Donegal Group Inc. (DGICB) filed Quarterly Report for the period ended 2009-09-30.
Donegal Group Inc. is an insurance holding company which is headquartered in Pennsylvania and engages through its subsidiaries in the property and casualty insurance business in mid-Atlantic and southeastern states. DGI and its subsidiaries and the Mutual Company underwrite a broad line of personal and commercial coverages consisting of private passenger and commercial automobile homeowners commercial multi-peril workers' compensation and other lines of insurance. Donegal Group Inc. has a market cap of $504.6 million; its shares were traded at around $19.8 with a P/E ratio of 29.2 and P/S ratio of 1.4. The dividend yield of Donegal Group Inc. stocks is 2%. Donegal Group Inc. had an annual average earning growth of 11.5% over the past 5 years.
Highlight of Business Operations:
Net Premiums Written. Net premiums written for the three months ended September 30, 2009 were $93.6 million, an increase of $1.4 million, or 1.6%, from the $92.2 million of net premiums written for the comparable period in 2008. Personal lines net premiums written increased $3.7 million, or 5.9%, for the third quarter of 2009 compared to the comparable period in 2008, due to increased writings in our personal automobile and homeowners lines of business . Commercial lines net premiums written decreased $2.3 million, or 7.9%, for the third quarter of 2009 compared to the comparable period in 2008 primarily because of competitive conditions in this market during an uncertain economy.
Net Income and Earnings Per Share. Our net income for the third quarter of 2009 was $6.7 million, or $.27 per share of Class A common stock and $.24 per share of Class B common stock, compared to net income of $6.3 million, or $.25 per share of Class A common stock and $.23 per share of Class B common stock, reported for the third quarter of 2008. Our fully diluted Class A shares outstanding for the third quarter of 2009 decreased slightly to 19.9 million, compared to 20.0 million for the third quarter of 2008, as a result of our repurchase of treasury stock. We had 5.6 million Class B shares outstanding for both periods.
Net Premiums Written. Net premiums written for the nine months ended September 30, 2009 were $275.2 million, a decrease of $11.1 million, or 3.9%, over the comparable period in 2008. Net premiums written for the nine months of 2008 included a $13.6 million transfer of unearned premiums related to the change in the pooling agreement between Atlantic States and Donegal Mutual effective March 1, 2008. Commercial lines net premiums written decreased $14.6 million, or 14.4%, for the first nine months of 2009 compared to the comparable period in 2008 primarily because of competitive conditions in this market during an uncertain economy. Personal lines net premiums written increased $3.4 million, or 1.9%, for the first nine months of 2009 compared to the comparable period in 2008, due to increased writings in our personal automobile and homeowners lines of business.
Investment Income. For the nine months ended September 30, 2009, our net investment income decreased to $15.7 million, compared to $17.3 million for the comparable period one year ago. An increase in average invested assets from $615.0 million for the first nine months of 2008 to $647.7 million for the first nine months of 2009 was offset by a decrease in the annualized average rate of return on investments from 3.7% for the first nine months of 2008 to 3.2% for the first nine months of 2009. The decrease in our annualized average rate of return on investments was primarily due to increased holdings of lower-yielding tax-exempt municipal bonds and short-term U.S. Treasury securities during the first nine months of 2009.
Interest Expense. Interest expense for the first nine months of 2009 was $1.6 million, compared to $1.5 million for the first nine months of 2008. The higher interest expense for the 2009 period reflected approximately $974,000 related to interest and penalties on contested premium tax litigation, which was offset by a decrease in average interest rates on our subordinated debentures in the first nine months of 2009 compared to the comparable period in 2008 and the redemption of $15 million of subordinated debentures in August 2008.
Net Income and Earnings Per Share. Our net income for the first nine months of 2009 was $11.3 million, or $.45 per share of Class A common stock and $.41 per share of Class B common stock, compared to our net income of $19.1 million, or $.76 per share of Class A common stock on a diluted basis and $.69 per share of Class B common stock, for the first nine months of 2008. We had 20.0 million diluted Class A shares and 5.6 million Class B shares outstanding for both periods.
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