☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 23-2424711 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer ☐ | Accelerated filer ☑ | Non-accelerated filer ☐ | Smaller reporting company ☑ | |||||
Emerging growth company ☐ |
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 |
Page | |||||
PART I | FINANCIAL INFORMATION | ||||
Item 1. | 1 | ||||
Item 2. | 18 | ||||
Item 3. | 28 | ||||
Item 4. | 28 | ||||
PART II | OTHER INFORMATION | ||||
Item 1. | 29 | ||||
Item 1A. | 29 | ||||
Item 2. | 29 | ||||
Item 3. | 29 | ||||
Item 4. | 29 | ||||
Item 5. | 29 | ||||
Item 6. | 30 | ||||
March 31, 2022 | December 31, 2021 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Investments | ||||||||
Fixed maturities | ||||||||
Held to maturity, at amortized cost | $ | 690,691,302 | $ | 668,104,568 | ||||
Available for sale, at fair value | 516,894,776 | 532,629,015 | ||||||
Equity securities, at fair value | 54,046,368 | 63,419,973 | ||||||
Short-term investments, at cost, which approximates fair value | 9,194,174 | 12,692,341 | ||||||
Total investments | 1,270,826,620 | 1,276,845,897 | ||||||
Cash | 56,074,886 | 57,709,375 | ||||||
Accrued investment income | 9,448,842 | 8,214,971 | ||||||
Premiums receivable | 182,475,495 | 168,862,580 | ||||||
Reinsurance receivable | 448,295,785 | 455,411,009 | ||||||
Deferred policy acquisition costs | 71,608,211 | 68,028,373 | ||||||
Deferred tax asset, net | 12,493,161 | 6,685,619 | ||||||
Prepaid reinsurance premiums | 174,523,309 | 176,935,842 | ||||||
Property and equipment, net | 2,885,074 | 2,956,930 | ||||||
Accounts receivable - securities | 1,936 | 2,252 | ||||||
Federal income taxes recoverable | 1,863,053 | 5,290,938 | ||||||
Receivable from Michigan Catastrophic Claims Association | 0 | 18,112,800 | ||||||
Due from affiliate | 2,209,909 | 1,922,717 | ||||||
Goodwill | 5,625,354 | 5,625,354 | ||||||
Other intangible assets | 958,010 | 958,010 | ||||||
Other | 1,472,250 | 1,612,732 | ||||||
Total assets | $ | 2,240,761,895 | $ | 2,255,175,399 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Losses and loss expenses | $ | 1,071,587,385 | $ | 1,077,620,301 | ||||
Unearned premiums | 589,739,092 | 572,958,422 | ||||||
Accrued expenses | 4,900,102 | 4,028,659 | ||||||
Reinsurance balances payable | 4,069,560 | 3,946,105 | ||||||
Borrowings under lines of credit | 35,000,000 | 35,000,000 | ||||||
Cash dividends declared to stockholders | 0 | 4,915,268 | ||||||
Cash refunds due to Michigan policyholders | 0 | 18,112,800 | ||||||
Accounts payable - securities | 3,247,575 | 0 | ||||||
Other | 7,952,320 | 7,557,757 | ||||||
Total liabilities | 1,716,496,034 | 1,724,139,312 | ||||||
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 28,790,510 and 28,756,203 shares and outstanding 25,787,922 and 25,753,615 shares | 287,906 | 287,562 | ||||||
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 | 305,668,006 | 304,889,481 | ||||||
Accumulated other comprehensive (loss) income | (17,306,674 | ) | 3,283,551 | |||||
Retained earnings | 276,786,488 | 263,745,358 | ||||||
Treasury stock, at cost | (41,226,357 | ) | (41,226,357 | ) | ||||
Total stockholders’ equity | 524,265,861 | 531,036,087 | ||||||
Total liabilities and stockholders’ equity | $ | 2,240,761,895 | $ | 2,255,175,399 |
June 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Investments | ||||||||
Fixed maturities | ||||||||
Held to maturity, at amortized cost | $ | 643,847,647 | $ | 586,609,439 | ||||
Available for sale, at fair value | 522,580,264 | 555,136,017 | ||||||
Equity securities, at fair value | 72,757,031 | 58,556,173 | ||||||
Short-term investments, at cost, which approximates fair value | 22,767,372 | 20,900,155 | ||||||
Total investments | 1,261,952,314 | 1,221,201,784 | ||||||
Cash | 88,004,738 | 103,094,236 | ||||||
Accrued investment income | 8,175,750 | 7,936,879 | ||||||
Premiums receivable | 189,383,783 | 169,596,332 | ||||||
Reinsurance receivable | 422,198,101 | 408,908,850 | ||||||
Deferred policy acquisition costs | 69,687,624 | 59,156,958 | ||||||
Deferred tax asset, net | 5,134,455 | 5,683,113 | ||||||
Prepaid reinsurance premiums | 186,451,557 | 169,418,333 | ||||||
Property and equipment, net | 3,350,691 | 4,390,377 | ||||||
Accounts receivable - securities | 79,402 | 67,676 | ||||||
Federal income taxes recoverable | 4,018,210 | 3,089,369 | ||||||
Goodwill | 5,625,354 | 5,625,354 | ||||||
Other intangible assets | 958,010 | 958,010 | ||||||
Other | 1,380,569 | 1,393,053 | ||||||
Total assets | $ | 2,246,400,558 | $ | 2,160,520,324 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Losses and loss expenses | $ | 998,658,015 | $ | 962,007,437 | ||||
Unearned premiums | 599,949,617 | 537,189,598 | ||||||
Accrued expenses | 11,465,644 | 29,115,198 | ||||||
Reinsurance balances payable | 4,030,947 | 3,233,523 | ||||||
Borrowings under lines of credit | 35,000,000 | 85,000,000 | ||||||
Cash dividends declared to stockholders | 0 | 4,436,301 | ||||||
Subordinated debentures | 5,000,000 | 5,000,000 | ||||||
Accounts payable - securities | 11,295,765 | 0 | ||||||
Due to affiliate | 22,196,384 | 10,293,495 | ||||||
Other | 8,647,393 | 6,470,652 | ||||||
Total liabilities | 1,696,243,765 | 1,642,746,204 | ||||||
Stockholders’ Equity | ||||||||
Preferred stock, $.01 par value, authorized 2,000,000 shares; 0ne issued | 0— | 0— | ||||||
Class A common stock, $.01 par value, authorized 50,000,000 shares, issued 28,619,866 and 27,651,774 shares and outstanding 25,617,278 and 24,649,186 shares | 286,199 | 276,518 | ||||||
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 | ||||||
Additional paid-in capital | 302,510,624 | 289,149,567 | ||||||
Accumulated other comprehensive income | 8,473,471 | 11,130,612 | ||||||
Retained earnings | 280,056,364 | 258,387,288 | ||||||
Treasury stock, at cost | (41,226,357 | ) | (41,226,357 | ) | ||||
Total stockholders’ equity | 550,156,793 | 517,774,120 | ||||||
Total liabilities and stockholders’ equity | $ | 2,246,400,558 | $ | 2,160,520,324 | ||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Revenues: | ||||||||
Net premiums earned | $ | 199,248,624 | $ | 187,251,600 | ||||
Investment income, net of investment expenses | 7,858,881 | 7,510,578 | ||||||
Net investment (losses) gains (includes $ 165,354 and ($29,186) accumulated other comprehensive income reclassifications) | (76,247 | ) | 2,469,054 | |||||
Lease income | 104,628 | 107,767 | ||||||
Installment payment fees | 490,831 | 630,899 | ||||||
Total revenues | 207,626,717 | 197,969,898 | ||||||
Expenses: | ||||||||
Net losses and loss expenses | 117,883,002 | 119,219,747 | ||||||
Amortization of deferred policy acquisition costs | 34,182,000 | 30,179,000 | ||||||
Other underwriting expenses | 37,106,304 | 33,782,050 | ||||||
Policyholder dividends | 1,648,751 | 1,294,021 | ||||||
Interest | 153,033 | 312,326 | ||||||
Other expenses, net | 427,388 | 432,069 | ||||||
Total expenses | 191,400,478 | 185,219,213 | ||||||
Income before income tax expense | 16,226,239 | 12,750,685 | ||||||
Income tax expense (includes $ 34,724 and ($6,129) income tax expense (benefit) from reclassification items) | 3,081,210 | 2,220,837 | ||||||
Net income | $ | 13,145,029 | $ | 10,529,848 | ||||
Earnings per common share: | ||||||||
Class A common stock - basic and diluted | $ | 0.43 | $ | 0.35 | ||||
Class B common stock - basic and diluted | $ | 0.39 | $ | 0.32 |
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
Net premiums earned | $ | 192,488,665 | $ | 184,373,768 | ||||
Investment income, net of investment expenses | 7,652,180 | 7,172,144 | ||||||
Net investment gains (includes $479,211 and $14,493 accumulated other comprehensive income reclassifications) | 4,241,031 | 6,485,896 | ||||||
Lease income | 108,038 | 109,205 | ||||||
Installment payment fees | 656,029 | 758,759 | ||||||
Total revenues | 205,145,943 | 198,899,772 | ||||||
Expenses: | ||||||||
Net losses and loss expenses | 113,956,652 | 105,349,019 | ||||||
Amortization of deferred policy acquisition costs | 33,103,000 | 29,634,000 | ||||||
Other underwriting expenses | 36,229,677 | 33,567,266 | ||||||
Policyholder dividends | 1,629,499 | 1,683,658 | ||||||
Interest | 217,290 | 428,092 | ||||||
Other expenses, net | 313,000 | 249,688 | ||||||
Total expenses | 185,449,118 | 170,911,723 | ||||||
Income before income tax expense | 19,696,825 | 27,988,049 | ||||||
Income tax expense (includes $100,634 and $3,044 income tax expense from reclassification items) | 3,532,789 | 5,309,271 | ||||||
Net income | $ | 16,164,036 | $ | 22,678,778 | ||||
Earnings per common share: | ||||||||
Class A common stock - basic | $ | 0.53 | $ | 0.80 | ||||
Class A common stock - diluted | $ | 0.53 | $ | 0.79 | ||||
Class B common stock - basic and diluted | $ | 0.48 | $ | 0.72 | ||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Net income | $ | 13,145,029 | $ | 10,529,848 | ||||
Other comprehensive loss, net of tax | ||||||||
Unrealized loss on securities: | ||||||||
Unrealized holding loss during the period, net of income tax benefit of ($5,438,628) and ($1,125,625) | (20,459,595 | ) | (4,230,172 | ) | ||||
Reclassification adjustment for (gains) losses included in net income, net of income tax expense (benefit) of $ 34,724 and ($6,129) | (130,630 | ) | 23,057 | |||||
Other comprehensive loss | (20,590,225 | ) | (4,207,115 | ) | ||||
Comprehensive (loss) income | $ | (7,445,196 | ) | $ | 6,322,733 |
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Net income | $ | 16,164,036 | $ | 22,678,778 | ||||
Other comprehensive income, net of tax | ||||||||
Unrealized gain on securities: | ||||||||
Unrealized holding gain during the period, net of income tax expense of $511,306 and $1,774,279 | 1,928,551 | 6,674,664 | ||||||
Reclassification adjustment for gains included in net income, net of income tax expense of $100,634 and $3,044 | (378,577 | ) | (11,449 | ) | ||||
Other comprehensive income | 1,549,974 | 6,663,215 | ||||||
Comprehensive income | $ | 17,714,010 | $ | 29,341,993 | ||||
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
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 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 33,407 | 0 | 335 | 0 | 423,665 | 0 | 0 | 0 | 424,000 | |||||||||||||||||||||||||||
Share-based compensation | 900 | 0 | 9 | 0 | 256,451 | 0 | 0 | 0 | 256,460 | |||||||||||||||||||||||||||
Net income | — | — | 0 | 0 | 0 | 0 | 13,145,029 | 0 | 13,145,029 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | 0 | 0 | 0 | 0 | (5,490 | ) | 0 | (5,490 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | 0 | 0 | 98,409 | 0 | (98,409 | ) | 0 | 0 | ||||||||||||||||||||||||||
Other comprehensive loss | — | — | 0 | 0 | 0 | (20,590,225 | ) | 0 | 0 | (20,590,225 | ) | |||||||||||||||||||||||||
Balance, March 31, 2022 | 28,790,510 | 5,649,240 | $ | 287,906 | $ | 56,492 | $ | 305,668,006 | $ | (17,306,674 | ) | $ | 276,786,488 | $ | (41,226,357 | ) | $ | 524,265,861 |
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
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) | 33,336 | 0 | 334 | 0 | 419,454 | 0 | 0 | 0 | 419,788 | |||||||||||||||||||||||||||
Share-based compensation | 346,124 | 0 | 3,461 | 0 | 4,719,388 | 0 | 0 | 0 | 4,722,849 | |||||||||||||||||||||||||||
Net income | — | — | 0 | 0 | 0 | 0 | 10,529,848 | 0 | 10,529,848 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | 0 | 0 | 0 | 0 | (5,000 | ) | 0 | (5,000 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | 0 | 0 | 109,184 | 0 | (109,184 | ) | 0 | 0 | ||||||||||||||||||||||||||
Other comprehensive loss | — | — | 0 | 0 | 0 | (4,207,115 | ) | 0 | 0 | (4,207,115 | ) | |||||||||||||||||||||||||
Balance, March 31, 2021 | 28,031,234 | 5,649,240 | $ | 280,313 | $ | 56,492 | $ | 294,397,593 | $ | 6,923,497 | $ | 268,802,952 | $ | (41,226,357 | ) | $ | 529,234,490 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 13,145,029 | $ | 10,529,848 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and other non-cash items | 1,343,128 | 1,654,449 | ||||||
Net investment losses (gains) | 76,247 | (2,469,054 | ) | |||||
Changes in assets and liabilities: | ||||||||
Losses and loss expenses | (6,032,916 | ) | 34,971,439 | |||||
Unearned premiums | 16,780,670 | 40,291,574 | ||||||
Premiums receivable | (13,612,915 | ) | (12,012,018 | ) | ||||
Deferred acquisition costs | (3,579,838 | ) | (5,373,755 | ) | ||||
Deferred income taxes | (334,190 | ) | 84,596 | |||||
Reinsurance receivable | 7,115,224 | (17,430,975 | ) | |||||
Prepaid reinsurance premiums | 2,412,533 | (11,681,526 | ) | |||||
Accrued investment income | (1,233,871 | ) | (1,009,425 | ) | ||||
Due from affiliate | (287,192 | ) | (6,372,406 | ) | ||||
Reinsurance balances payable | 123,455 | 581,043 | ||||||
Current income taxes | 3,427,885 | 2,148,756 | ||||||
Accrued expenses | 871,443 | (5,552,527 | ) | |||||
Other, net | 535,049 | 1,516,906 | ||||||
Net adjustments | 7,604,712 | 19,347,077 | ||||||
Net cash provided by operating activities | 20,749,741 | 29,876,925 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of fixed maturities, held to maturity | (28,656,113 | ) | (33,904,795 | ) | ||||
Purchases of fixed maturities, available for sale | (34,281,491 | ) | (16,747,351 | ) | ||||
Purchases of equity securities, available for sale | (5,276,815 | ) | (13,885,992 | ) | ||||
Maturity of fixed maturities: | ||||||||
Held to maturity | 9,203,976 | 7,317,449 | ||||||
Available for sale | 23,296,757 | 69,586,285 | ||||||
Sales of equity securities, available for sale | 14,408,819 | 6,300,459 | ||||||
Net sales of property and equipment | 28,288 | 684,629 | ||||||
Net sales (purchases) of short-term investments | 3,498,167 | (198,239 | ) | |||||
Net cash (used in) provided by investing activities | (17,778,412 | ) | 19,152,445 | |||||
Cash Flows from Financing Activities: | ||||||||
Cash dividends paid | (4,920,758 | ) | (4,441,301 | ) | ||||
Issuance of common stock | 314,940 | 4,709,242 | ||||||
Payments on lines of credit | 0 | (50,000,000 | ) | |||||
Net cash used in financing activities | (4,605,818 | ) | (49,732,059 | ) | ||||
Net decrease in cash | (1,634,489 | ) | (702,689 | ) | ||||
Cash at beginning of period | 57,709,375 | 103,094,236 | ||||||
Cash at end of period | $ | 56,074,886 | $ | 102,391,547 | ||||
Cash paid during period - Interest | $ | 161,506 | $ | 257,821 | ||||
Net cash paid during period - Taxes | $ | 0 | $ | 0 |
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
Net premiums earned | $ | 379,740,265 | $ | 371,626,546 | ||||
Investment income, net of investment expenses | 15,162,758 | 14,548,428 | ||||||
Net investment gains (losses) (includes $450,025 and $436,328 accumulated other comprehensive income reclassifications) | 6,710,085 | (4,208,947 | ) | |||||
Lease income | 215,805 | 218,472 | ||||||
Installment payment fees | 1,286,928 | 1,626,479 | ||||||
Total revenues | 403,115,841 | 383,810,978 | ||||||
Expenses: | ||||||||
Net losses and loss expenses | 233,176,399 | 222,595,545 | ||||||
Amortization of deferred policy acquisition costs | 63,282,000 | 59,571,000 | ||||||
Other underwriting expenses | 70,011,727 | 66,164,895 | ||||||
Policyholder dividends | 2,923,520 | 3,525,658 | ||||||
Interest | 529,616 | 652,422 | ||||||
Other expenses, net | 745,069 | 810,238 | ||||||
Total expenses | 370,668,331 | 353,319,758 | ||||||
Income before income tax expense | 32,447,510 | 30,491,220 | ||||||
Income tax expense (includes $94,505 and $91,629 income tax expense from reclassification items) | 5,753,626 | 4,081,321 | ||||||
Net income | $ | 26,693,884 | $ | 26,409,899 | ||||
Earnings per common share: | ||||||||
Class A common stock - basic | $ | 0.89 | $ | 0.93 | ||||
Class A common stock - diluted | $ | 0.88 | $ | 0.92 | ||||
Class B common stock - basic and diluted | $ | 0.80 | $ | 0.84 | ||||
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Net income | $ | 26,693,884 | $ | 26,409,899 | ||||
Other comprehensive (loss) income, net of tax | ||||||||
Unrealized (loss) gain on securities: | ||||||||
Unrealized holding (loss) gain during the period, net of income tax (benefit) expense of ($614,319) and $2,713,454 | (2,301,621 | ) | 10,207,754 | |||||
Reclassification adjustment for gains included in net income, net of income tax expense of $94,505 and $91,629 | (355,520 | ) | (344,699 | ) | ||||
Other comprehensive (loss) income | (2,657,141 | ) | 9,863,055 | |||||
Comprehensive income | $ | 24,036,743 | $ | 36,272,954 | ||||
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
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) | 33,336 | — | 334 | — | 419,454 | — | — | — | 419,788 | |||||||||||||||||||||||||||
Share-based compensation | 346,124 | — | 3,461 | — | 4,719,388 | — | — | — | 4,722,849 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 10,529,848 | — | 10,529,848 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (5,000 | ) | — | (5,000 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 109,184 | — | (109,184 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (4,207,115 | ) | — | — | (4,207,115 | ) | |||||||||||||||||||||||||
Balance, March 31, 2021 | 28,031,234 | 5,649,240 | $ | 280,313 | $ | 56,492 | $ | 294,397,593 | $ | 6,923,497 | $ | 268,802,952 | $ | (41,226,357 | ) | $ | 529,234,490 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 49,613 | — | 496 | — | 730,005 | — | — | — | 730,501 | |||||||||||||||||||||||||||
Share-based compensation | 539,019 | — | 5,390 | — | 7,313,031 | — | — | — | 7,318,421 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 16,164,036 | — | 16,164,036 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (4,840,629 | ) | — | (4,840,629 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 69,995 | — | (69,995 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 1,549,974 | — | — | 1,549,974 | |||||||||||||||||||||||||||
Balance, June 30, 2021 | 28,619,866 | 5,649,240 | $ | 286,199 | $ | 56,492 | $ | 302,510,624 | $ | 8,473,471 | $ | 280,056,364 | $ | (41,226,357 | ) | $ | 550,156,793 | |||||||||||||||||||
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
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) | 28,924 | — | 289 | — | 376,539 | — | — | — | 376,828 | |||||||||||||||||||||||||||
Share-based compensation | 67,087 | — | 671 | — | 1,242,315 | — | — | — | 1,242,986 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 3,731,121 | — | 3,731,121 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (5,363 | ) | — | (5,363 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 118,525 | — | (118,525 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 3,199,840 | — | — | 3,199,840 | |||||||||||||||||||||||||||
Balance, March 31, 2020 | 26,299,946 | 5,649,240 | $ | 263,000 | $ | 56,492 | $ | 269,888,980 | $ | 3,704,010 | $ | 226,874,806 | $ | (41,226,357 | ) | $ | 459,560,931 | |||||||||||||||||||
Issuance of common stock (stock compensation plans) | 52,964 | — | 530 | — | 720,018 | — | — | — | 720,548 | |||||||||||||||||||||||||||
Share-based compensation | 160,869 | — | 1,608 | — | 2,490,136 | — | — | — | 2,491,744 | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 22,678,778 | — | 22,678,778 | |||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | — | — | (4,255,882 | ) | — | (4,255,882 | ) | |||||||||||||||||||||||||
Grant of stock options | — | — | — | — | 76,354 | — | (76,354 | ) | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 6,663,215 | — | — | 6,663,215 | |||||||||||||||||||||||||||
Balance, June 30, 2020 | 26,513,779 | 5,649,240 | $ | 265,138 | $ | 56,492 | $ | 273,175,488 | $ | 10,367,225 | $ | 245,221,348 | $ | (41,226,357 | ) | $ | 487,859,334 | |||||||||||||||||||
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 26,693,884 | $ | 26,409,899 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and other non-cash items | 3,083,025 | 3,502,046 | ||||||
Net investment (gains) losses | (6,710,085 | ) | 4,208,947 | |||||
Changes in assets and liabilities: | ||||||||
Losses and loss expenses | 36,650,578 | 32,149,773 | ||||||
Unearned premiums | 62,760,019 | 52,796,454 | ||||||
Premiums receivable | (19,787,451 | ) | (21,717,231 | ) | ||||
Deferred acquisition costs | (10,530,666 | ) | (2,865,674 | ) | ||||
Deferred income taxes | 1,266,870 | (837,202 | ) | |||||
Reinsurance receivable | (13,289,251 | ) | (12,319,334 | ) | ||||
Prepaid reinsurance premiums | (17,033,224 | ) | (32,483,228 | ) | ||||
Accrued investment income | (238,871 | ) | (597,823 | ) | ||||
Due to affiliate | 11,902,889 | (2,053,312 | ) | |||||
Reinsurance balances payable | 797,424 | 144,398 | ||||||
Current income taxes | (928,841 | ) | 4,893,520 | |||||
Accrued expenses | (17,649,554 | ) | (5,005,473 | ) | ||||
Other, net | 2,189,225 | 1,809,764 | ||||||
Net adjustments | 32,482,087 | 21,625,625 | ||||||
Net cash provided by operating activities | 59,175,971 | 48,035,524 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of fixed maturities, held to maturity | (80,315,578 | ) | (55,313,641 | ) | ||||
Purchases of fixed maturities, available for sale | (73,023,551 | ) | (81,210,780 | ) | ||||
Purchases of equity securities, available for sale | (25,332,194 | ) | (5,071,801 | ) | ||||
Maturity of fixed maturities: | ||||||||
Held to maturity | 23,650,172 | 18,812,367 | ||||||
Available for sale | 111,197,663 | 70,379,590 | ||||||
Sales of fixed maturities, available for sale | — | 15,251,996 | ||||||
Sales of equity securities, available for sale | 17,391,396 | 3,202,672 | ||||||
Net sales of property and equipment | 935,029 | 32,107 | ||||||
Net purchases of short-term investments | (1,867,217 | ) | (37,311,903 | ) | ||||
Net cash used in investing activities | (27,364,280 | ) | (71,229,393 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Cash dividends paid | (9,281,930 | ) | (8,336,479 | ) | ||||
Issuance of common stock | 12,380,741 | 3,988,784 | ||||||
Borrowing under lines of credit | — | 50,000,000 | ||||||
Payments on lines of credit | (50,000,000 | ) | — | |||||
Net cash (used in) provided by financing activities | (46,901,189 | ) | 45,652,305 | |||||
Net (decrease) increase in cash | (15,089,498 | ) | 22,458,436 | |||||
Cash at beginning of period | 103,094,236 | 49,318,930 | ||||||
Cash at end of period | $ | 88,004,738 | $ | 71,777,366 | ||||
Cash paid during period - Interest | $ | 659,222 | $ | 664,342 | ||||
Net cash paid during period - Taxes | $ | 5,400,000 | $ | — |
1 - | Organization |
2 - | Basis of Presentation |
3 - | Earnings Per Share |
Three Months Ended March 31, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 10,986 | $ | 2,159 | $ | 8,742 | $ | 1,788 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 25,787 | 5,577 | 24,768 | 5,577 | ||||||||||||
Basic earnings per share | $ | 0.43 | $ | 0.39 | $ | 0.35 | $ | 0.32 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 10,986 | $ | 2,159 | $ | 8,742 | $ | 1,788 | ||||||||
Denominator: | ||||||||||||||||
Number of shares used in basic computation | 25,787 | 5,577 | 24,768 | 5,577 | ||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||
Director and employee stock options | 22 | 0 | 128 | 0 | ||||||||||||
Number of shares used in diluted computation | 25,809 | 5,577 | 24,896 | 5,577 | ||||||||||||
Diluted earnings per share | $ | 0.43 | $ | 0.39 | $ | 0.35 | $ | 0.32 |
Three Months Ended June 30, | ||||||||||||||||
2021 | 2020 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 13,482 | $ | 2,682 | $ | 18,665 | $ | 4,014 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 25,342 | 5,577 | 23,451 | 5,577 | ||||||||||||
Basic earnings per share | $ | 0.53 | $ | 0.48 | $ | 0.80 | $ | 0.72 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 13,482 | $ | 2,682 | $ | 18,665 | $ | 4,014 | ||||||||
Denominator: | ||||||||||||||||
Number of shares used in basic computation | 25,342 | 5,577 | 23,451 | 5,577 | ||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||
Director and employee stock options | 252 | — | 199 | — | ||||||||||||
Number of shares used in diluted computation | 25,594 | 5,577 | 23,650 | 5,577 | ||||||||||||
Diluted earnings per share | $ | 0.53 | $ | 0.48 | $ | 0.79 | $ | 0.72 | ||||||||
Six Months Ended June 30, | ||||||||||||||||
2021 | 2020 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 22,223 | $ | 4,471 | $ | 21,721 | $ | 4,689 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 25,057 | 5,577 | 23,356 | 5,577 | ||||||||||||
Basic earnings per share | $ | 0.89 | $ | 0.80 | $ | 0.93 | $ | 0.84 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 22,223 | $ | 4,471 | $ | 21,721 | $ | 4,689 | ||||||||
Denominator: | ||||||||||||||||
Number of shares used in basic computation | 25,057 | 5,577 | 23,356 | 5,577 | ||||||||||||
Weighted-average shares effect of dilutive securities: | ||||||||||||||||
Director and employee stock options | 190 | — | 193 | — | ||||||||||||
Number of shares used in diluted computation | 25,247 | 5,577 | 23,549 | 5,577 | ||||||||||||
Diluted earnings per share | $ | 0.88 | $ | 0.80 | $ | 0.92 | $ | 0.84 | ||||||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Number of options to purchase Class A shares excluded | 5,434,934 | 6,051,359 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Number of options to purchase Class A shares excluded | 4,952,276 | 6,183,992 | 4,952,276 | 6,183,992 |
4 - | Reinsurance |
• | excess of loss reinsurance, under which Donegal Mutual and our insurance subsidiaries recover losses over a set retention of $2.0 million; and |
5 - | Investments |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 89,848 | $ | 310 | $ | 4,139 | $ | 86,019 | ||||||||
Obligations of states and political subdivisions | 395,793 | 5,884 | 21,439 | 380,238 | ||||||||||||
Corporate securities | 190,105 | 2,594 | 5,844 | 186,855 | ||||||||||||
Mortgage-backed securities | 14,945 | 6 | 156 | 14,795 | ||||||||||||
Totals | $ | 690,691 | $ | 8,794 | $ | 31,578 | $ | 667,907 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 37,003 | $ | 0 | $ | 2,258 | $ | 34,745 | ||||||||
Obligations of states and political subdivisions | 57,822 | 456 | 1,973 | 56,305 | ||||||||||||
Corporate securities | 219,350 | 1,307 | 5,484 | 215,173 | ||||||||||||
Mortgage-backed securities | 219,597 | 134 | 9,059 | 210,672 | ||||||||||||
Totals | $ | 533,772 | $ | 1,897 | $ | 18,774 | $ | 516,895 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 89,716 | $ | 2,839 | $ | 649 | $ | 91,906 | ||||||||
Obligations of states and political subdivisions | 346,517 | 20,073 | 788 | 365,802 | ||||||||||||
Corporate securities | 188,162 | 15,061 | 267 | 202,956 | ||||||||||||
Mortgage-backed securities | 19,453 | 1,005 | 0 | 20,458 | ||||||||||||
Totals | $ | 643,848 | $ | 38,978 | $ | 1,704 | $ | 681,122 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 22,508 | $ | 257 | $ | 439 | $ | 22,326 | ||||||||
Obligations of states and political subdivisions | 59,378 | 2,366 | 31 | 61,713 | ||||||||||||
Corporate securities | 201,634 | 9,644 | 202 | 211,076 | ||||||||||||
Mortgage-backed securities | 222,814 | 5,068 | 417 | 227,465 | ||||||||||||
Totals | $ | 506,334 | $ | 17,335 | $ | 1,089 | $ | 522,580 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 89,268 | $ | 1,923 | $ | 1,015 | $ | 90,176 | ||||||||
Obligations of states and political subdivisions | 371,436 | 17,857 | 948 | 388,345 | ||||||||||||
Corporate securities | 191,147 | 11,576 | 773 | 201,950 | ||||||||||||
Mortgage-backed securities | 16,254 | 676 | 0 | 16,930 | ||||||||||||
Totals | $ | 668,105 | $ | 32,032 | $ | 2,736 | $ | 697,401 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 32,501 | $ | 144 | $ | 461 | $ | 32,184 | ||||||||
Obligations of states and political subdivisions | 55,459 | 2,002 | 83 | 57,378 | ||||||||||||
Corporate securities | 215,669 | 6,817 | 874 | 221,612 | ||||||||||||
Mortgage-backed securities | 219,664 | 3,001 | 1,210 | 221,455 | ||||||||||||
Totals | $ | 523,293 | $ | 11,964 | $ | 2,628 | $ | 532,629 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 77,435 | $ | 3,984 | $ | 223 | $ | 81,196 | ||||||||
Obligations of states and political subdivisions | 312,319 | 23,212 | 143 | 335,388 | ||||||||||||
Corporate securities | 173,270 | 18,172 | 206 | 191,236 | ||||||||||||
Mortgage-backed securities | 23,585 | 1,236 | 0 | 24,821 | ||||||||||||
Totals | $ | 586,609 | $ | 46,604 | $ | 572 | $ | 632,641 | ||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 47,512 | $ | 424 | $ | 121 | $ | 47,815 | ||||||||
Obligations of states and political subdivisions | 66,287 | 2,690 | 12 | 68,965 | ||||||||||||
Corporate securities | 202,396 | 10,496 | 184 | 212,708 | ||||||||||||
Mortgage-backed securities | 218,763 | 6,902 | 17 | 225,648 | ||||||||||||
Totals | $ | 534,958 | $ | 20,512 | $ | 334 | $ | 555,136 | ||||||||
Amortized Cost | Estimated Fair Value | |||||||
(in thousands) | ||||||||
Held to maturity | ||||||||
Due in one year or less | $ | 60,854 | $ | 62,484 | ||||
Due after one year through five years | 84,257 | 85,415 | ||||||
Due after five years through ten years | 223,309 | 216,052 | ||||||
Due after ten years | 307,326 | 289,161 | ||||||
Mortgage-backed securities | 14,945 | 14,795 | ||||||
Total held to maturity | $ | 690,691 | $ | 667,907 | ||||
Available for sale | ||||||||
Due in one year or less | $ | 29,090 | $ | 29,320 | ||||
Due after one year through five years | 148,499 | 145,592 | ||||||
Due after five years through ten years | 105,650 | 101,917 | ||||||
Due after ten years | 30,936 | 29,394 | ||||||
Mortgage-backed securities | 219,597 | 210,672 | ||||||
Total available for sale | $ | 533,772 | $ | 516,895 |
Amortized Cost | Estimated Fair Value | |||||||
(in thousands) | ||||||||
Held to maturity | ||||||||
Due in one year or less | $ | 38,641 | $ | 39,762 | ||||
Due after one year through five years | 83,282 | 88,929 | ||||||
Due after five years through ten years | 224,135 | 237,348 | ||||||
Due after ten years | 278,337 | 294,625 | ||||||
Mortgage-backed securities | 19,453 | 20,458 | ||||||
Total held to maturity | $ | 643,848 | $ | 681,122 | ||||
Available for sale | ||||||||
Due in one year or less | $ | 26,146 | $ | 26,621 | ||||
Due after one year through five years | 131,837 | 138,624 | ||||||
Due after five years through ten years | 96,413 | 99,711 | ||||||
Due after ten years | 29,124 | 30,159 | ||||||
Mortgage-backed securities | 222,814 | 227,465 | ||||||
Total available for sale | $ | 506,334 | $ | 522,580 | ||||
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 35,307 | $ | 18,795 | $ | 56 | $ | 54,046 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 50,864 | $ | 22,007 | $ | 114 | $ | 72,757 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 43,263 | $ | 20,413 | $ | 256 | $ | 63,420 |
Cost | Gross Gains | Gross Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Equity securities | $ | 42,410 | $ | 17,103 | $ | 957 | $ | 58,556 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Gross realized gains: | ||||||||
Fixed maturities | $ | 234 | $ | 193 | ||||
Equity securities | 843 | 73 | ||||||
Real estate | 477 | 0 | ||||||
1,554 | 266 | |||||||
Gross realized losses: | ||||||||
Fixed maturities | 69 | 222 | ||||||
Equity securities | 824 | 0 | ||||||
893 | 222 | |||||||
Net realized gains | 661 | 44 | ||||||
Gross unrealized gains on equity securities | 716 | 3,204 | ||||||
Gross unrealized losses on equity securities | (1,453 | ) | (779 | ) | ||||
Net investment (losses) gains | $ | (76 | ) | $ | 2,469 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Gross investment gains: | ||||||||||||||||
Fixed maturities | $ | 479 | $ | 229 | $ | 524 | $ | 652 | ||||||||
Equity securities | 3,762 | 6,474 | 6,728 | 3,355 | ||||||||||||
4,241 | 6,703 | 7,252 | 4,007 | |||||||||||||
Gross investment losses: | ||||||||||||||||
Fixed maturities | 0 | 217 | 74 | 218 | ||||||||||||
Equity securities | 0 | 0 | 468 | 7,998 | ||||||||||||
0 | 217 | 542 | 8,216 | |||||||||||||
Net investment gains (losses) | $ | 4,241 | $ | 6,486 | $ | 6,710 | $ | (4,209 | ) | |||||||
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 52,488 | $ | 2,816 | $ | 31,710 | $ | 3,581 | ||||||||
Obligations of states and political subdivisions | 231,429 | 19,976 | 28,289 | 3,436 | ||||||||||||
Corporate securities | 188,463 | 8,531 | 25,649 | 2,797 | ||||||||||||
Mortgage-backed securities | 192,115 | 7,590 | 14,313 | 1,625 | ||||||||||||
Totals | $ | 664,495 | $ | 38,913 | $ | 99,961 | $ | 11,439 |
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 38,202 | $ | 1,088 | $ | — | $ | — | ||||||||
Obligations of states and political subdivisions | 45,446 | 819 | 0 | 0 | ||||||||||||
Corporate securities | 38,846 | 344 | 3,375 | 125 | ||||||||||||
Mortgage-backed securities | 55,930 | 415 | 487 | 2 | ||||||||||||
Totals | $ | 178,424 | $ | 2,666 | $ | 3,862 | $ | 127 | ||||||||
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 27,691 | $ | 412 | $ | 28,426 | $ | 1,064 | ||||||||
Obligations of states and political subdivisions | 56,655 | 899 | 7,091 | 132 | ||||||||||||
Corporate securities | 92,737 | 1,610 | 1,463 | 37 | ||||||||||||
Mortgage-backed securities | 90,006 | 1,128 | 2,361 | 82 | ||||||||||||
Totals | $ | 267,089 | $ | 4,049 | $ | 39,341 | $ | 1,315 |
Less Than 12 Months | More Than 12 Months | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 29,144 | $ | 345 | $ | — | $ | — | ||||||||
Obligations of states and political subdivisions | 9,362 | 154 | — | — | ||||||||||||
Corporate securities | 26,143 | 115 | 8,230 | 276 | ||||||||||||
Mortgage-backed securities | 3,091 | 15 | 236 | 1 | ||||||||||||
Totals | $ | 67,740 | $ | 629 | $ | 8,466 | $ | 277 | ||||||||
6 - | Segment Information |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Premiums earned: | ||||||||
Commercial lines | $ | 124,329 | $ | 109,226 | ||||
Personal lines | 74,920 | 78,026 | ||||||
GAAP premiums earned | 199,249 | 187,252 | ||||||
Net investment income | 7,859 | 7,511 | ||||||
Investment (losses) gains | (76 | ) | 2,469 | |||||
Other | 595 | 738 | ||||||
Total revenues | $ | 207,627 | $ | 197,970 | ||||
Income before income tax expense: | ||||||||
Underwriting income (loss): | ||||||||
Commercial lines | $ | 62 | $ | (8,242 | ) | |||
Personal lines | 4,642 | 5,037 | ||||||
SAP underwriting income (loss) | 4,704 | (3,205 | ) | |||||
GAAP adjustments | 3,725 | 5,982 | ||||||
GAAP underwriting income | 8,429 | 2,777 | ||||||
Net investment income | 7,859 | 7,511 | ||||||
Investment (losses) gains | (76 | ) | 2,469 | |||||
Other | 14 | (6 | ) | |||||
Income before income tax expense | $ | 16,226 | $ | 12,751 |
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Premiums earned: | ||||||||
Commercial lines | $ | 115,300 | $ | 101,870 | ||||
Personal lines | 77,189 | 82,504 | ||||||
GAAP premiums earned | 192,489 | 184,374 | ||||||
Net investment income | 7,652 | 7,172 | ||||||
Investment gains | 4,241 | 6,486 | ||||||
Other | 764 | 868 | ||||||
Total revenues | $ | 205,146 | $ | 198,900 | ||||
Income before income tax expense: | ||||||||
Underwriting income: | ||||||||
Commercial lines | $ | 1,767 | $ | 4,472 | ||||
Personal lines | 547 | 8,290 | ||||||
SAP underwriting income | 2,314 | 12,762 | ||||||
GAAP adjustments | 5,256 | 1,378 | ||||||
GAAP underwriting income | 7,570 | 14,140 | ||||||
Net investment income | 7,652 | 7,172 | ||||||
Investment gains | 4,241 | 6,486 | ||||||
Other | 234 | 190 | ||||||
Income before income tax expense | $ | 19,697 | $ | 27,988 | ||||
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Premiums earned: | ||||||||
Commercial lines | $ | 224,525 | $ | 203,645 | ||||
Personal lines | 155,215 | 167,982 | ||||||
GAAP premiums earned | 379,740 | 371,627 | ||||||
Net investment income | 15,163 | 14,548 | ||||||
Investment gains (losses) | 6,710 | (4,209 | ) | |||||
Other | 1,503 | 1,845 | ||||||
Total revenues | $ | 403,116 | $ | 383,811 | ||||
Income before income tax expense: | ||||||||
Underwriting (loss) income: | ||||||||
Commercial lines | $ | (6,475 | ) | $ | 3,906 | |||
Personal lines | 5,584 | 13,101 | ||||||
SAP underwriting (loss) income | (891 | ) | 17,007 | |||||
GAAP adjustments | 11,238 | 2,762 | ||||||
GAAP underwriting income | 10,347 | 19,769 | ||||||
Net investment income | 15,163 | 14,548 | ||||||
Investment gains (losses) | 6,710 | (4,209 | ) | |||||
Other | 228 | 383 | ||||||
Income before income tax expense | $ | 32,448 | $ | 30,491 | ||||
7 - | Borrowings |
FHLB of Pittsburgh stock purchased and owned | $ | 1,575,600 | $ | 1,575,600 | ||||
Collateral pledged, at par (carrying value $45,226,104) | 44,343,661 | |||||||
Collateral pledged, at par (carrying value $39,728,104) | 40,871,156 | |||||||
Borrowing capacity currently available | 8,847,792 | 2,703,399 |
8 - | Share–Based Compensation |
9 - | Fair Value Measurements |
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 | $ | 34,745 | $ | 0 | $ | 34,745 | $ | 0 | ||||||||
Obligations of states and political subdivisions | 56,305 | 0 | 56,305 | 0 | ||||||||||||
Corporate securities | 215,173 | 0 | 215,173 | 0 | ||||||||||||
Mortgage-backed securities | 210,672 | 0 | 210,672 | 0 | ||||||||||||
Equity securities | 54,046 | 51,759 | 2,287 | 0 | ||||||||||||
Total investments in the fair value hierarchy | $ | 570,941 | $ | 51,759 | $ | 519,182 | $ | 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) | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 22,326 | $ | — | $ | 22,326 | $ | — | ||||||||
Obligations of states and political subdivisions | 61,713 | — | 61,713 | — | ||||||||||||
Corporate securities | 211,076 | — | 211,076 | — | ||||||||||||
Mortgage-backed securities | 227,465 | — | 227,465 | — | ||||||||||||
Equity securities | 72,757 | 70,467 | 2,290 | — | ||||||||||||
Total investments in the fair value hierarchy | $ | 595,337 | $ | 70,467 | $ | 524,870 | $ | — | ||||||||
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 | $ | 32,185 | $ | 0 | $ | 32,185 | $ | 0 | ||||||||
Obligations of states and political subdivisions | 57,378 | 0 | 57,378 | 0 | ||||||||||||
Corporate securities | 221,611 | 0 | 221,611 | 0 | ||||||||||||
Mortgage-backed securities | 221,455 | 0 | 221,455 | 0 | ||||||||||||
Equity securities | 63,420 | 61,130 | 2,290 | 0 | ||||||||||||
Totals | $ | 596,049 | $ | 61,130 | $ | 534,919 | $ | 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) | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 47,815 | $ | — | $ | 47,815 | $ | — | ||||||||
Obligations of states and political subdivisions | 68,965 | — | 68,965 | — | ||||||||||||
Corporate securities | 212,708 | — | 212,708 | — | ||||||||||||
Mortgage-backed securities | 225,648 | — | 225,648 | — | ||||||||||||
Equity securities | 58,556 | 54,152 | 4,404 | — | ||||||||||||
Totals | $ | 613,692 | $ | 54,152 | $ | 559,540 | $ | — | ||||||||
10 - | Income Taxes |
11 - | Liabilities for Losses and Loss Expenses |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Balance at January 1 | $ | 1,077,620 | $ | 962,007 | ||||
Less reinsurance recoverable | (451,261 | ) | (404,818 | ) | ||||
Net balance at January 1 | 626,359 | 557,189 | ||||||
Incurred related to: | ||||||||
Current year | 134,432 | 127,433 | ||||||
Prior years | (16,549 | ) | (8,213 | ) | ||||
Total incurred | 117,883 | 119,220 | ||||||
Paid related to: | ||||||||
Current year | 40,293 | 35,584 | ||||||
Prior years | 76,088 | 65,192 | ||||||
Total paid | 116,381 | 100,776 | ||||||
Net balance at end of period | 627,861 | 575,633 | ||||||
Plus reinsurance recoverable | 443,726 | 421,346 | ||||||
Balance at end of period | $ | 1,071,587 | $ | 996,979 |
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Balance at January 1 | $ | 962,007 | $ | 869,674 | ||||
Less reinsurance recoverable | (404,818 | ) | (362,768 | ) | ||||
Net balance at January 1 | 557,189 | 506,906 | ||||||
Incurred related to: | ||||||||
Current year | 254,740 | 233,460 | ||||||
Prior years | (21,564 | ) | (10,864 | ) | ||||
Total incurred | 233,176 | 222,596 | ||||||
Paid related to: | ||||||||
Current year | 98,966 | 97,473 | ||||||
Prior years | 111,300 | 106,716 | ||||||
Total paid | 210,266 | 204,189 | ||||||
Net balance at end of period | 580,099 | 525,313 | ||||||
Plus reinsurance recoverable | 418,559 | 376,511 | ||||||
Balance at end of period | $ | 998,658 | $ | 901,824 | ||||
12 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
March 31, 2022 | December 31, 2021 | |||||||
(in thousands) | ||||||||
Commercial lines: | ||||||||
Automobile | $ | 172,242 | $ | 172,302 | ||||
Workers’ compensation | 122,025 | 122,398 | ||||||
Commercial multi-peril | 169,743 | 168,445 | ||||||
Other | 21,705 | 18,530 | ||||||
Total commercial lines | 485,715 | 481,675 | ||||||
Personal lines: | ||||||||
Automobile | 107,595 | 109,915 | ||||||
Homeowners | 27,741 | 26,169 | ||||||
Other | 6,810 | 8,600 | ||||||
Total personal lines | 142,146 | 144,684 | ||||||
Total commercial and personal lines | 627,861 | 626,359 | ||||||
Plus reinsurance recoverable | 443,726 | 451,261 | ||||||
Total liabilities for losses and loss expenses | $ | 1,071,587 | $ | 1,077,620 |
June 30, 2021 | December 31, 2020 | |||||||
(in thousands) | ||||||||
Commercial lines: | ||||||||
Automobile | $ | 159,162 | $ | 151,813 | ||||
Workers’ compensation | 116,346 | 118,037 | ||||||
Commercial multi-peril | 139,497 | 126,299 | ||||||
Other | 16,476 | 13,212 | ||||||
Total commercial lines | 431,481 | 409,361 | ||||||
Personal lines: | ||||||||
Automobile | 118,165 | 120,861 | ||||||
Homeowners | 23,169 | 20,976 | ||||||
Other | 7,284 | 5,991 | ||||||
Total personal lines | 148,618 | 147,828 | ||||||
Total commercial and personal lines | 580,099 | 557,189 | ||||||
Plus reinsurance recoverable | 418,559 | 404,818 | ||||||
Total liabilities for losses and loss expenses | $ | 998,658 | $ | 962,007 | ||||
Percentage Change in Loss and Loss Expense Reserves Net of Reinsurance | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at March 31, 2022 | Percentage Change in Stockholders’ Equity at March 31, 2022(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2021 | Percentage Change in Stockholders’ Equity at December 31, 2021(1) | ||||
(dollars in thousands) | ||||||||
(10.0)% | $565,075 | 9.5% | $563,723 | 9.3% | ||||
(7.5) | 580,771 | 7.1 | 579,382 | 7.0 | ||||
(5.0) | 596,468 | 4.7 | 595,041 | 4.7 | ||||
(2.5) | 612,164 | 2.4 | 610,700 | 2.3 | ||||
Base | 627,861 | — | 626,359 | — | ||||
2.5 | 643,558 | (2.4) | 642,018 | (2.3) | ||||
5.0 | 659,254 | (4.7) | 657,677 | (4.7) | ||||
7.5 | 674,951 | (7.1) | 673,336 | (7.0) | ||||
10.0 | 690,647 | (9.5) | 688,995 | (9.3) |
Percentage Change in Loss and Loss Expense Reserves Net of Reinsurance | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at June 30, 2021 | Percentage Change in Stockholders’ Equity at June 30, 2021(1) | Adjusted Loss and Loss Expense Reserves Net of Reinsurance at December 31, 2020 | Percentage Change in Stockholders’ Equity at December 31, 2020(1) | ||||
(dollars in thousands) | ||||||||
(10.0)% | $522,089 | 8.3% | $501,470 | 8.5% | ||||
(7.5) | 536,592 | 6.2 | 515,400 | 6.4 | ||||
(5.0) | 551,094 | 4.2 | 529,330 | 4.3 | ||||
(2.5) | 565,597 | 2.1 | 543,259 | 2.1 | ||||
Base | 580,099 | — | 557,189 | — | ||||
2.5 | 594,601 | (2.1) | 571,119 | (2.1) | ||||
5.0 | 609,104 | (4.2) | 585,048 | (4.3) | ||||
7.5 | 623,606 | (6.2) | 598,978 | (6.4) | ||||
10.0 | 638,109 | (8.3) | 612,908 | (8.5) |
(1) | Net of income tax effect. |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Net premiums earned | $ | 199,249 | $ | 187,252 | ||||
Change in net unearned premiums | 19,193 | 28,610 | ||||||
Net premiums written | $ | 218,442 | $ | 215,862 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | ||||||||||||||||
Net premiums earned | $192,489 | $184,374 | $379,740 | $371,627 | ||||||||||||
Change in net unearned premiums | 17,116 | 9,329 | 45,727 | 20,313 | ||||||||||||
Net premiums written | $209,605 | $193,703 | $425,467 | $391,940 | ||||||||||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
GAAP Combined Ratios (Total Lines) | ||||||||
Loss ratio (non-weather) | 55.2 | % | 60.0 | % | ||||
Loss ratio (weather-related) | 4.0 | 3.7 | ||||||
Expense ratio | 35.8 | 34.1 | ||||||
Dividend ratio | 0.8 | 0.7 | ||||||
Combined ratio | 95.8 | % | 98.5 | % | ||||
Statutory Combined Ratios | ||||||||
Commercial lines: | ||||||||
Automobile | 89.1 | % | 102.3 | % | ||||
Workers’ compensation | 97.0 | 95.4 | ||||||
Commercial multi-peril | 99.7 | 107.7 | ||||||
Other | 72.4 | 60.1 | ||||||
Total commercial lines | 93.5 | 99.3 | ||||||
Personal lines: | ||||||||
Automobile | 93.5 | 93.4 | ||||||
Homeowners | 108.0 | 94.7 | ||||||
Other | 43.8 | 76.9 | ||||||
Total personal lines | 94.8 | 92.6 | ||||||
Total commercial and personal lines | 94.1 | 96.5 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
GAAP Combined Ratios (Total Lines) | ||||||||||||||||
Loss ratio (non-weather) | 53.1 | % | 47.0 | % | 56.5 | % | 53.0 | % | ||||||||
Loss ratio (weather-related) | 6.1 | 10.1 | 4.9 | 6.9 | ||||||||||||
Expense ratio | 36.0 | 34.3 | 35.1 | 33.8 | ||||||||||||
Dividend ratio | 0.9 | 0.9 | 0.8 | 1.0 | ||||||||||||
Combined ratio | 96.1 | % | 92.3 | % | 97.3 | % | 94.7 | % | ||||||||
Statutory Combined Ratios | ||||||||||||||||
Commercial lines: | ||||||||||||||||
Automobile | 105.5 | % | 104.4 | % | 103.9 | % | 110.8 | % | ||||||||
Workers’ compensation | 84.0 | 80.9 | 89.3 | 85.5 | ||||||||||||
Commercial multi-peril | 94.5 | 95.8 | 100.8 | 92.4 | ||||||||||||
Other | 77.2 | 80.6 | 68.8 | 72.4 | ||||||||||||
Total commercial lines | 94.3 | 93.5 | 96.6 | 94.7 | ||||||||||||
Personal lines: | ||||||||||||||||
Automobile | 91.1 | 76.1 | 92.2 | 88.4 | ||||||||||||
Homeowners | 110.1 | 109.5 | 102.4 | 100.1 | ||||||||||||
Other | 74.5 | 78.6 | 75.7 | 72.6 | ||||||||||||
Total personal lines | 96.9 | 88.1 | 94.7 | 91.5 | ||||||||||||
Total commercial and personal lines | 95.4 | 91.0 | 95.9 | 93.3 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
None. None. Not Applicable.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
31 |