Donegal Reports $8M Q1 Income, Largest Quarterly Earning in 3 Years

Donegal Group, a P/C insurance holding company headquartered in Marietta, Penn., reported $8.0 million net income for 2012 first quarter — almost four times the $2.2 million net income reported one year ago.

Donegal said the $8.0 million 2012 first quarter net income also represented the highest level of quarterly earnings over the past three years. The company cited favorable underwriting results and net realized investment gains for its improved profit.

The statutory combined ratio for the first quarter improved to 96.9 percent, down from 99.1 percent one year ago. The total commercial lines combined ratio was 88.4 percent, down from 94.3 percent one year ago. The total personal lines combined ratio was 101.6 percent, slightly improving from 101.8 percent one year ago.

Net premiums written were $121.32 million, up 8.1 percent from $112.19 million one year ago. The increase was fueled by acquisition growth, organic growth as well as rate increases. Net premiums written for commercial lines, including auto, workers’ comp and commercial multi-peril, were $49.44 million, up 14.8 percent from one year ago. Net premiums written for personal lines, including auto and homeowners, were $71.88 million, up 4 percent from last year.

Net investment income for the first quarter was $5.10 million, down 2.7 percent from one year ago. But realized gains improved to $2.31 million, up from $373,000 one year ago.

CEO Donald Nikolaus said, “Our first quarter results represented a significant improvement, as we reported our highest level of quarterly earnings we have achieved over the past three years.”

“Favorable underwriting results and realized investment gains contributed to our improved results. We attribute the slight decline in our investment income for the quarter to lower prevailing yields on investments,” Nikolaus said.

“Our premium revenues rose due to growth in premiums we acquired, 11.2 percent organic growth in our commercial lines of business and the benefits of personal lines premium rate increases we implemented throughout 2011. The commercial lines organic growth represents a continuation of a trend that began in 2011.”

Nikolaus said this trend reflects the success of the company’s efforts to increase its share of business within existing independent agencies and to introduce commercial products in regions where the company acquired personal lines companies in the past several years. Further, he said, the company is seeing clear signs that the insurance market conditions in the company’s operating regions are improving with rates stabilizing or firming across virtually all lines of business.

Nikolaus added, “We also benefited from mild winter weather conditions in our operating areas and a lower number of large fire losses during the quarter.”

Donegal Group is an insurance holding company with insurance subsidiaries offering personal and commercial property/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 eight Midwestern states (Indiana, Iowa, Michigan, Nebraska, Ohio, Oklahoma, South Dakota and Wisconsin). The insurance subsidiaries of Donegal Group conduct business together with Donegal Mutual Insurance Company as the Donegal Insurance Group.