Donegal Group Inc. (NASDAQ:DGICA) Q3 2022 Results Conference Call October 27, 2022 8:30 AM ET Company Participants Karin Daly - VP, The Equity Group Inc. Kevin Burke - President and CEO Jeff Miller - CFO Jeff Hay - Chief Underwriting Officer Tony Viozzi - Chief Investment Officer Karin Daly Good morning, and thank you for joining us today. This morning, Donegal Group issued its Third Quarter 2022 earnings release outlining its results. The release and a supplemental investor presentation are available in th ...

[PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Donegal Group Inc. reported a significant decline in H1 2022 financial performance, with net income dropping to **$4.9 million** and a comprehensive loss of **$27.8 million**, driven by investment losses Consolidated Balance Sheet Highlights (June 30, 2022 vs. Dec 31, 2021) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Investments | $1,299,326,949 | $1,276,845,897 | | Total Assets | $2,249,848,336 | $2,255,175,399 | | Total Liabilities | $1,738,825,854 | $1,724,139,312 | | Total Stockholders' Equity | $511,022,482 | $531,036,087 | Consolidated Income Statement Highlights | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Premiums Earned | $204,128,489 | $192,488,665 | $403,377,113 | $379,740,265 | | Total Revenues | $204,311,149 | $205,145,943 | $411,937,866 | $403,115,841 | | Net (Loss) Income | $(8,207,757) | $16,164,036 | $4,937,272 | $26,693,884 | | Diluted EPS (Class A) | $(0.26) | $0.53 | $0.16 | $0.88 | Consolidated Cash Flow Highlights (Six Months Ended June 30) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,989,404 | $59,175,971 | | Net cash used in investing activities | $(73,101,376) | $(27,364,280) | | Net cash provided by (used in) financing activities | $2,213,314 | $(46,901,189) | | **Net decrease in cash** | **$(35,898,658)** | **$(15,089,498)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's structure, accounting policies, pooling agreement, reinsurance, and significant unrealized investment losses - The company operates in three segments: investment, commercial lines, and personal lines. Donegal Mutual holds approximately **70% of the total voting power**[33](index=33&type=chunk)[34](index=34&type=chunk) - Atlantic States participates in a pooling agreement, assuming **80% of the pooled business** from Donegal Mutual, which homogenizes underwriting risk[35](index=35&type=chunk)[38](index=38&type=chunk) - The company's reinsurance program includes excess of loss coverage over a **$2.0 million retention** and catastrophe reinsurance for losses between **$15.0 million and $185.0 million** per occurrence[48](index=48&type=chunk) Activity in Liabilities for Losses and Loss Expenses (Six Months Ended June 30, in thousands) | Description | 2022 | 2021 | | :--- | :--- | :--- | | Net Balance at January 1 | $626,359 | $557,189 | | Incurred related to Current year | $283,906 | $254,740 | | Incurred related to Prior years (Favorable Development) | $(24,415) | $(21,564) | | Total Incurred | $259,491 | $233,176 | | Total Paid | $242,694 | $210,266 | | **Net Balance at end of period** | **$643,156** | **$580,099** | - Fixed maturities with a fair value of **$855.8 million** had temporary unrealized losses totaling **$78.9 million** for durations less than 12 months, and securities with a fair value of **$136.8 million** had unrealized losses of **$22.6 million** for durations over 12 months as of June 30, 2022[63](index=63&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2022 net loss of **$8.2 million** to a higher loss ratio and significant net investment losses, increasing the combined ratio to **105.0%** [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q2 2022 saw a net loss of **$8.2 million**, driven by a higher loss ratio (**69.4%**) due to increased weather losses and net investment losses Q2 Performance Comparison (2022 vs 2021) | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Net Premiums Written | $218.4M (+4.2%) | $209.6M | | Net (Loss) Income | $(8.2)M | $16.2M | | Loss Ratio | 69.4% | 59.2% | | Expense Ratio | 35.0% | 36.0% | | Combined Ratio | 105.0% | 96.1% | | Net Investment (Losses) Gains | $(8.4)M | $4.2M | Six-Month Performance Comparison (2022 vs 2021) | Metric | H1 2022 | H1 2021 | | :--- | :--- | :--- | | Net Premiums Written | $436.9M (+2.7%) | $425.5M | | Net Income | $4.9M | $26.7M | | Loss Ratio | 64.3% | 61.4% | | Expense Ratio | 35.4% | 35.1% | | Combined Ratio | 100.4% | 97.3% | | Net Investment (Losses) Gains | $(8.5)M | $6.7M | - The increase in the Q2 loss ratio was driven by higher weather-related losses (**$19.6 million** vs. **$11.7 million**) and lower favorable prior-year loss reserve development (**$7.9 million** vs. **$13.4 million**)[125](index=125&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$35.0 million** in H1 2022 operating cash flow and access to credit facilities - Operating activities provided net cash flows of **$35.0 million** in the first six months of 2022, down from **$59.2 million** in the same period of 2021[142](index=142&type=chunk) - As of June 30, 2022, the company had access to a **$20.0 million** line of credit with M&T and an outstanding **$35.0 million** advance with the FHLB of Pittsburgh[143](index=143&type=chunk) - On July 21, 2022, the board declared quarterly cash dividends of **16.5 cents per Class A share** and **14.75 cents per Class B share**[147](index=147&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks relate to investment portfolio fair value fluctuations from equity prices and interest rates, with no material changes reported - The company's market risk is primarily related to fluctuations in prices and interest rates affecting its investment portfolio[154](index=154&type=chunk) - There have been no material changes to quantitative or qualitative market risk exposure from December 31, 2021, through June 30, 2022[155](index=155&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2022, following a new application system implementation that enhanced internal controls - The CEO and CFO concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[157](index=157&type=chunk) - A new application system was implemented for expense allocation, reinsurance premiums, and commissions, resulting in changes to internal controls over financial reporting to enhance automation and efficiency[158](index=158&type=chunk)[160](index=160&type=chunk) [PART II: OTHER INFORMATION](index=38&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings for the period - None[164](index=164&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes in risk factors were reported for the six months ended June 30, 2022 - No material changes in risk factors were reported for the six months ended June 30, 2022[165](index=165&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, Donegal Mutual purchased **367,077 Class A** and **54,231 Class B** common shares in open market or privately negotiated transactions Share Purchases by Donegal Mutual (Q2 2022) | Stock Class | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Class A | 367,077 | $15.68 | | Class B | 54,231 | $14.25 | [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - None[173](index=173&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) The report includes several exhibits filed, such as an amendment to the 2021 Employee Stock Purchase Plan, CEO/CFO certifications, and XBRL data files - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2), an amendment to the employee stock purchase plan (10.1), and XBRL interactive data files (101 series)[176](index=176&type=chunk)

Donegal Group Inc. (NASDAQ:DGICA) Q2 2022 Results Conference Call July 28, 2022 8:30 AM ET Company Participants Karin Daly - VP, The Equity Group Inc. Kevin Burke - President and CEO Jeffrey Miller - CFO Jeffery Hay - Chief Underwriting Officer Tony Viozzi - Chief Investment Officer Karin Daly Good morning, and thank you for joining us today. This morning, Donegal Group issued its second quarter 2022 earnings release outlining its results. The release and a supplemental investor presentation are available i ...

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q1 2022 present the company's financial position, operational results, and cash flows, highlighting key changes from the prior year [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets were **$2.24 billion** and total stockholders' equity was **$524.3 million**, reflecting a decrease primarily due to increased accumulated other comprehensive loss Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Investments** | $1,270,827 | $1,276,846 | | **Total Assets** | **$2,240,762** | **$2,255,175** | | **Losses and loss expenses** | $1,071,587 | $1,077,620 | | **Total Liabilities** | **$1,716,496** | **$1,724,139** | | **Total Stockholders' Equity** | **$524,266** | **$531,036** | - Accumulated other comprehensive income swung from a positive **$3.3 million** at year-end 2021 to a loss of **$17.3 million** as of March 31, 2022, primarily reflecting unrealized losses on securities[10](index=10&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2022, total revenues increased to **$207.6 million** and net income rose to **$13.1 million**, with diluted EPS at **$0.43** Q1 2022 vs Q1 2021 Income Statement (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Net premiums earned** | $199,249 | $187,252 | | **Total revenues** | $207,627 | $197,970 | | **Total expenses** | $191,400 | $185,219 | | **Income before income tax** | $16,226 | $12,751 | | **Net income** | **$13,145** | **$10,530** | | **EPS (Class A, diluted)** | **$0.43** | **$0.35** | - The company experienced a net investment loss of **$76,247** in Q1 2022, a significant reversal from the **$2.5 million** net investment gain reported in Q1 2021[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to **$20.7 million** in Q1 2022, while investing activities reversed to a net cash outflow of **$17.8 million** Q1 2022 vs Q1 2021 Cash Flows (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Net cash from Operating** | $20,750 | $29,877 | | **Net cash (used in) from Investing** | ($17,778) | $19,152 | | **Net cash used in Financing** | ($4,606) | ($49,732) | | **Net decrease in cash** | ($1,634) | ($703) | | **Cash at end of period** | $56,075 | $102,392 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's organizational structure, accounting policies, investment portfolio, segment performance, and loss reserve methodology - Donegal Group Inc. is organized as an insurance holding company, with Donegal Mutual Insurance Company holding approximately **70%** of the total voting power[26](index=26&type=chunk)[28](index=28&type=chunk) - Atlantic States, the largest subsidiary, participates in a proportional reinsurance pooling agreement with Donegal Mutual, allocated **80%** of the pooled business[29](index=29&type=chunk) - The company operates in three segments: investment function, commercial lines of insurance, and personal lines of insurance[27](index=27&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a **6.4%** increase in net premiums earned and an improved combined ratio of **95.8%** in Q1 2022, while addressing liquidity and capital resources - The most significant accounting estimate is the liability for property and casualty insurance losses and loss expenses, where a **1%** change in net reserves would impact pre-tax results by approximately **$6.3 million**[93](index=93&type=chunk)[96](index=96&type=chunk) GAAP Combined Ratio Breakdown | Ratio Component | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Loss ratio (non-weather) | 55.2% | 60.0% | | Loss ratio (weather-related) | 4.0% | 3.7% | | **Total Loss Ratio** | **59.2%** | **63.7%** | | Expense ratio | 35.8% | 34.1% | | Dividend ratio | 0.8% | 0.7% | | **Combined ratio** | **95.8%** | **98.5%** | - Favorable loss reserve development for Q1 2022 was approximately **$16.5 million**, or **8.3 percentage points** of the loss ratio, compared to **$8.2 million** (**4.4 percentage points**) in Q1 2021[123](index=123&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Net premiums earned increased by **6.4%** to **$199.2 million** in Q1 2022, driven by a lower loss ratio and an improved combined ratio of **95.8%** - Net premiums earned increased by **$11.9 million** (**6.4%**) in Q1 2022, primarily due to the inclusion of Mountain States Insurance Group business and renewal premium increases[119](index=119&type=chunk) - The loss ratio decreased to **59.2%** in Q1 2022 from **63.7%** in Q1 2021, attributed to favorable prior year loss development and lower fire losses[123](index=123&type=chunk) - The expense ratio increased to **35.8%** from **34.1%** year-over-year, reflecting higher underwriting-based incentive costs and increased technology system-related expenses[124](index=124&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through operating cash flows, investment income, and available credit facilities, with **$20.7 million** provided by operations in Q1 2022 - Operating activities provided net cash flows of **$20.7 million** and **$29.9 million** in the first three months of 2022 and 2021, respectively[130](index=130&type=chunk) - As of March 31, 2022, the company had a **$20.0 million** unsecured line of credit with no outstanding balance and a **$35.0 million** outstanding advance from the FHLB of Pittsburgh[131](index=131&type=chunk) - Approximately **$47.3 million** is available for dividend distribution from insurance subsidiaries to the parent company in 2022 without prior regulatory approval[136](index=136&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk primarily arises from its investment portfolio's exposure to price and interest rate fluctuations, with no material changes reported - The company's main market risks are associated with its investment portfolio (price and interest rate risk) and, to a lesser extent, its debt obligations[143](index=143&type=chunk) - No material changes were reported in the quantitative or qualitative market risk exposure from December 31, 2021, through March 31, 2022[144](index=144&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of March 31, 2022, following the implementation of a new expense allocation and reinsurance system - The CEO and CFO concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective[145](index=145&type=chunk) - A new application system for expense allocation and reinsurance was implemented, leading to changes in internal controls over financial reporting as part of a systems modernization project[146](index=146&type=chunk)[147](index=147&type=chunk) [PART II OTHER INFORMATION](index=31&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings - None[152](index=152&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported in the risk factors from the company's 2021 Annual Report on Form 10-K - No material changes were reported in the risk factors from the 2021 Annual Report on Form 10-K[153](index=153&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds from such sales - None[155](index=155&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits filed include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and XBRL interactive data files (Exhibit 101 series)[164](index=164&type=chunk)

Donegal Group Inc (NASDAQ:DGICA) Q1 2022 Earnings Conference Call April 28, 2022 8:30 AM ET Company Participants Kevin G. Burke – President and Chief Executive Officer Jeffrey D. Miller – Executive Vice President and Chief Financial Officer V. Anthony Viozzi – Senior Vice President and Chief Investment Officer Jeffrey Hay – Senior Vice President and Chief Underwriting Officer Conference Call Participants Operator Good morning and thank you for joining us today. This morning, Donegal Group issued its first q ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K 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 ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIE ...

Donegal Group Inc. (NASDAQ:DGICA) Q4 2021 Earnings Conference Call February 18, 2022 11:00 AM ET Company Participants Karin Daly - VP, The Equity Group Inc. Jeff Miller - EVP and CFO Kevin Burke - President and CEO Conference Call Participants Meyer Shields - KBW Robert Farnam - Boenning & Scattergood Inc. Operator Good day and thank you for standing by. Welcome to the Donegal Group Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 0-15341 | --- | --- | --- | |---------------------------------------------------|--------------------------- ...

Donegal Group Inc. (NASDAQ:DGICA) Q3 2021 Earnings Conference Call October 28, 2021 11:00 AM ET Company Participants Jeff Miller - Executive Vice President and Chief Financial Officer Kevin Burke - President, Chief Executive Officer and Director Conference Call Participants Derek Han - KBW Bob Farnam - Boenning and Scattergood Doug Eden - ECM Capital Operator Good day and thank you for standing by. Welcome to the Donegal Group Inc. Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please ...

Table of Contents 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SEC ...