☒ | 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 | |||||||
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 | ||||||
Item 1. | 1 | |||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
PART II | ||||||
Item 1. | ||||||
Item 1A. | ||||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. | ||||||
Item 1. | Financial Statements |
June 30, 2020 | December 31, 2019 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Investments | ||||||||
Fixed maturities | ||||||||
Held to maturity, at amortized cost | $ | 519,731,423 | $ | 476,093,782 | ||||
Available for sale, at fair value | 569,942,279 | 564,951,803 | ||||||
Equity securities, at fair value | 52,703,395 | 55,477,556 | ||||||
Short-term investments, at cost, which approximates fair value | 51,342,125 | 14,030,222 | ||||||
Total investments | 1,193,719,222 | 1,110,553,363 | ||||||
Cash | 71,777,366 | 49,318,930 | ||||||
Accrued investment income | 7,663,852 | 7,066,029 | ||||||
Premiums receivable | 187,450,180 | 165,732,949 | ||||||
Reinsurance receivable | 379,340,802 | 367,021,468 | ||||||
Deferred policy acquisition costs | 62,150,533 | 59,284,859 | ||||||
Deferred tax asset, net | 6,729,689 | 8,514,311 | ||||||
Prepaid reinsurance premiums | 174,958,995 | 142,475,767 | ||||||
Property and equipment, net | 4,396,529 | 4,558,072 | ||||||
Accounts receivable - | 6,440 | 4,961 | ||||||
Goodwill | 5,625,354 | 5,625,354 | ||||||
Other intangible assets | 958,010 | 958,010 | ||||||
Other | 1,369,687 | 2,047,058 | ||||||
Total assets | $ | 2,096,146,659 | $ | 1,923,161,131 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Unpaid losses and loss expenses | $ | 901,823,622 | $ | 869,673,849 | ||||
Unearned premiums | 562,943,939 | 510,147,485 | ||||||
Accrued expenses | 23,448,271 | 28,453,744 | ||||||
Reinsurance balances payable | 2,260,482 | 2,116,084 | ||||||
Borrowings under lines of credit | 85,000,000 | 35,000,000 | ||||||
Cash dividends declared to stockholders | — | 4,075,234 | ||||||
Subordinated debentures | 5,000,000 | 5,000,000 | ||||||
Accounts payable - securities | 6,160,309 | 1,119 | ||||||
Income taxes payable | 4,978,351 | 84,831 | ||||||
Due to affiliate | 8,015,859 | 10,069,171 | ||||||
Other | 8,656,492 | 7,524,095 | ||||||
Total liabilities | 1,608,287,325 | 1,472,145,612 | ||||||
Stockholders’ Equity | ||||||||
Preferred stock, $.01 par value, authorized 2,000,000 shares; 0ne issued | — | — | ||||||
Class A common stock, $.01 par value, authorized 50,000,000 shares, issued 26,513,779 and 26,203,935 shares and outstanding 23,511,191 and 23,201,347 shares | 265,138 | 262,040 | ||||||
Class B common stock, $.01 par value, authorized 10,000,000 shares, issued 5,649,240 shares and outstanding 5,576,775 shares | 56,492 | 56,492 | ||||||
Additional paid-in capital | 273,175,488 | 268,151,601 | ||||||
Accumulated other comprehensive income | 10,367,225 | 504,170 | ||||||
Retained earnings | 245,221,348 | 223,267,573 | ||||||
Treasury stock, at cost | (41,226,357 | ) | (41,226,357 | ) | ||||
Total stockholders’ equity | 487,859,334 | 451,015,519 | ||||||
Total liabilities and stockholders’ equity | $ | 2,096,146,659 | $ | 1,923,161,131 | ||||
March 31, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Investments | ||||||||
Fixed maturities | ||||||||
Held to maturity, at amortized cost | $ | 613,485,144 | $ | 586,609,439 | ||||
Available for sale, at fair value | 497,654,660 | 555,136,017 | ||||||
Equity securities, at fair value | 68,639,946 | 58,556,173 | ||||||
Short-term investments, at cost, which approximates fair value | 21,098,394 | 20,900,155 | ||||||
Total investments | 1,200,878,144 | 1,221,201,784 | ||||||
Cash | 102,391,547 | 103,094,236 | ||||||
Accrued investment income | 8,946,304 | 7,936,879 | ||||||
Premiums receivable | 181,608,350 | 169,596,332 | ||||||
Reinsurance receivable | 426,339,825 | 408,908,850 | ||||||
Deferred policy acquisition costs | 64,530,713 | 59,156,958 | ||||||
Deferred tax asset, net | 6,718,013 | 5,683,113 | ||||||
Prepaid reinsurance premiums | 181,099,859 | 169,418,333 | ||||||
Property and equipment, net | 3,650,378 | 4,390,377 | ||||||
Accounts receivable - securities | 72,387 | 67,676 | ||||||
Federal income taxes recoverable | 940,613 | 3,089,369 | ||||||
Goodwill | 5,625,354 | 5,625,354 | ||||||
Other intangible assets | 958,010 | 958,010 | ||||||
Other | 1,461,163 | 1,393,053 | ||||||
Total assets | $ | 2,185,220,660 | $ | 2,160,520,324 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Losses and loss expenses | $ | 996,978,876 | $ | 962,007,437 | ||||
Unearned premiums | 577,481,172 | 537,189,598 | ||||||
Accrued expenses | 23,562,671 | 29,115,198 | ||||||
Reinsurance balances payable | 3,814,566 | 3,233,523 | ||||||
Borrowings under lines of credit | 35,000,000 | 85,000,000 | ||||||
Cash dividends declared to stockholders | 0 | 4,436,301 | ||||||
Subordinated debentures | 5,000,000 | 5,000,000 | ||||||
Accounts payable - securities | 2,177,340 | 0 | ||||||
Due to affiliate | 3,921,089 | 10,293,495 | ||||||
Other | 8,050,456 | 6,470,652 | ||||||
Total liabilities | 1,655,986,170 | 1,642,746,204 | ||||||
Stockholders’ Equity | ||||||||
Preferred stock, $.01 par value, authorized 2,000,000 shares; 0ne issued | 0— | 0— | ||||||
Class A common stock, $.01 par value, authorized 50,000,000 shares, issued 28,031,234 and 27,651,774 shares and outstanding 25,028,646 and 24,649,186 shares | 280,313 | 276,518 | ||||||
Class B common stock, $.01 par value, authorized 10,000,000 shares, issued 5,649,240 shares and outstanding 5,576,775 shares | 56,492 | 56,492 | ||||||
Additional paid-in capital | 294,397,593 | 289,149,567 | ||||||
Accumulated other comprehensive income | 6,923,497 | 11,130,612 | ||||||
Retained earnings | 268,802,952 | 258,387,288 | ||||||
Treasury stock, at cost | (41,226,357 | ) | (41,226,357 | ) | ||||
Total stockholders’ equity | 529,234,490 | 517,774,120 | ||||||
Total liabilities and stockholders’ equity | $ | 2,185,220,660 | $ | 2,160,520,324 | ||||
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Revenues: | ||||||||
Net premiums earned | $ | 184,373,768 | $ | 188,763,313 | ||||
Investment income, net of investment expenses | 7,172,144 | 7,289,652 | ||||||
Net investment gains (includes $14,493 and $13,150 accumulated other comprehensive income reclassifications) | 6,485,896 | 1,566,157 | ||||||
Lease income | 109,205 | 112,155 | ||||||
Installment payment fees | 758,759 | 1,057,677 | ||||||
Total revenues | 198,899,772 | 198,788,954 | ||||||
Expenses: | ||||||||
Net losses and loss expenses | 105,349,019 | 131,507,280 | ||||||
Amortization of deferred policy acquisition costs | 29,634,000 | 30,925,000 | ||||||
Other underwriting expenses | 33,567,266 | 28,208,336 | ||||||
Policyholder dividends | 1,683,658 | 1,969,490 | ||||||
Interest | 428,092 | 303,423 | ||||||
Other expenses, net | 249,688 | 337,894 | ||||||
Total expenses | 170,911,723 | 193,251,423 | ||||||
Income before income tax expense | 27,988,049 | 5,537,531 | ||||||
Income tax expense (includes $3,044 and $2,762 incometax expense from reclassification items) | 5,309,271 | 749,077 | ||||||
Net income | $ | 22,678,778 | $ | 4,788,454 | ||||
Earnings per common share: | ||||||||
Class A common stock - basic | $ | 0.80 | $ | 0.17 | ||||
Class A common stock - diluted | $ | 0.79 | $ | 0.17 | ||||
Class B common stock - basic and diluted | $ | 0.72 | $ | 0.15 | ||||
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Net income | $ | 22,678,778 | $ | 4,788,454 | ||||
Other comprehensive income, net of tax | ||||||||
Unrealized gain on securities: | ||||||||
Unrealized holding gain during the period, net of income tax expense of $1,774,279 and $1,593,511 | 6,674,664 | 5,932,595 | ||||||
Reclassification adjustment for gains included in net income, net of income tax expense of $3,044 and $2,762 | (11,449 | ) | (10,388 | ) | ||||
Other comprehensive income | 6,663,215 | 5,922,207 | ||||||
Comprehensive income | $ | 29,341,993 | $ | 10,710,661 | ||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
Net premiums earned | $ | 187,251,600 | $ | 187,252,778 | ||||
Investment income, net of investment expenses | 7,510,578 | 7,376,284 | ||||||
Net investment gains (losses) (includes ($ 29,186) and $421,835 accumulated other comprehensive income reclassifications) | 2,469,054 | (10,694,843 | ) | |||||
Lease income | 107,767 | 109,267 | ||||||
Installment payment fees | 630,899 | 867,720 | ||||||
Total revenues | 197,969,898 | 184,911,206 | ||||||
Expenses: | ||||||||
Net losses and loss expenses | 119,219,747 | 117,246,526 | ||||||
Amortization of deferred policy acquisition costs | 30,179,000 | 29,937,000 | ||||||
Other underwriting expenses | 33,782,050 | 32,597,629 | ||||||
Policyholder dividends | 1,294,021 | 1,842,000 | ||||||
Interest | 312,326 | 224,330 | ||||||
Other expenses, net | 432,069 | 560,550 | ||||||
Total expenses | 185,219,213 | 182,408,035 | ||||||
Income before income tax expense (benefit) | 12,750,685 | 2,503,171 | ||||||
Income tax expense (benefit) (includes ($ 6,129) and $88,585income tax (benefit) expense from reclassification items) | 2,220,837 | (1,227,950 | ) | |||||
Net income | $ | 10,529,848 | $ | 3,731,121 | ||||
Earnings per common share: | ||||||||
Class A common stock - basic and diluted | $ | 0.35 | �� | $ | 0.13 | |||
Class B common stock - basic and diluted | $ | 0.32 | $ | 0.12 | ||||
Donegal Group Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Net income | $ | 10,529,848 | $ | 3,731,121 | ||||
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 ($ 1,125,625) and $939,175 | (4,230,172 | ) | 3,533,090 | |||||
Reclassification adjustment for losses (gains) included in net income, net of income tax (benefit) expense of ( $6,129) and 88,585$ | 23,057 | (333,250 | ) | |||||
Other comprehensive (loss) income | (4,207,115 | ) | 3,199,840 | |||||
Comprehensive income | $ | 6,322,733 | $ | 6,930,961 | ||||
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Revenues: | ||||||||
Net premiums earned | $ | 371,626,546 | $ | 376,836,555 | ||||
Investment income, net of investment expenses | 14,548,428 | 14,338,155 | ||||||
Net investment (losses) gains (includes $436,328 and $52,414 accumulated other comprehensive income reclassifications) | (4,208,947 | ) | 19,663,270 | |||||
Lease income | 218,472 | 223,254 | ||||||
Installment payment fees | 1,626,479 | 2,146,594 | ||||||
Equity in earnings of Donegal Financial Services Corporation | — | 295,000 | ||||||
Total revenues | 383,810,978 | 413,502,828 | ||||||
Expenses: | ||||||||
Net losses and loss expenses | 222,595,545 | 254,617,936 | ||||||
Amortization of deferred policy acquisition costs | 59,571,000 | 61,517,000 | ||||||
Other underwriting expenses | 66,164,895 | 58,893,219 | ||||||
Policyholder dividends | 3,525,658 | 4,319,138 | ||||||
Interest | 652,422 | 868,715 | ||||||
Other expenses, net | 810,238 | 904,265 | ||||||
Total expenses | 353,319,758 | 381,120,273 | ||||||
Income before income tax expense | 30,491,220 | 32,382,555 | ||||||
Income tax expense (includes $91,629 and $11,007 income tax expense from reclassification items) | 4,081,321 | 4,570,937 | ||||||
Net income | $ | 26,409,899 | $ | 27,811,618 | ||||
Earnings per common share: | ||||||||
Class A common stock - basic | $ | 0.93 | $ | 1.00 | ||||
Class A common stock - diluted | $ | 0.92 | $ | 0.99 | ||||
Class B common stock - basic and diluted | $ | 0.84 | $ | 0.90 | ||||
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Net income | $ | 26,409,899 | $ | 27,811,618 | ||||
Other comprehensive income, net of tax | ||||||||
Unrealized gain on securities: | ||||||||
Unrealized holding gain during the period, net of income tax expense of $2,713,454 and $3,304,733 | 10,207,754 | 12,432,087 | ||||||
Reclassification adjustment for gains included in net income, net of income tax expense of $91,629 and $11,007 | (344,699 | ) | (41,407 | ) | ||||
Other comprehensive income | 9,863,055 | 12,390,680 | ||||||
Comprehensive income | $ | 36,272,954 | $ | 40,202,298 | ||||
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 | ||||||||||||||||||||||||||||
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 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 33,336 | — | 334 | — | 419,454 | — | — | — | 419,788 | |||||||||||||||||||||||||||
Share-based compensation | 346,124 | — | 3,461 | — | 4,719,388 | — | — | — | 4,722,849 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 10,529,848 | — | 10,529,848 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (5,000 | ) | — | (5,000 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 109,184 | — | (109,184 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (4,207,115 | ) | — | — | (4,207,115 | ) | |||||||||||||||||||||||||
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 | |||||||||||||||||||
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 | ||||||||||||||||||||||||||||
Balance, December 31, 2019 | 26,203,935 | 5,649,240 | $ | 262,040 | $ | 56,492 | $ | 268,151,601 | $ | 504,170 | $ | 223,267,573 | $ | (41,226,357 | ) | $ | 451,015,519 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 28,924 | — | 289 | — | 376,539 | — | — | — | 376,828 | |||||||||||||||||||||||||||
Share-based compensation | 67,087 | — | 671 | — | 1,242,315 | — | — | — | 1,242,986 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 3,731,121 | — | 3,731,121 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (5,363 | ) | — | (5,363 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 118,525 | — | (118,525 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 3,199,840 | — | — | 3,199,840 | |||||||||||||||||||||||||||
Balance, March 31, 2020 | 26,299,946 | 5,649,240 | $ | 263,000 | $ | 56,492 | $ | 269,888,980 | $ | 3,704,010 | $ | 226,874,806 | $ | (41,226,357 | ) | $ | 459,560,931 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 52,964 | — | 530 | — | 720,018 | — | — | — | 720,548 | |||||||||||||||||||||||||||
Share-based compensation | 160,869 | — | 1,608 | — | 2,490,136 | — | — | — | 2,491,744 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 22,678,778 | — | 22,678,778 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (4,255,882 | ) | — | (4,255,882 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 76,354 | — | (76,354 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 6,663,215 | — | — | 6,663,215 | |||||||||||||||||||||||||||
Balance, June 30, 2020 | 26,513,779 | 5,649,240 | $ | 265,138 | $ | 56,492 | $ | 273,175,488 | $ | 10,367,225 | $ | 245,221,348 | $ | (41,226,357 | ) | $ | 487,859,334 | |||||||||||||||||||
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 | ||||||||||||||||||||||||||||
Balance, December 31, 2019 | 26,203,935 | 5,649,240 | $ | 262,040 | $ | 56,492 | $ | 268,151,601 | $ | 504,170 | $ | 223,267,573 | $ | (41,226,357 | ) | $ | 451,015,519 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 28,924 | — | 289 | — | 376,539 | — | — | — | 376,828 | |||||||||||||||||||||||||||
Share-based compensation | 67,087 | — | 671 | — | 1,242,315 | — | — | — | 1,242,986 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 3,731,121 | — | 3,731,121 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (5,363 | ) | — | (5,363 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 118,525 | — | (118,525 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 3,199,840 | — | — | 3,199,840 | |||||||||||||||||||||||||||
Balance, March 31, 2020 | 26,299,946 | 5,649,240 | $ | 263,000 | $ | 56,492 | $ | 269,888,980 | $ | 3,704,010 | $ | 226,874,806 | $ | (41,226,357 | ) | $ | 459,560,931 | |||||||||||||||||||
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, 2018 | 25,819,341 | 5,649,240 | $ | 258,194 | $ | 56,492 | $ | 261,258,423 | $ | (14,228,059 | ) | $ | 192,751,208 | $ | (41,226,357 | ) | $ | 398,869,901 | ||||||||||||||||||
Issuance of common stock (stock compensation plans) | 33,334 | — | 333 | — | 403,722 | — | — | — | 404,055 | |||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 442,920 | — | — | — | 442,920 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 23,023,164 | — | 23,023,164 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (4,752 | ) | — | (4,752 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 144,226 | — | (144,226 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 6,468,473 | — | — | 6,468,473 | |||||||||||||||||||||||||||
Balance, March 31, 2019 | 25,852,675 | 5,649,240 | $ | 258,527 | $ | 56,492 | $ | 262,249,291 | $ | (7,759,586 | ) | $ | 215,625,394 | $ | (41,226,357 | ) | $ | 429,203,761 | ||||||||||||||||||
Issuance of common stock (stock compensation plans) | 55,933 | — | 560 | — | 752,354 | — | — | — | 752,914 | |||||||||||||||||||||||||||
Share-based compensation | 60,969 | — | 609 | — | 1,218,195 | — | — | — | 1,218,804 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 4,788,454 | — | 4,788,454 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (4,032,416 | ) | — | (4,032,416 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 100,485 | — | (100,485 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 5,922,207 | — | — | 5,922,207 | |||||||||||||||||||||||||||
Balance, June 30, 2019 | 25,969,577 | 5,649,240 | $ | 259,696 | $ | 56,492 | $ | 264,320,325 | $ | (1,837,379 | ) | $ | 216,280,947 | $ | (41,226,357 | ) | $ | 437,853,724 | ||||||||||||||||||
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 26,409,899 | $ | 27,811,618 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and other non-cash items | 3,502,046 | 3,013,417 | ||||||
Net investment losses (gains) | 4,208,947 | (19,663,270 | ) | |||||
Equity in earnings of Donegal Financial Services Corporation | — | (295,000 | ) | |||||
Changes in assets and liabilities: | ||||||||
Losses and loss expenses | 32,149,773 | 30,617,211 | ||||||
Unearned premiums | 52,796,454 | 29,470,779 | ||||||
Premiums receivable | (21,717,231 | ) | (19,555,531 | ) | ||||
Deferred acquisition costs | (2,865,674 | ) | (3,659,349 | ) | ||||
Deferred income taxes | (837,202 | ) | 272,997 | |||||
Reinsurance receivable | (12,319,334 | ) | (14,260,221 | ) | ||||
Prepaid reinsurance premiums | (32,483,228 | ) | (8,589,599 | ) | ||||
Accrued investment income | (597,823 | ) | (737,007 | ) | ||||
Due to affiliate | (2,053,312 | ) | (4,864,419 | ) | ||||
Reinsurance balances payable | 144,398 | (1,336,217 | ) | |||||
Current income taxes | 4,893,520 | 2,072,938 | ||||||
Accrued expenses | (5,005,473 | ) | (261,869 | ) | ||||
Other, net | 1,809,764 | 1,154,221 | ||||||
Net adjustments | 21,625,625 | (6,620,919 | ) | |||||
Net cash provided by operating activities | 48,035,524 | 21,190,699 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of fixed maturities, held to maturity | (55,313,641 | ) | (38,094,242 | ) | ||||
Purchases of fixed maturities, available for sale | (81,210,780 | ) | (88,098,117 | ) | ||||
Purchases of equity securities, available for sale | (5,071,801 | ) | (12,356,474 | ) | ||||
Maturity of fixed maturities: | ||||||||
Held to maturity | 18,812,367 | 6,656,093 | ||||||
Available for sale | 70,379,590 | 41,569,635 | ||||||
Sales of fixed maturities, available for sale | 15,251,996 | 20,548,077 | ||||||
Sales of equity securities, available for sale | 3,202,672 | 37,071,301 | ||||||
Net sales (purchases) of property and equipment | 32,107 | (129,877 | ) | |||||
Sale of investment in Donegal Financial Services Corporation | — | 33,922,773 | ||||||
Net purchases of short-term investments | (37,311,903 | ) | (7,704,029 | ) | ||||
Net cash used in investing activities | (71,229,393 | ) | (6,614,860 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Cash dividends paid | (8,336,479 | ) | (7,985,652 | ) | ||||
Issuance of common stock | 3,988,784 | 1,760,919 | ||||||
Borrowing under lines of credit | 50,000,000 | — | ||||||
Payments on lines of credit | — | (25,000,000 | ) | |||||
Net cash provided by (used in) financing activities | 45,652,305 | (31,224,733 | ) | |||||
Net increase (decrease) in cash | 22,458,436 | (16,648,894 | ) | |||||
Cash at beginning of period | 49,318,930 | 52,594,461 | ||||||
Cash at end of period | $ | 71,777,366 | $ | 35,945,567 | ||||
Cash paid during period - Interest | $ | 664,342 | $ | 321,585 | ||||
Net cash paid during period - Taxes | $ | — | $ | 2,200,000 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 10,529,848 | $ | 3,731,121 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and other non-cash items | 1,654,449 | 1,737,307 | ||||||
Net investment (gains) losses | (2,469,054 | ) | 10,694,843 | |||||
Changes in assets and liabilities: | ||||||||
Losses and loss expenses | 34,971,439 | 18,538,450 | ||||||
Unearned premiums | 40,291,574 | 32,130,738 | ||||||
Premiums receivable | (12,012,018 | ) | (16,331,348 | ) | ||||
Deferred acquisition costs | (5,373,755 | ) | (1,029,845 | ) | ||||
Deferred income taxes | 84,596 | (2,001,451 | ) | |||||
Reinsurance receivable | (17,430,975 | ) | (7,736,560 | ) | ||||
Prepaid reinsurance premiums | (11,681,526 | ) | (21,146,913 | ) | ||||
Accrued investment income | (1,009,425 | ) | (734,103 | ) | ||||
Due to affiliate | (6,372,406 | ) | (2,879,960 | ) | ||||
Reinsurance balances payable | 581,043 | 477,950 | ||||||
Current income taxes | 2,148,756 | 785,998 | ||||||
Accrued expenses | (5,552,527 | ) | (6,427,828 | ) | ||||
Other, net | 1,516,906 | 1,000,247 | ||||||
Net adjustments | 19,347,077 | 7,077,525 | ||||||
Net cash provided by operating activities | 29,876,925 | 10,808,646 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of fixed maturities, held to maturity | (33,904,795 | ) | (19,222,869 | ) | ||||
Purchases of fixed maturities, available for sale | (16,747,351 | ) | (13,558,579 | ) | ||||
Purchases of equity securities, available for sale | (13,885,992 | ) | (5,020,901 | ) | ||||
Maturity of fixed maturities: | ||||||||
Held to maturity | 7,317,449 | 9,287,575 | ||||||
Available for sale | 69,586,285 | 29,078,287 | ||||||
Sales of equity securities, available for sale | 6,300,459 | 3,202,672 | ||||||
Net sales (purchases) of property and equipment | 684,629 | (5,905 | ) | |||||
Net purchases of short-term investments | (198,239 | ) | (58,688,855 | ) | ||||
Net cash provided by (used in) investing activities | 19,152,445 | (54,928,575 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Cash dividends paid | (4,441,301 | ) | (4,080,597 | ) | ||||
Issuance of common stock | 4,709,242 | 1,163,331 | ||||||
Borrowing under lines of credit | — | 50,000,000 | ||||||
Payments on lines of credit | ) | — | ||||||
Net cash (used in) provided by financing activities | (49,732,059 | ) | 47,082,734 | |||||
Net (decrease) increase in cash | (702,689 | ) | 2,962,805 | |||||
Cash at beginning of period | 103,094,236 | 49,318,930 | ||||||
Cash at end of period | $ | 102,391,547 | $ | 52,281,735 | ||||
Cash paid during period - Interest | $ | 257,821 | $ | 161,830 | ||||
Net cash paid during period - Taxes | $ | 0— | $ | — |
Three Months Ended June 30, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 18,665 | $ | 4,014 | $ | 3,941 | $ | 848 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 23,451 | 5,577 | 22,933 | 5,577 | ||||||||||||
Basic earnings per share | $ | 0.80 | $ | 0.72 | $ | 0.17 | $ | 0.15 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 18,665 | $ | 4,014 | $ | 3,941 | $ | 848 | ||||||||
Denominator: | ||||||||||||||||
Number of shares used in basic computation | 23,451 | 5,577 | 22,933 | 5,577 | ||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||
Director and employee stock options | 199 | — | 200 | — | ||||||||||||
Number of shares used in diluted computation | 23,650 | 5,577 | 23,133 | 5,577 | ||||||||||||
Diluted earnings per share | $ | 0.79 | $ | 0.72 | $ | 0.17 | $ | 0.15 | ||||||||
Three Months Ended March 31, | ||||||||||||||||
2021 | 2020 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 8,742 | $ | 1,788 | $ | 3,064 | $ | 667 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 24,768 | 5,577 | 23,260 | 5,577 | ||||||||||||
Basic earnings per share | $ | 0.35 | $ | 0.32 | $ | 0.13 | $ | 0.12 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 8,742 | $ | 1,788 | $ | 3,064 | $ | 667 | ||||||||
Denominator: | ||||||||||||||||
Number of shares used in basic computation | 24,768 | 5,577 | 23,260 | 5,577 | ||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||
Director and employee stock options | 128 | — | 188 | — | ||||||||||||
Number of shares used in diluted computation | 24,896 | 5,577 | 23,448 | 5,577 | ||||||||||||
Diluted earnings per share | $ | 0.35 | $ | 0.32 | $ | 0.13 | $ | 0.12 | ||||||||
Six Months Ended June 30, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 21,721 | $ | 4,689 | $ | 22,790 | $ | 5,022 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 23,356 | 5,577 | 22,892 | 5,577 | ||||||||||||
Basic earnings per share | $ | 0.93 | $ | 0.84 | $ | 1.00 | $ | 0.90 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 21,721 | $ | 4,689 | $ | 22,790 | $ | 5,022 | ||||||||
Denominator: | ||||||||||||||||
Number of shares used in basic computation | 23,356 | 5,577 | 22,892 | 5,577 | ||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||
Director and employee stock options | 193 | — | 135 | — | ||||||||||||
Number of shares used in diluted computation | 23,549 | 5,577 | 23,027 | 5,577 | ||||||||||||
Diluted earnings per share | $ | 0.92 | $ | 0.84 | $ | 0.99 | $ | 0.90 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Number of options to purchase Class A shares excluded | 6,183,992 | 5,531,561 | 6,183,992 | 5,417,725 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Number of options to purchase Class A shares excluded | 6,051,359 | 6,196,526 |
5 - | Investments |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 73,824 | $ | 4,619 | $ | — | $ | 78,443 | ||||||||
Obligations of states and political subdivisions | 252,121 | 19,442 | 223 | 271,340 | ||||||||||||
Corporate securities | 165,640 | 14,078 | 1,085 | 178,633 | ||||||||||||
Mortgage-backed securities | 28,146 | 1,478 | — | 29,624 | ||||||||||||
Totals | $ | 519,731 | $ | 39,617 | $ | 1,308 | $ | 558,040 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 14,847 | $ | 550 | $ | — | $ | 15,397 | ||||||||
Obligations of states and political subdivisions | 60,906 | 2,189 | — | 63,095 | ||||||||||||
Corporate securities | 204,155 | 8,477 | 461 | 212,171 | ||||||||||||
Mortgage-backed securities | 270,271 | 9,041 | 33 | 279,279 | ||||||||||||
Totals | $ | 550,179 | $ | 20,257 | $ | 494 | $ | 569,942 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and | $ | 79,016 | $ | 2,720 | $ | 1,329 | $ | 80,407 | ||||||||
Obligations of states and political subdivisions | 332,642 | 16,797 | 3,200 | 346,239 | ||||||||||||
Corporate securities | 180,425 | 11,307 | 921 | 190,811 | ||||||||||||
Mortgage-backed securities | 21,402 | 1,037 | — | 22,439 | ||||||||||||
Totals | $ | 613,485 | $ | 31,861 | $ | 5,450 | $ | 639,896 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 19,512 | $ | 251 | $ | 610 | $ | 19,153 | ||||||||
Obligations of states and political subdivisions | 67,283 | 1,829 | 260 | 68,852 | ||||||||||||
Corporate securities | 194,779 | 8,674 | 678 | 202,775 | ||||||||||||
Mortgage-backed securities | 201,606 | 5,900 | 631 | 206,875 | ||||||||||||
Totals | $ | 483,180 | $ | 16,654 | $ | 2,179 | $ | 497,655 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 82,916 | $ | 1,803 | $ | 69 | $ | 84,650 | ||||||||
Obligations of states and political subdivisions | 204,634 | 14,237 | 288 | 218,583 | ||||||||||||
Corporate securities | 156,398 | 8,275 | 333 | 164,340 | ||||||||||||
Mortgage-backed securities | 32,146 | 611 | 16 | 32,741 | ||||||||||||
Totals | $ | 476,094 | $ | 24,926 | $ | 706 | $ | 500,314 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 19,302 | $ | 82 | $ | 19 | $ | 19,365 | ||||||||
Obligations of states and political subdivisions | 55,162 | 1,641 | 7 | 56,796 | ||||||||||||
Corporate securities | 154,946 | 4,477 | 180 | 159,243 | ||||||||||||
Mortgage-backed securities | 327,429 | 2,857 | 738 | 329,548 | ||||||||||||
Totals | $ | 556,839 | $ | 9,057 | $ | 944 | $ | 564,952 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 77,435 | $ | 3,984 | $ | 223 | $ | 81,196 | ||||||||
Obligations of states and political subdivisions | 312,319 | 23,212 | 143 | 335,388 | ||||||||||||
Corporate securities | 173,270 | 18,172 | 206 | 191,236 | ||||||||||||
Mortgage-backed securities | 23,585 | 1,236 | 0 | 24,821 | ||||||||||||
Totals | $ | 586,609 | $ | 46,604 | $ | 572 | $ | 632,641 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 47,512 | $ | 424 | $ | 121 | $ | 47,815 | ||||||||
Obligations of states and political subdivisions | 66,287 | 2,690 | 12 | 68,965 | ||||||||||||
Corporate securities | 202,396 | 10,496 | 184 | 212,708 | ||||||||||||
Mortgage-backed securities | 218,763 | 6,902 | 17 | 225,648 | ||||||||||||
Totals | $ | 534,958 | $ | 20,512 | $ | 334 | $ | 555,136 | ||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Held to maturity | ||||||||||||||||
Due in one year or less | $ | 32,774 | $ | 33,145 | $ | 50,512 | $ | 52,261 | ||||||||
Due after one year through five years | 85,516 | 91,701 | 84,179 | 89,856 | ||||||||||||
Due after five years through ten years | 180,630 | 195,464 | 205,132 | 214,111 | ||||||||||||
Due after ten years | 192,665 | 208,106 | 252,260 | 261,229 | ||||||||||||
Mortgage-backed securities | 28,146 | 29,624 | 21,402 | 22,439 | ||||||||||||
Total held to maturity | $ | 519,731 | $ | 558,040 | $ | 613,485 | $ | 639,896 | ||||||||
Available for sale | ||||||||||||||||
Due in one year or less | $ | 58,794 | $ | 59,296 | $ | 34,002 | $ | 34,683 | ||||||||
Due after one year through five years | 100,488 | 105,594 | 122,623 | 128,868 | ||||||||||||
Due after five years through ten years | 99,183 | 103,688 | 97,120 | 99,047 | ||||||||||||
Due after ten years | 21,443 | 22,085 | 27,829 | 28,182 | ||||||||||||
Mortgage-backed securities | 270,271 | 279,279 | 201,606 | 206,875 | ||||||||||||
Total available for sale | $ | 550,179 | $ | 569,942 | $ | 483,180 | $ | 497,655 | ||||||||
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 42,574 | $ | 11,495 | $ | 1,366 | $ | 52,703 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 50,216 | $ | 18,959 | $ | 535 | $ | 68,640 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 43,419 | $ | 12,180 | $ | 121 | $ | 55,478 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 42,410 | $ | 17,103 | $ | 957 | $ | 58,556 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Gross investment gains: | ||||||||||||||||
Fixed maturities | $ | 229 | $ | 14 | $ | 652 | $ | 372 | ||||||||
Equity securities | 6,474 | 1,586 | 3,355 | 7,572 | ||||||||||||
Investment in affiliate | — | — | — | 12,662 | ||||||||||||
6,703 | 1,600 | 4,007 | 20,606 | |||||||||||||
Gross investment losses: | ||||||||||||||||
Fixed maturities | 217 | 2 | 218 | 320 | ||||||||||||
Equity securities | — | 32 | 7,998 | 623 | ||||||||||||
217 | 34 | 8,216 | 943 | |||||||||||||
Net investment gains (losses) | $ | 6,486 | $ | 1,566 | $ | (4,209 | ) | $ | 19,663 | |||||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Gross investment gains: | ||||||||
Fixed maturities | $ | 193 | $ | 423 | ||||
Equity securities | 3,277 | 431 | ||||||
3,470 | 854 | |||||||
Gross investment losses: | ||||||||
Fixed maturities | 222 | 1 | ||||||
Equity securities | 779 | 11,548 | ||||||
1,001 | 11,549 | |||||||
Net investment gains (losses) | $ | 2,469 | $ | (10,695 | ) | |||
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
Obligations of states and political subdivisions | $ | 7,058 | $ | 223 | $ | — | $ | — | ||||||||
Corporate securities | 44,522 | 696 | 7,195 | 850 | ||||||||||||
Mortgage-backed securities | 1,674 | 32 | 459 | 1 | ||||||||||||
Totals | $ | 53,254 | $ | 951 | $ | 7,654 | $ | 851 | ||||||||
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 33,349 | $ | 1,939 | $ | — | $ | — | ||||||||
Obligations of states and political subdivisions | 88,703 | 3,255 | 2,094 | 205 | ||||||||||||
Corporate securities | 46,939 | 1,403 | 8,289 | 196 | ||||||||||||
Mortgage-backed securities | 21,509 | 626 | 520 | 5 | ||||||||||||
Totals | $ | 190,500 | $ | 7,223 | $ | 10,903 | $ | 406 | ||||||||
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 7,461 | $ | 46 | $ | 5,395 | $ | 42 | ||||||||
Obligations of states and political subdivisions | 23,339 | 293 | 2,327 | 2 | ||||||||||||
Corporate securities | 19,363 | 263 | 18,803 | 250 | ||||||||||||
Mortgage-backed securities | 28,507 | 56 | 74,089 | 698 | ||||||||||||
Totals | $ | $ | 658 | $ | 100,614 | $ | 992 | |||||||||
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 29,144 | $ | 345 | $ | — | $ | — | ||||||||
Obligations of states and political subdivisions | 9,362 | 154 | — | — | ||||||||||||
Corporate securities | 26,143 | 115 | 8,230 | 276 | ||||||||||||
Mortgage-backed securities | 3,091 | 15 | 236 | 1 | ||||||||||||
Totals | $ | 67,740 | $ | 629 | $ | 8,466 | $ | 277 | ||||||||
6 - | Segment Information |
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Premiums earned: | ||||||||
Commercial lines | $ | 101,870 | $ | 94,788 | ||||
Personal lines | 82,504 | 93,975 | ||||||
Premiums earned | 184,374 | 188,763 | ||||||
Net investment income | 7,172 | 7,290 | ||||||
Investment gains | 6,486 | 1,566 | ||||||
Other | 868 | 1,170 | ||||||
Total revenues | $ | 198,900 | $ | 198,789 | ||||
Income before income tax expense: | ||||||||
Underwriting income (loss): | ||||||||
Commercial lines | $ | 4,472 | $ | 4,113 | ||||
Personal lines | 8,290 | (9,238 | ) | |||||
SAP underwriting income ( loss | 12,762 | (5,125 | ) | |||||
GAAP adjustments | 1,378 | 1,278 | ||||||
GAAP underwriting income ( loss ) | 14,140 | (3,847 | ) | |||||
Net investment income | 7,172 | 7,290 | ||||||
Investment gains | 6,486 | 1,566 | ||||||
Other | 190 | 529 | ||||||
Income before income tax expense | $ | 27,988 | $ | 5,538 | ||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Premiums earned: | ||||||||
Commercial lines | $ | 109,226 | $ | 101,775 | ||||
Personal lines | 78,026 | 85,478 | ||||||
GAAP premiums earned | 187,252 | 187,253 | ||||||
Net investment income | 7,511 | 7,376 | ||||||
Investment gains (losses) | 2,469 | (10,695 | ) | |||||
Other | 738 | 977 | ||||||
Total revenues | $ | 197,970 | $ | 184,911 | ||||
Income before income tax expense (benefit): | ||||||||
Underwriting (loss) income: | ||||||||
Commercial lines | $ | (8,242 | ) | $ | (566 | ) | ||
Personal lines | 5,037 | 4,811 | ||||||
SAP underwriting (loss) income | (3,205 | ) | 4,245 | |||||
GAAP adjustments | 5,982 | 1,385 | ||||||
GAAP underwriting income | 2,777 | 5,630 | ||||||
Net investment income | 7,511 | 7,376 | ||||||
Investment gains (losses) | 2,469 | (10,695 | ) | |||||
Other | (6 | ) | 192 | |||||
Income before income tax expense (benefit) | $ | 12,751 | $ | 2,503 | ||||
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Premiums earned: | ||||||||
Commercial lines | $ | 203,645 | $ | 186,269 | ||||
Personal lines | 167,982 | 190,568 | ||||||
Premiums earned | 371,627 | 376,837 | ||||||
Net investment income | 14,548 | 14,338 | ||||||
Investment (losses) gains | (4,209 | ) | 19,663 | |||||
Equity in earnings of DFSC | — | 295 | ||||||
Other | 1,845 | 2,370 | ||||||
Total revenues | $ | 383,811 | $ | 413,503 | ||||
Income before income tax expense: | ||||||||
Underwriting income (loss): | ||||||||
Commercial lines | $ | 3,906 | $ | 2,425 | ||||
Personal lines | 13,101 | (6,765 | ) | |||||
SAP underwriting income (loss) | 17,007 | (4,340 | ) | |||||
GAAP adjustments | 2,762 | 1,829 | ||||||
GAAP underwriting income (loss) | 19,769 | (2,511 | ) | |||||
Net investment income | 14,548 | 14,338 | ||||||
Investment (losses) gains | (4,209 | ) | 19,663 | |||||
Equity in earnings of DFSC | — | 295 | ||||||
Other | 383 | 598 | ||||||
Income before income tax expense | $ | 30,491 | $ | 32,383 | ||||
7 - | Borrowings |
FHLB of Pittsburgh stock purchased and owned | $ | 3,690,100 | ||||||
Collateral pledged, at par (carrying value $100,792,651) | 99,518,118 | |||||||
Borrowing capacity currently available | 14,813,722 |
FHLB of Pittsburgh stock purchased and owned | $ | 1,690,100 | ||||
Collateral pledged, at par (carrying value $49,326,964) | 48,385,986 | |||||
Borrowing capacity currently available | 12,714,454 |
8 - | Share–Based Compensation |
9 - | Fair Value Measurements |
Fair Value Measurements Using | ||||||||||||||||
Fair | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 15,397 | $ | — | $ | 15,397 | $ | — | ||||||||
Obligations of states and political subdivisions | 63,095 | — | 63,095 | — | ||||||||||||
Corporate securities | 212,171 | — | 212,171 | — | ||||||||||||
Mortgage-backed securities | 279,279 | — | 279,279 | — | ||||||||||||
Equity securities | 52,703 | 48,299 | 4,404 | — | ||||||||||||
Total investments in the fair value hierarchy | $ | 622,645 | $ | 48,299 | $ | 574,346 | $ | — | ||||||||
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) | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 19,153 | $ | — | $ | 19,153 | $ | — | ||||||||
Obligations of states and political subdivisions | 68,852 | — | 68,852 | — | ||||||||||||
Corporate securities | 202,775 | — | 202,775 | — | ||||||||||||
Mortgage-backed securities | 206,875 | — | 206,875 | — | ||||||||||||
Equity securities | 68,640 | 66,236 | 2,404 | — | ||||||||||||
Total investments in the fair value hierarchy | $ | 566,295 | $ | 66,236 | $ | 500,059 | $ | — | ||||||||
Fair Value Measurements Using | ||||||||||||||||
Fair | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 19,364 | $ | — | $ | 19,364 | $ | — | ||||||||
Obligations of states and political subdivisions | 56,796 | — | 56,796 | — | ||||||||||||
Corporate securities | 159,243 | — | 159,243 | — | ||||||||||||
Mortgage-backed securities | 329,548 | — | 329,548 | — | ||||||||||||
Equity securities | 55,478 | 53,124 | 2,354 | — | ||||||||||||
Totals | $ | 620,429 | $ | 53,124 | $ | 567,305 | $ | |||||||||
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) | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 47,815 | $ | — | $ | 47,815 | $ | — | ||||||||
Obligations of states and political subdivisions | 68,965 | — | 68,965 | — | ||||||||||||
Corporate securities | 212,708 | — | 212,708 | — | ||||||||||||
Mortgage-backed securities | 225,648 | — | 225,648 | — | ||||||||||||
Equity securities | 58,556 | 54,152 | 4,404 | — | ||||||||||||
Totals | $ | 613,692 | $ | 54,152 | $ | 559,540 | $ | — | ||||||||
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Balance at January 1 | $ | 869,674 | $ | 814,665 | ||||
Less reinsurance recoverable | (362,768 | ) | (339,267 | ) | ||||
Net balance at January 1 | 506,906 | 475,398 | ||||||
Incurred related to: | ||||||||
Current year | 233,460 | 261,517 | ||||||
Prior years | (10,864 | ) | (6,899 | ) | ||||
Total incurred | 222,596 | 254,618 | ||||||
Paid related to: | ||||||||
Current year | 97,473 | 118,045 | ||||||
Prior years | 106,716 | 120,605 | ||||||
Total paid | 204,189 | 238,650 | ||||||
Net balance at end of period | 525,313 | 491,366 | ||||||
Plus reinsurance recoverable | 376,511 | 353,916 | ||||||
Balance at end of period | $ | 901,824 | $ | 845,282 | ||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Balance at January 1 | $ | 962,007 | $ | 869,674 | ||||
Less reinsurance recoverable | (404,818 | ) | (362,768 | ) | ||||
Net balance at January 1 | 557,189 | 506,906 | ||||||
Incurred related to: | ||||||||
Current year | 127,433 | 121,551 | ||||||
Prior years | (8,213 | ) | (4,304 | ) | ||||
Total incurred | 119,220 | 117,247 | ||||||
Paid related to: | ||||||||
Current year | 35,584 | 39,689 | ||||||
Prior years | 65,192 | 68,050 | ||||||
Total paid | 100,776 | 107,739 | ||||||
Net balance at end of period | 575,633 | 516,414 | ||||||
Plus reinsurance recoverable | 421,346 | 371,798 | ||||||
Balance at end of period | $ | 996,979 | $ | 888,212 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
June 30, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Commercial lines: | ||||||||||||||||
Automobile | $ | 137,528 | $ | 126,224 | $ | 153,747 | $ | 151,813 | ||||||||
Workers’ compensation | 113,765 | 109,060 | 120,963 | 118,037 | ||||||||||||
Commercial multi-peril | 108,849 | 102,424 | 137,868 | 126,299 | ||||||||||||
Other | 11,116 | 9,115 | 13,850 | 13,212 | ||||||||||||
Total commercial lines | 371,258 | 346,823 | 426,428 | 409,361 | ||||||||||||
Personal lines: | ||||||||||||||||
Automobile | 124,591 | 132,191 | 120,386 | 120,861 | ||||||||||||
Homeowners | 24,196 | 23,494 | 22,399 | 20,976 | ||||||||||||
Other | 5,268 | 4,398 | 6,420 | 5,991 | ||||||||||||
Total personal lines | 154,055 | 160,083 | 149,205 | 147,828 | ||||||||||||
Total commercial and personal lines | 525,313 | 506,906 | 575,633 | 557,189 | ||||||||||||
Plus reinsurance recoverable | 376,511 | 362,768 | 421,346 | 404,818 | ||||||||||||
Total liability for unpaid losses and loss expenses | $ | 901,824 | $ | 869,674 | ||||||||||||
Total liabilities for losses and loss expenses | $ | 996,979 | $ | 962,007 | ||||||||||||
Percentage Change in Loss and Loss Expense Reserves Net of Reinsurance | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at June 30, 2020 | Percentage Change in Stockholders’ Equity at June 30, 2020(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2019 | Percentage Change in Stockholders’ Equity at December 31, 2019(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at March 31, 2021 | Percentage Change in Stockholders’ Equity at March 31, 2021(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2020 | Percentage Change in Stockholders’ Equity at December 31, 2020(1) | (dollars in thousands) | |||||||
(10.0)% | $472,782 | 8.5% | $456,215 | 8.9% | $518,070 | 8.6% | $501,470 | 8.5% | ||||||||
(7.5) | 485,915 | 6.4 | 468,888 | 6.7 | 532,461 | 6.4 | 515,400 | 6.4 | ||||||||
(5.0) | 499,047 | 4.3 | 481,561 | 4.4 | 546,851 | 4.3 | 529,330 | 4.3 | ||||||||
(2.5) | 512,180 | 2.1 | 494,233 | 2.2 | 561,242 | 2.1 | 543,259 | 2.1 | ||||||||
Base | 525,313 | — | 506,906 | — | 575,633 | — | 557,189 | — | ||||||||
2.5 | 538,446 | (2.1) | 519,579 | (2.2) | 590,024 | (2.1) | 571,119 | (2.1) | ||||||||
5.0 | 551,579 | (4.3) | 532,251 | (4.4) | 604,415 | (4.3) | 585,048 | (4.3) | ||||||||
7.5 | 564,711 | (6.4) | 544,924 | (6.7) | 618,805 | (6.4) | 598,978 | (6.4) | ||||||||
10.0 | 577,844 | (8.5) | 557,597 | (8.9) | 633,196 | (8.6) | 612,908 | (8.5) |
(1) | Net of income tax effect. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net premiums earned | $ | 184,374 | $ | 188,763 | $ | 371,627 | $ | 376,837 | ||||||||
Change in net unearned premiums | 9,329 | 9,040 | 20,313 | 20,881 | ||||||||||||
Net premiums written | $ | 193,703 | $ | 197,803 | $ | 391,940 | $ | 397,718 | ||||||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Net premiums earned | $ | 187,252 | $ | 187,253 | ||||
Change in net unearned premiums | 28,610 | 10,984 | ||||||
Net premiums written | $ | 215,862 | $ | 198,237 | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
GAAP Combined Ratios (Total Lines) | ||||||||||||||||
Loss ratio (non-weather) | 47.0 | % | 60.7 | % | 53.0 | % | 60.5 | % | ||||||||
Loss ratio (weather-related) | 10.1 | 9.0 | 6.9 | 7.1 | ||||||||||||
Expense ratio | 34.3 | 31.3 | 33.8 | 32.0 | ||||||||||||
Dividend ratio | 0.9 | 1.0 | 1.0 | 1.1 | ||||||||||||
Combined ratio | 92.3 | % | 102.0 | % | 94.7 | % | 100.7 | % | ||||||||
Statutory Combined Ratios | ||||||||||||||||
Commercial lines: | ||||||||||||||||
Automobile | 104.4 | % | 112.7 | % | 110.8 | % | 114.5 | % | ||||||||
Workers’ compensation | 80.9 | 71.7 | 85.5 | 80.2 | ||||||||||||
Commercial multi-peril | 95.8 | 93.2 | 92.4 | 92.1 | ||||||||||||
Other | 80.6 | 95.1 | 72.4 | 80.9 | ||||||||||||
Total commercial lines | 93.5 | 92.9 | 94.7 | 94.6 | ||||||||||||
Personal lines: | ||||||||||||||||
Automobile | 76.1 | 107.2 | 88.4 | 104.2 | ||||||||||||
Homeowners | 109.5 | 113.6 | 100.1 | 104.4 | ||||||||||||
Other | 78.6 | 89.2 | 72.6 | 79.9 | ||||||||||||
Total personal lines | 88.1 | 108.5 | 91.5 | 103.1 | ||||||||||||
Total commercial and personal lines | 91.0 | 100.7 | 93.3 | 98.9 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
GAAP Combined Ratios (Total Lines) | ||||||||
Loss ratio (non-weather) | 60.0% | 58.9% | ||||||
Loss ratio (weather-related) | 3.7 | 3.7 | ||||||
Expense ratio | 34.1 | 33.4 | ||||||
Dividend ratio | 0.7 | 1.0 | ||||||
Combined ratio | 98.5% | 97.0% | ||||||
Statutory Combined Ratios | ||||||||
Commercial lines: | ||||||||
Automobile | 102.3% | 117.4% | ||||||
Workers’ compensation | 95.4 | 90.1 | ||||||
Commercial multi-peril | 107.7 | 89.1 | ||||||
Other | 60.1 | 64.2 | ||||||
Total commercial lines | 99.3 | 96.0 | ||||||
Personal lines: | ||||||||
Automobile | 93.4 | 100.0 | ||||||
Homeowners | 94.7 | 90.7 | ||||||
Other | 76.9 | 66.5 | ||||||
Total personal lines | 92.6 | 94.7 | ||||||
Total commercial and personal lines | 96.5 | 95.4 |
Total | Less than 1 year | 1-3 years | 4-5 years | After 5 years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net liability for unpaid losses and loss expenses of our insurance subsidiaries | $ | 525,313 | $ | 236,254 | $ | 248,958 | $ | 19,206 | $ | 20,895 | ||||||||||
Subordinated debentures | 5,000 | — | — | — | 5,000 | |||||||||||||||
Borrowings under lines of credit | 85,000 | 50,000 | — | 35,000 | — | |||||||||||||||
Total contractual obligations | $ | 615,313 | $ | 286,254 | $ | 248,958 | $ | 54,206 | $ | 25,895 | ||||||||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. Controls and Procedures. |
Item 1. Legal Proceedings. |
Item 1A. Risk Factors. |
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, 2021 | Class A – None Class B – None | Class A – None Class B – None | Class A – None Class B – None | |||||
Month #2 February 1-28, 2021 | Class A – None Class B – None | Class A – None Class B – None | Class A – None Class B – None | |||||
Month #3 March 1-31, 2021 | Class A – 75,000 Class B – None | Class A – $14.85 Class B – None | Class A – 75,000 Class B – None | (1) | ||||
Total | Class A – 75,000 Class B – None | Class A – $14.85 Class B – None | Class A – 75,000 Class B – None |
(1) | Donegal Mutual purchased these shares pursuant to its announcement on August 17, 2004 that it will, at its discretion, purchase shares of our Class A common stock and Class B common stock at market prices prevailing from time to time in the open market subject to the provisions of SEC Rule 10b-18 and in privately negotiated transactions. Such announcement did not stipulate a maximum number of shares that may be purchased under this program. |
Item 6. Exhibits. |
Exhibit No. | Description | |
Exhibit 31.1 | ||
Exhibit 31.2 | ||
Exhibit 32.1 | ||
Exhibit 32.2 | ||
Exhibit 101.INS | XBRL Instance Document | |
Exhibit 101.SCH | | XBRL Taxonomy Extension Schema Document |
Exhibit 101.PRE | XBRL Taxonomy Presentation Linkbase Document | |
Exhibit 101.CAL | XBRL Taxonomy Calculation Linkbase Document | |
Exhibit 101.LAB | XBRL Taxonomy Label Linkbase Document | |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
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 |