Citing areas including the companies’ “excellent risk-adjusted capitalization” and “historically favorable operating performance,” A.M. Best affirmed the ratings of the Donegal Insurance Group and its members.

The ratings service affirmed the financial strength rating (FSR) of “A” (Excellent) and issuer credit ratings (ICR) of “a” for Donegal Insurance Group and its members and affirmed the ICR of “bbb” of Donegal Group, Inc., both of Marietta, Pa.

The members of the Donegal Insurance Group are Atlantic States Insurance Co., Donegal Mutual Insurance Co., Southern Insurance Co. of Virginia, Le Mars Insurance Co. and Sheboygan Falls Insurance Co.

A.M. Best also affirmed the FSR of “A” (Excellent) and ICRs of “a” of Salisbury, Md.-based Peninsula Insurance Group, a Donegal company.
The ratings service noted the affirmation for Donegal Insurance Group and its members resulted from its sustainable competitive advantage and management’s “prudent catastrophe risk management and well-established regional market presence. “

“Despite the unprecedented events in the global financial environment and increased weather-related activity in 2008, the group’s operating results remained profitable with minimal investment losses,” A.M. Best said.

A.M. Best also noted Donegal’s successful operating strategies and efforts to achieve greater market penetration in Georgia and South Carolina.
Offsetting factors noted by the ratings service include Donegal Insurance Group’s geographic concentration, which exposes its earnings and surplus to volatility from weather-related events as well as changes in the regulatory, legal and competitive market environments.

A.M. Best said that Peninsula’s ratings affirmations reflect its conservative underwriting leverage and favorable operating performance from profitable underwriting results and investment income. These strengths are partially offset by Peninsula’s geographic business concentration and narrow marketing niche, it noted.