Donegal (US:DGICA)2025-11-04 00:06Financial Performance - Net income for Q3 2025 was $20.1 million, or $0.55 per share, compared to $16.8 million, or $0.51 per share, in Q3 2024[131]. - Net income for the first nine months of 2025 was $62.2 million, or $1.72 per share, compared to $26.9 million, or $0.81 per share, in 2024[140]. - Net cash flows from operating activities were $60.2 million for the first nine months of 2025, up from $39.2 million in 2024[143]. Premiums and Underwriting - Net premiums written for the three months ended September 30, 2025, were $219,615,000, compared to $232,208,000 for the same period in 2024, indicating a decrease of about 5.4%[116]. - Net premiums earned for Q3 2025 were $229.8 million, a decrease of $8.2 million, or 3.4%, compared to Q3 2024[123]. - Net premiums written for Q3 2025 were $219.6 million, a decrease of $12.6 million, or 5.4%, from Q3 2024, with commercial lines increasing by 3.4% and personal lines decreasing by 15.9%[124]. - Net premiums earned for the first nine months of 2025 were $694.3 million, a decrease of $5.7 million, or 0.8%, compared to the same period in 2024[132]. - Net premiums written for the first nine months of 2025 were $700.5 million, a decrease of $30.3 million, or 4.1%, from the same period in 2024[133]. Loss Ratios and Reserves - The loss ratio for Q3 2025 was 62.1%, up from 61.5% in Q3 2024, with a core loss ratio of 51.1% compared to 50.1%[127]. - The loss ratio for the insurance subsidiaries was 61.3% for the first nine months of 2025, down from 66.1% in the same period of 2024[136]. - The core loss ratio, excluding weather-related losses, was 51.8% for the first nine months of 2025, compared to 54.5% for the same period in 2024[136]. - The establishment of loss reserves is inherently uncertain, and the ultimate liability may exceed current estimates, impacting financial results[108]. - For every 1% change in loss and loss expense reserves, the pre-tax impact on results of operations would be approximately $7.2 million[107]. Claims and Expenses - The average claim amount has gradually increased due to rising property and automobile repair costs, with significant impacts from inflation and litigation trends[109]. - The company’s insurance subsidiaries have experienced an increase in claims severity and longer settlement periods for bodily injury claims in recent years[107]. - The combined ratio for Q3 2025 was 95.9%, a decrease from 96.4% in Q3 2024, primarily due to a lower expense ratio[129]. - The expense ratio decreased to 33.4% for the first nine months of 2025 from 34.0% in 2024, reflecting expense management initiatives[137]. - The combined ratio improved to 95.1% for the first nine months of 2025, down from 100.6% in 2024, primarily due to a decrease in the loss ratio[138]. Investment Income - Net investment income for Q3 2025 was $13.9 million, an increase of $3.1 million, or 28.8%, compared to Q3 2024[125]. - Net investment income for the first nine months of 2025 was $38.5 million, an increase of $5.6 million, or 17.0%, compared to the same period in 2024[134]. - Net investment gains for the first nine months of 2025 were $2.3 million, down from $4.7 million in the same period of 2024[135]. Liabilities and Reserves - Total liabilities for losses and loss expenses as of September 30, 2025, amounted to $1,114,302,000, a slight decrease from $1,120,985,000 on December 31, 2024[111]. - The total commercial lines liabilities increased to $578,479,000 as of September 30, 2025, compared to $558,175,000 at the end of 2024, reflecting a growth of approximately 3.8%[111]. - The liabilities for reported losses are evaluated on a case-by-case basis, while unreported claims are based on historical data by line of insurance[106]. Weather and Other Losses - Weather-related losses were $48.7 million, contributing 7.0 percentage points to the loss ratio for the first nine months of 2025, down from $60.0 million and 8.6 percentage points in 2024[136]. - Large fire losses were $29.8 million for the first nine months of 2025, compared to $36.2 million in 2024[136]. Dividends and Borrowings - The insurance subsidiaries paid $10.0 million in dividends to the company during the first nine months of 2025[147]. - The company had no outstanding borrowings under its line of credit as of September 30, 2025, with the ability to borrow up to $20.0 million[144].