Gregory Shepard Blasts Don Nikolaus for Once Again Rejecting an Amicable Transaction

   Gregory Shepard Blasts Don Nikolaus for Once Again Rejecting an Amicable

PR Newswire

BRADENTON, Fla., Oct. 24, 2013

BRADENTON, Fla., Oct. 24, 2013 /PRNewswire/ -- (NASDAQ: "DGICA" and "DGICB") –
Gregory Mark Shepard today blasted CEO Don Nikolaus and the Boards of
Directors of Donegal Group Inc. ("Donegal Group") and Donegal Mutual Insurance
Company ("Donegal Mutual") for rejecting his proposed amicable transaction.
He calls on both Boards to exercise their fiduciary duty and not "kow-tow" to
Mr. Nikolaus' desire to control Donegal Group and Donegal Mutual as his
personal fiefdom. He calls on other shareholders of Donegal Group to let
their voices be heard. Mr. Shepard's amicable proposal was filed on October
7, 2013 and is available in Mr. Shepard's 13D/A #18 at

Mr. Shepard blasted the Boards of Donegal Mutual and Donegal Group for failing
to adequately consider Mr. Shepard's October 7, 2013 proposal. According to
Mr. Shepard: "These Board members really need to be reminded that their
fiduciary duties under law are to the Donegal Group shareholders to maximize
the value of the Donegal Group shares. Simply put, Mr. Nikolaus business
plans just aren't successful for the Donegal Group shareholders; Mr. Nikolaus'
plans only work for Mr. Nikolaus and his friends on the Boards, as witnessed
by the gigantic and highly dilutive stock option increases over the last 5

According to Mr. Shepard, "By my calculations, during the 5 years between 2007
and 2012, Donegal Group's a) book value grew by a total of 13.4% or a meager
2.7% per year; b) book value per outstanding shares grew by a total of only
12.2% or 2.4% per year; c) but stock options grew by an astounding 181% or
36.2% per year; and d) fully diluted book value grew by a total of only 7.9%
or 1.6% per year.

Mr. Shepard further notes that Donegal Group's Investor Presentation titled
"Pursuing Effective Business Strategy in Regional Insurance Markets" to
"Achieve Book Value Growth By Implementing Plan" dated September 20, 2013 and
filed with the SEC, makes no mention of the substantial dilution of Donegal
Group's shareholders as a result of the extraordinarily high number of options
granted to Donegal Group insiders and employees relative to industry peers.
This Investor Presentation was filed as Exhibit 99.1 to Donegal Group's Form
8-K on September 20, 2013, and is available at

Mr. Nikolaus called Mr. Shepard's offer illusory because, among other things,
Mr. Shepard has not yet obtained "all of the regulatory approvals necessary
for you to purchase any additional shares of [Donegal Group] common stock."
Mr. Shepard calls this: "ridiculous and absurd, and the sure sign of a
desperate man. If Mr. Nikolaus hired any financial advisor worth his salt,
Mr. Nikolaus would learn that regulatory approvals are frequently obtained
after an amicable transaction has been agreed to, or during the negotiation
process." Mr. Shepard continued: "This process has really suffered from each
Board not hiring credible investment banks to advise them, but instead relying
on the advice of lawyers. I call on each Board to hire an investment bank of
national standing to properly advise them." In any event, Mr. Shepard's
regulatory applications to purchase additional shares are pending with the

Mr. Shepard calls on Mr. Nikolaus to resign and step down from all positions
at Donegal Mutual and Donegal Group. "Mr. Nikolaus is hopelessly conflicted
between his focus on his thirty-some year career, his standing with his
employees, his place in the community, his duties to the Donegal Group
shareholders, and his duties to the Donegal Mutual policyholders," according
to Mr. Shepard. Furthermore, Mr. Shepard asserts, "Mr. Nikolaus' stale
business strategyhas failed to produce acceptable results for Donegal Group's
long-suffering public shareholders,whofrom September 30, 2006 to September
30, 2013were forced to watch their Class A stock price decline by 31% from
$20.22 to $13.99 per Class A Share and their Class B stock price rise by a
paltry 8% from $18.02 to $19.49 per Class B Share, while during the same
period outstanding stock options increased by 181%."

The release is not intended to and does not constitute (i) a solicitation of a
proxy, consent or authorization for or any special meeting of Donegal's
stockholders or (ii) a solicitation of a consent or authorization in the
absence of any such meeting.

SOURCE Gregory Mark Shepard

Contact: D.F. King, 212-269-5550
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