Insurer Old Republic International Corp. said Thursday that it would acquire PMA Capital Corp., of Blue Bell, in an all-stock deal the companies valued at $228 million.

Under the terms of the deal, Chicago-based Old Republic will swap 0.55 shares of its stock for every outstanding share of PMA Capital. The ratio may be changed to as little as 0.5 shares or raised to 0.6 shares, depending on the value of Old Republic's stock at the time the transaction is completed.

But the swap of 0.55 shares sets the per-share price at about a 15 percent premium to PMA Capital's closing price of $6.17 per share on Tuesday, the last trading day before the agreement was signed.

The companies said the buyout also includes the assumption of $137 million in PMA Capital debt, bringing the total value to $365 million.

The acquisition is expected to be completed in the third quarter, but still needs shareholder and regulatory approval.

"The two companies share a commitment to conservative underwriting and a focus on select industries important to the American economy," Old Republic Chairman and CEO Al Zucaro said in a statement. "We are convinced that the long-term orientation of the decision to effect this merger will at once provide greater scale, balance and diversification for our general insurance business, and produce enhanced future benefits for the combined shareholder groups."

PMA Capital offers workers' compensation and other commercial property and casualty insurance as well as fee-based administration services. PMA shares were trading early this afternoon at $6.84, up 73 cents; while Old Republic closed trading at $12.76, down 15 cents.

Meanwhile, Chicago's Old Republic is an insurance holding company with subsidiaries that market, underwrite and provide risk management services for property and liability, mortgage guaranty and title insurance.