Pennsylvania-based Donegal Group Inc. reported net income for the quarter ended March 31, 2004 of $11,732,306, or $.87 per share on a diluted basis, which includes an extraordinary gain of $5,445,670, or $.40 per share on a diluted basis, related to an acquisition.
Net income before the extraordinary gain was $6,286,636, or $.47 per share on a diluted basis, for the first quarter of 2004 compared to $3,844,432, or $.41 per share on a diluted basis, for the quarter ended March 31, 2003.
The company’s results continue to benefit from excellent underwriting
results, with the company posting a combined ratio of 92.7% for the first quarter of 2004 compared to a combined ratio of 97.2% for the comparable period in 2003.
The extraordinary gain of $5,445,670 resulted from GAAP purchase
accounting for unallocated negative goodwill from the Le Mars Insurance Company acquisition completed in early January. The acquisitions of Le Mars Insurance Company, The Peninsula Insurance Company and Peninsula Indemnity Company were effective Jan. 1, 2004.
The company’s fully diluted shares outstanding during the first quarter of 2004 increased to 13,508,530 compared to 9,330,855 in the first quarter of 2003, due primarily to the company’s successful follow on stock offering that was completed in November, 2003.
Revenues for the first quarter of 2004 were $68,001,661, an increase of
30.3% over a year earlier, with premiums earned for the first quarter of
$62,699,478, a 30.8% increase over the first quarter of 2003. Premiums earned in the first quarter, excluding premiums earned by the companies acquired in January, increased $3.3 million, or 7.0%, to $51,282,376. The lower interest rate environment continues to impact investment income, which increased 12.3% to $3,780,017 for the first quarter of 2004 compared to $3,364,518 for the first quarter of 2003. Service fees for the first quarter of 2004 were $833,897, an increase of 35.8% over the first quarter of 2003 total of
The company’s loss ratio for the first quarter of 2004 improved to 64.4% compared to 66.5% for the first quarter of 2003, benefiting from continued pricing improvements and from a relative absence of severe weather in the first quarter of 2004. The company’s expense ratio improved to 27.7% for the first quarter of 2004 compared to 30.2% for the first quarter of 2003. The company’s workers’ compensation policy dividend ratio increased slightly from 0.5% in the first quarter of 2003 to 0.6% in the first quarter of 2004.
“The profitable results of the newly acquired companies, coupled with a continuation of the excellent underwriting results by our core companies and a relatively normal weather period, has resulted in a combined ratio that is as low as the company has ever achieved,” stated Donald Nikolaus, president and CEO of Donegal Group Inc. “The rate increases taken over the past few years, coupled with our continued dedication to sound underwriting principles and our ongoing expense control, have all contributed to a winning formula,” stated Nikolaus.
Donegal Group Inc. is a property and casualty holding company
whose insurance subsidiaries offer personal and commercial lines of insurance to businesses and individuals in six Mid-Atlantic states (Connecticut, Delaware, Maryland, New Hampshire, New York and Pennsylvania), eight Southeastern states (Alabama, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and five Midwestern states (Iowa, Nebraska, Ohio, Oklahoma and South Dakota).
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