Celebrating Years of Service

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					ANNUAL REPORT 2007
 Richard J. Schinler
 President and CEO




Celebrating          25 Years of Service
In 2007 Integrity weathered several storms, both literally and
figuratively. Yet through it all our associates met the challenges
                                                                                           Board of Directors
head-on and achieved success. Integrity’s direct premium writings for
the year were $100.1 million. This was a slight drop from 2006, but a
strong showing none the less considering the competitiveness of the
property and casualty marketplace. It also represents the balance
that can be achieved between personal and commercial lines.
Our personal lines premiums grew by 16.4% in 2007, hitting
$57.0 million. At the same time, our commercial business dropped
by 16% to $43.2 million.

Personal lines new business exceeded $10 million for the second
consecutive year and renewal premiums grew by 33.8% over 2006.              Douglas P. Buth               Alan Brannan                 Roger A. Formisano
Commercial renewal business was impacted by both economic and                   Retired CEO                   President                  Vice President Strategy
market conditions, but we wrote 15.4% more new business policies                APPLETON                Property and Casualty
                                                                                                          Grange Insurance
                                                                                                                                    University of Wisconsin - Madison
                                                                                                                                          Medical Foundation
and attained 7% more new business premium than 2006, a
tremendous accomplishment in the current market.

Profitability was challenged by a number of factors in 2007.
Summer storms and a higher than expected number of large losses
put pressure on both personal and commercial lines combined
ratios. Despite that pressure, Integrity ended the year with a pooled
combined ratio of 100.9.

Beyond the numbers, 2007 was a year of accomplishments at
Integrity. We launched our new subsidiary company, Integrity
Property & Casualty Insurance Company. This company will be
used to write new products in both our commercial and personal
                                                                         Franklin C. Jesse, Jr.        Michael V. Parrott               Richard J. Schinler
business segments, expanding new business opportunities for the          Vice Chairman of the Board           President                    President and CEO
independent agencies that represent us.                                            Principal                 ICON, Inc.                    Integrity Insurance
                                                                             Gray, Plant, Mooty
                                                                                 Law Firm
We celebrated our fifth anniversary as an affiliate of the Grange
Mutual Casualty Group in 2007. This affiliation continues to pay
huge dividends to Integrity in a whole host of ways. Our pooling
arrangement with Grange enabled us to post profitable results for
2007 despite the challenges noted above. We continue to offer our
agents award-winning technology and expanded products brought
to us by Grange. Internally, integration opportunities contribute to
greater operational effectiveness. Looking ahead, I believe this
relationship will continue to benefit Integrity, our agents, and our
policyholders for years to come.

2008 will hold special meaning for both Integrity and for me,
personally. Integrity will celebrate 75 years in business and I will      Thomas S. Stewart            Philip W. Stichter                 Philip H. Urban
                                                                                Instructor
reach my 25th anniversary with the company. Looking back, I am            The Ohio State University
                                                                                                           Vice Chairman
                                                                                                      The Griffith Foundation for
                                                                                                                                         Chairman of the Board
                                                                                                                                           President and CEO
impressed by the evolution of Integrity. We’ve successfully                                              Insurance Education               Grange Insurance
weathered market highs and lows, changing economic cycles,
and Mother Nature. We moved into a new corporate headquarters,
technology has become critical to our daily operations, and
premiums have increased five-fold. While the changes are
remarkable, I think I’m most impressed by what has remained
constant over the past 25 years. Our associates have always been
the lifeblood and spirit of Integrity – their steady commitment has
translated into strong relationships with, and a high level of service
to, our independent agency partners, policyholders, and community.

As we look to 2008, we can be proud of what was accomplished
in 2007, but we are also aware of the increasing challenges that our
industry faces. Market conditions, weather risks, and the current
economic downturn all will create pressure on both the top line and
bottom line. Integrity is positioned to successfully cope with that
pressure and maintain our course.
“Thank you for all your help after my injury. Thank you for pushing my
appointments and helping me get back to work.” - Policyholder Comment



                                       Denise Runge
                                       Integrity Work Comp Claims Rep




            The atmosphere at Integrity is driven by a simple
            inherent philosophy: Ease of Doing Business (EODB). We measure our success based
                                                                       ®


                                               on this guiding principle, and we are happy to report that in
                                               2007 Integrity’s agents rated our personal lines and marketing
                                               departments easier to do business with than our competition
                                               for the second consecutive year. Integrity agents selling Grange Life




                                            EODB
                                               insurance ranked Grange better than the competition in seven out of
                                               eight categories. We are pleased to report that all departments
                                               showed marked improvement.
                                                                                                               ®
                                               Integrity was also ranked third in the annual survey conducted by
                                               Deep Consumer Connections, Inc. The company asked more than
                                               8,000 independent agents to assess the performance of more than
                                               200 property/casualty carriers on eleven EODB factors, including
                                               underwriting responsiveness, handling claims promptly, providing
                                               effective technology, and acting with the agency’s needs in mind.




                                                  “As a regional, Integrity is close enough to note loss
                                                  trends, and flexible enough to make adjustments that work
                                                  to everyone's advantage.
                                                  They're also easy to work with on every level. The Integrity
                                                  people never stop thinking of ways to make things user-friendly
                                                  for agents, and are always inventing new ways of doing business
                                                  that help me help my clients. Their claims service is fast and fair.

               Steve Wells
                                                  And, they're eager to write business.

               United Insurance Agencies          The fact that they're 100% committed to the Independent Agent
               Iowa                               Network makes Integrity easy to recommend to agents and
                                                  customers alike.”
                                                   Ease of Doing Business® is our goal.


A critical component of Integrity’s service philosophy is to provide our
agents with technology that helps them to be more productive, reduce
turnaround time, and deliver high-quality, personalized service. Our
accomplishments in this area were recognized when we received
the Interface Partner Award from Applied Systems, Inc. for being
one of the best at advancing agency-company interface.

Another EODB factor is providing our customers with competitive
products. Our personal lines department introduced a new dwelling
fire product in all states and expanded our motorcycle program to
Iowa and Minnesota. We strengthened our current commercial
product offerings by adding liquor liability coverage in Iowa and
Minnesota. Our new subsidiary, Integrity Property & Casualty
Company, will enable us to further expand our product offerings.




      “The loss control representatives at Integrity range from
      22 - 29 years of experience. That experience allows us to
      provide customers with common sense insight based on
      solutions beyond the books. We're not afraid to look for
      alternatives, such as providing our CD/video program. We
       feel it is important to provide our customers with tools to help
      them, not just point them to safety websites. And, we believe
      all customers deserve loss control services, not just the
      large accounts.”
                                                                           Steve Pautz
                                                                           Integrity Loss Control Manager
“First and foremost, I want to thank you for all your efforts. It amazes
me that it is easier working with an insurance company than with local
repair shops. You have made this as painless as possible, and I greatly
appreciate this. Please feel free to share this with your supervisor as you
deserve a pat on the back!” - Policyholder Comment



                                         Bree Sweetack
                                         Integrity Property Claims Rep




  Integrity literally weathered the storm in 2007, as we paid
  out more than $7.2 million for storm-related claims. Our associates received a flurry of
                                                     claims during June, August, and October. The vast majority of
                                                     storm activity took place in Minnesota in the form of hail damage.

                                                     Our affiliation with Grange Insurance allows us to financially
                                                     weather these storms. We pool our financial results and spread the
                                                     risk as a member of a $1.1 billion enterprise; thus protecting the
                                                     financial security of our policyholders. Integrity partners with the
                                                                      Grange Catastrophe Team, which has consistently
                                                                      outperformed its competition with strong service,
                                                                      even in the most devastating situations. No matter
                                                                     the storm, we will be there to fulfill our promise.

                                                                     In order for the Integrity claims department to
                                                                    gauge our EODB, we hire third-party vendors to
                                                                    survey both insureds and agents. Insureds expressed
                                                                    their satisfaction with a 95% rating, stating they
                                                                    would recommend Integrity to their family
                                                                    and friends.




                                                                   “In 2007, we launched a claims website on
                                                                   IntegrityAgent.com. Agents can now report a
                                                                   claim on-line, find out what action is being taken,
                                                                   and contact the appropriate claims representative.
                                                                   We also added a claims center to our newly
                                                                   designed public website, IntegrityInsurance.com,
                                Jennifer Bohlmann                  to help our insureds learn about the claims
                                Integrity Claims                   process.”
                                Business Analyst
                                              A year of many weather-related claims.


Claims associates work to maintain this high satisfaction level. They are
quick to respond within a three-hour initial contact goal, and are ready
with a vast array of technology-based tools to aid our policyholders with
fast and fair service.

Based on feedback from our agents, they wanted more online access to
their insureds’ claims information and we delivered just that. At the end
of 2007 we unveiled a new claims website. Agents can now view their
insureds’ claims and email the adjuster directly from a web link. Agents
also have access to claims milestones which include:
         • Loss received
         • Initial contact
         • Payment history

Whatever the weather holds, our claims associates have proven they
have the service philosophy, technology, and resources to excel in
any situation.




“I joined the Integrity Agency Council in 2007.
I’ve had the opportunity to get to know the
management at Integrity and they really listen
and then make things work.
Everyone we work with has gone above and beyond
what is expected to position our Agency for success
with Integrity Insurance. I really like their
                                                                     Kevin Kohlbeck
                                                                     The Vincent Group
commitment to making our job easier.”                                Wisconsin
“I wanted to let you know that Keith at the auto body shop had
good things to say about you. He said you did a better job on this
claim than most of the adjusters he works with. I just wanted to say
thanks! Not only does that make you look good but it makes our
agency look good too and we appreciate it! Thanks again.”
                          - Sue Anderson, Core-Vens & Company



                              Eric Truttschel
                              Integrity Auto Claims Rep




 The month of February 2007 commemorated the
 five-year anniversary of the affiliation of Grange Mutual Casualty Company with Integrity
                                                Mutual Insurance Company.

                                                Our two companies agreed to create an innovative partnership
                                                using a merger model that was new to the insurance industry.
                                                We sought improved financial stability and automation capabilities,
                                                while Grange looked to expand geographic operating territory.
                                                As part of the affiliation, we pooled underwriting results, allowing
                                                us to achieve a shared AM Best rating of “A” Excellent, while also
                                                sharing technology and other benefits across the two organizations.

                                                In the five years of affiliation, we’ve seen tremendous benefits
                                                and reached important milestones. We’ve added new products
                                                and enhanced shared technology. We’ve reached $100 million
                                                in direct written premium for the first time in company history,
                                                while Grange celebrated reaching the $1 billion mark.




                                                          “The affiliation between Grange and Integrity
                                                          has truly been a win-win for our agency and our
                                                          customers. The new technology we’ve gained
                                                          access to makes it easy for our staff to work
                                                          smoothly, efficiently, and professionally, which
                                                          in turns helps our clients.”
                          Steve Micke
                          Reliable Agency
                          Minnesota
                                                                  New products on the horizon.

As we reflect back on 2007, it is exciting to look forward to the
beginning of a new year. In 2008 Integrity will offer a new monoline
commercial auto product, AutoAccel®. We will also be introducing
a new commercial property policy.

In personal lines, we will be busy preparing for the launch of new
products later in the year. These new products will expand our market
position, creating new business opportunities for agents in all three states.
Along with the new products will come a new easy-to-use format on
our Integrity agent quoting system, GAINWeb®.

Integrity is poised and ready to start a new day, a new chapter in
our history. As we celebrate 75 years of service in 2008, we’ll continue
to build on the tradition of service set forth by our forefathers,
“Insurance founded on the Golden Rule.”




     “Integrity understands the important role training plays
     in EODB. That's why we provide support to our agency
     partners, helping them utilize our technology. We offer
     training via WebEx, an online program that allows
     participants to join a training session right from
     their office.”
                                                                                Moira Blaney
                                                                                Integrity Agency
                                                                                Training Consultant
                    Balance Sheet (000 omitted)
Financial Results                                                    Dec. 31, 2007    Dec. 31, 2006
                    Admitted Assets
                    Bonds                                                $ 46,126         $ 43,696
                    Stocks                                                  9,033            8,631
                    Real Estate                                             2,176            2,347
                    Cash and Short-Term Investments                         5,511            3,173
                    Agents’ Balances/Premium Due                            7,869            7,697
                    Accrued Investment Income                                 483              486
                    Other Assets                                            1,421            3,006
                    Total Admitted Assets                                $ 72,619         $ 69,036

                    Liabilities & Policyholders’ Surplus
                    Reserve for Losses
                     and Loss Expenses                                   $ 20,773         $ 20,884
                    Unearned Premiums                                      15,901           15,802
                    Accrued Expenses, Accounts
                     Payable, and Other Liabilities                         6,278            5,389
                    Total Liabilities                                      42,952           42,075
                    Policyholders’ Surplus                                 29,667           26,961
                    Total Liabilities and
                     Policyholders’ Surplus                              $ 72,619         $ 69,036



                    Statements of Income (000 omitted)
                                                                     Dec. 31, 2007    Dec. 31, 2006

                    Premiums Earned                                      $ 43,890         $ 41,926
                    Losses                                                (23,201)         (22,174)
                    Loss Adjustment Expenses                               (4,990)          (4,808)
                    Other Underwriting Expense                            (16,025)         (14,110)
                    Net Underwriting Gain (Loss)                             (326)             834
                    Net Investment and Other Income                         3,467            2,783
                    Dividends to Policyholders                                 (96)           (167)
                    Federal Income Taxes                                   (1,056)          (1,239)
                    Net Income                                           $ 1,988          $ 2,211



                    Statements of Changes in Surplus (000 omitted)
                                                                     Dec. 31, 2007    Dec. 31, 2006
                    Policyholders’ Surplus
                     Beginning of Year                                   $ 26,961         $ 24,438
                    Net Income                                              1,988            2,211
                    Change in Unrealized Gains                                154              400
                    Change in Net Deferred Income Tax                         177              (34)
                    Change in Non-Admitted Assets                             387              (54)
                    Policyholders’ Surplus, End of Year                  $ 29,667         $ 26,961
                                                                        Senior Management Team
         Mary Jo Buchberger - VP Finance, Richard J. Schinler - President and CEO, Cathy Beaudin - VP Marketing,
     (Back)
       Gary Gudex - VP Commercial Lines Underwriting, Carolyn Peterson - Personal Lines Underwriting Manager
                        (Front) Cindy Heindel - VP Human Resources, Jon Match - VP Claims



30                                        120                                        120


25                                        100                                        100


20                                        80                                         80


15                                        60                                         60


10                         29.7           40                                         40
                 24.4 27.0                                     96.4 100.3    100.1                       94.4   97.8   100.9
       19.3 22.3                                 87.0   95.2                               98.1   93.7
5                                         20                                         20


0                                          0     2003   2004   2005   2006   2007     0    2003   2004   2005   2006   2007
      2003    2004   2005   2006   2007


                 Surplus                        Direct Written Premium                        Combined Ratio
               (in Millions)                            (in Millions)
                             MISSION
To protect the financial security of our policyholders.

                              VISION
  To build financial strength for the benefit of our
  policyholders and independent agents by leading
         our industry in profitable growth.

                         At Integrity we will:
               Operate within a high-performance culture.
            Sustain successful relationships with our agents.
     Provide the right products, for the right risks, at the right price.
             Seek opportunities to increase our market share.
               Deliver exceptional service and technology.
           Produce the highest levels of quality and efficiency.

   We will measure our performance by maintaining a combined ratio
    of 97 and growing at a rate equal to or greater than the industry.




                 2121 East Capitol Drive, P.O. Box 539
                   Appleton, Wisconsin 54912-0539
                     www.IntegrityInsurance.com

              A Member of the Grange Mutual Casualty Group