Lmi S-1/A IPO registration (amended)

Exhibit 99.7

Feldman Financial Advisors, Inc.

1001 Connecticut Avenue, NW• Suite 840
Washington, DC 20036
202-467-6862• (Fax) 202-467-6963

Lebanon Mutual Insurance Company

Cleona, Pennsylvania

Conversion Valuation Appraisal Update

Valued as of June 2, 2008

Prepared By

Feldman Financial Advisors, Inc.
Washington, D.C.

Feldman Financial Advisors, Inc.

1001 Connecticut Avenue, NW• Suite 840
Washington, DC 20036
202-467-6862• (Fax) 202-467-6963

June 2, 2008

Board of Directors
Lebanon Mutual Insurance Company
137 West Penn Avenue
Cleona, Pennsylvania 17042

Members of the Board:

     At your request, we have completed and hereby provide an updated independent appraisal (the “Appraisal”) of the estimated pro forma market value of Lebanon Mutual Insurance Company (“Lebanon Mutual” or the “Company”), as of June 2, 2008. Pursuant to a Plan of Conversion (the “Plan”) adopted by the Board of Directors of the Company, Lebanon Mutual will convert from a Pennsylvania-chartered mutual property and casualty insurance company to a Pennsylvania-chartered stock property and casualty insurance company (the “Conversion”), issue all of its capital stock to a newly formed holding company, LMI Holdings, Inc. (“LMI Holdings”), and become a wholly-owned subsidiary of LMI Holdings. In accordance with the Plan, LMI Holdings will then offer shares of its common stock for sale in a subscription offering and, if necessary, in a community offering and a syndicated community offering. Our previous Appraisal as of April 11, 2008 is incorporated herein by reference.

     To facilitate completion of the Conversion, Lebanon Mutual and LMI Holdings entered into an Investment Agreement with Griffin MTS Partners, LP (“Griffin MTS”), a newly formed Pennsylvania limited partnership created for the sole purpose of entering into the Investment Agreement with Lebanon Mutual and LMI Holdings and performing its obligations under that agreement. Under the Investment Agreement, Griffin MTS will pay the costs of the Conversion in exchange for a payment at closing and will absorb the costs fully in the event the transaction is not completed (unless the reason it is not completed is abandonment by Lebanon Mutual). In addition, Griffin MTS has agreed to purchase a significant interest in LMI Holdings to help ensure completion of the Conversion.

     As part of the Conversion, LMI Holdings is offering shares of its common stock for sale in a subscription offering to the following potential subscribers: policyholders insured under policies of insurance issued by Lebanon Mutual; the Company’s employee stock ownership plan (“ESOP”); directors, officers, and employees of Lebanon Mutual; and Griffin MTS. Any shares not subscribed for in the subscription offering may be offered to members of the general public in a community offering with preference given to Griffin MTS, residents of Berks, Dauphin, Lancaster, or Lebanon Counties in Pennsylvania, and licensed insurance agencies and brokers that market and distribute insurance policies issued by the Company. If there are any shares of common stock not purchased in the subscription and community offerings, they may be offered for sale to the public in a syndicated community offering.

FELDMAN FINANCIAL ADVISORS, INC.

Board of Directors
Lebanon Mutual Insurance Company
June 2, 2008
Page Two

     Griffin MTS has agreed to purchase up to the lesser of 35% of LMI Holdings common stock sold in the Conversion or $6,500,000 of LMI Holdings common stock. Griffin MTS will have the right to purchase $500,000 of LMI Holdings common stock in the subscription offering and has agreed to submit an order in the community offering for the balance of the shares that it has agreed to purchase. LMI Holdings will have the option to accept or reject, in whole or in part, the order submitted by Griffin MTS in the community offering.

     This Appraisal is furnished in conjunction with the submission by Lebanon Mutual of the Application for Approval to Convert from Mutual to Stock Form (the “Application”) with the Pennsylvania Insurance Department under the Insurance Company Mutual to Stock Conversion Act, 40 P.S. Sections 911-Aet seq.(the “Conversion Act”). In accordance with the Plan and Section 914-A(d) of the Conversion Act, the estimated pro forma market value of the Company shall be determined by an independent valuation expert and shall represent the aggregate price of common stock sold in the Conversion. Furthermore, as permitted by Section 914-A(d) of the Conversion Act, 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 Conversion.

     Feldman Financial Advisors, Inc. (“Feldman Financial”) is a financial consulting and economic research firm that specializes in financial valuations and analyses of business enterprises and securities in the financial services industries. The background of Feldman Financial is presented in Exhibit I. In preparing the Appraisal, we conducted an analysis of Lebanon Mutual that included discussions with the Company’s management and an onsite visit to the Company’s headquarters. We reviewed the audited financial statements of the Company as of and for the years ended December 31, 2006 and 2007 and unaudited financial statements as of and for the three months ended March 31, 2007 and 2008. 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, 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 is based on the Company’s representation that the information contained in the Application 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 its independent auditor, nor did we independently value the assets or liabilities of the Company. The Appraisal 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.

FELDMAN FINANCIAL ADVISORS, INC.

Board of Directors
Lebanon Mutual Insurance Company
June 2, 2008
Page Three

     It is our opinion that, as of June 2, 2008, the estimated pro forma market value of the Company was within a range (the “Valuation Range”) of $10,200,000 to $13,800,000 with a midpoint of $12,000,000. The Valuation Range was based upon a 15 percent decrease from the midpoint to determine the minimum and a 15 percent increase from the midpoint to establish the maximum.

     Our Appraisal 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 in the Conversion. Moreover, because the Appraisal 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 estimate of the Company’s pro forma market value. Feldman Financial is not a seller of securities within the meaning of any federal or state securities laws and any report prepared by Feldman Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.

     The Valuation Range reported herein will be updated as appropriate. These updates will consider, among other factors, any developments or changes in the Company’s operating performance, financial condition, or management policies, and current conditions in the securities markets for insurance company common stocks. Should any such new developments or changes be material, in our opinion, to the estimated pro forma market value of the Company, appropriate adjustments to the Valuation Range will be made. The reasons for any such adjustments will be explained in detail at that time.

Respectfully submitted,

Feldman Financial Advisors, Inc.
 

/s/ Trent R. Feldman   

Trent R. Feldman 

President 

/s/ Peter W. L. Williams   

Peter W. L. Williams 

Principal 

FELDMAN FINANCIAL ADVISORS, INC.

TABLE OF CONTENTS

TAB			PAGE
I.	Chapter One — RECENT FINANCIAL PERFORMANCE
	Financial Condition			1
	Operating Results			2
	A.M. Best Rating Update			6
II.	Chapter Two — COMPARISONS WITH PUBLICLY TRADED COMPANIES
	Recent Financial Comparisons			7
	Stock Price Performance and Market Conditions			11
III.	Chapter Three — VALUATION ANALYSIS AND CONCLUSION
	Valuation Review			15
	Valuation Analysis			16
	Valuation Conclusion			20
IV.	Appendix — EXHIBITS
	I	Background of Feldman Financial Advisors, Inc.		I-1
	II	Statement of Contingent and Limiting Conditions	II-1
	III-1	Balance Sheets (December 31, 2007 and March 31, 2008)	III-1
	III-2	Balance Sheets (December 31, 2005 and 2006)	III-2
	III-3	Income Statements (Quarters Ended March 31, 2007 and 2008)	III-3
	III-4	Income Statements (Years Ended December 31, 2006 and 2007)	III-4
	III-5	Business Segment Earnings Summary (Quarterly: March 2007 and 2008)	III-5
	III-6	Business Segment Earnings Summary (Yearly: 2006 and 2007)	III-6
	III-7	Business Segment Operating Ratios	III-7
	III-8	Investment Portfolio (December 31, 2006 and 2007 and March 31, 2008)	III-8
	IV-1	Financial Performance Data for Public P&C Insurance Companies	IV-1
	IV-2	Market Valuation Data for Public P&C Insurance Companies	IV-5
	V-1	Pro Forma Assumptions for Conversion Valuation		V-1
	V-2	Pro Forma Conversion Valuation Range		V-2

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FELDMAN FINANCIAL ADVISORS, INC.

I. RECENT FINANCIAL PERFORMANCE

Financial Condition

     Table 1 presents selected balance sheet data for Lebanon Mutual as of the year-end periods from December 31, 2005 to 2007 and quarter-end periods for March 31, 2007 and 2008. Exhibit III-1 presents the Company’s balance sheets as of December 31, 2007 and March 31, 2008. Exhibit III-2 displays the Company’s balance sheet as of December 31, 2006 and 2007.

Table 1
Selected Financial Condition Data
As of December 31, 2005 to 2007
And March 31, 2007 and 2008
(Dollars in Thousands)

	March 31,						December 31,
	2008			2007			2007			2006			2005
Balance Sheet Data
Total assets	$	28,182		$	29,970		$	27,801		$	30,088		$	29,547
Total investments, cash and cash equivalents		21,632			22,552			21,218			21,736			21,055
Unpaid losses and loss adjustment expenses		6,879			8,015			6,645			9,096			9,409
Unearned premiums		6,326			6,760			6,610			7,074			7,339
Total liabilities		14,987			16,487			14,727			17,684			18,186
Total equity		13,195			13,483			13,074			12,404			11,361
Total equity / assets		46.82	%		44.99	%		47.03	%		41.23	%		38.45	%

Source: Lebanon Mutual, financial statements.

     The Company’s balance sheet was relatively unchanged between December 31, 2007 and March 31, 2008. Total assets increased by $381,000 or 1.2% between December 31, 2007 and March 31, 2008. The asset growth was primarily attributable to a $568,000 increase in cash and cash equivalents, and was offset partially by a decrease of $154,000 in investments. The increase in cash and cash equivalents reflected an accumulation of liquidity in anticipation of

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FELDMAN FINANCIAL ADVISORS, INC.

paying reinsurance premiums. The decrease in investments was due to a combination of sales and maturities of securities in excess of purchases along with a decline in the estimated fair value of the investment portfolio relative to cost. Total investments declined from $21.0 million at December 31, 2007 to $20.9 million at March 31, 2008. Total liabilities amounted to $15.0 million at March 31, 2008, as compared to $14.7 million at December 31, 2007. The increase of $260,000 in total liabilities was related largely to an increase of $805,000 in reinsurance premiums payable, offset partially by a $363,000 decrease in accounts payable and accrued expenses and a $284,000 decrease in unearned premiums.

     Total equity amounted to $13.2 million at March 31, 2008, compared to $13.1 million at December 31, 2007. The increase in the Company’s equity was attributable to net income of $56,000 for the March 2008 quarter and other comprehensive income of $65,000 related to unrealized investment holdings gains. The ratio of total equity to total assets decreased from 47.03% as of December 31, 2007 to 46.82% at March 31, 2008 as the equity growth rate of 0.9% lagged the asset growth rate of 1.4% for the March 2008 quarter.

Operating Results

     Table 2 summarizes the recent operating results of Lebanon Mutual. Exhibit III-3 presents the Company’s income statements for the three months ended March 31, 2007 and 2008. Exhibit III-4 presents the Company’s income statements for the years ended December 31, 2006 and 2007. Lebanon Mutual reported net income of $56,000 for the three months ended March 31, 2008, compared to net income $239,000 for the same period in 2007. The 76% decline in the Company’s earnings reflected a higher combined ratio of 100.23% for the March 2008 quarter versus 95.13% for the March 2007 quarter.

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FELDMAN FINANCIAL ADVISORS, INC.

Table 2
Selected Income Statement Data
For the Years Ended December 31, 2005 to 2007
And the Three Months Ended March 31, 2007 and 2008
(Dollars in Thousands)

	For the Three Months						For the Years
	Ended March 31,						Ended December 31,
	2008			2007			2007			2006			2005
Income Statement Data
Direct premiums written	$	2,937		$	3,270		$	13,642		$	14,583		$	14,822
Net premiums written		1,872			2,234			9,618			10,163			10,688
Net premiums earned	$	2,173		$	2,555		$	9,883		$	10,451		$	10,485
Net investment income		130			146			581			673			707
Net realized investment gains		(51	)		44			55			610			(170	)
Other revenue		7			31			92			66			73
Total revenue		2,259			2,776			10,611			11,800			11,095
Losses and loss adjustment expenses		1,115			1,392			5,777			6,030			5,518
Salaries and benefits		372			325			1,248			1,220			1,321
Commissions		350			403			1,601			1,740			1,822
Other operating expenses		341			311			1,176			1,137			1,051
Total losses and expenses		2,178			2,431			9,802			10,127			9,712
Income before income taxes		81			345			810			1,673			1,383
Income tax expense		25			106			227			527			424
Net income	$	56		$	239		$	583		$	1,146		$	959
Operating Ratios
Loss ratio (1)		51.31	%		54.48	%		58.45	%		57.70	%		52.63	%
Expense ratio (2)		48.92	%		40.65	%		40.73	%		39.20	%		40.00	%
Combined ratio (3)		100.23	%		95.13	%		99.18	%		96.90	%		92.63	%

(1)	Losses and loss adjustment expenses divided by net premiums earned.
(2)	Underwriting expenses divided by net premiums earned.
(3)	Sum of the loss ratio and the expense ratio.

Source: Lebanon Mutual, financial statements.

     Underwriting income from the commercial lines segment in the first quarter of 2008 decreased from the prior year by $211,000 to $(150,000), and the personal lines segment incurred an underwriting gain of $145,000, which represented an increase of $82,000 from the

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FELDMAN FINANCIAL ADVISORS, INC.

prior year. Overall, the Company experienced an underwriting loss of $5,000 for the March 2008 quarter as compared to an underwriting gain of $124,000 for the March 2007 quarter.

     Lebanon Mutual’s total revenue for the first quarter of 2008 was $2.3 million, which was $517,000 or 18.6% less than total revenue of $2.8 million for the corresponding quarter in 2007. This decrease was primarily due to a $382,000 decrease in net premiums earned from the 2007 period to the 2008 period and a $95,000 decrease in net realized investment gains.

     Direct premiums written decreased by 10.2% to $2.9 million in the March 2008 quarter, from $3.3 million in 2007 and consisted of $2.2 million of commercial lines premiums and $764,000 of personal lines premiums, compared to $2.4 million in commercial lines premiums and $852,000 in personal lines premiums for the March 2007 quarter. Net premiums earned decreased by 14.9% to $2.2 million in 2008 from $2.6 million in 2007. Commercial lines comprised $1.4 million and personal lines comprised $744,000 of net premiums earned in 2008, compared to $1.7 million and $853,000, respectively, in 2007. The overall decreases in direct premiums written and net premiums earned reflect continuing soft market conditions.

     Direct commercial multi-peril premiums written (the largest component of the Company’s commercial lines segment) decreased by 15.4% to $1.1 million in the three months ended March 31, 2008, compared to $1.3 million in 2007, and commercial multi-peril net premiums earned decreased by 11.9% to $1.3 million in 2008, compared to $1.4 million in 2007. For the same comparative periods, direct premiums written for the Company’s homeowners insurance (the largest component of its personal lines segment) decreased 8.4% to $708,000 in 2008 compared to $773,000 in 2007 while homeowners premiums earned decreased 8.3% to $874,000 in 2008 from $953,000 in 2007. The decline in homeowners insurance premiums

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FELDMAN FINANCIAL ADVISORS, INC.

written reflects the Company’s strategy of focusing on commercial lines and decreasing its personal lines exposure. Lebanon Mutual expects this decline to continue to be reflected in homeowners net premiums earned in future periods.

     Net investment income decreased $16,000, or 11.0%, to $130,000 for the three months ended March 31, 2008, compared to the same period in 2007 due to declining interest rates and a decline in the amount of the Company’s average invested assets. Net realized investment gains decreased by $95,000 for the quarter ended March 31, 2008, to a loss of $51,000 compared to a gain of $44,000 for the quarter ended March 31, 2007. This decrease in net realized gains was largely attributable to the change in fair value of the convertible securities in the Company’s investment portfolio, which resulted in a decrease in net realized investment gains of $186,000. During 2007, the Company sold convertible securities having a fair value of approximately $1.0 million and reinvested the proceeds in fixed income securities to reduce its exposure to the equity markets.

     For the quarter ended March 31, 2008, Lebanon Mutual reported an underwriting loss of $150,000, compared to an underwriting gain of $61,000 for the quarter ended March 31, 2007 in the commercial lines segment. In the personal lines segment during the recent quarter, the Company had an underwriting gain of $145,000 compared to an underwriting gain of $63,000 for the corresponding quarter in 2007. The decreased profitability of the commercial lines segment reflected sluggish revenue growth, while the earnings results in the personal lines segment were aided by an unusually mild weather cycle.

     Net loss and loss adjustment expenses decreased overall by $277,000 or 19.9%, to $1.1 million for the quarter ended March 31, 2008, from the same period in 2007. The Company’s

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FELDMAN FINANCIAL ADVISORS, INC.

loss ratio decreased from 54.48% in the March 2007 quarter to 51.31% in the March 2008 quarter primarily due to the improved loss experience in the personal lines segment, which was partially offset by the adverse loss experience improvement in the commercial lines segment.

     Expenses increased by $24,000, or 2.4%, to $1.1 million for the quarter ended March 31, 2008 from the same period in 2007. This increase was largely attributable to an increase in salary and wages due to accrued vacations, which was partially offset by reduced commissions paid resulting from the decline in direct premiums written. However, because of the decline in net premiums earned, the expense ratio climbed significantly from 40.65% in the March 2007 quarter to 48.92% in the March 2008 quarter.

A.M. Best Rating Update

     On April 15, 2008, A.M. Best Company, Inc. (“A.M. Best”) affirmed the financial strength rating of B++ (Good) of Lebanon Mutual. A.M. Best also affirmed the outlook for the financial strength rating as stable. According to A.M. Best, the rating reflected Lebanon Mutual’s favorable risk-adjusted capitalization, consistent investment income, and several years of improved financial results. A.M. Best referenced Lebanon Mutual’s historically unfavorable underwriting performance, variable reserve development, and single-state risk concentration as partially offsetting factors.

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FELDMAN FINANCIAL ADVISORS, INC.

II. COMPARISONS WITH PUBLICLY TRADED COMPANIES

Recent Financial Comparisons

     Table 3 summarizes certain key financial comparisons between Lebanon Mutual and the Comparative Group. The selection criteria and background information for the publicly traded property and casualty (“P&C”) insurance companies comprising the Comparative Group were discussed in our prior Appraisal. Financial data for the Company, the Comparative Group, and the aggregate Public P&C Insurance Group are shown as of or for the last twelve months (“LTM”) ended March 31, 2008. The Public P&C Insurance Group includes all the companies presented in Exhibit IV.

     The fundamental financial comparisons summarized in our previous Appraisal generally held constant through the LTM period ended March 31, 2008. The Company’s total assets of $28.2 million measured below the Comparative Group mean and median of $572.0 million and $533.5 million, respectively. The Company’s ratio of total policy reserves to total equity was virtually unchanged from 1.01% at December 31, 2007, measuring 1.00x at March 31, 2008 and reflecting both the Company’s strong capital position and restrained measure of underwriting leverage. The Comparative Group mean and median ratios of policy reserves to equity were 1.66x and 1.54x, respectively, as of March 31, 2008. Lebanon Mutual’s capital ratios continued to compare favorably to those of Comparative Group and the P&C industry aggregate. The Company’s ratio of total equity to total assets was 46.82% as of March 31, 2008, while the Comparative Group mean and median ratios of total equity to total assets were 34.36% and 34.86%, respectively, and the Public P&C Insurance Group mean and median capital ratios were slightly lower at 32.09% and 29.05%, respectively.

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FELDMAN FINANCIAL ADVISORS, INC.

Table 3
Comparative Financial Condition Data
Lebanon Mutual and the Comparative Group
As of March 31, 2008

			Total				LTM			Policy		Cash &		Total		Tang.
	Total		Policy		Total		Asset			Resrvs./		Invest./		Equity/		Equity/
	Assets		Reserves		Equity		Growth			Equity		Assets		Assets		Assets
	($Mil.)		($Mil.)		($Mil.)		(%)			(x)		(%)		(%)		(%)
Lebanon Mutual Insurance Company		28.2		13.2		13.2		(5.97	)		1.00		76.76		46.82		46.82
Comaprative Group Mean		572.0		309.7		193.0		12.59			1.66		70.00		34.36		32.88
Comparative Group Median		533.5		315.8		176.6		7.77			1.54		71.56		34.86		32.17
Public P&C Insurance Group Mean		12,006.6		6,219.9		3,446.2		12.00			2.10		71.08		32.09		30.07
Public P&C Insurance Group Median		2,747.4		1,454.4		763.4		4.75			1.99		72.86		29.05		27.36
Comparative Group
21st Century Holding Company		217.7		114.9		84.9		0.03			1.35		77.43		38.99		38.99
Baldwin & Lyons, Inc.		822.9		400.4		369.3		(2.87	)		1.08		75.62		44.88		44.88
CRM Holdings, Ltd.		392.0		207.1		113.9		24.47			1.82		77.84		29.05		28.42
Darwin Professional Underwriters		887.2		562.2		269.3		28.11			2.09		69.05		30.36		29.37
Donegal Group, Inc.		868.6		452.2		356.7		3.66			1.27		73.04		41.06		41.03
Eastern Insurance Holdings, Inc.		391.3		183.6		167.5		0.27			1.10		74.71		42.81		40.68
First Mercury Financial Corporation		831.7		435.3		239.5		46.76			1.82		59.49		28.80		21.95
Hallmark Financial Services, Inc.		519.1		239.8		185.7		20.10			1.29		70.07		35.77		28.43
Mercer Insurance Group, Inc.		547.9		369.3		136.6		7.30			2.70		66.89		24.94		24.19
National Interstate Corporation		999.1		520.2		218.1		8.23			2.39		52.64		21.83		21.83
National Security Group, Inc.		139.9		72.5		47.5		4.19			1.53		78.91		33.95		33.95
SeaBright Insurance Holdings		776.7		405.5		305.1		21.39			1.33		66.94		39.29		38.96
Specialty Underwriters’ Alliance		421.3		262.3		135.5		11.77			1.94		57.25		32.16		30.39
Unico American Corporation		193.0		110.6		71.8		2.83			1.54		80.14		37.20		37.20

Source: Lebanon Mutual, financial data; SNL Financial.

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FELDMAN FINANCIAL ADVISORS, INC.

     The Company’s ratio of cash and investments to total assets was 76.8% as of March 31, 2008, and remained above the Comparative Group mean and median ratios of 70.0% and 71.6%. The Company’s total assets decreased by 6.0% over the LTM period ended March 31, 2008. In contrast, the Comparative Group reflected mean and median asset growth rates of 12.6% and 7.8% for the corresponding period.

     Table 4 compares Lebanon Mutual with the Comparative Group and Public P&C Insurance Group based on selected measures of profitability. The Company’s LTM and quarterly return on average assets (“ROA”) and return on average equity (“ROE”) were below the corresponding Comparative Group ratios. The Company’s ROA for the LTM ended March 31, 2008 was 1.38% and trailed the Comparative Group mean and median ROA results of 5.16% and 4.85%, respectively. Lebanon Mutual experienced a lower ROA for the recent LTM period versus the 2.01% ROA for the LTM ended December 31, 2007, while the Comparative Group’s mean and median ratios were largely unchanged. The Company’s profitability was impacted by its relatively high combined ratio of 100.5% and recognition of net realized investment losses for the LTM ended March 31, 2008. The Company’s LTM ROE of 3.00% was below the Comparative Group’s mean and median of 15.61% and 13.16%, respectively.

     For the recent March 2008 quarter, the Company’s annualized ROA of 0.81% was also below the Comparative Group mean and median ratios of 3.76% and 3.66%, respectively. The Company’s annualized ROE of 1.72% for the quarter trailed the Comparative Group mean and median ratios of 11.74% and 12.44%, respectively. The Company’s combined ratio of 100.2% exceeded the Comparative Group’s mean and median combined ratios of 88.3%, and 90.7%, respectively, for the March 2008 quarter.

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FELDMAN FINANCIAL ADVISORS, INC.

Table 4
Comparative Operating Performance Data
Lebanon Mutual and the Comparative Group
For the Last Twelve Months Ended March 31, 2008

			LTM Net
			Prem.		Qtrly.		Qtrly.		Qtrly.
	Total		Written/		Loss		Exp.		Comb.		Qtrly.			Qtrly.			LTM		LTM
	Rev.		Avg.Eq.		Ratio		Ratio		Ratio		ROA			ROE			ROA		ROE
	($Mil.)		(%)		(%)		(%)		(%)		(%)			(%)			(%)		(%)
Lebanon Mutual Insurance Company		10.1		0.69		51.3		48.9		100.2		0.81			1.72			1.38		3.00
Comaprative Group Mean		193.4		1.06		56.5		30.6		88.3		3.76			11.74			5.16		15.61
Comparative Group Median		185.3		0.97		59.7		30.5		90.7		3.66			12.44			4.85		13.16
Public P&C Insurance Group Mean		0.0		0.96		61.4		30.8		89.6		3.17			11.13			4.32		14.75
Public P&C Insurance Group Median		0.0		0.91		59.6		30.5		92.1		3.13			10.94			4.05		14.14
Comparative Group
21st Century Holding Company		113.6		0.87		42.3	NA		NA			7.89			20.75			11.14		31.82
Baldwin & Lyons, Inc.		229.9	NA			65.3		33.2		98.5		(2.21	)		(4.92	)		5.01		11.31
CRM Holdings, Ltd.		163.7		1.30		43.2		31.9		75.1		5.16			17.98			6.15		22.11
Darwin Professional Underwriters		216.3		0.86		38.4		26.3		64.7		6.93			22.71			5.39		17.31
Donegal Group, Inc.		346.7		0.97		65.3		32.2		97.5		3.16			7.58			4.68		11.53
Eastern Insurance Holdings, Inc.		148.8		0.76		59.7		36.9		96.7		2.65			5.96			4.64		10.37
First Mercury Financial Corporation		204.1		0.83		53.8		21.2		75.0		4.93			16.59			5.95		19.23
Hallmark Financial Services, Inc.		281.7		1.39		60.3		29.0		89.3		5.01			15.46			5.74		17.20
Mercer Insurance Group, Inc.		166.4		1.24		63.4		34.7		98.1		1.89			7.68			2.65		11.13
National Interstate Corporation		289.5		1.40		61.6		22.7		84.3		4.03			17.77			4.62		21.02
National Security Group, Inc.		70.6	NA		NA		NA		NA			2.27			6.52			4.22		11.85
SeaBright Insurance Holdings		263.7		0.97		52.9		27.6		80.5		5.67			14.48			5.75		14.47
Specialty Underwriters’ Alliance		163.0		1.11		58.9		48.9		107.8		3.28			10.40			3.23		10.38
Unico American Corporation		49.6	NA			69.0		23.0		92.0		1.99			5.42			3.09		8.77

Source: Lebanon Mutual, financial data; SNL Financial.

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FELDMAN FINANCIAL ADVISORS, INC.

     The lack of top-line revenue growth continues to restrain the Company’s profitability. For the quarter ended March 31, 2008, Lebanon Mutual exhibited a loss ratio of 51.3%, an expense ratio of 48.9%, and a combined ratio of 100.2%. The Company reported an underwriting loss of $5,000 for the recent quarter. For the same quarterly period, the Comparative Group’s median loss, expense, and combined ratios were 59.7%, 30.5%, and 90.7%, respectively. The Company’s ratio of net premiums written to average equity declined further to 0.69% for the LTM ended March 31, 2008, and lagged significantly behind the Comparative Group’s mean and median ratios of 1.06x and 0.97x, respectively.

Stock Price Performance and Market Conditions

     Table 5 summarizes the stock price and valuation ratio changes of the Comparative Group companies from April 11, 2008 (the date of our prior Appraisal) and June 2, 2008 (the date of the current Appraisal). Stock prices of the Comparative Group companies exhibited varied movement as seven members reported a net price gain, and seven experienced a net price decline. The mean and median price changes among the Comparative Group were negative 0.4% and 2.0%, respectively. The SNL All Public Insurance Index declined 0.2% in the seven-week period between April 11, 2008 and June 2, 2008. The broader market exhibited modest upward movement as reflected by the Dow Jones Industrials Average and Standard & Poor’s 500 Stock Index increasing by 1.5% and 4.0%, respectively.

     The market trading valuation ratios of the Comparative Group have not changed materially since our original Appraisal. The Comparative Group’s mean price-to-book ratio (“P/B”) decreased slightly from 107.5% to 106.8%, while the median price-to-book ratio decreased from 100.4% to 97.4%. The mean price-to-earnings ratio (“P/E”) of the Comparative

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FELDMAN FINANCIAL ADVISORS, INC.

Group increased marginally from 7.7x to 7.8x over the observed time period, and the median price-to-earnings ratio increased from 7.4x to 7.8x.

     Table 6 presents the performance of selected market indexes through June 2, 2008. Following on the heels of the first quarter of 2008, the months of April and May continued the extension of a challenging period for the equity markets. Amid the turmoil and volatility affecting stocks as a whole over the past year, the insurance sector continues to lag the broader market but outperform the overall financials sector. However, the earnings performance of the P&C insurance industry slipped in the first quarter of 2008 due to slow top-line premium growth, reduced investment income, and increased realized losses on investments. Lower premiums were a direct result of the soft market stemming from excess capital in the industry. Reduced investment income was attributable to the lowering of interest rates by the Federal Reserve to combat inflation. Volatility in the financial markets contributed to many companies reporting mixed investment results and write-downs in their investment portfolios.

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FELDMAN FINANCIAL ADVISORS, INC.

Table 5
Comparative Market Valuation Performance
From April 11, 2008 to June 2, 2008

	4/11/08		6/02/08					4/11/08		6/02/08		4/11/08		6/02/08		4/11/08		6/02/08
	Closing		Closing					Price/		Price/		Price/		Price/		Price/		Price/
	Market		Market		Pct.			Book		Book		Tang.		Tang.		LTM		LTM
	Price		Price		Chg.			Value		Value		Book		Book		EPS		EPS
Company or Aggregate	($)		($)		(%)			(%)		(%)		(%)		(%)		(x)		(x)
Comparative Group Mean	NA		NA			(0.4	)		107.5		106.8		114.6		116.7		7.7		7.8
Comparative Group Median	NA		NA			2.0			100.4		97.4		105.5		101.5		7.4		7.8
Public P&C Insurance Mean	NA		NA		NA				121.4		120.0		133.2		131.4		8.8		9.3
Public P&C Insurance Median	NA		NA		NA				114.5		108.6		121.4		117.6		7.5		8.6
Comparative Group
21st Century Holding Company		12.33		10.37		(15.9	)		119.5		97.0		119.5		97.0		4.7		3.4
Baldwin & Lyons, Inc.		24.45		21.28		(13.0	)		97.9		87.8		97.9		87.8		6.7		7.6
CRM Holdings, Ltd.		4.96		3.39		(31.7	)		75.6		48.8		77.6		50.4		4.0		2.5
Darwin Professional Underwriters		22.55		27.91		23.8			151.0		176.2		155.6		184.7		11.9		11.4
Donegal Group, Inc.		16.31		17.41		6.7			117.2		124.2		117.3		124.3		10.9		11.3
Eastern Insurance Holdings, Inc.		16.40		16.06		(2.1	)		100.8		97.8		109.7		106.7		9.3		9.1
First Mercury Financial Corp.		16.39		17.42		6.3			128.5		133.0		152.9		191.3		7.3		7.8
Hallmark Financial Services, Inc.		9.89		11.71		18.4			114.6		131.1		163.8		183.8		7.5		8.3
Mercer Insurance Group, Inc.		16.35		17.31		5.9			76.1		78.9		79.6		82.2		7.3		7.7
National Interstate Corporation		21.98		22.91		4.2			198.4		202.6		198.4		202.6		9.8		10.5
National Security Group, Inc.		16.70		16.67		(0.2	)		85.0		86.6		85.0		86.6		6.8		7.3
SeaBright Insurance Holdings, Inc.		14.13		15.11		6.9			100.0		104.7		101.4		106.1		7.4		7.8
Specialty Underwriters’ Alliance		5.00		4.75		(5.0	)		59.4		54.9		64.7		59.6		6.1		5.7
Unico American Corporation		10.12		9.11		(10.0	)		81.5		71.4		81.5		71.4		8.7		8.8
Market Indexes
SNL Insurance Index		484.7		483.7		(0.2	)
SNL Insurance Underwriter Index		485.4		483.2		(0.4	)
SNL Insurance P&C Index		394.1		404.7		2.7
SNL Insurance < $250M Assets		507.6		484.9		(4.5	)
SNL Micro Cap Insurance < $250M		326.2		320.9		(1.6	)
Dow Jones Industrials Average		12,324.4		12,503.8		1.5
S&P500 Stock Index		1,332.8		1,385.7		4.0

Source: SNL Financial; Feldman Financial.

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FELDMAN FINANCIAL ADVISORS, INC.

Table 6
Selected Stock Market Index Performance
For the Period Ended June 2, 2008

			Prior			Year			One			Three
	Index		Appraisal			To Date			Year			Year
	Value		04/11/08			Change			Change			Change
Selected Insurance Indexes
SNL Insurance Indexes
SNL Insurance		483.69		(0.20)	%		(16.84)	%		(22.43)	%		3.44	%
SNL Insurance Underwriter		483.20		(0.45	)		(17.31	)		(22.83	)		2.97
SNL Insurance Broker		597.51		5.25			(5.53	)		(13.03	)		14.60
Standard & Poor’s Insurance		303.21		(2.50	)		(16.46	)		(27.34	)		(3.08	)
NASDAQ Insurance		3,844.23		(0.31	)		(5.68	)		(11.19	)		15.22
SNL Sector Indexes
SNL Insurance Property & Casualty		404.67		2.68			(5.61	)		(1.29	)		23.20
SNL Insurance Multiline		373.75		(8.00	)		(28.71	)		(41.54	)		(19.49	)
SNL Insurance Life & Health		681.95		(1.90	)		(8.62	)		(16.59	)		28.44
SNL Reinsurance		778.71		(10.81	)		(23.23	)		(25.00	)		(5.95	)
SNL Managed Care		608.93		5.70			(33.93	)		(31.09	)		(12.97	)
SNL Title Insurer		623.44		(7.81	)		4.65			(43.78	)		(34.77	)
SNL Mortgage & Financial Guaranty		70.78		(18.76	)		(61.07	)		(88.29	)		(85.50	)
SNL Asset Size Indexes
SNL Insurance <$250 Million		484.89		(4.48	)		(8.12	)		(16.99	)		(11.67	)
SNL Insurance $250 Million — $500 Million		436.78		(4.07	)		(6.34	)		(31.40	)		(2.73	)
SNL Insurance $500 Million — $1 Billion		372.64		3.33			(11.51	)		(20.46	)		(14.59	)
SNL Insurance $1 Billion — $2.5 Billion		699.11		7.56			(6.16	)		(14.08	)		18.41
SNL Insurance $2.5 Billion — $10 Billion		485.38		1.27			(12.83	)		(29.62	)		(3.59	)
SNL Insurance > $10 Billion		485.50		(0.80	)		(18.04	)		(22.20	)		2.75
SNL Insurance > $1 Billion		507.29		(0.46	)		(17.38	)		(22.86	)		2.37
SNL Insurance < $1 Billion		454.19		1.25			(10.82	)		(21.78	)		(13.40	)
SNL Market Cap Indexes
SNL Micro Cap Insurance		320.94		(1.60	)		(12.61	)		(26.81	)		10.90
SNL Small Cap Insurance		514.49		(0.24	)		(17.56	)		(25.37	)		11.42
SNL Mid Cap Insurance		322.65		1.24			(12.16	)		(32.89	)		(10.92	)
SNL Large Cap Insurance		408.57		(0.50	)		(18.08	)		(21.45	)		3.51
Broad Market Indexes
Dow Jones Industrials Average		12,503.82		1.45			(5.74	)		(8.52	)		18.48
Standard &Poor’s 500		1,385.67		3.96			(5.63	)		(9.81	)		15.06
Standard & Poor’s Mid-Cap		874.55		9.41			1.91			(5.12	)		28.94
Standard & Poor’s Small-Cap		391.39		7.53			(0.95	)		(11.71	)		19.54
Standard & Poor’s Financials		327.20		(2.99	)		(16.55	)		(35.70	)		(17.04	)
SNL All Financial Institutions		613.69		(1.58	)		(16.88	)		(32.39	)		(13.87	)
NASDAQ		2,491.53		8.79			(6.06	)		(4.68	)		18.77
NASDAQ Financial		2,578.69		2.17			(10.07	)		(21.45	)		(4.75	)
NYSE		9,316.61		4.26			(4.35	)		(7.23	)		29.29
Russell 1000		1,462.26		4.61			(4.89	)		(9.27	)		8.35
Russell 2000		1,841.61		7.68			(3.27	)		(13.17	)		0.48
Russell 3000		1,485.67		4.85			(4.77	)		(9.61	)		7.64

Source: SNL Financial.

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FELDMAN FINANCIAL ADVISORS, INC.

III. VALUATION ANALYSIS AND CONCLUSION

Valuation Review

     In our original Appraisal, we concluded that the Company’s estimated pro forma market value should be discounted on a price-to-book basis relative to the trading market valuations of the Comparative Group. Contributing factors to the discounted valuation were the Company’s restrained earnings prospects and its surplus capital position relative to the Comparative Group. We also took into account the new issue discount for initial public offerings of equity securities and the lesser liquidity anticipated with the Company’s stock issuance and listing.

     Lebanon Mutual’s earnings declined by 31.3% to $400,000 for the LTM period ended March 31, 2008, as compared to $583,000 for the prior LTM period ended December 31, 2007. As discussed earlier, the Company’s earnings were impacted by essentially breakeven results from its underwriting operations and recognition of net realized investment losses for the LTM ended March 31, 2008. Net investment income has become the key component of the Company’s profitability as underwriting losses and expenses exceed a declining base of net premiums earned.

     On the whole, the Comparative Group’s earnings performance and market valuation ratios did not change materially since our previous Appraisal. The median price-to-book ratio of the Comparative Group decreased from 100.4% at April 11, 2008 to 97.4% at June 2, 2008, and the median price-to-LTM earnings ratio increased to 7.8x at June 2, 2008 as compared to 7.7x at April 11, 2008. Because of the Company’s restrained earnings fundamentals and near-term outlook, we continue to believe that the price-to-book ratio carries greater weighting as a valuation metric as compared to the price-to-earnings ratio.

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FELDMAN FINANCIAL ADVISORS, INC.

Valuation Analysis

     Based on our review of the Company’s recent financial performance, its near-term earnings outlook, and the updated financial performance and trading market valuations for the Comparative Group, we believe that the estimated pro forma market value of Lebanon Mutual should be maintained at the current Valuation Range. In our prior Appraisal, we determined that a discount of approximately 40% to 50% based on the price-to-book valuation metric was reasonable and appropriate for determining the Company’s pro forma Valuation Range relative to the Comparative Group’s trading ratios. Accordingly, we affirm that this comparative valuation relationship on a price-to-book basis is still applicable and that the current Valuation Range is still reflective of the aforementioned comparative fundamentals.

     Considering financial data as of March 31, 2008, the Company is valued at a pro forma price-to-book ratio of 51.3% at the minimum, 55.8% at the midpoint, and 59.7% at the maximum as shown in Table 7. Lebanon Mutual is valued at a pro forma price-to-earnings ratio of 19.2x, 21.5x, and 23.7x at the minimum, midpoint, and maximum, respectively, of the Valuation Range.

     Table 8 displays the trading market price valuation ratios of the Comparative Group as of June 2, 2008. Exhibit V displays the pro forma assumptions and calculations utilized in analyzing the Company’s valuation ratios. The Company’s pro forma P/B valuation ratios reflect discounts to the Comparative Group’s median ratio of 97.4% measuring 38.7% at the valuation maximum, 42.7% at the valuation midpoint, and 47.3% at the valuation minimum. The Company’s P/B valuation ratios reflect discounts to the Comparative Group’s mean of 106.8% measuring 44.1% at the valuation maximum, 47.8% at the valuation midpoint, and

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FELDMAN FINANCIAL ADVISORS, INC.

52.0% at the valuation minimum. In our opinion, these levels of discounts are appropriate to reflect the previously discussed adjustments for earnings prospects, the new issue discount, and liquidity of the issue. In addition, we also took into consideration the low returns on equity that would be anticipated by the Company on a pro forma stand-alone basis as its capital levels reach very high levels ranging from a 57.01% equity-to-assets ratio at the valuation minimum to 58.92% at the valuation midpoint and 60.67% at the valuation maximum. The Company’s pro forma equity ratios would exceed all of the capital ratios reported by the Comparative Group companies.

     Based on the Valuation Range, the Company’s pro forma P/E ratios ranged from the minimum of 19.2x to 23.7x at the maximum based on pro forma LTM earnings per share (“EPS”). In comparison, the Comparative Group’s mean and median P/E ratios were both 7.8x. As noted previously, the Company’s higher pro forma P/E ratios do not reflect premium valuation ratios as qualitative measures, but rather are reflective of the Company’s low historical earnings base that produces comparatively high pro forma P/E multiples.

     Based on the price-to-assets (“P/A”) measure, the Company’s midpoint valuation of $12.0 million reflects a P/A ratio of 32.89%, ranging from 29.26% at the minimum to 36.22% at the maximum. The Company’s P/A valuation ratio at the maximum is within range of the Comparative Group’s corresponding mean and median P/A ratios of 35.68% and 38.86%, respectively. To some extent, as reflected by the comparable P/A ratios, the Company’s profitability disadvantage relative to the Comparative Group continues to be offset partially by its solid pro forma capital position. Similarly, the Company’s pro forma price-to-total revenue

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FELDMAN FINANCIAL ADVISORS,INC.

ratios are supported by the strong capital position and measured 1.16x at the midpoint valuation versus the mean and median ratios of 1.06x and 1.04x, respectively, for the Comparative Group.

Table 7
Comparative Appraisal Valuation Ratios For
Lebanon Mutual Insurance Company
Based on the Estimated Pro Forma Market Valuation Range
(Dollars in Thousands)

	Pro Forma Market Valuation Range
	Minimum			Midpoint			Maximum
	$10,200			$12,000			$13,800
Appraisal date: June 2, 2008
Financial data: March 31, 2008
Price-to-book value ratio		51.32	%		55.83	%		59.70	%
Price-to-tangible book value ratio		51.32	%		55.83	%		59.70	%
Price-to-LTM earnings per share		19.23	x		21.55	x		23.65	x
Price-to-total assets		29.26	%		32.89	%		36.22	%
Appraisal date: April 11, 2008
Financial data: Dec. 31, 2007
Price-to-book value ratio		51.64	%		56.14	%		60.02	%
Price-to-tangible book value ratio		51.64	%		56.14	%		60.02	%
Price-to-LTM earnings per share		13.92	x		15.81	x		17.57	x
Price-to-total assets		29.58	%		33.24	%		36.58	%

Source: Feldman Financial.

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FELDMAN FINANCIAL ADVISORS, INC.

Table 8
Comparative Market Valuation Analysis
Lebanon Mutual Insurance Company and the Comparative Group
Market Price Data as of June 2, 2008

	Closing				Total		Price/		Price/		Price/		Price/		Price/		Price/		Total		Current
	Stock		Total		Market		Book		Tang.		LTM		Oper.		Total		Total		Equity/		Div.
	Price		Assets		Value		Value		Book		EPS		EPS		Rev.		Assets		Assets		Yield
Company	($)		($Mil.)		($Mil.)		(%)		(%)		(x)		(x)		(x)		(%)		(%)		(%)
Lebanon Mutual Insurance Company
Pro Forma Minimum		10.00		34.9		10.2		51.3		51.3		19.2		18.2		0.99		29.26		57.01		0.00
Pro Forma Midpoint		10.00		36.5		12.0		55.8		55.8		21.5		20.5		1.16		32.89		58.92		0.00
Pro Forma Maximum		10.00		38.1		13.8		59.7		59.7		23.7		22.5		1.32		36.22		60.67		0.00
Comparative Group Mean	NA			572.0		224.1		106.8		116.7		7.8		9.2		1.06		35.68		34.36		1.71
Comparative Group Median	NA			533.5		199.1		97.4		101.5		7.8		8.9		1.04		38.86		34.86		0.53
Public P&C Insurance Mean	NA			12,006.6		4,778.7		120.0		131.4		9.3		10.3		1.45		35.58		32.09		1.50
Public P&C Insurance Median	NA			2,747.4		938.0		108.6		117.6		8.6		8.9		1.16		34.38		29.05		1.17
Comparative Group
21st Century Holding Company		10.37		217.7		82.4		97.0		97.0		3.4		3.2		0.72		37.83		38.99		6.94
Baldwin & Lyons, Inc.		21.28		822.9		324.5		87.8		87.8		7.6		12.7		1.41		39.44		44.88		4.70
CRM Holdings, Ltd.		3.39		392.0		54.4		48.8		50.4		2.5	NA			0.33		13.88		29.05		0.00
Darwin Professional Underwriters		27.91		887.2		474.7		176.2		184.7		11.4	NA			2.19		53.50		30.36		0.00
Donegal Group, Inc.		17.41		868.6		444.8		124.2		124.3		11.3		11.7		1.28		51.21		41.06		2.41
Eastern Insurance Holdings, Inc.		16.06		391.3		154.4		97.8		106.7		9.1		9.8		1.04		39.46		42.81		1.74
First Mercury Financial Corp.		17.42		831.7		318.4		133.0		191.3		7.8		7.9		1.56		38.28		28.80		0.00
Hallmark Financial Services, Inc.		11.71		519.1		243.7		131.1		183.8		8.3		8.9		0.86		46.95		35.77		0.00
Mercer Insurance Group, Inc.		17.31		547.9		113.7		78.9		82.2		7.7		7.4		0.68		20.75		24.94		1.73
National Interstate Corporation		22.91		999.1		444.0		202.6		202.6		10.5	NA			1.53		44.44		21.83		1.05
National Security Group, Inc.		16.67		139.9		41.1		86.6		86.6		7.3		12.4		0.58		29.40		33.95		5.40
SeaBright Insurance Holdings, Inc.		15.11		776.7		320.3		104.7		106.1		7.8	NA			1.21		41.24		39.29		0.00
Specialty Underwriters’ Alliance		4.75		421.3		69.8		54.9		59.6		5.7	NA			0.43		16.57		32.16		0.00
Unico American Corporation		9.11		193.0		51.3		71.4		71.4		8.8		8.8		1.03		26.56		37.20		0.00

Source: Lebanon Mutual; SNL Financial; Feldman Financial.

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FELDMAN FINANCIAL ADVISORS, INC.

Valuation Conclusion

     It is our opinion that, as of June 2, 2008, the estimated pro forma market value of the Company was within a range (the “Valuation Range”) of $10,200,000 to $13,800,000 with a midpoint of $12,000,000. The Valuation Range was based upon a 15% decrease from the midpoint to determine the minimum and a 15% increase to establish the maximum. Exhibit V displays the assumptions and calculations utilized in determining the Company’s estimated pro forma market value.

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FELDMAN FINANCIAL ADVISORS, INC.

Exhibit I
Background of Feldman Financial Advisors, Inc.

Overview of Firm

Feldman Financial Advisorsprovides consulting and advisory services to financial services companies in the areas of corporate valuations, mergers and acquisitions, strategic planning, branch sales and purchases, developing and implementing regulatory business and capital plans, and expert witness testimony and analysis. Our senior staff members have been involved in the mutual to stock conversion process since 1982 and have valued more than 350 converting institutions.

Feldman Financial Advisorswas incorporated in February 1996 by a group of consultants who were previously associated with Credit Suisse First Boston and Kaplan Associates. Each of the officers of Feldman Financial Advisors has 15 to 25 years of experience in consulting. Our senior staff collectively has worked with more than 1,000 commercial banks, savings institutions, mortgage companies, and insurance companies nationwide. The firm’s office is located in Washington, D.C.

Background of Senior Professional Staff

Trent Feldman — President. Trent is a nationally recognized expert in providing strategic advice to and valuing financial service companies, and advising on mergers and acquisitions. Trent was with Kaplan Associates for 14 years and was one of three founding principals at that firm. Trent also has worked at the Federal Home Loan Bank Board and with the California legislature. Trent holds Bachelors and Masters Degrees from the University of California at Los Angeles.

Peter Williams — Principal. Peter specializes in merger and acquisition analysis, stock and other corporate valuations, strategic business plans and retail delivery analysis. Peter was with Kaplan Associates for 13 years. Peter also served as a Corporate Development Analyst with the Wilmington Trust Company in Delaware. Peter holds a BA in Economics from Yale University and an MBA in Finance and Investments from George Washington University.

Michael Green — Principal. Mike is an expert in mergers and acquisition analysis, financial institution and corporate valuations, and strategic and business plans. During Mike’s 10 years at Kaplan Associates, his experience also included business restructurings, litigation support, mark-to-market analysis, and goodwill valuations. Mike holds a BA in Finance and Economics from Rutgers College.

Greg Izydorczyk — Senior Vice President. Greg specializes in merger and acquisition analysis and corporate valuations and also has experience in mark-to-market analysis and business plans. Greg was with Kaplan Associates for three years. Previously, Greg worked as a Senior Auditor for First Virginia Bank and Integra Financial. Greg holds a BS in Finance from Pennsylvania State University and an MBA in Finance from the University of Pittsburgh.

I-1

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit II
Statement of Contingent and Limiting Conditions

This Appraisal is made subject to the following general contingent and limiting conditions:

1.	The analyses, opinions, and conclusions presented in this Appraisal apply to this engagement only and may not be used out of the context presented herein. This Appraisal is valid only for the effective date specified herein and only for the purpose specified herein.
2.	Neither all nor any part of the contents of this Appraisal is to be referred to or quoted in any registration statement, prospectus, public filing, loan agreement, or other agreement or document without our prior written approval. In addition, our Appraisal and analysis are not intended for general circulation or publication, nor are they to be reproduced or distributed to other third parties without our prior written consent.
3.	Neither our Appraisal nor our valuation conclusion is to be construed as a fairness opinion as to the fairness of an actual or proposed transaction, a solvency assessment, or an investment recommendation. For various reasons, the price at which the subject interest might be sold in a specific transaction between specific parties on a specific date might be significantly different from the valuation conclusion expressed herein.
4.	Our analysis assumes that as of the effective valuation date, the Company and its assets will continue to operate as a going concern. Furthermore, our analysis is based on the past and present financial condition of the Company and its assets as of the effective valuation date.
5.	We assume no responsibility for legal matters including interpretations of the law, contracts, or title considerations. We assume that the subject assets, properties, or business interests are appraised free and clear of any or all liens or encumbrances unless otherwise stated.
6.	We assume that there is full compliance with all applicable federal, state, and local regulations and laws unless the lack of compliance is stated, defined, and considered in the Appraisal.
7.	We do not express an opinion or any other form of assurance on the reasonableness of management’s projections reviewed by us or on the underlying assumptions.
8.	We assume responsible ownership and competent management with respect to the subject assets, properties, or business interests.
9.	The information furnished by others is believed to be reliable. However, we issue no warranty or other form of assurance regarding its accuracy.

II-1

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-1
Lebanon Mutual Insurance Company
Balance Sheets
As of December 31, 2007 and March 31, 2008
(Dollars in Thousands)

	March 31,		Dec. 31,
	2008		2007
ASSETS
Investments available for sale:
Debt securities	$	15,935	$	15,979
Equity securities		584		361
Convertible securities		4,350		4,683
Total investments available for sale		20,869		21,023
Cash and cash equivalents		763		195
Premiums receivable		2,183		2,246
Reinsurance receivable and recoverable		1,968		1,839
Deferred acquisition costs		1,291		1,356
Deferred income taxes		116		55
Accrued investment income		176		163
Property and equipment		410		458
Other assets		406		466
TOTAL ASSETS	$	28,182	$	27,801
LIABILITIES AND EQUITY
Unpaid losses and loss adjustment expenses	$	6,879	$	6,645
Unearned premiums		6,326		6,610
Advance premiums		214		149
Reinsurance premiums payable		805		—
Accounts payable and accrued expenses		382		745
Other liabilities		381		578
Total liabilities		14,987		14,727
Retained earnings		12,916		12,860
Accumulated other comprehensive income		279		214
Total equity		13,195		13,074
TOTAL LIABIITIES AND EQUITY	$	28,182	$	27,801

Source: Lebanon Mutual, financial statements.

III-1

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-2
Lebanon Mutual Insurance Company
Balance Sheets
As of December 31, 2006 and 2007
(Dollars in Thousands)

	December 31,
	2007		2006
ASSETS
Investments available for sale:
Debt securities	$	15,979	$	14,881
Equity securities		361		430
Convertible securities		4,683		5,244
Total investments available for sale		21,023		20,555
Cash and cash equivalents		195		1,182
Premiums receivable		2,246		2,193
Reinsurance receivable and recoverable		1,839		3,735
Deferred acquisition costs		1,356		1,369
Deferred income taxes		55		—
Accrued investment income		163		159
Property and equipment		458		608
Other assets		466		287
TOTAL ASSETS	$	27,801	$	30,088
LIABILITIES AND EQUITY
Unpaid losses and loss adjustment expenses	$	6,645	$	9,096
Unearned premiums		6,610		7,074
Advance premiums		149		206
Reinsurance premiums payable		—		69
Accounts payable and accrued expenses		745		699
Deferred income taxes		—		132
Other liabilities		578		408
Total liabilities		14,727		17,684
Retained earnings		12,860		12,277
Accumulated other comprehensive income		214		127
Total equity		13,074		12,404
TOTAL LIABIITIES AND EQUITY	$	27,801	$	30,088

Source: Lebanon Mutual, financial statements.

III-2

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-3
Lebanon Mutual Insurance Company
Income Statements
For the Three Months Ended March 31, 2007 and 2008
(Dollars in Thousands)

	Three Months Ended
	March 31,
	2008			2007
REVENUES
Net premiums earned	$	2,173		$	2,555
Net investment income		130			146
Net realized investment gains		(51	)		44
Other revenue		7			31
Total revenues		2,259			2,776
LOSSES AND EXPENSES
Losses and loss adjustment expenses		1,115			1,392
Salaries and benefits		372			325
Commissions		350			403
Other operating expense		341			311
Total losses and expenses		2,178			2,431
Income before provision for income taxes		81			345
Provision for income taxes		25			106
Net income	$	56		$	239

Source: Lebanon Mutual, financial statements.

III-3

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-4
Lebanon Mutual Insurance Company
Income Statements
For the Years Ended December 31, 2006 and 2007
(Dollars in Thousands)

	Years Ended
	December 31,
	2007		2006
REVENUES
Net premiums earned	$	9,883	$	10,451
Net investment income		581		673
Net realized investment gains		55		610
Other revenue		93		66
Total revenues		10,612		11,800
LOSSES AND EXPENSES
Losses and loss adjustment expenses		5,777		6,029
Salaries and benefits		1,248		1,220
Commissions		1,601		1,740
Other operating expense		1,176		1,138
Total losses and expenses		9,802		10,127
Income before provision for income taxes		810		1,673
Provision for income taxes		227		527
Net income	$	583	$	1,146

Source: Lebanon Mutual, financial statements.

III-4

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-5
Lebanon Mutual Insurance Company
Business Segment Earnings Summary
For the Three Months Ended March 31, 2007 and 2008
(Dollars in Thousands)

	For the Three Months Ended
	March 31, 2008
	Comm’l			Personal		Comm’l		Personal
	Lines			Lines		Lines		Lines
	Segment			Segment		(Pct. of		(Pct. of		Total
	($000s)			($000s)		Total)		Total)		($000s)
Direct premiums written	$	2,173		$	764		73.98		26.02	$	2,937
Net premiums earned	$	1,429		$	744		65.78		34.22	$	2,173
Losses and loss adj. expenses		847			268		75.92		24.08		1,115
Other underwriting expenses		732			331		68.90		31.10		1,063
Total losses and expenses		1,579			599		72.49		27.51		2,178
Underwriting income (loss)	$	(150	)	$	145		N.A.		N.A.	$	(5	)

	For the Three Months Ended
	March 31, 2007
	Comm’l		Personal		Comm’l		Personal
	Lines		Lines		Lines		Lines
	Segment		Segment		(Pct. of		(Pct. of			Total
	($000s)		($000s)		Total)		Total)			($000s)
Direct premiums written	$	2,418	$	852		73.95		26.05		$	3,270
Net premiums earned	$	1,701	$	853		66.59		33.41		$	2,555
Losses and loss adj. expenses		933		459		67.02		32.98			1,392
Other underwriting expenses		707		331		68.09		31.91			1,039
Total losses and expenses		1,640		790		67.48		32.52			2,431
									��
Underwriting income (loss)	$	61	$	63		49.30		50.70		$	124

Source: Lebanon Mutual, financial statements.

III-5

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-6
Lebanon Mutual Insurance Company
Business Segment Earnings Summary
For the Years Ended December 31, 2006 and 2007
(Dollars in Thousands)

	For the Year Ended
	December 31, 2007
	Comm’l		Personal			Comm’l		Personal
	Lines		Lines			Lines		Lines
	Segment		Segment			(Pct. of		(Pct. of		Total
	($000s)		($000s)			Total)		Total)		($000s)
Direct premiums written	$	9,772	$	3,870			71.63		28.37	$	13,642
Net premiums earned	$	6,722	$	3,162			68.01		31.99	$	9,883
Losses and loss adj. expenses		3,632		2,145			62.86		37.14		5,777
Other underwriting expenses		2,726		1,299			67.72		32.28		4,025
Total losses and expenses		6,358		3,445			64.86		35.14		9,802
Underwriting income (loss)	$	364	$	(283	)		N.A.		N.A.	$	82

	For the Year Ended
	December 31, 2006
	Comm’l		Personal			Comm’l		Personal
	Lines		Lines			Lines		Lines
	Segment		Segment			(Pct. of		(Pct. of		Total
	($000s)		($000s)			Total)		Total)		($000s)
Direct premiums written	$	10,314	$	4,269			70.73		29.27	$	14,583
Net premiums earned	$	6,876	$	3,575			65.80		34.20	$	10,451
Losses and loss adj. expenses		3,180		2,850			52.74		47.26		6,030
Other underwriting expenses		2,754		1,344			67.21		32.79		4,098
Total losses and expenses		5,934		4,194			58.59		41.41		10,127
Underwriting income (loss)	$	942	$	(619	)		N.A.		N.A.	$	323

Source: Lebanon Mutual, financial statements.

III-6

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-7
Lebanon Mutual Insurance Company
Business Segment Operating Ratios
For the Years Ended December 31, 2005 to 2007
And for the Three Months Ended March 31, 2007 and 2008
(Dollars in Thousands)

	For the Three
	Months Ended						For the Years Ended
	March 31,						December 31,
	2008			2007			2007			2006			2005
Commercial Lines Segment
Loss Ratio		59.23	%		54.83	%		54.02	%		46.24	%		38.30	%
Expense Ratio		51.24			41.57			40.57			40.05			41.34
Combined Ratio		110.47			96.40			94.59			86.29			79.64
Personal Lines Segment
Loss Ratio		36.10			53.79			67.85			79.73			76.52
Expense Ratio		44.46			38.83			41.09			37.60			37.77
Combined Ratio		80.56			92.62			108.94			117.33			114.29
Total Business Segments
Loss Ratio		51.31			54.48			58.45			57.70			52.63
Expense Ratio		48.92			40.65			40.73			39.20			40.00
Combined Ratio		100.23			95.13			99.18			96.90			92.63

Source: Lebanon Mutual, internal financial data.

III-7

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit III-8
Lebanon Mutual Insurance Company
Investment Portfolio
As of December 31, 2006 and 2007
And March 31, 2008
(Dollars in Thousands)

	March 31,				December 31,
	2008				2007				2006
	Cost or		Estimated		Cost or		Estimated		Cost or		Estimated
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
Debt securities:
U.S. treasury and govt. agencies	$	202	$	210	$	202	$	203	$	—	$	—
State, territories, and possessions		1,330		1,339		1,182		1,181		1,062		1,046
Special revenue		3,259		3,295		2,981		2,975		3,316		3,258
Public utilities		73		75		73		74		173		181
Industrial and miscellaneous		3,211		3,199		3,328		3,315		2,978		2,958
Mortgage-backed securities		7,791		7,817		8,245		8,231		7,585		7,438
Total debt securities		15,866		15,935		16,011		15,979		15,114		14,881
Equity securities		231		584		5		361		5		430
Convertible securities		4,479		4,350		4,627		4,683		4,560		5,244
Total investment securities	$	20,576	$	20,869	$	20,643	$	21,023	$	19,679	$	20,555

Source: Lebanon Mutual, financial statements.

III-8

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-1
Financial Performance Data for Public Property and Casualty Insurance Companies

				Total				Policy		Total		Tang.		LTM		Net Prem.		Qtrly.		Qtrly.		Qtrly.
		Total		Policy		Total		Resrvs./		Equity/		Equity/		Policy		Written/		Loss		Exp.		Comb.		LTM		LTM
		Assets		Reserves		Equity		Equity		Assets		Assets		Revenue		Avg.Eq.		Ratio		Ratio		Ratio		ROA		ROE
Company	State	($Mil.)		($Mil.)		($Mil.)		(x)		(%)		(%)		($Mil.)		(x)		(%)		(%)		(%)		(%)		(%)
21st Century Holding Co.	FL		218		115		85		1.35		38.99		38.99		95		0.87		42.3	NA		NA			11.14		31.82
ACE Ltd.	—		73,919		44,829		16,735		2.68		22.64		19.64		12,155		0.74		55.6		29.0		84.6		3.14		14.14
Affirmative Insurance Holdings	TX		903		358		220		1.63		24.36		4.67		408		1.92		75.2		17.1		92.3		1.30		5.63
Alleghany Corp.	NY		6,828		3,470		2,838		1.22		41.57		39.64		1,181		0.44		52.2		28.3		80.5		4.54		11.06
Allied World Assurance Co.	—		8,244		4,896		2,395		2.04		29.05		28.92		1,146		0.48		52.5		25.7		78.2		5.83		20.71
Allstate Corporation	IL		152,210		103,901		20,303		5.12		13.34		12.87		29,026		1.25		69.1		24.9		94.0		2.21		16.14
AmCOMP Inc.	FL		681		439		165		2.66		24.24		24.10		222		1.35		52.7		42.8		95.5		2.83		12.52
American Financial Group Inc.	OH		26,002		19,592		3,020		6.49		11.61		10.90		3,124		0.90		45.8		35.0		80.8		1.34		11.46
American Physicians Capital	MI		1,044		722		258		2.80		24.74	NA			136		0.48		51.2		22.2		73.4		5.00		20.02
American Physicians Svc Grp	TX		285		136		127		1.07		44.58		44.34		73	NA			43.3		15.5		58.8	NA		NA
American Safety Ins Hldgs Ltd	—		932		624		234		2.66		25.14		24.40		148		0.68		57.9		42.5		100.4		3.00		12.36
AMERISAFE Inc.	LA		1,090		722		218		3.31		20.02		20.02		305		1.54		67.2		19.9		87.1		5.03		27.77
AmTrust Financial Services Inc	NY		2,609		1,356		395		3.43		15.14		13.39		423		0.98		56.6		20.5		77.2		4.45		23.76
Arch Capital Group Ltd.	—		16,354		9,129		4,005		2.28		24.49		24.41		2,907		0.73		57.1		29.1		86.2		5.47		21.89
Argo Group Intl Holdings	—		4,980		2,998		1,423		2.11		28.57		26.91		873		0.75		60.2		35.8		95.9		3.37		13.13
Aspen Insurance Holdings Ltd.	—		7,507		3,880		2,923		1.33		38.93		38.87		1,686		0.58		52.9		32.5		85.4		6.22		16.52
AXIS Capital Holdings Ltd.	—		15,640		8,389		5,371		1.56		34.34		34.09		2,708		0.57		54.9		26.3		81.3		7.42		22.26
Baldwin & Lyons Inc.	IN		823		400		369		1.08		44.88		44.88		180	NA			65.3		33.2		98.5		5.01		11.31
Berkshire Hathaway Inc.	NE		281,047		72,583		119,372		0.61		42.47		34.68		24,478	NA			73.0		22.5		95.5		4.24		9.83
CastlePoint Holdings Ltd.	—		1,098		391		420		0.93		38.25		38.25		302		1.02		54.3		39.8		94.1		4.14		8.54
Chubb Corp.	NJ		51,193		29,487		14,347		2.06		28.03		27.36		11,937		0.84		53.4		30.5		83.9		5.37		19.51
Cincinnati Financial Corp.	OH		15,945		7,109		5,449		1.30		34.17		34.17		3,222		0.51		66.7		31.9		98.6		3.56		9.76
CNA Surety Corp.	IL		1,538		747		688		1.09		44.74		39.26		426		0.68		25.3		53.9		79.2		6.51		15.00
Commerce Group Inc.	MA		3,931		1,844		1,304		1.41		33.18	NA			1,804		1.27		65.8		27.0		92.8		3.48		10.14
CRM Holdings Ltd.	—		392		207		114		1.82		29.05		28.42		126		1.30		43.2		31.9		75.1		6.15		22.11
Darwin Professional Undrwrtr	CT		887		562		269		2.09		30.36		29.37		193		0.86		38.4		26.3		64.7		5.39		17.31
Donegal Group Inc.	PA		869		452		357		1.27		41.06		41.03		315		0.97		65.3		32.2		97.5		4.68		11.53
Eastern Insurance Holdings Inc	PA		391		184		168		1.10		42.81		40.68		133		0.76		59.7		36.9		96.7		4.64		10.37
EMC Insurance Group Inc.	IA		1,169		713		358		1.99		30.65		30.59		394		1.15		63.2		33.7		96.9		2.91		10.43
Employers Holdings Inc	NV		3,180		2,320		396		5.86		12.46		12.46		333		0.89		40.3		42.7		83.0		3.69		32.37
Endurance Specialty Holdings	—		7,875		4,198		2,538		1.65		32.23		30.39		1,590		0.68		50.9		33.5		84.4		6.76		20.20

IV-1

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-1 (continued)
Financial Performance Data for Public Property and Casualty Insurance Companies

				Total				Policy		Total		Tang.		LTM		Net Prem.		Qtrly.		Qtrly.		Qtrly.
		Total		Policy		Total		Resrvs./		Equity/		Equity/		Policy		Written/		Loss		Exp.		Comb.		LTM			LTM
		Assets		Reserves		Equity		Equity		Assets		Assets		Revenue		Avg.Eq.		Ratio		Ratio		Ratio		ROA			ROE
Company	State	($Mil.)		($Mil.)		($Mil.)		(x)		(%)		(%)		($Mil.)		(x)		(%)		(%)		(%)		(%)			(%)
Enstar Group Ltd.	—		3,995		2,701		465		5.81		11.64		11.16		0		0.00	NA		NA		NA			2.26			14.04
Erie Indemnity Co.	PA		2,851		1,434		996		1.44		34.93		34.93		208	NA			65.0		27.1		92.1		6.38			17.00
Everest Re Group Ltd.	—		18,046		10,696		5,633		1.90		31.21	NA			3,905		0.68		59.8		29.3		89.1		3.50			11.24
Fairfax Financial Holdings Ltd	—		28,033		17,039		4,809		3.54		17.16		17.00		4,629		1.21		72.0		28.7		100.7		5.88			43.43
First Acceptance Corp.	TN		486		187		236		0.79		48.53		26.76		298	NA			76.6		21.6		98.2		(6.78	)		(13.64	)
First Mercury Financial Corp.	MI		832		435		239		1.82		28.80		21.95		168		0.83		53.8		21.2		75.0		5.95			19.23
Flagstone Reinsurance Holdings	—		2,242		477		1,242		0.38		55.38		55.16		511		0.48		29.4		37.5		66.9		8.23			14.34
FPIC Insurance Group Inc.	FL		1,078		700		299		2.34		27.76		27.03		192		0.60		56.8		22.4		79.2		4.05			15.15
GAINSCO INC.	TX		253		128		65		1.99		25.52		25.34		185		2.38		74.8		25.8		100.6		(6.02	)		(21.26	)
Greenlight Capital Re Ltd	—		1,059		150		601		0.25		56.80		56.80		105		0.25		44.1		52.3		96.4		4.36			7.91
Hallmark Financial Services	TX		519		240		186		1.29		35.77		28.43		233		1.39		60.3		29.0		89.3		5.74			17.20
Hanover Insurance Group Inc.	MA		9,701		5,718		2,321		2.46		23.92		22.87		2,434		1.11		61.5		33.5		95.0		2.53			11.27
Harleysville Group Inc.	PA		3,277		2,237		763		2.93		23.29		22.74		857		1.23		64.2		34.0		98.2		3.31			13.75
HCC Insurance Holdings Inc.	TX		8,218		4,312		2,522		1.71		30.69		23.03		1,981		0.85		59.4		24.3		83.7		4.75			16.36
Hilltop Holdings Inc.	TX		1,065		92		816		0.11		76.62		75.73		110		0.18		49.1		31.5		80.6		21.50			41.14
Horace Mann Educators Corp.	IL		6,080		3,548		643		5.52		10.57		9.87		656		1.44		69.0		24.5		93.5		1.17			10.98
Infinity Property and Casualty	AL		1,970		1,020		613		1.66		31.09		28.35		1,011		1.53		72.1		22.3		94.5		3.18			10.22
IPC Holdings Ltd.	—		2,712		537		2,148		0.25		79.21		79.21		376		0.17		5.9		17.6		23.5		14.49			19.14
Kingsway Financial Services	—		4,545		2,992		894		3.35		19.67		17.58		1,867		1.85		83.5		32.1		115.6		(1.59	)		(7.46	)
Markel Corp.	VA		716		176		537		0.33		75.09	NA		NA		NA		NA		NA		NA		NA			NA
Meadowbrook Insurance Group	MI		10,156		6,527		2,615		2.50		25.75		23.14		2,086		0.79		56.0		35.9		92.0		3.36			13.44
Mercer Insurance Group Inc.	NJ		1,131		706		310		2.28		27.41		23.83		269		1.05		61.7		32.2		93.9		2.63			10.51
Mercury General Corp.	CA		548		369		137		2.70		24.94		24.19		152		1.24		63.4		34.7		98.1		2.65			11.13
Montpelier Re Holdings Ltd	—		4,344		1,989		1,826		1.09		42.04	NA			2,959		1.60		67.1		28.3		95.4		3.94			9.51
National Atlantic Holdings	NJ		3,352		1,131		1,570		0.72		46.83		46.83		555		0.36		54.5		35.2		89.7		6.74			15.20
National Interstate Corp.	OH		442		277		141		1.97		31.78		31.78		168		1.12		92.8		33.7		126.5		(3.12	)		(9.55	)
National Security Group Inc.	AL		999		520		218		2.39		21.83		21.83		265		1.40		61.6		22.7		84.3		4.62			21.02
Navigators Group Inc.	NY		140		73		47		1.53		33.95		33.95		63	NA		NA		NA		NA			4.22			11.85
North Pointe Holdings Corp.	MI		3,182		2,162		677		3.19		21.27		21.07		619		1.06		56.8		32.4		89.2		3.17			15.86
NYMAGIC INC.	NY		1,061		659		249		2.65		23.46		23.46		171		0.62		57.9		41.5		99.4		(2.17	)		(8.51	)
Odyssey Re Holdings Corp	CT		9,799		5,880		2,813		2.09		28.70	NA			2,093		0.85		68.9		29.5		98.4		8.05			30.82

IV-2

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-1 (continued)
Financial Performance Data for Public Property and Casualty Insurance Companies

				Total				Policy		Total		Tang.		LTM		Net Prem.		Qtrly.		Qtrly.		Qtrly.
		Total		Policy		Total		Resrvs./		Equity/		Equity/		Policy		Written/		Loss		Exp.		Comb.		LTM			LTM
		Assets		Reserves		Equity		Equity		Assets		Assets		Revenue		Avg.Eq.		Ratio		Ratio		Ratio		ROA			ROE
Company	State	($Mil.)		($Mil.)		($Mil.)		(x)		(%)		(%)		($Mil.)		(x)		(%)		(%)		(%)		(%)			(%)
Old Republic International	IL		13,250		7,823		4,377		1.79		33.03	NA			3,578	NA			76.6		39.1		115.7		1.12			3.22
OneBeacon Insurance Group Ltd.	—		8,992		5,447		1,613		3.38		17.94	NA			1,860		1.00		66.1		34.0		100.1		1.74			8.96
PartnerRe Ltd.	—		17,291		11,012		4,473		2.46		25.87		23.98		3,845		0.94		61.3		31.0		92.3		4.20			16.25
Philadelphia Consolidated Hldg	PA		4,246		2,366		1,560		1.52		36.74	NA			1,440		1.07		51.0		30.1		81.1		8.19			22.61
Platinum Underwriters Hldgs	—		5,044		2,703		1,929		1.40		38.25		38.25		1,190		0.56		53.1		25.3		78.4		7.56			19.65
PMA Capital Corp.	PA		2,595		1,484		384		3.87		14.78		14.04		370		0.96		70.0		41.5		111.5		(1.47	)		(9.76	)
ProAssurance Corp.	AL		4,474		2,801		1,276		2.20		28.52		27.34		517		0.40		67.7		21.8		89.5		3.79			13.92
ProCentury Corp.	OH		666		393		165		2.38		24.82	NA			212		1.28		57.5		35.9		93.4		3.99			15.86
Progressive Corp.	OH		18,717		10,260		4,750		2.16		25.38		25.38		13,774		2.52		73.3		21.3		94.6		5.36			19.58
Quanta Capital Holdings Ltd.	—		710		378		248		1.52		34.99		34.33		61		0.18		337.4	NA		NA			3.15			10.53
RenaissanceRe Holdings Ltd.	—		8,170		2,660		3,386		0.79		41.44	NA			1,371		0.37		26.6		24.8		51.4		6.65			16.18
RLI Corp.	IL		2,610		1,568		748		2.10		28.65		27.92		542		0.69		50.9		38.3		89.2		6.14			21.68
Safeco Corp.	WA		12,297		7,353		3,332		2.21		27.10	NA			5,592		1.52		64.8		28.2		93.0		5.04			18.02
Safety Insurance Group Inc.	MA		1,451		803		585		1.37		40.31		40.31		606		1.07		63.6		29.5		93.1		5.69			14.84
SCPIE Holdings Inc.	CA		722		465		238		1.95		33.01	NA			120		0.51		65.2		28.7		93.9		2.52			7.86
SeaBright Insurance Hldgs Inc.	WA		777		405		305		1.33		39.29		38.96		236		0.97		52.9		27.6		80.5		5.75			14.47
Selective Insurance Group	NJ		4,970		3,418		1,046		3.27		21.04		20.50		1,519		1.47		66.4		34.0		100.4		2.63			12.46
Specialty UnderwritersAlliance	IL		421		262		136		1.94		32.16		30.39		153		1.11		58.9		48.9		107.8		3.23			10.38
State Auto Financial Corp.	OH		2,425		1,233		882		1.40		36.38		36.33		1,039		1.23		76.8		34.5		111.3		3.25			8.48
Tower Group Inc.	NY		1,366		781		314		2.49		22.99		20.64		294		0.93		54.5		30.4		84.9		3.73			16.06
Transatlantic Holdings Inc.	NY		15,772		9,352		3,381		2.77		21.44		21.44		3,955		1.24		66.4		27.7		94.1		3.30			15.29
Travelers Cos	MN		114,144		75,278		26,388		2.85		23.12		20.22		21,515		0.83		55.7		31.9		87.6		3.89			17.22
Unico American Corp.	CA		193		111		72		1.54		37.20		37.20		36	NA			69.0		23.0		92.0		3.09			8.77
United America Indemnity Ltd.	—		2,728		1,690		842		2.01		30.87		28.06		511		0.53		67.8		33.8		101.6		2.93			10.15
United Fire & Casualty Co.	IA		2,779		1,913		759		2.52		27.32	NA			506		0.68		56.1		30.3		86.4		3.50			13.04
Universal Insurance Hldgs Inc.	FL		559		324		86		3.75		15.46		15.46		150		2.27		36.3	NA		NA			10.03			90.37
Validus Holdings Ltd	—		4,536		1,727		1,991		0.87		43.89		41.96		1,038		0.60		48.0		34.4		82.4		11.87			24.75
W.R. Berkley Corp.	CT		16,835		11,130		3,449		3.23		20.49		19.98		4,633		1.27		60.8		29.4		90.2		4.45			21.02
Wesco Financial Corp.	CA		3,150		194		2,509		0.08		79.66		77.76		67		0.05		59.5		30.6		90.0		3.41			4.29
White Mountains Insurance	NH		19,365		9,792		4,679		2.09		24.16		24.03		3,775		0.80		68.7		32.7		101.4		1.34			5.55
Zenith National Insurance Corp	CA		2,747		1,454		1,100		1.32		40.03		39.57		703		0.65		34.4		40.4		74.8		7.61			20.02

IV-3

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-1 (continued)
Financial Performance Data for Public Property and Casualty Insurance Companies

				Total				Policy		Total		Tang.		LTM		Net Prem.		Qtrly.		Qtrly.		Qtrly.
		Total		Policy		Total		Resrvs./		Equity/		Equity/		Policy		Written/		Loss		Exp.		Comb.		LTM		LTM
		Assets		Reserves		Equity		Equity		Assets		Assets		Revenue		Avg.Eq.		Ratio		Ratio		Ratio		ROA		ROE
Company	State	($Mil.)		($Mil.)		($Mil.)		(x)		(%)		(%)		($Mil.)		(x)		(%)		(%)		(%)		(%)		(%)
Overall P&C Insurance Group Mean			12,007		6,220		3,446		2.10		32.09		30.07		2,243		0.94		61.4		30.8		89.6		4.32		14.75
Overall P&C Insurance Group Median			2,747		1,454		763		1.99		29.05		27.36		514		0.88		59.6		30.5		92.1		4.05		14.14
P&C Group Mean > $1 Bil. Total Assets			15,989		8,511		4,706		2.23		31.27		30.08		3,015		0.87		57.9		31.1		89.0		4.63		15.13
P&C Group Median > $1 Bil. Total Assets			4,474		2,701		1,570		2.09		28.57		26.97		1,146		0.84		59.4		30.5		90.1		4.05		15.00
P&C Group Mean < $1 Bil. Total Assets			620		316		199		1.77		34.18		30.06		176		1.17		71.0		30.1		91.4		3.47		13.72
P&C Group Median < $1 Bil. Total Assets			673		341		177		1.73		32.59		29.37		168		1.12		60.0		29.0		93.9		4.11		11.69
P&C Group Mean > $500 Mil. Total Rev.			19,165		10,282		5,684		2.13		31.87		29.45		3,729		0.94		59.9		29.8		89.7		4.58		15.14
P&C Group Median > $500 Mil. Total Rev.			5,562		3,509		2,234		2.05		28.68		27.13		1,686		0.85		60.8		30.1		92.0		3.94		14.84
P&C Group Mean < $500 Mil. Total Rev.			953		541		268		2.10		32.14		30.86		195		0.96		64.6		32.7		90.5		3.89		14.17
P&C Group Median < $500 Mil. Total Rev.			827		403		239		1.96		30.51		28.43		176		0.96		57.9		32.2		93.9		4.05		12.36

Source: SNL Financial.

IV-4

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-2
Market Valuation Data for Public Property and Casualty Insurance Companies

					Closing		Total		Price/		Price/		Price/		Price/		Price/		Price/		Price/		Current		One-Yr.
					Price		Market		Book		Tang.		LTM		Oper.		Next Yr.		LTM		Total		Div.		Price
					6/02/08		Value		Value		Book		EPS		EPS		Est. EPS		Revenue		Assets		Yield		Change
Company	Ticker	Exchange	State		($)		($Mil.)		(%)		(%)		(x)		(x)		(x)		(x)		(%)		(%)		(%)
21st Century Holding Co.	TCHC	NASDAQ	FL			10.37		82		97.0		97.0		3.35		3.21	NA			0.72		37.83		6.94		(7.16	)
ACE Ltd.	ACE	NYSE	—			59.59		19,842		122.5		147.7		8.93		7.22		7.83		1.46		26.84		1.95		(3.03	)
Affirmative Insurance Holdings	AFFM	NASDAQ	TX			7.35		113		51.5		338.9		9.42	NA			8.17		0.22		12.55		1.09		(52.30	)
Alleghany Corp.	Y	NYSE	NY			363.97		3,036		119.5		130.7		11.36		16.57	NA			2.07		44.47		0.00		1.16
Allied World Assurance Co.	AWH	NYSE	—			45.60		2,227		100.4		101.0		5.53		5.57		6.36		1.54		27.02		1.58		(10.41	)
Allstate Corporation	ALL	NYSE	IL			50.95		28,062		139.8		145.7		8.52		8.68		8.36		0.79		18.44		3.22		(17.26	)
AmCOMP Inc.	AMCP	NASDAQ	FL			11.04		169		102.3		103.1		8.90	NA			11.54		0.70		24.80		0.00		20.26
American Financial Group Inc.	AFG	NYSE	OH			29.88		3,359		111.7		120.1		10.41		7.99		8.52		0.77		12.92		1.67		(17.18	)
American Physicians Capital	ACAP	NASDAQ	MI			47.54		463		179.2	NA			9.57		9.47		10.29		2.62		44.32		0.84		13.87
American Physicians Svc Grp	AMPH	NASDAQ	TX			22.24		159		125.9		127.1		5.08	NA			11.12		1.67		55.88		0.00		32.38
American Safety Ins Hldgs Ltd	ASI	NYSE	—			16.25		172		75.8		78.9		6.61	NA			8.15		0.95		18.48		0.00		(24.42	)
AMERISAFE Inc.	AMSF	NASDAQ	LA			15.77		297		136.1		136.1		5.95		5.31		7.57		0.88		27.24		0.00		(14.29	)
AmTrust Financial Services Inc	AFSI	NASDAQ	NY			14.53		872		220.2		254.0		9.69	NA			7.33		1.55		33.41		1.10		(6.50	)
Arch Capital Group Ltd.	ACGL	NASDAQ	—			70.40		4,512		123.7		124.3		6.12		6.64		6.84		1.31		27.59		0.00		(1.79	)
Argo Group Intl Holdings	AGII	NASDAQ	—			38.29		1,176		82.6		89.7		7.27		12.68		7.72		1.15		23.60		0.00		(16.94	)
Aspen Insurance Holdings Ltd.	AHL	NYSE	—			25.50		2,178		89.5		89.8		5.44		5.64		5.92		1.12		29.01		2.35		(6.70	)
AXIS Capital Holdings Ltd.	AXS	NYSE	—	��		34.78		5,174		116.1		117.6		5.33		5.51		6.71		1.62		33.08		2.13		(11.18	)
Baldwin & Lyons Inc.	BWINB	NASDAQ	IN			21.28		325		87.8		87.8		7.63		12.67		13.57		1.41		39.44		4.70		(17.39	)
Berkshire Hathaway Inc.	BRK.A	NYSE	NE			132,350		204,686		171.7		238.8		17.72		21.89		22.27		1.85		72.83		0.00		21.14
CastlePoint Holdings Ltd.	CPHL	NASDAQ	—			10.74		411		98.0		98.0		11.80	NA			5.00		1.22		37.48		1.86		(31.46	)
Chubb Corp.	CB	NYSE	NJ			53.62		19,597		136.6		141.2		7.58		8.21		9.19		1.40		38.28		2.46		(2.69	)
Cincinnati Financial Corp.	CINF	NASDAQ	OH			34.74		5,668		104.0		104.0		9.68		10.43		12.42		1.44		35.55		4.49		(24.13	)
CNA Surety Corp.	SUR	NYSE	IL			14.50		640		93.0		116.5		6.78		6.74		6.87		1.36		41.60		0.00		(30.49	)
Commerce Group Inc.	CGI	NYSE	MA			36.70		2,211		169.6	NA			16.61		11.19		15.13		1.17		56.25		3.27		6.16
CRM Holdings Ltd.	CRMH	NASDAQ	—			3.39		54		48.8		50.4		2.49	NA			2.93		0.33		13.88		0.00		(56.65	)
Darwin Professional Undrwrtr	DR	NYSE	CT			27.91		475		176.2		184.7		11.39	NA			11.95		2.19		53.50		0.00		17.86
Donegal Group Inc.	DGICA	NASDAQ	PA			17.41		445		124.2		124.3		11.31		11.68		13.17		1.28		51.21		2.41		10.75
Eastern Insurance Holdings Inc	EIHI	NASDAQ	PA			16.06		154		97.8		106.7		9.12		9.79		10.22		1.04		39.46		1.74		7.00
EMC Insurance Group Inc.	EMCI	NASDAQ	IA			27.96		382		107.3		107.5		10.67		10.63		16.49		0.86		32.71		2.58		7.66
Employers Holdings Inc	EIG	NYSE	NV			18.98		938		237.4		237.4		8.22	NA			10.43		2.28		29.50		1.26		(11.31	)
Endurance Specialty Holdings	ENH	NYSE	—			33.39		2,007		92.8		101.8		4.78		4.50		5.67		1.11		25.49		2.99		(15.68	)

IV-5

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-2 (continued)
Market Valuation Data for Public Property and Casualty Insurance Companies

				Closing		Total		Price/		Price/		Price/		Price/		Price/		Price/		Price/		Current		One-Yr.
				Price		Market		Book		Tang.		LTM		Oper.		Next Yr.		LTM		Total		Div.		Price
				6/02/08		Value		Value		Book		EPS		EPS		Est. EPS		Revenue		Assets		Yield		Change
Company	Ticker	Exchange	State	($)		($Mil.)		(%)		(%)		(x)		(x)		(x)		(x)		(%)		(%)		(%)
Enstar Group Ltd.	ESGR	NASDAQ	—		104.67		1,250		269.0		281.9		21.19	NA		NA			15.87		31.29		0.00		(11.30	)
Erie Indemnity Co.	ERIE	NASDAQ	PA		50.15		2,598		293.3		293.3		16.50		14.75		15.47		2.15		91.12		3.51		(10.46	)
Everest Re Group Ltd.	RE	NYSE	—		87.15		5,397		95.8	NA			8.91		7.87		7.18		1.20		29.91		2.20		(18.78	)
Fairfax Financial Holdings Ltd	FFH	NYSE	—		273.00		4,825		107.6		108.9		3.16	NA			9.17		0.58		17.21		1.83		34.51
First Acceptance Corp.	FAC	NYSE	TN		3.57		172		72.7		187.6	NM		NA		NA			0.50		35.28		0.00		(65.20	)
First Mercury Financial Corp.	FMR	NYSE	MI		17.42		318		133.0		191.3		7.81		7.85		6.96		1.56		38.28		0.00		(6.75	)
Flagstone Reinsurance Holdings	FSR	NYSE	—		12.19		1,040		86.6		87.3		6.35	NA			5.65		1.81		46.39		1.31		(7.58	)
FPIC Insurance Group Inc.	FPIC	NASDAQ	FL		45.84		404		135.2		140.3		9.84		9.71		10.51		1.82		37.44		0.00		(2.47	)
GAINSCO INC.	GAN	AMEX	TX		3.65		89		140.8		142.1	NM		NM		NA			0.42		34.98		0.00		(40.65	)
Greenlight Capital Re Ltd	GLRE	NASDAQ	—		19.67		590		119.9		119.9		14.36	NA			5.68		4.19		55.70		0.00		(17.63	)
Hallmark Financial Services	HALL	NASDAQ	TX		11.71		244		131.1		183.8		8.25		8.94		9.41		0.86		46.95		0.00		(9.58	)
Hanover Insurance Group Inc.	THG	NYSE	MA		45.13		2,320		99.8		105.8		9.54		10.26		10.67		0.83		23.91		0.89		(8.22	)
Harleysville Group Inc.	HGIC	NASDAQ	PA		38.70		1,145		151.5		156.3		11.87		11.83		11.37		1.16		34.95		2.58		24.64
HCC Insurance Holdings Inc.	HCC	NYSE	TX		23.61		2,722		107.9		159.6		7.26		7.45		7.50		1.15		33.12		1.86		(29.01	)
Hilltop Holdings Inc.	HTH	NYSE	TX		10.59		598		85.7		90.9		2.14	NA			30.00		3.05		56.11		0.00		(9.41	)
Horace Mann Educators Corp.	HMN	NYSE	IL		16.28		661		102.9		111.1		9.69		8.95		9.36		0.75		10.88		2.58		(27.93	)
Infinity Property and Casualty	IPCC	NASDAQ	AL		40.01		648		105.9		120.7		10.99		10.13		12.44		0.60		32.91		1.10		(26.76	)
IPC Holdings Ltd.	IPCR	NASDAQ	—		28.14		1,508		82.0		82.0		4.86		5.53		6.45		2.78		55.59		3.13		(10.30	)
Kingsway Financial Services	KFS	NYSE	—		9.62		532		59.5		68.2	NM		NM			6.75		0.26		11.69		3.12		(50.00	)
Maiden Holdings	MHLD	NASDAQ	VA		7.49		446		83.0	NA		NA		NA		NA		NA			62.33		0.00	NA
Markel Corp.	MKL	NYSE	MI		407.25		4,047		154.8		178.2		11.91		11.68		15.09		1.70		39.85		0.00		(16.72	)
Meadowbrook Insurance Group	MIG	NYSE	NJ		6.82		252		81.5		98.3		8.52		8.42		6.87		0.74		22.33		1.17		(37.08	)
Mercer Insurance Group Inc.	MIGP	NASDAQ	CA		17.31		114		78.9		82.2		7.69		7.43		7.35		0.68		20.75		1.73		(6.08	)
Mercury General Corp.	MCY	NYSE	—		51.01		2,792		152.9	NA			16.14		12.69		13.46		0.92		64.27		4.55		(9.23	)
Montpelier Re Holdings Ltd	MRH	NYSE	NJ		16.79		1,568		94.5		94.5		6.56		6.38		6.65		2.35		46.77		1.79		(8.75	)
National Atlantic Holdings	NAHC	NASDAQ	OH		6.06		67		47.5		47.5	NM		NA			11.15		0.36		15.10		0.00		(55.01	)
National Interstate Corp.	NATL	NASDAQ	AL		22.91		444		202.6		202.6		10.46	NA			8.38		1.53		44.44		1.05		(7.81	)
National Security Group Inc.	NSEC	NASDAQ	NY		16.67		41		86.6		86.6		7.28		12.44	NA			0.58		29.40		5.40		(10.71	)
Navigators Group Inc.	NAVG	NASDAQ	MI		50.18		843		124.6		126.1		8.62		8.70		8.90		1.21		26.49		0.00		0.42
NYMAGIC INC.	NYM	NYSE	NY		22.13		192		78.8		78.8	NM		NM			14.56		1.39		18.09		1.45		(47.81	)
Odyssey Re Holdings Corp	ORH	NYSE	CT		37.49		2,484		93.0	NA			3.50		12.02		11.75		0.77		25.35		0.67		(12.85	)

IV-6

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-2 (continued)
Market Valuation Data for Public Property and Casualty Insurance Companies

				Closing		Total		Price/		Price/		Price/		Price/		Price/		Price/		Price/		Current		One-Yr.
				Price		Market		Book		Tang.		LTM		Oper.		Next Yr.		LTM		Total		Div.		Price
				6/02/08		Value		Value		Book		EPS		EPS		Est. EPS		Revenue		Assets		Yield		Change
Company	Ticker	Exchange	State	($)		($Mil.)		(%)		(%)		(x)		(x)		(x)		(x)		(%)		(%)		(%)
Old Republic International	ORI	NYSE	IL		14.91		3,437		78.5	NA			24.05		34.67		22.46		0.84		25.94		4.56		(32.47	)
OneBeacon Insurance Group Ltd.	OB	NYSE	—		18.25		441		108.6	NA			11.06		14.60		10.55		0.21		4.91		4.60		(28.29	)
PartnerRe Ltd.	PRE	NYSE	—		73.90		4,011		104.2		116.8		6.54		6.08		7.41		0.93		23.20		2.49		(2.56	)
Philadelphia Consolidated Hldg	PHLY	NASDAQ	PA		37.77		2,698		172.5	NA			8.64		8.93		9.73		1.70		63.54		0.00		(9.45	)
Platinum Underwriters Hldgs	PTP	NYSE	—		35.44		1,734		104.8		104.8		5.84	NA			6.94		1.24		34.38		0.90		2.67
PMA Capital Corp.	PMACA	NASDAQ	PA		10.03		319		83.0		88.2	NM			18.57		14.06		0.70		12.28		0.00		(6.26	)
ProAssurance Corp.	PRA	NYSE	AL		51.02		1,635		128.2		135.9		10.63		10.61		10.45		2.38		36.56		0.00		(10.91	)
ProCentury Corp.	PROS	NASDAQ	OH		17.50		235		142.2	NA			9.56		8.84		11.04		1.01		35.28		0.91		(6.42	)
Progressive Corp.	PGR	NYSE	OH		20.42		13,835		291.3		291.3		13.61		14.59		16.05		0.95		73.92		0.71		(11.98	)
Quanta Capital Holdings Ltd.	QNTA	NASDAQ	—		2.64		185		74.5		76.7		4.98		33.00	NA			1.64		26.08		0.00		29.41
RenaissanceRe Holdings Ltd.	RNR	NYSE	—		52.37		3,378		124.3	NA			7.16		5.31		6.25		2.18		41.35		1.76		(10.40	)
RLI Corp.	RLI	NYSE	IL		51.56		1,115		149.2		154.6		7.24		8.12		12.26		1.69		42.72		1.94		(11.10	)
Safeco Corp.	SAF	NYSE	WA		67.10		6,033		180.9	NA			9.85		10.63		11.43		0.97		49.06		2.38		6.31
Safety Insurance Group Inc.	SAFT	NASDAQ	MA		38.83		631		107.9		107.9		7.66		7.64		9.22		0.94		43.50		4.12		(8.74	)
SCPIE Holdings Inc.	SKP	NYSE	CA		27.62		265		111.0	NA			15.52		15.43	NA			1.86		36.66		0.00		27.99
SeaBright Insurance Hldgs Inc.	SEAB	NASDAQ	WA		15.11		320		104.7		106.1		7.75	NA			7.30		1.21		41.24		0.00		(15.92	)
Selective Insurance Group	SIGI	NASDAQ	NJ		21.58		1,150		110.0		113.7		9.18		10.23		10.04		0.63		23.14		2.41		(21.04	)
Specialty UnderwritersAlliance	SUAI	NASDAQ	IL		4.75		70		54.9		59.6		5.65	NA			9.50		0.43		16.57		0.00		(40.92	)
State Auto Financial Corp.	STFC	NASDAQ	OH		27.49		1,090		123.9		124.2		15.19		16.46		11.38		0.96		44.95		2.18		(13.23	)
Tower Group Inc.	TWGP	NASDAQ	NY		25.06		585		186.1		213.5		12.05	NA			7.76		1.33		42.78		0.80		(21.69	)
Transatlantic Holdings Inc.	TRH	NYSE	NY		63.35		4,197		124.1		124.1		8.54		8.30		9.11		0.95		26.61		1.20		(11.41	)
Travelers Cos	TRV	NYSE	MN		49.28		29,800		113.8		135.1		7.19		7.27		8.19		1.15		26.11		2.44		(9.71	)
Unico American Corp.	UNAM	NASDAQ	CA		9.11		51		71.4		71.4		8.76		8.76	NA			1.03		26.56		0.00		(22.80	)
United America Indemnity Ltd.	INDM	NASDAQ	—		14.23		314		58.7		67.2		6.32		6.27		7.26		0.53		11.50		0.00		(42.94	)
United Fire & Casualty Co.	UFCS	NASDAQ	IA		35.05		956		125.5	NA			9.93		10.40		10.94		1.51		34.39		1.71		(11.96	)
Universal Insurance Hldgs Inc.	UVE	AMEX	FL		3.42		135		148.9		148.9		2.53		2.53	NA			0.72		24.11		0.00		(43.84	)
Validus Holdings Ltd	VR	NYSE	—		21.12		1,568		86.5		93.5	NA		NA			4.36		1.32		34.57		3.79	NA
W.R. Berkley Corp.	WRB	NYSE	CT		27.00		4,549		133.5		137.7		6.99		7.40		7.61		0.82		27.02		0.89		(19.35	)
Wesco Financial Corp.	WSC	AMEX	CA		424.99		3,026		120.7		135.2		28.20	NA		NA			4.72		96.05		0.36		0.00
White Mountains Insurance	WTM	NYSE	NH		463.80		4,902		105.0		105.8		19.36	NA			16.54		1.09		25.32		1.72		(22.70	)
Zenith National Insurance Corp	ZNT	NYSE	CA		40.94		1,522		138.4		141.1		7.23		7.68		9.91		1.85		55.41		4.89		(15.59	)

IV-7

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit IV-2 (continued)
Market Valuation Data for Public Property and Casualty Insurance Companies

				Closing	Total		Price/		Price/		Price/		Price/		Price/		Price/		Price/		Current		One-Yr.
				Price	Market		Book		Tang.		LTM		Oper.		Next Yr.		LTM		Total		Div.		Price
				6/02/08	Value		Value		Book		EPS		EPS		Est. EPS		Revenue		Assets		Yield		Change
Company	Ticker	Exchange	State	($)	($Mil.)		(%)		(%)		(x)		(x)		(x)		(x)		(%)		(%)		(%)
Overall P&C Insurance Group Mean				NA		4,779		120.0		131.4		9.34		10.27		10.05		1.45		35.58		1.50		(12.42	)
Overall P&C Insurance Group Median				NA		938		108.6		117.6		8.62		8.93		9.22		1.16		34.38		1.17		(10.91	)
P&C Group Mean > $1 Bil. Total Assets				NA		6,553		126.8		133.8		9.88		10.10		10.19		1.62		36.24		1.69		(11.92	)
P&C Group Median > $1 Bil. Total Assets				NA		1,635		113.8		120.0		8.91		8.82		9.18		1.21		33.12		1.71		(11.14	)
P&C Group Mean < $1 Bil. Total Assets				NA		206		102.7		125.4		7.80		10.97		9.52		1.00		35.18		1.51		(12.80	)
P&C Group Median < $1 Bil. Total Assets				NA		170		97.4		106.1		7.78		8.94		9.50		0.95		33.90		1.19		(11.01	)
P&C Group Mean > $500 Mil. Total Revenue				NA		7,943		122.5		137.0		9.87		10.25		9.96		1.29		36.53		1.90		(11.68	)
P&C Group Median > $500 Mil. Total Revenue				NA		2,273		110.9		122.4		8.91		8.82		9.17		1.15		33.10		1.85		(10.91	)
P&C Group Mean < $500 Mil. Total Revenue				NA		319		116.5		124.4		8.58		10.57		10.34		1.66		34.08		0.92		(13.46	)
P&C Group Median < $500 Mil. Total Revenue				NA		259		103.5		106.7		8.25		9.21		10.22		1.13		35.28		0.00		(11.01	)

Source: SNL Financial.

IV-8

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit V-1
Pro Forma Assumptions for Conversion Valuation

1.	The initial offering price is $10.00 per share and the number of shares offered is computed by dividing the estimated pro forma market value by the offering price.
2.	The total amount of the net offering proceeds was fully invested at the beginning of the applicable period.
3.	The net offering proceeds are invested to yield a return of 3.34%, which represents the Company estimated average yield on an invested portfolio of short-term investment securities for the relevant period. The effective income tax rate was assumed to be 34.0%, resulting in a net after-tax yield of 2.20%.
4.	It is assumed that 10.0% of the shares offered for sale 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 (“GAAP”), 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 of capital. The annual ESOP expense is estimated based on a ten-year loan period. It is further assumed that the ESOP purchase is funded by a loan from LMI Holdings. 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 investment. The ESOP expense reflects recognition of expense based upon shares committed to be allocated under the ESOP. The valuation of shares committed to be allocated under the ESOP would be based upon the average market value of the shares during the year. For purposes of this calculation, the average market value was assumed to be equal to the initial offering price of $10.00 per share.
5.	Expenses of the offering are estimated to be $2.5 million.
6.	No effect has been given in the pro forma equity calculation for the assumed earnings on the net proceeds.
7.	Pro forma per share amounts have been computed by dividing pro forma amounts by the total outstanding number of shares of stock for the book value calculations, and as adjusted to give effect to the purchase of shares by the ESOP for the earnings per share (“EPS”) calculations 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 during the yearly period are subtracted from total shares outstanding for purposes of EPS calculations.
8.	No effect has been given to the issuance of additional shares in conjunction with the grant of options or restricted stock awards under the stock-based incentive plan that LMI Holdings expects to adopt following the Conversion, subject to stockholder approval.

V-1

FELDMAN FINANCIAL ADVISORS, INC.

Exhibit V-2
Pro Forma Conversion Valuation Range
Lebanon Mutual Insurance Company
Historical Financial Data as of March 31, 2008
(Dollars in Thousands, Except Per Share Data)

	Minimum			Midpoint			Maximum
Shares offered		1,020,000			1,200,000			1,380,000
Offering price	$	10.00		$	10.00		$	10.00
Gross proceeds	$	10,200		$	12,000		$	13,800
Less: estimated expenses		(2,500	)		(2,500	)		(2,500	)
Net offering proceeds		7,700			9,500			11,300
Less: ESOP purchase		(1,020	)		(1,200	)		(1,380	)
Net investable proceeds	$	6,680		$	8,300		$	9,920
Net Income:
LTM ended March 31, 2008	$	400		$	400		$	400
Pro forma income on net proceeds		147			183			219
Pro forma ESOP adjustment		(67	)		(79	)		(91	)
Pro forma net income	$	480		$	504		$	528
Pro forma earnings per share	$	0.52		$	0.46		$	0.42
Operating Income:
LTM ended March 31, 2008	$	427		$	427		$	427
Pro forma income on net proceeds		147			183			219
Pro forma ESOP adjustment		(67	)		(79	)		(91	)
Pro forma operating income	$	507		$	531		$	555
Pro forma operating earnings per share	$	0.55		$	0.49		$	0.44
Total Revenue:
LTM ended March 31, 2008	$	10,095		$	10,095		$	10,095
Pro forma revenue on net proceeds, pre-tax		223			277			331
Pro forma total revenue	$	10,318		$	10,372		$	10,426
Total Equity	$	13,195		$	13,195		$	13,195
Net offering proceeds		7,700			9,500			11,300
Less: ESOP purchase		(1,020	)		(1,200	)		(1,380	)
Pro forma total equity	$	19,875		$	21,495		$	23,115
Pro forma book value per share	$	19.49		$	17.91		$	16.75
Tangible Equity	$	13,195		$	13,195		$	13,195
Net offering proceeds		7,700			9,500			11,300
Less: ESOP purchase		(1,020	)		(1,200	)		(1,380	)
Pro forma tangible equity	$	19,875		$	21,495		$	23,115
Pro forma tangible book value per share	$	19.49		$	17.91		$	16.75
Total Assets	$	28,182		$	28,182		$	28,182
Net offering proceeds		7,700			9,500			11,300
Less: ESOP purchase		(1,020	)		(1,200	)		(1,380	)
Pro forma total assets	$	34,862		$	36,482		$	38,102
Pro Forma Ratios:
Price / LTM EPS		19.23			21.55			23.65
Price / Operating EPS		18.21			20.45			22.50
Price / LTM Revenue		0.99			1.16			1.32
Price / Book Value		51.32	%		55.83	%		59.70	%
Price / Tangible Book Value		51.32	%		55.83	%		59.70	%
Price / Total Assets		29.26	%		32.89	%		36.22	%
Total Equity / Assets		57.01	%		58.92	%		60.67	%
Tangible Equity / Assets		57.01	%		58.92	%		60.67	%

V-2