Peninsula operates as a multiple-line carrier, primarily in Maryland, Delaware and Virginia. Personal lines coverages represent a majority of premiums written for Peninsula, with the balance coming from mercantile and service businesses, Donegal Group noted. Peninsula's largest line of business is private passenger auto liability and physical damage; other principal lines include homeowners and commercial multi-peril.

Donald Nikolaus, chief executive officer at Donegal Group, said this deal is part of his company's ongoing strategy for selective acquisitions of property- casualty insurers, to augment Donegal's organic growth in existing markets and expand into new geographic regions.

"We believe the Peninsula acquisition will enhance our market position and agency representation in the Mid-Atlantic states while enabling us to leverage certain expenses over a greater premium base and consolidate various reinsurance costs in the future," Mr. Nikolaus said.

Donegal Group Inc. offers various personal, farm and commercial property-casualty insurance, in about 15 Eastern states. The company's personal insurance products offerings range from auto and boat policies to homeowners and fire coverage. Its commercial insurance products include business owners, multi-peril and workers' compensation policies.