☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 23-2424711 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer ☐ | Accelerated filer ☑ | Non-accelerated filer ☐ | Smaller reporting company |
Emerging growth company ☐ |
Title of Each Class | Trading Symbols | Name of Each Exchange on Which Registered |
Class A Common Stock, $.01 par value | DGICA | The NASDAQ Global Select Market |
Class B Common Stock, $.01 par value | DGICB | The NASDAQ Global Select Market |
Page | ||
PART I | FINANCIAL INFORMATION | |
Item 1. | 1 | |
Item 2. | ||
20 | ||
Item 3. | ||
29 | ||
Item 4. | ||
PART II | OTHER INFORMATION | |
Item 1. | ||
30 | ||
Item 1A. | ||
30 | ||
Item 2. | ||
30 | ||
Item 3. | ||
31 | ||
Item 4. | ||
31 | ||
Item 5. | ||
31 | ||
Item 6. | ||
32 | ||
Item 1. | Financial Statements |
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Assets | ||||||||||||||||
Investments | ||||||||||||||||
Fixed maturities | ||||||||||||||||
Held to maturity, at amortized cost | $ | 700,335,137 | $ | 668,104,568 | ||||||||||||
Held to maturity, at amortized cost (net of allowance for expected credit losses of $1,355,484 and $0) | $ | 693,778,523 | $ | 688,439,360 | ||||||||||||
Available for sale, at fair value | 507,046,119 | 532,629,015 | 546,469,475 | 523,791,931 | ||||||||||||
Equity securities, at fair value | 45,260,978 | 63,419,973 | 37,584,654 | 35,104,840 | ||||||||||||
Short-term investments, at cost, which approximates fair value | 46,684,715 | 12,692,341 | 28,137,598 | 57,321,111 | ||||||||||||
Total investments | 1,299,326,949 | 1,276,845,897 | 1,305,970,250 | 1,304,657,242 | ||||||||||||
Cash | 21,810,717 | 57,709,375 | 22,836,044 | 25,123,332 | ||||||||||||
Accrued investment income | 8,466,487 | 8,214,971 | 10,183,882 | 8,861,292 | ||||||||||||
Premiums receivable | 190,324,020 | 168,862,580 | 189,545,403 | 173,846,294 | ||||||||||||
Reinsurance receivable | 445,150,797 | 455,411,009 | ||||||||||||||
Reinsurance receivable (net of allowance for expected credit losses of $1,466,994 and $0) | 460,681,422 | 456,522,223 | ||||||||||||||
Deferred policy acquisition costs | 74,247,225 | 68,028,373 | 77,189,596 | 73,170,230 | ||||||||||||
Deferred tax asset, net | 17,563,660 | 6,685,619 | 20,686,146 | 21,603,017 | ||||||||||||
Prepaid reinsurance premiums | 172,405,900 | 176,935,842 | 170,551,420 | 160,591,399 | ||||||||||||
Property and equipment, net | 2,841,509 | 2,956,930 | 2,757,161 | 2,755,105 | ||||||||||||
Accounts receivable - securities | 1,978 | 2,252 | 1,288 | 1,842 | ||||||||||||
Federal income taxes recoverable | 6,936,463 | 5,290,938 | 7,761,084 | 8,510,897 | ||||||||||||
Receivable from Michigan Catastrophic Claims Association | 0 | 18,112,800 | ||||||||||||||
Due from affiliate | 2,345,917 | 1,922,717 | 2,478,004 | — | ||||||||||||
Goodwill | 5,625,354 | 5,625,354 | 5,625,354 | 5,625,354 | ||||||||||||
Other intangible assets | 958,010 | 958,010 | 958,010 | 958,010 | ||||||||||||
Other | 1,843,350 | 1,612,732 | 1,460,420 | 1,123,098 | ||||||||||||
Total assets | $ | 2,249,848,336 | $ | 2,255,175,399 | $ | 2,278,685,484 | $ | 2,243,349,335 | ||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||
Liabilities | ||||||||||||||||
Losses and loss expenses | $ | 1,083,354,464 | $ | 1,077,620,301 | $ | 1,123,534,684 | $ | 1,121,045,758 | ||||||||
Unearned premiums | 601,939,060 | 572,958,422 | 609,684,232 | 577,653,130 | ||||||||||||
Accrued expenses | 4,796,689 | 4,028,659 | 4,692,378 | 4,226,390 | ||||||||||||
Reinsurance balances payable | 4,051,428 | 3,946,105 | 3,275,447 | 3,495,824 | ||||||||||||
Borrowings under lines of credit | 35,000,000 | 35,000,000 | 35,000,000 | 35,000,000 | ||||||||||||
Cash dividends declared to stockholders | 0 | 4,915,268 | — | 5,296,990 | ||||||||||||
Cash refunds due to Michigan policyholders | 0 | 18,112,800 | ||||||||||||||
Accounts payable - securities | 1,111,200 | 0 | ||||||||||||||
Due to affiliate | — | 5,173,289 | ||||||||||||||
Other | 8,573,013 | 7,557,757 | 8,936,574 | 7,864,942 | ||||||||||||
Total liabilities | 1,738,825,854 | 1,724,139,312 | 1,785,123,315 | 1,759,756,323 | ||||||||||||
Stockholders’ Equity | ||||||||||||||||
Preferred stock, $0.01 par value, authorized 2,000,000 shares; NaN issued | 0 | 0 | ||||||||||||||
Class A common stock, $0.01 par value, authorized 50,000,000 shares, issued 29,621,151 and 28,756,203 shares and outstanding 26,618,563 and 25,753,615 shares | 296,212 | 287,562 | ||||||||||||||
Preferred stock, $0.01 par value, authorized 2,000,000 shares; none issued | — | — | ||||||||||||||
Class A common stock, $0.01 par value, authorized 50,000,000 shares, issued 30,298,312 and 30,120,263 shares and outstanding 27,295,724 and 27,117,675 shares | 302,984 | 301,203 | ||||||||||||||
Class B common stock, $0.01 par value, authorized 10,000,000 shares, issued 5,649,240 shares and outstanding 5,576,775 shares | 56,492 | 56,492 | 56,492 | 56,492 | ||||||||||||
Additional paid-in capital | 317,940,000 | 304,889,481 | 328,375,472 | 325,601,647 | ||||||||||||
Accumulated other comprehensive (loss) income | (29,476,763 | ) | 3,283,551 | |||||||||||||
Accumulated other comprehensive loss | (37,696,109 | ) | (41,703,747 | ) | ||||||||||||
Retained earnings | 263,432,898 | 263,745,358 | 243,749,687 | 240,563,774 | ||||||||||||
Treasury stock, at cost | (41,226,357 | ) | (41,226,357 | ) | (41,226,357 | ) | (41,226,357 | ) | ||||||||
Total stockholders’ equity | 511,022,482 | 531,036,087 | 493,562,169 | 483,593,012 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 2,249,848,336 | $ | 2,255,175,399 | $ | 2,278,685,484 | $ | 2,243,349,335 |
Three Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums earned | $ | 204,128,489 | $ | 192,488,665 | $ | 215,233,160 | $ | 199,248,624 | ||||||||
Investment income, net of investment expenses | 8,203,846 | 7,652,180 | 9,449,078 | 7,858,881 | ||||||||||||
Net investment (losses) gains (includes $287,861 and $479,211 accumulated other comprehensive income reclassifications) | (8,376,713 | ) | 4,241,031 | |||||||||||||
Net investment losses (includes ($ 2,199,673) and $165,354 accumulated other comprehensive income reclassifications) | (331,189 | ) | (76,247 | ) | ||||||||||||
Lease income | 98,222 | 108,038 | 89,347 | 104,628 | ||||||||||||
Installment payment fees | 257,305 | 656,029 | 305,375 | 490,831 | ||||||||||||
Total revenues | 204,311,149 | 205,145,943 | 224,745,771 | 207,626,717 | ||||||||||||
Expenses: | ||||||||||||||||
Net losses and loss expenses | 141,608,361 | 113,956,652 | 138,105,889 | 117,883,002 | ||||||||||||
Amortization of deferred policy acquisition costs | 35,172,000 | 33,103,000 | 37,798,000 | 34,182,000 | ||||||||||||
Other underwriting expenses | 36,235,198 | 36,229,677 | 40,611,437 | 37,106,304 | ||||||||||||
Policyholder dividends | 1,288,744 | 1,629,499 | 1,343,340 | 1,648,751 | ||||||||||||
Interest | 239,725 | 217,290 | 152,957 | 153,033 | ||||||||||||
Other expenses, net | 346,200 | 313,000 | 437,715 | 427,388 | ||||||||||||
Total expenses | 214,890,228 | 185,449,118 | 218,449,338 | 191,400,478 | ||||||||||||
(Loss) income before income tax (benefit) expense | (10,579,079 | ) | 19,696,825 | |||||||||||||
Income tax (benefit) expense (includes $60,451 and $100,634 income tax expense from reclassification items) | (2,371,322 | ) | 3,532,789 | |||||||||||||
Net (loss) income | $ | (8,207,757 | ) | $ | 16,164,036 | |||||||||||
(Loss) earnings per common share: | ||||||||||||||||
Income before income tax expense | 6,296,433 | 16,226,239 | ||||||||||||||
Income tax expense (includes ($ 461,931) and $34,724 income tax (benefit) expense from reclassification items) | 1,092,837 | 3,081,210 | ||||||||||||||
Net income | $ | 5,203,596 | $ | 13,145,029 | ||||||||||||
Income per common share: | ||||||||||||||||
Class A common stock - basic and diluted | $ | (0.26 | ) | $ | 0.53 | $ | 0.16 | $ | 0.43 | |||||||
Class B common stock - basic and diluted | $ | (0.24 | ) | $ | 0.48 | $ | 0.15 | $ | 0.39 |
Three Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Net (loss) income | $ | (8,207,757 | ) | $ | 16,164,036 | |||
Other comprehensive (loss) income, net of tax | ||||||||
Unrealized (loss) gain on securities: | ||||||||
Unrealized holding (loss) gain during the period, net of income tax (benefit) expense of ($3,174,636) and $511,306 | (11,942,679 | ) | 1,928,551 | |||||
Reclassification adjustment for gains included in net (loss) income, net of income tax expense of $ 60,451 and $100,634 | (227,410 | ) | (378,577 | ) | ||||
Other comprehensive (loss) income | (12,170,089 | ) | 1,549,974 | |||||
Comprehensive (loss) income | $ | (20,377,846 | ) | $ | 17,714,010 |
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Revenues: | ||||||||
Net premiums earned | $ | 403,377,113 | $ | 379,740,265 | ||||
Investment income, net of investment expenses | 16,062,727 | 15,162,758 | ||||||
Net investment (losses) gains (includes $453,215 and $450,025 accumulated other comprehensive income reclassifications) | (8,452,960 | ) | 6,710,085 | |||||
Lease income | 202,850 | 215,805 | ||||||
Installment payment fees | 748,136 | 1,286,928 | ||||||
Total revenues | 411,937,866 | 403,115,841 | ||||||
Expenses: | ||||||||
Net losses and loss expenses | 259,491,363 | 233,176,399 | ||||||
Amortization of deferred policy acquisition costs | 69,354,000 | 63,282,000 | ||||||
Other underwriting expenses | 73,341,502 | 70,011,727 | ||||||
Policyholder dividends | 2,937,495 | 2,923,520 | ||||||
Interest | 392,758 | 529,616 | ||||||
Other expenses, net | 773,588 | 745,069 | ||||||
Total expenses | 406,290,706 | 370,668,331 | ||||||
Income before income tax expense | 5,647,160 | 32,447,510 | ||||||
Income tax expense (includes $95,175 and $94,505 income tax expense from reclassification items) | 709,888 | 5,753,626 | ||||||
Net income | $ | 4,937,272 | $ | 26,693,884 | ||||
Earnings per common share: | ||||||||
Class A common stock - basic | $ | 0.16 | $ | 0.89 | ||||
Class A common stock - diluted | $ | 0.16 | $ | 0.88 | ||||
Class B common stock - basic and diluted | $ | 0.14 | $ | 0.80 |
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Net income | $ | 4,937,272 | $ | 26,693,884 | ||||
Other comprehensive loss, net of tax | ||||||||
Unrealized loss on securities: | ||||||||
Unrealized holding loss during the period, net of income tax benefit of ($8,613,264) and ($614,319) | (32,402,274 | ) | (2,301,621 | ) | ||||
Reclassification adjustment for gains included in net income, net of income tax expense of $95,175 and $94,505 | (358,040 | ) | (355,520 | ) | ||||
Other comprehensive loss | (32,760,314 | ) | (2,657,141 | ) | ||||
Comprehensive (loss) income | $ | (27,823,042 | ) | $ | 24,036,743 |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net income | $ | 5,203,596 | $ | 13,145,029 | ||||
Other comprehensive income (loss), net of tax | ||||||||
Unrealized gain (loss) on securities: | ||||||||
Unrealized holding gain (loss) during the period, net of income tax expense (benefit) of $603,390 and ($5,438,628) | 2,269,896 | (20,459,595 | ) | |||||
Reclassification adjustment for losses (gains) included in net income, net of income tax (benefit) expense of ($ 461,931) and $34,724 | 1,737,742 | (130,630 | ) | |||||
Other comprehensive income (loss) | 4,007,638 | (20,590,225 | ) | |||||
Comprehensive income (loss) | $ | 9,211,234 | $ | (7,445,196 | ) |
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance, December 31, 2022 | 30,120,263 | 5,649,240 | $ | 301,203 | $ | 56,492 | $ | 325,601,647 | $ | (41,703,747 | ) | $ | 240,563,774 | $ | (41,226,357 | ) | $ | 483,593,012 | ||||||||||||||||||
Issuance of common stock (stock compensation plans) | 35,045 | — | 350 | — | 440,746 | — | — | — | 441,096 | |||||||||||||||||||||||||||
Share-based compensation | 143,004 | — | 1,431 | — | 2,218,355 | — | — | — | 2,219,786 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 5,203,596 | — | 5,203,596 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (7,057 | ) | — | (7,057 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 114,724 | — | (114,724 | ) | — | — | ||||||||||||||||||||||||||
Cumulative effect of adoption of updated guidance for credit losses at January 1, 2023 | — | — | — | — | — | — | (1,895,902 | ) | — | (1,895,902 | ) | |||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 4,007,638 | — | — | 4,007,638 | |||||||||||||||||||||||||||
Balance, March 31, 2023 | 30,298,312 | 5,649,240 | $ | 302,984 | $ | 56,492 | $ | 328,375,472 | $ | (37,696,109 | ) | $ | 243,749,687 | $ | (41,226,357 | ) | $ | 493,562,169 |
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance, December 31, 2021 | 28,756,203 | 5,649,240 | $ | 287,562 | $ | 56,492 | $ | 304,889,481 | $ | 3,283,551 | $ | 263,745,358 | $ | (41,226,357 | ) | $ | 531,036,087 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 33,407 | 0 | 335 | 0 | 423,665 | 0 | 0 | 0 | 424,000 | |||||||||||||||||||||||||||
Share-based compensation | 900 | 0 | 9 | 0 | 256,451 | 0 | 0 | 0 | 256,460 | |||||||||||||||||||||||||||
Net income | — | — | 0 | 0 | 0 | 0 | 13,145,029 | 0 | 13,145,029 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | 0 | 0 | 0 | 0 | (5,490 | ) | 0 | (5,490 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | 0 | 0 | 98,409 | 0 | (98,409 | ) | 0 | 0 | ||||||||||||||||||||||||||
Other comprehensive loss | — | — | 0 | 0 | 0 | (20,590,225 | ) | 0 | 0 | (20,590,225 | ) | |||||||||||||||||||||||||
Balance, March 31, 2022 | 28,790,510 | 5,649,240 | $ | 287,906 | $ | 56,492 | $ | 305,668,006 | $ | (17,306,674 | ) | $ | 276,786,488 | $ | (41,226,357 | ) | $ | 524,265,861 | ||||||||||||||||||
Issuance of common stock (stock compensation plans) | 54,743 | 0 | 547 | 0 | 736,349 | 0 | 0 | 0 | 736,896 | |||||||||||||||||||||||||||
Share-based compensation | 775,898 | 0 | 7,759 | 0 | 11,476,429 | 0 | 0 | 0 | 11,484,188 | |||||||||||||||||||||||||||
Net loss | — | — | 0 | 0 | 0 | 0 | (8,207,757 | ) | 0 | (8,207,757 | ) | |||||||||||||||||||||||||
Cash dividends declared | — | — | 0 | 0 | 0 | 0 | (5,086,617 | ) | 0 | (5,086,617 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | 0 | 0 | 59,216 | 0 | (59,216 | ) | 0 | 0 | ||||||||||||||||||||||||||
Other comprehensive loss | — | — | 0 | 0 | 0 | (12,170,089 | ) | 0 | 0 | (12,170,089 | ) | |||||||||||||||||||||||||
Balance, June 30, 2022 | 29,621,151 | 5,649,240 | $ | 296,212 | $ | 56,492 | $ | 317,940,000 | $ | (29,476,763 | ) | $ | 263,432,898 | $ | (41,226,357 | ) | $ | 511,022,482 |
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 27,651,774 | 5,649,240 | $ | 276,518 | $ | 56,492 | $ | 289,149,567 | $ | 11,130,612 | $ | 258,387,288 | $ | (41,226,357 | ) | $ | 517,774,120 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 28,756,203 | 5,649,240 | $ | 287,562 | $ | 56,492 | $ | 304,889,481 | $ | 3,283,551 | $ | 263,745,358 | $ | (41,226,357 | ) | $ | 531,036,087 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock (stock compensation plans) | 33,336 | 0 | 334 | 0 | 419,454 | 0 | 0 | 0 | 419,788 | 33,407 | — | 335 | — | 423,665 | — | — | — | 424,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 346,124 | 0 | 3,461 | 0 | 4,719,388 | 0 | 0 | 0 | 4,722,849 | 900 | — | 9 | — | 256,451 | — | — | — | 256,460 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 0 | 0 | 0 | 0 | 10,529,848 | 0 | 10,529,848 | — | — | — | — | — | — | 13,145,029 | — | 13,145,029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared | — | — | 0 | 0 | 0 | 0 | (5,000 | ) | 0 | (5,000 | ) | — | — | — | — | — | — | (5,490 | ) | — | (5,490 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Grant of stock options | — | — | 0 | 0 | 109,184 | 0 | (109,184 | ) | 0 | 0 | — | — | — | — | 98,409 | — | (98,409 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | 0 | 0 | 0 | (4,207,115 | ) | 0 | 0 | (4,207,115 | ) | — | — | — | — | — | (20,590,225 | ) | — | — | (20,590,225 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 28,031,234 | 5,649,240 | $ | 280,313 | $ | 56,492 | $ | 294,397,593 | $ | 6,923,497 | $ | 268,802,952 | $ | (41,226,357 | ) | $ | 529,234,490 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock (stock compensation plans) | 49,613 | 0 | 496 | 0 | 730,005 | 0 | 0 | 0 | 730,501 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 539,019 | 0 | 5,390 | 0 | 7,313,031 | 0 | 0 | 0 | 7,318,421 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 0 | 0 | 0 | 0 | 16,164,036 | 0 | 16,164,036 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared | — | — | 0 | 0 | 0 | 0 | (4,840,629 | ) | 0 | (4,840,629 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Grant of stock options | — | — | 0 | 0 | 69,995 | 0 | (69,995 | ) | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | 0 | 0 | 0 | 1,549,974 | 0 | 0 | 1,549,974 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 28,619,866 | 5,649,240 | $ | 286,199 | $ | 56,492 | $ | 302,510,624 | $ | 8,473,471 | $ | 280,056,364 | $ | (41,226,357 | ) | $ | 550,156,793 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | 28,790,510 | 5,649,240 | $ | 287,906 | $ | 56,492 | $ | 305,668,006 | $ | (17,306,674 | ) | $ | 276,786,488 | $ | (41,226,357 | ) | $ | 524,265,861 |
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net income | $ | 4,937,272 | $ | 26,693,884 | $ | 5,203,596 | $ | 13,145,029 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||||||||||
Depreciation, amortization and other non-cash items | 2,606,357 | 3,083,025 | 1,122,609 | 1,343,128 | ||||||||||||
Net investment losses (gains) | 8,452,960 | (6,710,085 | ) | |||||||||||||
Net investment losses | 331,189 | 76,247 | ||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Losses and loss expenses | 5,734,163 | 36,650,578 | 2,488,926 | (6,032,916 | ) | |||||||||||
Unearned premiums | 28,980,638 | 62,760,019 | 32,031,102 | 16,780,670 | ||||||||||||
Premiums receivable | (21,461,440 | ) | (19,787,451 | ) | (15,699,109 | ) | (13,612,915 | ) | ||||||||
Deferred acquisition costs | (6,218,852 | ) | (10,530,666 | ) | (4,019,366 | ) | (3,579,838 | ) | ||||||||
Deferred income taxes | (2,169,602 | ) | 1,266,870 | 355,524 | (334,190 | ) | ||||||||||
Reinsurance receivable | 10,260,212 | (13,289,251 | ) | (5,291,035 | ) | 7,115,224 | ||||||||||
Prepaid reinsurance premiums | 4,529,942 | (17,033,224 | ) | (9,960,021 | ) | 2,412,533 | ||||||||||
Accrued investment income | (251,516 | ) | (238,871 | ) | (1,322,590 | ) | (1,233,871 | ) | ||||||||
Due from affiliate | (423,200 | ) | 11,902,889 | (7,651,293 | ) | (287,192 | ) | |||||||||
Reinsurance balances payable | 105,323 | 797,424 | (220,377 | ) | 123,455 | |||||||||||
Current income taxes | (1,645,525 | ) | (928,841 | ) | 749,813 | 3,427,885 | ||||||||||
Accrued expenses | 768,030 | (17,649,554 | ) | 465,988 | 871,443 | |||||||||||
Other, net | 784,642 | 2,189,225 | 734,310 | 535,049 | ||||||||||||
Net adjustments | 30,052,132 | 32,482,087 | (5,884,330 | ) | 7,604,712 | |||||||||||
Net cash provided by operating activities | 34,989,404 | 59,175,971 | ||||||||||||||
Net cash (used in) provided by operating activities | (680,734 | ) | 20,749,741 | |||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Purchases of fixed maturities, held to maturity | (59,637,406 | ) | (80,315,578 | ) | (12,092,863 | ) | (28,656,113 | ) | ||||||||
Purchases of fixed maturities, available for sale | (61,330,076 | ) | (73,023,551 | ) | (34,354,601 | ) | (34,281,491 | ) | ||||||||
Purchases of equity securities, available for sale | (5,276,815 | ) | (25,332,194 | ) | (3,590,015 | ) | (5,276,815 | ) | ||||||||
Maturity of fixed maturities: | ||||||||||||||||
Held to maturity | 28,714,632 | 23,650,172 | 6,127,883 | 9,203,976 | ||||||||||||
Available for sale | 43,862,739 | 111,197,663 | 12,365,403 | 23,296,757 | ||||||||||||
Sales of fixed maturities: | ||||||||||||||||
Available for sale | 748,250 | — | ||||||||||||||
Sales of equity securities, available for sale | 14,529,635 | 17,391,396 | 3,066,129 | 14,408,819 | ||||||||||||
Net sales of property and equipment | 28,289 | 935,029 | ||||||||||||||
Net purchases of short-term investments | (33,992,374 | ) | (1,867,217 | ) | ||||||||||||
Net cash used in investing activities | (73,101,376 | ) | (27,364,280 | ) | ||||||||||||
Net (purchases) sales of property and equipment | (44,700 | ) | 28,288 | |||||||||||||
Net sales of short-term investments | 29,183,513 | 3,498,167 | ||||||||||||||
Net cash provided by (used in) investing activities | 1,408,999 | (17,778,412 | ) | |||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Cash dividends paid | (10,007,375 | ) | (9,281,930 | ) | (5,304,047 | ) | (4,920,758 | ) | ||||||||
Issuance of common stock | 12,220,689 | 12,380,741 | 2,288,494 | 314,940 | ||||||||||||
Payments on lines of credit | 0 | (50,000,000 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 2,213,314 | (46,901,189 | ) | |||||||||||||
Net cash used in financing activities | (3,015,553 | ) | (4,605,818 | ) | ||||||||||||
Net decrease in cash | (35,898,658 | ) | (15,089,498 | ) | (2,287,288 | ) | (1,634,489 | ) | ||||||||
Cash at beginning of period | 57,709,375 | 103,094,236 | 25,123,332 | 57,709,375 | ||||||||||||
Cash at end of period | $ | 21,810,717 | $ | 88,004,738 | $ | 22,836,044 | $ | 56,074,886 | ||||||||
Cash paid during period - Interest | $ | 307,747 | $ | 659,222 | $ | 156,346 | $ | 161,506 | ||||||||
Net cash paid during period - Taxes | $ | 4,500,000 | $ | 5,400,000 | $ | — | $ | — |
1 - | Organization |
2 - | Basis of Presentation |
3 - |
Three Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||||||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||||||||||||||||||
Class A | Class B | Class A | Class B | Class A | Class B | Class A | Class B | |||||||||||||||||||||||||
(in thousands, except per share data) | (in thousands, except per share data) | |||||||||||||||||||||||||||||||
Basic (loss) earnings per share: | ||||||||||||||||||||||||||||||||
Basic earnings per share: | ||||||||||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
Allocation of net (loss) income | $ | (6,866 | ) | $ | (1,342 | ) | $ | 13,482 | $ | 2,682 | ||||||||||||||||||||||
Allocation of net income | $ | 4,387 | $ | 817 | $ | 10,986 | $ | 2,159 | ||||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Weighted-average shares outstanding | 26,070 | 5,577 | 25,342 | 5,577 | 27,193 | 5,577 | 25,787 | 5,577 | ||||||||||||||||||||||||
Basic (loss) earnings per share | $ | (0.26 | ) | $ | (0.24 | ) | $ | 0.53 | $ | 0.48 | ||||||||||||||||||||||
Diluted (loss) earnings per share: | ||||||||||||||||||||||||||||||||
Basic earnings per share | $ | 0.16 | $ | 0.15 | $ | 0.43 | $ | 0.39 | ||||||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
Allocation of net (loss) income | $ | (6,866 | ) | $ | (1,342 | ) | $ | 13,482 | $ | 2,682 | ||||||||||||||||||||||
Allocation of net income | $ | 4,387 | $ | 817 | $ | 10,986 | $ | 2,159 | ||||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Number of shares used in basic computation | 26,070 | 5,577 | 25,342 | 5,577 | 27,193 | 5,577 | 25,787 | 5,577 | ||||||||||||||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||||||||||||||||||
Director and employee stock options | 0 | 0 | 252 | 0 | 173 | — | 22 | — | ||||||||||||||||||||||||
Number of shares used in diluted computation | 26,070 | 5,577 | 25,594 | 5,577 | 27,366 | 5,577 | 25,809 | 5,577 | ||||||||||||||||||||||||
Diluted (loss) earnings per share | $ | (0.26 | ) | $ | (0.24 | ) | $ | 0.53 | $ | 0.48 | ||||||||||||||||||||||
Diluted earnings per share | $ | 0.16 | $ | 0.15 | $ | 0.43 | $ | 0.39 |
Six Months Ended June 30, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 4,140 | $ | 797 | $ | 22,223 | $ | 4,471 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 25,929 | 5,577 | 25,057 | 5,577 | ||||||||||||
Basic earnings per share | $ | 0.16 | $ | 0.14 | $ | 0.89 | $ | 0.80 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 4,140 | $ | 797 | $ | 22,223 | $ | 4,471 | ||||||||
Denominator: | ||||||||||||||||
Number of shares used in basic computation | 25,929 | 5,577 | 25,057 | 5,577 | ||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||
Director and employee stock options | 123 | 0 | 190 | 0 | ||||||||||||
Number of shares used in diluted computation | 26,052 | 5,577 | 25,247 | 5,577 | ||||||||||||
Diluted earnings per share | $ | 0.16 | $ | 0.14 | $ | 0.88 | $ | 0.80 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Number of options to purchase Class A shares excluded | 0 | 4,952,276 | 731,600 | 4,952,276 |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Number of options to purchase Class A shares excluded | 2,307,435 | 5,434,934 |
4 - | Reinsurance |
• | excess of loss reinsurance, under which Donegal Mutual and our insurance subsidiaries recover losses over a set retention of $3.0 million for all losses other than workers’compensation and a retention of $2.0 |
5 - | Investments |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Carrying Value | Allowance for Credit Losses | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||||||||||||
Held to Maturity | |||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 101,072 | $ | 5 | $ | 6,817 | $ | 94,260 | $ | 101,899 | $ | 62 | $ | 101,961 | $ | — | $ | 9,660 | $ | 92,301 | |||||||||||||||||||||
Obligations of states and political subdivisions | 396,933 | 2,961 | 46,936 | 352,958 | 382,388 | 318 | 382,706 | 2,105 | 48,800 | 336,011 | |||||||||||||||||||||||||||||||
Corporate securities | 188,541 | 95 | 14,816 | 173,820 | 198,202 | 968 | 199,170 | 17 | 17,854 | 181,333 | |||||||||||||||||||||||||||||||
Mortgage-backed securities | 13,789 | 0 | 210 | 13,579 | 11,290 | 7 | 11,297 | — | 517 | 10,780 | |||||||||||||||||||||||||||||||
Totals | $ | 700,335 | $ | 3,061 | $ | 68,779 | $ | 634,617 | $ | 693,779 | $ | 1,355 | $ | 695,134 | $ | 2,122 | $ | 76,831 | $ | 620,425 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Available for Sale | ||||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 37,004 | $ | 0 | $ | 3,330 | $ | 33,674 | $ | 83,666 | $ | 134 | $ | 4,654 | $ | 79,146 | ||||||||||||||||
Obligations of states and political subdivisions | 55,677 | 95 | 4,498 | 51,274 | 45,383 | 72 | 4,105 | 41,350 | ||||||||||||||||||||||||
Corporate securities | 219,666 | 175 | 10,365 | 209,476 | 212,358 | 2 | 14,710 | 197,650 | ||||||||||||||||||||||||
Mortgage-backed securities | 227,130 | 23 | 14,531 | 212,622 | 248,187 | 246 | 20,110 | 228,323 | ||||||||||||||||||||||||
Totals | $ | 539,477 | $ | 293 | $ | 32,724 | $ | 507,046 | $ | 589,594 | $ | 454 | $ | 43,579 | $ | 546,469 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Held to Maturity | ||||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 89,268 | $ | 1,923 | $ | 1,015 | $ | 90,176 | $ | 103,362 | $ | 1 | $ | 10,566 | $ | 92,797 | ||||||||||||||||
Obligations of states and political subdivisions | 371,436 | 17,857 | 948 | 388,345 | 382,097 | 1,810 | 60,494 | 323,413 | ||||||||||||||||||||||||
Corporate securities | 191,147 | 11,576 | 773 | 201,950 | 190,949 | — | 20,510 | 170,439 | ||||||||||||||||||||||||
Mortgage-backed securities | 16,254 | 676 | 0 | 16,930 | 12,031 | — | 635 | 11,396 | ||||||||||||||||||||||||
Totals | $ | 668,105 | $ | 32,032 | $ | 2,736 | $ | 697,401 | $ | 688,439 | $ | 1,811 | $ | 92,205 | $ | 598,045 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Available for Sale | ||||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 32,501 | $ | 144 | $ | 461 | $ | 32,184 | $ | 68,538 | $ | 109 | $ | 5,125 | $ | 63,522 | ||||||||||||||||
Obligations of states and political subdivisions | 55,459 | 2,002 | 83 | 57,378 | 45,448 | 34 | 5,326 | 40,156 | ||||||||||||||||||||||||
Corporate securities | 215,669 | 6,817 | 874 | 221,612 | 218,041 | 8 | 15,211 | 202,838 | ||||||||||||||||||||||||
Mortgage-backed securities | 219,664 | 3,001 | 1,210 | 221,455 | 239,886 | 155 | 22,765 | 217,276 | ||||||||||||||||||||||||
Totals | $ | 523,293 | $ | 11,964 | $ | 2,628 | $ | 532,629 | $ | 571,913 | $ | 306 | $ | 48,427 | $ | 523,792 |
Amortized Cost | Estimated Fair Value | |||||||
(in thousands) | ||||||||
Held to maturity | ||||||||
Due in one year or less | $ | 45,820 | $ | 46,701 | ||||
Due after one year through five years | 84,198 | 83,346 | ||||||
Due after five years through ten years | 237,451 | 217,914 | ||||||
Due after ten years | 319,077 | 273,077 | ||||||
Mortgage-backed securities | 13,789 | 13,579 | ||||||
Total held to maturity | $ | 700,335 | $ | 634,617 | ||||
Available for sale | ||||||||
Due in one year or less | $ | 22,726 | $ | 22,718 | ||||
Due after one year through five years | 150,825 | 144,006 | ||||||
Due after five years through ten years | 107,916 | 100,391 | ||||||
Due after ten years | 30,880 | 27,309 | ||||||
Mortgage-backed securities | 227,130 | 212,622 | ||||||
Total available for sale | $ | 539,477 | $ | 507,046 |
Amortized Cost | Estimated Fair Value | |||||||
(in thousands) | ||||||||
Held to maturity | ||||||||
Due in one year or less | $ | 38,587 | $ | 38,484 | ||||
Due after one year through five years | 107,029 | 102,259 | ||||||
Due after five years through ten years | 243,499 | 220,660 | ||||||
Due after ten years | 294,722 | 248,242 | ||||||
Mortgage-backed securities | 11,297 | 10,780 | ||||||
Total held to maturity | $ | 695,134 | $ | 620,425 | ||||
Available for sale | ||||||||
Due in one year or less | $ | 46,221 | $ | 45,327 | ||||
Due after one year through five years | 181,269 | 169,788 | ||||||
Due after five years through ten years | 88,229 | 80,403 | ||||||
Due after ten years | 25,688 | 22,628 | ||||||
Mortgage-backed securities | 248,187 | 228,323 | ||||||
Total available for sale | $ | 589,594 | $ | 546,469 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 35,305 | $ | 10,968 | $ | 1,012 | $ | 45,261 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 31,672 | $ | 6,631 | $ | 718 | $ | 37,585 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 43,263 | $ | 20,413 | $ | 256 | $ | 63,420 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 30,771 | $ | 5,666 | $ | 1,332 | $ | 35,105 |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Gross realized gains: | ||||||||||||||||||||||||
Fixed maturities | $ | 438 | $ | 479 | $ | 672 | $ | 524 | $ | 22 | $ | 234 | ||||||||||||
Equity securities | 0 | 553 | 843 | 626 | 285 | 843 | ||||||||||||||||||
Real estate | 0 | 0 | 477 | 0 | — | 477 | ||||||||||||||||||
438 | 1,032 | 1,992 | 1,150 | 307 | 1,554 | |||||||||||||||||||
Gross realized losses: | ||||||||||||||||||||||||
Fixed maturities | 31 | 0 | 100 | 74 | 2,222 | 69 | ||||||||||||||||||
Equity securities | 0 | 354 | 824 | 354 | 46 | 824 | ||||||||||||||||||
31 | 354 | 924 | 428 | 2,268 | 893 | |||||||||||||||||||
Net realized gains | 407 | 678 | 1,068 | 722 | ||||||||||||||||||||
Net realized (losses) gains | (1,961 | ) | 661 | |||||||||||||||||||||
Gross unrealized gains on equity securities | 0 | 3,563 | 6 | 6,102 | 2,202 | 716 | ||||||||||||||||||
Gross unrealized losses on equity securities | (8,784 | ) | 0 | (9,527 | ) | (114 | ) | (485 | ) | (1,453 | ) | |||||||||||||
Net investment (losses) gains | $ | (8,377 | ) | $ | 4,241 | $ | (8,453 | ) | $ | 6,710 | ||||||||||||||
Fixed maturities - credit impairment charges | (87 | ) | — | |||||||||||||||||||||
Net investment losses | $ | (331 | ) | $ | (76 | ) |
Less Than 12 Months | More Than 12 Months | Less Than 12 Months | More Than 12 Months | |||||||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 90,365 | $ | 5,082 | $ | 33,226 | $ | 5,065 | $ | 80,775 | $ | 2,009 | $ | 77,265 | $ | 12,305 | ||||||||||||||||
Obligations of states and political subdivisions | 280,663 | 44,718 | 28,139 | 6,716 | 75,542 | 4,515 | 233,732 | 48,390 | ||||||||||||||||||||||||
Corporate securities | 306,511 | 20,417 | 31,213 | 4,764 | 198,944 | 8,137 | 177,785 | 24,427 | ||||||||||||||||||||||||
Mortgage-backed securities | 178,211 | 8,731 | 44,199 | 6,010 | 57,432 | 1,646 | 162,160 | 18,981 | ||||||||||||||||||||||||
Totals | $ | 855,750 | $ | 78,948 | $ | 136,777 | $ | 22,555 | $ | 412,693 | $ | 16,307 | $ | 650,942 | $ | 104,103 |
Less Than 12 Months | More Than 12 Months | Less Than 12 Months | More Than 12 Months | |||||||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 27,691 | $ | 412 | $ | 28,426 | $ | 1,064 | $ | 90,245 | $ | 5,327 | $ | 47,238 | $ | 10,364 | ||||||||||||||||
Obligations of states and political subdivisions | 56,655 | 899 | 7,091 | 132 | 261,465 | 49,327 | 47,945 | 16,493 | ||||||||||||||||||||||||
Corporate securities | 92,737 | 1,610 | 1,463 | 37 | 298,706 | 22,272 | 72,959 | 13,449 | ||||||||||||||||||||||||
Mortgage-backed securities | 90,006 | 1,128 | 2,361 | 82 | 143,886 | 10,941 | 69,879 | 12,459 | ||||||||||||||||||||||||
Totals | $ | 267,089 | $ | 4,049 | $ | 39,341 | $ | 1,315 | $ | 794,302 | $ | 87,867 | $ | 238,021 | $ | 52,765 |
6 - | Segment Information |
Three Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Revenues: | ||||||||||||||||
Premiums earned: | ||||||||||||||||
Commercial lines | $ | 126,854 | $ | 115,300 | $ | 130,466 | $ | 124,329 | ||||||||
Personal lines | 77,274 | 77,189 | 84,767 | 74,920 | ||||||||||||
GAAP premiums earned | 204,128 | 192,489 | 215,233 | 199,249 | ||||||||||||
Net investment income | 8,204 | 7,652 | 9,449 | 7,859 | ||||||||||||
Investment (losses) gains | (8,377 | ) | 4,241 | |||||||||||||
Investment losses | (331 | ) | (76 | ) | ||||||||||||
Other | 356 | 764 | 395 | 595 | ||||||||||||
Total revenues | $ | 204,311 | $ | 205,146 | $ | 224,746 | $ | 207,627 | ||||||||
(Loss) income before income tax (benefit) expense: | ||||||||||||||||
Income before income tax expense: | ||||||||||||||||
Underwriting (loss) income: | ||||||||||||||||
Commercial lines | $ | (4,848 | ) | $ | 1,767 | $ | (7,912 | ) | $ | 62 | ||||||
Personal lines | (8,170 | ) | 547 | 879 | 4,642 | |||||||||||
SAP underwriting (loss) income | (13,018 | ) | 2,314 | (7,033 | ) | 4,704 | ||||||||||
GAAP adjustments | 2,842 | 5,256 | 4,407 | 3,725 | ||||||||||||
GAAP underwriting (loss) income | (10,176 | ) | 7,570 | (2,626 | ) | 8,429 | ||||||||||
Net investment income | 8,204 | 7,652 | 9,449 | 7,859 | ||||||||||||
Investment (losses) gains | (8,377 | ) | 4,241 | |||||||||||||
Investment losses | (331 | ) | (76 | ) | ||||||||||||
Other | (230 | ) | 234 | (196 | ) | 14 | ||||||||||
(Loss) income before income tax (benefit) expense | $ | (10,579 | ) | $ | 19,697 | |||||||||||
Income before income tax expense | $ | 6,296 | $ | 16,226 |
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Premiums earned: | ||||||||
Commercial lines | $ | 251,183 | $ | 224,525 | ||||
Personal lines | 152,194 | 155,215 | ||||||
GAAP premiums earned | 403,377 | 379,740 | ||||||
Net investment income | 16,063 | 15,163 | ||||||
Investment (losses) gains | (8,453 | ) | 6,710 | |||||
Other | 951 | 1,503 | ||||||
Total revenues | $ | 411,938 | $ | 403,116 | ||||
Income before income tax expense: | ||||||||
Underwriting (loss) income: | ||||||||
Commercial lines | $ | (4,773 | ) | $ | (6,475 | ) | ||
Personal lines | (3,528 | ) | 5,584 | |||||
SAP underwriting loss | (8,301 | ) | (891 | ) | ||||
GAAP adjustments | 6,554 | 11,238 | ||||||
GAAP underwriting (loss) income | (1,747 | ) | 10,347 | |||||
Net investment income | 16,063 | 15,163 | ||||||
Investment (losses) gains | (8,453 | ) | 6,710 | |||||
Other | (216 | ) | 228 | |||||
Income before income tax expense | $ | 5,647 | $ | 32,448 |
7 - | Borrowings |
FHLB of Pittsburgh stock purchased and owned | $ | 1,573,300 | $ | 1,573,300 | ||||
Collateral pledged, at par (carrying value $46,850,969) | 49,384,840 | |||||||
Collateral pledged, at par (carrying value $46,842,191) | 50,046,414 | |||||||
Borrowing capacity currently available | 9,116,560 | 9,107,146 |
8 - | Share–Based Compensation |
9 - | Fair Value Measurements |
Fair Value Measurements Using | Fair Value Measurements Using | |||||||||||||||||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 33,674 | $ | 0 | $ | 33,674 | $ | 0 | $ | 79,146 | $ | — | $ | 79,146 | $ | — | ||||||||||||||||
Obligations of states and political subdivisions | 51,274 | 0 | 51,274 | 0 | 41,350 | — | 41,350 | — | ||||||||||||||||||||||||
Corporate securities | 209,476 | 0 | 209,476 | 0 | 197,650 | — | 197,650 | — | ||||||||||||||||||||||||
Mortgage-backed securities | 212,622 | 0 | 212,622 | 0 | 228,323 | — | 228,323 | — | ||||||||||||||||||||||||
Equity securities | 45,261 | 42,977 | 2,284 | 0 | 37,585 | 35,301 | 2,284 | — | ||||||||||||||||||||||||
Total investments in the fair value hierarchy | $ | 552,307 | $ | 42,977 | $ | 509,330 | $ | 0 | $ | 584,054 | $ | 35,301 | $ | 548,753 | $ | — |
Fair Value Measurements Using | Fair Value Measurements Using | |||||||||||||||||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 32,185 | $ | 0 | $ | 32,185 | $ | 0 | $ | 63,522 | $ | — | $ | 63,522 | $ | — | ||||||||||||||||
Obligations of states and political subdivisions | 57,378 | 0 | 57,378 | 0 | 40,156 | — | 40,156 | — | ||||||||||||||||||||||||
Corporate securities | 221,611 | 0 | 221,611 | 0 | 202,838 | — | 202,838 | — | ||||||||||||||||||||||||
Mortgage-backed securities | 221,455 | 0 | 221,455 | 0 | 217,276 | — | 217,276 | — | ||||||||||||||||||||||||
Equity securities | 63,420 | 61,130 | 2,290 | 0 | 35,105 | 32,821 | 2,284 | — | ||||||||||||||||||||||||
Totals | $ | 596,049 | $ | 61,130 | $ | 534,919 | $ | 0 | $ | 558,897 | $ | 32,821 | $ | 526,076 | $ | — |
10 - | Income Taxes |
11 - | Liabilities for Losses and Loss Expenses |
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Balance at January 1 | $ | 1,077,620 | $ | 962,007 | $ | 1,121,046 | $ | 1,077,620 | ||||||||
Less reinsurance recoverable | (451,261 | ) | (404,818 | ) | (451,184 | ) | (451,261 | ) | ||||||||
Cumulative effect of adoption of updated accounting guidance for credit losses at January 1 | 1,132 | — | ||||||||||||||
Net balance at January 1 | 626,359 | 557,189 | 670,994 | 626,359 | ||||||||||||
Incurred related to: | ||||||||||||||||
Current year | 283,906 | 254,740 | 146,413 | 134,432 | ||||||||||||
Prior years | (24,415 | ) | (21,564 | ) | (8,307 | ) | (16,549 | ) | ||||||||
Total incurred | 259,491 | 233,176 | 138,106 | 117,883 | ||||||||||||
Paid related to: | ||||||||||||||||
Current year | 112,253 | 98,966 | 41,205 | 40,293 | ||||||||||||
Prior years | 130,441 | 111,300 | 98,820 | 76,088 | ||||||||||||
Total paid | 242,694 | 210,266 | 140,025 | 116,381 | ||||||||||||
Net balance at end of period | 643,156 | 580,099 | 669,075 | 627,861 | ||||||||||||
Plus reinsurance recoverable | 440,198 | 418,559 | 454,460 | 443,726 | ||||||||||||
Balance at end of period | $ | 1,083,354 | $ | 998,658 | $ | 1,123,535 | $ | 1,071,587 |
12 - | Allowance for Expected Credit Losses |
At and For the Three Months Ended March 31, 2023 | At and For the Three Months Ended March 31, 2022 | |||||||||||||||
Held-to- Maturity, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | Held-to- Maturity, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Balance at January 1 | $ | 688,439 | $ | — | $ | 668,105 | $ | — | ||||||||
Cumulative effect of adoption of updated accounting guidance for credit losses at January 1 | 1,268 | — | ||||||||||||||
Current period change for expected credit losses | 87 | — | ||||||||||||||
Balance at end of period | $ | 693,779 | $ | 1,355 | $ | 690,691 | $ | — |
At and For the Three Months Ended March 31, 2023 | At and For the Three Months Ended March 31, 2022 | |||||||||||||||
Reinsurance Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | Reinsurance Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Balance at January 1 | $ | 456,522 | $ | — | $ | 455,411 | $ | — | ||||||||
Cumulative effect of adoption of updated accounting guidance for credit losses at January 1 | 1,132 | — | ||||||||||||||
Current period change for expected credit losses | 335 | — | ||||||||||||||
Balance at end of period | $ | 460,681 | $ | 1,467 | $ | 448,296 | $ | — |
Impact of New Accounting Standards |
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Commercial lines: | ||||||||||||||||
Automobile | $ | 174,047 | $ | 172,302 | $ | 173,782 | $ | 174,833 | ||||||||
Workers’ compensation | 118,869 | 122,398 | 121,195 | 120,539 | ||||||||||||
Commercial multi-peril | 179,236 | 168,445 | 205,873 | 203,567 | ||||||||||||
Other | 24,024 | 18,530 | 25,060 | 23,071 | ||||||||||||
Total commercial lines | 496,176 | 481,675 | 525,910 | 522,010 | ||||||||||||
Personal lines: | ||||||||||||||||
Automobile | 108,467 | 109,915 | 105,749 | 108,715 | ||||||||||||
Homeowners | 30,806 | 26,169 | 26,666 | 28,481 | ||||||||||||
Other | 7,707 | 8,600 | 10,750 | 10,656 | ||||||||||||
Total personal lines | 146,980 | 144,684 | 143,165 | 147,852 | ||||||||||||
Total commercial and personal lines | 643,156 | 626,359 | 669,075 | 669,862 | ||||||||||||
Plus reinsurance recoverable | 440,198 | 451,261 | 454,460 | 451,184 | ||||||||||||
Total liabilities for losses and loss expenses | $ | 1,083,354 | $ | 1,077,620 | $ | 1,123,535 | $ | 1,121,046 |
Percentage Change in Loss and Loss Expense Reserves Net of Reinsurance | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at June 30, 2022 | Percentage Change in Stockholders’ Equity at June 30, 2022(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2021 | Percentage Change in Stockholders’ Equity at December 31, 2021(1) | ||||
(dollars in thousands) | ||||||||
(10.0)% | $578,840 | 9.9% | $563,723 | 9.3% | ||||
(7.5) | 594,919 | 7.5 | 579,382 | 7.0 | ||||
(5.0) | 610,998 | 5.0 | 595,041 | 4.7 | ||||
(2.5) | 627,077 | 2.5 | 610,700 | 2.3 | ||||
Base | 643,156 | — | 626,359 | — | ||||
2.5 | 659,235 | (2.5) | 642,018 | (2.3) | ||||
5.0 | 675,314 | (5.0) | 657,677 | (4.7) | ||||
7.5 | 691,393 | (7.5) | 673,336 | (7.0) | ||||
10.0 | 707,472 | (9.9) | 688,995 | (9.3) |
Percentage Change in Loss and Loss Expense Reserves Net of Reinsurance | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at March 31, 2023 | Percentage Change in Stockholders’ Equity at March 31, 2023(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2022 | Percentage Change in Stockholders’ Equity at December 31, 2022(1) | |||||||||||||
(dollars in thousands) | |||||||||||||||||
(10.0)% | $ | 602,168 | 10.7% | $ | 602,876 | 10.9% | |||||||||||
(7.5) | 618,894 | 8.0 | 619,622 | 8.2 | |||||||||||||
(5.0) | 635,621 | 5.4 | 636,369 | 5.5 | |||||||||||||
(2.5) | 652,348 | 2.7 | 653,115 | 2.7 | |||||||||||||
Base | 669,075 | — | 669,862 | — | |||||||||||||
2.5 | 685,802 | (2.7) | 686,609 | (2.7) | |||||||||||||
5.0 | 702,529 | (5.4) | 703,355 | (5.5) | |||||||||||||
7.5 | 719,256 | (8.0) | 720,102 | (8.2) | |||||||||||||
10.0 | 735,983 | (10.7) | 736,848 | (10.9) |
(1) | Net of income tax effect. |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||||||
Net premiums earned | $ | 204,128 | $ | 192,489 | $ | 403,377 | $ | 379,740 | $ | 215,233 | $ | 199,249 | ||||||||||||
Change in net unearned premiums | 14,318 | 17,116 | 33,511 | 45,727 | 22,071 | 19,193 | ||||||||||||||||||
Net premiums written | $ | 218,446 | $ | 209,605 | $ | 436,888 | $ | 425,467 | $ | 237,304 | $ | 218,442 |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
GAAP Combined Ratios (Total Lines) | ||||||||||||||||||||||||
Loss ratio (non-weather) | 59.8 | % | 53.1 | % | 57.5 | % | 56.5 | % | 57.7 | % | 55.2 | % | ||||||||||||
Loss ratio (weather-related) | 9.6 | 6.1 | 6.8 | 4.9 | 6.5 | 4.0 | ||||||||||||||||||
Expense ratio | 35.0 | 36.0 | 35.4 | 35.1 | 36.4 | 35.8 | ||||||||||||||||||
Dividend ratio | 0.6 | 0.9 | 0.7 | 0.8 | 0.6 | 0.8 | ||||||||||||||||||
Combined ratio | 105.0 | % | 96.1 | % | 100.4 | % | 97.3 | % | 101.2 | % | 95.8 | % | ||||||||||||
Statutory Combined Ratios | ||||||||||||||||||||||||
Commercial lines: | ||||||||||||||||||||||||
Automobile | 100.1 | % | 105.5 | % | 94.7 | % | 103.9 | % | 96.2 | % | 89.1 | % | ||||||||||||
Workers’ compensation | 78.7 | 84.0 | 87.8 | 89.3 | 86.2 | 97.0 | ||||||||||||||||||
Commercial multi-peril | 119.5 | 94.5 | 109.8 | 100.8 | 114.8 | 99.7 | ||||||||||||||||||
Other | 87.1 | 77.2 | 79.9 | 68.8 | 79.7 | 72.4 | ||||||||||||||||||
Total commercial lines | 101.6 | 94.3 | 97.6 | 96.6 | 99.8 | 93.5 | ||||||||||||||||||
Personal lines: | ||||||||||||||||||||||||
Automobile | 104.0 | 91.1 | 98.9 | 92.2 | 103.9 | 93.5 | ||||||||||||||||||
Homeowners | 123.5 | 110.1 | 115.9 | 102.4 | 100.6 | 108.0 | ||||||||||||||||||
Other | 51.3 | 74.5 | 47.6 | 75.7 | 49.3 | 43.8 | ||||||||||||||||||
Total personal lines | 107.5 | 96.9 | 101.2 | 94.7 | 98.9 | 94.8 | ||||||||||||||||||
Total commercial and personal lines | 103.8 | 95.4 | 99.0 | 95.9 | 99.6 | 94.1 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||
Month #1 January 1-31, 2023 | Class A – None Class B – None | Class A – None Class B – None | Class A – None Class B – None | |||||
Month #2 | Class A – Class B – | Class A – Class B – | Class A – Class B – | |||||
Month #3 | Class A – Class B – None | Class A – Class B – None | Class A – Class B – None | (1) | ||||
Total | Class A – Class B – | Class A – Class B – | Class A – Class B – |
(1) | Donegal Mutual purchased these shares pursuant to its |
Exhibit No. | Description | ||
Certification of Chief Executive Officer | Filed herewith | ||
Certification of Chief Financial Officer | Filed herewith | ||
Statement of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 of Title 18 of the United States Code | Filed herewith | ||
Statement of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of Title 18 of the United States Code | Filed herewith | ||
Exhibit 101.INS | XBRL Instance Document | Filed herewith | |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith | |
Exhibit 101.PRE | XBRL Taxonomy Presentation Linkbase Document | Filed herewith | |
Exhibit 101.CAL | XBRL Taxonomy Calculation Linkbase Document | Filed herewith | |
Exhibit 101.LAB | XBRL Taxonomy Label Linkbase Document | Filed herewith | |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | |
Exhibit 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | Filed herewith |
DONEGAL GROUP INC. | ||
By: | /s/ Kevin G. Burke | |
Kevin G. Burke, President and Chief Executive Officer |
By: | /s/ Jeffrey D. Miller | |
Jeffrey D. Miller, Executive Vice President | ||
and Chief Financial Officer |