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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): February 23, 2018  

Donegal Group Inc.
(Exact Name of Registrant as Specified in Charter)

DELAWARE 0-1534123-2424711
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

1195 RIVER RD, MARIETTA, PA 17547
(Address of Principal Executive Offices) (Zip Code)

717-426-1931
(Registrant's telephone number, including area code)


(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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On February 23, 2018, 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 February 23, 2018

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 Donegal Group Inc.
   
  
Date: February 23, 2018By: /s/ Jeffrey D. Miller        
  Jeffrey D. Miller
  Executive Vice President & Chief Financial Officer
  

EXHIBIT INDEX

 

Exhibit Number Description
  
99.1 Press Release dated February 23, 2018

EdgarFiling

EXHIBIT 99.1

Donegal Group Inc. Announces 2017 Fourth Quarter and Full Year Results

MARIETTA, Pa., Feb. 23, 2018 (GLOBE NEWSWIRE) -- Donegal Group Inc. (NASDAQ:DGICA) (NASDAQ:DGICB) today reported its financial results for the fourth quarter and full year of 2017. Significant items included:

Fourth Quarter:

  • Income tax expense for the fourth quarter of 2017 included $4.8 million, or 17 cents per diluted Class A share, related to the Company’s revaluation of its net deferred tax assets pursuant to the provisions of the Tax Cuts and Jobs Act (the “TCJA”) that was enacted in December of 2017
  • Net income, excluding the above-mentioned TCJA impact, was $2.0 million, or 7 cents per diluted Class A share, for the fourth quarter of 2017, compared to $5.6 million, or 21 cents per diluted Class A share, for the fourth quarter of 2016
  • Net premiums earned of $181.1 million for the fourth quarter of 2017 increased 7.2% compared to the fourth quarter of 2016
  • Net premiums written1 of $171.4 million for the fourth quarter of 2017 increased 5.9% compared to the fourth quarter of 2016 as a result of organic growth in both personal and commercial lines
  • Combined ratio of 104.8% for the fourth quarter of 2017, compared to 100.5% for the prior-year fourth quarter

Full Year:

  • Net income, excluding the above-mentioned TCJA impact, was $11.9 million, or 43 cents per diluted Class A share, for the full year of 2017, compared to $30.8 million, or $1.16 per diluted Class A share, for the full year of 2016
  • Net premiums earned of $702.5 million for the full year of 2017 increased 7.1% compared to the full year of 2016
  • Net premiums written of $729.1 million for the full year of 2017 increased 6.9% compared to the full year of 2016
  • Combined ratio of 103.0% for the full year of 2017, compared to 98.1% for the full year of 2016
  • Book value per share of $15.95 at December 31, 2017, compared to $16.21 at year-end 2016
  Three Months Ended December 31,
 Year Ended December 31,
  2017 2016 % Change 2017 2016 % Change
                                       
  (dollars in thousands, except per share amounts)
             
 Income Statement Data           
 Net premiums earned$  181,060   $ 168,977   7.2% $ 702,515   $ 656,205   7.1%
 Investment income, net   6,142      6,161   -0.3       23,527      22,633   3.9   
 Net realized investment gains    1,498      321   366.7       5,705      2,525   125.9   
 Total revenues   190,759      177,196   7.7       739,027      688,423   7.4   
 Net (loss) income   (2,779)    5,554   NM2     7,116      30,801   -76.9   
 Operating income1   986      5,345   -81.6       8,103      29,160   -72.2   
 Annualized return on average equity -2.5%  5.0% -7.5pts  1.6%  7.3% -5.7pts
             
 Per Share Data           
 Net (loss) income – Class A (diluted)$  (0.10) $  0.21   NM $  0.26   $  1.16   -77.6%
 Net (loss) income – Class B   (0.10)    0.18   NM    0.22      1.06   -79.2   
 Operating income – Class A (diluted)   0.04      0.20   -80.0%    0.30      1.10   -72.7   
 Operating income – Class B   0.03      0.18   -83.3       0.26      1.00   -74.0   
 Book value   15.95      16.21   -1.6       15.95      16.21   -1.6   
             

1See the “Definitions of Non-GAAP and Operating Measures” section of this release, which defines data that the Company prepares on an accounting basis other than U.S. generally accepted accounting principles (“GAAP”) and reconciles such data to GAAP measures.

2Not meaningful.

Management Commentary

Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., stated, “We achieved a 7.1% increase in net premiums earned for the full year of 2017, which contributed to a 7.4% increase in our total revenues. However, throughout the fourth quarter of 2017, we continued to experience higher-than-expected losses within our personal and commercial automobile lines of business, primarily related to increases in claim severity in certain geographic markets. We have already implemented actions, and are taking additional measures, intended to reduce future losses and to increase our premium rates to levels that we expect will result in improved profitability of our automobile lines of business going forward. As we stated throughout 2017, we continue to strive for improved profitability by expanding our utilization of predictive analytical tools and implementing rate increases for those lines in all of the states in which we conduct business.”

Mr. Burke continued, “In spite of the challenges we faced in our automobile lines and the impact of unusually severe weather events, we achieved net income for the full year of 2017 of $11.9 million, excluding the $4.8 million income tax expense impact of the December tax law change. Excellent workers’ compensation results during the year helped to offset the underperformance in our commercial automobile line of business.”

Mr. Burke concluded, “In the coming quarters, the actions we have taken to increase premium rates will begin to add to our revenues, and we will continue to file for rate increases and manage our diversified product lines to achieve solid underwriting performance.”

Jeffrey D. Miller, Executive Vice President and Chief Financial Officer, added, “Our workers’ compensation statutory combined ratio1 was 80.7% for fourth quarter of 2017, compared to 79.6% for the fourth quarter of 2016.  Large losses in our workers’ compensation line of business, which we define as individual losses in excess of $50,000, increased $5.5 million compared to the fourth quarter of 2016. That increase in loss severity was related to a handful of unusual claims and was partially offset by $4.0 million of favorable loss reserve development that resulted from bulk reserve releases and favorable settlements of claims incurred in prior years.”

Mr. Miller concluded, “At December 31, 2017, our book value per share was $15.95, compared to $16.21 at December 31, 2016. The bulk of the decrease relates to the additional income tax expense related to the December 2017 tax law change, which reduced our book value per share by 17 cents. We expect to recoup that impact quickly through reduced income tax expense beginning in 2018.”

Insurance Operations
Donegal Group is an insurance holding company whose insurance subsidiaries offer personal and commercial property and casualty lines of insurance in four Mid-Atlantic states (Delaware, Maryland, New York and Pennsylvania), three New England states (Maine, New Hampshire and Vermont), seven Southern states (Alabama, Georgia, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and eight Midwestern states (Illinois, Indiana, Iowa, Michigan, Nebraska, Ohio, South Dakota and Wisconsin). Donegal Mutual Insurance Company and the insurance subsidiaries of Donegal Group conduct business together as the Donegal Insurance Group.

  Three Months Ended December 31, Year Ended December 31,
   2017  2016 % Change  2017  2016 % Change
                   
  (dollars in thousands)
             
 Net Premiums Earned           
 Personal lines$99,106 $92,308 7.4% $384,124 $361,131 6.4%
 Commercial lines 81,954  76,669 6.9   318,391  295,074 7.9 
 Total net premiums earned$181,060 $168,977 7.2% $702,515 $656,205 7.1%
             
 Net Premiums Written           
 Personal lines:           
 Automobile$61,435 $55,875 10.0% $255,297 $229,789 11.1%
 Homeowners 29,904  29,422 1.6   125,054  122,811 1.8 
 Other 4,765  4,690 1.6   19,672  19,057 3.2 
 Total personal lines 96,104  89,987 6.8   400,023  371,657 7.6 
 Commercial lines:           
 Automobile 23,430  20,625 13.6   99,333  87,849 13.1 
 Workers' compensation 23,891  24,848 (3.9)  109,884  108,349 1.4 
 Commercial multi-peril 25,961  24,225 7.2   110,313  104,728 5.3 
 Other 2,002  2,091 (4.3)  9,586  9,451 1.4 
 Total commercial lines 75,284  71,789 4.9   329,116  310,377 6.0 
 Total net premiums written$171,388 $161,776 5.9% $729,139 $682,034 6.9%
             

The 5.9% increase in the Company’s net premiums written for the fourth quarter of 2017 compared to the fourth quarter of 2016, as shown in the table above, represents the combination of 4.9% growth in commercial lines net premiums written and 6.8% growth in personal lines net premiums written. The $9.6 million growth in net premiums written for the fourth quarter of 2017 compared to the fourth quarter of 2016 included:

  • $3.5 million in commercial lines premiums that the Company attributes primarily to new commercial accounts the Company’s insurance subsidiaries have written throughout their operating regions and a continuation of modest renewal premium increases.
  • $6.1 million in personal lines premiums that the Company attributes to a combination of new policy growth and premium rate increases the Company has implemented over the past four quarters.

For the full year of 2017, the Company's net premiums written increased 6.9% compared to the full year of 2016.

The Company evaluates the performance of its commercial lines and personal lines segments primarily based upon the underwriting results of its insurance subsidiaries as determined under statutory accounting practices. The following table presents comparative details with respect to the Company’s GAAP and statutory combined ratios for the three months and full years ended December 31, 2017 and 2016:

  Three Months Ended Year Ended
  December 31, December 31,
  2017 2016 2017 2016
         
 GAAP Combined Ratios (Total Lines)       
 Loss ratio (non-weather)69.0% 62.8% 61.1% 58.8%
 Loss ratio (weather-related)3.0  4.3  8.3  5.7 
 Expense ratio31.9  32.4  32.9  33.0 
 Dividend ratio0.9  1.0  0.7  0.6 
 Combined ratio104.8% 100.5% 103.0% 98.1%
         
 Statutory Combined Ratios       
 Personal lines:       
 Automobile119.2% 118.5% 109.3% 106.7%
 Homeowners94.2  91.0  109.9  95.5 
 Other79.4  84.1  90.8  86.3 
 Total personal lines109.3  107.5  108.5  101.8 
 Commercial lines:       
 Automobile127.7  122.9  115.0  110.8 
 Workers' compensation80.7  79.6  79.0  83.8 
 Commercial multi-peril96.9  85.3  96.7  87.7 
 Total commercial lines98.8  91.9  93.6  90.7 
 Total lines104.6% 100.4% 101.7% 96.8%
         

Donegal Group’s combined ratio was 104.8% for the fourth quarter of 2017, compared to 100.5% for the fourth quarter of 2016. The increase related primarily to increases in loss severity in the Company’s casualty lines of business.

For the fourth quarter of 2017, the Company’s loss ratio increased to 72.0%, compared to 67.1% for the fourth quarter of 2016. Weather-related losses totaled approximately $5.4 million, or 3.0 percentage points of the Company’s loss ratio, decreasing from the $7.4 million of weather-related losses, or 4.3 percentage points of the Company’s loss ratio, for the fourth quarter of 2016. Weather-related losses for the fourth quarter of 2017 were in line with the previous five-year average for fourth quarter weather-related losses of $5.0 million.

Large fire losses, which the Company defines as individual fire losses in excess of $50,000, were $7.7 million for the fourth quarter of 2017, compared to $7.4 million for the fourth quarter of 2016. Large fire losses represented 4.3 percentage points of the Company’s loss ratio for the fourth quarter of 2017, compared to 4.4 percentage points of the Company’s loss ratio for the fourth quarter of 2016.

Unfavorable net development of reserves for losses incurred in prior accident years did not have a material impact on the Company's loss ratios for the fourth quarters and full years of 2017 and 2016. Favorable development of workers’ compensation loss reserves partially offset unfavorable development of commercial multi-peril, personal automobile and commercial automobile loss reserves.

The Company’s expense ratio was 31.9% for the fourth quarter of 2017, compared to 32.4% for the fourth quarter of 2016. The decrease in the Company's expense ratio reflected lower underwriting-based incentive costs for the fourth quarter of 2017 compared to the fourth quarter of 2016. The Company’s expense ratio was 32.9% for the full year of 2017, in line with the 33.0% expense ratio for the full year of 2016.

Investment Operations
Donegal Group’s investment strategy is to generate an appropriate amount of after-tax income on its invested assets while minimizing credit risk through investment in high-quality securities. As a result, the Company had invested 90.0% of its consolidated investment portfolio in diversified, highly rated and marketable fixed-maturity securities at December 31, 2017.

  December 31, 2017 December 31, 2016
  Amount % Amount %
               
  (dollars in thousands)
 Fixed maturities, at carrying value:       
 U.S. Treasury securities and obligations of U.S.       
 government corporations and agencies$115,786  11.5% $99,970  10.6%
 Obligations of states and political subdivisions 269,698  26.8   308,876  32.7 
 Corporate securities 213,764  21.2   179,011  18.9 
 Mortgage-backed securities 306,353  30.5   263,319  27.8 
 Total fixed maturities 905,601  90.0   851,176  90.0 
 Equity securities, at fair value 50,445  5.0   47,088  5.0 
 Investments in affiliates 38,774  3.9   37,885  4.0 
 Short-term investments, at cost 11,050  1.1   9,371  1.0 
 Total investments$1,005,870  100.0% $945,520  100.0%
         
 Average investment yield 2.4%    2.5%  
 Average tax-equivalent investment yield 2.9%    3.0%  
 Average fixed-maturity duration (years) 5.2     4.5   
         

Net investment income of $6.1 million for the fourth quarter of 2017 was comparable to $6.2 million in net investment income for the fourth quarter of 2016. The change in net investment income reflected primarily an increase in average invested assets relative to the prior-year fourth quarter, offset by an increase in expenses the Company allocated to the investment function.

Net realized investment gains were $1.5 million for the fourth quarter of 2017, compared to $321,042 for the fourth quarter of 2016.

Definitions of Non-GAAP and Operating Measures
The Company prepares its consolidated financial statements on the basis of GAAP. The Company’s insurance subsidiaries also prepare financial statements based on statutory accounting principles state insurance regulators prescribe or permit (“SAP”). In addition to using GAAP-based performance measurements, the Company also utilizes certain non-GAAP financial measures that it believes provide value in managing its business and for comparison to the financial results of its peers. These non-GAAP measures are net premiums written, operating income and statutory combined ratio.

Net premiums written and operating income are non-GAAP financial measures investors in insurance companies commonly use. The Company defines net premiums written as the amount of full-term premiums the Company records for policies effective within a given period less premiums the Company cedes to reinsurers. The Company defines operating income as net income excluding after-tax net realized investment gains or losses. The Company also excluded from its calculation of non-GAAP operating income for the fourth quarter and year ended December 31, 2017 the deferred income tax expense that resulted from the December 2017 enactment of the TCJA. Because the Company’s calculation of operating income may differ from similar measures other companies use, investors should exercise caution when comparing the Company’s measure of operating income to the measure of other companies.

The following table provides a reconciliation of the Company's net premiums earned to the Company's net premiums written for the periods indicated:

  Three Months Ended December 31, Year Ended December 31,
  2017 2016 % Change 2017 2016 % Change
                     
  (dollars in thousands)
             
 Reconciliation of Net Premiums           
 Earned to Net Premiums Written           
 Net premiums earned$181,060  $168,977  7.2% $702,515 $656,205 7.1%
 Change in net unearned premiums (9,672)  (7,201) 34.3%  26,624  25,829 3.1%
 Net premiums written$171,388  $161,776  5.9% $729,139 $682,034 6.9%
             

The following table provides a reconciliation of the Company's net (loss) income to the Company's operating income for the periods indicated:

  Three Months Ended December 31, Year Ended December 31,
  2017 2016 % Change 2017 2016 % Change
                       
  (dollars in thousands, except per share amounts)
             
 Reconciliation of Net (Loss) Income           
 to Operating Income           
 Net (loss) income$(2,779) $5,554  NM  $7,116  $30,801  -76.9%
 Realized gains (after tax) (988)  (209) 372.7%  (3,766)  (1,641) 129.5%
 Effect of the TCJA at enactment 4,753   -  NM   4,753   -  NM 
 Operating income$986  $5,345  -81.6% $8,103  $29,160  -72.2%
             
 Per Share Reconciliation of Net           
 (Loss) Income to Operating Income           
 Net (loss) income – Class A (diluted)$(0.10) $0.21  NM  $0.26  $1.16  -77.6%
 Realized gains (after tax) (0.03)  (0.01) 200.0%  (0.13)  (0.06) 116.7%
 Effect of the TCJA at enactment 0.17   -  NM   0.17   -  NM 
 Operating income – Class A$0.04  $0.20  -80.0% $0.30  $1.10  -72.7%
             
 Net (loss) income – Class B$(0.10) $0.18  NM  $0.22  $1.06  -79.2%
 Realized gains (after tax) (0.03)  -  NM   (0.12)  (0.06) 100.0%
 Effect of the TCJA at enactment 0.16   -  NM   0.16   -  NM 
 Operating income – Class B$0.03  $0.18  -83.3% $0.26  $1.00  -74.0%
             

The statutory combined ratio is a standard non-GAAP measurement of underwriting profitability that is based upon amounts determined under SAP. The statutory combined ratio is the sum of:

  • the statutory loss ratio, which is the ratio of calendar-year incurred losses and loss expenses to premiums earned;
  • the statutory expense ratio, which is the ratio of expenses incurred for net commissions, premium taxes and underwriting expenses to premiums written; and
  • the statutory dividend ratio, which is the ratio of dividends to holders of workers’ compensation policies to premiums earned.

The statutory combined ratio does not reflect investment income, federal income taxes or other non-operating income or expense. A statutory combined ratio of less than 100% generally indicates underwriting profitability.

Conference Call and Webcast

The Company will hold a conference call and webcast on Friday, February 23, 2018, beginning at 11:00 A.M. Eastern Time. You may listen via the Internet by accessing the webcast link on the Company’s website at http://investors.donegalgroup.com. A replay of the conference call will also be available via the Company’s website.

About the Company

Donegal Group is an insurance holding company. The Company’s Class A common stock and Class B common stock trade on the NASDAQ Global Select Market under the symbols DGICA and DGICB, respectively. As an effective acquirer of small to medium-sized “main street” property and casualty insurers, Donegal Group has grown profitably over the last three decades. The Company continues to seek opportunities for growth while striving to achieve its longstanding goal of outperforming the property and casualty insurance industry in terms of service, profitability and book value growth.

The Company owns 48.2% of the outstanding stock of Donegal Financial Services Corporation (“DFSC”). DFSC owns all of the outstanding stock of Union Community Bank (“UCB”). The Company accounts for its investment in DFSC using the equity method of accounting. Donegal Mutual Insurance Company owns the remaining 51.8% of the outstanding stock of DFSC.

Safe Harbor

We base all statements contained in this release that are not historic facts on our current expectations. These statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and involve a number of risks and uncertainties. Actual results could vary materially. Factors that could cause actual results to vary materially include: adverse and catastrophic weather events, our ability to maintain profitable operations, the adequacy of the loss and loss expense reserves of our insurance subsidiaries, business and economic conditions in the areas in which our insurance subsidiaries operate, interest rates, competition from various insurance and other financial businesses, terrorism, the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements, our ability to integrate and manage successfully the insurance companies we may acquire from time to time and other risks we describe in the periodic reports we file with the Securities and Exchange Commission. You should not place undue reliance on any such forward-looking statements. We disclaim any obligation to update such statements or to announce publicly the results of any revisions that we may make to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

For Further Information:
Jeffrey D. Miller, Executive Vice President & Chief Financial Officer
Phone: (717) 426-1931
E-mail: investors@donegalgroup.com

Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
      
   Quarter Ended December 31,
   2017 2016
      
Net premiums earned$181,060  $168,977 
Investment income, net of expenses 6,142   6,161 
Net realized investment gains 1,498   321 
Lease income 117   156 
Installment payment fees 1,344   1,193 
Equity in earnings of DFSC 598   388 
 Total revenues 190,759   177,196 
      
Net losses and loss expenses 130,442   113,369 
Amortization of deferred acquisition costs 29,674   27,842 
Other underwriting expenses 28,000   26,902 
Policyholder dividends 1,592   1,644 
Interest  381   371 
Other expenses 396   233 
 Total expenses 190,485   170,361 
      
Income before income tax expense 274   6,835 
Income tax expense 3,053   1,281 
      
Net (loss) income$(2,779) $5,554 
      
Net (loss) income per common share:   
 Class A - basic and diluted$(0.10) $0.21 
 Class B - basic and diluted$(0.10) $0.18 
      
Supplementary Financial Analysts' Data   
      
Weighted-average number of shares   
 outstanding:   
 Class A - basic 22,183,787   21,294,986 
 Class A - diluted 23,224,404   22,065,480 
 Class B - basic and diluted 5,576,775   5,576,775 
      
Net premiums written$171,388  $161,776 
      
Book value per common share   
 at end of period$15.95  $16.21 
      
Annualized return on average equity -2.5%  5.0%
      


Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
      
   Year Ended December 31,
   2017 2016
      
Net premiums earned$702,515  $656,205 
Investment income, net of expenses 23,527   22,633 
Net realized investment gains 5,705   2,525 
Lease income 501   671 
Installment payment fees 5,157   5,303 
Equity in earnings of DFSC 1,622   1,086 
 Total revenues 739,027   688,423 
      
Net losses and loss expenses 487,268   423,316 
Amortization of deferred acquisition costs 115,065   107,876 
Other underwriting expenses 116,538   108,459 
Policyholder dividends 5,015   4,373 
Interest  1,594   1,658 
Other expenses 1,433   1,413 
 Total expenses 726,913   647,095 
      
Income before income tax expense 12,114   41,328 
Income tax expense 4,998   10,527 
      
Net income$7,116  $30,801 
      
Net income per common share:   
 Class A - basic$0.27  $1.19 
 Class A - diluted$0.26  $1.16 
 Class B - basic and diluted$0.22  $1.06 
      
Supplementary Financial Analysts' Data   
      
Weighted-average number of shares   
 outstanding:   
 Class A - basic 21,798,948   20,917,429 
 Class A - diluted 22,642,442   21,530,142 
 Class B - basic and diluted 5,576,775   5,576,775 
      
Net premiums written$729,139  $682,034 
      
Book value per common share   
 at end of period$15.95  $16.21 
      
Annualized return on average equity 1.6%  7.3%
      

 

Consolidated Balance Sheets
(in thousands)
      
   December 31, December 31,
    2017   2016 
   (unaudited)  
      
ASSETS
Investments:   
 Fixed maturities:   
  Held to maturity, at amortized cost$366,655  $336,101 
  Available for sale, at fair value 538,946   515,075 
 Equity securities, at fair value 50,445   47,088 
 Investments in affiliates 38,774   37,885 
 Short-term investments, at cost 11,050   9,371 
  Total investments 1,005,870   945,520 
Cash  37,833   24,587 
Premiums receivable 160,406   159,390 
Reinsurance receivable 298,343   263,028 
Deferred policy acquisition costs 60,290   56,309 
Prepaid reinsurance premiums 135,033   124,256 
Other assets 40,145   50,041 
  Total assets$1,737,920  $1,623,131 
      
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:    
 Losses and loss expenses$676,672  $606,665 
 Unearned premiums 503,457   466,055 
 Accrued expenses 28,034   28,247 
 Borrowings under lines of credit 59,000   69,000 
 Subordinated debentures 5,000   5,000 
 Other liabilities 17,061   9,549 
  Total liabilities 1,289,224   1,184,516 
Stockholders' equity:   
 Class A common stock 256   245 
 Class B common stock 56   56 
 Additional paid-in capital 255,401   236,852 
 Accumulated other comprehensive loss (2,684)  (2,254)
 Retained earnings 236,893   244,942 
 Treasury stock (41,226)  (41,226)
  Total stockholders' equity 448,696   438,615 
  Total liabilities and stockholders' equity$1,737,920  $1,623,131