A.M. Best Upgrades and Assigns Ratings to Sheboygan Falls Mutual Insurance Company; Removes From Under Review.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from B++ (Good) and assigned an issuer credit rating (ICR) of "a" to Sheboygan Falls Mutual Insurance Company (Sheboygan Falls) (Sheboygan Falls, WI). The FSR has been removed from under review and assigned a stable outlook, and the outlook assigned to the ICR is stable.

These rating actions follow the announcement of the completed affiliation between Donegal Mutual Insurance Company (Donegal), a member of the Donegal Insurance Group (Marietta, PA) (current FSR of A and ICR of "a") and Sheboygan Falls, whereby Donegal purchased a $3.5 million contribution note from Sheboygan Falls. Furthermore, Donegal entered into a services agreement with Sheboygan Falls for the purpose of reducing costs through economies of scale. In addition, certain designees of Donegal have joined the board of directors of Sheboygan Falls.

The ratings reflect the implementation of a reinsurance and retrocession agreement between Donegal and Sheboygan Falls. Moreover, the upgrades reflect A.M. Best's opinion that Sheboygan Falls is now part of a financially stronger organization, which is anticipated to yield considerable benefits going forward. In addition to financial assistance, Donegal Insurance Group will provide technical support to Sheboygan Falls to facilitate premium growth and to increase operational efficiency. Further, the affiliation represents a step forward in Donegal Insurance Group's expansion into the Midwest region of the country.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.