EXHIBIT 99.1
MARIETTA, Penn., July 24, 2009 (GLOBE NEWSWIRE) -- Donegal Group Inc. (Nasdaq:DGICA) (Nasdaq:DGICB) today reported that its net income for the quarter ended June 30, 2009 was $4,387,624, or $.18 per share of Class A common stock on a diluted basis, compared to $6,318,177, or $.25 per share of Class A common stock on a diluted basis, for the second quarter of 2008. Pre-tax weather-related losses impacted second quarter results by approximately $8 million after reinsurance.
Revenues for the second quarter of 2009 were $94,794,979, an increase of 0.9% over the second quarter of 2008, with net premiums earned of $87,540,345, virtually unchanged from the year-earlier period. Net premiums written for the second quarter of 2009 were $93,580,829, representing a 1.0% decrease from net premiums written of $94,488,556 for the second quarter of 2008.
The Company's combined ratio was 101.8% for the second quarter of 2009, reflecting the impact of the previously mentioned weather-related losses, prior accident year reserve development of approximately $3.2 million during the quarter and the impact of two large workers' compensation claims that totaled $1.2 million after reinsurance. The Company's combined ratio was 97.6% for the second quarter of 2008, which was also impacted by severe weather events.
The Company's expense ratio decreased to 31.0% for the second quarter of 2009, compared to 32.8% for the second quarter of 2008, reflecting lower expenses incurred for underwriting-based incentive costs and the benefits of expense savings initiatives commenced in the fourth quarter of 2008.
Net investment income was $5,266,161 for the second quarter of 2009, compared to $5,793,985 reported for the second quarter of 2008. The impact of lower short-term interest rates during the second quarter of 2009 offset investment income attributable to an increase in average invested assets compared to the year earlier period. The Company had no other-than-temporary impairments in its investment portfolio in the second quarter of 2009.
Net income for the six months ended June 30, 2009 was $4,557,428, or $.18 per share of Class A common stock on a diluted basis, compared to $12,877,260, or $.52 per share of Class A common stock on a diluted basis, for the six months ended June 30, 2008. The Company's combined ratio for the first six months of 2008 was 103.9%, compared to a combined ratio of 97.7% for the comparable period in 2008. The Company's loss ratio was 72.7% for the first six months of 2009, compared to 65.1% for the first six months of 2008, with the increase primarily reflecting increased fire and weather-related claim activity in the first quarter of 2009 as well as increased prior accident year reserve development in the first six months of 2009 compared to the year-earlier period.
The Company's total stockholders' equity, or book value, increased to $371,327,450, a per common share amount of $14.58, at June 30, 2009, compared to $363,583,865, a per common share amount of $14.29, at December 31, 2008. The Company attributes this increase in book value primarily to net unrealized gains in the fair value of its available-for-sale fixed maturity investments during the first six months of 2009.
"We are disappointed to report a level of earnings that did not meet our expectations for the second quarter of 2009, but we recognize that our results are not immune from the effects of weather and challenging economic conditions. We continue to concentrate on returning to historical levels of profitability as well as maintaining balance sheet strength, as evidenced by our increasing book value," stated Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group Inc.
On July 16, 2009, the Company's board of directors approved a quarterly cash dividend payable August 17, 2009 of $.1125 per share of Class A common stock and $.10 per share of Class B common stock to stockholders of record as of the close of business on August 3, 2009.
The Company will hold a conference call and webcast on Friday, July 24, 2009, beginning at 11:00 A.M. Eastern Time. You may listen via the Internet by accessing the webcast link in the Investors area of the Company's web site at www.donegalgroup.com. A replay of the conference call will also be available via the Company's web site.
Donegal Group Inc. is an insurance holding company whose insurance subsidiaries offer personal and commercial property and casualty lines of insurance in five Mid-Atlantic states (Delaware, Maryland, New Hampshire, New York and Pennsylvania), seven Southeastern states (Alabama, Georgia, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and six Midwestern states (Iowa, Nebraska, Ohio, Oklahoma, South Dakota and Wisconsin).
All statements contained in this press release that are not historic facts are based on current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties. Actual results could vary materially. The factors that could cause actual results to vary materially include, but are not limited to, the ability of the Company to maintain profitable operations, the adequacy of the Company's reserves for losses and loss adjustment expenses, business and economic conditions in the areas in which the Company operates, conditions resulting from the ongoing recession in the United States, severe weather events, competition from various insurance and non-insurance businesses, terrorism, the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements and other risks that the Company describes from time to time in its filings with the Securities and Exchange Commissi on. The Company disclaims any obligation to update such statements or to announce publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Donegal Group Inc.
Financial Highlights
(unaudited)
Quarter Ended June 30
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2009 2008
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Net premiums earned $ 87,540,345 $ 87,329,195
Investment income, net of investment
expenses 5,266,161 5,793,985
Net realized investment gains (losses) 445,140 (673,627)
Total revenues 94,794,979 93,970,947
Net income $ 4,387,624 $ 6,318,177
Net income per common share:
Class A common stock - basic $ 0.18 $ 0.25
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Class A common stock - diluted $ 0.18 $ 0.25
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Class B common stock - basic
and diluted $ 0.16 $ 0.23
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Six Months Ended June 30
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2009 2008
------------ ------------
Net premiums earned $175,889,888 $169,336,961
Investment income, net of investment
expenses 10,623,750 11,485,726
Net realized investment gains 703,995 21,729
Total revenues 190,282,343 183,763,050
Net income $ 4,557,428 $ 12,877,260
Net income per common share:
Class A common stock - basic $ 0.18 $ 0.52
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Class A common stock - diluted $ 0.18 $ 0.52
------------ ------------
Class B common stock - basic
and diluted $ 0.16 $ 0.47
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Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Quarter Ended June 30
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2009 2008
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Net premiums earned $ 87,540 $ 87,329
Investment income, net of investment
expenses 5,266 5,794
Net realized investment gains (losses) 445 (674)
Lease income 235 230
Installment payment fees 1,309 1,292
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Total revenues 94,795 93,971
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Net losses and loss expenses 61,903 56,364
Amortization of deferred policy
acquisition costs 14,634 14,572
Other underwriting expenses 12,527 14,068
Other expenses 307 398
Policyholder dividends 92 217
Interest 198 534
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Total expenses 89,661 86,153
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Income before income tax expense 5,134 7,818
Income tax expense 746 1,500
------------ ------------
Net income $ 4,388 $ 6,318
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Net income per common share:
Class A common stock - basic $ 0.18 $ 0.25
------------ ------------
Class A common stock - diluted $ 0.18 $ 0.25
------------ ------------
Class B common stock - basic
and diluted $ 0.16 $ 0.23
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Supplementary Financial Analysts' Data
Weighted-average number of shares
outstanding:
Class A common stock - basic 19,898,680 19,879,304
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Class A common stock - diluted 19,898,680 19,956,601
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Class B common stock - basic
and diluted 5,576,775 5,576,775
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Net written premiums $ 93,581 $ 94,488
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Book value per common share at end
of period $ 14.58 $ 14.05
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Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Six Months Ended June 30
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2009 2008
---------------------------
Net premiums earned $ 175,890 $ 169,337
Investment income, net of investment
expenses 10,624 11,486
Net realized investment gains 704 22
Lease income 456 474
Installment payment fees 2,608 2,444
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Total revenues 190,282 183,763
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Net losses and loss expenses 127,852 110,149
Amortization of deferred policy
acquisition costs 29,367 28,291
Other underwriting expenses 25,204 26,471
Other expenses 775 897
Policyholder dividends 335 487
Interest 1,403 1,147
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Total expenses 184,936 167,442
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Income before income tax expense 5,346 16,321
Income tax expense 789 3,444
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Net income $ 4,557 $ 12,877
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Net income per common share:
Class A common stock - basic $ 0.18 $ 0.52
------------ ------------
Class A common stock - diluted $ 0.18 $ 0.52
------------ ------------
Class B common stock - basic
and diluted $ 0.16 $ 0.47
------------ ------------
Supplementary Financial Analysts' Data
Weighted-average number of shares
outstanding:
Class A common stock - basic 19,891,096 19,833,576
------------ ------------
Class A common stock - diluted 19,891,096 19,943,640
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Class B common stock - basic
and diluted 5,576,775 5,576,775
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Net written premiums $ 181,584 $ 194,163
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Book value per common share at end
of period $ 14.58 $ 14.05
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Donegal Group Inc.
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2009 2008
------------ ------------
(unaudited)
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost $ 81,367 $ 99,878
Available for sale, at fair value 494,305 445,816
Equity securities, at fair value 5,896 5,895
Investments in affiliates 8,802 8,594
Short-term investments, at cost 40,310 71,953
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Total investments 630,680 632,136
Cash 7,481 1,831
Premiums receivable 60,390 55,337
Reinsurance receivable 85,000 79,953
Accrued investment income 6,649 6,656
Deferred policy acquisition costs 30,706 29,541
Prepaid reinsurance premiums 55,468 51,436
Property and equipment, net 6,832 6,687
Deferred tax asset, net 7,975 10,995
Other assets 2,643 5,537
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Total assets $ 893,824 $ 880,109
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Donegal Group Inc.
Consolidated Balance Sheets (continued)
(in thousands)
June 30, December 31,
2009 2008
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Losses and loss expenses $ 249,497 $ 239,809
Unearned premiums 238,740 229,014
Accrued expenses 9,929 14,150
Subordinated debentures 15,465 15,465
Due to affiliate 755 3,148
Accounts payable - securities 742 1,821
Other liabilities 7,368 13,118
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Total liabilities 522,496 516,525
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Stockholders' equity:
Preferred stock -- --
Class A common stock 205 205
Class B common stock 56 56
Additional paid-in capital 163,891 163,137
Accumulated other comprehensive income 7,177 1,714
Retained earnings 208,908 207,182
Treasury stock, at cost (8,909) (8,710)
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Total stockholders' equity 371,328 363,584
------------ ------------
Total liabilities and stockholders'
equity $ 893,824 $ 880,109
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CONTACT: Donegal Group Inc.
Jeffrey D. Miller, Senior Vice President
& Chief Financial Officer
(717) 426-1931
Fax (717) 426-7009
jeffmiller@donegalgroup.com