Donegal Group Inc. Announces First Quarter Results
MARIETTA, Pa., April 22 /PRNewswire-FirstCall/ -- Donegal Group Inc. (NASDAQ:DGICANASDAQ:DGICB) today reported net income for the quarter ended
March 31, 2005 of $8,417,088, or $.46 per share on a diluted basis, compared to
$6,286,636, or $.35 per share on a diluted basis, before extraordinary item,
for the quarter ended March 31, 2004. Net income for the quarter ended March
31, 2004 was $11,732,306, or $.65 per share on a diluted basis, which included
an extraordinary gain of $5,445,670, or $.30 per share on a diluted basis,
related to an acquisition.
The Company's first quarter results were characterized by solid premium growth
and continued excellent underwriting results, with the Company posting a
combined ratio of 90.6% for the first quarter of 2005 compared to a combined
ratio of 92.7% for the comparable period in 2004.
All 2004 per share information has been restated to reflect a 4-for-3 stock
split in the form of a 33-1/3% stock dividend issued on March 28, 2005 to
stockholders of record as of March 1, 2005.
Revenues for the first quarter of 2005 were $78,079,058, an increase of 14.8%
over a year earlier. Premiums earned for the first quarter were $71,762,523, a
14.5% increase over the first quarter of 2004. Investment income increased
16.6% to $4,407,468 for the first quarter of 2005 compared to $3,780,017 for
the first quarter of 2004 as the Company continues to move some of its
short-term funds into tax-exempt securities. Service fees for the first
quarter of 2005 were $989,560, an increase of 18.7% over the first quarter of
2004 total of $833,897.
The Company's loss ratio for the first quarter of 2005 improved to 57.9%
compared to 64.4% for the first quarter of 2004, benefiting from continued
pricing improvements and from a relative absence of severe weather in the first
quarter of 2005. The Company's expense ratio decreased to 32.2% for the first
quarter of 2005 compared to 32.5% for the fourth quarter of 2004, but was up
from 27.8% in the first quarter of 2004, which was favorably impacted by the
purchase accounting for the acquisitions in that quarter. The Company's
workers' compensation policy dividend ratio in the first quarter of 2005
remained unchanged from a year earlier at 0.5%.
"We are pleased that operating results were improved in both the personal lines
and commercial lines sectors, with commercial lines benefiting from improved
loss ratios in the workers' compensation area," stated Donald H. Nikolaus,
President and Chief Executive Officer of Donegal Group Inc. "The acquisitions
completed in 2004 have continued to perform well and the identification of
other solid acquisition candidates continues to be a high priority for the
Company," stated Nikolaus.
These strong results helped the Company increase its book value per common
share 7.1% to $13.81 per share as of March 31, 2005 compared to $12.90 at
December 31, 2004.
The Company announced yesterday that its Board of Directors approved a
quarterly cash dividend payable May 16, 2005 of $.10 per share of Class A
Common Stock and $.085 per share of Class B Common Stock, to stockholders of
record as of May 2, 2005. These dividends represent an increase when compared
to the prior year's cash dividends adjusted for the 4-for-3 stock split.
The extraordinary gain in the first quarter of 2004 of $5,445,670 resulted from
GAAP purchase accounting for unallocated negative goodwill from the Le Mars
Insurance Company acquisition completed in early January 2004.
The Company will hold a conference call on Friday, April 22, 2005, beginning at
11:00 A.M. Eastern Time. You may participate in the conference call by calling
1-800-510-0219 (Passcode 79280048). An instant replay of the conference call
will be available until May 2, 2005, by calling 1-888-286-8010 (Passcode
80139543).
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.
Quarter Ended March 31
2005 2004* Net premiums earned $71,762,523 $62,699,881
Investment income,
net of investment expenses 4,407,468 3,780,017
Realized investment gains 690,291 468,443
Total revenues 78,079,058 68,001,661 Net income before extraordinary item $8,417,088 $6,286,636
Net income after extraordinary item $8,417,088 $11,732,306 Net income per common share
before extraordinary item
Basic $0.47 $0.37
Diluted $0.46 $0.35 Net income per common share
after extraordinary item
Basic $0.47 $0.68
Diluted $0.46 $0.65 * Per share information restated for 4-for-3 stock split
Consolidated Statements of Income
(unaudited; $ in thousands, except per share data) Quarter Ended March 31
2005 2004* Net premiums earned $71,763 $62,700
Investment income, net of investment expenses 4,407 3,780
Realized investment gains 690 468
Lease income 229 220
Service fees 990 834
Total revenues 78,079 68,002 Losses and loss expenses 41,538 40,371
Amortization of deferred policy
acquisition costs 11,486 8,345
Other underwriting expenses 11,654 9,058
Other expenses 430 583
Dividends 351 368
Interest 499 338
Total expenses 65,958 59,063
Income before income taxes and
extraordinary item 12,121 8,939
Income tax expense 3,704 2,652
Net income before extraordinary item 8,417 6,287
Extraordinary item - 5,445
Net income after extraordinary item $8,417 $11,732 Net income per common share
before extraordinary item
Basic $0.47 $0.37
Diluted $0.46 $0.35 Net income per common share after
extraordinary item
Basic $0.47 $0.68
Diluted $0.46 $0.65 Supplementary Financial Analysts' Data Weighted average number of shares outstanding
Basic 17,946,915 17,186,431
Diluted 18,473,084 18,011,373 Net written premiums $74,498 $68,416 Book value per common share $13.81 $12.90 * Per share information restated for 4-for-3 stock split
Consolidated Balance Sheet
(unaudited; in thousands) March 31, 2005 December 31, 2004 ASSETS
Investments:
Fixed Maturities:
Held to maturity, at amortized cost $190,629 $182,574
Available for sale, at fair value 245,889 226,757
Equity securities, at fair value 34,634 33,505
Investments in affiliates 8,748 8,865
Short-term investments, at cost,
which approximates fair value 24,169 47,368
Total investments 504,069 499,069
Cash 8,331 7,350
Premiums in course of collection 45,975 44,267
Reinsurance receivable 95,792 98,479
Accrued investment income 4,794 4,961
Deferred policy acquisition costs 22,530 22,258
Prepaid reinsurance premiums 37,722 35,907
Property and equipment, net 5,500 5,509
Deferred income taxes 12,850 10,922
Other assets 4,309 6,693
Total assets $741,872 $735,415 LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss
settlement expenses $265,842 $267,190
Unearned premiums 179,009 174,458
Accounts payable and accrued expenses 10,911 13,414
Debt 30,929 30,929
Due to affiliates 92 241
Other liabilities 7,146 6,479
Total liabilities 493,929 492,711
Shareholders' equity:
Preferred stock - -
Class A common stock 139 104
Class B common stock 42 32
Additional paid-in capital 132,253 131,980
Accumulated other comprehensive income 1,350 4,750
Retained earnings 115,051 106,730
Treasury stock, at cost (892) (892)
Total shareholders' equity 247,943 242,704
Total liabilities and shareholders' equity $741,872 $735,415
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/
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