AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

Exhibit 10.2

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT, made. and entered into as of the 15th day of March 2009, by and between PMA Capital Corporation, a Pennsylvania corporation, with its principal place of business at 380 Sentry Parkway, Blue Bell, Pennsylvania 19422-0754 and/or such of its affiliates and/or subsidiaries it designates (hereinafter collectively referred to as “PMA Capital”) and WILLIAM E. HITSELBERGER (“Executive”).

WHEREAS, Executive has significant experience in the insurance industry and currently serves as the Chief Financial Officer and Executive Vice President of PMA Capital pursuant to an Executive Employment Agreement made and entered into as of March 15, 2006;

WHEREAS, PMA Capital desires to continue to avail itself of the expertise possessed by Executive and to employ Executive as Chief Financial Officer and Executive Vice President, in which position he will have access to confidential information of PMA Capital;

WHEREAS, Executive desires to be so employed by PMA Capital;

WHEREAS, the parties desire to amend and restate the March 15, 2006 Employment Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and each intending to be legally bound hereby, the parties agree as follows:

1.            Employment .  Subject to the terms of this Agreement, PMA Capital hereby continues to employ Executive as Chief Financial Officer and Executive Vice President. In this capacity, Executive will perform such duties as are appropriate to the management of the financial and operational aspects of PMA Capital’s business and such other duties, consistent with the foregoing duties and his position, as directed by the Board of Directors of PMA Capital and the Chief Executive Officer of PMA Capital. Executive shall report directly to the Chief

Executive Officer of PMA Capital. Executive hereby accepts such employment and agrees to serve PMA Capital on a full-time basis and to perform such duties faithfully, diligently and to the best of his ability and in conformity with all federal, state and local statutes, regulations and rules applicable to PMA Capital and in accordance with the PMA Capital Business Ethics and Practices Policy. Executive further agrees not to engage in any outside for-profit business, employment or commercial activity, without first obtaining approval in writing from the Chief Executive Officer of PMA Capital.

2.             Compensation . PMA Capital agrees to pay Executive, and Executive agrees to accept from PMA Capital, in full payment for Executive’s services, compensation consisting of the following:

(a)           A minimum base salary at an annual rate of $445,000 payable on a semi-monthly basis or on such other basis that PMA Capital may adopt as its regular payroll practice. The Compensation Committee of the Board of Directors of PMA Capital will review the base salary on at least an annual basis at the same time that it reviews the annual incentive compensation awards;

(b)           The standard benefits PMA Capital makes available from time to time to its senior executive employees and, in addition, Executive will participate in the following employee benefit plans according to their terms, as amended and restated from time to time: the PMA Capital Corporation Retirement Savings Excess Plan; the PMA Capital Corporation Executive Management Pension Plan (the “EMPP”); the PMA Capital Corporation Supplemental Executive Retirement Plan (frozen as of 12/31/05); and a supplemental long-term disability benefit which currently provides for a benefit of $6,250 per month, subject to policy restrictions;

(c)           Annual incentive compensation based on performance objectives established for 2009, 2010 and 2011, to be described in Exhibit A.  Such incentive compensation is to be paid within two and a half months after the end of the applicable year.  Annual incentive metrics will be established annually by the Compensation Committee of the Board; and

(d)           Eligibility for such long-term incentive award(s) to be determined by the Compensation Committee of the Board of Directors of PMA Capital under PMA Capital’s 2007 Equity Incentive Plan or any successor plan as described in Exhibit B.

3.            Expenses . PMA Capital will reimburse Executive for such of his out-of-pocket expenses as are reasonably necessary in connection with services rendered by Executive pursuant to this Agreement, as provided in the business expense policies adopted by PMA Capital from time to time.  Notwithstanding the foregoing, the amount of expenses eligible for reimbursement during any calendar year shall not affect the expenses eligible for reimbursement in any other calendar year, and the reimbursement of an eligible expense shall be made as soon as practicable after Executive requests such reimbursement, but not later than December 31 following the calendar year in which the expense was incurred

4.            Term . The term of this Agreement is from March 15, 2009 through September 14, 2011. No later than July 1, 2011, Executive shall inform the Chief Executive Officer of PMA Capital in writing whether or not he is interested in negotiating an extension of this Agreement for a new term and, if so, propose the terms and conditions for such an extension. Within one week of receiving such written notice from Executive, PMA Capital shall inform Executive if it is willing to negotiate an extension of this Agreement. If both parties are interested in negotiating an extension of this Agreement, they then will engage in good faith negotiations for an extension of this Agreement, provided, however, that Executive’s failure to negotiate in good faith will not be deemed to be “Cause” for termination of Executive’s

employment hereunder, and will not be the basis for PMA Capital’s denial of or failure to pay any severance payments, compensation or benefits due to Executive pursuant to the provisions of this Agreement.

5.            Termination : Executive employment may be terminated before the end of the term of this Agreement as follows:

(a)           By PMA Capital, at any time, for Cause, after providing Executive with at least three (3) weeks written notice, specifying the circumstances amounting to Cause and, if requested by Executive, the opportunity for Executive and his counsel to appear before the Audit Committee of the Board of Directors of PMA Capital to address these circumstances. “Cause” shall mean Executive: (i) commits any act of fraud, embezzlement, theft or commission sofa felony in the course of his employment; (ii) engages inknowing and willful misconduct or gross negligence in the performance of his duties; (iii) unlawfully appropriates a corporate opportunity of PMA Capital or its affiliates and subsidiaries (as defined in paragraph 23 below); or (iv) knowingly and willfully breaches any of Executive’s representations, warranties or covenants contained in this Agreement in any material respect, each as reasonably determined by the Audit Committee of the Board of Directors of PMA Capital after the recommendation of the Chief Executive Officer of PMA Capital, In the event that “Cause” is based on gross negligence, PMA Capital shall give Executive written notice specifying in reasonable detail the conduct that it believes amounts to gross negligence, and shall provide Executive with the three (3) week notice period specified above to cease or correct such conduct;

(b)           Automatically on the date of Executive’s death;

(c)           Automatically if Executive becomes disabled or otherwise incapacitated so that Executive cannot perform the essential functions of his job with or without reasonable accommodation for a continuous period of more than one hundred eighty (180) days

or for more than one hundred eighty (180) cumulative days in any one (1) year period (“Permanent Disability”). Any question as to the existence of Permanent Disability upon which Executive and PMA Capital cannot agree shall be determined by a qualified independent physician selected by Executive (or, if Executive is unable to make such selection, such selection shall be made by any adult member of Executive’s immediate family or Executive’s legal representative) and approved by PMA Capital, said approval not to be unreasonably withheld. The determination of such physician shall be communicated in writing to PMA Capital and to Executive and shall be final and, conclusive for all purposes of this Agreement. Until the date of termination as defined herein by reason of Permanent Disability, Executive shall continue to receive the compensation and benefits as set forth in paragraph 2 of this Agreement. No termination of this Agreement for Permanent Disability. shall impair any rights of Executive to collect benefits according to the terms of any disability policy maintained by PMA Capital for that Permanent Disability;

(d)           By PMA Capital, at any time, for other than Cause upon thirty (30) days written notice to Executive;

(e)           By Executive’s voluntary resignation , prior to his being employed for at least 90% of the term of the Agreement, for other than Good Reason upon not less than thirty (30) days prior written notice to PMA Capital;

(f)           By Executive’s voluntary resignation for Good Reason, which shall mean Executive has given thirty (30) days prior written notice that he intends to resign due to:  (i) a material adverse change in his duties, authority or responsibilities without his agreement; (ii) a material negative change in his office location which requires him to relocate his office to executive offices outside of an area within a fifty (50) mile radius of PMA Capital’s existing executive offices in Blue Bell, Pennsylvania; (iii) there being a material reduction in the

overall value of the employee benefits being provided to him pursuant to paragraph 2(b) unless the reduction is effective for all senior executive employees; or (iv) a material breach by PMA Capital of any of its obligations to Executive under this Agreement (“Good Reason Events”).  For a voluntary resignation to constitute a voluntary resignation for Good Reason Executive (i) must provide PMA Capital notice within sixty (60) days of the initial existence of one or more of the Good Reason Events (“Good Reason Notice”) and PMA Capital fails to remedy the Good Reason Event(s) within thirty (30) days of receipt of the notice and (ii) must voluntarily incur a “separation from service” from PMA Capital within the meaning of section 409A of the Code” within 120 days of the initial existence of the Good Reason Event described in the Good Reason Notice;

(g)           By Executive’s voluntary resignation between twelve and fourteen months following a Section 409A Change in Control of PMA Capital Corporation, upon not less than thirty (30) days prior written notice to PMA Capital, which notice is given not earlier than eleven (11) months and not later than thirteen (13) months following a Section 409A Change in Control. For purposes of this Agreement, a “Section 409A Change in Control” is a “Change in Control” as set forth in paragraph 9(b) of the PMA Capital Corporation 2007 Omnibus Incentive Compensation Plan that is also a change in the ownership or effective control of PMA Capital Corporation, or in the ownership of a substantial portion of the assets of PMA Capital Corporation, as described in Section 409A(2)(A)(v) of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury regulations promulgated thereunder; or

(h)           By Executive’s voluntary resignation for other than Good Reason   after being employed for at least 90% of the term of the Agreement (“Service Period”), upon not less than thirty (30) days prior written notice to PMA Capital, provided Executive incurs a

“separation from service” from PMA Capital, within the meaning of Section 409A of the Code, on or prior to the expiration of this Agreement.

6.             Incidents of Termination.

(a)           If Executive’s employment is terminated under subparagraph 5(a), (b), (c) or (e) above, PMA Capital shall have no further obligation under this Agreement, except as provided under paragraph 16 and except the obligation to:  (i) pay Executive an amount equal to the portion of his compensation and out-of-pocket business expenses, as defined in paragraph 3, as may be accrued and unpaid on the date of termination; (ii) pay Executive such portion of Executive’s annual incentive compensation for the year in which termination occurs as the Compensation Committee of the Board of Directors of PMA Capital shall determine was earned by Executive; and (iii) provide all benefits set forth pursuant to the benefit, medical, pension or other plans and programs provided by PMA Capital for which Executive qualifies (collectively “Benefits”) as are due under the terms of the Benefits plans and programs, recognizing that Executive’s employment has terminated.  In the event of Executive’s death, any sums and benefits due to Executive under any provision of this Agreement shall be paid to his estate or heirs, as applicable.  Any accrued compensation and annual incentive compensation payable pursuant to this subparagraph 6(a) shall be paid within 90 days of the date on which Executive’s employment terminates.

(b)           (1)  Except as stated in subparagraph 6(d) below, if Executive’s employment is terminated under subparagraph 5(d), 5(f) or 5(h) above (and such termination constitutes a “separation from service” within the meaning of section 409A of the Code), then PMA Capital shall pay Executive as described in paragraph 6(a) above and as described in Exhibit B, plus it will pay any cash portion of the annual incentive compensation for the year in which termination occurs that is earned because Executive accomplished certain identifiable

tasks as of the date of termination.  With regard only to payment of the cash portion of the annual incentive compensation for the year in which termination occurs, it is specifically understood that objectives related to profitability, revenue growth, stock price and similar performance measures are not intended to be measured other than at year end and accordingly will not qualify as identifiable tasks on an interim basis and these are not eligible for payment of incentive compensation unless deemed appropriate by the Compensation Committee of the Board of Directors of PMA Capital in connection with their consideration of payments as discussed above. Any cash portion of the annual incentive compensation payable pursuant to this subparagraph 6(b)(1) shall be paid within 90 days of the date on which the Executive’s employment terminates. In addition, solely in the event of a termination under 5(d) or 5(f) above, PMA Capital shall pay Executive eighteen (18) months of severance pay with each monthly payment being equal to the sum of Executive's then current monthly base salary plus 1/12th of Executive's minimum targeted annual incentive compensation for the year in which employment terminates, minus any appropriate withholdings and deductions, without regard to whether Executive obtains another position with a new employer. (For example, if Executive's annual base salary at the time of his termination is $445,000 and his minimum targeted annual incentive compensation at the time of his termination is $200,250, Executive's monthly severance payment for each month of the severance period will equal 1/12th of $445,000 plus 1/12th of $200,250,, or $53,770.83, minus any appropriate withholdings or deductions.) These severance payments will be made on or about the regular pay dates recognized by PMA Capital, beginning on the next regular pay date following Executive's last regular pay date on which he is paid his base salary, provided that any severance triggered by a termination of Executive's employment that occurs within the fourteen (14) month period following a Section 409A Change in Control shall be paid in a lump sum on the first business day following the six (6) month anniversary of Executive's termination

 date. Solely in the event of a termination under 5(h) above, PMA Capital shall pay Executive severance pay totaling $967,875 in 18 equal monthly installments.  These severance payments will be made on or about the regular pay dates recognized by PMA Capital, beginning on the next regular pay date following Executive’s last regular pay date on which he is paid his base salary, provided that any severance triggered by a termination of Executive’s employment that occurs within the fourteen (14) month period following a Section 409A Change in Control shall be paid in a lump sum on the first business day following the six (6) month anniversary of Executive's termination date.

(2)              Notwithstanding the foregoing, the severance payments described in subparagraph 6(b)(1) which otherwise would be paid during the six (6) month period beginning on the day following Executive’s separation from service described in subparagraph 5(d), 5(f), or 5(h) shall instead be paid to Executive in a single lump sum payment on the first business day following the end of such six (6) month period.  The lump sum payment shall be adjusted for simple interest that accrues during the initial six (6) month period following Executive’s termination of employment at the interest rate used to determine lump sum payments under the PMA Capital Corporation Pension Plan.

(3)              Further, if Executive elects to continue his health insurance benefits under COBRA, PMA Capital will continue to pay the same monthly subsidy of the premiums for such insurance continuation as was being paid by PMA Capital before Executive’s employment terminated, with the remainder of the premium being deducted from Executive’s severance payments to the extent severance is paid in installments pursuant to subparagraph 6(b)(1), through the earlier of eighteen (18) months from the termination date or the date Executive becomes eligible to receive and/or obtain alternative health insurance coverage through new employment.  During the six (6) month period in which Executive’s severance benefits are delayed

(as described in subparagraph 6(b)(2)), PMA Capital shall pay the full premium for Executive’s continued health insurance benefits, and shall be reimbursed for the Executive’s portion of such premiums out of the lump sum severance payment to be made to Executive on the first business day following the six (6) month period.  It is intended that this provision of continuation health coverage shall run concurrently with any period of continuation coverage required under COBRA. Executive’s participation in the life insurance and accidental death and disability insurance provided by the Company shall continue through the end of eighteen (18) months from the termination date.

(4)              PMA Capital’s obligation to provide the severance pay and benefits provided in this paragraph is conditioned upon Executive signing and not revoking a valid general release agreement in the form attached hereto as Exhibit C.  The severance payments and benefits provided for in this Agreement shall be in lieu of and not in addition to any severance pay or benefits that are payable to Executive upon termination of employment under the PMA Capital Corporation and PMA Capital Insurance Company Severance Pay Plan or any other applicable severance plan or severance policy of PMA Capital.

(c)           If Executive’s employment is terminated under subparagraphs 5(b), (c), (d), (f), (g) or (h) above (and such termination constitutes a “separation from service” within the meaning of section 409A of the Code):

(1)              Executive shall have a fully (100%) vested and nonforfeitable interest in his “Retirement Benefit” under the EMPP or any successor or replacement plan, except to the extent his Retirement Benefit is reduced pursuant to the terms of the EMPP to take into account the twenty-five (25) year service limit; and

(2)              Executive’s benefit under the PMA Capital Corporation Retirement Savings Excess Plan shall be increased to the extent necessary so that his aggregate

benefit payable under the EMPP, and PMA Capital Corporation Retirement Savings Excess Plan (amounts attributable to Retirement Credits only) (collectively, the Ongoing Pension Arrangements) is not less than the aggregate benefit that would have been payable under such Ongoing Pension Arrangements if Executive’s employment had continued through the end of the calendar quarter that contains the 18-month anniversary following Executive’s termination date (or, in the case of a termination under subparagraph 5(g), above, through the end of the calendar quarter containing the 24-month anniversary following such termination date), assuming the Executive is paid at the same salary rate during such period as in effect as of his termination of employment.  Notwithstanding the foregoing, subparagraph 6(c)(2) shall apply only to the extent that it has the effect of increasing the present value of the aggregate benefit payable under the Ongoing Pension Arrangements.  Executive shall be entitled to receive the increased benefit described in subparagraph 6(c)(2) during the calendar quarter containing the 18-month anniversary following Executive’s termination date (or, in the case of a termination under subparagraph 5(c), (d), (f), (g), or (h), above, that occurs within fourteen (14) months following a Section 409A Change in Control, the first business day following the 6-month anniversary of Executive’s termination date).

(d)           (1)  If Executive’s employment is terminated under subparagraph 5(g) or if it is terminated under subparagraph 5(d) within twelve (12) months following a Section 409A Change in Control (and such termination constitutes a “separation from service” within the meaning of section 409A of the Code), then PMA Capital shall pay Executive as described in paragraph 6(a) above and as described in Exhibit B, plus it will pay any cash portion of the annual incentive compensation for the year in which termination occurs if it is earned because Executive accomplished certain identifiable tasks as of the date of termination.  With regard only to payment of the cash portion of the annual incentive compensation for the year in which

termination occurs, it is specifically understood that objectives related to profitability, revenue growth, stock price and similar performance measures are not intended to be measured other than at year end and accordingly will not qualify as identifiable tasks on an interim basis and these are not eligible for payment of incentive compensation unless deemed appropriate by the Compensation Committee of the Board of Directors of PMA Capital in connection with their consideration of payments as discussed above.  Any cash portion of the annual incentive compensation payable pursuant to this subparagraph 6(d)(1) shall be paid within 90 days of the date on which Executive’s employment terminates.

to be paid without regard to whether Executive obtains another position with a new employer,   with such sum to be paid on the first business day following the six (6) month anniversary of Executive’s termination date.