Donegal Group Inc (DGICA, Financial) announced its financial results for the third quarter and first nine months of 2023 on October 26, 2023. The company reported a net loss of $0.8 million, or 2 cents per Class A share, for the third quarter, compared to a net loss of $10.4 million, or 33 cents per Class A share, for the same period in 2022. The net loss included after-tax net investment losses of $1.0 million, or 3 cents per Class A share, compared to $1.9 million, or 6 cents per Class A share, in the prior-year quarter.
Financial Highlights
Net premiums earned for the quarter increased by 8.9% to $224.4 million, while net premiums written rose by 6.3% to $219.2 million. The combined ratio, a key measure of profitability in the insurance industry, improved to 104.5% from 109.6% in the third quarter of 2022, primarily due to lower commercial lines losses.
For the first nine months of 2023, net premiums earned increased by 7.6% to $655.9 million, and net premiums written grew by 6.2% to $683 million. The combined ratio for the period was 103.5%, unchanged from the same period in 2022.
Management Commentary
We remain focused on the ongoing execution of our strategic plan to build a solid foundation for future growth and consistent profitability, while we continue to navigate significant headwinds impacting the insurance industry," said Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc.
The company noted significant improvement in its commercial lines underwriting results compared to the prior-year third quarter, attributed in part to a decrease in large commercial property fire losses. However, personal lines underwriting results reflected elevated weather-related losses due to an increase in the frequency of severe weather events.
Insurance Operations
Donegal Group is an insurance holding company whose insurance subsidiaries and affiliates offer property and casualty lines of insurance in various states. The company reported a 1.8% decline in commercial lines net premiums written and 17.7% growth in personal lines net premiums written for the third quarter of 2023 compared to the same period in 2022.
Investment Operations
Donegal Group's investment strategy aims to generate an appropriate amount of after-tax income on its invested assets while minimizing credit risk through investment in high-quality securities. As of September 30, 2023, 95.7% of the company's consolidated investment portfolio was invested in diversified, highly rated, and marketable fixed-maturity securities.
Net investment income for the third quarter of 2023 increased by 23.0% to $10.5 million compared to $8.6 million for the same period in 2022. The increase primarily reflected an increase in the average investment yield relative to the prior-year third quarter.
Explore the complete 8-K earnings release (here) from Donegal Group Inc for further details.
