Marietta, Pa.-based Donegal Group Inc. has agreed to acquire all of the outstanding capital stock of an affiliated company, Le Mars Mutual Insurance Co. of Iowa, following the conversion of Le Mars to a stock insurance company. The conversion, which is subject to approval by the policyholders of Le Mars and Iowa’s insurance commissioner, is expected to be completed by the end of 2003. DGI will acquire the stock of Le Mars for $8.2 million. DGI also expects to make an additional capital contribution to Le Mars of approximately $4 million.
Le Mars operates as a multiple line carrier in Iowa, Nebraska, Oklahoma and South Dakota. Personal lines coverages represent a majority of premiums written, with the balance coming from farm owners and mercantile and service businesses. Le Mars’ largest line of business is private passenger automobile liability and physical damage; other principal lines include homeowners and commercial multi-peril.
On a statutory basis as of July 31, 2003, Le Mars had total admitted assets of $37.3 million, and policyholders’ surplus (exclusive of a $4 million surplus note held by DGI) of $7.2 million. For the year ended December 31, 2002 and the seven months ended July 31, 2003 on a statutory basis, Le Mars had earned premiums of $21 million and $10.3 million, respectively. Since June 2002, the Donegal Insurance Group has been assisting Le Mars in the restructuring of its insurance business for the purpose of restoring Le Mars’ underwriting profitability.
Donegal Group Inc. is a regional property-casualty insurance holding company currently doing business in 14 Mid-Atlantic and Southern states through its insurance subsidiaries, Atlantic States Insurance Co. and Southern Insurance Co. of Virginia.
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