Financial Performance - The net premiums written for the three months ended June 30, 2024, were 226,512 thousand for the same period in 2023, representing an increase of about 9.1%[100] - Net premiums earned for Q2 2024 were 18.0 million, or 8.3%, compared to Q2 2023[106] - Net premiums written for Q2 2024 were 20.7 million, or 9.1%, from Q2 2023[107] - Net premiums earned for the first half of 2024 were 30.6 million, or 7.1%, compared to the first half of 2023[114] - Net income for Q2 2024 was 0.13 per share, compared to 0.06 per share, in Q2 2023[113] - Net income for H1 2024 was 0.31 per share for Class A common stock, compared to 0.22 per share for Class A in H1 2023[121] Loss Ratios and Claims - The loss ratio for Q2 2024 was 70.6%, up from 69.9% in Q2 2023, primarily due to increased weather-related losses[109] - The core loss ratio for Q2 2024 was 55.0%, unchanged from Q2 2023[109] - The loss ratio for the first half of 2024 was 68.4%, up from 67.1% in the first half of 2023[118] - The company’s insurance subsidiaries have experienced an increase in claims severity and lengthening of claim settlement periods, particularly for bodily injury claims, over the past several years[88] - The average claim outstanding has gradually increased over the past several years due to rising inflation and increased litigation trends, contributing to greater uncertainty in future loss settlements[90] Ratios and Profitability - The statutory combined ratio, a measure of underwriting profitability, is calculated based on net incurred losses and loss expenses to net premiums earned, with a ratio of less than 100% indicating profitability[101] - The expense ratio for Q2 2024 decreased to 31.9% from 34.2% in Q2 2023, reflecting expense reduction initiatives[110] - The combined ratio for Q2 2024 was 103.0%, down from 104.7% in Q2 2023, attributed to the decrease in the expense ratio[112] - The expense ratio for the insurance subsidiaries decreased to 33.8% in H1 2024 from 35.3% in H1 2023, primarily due to expense reduction initiatives[119] - The combined ratio improved to 102.7% in H1 2024 from 103.0% in H1 2023, attributed to the decrease in the expense ratio[120] Liabilities and Reserves - Total liabilities for losses and loss expenses as of June 30, 2024, amounted to 1,126,157 thousand as of December 31, 2023, reflecting a growth of approximately 1.9%[93] - The total commercial lines liabilities as of June 30, 2024, were 535,681 thousand at the end of 2023, indicating an increase of approximately 3.5%[93] - The total personal lines liabilities increased to 153,462 thousand at the end of 2023, reflecting a growth of about 1.3%[93] - For every 1% change in loss and loss expense reserves, the effect on pre-tax results of operations would be approximately 26.5 million in H1 2024, up from 20.0 million at a rate of Term SOFR plus 2.11% as of June 30, 2024[125] - Dividends paid from insurance subsidiaries to the company totaled 34.6 million available for distribution without prior approval[128] - The company maintains significant liquidity with a portfolio of readily marketable fixed maturities, equity securities, and short-term investments[124] Tax and Market Risk - The effective tax rate increased to 17.6% in H1 2024 from 15.8% in H1 2023, with income tax expense recorded at 36,571 thousand, compared to $32,323 thousand for the same period in 2023, indicating an increase of approximately 13.9%[100] - The company has noted stable amounts in the number of claims incurred relative to their premium base across most lines of business, excluding severe weather events and the COVID-19 pandemic[90]
Donegal (DGICB) - 2024 Q2 - Quarterly Report