Donegal Group, an insurance holding company, has completed the acquisition of Michigan Insurance, which was formerly a majority-owned subsidiary of West Bend Mutual Insurance. It estimates that the final purchase price will be approximately $40m.

Michigan Insurance writes various lines of property and casualty insurance and had direct written premiums of $106.6m and net written premiums of $26.7m.

Effective on 1 December 2010, Michigan Insurance entered into a 50% quota share agreement with third-party reinsurers and a 25% quota share reinsurance agreement with Donegal Mutual Insurance to replace the 75% quota share reinsurance agreement Michigan Insurance maintained with West Bend.

Donegal Mutual Insurance will include its assumed business from Michigan Insurance in its pooling agreement with Atlantic States Insurance, and will have the ability to reduce the level of third-party quota share reinsurance and thereby provide additional premium growth, according to the Donegal group.

Donegal Group president and CEO Donald Nikolaus said the company look forward to providing technology and operational support to Michigan Insurance to increase its efficiency and further enhance relationships with its agents and policyholders.

We believe this acquisition will enhance our overall business and profitability and provide for significant future growth over time, Nikolaus said.

The insurance subsidiaries of Donegal Group Inc. conduct business together with Donegal Mutual Insurance Company as the Donegal Insurance Group.