Donegal (DGICB) - 2024 Q3 - Quarterly Report

Financial Performance - Net premiums written for the three months ended September 30, 2024, were $232,208 thousand, compared to$219,186 thousand for the same period in 2023, indicating an increase of approximately 5.8%[101] - Net premiums earned for Q3 2024 were $238.0 million, a 6.0$224.4 million in Q3 2023[106] - Net premiums written for Q3 2024 were $232.2 million, up 5.9$219.2 million in Q3 2023, with commercial lines increasing by 6.4% and personal lines by 5.4%[107] - For the first nine months of 2024, net premiums earned were $700.0 million, a 6.7$655.9 million in the same period of 2023[116] - Net income for Q3 2024 was $16.8 million, or$0.51 per share, compared to a net loss of $805,301, or$0.02 per share, in Q3 2023[115] - Net income for the first nine months of 2024 was $26.9 million, or$0.81 per share for Class A common stock, compared to $6.4 million, or$0.20 per share in 2023[125] Loss and Expense Ratios - The loss ratio for Q3 2024 was 61.5%, down from 69.8% in Q3 2023, primarily due to decreased core losses[110] - The core loss ratio for Q3 2024 was 50.1%, compared to 56.7% in Q3 2023, reflecting improved performance in both commercial and personal lines[110] - The combined ratio for Q3 2024 was 96.4%, significantly improved from 104.5% in Q3 2023, driven by a reduction in the loss ratio[113] - The combined ratio for the first nine months of 2024 was 100.6%, a decrease from 103.5% in 2023, primarily due to lower loss and expense ratios[123] Liabilities and Reserves - Total liabilities for losses and loss expenses as of September 30, 2024, amounted to $1,134,852 thousand, an increase from$1,126,157 thousand on December 31, 2023[94] - The total commercial lines liabilities were $545,015 thousand as of September 30, 2024, compared to$535,681 thousand at the end of 2023, reflecting a growth of approximately 1.25%[94] - Personal lines liabilities increased to $160,927 thousand as of September 30, 2024, up from$153,462 thousand at December 31, 2023, representing a growth of about 4.5%[94] - The establishment of liabilities for losses and loss expenses is inherently uncertain, with potential adjustments based on changes in external and internal assumptions[90] - For every 1% change in loss and loss expense reserves, the effect on pre-tax results of operations would be approximately $7.1 million[89] Claims and Settlements - The average claim amount has gradually increased due to rising inflation and increased litigation trends, impacting future loss settlements[91] - The company has noted stable amounts in the number of claims incurred relative to their premium base, excluding severe weather events and the COVID-19 pandemic[91] - The company’s insurance subsidiaries have experienced an increase in claims severity and lengthening of claim settlement periods, particularly for bodily injury claims[89] Investment Income - Net investment income for Q3 2024 was$10.8 million, a 2.8% increase from $10.5 million in Q3 2023[108] - Net investment gains for Q3 2024 were$1.9 million, compared to net investment losses of $1.2 million in Q3 2023[109] Operating Activities and Cash Flow - Operating activities generated net cash flows of$39.2 million in the first nine months of 2024, compared to $26.0 million in 2023[128] - The insurance subsidiaries paid$10.0 million in dividends to the company during the first nine months of 2024, with an additional $29.6 million available for distribution without prior approval[134] - At September 30, 2024, the company had no outstanding borrowings under its line of credit and could borrow up to$20.0 million[129] - The company maintained significant liquidity in its investment portfolio, structured to provide even cash flows from investment income and principal maturities[128] Tax and Expenses - Income tax expense for the first nine months of 2024 was $5.8 million, with an effective tax rate of 17.8$1.1 million and 15.2% in 2023[124] - The expense ratio for Q3 2024 was 34.5%, slightly up from 34.1% in Q3 2023, attributed to higher technology costs[112] Corporate Governance - There were no material changes in the company's internal control over financial reporting during the quarter[142] - The company has authorized a share repurchase program but did not purchase any shares during the nine months ended September 30, 2024[132]