Donegal Group, Inc. · NASDAQ:DGICA
Donegal — Q3 2022 Earnings Presentation
17 slides from Donegal's earnings presentation, Oct 27, 2022
Slide 1: Third Quarter 2022 Investor Presentation
Third Quarter 2022 Investor Presentation October 27, 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 2.63 2.57 2.05 Peer Average 1.58x 1.86 1.77 1.59 1.44 1.45 1.47 1.35 0.91 0.92 0.93 0.51 DGICA: Price and Book Value as of 9/30/2022 Peer Data Source: FactSet; Price as of 9/30/2022 and Book Value as of 6/30/2022 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, 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 106,686 100.0% 99,210 99,325 100,075 100,000 96,316 97,878 95.0% 89,971 91,254 87,051 89.7% 90.0% 82,528 80,000 86.4% 86.6% 86.2% 86.8% 85.5% 85.5% 85.4% 85.4% 85.0% 84.4% 80.0% 60,000 75.0% Q3 2022 Update 70.0% 40,000 In-Force Policy Count of 106,987 Premium Ret
Slide 9: Third Quarter 2022 – Overview
Third Quarter 2022 – Overview Solid Diversified Investment Underwriting Results Retention Portfolio Net Premiums Net Investment Investment Loss Ratio Expense Ratio Earned Income Yield $206.1M 75.6% 33.4% $8.6M 2.6% 5.0% (0.1 pt) (1.9 pts) 10.4% 0.1 pt vs. Q3’21 vs. Q3’21 vs. Q3’21 vs. Q3’21 vs. Q3’2
Slide 10: Financial Results – Third Quarter 2022
Financial Results – Third Quarter 2022 (dollars in thousands, except per share data) Q3’22 Q3’21 Change Net Premiums Written $206,229 $197,015 4.7% Net Premiums Earned $206,122 $196,235 5.0% Better/(Worse) Loss Ratio 75.6% 75.5% (0.1 pt) Weather 9.4% 9.2% (0.2 pts) Prior Accident Year Development (3
Slide 11: Results by Line of Business
Results by Line of Business • Strong premium retention and solid Q3’22 renewal rate increases of 10.6% in Commercial Lines (excluding Workers’ Comp) • Increases in new business from new product launch and renewal rate increases of 10.3% in legacy accounts to maintain a profitable book of business in
Slide 12: Conservative Investment Strategy
Conservative Investment Strategy $1.3 Billion in Invested Assets As of September 30, 2022 • Investment portfolio emphasizes on high- quality fixed-income securities Corporate 31.3% Mortgage Backed Securities (MBS) • “Laddering” structure provides additional 16.8% measure of liquidity Treasury and Ag
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 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 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 September 30, Nine Months Ended September 30, 2022 2021 % Change 2022 2021 % Change (dollars in thousands) Reconciliation of Net Premiums Earned to Net Premiums Written Net premiums earned $ 206,12