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Section 1: 8-K (FORM 8-K)

 

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 30, 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 October 30, 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 October 30, 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: October 30, 2018By: /s/ Jeffrey D. Miller        
  Jeffrey D. Miller
  Executive Vice President & Chief Financial Officer
  


EXHIBIT INDEX

 

Exhibit Number Description
  
99.1 Press Release dated October 30, 2018

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Section 2: EX-99.1 (PRESS RELEASE)

EdgarFiling

EXHIBIT 99.1

Donegal Group Inc. Announces Third Quarter and First Nine Months of 2018 Results

MARIETTA, Pa., Oct. 30, 2018 (GLOBE NEWSWIRE) -- Donegal Group Inc. (NASDAQ:DGICA) and (NASDAQ:DGICB) today reported its financial results for the third quarter and first nine months of 2018. The Company will hold a live conference call on Wednesday, October 31, 2018 at 11:00AM Eastern Time to discuss these results. You may listen to the webcast of this conference call by accessing the event link at http://investors.donegalgroup.com.

Significant items included:

            
 Three Months Ended September 30, Nine Months Ended September 30,
  2018   2017 % Change  2018   2017 % Change
  
 (dollars in thousands, except per share amounts)
            
Income Statement Data           
Net premiums earned$187,662  $177,284 5.9% $555,140  $521,455 6.5%
Investment income, net 6,620   5,980 10.7   19,341   17,385 11.3 
Net realized investment gains 3,464   561 517.5   4,062   4,208 (3.5)
Total revenues 199,904   185,716 7.6   585,022   548,268 6.7 
Net income (loss) 1,206   7,109 (83.0)  (17,762)  9,895 NM2
Non-GAAP operating (loss) income1 (917)  6,744 NM  (19,025)  7,160 NM
            
Per Share Data           
Net income (loss) – Class A (diluted)$0.04  $0.26 (84.6%) $(0.64) $0.36 NM  %
Net income (loss) – Class B 0.04   0.24 (83.3)  (0.59)  0.33 NM
Non-GAAP operating (loss) income – Class A (diluted) (0.03)  0.25 NM  (0.68)  0.26 NM
Non-GAAP operating (loss) income – Class B (0.03)  0.23 NM  (0.63)  0.24 NM
Book value 14.68   16.39 (10.4)  14.68   16.39 (10.4)
            
            

1The “Definitions of Non-GAAP Financial Measures” section of this release defines and reconciles data that the Company prepares on an accounting basis other than U.S. generally accepted accounting principles (“GAAP”).

2Not meaningful.

Management Commentary

Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., noted, “In the third quarter of 2018,  Donegal Group continued to make considerable progress on key initiatives to improve our underwriting performance and operating efficiency, and we achieved strong gains in investment income. We are pleased to report higher net premiums earned and a continuation of net premiums written growth in our commercial lines of business. We continue to leverage our relationships with larger commercially focused independent insurance agencies, where we see our greatest opportunities for profitable growth.”

Mr. Burke continued, “Donegal Group remains committed to maintaining and expanding our personal lines of business in markets where we have sufficient scale and spread of risk to achieve profitability. After a thorough analysis of our experience and future prospects, we decided to enter into an agreement to transfer our personal lines book of business in seven states. Our personal lines writings in these states represent a modest percentage of our overall premiums, but our claims experience in these states has contributed a disproportionately large percentage of our personal lines underwriting losses in recent years. We expect this transfer will expedite improvement of our personal lines underwriting performance in future periods, as we begin to non-renew our personal lines policies in these seven states beginning in February 2019.”

 Jeffrey D. Miller, Executive Vice President and Chief Financial Officer, commented, “Our workers’ compensation line of business continued to perform well during the third quarter of 2018, as the statutory combined ratio1 of 83.6% in this line of business indicates. We are also pleased that our commercial lines segment of business generated an underwriting profit, achieving a 97.5% statutory combined ratio for the third quarter of 2018.”

Mr. Miller continued, “Weather-related losses of approximately $21.2 million impacted our underwriting performance for the third quarter of 2018, compared to the $18.2 million of weather-related losses for the third quarter of 2017. Weather-related losses for the third quarter of 2018 were also considerably higher than our previous five-year average for third quarter weather-related losses of $13.0 million and were largely the result of a series of wind, hail and heavy rain events across the Company’s operating regions during the third quarter of 2018. None of the losses from weather events exceeded the Company’s $5.0 million third-party catastrophe reinsurance retention.”

Management Conclusion and Outlook

Mr. Burke concluded, “Our focus on optimizing our business mix within our commercial and personal lines segments is gaining traction. We expect that, for the remainder of 2018, net premiums written will continue to shift toward favorable commercial growth opportunities. We are in the process of extensively re-underwriting commercial automobile policy renewals in several underperforming states, and we have implemented commercial automobile rate increases in all of our markets. Our previously announced disposition of Donegal Financial Services Corporation (owner of Union Community Bank) is proceeding as planned, with an expected closing in the first quarter of 2019. We will utilize the proceeds from this transaction to support our strategic goals as we focus on our core property and casualty insurance business.”

Insurance Operations

Donegal Group is an insurance holding company whose insurance subsidiaries offer 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 September 30, Nine Months Ended September 30,
  2018  2017 % Change  2018  2017 % Change
  
 (dollars in thousands)
            
Net Premiums Earned           
Personal lines$103,410 $96,560 7.1% $304,111 $285,018 6.7%
Commercial lines 84,252  80,724 4.4   251,029  236,437 6.2 
Total net premiums earned$187,662 $177,284 5.9% $555,140 $521,455 6.5%
            
Net Premiums Written           
Personal lines:           
Automobile$62,502 $66,871 (6.5%) $193,919 $193,862 0.0%
Homeowners 34,562  34,248 0.9   96,149  95,150 1.0 
Other 5,678  4,801 18.3   15,599  14,907 4.6 
Total personal lines 102,742  105,920 (3.0)  305,667  303,919 0.6 
Commercial lines:           
Automobile 25,242  23,179 8.9   83,345  75,903 9.8 
Workers' compensation 25,039  24,760 1.1   84,735  85,993 (1.5)
Commercial multi-peril 28,049  26,355 6.4   89,944  84,352 6.6 
Other 3,446  2,264 52.2   12,032  7,584 58.6 
Total commercial lines 81,776  76,558 6.8   270,056  253,832 6.4 
Total net premiums written$184,518 $182,478 1.1% $575,723 $557,751 3.2%
            
            

Net Premiums Written

The 1.1% increase in the Company’s net premiums written for the third quarter of 2018 compared to the third quarter of 2017, as shown in the table above, represents the combination of 6.8% growth in commercial lines net premiums written and a 3.0% decrease in personal lines net premiums written. The $2.0 million growth in net premiums written for the third quarter of 2018 compared to the third quarter of 2017 included:

Underwriting Performance

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 and nine months ended September 30, 2018 and 2017:

        
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2018  2017  2018  2017 
        
GAAP Combined Ratios (Total Lines)       
Loss ratio (non-weather)63.7% 54.2% 68.5% 58.2%
Loss ratio (weather-related)11.3  10.3  9.5  10.2 
Expense ratio29.6  34.3  31.3  33.3 
Dividend ratio0.6  0.8  0.6  0.7 
Combined ratio105.2% 99.6% 109.9% 102.4%
        
Statutory Combined Ratios       
Personal lines:       
Automobile115.8% 103.8% 114.5% 105.8%
Homeowners110.3  117.0  112.0  115.2 
Other74.3  94.2  94.2  94.7 
Total personal lines111.4  107.5  112.6  108.2 
Commercial lines:       
Automobile114.6  116.6  133.7  110.5 
Workers' compensation83.6  67.6  86.6  78.5 
Commercial multi-peril96.0  86.7  101.2  96.6 
Other88.8  8.2  48.7  5.7 
Total commercial lines97.5  86.9  104.8  91.8 
Total lines105.2% 98.2% 109.0% 100.8%
        
        

Loss Ratio

The loss ratio for the third quarter of 2018 was 75.0%, compared to 64.5% for the third quarter of 2017. Weather-related losses contributed 11.3 percentage points to the Company’s loss ratio for the third quarter of 2018, compared to 10.3 percentage points of the Company’s loss ratio for the third quarter of 2017. Workers’ compensation losses in excess of $50,000 were $7.2 million for the third quarter of 2018, or 3.8 percentage points of the Company’s loss ratio, compared to $4.7 million for the third quarter of 2017, or 2.7 percentage points of the Company’s loss ratio.

Large fire losses, which the Company defines as individual fire losses in excess of $50,000, were $4.7 million for the third quarter of 2018, or 2.5 percentage points of the Company’s loss ratio. That amount was favorable compared to the large fire losses of $7.9 million for the third quarter of 2017, or 4.4 percentage points of the Company’s loss ratio. Both homeowners and commercial fire losses decreased in the third quarter of 2018.

Development of reserves for losses incurred in prior accident years added 1.4 percentage points to the Company’s loss ratio for the third quarter of 2018, compared to favorable development that reduced the Company’s loss ratio for the third quarter of 2017 by 1.9 percentage points. Primarily as a result of reserve strengthening actions in the first quarter of 2018, development of reserves for losses incurred in prior accident years added 5.2 percentage points to the Company’s loss ratio for the first nine months of 2018. Net development of reserves for losses incurred in prior accident years did not have a material impact on the Company's loss ratio for the nine months ended September 30, 2017.

The Company’s expense ratio was 29.6% for the third quarter of 2018, compared to 34.3% for the third quarter of 2017. The Company attributes this decrease to a reduction in underwriting-based incentive costs for the third quarter of 2018 compared to the prior-year quarter, as well as savings associated with the consolidation of certain operations of The Peninsula Insurance Company in July 2018. The Company has entered into a definitive purchase arrangement for the sale of Peninsula’s branch office real estate, and expects to receive net proceeds of $1.2 million during the fourth quarter of 2018. The Company recorded an impairment charge of $1.0 million in the third quarter of 2018 related to this real estate transaction.

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 September 30, 2018.

        
 September 30, 2018 December 31, 2017
 Amount % Amount %
  
 (dollars in thousands)
Fixed maturities, at carrying value:       
U.S. Treasury securities and obligations of U.S.       
government corporations and agencies$118,607  11.5% $115,786  11.5%
Obligations of states and political subdivisions 238,729  23.2   269,698  26.8 
Corporate securities 258,660  25.2   213,764  21.2 
Mortgage-backed securities 309,264  30.1   306,353  30.5 
Total fixed maturities 925,260  90.0   905,601  90.0 
Equity securities, at fair value 57,973  5.6   50,445  5.0 
Investments in affiliates 39,961  3.9   38,774  3.9 
Short-term investments, at cost 5,096  0.5   11,050  1.1 
Total investments$1,028,290  100.0% $1,005,870  100.0%
        
Average investment yield 2.5%    2.4%  
Average tax-equivalent investment yield 2.7%    2.9%  
Average fixed-maturity duration (years) 5.4     5.2   
        
        

Net investment income of $6.6 million for the third quarter of 2018 increased 10.7% compared to $6.0 million in net investment income for the third quarter of 2017. The increase in net investment income primarily reflected an increase in average invested assets compared to the prior-year third quarter.

Net realized investment gains were $3.5 million for the third quarter of 2018, compared to $561,000 for the third quarter of 2017. The Company attributes the increase in net realized investment gains to an increase in the market value of the equity securities it held at September 30, 2018.

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 (“DMIC”) owns the remaining 51.8% of the outstanding stock of DFSC. On June 12, 2018, the Company and DMIC reported that the Company and DMIC had entered into an agreement whereby DFSC will merge with and into Northwest Bancshares, Inc. (“Northwest”). Immediately prior to the closing of the transaction, DFSC will pay a dividend of approximately $30.0 million to the Company and DMIC. As the owner of 48.2% of DFSC’s common stock, the Company will receive a dividend payment from DFSC of approximately $14.5 million and consideration from Northwest that will range in value from $38.9 million to $43.0 million. The Company currently anticipates that it will realize an after-tax gain, net of transaction-related expenses, within a range of $9.5 million and $13.0 million, or approximately $.32 to $.47 per Class A common share, upon closing of the transaction expected in the first quarter of 2019.

Definitions of Non-GAAP Financial 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 or loss and statutory combined ratio.

Net premiums written and operating income or loss are non-GAAP financial measures commonly used by investors in insurance companies. 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 or loss as net income or loss excluding after-tax net realized investment gains or losses and after-tax restructuring charges. Because the Company’s calculation of operating income or loss may differ from similar measures other companies use, investors should exercise caution when comparing the Company’s measure of operating income or loss to the measure other companies use.

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 September 30, Nine Months Ended September 30,
  2018   2017 % Change  2018  2017 % Change
  
 (dollars in thousands)
            
Reconciliation of Net Premiums           
Earned to Net Premiums Written           
Net premiums earned$187,662  $177,284 5.9% $555,140 $521,455 6.5%
Change in net unearned premiums (3,144)  5,194 NM  20,583  36,296 (43.3)
Net premiums written$184,518  $182,478 1.1% $575,723 $557,751 3.2%
            
            

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

            
 Three Months Ended September 30, Nine Months Ended September 30,
  2018   2017  % Change  2018   2017  % Change
  
 (dollars in thousands, except per share amounts)
            
Reconciliation of Net Income (Loss)           
to Non-GAAP  Operating (Loss) Income           
Net income (loss)$1,206  $7,109  (83.0%) $(17,762) $9,895  NM
Realized gains (after tax) (2,286)  (365) 526.3   (2,681)  (2,735) (2.0%)
Restructuring charge (after tax) -   -  -   1,255   -  100.0 
Other, net 163   -  100.0   163   -  100.0 
Non-GAAP operating (loss) income$(917) $6,744  NM $(19,025) $7,160  NM
            
Per Share Reconciliation of Net Income           
(Loss) to Non-GAAP Operating (Loss) Income            
Net income (loss) – Class A (diluted)$0.04  $0.26  (84.6%) $(0.64) $0.36  NM
Realized gains (after tax) (0.08)  (0.01) 700.0   (0.09)  (0.10) (10.0%)
Restructuring charge (after tax) -   -  -   0.04   -  100.0 
Other, net 0.01   -  NM  0.01   -  100.0 
Non-GAAP operating (loss) income – Class A$(0.03) $0.25  NM $(0.68) $0.26  NM
            
Net income (loss) – Class B$0.04  $0.24  (83.3%) $(0.59) $0.33  NM
Realized gains (after tax) (0.07)  (0.01) 600.0   (0.08)  (0.09) (11.1%)
Restructuring charge (after tax) -   -  -   0.04   -  100.0 
Non-GAAP operating (loss) income – Class B$(0.03) $0.23  NM $(0.63) $0.24  NM
            
            

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

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 Wednesday, October 31, 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. The Company seeks 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.

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.

 
Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
      
   Quarter Ended September 30,
    2018  2017
      
Net premiums earned$  187,662 $  177,284
Investment income, net of expenses   6,620    5,980
Net realized investment gains   3,464    561
Lease income   120    113
Installment payment fees   1,305    1,374
Equity in earnings of DFSC   733    404
 Total revenues   199,904    185,716
      
Net losses and loss expenses   140,726    114,386
Amortization of deferred acquisition costs   31,110    29,008
Other underwriting expenses   24,529    31,790
Policyholder dividends   1,050    1,376
Interest    652    466
Other expenses, net   560    178
 Total expenses   198,627    177,204
      
Income before income tax expense   1,277    8,512
Income tax expense   71    1,403
      
Net income$  1,206 $  7,109
      
Net income per common share:   
 Class A - basic$  0.04 $  0.27
 Class A - diluted$  0.04 $  0.26
 Class B - basic and diluted$  0.04 $  0.24
      
Supplementary Financial Analysts' Data   
      
Weighted-average number of shares   
 outstanding:   
 Class A - basic   22,717,333    21,755,862
 Class A - diluted   22,894,773    22,217,011
 Class B - basic and diluted   5,576,775    5,576,775
      
Net premiums written$  184,518 $  182,478
      
Book value per common share   
 at end of period$  14.68 $  16.39
      


Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
      
   Nine Months Ended September 30
    2018   2017
      
Net premiums earned$  555,140  $  521,455
Investment income, net of expenses   19,341     17,385
Net realized investment gains   4,062     4,208
Lease income   366     383
Installment payment fees   3,960     3,814
Equity in earnings of DFSC   2,153     1,023
 Total revenues   585,022     548,268
      
Net losses and loss expenses   433,063     356,826
Amortization of deferred acquisition costs   91,354     85,391
Other underwriting expenses   82,344     88,539
Policyholder dividends   3,566     3,423
Interest    1,682     1,213
Other expenses   1,604     1,035
 Total expenses   613,613     536,427
      
(Loss) income before income tax (benefit) expense   (28,591)    11,841
Income tax (benefit) expense   (10,829)    1,946
      
Net (loss) income$  (17,762) $  9,895
      
Net (loss) income per common share:   
 Class A - basic$  (0.64) $  0.37
 Class A - diluted$  (0.64) $  0.36
 Class B - basic and diluted$  (0.59) $  0.33
      
Supplementary Financial Analysts' Data   
      
Weighted-average number of shares   
 outstanding:   
 Class A - basic   22,673,287     21,669,259
 Class A - diluted   23,057,629     22,447,134
 Class B - basic and diluted   5,576,775     5,576,775
      
Net premiums written$  575,723  $  557,751
      
Book value per common share   
 at end of period$  14.68  $  16.39
      


Donegal Group Inc.
Consolidated Balance Sheets
(in thousands)
      
   September 30, December 31,
    2018   2017 
   (unaudited)  
      
ASSETS
Investments:   
 Fixed maturities:   
  Held to maturity, at amortized cost$  400,233  $  366,655 
  Available for sale, at fair value   525,027     538,946 
 Equity securities, at fair value   57,973     50,445 
 Investments in affiliates   39,961     38,774 
 Short-term investments, at cost   5,096     11,050 
    Total investments   1,028,290     1,005,870 
Cash    55,259     37,833 
Premiums receivable   160,319     160,406 
Reinsurance receivable   322,468     298,343 
Deferred policy acquisition costs   64,567     60,290 
Prepaid reinsurance premiums   141,537     135,033 
Other assets   51,807     40,145 
  Total assets$  1,824,247  $  1,737,920 
      
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:    
 Losses and loss expenses$  779,980  $  676,672 
 Unearned premiums   530,544     503,457 
 Accrued expenses   24,382     28,034 
 Borrowings under lines of credit   60,000     59,000 
 Subordinated debentures   5,000     5,000 
 Other liabilities   8,801     17,061 
  Total liabilities   1,408,707     1,289,224 
Stockholders' equity:   
 Class A common stock   257     256 
 Class B common stock   56     56 
 Additional paid-in capital   259,667     255,401 
 Accumulated other comprehensive loss   (18,944)    (2,684)
 Retained earnings   215,730     236,893 
 Treasury stock   (41,226)    (41,226)
  Total stockholders' equity   415,540     448,696 
  Total liabilities and stockholders' equity$  1,824,247  $  1,737,920 
      

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

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