SECURITIES AND EXCHANGE COMMISSION
     Washington,  D.C.  20549
     FORM  10-K

[X]     ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
     SECURITIES  EXCHANGE  ACT  OF  1934  [FEE  REQUIRED]

For  the  fiscal  year  ended  December  31,  2002.
     OR
[  ]     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
     SECURITIES  EXCHANGE  ACT  OF  1934  [NO  FEE  REQUIRED]

For  the  transition  period  from                    to
                                   ------------------     ----------------
Commission  file  number  0-14697

                     HARLEYSVILLE  GROUP  INC.
     -------------------------------------------------------
     (Exact  name  of  registrant  as  specified  in  its  charter)

            Delaware                                    51-0241172
-------------------------------                    --------------------
(State  or  other  jurisdiction  of                 (I.R.S.  Employer
 incorporation  or  organization)                   Identification  No.)

   355  Maple  Avenue,  Harleysville,  PA              19438-2297
----------------------------------------               ----------
(Address  of  principal  executive  offices)           (Zip  Code)

Registrant's  telephone  number,  including  area  code:  (215)  256-5000

Securities  registered  pursuant  to  Section  12(b)  of  the  Act:  None

Securities  registered  pursuant  to  Section  12(g)  of  the  Act:

                  Common  Stock,  $1  par  value
                  ------------------------------
                       (Title  of  class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the Registrant was
required  to  file  such  reports)  and  (2)  has  been  subject  to such filing
requirements  for  the  past  90  days.  Yes   X.    No      .
                                             -----       -----

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K  [X].

Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Act).  Yes   X.     No      .
                                              -----       ------

On  June  28,  2002,  the  last  business  day of the Registrant's most recently
completed  second  fiscal  quarter,  the  aggregate  market  value (based on the
closing  sales price on that date) of the voting stock held by non-affiliates of
the  Registrant  was  $378,044,925.

Indicate the number of shares outstanding of each of the Registrant's classes of
common  stock,  as  of  the latest practicable date: 30,064,517 shares of Common
Stock  outstanding  on  March  5,  2003.

     DOCUMENTS  INCORPORATED  BY  REFERENCE:
1.     Portions of the Registrant's annual report to stockholders for the fiscal
year ended December 31, 2002 are incorporated by reference in Parts I, II and IV
of  this  report.

2.     Portions  of  the  Registrant's  proxy  statement  relating to the annual
meeting  of stockholders to be held April 23, 2003 are incorporated by reference
in  Parts  I  and  III  of  this  report.

Page

<PAGE>


     HARLEYSVILLE  GROUP  INC.
     ANNUAL  REPORT  ON  FORM  10-K

     DECEMBER  31,  2002

             PART  I                                                Page
             ------                                                 ----
ITEM   1.    BUSINESS                                                  3

ITEM   2.    PROPERTIES                                               27

ITEM   3.    LEGAL  PROCEEDINGS                                       27

ITEM   4.    SUBMISSION  OF  MATTERS  TO  A  VOTE
             OF  SECURITY  HOLDERS                                    27

             PART  II
             -------
ITEM   5.    MARKET  FOR  REGISTRANT'S  COMMON  STOCKD
             AND  RELATED  STOCKHOLDER  MATTERS                       28

ITEM   6.    SELECTED  FINANCIAL  DATA                                28

ITEM   7.    MANAGEMENT'S  DISCUSSION  AND  ANALYSIS
             OF  FINANCIAL  CONDITION  AND  RESULTS
             OF  OPERATIONS                                           28

ITEM   7A.   QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES
             ABOUT  MARKET  RISK                                      28

ITEM   8.    FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY
             DATA                                                     28

ITEM   9.    CHANGES  IN  AND  DISAGREEMENTS  WITH
             ACCOUNTANTS  ON  ACCOUNTING  AND
             FINANCIAL  DISCLOSURE                                    28

             PART  III
             --------
ITEM   10.   DIRECTORS  AND  EXECUTIVE  OFFICERS  OF
             THE  REGISTRANT                                          29

ITEM   11.   EXECUTIVE  COMPENSATION                                  29

ITEM   12.   SECURITY  OWNERSHIP  OF  CERTAIN
             BENEFICIAL  OWNERS  AND  MANAGEMENT                      29

ITEM   13.   CERTAIN  RELATIONSHIPS  AND  RELATED
             TRANSACTIONS                                             29

ITEM   14.   CONTROLS  AND  PROCEDURES                                29

             PART  IV
             -------
ITEM   15.   EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES
             AND  REPORTS  ON  FORM  8-K                              31

Page  2

<PAGE>


     PART  I

ITEM  1.    BUSINESS.
-------     --------

     General

     Harleysville  Group  Inc.  (the  "Company") is an insurance holding company
headquartered  in  Pennsylvania  which engages, through its subsidiaries, in the
property  and  casualty insurance business on a regional basis.  As used herein,
"Harleysville  Group"  refers  to  Harleysville Group Inc. and its subsidiaries.

     The  Company  is  a  Delaware  corporation  formed  by  Harleysville Mutual
Insurance  Company  (the "Mutual Company") in 1979 as a wholly-owned subsidiary.
In  May  1986,  the  Company  completed an initial public offering of its common
stock, reducing the percentage of outstanding shares owned by the Mutual Company
to  approximately  70%.  In April 1992, the Mutual Company completed a secondary
public  offering  of  a  portion of the Company's common stock then owned by it,
further  reducing  the  percentage  of  outstanding  shares  owned by the Mutual
Company.  At  December  31,  2002, the Mutual Company owned approximately 56% of
the  Company's  outstanding  shares.

     Harleysville  Group and the Mutual Company operate together as a network of
regional  insurance  companies  that  underwrite  a  broad  line of personal and
commercial  coverages.  These  insurance coverages are marketed primarily in the
eastern  and  midwestern  United  States  through  approximately 1,700 insurance
agencies.  Regional  offices  are  maintained  in  Georgia,  Indiana,  Maryland,
Massachusetts,  Michigan,  Minnesota,  New  Jersey,  New  York,  North Carolina,
Pennsylvania,  Tennessee,  and  Virginia.  The  Company's  property and casualty
insurance  subsidiaries  are:  Harleysville-Atlantic  Insurance  Company
("Atlantic"),  Harleysville  Insurance  Company  ("HIC"), Harleysville Insurance
Company  of New Jersey ("HNJ"), Harleysville Insurance Company of New York ("HIC
New  York"),  Harleysville  Insurance Company of Ohio ("HIC Ohio"), Harleysville
Lake  States Insurance Company ("Lake States"), Harleysville Preferred Insurance
Company  ("Preferred"),  Harleysville Worcester Insurance Company ("Worcester"),
and  Mid-America  Insurance  Company.

     The Company has followed a regional strategy.  Management believes that the
Company's  regional organization permits each regional operation to benefit from
economies  of  scale  provided  by  centralized  support while encouraging local
marketing  autonomy  and  managerial  entrepreneurship.  Services which directly
involve  the  insured  or  the  agent (i.e., underwriting, claims and marketing)

Page  3

<PAGE>


generally  are performed regionally in accordance with Company-wide standards to
promote  high  quality  service,  while  actuarial,  investment,  legal,  data
processing  and similar services are performed centrally.  The Company's network
of  regional insurance companies has expanded significantly in the last eighteen
years.  In 1983, the Company acquired Worcester, a property and casualty insurer
which  has conducted business in New England since 1823. In 1984, HNJ was formed
by  the  Company  and  began underwriting property and casualty insurance in New
Jersey.  In 1987, the Company acquired Atlantic, a property and casualty insurer
which  has  conducted business in the southeastern United States since 1905.  In
1991,  the  Company  acquired  Mid-America  (formerly  named  Connecticut  Union
Insurance  Company),  which conducted business in Connecticut, and HIC New York,
which conducts business in upstate New York.  In 1993, the Company acquired Lake
States,  which  primarily  conducts  business in Michigan.  In 1994, the Company
formed  HIC  Ohio  which  began  underwriting property and casualty insurance in
Ohio.  In  1997,  the Company acquired HIC, which primarily conducts business in
Minnesota  and  neighboring  states.

     The  Company's  property  and  casualty  subsidiaries  participate  in  an
intercompany  pooling  arrangement whereby these subsidiaries cede to the Mutual
Company  all  of their net premiums written and assume from the Mutual Company a
portion  of  the pooled business, which includes substantially all of the Mutual
Company's  property  and  casualty  insurance business.  See "Business - Pooling
Arrangement."


     BUSINESS  SEGMENTS.

     Harleysville  Group  has three segments which consist of the personal lines
of  insurance,  the  commercial  lines of insurance and the investment function.
Financial  information about these segments is set forth in Note 14 of the Notes
to  Consolidated  Financial  Statements.


     NARRATIVE  DESCRIPTION  OF  BUSINESS.

PROPERTY  AND  CASUALTY  UNDERWRITING

     Harleysville  Group and the Mutual Company together underwrite a broad line
of  personal  and  commercial  property  and  casualty  coverages,  including
automobile,  homeowners,  commercial  multi-peril and workers compensation.  The
Mutual  Company  and  the  Company's  insurance  subsidiaries  participate in an
intercompany  pooling  arrangement  under which such subsidiaries and the Mutual
Company  combine  their  property  and  casualty  business.

Page  4

<PAGE>


     Harleysville  Group  and  the  Mutual  Company  have a pooled rating of "A"
(excellent)  by  A.M.  Best  Company,  Inc. ("Best's") based upon 2001 statutory
results  and  operating  performance.  Best's  ratings  are  based  upon factors
relevant  to  policyholders  and  are  not  directed  toward  the  protection of
investors.  Management believes that the Best's rating is an important factor in
marketing  Harleysville  Group's  products  to  its  agents  and  customers.

     The  following  table  sets  forth  ratios  for  the Company's property and
casualty  subsidiaries,  prepared  in  accordance  with  accounting  principles
generally  accepted  in the United States of America ("GAAP") and with statutory
accounting  practices  ("SAP")  prescribed  or  permitted  by  state  insurance
authorities.  The statutory combined ratio is a standard measure of underwriting
profitability.  This  ratio  is  the sum of (i) the ratio of incurred losses and
loss settlement expenses to net earned premium ("loss ratio"); (ii) the ratio of
expenses  incurred  for  commissions,  premium  taxes,  administrative and other
underwriting  expenses  to  net written premium ("expense ratio"); and (iii) the
ratio  of  dividends  to policyholders to net earned premium ("dividend ratio").
The GAAP combined ratio is calculated in the same manner except that it is based
on  GAAP  amounts  and the denominator for each component is net earned premium.
When  the  combined  ratio  is  under  100%,  underwriting results are generally
considered  profitable.  Conversely,  when  the  combined  ratio  is  over 100%,
underwriting  results are generally considered unprofitable.  The combined ratio
does  not reflect investment income, federal income taxes or other non-operating
income  or expense.  Harleysville Group's operating income is a function of both
underwriting  results  and  investment  income.

Page  5

<PAGE>



                        HARLEYSVILLE GROUP BUSINESS ONLY
<TABLE>

<CAPTION>




                                   YEAR ENDED DECEMBER 31,
                                  -------------------------
                                   2002     2001     2000
                                  ------   ------   ------
<S>                               <C>      <C>      <C>
GAAP combined ratio               102.2%   104.7%   106.2%
                                  =====    =====    =====
Statutory operating ratios:
  Loss ratio                       68.2%    71.2%    71.7%
  Expense and dividend ratios      33.7%    33.0%    34.4%
                                  -----    -----    -----
  Statutory combined ratio        101.9%   104.2%   106.1%
                                  =====    =====    =====
</TABLE>

     The following table sets forth the net written premiums and combined ratios
by line of insurance, prepared in accordance with statutory accounting practices
prescribed  or  permitted by state insurance authorities, for Harleysville Group
for  the  periods  indicated:

     HARLEYSVILLE  GROUP  BUSINESS  ONLY
<TABLE>
<CAPTION>



                                    YEAR ENDED DECEMBER 31,
                               ---------------------------------
                                 2002         2001        2000
                               --------     --------    --------
                                     (dollars in thousands)
<S>                             <C>         <C>         <C>
NET PREMIUMS WRITTEN
--------------------
  Commercial:
    Automobile                  $199,511    $171,106    $142,589
    Workers compensation         114,565     117,583     108,473
    Commercial multi-peril       224,709     183,216     159,679
    Other commercial              57,272      43,955      35,978
                                --------    --------    --------
      Total commercial           596,057     515,860     446,719
                                --------    --------    --------

  Personal:
    Automobile                   125,593     151,270     168,116
    Homeowners                    67,831      70,679      75,551
    Other personal                 8,369       9,778      11,086
                                --------    --------    --------

      Total personal             201,793     231,727     254,753
                                --------    --------    --------

       Total Harleysville
        Group Business          $797,850    $747,587    $701,472
                                ========    ========    ========

COMBINED RATIOS
---------------
  Commercial:
    Automobile                      91.6%       96.6%      106.9%
    Workers compensation           127.4%      105.7%      102.2%
    Commercial multi-peril          93.7%      100.2%      105.8%
    Other commercial                86.3%       95.5%       95.2%
      Total commercial              99.5%      100.0%      104.5%
  Personal:
    Automobile                     115.8%      112.8%      106.0%
    Homeowners                      97.6%      117.8%      117.4%
    Other personal                  74.1%       85.2%       91.2%
      Total personal               108.1%      113.1%      108.7%
       Total Harleysville
         Group Business            101.9%      104.2%      106.1%
</TABLE>


Page  6

<PAGE>


POOLING  ARRANGEMENT

     The  Company's  property  and  casualty  subsidiaries  participate  in  an
intercompany  pooling arrangement with the Mutual Company. The underwriting pool
is  intended  to produce a more uniform and stable underwriting result from year
to  year  for  all companies in the pool than they would experience individually
and  to reduce the risk of loss of any of the pool participants by spreading the
risk  among all the participants.  Each company participating in the pool has at
its  disposal  the  capacity  of  the  entire pool, rather than being limited to
policy  exposures  of a size commensurate with its own capital and surplus.  The
additional  capacity  exists  because such policy exposures are spread among all
the  pool participants which each have their own capital and surplus. Regulation
is  applied  to  the  individual  companies  rather  than  to  the  pool.

     Pursuant  to  the  terms  of the pooling agreement with the Mutual Company,
each  of  the  Company's  subsidiary  participants  cedes  premiums,  losses and
expenses on all of its business to the Mutual Company which, in turn, retrocedes
to such subsidiaries a specified portion of premiums, losses and expenses of the
Mutual  Company  and  such  subsidiaries.  Under  the  terms of the intercompany
pooling  agreement  which  became  effective  January 1, 1986, Preferred and HNJ
ceded  to the Mutual Company all of their insurance business written on or after
January  1,  1986.  All  of the Mutual Company's property and casualty insurance
business  written  or in force on or after January 1, 1986, was also included in
the pooled business.  The pooling agreement provides, however, that Harleysville
Group  is  not  liable  for  any losses occurring prior to January 1, 1986.  The
pooling agreement does not legally discharge Harleysville Group from its primary
liability  for  the  full  amount  of the policies ceded.  However, it makes the
Mutual Company liable to Harleysville Group to the extent of the business ceded.

     The  following  table  sets  forth  a  chronology  of the changes that have
occurred  in the pooling agreement since it became effective on January 1, 1986.

Page  7
<PAGE>



<TABLE>
<CAPTION>



           CHRONOLOGY OF CHANGES IN POOLING AGREEMENT

                     HARLEYSVILLE    MUTUAL
                     GROUP           COMPANY
     DATE            PERCENTAGE      PERCENTAGE        EVENT
---------------     ------------     ----------     --------------
<S>                 <C>              <C>            <C>
January 1, 1986     30%              70%            Current pooling agreement began
                                                    with Preferred and HNJ as
                                                    participants with the Mutual
                                                    Company.

July 1, 1987        35%              65%            Atlantic acquired and included
                                                    in the pool.

January 1, 1989     50%              50%            Worcester included in the pool.

January 1, 1991     60%              40%            HIC New York and Mid-America
                                                    acquired and included in the pool
                                                    and the Mutual Company formed
                                                    Pennland (not a pool participant)
                                                    to write Pennsylvania personal
                                                    automobile business.

January 1, 1996     65%              35%            Pennland included in the pool.

January 1, 1997     70%              30%            Lake States included in the pool.

January 1, 1998     72%              28%            HIC included in the pool.
</TABLE>

     Effective  as  of  January  1,  1992,  Harleysville-Garden  State Insurance
Company  (Garden  State), a subsidiary of the Mutual Company, began insuring new
and  renewal  New  Jersey  personal  automobile insurance policies that had been
included  in  the pooling arrangement.  Garden State is not a participant in the
pooling  arrangement.

     When  pool participation percentages increased as described above, cash and
investments  equal  to  the  net  increase  in liabilities assumed less a ceding
commission  related  to the net increase in the liability for unearned premiums,
was transferred from the Mutual Company to Harleysville Group.  See Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of Operations.

     All  premiums,  losses,  loss  settlement  expenses  and other underwriting
expenses  are prorated among the parties to the pooling arrangement on the basis
of  their participation in the pool.  The method of establishing reserves is set
forth  under  "Business  -  Reserves."  The  pooling agreement may be amended or
terminated  by  agreement of the parties.  Termination may occur only at the end
of  a  calendar  year.  The  Boards  of  Directors of the Company and the Mutual
Company  maintain a coordinating committee which reviews and evaluates, and when
changes  are warranted, approve the pooling arrangements between the Company and
the  Mutual  Company.  See  "Business-Relationship with the Mutual Company."  In
evaluating  pool  participation  changes,  the

Page  8

<PAGE>


coordinating committee considers current and proposed acquisitions, the relative
capital positions and revenue contributions of the pool participants, and growth
prospects  and  ability  to  access  capital  markets  to  support  that growth.
Harleysville Group does not intend to terminate its participation in the pooling
agreement.

     The following table sets forth the net premiums written and combined ratios
by  line  of  insurance  for  the  total  pooled  business  after elimination of
management  fees,  prepared  in  accordance  with statutory accounting practices
prescribed  or  permitted  by  state  insurance  authorities,  for  the  periods
indicated.

                         TOTAL  POOLED  BUSINESS
<TABLE>
<CAPTION>



                                       YEAR ENDED DECEMBER 31,
                                -----------------------------------
                                   2002          2001         2000
                                ----------    ----------    --------
                                       (dollars in thousands)
NET PREMIUMS WRITTEN
--------------------
<S>                             <C>           <C>           <C>
  Commercial:
    Automobile                  $  277,807    $  238,262    $198,579
    Workers compensation           159,118       163,310     150,657
    Commercial multi-peril         317,657       259,082     225,960
    Other                           81,152        62,324      51,154
                                ----------    ----------    --------
      Total commercial             835,734       722,978     626,350
                                ----------    ----------    --------

  Personal:
    Automobile                     175,076       210,834     234,347
    Homeowners                      96,504       100,685     107,632
    Other                           11,631        13,588      15,406
                                ----------    ----------    --------

      Total personal               283,211       325,107     357,385
                                ----------    ----------    --------


        Total pooled business   $1,118,945    $1,048,085    $983,735
                                ==========    ==========    ========

COMBINED RATIOS (1)
---------------
  Commercial:
    Automobile                        91.4%         96.7%      107.3%
    Workers compensation             127.9%        105.5%      102.8%
    Commercial multi-peril            91.9%         99.1%      104.6%
    Other                             84.5%         94.4%       93.3%
      Total commercial                98.6%         99.5%      104.2%

  Personal:
    Automobile                        115.8%       113.2%      106.2%
    Homeowners                         95.6%       121.9%      117.4%
    Other                              73.9%        85.3%       91.2%
      Total personal                  107.3%       114.7%      108.9%

        Total pooled business         101.0%       104.4%      105.9%
</TABLE>


----------------
(1)  See  the  definition  of  combined ratio in "Business-Property and Casualty
Underwriting".

Page  9

<PAGE>


     The  combined ratio for the total pooled business differs from Harleysville
Group's  combined  ratio  primarily  because  of  the  effect  of  the aggregate
catastrophe reinsurance agreement with the Mutual Company.  See Note 2(a) of the
Notes  to  Consolidated  Financial  Statements  and  Business-Reinsurance.

     RESERVES.  Loss reserves are estimates at a given point in time of what the
insurer expects to pay to claimants for claims occurring on or before such point
in  time, including claims which have been incurred but not yet been reported to
the  insurer.  These  are  estimates,  and  it can be expected that the ultimate
liability  will  exceed  or  be  less  than  such  estimates.  During  the  loss
settlement  period,  additional  facts  regarding  individual  claims may become
known,  and  consequently  it  often  becomes necessary to refine and adjust the
estimates  of  liability.

     Harleysville  Group maintains reserves for estimates of the ultimate unpaid
cost  of  all  losses  incurred,  including  losses  for  claims which have been
incurred  but have not yet been reported to Harleysville Group.  Loss settlement
expense  reserves  are  intended  to  cover  the  ultimate costs of settling all
claims,  including  investigation  and litigation costs relating to such claims.
The  amount  of  loss  reserves  for  reported  claims is based primarily upon a
case-by-case  evaluation  of  the  type  of  risk  involved and knowledge of the
circumstances  surrounding  each  claim  and  the  insurance  policy  provisions
relating  to  the  type  of  loss. The amounts of loss reserves for incurred but
unreported  claims and loss settlement expense reserves are determined utilizing
historical  information  by line of insurance as adjusted to current conditions.
Inflation  is implicitly provided for in the reserving function through analysis
of  costs,  trends  and  reviews  of historical reserving results.  Reserves are
closely  monitored  and  are  recomputed  periodically  using  the  most  recent
information  on reported claims and a variety of actuarial techniques.  With the
exception of reserves relating to some workers compensation long-term disability
cases,  loss  reserves  are  not  discounted.

Page  10

<PAGE>


     The following table sets forth a reconciliation of beginning and ending net
reserves  for unpaid losses and loss settlement expenses for the years indicated
for  the  total  pooled  business  on  a  statutory  basis.



                           TOTAL  POOLED  BUSINESS
<TABLE>
<CAPTION>



                                            YEAR ENDED DECEMBER 31,
                                 ----------------------------------------
                                    2002           2001           2000
                                 -----------    -----------    ----------
                                               (in thousands)
<S>                              <C>            <C>            <C>
Reserves for losses
  and loss settlement
  expenses, beginning
  of the year                    $1,147,517     $1,136,848     $1,181,066
                                 ----------     ----------     ----------
Incurred losses and loss
  settlement expenses:
    Provision for insured
      events of the current
      year                          730,924        756,289        759,471
    Decrease in provision
      for insured events of
      prior years                    (3,816)       (22,444)       (65,319)
                                 ----------     ----------     ----------

        Total incurred
         losses and loss
         settlement expenses        727,108        733,845        694,152
                                 ----------     ----------     ----------

Payments:
  Losses and loss
    settlement expenses
    attributable to
    insured events of
    the current year                277,603        327,615        346,846
  Losses and loss
    settlement expenses
    attributable to
    insured events of
    prior years                     372,642        395,561        391,524
                                 ----------     ----------     ----------

        Total payments              650,245        723,176        738,370
                                 ----------     ----------     ----------

Reserves for losses and
  loss settlement expenses,
  end of the year                $1,224,380     $1,147,517     $1,136,848
                                 ==========     ==========     ==========

</TABLE>


Page  11

<PAGE>



     The  following  table sets forth the development of net reserves for unpaid
losses  and  loss  settlement  expenses  from  1992  through 2002 for the pooled
business  of  the  Mutual  Company  and Harleysville Group on a statutory basis.
"Reserve  for  losses  and  loss  settlement  expenses" sets forth the estimated
liability for unpaid losses and loss settlement expenses recorded at the balance
sheet  date  for  each  of  the  indicated years.  This liability represents the
estimated  amount  of  losses and loss settlement expenses for claims arising in
the  current  and  all  prior  years  that are unpaid at the balance sheet date,
including  losses  incurred  but  not  reported.

     The  "Reserves  reestimated"  portion  of  the  table shows the reestimated
amount  of  the  previously  recorded  liability  based  on  experience  of each
succeeding  year.  The  estimate  is increased or decreased as payments are made
and  more  information  becomes  known  about  the  severity of remaining unpaid
claims.  For  example,  the  1992 liability has developed a redundancy after ten
years,  in  that reestimated losses and loss settlement expenses are expected to
be  lower  than  the  initial  estimated liability established in 1992 of $784.5
million  by  $33.5  million,  or  4.3%.

     The  "Cumulative  amount  of  reserves paid" portion of the table shows the
cumulative  losses and loss settlement expense payments made in succeeding years
for  losses  incurred  prior  to  the balance sheet date.  For example, the 1992
column indicates that as of December 31, 2002, payments of $691.1 million of the
currently reestimated ultimate liability for losses and loss settlement expenses
had  been  made.

     The  "Redundancy"  portion  of the table shows the cumulative redundancy at
December  31,  2002  of  the  reserve  estimate  shown  on  the  top line of the
corresponding  column.  A redundancy in reserves means that reserves established
in  prior  years  exceeded  actual  losses  and loss settlement expenses or were
reevaluated  at  less  than  the  original  reserved  amount.

     The  following  table  includes  all  2002 pool participants as if they had
participated  in  the  pooling  arrangement  in  all  years indicated except for
acquired  pool  participant  companies,  which  are  included from their date of
acquisition.  Under  the terms of the pooling arrangement, Harleysville Group is
not  responsible for losses on the pooled business occurring prior to January 1,
1986.

Page  12

<PAGE>



<TABLE>
<CAPTION>




                                                TOTAL POOLED BUSINESS

                                               YEAR ENDED DECEMBER 31,

           1992      1993      1994      1995      1996      1997        1998        1999        2000        2001        2002
                                                (dollars in thousands)

<S>        <C>       <C>       <C>      <C>      <C>         <C>         <C>         <C>         <C>         <C>        <C>
Reserve for
 losses and
 loss
 settlement
 expenses  $784,514  $825,028  $855,305 $900,336 $1,033,376  $1,124,910  $1,172,664  $1,181,066  $1,136,848  $1,147,517 $1,224,380
Reserves
reestimated:
One year
 later      781,746   819,494   837,255  856,493    995,656   1,068,687   1,090,640   1,115,747   1,114,404   1,143,701
Two years
 later      778,064   802,213   817,330  820,894    961,228   1,005,208   1,042,183   1,097,544   1,124,881
Three years
 later      774,420   800,129   800,365  799,191    918,006     972,318   1,027,968   1,106,107
Four years
 later      776,687   792,901   790,234  768,704    894,015     961,721   1,028,927
Five years
 later      770,420   786,731   768,815  748,667    887,697     962,861
Six years
 later      767,777   771,015   753,928  743,859    890,713
Seven years
 later      756,912   759,080   750,226  747,954
Eight years
 later      749,287   755,744   753,753
Nine years
 later      746,889   760,274
Ten years
 later      750,994

Cumulative
 amount of
 reserves paid:
One year
 later      244,210   255,078   246,935  273,744    328,691     338,377     358,526     391,524     395,561     372,642
Two years
 later      402,394   403,601   406,944  448,497    523,307     540,522     562,908     609,016     609,777
Three years
 later      503,309   511,281   525,840  566,804    656,234     674,740     695,315     753,893
Four years
 later      572,656   587,900   599,336  643,451    741,013     756,502     777,204
Five years
 later      616,940   629,908   645,271  690,301    790,902     801,602
Six years
 later      639,186   657,570   677,668  720,664    821,164
Seven years
 later      656,913   677,123   698,652  740,151
Eight years
 later      671,091   691,518   712,800
Nine years
 later      682,514   702,435
Ten years
 later      691,098

Redundancy   33,520    64,754   101,552  152,382    142,663     162,049     143,737      74,959      11,967       3,816
Redundancy
 expressed
 as a percent
 of year end
 reserves       4.3%      7.8%     11.9%    16.9%      13.8%       14.4%       12.3%        6.3%        1.1%        0.3%
Cumulative
 redundancy
 excluding
 pre-1986
 reserve
 develop-
 ment(1)     58,819    89,026   124,163  171,452    156,988     171,463     150,664      80,354      14,975       5,997


</TABLE>

(1)  Excludes years not included in pooling arrangement with Harleysville Group.


Page  13

<PAGE>


     Harleysville  Group's reserves primarily are derived from those established
for  the total pooled business.  The terms of the pooling agreement provide that
Harleysville  Group  is  responsible only for pooled losses incurred on or after
the  effective  date,  January  1,  1986.  The  GAAP  loss reserve experience of
Harleysville  Group,  as  reflected in its financial statements, is shown in the
following  table  which  sets forth a reconciliation of beginning and ending net
reserves  for unpaid losses and loss settlement expenses for the years indicated
for  the  business  of  Harleysville  Group  only.


                HARLEYSVILLE  GROUP  BUSINESS  ONLY
<TABLE>
<CAPTION>



                                      Year Ended December 31,
                                  --------------------------------
                                    2002        2001        2000
                                  --------    --------    --------
                                           (in thousands)
<S>                               <C>         <C>         <C>
Reserves for losses and
  loss settlement expenses,
  beginning of the year           $800,861    $792,584    $823,914
                                  --------    --------    --------
Incurred losses and loss
  settlement expenses:
    Provision for insured
      events of the current
      year                         526,265     537,172     541,738
    Decrease in provision
      for insured events of
      prior years                   (4,648)    (17,350)    (48,937)
                                  --------    --------    --------

        Total incurred losses
          and loss settlement
          expenses                 521,617     519,822     492,801
                                  --------    --------    --------

Payments:
  Losses and loss settlement
    expenses attributable to
    insured events of the
    current year                   199,874     229,435     244,978
  Losses and loss settlement
    expenses attributable to
    insured events of prior
    years                          265,422     282,110     279,153
                                  --------    --------    --------

        Total payments             465,296     511,545     524,131
                                  --------    --------    --------

Reserves for losses and loss
  settlement expenses, end
  of the year                     $857,182    $800,861    $792,584
                                  ========    ========    ========

</TABLE>



     See  page  16  for  reconciliation  of  net  reserves  to  gross  reserves.


Page  14

<PAGE>


     Harleysville  Group  recognized  a  decrease  in  the provision for insured
events  of  prior years (favorable development) of $4.6, $17.4 and $48.9 million
in  2002,  2001,  and  2000,  respectively.  The  favorable development for 2002
primarily  relates  to  lower-than-expected claim severity in the commercial and
personal  lines  of  business.  The  favorable  development  for  2001 primarily
relates  to  lower-than-expected  loss  adjusting  expenses  and,  for  2000,
lower-than-expected  claim  severity  in  the  commercial  and personal lines of
business.  The  2001  and  2000 favorable development includes $14.8 million and
$20.2  million  of  reductions in loss settlement expenses.  In both years, such
reductions are related to benefits from initiatives to reduce costs of adjusting
claims  and  to  the  favorable  development  on  losses.

     The  following  table sets forth the development of net reserves for unpaid
losses  and  loss  settlement  expenses  for  Harleysville Group.  The effect of
changes  to the pooling agreement participation is reflected in this table.  For
example,  the  January  1,  1996  increase  in  Harleysville  Group's  pooling
participation from 60% to 65% is reflected in the first line of the 1996 column.
Amounts  of  assets  equal  to  increases  in net liabilities was transferred to
Harleysville  Group  from the Mutual Company in conjunction with each respective
pooling  change.  The  amount  of the assets transferred has been netted against
and  has  reduced  the  cumulative  amounts  paid for years prior to the pooling
changes.  For  example,  the  1995  column of the "Cumulative amount of reserves
paid"  portion  of the table reflects the assets transferred in conjunction with
the 1996 increase in the pooling percentage from 60% to 65% as a decrease netted
in the "one year later" line.  The cumulative amounts paid are reflected in this
manner  to maintain comparability.  This is because when Harleysville Group pays
claims subsequent to the date of a pool participation increase, the amounts paid
are greater, however, the prior year's reserve amounts are reflective of a lower
pool participation percentage.  By reflecting pooling participation increases in
this  manner,  loss  development  is  not  obscured.  Loss  development reflects
Harleysville  Group's  share of the total pooled business loss development since
January  1,  1986  when  Harleysville  Group  began  participation,  plus  loss
development  of  any  subsidiary  not  participating  in  the pooling agreement.

     Loss  development information for the total pooled business is presented on
pages  12  to  14  to provide greater analysis of underlying claims development.

Page  15

<PAGE>


<TABLE>
<CAPTION>




                                                       HARLEYSVILLE GROUP BUSINESS

                                                          YEAR ENDED DECEMBER 31,

                1992      1993      1994      1995      1996      1997      1998      1999      2000      2001      2002
                                                          (dollars in thousands)
<S>             <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Reserve for
 losses
 and loss
 settlement
 expenses       $437,883  $499,272  $535,452  $576,653  $718,700  $793,563  $813,519  $823,914  $792,584  $800,861  $857,182
Reserves
 reestimated:
One year
 later           438,135   496,057   524,565   541,654   688,972   750,956   753,987   774,977   775,234   796,213
Two years
 later           435,005   483,635   507,090   513,555   662,393   704,157   717,324   761,234   781,117
Three years
 later           430,728   477,164   491,919   496,138   630,170   678,757   706,491   765,816
Four years
 later           429,125   468,804   482,834   473,084   611,179   670,534   705,615
Five years
 later           421,408   462,571   466,309   456,940   606,037   669,789
Six years
 later           417,715   450,152   453,934   452,885   606,642
Seven years
 later           408,789   439,842   450,675   454,267
Eight years
 later           401,582   436,846   451,648
Nine years
 later           399,261   438,538
Ten years
 later           400,647

Cumulative
 amount
 of reserves
 paid:
One year
 later           144,465   161,557   164,849   105,774   200,907   228,622   252,972   279,153   282,110   265,422
Two years
 later           234,991   254,840   219,225   204,030   330,158   371,624   397,685   433,901   434,579
Three years
 later           292,381   290,667   283,816   281,546   423,337   465,897   491,274   536,547
Four years
 later           314,848   329,830   330,705   334,204   482,016   523,050   548,696
Five years
 later           335,411   355,338   361,250   365,574   516,221   553,984
Six years
 later           347,731   372,727   382,214   385,720   536,473
Seven years
 later           357,966   384,443   395,607   398,214
Eight years
 later           365,812   393,092   404,257
Nine years
 later           372,321   399,416
Ten years
 later           376,965

Redundancy        37,236    60,734    83,804   122,386   112,058   123,774   107,904    58,098    11,467     4,648

Redundancy
 expressed
 as a percent
 of year end
 reserves            8.5%     12.2%     15.7%     21.2%     15.6%     15.6%     13.3%      7.1%      1.4%      0.6%

Gross
 reserve        $486,608  $560,811  $603,088  $645,941  $796,820  $868,393  $893,420  $901,352  $864,843  $879,056  $928,335
Ceded
 reserve          48,725    61,539    67,636    69,288    78,120    74,830    79,901    77,438    72,259    78,195    71,153
                --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------
Net
 reserve        $437,883  $499,272  $535,452  $576,653  $718,700  $793,563  $813,519  $823,914  $792,584  $800,861  $857,182
                ========  ========  ========  ========  ========  ========  ========  ========  ========  ========  ========

Gross
 re-estimated   $452,444  $509,519  $522,302  $525,397  $685,556  $748,266  $785,044  $858,086  $889,122  $893,981
Ceded
 re-estimated     51,797    70,981    70,654    71,130    78,914    78,477    79,429    92,270   108,005    97,768
                --------  --------  --------  --------  --------  --------  --------  --------  --------  --------
Net
 re-estimated   $400,647  $438,538  $451,648  $454,267  $606,642  $669,789  $705,615  $765,816  $781,117  $796,213
                ========  ========  ========  ========  ========  ========  ========  ========  ========  ========
</TABLE>


NOTE:  The  amount  of  cash  and  investments received equal to the increase in
       liabilities  for  unpaid  losses  and  loss  settlement  expenses  was
       $93,966,000,  $28,318,000,  and  $12,392,000  for  the  changes  in  pool
       participation  in  1996,  1997,  and  1998,  respectively.

Page  16

<PAGE>


     REINSURANCE.  Harleysville Group follows the customary industry practice of
reinsuring  a portion of its exposures and paying to the reinsurers a portion of
the  premiums  received.  Insurance  is  ceded  principally  to  reduce  the net
liability  on  individual  risks  and  to  protect  against catastrophic losses.
Reinsurance does not legally discharge an insurer from its primary liability for
the  full  amount  of the policies, although it does make the assuming reinsurer
liable  to  the  insurer  to  the extent of the reinsurance ceded.  Therefore, a
ceding  company  is  subject  to  credit  risk  with  respect to its reinsurers.

     The  reinsurance  described  below  is  maintained  for  the  Company's
subsidiaries  and  the  Mutual  Company  and  its  wholly-owned  subsidiaries.
Reinsurance premiums and recoveries are allocated to participants in the pooling
agreement  according  to  pooling  percentages.

     Reinsurance  for  property  and  auto  physical  damage losses is currently
maintained  under  a  per  risk excess of loss treaty affording recovery to $8.5
million  above  a  retention  of $1.5 million. Harleysville Group's 2002 pooling
share  of such recovery would be $6.1 million above a retention of $1.1 million.
In  addition,  the  Company's  subsidiaries  and  the  Mutual  Company  and  its
wholly-owned  subsidiaries  are reinsured under a catastrophe reinsurance treaty
effective  for  one  year from July 1, 2002 which provides coverage ranging from
84.8% to 94.3% of up to $140.0 million in excess of a retention of $30.0 million
for  any  given  catastrophe.  Harleysville  Group's  2002 pooling share of this
coverage  would range from 84.8% to 94.3% of up to $100.8 million in excess of a
retention  of $21.6 million for any given catastrophe.  Accordingly, pursuant to
the  terms  of  the treaty, the maximum recovery would be $126.5 million for any
catastrophe  involving  an insured loss equal to or greater than $170.0 million.
Harleysville  Group's  pooling  share  of  this  maximum recovery would be $91.1
million  for  any  catastrophe  involving  an  insured loss of $122.4 million or
greater.  The  treaty  includes  reinstatement provisions providing for coverage
for  a  second catastrophe and requiring payment of an additional premium in the
event  of  a  first  catastrophe  occurring.  Most terrorism losses would not be
covered  by the treaty.  Harleysville Group has not purchased funded catastrophe
covers. Harleysville Group and Mutual have purchased property per risk excess of
loss reinsurance which covers certain terrorism losses and provides for recovery
of  up to $8.5 million in excess of $1.5 million of terrorism losses for any one
risk under certain circumstances.  The maximum recovery by Harleysville Group on
a  terrorism  loss  occurrence  is  $27.0  million.

     Casualty  reinsurance  (including  liability  and  workers compensation) is
currently  maintained under an excess of loss treaty affording recovery to $38.0
million  above  a  retention  of  $2.0  million  for  each  loss  occurrence.
Harleysville  Group's  2002

Page  17

<PAGE>


pooling  share  of  a recovery would be up to $25.9 million above a retention of
$1.4  million.  In  addition, there is reinsurance to protect Harleysville Group
from  large  workers  compensation  losses  in  2002.  For  umbrella  liability
coverages,  reinsurance  protection  up  to  $14.0  million  is  provided over a
retention of $1.0 million. Harleysville Group's 2002 pooling share would provide
for  recovery  of  $10.1 million over a retention of $0.7 million.  The casualty
reinsurance  programs  provide  coverage  for  a  terrorist  event  with  no
reinstatement  provision.

     Harleysville  Group  has  a  reinsurance  agreement with the Mutual Company
whereby the Mutual Company reinsures accumulated catastrophe losses in a quarter
up  to  $14.4  million  in  excess  of  $3.6 million in return for a reinsurance
premium.  The  agreement  excludes catastrophe losses resulting from earthquakes
or  hurricanes.  This  agreement  was  amended effective July 1, 2002 to exclude
terrorism losses in order to reflect current reinsurance market conditions.  The
premium  rate  and  other  terms  were  not  changed.

     The  terms  and  charges  for reinsurance coverage are typically negotiated
annually.  The  reinsurance market is subject to conditions which are similar to
those  in the direct property and casualty insurance market, and there can be no
assurance  that  reinsurance  will remain available to Harleysville Group to the
same  extent  and  at  the  same  cost  currently  maintained.

     Harleysville  Group  considers numerous factors in choosing reinsurers, the
most important of which are the financial stability and credit worthiness of the
reinsurer.  Harleysville  Group  has not experienced any material collectibility
problems  for  its  reinsurance  recoverables.

     COMPETITION.  The  property  and  casualty  insurance  industry  is  highly
competitive  on  the  basis  of  both  price  and  service.  There  are numerous
companies  competing for the categories of business underwritten by Harleysville
Group  in  the geographic areas where Harleysville Group operates, many of which
are  substantially larger and have considerably greater financial resources than
Harleysville Group.  In addition, because the insurance products of Harleysville
Group  and  the  Mutual  Company  are  marketed  exclusively through independent
insurance  agencies, most of which represent more than one company, Harleysville
Group  faces  competition  within  each  agency.

Page  18

<PAGE>


     MARKETING.  Harleysville  Group  markets  its  insurance  products  through
independent  agencies and monitors the performance of these agencies relative to
many  factors  including  profitability,  growth and retention.  At December 31,
2002,  there  were  approximately  1,700  agencies.


INVESTMENTS

     An  important element of the financial results of Harleysville Group is the
return on invested assets.  An investment objective of  Harleysville Group is to
maintain  a widely diversified fixed maturities portfolio structured to maximize
after-tax  investment income while minimizing credit risk through investments in
high quality instruments.  An objective also is to provide adequate funds to pay
claims without forced sales of investments.  At December 31, 2002, substantially
all  of  Harleysville  Group's  fixed maturity investment portfolio was rated at
investment grade and the investment portfolio did not contain any real estate or
mortgage  loans.  Harleysville  Group also invests in equity securities with the
objective  of  capital  appreciation.

     Harleysville  Group  has adopted and follows an investment philosophy which
precludes  the  purchase  of  non-investment  grade  fixed  income  securities.
However,  due  to uncertainties in the economic environment, it is possible that
the  quality  of  investments held in Harleysville Group's portfolio may change.

Page  19

<PAGE>


     The  following  table  shows  the composition of Harleysville Group's fixed
maturity  investment  portfolio  at  amortized  cost,  excluding  short-term
investments,  by  rating  as  of  December  31,  2002:

<TABLE>
<CAPTION>



                                             DECEMBER 31, 2002
                                          ----------------------
                                            AMOUNT       PERCENT
                                          ----------     -------
                                           (dollars in thousands)
RATING(1)
---------
<S>                                       <C>            <C>
U.S. Treasury and U.S. agency bonds(2)    $  282,652      19.7%
Aaa                                          492,091      34.3
Aa                                           410,895      28.6
A                                            220,223      15.3
Baa                                           27,481       1.9
Ba                                             3,282       0.2
C                                                418       0.0
                                          ----------     -----

      Total                               $1,437,042     100.0%
                                          ==========     =====
</TABLE>

---------------

(1)  Ratings  assigned  by  Moody's  Investors  Services,  Inc.
(2)  Includes  GNMA  pass-through  obligations  and  collateralized  mortgage
     obligations.

     Harleysville  Group  invests  in  both  taxable and tax-exempt fixed income
securities  as  part of its strategy to maximize after-tax income. Such strategy
considers,  among  other  factors,  the  impact  of the alternative minimum tax.
Tax-exempt  bonds made up approximately 44%, 40% and 45% of the total investment
portfolio  at  December  31,  2002,  2001  and  2000,  respectively.

     The  following  table  shows  the  composition  of  Harleysville  Group's
investment  portfolio  at  carrying  value, excluding short-term investments, by
type  of  security  as  of  December  31,  2002:

<TABLE>
<CAPTION>



                                    DECEMBER 31, 2002
                                 ----------------------
                                   AMOUNT       PERCENT
                                 ----------     -------
                                 (dollars in thousands)
Fixed maturities:
<S>                              <C>            <C>
  U.S. Treasury obligations      $   41,557       2.6%
  U.S. agency obligations            33,888       2.1
  Mortgage-backed securities        228,367      14.1
  Obligations of states and
    political subdivisions          703,558      43.5
  Corporate securities              502,661      31.1
                                 ----------     -----

      Total fixed maturities      1,510,031      93.4
                                 ----------     -----

Equity securities                   107,177       6.6
                                 ----------     -----

       Total                     $1,617,208     100.0%
                                 ==========     =====
</TABLE>


Page  20

<PAGE>


     Investment  results  of  Harleysville  Group's  fixed  maturity  investment
portfolio  are  as  shown  in  the  following  table:

<TABLE>
<CAPTION>



                                 YEAR ENDED DECEMBER 31,
                         ---------------------------------------
                            2002          2001           2000
                         ----------    ----------     ----------
                                   (dollars in thousands)
<S>                      <C>           <C>            <C>
  Invested assets(1)     $1,416,294    $ 1,379,551    $1,361,310
  Investment income(2)   $   84,438    $    83,191    $   83,958
  Average yield                 6.0%           6.0%          6.2%
</TABLE>

---------------

(1) Average of the aggregate invested amounts at amortized cost at the beginning
    and  end  of  the  period.

(2) Investment income does not include investment expenses, realized investment
    gains  or  losses  or  provision  for  income  taxes.

     The following table indicates the composition of Harleysville Group's fixed
maturity  investment  portfolio  at  carrying  value,  excluding  short-term
investments,  by  time  to  maturity  as  of  December  31,  2002:

<TABLE>
<CAPTION>



                                 December 31, 2002
                               ----------------------
                                AMOUNT       PERCENT
                               ----------     -------
                               (dollars in thousands)
DUE IN(1)
---------
<S>                             <C>            <C>
1 year or less                  $124,689        8.3%
Over 1 year through 5 years      435,433       28.8
Over 5 years through 10 years    601,700       39.9
Over 10 years                    119,842        7.9
                              ----------      -----
                               1,281,664       84.9

Mortgage-backed securities       228,367       15.1
                              ----------      -----

     Total                     1,510,031      100.0%
                              ==========      =====
</TABLE>


---------------

(1)  Based  on  stated  maturity  dates  with  no prepayment assumptions. Actual
     maturities  may  differ  because  borrowers may have the right to call or
     prepay obligations  with  or  without  call  or  prepayment  penalties.

Page  21

<PAGE>



     The  average  expected life of Harleysville Group's investment portfolio as
of  December  31,  2002  was  approximately  4.6  years.


REGULATION

     Insurance companies are subject to supervision and regulation in the states
in  which  they  transact  business.  Such  supervision and regulation relate to
numerous  aspects  of  an  insurance company's business and financial condition.
The  primary  purpose  of  such  supervision and regulation is the protection of
policyholders.  The extent of such regulation varies, but generally derives from
state  statutes  which  delegate  regulatory,  supervisory  and  administrative
authority  to  state  insurance  departments.  Accordingly, the authority of the
state  insurance departments includes the establishment of standards of solvency
which  must  be  met and maintained by insurers, the licensing to do business of
insurers and agents, the nature of and limitations on investments, premium rates
for property and casualty insurance, the provisions which insurers must make for
current losses and future liabilities, the deposit of securities for the benefit
of  policyholders  and the approval of policy forms.  Such insurance departments
also  conduct  periodic  examinations  of the affairs of insurance companies and
require  the  filing  of  annual  and  other  reports  relating to the financial
condition  of  insurance  companies.

     All  of  the  states  in which Harleysville Group and the Mutual Company do
business  have  guaranty  fund  laws under which insurers doing business in such
states  can  be  assessed  up to 2% of annual premiums written by the insurer in
that  state  in  order  to  fund policyholder liabilities of insolvent insurance
companies.  Under  these  laws  in general, an insurer is subject to assessment,
depending  upon  its  market share of a given line of business, to assist in the
payment  of  policyholder  and  third  party  claims against insolvent insurers.

     State  laws  also  require Harleysville Group to participate in involuntary
insurance  programs  for  automobile  insurance,  as  well as other property and
casualty  lines, in states in which Harleysville Group writes such lines.  These
programs  include  joint  underwriting  associations,  assigned risk plans, fair
access to insurance requirements ("FAIR") plans, reinsurance facilities and wind
storm  plans.  These state laws generally require all companies that write lines
covered  by  these  programs  to  provide  coverage  (either directly or through
reinsurance)  for  insureds who cannot obtain insurance in the voluntary market.
The  legislation creating these programs usually allocates a pro rata portion of
risks  attributable  to  such  insureds  to  each company on the basis of direct
written  premiums  or  the  number  of  automobiles  insured.

Page  22

<PAGE>


Generally,  state  law requires participation in such programs as a condition to
doing  business.  The loss ratio on insurance written under involuntary programs
generally  has  been  greater  than the loss ratio on insurance in the voluntary
market.

     State  insurance  holding  company  acts regulate insurance holding company
systems.  Each  insurance  company  in the holding company system is required to
register  with  the  insurance  supervisory  agency of its state of domicile and
furnish certain information concerning transactions between companies within the
holding  company system that may materially affect the operations, management or
financial  condition  of the insurer within the system, including the payment of
dividends  from  the  insurance  subsidiaries  to  the  Company.

     Insurance  holding company acts require that all transactions involving any
insurer  within the holding company system, including those involving the Mutual
Company  and the Company's insurance subsidiaries, must be fair and equitable to
that  insurer.  Further,  approval  of  the applicable insurance commissioner is
required  prior to the consummation of a transaction affecting the control of an
insurer.

     The  Terrorism  Risk  Insurance  Act  of  2002  (TRIA),  signed into law on
November 26, 2002, provides a federal backstop for losses related to the writing
of the terrorism peril in property casualty insurance policies.  Under TRIA, the
Companies  had until February 24, 2003, to notify commercial policyholders about
requirements  of  the  law, let them know that the Company was required to offer
coverage  for  acts  of terrorism certified under TRIA and let them know how the
coverage  would  be  priced.

     Harleysville  Group distributed the mandated disclosure which explained the
Act  and notified policyholders of their coverage options.  The terrorism rating
plan,  with  rates  that  vary based on geographical and risk-type factors, will
begin  to  go  into  effect  in 2003. The plan will charge commercial policies a
nominal  terrorism  premium in most territories to encourage coverage acceptance
while  minimizing  the  administrative  costs.

     The  property  and  casualty  insurance  industry  has  been  subject  to
significant  public  scrutiny  and  comment  primarily due to concerns regarding
solvency  issues,  rising  insurance  costs,  and  the  industry's  methods  of
operations.  Accordingly,  regulations  and legislation may be proposed to bring
the  insurance  industry

Page  23

<PAGE>


under  federal control; to strengthen state oversight, particularly in the field
of  solvency  and  investments;  to further restrict an insurer's flexibility in
underwriting  and pricing risks; and to impose new taxes and assessments.  It is
not  possible  to  predict whether, in what form or in what jurisdictions any of
these  proposals  might be adopted or the effect, if any, on Harleysville Group.

     The  Company's  insurance  subsidiaries  generally  are  restricted  by the
insurance  laws  of  their  respective  states  of  domicile as to the amount of
dividends  they  may  pay  to  the  Company  without  the  prior approval of the
respective  state  regulatory  authorities. Generally, the maximum dividend that
may  be paid by an insurance subsidiary during any year without prior regulatory
approval  is  limited  to  a  stated  percentage  of that subsidiary's statutory
surplus  as of a certain date, or adjusted net income of the subsidiary, for the
preceding  year.   Applying  the  current regulatory restrictions as of December
31,  2002,  $11.0  million  would  be available for distribution to Harleysville
Group  Inc.  without  prior  approval  until  October 1, 2003, after which $52.9
million  would  be available for distribution to Harleysville Group Inc. without
prior  approval.  The  Company's  insurance subsidiaries paid dividends of $12.0
million  in 2002, $10.0 in 2001 and, $20.0 million in 2000 to Harleysville Group
Inc.  An  additional  $42.0  million in aggregate dividends were declared by the
Company's insurance subsidiaries in 2002 and remain as a receivable on the books
of  the  Company  at  December  31,  2002.

     Various  states  have  adopted  the  National  Association  of  Insurance
Commissioners  (NAIC)  risk-based capital (RBC) standards that require insurance
companies to calculate and report statutory capital and surplus needs based on a
formula  measuring underwriting, investment and other business risks inherent in
an  individual  company's operations.  These RBC standards have not affected the
operations  of  Harleysville  Group  since  each  of  the  Company's  insurance
subsidiaries  has  statutory  capital and surplus in excess of RBC requirements.

     Various  states  have  adopted  the  NAIC's  Codification  of  Statutory
Accounting  Principles  which  were  effective  January  1,  2001.  The codified
principles  are intended to provide a basis of accounting recognized and adhered
to  in  the  absence  of,  conflict  with,  or  silence  of,  state statutes and
regulations.  The  impact  of  the  codified  principles  on the January 1, 2001
statutory  capital  and  surplus  of the Company's insurance subsidiaries ranged
from  a  decrease  of  $0.4  million  to  an increase of $6.4 million and was an
increase  of  $21.0  million  on  a  consolidated  basis.

Page  24

<PAGE>


     Harleysville  Group  is  required  to  file  financial  statements  for its
subsidiaries,  prepared  by  using  statutory  accounting  practices, with state
regulatory  authorities.  SAP  differs from GAAP primarily in the recognition of
revenue  and  expense.  The  adjustments  necessary  to reconcile net income and
shareholders'  equity  determined  by  using SAP to net income and shareholders'
equity  determined  in  accordance  with  GAAP  are  as  follows:


<TABLE>
<CAPTION>



                          NET INCOME               SHAREHOLDERS' EQUITY
                     YEAR ENDED DECEMBER 31,           DECEMBER 31,
                   --------------------------       --------------------
                     2002       2001     2000         2002        2001
                   -------    -------   -------     --------    --------
                                           (in thousands)
<S>                <C>        <C>       <C>         <C>         <C>
SAP amounts        $42,338    $41,095   $48,412     $509,344    $538,878
Adjustments:
  Deferred
   policy
   acquisition
   costs             8,820      1,317      1,218      94,896      86,076
  Deferred
   income
   taxes              (708)     3,626      1,608         357       6,093
  Unrealized
   investment
   gains                                              72,985      26,857
  Other, net        (3,925)    (2,443)    (2,109)     (6,768)      3,526
Holding
  company(1)          (270)      (102)      (437)    (38,702)    (71,132)
                   -------    -------    -------    --------    --------

GAAP amounts       $46,255    $43,493    $48,692    $632,112    $590,298
                   =======    =======    =======    ========    ========
</TABLE>


(1)  Represents  the  GAAP  income and equity amounts for Harleysville Group
     Inc., excluding  the  earnings  of  and  investment  in  subsidiaries.


RELATIONSHIP  WITH  THE  MUTUAL  COMPANY

     Harleysville Group's operations are interrelated with the operations of the
Mutual  Company  due  to  the pooling arrangement and other factors.  The Mutual
Company  owed  approximately  56%  of the issued and outstanding common stock of
Harleysville  Group  Inc.  at  December  31,  2002. Harleysville Group employees
provide  a  variety  of  services  to  the  Mutual  Company and its wholly-owned
subsidiaries.  The  cost  of  facilities  and  employees required to conduct the
business  of  both companies is charged on a cost-allocated basis.  Harleysville
Group  also  manages  the  operations of the Mutual Company and its wholly-owned
subsidiaries  pursuant to a management agreement which commenced January 1, 1993
under

Page  25

<PAGE>


which  Harleysville  Group  received  a management fee.  Harleysville Group also
manages  the  operations of Berkshire Mutual Insurance Company, a small property
and  casualty  insurance  company,  pursuant to a management services agreement.
Harleysville Group received $6.8 million, $7.3 million, and $7.4 million for the
years  ended  December  31,  2002,  2001  and  2000,  respectively, for all such
management  services.

     All  of  the Company's officers are officers of the Mutual Company, and six
of  the  Company's  nine  directors  are  directors  of  the  Mutual Company.  A
coordinating  committee  exists to review and evaluate the pooling agreement and
other  material  transactions  between Harleysville Group and the Mutual Company
and  is  responsible  for  matters  involving  actual  or potential conflicts of
interest  between the two companies.  The coordinating committee consists of six
non-employee  directors,  three  from Harleysville Group Inc. and three from the
Mutual  Company all of whom are not members of both Boards and one, a non-voting
Chairman,  who  is  a  member  of both Boards. The decisions of the coordinating
committee  are binding on the two companies.  No intercompany transaction can be
authorized  by  the  coordinating  committee unless at least two of three of the
Company's committee members conclude that such transaction is fair and equitable
to  Harleysville  Group.  For  information  concerning  the  members  of  the
coordinating committee, see "Board and Committee Meetings" section on pages 8 to
10  of  the  Company's  proxy  statement  relating  to the annual meeting of the
shareholders  to  be  held  April 23, 2003 which is incorporated by reference in
this  Form  10-K  Report.

     The  Mutual  Company  leases  the  home office from Harleysville Group with
which  it  shares  most of the facility.  Rental income under the lease was $3.5
million for 2002 and 2001 and $3.4 million for 2000. Harleysville Group believes
that  the  lease  terms  are  no  less favorable to it than if the property were
leased  to  a  non-affiliate.

     In  connection  with  the  acquisition of Mid-America and HIC New York, the
Company  borrowed approximately $18.5 million from the Mutual Company.  See Note
8 of the Notes to Consolidated Financial Statements.  For additional information
with respect to transactions with the Mutual Company, see Note 2 of the Notes to
Consolidated  Financial  Statements.

EMPLOYEES

     All  employees  are  paid  by Harleysville Group Inc. and, accordingly, are
considered  to  be employees of Harleysville Group Inc. As of December 31, 2002,
there  were  2,413  employees.  They provide a variety of services to the Mutual
Company  and its wholly-owned subsidiaries.  See "Business-Relationship with the
Mutual  Company"  and  Note 2 of the Notes to Consolidated Financial Statements.

Page  26

<PAGE>


AVAILABLE  INFORMATION

     The  Company  maintains  a website at www.harleysvillegroup.com. Our annual
report  on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K,  and  amendments  to  those reports, filed or furnished pursuant to Section
13(a)  or  15(d)  of  the Securities Exchange Act of 1934, are available free of
charge  on  our  website  as soon as practicable after electronic filing of such
material  with,  or  furnishing  it  to, the Securities and Exchange Commission.

ITEM  2.  PROPERTIES.
-------   -----------
     The  buildings  which  house the headquarters of Harleysville Group and the
Mutual  Company are leased to the Mutual Company by a subsidiary of Harleysville
Group.  See "Business-Relationship with the Mutual Company."  The Mutual Company
charges  Harleysville  Group  for  an  appropriate  portion of the rent under an
intercompany allocation agreement.  The buildings containing the headquarters of
Harleysville Group and the Mutual Company have approximately 220,000 square feet
of  office space.  Harleysville Group also rents office facilities in certain of
the  states  in  which  it  does  business.

ITEM  3.  LEGAL  PROCEEDINGS.
-------   ------------------
     In  2001,  GE  Reinsurance  Corporation  (GE  Re)  sought  rescission  of a
reinsurance  agreement  between  Mutual and GE Re relating to certain automobile
insurance  policies  written  in  California  through  a  managing general agent
beginning  in  1999.  On December 13, 2002, Mutual and GE Re settled this matter
by  agreeing  to  a  commutation  and  termination  of the reinsurance agreement
effective December 31, 2002.  The settlement agreement did not materially impact
Harleysville  Group's  financial  statements.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS.
-------   -----------------------------------------------------------
     No matter was submitted to a vote of the security holders during the fourth
quarter  of  2002.

Page  27

<PAGE>


     PART  II

ITEM  5.  MARKET  FOR  THE  REGISTRANT'S  COMMON  STOCK  AND  RELATED
-------   -----------------------------------------------------------
STOCKHOLDER  MATTERS.
--------------------
     The  "Market  for Common Stock and Related Security Holder Matters" section
from the Company's annual report to stockholders for the year ended December 31,
2002,  which  is  included  as  Exhibit  (13)(E)  to  this  Form 10-K Report, is
incorporated  herein  by  reference.

ITEM  6.  SELECTED  FINANCIAL  DATA.
-------   --------------------------
     The  "Selected  Consolidated  Financial  Data"  section  from the Company's
annual  report  to  stockholders  for the year ended December 31, 2002, which is
included  as Exhibit (13)(A) to this Form 10-K Report, is incorporated herein by
reference.

ITEM  7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
-------   ------------------------------------------------------
CONDITION  AND  RESULTS  OF  OPERATIONS.
----------------------------------------
     The  "Management's  Discussion  and  Analysis  of Results of Operations and
Financial  Condition"  section  from the Company's annual report to stockholders
for  the  year  ended December 31, 2002, which is included as Exhibit (13)(B) to
this  Form  10-K  Report,  is  incorporated  herein  by  reference.

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET
--------   ----------------------------------------------------------
RISK.
-----

     The  "Quantitative  and  Qualitative Disclosures About Market Risk" section
from the Company's annual report to stockholders for the year ended December 31,
2002,  which  is  included  as  Exhibit  (13)(C)  to  this  Form 10-K Report, is
incorporated  herein  by  reference.

ITEM  8.  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA.
-------   ------------------------------------------------
     The  consolidated  financial statements from the Company's annual report to
stockholders  for the year ended December 31, 2002, which is included as Exhibit
(13)(D)  to  this  Form  10-K  Report,  are  incorporated  herein  by reference.

ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
-------   ------------------------------------------------------
ACCOUNTING  AND  FINANCIAL  DISCLOSURE.
---------------------------------------

     None.

Page  28

<PAGE>


     PART  III

ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT.
--------  ----------------------------------------------------------
     The  "Election of Directors" and "Other Executive Officers" sections, which
provides  information  regarding the Company's directors and executive officers,
on  pages  13 to 16 and the "Section 16 Reporting Compliance" section on page 36
of  the Company's proxy statement relating to the annual meeting of stockholders
to  be  held  April  23,  2003,  are  incorporated  herein  by  reference.

ITEM  11.  EXECUTIVE  COMPENSATION.
--------  -------------------------
     The  information  set  forth  on  pages  29  to 34 and the "Compensation of
Directors"  section on pages 11 and 12 of the Company's proxy statement relating
to  the  annual  meeting  of  stockholders  to  be  held  April  23,  2003,  are
incorporated  herein  by  reference.

ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
--------   ---------------------------------------------------------
MANAGEMENT.
-----------
     The  "Ownership  of Common Stock" section on page 21 of the Company's proxy
statement  relating  to  the annual meeting of stockholders to be held April 23,
2003,  is  incorporated  herein  by  reference.

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.
--------   ---------------------------------------------------
     The  "Transactions  with Harleysville Mutual" section on pages 35 and 36 of
the  Company's proxy statement relating to the annual meeting of stockholders to
be  held  April  23,  2003,  is  incorporated  herein  by  reference.

ITEM  14.  CONTROLS  AND  PROCEDURES
--------   -------------------------
     The  Company  has  procedures  in  place  for  accumulating  and evaluating
information  which enable it to prepare and file reports with the Securities and
Exchange  Commission.  As  a result of procedures required by the Sarbanes-Oxley
Act of 2002, the Company has formed a committee that includes certain members of
senior management and key officers to ensure that all information required to be
disclosed  in  the  Company's  reports  is accumulated and communicated to those
individuals responsible for the preparation of the reports, and to our principal
executive  and  financial officers, in a manner that will allow timely decisions
regarding  required  disclosures.

Page  29

<PAGE>


     Within  the  90  days  prior to the date of this annual report, the Company
carried  out  an evaluation, under the supervision and with the participation of
management,  including  the chief executive officer and chief financial officer,
of  the  effectiveness  of  the  design and operation of disclosure controls and
procedures.  Based  on  that  evaluation  of  these  disclosure  controls  and
procedures,  the  chief  executive officer and chief financial officer concluded
that Harleysville Group Inc.'s disclosure controls and procedures were effective
as  of  the  date  of  such  evaluation.

     The chief executive officer and chief financial officer also have concluded
that  there were no significant changes in the Company's internal controls or in
other  factors  that could significantly affect the internal controls subsequent
to  the  date  that  the  Company  completed  its  evaluation.

Page  30

<PAGE>


                                     PART IV

ITEM  15.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON
--------  -------------------------------------------------------------
FORM  8-K.
----------
(a)  (1)   The  following  consolidated financial statements are filed as a
           part  of  this  report:

     Consolidated  Financial  Statements                                   Page
                                                                         ------
          Consolidated  Balance  Sheets  as  of
             December  31,  2002  and  2001                                 31*
          Consolidated  Statements  of  Income  for
             Each  of  the  Years  in  the  Three-year
             Period  Ended  December  31,  2002                             32*
          Consolidated  Statements  of  Shareholders'
             Equity  for  Each  of  the  Years  in  the  Three-
             year  Period  Ended  December  31,  2002                       33*
          Consolidated  Statements  of  Cash  Flows
             for  Each  of  the  Years  in  the  Three-year
             Period  Ended  December  31,  2002                             34*
          Notes  to  Consolidated  Financial  Statements                    35*
     Independent  Auditors'  Report                                         45*

     (2)   The  following  consolidated  financial  statement
           schedules  for  the  years  2002,  2001  and  2000
           are  submitted  herewith:

     Financial  Statement  Schedules
        Schedule  I.     Summary  of  Investments  -  Other
                         Than  Investments  in  Related
                         Parties                                            40
        Schedule  II.    Condensed  Financial  Information
                         of  Parent  Company                                41
        Schedule  III.   Supplementary  Insurance
                         Information                                        44
        Schedule  IV.    Reinsurance                                        45
        Schedule  VI.    Supplemental  Insurance  Information
                         Concerning  Property  and  Casualty
                         Subsidiaries                                       46
     Independent  Auditors'  Consent  and  Report  on  Schedules
       (filed  as  Exhibit  23)

     All  other  schedules  are  omitted  because they are not applicable or the
required  information  is included in the financial statements or notes thereto.

--------------------
     *Refers  to  the  respective  page of Harleysville Group Inc.'s 2002 Annual
Report  to  Stockholders.  The Consolidated Financial Statements and Independent
Auditors' Report, which are included as Exhibit (13)(D), are incorporated herein
by  reference.  With  the  exception  of  the  portions  of  such  Annual Report
specifically  incorporated  by  reference  in this Item and Items 5, 6, 7 and 8,
such  Annual  Report  shall  not  be  deemed  filed as part of this Form 10-K or
otherwise  subject  to  the liabilities of Section 18 of the Securities Exchange
Act  of  1934.

Page  31

<PAGE>



     (3)     Exhibits

 EXHIBIT
   NO.                 DESCRIPTION  OF  EXHIBITS
--------    ----------------------------------------------------

 ( 3)(A)    Amended and restated Certificate of Incor-
            poration of Registrant - incorporated  herein
            by reference to Exhibit (4)(A) to the
            Registrant's Form S-8 Registration  Statement
            No.  333-03127  filed  May  3,  1996.

 ( 3)(B)    Amended and Restated By-laws of Registrant -
            incorporated herein by reference to Exhibit
            4(B) to the Post-Effective Amendment No. 12 of
            Registrant's Form  S-3  Registration  Statement
            No.  33-90810  filed  October  10,  1995.

 ( 4)       Indenture between the Registrant and CoreStates
            Bank, N.A., dated as of November 15, 1993 -
            incorporated herein by reference to Exhibit (4) to
            the Registrant's  Annual  Report  on Form 10-K for
            the year ended December 31, 1993.

*(10)(A)    Standard  Deferred  Compensation Plan for Directors
            of Harleysville Mutual  Insurance  Company  and
            Harleysville  Group  Inc.  Amended and Restated
            November  17,  1999  -  incorporated herein by
            reference to Exhibit 10(A) to the Registrant's
            Annual  Report  on Form 10-K for the year ended
            December 31, 1999.

*(10)(B)    Harleysville  Insurance  Companies  Director  Deferred
            Compensation  Plan  Approved by the Board of Directors
            November 25, 1987 - incorporated herein by  reference
            to  Exhibit  10(B)  to  the  Registrant's  Form  S-3
            Registration  Statement  No.  33-28948  filed  May  25,
            1989.

*(10)(C)    Harleysville  Group  Inc.  Non-qualified Deferred
            Compensation Plan Amended  and  Restated  November  17,
            1999 - incorporated herein by reference to Exhibit
            10(C) to the Registrant's Annual Report on Form 10-K
            for the year ended December  31,  1999.

*(10)(D)    Pension  Plan  of  Harleysville Group Inc. and
            Associated Employers dated  December  1,  1994
            and  amendment  dated February 6, 1995 -
            incorporated herein  by  reference to Exhibit
            10(D) to the Registrant's Annual Report on
            Form 10-K  for  the  year  ended  December  31,
            1994.

Page  32

<PAGE>


 EXHIBIT
   NO.                 DESCRIPTION  OF  EXHIBITS
--------  ------------------------------------------------------

*(10)(E)    Harleysville  Mutual  Insurance  Company/  Harleysville
            Group Inc.  Senior  Management  Incentive Compensation
            Plan As Amended and Restated November 17, 1999 - incor-
            porated herein by reference to Exhibit 10(E) to the
            Registrant's Annual  Report  on  Form  10-K  for  the
            year  ended  December  31,  1999.

 (10)(F)    Proportional  Reinsurance Agreement effective as of
            January 1, 1986 among  Harleysville  Mutual  Insurance
            Company,  Huron  Insurance  Company  and  Harleysville
            Insurance  Company of New Jersey -incorporated herein by
            reference to Exhibit 10(N) to the Registrant's Form S-1
            Registration Statement No. 33-4885 declared  effective
            May  23,  1986.

*(10)(G)    Equity  Incentive  Plan  of  Registrant,  as amended -
            incorporated herein  by reference to Exhibit (4)(C) to
            the Registrant's Form S-8 Registration Statement
            No.  333-25817  filed  April  25,  1997.

 (10)(H)    Tax Allocation Agreement dated December 24, 1986 among
            Harleysville Insurance  Company  of  New Jersey, Huron
            Insurance Company, Worcester Insurance Company,  McAlear
            Associates,  Inc. and the Registrant - incorporated herein
            by reference  to  Exhibit  10(Q) to the Registrant's Annual
            Report on Form 10-K for the  year  ended  December  31,  1986.

 (10)(I)    Amended  and  Restated  Financial Tax Sharing Agreement dated
            March 20,  1995  among  Huron Insurance Company, Harleysville
            Insurance Company of New Jersey,  Worcester  Insurance
            Company, Harleysville-Atlantic Insurance Company, New  York
            Casualty Insurance Company, Connecticut Union Insurance
            Company, Great Oaks  Insurance  Company,  Lakes  States
            Insurance Company and the Registrant - incorporated  herein
            by reference to Exhibit (10)(L) to the Registrant's Annual
            Report  on  Form  10-K  for  the  year  ended  December
            31,  1994.

Page  33

<PAGE>


 EXHIBIT
   NO.                 DESCRIPTION  OF  EXHIBITS
--------  ------------------------------------------------------

 (10)(J)    Amendment,  effective July 1, 1987, to the Proportional
            Reinsurance Agreement effective January 1, 1986 among
            Harleysville Mutual Insurance Company, Huron  Insurance
            Company,  Harleysville  Insurance  Company  of  New Jersey
            and Atlantic Insurance Company of Savannah - incorporated
            herein by reference to the Registrant's  Form  8-K  Report
            dated  July  1,  1987.

 (10)(K)    Amendment,  effective  January  1,  1989,  to  the
            Proportional Reinsurance  Agreement  effective  January
            1,  1986  among  Harleysville Mutual Insurance  Company,
            Huron  Insurance Company, Harleysville Insurance Company of
            New  Jersey,  Atlantic  Insurance  Company  of  Savannah
            and Worcester Insurance Company  - incorporated herein by
            reference to Exhibit 10(U) to the Registrant's Annual
            Report  on  Form  10-K  for  the  year  ended  December
            31,  1988.

 (10)(L)    Amendment,  effective  January  1,  1991,  to  the
            Proportional Reinsurance  Agreement  effective  January  1,
            1986  among  Harleysville Mutual Insurance  Company,
            Huron  Insurance Company, Harleysville Insurance Company of
            New Jersey, Atlantic Insurance Company of Savannah, Worcester
            Insurance Company, Phoenix  General  Insurance  Company  and
            New York Casualty Insurance Company - incorporated  herein
            by reference to Exhibit (10)(O) to the Registrant's Annual
            Report  on  Form  10-K  for  the  year  ended  December
            31,  1990.

 (10)(M)    Amendments,  effective  January  1, 1995 and 1993,
            respectively, to the  Proportional  Reinsurance  Agreement
            effective  January  1,  1986  among Harleysville  Mutual
            Insurance  Company,  Huron Insurance Company, Harleysville
            Insurance  Company  of  New  Jersey,  Harleysville-Atlantic
            Insurance  Company, Worcester  Insurance  Company,
            Connecticut  Union  Insurance  Company, New York Casualty
            Insurance  Company  and  Great  Oaks  Insurance Company -
            incorporated herein by reference to Exhibit (10)(P) to the
            Registrant's Annual Report on Form 10-K  for  the  year
            ended  December  31,  1994.

Page  34

<PAGE>



 EXHIBIT
   NO.                 DESCRIPTION  OF  EXHIBITS
--------  ------------------------------------------------------

(10)(N)    Amendment, effective January 1, 1996 to the Proportional
           Reinsurance Agreement effective January 1, 1986 among
           Harleysville Mutual Insurance Company, Huron  Insurance
           Company,  Harleysville  Insurance  Company  of  New  Jersey,
           Harleysville-Atlantic  Insurance  Company,  Worcester
           Insurance  Company, Connecticut  Union Insurance Company,
           New York Casualty Insurance Company, Great Oaks  Insurance
           Company and Pennland Insurance Company - incorporated herein
           by reference  to Exhibit (10)(O) to the Registrant's Annual
           Report on Form 10-K for the  year  ended  December  31,  1995.

 (10)(O)    Amendment,  effective  January  1,  1997  to  the
            Proportional Reinsurance  Agreement  effective  January
            1,  1986  among  Harleysville Mutual Insurance  Company,
            Huron  Insurance Company, Harleysville Insurance Company of
            New  Jersey,  Harleysville-Atlantic  Insurance  Company,
            Worcester  Insurance Company,  Mid-America  Insurance
            Company,  New York Casualty Insurance Company, Great
            Oaks  Insurance  Company,  Pennland  Insurance  Company
            and  Lake States Insurance  Company  - incorporated herein
            by reference to Exhibit (10)(P) to the Registrant's
            Annual  Report  on Form 10-K for the year ended December 31,
            1996.

 (10)(P)    Amendment,  effective  January  1,  1998  to  the  Proportional
            Reinsurance  Agreement  effective  January  1,  1986  among
            Harleysville Mutual Insurance  Company,  Huron  Insurance
            Company, Harleysville Insurance Company of New  Jersey,
            Harleysville-Atlantic  Insurance  Company,  Worcester
            Insurance Company,  Mid-America  Insurance  Company,
            New York Casualty Insurance Company, Great  Oaks Insurance
            Company, Pennland Insurance Company, Lake States Insurance
            Company  and  Minnesota  Fire  and  Casualty  Company  -
            incorporated herein by reference  to Exhibit (10)(Q) to
            the Registrant's Annual Report on Form 10-K for the  year
            ended  December  31,  1997.

Page  35

<PAGE>


 EXHIBIT
   NO.                  DESCRIPTION  OF  EXHIBITS
--------  ------------------------------------------------------

 (10)(Q)    Lease and amendment effective January 1, 2000 between
            Harleysville, Ltd.  and  Harleysville  Mutual  Insurance
            Company  -  incorporated  herein  by reference  to  Exhibit
            10(R) to the Registrant's Annual Report on Form 10-K for
            the  year  ended  December  31,  1999.

*(10)(R)    1995  Directors' Stock Option Program of Registrant  -
            incorporated herein by reference to Exhibit (10)(S) to
            the Registrant's Annual Report on Form 10-K  for  the
            year  ended  December  31,  1993.

*(10)(S)    Harleysville  Group  Inc. Year 2000 Directors' Stock Option
            Program of  Registrant  -  incorporated  herein  by
            reference  to Exhibit (4)(C) to the Registrant's  Form
            S-8  Registration  Statement No. 333-85941, filed August 26,
            1999.

 (10)(T)    Loan  Agreement  dated  as  of  March  19,  1998  by  and
            between Harleysville Group Inc. and Harleysville Mutual
            Insurance Company - incorporated herein by reference to
            Exhibit (10)(V) to the Registrant's Annual Report on Form
            10-K  for  the  year  ended  December  31,  1997.

 (10)(U)    Form  of  Management  Agreements  dated  January  1,  1994
            between Harleysville  Group  Inc.  and  Harleysville  Mutual
            Insurance  Company, Harleysville-Garden  State  Insurance
            Company,  Mainland  Insurance  Company, Pennland  Insurance
            Company, Berkshire Mutual Insurance Company and Harleysville
            Life  Insurance Company - incorporated herein by reference
            to Exhibit (10)(U) to the  Registrant's  Annual Statement
            on Form 10-K for the year ended December 31, 1993.

Page  36

<PAGE>


 EXHIBIT
   NO.                 DESCRIPTION  OF  EXHIBITS
--------  ------------------------------------------------------

 (10)(V)    Form  of Salary Allocation Agreements dated January 1,
            1993 between Harleysville  Group  Inc.  and  Harleysville
            Mutual  Insurance  Company, Harleysville-Garden  State
            Insurance  Company,  Mainland  Insurance  Company, Pennland
            Insurance Company, Berkshire Mutual Insurance Company and
            Harleysville Life  Insurance Company - incorporated herein
            by reference to Exhibit (10)(U) to the  Registrant's
            Annual  Report  on  Form 10-K for the year ended December
            31, 1992.

 (10)(W)    Equipment  and  Supplies Allocation Agreement dated January
            1, 1993 between  Harleysville  Mutual  Insurance  Company
            and Harleysville Group Inc. - incorporated  herein  by
            reference to Exhibit (10)(V) to the Registrant's Annual
            Report  on  Form  10-K  for  the  year  ended  December
            31,  1992.

*(10)(X)    Form  of Change of Control Employment Agreements dated
            July 1, 1999  -  incorporated  herein by reference to
            Exhibit 10(Z) to the Registrant's Annual Report  on
            Form  10-K  for  the  year  ended  December  31,  1999.

*(10)(Y)    Harleysville  Group  Inc.  Supplemental Retirement Plan
            Amended and Restated  November 17, 1999 - incorporated
            herein by reference to Exhibit 10(AB) to  the  Registrant's
            Annual Report on Form 10-K for the year ended December 31,
            1999.

*(10)(Z)    1996  Directors'  Stock  Purchase Plan of Registrant -
            incorporated herein  by reference to Exhibit (4)(C)
            to the Registrant's Form S-8 Registration Statement
            No.  333-03127  filed  May  3,  1996.

Page  37

<PAGE>


EXHIBIT
   NO.                 DESCRIPTION  OF  EXHIBITS
--------  ------------------------------------------------------

*(10)(AA)   Directors Equity Award Program of Registrant -
            incorporated herein by  reference  to  Exhibit  (4)(C)
            to  the  Registrant's  Form S-8 Registration Statement
            No.  333-09701  filed  August  7,  1996.

*(10)(AB)   Excess  Stock Purchase Plan of Registrant - incorporated
            herein by reference to Exhibit 4.3 to the Registrant's
            Form S-8 Registration Statement No. 333-37212  filed
            May  17,  2000.

*(10)(AC)   Long  Term  Incentive  Plan of Registrant - incorporated
            herein by reference to Exhibit 4.3 to the Registrant's
            Form S-8 Registration Statement No. 333-37386  filed
            May  19,  2000.

 (13)(A)    Selected Consolidated Financial Data from the Company's
            2002 annual report  to  stockholders.

 (13)(B)    Management's  Discussion  and Analysis of Results of
            Operations and Financial  Condition  from  the  Company's
            2002  annual report to stockholders.

 (13)(C)    Quantitative and Qualitative Disclosures About Market
            Risk from the Company's  2002  annual  report  to
            stockholders.

 (13)(D)    Consolidated  financial  statements  from the Company's
            2002 annual report  to  stockholders.

 (13)(E)    Market  for  Common  Stock and Related Security Holder
            Matters from the  Company's  2002  annual  report  to
            stockholders.

Page  38

<PAGE>


EXHIBIT
   NO.                 DESCRIPTION  OF  EXHIBITS
--------  ------------------------------------------------------

 (21)       Subsidiaries  of  Registrant.

 (23)       Independent  Auditors'  Consent  and  Report  on  Schedules.

 (99)       Form  11-K Annual Report for the Harleysville Group Inc.
            Employee Stock  Purchase  Plan  for  the  year  ended
            December  31,  2002.

(99.1)      Certification  of  Chief  Executive  Officer

(99.2)      Certification  of  Chief  Financial  Officer


-----------------
*  A  management  contract,  compensatory  plan  or  arrangement  required
   to be separately  identified  by  reason  of  the  provision  of  Item
   14(a)(3).

(b)  Reports  on  Form  8-K


     A  Form  8-K  dated  December 16, 2002 was filed disclosing that litigation
involving  a  reinsurance agreement with GE Reinsurance Corporation was settled.

Page  39

<PAGE>

<TABLE>
<CAPTION>




                                HARLEYSVILLE GROUP

                       SCHEDULE I - SUMMARY OF INVESTMENTS -
                     OTHER THAN INVESTMENTS IN RELATED PARTIES

                                 DECEMBER 31, 2002
                                  (in thousands)

                                                              AMOUNT
                                                              AT WHICH
                                                              SHOWN IN
                                                              THE BALANCE
TYPE OF INVESTMENT               COST            VALUE        SHEET
------------------------     ------------     -----------     -----------

Fixed maturities:
<S>                          <C>              <C>             <C>
  United States
    government and
    government agencies
    and authorities          $   68,289       $   75,799      $   75,445

  States, municipalities
    and political
    subdivisions                674,553          720,436         703,558

  Mortgage-backed
    securities                  214,453          228,367         228,367

  All other corporate
    bonds                       479,747          517,209         502,661
                             ----------       ----------      ----------

    Total fixed
      maturities              1,437,042        1,541,811       1,510,031
                             ----------       ----------      ----------

Equity securities:

  Common stocks:
    Banks, trust and
      insurance companies        22,841           22,104          22,104
    Industrial,
      miscellaneous and
      all other                  74,008           85,073          85,073
                             ----------       ----------      ----------

    Total equities               96,849          107,177         107,177
                             ----------       ----------      ----------

Short-term
  investments                    89,692                           89,692
                             ----------                       ----------
      Total investments      $1,623,583                       $1,706,900
                             ==========                       ==========
</TABLE>

Page  40

<PAGE>



<TABLE>
<CAPTION>



                           HARLEYSVILLE GROUP INC.

      SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY

                         CONDENSED BALANCE SHEETS
                    (in thousands, except share data)

                                             DECEMBER 31,
                                    ----------------------------
                                        2002             2001
                                      --------         --------
       ASSETS
<S>                                   <C>              <C>
Short-term investments                $  8,652         $6,377
Fixed maturities:
  Available for sale, at fair
   value (cost $51 and $52)                 55             53
Investments in common
  stock of subsidiaries
  (equity method)                      670,814        661,430
Accrued investment income                   17             16
Due from affiliate                                      3,636
Federal income tax recoverable           3,528
Dividends receivable from
  subsidiaries                          41,965         12,000
Other assets                            13,748         14,521
                                      --------       --------

  Total assets                        $738,779       $698,033
                                      ========       ========


       LIABILITIES AND SHAREHOLDERS' EQUITY
Debt                                  $ 93,500       $ 93,500
Accounts payable and
  accrued expenses                      11,963         12,564
Due to affiliate                         1,204
Federal income taxes payable                            1,671
                                      --------       --------

  Total liabilities                    106,667        107,735
                                      --------       --------

Shareholders' equity:
  Preferred stock, $1 par value;
   authorized 1,000,000 shares,
   none issued
  Common stock, $1 par value;
   authorized 80,000,000 shares;
   issued 2002, 30,917,575 and
   2001, 30,444,678 shares; outstanding
   2002, 29,917,575 and 2001,
   29,444,678 shares                    30,918         30,445
  Additional paid-in capital           149,091        140,065
  Accumulated other
   comprehensive income                 49,086         44,265
  Retained earnings                    418,582        391,088
  Treasury stock, at cost,
   1,000,000 shares                    (15,565)       (15,565)
                                      --------       --------

  Total shareholders' equity           632,112        590,298
                                      --------       --------

  Total liabilities and
   shareholders' equity               $738,779       $698,033
                                       =======       ========

</TABLE>

Page  41

<PAGE>


<TABLE>
<CAPTION>



                      HARLEYSVILLE GROUP INC.

    SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY

                   CONDENSED STATEMENTS OF INCOME
                         (in thousands)

                                           YEAR ENDED DECEMBER 31,
                                     ----------------------------------
                                        2002        2001        2000
                                      --------    --------    --------
<S>                                   <C>         <C>         <C>
Revenues                              $7,034      $7,782      $7,631
Expenses:
  Interest                             5,649       6,102       6,468
  Expenses other than interest         1,793       1,828       1,823
                                     -------     -------      ------

                                        (408)       (148)       (660)
Income tax benefit                      (138)        (46)       (223)
                                     -------     -------     -------

Loss before equity in
  income of subsidiaries                (270)       (102)       (437)

Equity in income of subsidiaries      46,525      43,595      49,129
                                     -------     -------     -------

Net income                           $46,255     $43,493     $48,692
                                     =======     =======     =======

Page 42

<PAGE>
</TABLE>




<TABLE>
<CAPTION>



                         HARLEYSVILLE GROUP INC.

    SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY

                   CONDENSED STATEMENTS OF CASH FLOWS
                             (in thousands)

                                               YEAR ENDED DECEMBER 31,
                                        ----------------------------------
                                          2002         2001         2000
                                        --------     --------     --------
Cash flows from operating
activities:
<S>                                     <C>          <C>          <C>
  Net income                            $ 46,255     $ 43,493     $ 48,692
  Adjustments to reconcile
   net income to net cash
   used by operating activities:
    Equity in undistributed
      earnings of subsidiaries           (46,525)     (43,595)     (49,129)
    (Increase) decrease in
      accrued investment income               (1)          19          (16)
    Increase (decrease) in
      accrued income taxes                (5,179)      (2,396)       3,209
    Other, net                             6,399        1,723       (3,984)
                                        --------     --------     --------
      Net cash provided (used)
        by operating activities              949         (756)      (1,228)
                                        --------     --------     --------


Cash flows from investing activities:
  Purchases of fixed maturity
    investments                                           (52)
  Maturities of fixed maturity
    investments                                            10
  Net purchases of short-term
    investments                           (2,275)         (34)      (4,646)
                                        --------     --------     --------
      Net cash used by
       investing activities               (2,275)         (76)      (4,646)
                                        --------     --------     --------

Cash flows from financing activities:
  Issuance of common stock                 8,051        7,807        6,419
  Dividends from subsidiaries             12,036       10,027       20,030
  Dividends paid                         (18,761)     (17,002)     (15,864)
  Purchase of treasury stock                                        (4,711)
                                        --------     --------     --------

      Net cash provided by
        financing activities               1,326          832       5,874
                                        --------     --------     --------

  Change in cash                            -            -           -

    Cash at beginning of year
                                        --------     --------     --------

    Cash at end of year                 $   -        $  -         $  -
                                        ========     ========     ========
</TABLE>

Page  43

<PAGE>


<TABLE>
<CAPTION>


                                               HARLEYSVILLE  GROUP

                             SCHEDULE  III  -  SUPPLEMENTARY  INSURANCE  INFORMATION

                               YEARS  ENDED  DECEMBER  31,  2002,  2001  AND  2000
                                                          (in  thousands)


                               LIABILITY
                               FOR UNPAID                                               AMORTIZATION
                  DEFERRED     LOSSES AND                                   LOSSES      OF DEFERRED
                  POLICY       LOSS                             NET         AND LOSS    POLICY       OTHER
                  ACQUISITION  SETTLEMENT  UNEARNED   EARNED    INVESTMENT  SETTLEMENT  ACQUISITION  UNDERWRITING  PREMIUMS
                  COSTS        EXPENSES    PREMIUMS   PREMIUMS  INCOME      EXPENSES    COSTS        EXPENSES      WRITTEN
<S>               <C>          <C>         <C>       <C>       <C>         <C>         <C>           <C>           <C>
Year ended
 December 31,
 2002
  Commercial
   lines                        $702,663   $280,913  $553,194              $360,339                                $596,057
  Personal
   lines                         154,519    105,942   211,442               161,278                                 201,793
  GAAP
   adjustments(1)                 71,153     19,422
                                --------   --------  --------              --------                                --------
   Total          $94,896       $928,335   $406,277  $764,636              $521,617    $185,547      $74,105       $797,850
                  =======       ========   ========  ========              ========    ========      =======       ========

    Net
     investment
     income                                                    $86,265
                                                               =======

Year ended
 December 31,
 2001
  Commercial
   lines                        $651,088   $238,050  $493,362              $330,943                                $515,860
  Personal
   lines                         149,773    115,591   236,527               188,879                                 231,727
  GAAP
   adjustments(1)                 78,195     20,096
                                --------   --------  --------              --------                                --------
   Total          $86,076       $879,056   $373,737  $729,889              $519,822    $180,283      $64,267       $747,587
                  =======       ========   ========  ========              ========    ========      =======       ========

    Net
     investment
     income                                                    $85,518
                                                               =======


Year ended
 December 31,
 2000
  Commercial
   lines                        $635,184   $215,553  $437,873              $302,590                                $446,719
  Personal
   lines                         157,400    120,392   250,457               191,084                                 254,753
  GAAP
   adjustments(1)                 72,259     18,153                            (873)
                                --------   --------  --------              --------                                --------
   Total          $84,759       $928,335   $354,098  $688,330              $492,801    $177,217      $60,916       $701,472
                  =======       ========   ========  ========              ========    ========      =======       ========

    Net
     investment
     income                                                    $86,791
                                                               =======

</TABLE>


Page  44

<PAGE>


<TABLE>
<CAPTION>



                                  HARLEYSVILLE GROUP

                              SCHEDULE IV - REINSURANCE

                     YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                                    (in thousands)

                                            ASSUMED                  PERCENTAGE
                               CEDED        FROM                     OF AMOUNT
                    GROSS      TO OTHER     OTHER        NET         ASSUMED
                    AMOUNT     COMPANIES    COMPANIES    AMOUNT      TO NET
                    --------   ---------    ---------    --------    ----------
<S>                 <C>        <C>          <C>          <C>         <C>
Year ended
 December 31, 2002
 Property and
 casualty
 premiums           $699,482   $732,487     $797,641     $764,636    104.3%
                    ========   ========     ========     ========    =====


Year ended
 December 31, 2001
 Property and
 casualty
 premiums           $658,166   $694,643     $766,366    $729,889    105.0%
                    ========   ========     ========    ========    =====

Year ended
 December 31, 2000
 Property and
 casualty
 premiums            $647,300   $679,770     $720,800    $688,330    104.7%
                     ========   ========     ========    ========    =====
</TABLE>

Note:   The  amounts  ceded  and  assumed  include  the  amounts  ceded  and
        assumed  under  the  terms  of  the  pooling  arrangement.


Page  45

<PAGE>



<TABLE>
<CAPTION>





                       HARLEYSVILLE GROUP

      SCHEDULE VI - SUPPLEMENTAL INSURANCE INFORMATION CONCERNING
                  PROPERTY AND CASUALTY SUBSIDIARIES

             YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                         (in thousands)

                                              LOSSES AND LOSS
                 LIABILITY                  SETTLEMENT EXPENSES
                 FOR UNPAID   DISCOUNT,        (BENEFITS)
                 LOSSES AND   IF ANY,           INCURRED           PAID LOSSES
                 LOSS         DEDUCTED         RELATED TO          AND LOSS
                 SETTLEMENT   FROM          CURRENT    PRIOR       SETTLEMENT
                 EXPENSES     RESERVES(1)   YEAR       YEARS       EXPENSES
                 ----------   -----------   -------    ---------   ----------

<S>              <C>          <C>          <C>         <C>         <C>
Year ended:

  December 31,
   2002           $928,335     $9,786       $526,265   $ (4,648)   $465,296
                  ========     ======       ========   ========    ========


  December 31,
   2001           $879,056     $8,007       $537,172   $(17,350)   $511,545
                  ========     ======       ========   ========    ========


  December 31,
   2000           $864,843     $7,774       $541,738   $(48,937)   $524,131
                  ========     ======       ========   ========    ========

</TABLE>


Notes:  (1)  The  amount  of  discount  relates  to  certain  long-term
             disability  workers'  compensation  cases.  A  discount
             rate of 3.5% (5% on New Jersey  cases)  was  used.

        (2)  Information  required  by  remaining  columns  is contained
             in  Schedule  III.

Page  46

<PAGE>



                             SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned  thereunto  duly  authorized.

                      HARLEYSVILLE  GROUP  INC.


Date:  March 26,  2003          By:  /s/  WALTER  R.  BATEMAN
                                    ------------------------------
                                      Walter  R.  Bateman
                                      Chairman  of  the  Board and
                                      Chief  Executive  Officer


          Pursuant  to  the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
in  the  capacities  and  on  the  dates  indicated.



       SIGNATURE                       TITLE                     DATE
------------------------     -------------------------     ---------------

                             Chairman  of  the  Board,     March 26,  2003
                             Chief  Executive  Officer
/s/  WALTER  R.  BATEMAN     and  a  Director
------------------------
   Walter R. Bateman


                             Senior  Vice  President       March 26,  2003
                             and  Chief  Financial
                             Officer  (principal
                             financial  officer  and
                             principal  accounting
/s/  BRUCE J. MAGEE          officer)
------------------------
   Bruce J. Magee


Page  47

<PAGE>



                          SIGNATURES
                          (Continued)


         SIGNATURE                     TITLE              DATE
---------------------------        ---------------   --------------

/s/  LOWELL  R.  BECK              Director          March 26,  2003
---------------------------
   Lowell  R.  Beck


/S/  W.  THACHER  BROWN            Director          March 26,  2003
---------------------------
   W.  Thacher  Brown


/s/  MICHAEL  L.  BROWNE           Director          March 26,  2003
---------------------------
   Michael  L.  Browne


/s/  ROBERT  D.  BUZZELL           Director          March 26,  2003
---------------------------
   Robert  D.  Buzzell


/s/  MIRIAN  M.  GRADDICK-WEIR     Director          March 26,  2003
------------------------------
   Mirian  M.  Graddick-Weir


/s/  JOSEPH  E.  MCMENAMIN         Director          March 26,  2003
---------------------------
   Joseph  E.  McMenamin


/s/  FRANK  E.  REED               Director          March 26,  2003
---------------------------
   Frank  E.  Reed


/s/  JERRY  S.  ROSENBLOOM         Director          March 26,  2003
---------------------------
   Jerry  S.  Rosenbloom


Page  48

<PAGE>


                    CERTIFICATION PURSUANT TO THE SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

     I,  Walter  R.  Bateman  certify  that:

     1.     I  have  reviewed  this  annual  report on Form 10-K of Harleysville
Group  Inc.;

     2.     Based  on  my  knowledge,  this  annual  report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
to  make  the  statements  made,  in light of the circumstances under which such
statements  were made, not misleading with respect to the period covered by this
annual  report;

     3.     Based on my knowledge, the financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial conditions, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

     4.     The registrant's other certifying officers and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a)     designed  such  disclosure  controls  and  procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

     b)     evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");  and

     c)     presented  in  this  annual  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

     5.     The  registrant's  other  certifying  officers and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent  function):

     a)     all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b)     any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and

     6.     The  registrant's  other certifying officers and I have indicated in
this  annual  report  whether  or not there were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

Date:  March 26,  2003           /s/WALTER  R.  BATEMAN
       ------------------        -----------------------------
                                 Walter  R.  Bateman
                                 Chairman  of  the  Board  and
                                 Chief  Executive  Officer

Page  49

<PAGE>



                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

     I,  Bruce  J.  Magee  certify  that:

     1.     I  have  reviewed  this  annual  report on Form 10-K of Harleysville
Group  Inc.;

     2.     Based  on  my  knowledge,  this  annual  report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
to  make  the  statements  made,  in light of the circumstances under which such
statements  were made, not misleading with respect to the period covered by this
annual  report;

     3.     Based on my knowledge, the financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial conditions, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

     4.     The registrant's other certifying officers and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a)     designed  such  disclosure  controls  and  procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

     b)     evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");  and

     c)     presented  in  this  annual  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

     5.     The  registrant's  other  certifying  officers and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent  function):

     a)     all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b)     any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and

     6.     The  registrant's  other certifying officers and I have indicated in
this  annual  report  whether  or not there were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

Date:  March 26,  2003         /s/BRUCE  J.  MAGEE
      ------------------       -----------------------------
                               Bruce  J.  Magee
                               Senior  Vice  President  and
                               Chief  Financial  Officer

Page  50

<PAGE>



            EXHIBIT  INDEX

 EXHIBIT
   NO.                  DESCRIPTION  OF  EXHIBITS
--------     -------------------------------------------------

 (13)(A)     Selected Consolidated Financial Data from the
             Company's 2002 annual report  to  stockholders.

 (13)(B)     Management's  Discussion  and Analysis of Results
             of Operations and Financial  Condition  from  the
             Company's  2002  annual report to stockholders.

 (13)(C)     Quantitative and Qualitative Disclosures About
             Market Risk from the Company's  2002  annual
             report  to  stockholders.

 (13)(D)     Consolidated  financial  statements  from the
             Company's 2002 annual report  to  stockholders.

 (13)(E)     Market  for  Common  Stock and Related Security
             Holder Matters from the  Company's  2002  annual
             report  to  stockholders.

 (21)     Subsidiaries  of  Registrant.

 (23)     Independent  Auditors'  Consent  and  Report  on
          Schedules.

 (99)     Form 11-K Annual Report for the Harleysville
          Group Inc. Employee Stock Purchase  Plan  for
          the  year  ended  December  31,  2002.

 (99.1)   Certification  of  Chief  Executive  Officer

 (99.2)   Certification  of  Chief  Financial  Officer

<PAGE>