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Donegal Group Inc. Announces Second Quarter and First Half 2022 Results

Donegal Group, Inc.
Donegal Group, Inc.

MARIETTA, Pa., July 28, 2022 (GLOBE NEWSWIRE) -- Donegal Group Inc. (NASDAQ: DGICA) and (NASDAQ: DGICB) today reported its financial results for the second quarter and first half of 2022.

Significant Items for Second Quarter of 2022 (all comparisons to second quarter of 2021):

  • Net loss of $8.2 million, or 26 cents per Class A share, compared to net income of $16.2 million, or 53 cents per diluted Class A share

  • Net premiums earned increased 6.0% to $204.1 million

  • Net premiums written1 increased 4.2% to $218.4 million

  • Combined ratio of 105.0%, compared to 96.1%

  • Net loss included after-tax net investment losses of $6.6 million, or 21 cents per Class A share, compared to after-tax net investment gains of $3.4 million, or 11 cents per diluted Class A share

  • Book value per share of $15.87 at June 30, 2022

Financial Summary

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

 

2021

 

 

% Change

 

 

2022

 

 

 

2021

 

 

% Change

 

 

(dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Statement Data

 

 

 

 

 

 

 

 

 

 

 

 

Net premiums earned

$

204,128

 

 

$

192,489

 

 

6.0

%

 

$

403,377

 

 

$

379,740

 

 

6.2

%

 

Investment income, net

 

8,204

 

 

 

7,652

 

 

7.2

 

 

 

16,063

 

 

 

15,163

 

 

5.9

 

 

Net investment (losses) gains

 

(8,377

)

 

 

4,241

 

 

NM2

 

 

 

(8,453

)

 

 

6,710

 

 

NM

 

 

Total revenues

 

204,311

 

 

 

205,146

 

 

-0.4

 

 

 

411,938

 

 

 

403,116

 

 

2.2

 

 

Net (loss) income

 

(8,208

)

 

 

16,164

 

 

NM

 

 

 

4,937

 

 

 

26,694

 

 

-81.5

 

 

Non-GAAP operating (loss) income1

 

(1,590

)

 

 

12,814

 

 

NM

 

 

 

11,615

 

 

 

21,393

 

 

-45.7

 

 

Annualized (loss) return on average equity

 

-6.3

%

 

 

12.0

%

 

NM

 

 

 

1.9

%

 

 

10.0

%

 

-8.1

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income – Class A (diluted)

$

(0.26

)

 

$

0.53

 

 

NM

 

 

$

0.16

 

 

$

0.88

 

 

-81.8

%

 

Net (loss) income – Class B

 

(0.24

)

 

 

0.48

 

 

NM

 

 

 

0.14

 

 

 

0.80

 

 

-82.5

 

 

Non-GAAP operating (loss) income – Class A (diluted)

 

(0.05

)

 

 

0.42

 

 

NM

 

 

 

0.37

 

 

 

0.71

 

 

-47.9

 

 

Non-GAAP operating (loss) income – Class B

 

(0.05

)

 

 

0.38

 

 

NM

 

 

 

0.34

 

 

 

0.64

 

 

-46.9

 

 

Book value

 

15.87

 

 

 

17.64

 

 

-10.0

%

 

 

15.87

 

 

 

17.64

 

 

-10.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1The “Definitions of Non-GAAP Financial Measures” section of this release defines data that the Company prepares on an accounting basis other than U.S. generally accepted accounting principles (“GAAP”) and reconciles such data to GAAP measures.

2Not meaningful.

Management Commentary

Kevin G. Burke, President and Chief Executive Officer, stated, “Our second quarter of 2022 results reflected a number of factors, including after-tax investment losses of $6.6 million related to the market-driven decline in the value of our equity investment holdings as well as elevated weather-related and large fire losses during the quarter. The above-average weather-related losses for the second quarter of 2022 resulted primarily from multiple localized wind and hail events, with only one event generating claims that exceeded our insurance subsidiaries’ reinsurance retention amount. While claim frequency levels generally remained consistent with historical trends, inflationary pressures contributed to higher loss costs in our homeowners, commercial multi-peril and automobile lines of business. We expect the premium rate increases we have implemented to date, and plan to implement during the remainder of 2022 and 2023 will lead to improved results as those increases are earned over the terms of the underlying policies. In spite of the elevated loss activity in the second quarter, our underwriting results for the first half of 2022 largely met our expectations. We are making excellent progress on our ongoing strategic and business transformation initiatives. Maintaining a long-term view, we believe that we are well-positioned to enhance our profitability and achieve our operational and financial objectives over time.”

Insurance Operations

Donegal Group is an insurance holding company whose insurance subsidiaries and affiliates offer personal and commercial property and casualty lines of insurance in three Mid-Atlantic states (Delaware, Maryland and Pennsylvania), three New England states (Maine, New Hampshire and Vermont), six Southern states (Alabama, Georgia, North Carolina, South Carolina, Tennessee and Virginia), eight Midwestern states (Illinois, Indiana, Iowa, Michigan, Nebraska, Ohio, South Dakota and Wisconsin) and four Southwestern states (Colorado, New Mexico, Texas and Utah). Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group conduct business together as the Donegal Insurance Group.

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

 

2021

 

 

% Change

 

 

2022

 

 

 

2021

 

 

% Change

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Premiums Earned

 

 

 

 

 

 

 

 

 

 

 

 

Commercial lines

$

126,854

 

 

$

115,300

 

 

 

10.0

%

 

$

251,183

 

 

$

224,525

 

 

11.9

%

 

Personal lines

 

77,274

 

 

 

77,189

 

 

 

0.1

 

 

 

152,194

 

 

 

155,215

 

 

-1.9

 

 

Total net premiums earned

$

204,128

 

 

$

192,489

 

 

 

6.0

%

 

$

403,377

 

 

$

379,740

 

 

6.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Premiums Written

 

 

 

 

 

 

 

 

 

 

 

 

Commercial lines:

 

 

 

 

 

 

 

 

 

 

 

 

Automobile

$

43,588

 

 

$

42,574

 

 

 

2.4

%

 

$

92,216

 

 

$

89,813

 

 

2.7

%

 

Workers' compensation

 

29,343

 

 

 

28,567

 

 

 

2.7

 

 

 

62,240

 

 

 

63,508

 

 

-2.0

 

 

Commercial multi-peril

 

51,117

 

 

 

47,912

 

 

 

6.7

 

 

 

105,314

 

 

 

99,715

 

 

5.6

 

 

Other

 

10,496

 

 

 

9,970

 

 

 

5.3

 

 

 

21,607

 

 

 

20,421

 

 

5.8

 

 

Total commercial lines

 

134,544

 

 

 

129,023

 

 

 

4.3

 

 

 

281,377

 

 

 

273,457

 

 

2.9

 

 

Personal lines:

 

 

 

 

 

 

 

 

 

 

 

 

Automobile

 

44,988

 

 

 

44,296

 

 

 

1.6

 

 

 

87,228

 

 

 

87,303

 

 

-0.1

 

 

Homeowners

 

32,785

 

 

 

30,369

 

 

 

8.0

 

 

 

56,300

 

 

 

53,057

 

 

6.1

 

 

Other

 

6,129

 

 

 

5,917

 

 

 

3.6

 

 

 

11,983

 

 

 

11,650

 

 

2.9

 

 

Total personal lines

 

83,902

 

 

 

80,582

 

 

 

4.1

 

 

 

155,511

 

 

 

152,010

 

 

2.3

 

 

Total net premiums written

$

218,446

 

 

$

209,605

 

 

 

4.2

%

 

$

436,888

 

 

$

425,467

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Premiums Written

The 4.2% increase in net premiums written for the second quarter of 2022 compared to the second quarter of 2021, as shown in the table above, represents 4.3% growth in commercial lines net premiums written and 4.1% growth in personal lines net premiums written. The $8.8 million increase in net premiums written for the second quarter of 2022 compared to the second quarter of 2021 included:

  • Commercial Lines: $5.5 million increase that we attribute primarily to modest new business writings, strong premium retention and a continuation of renewal premium increases in lines other than workers’ compensation, offset partially by planned attrition in regions we have targeted for profit improvement.

  • Personal Lines: $3.3 million increase that we attribute to premium rate increases our insurance subsidiaries have implemented over the past four quarters, strong policy retention and modest new business writings in certain states where we have introduced an updated suite of products.

Underwriting Performance

We evaluate the performance of our commercial lines and personal lines segments primarily based upon the underwriting results of our insurance subsidiaries as determined under statutory accounting practices. The following table presents comparative details with respect to the GAAP and statutory combined ratios1 for the three and six months ended June 30, 2022 and 2021:

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

GAAP Combined Ratios (Total Lines)

 

 

 

 

 

 

 

 

Loss ratio (non-weather)

 

59.8

%

 

 

53.1

%

 

 

57.5

%

 

 

56.5

%

 

Loss ratio (weather-related)

 

9.6

 

 

 

6.1

 

 

 

6.8

 

 

 

4.9

 

 

Expense ratio

 

35.0

 

 

 

36.0

 

 

 

35.4

 

 

 

35.1

 

 

Dividend ratio

 

0.6

 

 

 

0.9

 

 

 

0.7

 

 

 

0.8

 

 

Combined ratio

 

105.0

%

 

 

96.1

%

 

 

100.4

%

 

 

97.3

%

 

 

 

 

 

 

 

 

 

 

Statutory Combined Ratios

 

 

 

 

 

 

 

 

Commercial lines:

 

 

 

 

 

 

 

 

Automobile

 

100.1

%

 

 

105.5

%

 

 

94.7

%

 

 

103.9

%

 

Workers' compensation

 

78.7

 

 

 

84.0

 

 

 

87.8

 

 

 

89.3

 

 

Commercial multi-peril

 

119.5

 

 

 

94.5

 

 

 

109.8

 

 

 

100.8

 

 

Other

 

87.1

 

 

 

77.2

 

 

 

79.9

 

 

 

68.8

 

 

Total commercial lines

 

101.6

 

 

 

94.3

 

 

 

97.6

 

 

 

96.6

 

 

Personal lines:

 

 

 

 

 

 

 

 

Automobile

 

104.0

 

 

 

91.1

 

 

 

98.9

 

 

 

92.2

 

 

Homeowners

 

123.5

 

 

 

110.1

 

 

 

115.9

 

 

 

102.4

 

 

Other

 

51.3

 

 

 

74.5

 

 

 

47.6

 

 

 

75.7

 

 

Total personal lines

 

107.5

 

 

 

96.9

 

 

 

101.2

 

 

 

94.7

 

 

Total lines

 

103.8

%

 

 

95.4

%

 

 

99.0

%

 

 

95.9

%

 

 

 

 

 

 

 

 

 

 

Loss Ratio

For the second quarter of 2022, the loss ratio increased to 69.4%, compared to 59.2% for the second quarter of 2021. Weather-related losses were $19.6 million, or 9.6 percentage points of the loss ratio, for the second quarter of 2022, compared to $11.7 million, or 6.1 percentage points of the loss ratio, for the second quarter of 2021. Weather-related loss activity for the second quarter of 2022 was higher than our previous five-year average of $17.1 million for second-quarter weather-related losses.

Large fire losses, which we define as individual fire losses in excess of $50,000, for the second quarter of 2022 were $13.4 million, or 6.6 percentage points of the loss ratio. That amount exceeded the large fire losses of $11.7 million, or 6.1 percentage points of the loss ratio, for the second quarter of 2021.   We experienced a $1.5 million increase in commercial property fire losses compared to the prior-year quarter.

Net favorable development of reserves for losses incurred in prior accident years of $7.9 million decreased the loss ratio for the second quarter of 2022 by 3.9 percentage points, compared to $13.4 million that decreased the loss ratio for the second quarter of 2021 by 6.9 percentage points. Our insurance subsidiaries experienced favorable development primarily relating to reserves for accident years 2021 and 2020 in the commercial automobile, personal automobile and workers’ compensation lines of business.

Expense Ratio

The expense ratio was 35.0% for the second quarter of 2022, compared to 36.0% for the second quarter of 2021. The decrease in the expense ratio reflected lower underwriting-based incentive costs for our agents and employees for the second quarter of 2022 compared to the prior-year quarter.

Investment Operations

Donegal Group’s investment strategy is to generate an appropriate amount of after-tax income on its invested assets while minimizing credit risk through investment in high-quality securities. As a result, we had invested 92.9% of our consolidated investment portfolio in diversified, highly rated and marketable fixed-maturity securities at June 30, 2022.

 

June 30, 2022

 

December 31, 2021

 

 

Amount

 

%

 

Amount

 

%

 

 

(dollars in thousands)

 

Fixed maturities, at carrying value:

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. government corporations and agencies

$

134,746

 

 

 

10.4

%

 

$

121,453

 

 

 

9.5

%

 

Obligations of states and political subdivisions

 

448,206

 

 

 

34.5

 

 

 

428,814

 

 

 

33.6

 

 

Corporate securities

 

398,017

 

 

 

30.6

 

 

 

412,758

 

 

 

32.3

 

 

Mortgage-backed securities

 

226,412

 

 

 

17.4

 

 

 

237,709

 

 

 

18.6

 

 

Total fixed maturities

 

1,207,381

 

 

 

92.9

 

 

 

1,200,734

 

 

 

94.0

 

 

Equity securities, at fair value

 

45,261

 

 

 

3.5

 

 

 

63,420

 

 

 

5.0

 

 

Short-term investments, at cost

 

46,685

 

 

 

3.6

 

 

 

12,692

 

 

 

1.0

 

 

Total investments

$

1,299,327

 

 

 

100.0

%

 

$

1,276,846

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

Average investment yield

 

2.5

%

 

 

 

 

2.6

%

 

 

 

Average tax-equivalent investment yield

 

2.6

%

 

 

 

 

2.6

%

 

 

 

Average fixed-maturity duration (years)

 

6.1

 

 

 

 

 

4.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments at June 30, 2022 increased by $22.5 million compared to December 31, 2021, as new funds invested were largely offset by $41.5 million of unrealized losses within our available-for-sale fixed-maturity portfolio due to a substantial increase in market interest rates during the first half of 2022.

Net investment income of $8.2 million for the second quarter of 2022 increased 7.2% compared to $7.7 million for the second quarter of 2021. The increase in net investment income reflected primarily an increase in average invested assets relative to the prior-year second quarter.

Net investment losses of $8.4 million for the second quarter of 2022 were primarily related to unrealized losses in the fair value of equity securities held at June 30, 2022. Net investment gains of $4.2 million for the second quarter of 2021 were primarily related to unrealized gains in the fair value of equity securities held at June 30, 2021.

Our book value per share was $15.87 at June 30, 2022, compared to $16.95 at December 31, 2021, with the decrease primarily related to after-tax unrealized losses within our available-for-sale fixed-maturity portfolio during the first half of 2022 that reduced our book value by $1.02 per share.

Definitions of Non-GAAP Financial Measures

We prepare our consolidated financial statements on the basis of GAAP. Our insurance subsidiaries also prepare financial statements based on statutory accounting principles state insurance regulators prescribe or permit (“SAP”). In addition to using GAAP-based performance measurements, we also utilize certain non-GAAP financial measures that we believe provide value in managing our business and for comparison to the financial results of our peers. These non-GAAP measures are net premiums written, operating income or loss and statutory combined ratio.

Net premiums written and operating income or loss are non-GAAP financial measures investors in insurance companies commonly use. We define net premiums written as the amount of full-term premiums our insurance subsidiaries record for policies effective within a given period less premiums our insurance subsidiaries cede to reinsurers. We define operating income or loss as net income or loss excluding after-tax net investment gains or losses, after-tax restructuring charges and other significant non-recurring items. Because our calculation of operating income or loss may differ from similar measures other companies use, investors should exercise caution when comparing our measure of operating income or loss to the measure of other companies.

The following table provides a reconciliation of net premiums earned to net premiums written for the periods indicated:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

 

2021

 

 

% Change

 

 

2022

 

 

 

2021

 

 

% Change

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Premiums

 

 

 

 

 

 

 

 

 

 

 

 

Earned to Net Premiums Written

 

 

 

 

 

 

 

 

 

 

 

 

Net premiums earned

$

204,128

 

 

$

192,489

 

 

6.0

%

 

$

403,377

 

 

$

379,740

 

 

6.2

%

 

Change in net unearned premiums

 

14,318

 

 

 

17,116

 

 

-16.3

 

 

 

33,511

 

 

 

45,727

 

 

-26.7

 

 

Net premiums written

$

218,446

 

 

$

209,605

 

 

4.2

%

 

$

436,888

 

 

$

425,467

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table provides a reconciliation of net (loss) income to operating (loss) income for the periods indicated:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

 

2021

 

 

% Change

 

 

2022

 

 

 

2021

 

 

% Change

 

 

(dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net (Loss) Income

 

 

 

 

 

 

 

 

 

 

 

 

to Non-GAAP Operating (Loss) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(8,208

)

 

$

16,164

 

 

NM

 

 

$

4,937

 

 

$

26,694

 

 

-81.5

%

 

Investment losses (gains) (after tax)

 

6,618

 

 

 

(3,350

)

 

NM

 

 

 

6,678

 

 

 

(5,301

)

 

NM

 

 

Non-GAAP operating (loss) income

$

(1,590

)

 

$

12,814

 

 

NM

 

 

$

11,615

 

 

$

21,393

 

 

-45.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Reconciliation of Net (loss) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to Non-GAAP Operating (Loss) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income – Class A (diluted)

$

(0.26

)

 

$

0.53

 

 

NM

 

 

$

0.16

 

 

$

0.88

 

 

-81.8

%

 

Investment losses (gains) (after tax)

 

0.21

 

 

 

(0.11

)

 

NM

 

 

 

0.21

 

 

 

(0.17

)

 

NM

 

 

Non-GAAP operating (loss) income – Class A

$

(0.05

)

 

$

0.42

 

 

NM

 

 

$

0.37

 

 

$

0.71

 

 

-47.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income – Class B

$

(0.24

)

 

$

0.48

 

 

NM

 

 

$

0.14

 

 

$

0.80

 

 

-82.5

%

 

Investment losses (gains) (after tax)

 

0.19

 

 

 

(0.10

)

 

NM

 

 

 

0.20

 

 

 

(0.16

)

 

NM

 

 

Non-GAAP operating (loss) income – Class B

$

(0.05

)

 

$

0.38

 

 

NM

 

 

$

0.34

 

 

$

0.64

 

 

-46.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The statutory combined ratio is a non-GAAP standard measurement of underwriting profitability that is based upon amounts determined under SAP. The statutory combined ratio is the sum of:

  • the statutory loss ratio, which is the ratio of calendar-year incurred losses and loss expenses, excluding anticipated salvage and subrogation recoveries, to premiums earned;

  • the statutory expense ratio, which is the ratio of expenses incurred for net commissions, premium taxes and underwriting expenses to premiums written; and

  • the statutory dividend ratio, which is the ratio of dividends to holders of workers’ compensation policies to premiums earned.

The statutory combined ratio does not reflect investment income, federal income taxes or other non-operating income or expense. A statutory combined ratio of less than 100% generally indicates underwriting profitability.

Dividend Information

On July 21, 2022, we declared a regular quarterly cash dividend of $0.165 per share for our Class A common stock and $0.1475 per share for our Class B common stock, which is payable on August 15, 2022 to stockholders of record as of the close of business on August 1, 2022.

Pre-Recorded Webcast

At approximately 8:30 am EDT on Thursday, July 28, 2022, we will make available in the Investors section of our website a pre-recorded audio webcast featuring management commentary and a question and answer session. You may listen to the pre-recorded webcast by accessing the link on our website at http://investors.donegalgroup.com. A supplemental investor presentation is also available via our website.

About the Company

Donegal Group Inc. is an insurance holding company whose insurance subsidiaries and affiliates offer property and casualty lines of insurance in certain Mid-Atlantic, Midwestern, New England, Southern and Southwestern states. Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group Inc. conduct business together as the Donegal Insurance Group. The Donegal Insurance Group has an A.M. Best rating of A (Excellent).

The Class A common stock and Class B common stock of Donegal Group Inc. trade on the NASDAQ Global Select Market under the symbols DGICA and DGICB, respectively. We are focused on several primary strategies, including achieving sustained excellent financial performance, strategically modernizing our operations and processes to transform our business, capitalizing on opportunities to grow profitably and delivering a superior experience to our agents and customers.

Safe Harbor

We base all statements contained in this release that are not historic facts on our current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties. Forward-looking statements we make may be identified by our use of words such as “will,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “seek,” “estimate” and similar expressions. Our actual results could vary materially from our forward-looking statements. The factors that could cause our actual results to vary materially from the forward-looking statements we have previously made include, but are not limited to, prolonged economic challenges resulting from the COVID-19 pandemic, adverse litigation and other trends that could increase our loss costs (including labor shortages and escalating medical, automobile and property repair costs), adverse and catastrophic weather events, our ability to maintain profitable operations (including our ability to underwrite risks effectively and charge adequate premium rates), the adequacy of the loss and loss expense reserves of our insurance subsidiaries, the availability and successful operation of the information technology systems our insurance subsidiaries utilize, the successful development of new information technology systems to allow our insurance subsidiaries to compete effectively, business and economic conditions in the areas in which we and our insurance subsidiaries operate, interest rates, competition from various insurance and other financial businesses, terrorism, the availability and cost of reinsurance, legal and judicial developments including those related to COVID-19 business interruption coverage exclusions, changes in regulatory requirements, our ability to attract and retain independent insurance agents, changes in our A.M. Best rating and the other risks that we describe from time to time in our filings with the Securities and Exchange Commission. We disclaim any obligation to update such statements or to announce publicly the results of any revisions that we may make to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Investor Relations Contacts

Karin Daly, Vice President, The Equity Group Inc.
Phone: (212) 836-9623
E-mail: kdaly@equityny.com

Jeffrey D. Miller, Executive Vice President & Chief Financial Officer
Phone: (717) 426-1931
E-mail: investors@donegalgroup.com

Financial Supplement

Donegal Group Inc.

Consolidated Statements of (Loss) Income

(unaudited; in thousands, except share data)

 

 

 

 

 

Quarter Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

 

Net premiums earned

$

204,128

 

 

$

192,489

Investment income, net of expenses

 

8,204

 

 

 

7,652

Net investment (losses) gains

 

(8,377

)

 

 

4,241

Lease income

 

98

 

 

 

108

Installment payment fees

 

258

 

 

 

656

Total revenues

 

204,311

 

 

 

205,146

 

 

 

 

Net losses and loss expenses

 

141,608

 

 

 

113,957

Amortization of deferred acquisition costs

 

35,172

 

 

 

33,103

Other underwriting expenses

 

36,235

 

 

 

36,230

Policyholder dividends

 

1,289

 

 

 

1,629

Interest

 

240

 

 

 

217

Other expenses, net

 

346

 

 

 

313

Total expenses

 

214,890

 

 

 

185,449

 

 

 

 

(Loss) income before income tax (benefit) expense

 

(10,579

)

 

 

19,697

Income tax (benefit) expense

 

(2,371

)

 

 

3,533

 

 

 

 

Net (loss) income

$

(8,208

)

 

$

16,164

 

 

 

 

(Loss) earnings per common share:

 

 

 

Class A - basic and diluted

$

(0.26

)

 

$

0.53

Class B - basic and diluted

$

(0.24

)

 

$

0.48

 

 

 

 

Supplementary Financial Analysts' Data

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

Class A - basic

 

26,069,692

 

 

 

25,341,989

Class A - diluted

 

26,294,147

 

 

 

25,594,024

Class B - basic and diluted

 

5,576,775

 

 

 

5,576,775

 

 

 

 

Net premiums written

$

218,446

 

 

$

209,605

 

 

 

 

Book value per common share at end of period

$

15.87

 

 

$

17.64

 

 

 

 


Donegal Group Inc.

Consolidated Statements of Income

(unaudited; in thousands, except share data)

 

 

 

 

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

 

Net premiums earned

$

403,377

 

 

$

379,740

Investment income, net of expenses

 

16,063

 

 

 

15,163

Net investment (losses) gains

 

(8,453

)

 

 

6,710

Lease income

 

203

 

 

 

216

Installment payment fees

 

748

 

 

 

1,287

Total revenues

 

411,938

 

 

 

403,116

 

 

 

 

Net losses and loss expenses

 

259,491

 

 

 

233,176

Amortization of deferred acquisition costs

 

69,354

 

 

 

63,282

Other underwriting expenses

 

73,342

 

 

 

70,012

Policyholder dividends

 

2,937

 

 

 

2,924

Interest

 

393

 

 

 

530

Other expenses, net

 

774

 

 

 

744

Total expenses

 

406,291

 

 

 

370,668

 

 

 

 

Income before income tax expense

 

5,647

 

 

 

32,448

Income tax expense

 

710

 

 

 

5,754

 

 

 

 

Net income

$

4,937

 

 

$

26,694

 

 

 

 

Net income per common share:

 

 

 

Class A - basic

$

0.16

 

 

$

0.89

Class A - diluted

$

0.16

 

 

$

0.88

Class B - basic and diluted

$

0.14

 

 

$

0.80

 

 

 

 

Supplementary Financial Analysts' Data

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

Class A - basic

 

25,928,952

 

 

 

25,056,610

Class A - diluted

 

26,052,149

 

 

 

25,246,791

Class B - basic and diluted

 

5,576,775

 

 

 

5,576,775

 

 

 

 

Net premiums written

$

436,888

 

 

$

425,467

 

 

 

 

Book value per common share at end of period

$

15.87

 

 

$

17.64

 

 

 

 


Donegal Group Inc.

Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

 

 

2021

 

 

(unaudited)

 

 

 

 

 

 

ASSETS

Investments:

 

 

 

Fixed maturities:

 

 

 

Held to maturity, at amortized cost

$

700,335

 

 

$

668,105

 

Available for sale, at fair value

 

507,046

 

 

 

532,629

 

Equity securities, at fair value

 

45,261

 

 

 

63,420

 

Short-term investments, at cost

 

46,685

 

 

 

12,692

 

Total investments

 

1,299,327

 

 

 

1,276,846

 

Cash

 

21,811

 

 

 

57,709

 

Premiums receivable

 

190,324

 

 

 

168,863

 

Reinsurance receivable

 

445,151

 

 

 

455,411

 

Deferred policy acquisition costs

 

74,247

 

 

 

68,028

 

Prepaid reinsurance premiums

 

172,406

 

 

 

176,936

 

Receivable from Michigan Catastrophic Claims Association

 

-

 

 

 

18,113

 

Other assets

 

46,582

 

 

 

33,269

 

Total assets

$

2,249,848

 

 

$

2,255,175

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

 

 

 

Losses and loss expenses

$

1,083,354

 

 

$

1,077,620

 

Unearned premiums

 

601,939

 

 

 

572,958

 

Accrued expenses

 

4,797

 

 

 

4,029

 

Borrowings under lines of credit

 

35,000

 

 

 

35,000

 

Cash refunds due to Michigan policyholders

 

-

 

 

 

18,113

 

Other liabilities

 

13,736

 

 

 

16,419

 

Total liabilities

 

1,738,826

 

 

 

1,724,139

 

Stockholders' equity:

 

 

 

Class A common stock

 

296

 

 

 

288

 

Class B common stock

 

56

 

 

 

56

 

Additional paid-in capital

 

317,940

 

 

 

304,889

 

Accumulated other comprehensive (loss) income

 

(29,477

)

 

 

3,284

 

Retained earnings

 

263,433

 

 

 

263,745

 

Treasury stock

 

(41,226

)

 

 

(41,226

)

Total stockholders' equity

 

511,022

 

 

 

531,036

 

Total liabilities and stockholders' equity

$

2,249,848

 

 

$

2,255,175