.

“As a shareholder of PMA Capital myself, I am obviously disappointed that the market has chosen to value our shares on the basis of speculation about our capital raising plans. However, as we stated in a release earlier today, none of the alternatives currently being considered involve the issuance of our common stock or debt convertible into common stock.”

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