Donegal Group Inc. of Marietta, Pa. reported improved results including increased net income for the quarter ended June 30, 2004 of $6,770,187, or $.50 per share, compared to $5,268,953, or $.56 per share, for the second quarter of 2003.
The second quarter results for this year were achieved despite property claims from a severe weather event in the Midwest that totaled approximately $1 million, net of reinsurance, and reduced net income by $650,000, or $.05 per share on a diluted basis, according to the company.
Net income for the six months ended June 30, 2004 was $18,502,493, or $1.36 per share on a diluted basis compared to $9,113,385, or $.97 per share on a diluted basis for the six months ended June 30, 2003.
Net income in the first six months of 2004 included an extraordinary gain of $5,445,670, or $.40 per share on a diluted basis, related to an acquisition in the first quarter.
The company achieved positive underwriting results, posting a combined ratio of 91.8% for the second quarter of 2004 compared to a combined ratio of 92.3% for the comparable period in 2003.
Revenues for the second quarter of 2004 were $70,692,422, an increase of 33.8% over a year earlier, with premiums earned for the second quarter of $65,498,402, a 35.2% increase over the second quarter of 2003. Premiums earned in the second quarter, excluding premiums earned by the companies acquired in January 2004, increased $4.6 million, or 9.5%, to $53,012,325, reflecting an increase of 10.8% in net premiums written for the second quarter.
“We believe that achieving these levels of profitability in the second quarter, despite the storm activity, demonstrates the continued soundness of our underwriting-focused business strategy,” stated Donald H. Nikolaus, president and chief executive officer of the Donegal Group Inc.
The company’s loss ratio for the second quarter of 2004 improved slightly to 61.0% compared to 61.2% for the second quarter of 2003, despite the effects of the severe weather in the second quarter of 2004. Claims from that weather added 1.5 percentage points to the loss ratio in the second quarter of 2004. The expense ratio remained fairly constant at 30.7% for the second quarter of 2004 compared to 30.6% for the second quarter of 2003, reflecting lower operating expenses offset by higher levels of incentive expenses due to increased profitability.
The combined ratio for the first six months of 2004 was 92.2% compared to a combined ratio of 94.7% for the comparable period in 2003. The loss ratio for the first six months of 2004 improved to 62.7% compared to 63.8% for the first six months of 2003. The expense ratio improved to 29.2% for the first six months of 2004 compared to 30.4% for the same period of 2003.
These results helped the company increase its book value per common share to $17.23 per share as of June 30, 2004, compared to $16.29 per share at December 31, 2003.
Donegal Group Inc. write property and casualty coverages 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).
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