The Pennsylvania-based Donegal Group, Inc. announced that it has agreed to acquire all of the outstanding capital stock of the Peninsula Insurance Group from Folksamerica Reinsurance Company.
“The acquisition is subject to approval by the Insurance Commissioner of the State of Maryland and is expected to be completed by the end of 2003 or early 2004,” said the bulletin. Donegal said it would acquire Peninsula “for cash at a price equal to 107.5% of its consolidated GAAP stockholders’ equity as of the closing, an estimated $23 million.”
The announcement indicated that “Peninsula operates as a multiple line carrier, primarily in Maryland, Delaware and Virginia through approximately 350 independent agencies. Personal lines coverages represent a majority of premiums written, with the balance coming from mercantile and service businesses. Peninsula’s largest line of business is private passenger automobile liability and physical damage; other principal lines include commercial auto, commercial multi-peril and homeowners.
“On a GAAP basis as of September 30, 2003, Peninsula had total assets of $61.4 million, and consolidated GAAP stockholders’ equity of $21.8 million. For the year ended December 31, 2002 and the nine months ended September 30, 2003 on a GAAP basis, Peninsula had earned premiums of $29.7 million and $24.4 million, respectively.”
Donegal President and CEO Donald H. Nikolaus, commented, “We believe the Peninsula acquisition will enhance our market position and agency representation in the Middle Atlantic states while enabling us to leverage certain expenses over a greater premium base and consolidate various reinsurance costs in the future. This acquisition furthers our business strategy of profitable growth through quality acquisitions and organic growth.”
Donegal, which currently does business in 14 Mid-Atlantic and Southern states through its insurance subsidiaries, Atlantic States Insurance Company and Southern Insurance Company of Virginia, noted that the “Peninsula acquisition will be accretive to the Company’s earnings for the full year 2004.
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