Donegal Group Inc. (NASDAQ:DGICA) (NASDAQ:DGICB) today reported its
financial results for the second quarter of 2016. Highlights
included:
- Net income increased 32.8% to $8.6 million, or 32 cents per
diluted Class A share, for the second quarter of 2016, compared to
net income of $6.5 million, or 24 cents per diluted Class A share,
for the second quarter of 2015
- Net premiums written increased 7.7% to $178.2 million for the
second quarter of 2016, reflecting organic growth in both personal
and commercial lines
- Statutory combined ratio1 of 95.0% for the second quarter of
2016, compared to 96.4% for the prior-year second quarter
- Statutory combined ratio of 93.6% for the first half of 2016,
compared to 96.6% for the first half of 2015
- Annualized return on average equity of 7.9% for the second
quarter of 2016, compared to 6.0% for the prior-year second
quarter
- Book value per share of $16.62 at June 30, 2016, compared to
$15.66 at year-end 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement Data |
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
161,943 |
|
|
$ |
150,458 |
|
|
|
7.6 |
% |
|
$ |
320,418 |
|
|
$ |
296,988 |
|
|
|
7.9 |
% |
Investment income, net |
|
5,344 |
|
|
|
5,157 |
|
|
|
3.6 |
|
|
|
10,890 |
|
|
|
10,106 |
|
|
|
7.8 |
|
Realized gains |
|
715 |
|
|
|
390 |
|
|
|
83.3 |
|
|
|
1,186 |
|
|
|
1,437 |
|
|
|
-17.5 |
|
Total revenues |
|
169,847 |
|
|
|
158,017 |
|
|
|
7.5 |
|
|
|
335,916 |
|
|
|
312,789 |
|
|
|
7.4 |
|
Net income |
|
8,585 |
|
|
|
6,465 |
|
|
|
32.8 |
|
|
|
20,434 |
|
|
|
13,319 |
|
|
|
53.4 |
|
Operating income1 |
|
8,120 |
|
|
|
6,211 |
|
|
|
30.7 |
|
|
|
19,663 |
|
|
|
12,385 |
|
|
|
58.8 |
|
Annualized return on average equity |
|
7.9 |
% |
|
|
6.0 |
% |
|
1.9 pts |
|
|
9.6 |
% |
|
|
6.2 |
% |
|
3.4 pts |
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
Net income – Class A (diluted) |
$ |
0.32 |
|
|
$ |
0.24 |
|
|
|
33.3 |
% |
|
$ |
0.78 |
|
|
$ |
0.49 |
|
|
|
59.2 |
% |
Net income – Class B |
|
0.30 |
|
|
|
0.21 |
|
|
|
42.9 |
|
|
|
0.72 |
|
|
|
0.45 |
|
|
|
60.0 |
|
Operating income – Class A (diluted) |
|
0.31 |
|
|
|
0.23 |
|
|
|
34.8 |
|
|
|
0.75 |
|
|
|
0.45 |
|
|
|
66.7 |
|
Operating income – Class B |
|
0.28 |
|
|
|
0.21 |
|
|
|
33.3 |
|
|
|
0.69 |
|
|
|
0.41 |
|
|
|
68.3 |
|
Book value |
|
16.62 |
|
|
|
15.62 |
|
|
|
6.4 |
|
|
|
16.62 |
|
|
|
15.62 |
|
|
|
6.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 reported a
strong second quarter and first half of 2016 highlighted by
significant increases in net income, earnings per share, and return
on average equity. We are continuing to achieve solid underwriting
performance by executing on our strategy of providing a strong
regional market presence for each of our lines of business.
Our focus on bottom-line execution has helped to drive improvements
in our loss and expense ratios over the past several quarters, and
we attribute our GAAP combined ratio of 97.0% for the second
quarter of 2016 to that ongoing focus.”
Mr. Burke concluded, “Donegal Group achieved net
premiums written growth of 7.7% during the second quarter of 2016,
driven predominantly by double-digit growth in our commercial lines
business segment. Our homeowners net premiums written
remained relatively comparable to the prior-year second quarter due
to the effect of reinsurance reinstatement premiums we paid
following a catastrophe loss event that impacted one of our
subsidiaries during the second quarter of 2016. We reported
growth in all of our lines of business during the first half of
2016. We attribute that achievement to our strong
relationships with our independent agents located throughout the 21
states in which we write business, along with modest rate increases
in certain lines. We expect our continuing technology
enhancements, such as the expanded use of predictive modeling and
the implementation of our new policy rating and billing systems, to
support additional growth opportunities. We remain committed
to our regional focus, working closely with our independent agents,
adhering to sound underwriting discipline and delivering
best-in-class customer service.”
Donald H. Nikolaus, Chairman, further remarked,
“We continue to strive to outperform the property and casualty
insurance industry in terms of service, profitability and book
value growth over the long term. At June 30, 2016, our book
value per share increased to the highest amount in our history at
$16.62, compared to $15.66 at December 31, 2015. Our
favorable earnings during the first half of 2016, as well as an
increase in unrealized gains within our available-for-sale
fixed-maturity and equity investment portfolios, contributed to the
increase in our book value at June 30, 2016.”
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 June 30, |
|
Six Months Ended June 30, |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Premiums Written |
|
|
|
|
|
|
|
|
|
|
|
Personal lines: |
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
59,043 |
|
|
$ |
55,635 |
|
|
|
6.1 |
% |
|
$ |
114,097 |
|
|
$ |
107,972 |
|
|
|
5.7 |
% |
Homeowners |
|
33,354 |
|
|
|
33,395 |
|
|
|
(0.1 |
) |
|
|
59,236 |
|
|
|
57,805 |
|
|
|
2.5 |
|
Other |
|
5,261 |
|
|
|
4,852 |
|
|
|
8.4 |
|
|
|
9,612 |
|
|
|
9,048 |
|
|
|
6.2 |
|
Total personal lines |
|
97,658 |
|
|
|
93,882 |
|
|
|
4.0 |
|
|
|
182,945 |
|
|
|
174,825 |
|
|
|
4.6 |
|
Commercial lines: |
|
|
|
|
|
|
|
|
|
|
|
Automobile |
|
23,118 |
|
|
|
20,005 |
|
|
|
15.6 |
|
|
|
46,029 |
|
|
|
40,128 |
|
|
|
14.7 |
|
Workers'
compensation |
|
28,203 |
|
|
|
25,259 |
|
|
|
11.7 |
|
|
|
59,233 |
|
|
|
53,989 |
|
|
|
9.7 |
|
Commercial
multi-peril |
|
26,618 |
|
|
|
24,342 |
|
|
|
9.4 |
|
|
|
55,071 |
|
|
|
49,377 |
|
|
|
11.5 |
|
Other |
|
2,638 |
|
|
|
2,068 |
|
|
|
27.6 |
|
|
|
5,032 |
|
|
|
3,884 |
|
|
|
29.6 |
|
Total commercial lines |
|
80,577 |
|
|
|
71,674 |
|
|
|
12.4 |
|
|
|
165,365 |
|
|
|
147,378 |
|
|
|
12.2 |
|
Total net premiums written |
$ |
178,235 |
|
|
$ |
165,556 |
|
|
|
7.7 |
% |
|
$ |
348,310 |
|
|
$ |
322,203 |
|
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The 7.7% increase in the Company’s net premiums written for the
second quarter of 2016 compared to the second quarter of 2015, as
shown in the table above, represents the combination of 12.4%
growth in commercial lines net premiums written and 4.0% growth in
personal lines net premiums written. The $12.7 million growth in
net premiums written for the second quarter of 2016 compared to the
second quarter of 2015 included:
- $8.9 million in commercial lines premiums that the Company
attributes primarily to new commercial accounts the Company’s
insurance subsidiaries have written throughout their operating
regions and a continuation of modest renewal premium
increases.
- $3.8 million in personal lines premiums that the Company
attributes to a combination of new policy growth and premium rate
increases the Company has implemented over the past four quarters,
partially offset by higher reinsurance reinstatement premiums.
The following table presents comparative details
with respect to our statutory and GAAP combined ratios for the
three and six months ended June 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Statutory Combined Ratios |
|
|
|
|
|
|
|
Personal Lines: |
|
|
|
|
|
|
|
Automobile |
|
102.0 |
% |
|
|
101.7 |
% |
|
|
100.9 |
% |
|
|
100.6 |
% |
Homeowners |
|
98.7 |
|
|
|
98.3 |
|
|
|
94.8 |
|
|
|
98.5 |
|
Other |
|
88.8 |
|
|
|
78.0 |
|
|
|
85.5 |
|
|
|
83.3 |
|
Total personal lines |
|
100.2 |
|
|
|
99.4 |
|
|
|
98.0 |
|
|
|
98.9 |
|
Commercial Lines: |
|
|
|
|
|
|
|
Automobile |
|
106.5 |
|
|
|
98.2 |
|
|
|
104.2 |
|
|
|
99.8 |
|
Workers'
compensation |
|
82.7 |
|
|
|
100.5 |
|
|
|
84.5 |
|
|
|
94.2 |
|
Commercial
multi-peril |
|
85.9 |
|
|
|
85.4 |
|
|
|
85.3 |
|
|
|
93.8 |
|
Total commercial lines |
|
88.5 |
|
|
|
92.4 |
|
|
|
88.2 |
|
|
|
93.7 |
|
Total lines |
|
95.0 |
% |
|
|
96.4 |
% |
|
|
93.6 |
% |
|
|
96.6 |
% |
|
|
|
|
|
|
|
|
GAAP Combined Ratios (Total
Lines) |
|
|
|
|
|
|
Loss
ratio (non-weather) |
|
56.8 |
% |
|
|
59.1 |
% |
|
|
56.3 |
% |
|
|
59.2 |
% |
Loss
ratio (weather-related) |
|
6.9 |
|
|
|
5.9 |
|
|
|
5.7 |
|
|
|
6.0 |
|
Expense ratio |
|
32.8 |
|
|
|
33.3 |
|
|
|
33.0 |
|
|
|
33.0 |
|
Dividend ratio |
|
0.5 |
|
|
|
0.4 |
|
|
|
0.5 |
|
|
|
0.5 |
|
Combined ratio |
|
97.0 |
% |
|
|
98.7 |
% |
|
|
95.5 |
% |
|
|
98.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey D. Miller, Executive Vice President and Chief Financial
Officer, commented, “Donegal Group’s improved statutory combined
ratio of 95.0% for the second quarter of 2016 was driven by
improvement in our core loss ratio. While we incurred a
higher amount of weather-related losses during the second quarter
of 2016 compared to the prior-year second quarter, those losses
were in line with our previous five-year average for the second
quarter. Our workers’ compensation line of business performed
exceptionally well during the period, which helped to offset an
increase in our commercial automobile combined ratio. That
increase resulted primarily from an increase in claims frequency
during the second quarter of 2016. We believe the uptick was
a seasonal anomaly, as our first half of 2016 commercial automobile
frequency statistics compared favorably to our commercial
automobile frequency statistics for the past several years.
We continue to focus on improving the profitability of our
commercial automobile line of business, and we recently filed rate
increases for that line in all of the states in which we conduct
business.”
For the second quarter of 2016, the Company’s
statutory loss ratio decreased to 63.8%, compared to 65.1% for the
second quarter of 2015. Weather-related losses of $11.2
million for the second quarter of 2016, which equate to 6.9
percentage points of the Company’s loss ratio, increased from the
$8.9 million, or 5.9 percentage points of the Company’s loss ratio,
for the second quarter of 2015. Weather-related loss activity for
the second quarter of 2016 compared favorably to the Company's
five-year average of $12.4 million for second-quarter
weather-related losses.
Large fire losses, which the Company defines as
individual fire losses in excess of $50,000, were $3.7 million for
the second quarter of 2016, or 2.3 percentage points of the
Company’s loss ratio. That amount was substantially lower
than the large fire losses of $5.9 million, or 3.9 percentage
points of the Company’s loss ratio, for the second quarter of 2015.
Similar to its experience for the first quarter of 2016, the
Company noted significant decreases in commercial fire loss
frequency and severity as well as a lower incidence of large
homeowners fire losses compared to the prior-year second
quarter.
Development of reserves for losses incurred in
prior accident years added 2.3 percentage points to the Company’s
loss ratio for the second quarter of 2016, compared to 2.6
percentage points to the Company’s loss ratio for the second
quarter of 2015. For the six-month periods ended June 30, 2016 and
2015, development of reserves for losses incurred in prior accident
years added 1.2 and 1.1 percentage points, respectively, to the
Company's loss ratios.
The Company’s statutory expense ratio1 was 30.7%
for the second quarter of 2016, compared to 30.9% for the second
quarter of 2015. The Company's other underwriting expenses
reflected the benefit of premium tax credits in the amount of $2.8
million that Michigan Insurance Company recognized following
legislative resolution of an unintended result of a 2012 Michigan
legislative change that made certain premium tax credits available
to insurance companies doing business in that state. That
benefit was offset by increased underwriting-based incentive costs
for the second quarter of 2016.
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, the Company had invested 90%
of its consolidated investment portfolio in diversified, highly
rated and marketable fixed-maturity securities at June 30,
2016.
|
|
|
|
|
|
|
|
|
June 30, 2016 |
|
December 31, 2015 |
|
Amount |
|
% |
|
Amount |
|
% |
|
(dollars in thousands) |
Fixed maturities, at carrying value: |
|
|
|
|
|
|
|
U.S. Treasury
securities and obligations of U.S. |
|
|
|
|
|
|
|
government corporations and agencies |
$ |
95,303 |
|
|
|
10.2 |
% |
|
$ |
88,383 |
|
|
|
9.8 |
% |
Obligations
of states and political subdivisions |
|
322,057 |
|
|
|
34.6 |
|
|
|
355,671 |
|
|
|
39.5 |
|
Corporate
securities |
|
167,670 |
|
|
|
18.0 |
|
|
|
138,119 |
|
|
|
15.3 |
|
Mortgage-backed securities |
|
253,246 |
|
|
|
27.2 |
|
|
|
229,479 |
|
|
|
25.5 |
|
Total fixed maturities |
|
838,276 |
|
|
|
90.0 |
|
|
|
811,652 |
|
|
|
90.1 |
|
Equity securities, at fair value |
|
44,607 |
|
|
|
4.8 |
|
|
|
37,261 |
|
|
|
4.1 |
|
Investments in affiliates |
|
39,869 |
|
|
|
4.3 |
|
|
|
38,477 |
|
|
|
4.3 |
|
Short-term investments, at cost |
|
9,389 |
|
|
|
0.9 |
|
|
|
13,432 |
|
|
|
1.5 |
|
Total investments |
$ |
932,141 |
|
|
|
100.0 |
% |
|
$ |
900,822 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
Average investment yield |
|
2.4 |
% |
|
|
|
|
2.4 |
% |
|
|
Average tax-equivalent investment yield |
|
3.0 |
% |
|
|
|
|
3.1 |
% |
|
|
Average fixed-maturity duration (years) |
|
4.0 |
|
|
|
|
|
4.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income of $5.3 million for the second quarter of
2016 increased 3.6% compared to $5.2 million in net investment
income for the second quarter of 2015. The increase in net
investment income reflected primarily an increase in average
invested assets relative to the prior-year second quarter.
Net realized investment gains were $715,177
for the second quarter of 2016, compared to $390,461 for the second
quarter of 2015.
The Company had no impairments in its investment
portfolio that it considered to be other than temporary during the
second quarters of 2016 or 2015.
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 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 its peers. These
non-GAAP measures are operating income and statutory combined
ratio.
Operating income is a non-GAAP financial measure
investors in insurance companies commonly use. The Company defines
operating income as net income excluding after-tax net realized
investment gains or losses. Because the Company’s calculation of
operating income may differ from similar measures other companies
use, investors should exercise caution when comparing the Company’s
measure of operating income to the measure of other companies.
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 June 30, |
|
Six Months Ended June 30, |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income |
|
|
|
|
|
|
|
|
|
|
|
to Operating Income |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
8,585 |
|
|
$ |
6,465 |
|
|
|
32.8 |
% |
|
$ |
20,434 |
|
|
$ |
13,319 |
|
|
|
53.4 |
% |
Realized gains (after tax) |
|
(465 |
) |
|
|
(254 |
) |
|
|
83.1 |
% |
|
|
(771 |
) |
|
|
(934 |
) |
|
|
-17.5 |
% |
Operating income |
$ |
8,120 |
|
|
$ |
6,211 |
|
|
|
30.7 |
% |
|
$ |
19,663 |
|
|
$ |
12,385 |
|
|
|
58.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Reconciliation of Net |
|
|
|
|
|
|
|
|
|
|
|
Income to Operating Income |
|
|
|
|
|
|
|
|
|
|
|
Net income – Class A (diluted) |
$ |
0.32 |
|
|
$ |
0.24 |
|
|
|
33.3 |
% |
|
$ |
0.78 |
|
|
$ |
0.49 |
|
|
|
59.2 |
% |
Realized gains (after tax) |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
0.0 |
% |
|
|
(0.03 |
) |
|
|
(0.04 |
) |
|
|
-25.0 |
% |
Operating income – Class A |
$ |
0.31 |
|
|
$ |
0.23 |
|
|
|
34.8 |
% |
|
$ |
0.75 |
|
|
$ |
0.45 |
|
|
|
66.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income – Class B |
$ |
0.30 |
|
|
$ |
0.21 |
|
|
|
42.9 |
% |
|
$ |
0.72 |
|
|
$ |
0.45 |
|
|
|
60.0 |
% |
Realized gains (after tax) |
|
(0.02 |
) |
|
|
- |
|
|
|
0.0 |
% |
|
|
(0.03 |
) |
|
|
(0.04 |
) |
|
|
-25.0 |
% |
Operating income – Class B |
$ |
0.28 |
|
|
$ |
0.21 |
|
|
|
33.3 |
% |
|
$ |
0.69 |
|
|
$ |
0.41 |
|
|
|
68.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The 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 Tuesday, July 26, 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 over the last three decades. 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
book value growth.
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 (“UCB”). The
Company accounts for its investment in DFSC using the equity method
of accounting. Donegal Mutual Insurance Company owns the remaining
51.8% of the outstanding stock of DFSC.
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, 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 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 June 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Net premiums
earned |
|
|
$ |
161,943 |
|
|
$ |
150,458 |
|
Investment income, net
of expenses |
|
|
|
5,344 |
|
|
|
5,157 |
|
Net realized investment
gains |
|
|
|
715 |
|
|
|
390 |
|
Lease income |
|
|
|
173 |
|
|
|
190 |
|
Installment payment
fees |
|
|
|
1,367 |
|
|
|
1,480 |
|
Equity in earnings of
DFSC |
|
|
|
305 |
|
|
|
342 |
|
Total revenues |
|
169,847 |
|
|
|
158,017 |
|
|
|
|
|
|
|
Net losses and loss
expenses |
|
|
|
103,194 |
|
|
|
97,839 |
|
Amortization of
deferred acquisition costs |
|
|
|
26,554 |
|
|
|
24,826 |
|
Other underwriting
expenses |
|
|
|
26,579 |
|
|
|
25,203 |
|
Policyholder
dividends |
|
|
|
755 |
|
|
|
688 |
|
Interest |
|
|
|
404 |
|
|
|
390 |
|
Other expenses |
|
|
|
315 |
|
|
|
678 |
|
Total expenses |
|
157,801 |
|
|
|
149,624 |
|
|
|
|
|
|
|
Income before income
tax expense |
|
|
|
12,046 |
|
|
|
8,393 |
|
Income tax expense |
|
|
|
3,461 |
|
|
|
1,928 |
|
|
|
|
|
|
|
Net income |
|
|
$ |
8,585 |
|
|
$ |
6,465 |
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
Class A - basic |
$ |
0.33 |
|
|
$ |
0.24 |
|
Class A - diluted |
$ |
0.32 |
|
|
$ |
0.24 |
|
Class B - basic and diluted |
$ |
0.30 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
Supplementary Financial
Analysts' Data |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number
of shares |
|
|
|
|
|
outstanding: |
|
|
|
Class A - basic |
|
20,746,193 |
|
|
|
22,002,187 |
|
Class A - diluted |
|
21,322,432 |
|
|
|
22,378,472 |
|
Class B - basic and diluted |
|
5,576,775 |
|
|
|
5,576,775 |
|
|
|
|
|
|
|
Net premiums
written |
|
|
$ |
178,235 |
|
|
$ |
165,556 |
|
|
|
|
|
|
|
Book value per common
share |
|
|
|
|
|
at
end of period |
$ |
16.62 |
|
|
$ |
15.62 |
|
|
|
|
|
|
|
Annualized return on
average equity |
|
|
|
7.9 |
% |
|
|
6.0 |
% |
Donegal Group Inc. |
Consolidated Statements of Income |
(unaudited; in thousands, except share data) |
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Net premiums
earned |
|
|
$ |
320,418 |
|
|
$ |
296,988 |
|
Investment
income, net of expenses |
|
10,890 |
|
|
|
10,106 |
|
Net
realized investment gains |
|
|
1,186 |
|
|
|
1,437 |
|
Lease income |
|
|
|
351 |
|
|
|
390 |
|
Installment
payment fees |
|
|
2,730 |
|
|
|
3,000 |
|
Equity in
earnings of DFSC |
|
|
341 |
|
|
|
868 |
|
Total revenues |
|
335,916 |
|
|
|
312,789 |
|
|
|
|
|
|
|
Net losses
and loss expenses |
|
|
198,772 |
|
|
|
193,779 |
|
Amortization of deferred acquisition costs |
|
52,510 |
|
|
|
48,836 |
|
Other
underwriting expenses |
|
|
53,217 |
|
|
|
49,036 |
|
Policyholder
dividends |
|
|
|
1,587 |
|
|
|
1,606 |
|
Interest |
|
|
|
812 |
|
|
|
721 |
|
Other expenses |
|
|
|
953 |
|
|
|
1,403 |
|
Total expenses |
|
307,851 |
|
|
|
295,381 |
|
|
|
|
|
|
|
Income
before income tax expense |
|
|
28,065 |
|
|
|
17,408 |
|
Income tax expense |
|
|
|
7,631 |
|
|
|
4,089 |
|
|
|
|
|
|
|
Net income |
|
|
$ |
20,434 |
|
|
$ |
13,319 |
|
|
|
|
|
|
|
Net income
per common share: |
|
|
|
|
Class A - basic |
$ |
0.79 |
|
|
$ |
0.50 |
|
Class A - diluted |
$ |
0.78 |
|
|
$ |
0.49 |
|
Class B - basic and diluted |
$ |
0.72 |
|
|
$ |
0.45 |
|
|
|
|
|
|
|
Supplementary Financial Analysts' Data |
|
|
|
|
|
|
|
|
|
Weighted-average number of shares |
|
|
|
outstanding: |
|
|
|
Class A - basic |
|
20,645,467 |
|
|
|
21,769,110 |
|
Class A - diluted |
|
21,068,986 |
|
|
|
22,247,476 |
|
Class B - basic and diluted |
|
5,576,775 |
|
|
|
5,576,775 |
|
|
|
|
|
|
|
Net premiums
written |
|
|
$ |
348,310 |
|
|
$ |
322,203 |
|
|
|
|
|
|
|
Book value
per common share |
|
|
|
|
at
end of period |
$ |
16.62 |
|
|
$ |
15.62 |
|
|
|
|
|
|
|
Annualized
return on average equity |
|
9.6 |
% |
|
|
6.2 |
% |
|
|
|
|
|
|
Donegal Group Inc. |
Consolidated Balance Sheets |
(in thousands) |
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
ASSETS |
Investments: |
|
|
|
|
|
Fixed maturities: |
|
|
|
Held to maturity, at amortized cost |
$ |
328,167 |
|
|
$ |
310,259 |
|
Available for sale, at fair value |
|
510,109 |
|
|
|
501,393 |
|
Equity securities, at fair value |
|
44,607 |
|
|
|
37,261 |
|
Investments in affiliates |
|
39,869 |
|
|
|
38,477 |
|
Short-term investments, at cost |
|
9,389 |
|
|
|
13,432 |
|
Total investments |
|
932,141 |
|
|
|
900,822 |
|
Cash |
|
|
|
29,697 |
|
|
|
28,139 |
|
Premiums
receivable |
|
|
159,991 |
|
|
|
141,267 |
|
Reinsurance
receivable |
|
|
258,140 |
|
|
|
259,728 |
|
Deferred
policy acquisition costs |
|
56,344 |
|
|
|
52,108 |
|
Prepaid
reinsurance premiums |
|
|
127,155 |
|
|
|
113,523 |
|
Other assets |
|
|
|
36,782 |
|
|
|
42,247 |
|
Total assets |
$ |
1,600,250 |
|
|
$ |
1,537,834 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
Liabilities: |
|
|
|
|
|
Losses and loss expenses |
$ |
577,165 |
|
|
$ |
578,205 |
|
Unearned premiums |
|
471,018 |
|
|
|
429,493 |
|
Accrued expenses |
|
19,168 |
|
|
|
22,460 |
|
Borrowings under lines of credit |
|
77,500 |
|
|
|
81,000 |
|
Subordinated debentures |
|
5,000 |
|
|
|
5,000 |
|
Other liabilities |
|
10,532 |
|
|
|
13,288 |
|
Total liabilities |
|
1,160,383 |
|
|
|
1,129,446 |
|
Stockholders' equity: |
|
|
|
|
Class A common stock |
|
239 |
|
|
|
235 |
|
Class B common stock |
|
56 |
|
|
|
56 |
|
Additional paid-in capital |
|
227,074 |
|
|
|
219,525 |
|
Accumulated other comprehensive income |
|
8,109 |
|
|
|
774 |
|
Retained earnings |
|
245,615 |
|
|
|
229,024 |
|
Treasury stock |
|
(41,226 |
) |
|
|
(41,226 |
) |
Total stockholders' equity |
|
439,867 |
|
|
|
408,388 |
|
Total liabilities and stockholders' equity |
$ |
1,600,250 |
|
|
$ |
1,537,834 |
|
|
|
|
|
|
|
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 Apr 2024 to May 2024
Donegal (NASDAQ:DGICA)
Historical Stock Chart
From May 2023 to May 2024