Donegal Group Inc. Announces Earnings For Third Quarter
MARIETTA, Pa., Oct. 22 /PRNewswire-FirstCall/ -- Donegal Group Inc. (NASDAQ:DGICANASDAQ:DGICB) today reported net income for the quarter and nine
months ended September 30, 2004.
Net income for the quarter ended September 30, 2004 was $5,886,886, or $.43 per
share on a diluted basis, compared to $4,001,385, or $.40 per share on a
diluted basis, for the third quarter of 2003. Results for the third quarter
2004 included previously announced property losses from severe weather of
approximately $3.2 million that reduced net income by approximately $2.1
million, or $.15 per share on a diluted basis. Results for the third quarter of
2003 included losses of $1 million from Hurricane Isabel that reduced net
income in that quarter by $650,000, or $.07 per share on a diluted basis.
Net income for the nine months ended September 30, 2004 was $24,389,379, or
$1.79 per share on a diluted basis, compared to $13,114,770, or $1.37 per share
on a diluted basis, for the nine months ended September 30, 2003. Net income
for the first nine months of 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.
Even with the claims from the unprecedented number of storms in the current
quarter, the Company achieved excellent underwriting results, posting a
combined ratio of 95.0% for the third quarter of 2004 compared to a combined
ratio of 96.8% for the comparable period in 2003. Excluding claims from the
third quarter storms, the Company's combined ratios would have been 90.4% and
94.8% for the third quarter of 2004 and 2003, respectively.
"Our disciplined underwriting approach, including the careful management of
catastrophe exposures, has helped Donegal limit the impact from this unusual
series of storms and still achieve solid results for the quarter," stated
Donald H. Nikolaus, President and Chief Executive Officer of the Donegal
Companies.
The storm losses occurred primarily in the Mid-Atlantic and Southeastern
regions of the Company's operations and were non-coastal in nature. The losses
are comprised of approximately $60,000 in net losses from Hurricane Charley,
$360,000 from Hurricane Frances, $1.3 million from Hurricane Ivan, $800,000
from Hurricane Jeanne and $650,000 from a July tornado.
Revenues for the third quarter of 2004 were $73,613,653, an increase of 35.6%
over a year earlier, with premiums earned for the third quarter of $67,958,382,
a 36.7% increase over the third quarter of 2003. Premiums earned in the third
quarter, excluding premiums earned by the companies acquired in January 2004,
increased $4.8 million, or 9.6%, to $54,511,192.
Investment income continued to increase notwithstanding as the Company's shift
towards greater levels of tax-exempt securities. Investment income for the
third quarter of 2004 was $4,017,915, an increase of $175,341, or 4.6%, over
investment income in the second quarter of 2004. This increase was accomplished
despite the shift towards tax-exempt investment income, with tax- exempt
interest representing 45.1% of total investment income in the third quarter of
2004 compared to 37.0% in the second quarter of 2004.
The Company's combined ratio for the first nine months of 2004 was 93.2%
compared to a combined ratio of 95.4% for the comparable period in 2003. The
Company's loss ratio for the first nine months of 2004 improved to 62.5%
compared to 64.5% for the first nine months of 2003. The Company's expense
ratio improved slightly to 30.3% for the first nine months of 2004 compared to
30.4% for the same period in 2003.
These results helped the Company increase its book value per common share to
$17.79 per share as of September 30, 2004, compared to $16.29 per share at
December 31, 2003.
The Company's per share results were impacted by the Company's offering of
3,450,000 shares of Class A Common Stock that was completed in December 2003. The offering was the principal reason for the increase in the weighted average
number of shares outstanding during the third quarter of 2004 to 13,654,781
shares compared to 9,905,492 shares in the third quarter of 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 also reported that at yesterday's meeting its Board of Directors
declared a regular cash dividend of 10.5 cents per share for the Company's
Class B Common Stock and 12 cents per share for the Company's Class A Common
Stock, payable November 15, 2004 to shareholders of record as of the close of
business on November 1, 2004.
The Company will hold a conference call on Friday, October 22, 2004, beginning
at 11:00 A.M. Eastern Time. You may participate in the conference call by
calling 1-800-261-3417 (Passcode 92272027). An instant replay of the conference
call will be available until November 2, by calling 1-888-286-8010 (Passcode
70579112).
Donegal Group Inc. is a property and casualty insurance holding company whose
insurance subsidiaries offer personal and commercial lines of insurance to
businesses and individuals 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 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 involve a
number of risks and uncertainties. Actual results could vary materially.
Among the factors that could cause actual results to vary materially include:
the ability of the Company to maintain profitable operations, the adequacy of
the Company's reserves for losses and loss adjustment expenses, severe weather,
business and economic conditions in the Company's primary operating areas,
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 periodic reports that the
Company files with the Securities and Exchange Commission. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such statements should not be regarded as a
representation by the Company or any other person. The Company disclaims any
obligation to update such statements or to announce publicly the results of any
revisions to any of the forward- looking statements included herein to reflect
future events or developments.
Three Months Ended
September 30, September 30,
2004 2003 Net premiums earned $67,958,382 $49,719,584
Investment income,
net of investment
expenses 4,017,915 3,326,603
Realized investment gains 448,367 408,873
Total revenues 73,613,653 54,285,753 Net income $5,886,886 $4,001,385 Net income per common share
Basic $0.44 $0.43
Diluted $0.43 $0.40
Nine Months Ended
September 30, September 30,
2004 2003 Net premiums earned $196,156,262 $146,082,154
Investment income,
net of investment expenses 11,640,506 10,006,831
Realized investment gains 1,092,365 494,763
Total revenues 212,307,736 159,297,990 Net income before
extraordinary item $18,943,709 $13,114,770 Net income after extraordinary
item $24,389,379 $13,114,770 Net income per common share
before extraordinary item
Basic $1.45 $1.42
Diluted $1.39 $1.37 Net income per common share
after extraordinary item
Basic $1.86 $1.42
Diluted $1.79 $1.37
Consolidated Statements of Income
(unaudited; in thousands, except share data) Quarter Ended
September 30, September 30,
2004 2003 Net premiums earned $67,959 $49,720
Investment income,
net of investment
expenses 4,018 3,326
Realized investment gains 448 409
Lease income 224 215
Service charge income 965 616
Total revenues 73,614 54,286 Losses and loss expenses 42,286 32,760
Amortization of deferred
policy acquisition costs 9,961 7,874
Other underwriting
expenses 11,941 7,239
Other expenses 382 310
Policyholder dividends 404 242
Interest 417 358
Total expenses 65,391 48,783 Income before income taxes 8,223 5,503
Income tax expense 2,336 1,502
Net income $5,887 $4,001
Net income per common
share
Basic $0.44 $0.43
Diluted $0.43 $0.40
Supplementary Financial
Analysts' Data Weighted average number of
shares outstanding
Basic 13,230,009 9,315,339
Diluted 13,654,781 9,905,492 Net written premiums $71,079 $53,009 Book value per common
share $17.79 $15.69
Consolidated Statements of Income
(unaudited; in thousands, except per share data) Nine Months Ended
September 30, September 30,
2004 2003 Net premiums earned $196,156 $146,082
Investment income,
net of investment
expenses 11,641 10,007
Realized investment gains 1,092 495
Lease income 663 629
Service fees 2,756 1,879
Other income - 206
Total revenues 212,308 159,298 Losses and loss expenses 122,618 94,268
Amortization of deferred
policy acquisition costs 28,248 22,861
Other underwriting expenses 31,098 21,532
Other expenses 1,463 985
Dividends 866 711
Interest 1,114 880
Total expenses 185,407 141,237
Income before income taxes and
extraordinary item 26,901 18,061
Income tax expense 7,957 4,946
Net income before
extraordinary item 18,944 13,115
Extraordinary item 5,445 -
Net income after
extraordinary item $24,389 $13,115 Net income per common share
before extraordinary item
Basic $1.45 $1.42
Diluted $1.39 $1.37 Net income per common share
after extraordinary item
Basic $1.86 $1.42
Diluted $1.79 $1.37 Supplementary Financial
Analysts' Data Weighted average number of
shares outstanding
Basic 13,086,199 9,265,308
Diluted 13,595,348 9,590,809 Net written premiums $213,270 $156,533
Consolidated Balance Sheet
(unaudited; in thousands) September 30, 2004 December 31, 2003
ASSETS
Investments:
Fixed maturities:
Held to maturity, at
amortized cost $184,316 $113,051
Available for sale, at fair
value 231,413 198,433
Equity securities, at fair
value 44,591 31,448
Short-term investments, at
cost, which approximates
fair value 33,282 78,344
Total investments 493,602 421,276
Cash 6,473 5,909
Premiums in course of collection 43,747 29,017
Reinsurance receivable 95,687 81,009
Accrued investment income 4,787 3,752
Deferred policy acquisition costs 21,649 16,224
Prepaid reinsurance premiums 38,850 30,692
Property and equipment, net 5,559 4,152
Deferred income taxes 11,134 7,032
Other assets 7,096 2,973
Total assets $728,584 $602,036 LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss
settlement expenses $265,821 $217,914
Unearned premiums 177,071 134,028
Accounts payable and accrued
expenses 11,384 7,770
Debt 30,929 25,774
Due to affiliates - 904
Other liabilities 7,800 6,997
Total liabilities 493,005 393,387
Shareholders' equity:
Preferred stock Class A common stock 102 99
Class B common stock 31 30
Additional paid-in capital 129,166 122,745
Accumulated other
comprehensive income 4,553 5,291
Retained earnings 102,619 81,376
Treasury stock, at cost (892) (892)
Total shareholders' equity 235,579 208,649
Total liabilities and
shareholders' equity $728,584 $602,036
DATASOURCE: Donegal Group Inc.
CONTACT: Ralph G. Spontak, Senior Vice President and Chief Financial Officer of Donegal Group, +1-717-426-1931, or Fax, +1-717-426-7009 Web site: http://www.donegalgroup.com/
|