Donegal Group Inc. (NASDAQ:DGICA) and (NASDAQ:DGICB) today reported
its financial results for the fourth quarter and full year of 2015.
Significant developments include:
- Net income and operating income1 for the fourth quarter of 2015
increased by more than 70% over amounts for the fourth quarter of
2014, largely due to lower non-weather losses in the 2015
period
- Net income and operating income for the full year of 2015
increased by approximately 84% and 105%, respectively, from the
levels for the full year of 2014, largely due to improved
underwriting results in 2015
- Statutory combined ratio1 of 98.9% for the fourth quarter of
2015, improved from 101.8% for the prior-year fourth quarter
- Statutory combined ratio of 97.4% for the full year of 2015,
improved from 100.5% for the prior year
- Net premiums written increased 9.1% and 8.6% for the fourth
quarter and full year of 2015, respectively, primarily reflecting
growth in commercial lines
- Book value per share of $15.66 at December 31, 2015, compared
to $15.40 at year-end 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
|
2014 |
|
|
% Change |
|
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement Data |
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
155,557 |
|
|
$ |
144,211 |
|
|
|
7.9 |
% |
|
$ |
605,641 |
|
|
$ |
556,498 |
|
|
|
8.8 |
% |
Investment income, net |
|
5,444 |
|
|
|
4,815 |
|
|
|
13.1 |
|
|
|
20,950 |
|
|
|
18,344 |
|
|
|
14.2 |
|
Realized gains |
|
1,251 |
|
|
|
837 |
|
|
|
49.5 |
|
|
|
1,934 |
|
|
|
3,134 |
|
|
|
-38.3 |
|
Total revenues |
|
163,796 |
|
|
|
151,591 |
|
|
|
8.1 |
|
|
|
636,387 |
|
|
|
586,548 |
|
|
|
8.5 |
|
Net income |
|
7,764 |
|
|
|
4,486 |
|
|
|
73.1 |
|
|
|
26,770 |
|
|
|
14,539 |
|
|
|
84.1 |
|
Operating income1 |
|
6,950 |
|
|
|
3,934 |
|
|
|
76.7 |
|
|
|
25,513 |
|
|
|
12,471 |
|
|
|
104.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
Net income – Class A (diluted) |
$ |
0.28 |
|
|
$ |
0.17 |
|
|
|
64.7 |
% |
|
$ |
0.98 |
|
|
$ |
0.55 |
|
|
|
78.2 |
% |
Operating income – Class A (diluted) |
|
0.25 |
|
|
|
0.15 |
|
|
|
66.7 |
|
|
|
0.93 |
|
|
|
0.47 |
|
|
|
97.9 |
|
Book value |
|
15.66 |
|
|
|
15.40 |
|
|
|
1.7 |
|
|
|
15.66 |
|
|
|
15.40 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1The
“Definitions of Non-GAAP and Operating Measures” section of this
release defines and reconciles data that the Company prepares on an
accounting basis other than U.S. generally accepted accounting
principles (“GAAP”). |
|
Kevin G. Burke, President and Chief Executive Officer of Donegal
Group Inc., noted, “Donegal Group achieved strong performance
across nearly all lines of business in 2015, with full-year
earnings nearly double the prior-year amount. The favorable results
reinforce our commitment to Donegal’s regional business approach
and conservative underwriting philosophy, while also confirming
that we are making meaningful progress toward our long-term
objective of outperforming the property and casualty insurance
industry in terms of service, profitability and book value
growth.
“Within our 21-state operating territory, we offer a steadfast
commitment to our independent insurance agents and policyholders
that Donegal will be there when it matters most. We believe that
commitment was integral to our continued expansion in 2015, with
organic growth across all regions representing the majority of the
increase in our net premiums written for the year. We believe that
commitment will be the key to our future growth and success as
well. Throughout 2015, growth in our net premiums written also
reflected additional net writings from our Michigan Insurance
Company (“MICO”) subsidiary. Those additional writings
resulted from our decision to terminate MICO’s external quota-share
reinsurance agreement effective January 1, 2015,” Mr. Burke
added.
Mr. Burke noted, “We are continuing to obtain low-single-digit
premium increases, on average, as commercial accounts renew their
policies with Donegal. We recognize that our emphasis on supporting
our agency relationships is essential to increasing the flow of
their best new commercial business to us. Agents routinely express
their appreciation for Donegal’s competitive products,
best-in-class technology, prompt claim handling and customer
service tailored to fit their specific needs and the
characteristics of our regional markets.
“Our agents also serve as an important resource for their
personal lines customers in making purchasing and insurance
coverage decisions. We believe our highly acclaimed agency
technology tools, comprehensive coverages and expanding use of
predictive modeling have positioned us well to provide competitive
homeowner and automobile insurance products within the regions we
serve,” Mr. Burke noted.
Donald H. Nikolaus, Chairman, further remarked, “The Donegal
Insurance Group, which includes Donegal Mutual Insurance Company
and the insurance subsidiaries of Donegal Group, marked an
important milestone in 2015, as its total direct premiums written
eclipsed $800 million. This accomplishment reflects our
competitive market position within our operating regions. We
believe the Donegal Insurance Group is well-positioned to continue
its expansion, which in turn will help Donegal Group to deliver on
its long-term commitment to enhance stockholder value.”
Mr. Nikolaus added, “At December 31, 2015, our book value per
share increased to $15.66, compared to $15.40 at December 31, 2014.
The increase in book value per share reflected our positive
earnings for the full year of 2015.”
Insurance Operations
Donegal Group is an insurance holding company whose insurance
subsidiaries offer personal and commercial property and casualty
lines of insurance in four Mid-Atlantic states (Delaware, Maryland,
New York and Pennsylvania), three New England states (Maine, New
Hampshire and Vermont), seven Southeastern states (Alabama,
Georgia, North Carolina, South Carolina, Tennessee, Virginia and
West Virginia) and seven Midwestern states (Indiana, Iowa,
Michigan, Nebraska, Ohio, South Dakota and Wisconsin). The
insurance subsidiaries of Donegal Group and Donegal Mutual
Insurance Company conduct business together as the Donegal
Insurance Group.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
|
2014 |
|
|
% Change |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Premiums Written |
|
|
|
|
|
|
|
|
|
|
|
Personal lines: |
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
51,048 |
|
|
$ |
48,498 |
|
|
|
5.3 |
% |
|
$ |
214,610 |
|
|
$ |
204,174 |
|
|
|
5.1 |
% |
Homeowners |
|
28,522 |
|
|
|
27,434 |
|
|
|
4.0 |
|
|
|
119,541 |
|
|
|
113,576 |
|
|
|
5.3 |
|
Other |
|
4,413 |
|
|
|
4,143 |
|
|
|
6.5 |
|
|
|
18,176 |
|
|
|
16,989 |
|
|
|
7.0 |
|
Total personal lines |
|
83,983 |
|
|
|
80,075 |
|
|
|
4.9 |
|
|
|
352,327 |
|
|
|
334,739 |
|
|
|
5.3 |
|
Commercial lines: |
|
|
|
|
|
|
|
|
|
|
|
Automobile |
|
18,032 |
|
|
|
15,007 |
|
|
|
20.2 |
|
|
|
76,729 |
|
|
|
65,552 |
|
|
|
17.1 |
|
Workers'
compensation |
|
21,842 |
|
|
|
19,134 |
|
|
|
14.2 |
|
|
|
98,079 |
|
|
|
88,739 |
|
|
|
10.5 |
|
Commercial
multi-peril |
|
22,052 |
|
|
|
19,550 |
|
|
|
12.8 |
|
|
|
94,219 |
|
|
|
83,413 |
|
|
|
13.0 |
|
Other |
|
1,804 |
|
|
|
1,578 |
|
|
|
14.3 |
|
|
|
7,483 |
|
|
|
6,758 |
|
|
|
10.7 |
|
Total commercial lines |
|
63,730 |
|
|
|
55,269 |
|
|
|
15.3 |
|
|
|
276,510 |
|
|
|
244,462 |
|
|
|
13.1 |
|
Total net premiums written |
$ |
147,713 |
|
|
$ |
135,344 |
|
|
|
9.1 |
% |
|
$ |
628,837 |
|
|
$ |
579,201 |
|
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s net premiums written increased 9.1% for the fourth
quarter of 2015 compared to the fourth quarter of 2014. This
increase represented the combination of 15.3% growth in commercial
lines net premiums written and 4.9% growth in personal lines net
premiums written. The $12.4 million growth in net premiums written
for the fourth quarter of 2015 compared to the fourth quarter of
2014 included:
- $4.3 million, or 3.2% of total net premiums written, related to
the termination at the beginning of 2015 of the MICO external
quota-share reinsurance agreement that increased the amount of
business MICO retained.
- $5.8 million in commercial lines premiums, in addition to the
MICO reinsurance change, that the Company attributes primarily to
premium rate and exposure increases as well as new commercial
accounts the Company’s insurance subsidiaries have written
throughout their operating regions.
- $2.3 million in personal lines premiums, in addition to the
MICO reinsurance change, that the Company attributes primarily to
premium rate increases the Company has implemented over the past
year and lower reinsurance reinstatement premiums resulting from
catastrophic loss events.
For the full year of 2015, the Company's net premiums written
increased 8.6% compared to the comparable prior-year period.
This increase included $19.6 million, or 3.4% of total net premiums
written, related to the aforementioned termination of the MICO
quota-share reinsurance agreement.
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
Statutory Combined Ratios |
|
|
|
|
|
|
|
Personal Lines: |
|
|
|
|
|
|
|
Automobile |
|
117.0 |
% |
|
|
116.0 |
% |
|
|
104.3 |
% |
|
|
102.8 |
% |
Homeowners |
|
85.6 |
|
|
|
93.4 |
|
|
|
97.6 |
|
|
|
97.8 |
|
Other |
|
76.0 |
|
|
|
79.9 |
|
|
|
82.7 |
|
|
|
99.5 |
|
Total personal lines |
|
104.2 |
|
|
|
106.5 |
|
|
|
100.9 |
|
|
|
101.0 |
|
Commercial Lines: |
|
|
|
|
|
|
|
Automobile |
|
119.3 |
|
|
|
123.9 |
|
|
|
109.5 |
|
|
|
115.0 |
|
Workers'
compensation |
|
83.7 |
|
|
|
86.6 |
|
|
|
87.6 |
|
|
|
91.1 |
|
Commercial
multi-peril |
|
84.1 |
|
|
|
88.7 |
|
|
|
90.8 |
|
|
|
102.9 |
|
Total commercial lines |
|
92.0 |
|
|
|
95.1 |
|
|
|
92.8 |
|
|
|
99.8 |
|
Total lines |
|
98.9 |
% |
|
|
101.8 |
% |
|
|
97.4 |
% |
|
|
100.5 |
% |
|
|
|
|
|
|
|
|
GAAP Combined Ratios (Total
Lines) |
|
|
|
|
|
|
Loss
ratio (non-weather) |
|
62.9 |
% |
|
|
67.8 |
% |
|
|
59.7 |
% |
|
|
62.3 |
% |
Loss
ratio (weather-related) |
|
2.9 |
|
|
|
2.8 |
|
|
|
6.1 |
|
|
|
7.5 |
|
Expense ratio |
|
32.2 |
|
|
|
30.4 |
|
|
|
32.6 |
|
|
|
31.4 |
|
Dividend ratio |
|
0.9 |
|
|
|
0.6 |
|
|
|
0.6 |
|
|
|
0.5 |
|
Combined ratio |
|
98.9 |
% |
|
|
101.6 |
% |
|
|
99.0 |
% |
|
|
101.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey D. Miller, Executive Vice President and Chief Financial
Officer, commented, “We were pleased to achieve solid core
underwriting results for 2015, as our 97.4% full-year statutory
combined ratio demonstrates. Weather losses for the full year were
modestly below our previous five-year average level. The benefits
of our multi-year focus on underwriting initiatives and rate
adequacy were seen most clearly in our favorable full-year 2015
combined ratios for workers’ compensation and commercial
multi-peril, our largest commercial lines of business, and also in
our solid full-year 2015 homeowners combined ratio within our
personal lines segment.”
Mr. Miller added, “For both our commercial lines and personal
lines of business, our agents market multiple insurance products
together as a package to service a policyholder’s entire account.
With that emphasis as an 'account writer,' we generally evaluate
the profitability of each segment as a whole. Nevertheless,
we continue to monitor, and take steps to improve, the
profitability of our personal and commercial automobile lines of
business, which have underperformed our other lines of
business.”
Weather-related losses of $4.5 million for the fourth quarter of
2015 contributed 2.9 percentage points to the Company’s loss ratio,
compared to the $4.0 million of weather-related losses, or 2.8
percentage points of the Company’s loss ratio, for the fourth
quarter of 2014. Weather-related loss activity in the fourth
quarter of 2015 was lower than the Company's five-year average for
fourth-quarter weather losses of $5.9 million. For the full year of
2015, weather-related losses were $36.9 million, which represented
an improvement from the $41.8 million of weather-related losses the
Company incurred for the full year of 2014.
Large fire losses, which the Company defines as individual fire
losses in excess of $50,000, for the fourth quarter of 2015 were
$6.0 million, or 3.9 percentage points of the Company’s loss ratio,
lower than the $7.1 million of large fire losses, or 4.9 percentage
points of the Company’s loss ratio, for the fourth quarter of 2014.
The Company incurred large fire losses of $29.5 million for the
full year of 2015, comparing favorably to the $32.8 million of
large fire losses the Company incurred for the full year of
2014.
Net development of reserves for losses incurred in prior
accident years for all lines of business added 1.5 percentage
points to the Company’s loss ratio for the fourth quarter of 2015,
comparing favorably to 4.8 percentage points for the fourth quarter
of 2014. Net development of reserves for losses incurred in prior
accident years added 1.2 percentage points to the Company's loss
ratio for the full year of 2015, compared to 2.6 percentage points
for the full year of 2014.
The Company’s statutory expense ratio1 was 32.0% for the fourth
quarter of 2015, compared to 30.1% for the fourth quarter of 2014.
The increase in the Company's statutory expense ratio reflected
higher underwriting-based incentive costs that resulted from more
favorable underwriting results for the fourth quarter of 2015
compared to the prior-year fourth quarter.
Investment Operations
Donegal Group’s investment strategy is to generate an
appropriate amount of after-tax income from its invested assets
while minimizing credit risk through investment in high-quality
securities. As a result, the Company had 90.1% of its consolidated
investment portfolio invested in diversified, highly rated and
marketable fixed-maturity securities at December 31, 2015.
|
|
|
|
|
|
|
|
|
December 31, 2015 |
|
December 31, 2014 |
|
Amount |
|
% |
|
Amount |
|
% |
|
(dollars in thousands) |
Fixed maturities, at carrying value: |
|
|
|
|
|
|
|
U.S. Treasury
securities and obligations of U.S. |
|
|
|
|
|
|
|
|
|
government
corporations and agencies |
$ |
93,403 |
|
|
|
10.4 |
% |
|
$ |
74,878 |
|
|
|
9.0 |
% |
Obligations
of states and political subdivisions |
|
355,671 |
|
|
|
39.5 |
|
|
|
377,241 |
|
|
|
45.3 |
|
Corporate
securities |
|
138,119 |
|
|
|
15.3 |
|
|
|
106,171 |
|
|
|
12.7 |
|
Mortgage-backed securities |
|
224,459 |
|
|
|
24.9 |
|
|
|
184,252 |
|
|
|
22.1 |
|
Total fixed maturities |
|
811,652 |
|
|
|
90.1 |
|
|
|
742,542 |
|
|
|
89.1 |
|
Equity securities, at fair value |
|
37,261 |
|
|
|
4.1 |
|
|
|
30,822 |
|
|
|
3.7 |
|
Investments in affiliates |
|
38,477 |
|
|
|
4.3 |
|
|
|
39,284 |
|
|
|
4.7 |
|
Short-term investments, at cost |
|
13,432 |
|
|
|
1.5 |
|
|
|
20,293 |
|
|
|
2.5 |
|
Total investments |
$ |
900,822 |
|
|
|
100.0 |
% |
|
$ |
832,941 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
Average investment yield |
|
2.4 |
% |
|
|
|
|
2.3 |
% |
|
|
Average tax-equivalent investment yield |
|
3.1 |
% |
|
|
|
|
3.1 |
% |
|
|
Average fixed-maturity duration (years) |
|
4.4 |
|
|
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income of $5.4 million for the fourth quarter of
2015 increased 13.1% compared to $4.8 million in net investment
income for the fourth quarter of 2014. The increase in net
investment income reflected primarily an increase in average
invested assets and a decreased allocation of expenses to our
investment operations for the fourth quarter of 2015 compared to
the prior-year period. Net realized investment gains were $1.3
million for the fourth quarter of 2015, compared to $837,172 for
the fourth quarter of 2014. The Company had no impairments in its
investment portfolio that it considered to be other than temporary
during the full years of 2015 or 2014.
Mr. Miller, in commenting on the Company’s investment
operations, noted, “For the full year of 2015, our invested assets
rose by $67.9 million, contributing to the growth in our investment
income during the year. We attribute the increase in invested
assets largely to our top-line premium growth. Our portfolio
consists primarily of highly rated fixed-maturity securities.
We are investing new funds and proceeds of called and maturing
securities in corporate and mortgage-backed fixed maturities and,
to a lesser extent, dividend-paying equity securities, as we strive
to maintain our average investment yield in the continuing low
interest rate environment.”
The Company owns 48.2% of the outstanding stock of Donegal
Financial Services Corporation (“DFSC”). DFSC owns all of the
outstanding stock of Union Community Bank. The Company accounts for
its investment in DFSC using the equity method of accounting. The
Company’s equity in the earnings of DFSC was immaterial for the
fourth quarters of 2015 and 2014. For the full years of 2015 and
2014, the Company’s equity in the earnings of DFSC was $1.3 million
and $1.2 million, respectively. Donegal Mutual Insurance Company
owns the remaining 51.8% of the outstanding stock of DFSC.
Definitions of Non-GAAP and Operating
Measures
The Company prepares its consolidated financial statements on
the basis of GAAP. The Company’s insurance subsidiaries also
prepare financial statements based on the statutory accounting
principles state insurance regulators prescribe or permit (“SAP”).
In addition to using GAAP-based performance measurements, the
Company also utilizes certain non-GAAP financial measures that it
believes provide value in managing its business and for comparison
to the financial results of the insurance companies the Company
regards as its peers. These non-GAAP measures are operating income
(loss) and statutory combined ratio.
Operating income (loss) is a non-GAAP financial measure
investors in insurance companies commonly use. The Company defines
operating income (loss) as net income (loss) excluding after-tax
net realized investment gains or losses. Because the Company’s
calculation of operating income (loss) may differ from similar
measures other companies use, investors should exercise caution
when comparing the Company’s measure of operating income (loss) to
the measures other companies report.
The following table provides a reconciliation of the Company's
net income to the Company's operating income for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
|
2014 |
|
|
% Change |
|
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income |
|
|
|
|
|
|
|
|
|
|
|
to Operating Income |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
7,764 |
|
|
$ |
4,486 |
|
|
|
73.1 |
% |
|
$ |
26,770 |
|
|
$ |
14,539 |
|
|
|
84.1 |
% |
Realized gains (after tax) |
|
(814 |
) |
|
|
(552 |
) |
|
|
47.5 |
% |
|
|
(1,257 |
) |
|
|
(2,068 |
) |
|
|
-39.2 |
% |
Operating income |
$ |
6,950 |
|
|
$ |
3,934 |
|
|
|
76.7 |
% |
|
$ |
25,513 |
|
|
$ |
12,471 |
|
|
|
104.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Reconciliation of Net |
|
|
|
|
|
|
|
|
|
|
|
Income to Operating Income |
|
|
|
|
|
|
|
|
|
|
|
Net income – Class A (diluted) |
$ |
0.28 |
|
|
$ |
0.17 |
|
|
|
64.7 |
% |
|
$ |
0.98 |
|
|
$ |
0.55 |
|
|
|
78.2 |
% |
Realized gains (after tax) |
|
(0.03 |
) |
|
|
(0.02 |
) |
|
|
50.0 |
% |
|
|
(0.05 |
) |
|
|
(0.08 |
) |
|
|
-37.5 |
% |
Operating income – Class A |
$ |
0.25 |
|
|
$ |
0.15 |
|
|
|
66.7 |
% |
|
$ |
0.93 |
|
|
$ |
0.47 |
|
|
|
97.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income – Class B |
$ |
0.25 |
|
|
$ |
0.15 |
|
|
|
66.7 |
% |
|
$ |
0.88 |
|
|
$ |
0.49 |
|
|
|
79.6 |
% |
Realized gains (after tax) |
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
0.0 |
% |
|
|
(0.04 |
) |
|
|
(0.07 |
) |
|
|
-42.9 |
% |
Operating income – Class B |
$ |
0.23 |
|
|
$ |
0.13 |
|
|
|
76.9 |
% |
|
$ |
0.84 |
|
|
$ |
0.42 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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.
Conference Call and Webcast
The Company will hold a conference call and webcast on Friday,
February 19, 2016, beginning at 11:00 A.M. Eastern Time. You may
listen via the Internet by accessing the webcast link on the
Company’s web site at http://investors.donegalgroup.com. A replay
of the conference call will also be available via the Company’s web
site.
About the Company
Donegal Group is an insurance holding company. The Company’s
Class A common stock and Class B common stock trade on the NASDAQ
Global Select Market under the symbols DGICA and DGICB,
respectively. As an effective acquirer of small to medium-sized
“main street” property and casualty insurers, Donegal Group has
grown profitably since its formation in 1986. The Company continues
to seek opportunities for growth while striving to achieve its
longstanding goal of outperforming the property and casualty
insurance industry in terms of service, profitability and growth in
book value.
Safe Harbor
We base all statements contained in this release that are not
historic facts on our current expectations. These statements are
forward-looking in nature (as defined in the Private Securities
Litigation Reform Act of 1995) and involve a number of risks and
uncertainties. Actual results could vary materially. Factors that
could cause actual results to vary materially include: our ability
to maintain profitable operations, the adequacy of the loss and
loss expense reserves of our insurance subsidiaries, business and
economic conditions in the areas in which our insurance
subsidiaries operate, interest rates, competition from various
insurance and other financial businesses, acts of terrorism, the
availability and cost of reinsurance, adverse and catastrophic
weather events, legal and judicial developments, changes in
regulatory requirements, our ability to integrate and manage
successfully the insurance companies we may acquire from time to
time and other risks we describe from time to time in the periodic
reports we file with the Securities and Exchange Commission. You
should not place undue reliance on any such forward-looking
statements. 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.
|
Donegal Group Inc. |
Consolidated Statements of Income |
(unaudited; in thousands, except share data) |
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
Net
premiums earned |
$ |
155,557 |
|
|
$ |
144,211 |
|
Investment
income, net of expenses |
|
5,444 |
|
|
|
4,815 |
|
Net
realized investment gains |
|
1,251 |
|
|
|
837 |
|
Lease
income |
|
182 |
|
|
|
212 |
|
Installment
payment fees |
|
1,361 |
|
|
|
1,508 |
|
Equity in
earnings of DFSC |
|
1 |
|
|
|
8 |
|
|
Total
revenues |
|
163,796 |
|
|
|
151,591 |
|
|
|
|
|
|
|
Net losses
and loss expenses |
|
102,354 |
|
|
|
101,877 |
|
Amortization of deferred acquisition costs |
|
25,641 |
|
|
|
23,913 |
|
Other
underwriting expenses |
|
24,517 |
|
|
|
19,859 |
|
Policyholder dividends |
|
1,371 |
|
|
|
860 |
|
Interest |
|
|
203 |
|
|
|
340 |
|
Other
expenses |
|
747 |
|
|
|
600 |
|
|
Total
expenses |
|
154,833 |
|
|
|
147,449 |
|
|
|
|
|
|
|
Income
before income tax expense (benefit) |
|
8,963 |
|
|
|
4,142 |
|
Income tax
expense (benefit) |
|
1,199 |
|
|
|
(344 |
) |
|
|
|
|
|
|
Net
income |
$ |
7,764 |
|
|
$ |
4,486 |
|
|
|
|
|
|
|
Net income
per common share: |
|
|
|
|
Class A -
basic |
$ |
0.29 |
|
|
$ |
0.17 |
|
|
Class A -
diluted |
$ |
0.28 |
|
|
$ |
0.17 |
|
|
Class B -
basic and diluted |
$ |
0.25 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
Supplementary Financial Analysts' Data |
|
|
|
|
|
|
|
|
|
Weighted-average number of shares |
|
|
|
|
outstanding: |
|
|
|
|
Class A -
basic |
|
22,194,507 |
|
|
|
21,383,054 |
|
|
Class A -
diluted |
|
22,388,042 |
|
|
|
21,946,147 |
|
|
Class B -
basic and diluted |
|
5,576,775 |
|
|
|
5,576,775 |
|
|
|
|
|
|
|
Net
premiums written |
$ |
147,713 |
|
|
$ |
135,344 |
|
|
|
|
|
|
|
Book value
per common share |
|
|
|
|
at end of
period |
$ |
15.66 |
|
|
$ |
15.40 |
|
|
|
|
|
|
|
Annualized
return on average equity |
|
7.3 |
% |
|
|
4.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Donegal Group Inc. |
Consolidated Statements of Income |
(unaudited; in thousands, except share data) |
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
Net
premiums earned |
$ |
605,641 |
|
|
$ |
556,498 |
|
Investment
income, net of expenses |
|
20,950 |
|
|
|
18,344 |
|
Net
realized investment gains |
|
1,934 |
|
|
|
3,134 |
|
Lease
income |
|
750 |
|
|
|
856 |
|
Installment
payment fees |
|
5,835 |
|
|
|
6,473 |
|
Equity in
earnings of DFSC |
|
1,277 |
|
|
|
1,243 |
|
|
Total
revenues |
|
636,387 |
|
|
|
586,548 |
|
|
|
|
|
|
|
Net losses
and loss expenses |
|
398,367 |
|
|
|
388,401 |
|
Amortization of deferred acquisition costs |
|
99,513 |
|
|
|
90,146 |
|
Other
underwriting expenses |
|
97,710 |
|
|
|
84,659 |
|
Policyholder dividends |
|
3,863 |
|
|
|
2,796 |
|
Interest |
|
|
1,111 |
|
|
|
1,517 |
|
Other
expenses |
|
2,451 |
|
|
|
2,746 |
|
|
Total
expenses |
|
603,015 |
|
|
|
570,265 |
|
|
|
|
|
|
|
Income
before income tax expense |
|
33,372 |
|
|
|
16,283 |
|
Income tax
expense |
|
6,602 |
|
|
|
1,744 |
|
|
|
|
|
|
|
Net
income |
$ |
26,770 |
|
|
$ |
14,539 |
|
|
|
|
|
|
|
Net income
per common share: |
|
|
|
|
Class A -
basic |
$ |
0.99 |
|
|
$ |
0.56 |
|
|
Class A -
diluted |
$ |
0.98 |
|
|
$ |
0.55 |
|
|
Class B -
basic and diluted |
$ |
0.88 |
|
|
$ |
0.49 |
|
|
|
|
|
|
|
Supplementary Financial Analysts' Data |
|
|
|
|
|
|
|
|
|
Weighted-average number of shares |
|
|
|
|
outstanding: |
|
|
|
|
Class A -
basic |
|
22,045,999 |
|
|
|
21,099,861 |
|
|
Class A -
diluted |
|
22,394,121 |
|
|
|
21,564,456 |
|
|
Class B -
basic and diluted |
|
5,576,775 |
|
|
|
5,576,775 |
|
|
|
|
|
|
|
Net
premiums written |
$ |
628,837 |
|
|
$ |
579,201 |
|
|
|
|
|
|
|
Book value
per common share |
|
|
|
|
at end of
period |
$ |
15.66 |
|
|
$ |
15.40 |
|
|
|
|
|
|
|
Return on
average equity |
|
6.5 |
% |
|
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Donegal Group Inc. |
Consolidated Balance Sheets |
(in thousands) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
ASSETS |
Investments: |
|
|
|
|
Fixed
maturities: |
|
|
|
|
|
Held to maturity, at
amortized cost |
$ |
310,259 |
|
|
$ |
307,392 |
|
|
|
Available for sale, at
fair value |
|
501,393 |
|
|
|
435,150 |
|
|
Equity
securities, at fair value |
|
37,261 |
|
|
|
30,822 |
|
|
Investments
in affiliates |
|
38,477 |
|
|
|
39,284 |
|
|
Short-term
investments, at cost |
|
13,432 |
|
|
|
20,293 |
|
|
|
Total investments |
|
900,822 |
|
|
|
832,941 |
|
Cash |
|
|
28,139 |
|
|
|
35,579 |
|
Premiums
receivable |
|
141,267 |
|
|
|
133,307 |
|
Reinsurance
receivable |
|
259,728 |
|
|
|
253,636 |
|
Deferred
policy acquisition costs |
|
52,108 |
|
|
|
48,299 |
|
Prepaid
reinsurance premiums |
|
113,523 |
|
|
|
115,872 |
|
Other
assets |
|
42,247 |
|
|
|
39,021 |
|
|
|
Total assets |
$ |
1,537,834 |
|
|
$ |
1,458,655 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
Liabilities: |
|
|
|
|
|
Losses and
loss expenses |
$ |
578,205 |
|
|
$ |
538,258 |
|
|
Unearned
premiums |
|
429,493 |
|
|
|
408,646 |
|
|
Accrued
expenses |
|
22,460 |
|
|
|
19,430 |
|
|
Borrowings
under lines of credit |
|
81,000 |
|
|
|
53,500 |
|
|
Subordinated debentures |
|
5,000 |
|
|
|
5,000 |
|
|
Other
liabilities |
|
13,288 |
|
|
|
17,686 |
|
|
|
Total liabilities |
|
1,129,446 |
|
|
|
1,042,520 |
|
Stockholders' equity: |
|
|
|
|
Class A
common stock |
|
235 |
|
|
|
224 |
|
|
Class B
common stock |
|
56 |
|
|
|
56 |
|
|
Additional
paid-in capital |
|
219,525 |
|
|
|
200,349 |
|
|
Accumulated
other comprehensive income |
|
774 |
|
|
|
5,354 |
|
|
Retained
earnings |
|
234,804 |
|
|
|
223,254 |
|
|
Treasury
stock, at cost |
|
(47,006 |
) |
|
|
(13,102 |
) |
|
|
Total stockholders' equity |
|
408,388 |
|
|
|
416,135 |
|
|
|
Total liabilities and stockholders'
equity |
$ |
1,537,834 |
|
|
$ |
1,458,655 |
|
|
|
|
|
|
|
For Further Information:
Jeffrey D. Miller, Executive Vice President & Chief Financial Officer
Phone: (717) 426-1931
E-mail: investors@donegalgroup.com
Donegal (NASDAQ:DGICA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Donegal (NASDAQ:DGICA)
Historical Stock Chart
From Apr 2023 to Apr 2024