Donegal Group, Inc. · NASDAQ:DGICA
Donegal — Q1 2022 Earnings Presentation
17 slides from Donegal's earnings presentation, Apr 28, 2022
Slide 1: First Quarter 2022 Investor Presentation
First Quarter 2022 Investor Presentation April 28, 2022 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 2.77 2.49 1.87 Peer Average 1.58x 1.69 1.70 1.72 1.51 1.55 1.44 1.24 0.86 0.89 0.84 0.79 DGICA: Price as of 4/18/2022 and Book Value as of 3/31/2022 Peer Data Source: FactSet; Price as of 4/18/2022 and Book Value as of 12/31/2021 www.donegalgr
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, 2021 Commercial Lines Other Personal Commercial Auto 2.7% Commercial Multi-Peril 62% of NPW Commercial Auto 19.5% Workers’ Comp Homeowners Other Commercial 14.3% Workers' Comp 12.9% Personal Auto 21
Slide 8: Continued Growth in Commercial Lines
Continued Growth in Commercial Lines 100.0% 110,000 95.0% 100,000 90.0% 90,000 80,000 85.0% 70,000 80.0% 60,000 75.0% 50,000 70.0% 40,000 65.0% 30,000 60.0% 20,000 10,000 55.0% - 50.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 In-Force Policy Count Retention Levels www.donegalgroup.com 8
Slide 9: First Quarter 2022 – Overview
First Quarter 2022 – Overview Solid Diversified Investment Underwriting Results Retention Portfolio Net Premiums Net Investment Investment Loss Ratio Expense Ratio Earned Income Yield $199.2M 59.2% 35.8% $7.9M 2.5% 6.4% 4.5 pts (1.7 pts) 4.6% No Change vs. Q1’21 vs. Q1’21 vs. Q1’21 vs. Q1’21 vs. Q1’
Slide 10: Financial Results – First Quarter 2022
Financial Results – First Quarter 2022 (dollars in thousands, except per share data) Q1’22 Q1’21 Change Net Premiums Written $218,442 $215,862 1.2% Net Premiums Earned $199,249 $187,252 6.4% Better/(Worse) Loss Ratio 59.2% 63.7% 4.5 pts Weather 4.0% 3.7% (0.3 pts) Prior Accident Year Development (8.
Slide 11: Results by Line of Business
Results by Line of Business • Strong premium retention and solid Q1’22 renewal rate increases of 8.2% in Commercial Lines (excluding Workers’ Comp) • Modest increases in new business from new product launch and renewal rate increases of 5.9% in legacy accounts to maintain a profitable book of busine
Slide 12: Conservative Investment Strategy
Conservative Investment Strategy $1.3 Billion in Invested Assets As of March 31, 2022 • Investment portfolio emphasizes on high- quality fixed-income securities Corporate Mortgage Backed 31.9% Securities (MBS) 17.7% • “Laddering” structure provides additional measure of liquidity Treasury and Agency
Slide 13: Increasing Stockholder Value Over Time
Increasing Stockholder Value Over Time Strategic corporate initiatives implemented beginning in 2018 continue to drive operating improvements $1.72 $2.35 $1.13 $0.56 $17.13 $16.95 $15.67 $14.05 2018 2019 2020 2021 Cumulative Dividends Paid Book Value www.donegalgroup.com 13
Slide 14: Investment Thesis
Investment Thesis • Well-established regional insurance group with a diverse book of business including both commercial and personal lines • Continuing the shift in our mix of business with emphasis on commercial lines while strategically stabilizing personal lines to maintain a profitable book of b
Slide 15: Contact Information
Contact Information Transfer Agent Investor Relations Contact Computershare Trust Company, N.A. Karin Daly P.O. Box 505000 Vice President, The Equity Group Louisville, KY 40233 Phone: (212) 836-9623 Phone: 800-317-4445 kdaly@equityny.com www.computershare.com www.donegalgroup.com 15
Slide 16: 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 17: Financial Supplement
Financial Supplement Reconciliation of net premiums earned to net premiums written: Three Months Ended March 31, 2022 2021 % Change (dollars in thousands) Reconciliation of Net Premiums Earned to Net Premiums Written Net premiums earned $ 199,249 $ 187,252 6.4% Change in net unearned premiums 19,193