Donegal Group, Inc. · NASDAQ:DGICA
Donegal — Investor Presentation (September 2020)
23 slides from Donegal's investor presentation, Sep 9, 2020
Slide 1: There when it matters most
There when it matters most.™ NASDAQ: DGICA/DGICB September 2020 Exhibit 99.1
Slide 2: Safe Harbor
Safe Harbor The Company bases all statements made in this presentation that are not historic facts on its 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
Slide 3: Investment Thesis
Investment Thesis Well-established regional insurance group with a diverse book of business including both commercial and personal lines Shift in focus to commercial lines growth and actions to improve personal lines results contributed to recent margin improvement (94.7% combined ratio and 7% book
Slide 4: Company Overview
Company Overview NASDAQ: DGICA/DGICB Corporate Headquarters Marietta, Pennsylvania DGICA Share Description 23.5 million shares outstanding (Voting rights 0.1:1) DGICB Share Description 5.6 million shares outstanding (Voting rights 1:1) At 6/30/2020 At 12/31/2019 Cash and Investments $1.3 billion $1.
Slide 5: Recent Accomplishments
Recent Accomplishments Improved performance of all major lines of business over past 18 months Continuing growth in our commercial lines segment Commenced development of new personal lines products for deployment beginning in 2021 Increased overall loss reserve strength, with favorable net developme
Slide 6: Balanced Mix of Commercial and Personal Lines
Balanced Mix of Commercial and Personal Lines Net Written Premiums for First Six Months of 2020 by Line of Business Personal Auto Homeowners Other Personal Commercial Auto Comm Multi-Peril Workers’ Comp Other Commercial Personal lines = 41.5% of NWP Commercial lines = 58.5% of NWP Renewal Premium In
Slide 7: First Six Months of 2020 – Operating Results
First Six Months of 2020 – Operating Results Increase in Non-GAAP Operating Income* Substantial Improvement in Combined Ratio due to Emphasis on Commercial Lines and Lower Claim Frequency Growth in Book Value Non-GAAP operating income of $29.9 million, or $1.04 per diluted Class A share, for the fir
Slide 8: Growth in Commercial Lines
Growth in Commercial Lines 94.7% Commercial Lines Statutory Combined Ratio for the First Six Months of 2020 Expand core Donegal products across regions Growth focus on accounts with premiums in $10,000 to $150,000 range Expand appetite within classes and lines already written: Continued agency devel
Slide 9: Strong Capital Position ~ Shareholder Returns
Strong Capital Position ~ Shareholder Returns Rated A (Excellent) by A.M. Best Debt-to-cash/investments of approximately 15.6% Premium-to-surplus of approximately 1.6-to-1 Dividend yield of 4.1% for Class A shares Book Value Plus Cumulative Dividends
Slide 10: Donegal: Where We've Been and Where We're Going
Donegal: Where We’ve Been and Where We’re Going
Slide 11: Organic Growth and Opportunistic Affiliations
Organic Growth and Opportunistic Affiliations $363 $392 $454 $496 $533 $629 $579 $682 $729 USD in millions 6.8% CAGR in Net Premiums Written (5.4% organic) $753
Slide 12: Maintain Multi-Faceted Regional Growth Strategy
Maintain Multi-Faceted Regional Growth Strategy Net premiums written of $753 million for the full year 2019, across 20 states in four operating regions – an increase of 1.2% compared to 2018 Acquisition Criteria Serving attractive geography Favorable regulatory, legislative and judicial environments
Slide 13: Organic Growth Centered on Relationships with ~2,400 Independent Agencies
Organic Growth Centered on Relationships with ~2,400 Independent Agencies Ongoing Objectives Continuing Focus on Commercial Lines Growth Achieve top-three ranking within appointed agencies in lines of business we write Cultivate relationships with existing agencies to move writings to next premium t
Slide 14: Drive Increased Efficiency with Automation
Drive Increased Efficiency with Automation Current infrastructure can support premium growth Premiums per employee rising over time due to technology systems Legacy systems modernization project in flight Mutual affiliation provides opportunities for operational and expense synergies Expense ratio o
Slide 15: Enhance Underwriting Profitability / Improve Operating Margins
Enhance Underwriting Profitability / Improve Operating Margins Sustain pricing discipline and conservative underwriting Manage exposure to catastrophe/unusual weather events Link employee incentive compensation directly to underwriting performance Focus on rate adequacy and pricing segmentation Coor
Slide 16: Donegal Mutual Acquisition of Mountain States Insurance Group
Donegal Mutual Acquisition of Mountain States Insurance Group Entering the Southwest In May 2017, Donegal Mutual completed the merger of Mountain States Mutual Casualty Company with and into Donegal Mutual. Donegal Mutual and its two insurance subsidiaries conduct business as the Mountain States Ins
Slide 17: Conservative Investment Strategy
Conservative Investment Strategy 91.3% of portfolio invested in fixed maturities Effective duration = 4 years Tax equivalent yield = 2.6% Emphasis on quality Liquidity managed through laddering $1.2 Billion in Invested Assets (at June 30, 2020)
Slide 18: Growth Strategy
Growth Strategy Improve financial performance Leverage technology to transform the business Grow profitably in commercial lines Strategically modernize business to achieve operational excellence Compete effectively to enhance market position
Slide 19: Valuation vs. Multi-Line Insurers
Valuation vs. Multi-Line Insurers (as of August 31, 2020)
Slide 20: Investment Conclusions
Investment Conclusions Diverse book of business of both commercial and personal lines Room for growth in multiple lines of business and several regional markets Emphasis on solid underwriting returns driving margin improvement Strength of brand and solid agency relationships provide competitive adva
Slide 21: Contact Information
Contact Information Donegal Group Inc. 1195 River Road P.O. Box 302 Marietta, PA 17547 Phone: (800) 877-0600 Corporate Website: donegalgroup.com Investor Relations Contact Mr. Jeffrey D. Miller Phone: (800) 877-0600 x7357 investors@donegalgroup.com Transfer Agent Computershare Trust Company, N.A. P.
Slide 22: Reconciliation of Net Income to Non-GAAP Operating Income
RECONCILIATION OF NET INCOME TO NON-GAAP OPERATING INCOME
Slide 23: There when it matters most
There when it matters most.™ NASDAQ: DGICA/DGICB www.donegalgroup.com
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