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 HARLEYSVILLE, Pa., Aug. 2 /PRNewswire/ -- Harleysville Group Inc. (NASDAQ: HGIC) and American Community Mutual Insurance Company jointly announce the execution of a letter of intent under which Harleysville Group would acquire all of the issued and outstanding shares of stock of Lake States Insurance Company, a Michigan property and casualty subsidiary of American Community.
 The purchase price would be $44 million. The transaction is subject to, among other things, the completion of due diligence, all necessary regulatory approvals and the approval of a definitive agreement by the boards of directors. The transaction is not expected to be dilutive to Harleysville Group earnings.
 "This acquisition will provide us with an opportunity to further achieve the strategic geographical diversification we have sought since we initiated our strategy of building a `national network of regional insurance companies' several years ago," commented Bradford W. Mitchell, chairman of the board and chief executive officer of Harleysville Group. "The acquisition will establish a firm presence for Harleysville Group in Michigan and the Midwest."
 In 1992, Lake States had $57.3 million in direct written property/casualty premium at a combined ratio of 99.3 percent. The company is represented by 218 insurance agents and writes a broad mix of property and casualty insurance business. Approximately 55 percent of its 1992 business was derived from personal lines and approximately 45 percent from commercial insurance lines. On a statutory basis, year end 1992 assets of Lake States totalled $70.6 million, while capital and surplus stood at $20.4 million.
 Management will determine, prior to the closing date, whether to include the acquisition in the intercompany pooling agreement between Harleysville Group and Harleysville Mutual Insurance Company.
 Harleysville Group Inc. is a regional holding company for six property and casualty insurance companies whose marketing territory encompasses the entire East Coast. The companies include: Connecticut Union Insurance Company, Harleysville-Atlantic Insurance Company, Harleysville Insurance Company of New Jersey, Huron Insurance Company, New York Casualty Insurance Company and Worcester Insurance Company. Harleysville Group also manages the operations of Harleysville Mutual Insurance Company and its wholly owned subsidiaries, as well as Berkshire Mutual Insurance Group, the financial results of which are not consolidated into Harleysville Group. Harleysville Group's property/casualty subsidiaries are rated A+ (Superior) by the A.M. Best Company.
 -0- 8/2/93
 /CONTACT: Frederick W. Baker, 215-256-5287, or Randy Buckwalter, 215-256-5288 (media); or Mark R. Cummins (investors), 215-256-5025, or Bruce J. Magee, 215-256-5011 (investors), all of Harleysville Group/

CO: Harleysville Group Inc.; American Community Mutual Insurance
 Company; Lake States Insurance Company ST: Pennsylvania IN: INS SU: TNM

MP -- PH002 -- 8140 08/02/93 07:47 EDT
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Publication:PR Newswire
Date:Aug 2, 1993
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