Donegal Group (DGICA) Misses Q3 EPS by 11c

Donegal Group (NASDAQ: DGICA) reported Q3 EPS of $0.22, $0.11 worse than the analyst estimate of $0.33.

Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., noted, "The objective of Donegal Group's long-term strategic business plan is to outperform the property and casualty insurance industry over the long term in terms of service, profitability and book value growth. While our underwriting results for the third-quarter of 2015 fell short of the excellent results we achieved in the third quarter of 2014, we believe the year-over-year improvement in our financial results for the first nine months of 2015 clearly shows the meaningful progress we are making toward our objective. Our progress reflects growth initiatives that center on our regional business approach and conservative underwriting philosophy.

"We attribute approximately half of the growth in our net premiums written for the first nine months of 2015 to additional net writings from our Michigan Insurance Company subsidiary ('MICO') that resulted from our decision to eliminate MICO's external quota-share reinsurance agreement effective January 1, 2015. We generated the remainder of the growth organically, reflecting our expanding position as a well-capitalized insurance group serving the needs of the independent agency markets within our operating regions," Mr. Burke added.

"Our commercial lines operations remain an area of focus for Donegal Group, generating a 12.5% increase in net premiums written for the first nine months of 2015, including the increased MICO contribution, and a year-to-date statutory combined ratio of 93.2%. Our strong emphasis on agency relationships remains an important factor in our continuing ability to achieve modest commercial lines renewal premium increases as we maintain our focus on underwriting profitability. Our agents continue to bring us a steady flow of new commercial lines business submissions," Mr. Burke said.

Mr. Burke stated, "Weather-related losses in the third quarter of 2015 affected our personal lines segment more significantly than our commercial lines segment. In spite of the increased weather activity, the statutory combined ratio for our personal lines segment was 99.8% for the first nine months of 2015. We continue to believe our focus on quality underwriting, our expanding use of predictive modeling and other underwriting strategies, and our implementation of rate increases where appropriate will enable us to maintain profitability in this business segment."

Donald H. Nikolaus, Chairman, further remarked, "Our agents continue to express their support for Donegal Insurance Group and their appreciation of our commitment to quality insurance products, advanced technology tools and services tailored to fit their specific needs and those of their customers. As a result of their support, our premium growth rates have remained above industry averages over the most recent five- and 10-year periods."

Mr. Nikolaus added, "Our premium revenue growth in recent quarters has enabled the steady expansion of our invested assets. This expansion has resulted in incremental increases in our investment income. At September 30, 2015, our book value per share increased to $15.76, compared to $15.40 at December 31, 2014. The increase in book value per share reflected our positive earnings for the first nine months of 2015, offset partially by cash dividends we declared and slightly lower unrealized gains in our available-for-sale fixed maturities portfolio at September 30, 2015."

For earnings history and earnings-related data on Donegal Group (DGICA) click here.

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