SHEBOYGAN FALLS, Wis. and MARIETTA, Penn., Dec. 28, 2006 (PRIME NEWSWIRE) -- Sheboygan Falls Mutual Insurance Company and Donegal Mutual Insurance Company announced today that they have signed an agreement whereby Donegal Mutual will make a contribution note investment of $3,500,000 in Sheboygan Falls Mutual and Donegal Mutual will enter into a services agreement with Sheboygan Falls Mutual for the purpose of reducing costs through economies of scale. Consummation of the transactions requires the approval of the Office of the Commissioner of Insurance of the State of Wisconsin.
Lee F. Wilcox, President of Sheboygan Falls Mutual, stated that the affiliation will enable Sheboygan Falls Mutual to become a more vigorous competitor in the property and casualty insurance markets in Wisconsin. With the assistance of Donegal Mutual, Sheboygan Falls Mutual will have enhanced opportunities to grow its business. Mr. Wilcox concluded by noting that the affiliation, which has been approved unanimously by the board of directors of Sheboygan Falls Mutual, will provide significant opportunities for the policyholders, agents and employees of Sheboygan Falls Mutual. There will be no change in the management team of Sheboygan Falls Mutual.
For Donegal Mutual, the affiliation provides an opportunity to expand its business into Wisconsin. Donald H. Nikolaus, President of Donegal Mutual, remarked, "We are pleased to affiliate with a fine company such as Sheboygan Falls Mutual, which has longstanding excellent relationships with its independent agents throughout Wisconsin. We look forward to making our strategic resources available to Sheboygan Falls Mutual, so that it can deliver enhanced products and services to its policyholders and agents."
Sheboygan Falls Mutual was formed in 1899 and writes both personal and commercial lines of insurance in Wisconsin. Sheboygan Falls Mutual is located in Sheboygan Falls, Wisconsin.
Donegal Mutual, which was incorporated in 1889, is a mutual fire and casualty insurance company located in Marietta, Pennsylvania. Donegal Mutual underwrites a broad line of personal and commercial insurance coverages. Donegal Mutual has an A.M. Best financial strength rating of A (Excellent) and its combined ratio regularly outperforms the combined ratio of the United States property and casualty insurance industry as a whole.
Donegal Mutual owns approximately 62% of the voting control of Donegal Group Inc., an insurance holding company that, through its insurance subsidiaries, conducts a property and casualty insurance business in 18 states in the Mid-Atlantic, Southeastern and Midwestern regions of the United States. The Class A common stock and Class B common stock of Donegal Group is traded on the Nasdaq Global Select Market under the symbols (Nasdaq:DGICA) and (Nasdaq:DGICB). Donegal Group is not a party to the transaction with Sheboygan Falls Mutual.