For Release: Immediately Contact: Mark Cummins (Investors) 215.256.5025 mcummins@harleysvillegroup.com Randy Buckwalter (Media) 215.256.5288 rbuckwalter@harleysvillegroup.com HARLEYSVILLE GROUP, HARLEYSVILLE MUTUAL AMEND INTERCOMPANY POOLING AGREEMENT
For
Release:
Immediately
Contact:
Xxxx Xxxxxxx
(Investors) 215.256.5025 xxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
Xxxxx
Xxxxxxxxxx
(Media) 215.256.5288 xxxxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
HARLEYSVILLE
GROUP, HARLEYSVILLE MUTUAL AMEND
HARLEYSVILLE,
PA—November 26, 2007—The boards of directors of Harleysville Group Inc. (NASDAQ:
HGIC) and Harleysville Mutual Insurance Company each separately today approved
an amendment to their intercompany pooling agreement that will adjust
Harleysville Group’s share of the pool to 80 percent, effective January 1, 2008.
The proposed amendment is subject to regulatory approval by various state
departments of insurance.
“This
adjustment in our intercompany pool reflects our confidence in our underwriting
results and our desire to have our shareholders, including Harleysville Mutual,
benefit more from our improved operating performance. The transaction, which
is
supported by independent legal and fairness opinions, will provide Harleysville
Group with greater opportunity for increased earnings and, subsequently,
enhanced access to capital, both of which would benefit our combined
operations,” commented Xxxxxxx X. Xxxxxx, Harleysville Group’s president and
chief executive officer. “Along with this change, our recent significant
increase in our dividend and two share repurchase programs initiated during
the
latter half of this year clearly illustrate the strength of our company’s
financial condition and the confidence we have in our prospects for continuing
success.”
All
Harleysville property/casualty subsidiaries participate in an underwriting
pooling arrangement whereby all premiums, losses and expenses for each
individual company’s business are shared in a pool. The pooling arrangement,
which was established in 1986, is designed to produce more consistent
underwriting results over the long term by spreading financial risk among
the
broad base of pool members.
[Missing
Graphic Reference]
There
are
two significant financial impacts associated with this change in pool share.
First, at the close of the transaction there will be a transfer of assets
and
liabilities from Harleysville Mutual Insurance Company and its non-public
affiliate, Pennland Insurance Company, to the various insurance subsidiaries
of
Harleysville Group. This transfer will include approximately $190 million
of
investments, which the company estimates would have increased investment
income
on a 2007 pro forma basis by approximately $0.19 per share. Second, the
subsidiaries of Harleysville Group, through this increase in their pool share,
are expected to accrue additional written and earned premiums of approximately
$90 million annually, based upon premium levels at year-end 2006. Consistent
with the company’s 2007 year-to-date combined ratio that would result in
additional annual pro forma earnings per share of $0.06 based upon the actual
combined ratio posted to date in 2007.
(more)
Harleysville
Group, Harleysville Mutual amend intercompany pooling
agreement
Page
two
Harleysville
Insurance is a leading regional provider of insurance products and services
for
small and mid-sized businesses, as well as for individuals, and ranks among
the
top 60 U.S. property/casualty insurance groups based on net written premiums.
Harleysville was listed recently as #23 in the InformationWeek 500, the
publication’s annual listing of the most innovative information technology
organizations in the U.S., and was the highest-ranked property and casualty
insurer on the 2007 list. Harleysville Mutual Insurance Company owns 53 percent
of Harleysville Group Inc. (NASDAQ: HGIC), a publicly traded holding company
for
nine regional property/casualty insurance companies collectively rated A-
(Excellent) by A.M. Best Company. Harleysville Group is a member of the NASDAQ
Global Select Market, which represents the top third of all NASDAQ-listed
companies and has the highest initial listing standards of any exchange in
the
world based on financial and liquidity requirements. Harleysville
Insurance—which distributes its products exclusively through independent
insurance agencies and reflects that commitment to its agency force by being
a
Trusted Choice®
company
partner—currently operates in 32 eastern and midwestern
states. Further information can be found on the company’s Web site at
xxx.xxxxxxxxxxxxxxxxx.xxx.
#####
Certain
of the statements contained herein (other than statements of historical facts)
are forward-looking statements. Such forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and include estimates and assumptions related to economic,
competitive and legislative developments. These forward-looking statements
are
subject to change and uncertainty that are, in many instances, beyond the
company’s control and have been made based upon management’s expectations and
beliefs concerning future developments and their potential effect on
Harleysville Group Inc. There can be no assurance that future developments
will
be in accordance with management’s expectations so that the effect of future
developments on Harleysville Group will be those anticipated by management.
Actual financial results including operating return on equity, premium growth
and underwriting results could differ materially from those anticipated by
Harleysville Group depending on the outcome of certain factors, which may
include changes in property and casualty loss trends and reserves; catastrophe
losses; the insurance product pricing environment; changes in applicable
law;
government regulation and changes therein that may impede the ability to
charge
adequate rates; changes in accounting principles; performance of the financial
markets; fluctuations in interest rates; availability and price of reinsurance;
and the status of the labor markets in which the company operates.
#07-50
11/26/07b
