Donegal Mutual Purchasing Donegal Group Stock

August 18, 2004

Donegal Mutual Insurance Company in Marietta, Pa., announced it will purchase shares of Class A common stock and Class B common stock of Donegal Group Inc. at market prices prevailing from time to time in the open market.

At June 30, 2004, the mutual company held approximately 41 percent of the outstanding Class A common stock and approximately 63 percent of the outstanding Class B common stock of Donegal Group Inc.

Donald H. Nikolaus, president and chief executive officer of Donegal Mutual Insurance Company, said the company believes that the purchase represents “a prudent and attractive investment opportunity” for the mutual company. We believe the Mutual Company’s majority ownership interest in Donegal Group Inc. provides it with the stability and continuity that has permitted the insurance subsidiaries of Donegal Group Inc. to outperform the industry.”

On July 19, 2004, Donegal Group Inc. reported record net income for the quarter and six months ended June 30, 2004.

Donegal Group Inc. is a property and casualty insurance holding company whose insurance subsidiaries offer personal and commercial lines of insurance to businesses and individuals in six Mid-Atlantic states (Connecticut, Delaware, Maryland, New Hampshire, New York and Pennsylvania), eight Southeastern states (Alabama, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and five Midwestern states (Iowa, Nebraska, Ohio, Oklahoma and South Dakota). Donegal Group Inc.’s wholly owned subsidiaries include Atlantic States Insurance Company and Southern Insurance Company of Virginia. It has a pooling arrangement with its affiliate, Donegal Mutual Insurance Company.

Topics Virginia

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