DGICA Donegal Group Inc

Donegal Group Inc. (NASDAQ:DGICA) and (NASDAQ:DGICB) today reported its financial results for the fourth quarter and full year ended December 31, 2022.

Significant Items for Fourth Quarter of 2022 (all comparisons to fourth quarter of 2021):

• Net premiums earned increased 6.5% to $213.0 million
• Combined ratio of 102.8%, compared to 101.6%
• Net income of $3.5 million, or 11 cents per diluted Class A share, compared to $5.3 million, or 17 cents per diluted Class A share
• Net investment gains (after tax) of $0.5 million, or 2 cents per diluted Class A share, compared to $1.1 million, or 3 cents per diluted Class A share, are included in net income

Significant Items for Full Year of 2022 (all comparisons to full year of 2021):

• Net premiums earned increased 6.0% to $822.5 million
• Combined ratio of 103.3%, compared to 101.0%
• Net loss of $2.0 million, or 6 cents per Class A share, compared to net income of $25.3 million, or 83 cents per diluted Class A share
• Net investment losses (after tax) of $8.0 million, or 26 cents per Class A share, compared to net investment gains (after tax) of $5.1 million, or 17 cents per diluted Class A share, are included in net loss
• Book value per share of $14.79 at December 31, 2022, compared to $16.95 at year-end 2021

Financial Summary

	Three Months Ended December 31,												Year Ended December 31,
		2022				2021			% Change					2022				2021			% Change
	(dollars in thousands, except per share amounts)
Income Statement Data
Net premiums earned	$	212,991			$	200,040				6.5	%		$	822,490			$	776,015			6.0	%
Investment income, net		9,385				8,199				14.5				34,016				31,126			9.3
Net investment gains (losses)		626				1,338				-53.2				(10,185	)			6,477			NM2
Total revenues		223,444				210,244				6.3				848,221				816,466			3.9
Net income (loss)		3,479				5,272				-34.0				(1,959	)			25,254			NM
Non-GAAP operating income1		2,985				4,216				-29.2				6,087				20,137			-69.8
Annualized return (loss) on average equity		2.9	%			3.9	%		-1.0 pts					-0.4	%			4.8	%		-5.2 pts
Per Share Data
Net income (loss) – Class A (diluted)	$	0.11			$	0.17				-35.3	%		$	(0.06	)		$	0.83			NM
Net income (loss) – Class B		0.09				0.15				-40.0				(0.07	)			0.74			NM
Non-GAAP operating income – Class A (diluted)		0.09				0.14				-35.7				0.20				0.66			-69.7	%
Non-GAAP operating income – Class B		0.08				0.12				-33.3				0.16				0.59			-72.9
Book value		14.79				16.95				-12.7				14.79				16.95			-12.7

1The “Definitions of Non-GAAP and Operating Measures” section of this release defines and reconciles data that we prepare on an accounting basis other than U.S. generally accepted accounting principles (“GAAP”).

2Not meaningful.

Management Commentary

Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., stated, “We are pleased to have achieved growth in net premiums written1 in the fourth quarter of 2022 in every line of business, led by a return to strong growth in our personal lines business segment. We attribute the personal lines growth to new business writings resulting from the successful launch of new products over the past year, strong renewal retention rates in our legacy products and substantial premium rate increases to combat ongoing inflationary pressures on loss costs. As we continue to closely monitor the effects of economic conditions, we are actively managing new business growth in this segment. We expect to expand our new personal lines products and agency portal to the state of Michigan in the second quarter of 2023, which will complete the ten-state rollout that we began in late 2021.

Net premiums written within our commercial lines segment increased by 6.9% for the fourth quarter of 2022. We continue to execute state-specific strategies that include accelerating growth in states where we see opportunities for profitable growth and reducing exposures in states we have targeted for profit improvement. We are accelerating pricing increases in tandem with tighter underwriting guidelines to improve profit margins within our commercial business segment. We look forward to the introduction of a new businessowners product, coupled with enhanced straight-through-processing capabilities for that product as well as commercial automobile, commercial umbrella and workers’ compensation policies via our new operating platform, beginning in the second quarter of 2023. This third major release of new systems will allow us to more effectively compete for smaller commercial accounts that we expect will begin to drive additional commercial lines growth in the second half of 2023.

Beyond the ongoing strategic transformation of our products and systems, we continue to enhance our pipeline for strategic growth by building and strengthening relationships with our independent agency partners as we strive to achieve targeted new business volumes, retain attractive accounts and restore rate adequacy where necessary.”

Jeffrey D. Miller, Executive Vice President and Chief Financial Officer, added, “From an underwriting perspective, our fourth quarter of 2022 results continued to benefit from net favorable development of reserves for losses incurred in prior accident years, which reflected our conservative reserving practices. The overall combined ratio of 102.8% during the quarter was disappointing, reflecting the impacts of elevated weather-related losses that included $5.0 million related to Winter Storm Elliott, ongoing inflationary impacts on property and automobile loss costs and higher technology expenses related to our systems and data modernization initiatives.”

Mr. Burke concluded, “On behalf of the entire Donegal leadership team, we would like to recognize the tireless efforts and hard work of our dedicated team of employees and independent agents over the past year. We are confident in our ability to stabilize our underwriting performance and expect profitable growth that will enable us to enhance long-term shareholder value in the years to come.”

Insurance Operations

Donegal Group is an insurance holding company whose insurance subsidiaries and affiliates offer 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 December 31,												Year Ended December 31,
		2022				2021			% Change					2022				2021			% Change
	(dollars in thousands)
Net Premiums Earned
Commercial lines	$	131,473			$	124,199				5.9	%		$	510,153			$	468,433			8.9	%
Personal lines		81,518				75,841				7.5				312,337				307,582			1.5
Total net premiums earned	$	212,991			$	200,040				6.5	%		$	822,490			$	776,015			6.0	%
Net Premiums Written
Commercial lines:
Automobile	$	38,228			$	35,530				7.6	%		$	167,774			$	161,947			3.6	%
Workers' compensation		25,019				23,483				6.5				111,892				113,256			-1.2
Commercial multi-peril		47,867				44,658				7.2				200,045				188,242			6.3
Other		9,122				8,762				4.1				40,086				38,340			4.6
Total commercial lines		120,236				112,433				6.9				519,797				501,785			3.6
Personal lines:
Automobile		45,429				38,564				17.8				181,129				170,578			6.2
Homeowners		29,705				25,939				14.5				120,087				109,974			9.2
Other		5,043				4,849				4.0				22,517				21,930			2.7
Total personal lines		80,177				69,352				15.6				323,733				302,482			7.0
Total net premiums written	$	200,413			$	181,785				10.2	%		$	843,530			$	804,267			4.9	%

Net Premiums Written

The 10.2% increase in net premiums written for the fourth quarter of 2022 compared to the fourth quarter of 2021, as shown in the table above, represents the combination of 6.9% growth in commercial lines net premiums written and 15.6% growth in personal lines net premiums written. The $18.6 million increase in net premiums written for the fourth quarter of 2022 compared to the fourth quarter of 2021 included:

• Commercial Lines: $7.8 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: $10.8 million increase that we attribute to premium rate increases our insurance subsidiaries have implemented over the past four quarters, strong policy retention and new business writings in certain states where we have introduced an updated suite of products.

The $39.3 million increase in net premiums written for the full year of 2022 compared to the full year of 2021 included:

• Commercial Lines: $18.0 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: $21.3 million increase that we attribute to premium rate increases our insurance subsidiaries have implemented over the past four quarters, strong policy retention and 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 months and full years ended December 31, 2022 and 2021:

	Three Months Ended								Year Ended
	December 31,								December 31,
		2022				2021				2022				2021
GAAP Combined Ratios (Total Lines)
Loss ratio - core losses		62.7	%			62.6	%			59.8	%			59.4	%
Loss ratio - weather-related losses		7.7				4.3				7.7				5.8
Loss ratio - large fire losses		6.2				5.5				6.5				5.9
Loss ratio - net prior-year reserve development		-6.7				-2.7				-5.4				-4.0
Loss ratio		69.9				69.7				68.6				67.1
Expense ratio		32.3				31.4				34.1				33.3
Dividend ratio		0.6				0.5				0.6				0.6
Combined ratio		102.8	%			101.6	%			103.3	%			101.0	%
Statutory Combined Ratios
Commercial lines:
Automobile		96.0	%			120.6	%			98.0	%			108.6	%
Workers' compensation		107.0				82.5				97.3				94.6
Commercial multi-peril		122.5				115.4				116.9				114.1
Other		77.9				94.5				80.8				77.5
Total commercial lines		107.4				108.1				103.7				104.9
Personal lines:
Automobile		114.0				109.3				103.8				94.4
Homeowners		88.7				88.6				111.0				102.9
Other		58.7				20.8				52.1				49.3
Total personal lines		101.2				95.6				102.8				94.4
Total lines		104.9	%			103.3	%			103.3	%			100.8	%

Loss Ratio – Fourth Quarter

For the fourth quarter of 2022, the loss ratio increased slightly to 69.9%, compared to 69.7% for the fourth quarter of 2021. For both commercial lines and personal lines segments, the fourth quarter of 2022 core loss ratios, which exclude weather-related losses, large fire losses and net favorable development of reserves for losses incurred in prior accident years, were virtually unchanged from the fourth quarter of 2021. The core loss ratios for both quarterly periods reflected increases in average claim severity due to the ongoing impact of supply chain disruption and labor shortages on repair and replacement costs for buildings and automobiles.

The fourth quarter of 2022 loss ratio for workers’ compensation was elevated due to several large workers’ compensation losses related to severe work-related injuries that occurred during the quarter. The commercial automobile core loss ratio decreased by 10.8 percentage points compared to the prior-year quarter, reflecting the benefit of significant premium rate increases and reduced exposures in underperforming states over the past several years.

Weather-related losses of $16.5 million, or 7.7 percentage points of the loss ratio, for the fourth quarter of 2022 increased from $8.7 million, or 4.3 percentage points of the loss ratio, for the fourth quarter of 2021. Our insurance subsidiaries incurred $5.0 million in losses from the severe freeze event that occurred across most of the country in late December 2022, primarily related to water damage from frozen pipes in commercial properties. The impact of weather-related loss activity to the loss ratio for the fourth quarter of 2022 was higher than our previous five-year average of 4.4 percentage points for fourth quarter weather-related losses.

Large fire losses, which we define as individual fire losses in excess of $50,000, were $13.1 million, or 6.2 percentage points of the loss ratio, for the fourth quarter of 2022. That amount compared to large fire losses of 10.9 million, or 5.5 percentage points of the loss ratio, for the fourth quarter of 2021. The average claim severity for large commercial property fires increased in the fourth quarter of 2022 relative to the prior-year quarter, due in part to higher costs of labor and building materials.

Net favorable development of reserves for losses incurred in prior accident years of $14.2 million reduced the loss ratio for the fourth quarter of 2022 by 6.7 percentage points. For the fourth quarter of 2022, our insurance subsidiaries experienced favorable development primarily in commercial automobile, homeowners and personal automobile losses. Net favorable development of reserves for losses incurred in prior accident years of $5.3 million reduced the loss ratio for the fourth quarter of 2021 by 2.7 percentage points. Our insurance subsidiaries experienced favorable development in personal automobile, commercial automobile and other commercial losses for the prior-year quarter.

Loss Ratio – Full Year

For the full year of 2022, the loss ratio increased to 68.6%, compared to 67.1% for the full year of 2021. While the 2022 core loss ratio increased modestly from 2021, the core loss ratios for both years reflected increases in average claim severity due to the ongoing impact of supply chain disruption and labor shortages on repair and replacement costs for buildings and automobiles.

Weather-related losses for the full year of 2022 of $63.5 million, or 7.7 percentage points of the loss ratio, increased from $45.3 million, or 5.8 percentage points of the loss ratio, for the full year of 2021. The loss ratio impact of weather-related losses for the full year of 2022 was modestly higher than the previous five-year average of 7.2 percentage points of the loss ratio.

Large fire losses were $53.5 million, or 6.5 percentage points of the loss ratio, for the full year of 2022, compared to $45.6 million, or 5.9 percentage points of the loss ratio, for the full year of 2021. The average claim severity for large commercial property fires and home fires increased for the full year of 2022 compared to 2021.

Net favorable development of reserves for losses incurred in prior accident years of $44.8 million reduced the loss ratio for the full year of 2022 by 5.4 percentage points. For the full year of 2022, our insurance subsidiaries experienced favorable development in losses in all major lines of business, with primary favorable impact in the personal automobile and commercial automobile lines of business. Net favorable development of reserves for losses incurred in prior accident years of $31.2 million reduced the loss ratio for the full year of 2021 by 4.0 percentage points. Our insurance subsidiaries experienced favorable development in losses in all major lines of business in the prior year, with primary favorable impact in the personal automobile, workers’ compensation and commercial automobile lines of business.

Expense Ratio

The expense ratio was 32.3% for the fourth quarter of 2022, compared to 31.4% for the fourth quarter of 2021. Relative to the prior-year quarter, the increase in the expense ratio primarily reflected higher technology costs related to our ongoing systems modernization initiatives.

The expense ratio was 34.1% for the full year of 2022, compared to 33.3% for the full year of 2021. An increase in technology systems-related expenses was partially offset by lower commercial growth incentive costs for our agents and decreased underwriting-based incentive costs for our employees for 2022 compared to 2021.

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 December 31, 2022.

	December 31, 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	$	166,883				12.8	%		$	121,453				9.5	%
Obligations of states and political subdivisions		422,253				32.4				428,814				33.6
Corporate securities		393,787				30.2				412,758				32.3
Mortgage-backed securities		229,308				17.5				237,709				18.6
Total fixed maturities		1,212,231				92.9				1,200,734				94.0
Equity securities, at fair value		35,105				2.7				63,420				5.0
Short-term investments, at cost		57,321				4.4				12,692				1.0
Total investments	$	1,304,657				100.0	%		$	1,276,846				100.0	%
Average investment yield		2.6	%							2.5	%
Average tax-equivalent investment yield		2.7	%							2.6	%
Average fixed-maturity duration (years)		5.9								4.7

Total investments at December 31, 2022 increased by $27.8 million compared to December 31, 2021, as new funds invested were partially offset by $57.5 million of unrealized losses within our available-for-sale fixed-maturity portfolio due to a substantial increase in market interest rates during 2022.

Net investment income of $9.4 million for the fourth quarter of 2022 increased 14.5% compared to $8.2 million in net investment income for the fourth quarter of 2021, due primarily to higher average invested assets and an increase in the average investment yield compared to the prior-year fourth quarter. Net investment income of $34.0 million for the full year of 2022 increased 9.3% compared to the full year of 2021, due primarily to higher average invested assets and an increase in the average investment yield compared to the prior year.

Net investment gains were $0.6 million for the fourth quarter of 2022, compared to $1.3 million for the fourth quarter of 2021. We attribute the gains to the quarterly increases in the market value of the equity securities held at the end of the respective periods.

Net investment losses were $10.2 million for the full year of 2022, compared to net investment gains of $6.5 million for the full year of 2021. We attribute the losses and gains to the change in the market value of the equity securities held at the end of the respective periods.

Our book value per share was $14.79 at December 31, 2022, compared to $16.95 at December 31, 2021, with the decrease primarily related to $45.4 million of after-tax unrealized losses within our available-for-sale fixed-maturity portfolio during 2022 that reduced our book value by $1.39 per share and dividends we declared during the year.

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 December 31,												Year Ended December 31,
		2022				2021			% Change					2022				2021			% Change
	(dollars in thousands)
Reconciliation of Net Premiums
Earned to Net Premiums Written
Net premiums earned	$	212,991			$	200,040				6.5	%		$	822,490			$	776,015			6.0	%
Change in net unearned premiums		(12,578	)			(18,255	)			-31.1				21,040				28,252			-25.5
Net premiums written	$	200,413			$	181,785				10.2	%		$	843,530			$	804,267			4.9	%

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

	Three Months Ended December 31,												Year Ended December 31,
		2022				2021			% Change					2022				2021			% Change
	(dollars in thousands, except per share amounts)
Reconciliation of Net Income (Loss)
to Non-GAAP Operating Income
Net income (loss)	$	3,479			$	5,272				-34.0	%		$	(1,959	)		$	25,254			NM
Investment (gains) losses (after tax)		(494	)			(1,056	)			-53.2				8,046				(5,117	)		NM
Non-GAAP operating income	$	2,985			$	4,216				-29.2	%		$	6,087			$	20,137			-69.8	%
Per Share Reconciliation of Net Income (Loss)
to Non-GAAP Operating Income
Net income (loss) – Class A (diluted)	$	0.11			$	0.17				-35.3	%		$	(0.06	)		$	0.83			NM
Investment (gains) losses (after tax)		(0.02	)			(0.03	)			-33.3				0.26				(0.17	)		NM
Non-GAAP operating income – Class A	$	0.09			$	0.14				-35.7	%		$	0.20			$	0.66			-69.7	%
Net income (loss) – Class B	$	0.09			$	0.15				-40.0	%		$	(0.07	)		$	0.74			NM
Investment (gains) losses (after tax)		(0.01	)			(0.03	)			-66.7				0.23				(0.15	)		NM
Non-GAAP operating income – Class B	$	0.08			$	0.12				-33.3	%		$	0.16			$	0.59			-72.9	%

The statutory combined ratio is a standard non-GAAP 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 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 December 15, 2022, we declared regular quarterly cash dividends of $0.165 per share for our Class A common stock and $0.1475 per share for our Class B common stock, which were paid on February 15, 2023 to stockholders of record as of the close of business on February 1, 2023.

Pre-Recorded Webcast

At approximately 8:30 am EDT on Thursday, February 23, 2023, 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 24 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 policyholders.

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) 836-9623E-mail: kdaly@equityny.com

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

Financial Supplement

Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
	Quarter Ended December 31,
		2022				2021
Net premiums earned	$	212,991			$	200,040
Investment income, net of expenses		9,385				8,199
Net investment gains		626				1,338
Lease income		89				107
Installment payment fees		353				560
Total revenues		223,444				210,244
Net losses and loss expenses		148,833				139,391
Amortization of deferred acquisition costs		37,563				33,673
Other underwriting expenses		31,171				29,254
Policyholder dividends		1,384				988
Interest		156				156
Other expenses, net		253				261
Total expenses		219,360				203,723
Income before income tax expense		4,084				6,521
Income tax expense		605				1,249
Net income	$	3,479			$	5,272
Income per common share:
Class A - basic and diluted	$	0.11			$	0.17
Class B - basic and diluted	$	0.09			$	0.15
Supplementary Financial Analysts' Data
Weighted-average number of shares outstanding:
Class A - basic		26,982,221				25,752,639
Class A - diluted		27,052,204				25,800,003
Class B - basic and diluted		5,576,775				5,576,775
Net premiums written	$	200,413			$	181,785
Book value per common share at end of period	$	14.79			$	16.95

Donegal Group Inc.
Consolidated Statements of (Loss) Income
(unaudited; in thousands, except share data)
	Year Ended December 31,
		2022				2021
Net premiums earned	$	822,490			$	776,015
Investment income, net of expenses		34,016				31,126
Net investment (losses) gains		(10,185	)			6,477
Lease income		384				431
Installment payment fees		1,516				2,417
Total revenues		848,221				816,466
Net losses and loss expenses		564,079				520,710
Amortization of deferred acquisition costs		142,430				128,733
Other underwriting expenses		137,924				129,368
Policyholder dividends		5,560				5,199
Interest		621				896
Other expenses, net		1,245				1,222
Total expenses		851,859				786,128
(Loss) income before income tax (benefit) expense		(3,638	)			30,338
Income tax (benefit) expense		(1,679	)			5,084
Net (loss) income	$	(1,959	)		$	25,254
Net (loss) income per common share:
Class A - basic and diluted	$	(0.06	)		$	0.83
Class B - basic and diluted	$	(0.07	)		$	0.74
Supplementary Financial Analysts' Data
Weighted-average number of shares outstanding:
Class A - basic		26,409,290				25,388,246
Class A - diluted		26,536,668				25,533,935
Class B - basic and diluted		5,576,775				5,576,775
Net premiums written	$	843,530			$	804,267
Book value per common share at end of period	$	14.79			$	16.95

Donegal Group Inc.
Consolidated Balance Sheets
(in thousands)
	December 31,				December 31,
		2022				2021
	(unaudited)
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost	$	688,439			$	668,105
Available for sale, at fair value		523,792				532,629
Equity securities, at fair value		35,105				63,420
Short-term investments, at cost		57,321				12,692
Total investments		1,304,657				1,276,846
Cash		25,123				57,709
Premiums receivable		173,846				168,863
Reinsurance receivable		456,522				455,411
Deferred policy acquisition costs		73,170				68,028
Prepaid reinsurance premiums		160,591				176,936
Receivable from Michigan Catastrophic Claims Association		-				18,113
Other assets		49,440				33,269
Total assets	$	2,243,349			$	2,255,175
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Losses and loss expenses	$	1,121,046			$	1,077,620
Unearned premiums		577,653				572,958
Accrued expenses		4,226				4,029
Borrowings under lines of credit		35,000				35,000
Cash refunds due to Michigan policyholders		-				18,113
Other liabilities		21,831				16,419
Total liabilities		1,759,756				1,724,139
Stockholders' equity:
Class A common stock		301				288
Class B common stock		56				56
Additional paid-in capital		325,602				304,889
Accumulated other comprehensive (loss) income		(41,704	)			3,284
Retained earnings		240,564				263,745
Treasury stock		(41,226	)			(41,226	)
Total stockholders' equity		483,593				531,036
Total liabilities and stockholders' equity	$	2,243,349			$	2,255,175