Slide 1: Fourth Quarter 2022 Investor Presentation
Fourth Quarter 2022 Investor Presentation February 23, 2023 Kevin G. Burke President and Chief Executive Officer Jeffrey D. Miller Executive Vice President and Chief Financial Officer www.donegalgroup.com
Slide 2: Forward-Looking Statement
Forward-Looking Statement We base all statements contained in this presentation that are not historic facts on our current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties.
Slide 3: Company Overview
Company Overview Donegal Group Inc. is an insurance holding company whose insurance subsidiaries and affiliates offer commercial and personal lines of property and casualty insurance to businesses and individuals in 24 Mid-Atlantic, Midwestern, New England, Southern and Southwestern states through a
Slide 4: Strategies to Provide Value to Stakeholders
Strategies to Provide Value to Stakeholders Strategically modernizing Achieving sustained Capitalizing on Delivering a superior our operations and excellent financial opportunities to grow experience to our agents processes to transform our performance profitably and policyholders business Implement
Slide 5: Significant Benefits to Shareholders from Mutual Relationship
Significant Benefits to Shareholders from Mutual Relationship • Pooling agreement fosters an environment of continuity and maintains superior employee relations in which the business can grow. • Shared combined business plan to enhance market penetration and underwriting profitability. Rated A (Exce
Slide 6: Valuation vs. Multi-Line Insurers
Valuation vs. Multi-Line Insurers Price-to-Book Multiple 3.59 3.04 2.97 2.40 Peer Average 2.08x 2.30 2.15 2.21 1.92 1.92 1.49 1.29 0.96 0.98 0.77 DGICA: Price and Book Value as of 12/31/2022 Peer Data Source: FactSet; Price as of 12/31/2022 and Book Value as of 9/30/2022 www.donegalgroup.com 6
Slide 7: Mix of Commercial and Personal Lines
Mix of Commercial and Personal Lines Net Premiums Written by Line of Business Year Ended December 31, 2022 Commercial Lines Other Personal Commercial Auto 2.7% Commercial Multi-Peril 62% of NPW Commercial Auto 19.9% Workers’ Comp Homeowners Other Commercial 14.2% Workers' Comp 13.3% Personal Auto 21
Slide 8: Continued Emphasis on Growth in Commercial Lines
Continued Emphasis on Growth in Commercial Lines 100.0% 115,000 95.0% 91.0% 89.7% 90.0% 86.4% 86.6% 86.2% 86.8% 85.5% 85.5% 85.4% 85.4% 84.4% 106,686 105,549 85.0% 105,000 100,075 80.0% 99,210 99,325 97,878 96,316 75.0% 95,000 91,254 70.0% 89,971 87,051 65.0% 85,000 82,528 60.0% 55.0% 75,000 50.0% 2
Slide 9: Fourth Quarter 2022 – Overview
Fourth Quarter 2022 – Overview Solid Diversified Investment Underwriting Results Retention Portfolio Net Premiums Net Investment Investment Loss Ratio Expense Ratio Earned Income Yield $213.0M 69.9% 32.3% $9.4M 2.9% 6.5% (0.2 pts) (0.9 pts) 14.5% 31 bps vs. Q4’21 vs. Q4’21 vs. Q4’21 vs. Q4’21 vs. Q4
Slide 10: Financial Results – Fourth Quarter & Full Year 2022
Financial Results – Fourth Quarter & Full Year 2022 (dollars in thousands, except per share data) Q4’22 Q4’21 Change FY2022 FY2021 Change Net Premiums Written $200,413 $181,785 10.2% $843,530 $804,267 4.9% Net Premiums Earned $212,991 $200,040 6.5% $822,490 $776,015 6.0% Better/(Worse) Better/(Worse
Slide 11: Results by Line of Business
Results by Line of Business • Strong premium retention and solid overall renewal rate increases of +8.9%* in Q4’22; +7.2%* FY 2022 • Return to premium growth in all lines of business (excluding Workers’ Comp) as new business writings increase in personal lines from the rollout of a new suite of prod
Slide 12: Conservative Investment Strategy
Conservative Investment Strategy $1.3 Billion in Invested Assets As of December 31, 2022 • Investment portfolio emphasizes on high- quality fixed-income securities Corporate 30.2% • “Laddering” structure provides additional Treasury and Agency Mortgage Backed Securities (MBS) measure of liquidity 12
Slide 13: Investment Thesis
Investment Thesis • Well-established regional insurance group with a diverse book of business including both commercial and personal lines • Continuing the optimization of our mix of business with emphasis on commercial lines while strategically stabilizing personal lines to maintain a profitable bo
Slide 14: Contact Information
Contact Information Transfer Agent Investor Relations Contact Computershare Trust Company, N.A. Karin Daly P.O. Box 43006 Vice President, The Equity Group Providence, RI 02940 Phone: (212) 836-9623 Phone: 800-317-4445 kdaly@equityny.com www.computershare.com www.donegalgroup.com 14
Slide 15: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures We prepare our consolidated financial statements on the basis of GAAP. Our insurance subsidiaries also prepare financial statements based on statutory accounting principles state insurance regulators prescribe or permit (“SAP”). In addition to using GAAP-ba
Slide 16: Financial Supplement
Financial Supplement Reconciliation of net premiums earned to net premiums written: Three Months Ended December 31, Year Ended December 31, 2022 2021 % Change 2022 2021 % Change (dollars in thousands) Reconciliation of Net Premiums Earned to Net Premiums Written Net premiums earned $ 212,991 $ 200,0