Donegal Group Acquires Le Mars Insurance

NU Online News Service, Jan. 5, 3:32 p.m.EST?Donegal Group Inc. announced today it had completedthe purchase of all outstanding stock of Le Mars Mutual InsuranceCompany of Iowa for $12.5 million following the conversion of LeMars to a stock insurance company.[@@]

The Marietta, Pa.-based Donegal Group said the Le Mars purchaseis part of its ongoing strategy to expand its operations in theMidwest by selectively acquiring property-casualty insurers in theregion.

Ralph Spontak, chief financial officer at Donegal Group, toldNational Underwriter that prior to this transaction,Donegal Mutual Insurance Company, one of Donegal Group's affiliatedcompanies, had purchased a surplus note from Le Mars in June of2002. "And Le Mars was brought to us as a potential acquisitioncandidate," Mr. Spontak said.

The Donegal Group, he said, "has a business strategy ofexpanding into the Midwest. We had previously written in Ohio andhad desire to find at least one, and maybe multiple, acquisitioncandidates in the Midwest."

Mr. Spontak also explained that although Le Mars was at thefar-western end of the region that Donegal Group was looking at forits expansion, "it fit the profile as far as size and the lines ofbusiness that it wrote. And we thought it was a good step intoexpanding our Midwest presence."

Donegal Group is now seeking to acquire additional companies to"fill in the gap" between the states that Le Mars writes and thestate of Ohio, Mr. Spontak said. "The Le Mars acquisition is thefirst step in the expansion of our operations to the Midwest."

Le Mars is a multiple-line carrier in Iowa, Nebraska, Oklahomaand South Dakota. Its personal-lines coverages represent most ofthe written premiums, with the balance coming from farm owners andmercantile and service businesses. Le Mars' largest line ofbusiness is private passenger auto liability and physical damage;other principal lines include homeowners and commercialmulti-peril.

Donegal Group Inc. offers various personal, farm and commercialproperty-casualty insurance, in about 15 eastern states. Thecompany's personal insurance products offerings range from auto andboat policies to homeowners and fire coverage. Its commercialinsurance products include business owners, multi-peril andworkers' compensation policies.