UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 23, 2009
Donegal Group Inc.
(Exact name of registrant as specified in its charter)
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DE |
0-15341 |
23-2424711 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
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1195 RIVER RD MARIETTA, PA |
17547 |
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| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 717-426-1931
________________________________________________________________________________
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02. Results of Operations and Financial Condition.
On October 23, 2009 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated October 23, 2009
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Donegal Group Inc.
(Registrant) |
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October 23, 2009
(Date) |
/s/ JEFFREY D. MILLER
Jeffrey D. Miller Senior Vice President and Chief Financial Officer |
| Exhibit Index | ||
| 99.1 | Press release dated October 23, 2009 | |
EXHIBIT 99.1
Donegal Group Inc. Announces Third Quarter Earnings
MARIETTA, Pa., Oct. 23, 2009 (GLOBE NEWSWIRE) -- Donegal Group Inc. (Nasdaq:DGICA) (Nasdaq:DGICB) today reported that its net income for the quarter ended September 30, 2009 was $6,744,851, or $.27 per share of Class A common stock on a diluted basis, compared to $6,270,421, or $.25 per share of Class A common stock on a diluted basis, for the third quarter of 2008.
Revenues for the third quarter of 2009 were $94,876,087, an increase of 2.3% over revenues for the third quarter of 2008, with net premiums earned of $87,997,723, a decrease of $173,034 from net premiums earned for the year-earlier period. Net premiums written for the third quarter of 2009 were $93,623,928, representing a 1.6% increase over net premiums written of $92,177,442 for the third quarter of 2008.
The Company's combined ratio was 98.9% for the third quarter of 2009, including the impact of $2.4 million of weather-related losses in the Company's Midwest operating region, which added 2.7 points to the third quarter combined ratio. The Company's combined ratio was 95.5% for the third quarter of 2008.
The Company's expense ratio decreased to 32.0% for the third quarter of 2009, compared to 33.0% for the third quarter of 2008, reflecting lower expenses incurred for underwriting-based incentive costs and the benefits of expense savings initiatives commenced in the fourth quarter of 2008.
Net investment income was $5,107,356 for the third quarter of 2009, compared to $5,801,750 reported for the third quarter of 2008. The impact of lower short-term interest rates during the third quarter of 2009 offset investment income attributable to an increase in average invested assets compared to the year-earlier period. The Company had no other-than-temporary impairments in its investment portfolio in the third quarter of 2009.
Net income for the nine months ended September 30, 2009 was $11,302,279, or $.45 per share of Class A common stock on a diluted basis, compared to $19,147,681, or $.76 per share of Class A common stock on a diluted basis, for the nine months ended September 30, 2008. The Company's combined ratio for the first nine months of 2009 was 102.2%, compared to a combined ratio of 96.9% for the comparable period in 2008. The Company's loss ratio was 70.7% for the first nine months of 2009, compared to 64.0% for the first nine months of 2008, with the increase primarily reflecting increased fire and weather-related claim activity in the first half of 2009 as well as increased prior accident year reserve development in the first nine months of 2009 compared to the year-earlier period.
The Company's total stockholders' equity, or book value, increased 7.7% to $391,529,722, a per common share amount of $15.36, at September 30, 2009, compared to $363,583,865, a per common share amount of $14.29, at December 31, 2008. The Company attributes this increase in book value primarily to $20.1 million of net after-tax unrealized gains in the fair value of its available-for-sale fixed maturity investments during the first nine months of 2009.
"We are pleased to report an increase in our quarterly net income relative to the first two quarters of the year. We are also pleased to report a significant increase in our book value in the current quarter and year to date, continuing the favorable trend of book value growth we achieved in 2008. Donegal Group is experiencing positive momentum and is well positioned to capitalize on opportunities that might arise in this challenging environment," stated Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group Inc.
On October 15, 2009, the Company's board of directors approved a quarterly cash dividend payable November 16, 2009 of $.1125 per share of Class A common stock and $.10 per share of Class B common stock to stockholders of record as of the close of business on November 2, 2009.
The Company will hold a conference call and webcast on Friday, October 23, 2009, beginning at 11:00 A.M. Eastern Time. You may listen via the Internet by accessing the webcast link in the Investors area of the Company's web site at www.donegalgroup.com. A replay of the conference call will also be available via the Company's web site.
Donegal Group Inc. is an insurance holding company whose insurance subsidiaries offer personal and commercial property and casualty lines of insurance in five Mid-Atlantic states (Delaware, Maryland, New Hampshire, New York and Pennsylvania), seven Southeastern states (Alabama, Georgia, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and six Midwestern states (Iowa, Nebraska, Ohio, Oklahoma, South Dakota and Wisconsin).
All statements contained in this press release that are not historic facts are based on current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties. Actual results could vary materially. The factors that could cause actual results to vary materially include, but are not limited to, the ability of the Company to maintain profitable operations, the adequacy of the Company's reserves for losses and loss adjustment expenses, business and economic conditions in the areas in which the Company operates, conditions resulting from the ongoing recession in the United States, severe weather events, competition from various insurance and non-insurance businesses, terrorism, the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements and the other risks that the Company describes from time to time in its filings with the Securities and Exchange Comm ission. The Company disclaims any obligation to update such statements or to announce publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Donegal Group Inc.
Financial Highlights
(unaudited)
Quarter Ended September 30
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2009 2008
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Net premiums earned $ 87,997,723 $ 88,170,757
Investment income, net of investment
expenses 5,107,356 5,801,750
Net realized investment gains (losses) 189,230 (2,811,264)
Total revenues 94,876,087 92,708,575
Net income $ 6,744,851 $ 6,270,421
Net income per common share:
Class A common stock - basic $ 0.27 $ 0.25
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Class A common stock - diluted $ 0.27 $ 0.25
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Class B common stock - basic and
diluted $ 0.24 $ 0.23
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Nine Months Ended
September 30
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2009 2008
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Net premiums earned $263,887,611 $257,507,718
Investment income, net of investment
expenses 15,731,106 17,287,476
Net realized investment gains (losses) 893,225 (2,789,535)
Total revenues 285,158,430 276,471,625
Net income $ 11,302,279 $ 19,147,681
Net income per common share:
Class A common stock - basic $ 0.45 $ 0.77
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Class A common stock - diluted $ 0.45 $ 0.76
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Class B common stock - basic and
diluted $ 0.41 $ 0.69
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Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Quarter Ended September 30
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2009 2008
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Net premiums earned $ 87,998 $ 88,171
Investment income, net of investment
expenses 5,107 5,801
Net realized investment gains (losses) 189 (2,811)
Lease income 233 231
Installment payment fees 1,349 1,316
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Total revenues 94,876 92,708
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Net losses and loss expenses 58,609 54,700
Amortization of deferred policy
acquisition costs 14,791 14,818
Other underwriting expenses 13,345 14,241
Other expenses 329 315
Policyholder dividends 252 437
Interest 185 399
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Total expenses 87,511 84,910
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Income before income tax expense 7,365 7,798
Income tax expense 620 1,528
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Net income $ 6,745 $ 6,270
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Net income per common share:
Class A common stock - basic $ 0.27 $ 0.25
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Class A common stock - diluted $ 0.27 $ 0.25
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Class B common stock - basic and diluted $ 0.24 $ 0.23
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Supplementary Financial Analysts' Data
Weighted-average number of shares
outstanding:
Class A common stock - basic 19,905,174 19,882,405
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Class A common stock - diluted 19,905,174 20,015,192
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Class B common stock - basic and diluted 5,576,775 5,576,775
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Net written premiums $ 93,624 $ 92,177
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Book value per common share at end of
period $ 15.36 $ 13.89
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Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Nine Months Ended
September 30
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2009 2008
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Net premiums earned $ 263,888 $ 257,508
Investment income, net of investment
expenses 15,731 17,288
Net realized investment gains (losses) 893 (2,790)
Lease income 689 705
Installment payment fees 3,957 3,761
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Total revenues 285,158 276,472
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Net losses and loss expenses 186,461 164,849
Amortization of deferred policy
acquisition costs 44,158 43,109
Other underwriting expenses 38,548 40,712
Other expenses 1,104 1,211
Policyholder dividends 587 925
Interest 1,589 1,546
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Total expenses 272,447 252,352
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Income before income tax expense 12,711 24,120
Income tax expense 1,409 4,972
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Net income $ 11,302 $ 19,148
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Net income per common share:
Class A common stock - basic $ 0.45 $ 0.77
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Class A common stock - diluted $ 0.45 $ 0.76
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Class B common stock - basic and diluted $ 0.41 $ 0.69
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Supplementary Financial Analysts' Data
Weighted-average number of shares
outstanding:
Class A common stock - basic 19,895,840 19,849,971
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Class A common stock - diluted 19,895,840 20,026,429
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Class B common stock - basic and diluted 5,576,775 5,576,775
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Net written premiums $ 275,208 $ 286,341
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Book value per common share at end of
period $ 15.36 $ 13.89
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Donegal Group Inc.
Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2009 2008
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(unaudited)
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost $ 78,540 $ 99,878
Available for sale, at fair value 527,576 445,816
Equity securities, at fair value 8,416 5,895
Investments in affiliates 8,946 8,594
Short-term investments, at cost 39,849 71,953
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Total investments 663,327 632,136
Cash 8,817 1,831
Premiums receivable 63,509 55,337
Reinsurance receivable 85,200 79,953
Accrued investment income 6,317 6,656
Deferred policy acquisition costs 31,784 29,541
Prepaid reinsurance premiums 58,261 51,436
Property and equipment, net 6,725 6,687
Deferred tax asset, net -- 10,995
Other assets 2,502 5,537
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Total assets $ 926,442 $ 880,109
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Donegal Group Inc.
Consolidated Balance Sheets (continued)
(in thousands)
September 30, December 31,
2009 2008
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(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Losses and loss expenses $ 251,032 $ 239,809
Unearned premiums 247,159 229,014
Accrued expenses 10,663 14,150
Deferred tax liability, net 518 --
Subordinated debentures 15,465 15,465
Due to affiliate 802 3,148
Accounts payable - securities 1,503 1,821
Other liabilities 7,770 13,118
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Total liabilities 534,912 516,525
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Stockholders' equity:
Preferred stock -- --
Class A common stock 205 205
Class B common stock 56 56
Additional paid-in capital 164,134 163,137
Accumulated other comprehensive income 23,218 1,714
Retained earnings 212,826 207,182
Treasury stock, at cost (8,909) (8,710)
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Total stockholders' equity 391,530 363,584
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Total liabilities and stockholders'
equity $ 926,442 $ 880,109
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CONTACT: Donegal Group Inc.
Jeffrey D. Miller, Senior Vice President & Chief
Financial Officer
(717) 426-1931
Fax (717) 426-7009
jeffmiller@donegalgroup.com