Donegal Mutual Insurance Co. and Mountain States Mutual Casualty Co. have announced plans for a strategic affiliation. Subject to regulator and policyholder approval, Mountain States will merge into Donegal Mutual.

The deal will allow Donegal Mutual—which conducts business in 21 Mid-Atlantic, Midwestern, New England and Southern states—to expand its business into the Southwestern region. Mountain States and its subsidiaries currently conduct business together as the Mountain States Insurance Group in Colorado, New Mexico, Texas and Utah.

Upon completion of the deal, Donegal Mutual will enter into quota share reinsurance, services and technology license agreements with Mountain States’ subsidiaries to make them eligible for the group’s “A (Excellent)” rating from A.M. Best. Donegal Mutual and those insurance subsidiaries will market their products together as the Mountain States Insurance Group in the Southwestern region.

Mountain States’ board of directors has unanimously approved the merger. The company’s executive officers will become officers of Donegal Mutual and will retain their responsibilities in the current headquarters of the Mountain States Insurance Group in Albuquerque, N.M.

Donegal Mutual noted that Mountain States Insurance Group’s business will be excluded from its pooling agreement with Atlantic States Insurance Co. for an indefinite time.

Earlier this month, Auto-Owners Insurance and Concord General Mutual Insurance announced their intention to enter into a similar arrangement.

Source: Donegal Group