ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2021
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
_________________ (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)Delaware 23-2424711 1195 River Road, Marietta, Pennsylvania 17547 (Address of principal executive offices) (Zip code)
Title of Each Class Trading Symbols Name of Each Exchange on Which Registered Class A Common Stock, $.01 par value DGICA The NASDAQ Global Select Market Class B Common Stock, $.01 par value DGICB The NASDAQ Global Select Market
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Large accelerated filer | ☐ | Accelerated filer ☑ | ||||
| Non-accelerated filer | ☐ | Smaller reporting company ☑ | ||||
Emerging growth company ☐ | ||||||
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$227,763,077.
1, 2022.
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PART I | ||||||
Item 1. | 1 | |||||
Item 1A. | 27 | |||||
Item 1B. | 42 | |||||
Item 2. | 42 | |||||
Item 3. | 42 | |||||
Item 4. | 42 | |||||
PART II | ||||||
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Item 5. | 43 | |||||
Item 6. | 44 | |||||
Item 7. | 45 | |||||
Item 7A. | 61 | |||||
Item 8. | 63 | |||||
Item 9. | 108 | |||||
Item 9A. | 108 | |||||
Item 9B. | 108 | |||||
PART III | ||||||
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Item 10. | 110 | |||||
Item 11. | 111 | |||||
Item 12. | 111 | |||||
Item 13. | 111 | |||||
Item 14. | 111 | |||||
PART IV | ||||||
Item 15. | 112 | |||||
Item 16. | 114 | |||||
companies that are affiliated with Donegal Mutual.
In July 2018, we consolidated
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Since we established Atlantic States in 1986, Donegal Mutual and our insurance subsidiaries have conducted business together as the Donegal Insurance Group. As
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business Atlantic States derives from the underwriting pool represents a significant percentage of our total consolidated revenues. However, that percentage has gradually decreased over the past few years as we have acquired a number of other property and casualty insurance companies that do not participate in the underwriting pool.
Donegal Mutual completed the merger of Mountain States Mutual Casualty Company, or Mountain States,wholly owns and has a 100% quota-share reinsurance agreement with and into Donegal Mutual effective May 25, 2017. Donegal Mutual was the surviving company in the merger, and Mountain States’ insurance subsidiaries, Mountain States Indemnity Company and Mountain States Commercial Insurance Company, became insurance subsidiaries of Donegal Mutual upon completion of the merger. Upon completion of the merger, Donegal Mutual assumed all of the policy obligations of Mountain States and began to market its products together with its insurance subsidiaries as the Mountain States Insurance Group in four Southwestern states. Donegal Mutual currently plans to place the business of the Mountain States Insurance Group into the underwriting pool beginninginsurance subsidiaries. Beginning with policies effective in 2021. As a result, our consolidated financial results will exclude the results of Donegal Mutual’s operations in those Southwestern states until2021, Donegal Mutual places suchits assumed business from the Mountain States insurance subsidiaries into the underwriting pool.
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(1) Because of the different relative voting power of our Class A common stock and our Class B common stock, our public stockholders hold approximately 30% of the combined voting power of our Class A common stock and our Class B common stock and Donegal Mutual holds approximately 70% of the combined voting power of our Class A common stock and our Class B common stock.
respect, with an environment designed to facilitate excellent service to the agents and customers of the Donegal Insurance Group. At December 31, 2021, Donegal Mutual had 838 employees, of which 488 were based in its Marietta, Pennsylvania headquarters and 350 were based in regional offices or were permanent remote employees. There were 829 full-time employees and 9 part-time employees. Due to health and safety concerns related to the COVID-19 pandemic, many of Donegal Mutual's employees continue to work remotely from their homes or follow a hybrid schedule that includes working several days in their assigned office to allow for enhanced collaboration and interaction with other employees. Donegal Mutual targets employee compensation that is competitive and consistent with an employee's position, knowledge, experience and skill level. Donegal Mutual provides annual wage increases that are based on merit. Donegal Mutual provides an annual cash incentive plan for all of its employees that provides an opportunity for Donegal Mutual's employees to earn a bonus as a percentage of their annual wages that varies based on the level of underwriting profit Donegal Insurance Group achieves for a calendar year. In addition, Donegal Mutual provides to its full-time employees a comprehensive employee benefits program, including medical, dental and vision insurance, paid time off, and a 401(k) retirement plan that includes company matching provisions. Donegal Mutual also provides substantial training, development and wellness programs and resources to its employees.
a catastrophe reinsurance agreement with Atlantic States, MICO, Peninsula and SouthernDonegal Mutual, pursuant to which Donegal Mutual provides coverage for losses related to any catastrophic occurrence over a set retention of $2.0 million for each participating insurance subsidiary, with a combined retention of $5.0 million for a catastrophe involving a combination of participating insurance subsidiaries, up to the amount Donegal Mutual and our insurance subsidiaries retain under catastrophe reinsurance agreements with unaffiliated reinsurers; and
quota-share reinsurance agreements with MICO and Peninsula.
reinsurers. The purpose of the catastrophe reinsurance agreement is to lessen the effects of an accumulation of losses arising from one event to levels that are appropriate given each subsidiary’s size, underwriting profile and amountsurplus.
the quota-share reinsurance agreement with MICO was to transfer to Donegal Mutual 25% of the premiums and losses related to MICO’s business. Donegal Mutual placed its assumed business from MICO into the underwriting pool. Donegal Mutual and MICO terminated this reinsurance agreement on a run-off basis effective January 1, 2022. As a result, MICO will retain 100% of its net premiums and losses beginning with policies effective as of that date.
The purpose of the quota-share Donegal Mutual and Peninsula terminated this reinsurance agreement with MICO is to transfer to Donegal Mutual 25%on a run-off basis effective January 1, 2022. As a result, Peninsula will retain 100% of theits net workers’ compensation premiums and losses related to MICO’s business. Donegal Mutual places its assumed business from MICO into the underwriting pool.
beginning with policies effective as of that date.
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stockholders and fair and equitable to Donegal Mutual and its policyholders or if Donegal Mutual and we should mutually agree to certain adjustments to the terms of the agreements. In the case of these reinsurance agreements, the annual adjustments typically relate to the reinsurance premiums losses and reinstatement premiums.loss retention amounts. These agreements are ongoing in nature and will continue in effect throughout 20202022 in the ordinary course of our business.
| 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
Our GAAP combined ratio | 99.5 | % | 110.1 | % | 103.0 | % | 98.1 | % | 99.0 | % | ||||||||||
Our SAP combined ratio | 98.7 | 109.4 | 101.7 | 96.8 | 97.4 | |||||||||||||||
Industry SAP combined ratio(1) | 98.2 | 99.6 | 105.1 | 100.9 | 98.3 | |||||||||||||||
| 2021 | 2020 | 2019 | 2018 | 2017 | ||||||||||||||||
| Our GAAP combined ratio | 101.0 | % | 96.0 | % | 99.5 | % | 110.1 | % | 103.0 | % | ||||||||||
| Our SAP combined ratio | 100.8 | 95.4 | 98.7 | 109.4 | 101.7 | |||||||||||||||
Industry SAP combined ratio (1) | 101.8 | 98.8 | 98.9 | 99.2 | 103.9 | |||||||||||||||
| (1) | As reported (projected for |
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minimizing
Our insurance subsidiaries have no material exposures to asbestos or environmental liabilities. Our insurance subsidiaries seek to provide more than one policy to a given personal lines or commercial lines customer because this “account selling” strategy diversifies their risk and has historically improved their underwriting results. Our insurance subsidiaries also use reinsurance to manage their exposure and limit their maximum net loss from large single risks or risks in concentrated areas.
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Continued expansion of our insurance subsidiaries within their existing markets will be a key source of their continued premium growth, and maintaining an effective and growing network of independent agencies is integral to this expansion. Our insurance subsidiaries seek to be among the top three insurers within each of the independent agencies for the lines of business our insurance subsidiaries write by providing a consistent, competitive and stable market for their products. We believe that the consistency of the product offerings of our insurance subsidiaries enables our insurance subsidiaries to compete effectively for independent agents with other insurers whose product offerings may fluctuate based on industry conditions. Our insurance subsidiaries offer a competitive compensation program to their independent agents that rewards them for producing profitable growth for our insurance subsidiaries. Our insurance subsidiaries provide their independent agents with ongoing support to enable them to better attract and service customers, including:
fully automated underwriting and policy issuance systems for commercial and personal lines of insurance;
training programs;
marketing support;
availability of a service center that provides comprehensive service for our policyholders; and
field visitations by marketing and underwriting personnel and senior management of our insurance subsidiaries.
Our insurance subsidiaries appoint independent agencies with a strong underwriting and growth track record. We believe that our insurance subsidiaries, by carefully selecting, motivating and supporting their independent agencies, will drive continued long-term growth.
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We have been an effective consolidator of smaller “main street” property and casualty insurance companies, and we expect to continue to acquire other insurance companies to expand our business in a given region over time.
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Since 1995, we have completed six acquisitions of property and casualty insurance companies or participated in their business through Donegal Mutual’s entry into quota-share reinsurance agreements with them. We intend to continue our growth by pursuing affiliations and acquisitions that meet our criteria. Our primary criteria are:
location in regions where our insurance subsidiaries are currently conducting business or that offer an attractive opportunity to conduct profitable business;
a mix of business similar to the mix of business of our insurance subsidiaries;
annual premium volume between $50.0 million to $100.0 million; and
fair and reasonable transaction terms.
We believe that our relationship with Donegal Mutual assists us in pursuing affiliations with, and subsequent acquisitions of, mutual insurance companies because, through Donegal Mutual, we understand the concerns and issues that mutual insurance companies face. In particular, Donegal Mutual has had success affiliating with underperforming mutual insurance companies, and we have either acquired them following their conversion to a stock company or benefited from their underwriting results as a result of Donegal Mutual’s entry into a 100% quota-share reinsurance agreement with them and placement of that assumed business into the pooling agreement. We have utilized our strengths and financial position to improve the operations of those underperforming insurance companies. We evaluate a number of areas for operational synergies when considering acquisitions, including product underwriting, expenses, the cost of reinsurance and technology.
We and Donegal Mutual have the ability to employ a number of acquisition and affiliation methods. Our prior acquisitions and affiliations have taken one of the following forms:
purchase of all of the outstanding stock of a stock insurance company;
purchase of a book of business;
quota-share reinsurance transaction;
merger of a mutual company into Donegal Mutual; or
two-step acquisition of a mutual insurance company in which:
as the first step, Donegal Mutual purchases a surplus note from the mutual insurance company, Donegal Mutual enters into a services agreement with the mutual insurance company and Donegal Mutual’s designees become a majority of the members of the board of directors of the mutual insurance company; and
as the second step, the mutual insurance company enters into a quota-share reinsurance agreement with Donegal Mutual or demutualizes, or converts, into a stock insurance company. Upon the demutualization or conversion, we purchase the surplus note from Donegal Mutual and exchange it for all of the stock of the stock insurance company resulting from the demutualization or conversion.
We believe that our ability to make direct acquisitions of stock insurance companies and to make indirect acquisitions of mutual insurance companies through a sponsored conversion or a quota-share reinsurance agreement provides us with flexibility that is a competitive advantage in making acquisitions. We also believe our historic record demonstrates our ability to acquire control of an underperforming insurance company,re-underwrite its book of business, reduce its cost structure and return it to sustained profitability.
While Donegal Mutual and we generally engage in preliminary discussions with potential direct or indirect acquisition candidates from time to time, neither Donegal Mutual nor we make any public disclosure regarding a proposed acquisition until Donegal Mutual or we have entered into a definitive acquisition agreement.
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The following table highlights our and Donegal Mutual’s history of insurance company acquisitions and affiliations since 1988:
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We believe that excellent policyholder service is important in attracting new policyholders and retaining existing policyholders. Our insurance subsidiaries work closely with their independent agents to provide a consistently responsive level of claims service, underwriting and customer support. Our insurance subsidiaries seek to respond expeditiously and effectively to address customer and independent agent inquiries in a number of ways, including:
availability of a customer call center, secure website and mobile application for claims reporting;
availability of a secure website and mobile application for access to policy information and documents, payment processing and other features;
timely replies to information requests and policy submissions; and
prompt responses to, and processing of, claims.
Our insurance subsidiaries periodically conduct policyholder surveys to evaluate the effectiveness of their service to policyholders. The management of our insurance subsidiaries meets on a regular basis with the personnel of the independent insurance agents our insurance subsidiaries appoint to seek service improvement recommendations, react to service issues and better understand local market conditions.
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Our insurance subsidiaries maintain discipline in their pricing by effecting rate increases to sustain or improve their underwriting results without unduly affecting their customer retention. In addition to appropriate pricing, our insurance subsidiaries seek to ensure that their premium rates are adequate relative to the amount of risk they insure. Our insurance subsidiaries review loss trends on a regular basis to identify changes in the frequency and severity of their claims and to assess the adequacy of their rates and underwriting standards. Our insurance subsidiaries also carefully monitor and audit the information they use to price their policies for the purpose of enabling them to receive an adequate level of premiums for the risk they assume. For example, our insurance subsidiaries audit the payroll data of their workers’ compensation customers to verify that the assumptions used to price a particular policy were accurate. By implementing appropriate rate increases and understanding the risks our insurance subsidiaries agree to insure, our insurance subsidiaries seek to achieve consistent underwriting profitability.
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Return on invested assets is an important element of In addition, we are employing new agency relationship management solutions to expand the financial results of our insurance subsidiaries. The investment strategyabilities of our insurance subsidiaries to manage their agency relationships and enhance their agency communications and interactions.
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portfoliosmanagement of our insurance subsidiaries consistmeets on a regular basis with the personnel of both taxable andtax-exempt securities. Ourthe independent insurance agents our insurance subsidiaries maintainappoint to seek service improvement recommendations, react to service issues and better understand local market conditions.
making acquisitions. We also believe our historic record demonstrates our ability to acquire control of an underperforming insurance company utilizing a number of different acquisition structures and affiliation strategies, re-underwrite its book of business, reduce its cost structure and return it to sustained profitability.
| Company Name | State of Domicile | Year Control Acquired | Method of Acquisition/Affiliation | |||
Southern Heritage Insurance Company (1) | Georgia | 1998 | Purchase of stock by us in 1998. | |||
Le Mars Mutual Insurance Company of Iowa and then Le Mars Insurance Company (1) | Iowa | 2002 | Surplus note investment by Donegal Mutual in 2002; conversion to stock company in 2004; acquisition of stock by us in 2004. | |||
| Peninsula Insurance Group | Maryland | 2004 | Purchase of stock by us in 2004. | |||
Sheboygan Falls Mutual Insurance Company and then Sheboygan Falls Insurance Company (1) | Wisconsin | 2007 | Contribution note investment by Donegal Mutual in 2007; conversion to stock company in 2008; acquisition of stock by us in 2008. | |||
Southern Mutual Insurance Company (2) | Georgia | 2009 | Surplus note investment by Donegal Mutual and quota-share reinsurance in 2009. | |||
| Michigan Insurance Company | Michigan | 2010 | Purchase of stock by us in 2010. | |||
Mountain States Mutual Casualty Company(3) | New Mexico | 2017 | Merger with and into Donegal Mutual in 2017. |
| (1) | To reduce administrative and compliance costs and expenses, these subsidiaries subsequently merged into one of our existing insurance subsidiaries. |
| (2) | Control acquired by Donegal Mutual. |
| (3) | Donegal Mutual completed the merger of Mountain States with and into Donegal Mutual effective May 25, 2017. Donegal Mutual was the surviving company in the merger, and Mountain States insurance subsidiaries became insurance subsidiaries of Donegal Mutual upon completion of the merger. Donegal Mutual also entered into a 100% quota-share reinsurance agreement with the Mountain States insurance subsidiaries on the merger date. Beginning with policies effective in 2021, Donegal Mutual places the business of the Mountain States Insurance Group into the underwriting pool. |
Insurance companies that are substantially larger than our insurance subsidiaries are likely to benefit from certain cost synergies, and insurance companies that market their products directly to end consumers are likely to incur lower relative acquisition costs compared to those of our insurance subsidiaries.
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| Year Ended December 31, | ||||||||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||||||||||||
| (dollars in thousands) | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
Commercial lines: | ||||||||||||||||||||||||
Automobile | $ | 122,142 | 16.2 | % | $ | 108,123 | 14.5 | % | $ | 99,333 | 13.6 | % | ||||||||||||
Workers’ compensation | 113,684 | 15.1 | 109,022 | 14.7 | 109,884 | 15.1 | ||||||||||||||||||
Commercial multi-peril | 138,750 | 18.5 | 117,509 | 15.8 | 110,313 | 15.1 | ||||||||||||||||||
Other | 30,303 | 4.0 | 15,241 | 2.0 | 9,586 | 1.3 | ||||||||||||||||||
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Total commercial lines | 404,879 | 53.8 | 349,895 | 47.0 | 329,116 | 45.1 | ||||||||||||||||||
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Personal lines: | ||||||||||||||||||||||||
Automobile | 210,507 | 28.0 | 249,275 | 33.5 | 255,297 | 35.0 | ||||||||||||||||||
Homeowners | 117,118 | 15.5 | 123,782 | 16.6 | 125,054 | 17.2 | ||||||||||||||||||
Other | 20,097 | 2.7 | 21,064 | 2.9 | 19,672 | 2.7 | ||||||||||||||||||
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Total personal lines | 347,722 | 46.2 | 394,121 | 53.0 | 400,023 | 54.9 | ||||||||||||||||||
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Total business | $ | 752,601 | 100.0 | % | $ | 744,016 | 100.0 | % | $ | 729,139 | 100.0 | % | ||||||||||||
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| Year Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2020 | 2019 | ||||||||||||||||||||||
| (dollars in thousands) | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
| Commercial lines: | ||||||||||||||||||||||||
| Automobile | $ | 161,947 | 20.1 | % | $ | 135,294 | 18.2 | % | $ | 122,142 | 16.2 | % | ||||||||||||
| Workers’ compensation | 113,256 | 14.1 | 109,960 | 14.8 | 113,684 | 15.1 | ||||||||||||||||||
| Commercial multi-peril | 188,242 | 23.4 | 147,993 | 19.9 | 138,750 | 18.5 | ||||||||||||||||||
| Other | 38,340 | 4.8 | 32,739 | 4.5 | 30,303 | 4.0 | ||||||||||||||||||
| Total commercial lines | 501,785 | 62.4 | 425,986 | 57.4 | 404,879 | 53.8 | ||||||||||||||||||
| Personal lines: | ||||||||||||||||||||||||
| Automobile | 170,578 | 21.2 | 184,602 | 24.9 | 210,507 | 28.0 | ||||||||||||||||||
| Homeowners | 109,974 | 13.7 | 111,886 | 15.1 | 117,118 | 15.5 | ||||||||||||||||||
| Other | 21,930 | 2.7 | 19,666 | 2.6 | 20,097 | 2.7 | ||||||||||||||||||
| Total personal lines | 302,482 | 37.6 | 316,154 | 42.6 | 347,722 | 46.2 | ||||||||||||||||||
| Total business | $ | 804,267 | 100.0 | % | $ | 742,140 | 100.0 | % | $ | 752,601 | 100.0 | % | ||||||||||||
We formally established an enterprise analytics function in early 2019. Our enterprise analytics team is responsible for core functionsprofitability as well as the enhancement of ratemaking, predictive analytics, data governance and business intelligence. Those responsibilities include the development and expansion of risk-based pricing segmentation, analytical innovation, predictive modeling solutions, formal data strategies, performance monitoring and enhanced reporting mechanisms.
our current products to meet targeted customer needs.
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Pennsylvania | % | |||
Michigan | ||||
Maryland | ||||
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Virginia | ||||
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Wisconsin | 3.9 | |||
| Ohio | 3.3 | |||
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| Other | 8.2 | |||
Total | 100.0 | % | ||
We have an agency stock purchase plan that allows our independent agents to purchase our Class A common stock at a discount to market prices to further align the interests of our independent agents with the interests of our stockholders.
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We believe Donegal Mutual is currently in the availabilitymidst of a multi-year effort to modernize certain of its key infrastructure and useapplications systems we describe in more detail under “Business - Business Strategy - Strategically modernizing our operations and processes to transform our business.”
technology enhancements.
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establishing its estimates, an insurer recognizes that its ultimate liability for losses and loss expenses will exceed or be less than such estimates. Our insurance subsidiaries base their estimates of liabilities for losses and loss expenses on assumptions as to future loss trends, expected claims severity, judicial theories of liability and other factors. However, during the loss adjustment period, our insurance subsidiaries may learn additional facts regarding individual claims, and, consequently, it often becomes necessary for our insurance subsidiaries to refine and adjust their estimates for these liabilities. We reflect any adjustments to the liabilities for losses and loss expenses of our insurance subsidiaries in our consolidated results of operations in the period in which our insurance subsidiaries make adjustments to their estimates.
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commercial automobile and personal automobile claims that led our insurance subsidiaries to conclude that their prior actuarial assumptions did not fully anticipate recent changes in severity and reporting trends. Our insurance subsidiaries have encountered increasing difficulties in projecting the ultimate severity of automobile losses over recent accident years, which our insurance subsidiaries attribute to worsening litigation trends and an increased delay in the reporting to our insurance subsidiaries of information with respect to the severity of claims. As a result, our insurance subsidiaries’ actuaries increased their projections of the ultimate cost of our insurance subsidiaries’ prior-year personal automobile and commercial automobile losses, and our insurance subsidiaries added $17.7 million to their reserves for personal automobile and $20.8 million to their reserves for commercial automobile for accident years prior to 2018. The 2017 development represented 1.9% of the December 31, 2016 net carried reserves and resulted primarily from higher-than-expected severity in the commercial multi-peril, personal automobile and commercial automobile lines of business, offset by lower-than-expected severity in the workers’ compensation line of business, for accident years prior to 2017. The majority of the 2017 development related to increases in the liability for losses and loss expenses of prior years for Atlantic States and Peninsula.
Donegal Mutual and our insurance subsidiaries operate together as the Donegal Insurance Group and share a combined business plan designed to achieve market penetration and underwriting profitability objectives. The products our insurance subsidiaries and Donegal Mutual offer are generally complementary, thereby allowing Donegal Insurance Group to offer a broader range of products to a given market and to expand Donegal Insurance Group’s ability to service an entire personal lines or commercial lines account. Distinctions within the products of Donegal Mutual and our insurance subsidiaries generally relate to specific risk profiles targeted within similar classes of business, such as preferred tier products compared to standard tier products, but we do not allocate all of the standard risk gradients to one company. Therefore, the underwriting profitability of the business the individual companies write directly will vary.
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| Year Ended December 31, | ||||||||||||
| (in thousands) | 2019 | 2018 | 2017 | |||||||||
Gross liability for unpaid losses and loss expenses at beginning of year | $ | 814,665 | $ | 676,672 | $ | 606,665 | ||||||
Less reinsurance recoverable | 339,267 | 293,271 | 259,147 | |||||||||
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Net liability for unpaid losses and loss expenses at beginning of year | 475,398 | 383,401 | 347,518 | |||||||||
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Provision for net losses and loss expenses for claims incurred in the current year | 519,320 | 540,827 | 480,647 | |||||||||
Change in provision for estimated net losses and loss expenses for claims incurred in prior years | (12,932 | ) | 35,631 | 6,621 | ||||||||
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Total incurred | 506,388 | 576,458 | 487,268 | |||||||||
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Net losses and loss expense payments for claims incurred during: | ||||||||||||
The current year | 278,924 | 308,578 | 288,380 | |||||||||
Prior years | 195,956 | 175,883 | 163,005 | |||||||||
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Total paid | 474,880 | 484,461 | 451,385 | |||||||||
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Net liability for unpaid losses and loss expenses at end of year | 506,906 | 475,398 | 383,401 | |||||||||
Plus reinsurance recoverable | 362,768 | 339,267 | 293,271 | |||||||||
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Gross liability for unpaid losses and loss expenses at end of year | $ | 869,674 | $ | 814,665 | $ | 676,672 | ||||||
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| Year Ended December 31, | ||||||||||||
| (in thousands) | 2021 | 2020 | 2019 | |||||||||
| Gross liability for unpaid losses and loss expenses at beginning of year | $ | 962,007 | $ | 869,674 | $ | 814,665 | ||||||
| Less reinsurance recoverable | 404,818 | 362,768 | 339,267 | |||||||||
| Net liability for unpaid losses and loss expenses at beginning of year | 557,189 | 506,906 | 475,398 | |||||||||
| Provision for net losses and loss expenses for claims incurred in the current year | 551,918 | 472,709 | 519,320 | |||||||||
| Change in provision for estimated net losses and loss expenses for claims incurred in prior years | (31,208 | ) | (12,945 | ) | (12,932 | ) | ||||||
| Total incurred | 520,710 | 459,764 | 506,388 | |||||||||
| Net losses and loss expense payments for claims incurred during: | ||||||||||||
| The current year | 269,317 | 236,984 | 278,924 | |||||||||
| Prior years | 182,223 | 172,497 | 195,956 | |||||||||
| Total paid | 451,540 | 409,481 | 474,880 | |||||||||
| Net liability for unpaid losses and loss expenses at end of year | 626,359 | 557,189 | 506,906 | |||||||||
| Plus reinsurance recoverable | 451,261 | 404,818 | 362,768 | |||||||||
| Gross liability for unpaid losses and loss expenses at end of year | $ | 1,077,620 | $ | 962,007 | $ | 869,674 | ||||||
Amounts shown in the 2010 column of the table include information for MICO for all accident years prior to 2010.
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| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||||||||||||||||||
Net liability at end of year for unpaid losses and loss expenses | $ | 180,262 | $ | 217,896 | $ | 243,015 | $ | 250,936 | $ | 265,605 | $ | 292,301 | $ | 322,054 | $ | 347,518 | $ | 383,401 | $ | 475,398 | $ | 506,906 | ||||||||||||||||||||||
Net liabilityre-estimated as of: | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 177,377 | 217,728 | 250,611 | 261,294 | 280,074 | 299,501 | 325,043 | 354,139 | 419,032 | 462,466 | ||||||||||||||||||||||||||||||||||
Two years later | 177,741 | 217,355 | 255,612 | 268,877 | 281,782 | 299,919 | 329,115 | 375,741 | 413,535 | |||||||||||||||||||||||||||||||||||
Three years later | 178,403 | 218,449 | 257,349 | 270,473 | 281,666 | 304,855 | 338,118 | 376,060 | ||||||||||||||||||||||||||||||||||||
Four years later | 179,909 | 218,514 | 256,460 | 270,794 | 284,429 | 307,840 | 339,228 | |||||||||||||||||||||||||||||||||||||
Five years later | 179,961 | 218,202 | 255,660 | 271,954 | 285,130 | 310,354 | ||||||||||||||||||||||||||||||||||||||
Six years later | 179,858 | 217,430 | 256,388 | 272,553 | 287,439 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 179,996 | 217,703 | 257,132 | 274,111 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 180,130 | 218,173 | 257,935 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 180,487 | 218,603 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 180,681 | |||||||||||||||||||||||||||||||||||||||||||
Cumulative deficiency (excess) | 419 | 707 | 14,920 | 23,175 | 21,834 | 18,053 | 17,174 | 28,542 | 30,134 | (12,932 | ) | |||||||||||||||||||||||||||||||||
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Cumulative amount of liability paid through: | ||||||||||||||||||||||||||||||||||||||||||||
One year later | $ | 84,565 | $ | 96,202 | $ | 119,074 | $ | 126,677 | $ | 131,766 | $ | 131,779 | $ | 149,746 | $ | 163,005 | $ | 175,883 | $ | 195,956 | ||||||||||||||||||||||||
Two years later | 123,204 | 148,140 | 181,288 | 191,208 | 194,169 | 206,637 | 228,506 | 250,678 | 276,331 | |||||||||||||||||||||||||||||||||||
Three years later | 147,165 | 178,073 | 217,138 | 225,956 | 233,371 | 251,654 | 274,235 | 306,338 | ||||||||||||||||||||||||||||||||||||
Four years later | 161,363 | 195,948 | 234,392 | 245,094 | 255,451 | 274,248 | 300,715 | |||||||||||||||||||||||||||||||||||||
Five years later | 169,452 | 203,633 | 241,538 | 254,502 | 265,841 | 287,178 | ||||||||||||||||||||||||||||||||||||||
Six years later | 173,153 | 206,731 | 245,774 | 259,437 | 272,431 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 174,376 | 209,527 | 248,195 | 263,386 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 175,662 | 210,982 | 250,272 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 176,514 | 212,340 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 177,433 | |||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
| (in thousands) | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||||||||||||
Gross liability at end of year | $ | 442,408 | $ | 458,827 | $ | 495,619 | $ | 538,258 | $ | 578,205 | $ | 606,665 | $ | 676,672 | $ | 814,665 | $ | 869,674 | ||||||||||||||||||
Reinsurance recoverable | 199,393 | 207,891 | 230,014 | 245,957 | 256,151 | 259,147 | 293,271 | 339,266 | 362,768 | |||||||||||||||||||||||||||
Net liability at end of year | 243,015 | 250,936 | 265,605 | 292,301 | 322,054 | 347,518 | 383,401 | 475,398 | 506,906 | |||||||||||||||||||||||||||
Grossre-estimated liability | 515,334 | 511,331 | 536,133 | 584,517 | 615,168 | 664,526 | 742,616 | 846,081 | ||||||||||||||||||||||||||||
Re-estimated recoverable | 257,399 | 237,220 | 248,694 | 274,163 | 275,940 | 288,466 | 329,081 | 383,615 | ||||||||||||||||||||||||||||
Netre-estimated liability | 257,935 | 274,111 | 287,439 | 310,354 | 339,228 | 376,060 | 413,535 | 462,466 | ||||||||||||||||||||||||||||
Gross cumulative deficiency (excess) | 72,926 | 52,504 | 40,514 | 46,259 | 36,963 | 57,861 | 65,944 | 31,416 | ||||||||||||||||||||||||||||
-17-
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||
| Net liability at end of year for unpaid losses and loss expenses | $ | 243,015 | $ | 250,936 | $ | 265,605 | $ | 292,301 | $ | 322,054 | $ | 347,518 | $ | 383,401 | $ | 475,398 | $ | 506,906 | $ | 557,189 | $ | 626,359 | ||||||||||||||||||||||
| Net liability re-estimated as of: | ||||||||||||||||||||||||||||||||||||||||||||
| One year later | 250,611 | 261,294 | 280,074 | 299,501 | 325,043 | 354,139 | 419,032 | 462,466 | 493,961 | 525,981 | ||||||||||||||||||||||||||||||||||
| Two years later | 255,612 | 268,877 | 281,782 | 299,919 | 329,115 | 375,741 | 413,535 | 450,862 | 479,927 | |||||||||||||||||||||||||||||||||||
| Three years later | 257,349 | 270,473 | 281,666 | 304,855 | 338,118 | 376,060 | 404,902 | 440,168 | ||||||||||||||||||||||||||||||||||||
| Four years later | 256,460 | 270,794 | 284,429 | 307,840 | 339,228 | 372,230 | 398,560 | |||||||||||||||||||||||||||||||||||||
| Five years later | 255,660 | 271,954 | 285,130 | 310,354 | 338,020 | 370,960 | ||||||||||||||||||||||||||||||||||||||
| Six years later | 256,388 | 272,553 | 287,439 | 310,380 | 338,200 | |||||||||||||||||||||||||||||||||||||||
| Seven years later | 257,132 | 274,111 | 287,063 | 311,594 | ||||||||||||||||||||||||||||||||||||||||
| Eight years later | 257,935 | 274,472 | 288,298 | |||||||||||||||||||||||||||||||||||||||||
| Nine years later | 258,272 | 275,385 | ||||||||||||||||||||||||||||||||||||||||||
| Ten years later | 259,013 | |||||||||||||||||||||||||||||||||||||||||||
| Cumulative deficiency (excess) | 15,998 | 24,449 | 22,693 | 19,293 | 16,146 | 23,442 | 15,159 | (35,230 | ) | (26,979 | ) | (31,208 | ) | |||||||||||||||||||||||||||||||
| Cumulative amount of liability paid through: | ||||||||||||||||||||||||||||||||||||||||||||
| One year later | $ | 119,074 | $ | 126,677 | $ | 131,766 | $ | 131,779 | $ | 149,746 | $ | 163,005 | $ | 175,883 | $ | 195,956 | $ | 172,497 | $ | 182,223 | ||||||||||||||||||||||||
| Two years later | 181,288 | 191,208 | 194,169 | 206,637 | 228,506 | 250,678 | 276,331 | 275,993 | 276,069 | |||||||||||||||||||||||||||||||||||
| Three years later | 217,138 | 225,956 | 233,371 | 251,654 | 274,235 | 306,338 | 317,447 | 335,310 | ||||||||||||||||||||||||||||||||||||
| Four years later | 234,392 | 245,094 | 255,451 | 274,248 | 300,715 | 324,628 | 342,583 | |||||||||||||||||||||||||||||||||||||
| Five years later | 241,538 | 254,502 | 265,841 | 287,178 | 309,630 | 337,946 | ||||||||||||||||||||||||||||||||||||||
| Six years later | 245,774 | 259,437 | 272,431 | 292,327 | 315,105 | |||||||||||||||||||||||||||||||||||||||
| Seven years later | 248,195 | 263,386 | 275,357 | 295,106 | ||||||||||||||||||||||||||||||||||||||||
| Eight years later | 250,272 | 265,026 | 277,315 | |||||||||||||||||||||||||||||||||||||||||
| Nine years later | 251,696 | 266,433 | �� | |||||||||||||||||||||||||||||||||||||||||
| Ten years later | 252,228 | |||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
| (in thousands) | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||
| Gross liability at end of year | $ | 495,619 | $ | 538,258 | $ | 578,205 | $ | 606,665 | $ | 676,672 | $ | 814,665 | $ | 869,674 | $ | 962,007 | $ | 1,077,620 | ||||||||||||||||||
| Reinsurance recoverable | 230,014 | 245,957 | 256,151 | 259,147 | 293,271 | 339,266 | 362,768 | 404,818 | 451,261 | |||||||||||||||||||||||||||
| Net liability at end of year | 265,605 | 292,301 | 322,054 | 347,518 | 383,401 | 475,398 | 506,906 | 557,189 | 626,359 | |||||||||||||||||||||||||||
| Gross re-estimated liability | 520,208 | 559,837 | 589,947 | 625,221 | 677,919 | 761,282 | 806,750 | 904,062 | ||||||||||||||||||||||||||||
| Re-estimated recoverable | 231,910 | 248,243 | 251,747 | 254,261 | 279,359 | 321,114 | 326,823 | 378,081 | ||||||||||||||||||||||||||||
| Net re-estimated liability | 288,298 | 311,594 | 338,200 | 370,960 | 398,560 | 440,168 | 479,927 | 525,981 | ||||||||||||||||||||||||||||
| Gross cumulative deficiency (excess) | 24,589 | 21,579 | 11,742 | 18,556 | 1,247 | (53,383 | ) | (62,924 | ) | (57,945 | ) | |||||||||||||||||||||||||
2021.
| (dollars in thousands) | December 31, 2019 | |||||||
Rating(1) | Amount | Percent | ||||||
U.S. Treasury and U.S. agency securities(2) | $ | 463,974 | 44.6 | % | ||||
Aaa or AAA | 26,154 | 2.5 | ||||||
Aa or AA | 212,877 | 20.4 | ||||||
A | 171,822 | 16.5 | ||||||
BBB | 164,217 | 15.8 | ||||||
B | 2,002 | 0.2 | ||||||
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|
| |||||
Total | $ | 1,041,046 | 100.0 | % | ||||
|
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|
| |||||
| (dollars in thousands) | December 31, 2021 | |||||||
Rating(1) | Amount | Percent | ||||||
U.S. Treasury and U.S. agency securities(2) | $ | 359,161 | 29.9 | % | ||||
| Aaa or AAA | 26,073 | 2.2 | ||||||
| Aa or AA | 349,417 | 29.1 | ||||||
| A | 215,757 | 18.0 | ||||||
| BBB | 250,326 | 20.8 | ||||||
| Total | $ | 1,200,734 | 100.0 | % | ||||
| (1) | Ratings assigned by Moody’s Investors Services, Inc. or Standard & Poor’s Corporation. |
| (2) | Includes mortgage-backed securities of |
-18-
| December 31, | ||||||||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||||||||||||
| (dollars in thousands) | Amount | Percent of Total | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||||||||
Fixed maturities(1): | ||||||||||||||||||||||||
Held to maturity: | ||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 82,916 | 7.5 | % | $ | 76,223 | 7.4 | % | $ | 71,736 | 7.1 | % | ||||||||||||
Obligations of states and political subdivisions | 204,634 | 18.4 | 159,292 | 15.5 | 137,581 | 13.7 | ||||||||||||||||||
Corporate securities | 156,399 | 14.1 | 127,010 | 12.3 | 108,025 | 10.7 | ||||||||||||||||||
Mortgage-backed securities | 32,145 | 2.9 | 40,274 | 3.9 | 49,313 | 4.9 | ||||||||||||||||||
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| |||||||||||||
Total held to maturity | 476,094 | 42.9 | 402,799 | 39.1 | 366,655 | 36.4 | ||||||||||||||||||
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| |||||||||||||
Available for sale: | ||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 19,364 | 1.7 | 44,210 | 4.3 | 44,049 | 4.4 | ||||||||||||||||||
Obligations of states and political subdivisions | 56,796 | 5.1 | 75,216 | 7.3 | 132,117 | 13.1 | ||||||||||||||||||
Corporate securities | 159,244 | 14.3 | 137,833 | 13.4 | 105,740 | 10.5 | ||||||||||||||||||
Mortgage-backed securities | 329,548 | 29.7 | 269,299 | 26.1 | 257,040 | 25.6 | ||||||||||||||||||
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| |||||||||||||
Total available for sale | 564,952 | 50.8 | 526,558 | 51.1 | 538,946 | 53.6 | ||||||||||||||||||
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| |||||||||||||
Total fixed maturities | 1,041,046 | 93.7 | 929,357 | 90.2 | 905,601 | 90.0 | ||||||||||||||||||
Equity securities(2) | 55,477 | 5.0 | 43,667 | 4.2 | 50,445 | 5.0 | ||||||||||||||||||
Investment in affiliate(3) | — | — | 41,026 | 4.0 | 38,774 | 3.9 | ||||||||||||||||||
Short-term investments(4) | 14,030 | 1.3 | 16,749 | 1.6 | 11,050 | 1.1 | ||||||||||||||||||
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|
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| |||||||||||||
Total investments | $ | 1,110,553 | 100.0 | % | $ | 1,030,799 | 100.0 | % | $ | 1,005,870 | 100.0 | % | ||||||||||||
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| |||||||||||||
| December 31, | ||||||||||||||||||||||||
| 2021 | 2020 | 2019 | ||||||||||||||||||||||
| (dollars in thousands) | Amount | Percent of Total | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||||||||
Fixed maturities(1): | ||||||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 89,268 | 7.0 | % | $ | 77,435 | 6.3 | % | $ | 82,916 | 7.5 | % | ||||||||||||
| Obligations of states and political subdivisions | 371,436 | 29.1 | 312,319 | 25.6 | 204,634 | 18.4 | ||||||||||||||||||
| Corporate securities | 191,147 | 15.0 | 173,270 | 14.2 | 156,399 | 14.1 | ||||||||||||||||||
| Mortgage-backed securities | 16,254 | 1.2 | 23,585 | 1.9 | 32,145 | 2.9 | ||||||||||||||||||
| Total held to maturity | 668,105 | 52.3 | 586,609 | 48.0 | 476,094 | 42.9 | ||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | 32,185 | 2.5 | 47,815 | 3.9 | 19,364 | 1.7 | ||||||||||||||||||
| Obligations of states and political subdivisions | 57,378 | 4.5 | 68,965 | 5.7 | 56,796 | 5.1 | ||||||||||||||||||
| Corporate securities | 221,611 | 17.4 | 212,708 | 17.4 | 159,244 | 14.3 | ||||||||||||||||||
| Mortgage-backed securities | 221,455 | 17.3 | 225,648 | 18.5 | 329,548 | 29.7 | ||||||||||||||||||
| Total available for sale | 532,629 | 41.7 | 555,136 | 45.5 | 564,952 | 50.8 | ||||||||||||||||||
| Total fixed maturities | 1,200,734 | 94.0 | 1,141,745 | 93.5 | 1,041,046 | 93.7 | ||||||||||||||||||
Equity securities(2) | 63,420 | 5.0 | 58,556 | 4.8 | 55,477 | 5.0 | ||||||||||||||||||
Short-term investments(3) | 12,692 | 1.0 | 20,901 | 1.7 | 14,030 | 1.3 | ||||||||||||||||||
| Total investments | $ | 1,276,846 | 100.0 | % | $ | 1,221,202 | 100.0 | % | $ | 1,110,553 | 100.0 | % | ||||||||||||
| (1) | We refer to Notes 1 and 4 to our Consolidated Financial Statements. We value those fixed maturities we classify as held to maturity at amortized cost; we value those fixed maturities we classify as available for sale at fair value. The total fair value of fixed maturities we classified as held to maturity was $697.4 million at December 31, 2021, $632.6 million at December 31, 2020 and $500.3 million at December 31, |
| (2) | We value equity securities at fair value. The total cost of equity securities was $43.3million at December 31, 2021, $42.4 million at December 31, 2020 and $43.4 million at December 31, 2019 |
| (3) |
|
We value short-term investments at cost, which approximates fair value. |
-19-
| December 31, | ||||||||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||||||||||||
| (dollars in thousands) | Amount | Percent of Total | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||||||||
Due in(1): | ||||||||||||||||||||||||
One year or less | $ | 29,209 | 2.8 | % | $ | 39,282 | 4.2 | % | $ | 53,826 | 6.0 | % | ||||||||||||
Over one year through three years | 71,738 | 6.9 | 74,773 | 8.1 | 74,140 | 8.2 | ||||||||||||||||||
Over three years through five years | 93,982 | 9.0 | 84,987 | 9.1 | 82,476 | 9.1 | ||||||||||||||||||
Over five years through ten years | 297,836 | 28.6 | 256,267 | 27.6 | 221,904 | 24.5 | ||||||||||||||||||
Over ten years through fifteen years | 116,368 | 11.2 | 117,875 | 12.7 | 131,531 | 14.5 | ||||||||||||||||||
Over fifteen years | 70,220 | 6.8 | 46,600 | 5.0 | 35,371 | 3.9 | ||||||||||||||||||
Mortgage-backed securities | 361,693 | 34.7 | 309,573 | 33.3 | 306,353 | 33.8 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||
| $ | 1,041,046 | 100.0 | % | $ | 929,357 | 100.0 | % | $ | 905,601 | 100.0 | % | |||||||||||||
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|
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| |||||||||||||
| December 31, | ||||||||||||||||||||||||
| 2021 | 2020 | 2019 | ||||||||||||||||||||||
| (dollars in thousands) | Amount | Percent of Total | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||||||||
Due in(1): | ||||||||||||||||||||||||
| One year or less | $ | 48,771 | 4.1 | % | $ | 73,166 | 6.4 | % | $ | 29,209 | 2.8 | % | ||||||||||||
| Over one year through three years | 93,100 | 7.7 | 85,805 | 7.5 | 71,738 | 6.9 | ||||||||||||||||||
| Over three years through five years | 120,038 | 10.0 | 111,258 | 9.8 | 93,982 | 9.0 | ||||||||||||||||||
| Over five years through ten years | 362,266 | 30.2 | 341,947 | 30.0 | 297,836 | 28.6 | ||||||||||||||||||
| Over ten years through fifteen years | 165,327 | 13.8 | 139,604 | 12.2 | 116,368 | 11.2 | ||||||||||||||||||
| Over fifteen years | 173,523 | 14.4 | 140,732 | 12.3 | 70,220 | 6.8 | ||||||||||||||||||
| Mortgage-backed securities | 237,709 | 19.8 | 249,233 | 21.8 | 361,693 | 34.7 | ||||||||||||||||||
| $ | 1,200,734 | 100.0 | % | $ | 1,141,745 | 100.0 | % | $ | 1,041,046 | 100.0 | % | |||||||||||||
| (1) | Based on stated maturity dates with no prepayment assumptions. Actual maturities will differ because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. |
| Year Ended December 31, | ||||||||||||
| (dollars in thousands) | 2019 | 2018 | 2017 | |||||||||
Invested assets(1) | $ | 1,070,676 | $ | 1,018,334 | $ | 975,695 | ||||||
Investment income(2) | 29,515 | 26,908 | 23,527 | |||||||||
Average yield | 2.8 | % | 2.6 | % | 2.4 | % | ||||||
Averagetax-equivalent yield | 2.9 | 2.8 | 2.8 | |||||||||
| Year Ended December 31, | ||||||||||||
| (dollars in thousands) | 2021 | 2020 | 2019 | |||||||||
Invested assets(1) | $ | 1,249,024 | $ | 1,165,878 | $ | 1,070,676 | ||||||
Investment income(2) | 31,126 | 29,504 | 29,515 | |||||||||
| Average yield | 2.5 | % | 2.5 | % | 2.8 | % | ||||||
| Average tax-equivalent yield | 2.6 | 2.7 | 2.9 | |||||||||
| (1) | Average of the aggregate invested amounts at the beginning and end of the period. |
| (2) | Investment income is net of investment expenses and does not include investment gains or losses or provision for income taxes. |
-20-
require by a substantial margin.
-21-
of risks attributable to such insureds to each company on the basis of the direct premiums it has written in that state or the number of automobiles it insures in that state. Generally, state law requires participation in these programs as a condition to obtaining a certificate of authority. Our loss ratio on insurance we write under these involuntary programs has traditionally been significantly greater than our loss ratio on insurance we voluntarily write in those states.
Name of Insurance Subsidiary | Ordinary Dividend Amount | |||
Atlantic States | $ | 25,903,087 | ||
MICO | 6,576,859 | |||
Peninsula | 1,983,678 | |||
Southern | 5,440,557 | |||
|
| |||
Total | $ | 39,904,181 | ||
|
| |||
| Name of Insurance Subsidiary | Ordinary Dividend Amount | |||
| Atlantic States | $ | 27,888,319 | ||
| MICO | 7,670,872 | |||
| Peninsula | 4,786,779 | |||
| Southern | 6,927,576 | |||
| Total | $ | 47,273,546 | ||
-22-
Our property and casualty insurance operations expose us to claims arising from catastrophic events affecting multiple policyholders. Such catastrophic events consist of various natural disasters, including, but not limited to, hurricanes, tropical storms, tornadoes, windstorms, hailstorms, fires and wildfires, landslides, earthquakes, severe winter weather events andman-made disasters such as terrorist attacks, explosions and infrastructure failures. Historically, our insurance subsidiaries have experienced weather-related losses from hurricanes and tropical storms inMid-Atlantic and Southern states, tornadoes and hailstorms inMid-Atlantic, Midwestern and Southern states and severe winter weather events inMid-Atlantic, Midwestern and New England states.
Losses from catastrophic events are a function of both the extent of our insurance subsidiaries’ exposures, the frequency and severity of the events themselves and the level of reinsurance coverage our insurance subsidiaries purchase. Our ability to appropriately manage catastrophe risk depends partially on catastrophe models, which may be affected by inaccurate or incomplete data, the uncertainty of the frequency and severity of future events and the uncertain impact of climate change.
The increased frequency and severity of weather-related catastrophes and other losses, such as from wildfires, incurred by the industry in 2019 and in prior years may be indicative of changing weather patterns as a result of climate change. While the emerging science regarding climate change and its connection to extreme weather events continues to be subject to debate,studied, climate change, to the extent it produces rising temperatures and changes in weather patterns, could impactaffect the frequency and severity of weather events and wildfiresother losses and thus impact the affordability and availability of catastrophe reinsurance coverage for our insurance subsidiaries. In particular, increased weather-related catastrophes inOur insurance subsidiaries' ability to appropriately manage catastrophe risk depends partially on catastrophe models, which may be affected by inaccurate or incomplete data, the states inuncertainty of the frequency and severity of future events and the uncertain impact of changing climate conditions that tend to occur gradually over time.
higher loss activity.
-23-
insurance subsidiaries expect their ultimate liability to be. Significant periods of time often elapse between the occurrence of an insured loss, the reporting of the loss and the settlement of that loss. It is possible that our insurance subsidiaries’ ultimate liability could exceed these estimates because of the future development of known losses, the existence of losses that have occurred but are currently unreported and larger than historical settlements of pending and unreported claims. The process of estimating reserves is inherently judgmental and can be influenced by a number of factors, including the following:
-24-
changes in weather patterns for property exposures;
unanticipated
-25-
policy forms;
-26-
We
Our
We
We
-27-
the request of stockholders holding at least 20% of the combined voting power of our Class A common stock and our Class B common stock is required for a stockholder to call a special meeting of our stockholders;
-28-
Our
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from stable to negative as a result of the decline in the operating performance of Donegal Mutual and our insurance subsidiaries in 2017 and 2018. In March 2020,2021, A.M. Best affirmed its A (Excellent) ratings of Donegal Mutual and our insurance subsidiaries. However, if A.M. Best were to downgrade the rating of Donegal Mutual or any of our insurance subsidiaries, it would adversely affect the competitive position of Donegal Mutual or that insurance subsidiary and make it more difficult for it to market its products and retain its existing policyholders.
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independent agents. Many of these insurers have greater capital than our insurance subsidiaries and Donegal Mutual, have substantially greater financial, technical and operating resources, have substantially greater exposure and access to potential customers and have equal or higher ratings from A.M. Best than our insurance subsidiaries.subsidiaries and Donegal Mutual. In addition, our competitors may become increasingly better capitalized in the future as the property and casualty insurance industry continues to consolidate.
Because the
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liable to them for any reinsured losses, the reinsurance agreements do not generally relieve our insurance subsidiaries from their primary liability to their policyholders if the reinsurer fails to pay the reinsurance claims of our insurance subsidiaries. To the extent that a reinsurer is unable to pay losses for which it is liable to our insurance subsidiaries, our insurance subsidiaries remain liable for such losses. At December 31, 2019,2021, our insurance subsidiaries had approximately $141.0$138.2 million of reinsurance receivables from third-party reinsurers relating to paid and unpaid losses. Any insolvency or inability of these reinsurers to make timely payments to our insurance subsidiaries under the terms of their reinsurance agreements would adversely affect the results of operations of our insurance subsidiaries.
The growth and profitability of our insurance subsidiaries depend, in part, on the effective maintenance and ongoing development of Donegal Mutual’s information technology systems, and the allocation of related costs to our insurance subsidiaries may adversely impact their profitability.
Our insurance subsidiaries utilize Donegal Mutual’s information technology systems to conduct their insurance business, including policy quoting and issuance, claims processing, processing of incoming premium payments and other important functions. As a result, the ability of our insurance subsidiaries to grow their business and conduct profitable operations depends on Donegal Mutual’s ability to maintain its existing information technology systems and to develop new technology systems that will support the business of Donegal Mutual and our insurance subsidiaries in a cost-efficient manner and provide information technology capabilities equivalent to those of our competitors. The allocation among our insurance subsidiaries and Donegal Mutual of the costs of developing and maintaining Donegal Mutual’s information technology systems may impact adversely our insurance subsidiaries’ expense ratio and underwriting profitability, and such costs may exceed Donegal Mutual’s and our expectations.
Donegal Mutual is currently in the midst of a multi-year effort to modernize certain of its key infrastructure and applications systems. These new systems are intended to provide various benefits to Donegal Mutual and our insurance subsidiaries, including streamlined workflows and business processes, service enhancements for their agents and policyholders, opportunities to implement new product models and innovative business solutions, greater utilization of data analytics and operational efficiencies. Our insurance subsidiaries will issue workers’ compensation policies from the new systems beginning with new policies effective in May 2020 and renewal policies effective in June 2020. Over the next several years, Donegal Mutual expects to implement new systems for the remaining lines of business Donegal Mutual and our insurance subsidiaries offer currently. Even with Donegal Mutual’s and our best planning and efforts and the involvement of third-party experts, Donegal Mutual may not complete the implementation of these new systems within its planned time frames or budget. Further, Donegal Mutual’s information technology systems may not deliver the benefits Donegal Mutual and we expect and may fail to keep pace with our competitors’ information technology systems. As a result, Donegal Mutual and our insurance subsidiaries may not have the ability to grow their business and meet their profitability objectives.
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Donegal Mutual has established various security measures to protect its information technology systems and confidential data, unanticipated computer viruses, malware, ransomware, power outages, unauthorized access or other cyberattacks could disrupt those systems or result in the misappropriation or loss of confidential data. Donegal Mutual could experience technology system failures or other outages that would impact the availability of its information technology systems. Donegal Mutual has experienced brief disruptions of systems in the past, including those systems that allow underwriting and processing of new policies. Disruption in the availability of Donegal Mutual’s information technology systems could impactaffect the ability of Donegal Mutual and our insurance subsidiaries to underwrite and process their policies timely, process and settle claims promptly and provide expected levels of customer service to agents and policyholders.
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
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| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||||
Donegal Group Inc. Class A | $ | 100.00 | $ | 91.28 | $ | 117.47 | $ | 120.28 | $ | 98.62 | $ | 111.55 | ||||||||||||
Donegal Group Inc. Class B | 100.00 | 78.65 | 78.05 | 77.13 | 62.07 | 66.00 | ||||||||||||||||||
Russell 2000 Index | 100.00 | 94.29 | 112.65 | 127.46 | 111.94 | 138.50 | ||||||||||||||||||
Peer Group | 100.00 | 116.63 | 149.50 | 163.45 | 174.68 | 217.01 | ||||||||||||||||||
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||
| Donegal Group Inc. Class A | $ | 100.00 | $ | 102.40 | $ | 83.96 | $ | 94.96 | $ | 93.03 | $ | 98.60 | ||||||||||||
| Donegal Group Inc. Class B | 100.00 | 98.82 | 79.53 | 84.56 | 85.48 | 101.43 | ||||||||||||||||||
| Russell 2000 Index | 100.00 | 114.65 | 102.03 | 129.10 | 155.20 | 177.73 | ||||||||||||||||||
| Peer Group | 100.00 | 113.94 | 119.78 | 149.71 | 134.96 | 157.76 | ||||||||||||||||||
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| Item 6. |
|
| Year Ended December 31, | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Income Statement Data | ||||||||||||||||||||
Premiums earned | $ | 756,078,400 | $ | 741,290,873 | $ | 702,514,755 | $ | 656,204,797 | $ | 605,640,728 | ||||||||||
Investment income, net | 29,514,955 | 26,907,656 | 23,527,304 | 22,632,730 | 20,949,698 | |||||||||||||||
Investment gains (losses) | 21,984,617 | (4,801,509 | ) | 5,705,255 | 2,525,575 | 1,934,424 | ||||||||||||||
Total revenues | 812,451,471 | 771,828,320 | 739,026,537 | 688,423,020 | 636,387,263 | |||||||||||||||
Income (loss) before income tax expense (benefit) | 57,081,030 | (48,236,849 | ) | 12,114,462 | 41,328,407 | 27,592,268 | ||||||||||||||
Income tax expense (benefit) | 9,929,286 | (15,476,509 | ) | 4,998,362 | 10,527,270 | 6,602,235 | ||||||||||||||
Net income (loss) | 47,151,744 | (32,760,340 | ) | 7,116,100 | 30,801,137 | 20,990,033 | ||||||||||||||
Basic earnings (loss) per share - Class A | 1.68 | (1.18 | ) | 0.27 | 1.19 | 0.78 | ||||||||||||||
Diluted earnings (loss) per share - Class A | 1.67 | (1.18 | ) | 0.26 | 1.16 | 0.77 | ||||||||||||||
Cash dividends per share - Class A | 0.58 | 0.57 | 0.56 | 0.55 | 0.54 | |||||||||||||||
Basic earnings (loss) per share - Class B | 1.51 | (1.09 | ) | 0.22 | 1.06 | 0.69 | ||||||||||||||
Diluted earnings (loss) per share - Class B | 1.51 | (1.09 | ) | 0.22 | 1.06 | 0.69 | ||||||||||||||
Cash dividends per share - Class B | 0.51 | 0.50 | 0.49 | 0.48 | 0.47 | |||||||||||||||
Balance Sheet Data at Year End | ||||||||||||||||||||
Total investments | $ | 1,110,553,363 | $ | 1,030,798,566 | $ | 1,005,869,705 | $ | 945,519,655 | $ | 900,822,274 | ||||||||||
Total assets | 1,923,161,131 | 1,832,078,267 | 1,737,919,778 | 1,623,131,037 | 1,537,834,415 | |||||||||||||||
Debt obligations | 40,000,000 | 65,000,000 | 64,000,000 | 74,000,000 | 86,000,000 | |||||||||||||||
Stockholders’ equity | 451,015,519 | 398,869,901 | 448,696,104 | 438,615,320 | 408,388,568 | |||||||||||||||
Book value per share | 15.67 | 14.05 | 15.95 | 16.21 | 15.66 | |||||||||||||||
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During 2018, we and Donegal Mutual implemented a number of actions to improve our financial results and enhance our operations in the future. Those actions included implementing premium rate increases in many The personal lines products of our operating statesinsurance subsidiaries consist primarily of homeowners and business lines, strengthening our loss reserves in response to changing loss reporting and litigation trends, entering into a transfer agreement to facilitate an orderly exit from the personal lines markets in seven states where we projected continuing underwriting losses, consolidating a regional branch office into our home office, consolidating our reinsurance program for 2019 and initiating a multi-year systems modernization project.
We and Donegal Mutual Insurance Company sold Donegal Financial Services Corporation (“DFSC”) to Northwest Bancshares, Inc. (“Northwest”) on March 8, 2019, resulting in proceeds valued at approximately $85.8 million in a combination of cash and Northwest common stock. Immediately prior to the closing of the merger, DFSC paid a dividend of approximately $29.2 million to us and Donegal Mutual. As the owner of 48.2% of DFSC’s common stock, we received a dividend payment from DFSC of approximately $14.1 million and consideration from Northwest valued at approximately $41.4 million. We recorded a gain of $12.7 million from the sale of DFSC in our results of operations during 2019. We sold the Northwest common stock that we received as part of the consideration during 2019. This transaction represented the culmination of a banking strategy that began with the formation of DFSC in 2000.
private passenger automobile policies.
In July 2013, our board of directors authorized a share repurchase program pursuant to which we have the authority to purchase up to 500,000 additional shares of our Class A common stock at prices prevailing from time to time in the open market subject to the provisions of the SECRule 10b-18 and in privately negotiated transactions. We did not purchase any shares of our Class A common stock under this program during 2019 or 2018. We have purchased a total of 57,658 shares of our Class A common stock under this program from its inception through December 31, 2019.
Critical Accounting Policies and Estimates
We combine our financial statements with those of our insurance subsidiaries and present them on a consolidated basis in accordance with GAAP.
Our insurance subsidiaries make estimates and assumptions that can have a significant effect on amounts and disclosures we report in our financial statements. The most significant estimates relate to the reserves of our insurance subsidiaries for property and casualty insurance unpaid losses and loss expenses. While we believe our estimates and the estimates of our insurance subsidiaries are appropriate, the ultimate amounts may differ from the estimates we provided. We regularly review our methods for making these estimates, and we reflect any adjustment we consider necessary in our results of operations for the period in which we make an adjustment.
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Liability for Losses and Loss Expenses
Liabilities for losses and loss expenses are estimates at a given point in time of the amounts an insurer expects to pay with respect to incurred policyholder claims based on facts and circumstances the insurer knows at that point in time. At the time of establishing its estimates, an insurer recognizes that its ultimate liability for losses and loss expenses will exceed or be less than such estimates. Our insurance subsidiaries base their estimates of liabilities for losses and loss expenses on assumptions as to future loss trends, expected claims severity, judicial theories of liability and other factors. However, during the loss adjustment period, our insurance subsidiaries may learn additional facts regarding individual claims, and, consequently, it often becomes necessary for our insurance subsidiaries to refine and adjust their estimates for these liabilities. We reflect any adjustments to the liabilities for losses and loss expenses of our insurance subsidiaries in our consolidated results of operations in the period in which our insurance subsidiaries make adjustments to their estimates.
Our insurance subsidiaries maintain liabilities for the payment of losses and loss expenses with respect to both reported and unreported claims. Our insurance subsidiaries establish these liabilities for the purpose of covering the ultimate costs of settling all losses, including investigation and litigation costs. Our insurance subsidiaries base the amount of their liability for reported losses primarily upon acase-by-case evaluation of the type of risk involved, knowledge of the circumstances surrounding each claim and the insurance policy provisions relating to the type of loss the policyholder incurred. Our insurance subsidiaries determine the amount of their liability for unreported claims and loss expenses on the basis of historical information by line of insurance. Our insurance subsidiaries account for inflation in the reserving function through analysis of costs and trends and reviews of historical reserving results. Our insurance subsidiaries monitor their liabilities closely and recompute them periodically using new information on reported claims and a variety of statistical techniques. Our insurance subsidiaries do not discount their liabilities for losses and loss expenses.
Reserve estimates can change over time because of unexpected changes in assumptions related to our insurance subsidiaries’ external environment and, to a lesser extent, assumptions related to our insurance subsidiaries’ internal operations. For example, our insurance subsidiaries have experienced an increase in claims severity and a lengthening of the claim settlement periods on bodily injury claims during the past several years. These trend changes give rise to greater uncertainty as to the pattern of future loss settlements on bodily injury claims. Related uncertainties regarding future trends include the rate of plaintiff attorney involvement in claims and the cost of medical technologies and procedures. Assumptions related to our insurance subsidiaries’ external environment include the absence of significant changes in tort law and the legal environment that increase liability exposure, consistency in judicial interpretations of insurance coverage and policy provisions and the rate of loss cost inflation. Internal assumptions include consistency in the recording of premium and loss statistics, consistency in the recording of claims, payment and case reserving methodology, accurate measurement of the impact of rate changes and changes in policy provisions, consistency in the quality and characteristics of business written within a given line of business and consistency in reinsurance coverage and collectability of reinsured losses, among other items. To the extent our insurance subsidiaries determine that underlying factors impacting their assumptions have changed, our insurance subsidiaries make adjustments in their reserves that they consider appropriate for such changes. Accordingly, our insurance subsidiaries’ ultimate liability for unpaid losses and loss expenses will likely differ from the amount recorded at December 31, 2019. For every 1% change in our insurance subsidiaries’ loss and loss expense reserves, net of reinsurance recoverable, the effect on ourpre-tax results of operations would be approximately $5.1 million.
The establishment of appropriate liabilities is an inherently uncertain process and we can provide no assurance that our insurance subsidiaries’ ultimate liability will not exceed our insurance subsidiaries’ loss and loss expense reserves and have an adverse effect on our results of operations and financial condition. Furthermore, we cannot predict the timing, frequency and extent of adjustments to our insurance subsidiaries’ estimated future liabilities, because the historical conditions and events that serve as a basis for our insurance subsidiaries’ estimates of ultimate claim costs may change. As is the case for substantially all property and casualty insurance companies, our insurance subsidiaries have found it necessary in the past to increase their estimated future liabilities for losses and loss expenses in certain periods and, in other periods, their estimated future liabilities for losses and loss expenses have exceeded their actual liabilities for losses and loss expenses. Changes in our insurance subsidiaries’ estimates of their liability for losses and loss expenses generally reflect actual payments and their evaluation of information received subsequent to the prior reporting period.
Our insurance subsidiaries recognized a (decrease) increase in their liability for losses and loss expenses of prior years of ($12.9 million), $35.6 million and $6.6 million in 2019, 2018 and 2017, respectively. Our insurance subsidiaries made no significant changes in their reserving philosophy or claims management personnel, and they have made no significant offsetting changes in estimates that increased or decreased their loss and loss expense reserves in those years. The 2019 development
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represented 2.7% of the December 31, 2018 net carried reserves and resulted primarily from lower-than-expected severity in the workers’ compensation line of business, partially offset by higher-than-expected severity in the commercial automobile and commercial multi-peril lines of business, for accident years prior to 2019. The majority of the 2019 development related to decreases in the liability for losses and loss expenses of prior years for Atlantic States and Michigan. The 2018 development represented 9.3% of the December 31, 2017 net carried reserves and resulted primarily from higher-than-expected severity in the commercial multi-peril, personal automobile and commercial automobile lines of business, offset by lower-than-expected severity in the workers’ compensation line of business, for accident years prior to 2018. The majority of the 2018 development related to increases in the liability for losses and loss expenses of prior years for Atlantic States and Southern. During 2018, our insurance subsidiaries received new information on previously-reported commercial automobile and personal automobile claims that led our insurance subsidiaries to conclude that their prior actuarial assumptions did not fully anticipate recent changes in severity and reporting trends. Our insurance subsidiaries have encountered increasing difficulties in projecting the ultimate severity of automobile losses over recent accident years, which our insurance subsidiaries attribute to worsening litigation trends and an increased delay in the reporting to our insurance subsidiaries of information with respect to the severity of claims. As a result, our insurance subsidiaries’ actuaries increased their projections of the ultimate cost of our insurance subsidiaries’ prior-year personal automobile and commercial automobile losses, and our insurance subsidiaries added $17.7 million to their reserves for personal automobile and $20.8 million to their reserves for commercial automobile for accident years prior to 2018. The 2017 development represented 1.9% of the December 31, 2016 net carried reserves and resulted primarily from higher-than-expected severity in the commercial multi-peril, personal automobile and commercial automobile lines of business, offset by lower-than-expected severity in the workers’ compensation line of business, for accident years prior to 2017. The majority of the 2017 development related to increases in the liability for losses and loss expenses of prior years for Atlantic States and Peninsula.
Excluding the impact of severe weather events, our insurance subsidiaries have noted stable amounts in the number of claims incurred and the number of claims outstanding at period ends relative to their premium base in recent years across most of their lines of business. However, the amount of the average claim outstanding has increased gradually over the past several years due to various factors such as rising medical loss costs and increased litigation trends. We have also experienced a general slowing of settlement rates in litigated claims. Our insurance subsidiaries could have to make further adjustments to their estimates in the future. However, on the basis of our insurance subsidiaries’ internal procedures, which analyze, among other things, their prior assumptions, their experience with similar cases and historical trends such as reserving patterns, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions and public attitudes, we believe that our insurance subsidiaries have made adequate provision for their liability for losses and loss expenses.
Atlantic States’ participation in the pool with Donegal Mutual exposes Atlantic States to adverse loss development on the business of Donegal Mutual that the pool includes. However, pooled business represents the predominant percentage of the net underwriting activity of both companies, and Donegal Mutual and Atlantic States share proportionately any adverse risk development relating to the pooled business. The business in the pool is homogeneous and each company has apro-rata share of the entire pool. Since the predominant percentage of the business of Atlantic States and Donegal Mutual is pooled and the results shared by each company according to its participation level under the terms of the pooling agreement, the intent of the underwriting pool is to produce a more uniform and stable underwriting result from year to year for each company than either would experience individually and to spread the risk of loss between the companies.
Donegal Mutual and our insurance subsidiaries operate together as the Donegal Insurance Group and share a combined business plan designed to achieve market penetration and underwriting profitability objectives. The products our insurance subsidiaries and Donegal Mutual offer are generally complementary, thereby allowing Donegal Insurance Group to offer a broader range of products to a given market and to expand Donegal Insurance Group’s ability to service an entire personal lines or commercial lines account. Distinctions within the products of Donegal Mutual and our insurance subsidiaries generally relate to specific risk profiles targeted within similar classes of business, such as preferred tier products compared to standard tier products, but we do not allocate all of the standard risk gradients to one company. Therefore, the underwriting profitability of the business the individual companies write directly will vary. However, because the pool homogenizes the risk characteristics of the predominant percentage of the business Donegal Mutual and Atlantic States write directly and each company shares the underwriting results according to each company’s participation percentage, each company realizes its percentage share of the underwriting results of the pool.
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| 2019 | 2018 | |||||||
| (in thousands) | ||||||||
Commercial lines: | ||||||||
Automobile | $ | 126,224 | $ | 106,734 | ||||
Workers’ compensation | 109,060 | 109,512 | ||||||
Commercial multi-peril | 102,424 | 85,937 | ||||||
Other | 9,115 | 5,207 | ||||||
|
|
|
| |||||
Total commercial lines | 346,823 | 307,390 | ||||||
|
|
|
| |||||
Personal lines: | ||||||||
Automobile | 132,191 | 144,788 | ||||||
Homeowners | 23,494 | 18,374 | ||||||
Other | 4,398 | 4,846 | ||||||
|
|
|
| |||||
Total personal lines | 160,083 | 168,008 | ||||||
|
|
|
| |||||
Total commercial and personal lines | 506,906 | 475,398 | ||||||
Plus reinsurance recoverable | 362,768 | 339,267 | ||||||
|
|
|
| |||||
Total liability for losses and loss expenses | $ | 869,674 | $ | 814,665 | ||||
|
|
|
| |||||
| 2021 | 2020 | |||||||
| (in thousands) | ||||||||
| Commercial lines: | ||||||||
| Automobile | $ | 172,302 | $ | 151,813 | ||||
| Workers’ compensation | 122,398 | 118,037 | ||||||
| Commercial multi-peril | 168,445 | 126,299 | ||||||
| Other | 18,530 | 13,212 | ||||||
| Total commercial lines | 481,675 | 409,361 | ||||||
| Personal lines: | ||||||||
| Automobile | 109,915 | 120,861 | ||||||
| Homeowners | 26,169 | 20,976 | ||||||
| Other | 8,600 | 5,991 | ||||||
| Total personal lines | 144,684 | 147,828 | ||||||
| Total commercial and personal lines | 626,359 | 557,189 | ||||||
| Plus reinsurance recoverable | 451,261 | 404,818 | ||||||
| Total liability for losses and loss expenses | $ | 1,077,620 | $ | 962,007 | ||||
Change in Loss and Loss Expense Reserves Net of Reinsurance | Adjusted Loss and Loss Reinsurance at December 31, 2019 | Percentage Change in Equity at December 31, 2019(1) | Adjusted Loss and Loss Reinsurance at December 31, 2018 | Percentage Change in Equity at December 31, 2018(1) | ||||
| (dollars in thousands) | ||||||||
-10.0% | $456,215 | 8.9% | $427,858 | 9.4% | ||||
-7.5 | 468,888 | 6.7 | 439,743 | 7.1 | ||||
-5.0 | 481,561 | 4.4 | 451,628 | 4.7 | ||||
-2.5 | 494,233 | 2.2 | 463,513 | 2.4 | ||||
Base | 506,906 | — | 475,398 | — | ||||
2.5 | 519,579 | -2.2 | 487,283 | -2.4 | ||||
5.0 | 532,251 | -4.4 | 499,168 | -4.7 | ||||
7.5 | 544,924 | -6.7 | 511,053 | -7.1 | ||||
10.0 | 557,597 | -8.9 | 522,938 | -9.4 | ||||
|
Change in Loss and Loss Expense Reserves Net of Reinsurance | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2021 | Percentage Change in Equity at December 31, 2021(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2020 | Percentage Change in Equity at December 31, 2020(1) | |||||||||||||
| (dollars in thousands) | |||||||||||||||||
| -10.0 | % | $ | 563,723 | 9.3 | % | $ | 501,470 | 8.5 | % | ||||||||
| -7.5 | 579,382 | 7.0 | 515,400 | 6.4 | |||||||||||||
| -5.0 | 595,041 | 4.7 | 529,330 | 4.3 | |||||||||||||
| -2.5 | 610,700 | 2.3 | 543,259 | 2.1 | |||||||||||||
| Base | 626,359 | — | 557,189 | — | |||||||||||||
| 2.5 | 642,018 | -2.3 | 571,119 | -2.1 | |||||||||||||
| 5.0 | 657,677 | -4.7 | 585,048 | -4.3 | |||||||||||||
| 7.5 | 673,336 | -7.0 | 598,978 | -6.4 | |||||||||||||
| 10.0 | 688,995 | -9.3 | 612,908 | -8.5 | |||||||||||||
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subsidiaries consistently apply actuarial loss reserving techniques and assumptions, which rely on historical information as adjusted to reflect current conditions, including consideration of recent case reserve activity. Our insurance subsidiaries use the most-likely numberpoint estimate their actuaries determine.Forselect.For the year ended December 31, 2019,2021, the actuaries developed a range from a low of $468.8$575.7 million to a high of $548.1 $681.5million and withselected a most-likely numberpoint estimate of $506.9$626.4 million. The actuaries’ range of estimates for commercial lines in 20192021 was $320.8$442.8 million to $375.0$524.0 million, and the actuaries selected the most-likely numbera point estimate of $346.8$481.7 million. The actuaries’ range of estimates for personal lines in 20192021 was $148.0$132.9 million to $173.1$157.5 million, and the actuaries selected the most-likely numbera point estimate of $160.1$144.7 million. For the year ended December 31, 2018,2020, the actuaries developed a range from a low of $436.1$512.9 million to a high of $518.3$605.3 million and withselected a most-likely numberpoint estimate of $475.4$557.2 million. The actuaries’ range of estimates for commercial lines in 20182020 was $282.0$376.9 million to $335.0$444.7 million, and the actuaries selected the most-likely numbera point estimate of $307.4$409.4 million. The actuaries’ range of estimates for personal lines in 20182020 was $154.0$136.0 million to $183.2$160.6 million, and the actuaries selected the most-likely numbera point estimate of $168.0$147.8 million.
| For the Year Ended December 31, | ||||||||
| (dollars in thousands) | 2019 | 2018 | ||||||
Number of claims pending, beginning of period | 2,902 | 2,906 | ||||||
Number of claims reported | 6,868 | 6,475 | ||||||
Number of claims settled or dismissed | 6,756 | 6,479 | ||||||
Number of claims pending, end of period | 3,014 | 2,902 | ||||||
Losses paid | $ | 42,043 | $ | 43,129 | ||||
Loss expenses paid | 8,885 | 9,226 | ||||||
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| For the Year Ended December 31, | ||||||||
| (dollars in thousands) | 2021 | 2020 | ||||||
| Number of claims pending, beginning of period | 2,898 | 3,014 | ||||||
| Number of claims reported | 6,883 | 5,935 | ||||||
| Number of claims settled or dismissed | 6,445 | 6,051 | ||||||
| Number of claims pending, end of period | 3,336 | 2,898 | ||||||
| Losses paid | $ | 50,664 | $ | 38,204 | ||||
| Loss expenses paid | 10,067 | 9,065 | ||||||
| Year Ended December 31, | ||||||||||||
| (in thousands) | 2019 | 2018 | 2017 | |||||||||
Net premiums written: | ||||||||||||
Commercial lines: | ||||||||||||
Automobile | $ | 122,142 | $ | 108,123 | $ | 99,333 | ||||||
Workers’ compensation | 113,684 | 109,022 | 109,884 | |||||||||
Commercial multi-peril | 138,750 | 117,509 | 110,313 | |||||||||
Other | 30,303 | 15,241 | 9,586 | |||||||||
|
|
|
|
|
| |||||||
Total commercial lines | 404,879 | 349,895 | 329,116 | |||||||||
|
|
|
|
|
| |||||||
Personal lines: | ||||||||||||
Automobile | 210,507 | 249,275 | 255,297 | |||||||||
Homeowners | 117,118 | 123,782 | 125,054 | |||||||||
Other | 20,097 | 21,064 | 19,672 | |||||||||
|
|
|
|
|
| |||||||
Total personal lines | 347,722 | 394,121 | 400,023 | |||||||||
|
|
|
|
|
| |||||||
Total net premiums written | $ | 752,601 | $ | 744,016 | $ | 729,139 | ||||||
|
|
|
|
|
| |||||||
Components of combined ratio: | ||||||||||||
Loss ratio | 67.0 | % | 77.8 | % | 69.4 | % | ||||||
Expense ratio | 31.3 | 31.6 | 32.9 | |||||||||
Dividend ratio | 1.2 | 0.7 | 0.7 | |||||||||
|
|
|
|
|
| |||||||
Combined ratio | 99.5 | % | 110.1 | % | 103.0 | % | ||||||
|
|
|
|
|
| |||||||
Revenues: | ||||||||||||
Premiums earned: | ||||||||||||
Commercial lines | $ | 385,465 | $ | 337,924 | $ | 318,391 | ||||||
Personal lines | 370,613 | 403,367 | 384,124 | |||||||||
|
|
|
|
|
| |||||||
Total premiums earned | 756,078 | 741,291 | 702,515 | |||||||||
Net investment income | 29,515 | 26,908 | 23,527 | |||||||||
Investment gains (losses) | 21,985 | (4,802 | ) | 5,705 | ||||||||
Equity in earnings of DFSC | 295 | 2,694 | 1,622 | |||||||||
Other | 4,578 | 5,737 | 5,658 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | $ | 812,451 | $ | 771,828 | $ | 739,027 | ||||||
|
|
|
|
|
| |||||||
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Year Ended December 31, (in thousands) 2021 2020 2019 Net premiums written: Commercial lines: Automobile $ 161,947 $ 135,294 $ 122,142 Workers’ compensation 113,256 109,960 113,684 Commercial multi-peril 188,242 147,993 138,750 Other 38,340 32,739 30,303 Total commercial lines 501,785 425,986 404,879 Personal lines: Automobile 170,578 184,602 210,507 Homeowners 109,974 111,886 117,118 Other 21,930 19,666 20,097 Total personal lines 302,482 316,154 347,722 Total net premiums written $ 804,267 $ 742,140 $ 752,601 Components of combined ratio: Loss ratio 67.1 % 62.0 % 67.0 % Expense ratio 33.3 33.0 31.3 Dividend ratio 0.6 1.0 1.2 Combined ratio 101.0 % 96.0 % 99.5 % Revenues: Net premiums earned: Commercial lines $ 468,433 $ 412,877 $ 385,465 Personal lines 307,582 329,163 370,613 Total net premiums earned 776,015 742,040 756,078 Net investment income 31,126 29,504 29,515 Investment gains 6,477 2,778 21,985 Equity in earnings of DFSC — — 295 Other 2,848 3,497 4,578 Total revenues $ 816,466 $ 777,819 $ 812,451
| Year Ended December 31, | ||||||||||||
| (in thousands) | 2019 | 2018 | 2017 | |||||||||
Components of net income: | ||||||||||||
Underwriting income (loss): | ||||||||||||
Commercial lines | $ | 8,404 | $ | (22,059 | ) | $ | 13,263 | |||||
Personal lines | (1,617 | ) | (53,590 | ) | (39,042 | ) | ||||||
|
|
|
|
|
| |||||||
SAP underwriting income (loss) | 6,787 | (75,649 | ) | (25,779 | ) | |||||||
GAAP adjustments | (3,079 | ) | 894 | 4,408 | ||||||||
|
|
|
|
|
| |||||||
GAAP underwriting income (loss) | 3,708 | (74,755 | ) | (21,371 | ) | |||||||
Net investment income | 29,515 | 26,908 | 23,527 | |||||||||
Investment gains (losses) | 21,985 | (4,802 | ) | 5,705 | ||||||||
Equity in earnings of DFSC | 295 | 2,694 | 1,622 | |||||||||
Other | 1,578 | 1,718 | 2,631 | |||||||||
|
|
|
|
|
| |||||||
Income (loss) before income tax expense (benefit) | 57,081 | (48,237 | ) | 12,114 | ||||||||
Income tax expense (benefit) | 9,929 | (15,477 | ) | 4,998 | ||||||||
|
|
|
|
|
| |||||||
Net income (loss) | $ | 47,152 | $ | (32,760 | ) | $ | 7,116 | |||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| (in thousands) | 2021 | 2020 | 2019 | |||||||||
| Components of net income: | ||||||||||||
| Underwriting (loss) income: | ||||||||||||
| Commercial lines | $ | (35,174 | ) | $ | (858 | ) | $ | 8,404 | ||||
| Personal lines | 17,235 | 31,764 | (1,617 | ) | ||||||||
| SAP underwriting (loss) income | (17,939 | ) | 30,906 | 6,787 | ||||||||
| GAAP adjustments | 9,945 | (959 | ) | (3,079 | ) | |||||||
| GAAP underwriting (loss) income | (7,994 | ) | 29,947 | 3,708 | ||||||||
| Net investment income | 31,126 | 29,504 | 29,515 | |||||||||
| Investment gains | 6,477 | 2,778 | 21,985 | |||||||||
| Equity in earnings of DFSC | — | — | 295 | |||||||||
| Other | 730 | 1,043 | 1,578 | |||||||||
| Income before income tax expense | 30,339 | 63,272 | 57,081 | |||||||||
| Income tax expense | 5,085 | 10,457 | 9,929 | |||||||||
| Net income | $ | 25,254 | $ | 52,815 | $ | 47,152 | ||||||
| Year Ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
Net premiums earned | $ | 756,078,400 | $ | 741,290,873 | $ | 702,514,755 | ||||||
Change in net unearned premiums | (3,477,111 | ) | 2,724,931 | 26,624,163 | ||||||||
|
|
|
|
|
| |||||||
Net premiums written | $ | 752,601,289 | $ | 744,015,804 | $ | 729,138,918 | ||||||
|
|
|
|
|
| |||||||
2019:
| Year Ended December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Net premiums earned | $ | 776,015,201 | $ | 742,040,339 | $ | 756,078,400 | ||||||
| Change in net unearned premiums | 28,251,308 | 99,554 | (3,477,111 | ) | ||||||||
| Net premiums written | $ | 804,266,509 | $ | 742,139,893 | $ | 752,601,289 | ||||||
-44-
| Year Ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
GAAP Combined Ratios (Total Lines) | ||||||||||||
Loss ratio(non-weather) | 60.9 | % | 69.0 | % | 61.1 | % | ||||||
Loss ratio (weather-related) | 6.1 | 8.8 | 8.3 | |||||||||
Expense ratio | 31.3 | 31.6 | 32.9 | |||||||||
Dividend ratio | 1.2 | 0.7 | 0.7 | |||||||||
|
|
|
|
|
| |||||||
Combined ratio | 99.5 | % | 110.1 | % | 103.0 | % | ||||||
|
|
|
|
|
| |||||||
Statutory Combined Ratios | ||||||||||||
Commercial lines: | ||||||||||||
Automobile | 117.4 | % | 133.3 | % | 115.0 | % | ||||||
Workers’ compensation | 78.5 | 86.6 | 79.0 | |||||||||
Commercial multi-peril | 93.7 | 98.1 | 96.7 | |||||||||
Other | 72.6 | 54.6 | 10.2 | |||||||||
Total commercial lines | 95.0 | 103.8 | 93.6 | |||||||||
Personal lines: | ||||||||||||
Automobile | 105.7 | 117.4 | 109.3 | |||||||||
Homeowners | 101.2 | 110.5 | 109.9 | |||||||||
Other | 73.2 | 96.4 | 90.8 | |||||||||
Total personal lines | 102.6 | 114.1 | 108.5 | |||||||||
Total commercial and personal lines | 98.7 | 109.4 | 101.7 | |||||||||
-45-
| Year Ended December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| GAAP Combined Ratios (Total Lines) | ||||||||||||
| Loss ratio (non-weather) | 61.3 | % | 55.1 | % | 60.9 | % | ||||||
| Loss ratio (weather-related) | 5.8 | 6.9 | 6.1 | |||||||||
| Expense ratio | 33.3 | 33.0 | 31.3 | |||||||||
| Dividend ratio | 0.6 | 1.0 | 1.2 | |||||||||
| Combined ratio | 101.0 | % | 96.0 | % | 99.5 | % | ||||||
| Statutory Combined Ratios | ||||||||||||
| Commercial lines: | ||||||||||||
| Automobile | 108.6 | % | 112.7 | % | 117.4 | % | ||||||
| Workers’ compensation | 94.6 | 86.3 | 78.5 | |||||||||
| Commercial multi-peril | 114.1 | 98.4 | 93.7 | |||||||||
| Other | 77.5 | 74.0 | 72.6 | |||||||||
| Total commercial lines | 104.9 | 97.8 | 95.0 | |||||||||
| Personal lines: | ||||||||||||
| Automobile | 94.4 | 91.3 | 105.7 | |||||||||
| Homeowners | 102.9 | 97.2 | 101.2 | |||||||||
| Other | 49.3 | 74.9 | 73.2 | |||||||||
| Total personal lines | 94.4 | 92.4 | 102.6 | |||||||||
| Total commercial and personal lines | 100.8 | 95.4 | 98.7 | |||||||||
2020
increases.
assets for 2021 compared to 2020.
2020.
2020, with the decrease primarily impacting the commercial multi-peril line of business. Large fire losses, which we define as individual fire losses in excess of $50,000, were $45.6 million, or 5.9 percentage points of the loss ratio, for 2021, compared to $22.8 million, or 3.1 percentage points of the loss ratio, for 2020. The significant increase was related to a higher incidence of both commercial property and home fires in 2021 compared to 2020.
-46-
2020.
effect, as allowed under the Coronavirus Aid, Relief and Economic Security Act that was enacted in March 2020.
earlier, primarily as a result of an increase in the number of Class A shares outstanding during the year.
2019
-47-
assets offset a modest decrease in the average investment yield.
Equity in Earnings of DFSC
Our equity in the earnings of DFSC in 2018 and 2017 was $2.7 million and $1.6 million, respectively. We attribute the increase in DFSC’s earnings primarily to higher net interest income related to loan portfolio growth that DFSC achieved during 2018.
2019.
line of business over the respective periods to which the dividends applied.
2019.
-48-
In March 2019, we terminated our previous credit agreement with Manufacturers and Traders Trust Company (“M&T”) and entered into a new credit agreement with M&T. The new credit agreement relates to a $30.0 million unsecured revolving line of credit. The line of credit expires in July 2020.
Atlantic States is a member of the FHLB of Pittsburgh. Through its membership,Pittsburgh that carry a fixed interest rate of 1.74%. In March 2020, Atlantic States has the ability to issueissued $50.0 million of debt to the FHLB of Pittsburgh in exchange for a cash advances. In August 2019,advance in the same amount for contingent liquidity funding in light of uncertainty surrounding the economic impact of the COVID-19 pandemic. Atlantic States exchanged a variable-rate cashrepaid this advance of $35.0 million that waswhen it became due in March 2020 for a fixed-rate cash advance2021. In September 2021, upon receipt of $35.0 million that was outstanding at December 31, 2019. Atlantic States incurred a penalty of $176,000 related to the early termination of its previous cash advance. The new cash advance carries a fixed interest rate of 1.74% and is due in August 2024.
-49-
The following table shows expected payments for our significant contractual obligations at December 31, 2019:
| (in thousands) | Total | Less than 1 year | 1-3 years | 4-5 years | After 5 years | |||||||||||||||
Net liability for unpaid losses and loss expenses of our insurance subsidiaries | $ | 506,906 | $ | 231,924 | $ | 237,195 | $ | 18,976 | $ | 18,811 | ||||||||||
Subordinated debentures | 5,000 | — | — | — | 5,000 | |||||||||||||||
Borrowings under lines of credit | 35,000 | — | — | 35,000 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total contractual obligations | $ | 546,906 | $ | 231,924 | $ | 237,195 | $ | 53,976 | $ | 23,811 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
We estimated the timing of the amounts for the net liability for unpaid losses and loss expenses of our insurance subsidiaries based on historical experience and expectations of future payment patterns. We have shown the liability net of reinsurance recoverable on unpaid losses and loss expenses to reflect expected future cash flows related to such liability. Assumed amountsapproval from the underwriting pool withMichigan Department of Insurance and Financial Services, MICO repaid in full the $5.0 million surplus note held previously by Donegal Mutual, represent a substantial portionalong with accrued interest of our insurance subsidiaries’ gross liability for unpaid losses and loss expenses, and ceded amounts to the underwriting pool represent a substantial portion of our insurance subsidiaries’ reinsurance recoverable on unpaid losses and loss expenses. We include cash settlements of Atlantic States’ assumed liability from the pool in our monthly settlements of pooled activity. In these monthly settlements, we net amounts ceded to and assumed from the pool. Donegal Mutual and Atlantic States do not anticipate any further changes in the pool participation levels in the foreseeable future. However, any such change would be prospective in nature and therefore would not impact the timing of expected payments for Atlantic States’ proportionate liability for pooled losses occurring in periods prior to the effective date of such change.
$178,082. We discuss in Note 9 – Borrowings our estimate of the timing of the amounts payable for the borrowings under our lines of credit based on their contractual maturities. The borrowings under
the pool participation levels in the foreseeable future, any such change would be prospective in nature and therefore would not impact the timing of expected payments by Atlantic States for its percentage share of pooled losses occurring in periods prior to the effective date of such change.
-50-
| December 31, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| (dollars in thousands) | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||
Fixed maturities: | ||||||||||||||||
Total held to maturity | $ | 476,094 | 42.9 | % | $ | 402,799 | 39.1 | % | ||||||||
Total available for sale | 564,952 | 50.8 | 526,558 | 51.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total fixed maturities | 1,041,046 | 93.7 | 929,357 | 90.2 | ||||||||||||
Equity securities | 55,477 | 5.0 | 43,667 | 4.2 | ||||||||||||
Investment in affiliate | — | — | 41,026 | 4.0 | ||||||||||||
Short-term investments | 14,030 | 1.3 | 16,749 | 1.6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments | $ | 1,110,553 | 100.0 | % | $ | 1,030,799 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, | ||||||||||||||||
| 2021 | 2020 | |||||||||||||||
| (dollars in thousands) | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||
| Fixed maturities: | ||||||||||||||||
| Total held to maturity | $ | 668,105 | 52.3 | % | $ | 586,609 | 48.0 | % | ||||||||
| Total available for sale | 532,629 | 41.7 | 555,136 | 45.5 | ||||||||||||
| Total fixed maturities | 1,200,734 | 94.0 | 1,141,745 | 93.5 | ||||||||||||
| Equity securities | 63,420 | 5.0 | 58,556 | 4.8 | ||||||||||||
| Short-term investments | 12,692 | 1.0 | 20,901 | 1.7 | ||||||||||||
| Total investments | $ | 1,276,846 | 100.0 | % | $ | 1,221,202 | 100.0 | % | ||||||||
2020, respectively.
2020.
In February 2016, the FASB issued guidance that requires lessees to recognize leases, including operating leases, on the lessee’s balance sheet, unless a lease is considered a short-term lease. This guidance also requires entities to make new judgments to identify leases. The guidance was effective for annual and interim reporting periods beginning after December 15, 2018 and permitted early adoption. Our adoption of this guidance on January 1, 2019 did not have a significant impact on our financial position, results of operations or cash flows.
-51-
In January 2017, the FASB issued guidance that simplifies the measurement of goodwill by modifying the goodwill impairment test previous guidance required. The guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize impairment for the amount by which the reporting unit’s carrying amount exceeds its fair value. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019 and permits early adoption. We early adopted this guidance in 2019. The adoption of this guidance did not have a significant impact on our financial position, results of operations or cash flows.
In August 2018, the FASB issued guidance that modifies disclosure requirements related to fair value measurements. The guidance removes the requirements to disclose the amounts of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019 and permits early adoption. We early adopted this guidance in 2019. The adoption of this guidance on January 1, 2019 did not have a significant impact on our financial position, results of operations or cash flows.
In JuneSeptember 2016, the FASB issued guidance that amends previous guidance on the impairment of financial instruments by adding an impairment model that requires an entity to recognize expected credit losses as an allowance rather than impairments as credit losses are incurred. The intent of this guidance is to reduce complexity and result in a more timely recognition of expected credit losses. In November 2019, the FASB issued guidance that delays the effective date for “smaller reporting companies,” as defined in Item 10(f)(1) of RegulationS-K, to annual and interim reporting periods beginning after December 15, 2022 from December 15, 2019. We are a smaller reporting company and are in the process of evaluating the impact of the adoption of this guidance on our financial position, results of operations and cash flows.
-52-
| (in thousands) | Principal Cash Flows | Weighted- Average Interest Rate | ||||||
Fixed-maturity and short-term investments: | ||||||||
2020 | $ | 43,644 | 2.40 | % | ||||
2021 | 38,710 | 3.42 | ||||||
2022 | 37,547 | 3.06 | ||||||
2023 | 46,126 | 2.87 | ||||||
2024 | 53,971 | 3.71 | ||||||
Thereafter | 821,889 | 3.47 | ||||||
|
| |||||||
Total | $ | 1,041,887 | ||||||
|
| |||||||
Fair value | $ | 1,079,296 | ||||||
|
| |||||||
Debt: | ||||||||
2024 | $ | 35,000 | 1.74 | % | ||||
Thereafter | 5,000 | 5.00 | ||||||
|
| |||||||
Total | $ | 40,000 | ||||||
|
| |||||||
Fair value | $ | 40,000 | ||||||
|
| |||||||
| (in thousands) | Principal Cash Flows | Weighted- Average Interest Rate | ||||||
| Fixed-maturity and short-term investments: | ||||||||
| 2022 | $ | 62,545 | 2.56 | % | ||||
| 2023 | 42,283 | 3.23 | ||||||
| 2024 | 49,683 | 4.11 | ||||||
| 2025 | 54,054 | 3.86 | ||||||
| 2026 | 64,492 | 3.52 | ||||||
| Thereafter | 920,020 | 3.01 | ||||||
| Total | $ | 1,193,077 | ||||||
| Fair value | $ | 1,242,722 | ||||||
| Debt: | ||||||||
| 2024 | $ | 35,000 | 1.74 | % | ||||
| Total | $ | 35,000 | ||||||
| Fair value | $ | 35,000 | ||||||
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| December 31, | ||||||||
| 2019 | 2018 | |||||||
Assets | ||||||||
Investments | ||||||||
Fixed maturities | ||||||||
Held to maturity, at amortized cost (fair value $500,314,344 and $405,038,296) | $ | 476,093,782 | $ | 402,798,518 | ||||
Available for sale, at fair value (amortized cost $556,839,278 and $535,112,451) | 564,951,803 | 526,558,304 | ||||||
Equity securities, at fair value | 55,477,556 | 43,667,009 | ||||||
Investment in Donegal Financial Services Corporation | — | 41,025,975 | ||||||
Short-term investments, at cost, which approximates fair value | 14,030,222 | 16,748,760 | ||||||
|
|
|
| |||||
Total investments | 1,110,553,363 | 1,030,798,566 | ||||||
Cash | 49,318,930 | 52,594,461 | ||||||
Accrued investment income | 7,066,029 | 6,561,199 | ||||||
Premiums receivable | 165,732,949 | 156,702,250 | ||||||
Reinsurance receivable | 367,021,468 | 343,369,065 | ||||||
Deferred policy acquisition costs | 59,284,859 | 60,615,127 | ||||||
Deferred tax asset, net | 8,514,311 | 13,069,755 | ||||||
Prepaid reinsurance premiums | 142,475,767 | 135,379,777 | ||||||
Property and equipment, net | 4,558,072 | 4,690,704 | ||||||
Accounts receivable - securities | 4,961 | 261,829 | ||||||
Federal income taxes recoverable | — | 19,032,604 | ||||||
Goodwill | 5,625,354 | 5,625,354 | ||||||
Other intangible assets | 958,010 | 958,010 | ||||||
Other | 2,047,058 | 2,419,566 | ||||||
|
|
|
| |||||
Total assets | $ | 1,923,161,131 | $ | 1,832,078,267 | ||||
|
|
|
| |||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Losses and loss expenses | $ | 869,673,849 | $ | 814,665,224 | ||||
Unearned premiums | 510,147,485 | 506,528,606 | ||||||
Accrued expenses | 28,453,744 | 25,442,146 | ||||||
Reinsurance balances payable | 2,116,084 | 3,882,193 | ||||||
Borrowings under lines of credit | 35,000,000 | 60,000,000 | ||||||
Cash dividends declared to stockholders | 4,075,234 | 3,948,484 | ||||||
Subordinated debentures | 5,000,000 | 5,000,000 | ||||||
Accounts payable - securities | 1,119 | 1,003,810 | ||||||
Income taxes payable | 84,831 | — | ||||||
Due to affiliate | 10,069,171 | 10,874,540 | ||||||
Other | 7,524,095 | 1,863,363 | ||||||
|
|
|
| |||||
Total liabilities | 1,472,145,612 | 1,433,208,366 | ||||||
|
|
|
| |||||
Stockholders’ Equity | ||||||||
Preferred stock, $.01 par value, authorized 2,000,000 shares; none issued | — | — | ||||||
Class A common stock, $.01 par value, authorized 50,000,000 shares, issued 26,203,935 and 25,819,341 shares and outstanding 23,201,347 and 22,816,753 shares | 262,040 | 258,194 | ||||||
Class B common stock, $.01 par value, authorized 10,000,000 shares, issued 5,649,240 shares and outstanding 5,576,775 shares | 56,492 | 56,492 | ||||||
Additionalpaid-in capital | 268,151,601 | 261,258,423 | ||||||
Accumulated other comprehensive income (loss) | 504,170 | (14,228,059 | ) | |||||
Retained earnings | 223,267,573 | 192,751,208 | ||||||
Treasury stock, at cost | (41,226,357 | ) | (41,226,357 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | 451,015,519 | 398,869,901 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 1,923,161,131 | $ | 1,832,078,267 | ||||
|
|
|
| |||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Investments | ||||||||
| Fixed maturities | ||||||||
Held to maturity, at amortized cost (fair value $697,400,964 and $632,640,821) | $ | 668,104,568 | $ | 586,609,439 | ||||
Available for sale, at fair value (amortized cost $523,293,046 and $534,958,100) | 532,629,015 | 555,136,017 | ||||||
| Equity securities, at fair value | 63,419,973 | 58,556,173 | ||||||
| Short-term investments, at cost, which approximates fair value | 12,692,341 | 20,900,155 | ||||||
| Total investments | 1,276,845,897 | 1,221,201,784 | ||||||
| Cash | 57,709,375 | 103,094,236 | ||||||
| Accrued investment income | 8,214,971 | 7,936,879 | ||||||
| Premiums receivable | 168,862,580 | 169,596,332 | ||||||
| Reinsurance receivable | 455,411,009 | 408,908,850 | ||||||
| Deferred policy acquisition costs | 68,028,373 | 59,156,958 | ||||||
| Deferred tax asset, net | 6,685,619 | 5,683,113 | ||||||
| Prepaid reinsurance premiums | 176,935,842 | 169,418,333 | ||||||
| Property and equipment, net | 2,956,930 | 4,390,377 | ||||||
| Accounts receivable - securities | 2,252 | 67,676 | ||||||
| Federal income taxes recoverable | 5,290,938 | 3,089,369 | ||||||
| Receivable from Michigan Catastrophic Claims Association | 18,112,800 | 0 | ||||||
| Due from affiliate | 1,922,717 | 0 | ||||||
| Goodwill | 5,625,354 | 5,625,354 | ||||||
| Other intangible assets | 958,010 | 958,010 | ||||||
| Other | 1,612,732 | 1,393,053 | ||||||
| Total assets | $ | 2,255,175,399 | $ | 2,160,520,324 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities | ||||||||
| Losses and loss expenses | $ | 1,077,620,301 | $ | 962,007,437 | ||||
| Unearned premiums | 572,958,422 | 537,189,598 | ||||||
| Accrued expenses | 4,028,659 | 29,115,198 | ||||||
| Reinsurance balances payable | 3,946,105 | 3,233,523 | ||||||
| Borrowings under lines of credit | 35,000,000 | 85,000,000 | ||||||
| Cash dividends declared to stockholders | 4,915,268 | 4,436,301 | ||||||
| Cash refunds due to Michigan policyholders | 18,112,800 | 0 | ||||||
| Subordinated debentures | 0 | 5,000,000 | ||||||
| Due to affiliate | 0 | 10,293,495 | ||||||
| Other | 7,557,757 | 6,470,652 | ||||||
| Total liabilities | 1,724,139,312 | 1,642,746,204 | ||||||
| Stockholders’ Equity | ||||||||
Preferred stock, $0.01 par value, authorized 2,000,000 shares; NaN issued | 0 | 0 | ||||||
Class A common stock, $0.01 par value, authorized 50,000,000 shares, issued 28,756,203 and 27,651,774 shares and outstanding 25,753,615 and 24,649,186 shares | 287,562 | 276,518 | ||||||
Class B common stock, $0.01 par value, authorized 10,000,000 shares, issued 5,649,240 shares and outstanding 5,576,775 shares | 56,492 | 56,492 | ||||||
| Additional paid-in capital | 304,889,481 | 289,149,567 | ||||||
| Accumulated other comprehensive income | 3,283,551 | 11,130,612 | ||||||
| Retained earnings | 263,745,358 | 258,387,288 | ||||||
| Treasury stock, at cost | (41,226,357 | ) | (41,226,357 | ) | ||||
| Total stockholders’ equity | 531,036,087 | 517,774,120 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,255,175,399 | $ | 2,160,520,324 | ||||
-55-
| Years Ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
Statements of Income (Loss) | ||||||||||||
Revenues | ||||||||||||
Net premiums earned (includes affiliated reinsurance of $203,409,131, $198,580,547 and $190,924,704 - see note 3) | $ | 756,078,400 | $ | 741,290,873 | $ | 702,514,755 | ||||||
Investment income, net of investment expenses | 29,514,955 | 26,907,656 | 23,527,304 | |||||||||
Installment payment fees | 4,134,749 | 5,256,721 | 5,157,163 | |||||||||
Lease income | 443,750 | 480,617 | 500,455 | |||||||||
Net investment gains (losses) (includes $147,236, ($499,244) and $5,705,255 accumulated other comprehensive income reclassification) | 21,984,617 | (4,801,509 | ) | 5,705,255 | ||||||||
Equity in earnings of Donegal Financial Services Corporation | 295,000 | 2,693,962 | 1,621,605 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | 812,451,471 | 771,828,320 | 739,026,537 | |||||||||
|
|
|
|
|
| |||||||
Expenses | ||||||||||||
Net losses and loss expenses (includes affiliated reinsurance of $103,218,679, $140,113,591 and $114,865,113 - see note 3) | 506,387,664 | 576,458,420 | 487,268,054 | |||||||||
Amortization of deferred policy acquisition costs | 122,443,000 | 120,964,000 | 115,065,000 | |||||||||
Other underwriting expenses | 114,561,741 | 113,270,131 | 116,538,431 | |||||||||
Policyholder dividends | 8,978,406 | 5,353,023 | 5,014,624 | |||||||||
Interest | 1,579,299 | 2,302,082 | 1,593,437 | |||||||||
Other, net | 1,420,331 | 1,717,513 | 1,432,529 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 755,370,441 | 820,065,169 | 726,912,075 | |||||||||
|
|
|
|
|
| |||||||
Income (loss) before income tax expense (benefit) | 57,081,030 | (48,236,849 | ) | 12,114,462 | ||||||||
Income tax expense (benefit) (includes $30,920, ($104,841) and $1,939,787 income tax expense (benefit) from reclassification items) | 9,929,286 | (15,476,509 | ) | 4,998,362 | ||||||||
|
|
|
|
|
| |||||||
Net income (loss) | $ | 47,151,744 | $ | (32,760,340 | ) | $ | 7,116,100 | |||||
|
|
|
|
|
| |||||||
Basic earnings (loss) per common share: | ||||||||||||
Class A common stock | $ | 1.68 | $ | (1.18 | ) | $ | 0.27 | |||||
|
|
|
|
|
| |||||||
Class B common stock | $ | 1.51 | $ | (1.09 | ) | $ | 0.22 | |||||
|
|
|
|
|
| |||||||
Diluted earnings (loss) per common share: | ||||||||||||
Class A common stock | $ | 1.67 | $ | (1.18 | ) | $ | 0.26 | |||||
|
|
|
|
|
| |||||||
Class B common stock | $ | 1.51 | $ | (1.09 | ) | $ | 0.22 | |||||
|
|
|
|
|
| |||||||
Statements of Comprehensive Income (Loss) | ||||||||||||
Net income (loss) | $ | 47,151,744 | $ | (32,760,340 | ) | $ | 7,116,100 | |||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss), net of tax | ||||||||||||
Unrealized gain (loss) on securities: | ||||||||||||
Unrealized holding gain (loss) arising during the period, net of income tax expense (benefit) of $3,947,082, ($1,865,948) and $1,964,385 | 14,848,545 | (7,019,532 | ) | 3,811,151 | ||||||||
Reclassification adjustment for (gains) losses included in net income (loss), net of income tax expense (benefit) of $30,920, ($104,841) and $1,939,787 | (116,316 | ) | 394,403 | (3,765,468 | ) | |||||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss) | 14,732,229 | (6,625,129 | ) | 45,683 | ||||||||
|
|
|
|
|
| |||||||
Comprehensive income (loss) | $ | 61,883,973 | $ | (39,385,469 | ) | $ | 7,161,783 | |||||
|
|
|
|
|
| |||||||
| Years Ended December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Statements of Income | ||||||||||||
| Revenues | ||||||||||||
Net premiums earned (includes affiliated reinsurance of $212,591,341, $192,861,276 and $204,708,630 - see note 3) | $ | 776,015,201 | $ | 742,040,339 | $ | 756,078,400 | ||||||
| Investment income, net of investment expenses | 31,125,631 | 29,504,466 | 29,514,955 | |||||||||
| Installment payment fees | 2,416,873 | 3,063,097 | 4,134,749 | |||||||||
| Lease income | 430,800 | 434,089 | 443,750 | |||||||||
Net investment gains (includes $382,602, $572,106 and $147,236 accumulated other comprehensive income reclassification) | 6,477,286 | 2,777,919 | 21,984,617 | |||||||||
| Equity in earnings of Donegal Financial Services Corporation | 0 | 0 | 295,000 | |||||||||
| Total revenues | 816,465,791 | 777,819,910 | 812,451,471 | |||||||||
| Expenses | ||||||||||||
Net losses and loss expenses (includes affiliated reinsurance of $131,367,599, $87,374,791 and $103,218,679 - see note 3) | 520,709,542 | 459,764,293 | 506,387,664 | |||||||||
| Amortization of deferred policy acquisition costs | 128,733,000 | 119,072,000 | 122,443,000 | |||||||||
| Other underwriting expenses | 129,367,893 | 125,862,651 | 114,561,741 | |||||||||
| Policyholder dividends | 5,198,515 | 7,394,310 | 8,978,406 | |||||||||
| Interest | 895,605 | 1,196,406 | 1,579,299 | |||||||||
| Other, net | 1,222,728 | 1,257,747 | 1,420,331 | |||||||||
| Total expenses | 786,127,283 | 714,547,407 | 755,370,441 | |||||||||
| Income before income tax expense | 30,338,508 | 63,272,503 | 57,081,030 | |||||||||
Income tax expense (includes $80,346, $120,142 and $30,920 income tax expense from reclassification items) | 5,084,334 | 10,457,251 | 9,929,286 | |||||||||
| Net income | $ | 25,254,174 | $ | 52,815,252 | $ | 47,151,744 | ||||||
| Basic earnings per common share: | ||||||||||||
| Class A common stock | $ | 0.83 | $ | 1.84 | $ | 1.68 | ||||||
| Class B common stock | $ | 0.74 | $ | 1.65 | $ | 1.51 | ||||||
| Diluted earnings per common share: | ||||||||||||
| Class A common stock | $ | 0.83 | $ | 1.83 | $ | 1.67 | ||||||
| Class B common stock | $ | 0.74 | $ | 1.65 | $ | 1.51 | ||||||
| Statements of Comprehensive Income | ||||||||||||
| Net income | $ | 25,254,174 | $ | 52,815,252 | $ | 47,151,744 | ||||||
| Other comprehensive (loss) income, net of tax | ||||||||||||
| Unrealized (loss) gain on securities: | ||||||||||||
Unrealized holding (loss) gain arising during the period, net of income tax (benefit) expense of ($2,008,078), $2,944,892 and $3,947,082 | (7,544,805 | ) | 11,078,406 | 14,848,545 | ||||||||
Reclassification adjustment for gains included in net income, net of income tax expense of $80,346, $120,142 and $30,920 | (302,256 | ) | (451,964 | ) | (116,316 | ) | ||||||
| Other comprehensive (loss) income | (7,847,061 | ) | 10,626,442 | 14,732,229 | ||||||||
| Comprehensive income | $ | 17,407,113 | $ | 63,441,694 | $ | 61,883,973 | ||||||
-56-
| Common Stock | ||||||||||||||||||||||||||||||||||||
| Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance, January 1, 2017 | 24,483,377 | 5,649,240 | $ | 244,834 | $ | 56,492 | $ | 236,851,709 | $ | (2,254,271 | ) | $ | 244,942,913 | $ | (41,226,357 | ) | $ | 438,615,320 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 157,085 | 1,571 | 2,486,762 | 2,488,333 | ||||||||||||||||||||||||||||||||
Stock-based compensation | 924,019 | 9,240 | 15,462,479 | 15,471,719 | ||||||||||||||||||||||||||||||||
Net income | 7,116,100 | 7,116,100 | ||||||||||||||||||||||||||||||||||
Cash dividends | (15,041,051 | ) | (15,041,051 | ) | ||||||||||||||||||||||||||||||||
Grant of stock options | 600,608 | (600,608 | ) | — | ||||||||||||||||||||||||||||||||
Reclassification of tax effects | (475,687 | ) | 475,687 | — | ||||||||||||||||||||||||||||||||
Other comprehensive income | 45,683 | 45,683 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Balance, December 31, 2017 | 25,564,481 | 5,649,240 | $ | 255,645 | $ | 56,492 | $ | 255,401,558 | $ | (2,684,275 | ) | $ | 236,893,041 | $ | (41,226,357 | ) | $ | 448,696,104 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 174,899 | 1,749 | 2,469,220 | 2,470,969 | ||||||||||||||||||||||||||||||||
Stock-based compensation | 79,961 | 800 | 2,853,111 | 2,853,911 | ||||||||||||||||||||||||||||||||
Net loss | (32,760,340 | ) | (32,760,340 | ) | ||||||||||||||||||||||||||||||||
Cash dividends | (15,765,614 | ) | (15,765,614 | ) | ||||||||||||||||||||||||||||||||
Grant of stock options | 534,534 | (534,534 | ) | — | ||||||||||||||||||||||||||||||||
Reclassification of equity unrealized gains | (4,918,655 | ) | 4,918,655 | — | ||||||||||||||||||||||||||||||||
Other comprehensive loss | (6,625,129 | ) | (6,625,129 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Balance, December 31, 2018 | 25,819,341 | 5,649,240 | $ | 258,194 | $ | 56,492 | $ | 261,258,423 | $ | (14,228,059 | ) | $ | 192,751,208 | $ | (41,226,357 | ) | $ | 398,869,901 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 167,096 | 1,671 | 2,225,527 | 2,227,198 | ||||||||||||||||||||||||||||||||
Stock-based compensation | 217,498 | 2,175 | 4,251,665 | 4,253,840 | ||||||||||||||||||||||||||||||||
Net income | 47,151,744 | 47,151,744 | ||||||||||||||||||||||||||||||||||
Cash dividends | (16,219,393 | ) | (16,219,393 | ) | ||||||||||||||||||||||||||||||||
Grant of stock options | 415,986 | (415,986 | ) | — | ||||||||||||||||||||||||||||||||
Other comprehensive income | 14,732,229 | 14,732,229 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Balance, December 31, 2019 | 26,203,935 | 5,649,240 | $ | 262,040 | $ | 56,492 | $ | 268,151,601 | $ | 504,170 | $ | 223,267,573 | $ | (41,226,357 | ) | $ | 451,015,519 | |||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||||||||||||||
| Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance, January 1, 2019 | 25,819,341 | 5,649,240 | $ | 258,194 | $ | 56,492 | $ | 261,258,423 | $ | (14,228,059 | ) | $ | 192,751,208 | $ | (41,226,357 | ) | $ | 398,869,901 | ||||||||||||||||||
| Issuance of common stock (stock compensation plans) | 167,096 | 1,671 | 2,225,527 | 2,227,198 | ||||||||||||||||||||||||||||||||
| Stock-based compensation | 217,498 | 2,175 | 4,251,665 | 4,253,840 | ||||||||||||||||||||||||||||||||
| Net income | 47,151,744 | 47,151,744 | ||||||||||||||||||||||||||||||||||
| Cash dividends | (16,219,393 | ) | (16,219,393 | ) | ||||||||||||||||||||||||||||||||
| Grant of stock options | 415,986 | (415,986 | ) | 0 | ||||||||||||||||||||||||||||||||
| Other comprehensive income | 14,732,229 | 14,732,229 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | 26,203,935 | 5,649,240 | $ | 262,040 | $ | 56,492 | $ | 268,151,601 | $ | 504,170 | $ | 223,267,573 | $ | (41,226,357 | ) | $ | 451,015,519 | |||||||||||||||||||
| Issuance of common stock (stock compensation plans) | 153,233 | 1,532 | 2,057,504 | 2,059,036 | ||||||||||||||||||||||||||||||||
| Stock-based compensation | 1,294,606 | 12,946 | 18,582,085 | 18,595,031 | ||||||||||||||||||||||||||||||||
| Net income | 52,815,252 | 52,815,252 | ||||||||||||||||||||||||||||||||||
| Cash dividends | (17,337,160 | ) | (17,337,160 | ) | ||||||||||||||||||||||||||||||||
| Grant of stock options | 358,377 | (358,377 | ) | 0 | ||||||||||||||||||||||||||||||||
| Other comprehensive income | 10,626,442 | 10,626,442 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 27,651,774 | 5,649,240 | $ | 276,518 | $ | 56,492 | $ | 289,149,567 | $ | 11,130,612 | $ | 258,387,288 | $ | (41,226,357 | ) | $ | 517,774,120 | |||||||||||||||||||
| Issuance of common stock (stock compensation plans) | 157,783 | 1,578 | 2,161,142 | 2,162,720 | ||||||||||||||||||||||||||||||||
| Stock-based compensation | 946,646 | 9,466 | 13,260,855 | 13,270,321 | ||||||||||||||||||||||||||||||||
| Net income | 25,254,174 | 25,254,174 | ||||||||||||||||||||||||||||||||||
| Cash dividends | (19,578,187 | ) | (19,578,187 | ) | ||||||||||||||||||||||||||||||||
| Grant of stock options | 317,917 | (317,917 | ) | 0 | ||||||||||||||||||||||||||||||||
| Other comprehensive loss | (7,847,061 | ) | (7,847,061 | ) | ||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 28,756,203 | 5,649,240 | $ | 287,562 | $ | 56,492 | $ | 304,889,481 | $ | 3,283,551 | $ | 263,745,358 | $ | (41,226,357 | ) | $ | 531,036,087 | |||||||||||||||||||
-57-
| Years Ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income (loss) | $ | 47,151,744 | $ | (32,760,340 | ) | $ | 7,116,100 | |||||
|
|
|
|
|
| |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation, amortization and othernon-cash items | 5,573,074 | 6,609,632 | 6,109,869 | |||||||||
Net investment (gains) losses | (21,984,617 | ) | 4,801,509 | (5,705,255 | ) | |||||||
Equity in earnings of Donegal Financial Services Corporation | (295,000 | ) | (2,693,962 | ) | (1,621,605 | ) | ||||||
Changes in Assets and Liabilities: | ||||||||||||
Losses and loss expenses | 55,008,625 | 137,993,497 | 70,007,137 | |||||||||
Unearned premiums | 3,618,879 | 3,072,065 | 37,401,313 | |||||||||
Accrued expenses | 3,011,598 | (2,591,630 | ) | (212,915 | ) | |||||||
Premiums receivable | (9,030,699 | ) | 3,704,182 | (1,016,765 | ) | |||||||
Deferred policy acquisition costs | 1,330,268 | (325,267 | ) | (3,980,664 | ) | |||||||
Deferred income taxes | 649,928 | (4,179,805 | ) | 11,889,970 | ||||||||
Reinsurance receivable | (23,652,403 | ) | (45,026,502 | ) | (35,314,555 | ) | ||||||
Accrued investment income | (504,830 | ) | (8,078 | ) | (257,608 | ) | ||||||
Amounts due to affiliate | (805,369 | ) | 3,560,172 | 16,519,278 | ||||||||
Reinsurance balances payable | (1,766,109 | ) | (233,966 | ) | (253,369 | ) | ||||||
Prepaid reinsurance premiums | (7,095,990 | ) | (347,136 | ) | (10,777,146 | ) | ||||||
Current income taxes | 19,117,435 | (8,097,499 | ) | (9,826,855 | ) | |||||||
Other, net | 6,033,243 | 299,262 | (113,482 | ) | ||||||||
Dividends received from Donegal Financial Services Corporation | — | — | 1,036,750 | |||||||||
|
|
|
|
|
| |||||||
Net adjustments | 29,208,033 | 96,536,474 | 73,884,098 | |||||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 76,359,777 | 63,776,134 | 81,000,198 | |||||||||
|
|
|
|
|
| |||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchases of fixed maturities: | ||||||||||||
Held to maturity | (96,724,391 | ) | (48,969,776 | ) | (51,049,152 | ) | ||||||
Available for sale | (165,989,508 | ) | (116,961,667 | ) | (138,675,907 | ) | ||||||
Purchases of equity securities | (20,722,416 | ) | (11,303,361 | ) | (17,033,093 | ) | ||||||
Sales of fixed maturities: | ||||||||||||
Available for sale | 19,527,658 | 13,202,367 | 10,081,785 | |||||||||
Maturity of fixed maturities: | ||||||||||||
Held to maturity | 24,460,749 | 13,184,665 | 20,577,326 | |||||||||
Available for sale | 119,113,273 | 105,266,805 | 99,544,479 | |||||||||
Sales of equity securities | 40,465,748 | 13,779,330 | 20,880,814 | |||||||||
Net purchases of property and equipment | (149,603 | ) | (105,525 | ) | (1,090,726 | ) | ||||||
Sale of investment in Donegal Financial Services Corporation | 33,922,773 | — | — | |||||||||
Net sales (purchases) of short-term investments | 2,718,538 | (5,698,845 | ) | (1,678,908 | ) | |||||||
|
|
|
|
|
| |||||||
Net cash used in investing activities | (43,377,179 | ) | (37,606,007 | ) | (58,443,382 | ) | ||||||
|
|
|
|
|
| |||||||
Cash Flows from Financing Activities: | ||||||||||||
Issuance of common stock | 4,834,514 | 3,249,849 | 15,511,457 | |||||||||
Cash dividends paid | (16,092,643 | ) | (15,658,950 | ) | (14,822,052 | ) | ||||||
Payments on lines of credit | (25,000,000 | ) | — | (10,000,000 | ) | |||||||
Borrowings under lines of credit | — | 1,000,000 | — | |||||||||
|
|
|
|
|
| |||||||
Net cash used in financing activities | (36,258,129 | ) | (11,409,101 | ) | (9,310,595 | ) | ||||||
|
|
|
|
|
| |||||||
Net (decrease) increase in cash | (3,275,531 | ) | 14,761,026 | 13,246,221 | ||||||||
Cash at beginning of year | 52,594,461 | 37,833,435 | 24,587,214 | |||||||||
|
|
|
|
|
| |||||||
Cash at end of year | $ | 49,318,930 | $ | 52,594,461 | $ | 37,833,435 | ||||||
|
|
|
|
|
| |||||||
| Years Ended December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net income | $ | 25,254,174 | $ | 52,815,252 | $ | 47,151,744 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation, amortization and other non-cash items | 5,837,809 | 6,721,621 | 5,573,074 | |||||||||
| Net investment gains | (6,477,286 | ) | (2,777,919 | ) | (21,984,617 | ) | ||||||
| Equity in earnings of Donegal Financial Services Corporation | 0 | 0 | (295,000 | ) | ||||||||
| Changes in Assets and Liabilities: | ||||||||||||
| Losses and loss expenses | 115,612,864 | 92,333,588 | 55,008,625 | |||||||||
| Unearned premiums | 35,768,824 | 27,042,113 | 3,618,879 | |||||||||
| Accrued expenses | (25,086,539 | ) | 661,454 | 3,011,598 | ||||||||
| Premiums receivable | 733,752 | (3,863,383 | ) | (9,030,699 | ) | |||||||
| Deferred policy acquisition costs | (8,871,415 | ) | 127,901 | 1,330,268 | ||||||||
| Deferred income taxes | 1,095,306 | 6,448 | 649,928 | |||||||||
| Reinsurance receivable | (46,502,159 | ) | (41,887,382 | ) | (23,652,403 | ) | ||||||
| Accrued investment income | (278,092 | ) | (870,850 | ) | (504,830 | ) | ||||||
| Amounts due to affiliate | (12,216,212 | ) | 224,324 | (805,369 | ) | |||||||
| Reinsurance balances payable | 712,582 | 1,117,439 | (1,766,109 | ) | ||||||||
| Prepaid reinsurance premiums | (7,517,509 | ) | (26,942,566 | ) | (7,095,990 | ) | ||||||
| Current income taxes | (2,201,569 | ) | (3,174,200 | ) | 19,117,435 | |||||||
| Other, net | 867,438 | (399,440 | ) | 6,033,243 | ||||||||
| Net adjustments | 51,477,794 | 48,319,148 | 29,208,033 | |||||||||
| Net cash provided by operating activities | 76,731,968 | 101,134,400 | 76,359,777 | |||||||||
| Cash Flows from Investing Activities: | ||||||||||||
| Purchases of fixed maturities: | ||||||||||||
| Held to maturity | (125,630,220 | ) | (157,048,527 | ) | (96,724,391 | ) | ||||||
| Available for sale | (163,593,018 | ) | (176,500,255 | ) | (165,989,508 | ) | ||||||
| Purchases of equity securities | (25,354,790 | ) | (6,964,092 | ) | (20,722,416 | ) | ||||||
| Sales of fixed maturities: | ||||||||||||
| Available for sale | 6,281,963 | 22,172,930 | 19,527,658 | |||||||||
| Maturity of fixed maturities: | ||||||||||||
| Held to maturity | 44,211,076 | 47,448,424 | 24,460,749 | |||||||||
| Available for sale | 165,867,395 | 172,084,542 | 119,113,273 | |||||||||
| Sales of equity securities | 26,585,663 | 6,091,288 | 40,465,748 | |||||||||
| Net sales (purchases) of property and equipment | 1,224,806 | (89,702 | ) | (149,603 | ) | |||||||
| Sale of investment in Donegal Financial Services Corporation | 0 | 0 | 33,922,773 | |||||||||
| Net sales (purchases) of short-term investments | 8,207,814 | (6,869,933 | ) | 2,718,538 | ||||||||
| Net cash used in investing activities | (62,199,311 | ) | (99,675,325 | ) | (43,377,179 | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Issuance of common stock | 14,181,702 | 19,292,324 | 4,834,514 | |||||||||
| Cash dividends paid | (19,099,220 | ) | (16,976,093 | ) | (16,092,643 | ) | ||||||
| Payments on subordinated debentures | (5,000,000 | ) | 0 | 0 | ||||||||
| Payments on lines of credit | (50,000,000 | ) | 0 | (25,000,000 | ) | |||||||
| Borrowings under lines of credit | 0 | 50,000,000 | 0 | |||||||||
| Net cash (used in) provided by financing activities | (59,917,518 | ) | 52,316,231 | (36,258,129 | ) | |||||||
| Net (decrease) increase in cash | (45,384,861 | ) | 53,775,306 | (3,275,531 | ) | |||||||
| Cash at beginning of year | 103,094,236 | 49,318,930 | 52,594,461 | |||||||||
| Cash at end of year | $ | 57,709,375 | $ | 103,094,236 | $ | 49,318,930 | ||||||
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We have threehad 3 segments: our investment function, our commercial lines of insurance and our personal lines of insurance. The commercial lines products of our insurance subsidiaries consist primarily of commercial automobile, commercial multi-peril and workers’ compensation policies. The personal lines products of our insurance subsidiaries consist primarily of homeowners and private passenger automobile policies.
underwriting pool.
In July 2018, we consolidated the branch office operations of Peninsula into our home office operations to achieve economies of scale and enhance service levels for policyholders of Peninsula. We recorded a restructuring charge for employee termination costs associated with the Peninsula consolidation of approximately $1.9 million and paid approximately $1.5 million of these costs in 2018. We paid approximately $260,000 of these costs in 2019 and had an accrual of approximately $130,000 remaining at December 31, 2019. We entered into a definitive purchase agreement for the sale of Peninsula’s branch office in 2018. The sale was completed in January 2019, and we received net proceeds of $1.2 million. We recorded an impairment charge of $1.1 million in other expenses in 2018 related to this real estate transaction and included the $1.2 million fair value of the real estate we held for sale in other assets at December 31, 2018.
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We and Donegal Mutual sold DFSC to Northwest Bancshares, Inc. (“Northwest”) on March 8, 2019, resulting in proceeds valued at approximately $85.8 million in a combination of cash and Northwest common stock. Immediately prior to the closing of the merger, DFSC paid a dividend of approximately $29.2 million to us and Donegal Mutual. As the owner of 48.2% of DFSC’s common stock, we received a dividend payment from DFSC of approximately $14.1 million and consideration from Northwest that included a combination of cash in the amount of $20.5 million and Northwest common stock with a fair value at the closing date of $20.9 million. We recorded a gain of $12.7 million from the sale of DFSC in our results of operations for the first quarter of 2019. We sold the Northwest common stock that we received as part of the consideration during 2019. This transaction represented the culmination of a banking strategy that began with the formation of DFSC in 2000.
Effective December 1, 2019, our insurance subsidiaries Le Mars Insurance Company (“Le Mars”) and Sheboygan Falls Insurance Company (“Sheboygan Falls”) merged with and into Atlantic States (the “Mergers”). As a result of the Mergers, the separate corporate existences of Le Mars and Sheboygan Falls ceased and Atlantic States continued as the surviving insurance company. Atlantic States will place the business of Le Mars and Sheboygan Falls, as their policies renew subsequent to the effective date of the Mergers, into the underwriting pool.
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impairment loss in our results of operations. If we do not intend to sell the debt security, we determine whether it is more likely than not that we will be required to sell the debt security prior to recovery. If we determine it is more likely than not that we will be required to sell the debt security prior to recovery, we recognize an impairment loss in our results of operations. If we determine it is more likely than not that we will not be required to sell the debt security prior to recovery, we then evaluate whether a credit loss has occurred. We determine whether a credit loss has occurred by comparing the amortized cost of the debt security to the present value of the cash flows we expect to collect. If we expect a cash flow shortfall, we consider that a credit loss has occurred. If we determine that a credit loss has occurred, we consider the impairment to be other than temporary. We then recognize the amount of the impairment loss related to the credit loss in our results of operations, and we recognize the remaining portion of the impairment loss in our other comprehensive income, net of applicable taxes. In addition, we may write down securities in an unrealized loss position based on a number of other factors, including when the fair value of an investment is significantly below its cost, when the financial condition of the issuer of a security has deteriorated, the occurrence of industry, company or geographic events that have negatively impacted the value of a security and rating agency downgrades.
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common share. Thetwo-class method is an earnings allocation formula that determines earnings per share separately for each class of common stock based on dividends declared and an allocation of remaining undistributed earnings using a participation percentage that reflects the dividend rights of each class.
In February 2016, the FASB issued guidance that requires lessees to recognize leases, including operating leases, on the lessee’s balance sheet, unless a lease is considered a short-term lease. This guidance also requires entities to make new judgments to identify leases. The guidance was effective for annual and interim reporting periods beginning after December 15, 2018 and permitted early adoption. Our adoption of this guidance on January 1, 2019 did not have a significant impact on our financial position, results of operations or cash flows.
In January 2017, the FASB issued guidance that simplifies the measurement of goodwill by modifying the goodwill impairment test previous guidance required. The guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize impairment for the amount by which the reporting unit’s carrying amount exceeds its fair value. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019 and permits early adoption. We early adopted this guidance in 2019. The adoption of this guidance did not have a significant impact on our financial position, results of operations or cash flows.
In August 2018, the FASB issued guidance that modifies disclosure requirements related to fair value measurements. The guidance removes the requirements to disclose the amounts of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019 and permits early adoption. We early adopted this guidance in 2019. The adoption of this guidance on January 1, 2019 did not have a significant impact on our financial position, results of operations or cash flows.
In JuneSeptember 2016, the FASB issued guidance that amends previous guidance on the impairment of financial instruments by adding an impairment model that requires an entity to recognize expected credit losses as an allowance rather than impairments as credit losses are incurred. The intent of this guidance is to reduce complexity and result in a more timely recognition of expected credit losses. In November 2019, the FASB issued guidance that delays the effective date for “smaller reporting companies,” as defined in Item 10(f)(1) of RegulationS-K, to annual and interim reporting periods beginning after December 15, 2022 from December 15, 2019. We are a smaller reporting company and are in the process of evaluating the impact of the adoption of this guidance on our financial position, results of operations and cash flows.
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| 2019 | 2018 | 2017 | ||||||||||
Premiums earned | $ | 218,642,984 | $ | 212,928,238 | $ | 200,752,599 | ||||||
Losses and loss expenses | 173,238,503 | 159,495,489 | 140,015,950 | |||||||||
Prepaid reinsurance premiums | 116,189,929 | 106,224,424 | 103,991,861 | |||||||||
Liability for losses and loss expenses | 183,326,589 | 158,081,925 | 136,786,070 | |||||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Premiums earned | $ | 305,729,418 | $ | 266,400,636 | $ | 218,642,984 | ||||||
| Losses and loss expenses | 222,737,225 | 181,205,743 | 173,238,503 | |||||||||
| Prepaid reinsurance premiums | 152,323,262 | 146,387,565 | 116,189,929 | |||||||||
| Liability for losses and loss expenses | 274,033,812 | 232,540,607 | 183,326,589 | |||||||||
| 2019 | 2018 | 2017 | ||||||||||
Premiums earned | $ | 479,835,362 | $ | 473,512,781 | $ | 451,470,894 | ||||||
Losses and loss expenses | 309,852,141 | 335,789,280 | 289,503,373 | |||||||||
Unearned premiums | 237,106,338 | 231,958,181 | 228,988,598 | |||||||||
Liability for losses and loss expenses | 322,658,731 | 303,546,744 | 252,263,547 | |||||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Premiums earned | $ | 573,891,394 | $ | 514,172,448 | $ | 479,835,362 | ||||||
| Losses and loss expenses | 383,455,320 | 309,315,497 | 309,852,141 | |||||||||
| Unearned premiums | 289,976,879 | 262,004,199 | 237,106,338 | |||||||||
| Liability for losses and loss expenses | 455,564,733 | 377,530,215 | 322,658,731 | |||||||||
| 2019 | 2018 | 2017 | ||||||||||
Premiums earned | $ | 42,079,112 | $ | 42,813,929 | $ | 42,578,047 | ||||||
Losses and loss expenses | 19,617,787 | 23,175,456 | 24,978,631 | |||||||||
Prepaid reinsurance premiums | 19,217,849 | 19,047,084 | 19,827,115 | |||||||||
Liability for losses and loss expenses | 36,597,834 | 38,434,078 | 36,396,109 | |||||||||
In 2019, each2019:
| 2021 | 2020 | 2019 | ||||||||||
| Premiums earned | $ | 37,996,474 | $ | 39,315,398 | $ | 42,079,112 | ||||||
| Losses and loss expenses | 20,037,608 | 15,471,037 | 19,617,787 | |||||||||
| Prepaid reinsurance premiums | 18,548,821 | 17,155,909 | 19,217,849 | |||||||||
| Liability for losses and loss expenses | 36,659,853 | 35,306,627 | 36,597,834 | |||||||||
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combination of these subsidiaries, up to the amount Donegal Mutual and our insurance subsidiaries retained under catastrophe reinsurance agreements with unaffiliated reinsurers. The set retention was $2,000,000, $1,500,000 and $750,000 for Atlantic States, Southern and Le Mars, respectively, for 2017. Through December 31, 2018, Donegal Mutual and Southern had an excess of loss reinsurance agreement in which Donegal Mutual assumed up to $500,000 of Southern’s losses in excess of $500,000.
| 2019 | 2018 | 2017 | ||||||||||
Premiums earned | $ | 14,404,636 | $ | 19,190,067 | $ | 17,215,273 | ||||||
Losses and loss expenses | 13,769,736 | 12,899,927 | 8,953,411 | |||||||||
Liability for losses and loss expenses | 3,149,907 | 4,847,176 | 3,399,207 | |||||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Premiums earned | $ | 17,574,161 | $ | 15,595,138 | $ | 14,404,636 | ||||||
| Losses and loss expenses | 9,309,624 | 25,259,527 | 13,769,736 | |||||||||
| Liability for losses and loss expenses | 1,658,057 | 3,812,339 | 3,149,907 | |||||||||
| 2019 | 2018 | 2017 | ||||||||||
Assumed | $ | 479,835,362 | $ | 473,512,781 | $ | 451,470,623 | ||||||
Ceded | (275,126,732 | ) | (274,932,234 | ) | (260,545,919 | ) | ||||||
|
|
|
|
|
| |||||||
Net | $ | 204,708,630 | $ | 198,580,547 | $ | 190,924,704 | ||||||
|
|
|
|
|
| |||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Assumed | $ | 573,891,394 | $ | 514,172,448 | $ | 479,835,362 | ||||||
| Ceded | (361,300,053 | ) | (321,311,172 | ) | (275,126,732 | ) | ||||||
| Net | $ | 212,591,341 | $ | 192,861,276 | $ | 204,708,630 | ||||||
| 2019 | 2018 | 2017 | ||||||||||
Assumed | $ | 309,844,705 | $ | 335,684,463 | $ | 288,813,105 | ||||||
Ceded | (206,626,026 | ) | (195,570,872 | ) | (173,947,992 | ) | ||||||
|
|
|
|
|
| |||||||
Net | $ | 103,218,679 | $ | 140,113,591 | $ | 114,865,113 | ||||||
|
|
|
|
|
| |||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Assumed | $ | 383,452,056 | $ | 309,311,098 | $ | 309,844,705 | ||||||
| Ceded | (252,084,457 | ) | (221,936,307 | ) | (206,626,026 | ) | ||||||
| Net | $ | 131,367,599 | $ | 87,374,791 | $ | 103,218,679 | ||||||
second releases over the next five years. Donegal Mutual incurred an additional $3.4 million of deferred costs related to releases under development that were not yet ready for their intended use at December 31, 2021.
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| 2019 | ||||||||||||||||
| Held to Maturity | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 82,916,052 | $ | 1,803,230 | $ | 68,560 | $ | 84,650,722 | ||||||||
Obligations of states and political subdivisions | 204,634,486 | 14,236,736 | 288,174 | 218,583,048 | ||||||||||||
Corporate securities | 156,398,001 | 8,274,912 | 333,166 | 164,339,747 | ||||||||||||
Mortgage-backed securities | 32,145,243 | 611,641 | 16,057 | 32,740,827 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totals | $ | 476,093,782 | $ | 24,926,519 | $ | 705,957 | $ | 500,314,344 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| 2019 | ||||||||||||||||
| Available for Sale | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 19,302,056 | $ | 81,773 | $ | 19,370 | $ | 19,364,459 | ||||||||
Obligations of states and political subdivisions | 55,162,046 | 1,641,171 | 6,929 | 56,796,288 | ||||||||||||
Corporate securities | 154,946,586 | 4,477,035 | 180,312 | 159,243,309 | ||||||||||||
Mortgage-backed securities | 327,428,590 | 2,856,820 | 737,663 | 329,547,747 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totals | $ | 556,839,278 | $ | 9,056,799 | $ | 944,274 | $ | 564,951,803 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| 2018 | ||||||||||||||||
| Held to Maturity | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 76,222,306 | $ | 174,904 | $ | 1,086,613 | $ | 75,310,597 | ||||||||
Obligations of states and political subdivisions | 159,292,158 | 8,236,804 | 704,104 | 166,824,858 | ||||||||||||
Corporate securities | 127,010,071 | 396,197 | 4,391,451 | 123,014,817 | ||||||||||||
Mortgage-backed securities | 40,273,983 | 64,318 | 450,277 | 39,888,024 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totals | $ | 402,798,518 | $ | 8,872,223 | $ | 6,632,445 | $ | 405,038,296 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| 2018 | ||||||||||||||||
| Available for Sale | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 45,188,053 | $ | 25,241 | $ | 1,003,365 | $ | 44,209,929 | ||||||||
Obligations of states and political subdivisions | 73,760,836 | 1,762,127 | 306,994 | 75,215,969 | ||||||||||||
Corporate securities | 140,688,937 | 203,393 | 3,059,185 | 137,833,145 | ||||||||||||
Mortgage-backed securities | 275,474,625 | 148,967 | 6,324,331 | 269,299,261 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totals | $ | 535,112,451 | $ | 2,139,728 | $ | 10,693,875 | $ | 526,558,304 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| 2021 | ||||||||||||||||
| Held to Maturity | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 89,267,988 | $ | 1,922,976 | $ | 1,015,040 | $ | 90,175,924 | ||||||||
| Obligations of states and political subdivisions | 371,435,776 | 17,856,745 | 948,113 | 388,344,408 | ||||||||||||
| Corporate securities | 191,147,051 | 11,576,693 | 772,809 | 201,950,935 | ||||||||||||
| Mortgage-backed securities | 16,253,753 | 675,944 | 0 | 16,929,697 | ||||||||||||
| Totals | $ | 668,104,568 | $ | 32,032,358 | $ | 2,735,962 | $ | 697,400,964 | ||||||||
| 2021 | ||||||||||||||||
| Available for Sale | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 32,501,080 | $ | 144,377 | $ | 460,831 | $ | 32,184,626 | ||||||||
| Obligations of states and political subdivisions | 55,458,687 | 2,002,035 | 82,631 | 57,378,091 | ||||||||||||
| Corporate securities | 215,668,644 | 6,817,036 | 874,405 | 221,611,275 | ||||||||||||
| Mortgage-backed securities | 219,664,635 | 3,000,806 | 1,210,418 | 221,455,023 | ||||||||||||
| Totals | $ | 523,293,046 | $ | 11,964,254 | $ | 2,628,285 | $ | 532,629,015 | ||||||||
| 2020 | ||||||||||||||||
| Held to Maturity | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 77,435,268 | $ | 3,983,890 | $ | 223,564 | $ | 81,195,594 | ||||||||
| Obligations of states and political subdivisions | 312,319,238 | 23,211,483 | 142,750 | 335,387,971 | ||||||||||||
| Corporate securities | 173,269,560 | 18,172,244 | 205,761 | 191,236,043 | ||||||||||||
| Mortgage-backed securities | 23,585,373 | 1,235,840 | 0 | 24,821,213 | ||||||||||||
| Totals | $ | 586,609,439 | $ | 46,603,457 | $ | 572,075 | $ | 632,640,821 | ||||||||
| 2020 | ||||||||||||||||
| Available for Sale | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 47,511,872 | $ | 423,855 | $ | 121,015 | $ | 47,814,712 | ||||||||
| Obligations of states and political subdivisions | 66,286,667 | 2,690,335 | 11,765 | 68,965,237 | ||||||||||||
| Corporate securities | 202,396,309 | 10,496,218 | 184,464 | 212,708,063 | ||||||||||||
| Mortgage-backed securities | 218,763,252 | 6,901,676 | 16,923 | 225,648,005 | ||||||||||||
| Totals | $ | 534,958,100 | $ | 20,512,084 | $ | 334,167 | $ | 555,136,017 | ||||||||
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income.
| Amortized Cost | Estimated Fair Value | |||||||
Held to maturity | ||||||||
Due in one year or less | $ | 16,132,891 | $ | 16,205,362 | ||||
Due after one year through five years | 73,727,277 | 76,542,800 | ||||||
Due after five years through ten years | 182,428,771 | 191,642,042 | ||||||
Due after ten years | 171,659,600 | 183,183,313 | ||||||
Mortgage-backed securities | 32,145,243 | 32,740,827 | ||||||
|
|
|
| |||||
Total held to maturity | $ | 476,093,782 | $ | 500,314,344 | ||||
|
|
|
| |||||
Available for sale | ||||||||
Due in one year or less | $ | 12,943,726 | $ | 13,075,792 | ||||
Due after one year through five years | 89,684,400 | 91,992,458 | ||||||
Due after five years through ten years | 112,308,452 | 115,407,525 | ||||||
Due after ten years | 14,474,110 | 14,928,281 | ||||||
Mortgage-backed securities | 327,428,590 | 329,547,747 | ||||||
|
|
|
| |||||
Total available for sale | $ | 556,839,278 | $ | 564,951,803 | ||||
|
|
|
| |||||
| Amortized Cost | Estimated Fair Value | |||||||
| Held to maturity | ||||||||
| Due in one year or less | $ | 29,359,965 | $ | 30,170,296 | ||||
| Due after one year through five years | 84,797,619 | 89,011,185 | ||||||
| Due after five years through ten years | 229,972,129 | 238,657,219 | ||||||
| Due after ten years | 307,721,102 | 322,632,567 | ||||||
| Mortgage-backed securities | 16,253,753 | 16,929,697 | ||||||
| Total held to maturity | $ | 668,104,568 | $ | 697,400,964 | ||||
| Available for sale | ||||||||
| Due in one year or less | $ | 19,157,465 | $ | 19,411,213 | ||||
| Due after one year through five years | 124,209,793 | 128,340,492 | ||||||
| Due after five years through ten years | 130,046,327 | 132,293,644 | ||||||
| Due after ten years | 30,214,826 | 31,128,643 | ||||||
| Mortgage-backed securities | 219,664,635 | 221,455,023 | ||||||
| Total available for sale | $ | 523,293,046 | $ | 532,629,015 | ||||
| Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
Equity securities | $ | 43,419,136 | $ | 12,179,912 | $ | 121,492 | $ | 55,477,556 | ||||||||
| Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
| Equity securities | $ | 43,262,577 | $ | 20,413,667 | $ | 256,271 | $ | 63,419,973 | ||||||||
| Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
Equity securities | $ | 40,942,716 | $ | 4,817,917 | $ | 2,093,624 | $ | 43,667,009 | ||||||||
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| Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
| Equity securities | $ | 42,409,750 | $ | 17,103,055 | $ | 956,632 | $ | 58,556,173 | ||||||||
| 2019 | 2018 | 2017 | ||||||||||
Fixed maturities | $ | 29,969,774 | $ | 27,733,555 | $ | 26,143,924 | ||||||
Equity securities | 1,268,056 | 1,264,120 | 999,335 | |||||||||
Short-term investments | 1,243,104 | 795,522 | 407,580 | |||||||||
Other | 29,251 | 29,450 | 33,316 | |||||||||
|
|
|
|
|
| |||||||
Investment income | 32,510,185 | 29,822,647 | 27,584,155 | |||||||||
Investment expenses | (2,995,230 | ) | (2,914,991 | ) | (4,056,851 | ) | ||||||
|
|
|
|
|
| |||||||
Net investment income | $ | 29,514,955 | $ | 26,907,656 | $ | 23,527,304 | ||||||
|
|
|
|
|
| |||||||
| 2021 | 2020 | 2019 | ||||||||||
| Fixed maturities | $ | 32,343,878 | $ | 30,750,231 | $ | 29,969,774 | ||||||
| Equity securities | 1,437,948 | 1,386,343 | 1,268,056 | |||||||||
| Short-term investments | 321,117 | 427,392 | 1,243,104 | |||||||||
| Other | 29,250 | 29,250 | 29,251 | |||||||||
| Investment income | 34,132,193 | 32,593,216 | 32,510,185 | |||||||||
| Investment expenses | (3,006,562 | ) | (3,088,750 | ) | (2,995,230 | ) | ||||||
| Net investment income | $ | 31,125,631 | $ | 29,504,466 | $ | 29,514,955 | ||||||
| 2019 | 2018 | 2017 | ||||||||||
Gross gains: | ||||||||||||
Fixed maturities | $ | 470,983 | $ | 131,660 | $ | 168,855 | ||||||
Equity securities | 10,471,285 | 1,890,762 | 6,197,253 | |||||||||
Investment in affiliate | 12,662,147 | |||||||||||
|
|
|
|
|
| |||||||
| 23,604,415 | 2,022,422 | 6,366,108 | ||||||||||
|
|
|
|
|
| |||||||
Gross losses: | ||||||||||||
Fixed maturities | 323,746 | 630,904 | 98,723 | |||||||||
Equity securities | 1,296,052 | 6,193,027 | 562,130 | |||||||||
|
|
|
|
|
| |||||||
| 1,619,798 | 6,823,931 | 660,853 | ||||||||||
|
|
|
|
|
| |||||||
Net investment gains (losses) | $ | 21,984,617 | $ | (4,801,509 | ) | $ | 5,705,255 | |||||
|
|
|
|
|
| |||||||
Change in difference between fair value and cost of investments: | ||||||||||||
Fixed maturities | $ | 38,647,456 | $ | (20,641,433 | ) | $ | 2,335,578 | |||||
Equity securities | 9,334,127 | (3,501,853 | ) | 1,569,999 | ||||||||
|
|
|
|
|
| |||||||
Totals | $ | 47,981,583 | $ | (24,143,286 | ) | $ | 3,905,577 | |||||
|
|
|
|
|
| |||||||
We recognized $8.9 million of unrealized gains and $25,751 of unrealized losses on equity securities held at December 31, 2019 in net investment gains for 2019. We recognized $1.2 million of unrealized gains and $4.4 million of unrealized losses on equity securities held at December 31, 2018 in net investment losses for 2018.
| 2021 | 2020 | 2019 | ||||||||||
| Gross realized gains: | ||||||||||||
| Fixed maturities | $ | 676,724 | $ | 818,350 | $ | 470,983 | ||||||
| Equity securities | 1,430,465 | 106,075 | 1,546,598 | |||||||||
| Investment in affiliate | 0 | 0 | 12,662,147 | |||||||||
| 2,107,189 | 924,425 | 14,679,728 | ||||||||||
| Gross realized losses: | ||||||||||||
| Fixed maturities | 294,126 | 246,243 | 323,746 | |||||||||
| Equity securities | 462,335 | 3,555,304 | 1,270,301 | |||||||||
| 756,461 | 3,801,547 | 1,594,047 | ||||||||||
| Net realized gains (losses) | 1,350,728 | (2,877,122 | ) | 13,085,681 | ||||||||
| Gross unrealized gains on equity securities | 5,627,949 | 8,426,806 | 8,924,687 | |||||||||
| Gross unrealized losses on equity securities | (501,391 | ) | (2,771,765 | ) | (25,751 | ) | ||||||
| Net investment gains | $ | 6,477,286 | $ | 2,777,919 | $ | 21,984,617 | ||||||
| Change in difference between fair value and cost of investments: | ||||||||||||
| Fixed maturities | $ | (27,576,934 | ) | $ | 33,876,212 | $ | 38,647,456 | |||||
| Equity securities | 4,010,973 | 4,088,003 | 9,334,127 | |||||||||
| Totals | $ | (23,565,961 | ) | $ | 37,964,215 | $ | 47,981,583 | |||||
| Less than 12 months | 12 months or longer | |||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 7,461,245 | $ | 45,688 | $ | 5,394,735 | $ | 42,242 | ||||||||
Obligations of states and political subdivisions | 23,339,340 | 293,516 | 2,326,813 | 1,587 | ||||||||||||
Corporate securities | 19,362,346 | 263,280 | 18,803,546 | 250,198 | ||||||||||||
Mortgage-backed securities | 28,507,123 | 55,729 | 74,088,769 | 697,991 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totals | $ | 78,670,054 | $ | 658,213 | $ | 100,613,863 | $ | 992,018 | ||||||||
|
|
|
|
|
|
|
| |||||||||
-69-
| Less than 12 months | 12 months or longer | |||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 27,691,051 | $ | 412,055 | $ | 28,426,248 | $ | 1,063,816 | ||||||||
| Obligations of states and political subdivisions | 56,654,480 | 899,139 | 7,090,499 | 131,605 | ||||||||||||
| Corporate securities | 92,736,747 | 1,609,931 | 1,462,717 | 37,283 | ||||||||||||
| Mortgage-backed securities | 90,006,234 | 1,128,197 | 2,361,232 | 82,221 | ||||||||||||
| Totals | $ | 267,088,512 | $ | 4,049,322 | $ | 39,340,696 | $ | 1,314,925 | ||||||||
| Less than 12 months | 12 months or longer | |||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 26,342,398 | $ | 165,774 | $ | 54,900,027 | $ | 1,924,204 | ||||||||
Obligations of states and political subdivisions | 28,321,962 | 477,357 | 21,559,520 | 533,741 | ||||||||||||
Corporate securities | 149,269,854 | 4,482,870 | 59,396,885 | 2,967,766 | ||||||||||||
Mortgage-backed securities | 82,593,454 | 912,616 | 181,379,875 | 5,861,992 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totals | $ | 286,527,668 | $ | 6,038,617 | $ | 317,236,307 | $ | 11,287,703 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Less than 12 months | 12 months or longer | |||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 29,144,224 | $ | 344,579 | $ | 0 | $ | 0 | ||||||||
| Obligations of states and political subdivisions | 9,361,435 | 154,515 | 0 | 0 | ||||||||||||
| Corporate securities | 26,142,933 | 114,606 | 8,229,646 | 275,619 | ||||||||||||
| Mortgage-backed securities | 3,091,272 | 15,425 | 236,560 | 1,498 | ||||||||||||
| Totals | $ | 67,739,864 | $ | 629,125 | $ | 8,466,206 | $ | 277,117 | ||||||||
2019.
Level 1 - quoted prices in active markets for identical assets and liabilities;
Level 2 - directly or indirectly observable inputs other than Level 1 quoted prices; and
Level 3 - unobservable inputs not corroborated by market data.
Level 1 - quoted prices in active markets for identical assets and liabilities; |
Level 2 - directly or indirectly observable inputs other than Level 1 quoted prices; and |
Level 3 - unobservable inputs not corroborated by market data. |
-70-
addition, the valuation of fixed maturity investments is more subjective when markets are less liquid, increasing the potential that the estimated fair value does not reflect the price at which an actual transaction would occur. We utilize nationally recognized independent pricing services to estimate fair values or obtain market quotations for substantially all of our fixed maturity and equity investments. We generally obtain two prices per security. The pricing services utilize market quotations for fixed maturity and equity securities that have quoted prices in active markets. For fixed maturity securities that generally do not trade on a daily basis, the pricing services prepare estimates of fair value measurements based predominantly on observable market inputs. The pricing services do not use broker quotes in determining the fair values of our investments. Our investment personnel review the estimates of fair value the pricing services provide to determine if the estimates we obtain are representative of fair values based upon the general knowledge of the market of our investment personnel, their research findings related to unusual fluctuations in value and their comparison of such values to execution prices for similar securities. Our investment personnel monitor the market and are familiar with current trading ranges for similar securities and pricing of specific investments. Our investment personnel review all pricing estimates that we receive from the pricing services against their expectations with respect to pricing based on fair market curves, security ratings, coupon rates, security type and recent trading activity. Our investment personnel review documentation with respect to the pricing services’ pricing methodology that they obtain periodically to determine if the primary pricing sources, market inputs and pricing frequency for various security types are reasonable. At December 31, 2019,2021, we received two estimates per security from the pricing services, and we priced substantially all of our Level 1 and Level 2 investments using those prices. In our review of the estimates the pricing services provided at December 31, 2019,2021, we did not identify any material discrepancies, and we did not make any adjustments to the estimates the pricing services provided.
2020.
| Fair Value Measurements Using | ||||||||||||||||
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| (in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 19,364,459 | $ | — | $ | 19,364,459 | $ | — | ||||||||
Obligations of states and political subdivisions | 56,796,288 | — | 56,796,288 | — | ||||||||||||
Corporate securities | 159,243,309 | — | 159,243,309 | — | ||||||||||||
Mortgage-backed securities | 329,547,747 | — | 329,547,747 | — | ||||||||||||
Equity securities | 55,477,556 | 53,124,368 | 2,353,188 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments in the fair value hierarchy | $ | 620,429,359 | $ | 53,124,368 | $ | 567,304,991 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
-71-
| Fair Value Measurements Using | ||||||||||||||||
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 32,184,626 | $ | 0 | $ | 32,184,626 | $ | 0 | ||||||||
| Obligations of states and political subdivisions | 57,378,091 | 0 | 57,378,091 | 0 | ||||||||||||
| Corporate securities | 221,611,275 | 0 | 221,611,275 | 0 | ||||||||||||
| Mortgage-backed securities | 221,455,023 | 0 | 221,455,023 | 0 | ||||||||||||
| Equity securities | 63,419,973 | 61,130,385 | 2,289,588 | 0 | ||||||||||||
| Total investments in the fair value hierarchy | $ | 596,048,988 | $ | 61,130,385 | $ | 534,918,603 | $ | 0 | ||||||||
| Fair Value Measurements Using | ||||||||||||||||
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 44,209,929 | $ | — | $ | 44,209,929 | $ | — | ||||||||
Obligations of states and political subdivisions | 75,215,969 | — | 75,215,969 | — | ||||||||||||
Corporate securities | 137,833,145 | — | 137,833,145 | — | ||||||||||||
Mortgage-backed securities | 269,299,261 | — | 269,299,261 | — | ||||||||||||
Equity securities | 30,674,835 | 28,351,110 | 2,323,725 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments in the fair value hierarchy | 557,233,139 | 28,351,110 | 528,882,029 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Investment measured at net asset value | 12,992,174 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Totals | $ | 570,225,313 | $ | 28,351,110 | $ | 528,882,029 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
2020:
| Fair Value Measurements Using | ||||||||||||||||
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 47,814,712 | $ | 0 | $ | 47,814,712 | $ | 0 | ||||||||
| Obligations of states and political subdivisions | 68,965,237 | 0 | 68,965,237 | 0 | ||||||||||||
| Corporate securities | 212,708,063 | 0 | 212,708,063 | 0 | ||||||||||||
| Mortgage-backed securities | 225,648,005 | 0 | 225,648,005 | 0 | ||||||||||||
| Equity securities | 58,556,173 | 54,152,085 | 4,404,088 | 0 | ||||||||||||
| Total investments in the fair value hierarchy | $ | 613,692,190 | $ | 54,152,085 | $ | 559,540,105 | $ | 0 | ||||||||
| 2019 | 2018 | 2017 | ||||||||||
Balance, January 1 | $ | 60,615,127 | $ | 60,289,860 | $ | 56,309,196 | ||||||
Acquisition costs deferred | 121,112,732 | 121,289,267 | 119,045,664 | |||||||||
Amortization charged to earnings | (122,443,000 | ) | (120,964,000 | ) | (115,065,000 | ) | ||||||
|
|
|
|
|
| |||||||
Balance, December 31 | $ | 59,284,859 | $ | 60,615,127 | $ | 60,289,860 | ||||||
|
|
|
|
|
| |||||||
| 2021 | 2020 | 2019 | ||||||||||
| Balance, January 1 | $ | 59,156,958 | $ | 59,284,859 | $ | 60,615,127 | ||||||
| Acquisition costs deferred | 137,604,415 | 118,944,099 | 121,112,732 | |||||||||
| Amortization charged to earnings | (128,733,000 | ) | (119,072,000 | ) | (122,443,000 | ) | ||||||
| Balance, December 31 | $ | 68,028,373 | $ | 59,156,958 | $ | 59,284,859 | ||||||
| 2019 | 2018 | Estimated Useful Life | ||||||||||
Office equipment | $ | 8,660,163 | $ | 10,049,884 | 3-15 years | |||||||
Automobiles | 301,119 | 448,015 | 5 years | |||||||||
Real estate | 4,977,813 | 4,977,813 | 5-50 years | |||||||||
Software | 2,065,927 | 2,843,782 | 5 years | |||||||||
|
|
|
| |||||||||
| 16,005,022 | 18,319,494 | |||||||||||
Accumulated depreciation | (11,446,950 | ) | (13,628,790 | ) | ||||||||
|
|
|
| |||||||||
| $ | 4,558,072 | $ | 4,690,704 | |||||||||
|
|
|
| |||||||||
| 2021 | 2020 | Estimated Useful Life | ||||||||
| Office equipment | $ | 8,382,877 | $ | 8,809,344 | 3-15 years | |||||
| Automobiles | 322,703 | 301,119 | 5 years | |||||||
| Real estate | 2,575,207 | 4,921,056 | 5-50 years | |||||||
| Software | 1,386,936 | 2,065,927 | 5 years | |||||||
| 12,667,723 | 16,097,446 | |||||||||
| Accumulated depreciation | (9,710,793 | ) | (11,707,069 | ) | ||||||
| $ | 2,956,930 | $ | 4,390,377 | |||||||
The reduction in real estate held at December 31, 2021 reflects the sale of several branch office facilities during 2021.
-72-
| 2019 | 2018 | 2017 | ||||||||||
Balance at January 1 | $ | 814,665,224 | $ | 676,671,727 | $ | 606,664,590 | ||||||
Less reinsurance recoverable | (339,267,525 | ) | (293,271,257 | ) | (259,147,147 | ) | ||||||
|
|
|
|
|
| |||||||
Net balance at January 1 | 475,397,699 | 383,400,470 | 347,517,443 | |||||||||
|
|
|
|
|
| |||||||
Incurred related to: | ||||||||||||
Current year | 519,319,941 | 540,826,810 | 480,646,641 | |||||||||
Prior years | (12,932,277 | ) | 35,631,610 | 6,621,413 | ||||||||
|
|
|
|
|
| |||||||
Total incurred | 506,387,664 | 576,458,420 | 487,268,054 | |||||||||
|
|
|
|
|
| |||||||
Paid related to: | ||||||||||||
Current year | 278,923,614 | 308,578,285 | 288,379,600 | |||||||||
Prior years | 195,956,327 | 175,882,906 | 163,005,427 | |||||||||
|
|
|
|
|
| |||||||
Total paid | 474,879,941 | 484,461,191 | 451,385,027 | |||||||||
|
|
|
|
|
| |||||||
Net balance at December 31 | 506,905,422 | 475,397,699 | 383,400,470 | |||||||||
Plus reinsurance recoverable | 362,768,427 | 339,267,525 | 293,271,257 | |||||||||
|
|
|
|
|
| |||||||
Balance at December 31 | $ | 869,673,849 | $ | 814,665,224 | $ | 676,671,727 | ||||||
|
|
|
|
|
| |||||||
| 2021 | 2020 | 2019 | ||||||||||
| Balance at January 1 | $ | 962,007,437 | $ | 869,673,849 | $ | 814,665,224 | ||||||
| Less reinsurance recoverable | (404,818,480 | ) | (362,768,427 | ) | (339,267,525 | ) | ||||||
| Net balance at January 1 | 557,188,957 | 506,905,422 | 475,397,699 | |||||||||
| Incurred related to: | ||||||||||||
| Current year | 551,917,571 | 472,709,060 | 519,319,941 | |||||||||
| Prior years | (31,208,029 | ) | (12,944,767 | ) | (12,932,277 | ) | ||||||
| Total incurred | 520,709,542 | 459,764,293 | 506,387,664 | |||||||||
| Paid related to: | ||||||||||||
| Current year | 269,316,762 | 236,984,291 | 278,923,614 | |||||||||
| Prior years | 182,222,742 | 172,496,467 | 195,956,327 | |||||||||
| Total paid | 451,539,504 | 409,480,758 | 474,879,941 | |||||||||
| Net balance at December 31 | 626,358,995 | 557,188,957 | 506,905,422 | |||||||||
| Plus reinsurance recoverable | 451,261,306 | 404,818,480 | 362,768,427 | |||||||||
| Balance at December 31 | $ | 1,077,620,301 | $ | 962,007,437 | $ | 869,673,849 | ||||||
-73-
-74-
| Personal Automobile | At December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 130,415 | $ | 133,201 | $ | 135,592 | $ | 136,493 | $ | 136,552 | $ | 136,463 | $ | 136,141 | $ | 136,677 | $ | 136,648 | $ | 136,542 | $ | 98 | 69 | |||||||||||||||||||||||||
| 2013 | 124,965 | 130,737 | 131,594 | 132,643 | 132,604 | 132,934 | 132,853 | 132,690 | 132,787 | 106 | 66 | |||||||||||||||||||||||||||||||||||||
| 2014 | 124,426 | 124,806 | 124,210 | 126,200 | 126,779 | 126,734 | 126,861 | 126,977 | 131 | 71 | ||||||||||||||||||||||||||||||||||||||
| 2015 | 137,569 | 139,333 | 139,181 | 142,493 | 142,408 | 142,073 | 142,010 | 293 | 70 | |||||||||||||||||||||||||||||||||||||||
| 2016 | 150,216 | 153,937 | 157,516 | 157,943 | 156,935 | 156,436 | 728 | 73 | ||||||||||||||||||||||||||||||||||||||||
| 2017 | 166,690 | 127,728 | 175,939 | 174,784 | 173,730 | 1,328 | 79 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 186,580 | 183,358 | 181,558 | 180,787 | 3,069 | 81 | ||||||||||||||||||||||||||||||||||||||||||
| 2019 | 161,056 | 157,689 | 156,300 | 5,151 | 68 | |||||||||||||||||||||||||||||||||||||||||||
| 2020 | 111,483 | 103,585 | 7,372 | 43 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 119,364 | 20,654 | 45 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,428,518 | ||||||||||||||||||||||||||||||||||||||||||||||
| Personal Automobile | ||||||||||||||||||||||||||||||||||||||||
| Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 87,517 | $ | 111,941 | $ | 124,652 | $ | 130,862 | $ | 133,428 | $ | 134,581 | $ | 135,132 | $ | 136,137 | $ | 136,165 | $ | 136,186 | ||||||||||||||||||||
| 2013 | 84,241 | 109,051 | 120,118 | 125,946 | 130,026 | 131,326 | 131,642 | 132,215 | 132,300 | |||||||||||||||||||||||||||||||
| 2014 | 85,377 | 104,736 | 114,893 | 120,491 | 123,815 | 124,926 | 125,619 | 125,762 | ||||||||||||||||||||||||||||||||
| 2015 | 93,611 | 116,303 | 128,395 | 135,027 | 139,121 | 140,028 | 140,892 | |||||||||||||||||||||||||||||||||
| 2016 | 102,433 | 129,507 | 143,321 | 151,159 | 153,521 | 154,769 | ||||||||||||||||||||||||||||||||||
| 2017 | 111,964 | 142,372 | 159,879 | 166,099 | 169,190 | |||||||||||||||||||||||||||||||||||
| 2018 | 115,585 | 150,175 | 163,036 | 169,651 | ||||||||||||||||||||||||||||||||||||
| 2019 | 103,101 | 127,187 | 141,004 | |||||||||||||||||||||||||||||||||||||
| 2020 | 66,084 | 81,783 | ||||||||||||||||||||||||||||||||||||||
| 2021 | 76,477 | |||||||||||||||||||||||||||||||||||||||
| Total | 1,328,014 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2012, net of reinsurance | 925 | |||||||||||||||||||||||||||||||||||||||
| Liabilities for claims and claims adjustment expenses, net of reinsurance | $ | 101,429 | ||||||||||||||||||||||||||||||||||||||
Personal Automobile | At December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
2010 | $ | 117,967 | $ | 117,552 | $ | 118,562 | $ | 118,876 | $ | 118,916 | $ | 118,587 | $ | 118,385 | $ | 118,289 | $ | 118,314 | $ | 118,294 | $ | 27 | 70 | |||||||||||||||||||||||||
2011 | 127,929 | 131,678 | 132,987 | 133,229 | 133,617 | 133,218 | 133,145 | 133,142 | 133,207 | 73 | 75 | |||||||||||||||||||||||||||||||||||||
2012 | 130,415 | 133,201 | 135,592 | 136,493 | 136,552 | 136,463 | 136,141 | 136,677 | 215 | 69 | ||||||||||||||||||||||||||||||||||||||
2013 | 124,965 | 130,737 | 131,594 | 132,643 | 132,604 | 132,934 | 132,853 | 175 | 66 | |||||||||||||||||||||||||||||||||||||||
2014 | 124,426 | 124,806 | 124,210 | 126,200 | 126,779 | 126,734 | 264 | 71 | ||||||||||||||||||||||||||||||||||||||||
2015 | 137,596 | 139,333 | 139,181 | 142,493 | 142,408 | 732 | 70 | |||||||||||||||||||||||||||||||||||||||||
2016 | 150,216 | 153,937 | 157,516 | 157,943 | 2,372 | 73 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 166,690 | 176,728 | 175,939 | 4,884 | 79 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 186,580 | 183,358 | 10,675 | 80 | ||||||||||||||||||||||||||||||||||||||||||||
2019 | 161,056 | 28,339 | 66 | |||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,468,469 | ||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Personal Automobile | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
2010 | $ | 75,889 | $ | 96,749 | $ | 107,662 | $ | 113,243 | $ | 116,748 | $ | 117,812 | $ | 117,978 | $ | 118,054 | $ | 118,093 | $ | 118,119 | ||||||||||||||||||||
2011 | 87,191 | 110,249 | 121,621 | 127,545 | 131,319 | 132,479 | 132,714 | 132,777 | 132,835 | |||||||||||||||||||||||||||||||
2012 | 87,517 | 111,941 | 124,652 | 130,862 | 133,428 | 134,581 | 135,132 | 136,137 | ||||||||||||||||||||||||||||||||
2013 | 84,241 | 109,051 | 120,118 | 125,946 | 130,026 | 131,326 | 131,642 | |||||||||||||||||||||||||||||||||
2014 | 85,377 | 104,736 | 114,893 | 120,491 | 123,815 | 124,926 | ||||||||||||||||||||||||||||||||||
2015 | 93,611 | 116,303 | 128,395 | 135,027 | 139,121 | |||||||||||||||||||||||||||||||||||
2016 | 102,433 | 129,507 | 143,321 | 151,159 | ||||||||||||||||||||||||||||||||||||
2017 | 111,964 | 142,372 | 159,879 | |||||||||||||||||||||||||||||||||||||
2018 | 115,585 | 150,175 | ||||||||||||||||||||||||||||||||||||||
2019 | 103,101 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| Total | 1,347,094 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2010, net of reinsurance | 719 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| Liabilities for claims and claims adjustment expenses, net of reinsurance | $ | 122,094 | ||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
-75-
| Homeowners | At December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 53,962 | $ | 54,794 | $ | 54,468 | $ | 54,351 | $ | 54,281 | $ | 54,381 | $ | 54,523 | $ | 54,537 | $ | 54,548 | $ | 54,556 | $ | 0 | 18 | |||||||||||||||||||||||||
| 2013 | 50,887 | 51,121 | 51,122 | 50,874 | 50,988 | 50,971 | 51,008 | 51,064 | 51,053 | 0 | 13 | |||||||||||||||||||||||||||||||||||||
| 2014 | 56,916 | 58,378 | 57,680 | 57,332 | 57,288 | 57,402 | 57,367 | 57,371 | 0 | 16 | ||||||||||||||||||||||||||||||||||||||
| 2015 | 63,359 | 63,925 | 63,053 | 63,071 | 63,099 | 62,993 | 63,043 | 19 | 13 | |||||||||||||||||||||||||||||||||||||||
| 2016 | 62,443 | 64,064 | 63,735 | 63,355 | 63,279 | 63,409 | 12 | 12 | ||||||||||||||||||||||||||||||||||||||||
| 2017 | 79,283 | 79,911 | 79,305 | 79,247 | 79,065 | 144 | 17 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 81,965 | 83,385 | 82,905 | 82,566 | 538 | 18 | ||||||||||||||||||||||||||||||||||||||||||
| 2019 | 73,294 | 73,554 | 73,234 | 912 | 16 | |||||||||||||||||||||||||||||||||||||||||||
| 2020 | 61,633 | 62,718 | 1,567 | 13 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 67,677 | 6,208 | 11 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 654,692 | ||||||||||||||||||||||||||||||||||||||||||||||
| Homeowners | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 46,566 | $ | 53,619 | $ | 54,028 | $ | 54,298 | $ | 54,317 | $ | 54,356 | $ | 54,557 | $ | 54,557 | $ | 54,553 | $ | 54,560 | ||||||||||||||||||||
| 2013 | 40,949 | 49,410 | 50,210 | 50,478 | 51,043 | 50,902 | 50,967 | 50,965 | 50,955 | |||||||||||||||||||||||||||||||
| 2014 | 45,823 | 56,255 | 56,990 | 57,195 | 56,995 | 57,243 | 57,336 | 57,339 | ||||||||||||||||||||||||||||||||
| 2015 | 51,885 | 61,542 | 62,204 | 62,590 | 62,844 | 62,943 | 62,936 | |||||||||||||||||||||||||||||||||
| 2016 | 50,125 | 61,145 | 62,760 | 63,144 | 63,162 | 63,217 | ||||||||||||||||||||||||||||||||||
| 2017 | 67,077 | 77,663 | 78,006 | 78,127 | 78,454 | |||||||||||||||||||||||||||||||||||
| 2018 | 70,385 | 79,892 | 80,905 | 81,464 | ||||||||||||||||||||||||||||||||||||
| 2019 | 58,074 | 69,145 | 70,416 | |||||||||||||||||||||||||||||||||||||
| 2020 | 51,226 | 60,348 | ||||||||||||||||||||||||||||||||||||||
| 2021 | 52,161 | |||||||||||||||||||||||||||||||||||||||
| Total | 631,850 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2012, net of reinsurance | 118 | |||||||||||||||||||||||||||||||||||||||
| Liabilities for claims and claims adjustment expenses, net of reinsurance | $ | 22,960 | ||||||||||||||||||||||||||||||||||||||
Homeowners | At December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
2010 | $ | 60,315 | $ | 60,729 | $ | 60,248 | $ | 59,972 | $ | 60,355 | $ | 60,440 | $ | 60,443 | $ | 60,542 | $ | 60,624 | $ | 60,641 | $ | — | 25 | |||||||||||||||||||||||||
2011 | 71,256 | 70,461 | 70,436 | 70,381 | 70,297 | 70,351 | 70,479 | 70,642 | 70,682 | — | 27 | |||||||||||||||||||||||||||||||||||||
2012 | 53,962 | 54,794 | 54,468 | 54,351 | 54,281 | 54,381 | 54,523 | 54,537 | — | 19 | ||||||||||||||||||||||||||||||||||||||
2013 | 50,887 | 51,121 | 51,122 | 50,874 | 50,988 | 50,971 | 51,008 | — | 13 | |||||||||||||||||||||||||||||||||||||||
2014 | 56,916 | 58,378 | 57,680 | 57,332 | 57,288 | 57,402 | (4 | ) | 18 | |||||||||||||||||||||||||||||||||||||||
2015 | 63,359 | 63,925 | 63,053 | 63,071 | 63,099 | 45 | 14 | |||||||||||||||||||||||||||||||||||||||||
2016 | 62,443 | 64,064 | 63,735 | 63,355 | 78 | 13 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 79,283 | 79,911 | 79,305 | 724 | 18 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 81,965 | 83,385 | 1,657 | 19 | ||||||||||||||||||||||||||||||||||||||||||||
2019 | 73,294 | 6,775 | 14 | |||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 656,708 | ||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Homeowners | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
2010 | $ | 47,419 | $ | 57,334 | $ | 59,283 | $ | 59,875 | $ | 60,239 | $ | 60,486 | $ | 60,501 | $ | 60,525 | $ | 60,540 | $ | 60,557 | ||||||||||||||||||||
2011 | 57,588 | 69,345 | 70,125 | 70,351 | 70,541 | 70,626 | 70,648 | 70,692 | 70,692 | |||||||||||||||||||||||||||||||
2012 | 46,566 | 53,619 | 54,028 | 54,298 | 54,317 | 54,356 | 54,557 | 54,557 | ||||||||||||||||||||||||||||||||
2013 | 40,949 | 49,410 | 50,210 | 50,478 | 51,043 | 50,902 | 50,967 | |||||||||||||||||||||||||||||||||
2014 | 45,823 | 56,255 | 56,990 | 57,195 | 56,995 | 57,243 | ||||||||||||||||||||||||||||||||||
2015 | 51,885 | 61,542 | 62,204 | 62,590 | 62,844 | |||||||||||||||||||||||||||||||||||
2016 | 50,125 | 61,145 | 62,760 | 63,144 | ||||||||||||||||||||||||||||||||||||
2017 | 67,077 | 77,663 | 78,006 | |||||||||||||||||||||||||||||||||||||
2018 | 70,385 | 79,892 | ||||||||||||||||||||||||||||||||||||||
2019 | 58,074 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| Total | 635,976 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2010, net of reinsurance | 30 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| | Liabilities for claims and claims adjustment expenses, net of | | $ | 20,762 | ||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
-76-
| Commercial Automobile | At December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 26,557 | $ | 27,720 | $ | 30,606 | $ | 31,435 | $ | 31,278 | $ | 31,648 | $ | 31,803 | $ | 31,896 | $ | 31,930 | $ | 31,922 | $ | 15 | 8 | |||||||||||||||||||||||||
| 2013 | 32,902 | 33,749 | 34,751 | 35,240 | 36,404 | 36,435 | 36,569 | 36,181 | 36,165 | 53 | 8 | |||||||||||||||||||||||||||||||||||||
| 2014 | 42,760 | 44,544 | 47,326 | 48,213 | 49,284 | 49,168 | 49,308 | 49,291 | 91 | 11 | ||||||||||||||||||||||||||||||||||||||
| 2015 | 46,526 | 48,323 | 51,412 | 54,259 | 54,517 | 54,619 | 53,793 | 234 | 12 | |||||||||||||||||||||||||||||||||||||||
| 2016 | 54,302 | 57,353 | 65,905 | 67,127 | 66,894 | 66,085 | 338 | 13 | ||||||||||||||||||||||||||||||||||||||||
| 2017 | 61,484 | 67,927 | 67,697 | 67,249 | 65,310 | 895 | 13 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 79,307 | 81,396 | 82,313 | 83,043 | 2,306 | 15 | ||||||||||||||||||||||||||||||||||||||||||
| 2019 | 88,864 | 91,245 | 90,290 | 7,365 | 16 | |||||||||||||||||||||||||||||||||||||||||||
| 2020 | 90,367 | 87,766 | 14,996 | 14 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 109,824 | 41,282 | 14 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 673,489 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commercial Automobile | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 13,642 | $ | 20,240 | $ | 23,718 | $ | 27,417 | $ | 29,873 | $ | 30,402 | $ | 31,104 | $ | 31,228 | $ | 31,263 | $ | 31,507 | ||||||||||||||||||||
| 2013 | 16,306 | 23,557 | 26,879 | 31,053 | 34,083 | 36,004 | 36,106 | 36,092 | 36,087 | |||||||||||||||||||||||||||||||
| 2014 | 22,707 | 31,089 | 39,436 | 44,374 | 47,290 | 48,418 | 48,603 | 48,714 | ||||||||||||||||||||||||||||||||
| 2015 | 23,875 | 35,342 | 41,678 | 48,261 | 51,605 | 51,992 | 52,728 | |||||||||||||||||||||||||||||||||
| 2016 | 27,033 | 38,237 | 48,837 | 57,237 | 60,485 | 64,421 | ||||||||||||||||||||||||||||||||||
| 2017 | 28,707 | 40,213 | 49,703 | 57,128 | 59,889 | |||||||||||||||||||||||||||||||||||
| 2018 | 33,862 | 47,941 | 57,451 | 69,487 | ||||||||||||||||||||||||||||||||||||
| 2019 | 36,948 | 53,026 | 63,575 | |||||||||||||||||||||||||||||||||||||
| 2020 | 31,884 | 46,459 | ||||||||||||||||||||||||||||||||||||||
| 2021 | 39,851 | |||||||||||||||||||||||||||||||||||||||
| Total | 512,718 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2012, net of reinsurance | 46 | |||||||||||||||||||||||||||||||||||||||
| Liabilities for claims and claims adjustment expenses, net of reinsurance | $ | 160,817 | ||||||||||||||||||||||||||||||||||||||
Commercial Automobile | At December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
2010 | $ | 19,315 | $ | 19,913 | $ | 20,695 | $ | 21,477 | $ | 21,490 | $ | 21,756 | $ | 21,746 | $ | 21,713 | $ | 21,726 | $ | 21,768 | $ | 9 | 7 | |||||||||||||||||||||||||
2011 | 26,642 | 27,157 | 28,570 | 28,893 | 29,112 | 29,107 | 29,487 | 29,751 | 29,542 | 18 | 9 | |||||||||||||||||||||||||||||||||||||
2012 | 26,557 | 27,720 | 30,606 | 31,435 | 31,278 | 31,648 | 31,803 | 31,896 | 28 | 8 | ||||||||||||||||||||||||||||||||||||||
2013 | 32,902 | 33,749 | 34,751 | 35,240 | 36,404 | 36,435 | 36,569 | 89 | 9 | |||||||||||||||||||||||||||||||||||||||
2014 | 42,760 | 44,544 | 47,326 | 48,213 | 49,284 | 49,168 | 270 | 11 | ||||||||||||||||||||||||||||||||||||||||
2015 | 46,526 | 48,323 | 51,412 | 54,259 | 54,517 | 662 | 12 | |||||||||||||||||||||||||||||||||||||||||
2016 | 54,302 | 57,353 | 65,905 | 67,127 | 2,134 | 13 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 61,484 | 67,927 | 67,697 | 5,149 | 14 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 79,307 | 81,396 | 11,763 | 15 | ||||||||||||||||||||||||||||||||||||||||||||
2019 | 88,864 | 27,764 | 15 | |||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 528,544 | ||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Automobile | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
2010 | $ | 10,778 | $ | 14,180 | $ | 16,426 | $ | 19,030 | $ | 20,804 | $ | 21,014 | $ | 21,482 | $ | 21,549 | $ | 21,558 | $ | 21,559 | ||||||||||||||||||||
2011 | 13,876 | 19,106 | 24,267 | 26,973 | 28,014 | 28,758 | 28,836 | 29,102 | 29,474 | |||||||||||||||||||||||||||||||
2012 | 13,642 | 20,240 | 23,718 | 27,417 | 29,873 | 30,402 | 31,104 | 31,228 | ||||||||||||||||||||||||||||||||
2013 | 16,306 | 23,557 | 26,879 | 31,053 | 34,083 | 36,004 | 36,106 | |||||||||||||||||||||||||||||||||
2014 | 22,707 | 31,089 | 39,436 | 44,374 | 47,290 | 48,418 | ||||||||||||||||||||||||||||||||||
2015 | 23,875 | 35,342 | 41,678 | 48,261 | 51,605 | |||||||||||||||||||||||||||||||||||
2016 | 27,033 | 38,237 | 48,837 | 57,237 | ||||||||||||||||||||||||||||||||||||
2017 | 28,707 | 40,213 | 49,703 | |||||||||||||||||||||||||||||||||||||
2018 | 33,862 | 47,941 | ||||||||||||||||||||||||||||||||||||||
2019 | 36,948 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| Total | 410,219 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2010, net of reinsurance | 47 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| | Liabilities for claims and claims adjustment expenses, net of | | $ | 118,372 | ||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
-77-
| Commercial Multi-Peril | At December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 29,789 | $ | 30,716 | $ | 32,449 | $ | 34,117 | $ | 35,755 | $ | 36,214 | $ | 36,525 | $ | 36,876 | $ | 36,662 | $ | 36,844 | $ | 0 | 6 | |||||||||||||||||||||||||
| 2013 | 35,683 | 35,679 | 37,292 | 37,205 | 37,981 | 37,365 | 37,453 | 37,495 | 37,630 | 0 | 6 | |||||||||||||||||||||||||||||||||||||
| 2014 | 48,204 | 50,135 | 51,843 | 52,336 | 53,294 | 53,116 | 52,926 | 52,933 | 79 | 7 | ||||||||||||||||||||||||||||||||||||||
| 2015 | 42,070 | 43,874 | 44,728 | 45,104 | 45,873 | 45,366 | 45,420 | 135 | 6 | |||||||||||||||||||||||||||||||||||||||
| 2016 | 43,005 | 46,988 | 48,267 | 48,871 | 48,732 | 48,823 | 373 | 6 | ||||||||||||||||||||||||||||||||||||||||
| 2017 | 56,185 | 56,043 | 56,517 | 54,812 | 55,076 | 674 | 7 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 66,265 | 66,470 | 67,749 | 67,810 | 3,653 | 7 | ||||||||||||||||||||||||||||||||||||||||||
| 2019 | 71,865 | 73,836 | 76,326 | 8,159 | 7 | |||||||||||||||||||||||||||||||||||||||||||
| 2020 | 83,195 | 79,910 | 15,880 | 8 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 116,827 | 37,194 | 6 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 617,599 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commercial Multi-Peril | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 16,666 | $ | 23,384 | $ | 26,634 | $ | 29,370 | $ | 33,327 | $ | 35,331 | $ | 35,909 | $ | 36,329 | $ | 36,399 | $ | 36,529 | ||||||||||||||||||||
| 2013 | 19,875 | 26,216 | 29,159 | 33,614 | 35,104 | 36,321 | 37,333 | 37,436 | 37,488 | |||||||||||||||||||||||||||||||
| 2014 | 27,920 | 35,520 | 40,936 | 47,021 | 50,017 | 51,615 | 52,103 | 52,252 | ||||||||||||||||||||||||||||||||
| 2015 | 21,837 | 29,419 | 34,323 | 39,162 | 42,849 | 44,090 | 44,439 | |||||||||||||||||||||||||||||||||
| 2016 | 19,660 | 29,402 | 34,612 | 41,193 | 43,435 | 44,944 | ||||||||||||||||||||||||||||||||||
| 2017 | 27,399 | 36,926 | 42,691 | 46,361 | 49,488 | |||||||||||||||||||||||||||||||||||
| 2018 | 30,597 | 42,296 | 48,050 | 54,913 | ||||||||||||||||||||||||||||||||||||
| 2019 | 28,210 | 41,266 | 47,522 | |||||||||||||||||||||||||||||||||||||
| 2020 | 34,729 | 46,193 | ||||||||||||||||||||||||||||||||||||||
| 2021 | 46,768 | |||||||||||||||||||||||||||||||||||||||
| Total | 460,536 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2012, net of reinsurance | 531 | |||||||||||||||||||||||||||||||||||||||
| Liabilities for claims and claims adjustment expenses, net of reinsurance | $ | 157,594 | ||||||||||||||||||||||||||||||||||||||
Commercial | At December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
2010 | $ | 28,745 | $ | 29,656 | $ | 29,390 | $ | 29,169 | $ | 29,373 | $ | 29,453 | $ | 29,463 | $ | 29,779 | $ | 29,925 | $ | 30,105 | $ | — | 6 | |||||||||||||||||||||||||
2011 | 33,054 | 35,411 | 35,942 | 37,576 | 37,385 | 38,270 | 38,105 | 38,160 | 38,434 | — | 7 | |||||||||||||||||||||||||||||||||||||
2012 | 29,789 | 30,716 | 32,449 | 34,117 | 35,755 | 36,214 | 36,525 | 36,876 | — | 6 | ||||||||||||||||||||||||||||||||||||||
2013 | 35,683 | 35,679 | 37,292 | 37,205 | 37,981 | 37,365 | 37,453 | 38 | 6 | |||||||||||||||||||||||||||||||||||||||
2014 | 48,204 | 50,135 | 51,843 | 52,336 | 53,294 | 53,116 | 147 | 7 | ||||||||||||||||||||||||||||||||||||||||
2015 | 42,070 | 43,874 | 44,728 | 45,104 | 45,873 | 519 | 6 | |||||||||||||||||||||||||||||||||||||||||
2016 | 43,005 | 46,988 | 48,267 | 48,871 | 2,015 | 6 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 56,185 | 56,043 | 56,517 | 4,604 | 7 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 66,265 | 66,470 | 10,568 | 7 | ||||||||||||||||||||||||||||||||||||||||||||
2019 | 71,865 | 21,633 | 6 | |||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 485,580 | ||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Multi-Peril | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
2010 | $ | 17,007 | $ | 22,017 | $ | 24,749 | $ | 26,832 | $ | 27,768 | $ | 28,681 | $ | 28,906 | $ | 29,632 | $ | 29,721 | $ | 29,923 | ||||||||||||||||||||
2011 | 18,773 | 24,767 | 30,286 | 33,526 | 36,722 | 37,759 | 38,240 | 38,366 | 38,413 | |||||||||||||||||||||||||||||||
2012 | 16,666 | 23,384 | 26,634 | 29,370 | 33,327 | 35,331 | 35,909 | 36,329 | ||||||||||||||||||||||||||||||||
2013 | 19,875 | 26,216 | 29,159 | 33,614 | 35,104 | 36,321 | 37,333 | |||||||||||||||||||||||||||||||||
2014 | 27,920 | 35,520 | 40,936 | 47,021 | 50,017 | 51,615 | ||||||||||||||||||||||||||||||||||
2015 | 21,837 | 29,419 | 34,323 | 39,162 | 42,849 | |||||||||||||||||||||||||||||||||||
2016 | 19,660 | 29,402 | 34,612 | 41,193 | ||||||||||||||||||||||||||||||||||||
2017 | 27,399 | 36,926 | 42,691 | |||||||||||||||||||||||||||||||||||||
2018 | 30,597 | 42,296 | ||||||||||||||||||||||||||||||||||||||
2019 | 28,210 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| Total | 390,852 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2010, net of reinsurance | 425 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| | Liabilities for claims and claims adjustment expenses, net of | | $ | 95,153 | ||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
-78-
| Workers’ Compensation | At December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 39,142 | $ | 39,516 | $ | 38,827 | $ | 37,926 | $ | 37,163 | $ | 36,468 | $ | 35,954 | $ | 35,932 | $ | 36,014 | $ | 36,056 | $ | 39 | 5 | |||||||||||||||||||||||||
| 2013 | 46,325 | 47,027 | 44,289 | 42,828 | 42,327 | 42,555 | 42,651 | 42,341 | 42,427 | 70 | 6 | |||||||||||||||||||||||||||||||||||||
| 2014 | 51,508 | 51,553 | 49,288 | 48,537 | 47,540 | 47,693 | 47,849 | 47,620 | 68 | 6 | ||||||||||||||||||||||||||||||||||||||
| 2015 | 53,332 | 49,615 | 45,991 | 44,986 | 43,006 | 42,597 | 42,225 | 328 | 5 | |||||||||||||||||||||||||||||||||||||||
| 2016 | 58,814 | 49,802 | 47,883 | 44,969 | 44,098 | 43,559 | 532 | 5 | ||||||||||||||||||||||||||||||||||||||||
| 2017 | 60,450 | 56,351 | 52,687 | 51,464 | 49,557 | 1,461 | 5 | |||||||||||||||||||||||||||||||||||||||||
| 2018 | 62,197 | 55,291 | 52,514 | 47,912 | 2,171 | 6 | ||||||||||||||||||||||||||||||||||||||||||
| 2019 | 60,998 | 59,624 | 57,728 | 3,474 | 6 | |||||||||||||||||||||||||||||||||||||||||||
| 2020 | 57,172 | 57,850 | 5,494 | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 67,035 | 21,111 | 6 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 491,969 | ||||||||||||||||||||||||||||||||||||||||||||||
| Workers’ Compensation | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Accident Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
| 2012 | $ | 11,097 | $ | 22,963 | $ | 28,812 | $ | 31,244 | $ | 33,196 | $ | 34,177 | $ | 34,460 | $ | 34,622 | $ | 34,691 | $ | 34,973 | ||||||||||||||||||||
| 2013 | 13,052 | 26,043 | 32,783 | 36,351 | 38,877 | 39,617 | 40,361 | 40,827 | 41,209 | |||||||||||||||||||||||||||||||
| 2014 | 13,932 | 28,513 | 36,284 | 40,393 | 42,465 | 43,866 | 44,403 | 44,671 | ||||||||||||||||||||||||||||||||
| 2015 | 13,071 | 27,531 | 34,192 | 36,929 | 37,936 | 38,596 | 39,096 | |||||||||||||||||||||||||||||||||
| 2016 | 14,709 | 30,344 | 37,178 | 40,570 | 41,208 | 41,543 | ||||||||||||||||||||||||||||||||||
| 2017 | 15,581 | 31,990 | 39,684 | 42,954 | 44,242 | |||||||||||||||||||||||||||||||||||
| 2018 | 17,644 | 31,928 | 37,072 | 41,611 | ||||||||||||||||||||||||||||||||||||
| 2019 | 16,939 | 33,009 | 41,740 | |||||||||||||||||||||||||||||||||||||
| 2020 | 14,591 | 32,817 | ||||||||||||||||||||||||||||||||||||||
| 2021 | 20,931 | |||||||||||||||||||||||||||||||||||||||
| Total | 382,833 | |||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2012, net of reinsurance | 4,643 | |||||||||||||||||||||||||||||||||||||||
| Liabilities for claims and claims adjustment expenses, net of reinsurance | $ | 113,779 | ||||||||||||||||||||||||||||||||||||||
Workers’ Compensation | At December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Total IBNR Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars and reported claims in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
2010 | $ | 27,304 | $ | 27,859 | $ | 27,010 | $ | 26,637 | $ | 26,944 | $ | 27,121 | $ | 27,037 | $ | 26,984 | $ | 26,801 | $ | 26,829 | $ | 37 | 5 | |||||||||||||||||||||||||
2011 | 32,490 | 35,757 | 36,614 | 36,369 | 35,670 | 35,039 | 35,194 | 34,926 | 35,034 | 53 | 6 | |||||||||||||||||||||||||||||||||||||
2012 | 39,142 | 39,516 | 38,827 | 37,926 | 37,163 | 36,468 | 35,954 | 35,932 | 75 | 6 | ||||||||||||||||||||||||||||||||||||||
2013 | 46,325 | 47,027 | 44,289 | 42,828 | 42,327 | 42,555 | 42,651 | 187 | 6 | |||||||||||||||||||||||||||||||||||||||
2014 | 51,508 | 51,553 | 49,288 | 48,537 | 47,540 | 47,693 | 264 | 6 | ||||||||||||||||||||||||||||||||||||||||
2015 | 53,332 | 49,615 | 45,991 | 44,986 | 43,006 | 836 | 6 | |||||||||||||||||||||||||||||||||||||||||
2016 | 58,814 | 49,802 | 47,883 | 44,969 | 1,630 | 6 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 60,450 | 56,351 | 52,687 | 3,362 | 6 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 62,197 | 55,291 | 7,081 | 6 | ||||||||||||||||||||||||||||||||||||||||||||
2019 | 60,998 | 19,280 | 6 | |||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 445,090 | ||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Workers’ Compensation | ||||||||||||||||||||||||||||||||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
2010 | $ | 8,066 | $ | 15,937 | $ | 21,176 | $ | 23,137 | $ | 24,539 | $ | 25,337 | $ | 25,804 | $ | 26,050 | $ | 26,295 | $ | 26,301 | ||||||||||||||||||||
2011 | 9,157 | 21,450 | 27,517 | 31,905 | 32,394 | 33,067 | 33,577 | 33,963 | 34,109 | |||||||||||||||||||||||||||||||
2012 | 11,097 | 22,963 | 28,812 | 31,244 | 33,196 | 34,177 | 34,460 | 34,622 | ||||||||||||||||||||||||||||||||
2013 | 13,052 | 26,043 | 32,783 | 36,351 | 38,877 | 39,617 | 40,361 | |||||||||||||||||||||||||||||||||
2014 | 13,932 | 28,513 | 36,284 | 40,393 | 42,465 | 43,866 | ||||||||||||||||||||||||||||||||||
2015 | 13,071 | 27,531 | 34,192 | 36,929 | 37,936 | |||||||||||||||||||||||||||||||||||
2016 | 14,709 | 30,344 | 37,178 | 40,570 | ||||||||||||||||||||||||||||||||||||
2017 | 15,581 | 31,990 | 39,684 | |||||||||||||||||||||||||||||||||||||
2018 | 17,644 | 31,928 | ||||||||||||||||||||||||||||||||||||||
2019 | 16,939 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| Total | 346,316 | |||||||||||||||||||||||||||||||||||||||
All outstanding liabilities before 2010, net of reinsurance | 3,261 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| | Liabilities for claims and claims adjustment expenses, net of | | $ | 102,035 | ||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
-79-
| At December 31, | ||||
| (in thousands) | 2019 | |||
Net outstanding liabilities: | ||||
Personal automobile | $ | 122,094 | ||
Homeowners | 20,762 | |||
Commercial automobile | 118,372 | |||
Commercial multi-peril | 95,153 | |||
Workers’ compensation | 102,035 | |||
Other | 12,524 | |||
|
| |||
| 470,940 | ||||
|
| |||
Reinsurance recoverable: | ||||
Personal automobile | $ | 119,364 | ||
Homeowners | 10,216 | |||
Commercial automobile | 70,973 | |||
Commercial multi-peril | 58,765 | |||
Workers’ compensation | 81,837 | |||
Other | 7,177 | |||
|
| |||
| 348,332 | ||||
|
| |||
Unallocated loss adjustment expenses | $ | 50,402 | ||
|
| |||
Gross liability for unpaid losses and loss expenses | $ | 869,674 | ||
|
| |||
| At December 31, | ||||
| (in thousands) | 2021 | |||
| Net outstanding liabilities: | ||||
| Personal automobile | $ | 101,429 | ||
| Homeowners | 22,960 | |||
| Commercial automobile | 160,817 | |||
| Commercial multi-peril | 157,593 | |||
Workers’ compensation | 113,779 | |||
| Other | 24,953 | |||
| 581,531 | ||||
| Reinsurance recoverable: | ||||
| Personal automobile | $ | 110,925 | ||
| Homeowners | 13,200 | |||
| Commercial automobile | 107,037 | |||
| Commercial multi-peril | 98,848 | |||
Workers’ compensation | 92,352 | |||
| Other | 6,616 | |||
| 428,978 | ||||
| Unallocated loss adjustment expenses | $ | 67,111 | ||
| Gross liability for unpaid losses and loss expenses | $ | 1,077,620 | ||
| Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance | ||||||||||||||||||||||||||||||||||||||||
Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||||||||||||||||||||
Personal automobile | 64.6 | % | 17.3 | % | 8.8 | % | 4.6 | % | 2.7 | % | 0.9 | % | 0.2 | % | 0.3 | % | — | % | — | % | ||||||||||||||||||||
Homeowners | 81.5 | 15.3 | 1.5 | 0.6 | 0.3 | 0.2 | 0.1 | — | — | — | ||||||||||||||||||||||||||||||
Commercial automobile | 44.0 | 18.1 | 13.3 | 11.3 | 6.6 | 2.5 | 1.2 | 0.5 | 0.7 | — | ||||||||||||||||||||||||||||||
Commercial multi-peril | 47.8 | 17.0 | 10.2 | 10.0 | 6.6 | 3.5 | 1.6 | 1.3 | 0.2 | 0.7 | ||||||||||||||||||||||||||||||
Workers’ compensation | 29.9 | 31.5 | 16.3 | 8.2 | 4.1 | 2.5 | 1.4 | 0.8 | 0.7 | — | ||||||||||||||||||||||||||||||
2021:
| Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance | ||||||||||||||||||||||||||||||||||||||||
| Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||||||||||||||||||||
| Personal automobile | 64.8 | % | 16.9 | % | 8.6 | % | 4.3 | % | 2.3 | % | 0.8 | % | 0.4 | % | 0.4 | % | 0 | % | 0 | % | ||||||||||||||||||||
| Homeowners | 81.5 | 15.0 | 1.3 | 0.5 | 0.3 | 0.1 | 0.2 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Commercial automobile | 41.7 | 18.3 | 12.8 | 12.0 | 6.2 | 3.2 | 1.1 | 0.2 | 0 | 0.8 | ||||||||||||||||||||||||||||||
| Commercial multi-peril | 45.4 | 16.9 | 9.4 | 10.2 | 6.5 | 3.5 | 1.5 | 0.6 | 0.2 | 0.4 | ||||||||||||||||||||||||||||||
| Workers’ compensation | 31.0 | 31.8 | 15.2 | 7.7 | 3.7 | 1.9 | 1.2 | 0.7 | 0.5 | 0.8 | ||||||||||||||||||||||||||||||
-80-
FHLB stock purchased and owned as part of the agreement | $ | 1,639,200 | ||
Collateral pledged, at par (carrying value $36,295,910) | 36,370,886 | |||
Borrowing capacity currently available | 240,569 |
MICO is a member of the FHLB of Indianapolis. During the second quarter of 2018, MICO terminated its line of credit with the FHLB of Indianapolis.
2021.
| FHLB stock purchased and owned as part of the agreement | $ | 1,575,600 | ||
Collateral pledged, at par (carrying value $43,486,897) | 43,074,486 | |||
| Borrowing capacity currently available | 6,913,889 |
$178,082.
Our insurance subsidiaries and Donegal Mutual also purchased facultative reinsurance to cover exposures in excess of the covered limits of their third-party reinsurance agreements.
In November 2021, the MCCA approved the return of approximately $3.0 billion of its estimated surplus to its member insurance companies and provided guidance to those companies with respect to the payment of refunds to Michigan policyholders in the first half of 2022. We recorded a receivable from the MCCA and a corresponding payable for cash refunds due to Michigan policyholders in the amount of $18.1 million on our balance sheet as of December 31, 2021.
-81-
| 2019 | 2018 | 2017 | ||||||||||
Premiums written | $ | 36,941,997 | $ | 50,160,604 | $ | 51,241,267 | ||||||
Premiums earned | 39,732,282 | 51,266,000 | 49,633,348 | |||||||||
Losses and loss expenses | 33,615,819 | 50,652,202 | 44,575,268 | |||||||||
Prepaid reinsurance premiums | 7,067,989 | 10,108,269 | 11,213,665 | |||||||||
Liability for losses and loss expenses | 139,694,097 | 137,904,346 | 116,689,871 | |||||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Premiums written | $ | 38,173,733 | $ | 34,165,635 | $ | 36,941,997 | ||||||
| Premiums earned | 37,984,833 | 35,358,765 | 39,732,282 | |||||||||
| Losses and loss expenses | 29,999,528 | 9,835,268 | 33,615,819 | |||||||||
| Prepaid reinsurance premiums | 6,063,759 | 5,874,859 | 7,067,989 | |||||||||
| Liability for losses and loss expenses | 138,909,584 | 133,158,907 | 139,694,097 | |||||||||
| 2019 | 2018 | 2017 | ||||||||||
Premiums earned | $ | 314,859,014 | $ | 326,198,234 | $ | 310,179,267 | ||||||
Losses and loss expenses | 240,241,845 | 246,223,074 | 218,523,260 | |||||||||
Prepaid reinsurance premiums | 142,475,767 | 135,379,777 | 135,032,641 | |||||||||
Liability for losses and loss expenses | 362,768,427 | 339,267,525 | 293,271,257 | |||||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Premiums earned | $ | 399,284,886 | $ | 356,669,937 | $ | 314,859,014 | ||||||
| Losses and loss expenses | 282,083,985 | 231,771,575 | 240,241,845 | |||||||||
| Prepaid reinsurance premiums | 176,935,842 | 169,418,333 | 142,475,767 | |||||||||
| Liability for losses and loss expenses | 451,261,306 | 404,818,480 | 362,768,427 | |||||||||
| 2019 | 2018 | 2017 | ||||||||||
Direct | $ | 589,572,526 | $ | 594,078,723 | $ | 584,007,351 | ||||||
Assumed | 485,233,762 | 476,482,451 | 466,087,983 | |||||||||
Ceded | (322,204,999 | ) | (326,545,370 | ) | (320,956,412 | ) | ||||||
|
|
|
|
|
| |||||||
Net premiums written | $ | 752,601,289 | $ | 744,015,804 | $ | 729,138,922 | ||||||
|
|
|
|
|
| |||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Direct | $ | 609,204,706 | $ | 586,681,839 | $ | 589,572,526 | ||||||
| Assumed | 601,864,198 | 539,070,557 | 485,233,762 | |||||||||
| Ceded | (406,802,395 | ) | (383,612,503 | ) | (322,204,999 | ) | ||||||
| Net premiums written | $ | 804,266,509 | $ | 742,139,893 | $ | 752,601,289 | ||||||
| 2019 | 2018 | 2017 | ||||||||||
Direct | $ | 591,101,804 | $ | 593,976,241 | $ | 561,178,447 | ||||||
Assumed | 479,835,610 | 473,512,866 | 451,515,575 | |||||||||
Ceded | (314,859,014 | ) | (326,198,234 | ) | (310,179,267 | ) | ||||||
|
|
|
|
|
| |||||||
Net premiums earned | $ | 756,078,400 | $ | 741,290,873 | $ | 702,514,755 | ||||||
|
|
|
|
|
| |||||||
Percentage of assumed premiums earned to net premiums earned | 63.5 | % | 63.9 | % | 64.3 | % | ||||||
|
|
|
|
|
| |||||||
2019:
| 2021 | 2020 | 2019 | ||||||||||
| Direct | $ | 601,408,581 | $ | 584,537,580 | $ | 591,101,804 | ||||||
| Assumed | 573,891,506 | 514,172,696 | 479,835,610 | |||||||||
| Ceded | (399,284,886 | ) | (356,669,937 | ) | (314,859,014 | ) | ||||||
| Net premiums earned | $ | 776,015,201 | $ | 742,040,339 | $ | 756,078,400 | ||||||
| Percentage of assumed premiums earned to net premiums earned | 74.0 | % | 69.3 | % | 63.5 | % | ||||||
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“ the TCJA”) was signed into law. The TCJA contains significant changes to corporate taxation, including the reduction of the corporate income tax rate to 21%, the acceleration of expensing for certain business assets, theone-time transition tax related to the transition of U.S. international tax from a worldwide tax system to a territorial tax system, the repeal of the domestic production deduction, additional limitations on the deductibility of interest expense, the repeal of the corporate alternative minimum tax and expanded limitations on the deductibility of executive compensation.
The key impacts of the TCJA on our financial statements for 2017 were the revaluation of our deferred tax balances to the new corporate tax rate that resulted in additional tax expense of $4.8 million and the reclassification of an alternative minimum tax credit carryforward of $8.5 million from net deferred tax assets to federal income taxes recoverable. We generated sufficient taxable income in 2019 to fully utilize this alternative minimum tax credit carryforward.
-82-
| 2019 | 2018 | 2017 | ||||||||||
Current federal income tax | $ | 8,454,358 | $ | (11,296,704 | ) | $ | (2,139,061 | ) | ||||
Deferred federal income tax | 649,928 | (4,179,805 | ) | 7,137,423 | ||||||||
|
|
|
|
|
| |||||||
Federal income tax expense (benefit) | $ | 9,104,286 | $ | (15,476,509 | ) | $ | 4,998,362 | |||||
|
|
|
|
|
| |||||||
Pennsylvania income tax | 825,000 | — | — | |||||||||
|
|
|
|
|
| |||||||
Income tax expense (benefit) | $ | 9,929,286 | $ | (15,476,509 | ) | $ | 4,998,362 | |||||
|
|
|
|
|
| |||||||
| 2021 | 2020 | 2019 | ||||||||||
| Current federal income tax | $ | 3,998,431 | $ | 10,450,803 | $ | 8,454,358 | ||||||
| Deferred federal income tax | 1,085,903 | 6,448 | 649,928 | |||||||||
| Federal income tax expense | $ | 5,084,334 | $ | 10,457,251 | $ | 9,104,286 | ||||||
| Pennsylvania income tax | 0 | 0 | 825,000 | |||||||||
| Income tax expense | $ | 5,084,334 | $ | 10,457,251 | $ | 9,929,286 | ||||||
| 2019 | 2018 | 2017 | ||||||||||
Income (loss) before income taxes | $ | 57,081,030 | $ | (48,236,849 | ) | $ | 12,114,462 | |||||
|
|
|
|
|
| |||||||
Computed “expected” taxes | 11,987,016 | (10,129,738 | ) | 4,240,062 | ||||||||
Tax-exempt interest | (1,325,197 | ) | (1,521,090 | ) | (3,241,530 | ) | ||||||
Proration | 357,044 | 405,204 | 518,948 | |||||||||
Effect of tax reform | — | — | 4,752,547 | |||||||||
Dividends received deduction | (1,913,238 | ) | (99,726 | ) | (508,409 | ) | ||||||
Net operating loss carryback | — | (4,210,523 | ) | — | ||||||||
Tax benefit on exercise of options | (64,765 | ) | (25,938 | ) | (873,515 | ) | ||||||
Other, net | 236,676 | 105,302 | 110,259 | |||||||||
Pennsylvania income tax, net of federal benefit | 651,750 | — | — | |||||||||
|
|
|
|
|
| |||||||
Income tax expense (benefit) | $ | 9,929,286 | $ | (15,476,509 | ) | $ | 4,998,362 | |||||
|
|
|
|
|
| |||||||
| 2021 | 2020 | 2019 | ||||||||||
| Income before income tax expense | $ | 30,338,508 | $ | 63,272,503 | $ | 57,081,030 | ||||||
| Computed “expected” taxes | 6,371,087 | 13,287,226 | 11,987,016 | |||||||||
| Tax-exempt interest | (1,491,154 | ) | (1,468,806 | ) | (1,325,197 | ) | ||||||
| Proration | 401,717 | 395,663 | 357,044 | |||||||||
| Dividends received deduction | (115,713 | ) | (113,845 | ) | (1,913,238 | ) | ||||||
| Net operating loss carryback | 0 | (1,640,084 | ) | 0 | ||||||||
| Tax benefit on exercise of options | (438,850 | ) | (302,901 | ) | (64,765 | ) | ||||||
| Other, net | 357,247 | 299,998 | 236,676 | |||||||||
| Pennsylvania income tax, net of federal benefit | 0 | 0 | 651,750 | |||||||||
| Income tax expense | $ | 5,084,334 | $ | 10,457,251 | $ | 9,929,286 | ||||||
| 2019 | 2018 | |||||||
Deferred tax assets: | ||||||||
Unearned premium | $ | 15,482,366 | $ | 15,634,433 | ||||
Loss reserves | 7,820,683 | 7,644,415 | ||||||
Net operating loss carryforward | 200,942 | 3,090,010 | ||||||
Net state operating loss carryforward - DGI Parent | 7,519,991 | 8,070,196 | ||||||
Net unrealized losses | — | 3,782,145 | ||||||
Other | 2,603,155 | 2,517,791 | ||||||
|
|
|
| |||||
Total gross deferred tax assets | 33,627,137 | 40,738,990 | ||||||
Less valuation allowance | (7,538,024 | ) | (8,334,663 | ) | ||||
|
|
|
| |||||
Net deferred tax assets | 26,089,113 | 32,404,327 | ||||||
|
|
|
| |||||
Deferred tax liabilities: | ||||||||
Deferred policy acquisition costs | 12,449,820 | 12,729,176 | ||||||
Loss reserve transition adjustment | 1,733,056 | 2,339,068 | ||||||
Other | 3,391,926 | 4,266,328 | ||||||
|
|
|
| |||||
Total gross deferred tax liabilities | 17,574,802 | 19,334,572 | ||||||
|
|
|
| |||||
Net deferred tax asset | $ | 8,514,311 | $ | 13,069,755 | ||||
|
|
|
| |||||
-83-
We recorded
| 2021 | 2020 | |||||||
| Deferred tax assets: | ||||||||
| Unearned premium | $ | 16,674,502 | $ | 15,481,602 | ||||
| Loss reserves | 9,568,677 | 8,808,342 | ||||||
| Net operating loss carryforward | 25,174 | 104,041 | ||||||
| Net state operating loss carryforward - DGI Parent | 7,865,563 | 7,850,334 | ||||||
| Other | 1,859,687 | 2,342,967 | ||||||
| Total gross deferred tax assets | 35,993,603 | 34,587,286 | ||||||
| Less valuation allowance | (7,865,563 | ) | (7,850,334 | ) | ||||
| Net deferred tax assets | 28,128,040 | 26,736,952 | ||||||
| Deferred tax liabilities: | ||||||||
| Deferred policy acquisition costs | 14,285,958 | 12,422,961 | ||||||
| Loss reserve transition adjustment | 1,148,529 | 1,440,793 | ||||||
| Other | 6,007,934 | 7,190,085 | ||||||
| Total gross deferred tax liabilities | 21,442,421 | 21,053,839 | ||||||
| Net deferred tax asset | $ | 6,685,619 | $ | 5,683,113 | ||||
March 2020.
2021.
2021.
-84-
The weighted-average grant date fair value of options we granted during 2018 was $1.66. We calculated this fair value based upon a risk-free interest rate of 2.68%, an expected life of three years, an expected volatility of 22% and an expected dividend yield of 4%.
The weighted-average grant date fair value of options we granted during 2017 was $1.81. We calculated this fair value based upon a risk-free interest rate of 2.01%, an expected life of three years, an expected volatility of 19% and an expected dividend yield of 3%.
-85-
| Number of Options | Weighted- Average Exercise Price Per Share | |||||||
Outstanding at December 31, 2016 | 9,338,648 | $ | 14.95 | |||||
Granted - 2017 | 943,000 | 17.58 | ||||||
Exercised - 2017 | (924,019 | ) | 14.45 | |||||
Forfeited - 2017 | (93,167 | ) | 15.43 | |||||
|
|
|
| |||||
Outstanding at December 31, 2017 | 9,264,462 | 15.26 | ||||||
Granted - 2018 | 1,063,000 | 13.69 | ||||||
Exercised - 2018 | (79,961 | ) | 13.74 | |||||
Forfeited - 2018 | (222,639 | ) | 16.00 | |||||
|
|
|
| |||||
Outstanding at December 31, 2018 | 10,024,862 | 15.09 | ||||||
Granted - 2019 | 1,045,400 | 14.97 | ||||||
Exercised - 2019 | (217,498 | ) | 13.23 | |||||
Forfeited - 2019 | (416,774 | ) | 15.88 | |||||
|
|
|
| |||||
Outstanding at December 31, 2019 | 10,435,990 | $ | 15.09 | |||||
|
|
|
| |||||
Exercisable at: | ||||||||
December 31, 2017 | 6,946,677 | $ | 14.90 | |||||
|
|
|
| |||||
December 31, 2018 | 7,936,659 | $ | 15.02 | |||||
|
|
|
| |||||
December 31, 2019 | 8,449,389 | $ | 15.13 | |||||
|
|
|
| |||||
| Number of Options | Weighted-Average Exercise Price Per Share | |||||||
| Outstanding at December 31, 2018 | 10,024,862 | $ | 15.09 | |||||
| Granted - 2019 | 1,045,400 | 14.97 | ||||||
| Exercised - 2019 | (217,498 | ) | 13.23 | |||||
| Forfeited - 2019 | (416,774 | ) | 15.88 | |||||
| Outstanding at December 31, 2019 | 10,435,990 | 15.09 | ||||||
| Granted - 2020 | 935,099 | 14.45 | ||||||
| Exercised - 2020 | (1,294,606 | ) | 13.52 | |||||
| Forfeited - 2020 | (303,908 | ) | 15.23 | |||||
| Expired - 2020 | (78,223 | ) | $ | 13.64 | ||||
| Outstanding at December 31, 2020 | 9,694,352 | $ | 15.24 | |||||
| Granted - 2021 | 906,500 | 14.39 | ||||||
| Exercised - 2021 | (946,646 | ) | 13.00 | |||||
| Forfeited - 2021 | (404,664 | ) | 15.69 | |||||
| Expired - 2021 | (1,139,816 | ) | $ | 16.40 | ||||
| Outstanding at December 31, 2021 | 8,109,726 | $ | 15.22 | |||||
| Exercisable at: | ||||||||
| December 31, 2019 | 8,449,389 | $ | 15.13 | |||||
| December 31, 2020 | 7,786,934 | $ | 15.42 | |||||
| December 31, 2021 | 6,297,849 | $ | 15.43 | |||||
Grant Date | Exercise Price | Number of Options Outstanding | Weighted-Average Remaining Contractual Life | Number of Options Exercisable | ||||||||||||
July 27, 2011 | $ | 12.50 | 907,101 | 2.0 years | 907,101 | |||||||||||
December 20, 2012 | 14.50 | 1,009,819 | 3.0 years | 1,009,819 | ||||||||||||
December 19, 2013 | 15.90 | 1,991,804 | 4.0 years | 1,991,804 | ||||||||||||
December 18, 2014 | 15.80 | 1,270,581 | 5.0 years | 1,270,581 | ||||||||||||
December 17, 2015 | 13.64 | 1,191,845 | 1.0 years | 1,191,845 | ||||||||||||
December 15, 2016 | 16.48 | 1,202,808 | 2.0 years | 1,202,808 | ||||||||||||
December 21, 2017 | 17.60 | 799,832 | 3.0 years | 533,168 | ||||||||||||
December 20, 2018 | 13.69 | 1,016,800 | 4.0 years | 338,930 | ||||||||||||
March 4, 2019 | 13.51 | 10,000 | 4.2 years | 3,333 | ||||||||||||
December 19, 2019 | 14.98 | 1,035,400 | 5.0 years | — | ||||||||||||
|
|
|
| |||||||||||||
| Total | 10,435,990 | 8,449,389 | ||||||||||||||
|
|
|
| |||||||||||||
2021:
| Grant Date | Exercise Price | Number of Options Outstanding | Weighted-Average Remaining Contractual Life | Number of Options Exercisable | |||||||||
| December 20, 2012 | 14.50 | 874,014 | 1.0 years | 874,014 | |||||||||
| December 19, 2013 | 15.90 | 1,784,970 | 2.0 years | 1,784,970 | |||||||||
| December 18, 2014 | 15.80 | 1,116,965 | 3.0 years | 1,116,965 | |||||||||
| December 21, 2017 | 17.60 | 735,700 | 1.0 years | 735,700 | |||||||||
| December 20, 2018 | 13.69 | 824,877 | 2.0 years | 824,877 | |||||||||
| March 4, 2019 | 13.51 | 10,000 | 2.2 years | 10,000 | |||||||||
| December 19, 2019 | 14.98 | 986,100 | 3.0 years | 657,393 | |||||||||
| December 17, 2020 | 14.43 | 871,800 | 4.0 years | 290,597 | |||||||||
| January 4, 2021 | 14.07 | 10,000 | 4.0 years | 3,333 | |||||||||
| December 16, 2021 | 14.39 | 895,300 | 5.0 years | 0 | |||||||||
| Total | 8,109,726 | 6,297,849 | |||||||||||
-86-
| Shares Issued | ||||||||
| Price | Shares | |||||||
January 1, 2017 | 13.76 | 18,512 | ||||||
July 1, 2017 | 13.52 | 25,155 | ||||||
January 1, 2018 | 13.34 | 20,662 | ||||||
July 1, 2018 | 11.57 | 27,802 | ||||||
January 1, 2019 | 11.60 | 24,834 | ||||||
July 1, 2019 | 12.24 | 22,926 | ||||||
| Shares Issued | ||||||||
| Price | Shares | |||||||
| January 1, 2019 | 11.60 | 24,834 | ||||||
| July 1, 2019 | 12.24 | 22,926 | ||||||
| January 1, 2020 | 12.28 | 20,424 | ||||||
| July 1, 2020 | 12.09 | 22,662 | ||||||
| January 1, 2021 | 11.96 | 23,336 | ||||||
| July 1, 2021 | 11.88 | 24,619 | ||||||
| 2019 | 2018 | 2017 | ||||||||||
Atlantic States: | ||||||||||||
Statutory capital and surplus | $ | 259,030,868 | $ | 230,736,313 | $ | 260,428,754 | ||||||
Statutory unassigned surplus | 155,909,822 | 140,713,118 | 172,709,955 | |||||||||
Statutory net income (loss) | 22,282,231 | (23,458,516 | ) | (2,037,672 | ) | |||||||
Southern: | ||||||||||||
Statutory capital and surplus | 54,405,568 | 45,355,785 | 54,503,581 | |||||||||
Statutory unassigned (deficit) surplus | (2,375,794 | ) | (6,346,270 | ) | 2,914,532 | |||||||
Statutory net income (loss) | 5,061,477 | (9,822,457 | ) | (3,375,434 | ) | |||||||
Peninsula: | ||||||||||||
Statutory capital and surplus | 39,244,570 | 32,717,996 | 39,396,818 | |||||||||
Statutory unassigned surplus | 20,936,805 | 14,415,949 | 21,148,253 | |||||||||
Statutory net income (loss) | 7,360,378 | (6,316,130 | ) | (841,119 | ) | |||||||
MICO: | ||||||||||||
Statutory capital and surplus | 65,768,590 | 55,708,442 | 52,796,379 | |||||||||
Statutory unassigned surplus | 38,910,008 | 28,949,919 | 26,162,540 | |||||||||
Statutory net income | 9,976,610 | 6,350,686 | 7,931,774 | |||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Atlantic States: | ||||||||||||
| Statutory capital and surplus | $ | 278,883,189 | $ | 279,796,696 | $ | 259,030,868 | ||||||
| Statutory unassigned surplus | 174,073,348 | 175,777,393 | 155,909,822 | |||||||||
| Statutory net (loss) income | (7,417,845 | ) | 20,735,871 | 22,282,231 | ||||||||
| Southern: | ||||||||||||
| Statutory capital and surplus | 64,238,221 | 57,142,228 | 54,405,568 | |||||||||
| Statutory unassigned surplus (deficit) | 7,330,382 | 300,409 | (2,375,794 | ) | ||||||||
| Statutory net income | 6,927,576 | 4,350,677 | 5,061,477 | |||||||||
| Peninsula: | ||||||||||||
| Statutory capital and surplus | 47,867,789 | 49,285,069 | 39,244,570 | |||||||||
| Statutory unassigned surplus | 29,558,589 | 30,975,869 | 20,936,805 | |||||||||
| Statutory net income | 3,536,404 | 10,955,796 | 7,360,378 | |||||||||
| MICO: | ||||||||||||
| Statutory capital and surplus | 75,197,207 | 72,183,575 | 65,768,590 | |||||||||
| Statutory unassigned surplus | 53,201,571 | 45,247,698 | 38,910,008 | |||||||||
| Statutory net income | 7,704,417 | 12,240,173 | 9,976,610 | |||||||||
-87-
surplus at December 31, 20192021 exceeded the amount of statutory capital and surplus necessary to satisfy regulatory requirements, including the RBC requirements, by a significant margin. Amounts available for distribution to us as dividends from our insurance subsidiaries without prior approval of insurance regulatory authorities in 20202022 are $25.9approximately $27.9 million from Atlantic States, $5.4$6.9 million from Southern, $2.0$4.8 million from Peninsula and $6.6$7.7 million from MICO, or a total of approximately $39.9$47.3 million.
| Year Ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
Statutory net income (loss) of insurance subsidiaries | $ | 44,680,696 | $ | (33,246,417 | ) | $ | 1,677,549 | |||||
Increases (decreases): | ||||||||||||
Deferred policy acquisition costs | (1,330,268 | ) | 325,267 | 3,980,664 | ||||||||
Deferred federal income taxes | 639,284 | 4,179,807 | 1,334,410 | |||||||||
Salvage and subrogation recoverable | 207,000 | 2,061,600 | 1,199,200 | |||||||||
Consolidating eliminations and adjustments | (11,048,314 | ) | (16,013,971 | ) | (13,534,428 | ) | ||||||
Parent-only net income | 14,003,346 | 9,933,374 | 12,458,705 | |||||||||
|
|
|
|
|
| |||||||
Net income (loss) | $ | 47,151,744 | $ | (32,760,340 | ) | $ | 7,116,100 | |||||
|
|
|
|
|
| |||||||
| December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
Statutory capital and surplus of insurance subsidiaries | $ | 418,449,596 | $ | 364,518,536 | $ | 407,125,532 | ||||||
Increases (decreases): | ||||||||||||
Deferred policy acquisition costs | 59,284,859 | 60,615,127 | 60,289,860 | |||||||||
Deferred federal income taxes | (15,477,843 | ) | (20,094,374 | ) | (14,422,511 | ) | ||||||
Salvage and subrogation recoverable | 20,245,200 | 20,038,200 | 17,976,600 | |||||||||
Non-admitted assets and other adjustments, net | 1,727,754 | 1,904,083 | 1,960,089 | |||||||||
Fixed maturities | (326,795 | ) | (16,528,367 | ) | (8,748,140 | ) | ||||||
Parent-only equity and other adjustments | (32,887,252 | ) | (11,583,304 | ) | (15,485,326 | ) | ||||||
|
|
|
|
|
| |||||||
Stockholders’ equity | $ | 451,015,519 | $ | 398,869,901 | $ | 448,696,104 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Statutory net income of insurance subsidiaries | $ | 10,750,552 | $ | 48,282,517 | $ | 44,680,696 | ||||||
| Increases (decreases): | ||||||||||||
| Deferred policy acquisition costs | 8,871,415 | (127,901 | ) | (1,330,268 | ) | |||||||
| Deferred federal income taxes | (1,085,903 | ) | (6,448 | ) | 639,284 | |||||||
| Salvage and subrogation recoverable | 2,551,800 | 713,400 | 207,000 | |||||||||
| Consolidating eliminations and adjustments | (18,769 | ) | (9,516,984 | ) | (11,048,314 | ) | ||||||
| Parent-only net income | 4,185,079 | 13,470,668 | 14,003,346 | |||||||||
| Net income | $ | 25,254,174 | $ | 52,815,252 | $ | 47,151,744 | ||||||
| December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Statutory capital and surplus of insurance subsidiaries | $ | 466,186,406 | $ | 458,407,568 | $ | 418,449,596 | ||||||
| Increases (decreases): | ||||||||||||
| Deferred policy acquisition costs | 68,028,373 | 59,156,958 | 59,284,859 | |||||||||
| Deferred federal income taxes | (21,294,388 | ) | (18,586,428 | ) | (15,477,843 | ) | ||||||
| Salvage and subrogation recoverable | 23,510,400 | 20,958,600 | 20,245,200 | |||||||||
| Non-admitted assets and other adjustments, net | 929,862 | 1,315,378 | 1,727,754 | |||||||||
| Fixed maturities | 5,958,434 | 15,309,610 | (326,795 | ) | ||||||||
| Parent-only equity and other adjustments | (12,283,000 | ) | (18,787,566 | ) | (32,887,252 | ) | ||||||
| Stockholders’ equity | $ | 531,036,087 | $ | 517,774,120 | $ | 451,015,519 | ||||||
| 2019 | 2018 | 2017 | ||||||||||
Income taxes | $ | (9,827,433 | ) | $ | (3,290,247 | ) | $ | 3,050,000 | ||||
Interest | 321,585 | 1,280,352 | 1,341,706 | |||||||||
-88-
| 2021 | 2020 | 2019 | ||||||||||
| Income taxes | $ | 6,200,000 | $ | 12,800,000 | $ | (9,827,433 | ) | |||||
| Interest | 1,150,211 | 1,191,800 | 321,585 | |||||||||
| Year Ended December 31, | ||||||||||||
| (in thousands, except per share amounts) | 2019 | 2018 | 2017 | |||||||||
Basic earnings (loss) per share: | ||||||||||||
Numerator: | ||||||||||||
Allocation of net income (loss) | $ | 38,718 | $ | (26,691 | ) | $ | 5,879 | |||||
|
|
|
|
|
| |||||||
Denominator: | ||||||||||||
Weighted-average shares outstanding | 22,986 | 22,705 | 21,799 | |||||||||
|
|
|
|
|
| |||||||
Basic earnings (loss) per share | $ | 1.68 | $ | (1.18 | ) | $ | 0.27 | |||||
|
|
|
|
|
| |||||||
Diluted earnings (loss) per share: | ||||||||||||
Numerator: | ||||||||||||
Allocation of net income (loss) | $ | 38,718 | $ | (26,691 | ) | $ | 5,879 | |||||
|
|
|
|
|
| |||||||
Denominator: | ||||||||||||
Number of shares used in basic computation | 22,986 | 22,705 | 21,799 | |||||||||
Weighted-average effect of dilutive securities | ||||||||||||
Add: Director and employee stock options | 211 | — | 843 | |||||||||
|
|
|
|
|
| |||||||
Number of shares used in per share computations | 23,197 | 22,705 | 22,642 | |||||||||
|
|
|
|
|
| |||||||
Diluted earnings (loss) per share | $ | 1.67 | $ | (1.18 | ) | $ | 0.26 | |||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| (in thousands) | 2021 | 2020 | 2019 | |||||||||
| Basic earnings per share: | ||||||||||||
| Numerator: | ||||||||||||
| Allocation of net income | $ | 21,131 | $ | 43,609 | $ | 38,718 | ||||||
| Denominator: | ||||||||||||
| Weighted-average shares outstanding | 25,388 | 23,707 | 22,986 | |||||||||
| Basic earnings per share | $ | 0.83 | $ | 1.84 | $ | 1.68 | ||||||
| Diluted earnings per share: | ||||||||||||
| Numerator: | ||||||||||||
| Allocation of net income | $ | 21,131 | $ | 43,609 | $ | 38,718 | ||||||
| Denominator: | ||||||||||||
| Number of shares used in basic computation | 25,388 | 23,707 | 22,986 | |||||||||
| Weighted-average effect of dilutive securities | ||||||||||||
| Add: Director and employee stock options | 146 | 180 | 211 | |||||||||
| Number of shares used in per share computations | 25,534 | 23,887 | 23,197 | |||||||||
| Diluted earnings per share | $ | 0.83 | $ | 1.83 | $ | 1.67 | ||||||
| Year Ended December 31, | ||||||||||||
| (in thousands, except per share amounts) | 2019 | 2018 | 2017 | |||||||||
Basic and diluted earnings (loss) per share: | ||||||||||||
Numerator: | ||||||||||||
Allocation of net income (loss) | $ | 8,434 | $ | (6,069 | ) | $ | 1,237 | |||||
|
|
|
|
|
| |||||||
Denominator: | ||||||||||||
Weighted-average shares outstanding | 5,577 | 5,577 | 5,577 | |||||||||
|
|
|
|
|
| |||||||
Basic and diluted earnings (loss) per share | $ | 1.51 | $ | (1.09 | ) | $ | 0.22 | |||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| (in thousands) | 2021 | 2020 | 2019 | |||||||||
| Basic and diluted earnings per share: | ||||||||||||
| Numerator: | ||||||||||||
| Allocation of net income | $ | 4,123 | $ | 9,206 | $ | 8,434 | ||||||
| Denominator: | ||||||||||||
| Weighted-average shares outstanding | 5,577 | 5,577 | 5,577 | |||||||||
| Basic and diluted earnings per share | $ | 0.74 | $ | 1.65 | $ | 1.51 | ||||||
-89-
| December 31, | 2019 | 2018 | ||||||
Assets | ||||||||
Investment in subsidiaries/affiliates (equity method) | $ | 489,657 | $ | 465,030 | ||||
Short-term investments | 2,502 | 29 | ||||||
Cash | 2,350 | 1,542 | ||||||
Property and equipment | 944 | 928 | ||||||
Other | — | — | ||||||
|
|
|
| |||||
Total assets | $ | 495,453 | $ | 467,529 | ||||
|
|
|
| |||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Cash dividends declared to stockholders | $ | 4,075 | $ | 3,948 | ||||
Borrowings under lines of credit | 35,000 | 60,000 | ||||||
Other | 5,362 | 4,711 | ||||||
|
|
|
| |||||
Total liabilities | 44,437 | 68,659 | ||||||
|
|
|
| |||||
Stockholders’ equity | 451,016 | 398,870 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 495,453 | $ | 467,529 | ||||
|
|
|
| |||||
| December 31, | 2021 | 2020 | ||||||
| Assets | ||||||||
| Investment in subsidiaries/affiliates (equity method) | $ | 554,804 | $ | 540,665 | ||||
| Short-term investments | 9 | 9 | ||||||
| Cash | 14,375 | 15,321 | ||||||
| Property and equipment | 716 | 833 | ||||||
| Other | 2,455 | 1,721 | ||||||
| Total assets | $ | 572,359 | $ | 558,549 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities | ||||||||
| Cash dividends declared to stockholders | $ | 4,915 | $ | 4,436 | ||||
| Notes payable to subsidiary | 35,000 | 35,000 | ||||||
| Other | 1,408 | 1,339 | ||||||
| Total liabilities | 41,323 | 40,775 | ||||||
| Stockholders’ equity | 531,036 | 517,774 | ||||||
| Total liabilities and stockholders’ equity | $ | 572,359 | $ | 558,549 | ||||
| Year Ended December 31, | 2019 | 2018 | 2017 | |||||||||
Statements of Income (Loss) | ||||||||||||
Revenues | ||||||||||||
Dividends from subsidiaries | $ | 4,000 | $ | 11,000 | $ | 13,000 | ||||||
Realized investment gains | 12,378 | — | — | |||||||||
Other | 1,009 | 3,196 | 2,131 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | 17,387 | 14,196 | 15,131 | |||||||||
|
|
|
|
|
| |||||||
Expenses | ||||||||||||
Operating expenses | 1,420 | 1,628 | 1,433 | |||||||||
Interest | 1,327 | 2,224 | 1,929 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 2,747 | 3,852 | 3,362 | |||||||||
|
|
|
|
|
| |||||||
Income before income tax expense (benefit) and equity in undistributed net income (loss) of subsidiaries | 14,640 | 10,344 | 11,769 | |||||||||
Income tax expense (benefit) | 636 | 411 | (690 | ) | ||||||||
|
|
|
|
|
| |||||||
Income before equity in undistributed net income (loss) of subsidiaries | 14,004 | 9,933 | 12,459 | |||||||||
Equity in undistributed net income (loss) of subsidiaries | 33,148 | (42,693 | ) | (5,343 | ) | |||||||
|
|
|
|
|
| |||||||
Net income (loss) | $ | 47,152 | $ | (32,760 | ) | $ | 7,116 | |||||
|
|
|
|
|
| |||||||
Statements of Comprehensive Income (Loss) | ||||||||||||
Net income (loss) | $ | 47,152 | $ | (32,760 | ) | $ | 7,116 | |||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss), net of tax | ||||||||||||
Unrealized gain (loss) - subsidiaries | 14,732 | (6,625 | ) | 46 | ||||||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss), net of tax | 14,732 | (6,625 | ) | 46 | ||||||||
|
|
|
|
|
| |||||||
Comprehensive income (loss) | $ | 61,884 | $ | (39,385 | ) | $ | 7,162 | |||||
|
|
|
|
|
| |||||||
-90-
| Year Ended December 31, | 2021 | 2020 | 2019 | |||||||||
| Statements of Income | ||||||||||||
| Revenues | ||||||||||||
| Dividends from subsidiaries | $ | 5,000 | $ | 14,000 | $ | 4,000 | ||||||
| Realized investment gains | 0 | 0 | 12,378 | |||||||||
| Other | 481 | 463 | 1,009 | |||||||||
| Total revenues | 5,481 | 14,463 | 17,387 | |||||||||
| Expenses | ||||||||||||
| Operating expenses | 1,223 | 1,258 | 1,420 | |||||||||
| Interest | 787 | 794 | 1,327 | |||||||||
| Total expenses | 2,010 | 2,052 | 2,747 | |||||||||
| Income before income tax (benefit) expense and equity in undistributed net income of subsidiaries | 3,471 | 12,411 | 14,640 | |||||||||
| Income tax (benefit) expense | (714 | ) | (1,059 | ) | 636 | |||||||
| Income before equity in undistributed net income of subsidiaries | 4,185 | 13,470 | 14,004 | |||||||||
| Equity in undistributed net income of subsidiaries | 21,069 | 39,345 | 33,148 | |||||||||
| Net income | $ | 25,254 | $ | 52,815 | $ | 47,152 | ||||||
| Statements of Comprehensive Income | ||||||||||||
| Net income | $ | 25,254 | $ | 52,815 | $ | 47,152 | ||||||
| Other comprehensive (loss) income, net of tax | ||||||||||||
| Unrealized (loss) gain - subsidiaries | (7,847 | ) | 10,627 | 14,732 | ||||||||
| Other comprehensive (loss) income, net of tax | (7,847 | ) | 10,627 | 14,732 | ||||||||
| Comprehensive income | $ | 17,407 | $ | 63,442 | $ | 61,884 | ||||||
| Year Ended December 31, | 2019 | 2018 | 2017 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 47,152 | $ | (32,760 | ) | $ | 7,116 | |||||
|
|
|
|
|
| |||||||
Adjustments: | ||||||||||||
Equity in undistributed net (income) loss of subsidiaries | (33,148 | ) | 42,694 | 5,343 | ||||||||
Realized investment gains | (12,378 | ) | — | — | ||||||||
Dividends received from DFSC | — | — | 1,037 | |||||||||
Other | 490 | 2,531 | 1,011 | |||||||||
|
|
|
|
|
| |||||||
Net adjustments | (45,036 | ) | 45,225 | 7,391 | ||||||||
|
|
|
|
|
| |||||||
Net cash provided | 2,116 | 12,465 | 14,507 | |||||||||
|
|
|
|
|
| |||||||
Cash flows from investing activities: | ||||||||||||
Net (purchases) sale of short-term investments | (2,473 | ) | — | 1 | ||||||||
Net purchase of property and equipment | (150 | ) | (106 | ) | (788 | ) | ||||||
Sale of DFSC | 33,923 | — | — | |||||||||
Sale of equity securities - available for sale | 20,287 | — | — | |||||||||
Investment in subsidiaries | (18,283 | ) | (2,644 | ) | (2,992 | ) | ||||||
Other | — | (1 | ) | (1 | ) | |||||||
|
|
|
|
|
| |||||||
Net cash received (used) | 33,304 | (2,751 | ) | (3,780 | ) | |||||||
|
|
|
|
|
| |||||||
Cash flows from financing activities: | ||||||||||||
Cash dividends paid | (16,093 | ) | (15,659 | ) | (14,821 | ) | ||||||
Issuance of common stock | 6,481 | 3,250 | 15,511 | |||||||||
Payments on lines of credit | (25,000 | ) | — | (10,000 | ) | |||||||
Borrowings under lines of credit | — | 1,000 | — | |||||||||
|
|
|
|
|
| |||||||
Net cash used | (34,612 | ) | (11,409 | ) | (9,310 | ) | ||||||
|
|
|
|
|
| |||||||
Net change in cash | 808 | (1,695 | ) | 1,417 | ||||||||
Cash at beginning of year | 1,542 | 3,237 | 1,820 | |||||||||
|
|
|
|
| �� | |||||||
Cash at end of year | $ | 2,350 | $ | 1,542 | $ | 3,237 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | 2021 | 2020 | 2019 | |||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 25,254 | $ | 52,815 | $ | 47,152 | ||||||
| Adjustments: | ||||||||||||
| Equity in undistributed net income of subsidiaries | (21,069 | ) | (39,345 | ) | (33,148 | ) | ||||||
| Realized investment gains | 0 | 0 | (12,378 | ) | ||||||||
| Other | (536 | ) | (5,615 | ) | 490 | |||||||
| Net adjustments | (21,605 | ) | (44,960 | ) | (45,036 | ) | ||||||
| Net cash provided | 3,649 | 7,855 | 2,116 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Net sale (purchases) of short-term investments | 0 | 2,493 | (2,473 | ) | ||||||||
| Net purchase of property and equipment | (13 | ) | (18 | ) | (150 | ) | ||||||
| Sale of DFSC | 0 | 0 | 33,923 | |||||||||
| Sale of equity securities - available for sale | 0 | 0 | 20,287 | |||||||||
| Investment in subsidiaries | (916 | ) | (1,037 | ) | (18,283 | ) | ||||||
| Net cash (used) received | (929 | ) | 1,438 | 33,304 | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Cash dividends paid | (19,099 | ) | (16,976 | ) | (16,093 | ) | ||||||
| Issuance of common stock | 15,433 | 20,654 | 6,481 | |||||||||
| Payments on lines of credit | 0 | 0 | (25,000 | ) | ||||||||
| Net cash (used) received | (3,666 | ) | 3,678 | (34,612 | ) | |||||||
| Net change in cash | (946 | ) | 12,971 | 808 | ||||||||
| Cash at beginning of year | 15,321 | 2,350 | 1,542 | |||||||||
| Cash at end of year | $ | 14,375 | $ | 15,321 | $ | 2,350 | ||||||
-91-
| 2019 | 2018 | 2017 | ||||||||||
| (in thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums earned: | ||||||||||||
Commercial lines | $ | 385,465 | $ | 337,924 | $ | 318,391 | ||||||
Personal lines | 370,613 | 403,367 | 384,124 | |||||||||
|
|
|
|
|
| |||||||
GAAP premiums earned | 756,078 | 741,291 | 702,515 | |||||||||
Net investment income | 29,515 | 26,908 | 23,527 | |||||||||
Investment gains (losses) | 21,985 | (4,802 | ) | 5,705 | ||||||||
Equity in earnings of DFSC | 295 | 2,694 | 1,622 | |||||||||
Other | 4,578 | 5,737 | 5,658 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | $ | 812,451 | $ | 771,828 | $ | 739,027 | ||||||
|
|
|
|
|
| |||||||
| 2019 | 2018 | 2017 | ||||||||||
| (in thousands) | ||||||||||||
Income (loss) before income taxes: | ||||||||||||
Underwriting income (loss): | ||||||||||||
Commercial lines | $ | 8,404 | $ | (22,059 | ) | $ | 13,263 | |||||
Personal lines | (1,617 | ) | (53,590 | ) | (39,042 | ) | ||||||
|
|
|
|
|
| |||||||
SAP underwriting income (loss) | 6,787 | (75,649 | ) | (25,779 | ) | |||||||
GAAP adjustments | (3,079 | ) | 894 | 4,408 | ||||||||
|
|
|
|
|
| |||||||
GAAP underwriting income (loss) | 3,708 | (74,755 | ) | (21,371 | ) | |||||||
Net investment income | 29,515 | 26,908 | 23,527 | |||||||||
Investment gains (losses) | 21,985 | (4,802 | ) | 5,705 | ||||||||
Equity in earnings of DFSC | 295 | 2,694 | 1,622 | |||||||||
Other | 1,578 | 1,718 | 2,631 | |||||||||
|
|
|
|
|
| |||||||
Income (loss) before income taxes | $ | 57,081 | $ | (48,237 | ) | $ | 12,114 | |||||
|
|
|
|
|
| |||||||
| 2021 | 2020 | 2019 | ||||||||||
| (in thousands) | ||||||||||||
| Revenues: | ||||||||||||
| Premiums earned: | ||||||||||||
| Commercial lines | $ | 468,433 | $ | 412,877 | $ | 385,465 | ||||||
| Personal lines | 307,582 | 329,163 | 370,613 | |||||||||
| GAAP premiums earned | 776,015 | 742,040 | 756,078 | |||||||||
| Net investment income | 31,126 | 29,504 | 29,515 | |||||||||
| Investment gains | 6,477 | 2,778 | 21,985 | |||||||||
| Equity in earnings of DFSC | 0 | 0 | 295 | |||||||||
| Other | 2,848 | 3,497 | 4,578 | |||||||||
| Total revenues | $ | 816,466 | $ | 777,819 | $ | 812,451 | ||||||
| 2021 | 2020 | 2019 | ||||||||||
| (in thousands) | ||||||||||||
| Income before income taxes: | ||||||||||||
| Underwriting (loss) income: | ||||||||||||
| Commercial lines | $ | (35,174 | ) | $ | (858 | ) | $ | 8,404 | ||||
| Personal lines | 17,235 | 31,764 | (1,617 | ) | ||||||||
| SAP underwriting (loss) income | (17,939 | ) | 30,906 | 6,787 | ||||||||
| GAAP adjustments | 9,945 | (959 | ) | (3,079 | ) | |||||||
| GAAP underwriting (loss) income | (7,994 | ) | 29,947 | 3,708 | ||||||||
| Net investment income | 31,126 | 29,504 | 29,515 | |||||||||
| Investment gains | 6,477 | 2,778 | 21,985 | |||||||||
| Equity in earnings of DFSC | 0 | 0 | 295 | |||||||||
| Other | 730 | 1,043 | 1,578 | |||||||||
| Income before income taxes | $ | 30,339 | $ | 63,272 | $ | 57,081 | ||||||
-92-
21 - Interim Financial Data (unaudited)
| 2019 | ||||||||||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
Net premiums earned | $ | 188,073,242 | $ | 188,763,313 | $ | 189,821,058 | $ | 189,420,787 | ||||||||
Total revenues | 214,713,874 | 198,788,954 | 198,009,900 | 200,938,743 | ||||||||||||
Net losses and loss expenses | 123,110,656 | 131,507,280 | 130,743,395 | 121,026,333 | ||||||||||||
Net income | 23,023,164 | 4,788,454 | 5,186,379 | 14,153,747 | ||||||||||||
Net earnings per common share: | ||||||||||||||||
Class A common stock - basic | 0.82 | 0.17 | 0.19 | 0.50 | ||||||||||||
Class A common stock - diluted | 0.82 | 0.17 | 0.18 | 0.50 | ||||||||||||
Class B common stock - basic and diluted | 0.75 | 0.15 | 0.16 | 0.45 | ||||||||||||
| 2018 | ||||||||||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
Net premiums earned | $ | 181,764,580 | $ | 185,714,110 | $ | 187,661,705 | $ | 186,150,478 | ||||||||
Total revenues | 189,328,278 | 195,790,028 | 199,904,180 | 186,805,834 | ||||||||||||
Net losses and loss expenses | 156,583,268 | 135,753,645 | 140,726,106 | 143,395,401 | ||||||||||||
Net (loss) income | (18,178,078 | ) | (789,855 | ) | 1,206,356 | (14,998,763 | ) | |||||||||
Net (loss) earnings per common share: | ||||||||||||||||
Class A common stock - basic | (0.66 | ) | (0.03 | ) | 0.04 | (0.53 | ) | |||||||||
Class A common stock - diluted | (0.66 | ) | (0.03 | ) | 0.04 | (0.53 | ) | |||||||||
Class B common stock - basic and diluted | (0.60 | ) | (0.03 | ) | 0.04 | (0.50 | ) | |||||||||
-93-
20192021 and 2018,2020, the related consolidated statements of income (loss) and comprehensive income, (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019,2021, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019,2021, in conformity with U.S. generally accepted accounting principles.2019,2021, based on criteria established inInternal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 6, 20207, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.We did not audit the financial statements of Donegal Financial Services Corporation (previously a 48.2 percent-owned investee company). The Company’s investment in Donegal Financial Services Corporation was $41,025,975 as of December 31, 2018, and its equity in earnings of Donegal Financial Services Corporation was $2,693,962 and $1,621,605 for the years 2018 and 2017, respectively. The financial statements of Donegal Financial Services Corporation were audited by other auditors whose report was furnished to us, and our opinion, insofar as it relates to the amounts included for Donegal Financial Services Corporation, is based solely on the report of the other auditors.Change in Accounting PrincipleAs discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for changes in fair value of equity securities in 2018 due to the adoption of Accounting Standards Update2016-01,Recognition and Measurement of Financial Assets and Liabilities.and the report of the other auditors provide a reasonable basis for our opinion.
6, 2020-94-
2021.
There were no
-95-
-96-
Name | Age | Position | ||
Kevin G. Burke | President and Chief Executive Officer of us since 2015; President and Chief Executive Officer of Donegal Mutual since 2018; | |||
| ||||
| Executive Vice President and Chief Financial Officer of Donegal Mutual and us since 2014; Senior Vice President and Chief Financial Officer of Donegal Mutual and us from 2005 to 2014; other positions from 1993 to 2005. | |||
| Kristi S. Altshuler | 41 | Senior Vice President and | ||
| W. Daniel DeLamater | 49 | Senior Vice President of us since 2022; Senior Vice President and Head of Field Operations & National Accounts of Donegal Mutual since 2022; Senior Vice President of National Accounts for Donegal Mutual from 2020 to 2022; President of Southern Mutual Insurance Company since 2016; other positions at Southern Mutual Insurance Company from 2000 to 2016. | ||
| William A. Folmar | 63 | Senior Vice President of Claims of Donegal Mutual and Senior Vice President of us since 2019; Vice President of Claims of Donegal Mutual from 2010 to 2019; other positions from 1998 to 2010. | ||
| Francis J. Haefner, Jr. | 58 | Senior Vice President of us since 2020; Senior Vice President of Commercial Lines Underwriting of Donegal Mutual since 2012; other positions from 1984 to 2012. | ||
| Jeffery T. Hay | 47 | Senior Vice President and Chief Underwriting Officer of Donegal Mutual and Senior Vice President of us since 2021; Senior Director of Willis Towers Watson from 2018 to 2021; Head of Personal Lines Product Management of The Hartford from 2015 to 2018; other positions at The Hartford from 2005 to 2015. | ||
| Christina M. Hoffman | 47 | Senior Vice President and Chief Risk Officer of Donegal Mutual and us since 2019; Senior Vice President of Internal Audit of Donegal Mutual and Senior Vice President of us from | ||
| Jeffrey A. Jacobsen | 68 | Senior Vice President of us since 2020; Senior Vice President of Personal Lines Underwriting of Donegal Mutual since 2008; other positions from | ||
| Senior Vice President and General Counsel of Donegal Mutual and us since 2018; Vice President and House Counsel of Donegal Mutual from 2012 to 2018; other positions from 2010 to 2012. | |||
| Sanjay Pandey | 55 | Senior Vice President and Chief Information Officer of Donegal Mutual and us since 2013; other positions from 2000 to 2013. | ||
| V. Anthony Viozzi | 48 | Senior Vice President and Chief | ||
Daniel J. Wagner | Senior Vice President and Treasurer of Donegal Mutual and us since 2005; | |||
-97-
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
-98-
| Item 15. | Exhibits, Financial Statement Schedules. |
(a) Financial statements, financial statement schedule and exhibits filed:
(a) Consolidated Financial Statements
| (a) | Financial statements, financial statement schedule and exhibits filed: |
| (i) | Consolidated Financial Statements |
| Page | ||||
| 106 | ||||
Donegal Group Inc. and Subsidiaries: | ||||
| 64 | ||||
| 65 | ||||
| 66 | ||||
| 67 | ||||
| 68 | ||||
Report and Consent of Independent Registered Public Accounting Firm | ||||
| (Filed as Exhibit 23.1) | ||||
| (b) | ||||
| ||||
| ||||
| 115 | ||||
| Filed herewith | ||||
(c) Exhibits
| (c) | Exhibits |
Exhibit No. | Description of Exhibits | Reference | ||
| ||||
| 3.1 | ||||
| ||||
| 3.2 | ||||
| ||||
| 4.1 | ||||
Management Contracts and Compensatory Plans or Arrangements | ||||
| ||||
| 10.1 | ||||
| ||||
| 10.2 | ||||
| ||||
| ||||
| ||||
| 10.4 | ||||
| ||||
| 10.5 | ||||
-99-