DGICA - Earnings call transcript Q4 2018

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Operator

Good morning. My name is Cheryl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Donegal Group Q4 2018 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Chief you Miller, conference. begin Jeff Instructions] Financial may Officer, your [Operator

Jeffrey Miller

December afternoon, you. to outlining fourth for ended welcome morning, our quarter XXXX. Donegal year Thank and call quarterly the results. Good news issued we a Group conference and XX, release Yesterday the

and For of will our President Burke, and overview please Executive Officer, that you details. visit section financial of Investor Relations update Kevin a our today's website business our of his developments initiatives. call, a our copy discuss recent number I'll of quarterly And brief at comments release, strategy the donegalgroup.com. on In Chief a with and follow

the our for you any comments, questions have. will Following prepared open line might we

that that that We release forward-looking our commentary get we materially in our project statements Before today actual involve the about cause results and information could uncertainties. SEC. number report on aware statements differ the the of risk described in risks forward-looking we Form XX-K to we submitted further provided that we to news in started, you factors and be a forward-looking includes those should from statements

link. our under the our through Form the access Investors of SEC section can You XX-K filings website

With We yesterday. and that, also our release I'll included information non-GAAP it the to reconciliation non-GAAP issued business measures turn refer to analyze use certain financial results of to news Kevin. you in we over the

Kevin Burke

everyone. Thanks, welcome, Jeff. And

personal our activity underwriting elevated use initiatives that during on we of the throughout towards continued during and activity percentage gradual fourth part challenges changes in of strategic quarter a automobile weather in fourth our improving technology expected business to the to XXXX have profitable that focus in cover claims loss We higher loss our of them we performance. challenges The that year. caused our lines, and including early future lines, address in due of confronted operations to to higher and infrastructure of shift key a preponderance into of increasing with in In commercial settlement in continue mix We establish the the XXXX several support our quarter loss significant recognized reserves us strengthening lines year throughout these than business, norms, states. reserves, in the commercial historical greater loss auto, severity to severity trends development. have actions the higher seen our was of with levels higher

expected. results impacted throughout the impact policies our a utilization XXXX While increased in large, industry renewal and In response, the commercial to our model was on has this than of predictive substantial automobile trend for of the commercial we've we at organization. more new underwriting our assist

which improve the throughout certain underperforming high business. In commercial discretionary been the our policy of every in we closely continued adjustments and addition, commercial and reviewing auto achieving work a exposures problematic book auto increases automobile underwriting through consistent we increases have in single-digits states commercial actions premium results underwriting classes pricing geographies several to through rate and reduce to base continue follow and XXXX of rate take to in we've will other business. filter as to our of combination increases been renewal We've performing

work with rate This us. business diligently and we them continuation to of needs of ultimately by accounts report to written our can their growth are increases, to growth. to business our earned their segment. We providing many leaders, We pleased also net year regions our higher have and collectively for ways premiums targeted their as in in and increase open driven faced about new for value commercial we but customers' was dialogue through to in that with and the assist in the customers business engaging growth listening communication agency agents challenges also growing feedback net profitable by their meeting we premiums partially

commitment and accessibility why their companies. to primary to deeper choose best to business agents leads are agents leaders' with as Our place which a factors our to we business believe our relationship

maintaining personal personal presence to lines; products Moving in of mix levels to offering pricing In underwriting allow identified we our cycles. at of we losses are we us will market markets, have committed of commercial it to to balanced consistent a and and many sufficient lines that fluctuating XXXX, profitability through part an did within acceptable incurred states timeframe. where scale profitable the restore X our not middle remain

agreement those calls, seven in to XXXX. transfer entered lines facilitate February, personal began will policies those non-renew our states. in effective we a in throughout personal exit we lines book policies with orderly the continue X that We As states an previous from into to outlined in market process

of the expressed accelerate agents states the is exiting considered our many personal agents. taking we're manner that our Our lines of an interest and have a appreciation well-planned approach one acceptable recovery our profitability. business This initiative to to for steps these in customers to of just of level

business; business, will our we workflows, distinct systems than project agents modernization and pace larger project encompassing view has competitors. legacy legacy integration systems in software. this technology Donegal platforms new eliminate our and far common this as view developed to enable to We operate enhance multi-year underwriters, ability Donegal our in kicked serve streamline through the Donegal ensure needs holders. to question the introducing to opportunity markets, simply policy more analytical Mutual employ with and formally capabilities operations. to Mutual us while as a processes an Moving to that within We processes way ultimately to multiple off Mutual our the technology and conduct of to and consistency of project we keep our subsidiaries and transform

data emerging will foundation solid support future. in ability analytic We will greatly our capabilities the build the and enhance have that to technologies a

commercial launched the second a capabilities, new new business recently models small We workers develop we've our continue to expect to in predictive and and enhance pricing compensation model further model quarter. implement deploy new to underwriting

areas other We identified can to and assist have them our predictive decision-making models business strategic overtime. while working implement where

it and to place of to data models easier us continue to reducing issue agents make increase our by the quote external required systems our utilization and We our business with policies. for of amount to

be predictive some compile next we few company within key that structural changes and areas the to weeks, for making business will rate-making, data analyze and our Within consolidate analysis such functions as intelligence. analytics, data govern,

data the forward analytic business looking are gain continues enhancing of to as to We analytics capabilities by and our data exponentially. will importance the grow we benefits our

call their Watson provided XXXX of with [ph] to a reinsurance I'll with our we Our some forward. Re for us through and consulting be to over deal placing and return assistance in will and going this Willis with also closing turn quarterly review comments. area Jeff then results, has emphasis services great access that Willis relationship of Towers I'll With the for

Jeffrey Miller

operational the net briefly of few financial call. the $XXX.X fourth the premium quarter X.X% I'll XXXX. Beginning of a with for quarter Kevin. Thanks, fourth premiums the million welcome earned discuss grew revenue; later certainly to and and metrics questions in any for

at in This an achievable plan our business. commercial XX% due writings decrease line to X% of our the results business of the profitability million. growth commercial leading added actions automobile balance lines. growth our the and overall increase our auto The to increases and we've for overall declining lines decline writings in X% over of premiums nearly personal growing that X% automobile with was rate a taken the X.X% to premium for personal our X% lines decline impact multi-parallel $XXX.X the quarter, Despite with to were However, Overall, X.X% year. written quarter. pleased decrease than in personal for in during the X.X% XXXX We sustainable growth each the to consistent personal to was the for period that largely the lower net achieve quarter continuing continued ensuring auto over toward quarter new writings is improve is effective. where for rate were commercial in underwriting declined

reflect commercial in XXXX. our of exposure continue will premium rate auto versus growth expect proportionately higher We growth increases impact to a

increase XXXX the of to we reflects modification Liability business. retained commercial addition historically Umbrella this proportion In premiums higher a other net third-party to lines, related pursuant to to profitable policies which in X, March reinsurance coverage a written effective

treaty line. business included policies Liability our we Umbrella XXXX profitable reduce in further reinsurance will the that our and casualty For associated with premiums reinsurance

minute net a or as XXXX our two take to written premiums of reinsurance the Let's in result program for made. increase discuss anticipate a an changes we as we

reinsurance February we in X, announcement combined January a effective with implemented As X, we Donegal program XXXX. Mutual on our discussed preliminary

a programs reinsurance investors program XXXX in compared long terms anticipate preserving that our encourage than announcement all XXXX, review for of main reviewed decrease would subsidiaries the to capital the is we've determined the While favorably details, more takeaway for in consolidated full coming of million in place a term. over managing the $XX and in the reinsurance premiums outperform net volatility total impact strategy year. the multiple reinsurance We across premiums will that and we written previously which to

catastrophe announcement, noted and large subsidiaries occurrence benefit upon XXXX. restructure loss events of the net of our ultimate we activity incidents As of preliminary in insurance may during the cost the the program the dependent or that impact is

norms, than weather-related break development of prior X% contributed historical loss Moving the components to the XXXX of and to quarter to compared this the bosses ratio prior to compared the loss ratio our our for fourth XX% year in performance, are was into in I'll much X.X% XX% quarter. losses fire period. ratio that quarter our in losses Weather-related loss including claims. period prior of higher fourth underwriting year number

in noticing fires a trends for changing year commercial quarter $XX.X accident that Michael. average million during excess our of commercial fourth the claims of We the to of incidents in actuaries loss of the claims. means our the claims adjustment we around did in a claims Kevin of mentioned Hurricane was benefit rates, those earlier loss fourth far automobile and the XXXX states. quarter The types system quarter reserves the both had losses recognition of $X.X X.X% receive The our of quarter which of million of our longer across in a period. losses settle development losses X% positive higher We compared XXXX. certain passed losses total of and the expense previous the Development last in the and million. losses million in losses simply quarter did closure XXXX. XXXX. we On homeowners our taking fourth million comparatively manage as business. of in the That of and weather-related a actions approximately for decrease $XX,XXX to Georgia lines years we prior in costs occurred result reinforced exceeded refinement the we XXXX to impact to ratio are in around in for fourth Virginia the number lower added fourth strengthening loss of those fire particularly were to centered of response Fire quarter took we for in which from reserve majority As for our our those from incurred in Michael largely significant prior five-year to highlighted, incurred property to weather-related resolve reserves will deceleration contributing fourth period. to storm $X.X note, that Hurricane $X.X claims compared In property $X.X a call, from

significant our ultimate higher assumptions was to XXXX continuing Our during not throughout but that reserves. release comment selected those mentioned were quarter. quarter, actuaries fourth loss actuaries intended high made establishing selections year change clear, our to ratios And into IB year the that the be in in any and fourth the suggest our

of XX.X% of expense assessment a handful to closure guarantee the a state company branch quarter The in increase will quarter will approximately related XXXX of Insurance reflected realize of the of we of benefit office Peninsula the of insurance Pennsylvania. in insolvencies ratio XXXX fourth our Our a for from In Company. full-year of was from savings to $XXX,XXX we the compared XXXX fourth December, the XXXX. XX.X% fund

approximately well million Overall, consolidation. combined was XXXX excellence of took all underwriting but and that in XXX.X% We of was we a for mark investments the equity of a the companies the expect XX, was ratio off public expense to to approximately adjustment achieve aimed certainly for from in to $X held market the operations. important to investment mark-to-market A year we we've underwriting annualized conservative prior savings cause primary quarter. value XXX.X% loss actions ratios our in This complementing at held long-term million after-tax the compared with improvement during the that $X.XX It's coming our our overall for, adjustment terms investment in $X.X in decrease the yield net quarters. equity income recorded XXXX. our strategy operational share. we net strive that or per of the at securities, December historically believe in we Class Like That securities note will we the

quarter. largely in have first value to has our rebounded our in To in reported due increase equity component our of loss of the put relatively has to between quarter third XXXX. X% equity investment our during in of XXXX Our equity securities market the gains X% And increased we've XXXX a that remained market-driven of date. million of to throughout as value context, $X.X total quarter net in investments investment stable portfolio investment the the portfolio

to per it to A XXXX $XX.XX value that, $X.XX became will XXXX fourth Class that $XX.XX loss the the losses future As $X.XX Class at or into guidance or in million compared results fourth as quarterly quarter was gains A of expected, we rises mark-to-market to certainly $XX quarter in our expect at back $X.X net with accounting in in, stock better XXXX XX, move year-end December investment as result of share the We million for the Book With falls. effective was turn All XXXX. Kevin. XXXX. or fluctuations and loss for the net has XXXX. share let our me market new per in per compared a share

Kevin Burke

brief Donegal We'll Thanks, the of questions I lines on provide open pending in moment sale Northwest Union shares. Community Corporation a but Bank wanted a for update Services to our Jeff. Financial and Bank's

casualty as early close gain XXXX. through and events proceeds value core higher over return-on-equity gain underwriting, as and tenants In closing, quarter Donegal $XX over can in this will core from of the in of stable The Based We achieve Mutual goals expect performance March. not our and and stock address on common the did of position certain business three in the in in million the this throughout we in that closing. to expectations, improving at year property as impact an it shareholder challenges overshadow individual our depend we value weather understand our investments of on the to receive part and for XXXX the We receive did last the strategic support our ultimately of those to $XX events proceeds in business. sharp focus our impact We on book investment Donegal insurance work of appreciation. will to future. performed the profitable the and Unfortunately, hard faced in to changes Northwest very barriers team months sale growth utilize intend shares proceeds Incorporated current transaction transaction. Group after-tax net upon million record we value The proceeds an as closing market Bank the final profitable [ph] our

on results thanks everyone As their reporting the that that, may look lines efforts, Thank out any for year our goes those you. operator the questions for the you efforts Donegal on the always, of we we'll open With as the progresses. team to forward and have. have positive to

Operator

of from comes Campbell The of line first KBW. Christopher question the

Christopher Campbell

CMT. is the I my first question guess, on

the bit the little can I you combined because is what's bit at which a looking guess of kind good; combined that like to on just losses I it I lower so a all little adverse sub XX's driving get still to improvement guess we developments sounds fire trying a from? look Just development but large ratio coming color driving the it's ratio put understand where pretty have there. you adverse which in a was more is just that there like but there together

Jeffrey Miller

versus quarter. been for was combined loss the years shift was CMP alluded Sure, had line impacting the weigh combined property you the I several was seen on stab a last impact again by reserves line but a ratio can the primarily this solid CMP. we a larger to that in line to about, for certainly some and homeowner's low so proportion Jeff. ratio addition development there throughout represented significant exposures is The at was drove as Kevin the take quarter liability, And talked losses LAE the part to not although very year The to have over I'll adding strengthening in. the impacted business; of that impact that as the fourth that to the that we CMP of it the fire -- weather of in that in have for weather exposures.

we in adding increase consistently the we've the on that as development expecting is claims to the fourth exposures liability in support tail this -- And been a that received. loss I quarter, So reserves. said, related loss longer adjustment reserve and the expense reserves, I've would of IBNR the development the to

Christopher Campbell

higher of Just on level. kind kind another of more question, --

of mutual recently didn't made public competitor One it for a own. float like already -- outstanding your a has hybrid the bid

guess this value I trading book a how Donegal type the do price would especially of below I So transaction? with here? bid for guess

Kevin

of interrelationship be be obviously It saw something we something that we it's that between that. be it be We've would do and would mean interested company. prohibited to not the would were pursuing. and in would -- but mutual cost -- actually the the I aware Chris stock

we interest would have And so in no that that would be doing. something

Christopher Campbell

be why cost would What be prohibitive? it. got driving And would Okay that?

Jeffrey Miller

Yes, this is Jeff.

versus the from structure other situation in size different with ours. quite relationship the public similar you're is the and that the but company about of in mutual at the the you is looked company talking that If proportionate the differences

not to are of doing shares of the be would that transaction. conducive the that the mutual our outstanding and of type So company size number

Christopher Campbell

-- kind then like type about then little think the is like bit bips then modeling trying of or And piece while did underwriting and dividend in increase I'm higher? that a bips? ratio expenses XX just better. the but like to question to the weeds trying that why And question a more XXX were of this I policyholder guess understand of results

Jeffrey Miller

dividends to The related they're compensation workers policyholder policies. -- are

a that of our policy. components the write flat there's increasing been the flat that there's So guaranteed that one you states at dividend by do I of is the What a two business, that. dividend are we've mean and state. in we time writings the givens In

of unique particular in an ratio. -- to a increased dividends because kind in it upon it's dependent that So line but has circumstance are resulted item state that has those increase not loss

we additional over We In profitable States I other profitable that X crew workers could do ratios. the explained you and loss of time the premium we're payment. addition, Comp dividends and that expect on business you for know dynamic that's and but to been the someone our plus over years addition very of dividends some But see duration why as terms Workers lag dividends there's increasing quite the potentially the our has know writings that competition that has Comp in last paying as in to been the and those moderate number higher flat we a current; dividends. the

Christopher Campbell

having or logic that discounting And just pricing the there Is it. Okay, some the other by makes experience? not that offset sense. makes what's terms that flat of in vary got And dividend? behind

Jeffrey Miller

it's the of part kind dynamic written worker's state. of that in historical comp that within way Yes, it's that state, just is

in of offer. to I behind you what workers it really competitors comp are want all but So, you explain a doing to if that can't have the write state, that's logic our

Kevin Burke

that years And many so. way it's been for well

Jeffrey Miller

why ramping you're up that state we're the our in just writings is the seeing impact. It's which

Christopher Campbell

sense. makes that it, Got

pretty event of guys may; reinsurance retention? it Just how program, like impact a lots your bigger And you in lines; I your cap would event one if per last savings. should that of looks then cost we of substantial hits what on one I guess, think would Donegal it I about -- individual how for big like cap changes, made coverage guess lines? like terms look some like that just

Jeffrey Miller

Sure, that. glad to we'll address be

have to of the is Group program a retention the Although of place covers that subsidiaries it relates a Mutual Donegal all as and so kind overall that. we in program when there $XX of and Donegal million

that each capped and Mutual retention that catastrophe has that subsidiaries impacts $X provided is Donegal subsidiaries there at However, if event to overall an multiple agreement Donegal the underlying is per retention event lowers subsidiary, of an $X with million the million. Group per

was because has -- that's retention. pretty now of in and between complicated what little the common place Donegal some individual there's a subs it place agreements DGI and of comparable there So was a had Mutual, we had to that some similar for we more in just one agreement XXXX,

reinstatement for Mutual significant because The catastrophe other for place what subsidiary, XXXX is, proportion premiums, there then agreement impacted was what does have that subsidiaries XXXX offset recovery. in recovered Insurance that we when we found that's Group Donegal place between a in was in the include many primary from factor Donegal that and past, paid event what large not loss of the Donegal difference between the it that Mutual, reinstatement cat a losses and and fairly although is a Group implemented premiums times Donegal it

I exposure actually believe or with be of event, will a have a the that as believe be premiums question in the to answer of underlying a that kind reinstatement policy Donegal the benefit change it's we don't long to total. So, that's the in going winded significant absence of and Groups question subsidiaries treaty -- to Mutual but cat Donegal

Christopher Campbell

the just dollars, So swapping group, the mutual then and we're right.

coverage? Okay, -- Mutual So the group the get back then and so have for they'd get reinstate got the they benefit pay Mutual to go it. to recoveries that would to reinsurance right of would

from you premiums, maybe of doing that's is are getting of like from type you mean, guys seeded anything those cat side, all come Comp million savings? mean where I or some -- so on facultative substantial I – cat does like, annually, pro-risk have you're savings workers coming saving pretty are it's you or a the property that $XX the like guys like where because So and

Kevin Burke

that the Umbrella facultative property eliminated level casualty getting in areas Yes, there primary and included in the had of two is the We've both, the savings Umbrella from. One that's facultative facultative. property of reduction that premiums a coverage, and on us Liability have we're facultative is significantly to treaty we've all fact now and reduction need higher increased a treaty, at and threshold; which we in so is the covers we buy side up premiums. the would a facultative to there

smaller is a The result losses, number treaties of expected that dollars the and own the the their out exposures, increasing other savings were our for band. of of subsidiaries of we've stripped programs. have would basically overall that of has reinsurers lower individual eliminating some those the so to covered those were expected we especially the premiums retention, consolidating at the end trading by low we paying basically losses And that in cover programs

Christopher Campbell

makes Got answers. XXXX. of in all Luck Well, it, that Best sense. the thanks for

Operator

the from line & Bob Farnam The comes Boenning of Scattergood. question Instructions] of next [Operator

Robert Farnam

your few have I on deal actions trying auto with more and to a questions, just business. color probably the

this and but if the action auto correct year's know the raised ratio recent what terms want moved action looked looked commercial loss you And most current personal years how of ratio of for far have both, -- like You sounds loss the have maybe current yours like me -- that in like just ratio up? to I'm -- business? year wrong or in

Jeffrey Miller

commercial so ratio loss the out -- would of we development ratio that reserves. established normalized -- XXXX what would to year for to end would both have we under stripping XX% the that Again, setting bit is selected than at accident I'm or and our ratio Jeff. non-weather XX% auto, for Those referring XX% the prior our is of XXXX basically in both, ratios current the -- and be loss what stripping loss lines auto -- are core loss year similar year. right auto which accident set was for Sure, and terms quite out to have this a weather; apply higher the personal very XXXX, -- the higher

ratio a the right would XX.X% line On XXXX. for personal we increased have to that XXXX, had has side, XX% loss about normalized in

ratio line commercial expecting we've On loss XXXX increased XX% almost for the side -- commercial line core XX% and we that around commercial to auto. were

trend that less tells you we you loss were ratios. and optimistic develop currently XX% that improvement The several XXXX to our we years So right in ratios, expecting were that XX% are last they the what is sitting the in around loss as range. to when

we've same experience So booked that -- it's rate. level several XXXX trend to same the last shows, at our our ultimately years going at are accident that

XXXX improve we we going show So as not the the expecting, are obviously anticipate took in the particularly actions in that move second are half we XXXX the results of to our but we year that XXXX, accident into measurable did year would any improvement.

Robert Farnam

have basically adverse developed year XXXX the the years? the avoid going ballpark other development -- in on in years Yes, you're so trying seen up further based the so basically other And too; words, you're setting you've the what numbers. prior in the XXXX forward year to

Jeffrey Miller

Yes.

Robert Farnam

what get loss targeted you're to to in eventually ratio to booking your XX% that it target how happy will you're a if to get long take down of to you lines, So -- auto for have going try the and range? kind did

Kevin Burke

target some number into models in that terms in reserve that behind in get and for is highlights there well. XX outside a of XX% as taken obviously, of sort on action state-by-state of aggressive Bob. the goal expense We'd little they're There really -- to able in digging load have personalized just with next all scenes it highlighted. really to bit wise things we're of the to of to the and the of doing we year working strengthening on do the to love lot were corrective we're that a has months us, the XX% addition a basis. be that an our a action predictive XX% Jeff

If and think XXXX, of sort we for some make had. that of back about rate we we inadequacy step you base really pricing took to up sort increases

a much doing state-by-state is our being personalized forward ensure move we're that so relatively and look of to those we're that at performed in on in and what basis, increases refined get terms has we careful rate trying at apply. taking As are time of the rates us be XX% overall book-of-business refined to got more it same to we've but the well, XX% we do that we're

aggressive So at overtime loss when get in anywhere would that actions. that in would It's and accelerate can some we passenger business. a we that those really can a be but states, we aside strengthening book how auto, us goal of that will that think it us the in $XX take reserve recovery X that million of we was it look one be of pure quite quickly target achieve we honestly from of for the our XX% the reasons about private ratio business

away all X in we On looking those the and on industry corrective now a deploy the are size certain taking got for telematics -- vendors side, open; hopefully, for that We're place. going number that we little measures, we're And XXXX. one are we're all right last think issue holder particularly I reserves eyes states, wide fleet; that those you appropriate done our we're we're we looking again, the Georgia, we sort XX commercial that we walk we've can know policy making of optimistic looking at to side as of I two not single that well forward policy thought at and it that reserve in to extremely different commercial But in in can sort what very have XXXX of a as a months we to Jeff the certain that provide we the problematic a had us. for needed being line think changing been them. at strengthening, wide auto model sure auto commercial categorized were do, and but every in renewal also and have chip particular with lines designed at we problematic of

few the brings XXXX. So forward we're for to quarters looking what seeing next

Robert Farnam

changing the just policy the profitability? re-underwriting rate increases not So any it doing that single you're sounds you're was upper it's rate generate to also the increases digit so like basically looks profiles expecting and mean you're better that book auto it's getting the but I

Kevin Burke

those -- Bob is more easy those but it it's and again base a we at of you forward very it's move. are rate at the going making from. a building basis that taking file XXXX looking we was We're our dragging foundation good time to gears an we're have tactical can What results. we component XX% retain of down not about do is, book-of-business a ensure sort of that's auto, that move on auto, agency-by-agency state-by-state the you is sure on shifting basis, -- obviously but know, to strategic, of an the fix private commercial passenger books It XX% rate that rates same that that to

us business organization the business just in states in at we're the lot which things not position the to We've a to model predictive we're we're pricing lines model starting really with hired really is going tactical at just direction new take a operate within will that that a Chief standpoint. in. business, of from the analytics, of sure terms that refining look and of in the understand a intelligence Analytics XX we look March, there and strategically X those but so making restructure to data our And that's rate all -- that we're doing be we behind that and moves that scenes to going going in Officer pull early

Robert Farnam

top what's little rates rates to this on of has high high and these you're okay, increases and you think their have you and or been going able off single their and be to single raise you business? policy Right your holders to their How know push as while able -- do rates clients digit the the on rate a ages ago. to I to started have know you how that ability in from the retention feedback agents impacted this digit

Kevin Burke

it, little is but that private decline some on a we we side we of some changes the a that of the We've there and had -- slip that planned retention knew of which made; forecast, of anticipated retention that's bit have would passenger we particularly sort was auto like expected.

auto that very of on commercial carriers aggressive there side, the the we're are many one rate. many out being On

agency agents to help also for that like them there days, with not we on business. you the states approach states through all business feedback that? right after the will in several why -- we around of things down candid you aggressive announcement in they lines you're appreciated predictive the of I looking move, them tell carriers in X that similar we've auto what first loss carrier. expected. agency are with as providing a after an personal make announced agents major them of have again respond in whether seeing one really on the on of close their processes to during feedback, very our transactions the an question and and to can off know and agents And question of change having chip lines know provide working having now really them the that's typical and of doing that or we're telematics tell sort personal value organization concerns we it book lines right or commitment anticipated that Virginia, how traveled in models. They respect right our The has doing -- some every were provide very ratios we to Pennsylvania, days, been or my fleet monitoring meetings, increases the the now, in auto other Bob, was solution back on first are spring transition those you you're would rate the to rails to push agents the our several the XX that have side have may gotten that first defined that to and we can so of commercial those our what personal announcement, of expected that the got we to relationship of book moving other terms help That's heels when of that that very XX Tennessee, announcement the part away doing XXX% dwindled in And they're for with were a side? market been some X pulling And we've a that. commercial comes states Georgia, you cases particularly you quickly out and I've in the are plant to and at

we in it agency retain commercial sort been quietly no pulled of out X will news. lines faded the push with that able into business. we've lines back as So to that we we've personal the at states of looked sunset personal book those business that's so if had and And line of the you good

Robert Farnam

going you're -- kind into in there you just So that premium renewing to lose that business the going what -- papers going Safeco business books? to that the off to to it's that, you're premium -- get and be so going you're that -- size is the not it be of to said started you're other sending

Kevin Burke

was and look easy and $XX yes of strategically like to we strong Virginia share market Yes, and Nebraska there, we started areas. us states February that States recovery a it states. and states, start personal at don't we accelerate lines when the where the have in mid-western for personal non-renewals million we we're majority being of Pennsylvania some so make relatively it but some but -- X the lines. it's will Dakota; South decision and other our like approximately at The over again

Operator

the of Your Philo line of question Inglis comes from Jamie next Smith.

Jamie Inglis

the One; initiative Good outward is a more inward little timing unit of about that? and tell facing and sort versus of that processing meeting? you is bit changes all an much morning technology facing of could guys, How what me sort questions. staging of the two

Kevin Burke

in first it. because start right a now timing and the let's with roles playing will for year comment of process. It both about Jeff very scheduled implementation -- that I off active on is it X.X both we're initiative. Its

of of from received what on. perspective agency we that have front very it's sort an very good So perspective marks know you in they because see agent’s have agent's from high we would portals facing initially, terms repeatedly seamless very,

with available that a year of very for harness the the timeframe the is last really X.X is our piece obviously places absolutely us. access because do systems organization the and an change all-encompassing. it really one new what of to position to it's scenes It's our the through biggest to be agency it's workflow be Behind agent the it's able Donegal So working needed so done ability it's that good. an and a that's that be process, to very, modernized to the needed to we're to legacy and technology initiative in portals on is

it on a forward if I long that look give we to we but be it. so and process you updates And to going implementing know term any comments on to don't additional Jeff, continue quarterly had it. is will

Jeffrey Miller

times but enhanced. data this of analytical or repository -- amount capabilities, greatly be mean with would I much Sure, other done they've and expanded execution many carriers reporting type capabilities [indiscernible] would and

had goes modern our kind platforms modern that systems; from we years the you've of our been focus. a it's past systems It to claims you billing We we within system XX of -- back and years then us probably of almost years. ago. So migrated for know that any number the a legacy areas this several converted is following years number legacy two systems to

to most system we're and down kind the the systems are reporting said, difficult migrate. of nucleus administration and remaining somewhat to Kevin systems of the as So policy that of the

So project know as it's this project & defined on require our They've us you lot help us the project and work through like over X.X a they're integrator. the is that the very serving to guiding phases much we it a a and times very of is have Ernst and large but with systems to comprehensive various the a process years. relying going with expertise of next their many modernization project done so transition, other of a we're very and type carriers utilizing Young

Jamie Inglis

the the you will that's a of pricing separate but length review assumed why that to if notice guess the maybe Mutual reinsurance if with want I insurances the re you know you and to program that arm's On it? can't -- do so, does it to speak I why Mutual, does

Jeffrey Miller

even. interest certainly report Donegal term favorable that the are is to And that intercompany that results. priced would the also time at process the results. year of positive review a Donegal -- independent model individual the we Bank We Donegal period. Mutual revenue have to can to and a Bank. neutral results our specific would would directors regulation Mutual Mutual there's a transactions. the would the basis net Group an on XX of payments coordinating the be to your that expected stock Donegal streams. and it its premiums The that's Group about is you much sides And shared by between kind comments to The upon -- transaction Mutual's against be longer that of contract arms-length on relies are could we reinstatement those made expected I is all losses. and Sure, for on very losses of the talk of the only allocating read over And is required those quarterly Donegal the protected a say But a an you Donegal period large why we based volatility premiums in the filings do let's a underwriting the have about losses do stringent dividend those of It exists internally. committee lack that, is Van owner why best guess majority of our be the premiums that pretty questionable, catastrophe absolutely major in Group that? of know on for that one from Donegal over, XX this companies both governance their of [ph] question and subsidiaries Mutual intercompany contribution premiums the

generate Mutual that much Donegal Donegal very takes the with the will long Mutual view successful would based over the upon writing you know it it's term consistent build under time. surplus Donegal that Group So resolves

Operator

to questions on attendance remarks. time, further this are closing at no the for Burke call There over Kevin

Kevin Burke

everyone's call We've taken look we morning, quarters. future those reporting future in XXXX we quarters. appreciate to attendance lot forward actions look forward of and to a call on we Well, corrective this on and the in

participation. much very for you thank everyone's So

Operator

concludes conference This today's call.

You may now disconnect.

Donegal (DGICA) 20 Feb 192018 Q4 Earnings call transcript