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Donegal Financial Services Corporation And Union National Financial Corporation Amend Pricing Terms Of Merger Agreement

MARIETTA, Pa. and LANCASTER, Pa., Sept. 1, 2010 (GLOBE NEWSWIRE) -- Donald H. Nikolaus, President of Donegal Financial Services Corporation ("DFSC"), and Mark D. Gainer, Chairman, President and Chief Executive Officer of Union National Financial Corporation ("UNNF") (OTCBB:UNNF), today jointly announced the execution of an amendment to the Agreement and Plan of Merger dated April 19, 2010, as amended and restated May 20, 2010, pursuant to which UNNF and DFSC would merge. The amendment increases the cash portion of the merger consideration payable to UNNF's shareholders upon the completion of the merger. UNNF and DFSC did not amend the merger agreement in any other respect.

As a result of the amendment, upon the completion of the merger, each share of UNNF common stock will become the right to receive 0.2134 share of Class A common stock of Donegal Group Inc. ("DGI") (Nasdaq:DGICA) and that amount of cash as equals $8.25 less the value of 0.2134 share of DGI Class A common stock, based on the average closing price of DGI Class A common stock for the five trading days immediately preceding the effective date of the merger, but in no event less than $5.05 per share in cash nor more than $5.90 per share in cash. In practical terms, UNNF shareholders will receive merger consideration with a value of approximately $8.25 per share of UNNF common stock provided DGI Class A common stock has an average closing price between $11.00 and $15.00 per share for the five trading days preceding the effective date of the merger. The merger consideration set forth in the amended merger agreement represents the maximum amount of merger consideration DFSC is willing to provide to UNNF's shareholders.

The amendment to the merger agreement addresses the fact that the closing price of DGI Class A common stock has declined from $14.68 per share on April 19, 2010 to $10.82 per share on August 30, 2010. By providing for an increase in the cash portion of the merger consideration that UNNF's shareholders will receive upon the completion of the merger, the parties believe UNNF shareholders will receive value for their UNNF shares that better reflects the value the parties anticipated when they originally signed the merger agreement.

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