Harleysville Group Notes Earnings Impacted by Spring Losses

Pennsylvania-based Harleysville Group Inc. announced that, based on loss activity through May 31, 2003, it expects 2003 second quarter diluted operating earnings per share to be in the range of $0.32 to $0.40. Current accident year losses were impacted in April and May by catastrophes and other weather-related losses, as well as large property losses. The company reported diluted operating earnings per share of $0.46 in the second quarter of 2002.

Diluted net income per share, which includes the impact of net realized after-tax investment gains and losses, is also expected to be in the range of $0.32 to $0.40 in the second quarter of 2003, assuming no significant realized net gains or losses. Net income was $0.01 per share in the second quarter of 2002, which reflected realized investment losses of $0.45 per share, mostly due to the write down of securities in the company’s investment portfolio.

In its first quarter earnings announcement, the company provided revised diluted operating earnings per share guidance of $1.45 to $1.55 for 2003. Given the anticipated results for the second quarter, the company intends to evaluate its results for the first six months after the completion of the second quarter and issue revised 2003 guidance when it releases second quarter 2003 earnings results on Friday, July 25.