Marietta, Penn.-based Donegal Group Inc. reported on Wednesday net income of $6.5 million for the first quarter of 2013, down nearly 17 percent compared to $8.0 million profit for first quarter of 2012. The company said the decrease was primarily attributable to increased large fire losses and lower realized investment gains.
The company posted a 99.7 percent GAAP combined ratio for the first quarter of 2013, compared to 99.4 percent for the first quarter of 2012.
Operating income came in at $5.6 million for the first quarter of 2013, compared to operating income of $6.5 million for the first quarter of 2012.
On a brighter note, Donegal reported a 9.2 percent increase in net premiums written to $132.5 million, reflecting strong organic growth in commercial lines and the continued impact of premium rate increases. Total revenue for the quarter was $133.9 million, up 6.8 percent from $125.3 million one year ago.
Investment income for the quarter was $4.8 million, down 5.4 percent from one year ago. Realized gains were $1.3 million, down 41.9 percent.
“Our combined ratio for the first quarter of 2013 was below 100 percent on both a GAAP and statutory basis but exceeded our targeted levels due to the occurrence of large fire losses that exceeded our quarterly average for 2012,” Donald Nikolaus, Donegal’s CEO, said.
“Approximately half of the first quarter fire losses came from commercial accounts, several of which were unusual in nature. We believe the increase in commercial fire losses is an aberration, but we will monitor this development closely,” Nikolaus said.
He added, “The contribution of our initiatives to top-line growth was noteworthy, especially our continuing progress in increasing the percentage of commercial writings within our mix of business.”
The 18.6 percent growth in commercial lines net written premiums reflected premium increases averaging approximately 8.0 percent for renewal business, with the remainder of the increase attributable to growth in new business, Nikolaus said. “Our personal lines growth of 2.7 percent was related almost entirely to the rate increases we have implemented over the past year, offset in part by our continuing de-emphasis of personal lines in certain jurisdictions.”
Was this article valuable?
Here are more articles you may enjoy.