Donegal Group Inc. Announces Earnings For Fourth Quarter
MARIETTA, Pa., Feb. 22 /PRNewswire-FirstCall/ -- Donegal Group Inc. (NASDAQ:DGICANASDAQ:DGICB) today reported net income for the fourth quarter and
year ended December 31, 2004.
Net income for the quarter ended December 31, 2004 was $7,224,890, compared to
$5,179,206 for the fourth quarter of 2003, an increase of 39.5%. On a fully
diluted per share basis net income for the fourth quarter of 2004 was $.53 per
share, based on 13,751,938 weighted average shares outstanding, compared to
$.47 per share, based on 11,065,320 weighted shares outstanding, for the fourth
quarter of 2003. The Company's December 2003 public offering of 3,450,000
shares of Class A Common Stock was the principal reason for the increase in the
weighted average number of shares outstanding.
Net income for the year ended December 31, 2004 was a historic high of
$31,614,269, compared to $18,293,976, for the year ended December 31, 2003, an
increase of 72.8%. On a fully diluted per share basis net income for 2004 was
$2.32 per share, based on 13,635,172 weighted average shares outstanding,
compared to $1.85 per share, based on 9,894,844 weighted average shares
outstanding for the year ended December 31, 2003. Net income for 2004 includes
an extraordinary gain of $5,445,670, or $.40 per share on a diluted basis,
related to an acquisition in the first quarter of 2004.
The Company continued to achieve excellent underwriting results, posting a
combined ratio of 92.7% for the fourth quarter of 2004 compared to a combined
ratio of 93.8% for the comparable period in 2003. The Company's combined ratio
for the full year 2004 was 93.1% compared to a combined ratio of 95.0% for
2003. The Company's loss ratio for the full year 2004 improved to 61.7%
compared to 64.2% for 2003. The Company's expense ratio increased slightly to
30.9% for all of 2004 compared to 30.2% for 2003.
"Solid premium growth and excellent underwriting results, from both our
historic insurance subsidiaries and our 2004 acquisitions, combined to achieve
the highest levels of profitability in the Company's history," stated Donald H. Nikolaus, President and Chief Executive Officer of the Donegal Companies.
Revenues for the fourth quarter of 2004 were $75,480,902, an increase of 35.5%
over a year earlier, with premiums earned for the fourth quarter of
$69,682,332, a 37.4% increase over the fourth quarter of 2003. Premiums earned
in the fourth quarter of 2004, excluding premiums earned by the companies we
acquired in January 2004, increased $5.0 million, or 9.8%, to $55,676,742.
Investment income for the fourth quarter of 2004 was $4,266,222, an increase of
$248,307, or 6.2%, over investment income in the third quarter of 2004. This
increase was accomplished despite the shift towards tax-exempt investment
income, with tax-exempt interest representing 46.7% of total investment income
in the fourth quarter of 2004 compared to 41.3% in the fourth quarter of 2003.
These results helped the Company increase its book value per common share to
$18.04 per share as of December 31, 2004, compared to $16.29 per share at
December 31, 2003.
The extraordinary gain of $5,445,670 in the first quarter of 2004 resulted from
GAAP purchase accounting for unallocated negative goodwill from the Le Mars
Insurance Company acquisition completed in early January 2004. The
acquisitions of Le Mars Insurance Company, The Peninsula Insurance Company and
Peninsula Indemnity Company were effective January 1, 2004.
The Company previously reported that its Board of Directors approved a
four-for-three split of its Class A Common Stock and Class B Common Stock to be
effective in the form of a 33-1/3% stock dividend to stockholders of record at
the close of business on March 1, 2005 and payable on March 25, 2005, which the
Company has changed to March 28, 2005.
The Company will hold a conference call on Tuesday February 22, 2005, beginning
at 11:00 A.M. Eastern Time. You may participate in the conference call by
calling 1-800-573-4754 (Passcode 51101444). An instant replay of the
conference call will be available until March 4, 2005 by calling 1-888-286-8010
(Passcode 13138424).
Donegal Group Inc. is an insurance holding company whose insurance subsidiaries
offer personal and commercial property and casualty lines of insurance in six
Mid-Atlantic states (Connecticut, Delaware, Maryland, New Hampshire, New York
and Pennsylvania), eight Southeastern states (Alabama, Georgia, Louisiana,
North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and five
Midwestern states (Iowa, Nebraska, Ohio, Oklahoma and South Dakota).
All statements contained in this press release that are not historic facts are
based on current expectations. Such statements are forward-looking (as defined
in the Private Securities Litigation Reform Act of 1995) in nature and
necessarily involve a number of risks and uncertainties. Actual results could
vary materially. The factors that could cause actual results to vary
materially include, but are not limited to, the ability of the Company to
maintain profitable operations, the adequacy of the Company's reserves for
losses and loss adjustment expenses, business and economic conditions in the
areas in which the Company operates, competition from various insurance and
non-insurance businesses, terrorism, legal and judicial developments, changes
in regulatory requirements and other risks that are described from time to time
in the Company's filings with the Securities and Exchange Commission. The
Company disclaims any obligation to update such statements or to announce
publicly the results of any revisions that may be made to any forward-looking
statements to reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
(Tables Follow)
Three Months Ended December 31,
2004 2003 Net premiums earned $69,682,332 $50,710,542
Investment income,
net of investment expenses 4,266,222 3,309,105
Realized investment gains 373,855 873,268
Total revenues 75,480,902 55,694,338 Net income $7,224,890 $5,179,206 Net income per common share
Basic $0.54 $0.49
Diluted $0.53 $0.47
Year Ended December 31,
2004 2003 Net premiums earned $265,838,594 $196,792,696
Investment income,
net of investment expenses 15,906,728 13,315,936
Realized investment gains 1,466,220 1,368,031
Total revenues 287,788,638 214,992,328 Net income before extraordinary item $26,168,599 $18,293,976
Net income after extraordinary item $31,614,269 $18,293,976 Net income per common share
before extraordinary item
Basic $1.99 $1.91
Diluted $1.92 $1.85 Net income per common share
after extraordinary item
Basic $2.40 $1.91
Diluted $2.32 $1.85 Consolidated Statements of Income
(unaudited; in thousands, except share data) Quarter Ended December 31,
2004 2003 Net premiums earned $69,682 $50,711
Investment income,
net of investment expenses 4,266 3,309
Realized investment gains 374 873
Lease income 228 216
Service charge income 931 585
Total revenues 75,481 55,694 Losses and loss expenses 41,524 31,975
Amortization of deferred policy
acquisition costs 11,186 7,978
Other underwriting expenses 11,446 7,155
Other expenses 237 360
Policyholder dividends 435 443
Interest 499 408
Total expenses 65,327 48,319 Income before income taxes 10,154 7,375
Income tax expense 2,929 2,196
Net income $7,225 $5,179
Net income per common share
Basic $0.54 $0.49
Diluted $0.53 $0.47
Supplementary Financial Analysts' Data Weighted average number of
shares outstanding
Basic 13,377,551 10,477,603
Diluted 13,751,938 11,065,320 Net written premiums $70,012 $50,448 Book value per common share $18.04 $16.29 Consolidated Statements of Income
(unaudited; in thousands, except per share data) Year Ended December 31,
2004 2003 Net premiums earned $265,838 $196,793
Investment income, net of investment expenses 15,907 13,316
Realized investment gains 1,466 1,368
Lease income 890 845
Service fees 3,687 2,464
Other income - 206
Total revenues 287,788 214,992 Losses and loss expenses 164,141 126,243
Amortization of deferred policy acquisition costs 39,434 30,839
Other underwriting expenses 42,544 28,687
Other expenses 1,700 1,345
Dividends 1,301 1,155
Interest 1,614 1,287
Total expenses 250,734 189,556
Income before income taxes and extraordinary item 37,054 25,436
Income tax expense 10,885 7,142
Net income before extraordinary item 26,169 18,294 Extraordinary item 5,445 -
Net income after extraordinary item $31,614 $18,294 Net income per common share
before extraordinary item
Basic $1.99 $1.91
Diluted $1.92 $1.85
Net income per common share after extraordinary item
Basic $2.40 $1.91
Diluted $2.32 $1.85 Supplementary Financial Analysts' Data Weighted average number of shares outstanding
Basic 13,159,435 9,570,872
Diluted 13,635,172 9,894,844 Net written premiums $283,282 $206,981
Consolidated Balance Sheet
(unaudited; in thousands) December 31, December 31,
2004 2003
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost $182,574 $113,051
Available for sale, at fair value 226,757 198,433
Equity securities, at fair value 42,370 31,448
Short-term investments, at cost, which
approximates fair value 47,368 78,344
Total investments 499,069 421,276
Cash 7,350 5,909
Premiums in course of collection 44,267 29,017
Reinsurance receivable 98,479 81,009
Accrued investment income 4,961 3,752
Deferred policy acquisition costs 22,258 16,224
Prepaid reinsurance premiums 35,907 30,692
Property and equipment, net 5,509 4,152
Deferred income taxes 10,922 7,032
Other assets 6,693 2,973
Total assets $735,415 $602,036
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss settlement expenses $267,190 $217,914
Unearned premiums 174,458 134,028
Accounts payable and accrued expenses 13,414 7,770
Debt 30,929 25,774
Due to affiliates - 904
Other liabilities 6,720 6,997
Total liabilities 492,711 393,387
Shareholders' equity:
Preferred stock Class A common stock 104 99
Class B common stock 32 30
Additional paid-in capital 131,980 122,745
Accumulated other comprehensive income 4,750 5,291
Retained earnings 106,730 81,376
Treasury stock, at cost (892) (892)
Total shareholders' equity 242,704 208,649
Total liabilities and shareholders' equity $735,415 $602,036
DATASOURCE: Donegal Group Inc.
CONTACT: Ralph G. Spontak, Senior Vice President and Chief Financial Officer, Donegal Group Inc., +1-717-426-1931, Fax: +1-717-426-7009, E-mail: Web site: http://www.donegalgroup.com/
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