Harleysville Mutual Finalizes Acquisition of Penn Mutual

January 2, 2003

Harleysville Mutual Insurance Company has completed the in-market acquisition of Penn Mutual Insurance Company’s operations. Harleysville Mutual owns 56 percent of Harleysville Group Inc., a publicly traded holding company for nine regional P/C companies.

“We’re pleased to have finalized this transaction, which marks another step in Harleysville’s long-term growth strategy, and reinforces our position as the premier provider of insurance products and services for small businesses and individuals in our markets,” Walter Bateman, Harleysville Mutual’s chairman and CEO, said.

As a result of the transaction, Harleysville Mutual has acquired Penn Mutual’s policies, operations and office facility in West Chester, Pa., but it did not acquire its affiliate, The Green Tree Perpetual Assurance Company.

In 2001, Penn Mutual generated $33 million in written premiums – $16 million of which was in commercial lines – in Delaware, Maryland, New Jersey, Pennsylvania and Virginia through 210 independent agencies, with about half of its business and agents concentrated in Pennsylvania.

“We now look forward to the swift and efficient integration of Penn Mutual’s profitable business and top-performing agencies into our operations,” Bateman added. “Since announcing plans for the acquisition in late November, we’ve established a productive dialogue with those agents and the initial feedback has been very positive. This group clearly recognizes that their affiliation with a stable, well-capitalized, A-rated company like Harleysville will result in long-term benefits for both them and their customers.”

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