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June 5, 2009

Board of Directors
Penn Millers Mutual Holding Company
72 North Franklin Street
Wilkes-Barre, Pennsylvania 18773

Members of the Board:

At your request, Curtis Financial Group, LLC (“Curtis”) completed and hereby provides an updated independent appraisal (the “Appraisal”) of the estimated consolidated pro forma market value of Penn Millers Mutual Holding Company (“PMMHC”) as of June 5, 2009, which is conducting a public offering in connection with the Plan of Conversion, as of April 22, 2009 (the “Plan” or “Offering”) transaction described below. PMHC Corp. (“PMHC”) is the wholly-owned subsidiary of PMMHC and the holding company for Penn Millers Insurance Company (“PMIC”, and together with PMHC and PMMHC, “Penn Millers” or the “Company”). Our previous Appraisal as of April 1, 2009 is incorporated herein by reference.

Because the Plan involves the conversion of PMMHC from mutual to stock form, the Plan must be approved by the Pennsylvania Insurance Commissioner pursuant to the Commissioner’s 1998 order approving the conversion transaction by which the Company’s current mutual holding company structure was created. Accordingly, and in order to ensure that this Plan is fair to members of PMMHC, the Company has discussed this Plan with senior staff at the Pennsylvania Insurance Department (“PID”), and, as a condition to the Offering, will obtain from the Insurance Commissioner an approval of the Offering or, as applicable, will obtain written confirmation from the Commissioner that such approval is not required and that the Company may proceed with the Offering. In accordance with the Plan, the estimated consolidated pro forma market value of the Company shall be determined by an independent valuation expert and shall represent the aggregate price of common stock (the “Estimated Pro Forma Market Value”). Furthermore, the pro forma market value may be expressed as a range of value and may be that value that is estimated to be necessary to attract a full subscription for the shares of common stock offered for sale in the Offering.

THE PLAN OF CONVERSION

The Board of Directors of the Company has adopted the Plan. As part of the Plan, PMMHC will convert from mutual to stock form and issue its common stock to its newly formed holding company, Penn Millers Holding Corporation, which will offer shares of its common stock (“Common Stock”) for sale in a subscription offering to the following potential subscribers: the Company’s policyholders, the Company’s employee stock ownership plan (“ESOP”), and directors, officers and employees of the Company in accordance with the terms and conditions of the Plan. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale in a community offering and a syndicated community offering, if needed.

Curtis Financial Group, LLC • One Liberty Place • 1650 Market Street, Suite 4400 • Philadelphia, PA 19103
(P) 215.972.2375 • (F) 215.972.2388 • www.curtisfinancial.com

Securities sold through Curtis Securities, LLC

Board of Directors
Penn Millers Mutual Holding Company
Page 2 of 4

CURTIS FINANCIAL GROUP, LLC

Curtis is an investment banking firm specializing in business valuations, mergers and acquisitions, and raising private capital. The professional staff has a diverse background in investment banking, securities analysis, banking, insurance, engineering, accounting and tax. The expertise of the staff includes valuing, originating, structuring, negotiating and closing a wide variety of investment banking transactions. The background of Curtis is presented in Exhibit III. We believe that, except for the fee we will receive for our appraisal, we are independent of the Company and the other parties engaged by the Company to assist in the corporate reorganization and stock issuance process.

VALUATION METHODOLOGY

In preparing the Appraisal Update, we conducted an analysis of PMMHC that included discussions with the Company’s management. We reviewed the audited GAAP and statutory financial statements of the Company as of and for the years ended December 31, 2003 through December 31, 2008 and the quarterly period ended March 31, 2009. In addition, where appropriate, we considered information based on other available published sources that we believe are reliable; however, we cannot guarantee the accuracy and completeness of such information.

In preparing the Appraisal Update, we also reviewed and analyzed: (i) financial and operating information with respect to the business, operations, and prospects of the Company furnished to us by the Company; (ii) publicly available information concerning the Company that we believe to be relevant to our analysis; (iii) a comparison of the historical financial results and present financial condition of the Company with those of selected, publicly-traded insurance companies that we deemed relevant; and (iv) financial performance and market valuation data of certain publicly-traded insurance industry aggregates as provided by industry sources.

The Appraisal Update is based on the Company’s representation that the information contained in the Plan and additional evidence furnished to us by the Company and its independent auditor are truthful, accurate, and complete. We did not independently verify the financial statements and other information provided by the Company and reviewed by its independent auditor, nor did we independently value the assets or liabilities of the Company. The Appraisal Update considers the Company only as a going concern on a stand-alone basis and should not be considered as an indication of the liquidation value of the Company.

We have investigated the competitive environment within which the Company operates and have assessed the Company’s strengths and weaknesses relative to comparable companies. We have monitored material regulatory and legislative actions affecting financial institutions generally and analyzed the potential impact of such developments on the Company and the industry as a whole, to the extent we were aware of such matters. We have analyzed the potential effects of the Offering on the Company’s operating characteristics and financial performance as they relate to the Estimated Pro Forma Market Value of PMMHC. We have reviewed the economy and

Board of Directors
Penn Millers Mutual Holding Company
Page 3 of 4

demographic characteristics of the primary market area in which the Company currently operates. We have compared the Company’s financial performance and condition with publicly-traded insurance institutions evaluated and selected in accordance with the valuation guidelines. We have reviewed conditions in the securities markets in general and the markets for insurance companies, and insurance holding companies.

Our appraised value is predicated on a continuation of the current operating environment for PMHC, PMMHC, and for all insurance companies and their holding companies. Changes in the local and national economy, the federal and state legislative and regulatory environments for insurance companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability, and may materially impact the value of insurance stocks as a whole or the Company’s value alone. To the extent that such factors can be foreseen, they have been factored into our analysis.

VALUATION CONCLUSION

It is our opinion that, as of June 5, 2009, the Estimated Pro Forma Market Value of the aggregate common shares outstanding immediately following the Offering, was within a range (the “Valuation Range”) of $45.05 million to $60.95 million with a midpoint of $53.0 million. The Valuation Range was based upon a fifteen percent decrease from the midpoint to determine the minimum and a fifteen percent increase from the midpoint to determine the maximum. Exhibit VII shows the assumptions and calculations utilized in determining the Company’s Valuation Range.

LIMITING FACTORS AND CONSIDERATIONS

Our Appraisal Update is not intended, and must not be construed, to be a recommendation of any kind as to the advisability of purchasing shares of Common Stock. Moreover, because the Appraisal Update is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of stock in the conversion will thereafter be able to sell such shares at prices related to the foregoing Estimated Pro Forma Market Value. The Appraisal Update reflects only a valuation range as of this date for the Estimated Pro Forma Market Value of PMMHC immediately upon issuance of the stock and does not take into account any trading actively with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the Offering. Any report prepared by Curtis shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.

Curtis has made no recommendation regarding the merits of the decision to proceed or not to proceed with the Offering. The results of our Appraisal Update are but one of the many factors the Company’s Board of Directors should consider in making its decision. The Company has assured Curtis that it has relied on its own counsel, accountants and other experts for legal, accounting, tax and similar professional advice.

PRO FORMA VALUATION APPRAISAL

I. RECENT FINANCIAL PERFORMANCE

Financial Condition

Table 1 presents selected data concerning the Company’s financial position as of December 31, 2008 and March 31, 2009. Exhibit IV-1 presents the Company’s balance sheet as of December 31, 2003 through December 31, 2008, as well as March 31, 2009.

Table 1
Selected Financial Condition Data
As of December 31, 2008 and March 31, 2009
(Dollars in Thousands)


	3/31/2009			12/31/2008
Balance Sheet Data
Total assets		228,415			220,524
Total investments and cash		143,993			133,873
Premiums and fees receivable		28,753			31,080
Reinsurance receivables and recoverables		25,064			20,637

Loss and loss adjustment expense reserves		116,775			108,065
Unearned premiums		44,811			45,322
Total liabilities		177,254			169,769
Total surplus		51,161			50,755
Total surplus / assets		22.40	%		23.02	%

Source: Penn Millers’ GAAP financial statements.

The Company’s total assets increased 3.6% from $220.5 million at December 31, 2008 to $228.4 million at March 31, 2009. From December 31, 2008 to March 31, 2009, total investments increased by $6.4 million, reinsurance receivables and recoverables increased by $4.4 million, and cash increased by $3.7 million. These increases were mostly offset by a $2.3 million decline in premiums and fees receivable, a $1.8 million decline in assets from discontinued operations, a $1.1 million decline in deferred income taxes and an $821,000 decline in other assets.

The Company’s portfolio of investment securities amounted to $128.3 million at March 31, 2009 and constituted 56.2% of total assets. As of March 31, 2009, Penn Millers’ investments

PRO FORMA VALUATION APPRAISAL

Table 2
Selected Operating Performance Data
For the TTM periods ended December 31, 2008 and March 31, 2009
(Dollars in Thousands)


	TTM ended
	3/31/2009 (e)			2008
REVENUE
Premiums earned	$	77,327		$	78,737
Investment income, net of investment expense		5,298			5,335
Realized investment (losses) gains, net		(7,627	)		(5,819	)
Other income		282			411

Total revenue		75,280			78,664

LOSSES AND EXPENSES
Losses and loss adjustment expenses		56,343			57,390
Underwriting and administrative expenses (a)		26,414			26,562
Interest expense		213			184
Other expenses, net		376			365

Total losses and expenses		83,346			84,501

Income from continuing operations		(8,066	)		(5,837	)


Income taxes expense (benefit)		(2,074	)		(1,378	)


Net income (loss) from continuing operations		(5,992	)		(4,459	)


Discontinued Operations:
Pre-tax (loss) income on discontinued ops		(3,104	)		(3,090	)
Income tax (benefit) expense		632			(170	)

(Loss) income on discontinued ops		(3,736	)		(2,920	)

Net income		(9,728	)		(7,379	)


Operating Ratios
Loss ratio (b)		72.9	%		72.9	%
Expense ratio (c)		34.2	%		33.7	%
Combined ratio (d)		107.0	%		106.6	%


Notes:

(a)		Includes amortization of deferred policy acquisition costs.

(b)		Losses and loss adjustment expenses divided by premiums earned.

(c)		Underwriting and administrative expenses divided by premiums earned.

(d)		Sum of the loss ratio and the expense ratio.

(e)		Represents the trailing twelve month period ended March 31, 2009.

Source: Financial reports prepared by management and reviewed by KPMG.

PRO FORMA VALUATION APPRAISAL

On February 2, 2009, the Company completed the sale of Eastern Insurance Group (“EIG”) to Eastern Insurance Acquisition Agency, LLC for approximately $3.4 million. Performance results of EIG have been classified as discontinued operations in Penn Millers’ historical financial statements.

Excluding revenue from discontinued operations, Penn Millers’ total revenue decreased from $78.7 million for the TTM period ended December 31, 2008 to $75.3 million for the TTM period ended March 31, 2009 due to a $1.4 million decrease in premiums earned and a $1.8 million increase in realized investment losses from the TTM period ended December 31, 2008 to the TTM period ended March 31, 2009. Including discontinued operations, Penn Millers experienced a net loss of $9.7 million for the TTM period ended March 31, 2009 as compared to net loss of $7.4 million for the TTM period ended December 31, 2008.

Underwriting and administrative expenses remained flat at $26.4 million for the TTM period ended December 31, 2008 to the TTM period ended March 31, 2009. As a percent of earned premium revenue, the Company’s expense ratio increased from 33.7% for the TTM period ended December 31, 2008 to 34.2% for the TTM period ended March 31, 2009. The loss ratio remained flat at 72.9% for the TTM period ended March 31, 2009, resulting in a combined ratio that increased from 106.6% for the TTM period ended December 31, 2008 to 107.0% for the TTM period ended March 31, 2009. According to management, Penn Millers continued to experience unusually high losses during the first quarter of 2009. As shown in the following chart, since 2003, Penn Millers’ combined ratio has ranged from 103.7% to 107.3%.

PRO FORMA VALUATION APPRAISAL

Table 3
Segment Operating Performance Data
For the TTM Periods ended December 31, 2008 and March 31, 2009
(Dollars in Thousands)


	For the twelve month period ended March 31, 2009
																		As a % of Total
	Agri			Commerical			Personal			Assumed		Total			Agri			Comm			Pers			Assum
Direct premiums written	$	59,305		$	35,661		$	0		$	263		95,229			62.3	%		37.4	%		0.0	%		0.3	%

Net premiums written		46,085			28,494			0			1,618		76,197			60.5	%		37.4	%		0.0	%		2.1	%

Net premiums earned		44,879			30,823			0			1,625		77,327			58.0	%		39.9	%		0.0	%		2.1	%

Losses and loss adjustment expenses		31,845			24,026			(198	)		673		56,346			56.5	%		42.6	%		-0.4	%		1.2	%
Other underwriting expenses		13,834			11,346			0			598		25,778			53.7	%		44.0	%		0.0	%		2.3	%


Total losses and expenses		45,679			35,372			(198	)		1,271		82,124			55.6	%		43.1	%		-0.2	%		1.5	%

Underwriting income (loss)		(800	)		(4,549	)		198			354		(4,797	)		16.7	%		94.8	%		-4.1	%		-7.4	%


	For the twelve month period ended December 31, 2008
																		As a % of Total
	Agri		Commerical			Personal			Assumed			Total			Agri			Comm			Pers			Assum
Direct premiums written	$	57,281	$	37,458		$	0		$	245			94,984			60.3	%		39.4	%		0.0	%		0.3	%

Net premiums written		45,110		30,632			0			1,625			77,367			58.3	%		39.6	%		0.0	%		2.1	%

Net premiums earned		45,298		31,805			0			1,634			78,737			57.5	%		40.4	%		0.0	%		2.1	%

Losses and loss adjustment expenses		31,137		25,480			(335	)		1,108			57,390			54.3	%		44.4	%		-0.6	%		1.9	%
Other underwriting expenses		13,848		11,371			0			574			25,793			53.7	%		44.1	%		0.0	%		2.2	%


Total losses and expenses		44,985		36,851			(335	)		1,682			83,183			54.1	%		44.3	%		-0.4	%		2.0	%

Underwriting income (loss)		313		(5,046	)		335			(48	)		(4,446	)		-7.0	%		113.5	%		-7.5	%		1.1	%

Source: Penn Millers financial statements.

Table 4 presents additional gross premium data for the Company’s agribusiness and commercial lines segments for the TTM periods ended December 31, 2008 and March 31, 2009.

PRO FORMA VALUATION APPRAISAL

Table 4
Agribusiness and Commercial Lines Segment Gross Premium Data
For the TTM Periods ended December 31, 2008 and March 31, 2009
(Dollars in Thousands)


	Agribusiness						Commerical Lines
	TTM 3/31/09			2008			TTM 3/31/09			2008

Direct premiums written:
Fire and Allied		19,235			18,504			4,837			5,097
Inland		2,238			2,166			275			281
Workers Compensation		8,290			8,064			7,373			8,031
General Liability		10,407			10,048			5,670			5,949
Product Liability		4,871			4,529			426			334
Surety		19			19			0			—
Burglary		168			161			61			38
Boiler and Machinery		898			871			838			850
Auto		13,181			12,919			5,041			5,068
Commercial Multi-Peril		—			—			11,118			11,782
Earthquake		—			—			22			27

Total		59,305			57,281			35,661			37,458


(% of Total Premiums)
Direct premiums written:
Fire and Allied		32.4	%		32.3	%		13.6	%		13.6	%
Inland		3.8	%		3.8	%		0.8	%		0.7	%
Workers Compensation		14.0	%		14.1	%		20.7	%		21.4	%
General Liability		17.5	%		17.5	%		15.9	%		15.9	%
Product Liability		8.2	%		7.9	%		1.2	%		0.9	%
Surety		0.0	%		0.0	%		0.0	%		0.0	%
Burglary		0.3	%		0.3	%		0.2	%		0.1	%
Boiler and Machinery		1.5	%		1.5	%		2.3	%		2.3	%
Auto		22.2	%		22.6	%		14.1	%		13.5	%
Commercial Multi-Peril		0.0	%		0.0	%		31.2	%		31.5	%
Earthquake		0.0	%		0.0	%		0.1	%		0.1	%

Total		100.0	%		100.0	%		100.0	%		100.0	%

Source: Penn Millers GAAP financial data.

Fire and allied direct premiums written, the largest component of the Company’s agribusiness segment, increased by 4.0% to $19.2 million in the TTM period ended March 31, 2009. Direct commercial multi-peril direct premiums written, the largest component of the Company’s commercial lines segment, decreased by 5.6% to $11.1 million in the TTM period ended March 31, 2009 due to declining prices. The chart below shows the Company’s composition of direct premiums written, by line of business, for the TTM period ended March 31, 2009.

PRO FORMA VALUATION APPRAISAL

from the loss levels in the third and fourth quarters of 2008. The number of companies reporting realized capital losses during the first quarter of 2009 outnumbered those posting gains by a count of 995 to 828. The industry’s combined ratio of 102.01% for the first quarter of 2009, was similar to the combined ratio of 102.53% for the fourth quarter of 2008. Net premiums written increased by approximately 7.9% from $98.7 billion in the fourth quarter of 2008 to $106.5 billion in the first quarter of 2009.

P&C individual insurance entity performance
2,691 out of 2,824 estimated P&C filers


	Q1’09			Q1’08			Q1’07			Q4’08			Q4’07			Q4’06			2008Y			2007Y
Direct premiums written ($000)		118,455,173			121,804,657			124,068,523			111,594,148			116,741,582			118,218,869			485,991,577			494,306,660
Net premiums written ($000)		106,506,506			110,863,246			110,075,278			98,751,445			103,103,331			104,799,553			436,753,985			442,117,195
Premiums earned ($000)		105,705,550			108,127,697			108,519,714			107,782,211			110,306,568			110,149,769			438,802,790			439,868,969
Losses & LAE ($000)		78,817,336			78,364,422			70,482,463			79,487,557			77,200,013			71,449,801			337,270,449			297,370,025
Under writing expenses ($000)		28,883,752			30,024,309			29,553,977			27,688,341			28,600,233			29,396,912			119,469,343			108,149,919
Under writing gain		-1,995,539			-261,033			8,483,274			606,313			4,506,322			9,303,056			-17,937,002			34,349,026
Dividends to policyholders ($000)		343,872			386,482			326,130			803,002			1,133,648			2,083,073			2,005,743			3,322,619
Loss ratio (%)		74.56	%		72.47	%		64.95	%		73.75	%		69.99	%		64.87	%		76.86	%		67.60	%
Expense ratio (NPW) (%)		27.12	%		27.08	%		26.85	%		28.04	%		27.74	%		28.05	%		27.35	%		24.46	%
Policy holder dividend ratio (%)		0.33	%		0.36	%		0.30	%		0.75	%		1.03	%		1.89	%		0.46	%		0.76	%
Combined ratio (%)		102.01	%		99.91	%		92.10	%		102.53	%		98.75	%		94.81	%		104.67	%		92.82	%
Change in DPW (%)		-2.75	%		-1.82	%					-4.41	%		-1.25	%					-1.68	%		0.78	%
Change in NPW (%)		-3.93	%		0.72	%					-4.22	%		-1.62	%					-1.21	%		-0.23	%
After-tax realized capital gains ($000)		-7,919,560			-364,638			1,858,954			-10,166,651			1,598,324			1,505,369			-19,367,269			8,807,110

Source: SNL Financial

Fitch Ratings (“Fitch”) believes that profitability will improve moderately in 2009 but underwriting losses are anticipated to continue. Both SNL Financial and Fitch acknowledged that a primary contributor to the poor underwriting performance in the P&C sector was due to the deterioration in results for financial guarantors and mortgage insurers, which are included in the P&C industry.

Fitch’s outlook for the P&C insurance industry is negative based on economic and investment uncertainty. Key negative factors affecting the P&C industry include: pricing trends and recession related reductions in insurance exposure that will promote a decline in premium revenue and higher expense ratios; higher accident year loss ratios (excluding catastrophe losses); reduced prior period favorable reserve development; and low investment yields and returns. According to Fitch, market underwriting capacity has not declined to a level that will spark premium rate improvements.

PRO FORMA VALUATION APPRAISAL

Table 5
Comparable Financial Condition Data
Penn Millers and the Comparable Group
As of or for the TTM Period ended March 31, 2009


									Total Cash
							Total Policy		and					Tangible			Total Policy		Cash and
	Total Assets		Total Equity		Tangible		Reserves		Investments		Equity /			Equity /			Reserves /		Investments /
	($000)		($000)		Equity ($000)		($000)		($000)		Assets			Assets			Equity		Assets

Penn Millers	$	228,415	$	51,161	$	51,161	$	116,775	$	143,993		22.4	%		22.4	%		2.28x		63.0	%

Public P&C Insurance Group Mean		12,459,344		3,402,190		2,806,295		6,793,526		7,932,351		30.4	%		27.8	%		2.42x		69.4	%
Public P&C Insurance Group Median		2,838,743		789,066		756,180		1,724,858		2,126,683		28.0	%		24.6	%		2.15x		70.9	%

Comparable Group Mean		651,072		195,902		183,892		378,004		443,835		31.4	%		29.5	%		2.00x		69.9	%
Comparable Group Median		665,975		180,855		153,791		388,800		454,018		31.3	%		26.9	%		1.76x		69.7	%

Comparable Group
21st Century Holding Company		204,676		76,228		76,228		114,701		150,471		37.2	%		37.2	%		1.50x		73.5	%
Baldwin & Lyons, Inc.		765,729		325,649		325,649		398,016		524,088		42.5	%		42.5	%		1.22x		68.4	%
CRM Holdings, Ltd.		452,951		101,677		98,465		273,506		340,804		22.4	%		21.7	%		2.69x		75.2	%
Donegal Group Inc.		890,379		368,350		367,428		478,479		641,909		41.4	%		41.3	%		1.30x		72.1	%
Eastern Insurance Holdings, Inc.		385,487		137,234		117,736		207,849		273,564		35.6	%		30.5	%		1.51x		71.0	%
EMC Insurance Group Inc.		1,105,584		286,182		285,240		724,156		948,106		25.9	%		25.8	%		2.53x		85.8	%
First Mercury Financial Corporation		985,641		274,384		210,125		548,289		606,108		27.8	%		21.3	%		2.00x		61.5	%
Hallmark Financial Services, Inc.		551,279		190,555		121,220		277,022		368,415		34.6	%		22.0	%		1.45x		66.8	%
Mercer Insurance Group, Inc.		566,221		141,843		136,427		379,583		383,947		25.1	%		24.1	%		2.68x		67.8	%
National Interstate Corporation		1,025,934		224,907		224,907		584,812		572,269		21.9	%		21.9	%		2.60x		55.8	%
National Security Group, Inc.		125,054		35,045		35,045		70,927		93,511		28.0	%		28.0	%		2.02x		74.8	%
NYMAGIC, INC.		977,190		171,154		171,154		651,829		582,965		17.5	%		17.5	%		3.81x		59.7	%
SeaBright Insurance Holdings, Inc.		896,537		333,196		328,636		486,743		578,196		37.2	%		36.7	%		1.46x		64.5	%
Unico American Corporation		182,340		76,226		76,226		96,150		149,331		41.8	%		41.8	%		1.26x		81.9	%

Source: Penn Millers’ GAAP financial statements; SNL Financial.

PRO FORMA VALUATION APPRAISAL

Table 6 compares Penn Millers with the Comparable Group and Public P&C Insurance Group based on selected measures of profitability.

Table 6
Comparable Operating Performance Data
Penn Millers and the Comparable Group
For the TTM period ended March 31, 2009


	Total Revenue		Net Income			GAAP			GAAP Loss			Combined
	($000)		($000)			Expense Ratio			Ratio			Ratio			ROAA			ROAE

Penn Millers	$	75,280	$	(5,992	)		34.2	%		72.9	%		107.0	%		-2.7	%		-10.6	%

Public P&C Insurance Group Mean		3,502,076		161,709			32.1	%		61.4	%		93.6	%		0.6	%		2.2	%
Public P&C Insurance Group Median		634,172		29,149			31.3	%		60.8	%		93.2	%		1.1	%		3.8	%

Comparable Group Mean		193,487		139			36.1	%		63.8	%		99.9	%		-0.4	%		-2.0	%
Comparable Group Median		163,129		3,844			34.8	%		62.2	%		99.1	%		0.8	%		3.0	%

Comparable Group
21st Century Holding Company		62,937		(6,484	)		47.5	%		63.8	%		111.3	%		-3.2	%		-8.1	%
Baldwin & Lyons, Inc.		167,677		2,336			34.9	%		54.1	%		89.0	%		0.3	%		0.7	%
CRM Holdings, Ltd.		134,533		(14,860	)		51.3	%		80.8	%		132.1	%		-3.5	%		-13.5	%
Donegal Group Inc.		378,007		19,152			31.2	%		74.7	%		105.9	%		2.2	%		5.3	%
Eastern Insurance Holdings, Inc.		129,820		(20,512	)		34.8	%		67.0	%		101.7	%		-5.4	%		-13.5	%
EMC Insurance Group Inc.		406,030		(4,121	)		37.8	%		58.2	%		96.0	%		-0.4	%		-1.3	%
First Mercury Financial Corporation		231,115		39,802			30.4	%		58.0	%		88.4	%		4.4	%		15.2	%
Hallmark Financial Services, Inc.		267,758		12,208			29.5	%		62.0	%		91.5	%		2.3	%		6.5	%
Mercer Insurance Group, Inc.		158,581		8,533			36.0	%		62.4	%		98.4	%		1.5	%		6.3	%
National Interstate Corporation		295,232		13,735			22.4	%		56.6	%		79.0	%		1.4	%		6.4	%
National Security Group, Inc.		59,538		(4,505	)		42.0	%		76.5	%		118.4	%		-3.4	%		-11.5	%
NYMAGIC, INC.		102,751		(71,109	)		48.2	%		51.5	%		99.7	%		-7.1	%		-35.5	%
SeaBright Insurance Holdings, Inc.		269,751		22,414			34.0	%		66.1	%		100.1	%		2.7	%		7.1	%
Unico American Corporation		45,089		5,352			26.0	%		61.0	%		87.0	%		2.9	%		7.3	%

Source: Penn Millers’ GAAP financial statements; SNL Financial.

The Company was not profitable in the TTM period ended March 31, 2009. Six companies in the Comparable Group also experienced operating losses during the TTM period ended March 31, 2009. Penn Millers’ profitability continues to be impacted by a high combined ratio, which was 107.0%. The Comparable Group reported mean and median combined ratios of 99.9% and 99.1%, respectively.

The Company’s relatively high combined ratio was attributable primarily to its higher loss ratio. Penn Millers’ loss ratio measured 72.9% for the TTM period ended March 31, 2009, which was above the Comparable Group mean and median loss ratios of 63.8% and 62.2%. Among the Comparable Group members, CRM Holdings, Ltd., Donegal Group, Inc., and National Security Group, Inc. reported higher loss ratios at 80.8%, 74.7%, and 76.5%, respectively.

PRO FORMA VALUATION APPRAISAL

V. MARKET CONDITIONS AND MARKET VALUE ADJUSTMENTS

Stock Price Performance and Market Conditions

Table 7 summarizes stock price and valuation ratios changes for the Comparable Group from April 1, 2009 and December 31, 2008, respectively. Ten companies experienced a price increase, and four companies experienced a price decline. The mean and median price changes among the Comparable Group were negative 9.4% and positive 3.5%, respectively. The market valuation ratios of the Comparable Group have remained relatively unchanged since April 1, 2009.

Table 7
Comparative Market Valuation Performance
As of April 1, 2009 and June 5, 2009


														6/5/2009			4/1/2009
	Change in													Price /			Price /			6/5/2009		4/1/2009		6/5/2009		4/1/2009		6/5/2009			4/1/2009
	Closing			6/5/2009		4/1/2009		6/5/2009 Price			4/1/2009 Price			Tangible			Tangible			Price / LTM		Price / LTM		Price / LTM		Price / LTM		Price / Total			Price / Total
	Price			Closing Price		Closing Price		/ Book			/ Book			Book			Book			EPS		EPS		Revenue		Revenue		Assets			Assets

Public P&C Insurance Group Mean	NA			NA		NA			96.4	%		93.2	%		106.9	%		103.6	%		28.43x		26.05x		1.53x		0.66x		28.6	%		27.6	%
Public P&C Insurance Group Median	NA			NA		NA			92.1	%		87.2	%		101.6	%		94.5	%		11.58x		10.44x		0.99x		0.95x		26.1	%		25.7	%

Comparable Group Mean		9.4	%	NA		NA			75.3	%		74.7	%		81.5	%		81.6	%		27.78x		12.87x		0.82x		0.85x		23.4	%		23.2	%
Comparable Group Median		3.5	%	NA		NA			70.4	%		73.4	%		73.4	%		74.0	%		11.65x		10.66x		0.73x		0.77x		23.1	%		24.2	%

Comparable Group
21st Century Holding Company		2.4	%		3.38		3.30		35.5	%		34.7	%		35.5	%		34.7	%	Neg		Neg			0.43x		0.39x		13.2	%		13.4	%
Baldwin & Lyons, Inc.		6.8	%		20.95		19.61		95.0	%		87.7	%		95.0	%		88.6	%		130.94x	Neg			1.85x		1.85x		40.4	%		37.2	%
CRM Holdings, Ltd.		87.3	%		1.18		0.63		19.3	%		9.6	%		19.9	%		9.9	%	Neg		Neg			0.15x		0.07x		4.3	%		2.4	%
Donegal Group Inc.		4.5	%		15.89		15.21		110.2	%		106.8	%		110.4	%		107.1	%		20.91x		15.21x		1.07x		1.04x		45.6	%		44.1	%
Eastern Insurance Holdings, Inc.		24.3	%		9.44		7.60		62.5	%		50.0	%		72.8	%		58.4	%	Neg		Neg			0.66x		0.53x		22.2	%		18.3	%
EMC Insurance Group Inc.		1.3	%		21.75		21.48		100.7	%		100.6	%		101.0	%		100.9	%	Neg		Neg			0.71x		0.69x		26.1	%		25.7	%
First Mercury Financial Corporation		-4.4	%		13.94		14.58		92.0	%		100.9	%		120.1	%		134.2	%		6.51x		6.66x		1.09x		1.23x		25.6	%		28.0	%
Hallmark Financial Services, Inc.		5.6	%		6.98		6.61		76.5	%		76.9	%		120.2	%		126.2	%		12.03x		10.66x		0.54x		0.51x		26.4	%		25.6	%
Mercer Insurance Group, Inc.		5.6	%		15.20		14.40		66.8	%		65.4	%		69.4	%		68.2	%		11.26x		11.08x		0.60x		0.56x		16.7	%		15.8	%
National Interstate Corporation		-1.1	%		16.69		16.88		143.6	%		151.2	%		143.6	%		151.2	%		23.51x		30.69x		1.09x		1.11x		31.5	%		33.0	%
National Security Group, Inc.		-20.7	%		8.60		10.85		60.5	%		77.2	%		60.5	%		77.2	%	Neg		Neg			0.36x		0.44x		17.0	%		21.4	%
NYMAGIC, INC.		28.8	%		14.74		11.44		74.0	%		59.9	%		74.0	%		59.9	%	Neg		Neg			1.23x		1.75x		13.0	%		10.4	%
SeaBright Insurance Holdings, Inc.		-11.1	%		9.46		10.64		60.5	%		69.8	%		61.3	%		70.8	%		9.01x		7.71x		0.75x		0.85x		22.5	%		26.9	%
Unico American Corporation		2.5	%		7.68		7.50		56.5	%		54.6	%		56.5	%		54.6	%		8.09x		8.06x		0.96x		0.90x		23.6	%		22.8	%

Source: SNL Financial and CapitalIQ.

Table 8 summarizes the recent performance of various insurance stock indexes maintained by SNL Financial, along with selected other industry and broader market indexes. The SNL Insurance Index of all publicly-traded insurance companies increased 17.4% between

PRO FORMA VALUATION APPRAISAL

April 1, 2009 and June 5, 2009. The SNL Insurance Index slightly outperformed the broader markets indexes as reflected by the Standard & Poor’s 500, which increased 15.9% and the Russell 3000, which increased 17.1% between April 1, 2009 and June 5, 2009.

Table 8
Selected Stock Market Index Performance
For the Period Ended June 5, 2009


	Index Value		Index Value					Change (%)
	6/5/2009		4/1/2009		4/1/2009			YTD			1 Year			3 Years
SNL Insurance Indexes
SNL Insurance		287.77		245.09		17.41			(5.83	)		(41.25	)		(44.17	)
SNL Insurance Underwriter		283.17		238.83		18.57			(5.28	)		(42.09	)		(45.19	)
SNL Insurance Broker		469.08		462.05		1.52			(13.73	)		(23.33	)		(20.72	)
S&P Insurance		138.28		106.56		29.77			(6.63	)		(55.17	)		(60.07	)
SNL Sector Indexes
SNL Insurance Multiline		88.20		61.44		43.57			(4.23	)		(76.90	)		(82.86	)
SNL Insurance L&H		358.42		220.38		62.63			(4.13	)		(48.16	)		(45.58	)
SNL Insurance P&C		299.74		280.08		7.02			(8.37	)		(26.27	)		(13.59	)
SNL Reinsurance		379.44		358.14		5.95			(6.09	)		(52.13	)		(55.73	)
SNL Managed Care		432.64		349.89		23.65			3.99			(30.51	)		(39.59	)
SNL Title Insurer		425.66		584.99		(27.24	)		(24.98	)		(30.31	)		(60.80	)
SNL Mortgage & Finl Guaranty		45.50		25.09		81.37			39.06			(33.80	)		(91.56	)
SNL Asset Size Indexes
SNL Insurance < $250M		323.83		289.98		11.67			9.00			(32.28	)		(47.97	)
SNL Insurance $250M-$500M		285.08		255.62		11.52			(5.89	)		(36.20	)		(49.44	)
SNL Insurance $500M-$1B		317.42		308.44		2.91			(2.16	)		(15.52	)		(25.06	)
SNL Insurance $1B-$2.5B		561.29		520.89		7.75			(7.18	)		(22.07	)		(12.78	)
SNL Insurance $2.5B-$10B		368.06		353.22		4.20			(8.64	)		(25.19	)		(34.15	)
SNL Insurance > $10B		272.55		224.41		21.45			(4.75	)		(44.50	)		(47.13	)
SNL Insurance > $1B		296.65		249.86		18.73			(5.29	)		(42.22	)		(45.25	)
SNL Insurance < $1B		363.09		346.49		4.79			(1.08	)		(20.74	)		(31.32	)
SNL Market Cap Indexes
SNL Micro Cap Insurance		176.53		128.34		37.55			6.35			(44.91	)		(49.17	)
SNL Small Cap Insurance		358.86		320.07		12.12			(14.25	)		(31.14	)		(38.42	)
SNL Mid Cap Insurance		199.72		160.14		24.72			(8.71	)		(39.01	)		(50.71	)
SNL Large Cap Insurance		233.30		199.56		16.91			(4.24	)		(43.55	)		(46.00	)
Broad Market Indexes
S&P 500		940.09		811.08		15.91			4.08			(33.04	)		(25.70	)
SNL All Financial Institutions		347.62		276.88		25.55			(2.94	)		(43.62	)		(55.79	)
Russell 1000		987.61		847.30		16.56			5.33			(33.40	)		(25.50	)
Russell 2000		1,318.08		1,066.57		23.58			6.19			(30.51	)		(25.71	)
Russell 3000		1,008.03		860.92		17.09			5.40			(33.18	)		(25.54	)

PRO FORMA VALUATION APPRAISAL

VI. VALUATION ANALYSIS AND CONCLUSIONS

Valuation Review

In the April 1, 2009 Appraisal, the Company’s Estimated Pro Forma Market Value was discounted on a P/B basis relative to the trading market valuations of the Comparable Group. The Company’s Estimated Pro Forma Market Value was adjusted for earnings prospects, liquidity of issue and new issue discounts.

The Comparable Group’s market valuation ratios have remained relatively unchanged since the April 1, 2009 Appraisal. The median P/B ratio of the Comparable Group decreased from 73.4% at April 1, 2009 to 70.4% at June 5, 2009 and the mean P/B ratio of the Comparable Group increased from 74.7% at April 1, 2009 to 75.3% at June 5, 2009. The P/B ratio continues to be the primary valuation metric generally accepted for financial services companies in the current investment climate. Penn Millers’ relatively low returns on equity and assets and negative profitability during the TTM period ended March 31, 2009 render the P/E ratio not applicable. The P/A ratio was again considered to confirm that our Valuation Range for PMMHC was within reason.

Valuation Analysis

As noted in our April 1, 2009 Appraisal, a discount of approximately 25% to 35% based on the P/B ratio was deemed appropriate for determining the Company’s Estimated Pro Forma Market Value relative to the Comparable Group’s market valuation ratios. The Company is valued at a pro-forma P/B ratio of 50.9% at the minimum, 55.5% at the midpoint, and 59.4% at the maximum as shown in Table 9.

PRO FORMA VALUATION APPRAISAL

Table 10 displays the market valuation ratios of the Comparable Group as of June 5, 2009 and pro forma ratios for the Company.

Table 10
Comparative Market Valuation Analysis
As of June 5, 2009


								Price /
			Total Market					Tangible			Price / LTM			Price / LTM			Price / Total			Equity /
	Closing Price		Value ($000’s)		Price / Book			Book			EPS			Revenue			Assets			Assets

Penn Millers
Pro Forma Valuation Minimum	$	10.00	$	45,050		50.9	%		50.9	%	Neg				0.59	x		17.0	%		33.3	%
Pro Forma Valuation Midpoint		10.00		53,000		55.5	%		55.5	%	Neg				0.69	x		19.4	%		35.0	%
Pro Forma Valuation Maximum		10.00		60,950		59.4	%		59.4	%	Neg				0.79	x		21.8	%		36.6	%

Comparable Group Mean	NA		$	167,438		75.3	%		81.5	%		27.78	x		0.82	x		23.4	%		31.4	%
Comparable Group Median	NA			136,157		70.4	%		73.4	%		11.65	x		0.73	x		23.1	%		31.3	%

Comparable Group
21st Century Holding Company		3.38		27,087		35.5	%		35.5	%	Neg				0.43	x		13.2	%		37.2	%
Baldwin & Lyons, Inc.		20.95		309,369		95.0	%		95.0	%		130.94	x		1.85	x		40.4	%		42.5	%
CRM Holdings, Ltd.		1.18		19,609		19.3	%		19.9	%	Neg				0.15	x		4.3	%		22.4	%
Donegal Group Inc.		15.89		405,745		110.2	%		110.4	%		20.91	x		1.07	x		45.6	%		41.4	%
Eastern Insurance Holdings, Inc.		9.44		85,767		62.5	%		72.8	%	Neg				0.66	x		22.2	%		35.6	%
EMC Insurance Group Inc.		21.75		288,182		100.7	%		101.0	%	Neg				0.71	x		26.1	%		25.9	%
First Mercury Financial Corporation		13.94		252,444		92.0	%		120.1	%		6.51	x		1.09	x		25.6	%		27.8	%
Hallmark Financial Services, Inc.		6.98		145,694		76.5	%		120.2	%		12.03	x		0.54	x		26.4	%		34.6	%
Mercer Insurance Group, Inc.		15.20		94,742		66.8	%		69.4	%		11.26	x		0.60	x		16.7	%		25.1	%
National Interstate Corporation		16.69		323,002		143.6	%		143.6	%		23.51	x		1.09	x		31.5	%		21.9	%
National Security Group, Inc.		8.60		21,213		60.5	%		60.5	%	Neg				0.36	x		17.0	%		28.0	%
NYMAGIC, INC.		14.74		126,620		74.0	%		74.0	%	Neg				1.23	x		13.0	%		17.5	%
SeaBright Insurance Holdings, Inc.		9.46		201,575		60.5	%		61.3	%		9.01	x		0.75	x		22.5	%		37.2	%
Unico American Corporation		7.68		43,085		56.5	%		56.5	%		8.09	x		0.96	x		23.6	%		41.8	%

Source: Penn Millers, SNL Financial and Capital IQ.

The Company’s pro forma P/B valuation ratios reflect discounts to the Comparable Group’s mean ratio of 75.3% measuring 21.0% at the valuation maximum, 26.3% at the valuation midpoint, and 32.3% at the valuation minimum. The Company’s P/B valuation ratios reflect a discount to the Comparable Group’s 70.4% median of 15.5% at the valuation maximum, 21.2% at the valuation midpoint, and 27.6% at the valuation minimum. In our opinion, these levels of discounts are appropriate to reflect the adjustments for earnings prospects, the new issue discount, and liquidity of the issue discussed in the previous Appraisal as of April 1, 2009.

Based on the P/A ratio, the Company’s midpoint valuation of $45.0 million reflects a P/A ratio of 19.4%, ranging from 17.0% at the minimum to 21.8% at the maximum. The Company’s P/A valuation ratio at the midpoint is below the Comparable Group’s corresponding mean and

EXHIBIT I

STATEMENT OF GENERAL ASSUMPTIONS AND LIMITING CONDITIONS

This report is subject to the following general assumptions and limiting conditions.

1.		No investigation has been made of, and no responsibility is assumed for, the legal description of the property being valued or legal matters, including title or encumbrances. Title to the property is assumed to be good and marketable unless otherwise stated. The property is assumed to be free and clear of any liens, easements or encumbrances unless otherwise stated.

2.		Information furnished by others, upon which all or portions of this analysis is based, is believed to be reliable, but has not been verified except as set forth in this report. No warranty is given as to the accuracy of such information.

3.		This report has been made only for the purpose stated and shall not be used for any other purpose.

4.		Except as specified in our engagement letter, neither Curtis nor any individual signing or associated with this report shall be required by reason of this report to give further consultation, provide testimony, or appear in court or other legal proceeding.

5.		No responsibility is taken for changes in market conditions and no obligation is assumed to revise this report to reflect events or conditions which occur subsequent to the date hereof.

6.		The date to which the opinions expressed in this report apply is set forth in the letter of transmittal. Our opinion is based on the purchasing power of the United States dollar as of that date.

7.		It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can readily be obtained or renewed.

8.		Full compliance with all applicable federal, state and local zoning, use, environmental and similar laws and regulations is assumed, unless otherwise stated.

9.		Competent management is assumed.

10.		The opinion is predicated on the financial structure prevailing as of the date of this report.

Exhibit III

Overview of Curtis

With offices in Philadelphia and Pittsburgh, PA, Curtis Financial Group, LLC (“Curtis”) is a leading investment banking and corporate finance advisory firm serving middle-market clients since 1994. Our expertise and experience with financial services industry clients is reflected in our consistently high national rankings by SNL Financial LC. The Curtis team offers clients the benefit of more than 125 years of collective experience, having served: public and private middle-market companies operating in a diverse group of industries in the United States and globally; and entrepreneurs, families, corporations, private equity and venture capital investors. All securities are sold through Curtis Securities, LLC, a FINRA (www.finra.org) registered broker-dealer.

Background of Appraisers

Anthony A. Latini, Jr., CFA
Managing Director

Mr. Latini has over 20 years of experience providing corporate finance and investment banking services to middle market and large corporate clients. Mr. Latini focuses on merger and acquisition advisory services and capital raising for clients in a wide variety of industries including manufacturing, distribution, and financial services. He has been involved with seven mutual to stock conversions. Prior to joining Curtis, Mr. Latini was a Director in the Financial Services Group at Berwind Financial L.P. and has also held positions at Evans & Company, Inc., and CoreStates Financial Corporation. Mr. Latini received his B.S. from the Wharton School at the University of Pennsylvania and is a Chartered Financial Analyst (CFA).

Paul M. Yeakel, Jr.
Vice President

Mr. Yeakel has more than eight years of investment banking and real estate financing experience, having successfully completed projects in industries including telecommunications, flat panel displays, accounts receivable management, healthcare, software, energy and real estate. Prior to joining Curtis Financial Group, Mr. Yeakel co-founded Lighthouse Development Partners, LLC, a real estate development firm, and spent four years working in a corporate development role for CD Ventures and Gatehouse Ventures, both private investment firms located in Berwyn, PA. Additionally, Mr. Yeakel worked for Corning Incorporated as an internal corporate strategy consultant. Mr. Yeakel graduated from Carnegie Mellon’s Graduate School of Industrial Administration with a M.B.A. and earned a B.A. in English from The College of Wooster.

Laura E. Anastasio
Senior Associate

Ms. Anastasio joined Curtis Financial Group in 2005 after two years with Ernst & Young, LLP. As part of the Transaction Advisory Services Group, Ms. Anastasio completed valuation assignments involving both businesses and sale leaseback transactions. She has experience working in a variety of industries ranging from consumer products to computer technology, and has been involved with three mutual to stock conversions. Ms. Anastasio holds a B.S. in Industrial Engineering from Lehigh University. She is also a member of the American Society of Appraisers.

Exhibit IV-1
Penn Millers Mutual Holding Company
Historical Balance Sheets — GAAP Basis
(Dollars in Thousands)


	3/31/2009			12/31/2008			12/31/2007			12/31/2006			12/31/2005			12/31/2004			12/31/2003
ASSETS
Investments:
Fixed securities		128,298			121,914			112,769			99,906			94,549			92,752			87,123
Equity securities		—			—			13,409			13,697			12,328			12,819			11,266

Total investments		128,298			121,914			126,178			113,603			106,877			105,571			98,389

Cash and cash equivalents (cash overdraft)		15,695			11,959			10,134			13,052			10,021			11,431			14,387
Premiums and fees receivable		28,753			31,080			32,489			30,465			26,910			29,256			24,056
Reinsurance receivables and recoverables		25,064			20,637			15,640			18,886			22,923			18,053			22,222
Deferred acquisition costs		10,522			10,601			11,014			10,381			9,646			10,352			9,243
Prepaid reinsurance premiums		4,170			4,342			4,234			4,119			3,645			3,731			3,209
Accrued investment income		1,391			1,431			1,499			1,439			1,302			1,225			1,236
PP&E, less accumulated depreciation		4,071			4,231			4,401			4,228			4,255			5,020			5,583
Income taxes receivable		1,294			1,508			1,056			—			894						—
Deferred income taxes		3,656			4,728			1,872			1,439			1,429			—			—
Other		4,058			4,879			3,972			2,812			2,557			2,144			1,845
Assets from discontinued operations		1,443			3,214			7,124			7,344			7,438			5,237			5,285

Total assets		228,415			220,524			219,613			207,768			197,897			192,020			185,455


LIABILITIES AND SURPLUS

Loss and loss adjustment expense reserves		116,775			108,065			95,956			89,405			83,849			73,287			69,463
Unearned premiums		44,811			45,322			46,595			43,294			39,984			42,798			38,090
Accounts due reinsurers		—			—			—			—			—			2,597			4,973
Accounts payable and accrued expenses		12,631			13,353			12,874			10,394			9,603			7,991			7,226
Deferred income taxes payable		—			—			—			—			—			673			1,344
Income taxes payable		—			—			—			256			1			22			161
Long-term debt		3,037			2,382			1,745			2,307			4,400			3,064			3,059
Liabilities from discontinued operations		—			647			1,042			1,582			2,291			1,682			1,864


Total liabilities		177,254			169,769			158,212			147,238			140,128			132,114			126,180

Unassigned surplus		51,945			51,914			59,293			58,207			56,127			55,837			54,439
Accumulated other comprehensive income, net		(784	)		(1,159	)		2,108			2,323			1,642			4,069			4,836

Total surplus		51,161			50,755			61,401			60,530			57,769			59,906			59,275

Total liabilities and surplus		228,415			220,524			219,613			207,768			197,897			192,020			185,455


Performance and Capital Ratios
Return on average assets (a)		-2.66	%		-2.03	%		0.68	%		0.94	%		0.12	%		0.64	%		1.00	%
Return on average surplus (a)		-10.57	%		-7.95	%		2.38	%		3.23	%		0.41	%		2.03	%		3.12	%
Surplus to total assets		22.40	%		23.02	%		27.96	%		29.13	%		29.19	%		31.20	%		31.96	%


Notes:

(a)		Return on average assets and return on average equity as of 3/31/2009; asset and equity values are derived as the average of 3/31/2008 and 3/31/2009.

Source: Financial reports prepared by management and reviewed by KPMG.

Exhibit IV–2
Penn Millers Mutual Holding Company
Historical Income Statements — GAAP Basis
(Dollars in Thousands)


	TTM ended
	3/31/2009 (e)			2008			2007			2006			2005			2004			2003
REVENUE
Premiums earned	$	77,327		$	78,737		$	70,970		$	64,645		$	64,723		$	63,090		$	56,065
Investment income, net of investment expense		5,298			5,335			5,324			4,677			4,444			4,278			4,058
Realized investment (losses) gains, net		(7,627	)		(5,819	)		(702	)		349			424			936			833
Other income		282			411			508			345			277			301			371

Total revenue		75,280			78,664			76,100			70,016			69,868			68,605			61,327

LOSSES AND EXPENSES
Losses and loss adjustment expenses		56,343			57,390			49,783			43,766			40,242			42,910			35,822
Underwriting and administrative expenses (a)		26,414			26,562			24,163			23,296			29,221			24,359			22,911
Interest expense		213			184			125			222			195			51			56
Other expenses, net		376			365			184			314			266			82			101

Total losses and expenses		83,346			84,501			74,255			67,598			69,924			67,402			58,890

Income from continuing operations		(8,066	)		(5,837	)		1,845			2,418			(56	)		1,203			2,437

Income taxes expense (benefit)		(2,074	)		(1,378	)		396			506			(296	)		(4	)		587


Net income (loss) from continuing operations		(5,992	)		(4,459	)		1,449			1,912			240			1,207			1,850


Discontinued Operations:
Pre-tax (loss) income on discontinued ops		(3,104	)		(3,090	)		(489	)		292			385			240			340
Income tax (benefit) expense		632			(170	)		(126	)		124			151			63			143

(Loss) income on discontinued ops		(3,736	)		(2,920	)		(363	)		168			234			177			197

Net income		(9,728	)		(7,379	)		1,086			2,080			474			1,384			2,047


Operating Ratios
Loss ratio (b)		72.9	%		72.9	%		70.1	%		67.7	%		62.2	%		68.0	%		63.9	%
Expense ratio (c)		34.2	%		33.7	%		34.0	%		36.0	%		45.1	%		38.6	%		40.9	%
Combined ratio (d)		107.0	%		106.6	%		104.2	%		103.7	%		107.3	%		106.6	%		104.8	%


Notes:

(a)		Includes amortization of deferred policy acquisition costs.

(b)		Losses and loss adjustment expenses divided by premiums earned.

(c)		Underwriting and administrative expenses divided by premiums earned.

(d)		Sum of the loss ratio and the expense ratio.

(e)		Represents the trailing twelve month period ended March 31, 2009.

Source: Financial reports prepared by management and reviewed by KPMG. Statutory financials provided in Exhibit V.

Exhibit V-1
Penn Millers Mutual Holding Company (b)
Historical Balance Sheets — Statutory Basis (a)
(Dollars in Thousands)


	12/31/2008			12/31/2007			12/31/2006			12/31/2005			12/31/2004			12/31/2003
ASSETS
Investments:
Bonds		120,538			110,972			99,628			93,879			89,641			82,441
Stocks		1			13,411			13,697			12,329			12,819			11,267
Real estate		2,694			2,788			2,909			1,199			1,204			1,076
Receivables for securities					91			—			—			—			—

Total investments		123,233			127,262			116,234			107,407			103,664			94,784

Cash and cash equivalents (cash overdraft)		11,695			10,034			12,911			9,459			10,996			14,365
Premiums and considerations		31,950			32,416			30,396			26,730			29,076			23,919
Reinsurance receivables		3,074			917			1,120			1,114			838			1,036
Accrued investment income		1,431			1,499			1,439			1,302			1,225			1,236
Other receivables		1,160			1,723			1,524			1,682			1,490			926
PP&E		642			857			508			152			194			295
Income taxes receivable		1,406			646			—			10			13			—
Deferred income taxes		5,190			4,893			4,242			4,071			3,820			3,747
Receivable from parent		186			557			219			361			204			250
Aggregate write-ins for other than invested assets		2,973			3,011			1,960			1,761			981			517

Total assets		182,941			183,815			170,553			154,049			152,501			141,075


LIABILITIES AND SURPLUS
Loss and loss adjustment expense reserves		85,439			77,222			69,317			61,033			55,805			48,072
Unearned premiums		41,061			42,499			39,221			36,348			39,102			35,122
Accounts due reinsurers and provisions		5			22			276			227			100			287
Commissions payable, contingent commissions		1,488			2,515			2,581			2,292			2,867			2,154
Other expenses		6,411			6,532			6,110			6,124			5,480			5,361
Ceded reinsurance premiums payable		2,024			3,686			1,275			614			2,482			2,782
Funds held by company under reinsurance treaties		2,616			—			677			73			114			2,191
Amounts withheld or retained by company		55			47			67			78			68			130
Payable for securities		—			414			472			—			—			—
Aggregate write ins for liabilities		—			—			—			—			811			273
Payable to parent		15			83			32			44			227			371


Total liabilities		139,115			133,020			120,028			106,833			107,056			96,743

Aggregate write-ins for special surplus funds		2,250			2,250			2,250			2,250			2,250			2,250
Common capital stock		5,000			5,000			5,000			5,000			5,000			5,000
Gross paid in and contributed surplus		5,000			5,000			5,000			5,000			5,000			5,000
Unassigned surplus		30,576			38,545			38,275			34,966			33,195			32,082

Total surplus		42,826			50,795			50,525			47,216			45,445			44,332

Total liabilities and surplus		181,941			183,815			170,553			154,049			152,501			141,075

Performance and Capital Ratios
Return on assets		-2.43	%		0.50	%		0.85	%		2.07	%		0.43	%		0.43	%
Return on surplus		-9.53	%		1.73	%		2.81	%		6.84	%		1.41	%		1.37	%
Surplus to total assets		23.41	%		27.63	%		29.62	%		30.65	%		29.80	%		31.42	%


Notes:

(a)		Statutory financials do not include the effects of discontinued operations.

(b)		Statutory financial statements represent the results of operations of PMHC.

Source: Statutory prepared financial statements.

Exhibit V-2
Penn Millers Mutual Holding Company (e)
Historical Income Statements — Statutory Basis (d)
(Dollars in Thousands)


	2008			2007			2006			2005			2004			2003
REVENUE
Premiums earned		78,737		$	70,970		$	64,645		$	64,723		$	63,090		$	56,065
Investment income, net of investment expense		5,085			5,104			4,370			4,131			4,052			4,097
Realized investment (losses) gains, net		(5,778	)		(431	)		232			262			937			833

Total revenue		78,044			75,643			69,247			69,116			68,079			60,995

LOSSES AND EXPENSES
Losses and loss adjustment expenses		57,391			49,774			43,770			40,242			42,910			35,822
Underwriting and administrative expenses		25,256			24,059			23,525			24,427			24,407			23,407
Other expenses, net		39			(318	)		(31	)		(114	)		(219	)		(212	)


Total losses and expenses		82,686			73,515			67,264			64,555			67,098			59,017
Income from continuing operations		(4,642	)		2,128			1,983			4,561			981			1,978

Income taxes expense (benefit)		(181	)		1,250			609			1,390			347			1,369


Net income (loss)		(4,461	)		878			1,374			3,171			634			609


Operating Ratios
Loss ratio (a)		72.9	%		70.1	%		67.7	%		62.2	%		68.0	%		63.9	%
Expense ratio (b)		32.1	%		33.9	%		36.4	%		37.7	%		38.7	%		41.7	%
Combined ratio (c)		105.0	%		104.0	%		104.1	%		99.9	%		106.7	%		105.6	%


Notes:

(a)		Losses and loss adjustment expenses divided by net premiums earned.

(b)		Underwriting expenses divided by net premiums earned.

(c)		Sum of the loss ratio and the expense ratio.

(d)		Statutory financials do not include the effects of discontinued operations.

(e)		Statutory financial statements represent the results of operations of PMHC.

Source: Statutory prepared financial statements.

Exhibit VI-1
Penn Millers Mutual Holding Company
Financial Performance Data for Publicly Traded Property and Casualty Companies


												Cash and		Cash and		Policy				Tangible		Net Prem				GAAP		GAAP
		Total Assets		Total Policy		Total Equity		Tangible Equity		Total Policy		Investments		Investments /		Reserves /		Total Equity		Equity /		Writ/ Avg		GAAP Loss		Expense		Combined
Company Name	Ticker	($000)		Reserves ($000)		($000)		($000)		Revenue ($000)		($000)		Assets		Equity		/ Assets		Assets		Equity (x)		Ratio (%)		Ratio (%)		Ratio (%)		ROAA (%)		ROAE (%)

21st Century Holding Company	TCHC		204,676		114,701		76,228		76,228		60,429		150,471		0.74		1.50		0.37		0.37		0.68		63.81		47.50		111.31		-3.17		-8.12
ACE Limited	ACE		73,127,000		46,365,000		14,718,000		10,983,000		13,457,000		41,970,000		0.57		3.15		0.20		0.15		0.86		59.70		27.80		87.50		1.86		8.97
Affirmative Insurance Holdings, Inc.	AFFM		811,112		327,695		231,944		51,207		355,658		356,534		0.44		1.41		0.29		0.06		1.63		74.70		24.00		98.70		0.92		3.49
Alleghany Corporation	Y		6,012,686		3,164,484		2,551,029		2,400,723		921,215		4,112,254		0.68		1.24		0.42		0.40		0.32		51.70		30.90		82.60		1.47		3.63
Allied World Assurance Company Holdings, Ltd	AWH		8,892,255		5,598,837		2,491,860		2,152,983		1,167,805		6,710,099		0.75		2.25		0.28		0.24		0.51		45.80		29.50		75.30		2.15		7.92
Allstate Corporation	ALL		130,371,000		98,099,000		12,271,000		11,397,000		28,712,000		94,710,000		0.73		7.99		0.09		0.09		1.60		71.70		25.10		96.80		-1.61		-14.00
American Financial Group, Inc.	AFG		25,842,100		20,189,900		2,678,800		2,396,900		3,241,900		17,135,600		0.66		7.54		0.10		0.09		1.02		47.30		34.60		81.90		0.87		8.35
American Physicians Capital, Inc.	ACAP		996,515		700,842		248,092		248,092		121,927		827,666		0.83		2.82		0.25		0.25		0.45		53.30		24.30		77.60		4.27		16.88
American Physicians Service Group, Inc.	AMPH		289,825		129,537		142,139		139,885		63,184		240,641		0.83		0.91		0.49		0.48		0.51		37.00		18.00		55.00		7.23		15.42
American Safety Insurance Holdings, Ltd.	ASI		1,036,776		714,595		223,150		213,454		181,102		696,774		0.67		3.20		0.22		0.21		0.82		60.60		40.50		101.10		-0.01		-0.04
AMERISAFE, Inc.	AMSF		1,143,399		728,610		262,111		262,111		285,194		808,555		0.71		2.78		0.23		0.23		1.19		67.20		21.40		88.60		3.87		17.81
AmTrust Financial Services, Inc.	AFSI		3,164,023		1,848,674		401,488		297,489		474,107		1,355,805		0.43		4.60		0.13		0.09		1.44		56.60		23.10		79.70		2.78		21.30
Arch Capital Group Ltd.	ACGL		16,092,287		9,326,748		3,630,396		3,603,333		2,837,784		11,144,493		0.69		2.57		0.23		0.22		0.77		57.20		29.50		86.70		1.53		6.59
Argo Group International Holdings, Ltd.	AGII		6,479,500		3,895,100		1,384,300		1,126,200		1,251,800		4,065,900		0.63		2.81		0.21		0.17		0.92		59.20		37.10		96.30		0.85		3.85
Aspen Insurance Holdings Limited	AHL		7,639,800		4,060,000		2,832,400		2,824,200		1,757,400		6,062,500		0.79		1.43		0.37		0.37		0.65		56.10		28.40		84.50		1.54		4.09
AXIS Capital Holdings Limited	AXS		14,777,366		9,038,856		4,492,837		4,397,457		2,693,906		10,448,241		0.71		2.01		0.30		0.30		0.57		58.31		28.34		86.65		1.76		5.51
Baldwin & Lyons, Inc.	BWINB		765,729		398,016		325,649		326,667		181,375		524,088		0.68		1.22		0.43		0.43		0.49		54.10		34.90		89.00		0.29		0.68
Berkshire Hathaway Inc.	BRK.A		260,542,000		71,239,000		106,919,000		73,140,000		27,499,000		121,426,000		0.47		0.67		0.41		0.28		0.23		79.38		16.47		95.85		0.95		2.27
Chubb Corporation	CB		48,572,000		28,435,000		13,804,000		13,337,000		11,678,000		39,187,000		0.81		2.06		0.28		0.27		0.84		57.15		32.24		89.39		2.97		10.72
Cincinnati Financial Corporation	CINF		13,108,000		7,248,000		3,881,000		3,881,000		3,120,026		9,391,000		0.72		1.87		0.30		0.30		0.70		74.20		33.30		107.50		3.55		11.10
CNA Surety Corporation	SUR		1,609,466		715,456		797,909		659,124		430,206		1,162,204		0.72		0.90		0.50		0.41		0.59		29.30		53.70		83.00		7.00		14.85
CRM Holdings, Ltd.	CRMH		452,951		273,506		101,677		98,465		110,733		340,804		0.75		2.69		0.22		0.22		1.04		80.80		51.30		132.10		-3.45		-13.46
Donegal Group Inc.	DGICA		890,379		478,479		368,350		367,428		352,918		641,909		0.72		1.30		0.41		0.41		0.98		74.70		31.20		105.90		2.17		5.32
Eastern Insurance Holdings, Inc.	EIHI		385,487		207,849		137,234		117,736		136,542		273,564		0.71		1.51		0.36		0.31		0.88		66.95		34.77		101.72		-5.35		-13.47
EMC Insurance Group Inc.	EMCI		1,105,584		724,156		286,182		285,240		386,795		948,106		0.86		2.53		0.26		0.26		1.23		58.20		37.80		96.00		-0.36		-1.31
Employers Holdings, Inc.	EIG		3,764,778		2,655,209		459,942		406,392		364,651		2,273,650		0.60		5.77		0.12		0.11		0.86		53.00		46.80		99.80		2.85		23.33
Endurance Specialty Holdings Ltd.	ENH		7,797,419		4,377,166		2,253,540		2,055,093		1,772,717		5,461,590		0.70		1.94		0.29		0.26		0.74		58.20		34.00		92.20		1.29		4.23
Enstar Group Limited	ESGR		4,371,009		2,797,827		860,581		839,359		0		3,477,957		0.80		3.25		0.20		0.19		0.00	NA		NA		NA			2.05		14.05
Erie Indemnity Company	ERIE		2,542,434		1,400,302		776,948		776,948		207,231		1,030,654		0.41		1.80		0.31		0.31		0.22		83.10		28.10		111.20		1.86		5.62
Everest Re Group, Ltd.	RE		16,724,994		10,207,310		5,039,854		5,039,854		3,714,618		13,601,083		0.81		2.03		0.30		0.30		0.70		61.10		28.60		89.70		0.07		0.23
Fairfax Financial Holdings Limited	FFH		25,686,300		16,535,400		4,558,200		4,272,200		4,531,700		18,016,300		0.70		3.63		0.18		0.17		0.92		71.48		27.22		98.70		2.87		16.36
First Acceptance Corporation	FAC		447,662		161,513		226,661		82,219		239,924		215,102		0.48		0.71		0.51		0.18	NA			70.10		23.90		94.00		-1.20		-2.44
First Mercury Financial Corporation	FMR		985,641		548,289		274,384		210,125		202,767		606,108		0.61		2.00		0.28		0.21		0.81		58.00		30.40		88.40		4.36		15.24
Flagstone Reinsurance Holdings Limited	FSR		2,472,039		851,020		1,224,152		1,175,599		691,746		1,770,190		0.72		0.70		0.50		0.48		0.60		44.30		36.10		80.40		-7.45		-13.91
FPIC Insurance Group, Inc.	FPIC		985,043		652,238		258,656		247,823		166,949		704,737		0.72		2.52		0.26		0.25		0.57		60.50		23.70		84.20		2.90		10.83
GAINSCO, INC.	GAN		246,972		131,732		54,741		54,132		179,266		175,854		0.71		2.41		0.22		0.22		3.11		70.40		25.30		95.70		-0.65		-2.68
Greenlight Capital Re, Ltd.	GLRE		1,128,804		212,216		520,545		520,545		133,650		981,729		0.87		0.41		0.46		0.46		0.28		65.40		38.20		103.60		-7.95		-16.00
Hallmark Financial Services, Inc.	HALL		551,279		277,022		190,555		121,220		236,185		368,415		0.67		1.45		0.35		0.22		1.29		62.00		29.50		91.50		2.26		6.52
Hanover Insurance Group, Inc.	THG		7,698,100		4,395,800		1,967,600		1,798,000		2,499,200		4,789,600		0.62		2.23		0.26		0.23		1.22		67.80		33.40		101.20		-0.13		-0.58
Harleysville Group Inc.	HGIC		3,162,276		2,257,692		671,655		648,255		907,165		2,501,363		0.79		3.36		0.21		0.20		1.30		67.30		34.32		101.62		1.11		5.17
HCC Insurance Holdings, Inc.	HCC		8,623,917		4,528,233		2,704,910		1,842,252		2,016,616		5,237,354		0.61		1.67		0.31		0.21		0.79		62.80		24.50		87.30		3.66		11.84
Hilltop Holdings Inc.	HTH		1,044,775		101,698		791,201		753,659		114,177		915,693		0.88		0.13		0.76		0.72		0.14		48.50		38.00		86.50		-1.33		-1.81
Horace Mann Educators Corporation	HMN		5,526,333		3,727,430		444,711		397,315		658,446		3,910,251		0.71		8.38		0.08		0.07		1.87		69.30		25.30		94.60		0.17		1.97
Infinity Property and Casualty Corporation	IPCC		1,729,904		928,934		529,639		454,364		902,054		1,182,724		0.68		1.75		0.31		0.26		1.54		70.47		21.94		92.41		0.88		2.85
IPC Holdings, Ltd.	IPCR		2,453,085		574,108		1,849,474		1,849,474		396,378		2,189,966		0.89		0.31		0.75		0.75		0.23		39.60		34.60		74.20		0.47		0.62
Kingsway Financial Services Inc.	KFS		3,098,788		2,299,905		370,547		308,069		1,376,335		2,369,038		0.76		6.21		0.12		0.10		1.83		86.70		34.00		120.70		-11.08		-63.37
Markel Corporation	MKL		9,395,753		6,230,459		2,180,080		1,837,228		1,979,010		6,886,611		0.73		2.86		0.23		0.20		0.81		55.42		39.77		95.19		-0.78		-3.26
Meadowbrook Insurance Group, Inc.	MIG		1,849,493		1,184,754		458,181		293,432		432,737		1,116,023		0.60		2.59		0.25		0.16		1.12		58.00		29.70		87.70		2.17		8.70
Mercer Insurance Group, Inc.	MIGP		566,221		379,583		141,843		136,427		149,082		383,947		0.68		2.68		0.25		0.24		1.06		62.40		36.00		98.40		1.52		6.26
Mercury General Corporation	MCY		4,131,962		1,976,741		1,559,344		1,445,012		2,753,986		3,084,061		0.75		1.27		0.38		0.35		1.60		66.70		30.20		96.90		-3.40		-8.39
Montpelier Re Holdings Ltd.	MRH		2,958,800		1,065,100		1,437,300		1,432,500		521,600		2,451,200		0.83		0.74		0.49		0.48		0.38		34.70		39.40		74.10		-3.04		-6.40

Exhibit VI-1 (Continued)
Penn Millers Mutual Holding Company
Financial Performance Data for Publicly Traded Property and Casualty Companies


												Cash and		Cash and		Policy				Tangible		Net Prem				GAAP		GAAP
		Total Assets		Total Policy		Total Equity		Tangible Equity		Total Policy		Investments		Investments /		Reserves /		Total Equity		Equity /		Writ/ Avg		GAAP Loss		Expense		Combined
Company Name	Ticker	($000)		Reserves ($000)		($000)		($000)		Revenue ($000)		($000)		Assets		Equity		/ Assets		Assets		Equity (x)		Ratio (%)		Ratio (%)		Ratio (%)		ROAA (%)			ROAE (%)

National Interstate Corporation	NATL		1,025,934		584,812		224,907		224,907		292,530		572,269		0.56		2.60		0.22		0.22		1.34		56.60		22.40		79.00		1.37			6.39
National Security Group, Inc.	NSEC		125,054		70,927		35,045		35,045		54,898		93,511		0.75		2.02		0.28		0.28		1.46		76.47		41.98		118.44		-3.36			-11.53
Navigators Group, Inc.	NAVG		3,403,633		2,374,350		712,454		705,922		653,182		1,951,428		0.57		3.33		0.21		0.21		0.99		60.80		32.00		92.80		1.22			5.96
NYMAGIC, INC.	NYM		977,190		651,829		171,154		171,154		162,298		582,965		0.60		3.81		0.18		0.18		0.79		51.50		48.20		99.70		-7.14			-35.54
Odyssey Re Holdings Corp.	ORH		9,533,423		5,985,527		2,713,662		2,777,435		2,034,954		7,458,632		0.78		2.21		0.28		0.29		0.73		67.60		28.90		96.50		3.01			10.73
Old Republic International Corporation	ORI		13,293,500		8,719,400		3,643,200		3,578,900		3,248,700		8,944,900		0.67		2.39		0.27		0.27		0.75		83.90		39.60		123.50		-4.49			-15.09
OneBeacon Insurance Group, Ltd.	OB		7,680,400		5,283,200		1,188,700		1,188,700		1,911,500		3,833,500		0.50		4.44		0.15		0.15		1.45		59.00		34.60		93.60		-3.89			-23.48
PartnerRe Ltd.	PRE		16,274,774		10,521,223		4,282,067		3,852,548		3,884,721		11,401,890		0.70		2.46		0.26		0.24		0.91		55.90		31.10		87.00		0.35			1.38
Platinum Underwriters Holdings, Ltd.	PTP		4,990,996		2,708,635		1,829,459		1,829,459		1,060,697		4,314,641		0.86		1.48		0.37		0.37		0.53		58.20		21.90		80.10		4.15			11.09
PMA Capital Corporation	PMACA		2,553,043		1,535,859		351,270		321,602		409,551		798,074		0.31		4.37		0.14		0.13		1.15		72.21		38.25		110.46		0.28			1.95
ProAssurance Corporation	PRA		4,322,067		2,600,074		1,462,064		1,371,814		442,592		3,597,203		0.83		1.78		0.34		0.32		0.31		66.50		23.10		89.60		3.91			12.66
Progressive Corporation	PGR		18,215,100		10,367,900		4,303,300		4,303,300		13,648,000		12,902,900		0.71		2.41		0.24		0.24		3.06		68.60		20.90		89.50		-0.41			-1.73
RenaissanceRe Holdings Ltd.	RNR		8,059,909		2,708,662		3,772,166		3,699,629		1,379,658		6,371,706		0.79		0.72		0.47		0.46		0.36		28.60		27.90		56.50		0.47			1.01
RLI Corp.	RLI		2,396,917		1,493,374		711,723		685,509		518,481		1,704,593		0.71		2.10		0.30		0.29		0.68		48.70		39.20		87.90		2.01			6.94
Safety Insurance Group, Inc.	SAFT		1,416,693		751,640		605,532		605,532		561,158		1,059,199		0.75		1.24		0.43		0.43		0.89		68.60		30.30		98.90		4.35			10.59
SeaBright Insurance Holdings, Inc.	SBX		896,537		486,743		333,196		328,636		249,926		578,196		0.64		1.46		0.37		0.37		0.86		66.10		34.00		100.10		2.73			7.10
Selective Insurance Group, Inc.	SIGI		5,001,933		3,521,660		910,135		880,498		1,478,090		3,657,712		0.73		3.87		0.18		0.18		1.52		69.30		31.50		100.80		0.21			1.07
Specialty Underwriters’ Alliance, Inc.	SUAI		451,750		288,858		138,062		127,317		142,490		261,908		0.58		2.09		0.31		0.28		1.06		60.10		43.45		103.55		1.13			3.67
State Auto Financial Corporation	STFC		2,435,800		1,328,000		760,700		758,700		1,132,800		2,063,400		0.85		1.75		0.31		0.31		1.45		78.60		33.40		112.00		-1.34			-4.06
Tower Group, Inc.	TWGP		2,481,368		1,335,168		786,930		512,378		414,211		1,486,414		0.60		1.70		0.32		0.21		1.34		53.70		33.00		86.70		3.86			17.56
Transatlantic Holdings, Inc.	TRH		13,676,207		9,438,353		3,320,907		3,320,907		4,026,731		10,874,761		0.80		2.84		0.24		0.24		1.27		68.60		26.40		95.00		0.42			1.91
Travelers Companies, Inc.	TRV		110,467,000		71,904,000		26,497,000		22,473,000		21,540,000		72,398,000		0.66		2.71		0.24		0.20		0.85		59.70		30.90		90.60		2.34			10.23
Unico American Corporation	UNAM		182,340		96,150		76,226		76,226		32,643		149,331		0.82		1.26		0.42		0.42		0.43		61.00		26.00		87.00		2.88			7.27
United America Indemnity, Ltd.	INDM		2,415,436		1,601,042		638,777		629,486		347,991		1,574,671		0.65		2.51		0.26		0.26		0.44		60.80		39.20		100.00		-5.51			-19.67
United Fire & Casualty Company	UFCS		2,710,869		1,997,120		635,259		634,724		498,753		2,230,103		0.82		3.14		0.23		0.23		0.71		75.30		30.50		105.80		-1.10			-4.35
Universal Insurance Holdings, Inc.	UVE		621,498		365,086		109,260		109,260		150,079		333,474		0.54		3.34		0.18		0.18		1.64		54.10	NA		NA			6.67			38.21
Validus Holdings, Ltd.	VR		4,762,798		2,113,965		2,022,986		1,876,416		1,283,414		3,462,657		0.73		1.04		0.42		0.39		0.68		41.40		33.60		75.00		1.81			4.12
W.R. Berkley Corporation	WRB		16,193,308		11,056,760		3,079,957		2,973,665		4,144,479		12,330,570		0.76		3.59		0.19		0.18		1.23		62.30		31.40		93.70		0.44			2.29
Wesco Financial Corporation	WSC		2,718,686		403,777		2,117,734		1,839,939		290,881		1,786,949		0.66		0.19		0.78		0.68		0.15		60.92		29.28		90.20		2.62			3.36
White Mountains Insurance Group, Ltd.	WTM		15,640,500		8,992,400		3,482,300		3,462,700		3,692,300		9,353,200		0.60		2.58		0.22		0.22		0.94		59.60		32.65		92.25		-2.64			-11.80
Zenith National Insurance Corp.	ZNT		2,485,881		1,302,902		1,001,431		980,446		566,278		1,932,593		0.78		1.30		0.40		0.39		0.52		73.10		46.60		119.70		2.15			5.32

Group Aggregate
Overall P&C Insurance Group Mean			12,459,344		6,793,526		3,402,190		2,806,295		2,425,368		7,932,351		0.69		2.42		0.30		0.28		0.93		61.36		32.14		93.59		0.56			2.16
Overall P&C Insurance Group Median			2,838,743		1,724,858		789,066		756,180		541,379		2,126,683		0.71		2.15		0.28		0.25		0.85		60.80		31.30		93.20		1.12			3.76

P&C Group Mean > $1.2 Bil. Total Assets			17,916,913		9,772,544		4,875,543		4,013,053		3,466,740		11,387,864		0.69		2.64		0.29		0.27		0.90		61.01		31.71		92.72		0.63			2.18
P&C Group Median >$1.2 Bil. Total Assets			5,769,510		3,343,072		1,908,537		1,833,344		1,329,875		3,988,076		0.71		2.24		0.28		0.24		0.83		60.80		31.10		92.25		1.17			3.97

P&C Group Mean < $1.2 Bil. Total Assets			704,582		377,180		228,815		207,123		182,412		489,706		0.69		1.95		0.33		0.29		0.99		62.10		33.07		95.48		0.41			2.10
P&C Group Median <$1.2 Bil. Total Assets			788,421		346,391		224,029		155,520		164,624		454,018		0.71		2.01		0.28		0.25		0.88		61.50		34.00		96.00		1.03			3.58

P&C Group Mean > $500 m Total Revenue			13,957,254		7,610,881		3,808,104		3,141,218		2,710,412		8,884,268		0.69		2.51		0.30		0.27		0.91		60.88		31.81		92.79		0.71			2.77
P&C Group Mean > $500 m Total Revenue			3,403,633		2,257,692		1,001,431		980,446		691,746		2,451,200		0.71		2.25		0.27		0.24		0.84		60.55		31.20		92.25		1.29			4.12

P&C Group Mean < $500 m Total Revenue			309,635		163,864		109,779		89,695		113,345		211,243		0.71		1.68		0.35		0.31		1.15		65.18		34.69		99.87		(0.66	)		(2.82	)
P&C Group Median <$500 m Total Revenue			289,825		131,732		101,677		82,219		110,733		215,102		0.74		1.51		0.36		0.28		0.96		66.95		34.77		101.72		(1.20	)		(2.68	)

Source: SNL Financial.

Exhibit VI-2
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies


				Total Diluted							(a)
				Shares					Price /		Price /		(a)						Current		One-Year
				Outstand.		Total Market	Price / Book		Tangible		Operating		Price / LTM		Price / LTM		Price / Total		Dividend		Price Change
Company Name		Closing price		(000’S)		value (000’s)	(%)		Book (%)		EPS (x)		EPS (x)		Revenue (x)		Assets (%)		Yield (%)		(%)
		6/5/2009
21st Century Holding Company	TCHC		3.38		8,014	27,087		35.53		35.53	Neg		Neg			0.43		13.23		15.55		(66.00	)
ACE Limited	ACE		46.01		336,116	15,464,677		105.07		140.81		6.10		13.03		1.09		21.15		2.04		(24.84	)
Affirmative Insurance Holdings, Inc.	AFFM		3.45		15,415	53,182		22.93		103.86		28.75		28.75		0.11		6.56		2.53		(48.51	)
Alleghany Corporation	Y		258.00		9,499	2,450,616		96.06		102.08		22.96		16.40		2.80		40.76	NA			(27.31	)
Allied World Assurance Company Holdings, Ltd	AWH		38.86		51,120	1,986,525		79.72		92.27		4.27		10.82		1.66		22.34		1.77		(13.32	)
Allstate Corporation	ALL		25.05		538,900	13,499,445		110.01		118.45		9.21	Neg			0.46		10.35		5.01		(49.93	)
American Financial Group, Inc.	AFG		23.10		116,400	2,688,840		100.37		112.18		5.61		13.83		0.62		10.40		2.19		(21.91	)
American Physicians Capital, Inc.	ACAP		41.93		8,890	372,758		150.25		150.25		8.50		9.12		2.38		37.41		0.83		(11.32	)
American Physicians Service Group, Inc.	AMPH		21.29		7,083	150,797		106.09		107.80		8.06		8.06		2.03		52.03		1.39		(2.56	)
American Safety Insurance Holdings, Ltd.	ASI		12.90		10,475	135,127		60.55		63.31		430.00		430.00		0.68		13.03	NA			(18.10	)
AMERISAFE, Inc.	AMSF		17.90		19,235	344,305		131.36		131.36		6.23		8.33		1.16		30.11	NA			10.43
AmTrust Financial Services, Inc.	AFSI		10.31		60,000	618,600		154.08		207.94		4.78		7.53		1.00		19.55		1.72		(29.77	)
Arch Capital Group Ltd.	ACGL		59.22		62,560	3,704,801		102.05		102.82		7.34		14.48		1.29		23.02	NA			(16.27	)
Argo Group International Holdings, Ltd.	AGII		30.05		30,747	923,947		66.74		82.04		10.96	Neg			0.68		14.26	NA			(22.85	)
Aspen Insurance Holdings Limited	AHL		24.33		83,572	2,033,303		71.79		72.00		11.22		27.34		1.10		26.61		2.47		(4.10	)
AXIS Capital Holdings Limited	AXS		26.18		149,023	3,901,422		86.84		88.72		10.08		11.58		1.42		26.40		2.75		(23.23	)
Baldwin & Lyons, Inc.	BWINB		20.95		14,767	309,369		95.00		94.70		12.20	Neg			1.85		40.40		5.50		1.26
Berkshire Hathaway Inc.	BRK.A		89,800.00		1,549	139,143,304		130.14		190.24		14.78		27.85		1.32		53.41	NA			(30.60	)
Chubb Corporation	CB		41.20		358,300	14,761,960		106.94		110.68		7.61		8.37		1.17		30.39		2.59		(22.44	)
Cincinnati Financial Corporation	CINF		24.12		162,664	3,923,447		101.09		101.09		14.42		9.21		0.98		29.93		5.37		(27.57	)
CNA Surety Corporation	SUR		16.35		44,376	725,548		90.93		110.08		6.64		6.57		1.52		45.08	NA			14.58
CRM Holdings, Ltd.	CRMH		1.18		16,618	19,609		19.29		19.91	Neg		Neg			0.15		4.33	NA			(69.74	)
Donegal Group Inc.	DGICA		15.89		25,535	405,745		110.15		110.43		18.99		15.89		1.07		45.57		2.50		(5.59	)
Eastern Insurance Holdings, Inc.	EIHI		9.44		9,085	85,767		62.50		72.85	Neg		Neg			0.66		22.25		3.49		(40.06	)
EMC Insurance Group Inc.	EMCI		21.75		13,250	288,182		100.70		101.03		18.63	Neg			0.71		26.07		2.81		(18.86	)
Employers Holdings, Inc.	EIG		12.89		48,613	626,620		136.24		154.19		6.23		6.23		1.44		16.64		1.45		(31.62	)
Endurance Specialty Holdings Ltd.	ENH		29.73		59,007	1,754,285		77.85		85.36		9.87		22.52		0.97		22.50		3.28		(10.61	)
Enstar Group Limited	ESGR		59.90		13,699	820,595		95.35		97.76		9.49		9.49		13.87		18.77	NA			(39.96	)
Erie Indemnity Company	ERIE		36.47		57,363	2,092,032		269.26		269.26		18.45		30.65		1.98		82.28		4.78		(26.41	)
Everest Re Group, Ltd.	RE		74.30		61,433	4,564,472		90.57		90.57		9.54	Neg			1.27		27.29		2.52		(14.05	)
Fairfax Financial Holdings Limited	FFH		281.50		17,484	4,921,830		107.98		115.21		3.54		3.54		0.72		19.16		1.60		9.43
First Acceptance Corporation	FAC		2.04		48,865	99,685		43.98		121.24	Neg		Neg			0.35		22.27	NA			(46.32	)
First Mercury Financial Corporation	FMR		13.94		18,109	252,444		92.00		120.14		8.43		6.37		1.09		25.61	NA			(21.29	)
Flagstone Reinsurance Holdings Limited	FSR		9.96		85,208	848,675		69.33		72.19	Neg		Neg			1.68		34.33		1.64		(16.93	)
FPIC Insurance Group, Inc.	FPIC		34.71		7,824	271,571		104.99		109.58		7.03		9.33		1.48		27.57	NA			(24.40	)
GAINSCO, INC.	GAN		13.75		23,930	329,038		601.08		607.84		117.47	Neg			1.71		133.23	NA			(21.43	)
Greenlight Capital Re, Ltd.	GLRE		17.73		36,335	644,217		123.76		123.76	Neg		Neg			14.94		57.07	NA			(17.46	)
Hallmark Financial Services, Inc.	HALL		6.98		20,873	145,694		76.46		120.19		7.17		6.65		0.54		26.43	NA			(38.77	)
Hanover Insurance Group, Inc.	THG		37.36		51,400	1,920,304		97.60		106.80		13.26		93.40		0.71		24.95		1.05		(16.08	)
Harleysville Group Inc.	HGIC		30.09		28,463	856,448		127.51		132.12		11.45		20.90		0.88		27.08		3.46		(22.55	)
HCC Insurance Holdings, Inc.	HCC		25.49		113,289	2,887,737		106.76		156.75		8.88		9.66		1.25		33.49		1.87		7.28
Hilltop Holdings Inc.	HTH		12.33		56,459	696,139		87.99		92.37	Neg		Neg			6.05		66.63	NA			14.70
Horace Mann Educators Corporation	HMN		9.88		40,385	399,004		89.72		100.43		8.01		36.59		0.48		7.22		2.29		(38.97	)

Exhibit VI-2 (Continued)
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies


				Total Diluted								(a)
				Shares						Price /		Price /		(a)						Current		One-Year
				Outstand.		Total Market		Price / Book		Tangible		Operating		Price / LTM		Price / LTM		Price / Total		Dividend		Price Change
Company Name		Closing price		(000’S)		value (000’s)		(%)		Book (%)		EPS (x)		EPS (x)		Revenue (x)		Assets (%)		Yield (%)		(%)
		6/5/2009
Infinity Property and Casualty Corporation	IPCC		38.58		14,185		547,257		103.33		120.44		7.51		31.37		0.61		31.64		0.94		(4.95	)
IPC Holdings, Ltd.	IPCR		27.93		55,916		1,561,741		84.44		84.44		7.45		19.26		5.37		63.66		2.94		(3.79	)
Kingsway Financial Services Inc.	KFS		3.89		55,107		214,366		57.85		69.58	Neg		Neg			0.16		6.92		4.37		(57.02	)
Markel Corporation	MKL		287.23		9,823		2,821,460		129.42		153.57		15.13	Neg			1.53		30.03	NA			(28.59	)
Meadowbrook Insurance Group, Inc.	MIG		7.12		57,410		408,762		89.21		139.30		8.50		11.67		0.81		22.10		1.24		6.59
Mercer Insurance Group, Inc.	MIGP		15.20		6,233		94,742		66.79		69.45		7.31		11.69		0.60		16.73		2.37		(12.69	)
Mercury General Corporation	MCY		35.58		55,091		1,960,155		125.70		135.65		18.53	Neg			0.77		47.44		5.04		(30.64	)
Montpelier Re Holdings Ltd.	MRH		14.34		85,000		1,218,900		84.80		85.09		10.78	Neg			3.09		41.20		1.79		(14.39	)
National Interstate Corporation	NATL		16.69		19,353		323,002		143.62		143.62		9.86		30.35		1.09		31.48		1.34		(24.68	)
National Security Group, Inc.	NSEC		8.60		2,467		21,213		60.53		60.53	Neg		Neg			0.36		16.96		6.57	NA
Navigators Group, Inc.	NAVG		45.38		17,002		771,551		108.29		109.30		10.50		14.93		1.13		22.67	NA			(9.28	)
NYMAGIC, INC.	NYM		14.74		8,590		126,620		73.98		73.98	Neg		Neg			1.23		12.96		1.68		(33.54	)
Odyssey Re Holdings Corp.	ORH		41.70		59,849		2,495,696		91.97		89.86		22.38		4.91		0.98		26.18		0.58		12.67
Old Republic International Corporation	ORI		10.40		235,259		2,446,696		67.16		68.36	Neg		Neg			0.77		18.41		5.70		(29.68	)
OneBeacon Insurance Group, Ltd.	OB		12.95		95,100		1,231,545		103.60		103.60		8.89	Neg			0.91		16.03		8.05		(28.77	)
PartnerRe Ltd.	PRE		67.16		57,320		3,849,631		89.90		99.92		7.48		305.27		0.98		23.65		2.58		(7.54	)
Platinum Underwriters Holdings, Ltd.	PTP		29.77		53,702		1,598,709		87.39		87.39		7.48		7.48		1.27		32.03		0.89		(16.02	)
PMA Capital Corporation	PMACA		4.98		32,020		159,461		45.40		49.58		7.13		27.67		0.31		6.25	NA			(48.77	)
ProAssurance Corporation	PRA		47.39		33,609		1,592,731		108.94		116.10		7.82		9.08		2.96		36.85	NA			(5.05	)
Progressive Corporation	PGR		16.58		672,000		11,141,760		258.91		258.91		12.32	Neg			0.88		61.17	NA			(17.43	)
RenaissanceRe Holdings Ltd.	RNR		47.92		60,989		2,922,584		77.48		79.00		20.97	Neg			2.47		36.26		1.78		(4.67	)
RLI Corp.	RLI		49.32		21,557		1,063,191		149.38		155.10		9.80		13.70		2.06		44.36		1.70		(4.86	)
Safety Insurance Group, Inc.	SAFT		33.23		16,189		537,948		88.84		88.84		8.56		7.62		0.86		37.97		4.20		(13.73	)
SeaBright Insurance Holdings, Inc.	SBX		9.46		21,308		201,575		60.50		61.34		6.86		6.86		0.75		22.48	NA			(37.80	)
Selective Insurance Group, Inc.	SIGI		13.95		52,352		730,310		80.24		82.94		12.37		17.01		0.45		14.60		2.27		(35.54	)
Specialty Underwriters’ Alliance, Inc.	SUAI		3.65		15,945		58,199		42.15		45.71		7.77		7.77		0.38		12.88	NA			(24.59	)
State Auto Financial Corporation	STFC		17.72		39,600		701,712		92.25		92.49	Neg		Neg			0.60		28.81		2.00		(36.17	)
Tower Group, Inc.	TWGP		25.88		33,918		877,800		111.55		171.32		13.14		10.48		1.51		35.38		0.71		6.33
Transatlantic Holdings, Inc.	TRH		42.10		66,576		2,802,850		84.40		84.40		7.48		27.52		0.70		20.49		1.90		(33.49	)
Travelers Companies, Inc.	TRV		43.75		590,400		25,830,000		97.48		114.94		8.65		9.08		1.08		23.38		2.65		(7.41	)
Unico American Corporation	UNAM		7.68		5,607		43,085		56.52		56.52		8.05		8.73		0.96		23.63	NA			(13.18	)
United America Indemnity, Ltd.	INDM		4.86		31,507		153,125		23.97		24.33	Neg		Neg			0.42		6.34	NA			(66.39	)
United Fire & Casualty Company	UFCS		19.22		26,642		512,059		80.61		80.67	Neg		Neg			0.87		18.89		1.93		(42.83	)
Universal Insurance Holdings, Inc.	UVE		5.60		39,922		223,563		204.62		204.62		5.58		5.28		1.20		35.97		32.92		70.21
Validus Holdings, Ltd.	VR		23.96		79,103		1,895,299		93.69		101.01		9.03		12.68		1.47		39.79		3.63		13.18
W.R. Berkley Corporation	WRB		23.41		161,090		3,771,117		122.44		126.82		9.55		10.22		0.88		23.29		0.87		(11.93	)
Wesco Financial Corporation	WSC		304.50		7,120		2,167,982		102.37		117.83		27.95		23.35		2.55		79.74		0.53		(27.50	)
White Mountains Insurance Group, Ltd.	WTM		212.75		8,826		1,877,732		53.92		54.23	Neg		Neg			0.63		12.01		0.39		(53.75	)
Zenith National Insurance Corp.	ZNT		23.57		37,330		879,868		87.86		89.74		13.16		6.97		1.36		35.39		6.64		(40.42)

Exhibit VI-2 (Continued)
Penn Millers Mutual Holding Company
Market Valuation Data for Publicly Traded Property and Casualty Companies


			Total Diluted							(a)
			Shares					Price /		Price /		(a)						Current		One-Year
			Outstand.	Total Market		Price / Book		Tangible		Operating		Price / LTM		Price / LTM		Price / Total		Dividend		Price Change
Company Name	Closing price		(000’S)	value (000’s)		(%)		Book (%)		EPS (x)		EPS (x)		Revenue (x)		Assets (%)		Yield (%)		(%)
		6/5/2009
Group Aggregate
Overall P&C Insurance Group Mean					3,825,877		96.41		106.86		17.17		28.43		1.53		28.62		3.42		(20.27	)
Overall P&C Insurance Group Median					834,635		92.12		101.59		9.03		11.58		0.99		26.12		2.29		(21.43	)

P&C Group Mean > $1.2 Bil. Total Assets					5,504,686		100.94		111.55		10.76		24.26		1.48		29.11		2.62		(20.39	)
P&C Group Median > $1.2 Bil. Total Assets					1,886,515		94.52		101.59		9.49		12.86		1.04		26.29		2.12		(22.17	)

P&C Group Mean < $1.2 Bil. Total Assets					209,980		86.63		96.76		34.61		39.54		1.64		27.55		6.11		(20.01	)
P&C Group Median < $1.2 Bil. Total Assets					148,245		82.22		102.44		8.25		8.73		0.85		25.84		2.53		(21.29	)

P&C Group Mean > $500 m Total Revenue					6,882,451		99.08		107.53		10.78		27.87		1.12		27.41		2.77		(19.70	)
P&C Group Mean > $500 m Total Revenue					2,033,303		93.69		101.01		9.68		13.70		0.98		26.40		2.28		(17.43	)

P&C Group Mean < $500 m Total Revenue					455,809		93.46		106.11		25.53		29.04		1.98		29.95		4.51		(20.92	)
P&C Group Median < $500 m Total Revenue					271,571		90.93		107.80		8.06		9.22		1.07		25.61		2.37		(22.91	)


Source:		SNL Financial and market data provided by CapitalIQ.

(a) Price / Operating EPS and Price / EPS is reported as “Neg” if the company has negative earnings.

Exhibit VII-1
Penn Millers Mutual Holding Company Pro
Forma Assumptions for Conversion Valuation


B-1		The initial offering price is $10.00 per share and the number of shares offered is calculated by dividing the estimated pro forma market value by the offering price.


B-2		Conversion and offering expenses are estimated at $2.570 million plus commission and fees of 1.5% of the total shares sold in the subscription and community offerings. Also assumes that no shares are sold in a syndicated community offering.


B-3		It is assumed that 10% of the shares offered for sale, less one share, will be acquired by the employee stock ownership plan (“ESOP”). Pro forma adjustments have been made to earnings and equity to reflect the impact of the ESOP. Under generally accepted accounting principles, the aggregate purchase price of shares of common stock to be purchased by the ESOP in the offering represents unearned compensation and is reflected as a reduction in capital. It is further assumed that the ESOP purchase is funded by a loan from PMHC. No reinvestment is assumed on proceeds used to fund the ESOP. The amount of this borrowing has been reflected as a reduction from gross proceeds to determine the estimated net funds available for reinvestment. The ESOP expense reflects recognition of expense based upon shares committed to be allocated under the ESOP. For purposes of this calculation, the average market value was assumed to be equal to the initial offering price of $10.00.


B-4		The net investable proceeds is fully invested at the beginning of the applicable period. The net investable proceeds are invested to yield a return of 3.47%, which represents the estimated yield on the 10 year U.S. Treasury bond at the end of May 2009. The effective income tax rate was assumed to be 35.0%, resulting in an after-tax yield of 2.26%.


B-5		The net increase in earnings excludes after-tax ESOP amortization over 10 years.


B-6		No effect has been given in the pro forma equity calculation for the assumed earnings on the net proceeds.


B-7		For the earnings per share (“EPS”) calcluations, pro forma per share amounts have been computed by dividing pro forma amounts by the total outstanding number of shares of stock, adjusted to give effect to the purchase of ESOP shares in accordance with Statement of Position (“SOP”) 93-6. Under SOP 93-6, the weighted average of the ESOP shares that have not been committed for release are subtracted from total shares outstanding when calculated EPS.


B-8		For the book value calcluations, pro forma per share amounts have been computed by dividing pro forma amounts by the total outstanding number of shares of stock.


B-9		The additional shares that Penn Millers expects to issue after the Conversion in conjunction with the grant of options or restricted stock awards under the stock-based incentive plan have not been considered in our analysis.

Exhibit VII-2
Penn Millers Mutual Holding Company
Pro Forma Conversion Valuation Range
(Dollars in Thousands, except per share data)


	Minimum			Midpoint			Maximum
Total implied shares offered		4,505,000			5,300,000			6,095,000
Offering price (b-1)	$	10.00		$	10.00		$	10.00


Implied gross proceeds:	$	45,050		$	53,000		$	60,950
Less: estimated expenses (b-2)		(3,246	)		(3,365	)		(3,484	)

Implied net offering proceeds		41,804			49,635			57,466
Less: ESOP purchase (b-3)		(4,505	)		(5,299	)		(6,094	)

Net investable proceeds (b-4)	$	37,300		$	44,336		$	51,371

Net income:
LTM ended 3/31/2009 (a)		(5,992	)		(5,992	)		(5,992	)
Pro forma income on net proceeds (b-4)		841			1,000			1,159
Pro forma ESOP adjustment (b-5)		(293	)		(344	)		(396	)

Pro forma net income		(5,444	)		(5,336	)		(5,229	)
Pro forma earnings per share (b-8)		(1.34	)		(1.12	)		(0.95	)

Total Revenue:
LTM ended 3/31/2009 (a)		75,280			75,280			75,280
Pro forma revenue on net proceeds, pre-tax		1,294			1,538			1,783

Pro forma total revenue		76,574			76,818			77,063

Total Equity:
Total equity at 3/31/2009		51,161			51,161			51,161
Net offering proceeds		41,804			49,635			57,466
Less: ESOP purchase		(4,505	)		(5,299	)		(6,094	)

Pro forma total equity (b-6)		88,461			95,497			102,532
Pro forma book value per share (b-7)		19.64			18.02			16.82

Tangible Equity:
Total tangible equity at 3/31/2009		51,161			51,161			51,161
Net offering proceeds		41,804			49,635			57,466
Less: ESOP purchase		(4,505	)		(5,299	)		(6,094	)

Pro forma tangible equity		88,461			95,497			102,532
Pro forma tangible book value per share (b-7)		19.64			18.02			16.82

Total Assets:
Total assets at 3/31/2009		228,415			228,415			228,415
Net offering proceeds		41,804			49,635			57,466
Less: ESOP purchase		(4,505	)		(5,299	)		(6,094	)

Pro forma total assets		265,715			272,751			279,786

Pro Forma Ratios:
Price / LTM EPS		-7.45	x		-8.94	x		-10.49	x
Price / LTM Revenue		0.59	x		0.69	x		0.79	x
Price / Book Value		50.93	%		55.50	%		59.44	%
Price / Tangible Book Value		50.93	%		55.50	%		59.44	%
Price / Total Assets		16.95	%		19.43	%		21.78	%
Total Equity / Assets		33.29	%		35.01	%		36.65	%
Tangible Equity / Assets		33.29	%		35.01	%		36.65	%


Notes:

(a)		Excludes income from discontinued operations.

(b)		See Exhibit VII-1 for explanation of assumptions.


I.		Statement of General Assumptions and Limiting Conditions

II.		Certification

III.		Overview of Curtis and Qualifications of Appraisers

IV-1.		Balance Sheets — GAAP Basis

IV-2.		Income Statements — GAAP Basis

IV-3.		Investment Portfolio — GAAP Basis

V-1.		Balance Sheets — Statutory Basis

V-2		Income Statements — Statutory Basis

VI-1.		Financial Performance Data for Public P&C Insurance Companies

VI-2.		Market Valuation Data for Public P&C Insurance Companies

VII-1.		Pro Forma Assumptions for Conversion Valuation

VII-2.		Pro Forma Conversion Valuation Range


	3/31/2009				12/31/2008				12/31/2007				12/31/2006
	Amortized		Estimated		Amortized		Estimated		Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value		Cost		Fair Value

ASSETS
Fixed Securities:
U.S. government and agencies		24,533		26,063		23,459		25,399		26,360		26,984		27,509		27,461
State and political subdivisions		32,228		33,932		31,775		32,957		30,321		31,134		26,538		27,047
Mortgage backed		24,431		24,617		25,374		25,305		20,636		20,724		11,618		11,488
Corporate		45,220		43,686		39,930		38,253		33,656		33,927		33,964		33,910

Total fixed securities		126,412		128,298		120,538		121,914		110,973		112,769		99,629		99,906

Equity		—		—		—		—		10,525		13,409		10,476		13,697


Total investment securities		126,412		128,298		120,538		121,914		121,498		126,178		110,105		113,603


I. RECENT FINANCIAL PERFORMANCE			1
Financial Condition			1
Income and Expense Trends			3
III. INDUSTRY UPDATE			11
IV. COMPARISONS WITH PUBLICLY-TRADED COMPANIES			13
Recent Financial Comparisons			13
V. MARKET CONDITIONS AND MARKET VALUE ADJUSTMENTS			16
Stock Price Performance and Market Conditions			16
VI. VALUATION ANALYSIS AND CONCLUSIONS			18
Valuation Review			18
Valuation Analysis			18
Valuation Conclusion			21


	Estimated Pro Forma Market Valuation Range
	Minimum			Midpoint			Maximum

June 5, 2009 Appraisal
Financial Data as of March 31, 2009
Gross Proceeds	$	45,050		$	53,000		$	60,950

Price / Book Value		50.9	%		55.5	%		59.4	%
Price / Tangible Book Value		50.9	%		55.5	%		59.4	%
Price / Total Assets		17.0	%		19.4	%		21.8	%
Price / LTM EPS	neg			neg			neg

April 1, 2009 Appraisal
Financial Data as of December 31, 2008
Gross Proceeds	$	45,050		$	53,000		$	60,950

Price / Book Value		51.2	%		55.7	%		59.7	%
Price / Tangible Book Value		52.7	%		57.3	%		61.2	%
Price / Total Assets		17.5	%		20.0	%		22.4	%
Price / LTM EPS	neg			neg			neg

	•		the facts and data reported by the reviewer and used in the review process are true and correct;

	•		the analyses, opinions, and conclusions in this report are limited only by the assumptions and limiting conditions stated in this review report, and are our personal, impartial and unbiased professional analyses, opinions and conclusions;

	•		we have no present or prospective interest in the property that is the subject of this review report, and we have no personal interest or bias with respect to the parties involved;

	•		our engagement in this assignment was not contingent upon developing or reporting predetermined results;

	•		our compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report;

	•		We have made a personal visit to the headquarters of Penn Millers.


		Anthony A. Latini, Jr.



		Paul M. Yeakel, Jr.



		Laura E. Anastasio

		June 5, 2009


Notes:

Financial reports prepared by management and reviewed by KPMG.