Donegal (DGICA)2025-03-10 21:11Ownership and Structure - Donegal Mutual held approximately 44% of the outstanding Class A common stock and 84% of the outstanding Class B common stock as of December 31, 2024, providing it with about 70% of the combined voting power[230]. - The pooling agreement between Donegal Mutual and Atlantic States allocates 80% of the pooled business to Atlantic States, allowing both companies to share underwriting results proportionately[231]. - In 2024, Donegal Mutual purchased 1,057,282 shares of Class A common stock, while no shares of Class B common stock were purchased during 2024 or 2023[234]. - Donegal Mutual has 100% quota-share reinsurance agreements with Southern Mutual Insurance Company and Mountain States insurance subsidiaries, placing their assumed business into the underwriting pool[339]. - The underwriting pool allows Donegal Mutual and Atlantic States to share underwriting results in proportion to their participation, significantly impacting total consolidated revenues[340]. Financial Performance - Net income for 2024 was 1.53 per share, compared to 0.14 per share, in 2023[276]. - Net premiums written increased from 942,281,000 in 2024, representing a growth of approximately 5.2%[256]. - The combined ratio improved from 104.4% in 2023 to 98.6% in 2024, indicating a significant enhancement in underwriting profitability[256]. - Net investment income rose from 44,918,000 in 2024, an increase of about 10.1%[256]. - Total revenues for 2024 were 927,337,984 in 2023[326]. - Net income for 2024 reached 4,425,504 in 2023 and a recovery from a net loss of 15.0 million in 2024, representing 2.2% of the December 31, 2023 net carried reserves[243]. - The average claim outstanding has gradually increased due to rising property and automobile repair costs, medical loss costs, and increased litigation trends[244]. - The establishment of liabilities for losses and loss expenses is inherently uncertain, and the ultimate liability may exceed the recorded reserves[242]. - The total liability for losses and loss expenses decreased slightly from 1,120,985,000 in 2024, reflecting a reduction of approximately 0.5%[247]. - The number of claims pending at the end of the period decreased from 3,144 in 2023 to 2,832 in 2024, a decline of approximately 9.9%[252]. - The total expected development on reported claims for 2024 is 1.4 billion at December 31, 2024, from 1,895,902[329]. - The company recorded gross realized gains of 3.7 billion in 2023, indicating a significant decrease in investment performance[401]. - The total available for sale securities had an amortized cost of 617.9 billion as of December 31, 2024[398]. - The company’s investment expenses increased to 2.9 million in 2023, indicating rising costs associated with investment management[401]. Tax and Regulatory - The effective tax rate increased to 18.4% in 2024 from 12.6% in 2023, with income tax expense rising to 370,644 in tax benefits upon the exercise of stock options, compared to 360,452 in 2022, indicating a significant increase in tax benefits year-over-year[371]. Equity and Dividends - Book value per share increased to 14.39 a year earlier[277]. - Cash dividends declared totaled 22.2 million in 2023 and 545,776,131 in 2024, compared to $479,745,354 in 2023, reflecting a growth of approximately 13.8%[323]. Actuarial and Reserving Practices - The actuaries for the insurance subsidiaries prepare initial estimates for ultimate losses by multiplying earned premium by an expected loss ratio, which is based on historical experience and various trends[419]. - The actuaries utilize methods such as paid loss development and incurred loss development to estimate ultimate costs, selecting point estimates through judgmental weighting of these methods[420]. - Claims are recognized at the claimant level, with one count for each claim event, and the methods for summarizing claim counts have remained consistent over time[423]. - The company continues to monitor trends in claims development to adjust their actuarial estimates and reserves accordingly[424].