Donegal (US:DGICA)2025-05-06 18:27Financial Performance - Net premiums written for the three months ended March 31, 2025, totaled $247,092,000, compared to $251,442,000 for the same period in 2024, reflecting a decrease of approximately 1.4%[104][105] - Net premiums earned for Q1 2025 were $232.7 million, an increase of $5.0 million, or 2.2%, compared to $227.7 million in Q1 2024[110] - Net premiums written for Q1 2025 were $247.1 million, a decrease of $4.4 million, or 1.7%, from $251.4 million in Q1 2024[111] - Net investment income increased to $12.0 million in Q1 2025, up $1.0 million, or 9.2%, from $11.0 million in Q1 2024[112] - Net income for Q1 2025 was $25.2 million, or $0.71 per share, compared to $6.0 million, or $0.18 per share, in Q1 2024[119] - Net cash flows provided by operating activities were $25.7 million in Q1 2025, significantly higher than $4.8 million in Q1 2024[121] Loss and Expense Management - Total liabilities for losses and loss expenses as of March 31, 2025, amounted to $1,092,624,000, a decrease from $1,120,985,000 as of December 31, 2024[98] - The loss ratio for Q1 2025 was 56.7%, down from 66.3% in Q1 2024, attributed to decreased core losses and large fire losses[114] - The core loss ratio for Q1 2025 was 54.2%, compared to 58.7% in Q1 2024, reflecting ongoing premium rate increases[114] - The expense ratio for Q1 2025 was 34.6%, a decrease from 35.7% in Q1 2024, due to effective expense management initiatives[116] - The combined ratio improved to 91.6% in Q1 2025 from 102.4% in Q1 2024, primarily due to a decrease in the loss ratio[117] Claims and Reserves - The average claim amount has gradually increased over the past several years due to rising property and automobile repair costs, as well as increased medical loss costs[95] - The company has noted stable amounts in the number of claims incurred and outstanding relative to their premium base, excluding severe weather events and the COVID-19 pandemic[95] - For every 1% change in loss and loss expense reserves, the effect on pre-tax results of operations would be approximately $7,000,000[93] - The company’s insurance subsidiaries maintain liabilities for both reported and unreported claims, with a focus on covering ultimate costs including investigation and litigation[91] Capital and Dividends - The total amount available for distribution as dividends from insurance subsidiaries without prior approval in 2025 is approximately $53.3 million, comprising $40.7 million from Atlantic States, $7.8 million from MICO, and $4.7 million from Peninsula[125] - Atlantic States did not purchase any shares of its Class A common stock under the share repurchase program during the three months ended March 31, 2025, with a total of 57,658 shares purchased since the program's inception[124] - The insurance subsidiaries did not pay any dividends to Atlantic States during the first three months of 2025[125] Debt and Borrowing - As of March 31, 2025, Atlantic States had no outstanding borrowings under its line of credit with M&T, with the ability to borrow up to $20.0 million at interest rates equal to the current Term SOFR rate plus 2.11%[122] - Atlantic States had a $35.0 million outstanding advance with the FHLB of Pittsburgh at a fixed interest rate of 3.806%, due in September 2026[122] Risk Management - The company is monitoring the impact of tariffs and inflationary factors, which may lead to future increases in loss costs[93] - Atlantic States' insurance subsidiaries maintain reinsurance agreements with Donegal Mutual and other major unaffiliated authorized reinsurers, indicating a strategy to manage credit risk[130] - There have been no material changes to Atlantic States' quantitative or qualitative market risk exposure from December 31, 2024, through March 31, 2025[133] - The company manages interest rate risk by maintaining an appropriate relationship between the average duration of its investment portfolio and the duration of its liabilities[132] Business Operations - The total commercial lines liabilities as of March 31, 2025, were $556,596,000, slightly down from $558,175,000 as of December 31, 2024[98] - The total personal lines liabilities decreased from $146,189,000 as of December 31, 2024, to $139,601,000 as of March 31, 2025[98] - Atlantic States' insurance subsidiaries provide property and casualty insurance coverages primarily through independent insurance agencies, billing the majority of this business directly to the insured[129]