MARIETTA, PA — Donegal Group Inc. (NASDAQ: DGICA) and (NASDAQ: DGICB) reported a robust financial performance for the second quarter and first half of 2024. The insurance firm’s net income for Q2 reached $4.2 million, or 13 cents per diluted Class A share, up significantly from $2.0 million, or 6 cents per share, in the same period last year.
Financial Highlights
Donegal’s net premiums earned rose by 8.3% to $234.3 million, while net premiums written saw a 9.1% increase to $247.2 million. The combined ratio, a key measure of underwriting profitability, improved to 103.0% from 104.7% in Q2 2023. This ratio indicates the company is nearing the break-even point in its underwriting operations.
CEO Kevin G. Burke attributed the growth to strong renewal premium rate increases and policy retention. He emphasized the firm’s strategic focus on commercial lines growth and enhanced underwriting capabilities. “We continued to execute successfully on several important objectives during the second quarter of 2024 that we expect will further enhance our financial performance in future periods,” Burke stated.
Premiums and Underwriting
The company’s commercial lines net premiums written grew by 7.1%, while personal lines saw a 12.1% increase. This growth is due to new business writings, strong premium retention, and continued renewal premium increases.
The loss ratio for Q2 2024 was 70.6%, a slight increase from 69.9% in the prior year, impacted by weather-related losses and large fire losses. Weather-related losses were higher than the previous five-year average, with $24.7 million attributed to severe convective storms.
Expense Management
Donegal’s expense ratio improved to 31.9% from 34.2% in Q2 2023, thanks to various expense reduction initiatives. These included adjustments to commission schedules, staffing reductions, and deferred replacement of open positions. Despite the peak impact of expenses related to a systems modernization project, the firm managed to lower its overall expenses.
Investment Performance
Net investment income for Q2 2024 increased by 9.0% to $11.1 million, driven by a higher average investment yield. However, net investment gains dropped to $0.7 million from $2.5 million in Q2 2023, reflecting lower unrealized gains in equity securities.
Dividend Announcement
On July 18, 2024, Donegal declared a regular quarterly cash dividend of $0.1725 per share for Class A common stock and $0.155 per share for Class B common stock, payable on August 15, 2024, to shareholders of record as of August 1, 2024.
Donegal’s strong Q2 performance reflects its effective strategic initiatives and robust premium growth. The firm continues to navigate economic uncertainties with a focus on long-term value creation for its shareholders.
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