Donegal Mutual, Southern Mutual Finalize Pooling, Marketing Affiliation

October 30, 2009

Pennsylvania-based Donegal Mutual Insurance Co. and Georgia-based Southern Mutual Insurance Co. have finalize an affiliation they announced in early September.

The deal brings Southern Mutual into Donegal’s insurance pool and gives the Georgia insurer additional products to sell.

Southern Mutual will retain its mutual status, its Georgia domicile and its current headquarters in Athens, Georgia with the same management, employees and agents. Donegal Mutual will assist Southern Mutual in offering additional insurance products and coverages.

Donald H. Nikolaus, president of Donegal Mutual, and Allen R. Green, president of Southern Mutual, jointly announced that the affiliation of has become effective following approval by the Georgia insurance commisioner on Oct. 28.

Donald H. Nikolaus said he expects both companies to increase their business in Georgia and South Carolina as a result of the deal.

The affiliation includes the following elements:

  • Donegal Mutual purchased a surplus note of Southern Mutual in the principal amount of $2,500,000 and Southern Mutual’s surplus now exceeds $11 million;
  • Southern Mutual has entered into a quota share reinsurance agreement pursuant to which Donegal Mutual has assumed 100% of Southern Mutual’s currently in force business and will assume 100% of Southern Mutual’s future business, and Donegal Mutual is including and will include all business it assumes from Southern Mutual in its pooling agreement with Atlantic States Insurance Co., a subsidiary of Donegal Group Inc.
  • Donegal Mutual has licensed Southern Mutual to use Donegal Mutual’s WritePro and WriteBiz technology, which permits agents to underwrite applications and issue policies automatically through the Internet and enhances ease of use;
  • Southern Mutual will retain its mutual status, its Georgia domicile and its current headquarters in Athens, Georgia with the same management, employees and agents;
  • Donegal Mutual will assist Southern Mutual in offering additional
    insurance products and coverages; and

  • Seven Donegal Mutual designees now serve on Southern Mutual’s 12-person Board of Directors.

Donegal Mutual is a member of the Donegal Insurance Group, which had $1.0 billion in assets and $489 million in surplus at June 30, 2009. The Donegal Insurance Group had net written premium of $452.2 million in 2008. The Donegal Insurance Group has a group A.M. Best rating of A (Excellent).

Southern Mutual is a mutual property/ casualty insurance company that was formed in 1847. Its marketing territory is Georgia and South Carolina. Southern Mutual had net written premiums of approximately $12 million in 2008.

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