Harleysville says income hurt by catastrophe losses

HARLEYSVILLE, PA—July 9, 2008—Harleysville Group Inc. (NASDAQ: HGIC) today announced that estimated catastrophe losses incurred during the second quarter will reduce operating income1 by $0.52 to $0.57 per share after taxes, and will impact the company’s statutory combined ratio between 10 and 11 points for the quarter. In the second quarter of 2007, when Harleysville Group reported operating income of $0.81 per share after taxes, the company experienced net catastrophe losses of $0.09 per share after taxes, which had a 2.2 point impact on the combined ratio. Over the past eight quarters, the company’s net catastrophe losses have averaged $0.06 per share after taxes. Harleysville Group plans to announce its second quarter results on August 4.
“During the second quarter, we experienced a significantly greater frequency of severe weather throughout much of our operating territory, but especially in the Midwest. All told, we faced 14 second quarter storms that were classified as catastrophes,” commented Michael L. Browne, Harleysville Group’s president and chief executive officer. “For many people, these storms have produced devastating and life-altering effects—forcing them from their homes and businesses, and destroying their possessions. We are committed to helping our policyholders as they seek to restore their lives, so our claims staff has been working tirelessly to assist them.
“While responding to catastrophes is a normal part of our business, this is the most we’ve experienced in a quarter since becoming a public company in 1986, and it’s projected to be a heavily impacted quarter for the industry as a whole,” Browne continued. “We remain confident in our strong financial position and the future of our organization—as evidenced by the fact that we continue with our plans to buy back Harleysville Group stock. And thanks to our outstanding financial strength, we have the resources necessary to respond promptly and assist the storm victims as they work to rebuild their lives.”