Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 02, 2022 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Document Transition Report | false | |
Entity File Number | 0-15341 | |
Entity Registrant Name | Donegal Group Inc. | |
Entity Central Index Key | 0000800457 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 23-2424711 | |
Entity Address, Address Line One | 1195 River Road | |
Entity Address, Address Line Two | P.O. Box 302 | |
Entity Address, City or Town | Marietta | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 17547 | |
City Area Code | 717 | |
Local Phone Number | 426-1931 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Common Class A [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Class A Common Stock, $.01 par value | |
Trading Symbol | DGICA | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 25,842,665 | |
Common Class B [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Class B Common Stock, $.01 par value | |
Trading Symbol | DGICB | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 5,576,775 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
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 | ||
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, $.01 par value, authorized 2,000,000 shares; none issued | 0 | 0 |
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 |
Class A Common Stock [Member] | ||
Stockholders' Equity | ||
Common stock | 287,906 | 287,562 |
Class B Common Stock [Member] | ||
Stockholders' Equity | ||
Common stock | $ 56,492 | $ 56,492 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Stockholders' Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Class A Common Stock [Member] | ||
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 28,790,510 | 28,756,203 |
Common stock, shares outstanding (in shares) | 25,787,922 | 25,753,615 |
Class B Common Stock [Member] | ||
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares issued (in shares) | 5,649,240 | 5,649,240 |
Common stock, shares outstanding (in shares) | 5,576,775 | 5,576,775 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 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 |
Class A Common Stock [Member] | ||
Earnings per common share: | ||
Basic (in dollars per share) | $ 0.43 | $ 0.35 |
Diluted (in dollars per share) | 0.43 | 0.35 |
Class B Common Stock [Member] | ||
Earnings per common share: | ||
Basic (in dollars per share) | 0.39 | 0.32 |
Diluted (in dollars per share) | $ 0.39 | $ 0.32 |
Consolidated Statements of In_2
Consolidated Statements of Income (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues: | ||
Net investment (losses) gains | $ (76,247) | $ 2,469,054 |
Income tax expense (benefit) | 3,081,210 | 2,220,837 |
Reclassification out of Accumulated Other Comprehensive Income [Member] | ||
Revenues: | ||
Net investment (losses) gains | 165,354 | (29,186) |
Income tax expense (benefit) | $ 34,724 | $ (6,129) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Consolidated Statements of Comprehensive (Loss) Income [Abstract] | ||
Net income | $ 13,145,029 | $ 10,529,848 |
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 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Unrealized loss on securities: | ||
Income tax benefit on unrealized holding loss arising during the period | $ (5,438,628) | $ (1,125,625) |
Income tax expense (benefit) on reclassification adjustment for (gains) losses | $ 34,724 | $ (6,129) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Common Stock [Member]Class A Common Stock [Member] | Common Stock [Member]Class B Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Beginning balance at Dec. 31, 2020 | $ 276,518 | $ 56,492 | $ 289,149,567 | $ 11,130,612 | $ 258,387,288 | $ (41,226,357) | $ 517,774,120 |
Beginning balance (in shares) at Dec. 31, 2020 | 27,651,774 | 5,649,240 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock (stock compensation plans) | $ 334 | $ 0 | 419,454 | 0 | 0 | 0 | 419,788 |
Issuance of common stock (stock compensation plans) (in shares) | 33,336 | 0 | |||||
Share-based compensation | $ 3,461 | $ 0 | 4,719,388 | 0 | 0 | 0 | 4,722,849 |
Share-based compensation (in shares) | 346,124 | 0 | |||||
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) |
Ending balance at Mar. 31, 2021 | $ 280,313 | $ 56,492 | 294,397,593 | 6,923,497 | 268,802,952 | (41,226,357) | 529,234,490 |
Ending balance (in shares) at Mar. 31, 2021 | 28,031,234 | 5,649,240 | |||||
Beginning balance at Dec. 31, 2021 | $ 287,562 | $ 56,492 | 304,889,481 | 3,283,551 | 263,745,358 | (41,226,357) | 531,036,087 |
Beginning balance (in shares) at Dec. 31, 2021 | 28,756,203 | 5,649,240 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock (stock compensation plans) | $ 335 | $ 0 | 423,665 | 0 | 0 | 0 | 424,000 |
Issuance of common stock (stock compensation plans) (in shares) | 33,407 | 0 | |||||
Share-based compensation | $ 9 | $ 0 | 256,451 | 0 | 0 | 0 | 256,460 |
Share-based compensation (in shares) | 900 | 0 | |||||
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) |
Ending balance at Mar. 31, 2022 | $ 287,906 | $ 56,492 | $ 305,668,006 | $ (17,306,674) | $ 276,786,488 | $ (41,226,357) | $ 524,265,861 |
Ending balance (in shares) at Mar. 31, 2022 | 28,790,510 | 5,649,240 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 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 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2022 | |
Organization [Abstract] | |
Organization | 1 - Organization Donegal Mutual Insurance Company (“Donegal Mutual”) organized us as an insurance holding company on August 26, 1986. Our insurance subsidiaries, Atlantic States Insurance Company (“Atlantic States”), Southern Insurance Company of Virginia (“Southern”), the Peninsula Insurance Group (“Peninsula”), which consists of Peninsula Indemnity Company and The Peninsula Insurance Company and Michigan Insurance Company (“MICO”), and our affiliates write personal and commercial lines of property and casualty coverages exclusively through a network of independent insurance agents in certain Mid-Atlantic, Midwestern, New England, Southern and Southwestern states. At March 31, 2022, we had three 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. At March 31, 2022, Donegal Mutual held approximately 41% of our outstanding Class A common stock and approximately 84% of our outstanding Class B common stock. This ownership provides Donegal Mutual with approximately 70% of the total voting power of our common stock. Our insurance subsidiaries and Donegal Mutual have interrelated operations due to a pooling agreement and other intercompany agreements and transactions. While each company maintains its separate corporate existence, our insurance subsidiaries and Donegal Mutual conduct business together as the Donegal Insurance Group. As such, Donegal Mutual and our insurance subsidiaries share the same business philosophy, the same management, the same employees and the same facilities and offer the same types of insurance products. Atlantic States, our largest subsidiary, participates in a proportional reinsurance agreement, or pooling agreement, with Donegal Mutual. Under the pooling agreement, Donegal Mutual and Atlantic States contribute substantially all of their respective premiums, losses and loss expenses to the underwriting pool, and the underwriting pool, acting through Donegal Mutual, then allocates 80% of the pooled business to Atlantic States. Thus, Donegal Mutual and Atlantic States share the underwriting results of the pooled business in proportion to their respective participation in the underwriting pool. In addition, Donegal Mutual has a 100% quota-share reinsurance agreement with Southern Mutual Insurance Company, or Southern Mutual. Donegal Mutual places its assumed business from Southern Mutual into the underwriting pool. Donegal Mutual completed the merger of Mountain States Mutual Casualty Company, or 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, Mountain States Indemnity Company and Mountain States Commercial Insurance Company (collectively, the “Mountain States insurance subsidiaries”), 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 the Mountain States insurance subsidiaries as the Mountain States Insurance Group in four Southwestern states. 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 began to place the business of the Mountain States Insurance Group into the underwriting pool. The same executive management and underwriting personnel administer products, classes of business underwritten, pricing practices and underwriting standards of Donegal Mutual and our insurance subsidiaries. In addition, as the Donegal Insurance Group, Donegal Mutual and our insurance subsidiaries share a combined business plan to achieve market penetration and underwriting profitability objectives. The products our insurance subsidiaries and Donegal Mutual market are generally complementary, thereby allowing the Donegal Insurance Group to offer a broader range of products to a given market and to expand the 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 versus 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, the underwriting pool homogenizes the risk characteristics of all business that Donegal Mutual and Atlantic States write directly. The business Atlantic States derives from the underwriting pool represents a significant percentage of our total consolidated revenues. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 2 - Basis of Presentation Our financial information for the interim periods included in this Form 10-Q Report is unaudited; however, our financial information we include in this Form 10-Q Report reflects all adjustments, consisting only of normal recurring adjustments that, in the opinion of our management, are necessary for a fair presentation of our financial position, results of operations and cash flows for those interim periods. Our results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations we expect for the year ending December 31, 2022. We recommend you read the interim financial statements we include in this Form 10-Q Report in conjunction with the financial statements and the notes to our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 3 - Earnings Per Share We have two classes of common stock, which we refer to as our Class A common stock and our Class B common stock. Our certificate of incorporation provides that whenever our board of directors declares a dividend on our Class B common stock, our board of directors shall simultaneously declare a dividend on our Class A common stock that is payable to the holders of our Class A common stock at the same time and as of the same record date at a rate that is at least 10% greater than the rate at which our board of directors declared a dividend on our Class B common stock. Accordingly, we use the two-class method to compute our earnings per common share. The two-class method is an earnings allocation formula that determines earnings per share separately for each class of common stock based on dividends we have declared and an allocation of our remaining undistributed earnings using a participation percentage that reflects the dividend rights of each class. The table below presents for the periods indicated a reconciliation of the numerators and denominators we used to compute basic and diluted net income per share for our Class A common stock and our Class B common stock: 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 — 128 — 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 We did not include outstanding options to purchase the following number of shares of Class A common stock in our computation of diluted earnings per share because the exercise price of the options exceeded the average market price of our Class A common stock during the applicable periods. Three Months Ended March 31, 2022 2021 Number of options to purchase Class A shares excluded 5,434,934 6,051,359 |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2022 | |
Reinsurance [Abstract] | |
Reinsurance | 4 - Reinsurance Atlantic States and Donegal Mutual have participated in a pooling agreement since 1986 under which they pool their direct premiums written, and Atlantic States and Donegal Mutual then share the underwriting results of the pool in accordance with the terms of the pooling agreement. Atlantic States has an 80% share of the results of the pool, and Donegal Mutual has a 20% share of the results of the pool. Donegal Mutual began placing the business of the Mountain States Insurance Group into the pool beginning with policies effective in 2021. Our insurance subsidiaries and Donegal Mutual participate in a consolidated third-party reinsurance program. The coverage and parameters of the program are common to all of our insurance subsidiaries and Donegal Mutual. The program utilizes several different reinsurers. They require their reinsurers to maintain an A.M. Best rating of A- (Excellent) or better or, with respect to foreign reinsurers, have a financial condition that, in the opinion of our management, is equivalent to a company with at least an A- rating from A.M. Best. The following information describes the external reinsurance Donegal Mutual and our insurance subsidiaries have in place for 2022: • excess of loss reinsurance, under which Donegal Mutual and our insurance subsidiaries recover losses over a set retention of $2.0 million; and • catastrophe reinsurance, under which Donegal Mutual and our insurance subsidiaries recover 100% of an accumulation of many losses resulting from a single event, including natural disasters, over a set retention of $15.0 million up to aggregate losses of $185.0 million per occurrence. For property insurance, our insurance subsidiaries have excess of loss reinsurance that provide for coverage of $38.0 million per loss over a set retention of $2.0 million. For liability insurance, our insurance subsidiaries have excess of loss reinsurance that provide for coverage of $73.0 million per occurrence over a set retention of $2.0 million. For workers’ compensation insurance, our insurance subsidiaries have excess of loss reinsurance that provide for coverage of $18.0 million on any one life over a set retention of $2.0 million. In addition to the pooling agreement and third-party reinsurance, our insurance subsidiaries have a catastrophe reinsurance agreement with Donegal Mutual, under which each of our insurance subsidiaries recovers 100% of an accumulation of multiple losses resulting from a single event, including natural disasters, over a set retention of $2.0 million up to aggregate losses of $13.0 million per occurrence. The agreement also provides additional coverage for an accumulation of losses from a single event including a combination of our insurance subsidiaries over a combined retention of $5.0 million. Our insurance subsidiaries and Donegal Mutual also purchase facultative reinsurance to cover certain exposures, including property exposures that exceeded the limits provided by their respective treaty reinsurance. In order to write automobile insurance in the state of Michigan, MICO is required to be a member of the Michigan Catastrophic Claims Association (“MCCA”). The MCCA provides reinsurance to MICO for personal automobile and commercial automobile personal injury claims in the state of Michigan over a set retention. 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. In March 2022, we received such payment from the MCCA and subsequently paid the refunds due to our Michigan policyholders. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Investments | 5 - Investments The amortized cost and estimated fair values of our fixed maturities at March 31, 2022 were as follows: 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 $ — $ 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 At March 31, 2022, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $283.6 million and an amortized cost of $296.1 million. Our holdings at March 31, 2022 also included special revenue bonds with an aggregate fair value of $152.9 million and an amortized cost of $157.5 million. With respect to both categories of those bonds at March 31, 2022, we held no securities of any issuer that comprised more than 10% of our holdings of either bond category. Education bonds and water and sewer utility bonds represented 48% and 35%, respectively, of our total investments in special revenue bonds based on the carrying values of these investments at March 31, 2022. Many of the issuers of the special revenue bonds we held at March 31, 2022 have the authority to impose ad valorem taxes. In that respect, many of the special revenue bonds we held at March 31, 2022 are similar to general obligation bonds. The amortized cost and estimated fair values of our fixed maturities at December 31, 2021 were as follows: 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 — 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 At December 31, 2021, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $284.9 million and an amortized cost of $272.7 million. Our holdings also included special revenue bonds with an aggregate fair value of $160.8 million and an amortized cost of $154.2 million. With respect to both categories of bonds, we held no securities of any issuer that comprised more than 10% of that category at December 31, 2021. Education bonds and water and sewer utility bonds represented 48% and 35%, respectively, of our total investments in special revenue bonds based on their carrying values at December 31, 2021. Many of the issuers of the special revenue bonds we held at December 31, 2021 have the authority to impose ad valorem taxes. In that respect, many of the special revenue bonds we held are similar to general obligation bonds. We have segregated within accumulated other comprehensive (loss) income the net unrealized losses of $15.1 million arising prior to the November 30, 2013 reclassification date for fixed maturities reclassified from available for sale to held to maturity. We are amortizing this balance over the remaining life of the related securities as an adjustment of yield in a manner consistent with the accretion of discount on the same fixed maturities. We recorded amortization of $ 149,475 and $371,265 in other comprehensive loss during the three months ended March 31, 2022 and 2021, respectively. At March 31, 2022 and December 31, 2021, net unrealized losses of $5.0 million and $5.2 million, respectively, remained within accumulated other comprehensive (loss) income. We show below the amortized cost and estimated fair value of our fixed maturities at March 31, 2022 by contractual maturity. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties . 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 The cost and estimated fair values of our equity securities at March 31, 2022 were as follows: Cost Gross Gains Gross Losses Estimated Fair Value (in thousands) Equity securities $ 35,307 $ 18,795 $ 56 $ 54,046 The cost and estimated fair values of our equity securities at December 31, 2021 were as follows: Cost Gross Gains Gross Losses Estimated Fair Value (in thousands) Equity securities $ 43,263 $ 20,413 $ 256 $ 63,420 We present below gross gains and losses from investments and the change in the difference between fair value and cost of investments: Three Months Ended March 31, 2022 2021 (in thousands) Gross realized gains: Fixed maturities $ 234 $ 193 Equity securities 843 73 Real estate 477 — 1,554 266 Gross realized losses: Fixed maturities 69 222 Equity securities 824 — 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 We held fixed maturities with unrealized losses representing declines that we considered temporary at March 31, 2022 as follows: 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 We held fixed maturities with unrealized losses representing declines that we considered temporary at December 31, 2021 as follows: 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 We make estimates concerning the valuation of our investments and the recognition of other-than-temporary declines in the value of our investments. For equity securities, we measure investments at fair value, and we recognize changes in fair value in our results of operations. With respect to a debt security that is in an unrealized loss position, we first assess if we intend to sell the debt security. If we determine we intend to sell the debt security, we recognize the 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 the 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 with respect to that security. We determine whether a credit loss has occurred by comparing the amortized cost of the debt We amortize premiums and discounts on debt securities over the life of the security as an adjustment to yield using the effective interest method. We compute realized investment gains and losses using the specific identification method. We amortize premiums and discounts on mortgage-backed debt securities using anticipated prepayments. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Information [Abstract] | |
Segment Information | 6 - Segment Information We evaluate the performance of our personal lines and commercial lines segments based upon the underwriting results of our insurance subsidiaries using statutory accounting principles (“SAP”) that various state insurance departments prescribe or permit. Our management uses SAP to measure the performance of our insurance subsidiaries instead of United States generally accepted accounting principles (“GAAP”). SAP financial measures are considered non-GAAP financial measures under applicable SEC rules because they include or exclude certain items that the most comparable GAAP financial measures do not ordinarily include or exclude. Financial data by segment for the three months ended March 31, 2022 and 2021 is as follows: 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 |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2022 | |
Borrowings [Abstract] | |
Borrowings | 7 - Borrowings Lines of Credit In August 2020, we entered into a credit agreement with Manufacturers and Traders Trust Company (“M&T”) that related to a $20.0 million unsecured demand line of credit. The line of credit has no expiration date, no annual fees and no covenants. At March 31, 2022, we had no outstanding borrowings from M&T and had the ability to borrow up to $20.0 million at interest rates equal to the then-current LIBOR rate plus 2.00%. Atlantic States is a member of the FHLB of Pittsburgh. Through its membership, Atlantic States has the ability to issue debt to the FHLB of Pittsburgh in exchange for cash advances. Atlantic States has a fixed-rate cash advance of $35.0 million that was outstanding at March 31, 2022. The cash advance carries a fixed interest rate of 1.74% and is due in August 2024 March 2021 The table below presents the amount of FHLB of Pittsburgh stock Atlantic States purchased, collateral pledged and assets related to Atlantic States’ membership in the FHLB of Pittsburgh at March 31, 2022. FHLB of Pittsburgh stock purchased and owned $ 1,575,600 Collateral pledged, at par (carrying value $39,728,104) 40,871,156 Borrowing capacity currently available 2,703,399 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Share-Based Compensation [Abstract] | |
Share-Based Compensation | 8 - Share–Based Compensation We measure all share-based payments to employees, including grants of stock options, and use a fair-value-based method for the recording of related compensation expense in our results of operations. In determining the expense we record for stock options granted to directors and employees of our subsidiaries and affiliates, we estimate the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The significant assumptions we utilize in applying the Black-Scholes option pricing model are the risk-free interest rate, the expected term, the dividend yield and the expected volatility. We recorded compensation expense related to our stock compensation plans of $244,140 and $292,795 for the three months ended March 31, 2022 and 2021, respectively, with a corresponding income tax benefit of $51,269 and $61,487, respectively. At March 31, 2022, we had $1.2 million of unrecognized compensation expense related to nonvested share-based compensation granted under our stock compensation plans that we expect to recognize over a weighted average period of approximately 1.8 years. We received cash from option exercises under all stock compensation plans during the three months ended March 31, 2022 and 2021 of $ 12,321 and $4.4 million, respectively. We realized actual tax benefits for the tax deductions related to those option exercises of $ 153 and $149,156 for the three months ended March 31, 2022 and 2021, respectively. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 9 - Fair Value Measurements We account for financial assets using a framework that establishes a hierarchy that ranks the quality and reliability of the inputs, or assumptions, we use in the determination of fair value, and we classify financial assets and liabilities carried at fair value in one of the following three categories: 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. For investments that have quoted market prices in active markets, we use the quoted market price as fair value and include these investments in Level 1 of the fair value hierarchy. We classify publicly-traded equity securities as Level 1. When quoted market prices in active markets are not available, we base fair values on quoted market prices of comparable instruments or price estimates we obtain from independent pricing services and include these investments in Level 2 of the fair value hierarchy. We classify our fixed maturity investments and non-publicly traded equity securities as Level 2. Our fixed maturity investments consist of U.S. Treasury securities and obligations of U.S. government corporations and agencies, obligations of states and political subdivisions, corporate securities and mortgage-backed securities. We present our investments in available-for-sale fixed maturity and equity securities at estimated fair value. The estimated fair value of a security may differ from the amount that could be realized if we sold the security in a forced transaction. In 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. These 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 verify that the estimates we obtain from the pricing services are representative of fair values based upon our investment personnel’s general knowledge of the market, 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 the 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 types and recent trading activity. Our investment personnel periodically review documentation with respect to the pricing services’ pricing methodology that they obtain to determine if the primary pricing sources, market inputs and pricing frequency for various security types are reasonable. At March 31, 2022, 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 March 31, 2022, we did not identify any material discrepancies, and we did not make any adjustments to the estimates the pricing services provided. We present our cash and short-term investments at estimated fair value. We classify these items as Level 1. The carrying values we report in our balance sheet for premium receivables, reinsurance receivables related to paid losses and loss expenses and reinsurance balances payable approximate their fair values. The carrying amounts we report in our balance sheets for our subordinated debentures and borrowings under lines of credit approximate their fair values. We classify these items as Level 3. We evaluate our assets and liabilities to determine the appropriate level at which to classify them for each reporting period. The following table presents our fair value measurements for our investments in available-for-sale fixed maturity and equity securities at March 31, 2022: 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 $ — $ 34,745 $ — Obligations of states and political subdivisions 56,305 — 56,305 — Corporate securities 215,173 — 215,173 — Mortgage-backed securities 210,672 — 210,672 — Equity securities 54,046 51,759 2,287 — Total investments in the fair value hierarchy $ 570,941 $ 51,759 $ 519,182 $ — The following table presents our fair value measurements for our investments in available-for-sale fixed maturity and equity securities at December 31, 2021: 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 $ — $ 32,185 $ — Obligations of states and political subdivisions 57,378 — 57,378 — Corporate securities 221,611 — 221,611 — Mortgage-backed securities 221,455 — 221,455 — Equity securities 63,420 61,130 2,290 — Totals $ 596,049 $ 61,130 $ 534,919 $ — |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes [Abstract] | |
Income Taxes | 10 - Income Taxes At March 31, 2022 and December 31, 2021, respectively, we had no material unrecognized tax benefits or accrued interest and penalties. Tax years 2016 2021 |
Liabilities for Losses and Loss
Liabilities for Losses and Loss Expenses | 3 Months Ended |
Mar. 31, 2022 | |
Liability for Losses and Loss Expenses [Abstract] | |
Liabilities for Losses and Loss Expenses | 11 - Liabilities for Losses and Loss Expenses The establishment of appropriate liabilities for losses and loss expenses is an inherently uncertain process, and we can provide no assurance that our insurance subsidiaries’ ultimate liabilities for losses and loss expenses will not exceed their 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’ estimate of their liabilities for losses and loss expenses generally reflect actual payments and their evaluation of information received subsequent to the prior reporting period. We summarize activity in our insurance subsidiaries’ liabilities for losses and loss expenses as follows: Three Months Ended 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 Our insurance subsidiaries recognized a decrease in their liabilities for losses and loss expenses of prior years of $16.5 million and $8.2 million for the three months ended March 31, 2022 and 2021, 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 2022 development represented 2.6% of the December 31, 2021 net carried reserves and resulted primarily from lower-than-expected loss emergence or severity in nearly all lines of business. The majority of the 2022 development related to decreases in the liabilities for losses and loss expenses of prior years for Atlantic States and MICO. The 2021 development represented 1.5% of the December 31, 2020 net carried reserves and resulted primarily from lower-than-expected loss emergence or severity in nearly all lines of business. The majority of the 2021 development related to decreases in the liabilities for losses and loss expenses of prior years for Atlantic States and MICO. Short-duration contracts are contracts for which our insurance subsidiaries receive premiums that they recognize as revenue over the period of the contract in proportion to the amount of insurance protection our insurance subsidiaries provide. Our insurance subsidiaries consider the policies they issue to be short-duration contracts. We consider the material lines of business of our insurance subsidiaries to be personal automobile, homeowners, commercial automobile, commercial multi-peril and workers’ compensation. Our insurance subsidiaries determine incurred but not reported (“IBNR”) reserves by subtracting the cumulative loss and loss expense amounts our insurance subsidiaries have paid and the case reserves our insurance subsidiaries have established at the balance sheet date from their actuaries’ estimate of the ultimate cost of losses and loss expenses. Accordingly, the IBNR reserves of our insurance subsidiaries include their actuaries’ projections of the cost of unreported claims as well as their actuaries’ projected development of case reserves on known claims and reopened claims. Our insurance subsidiaries’ methodology for estimating IBNR reserves has been in place for many years, and their actuaries made no significant changes to that methodology during the three months ended March 31, 2022. The actuaries for our insurance subsidiaries generally prepare an initial estimate for ultimate losses and loss expenses for the current accident year by multiplying earned premium by an “ a priori ,” or The actuaries use a variety of actuarial methods to estimate the ultimate cost of losses and loss expenses. These methods include paid loss development, incurred loss development and the Bornhuetter-Ferguson method from which the actuaries select loss development factor assumptions. The actuaries base their selection of a point estimate on a judgmental weighting of the estimates each of these methods produce. The actuaries consider loss frequency and severity trends when they develop expected loss ratios and point estimates. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors that affect loss frequency include changes in weather patterns and economic activity. Factors that affect loss severity include changes in policy limits, reinsurance retentions, inflation rates and judicial interpretations. Our insurance subsidiaries create a claim file when they receive notice of an actual demand for payment, an event that may lead to a demand for payment or when they otherwise determine that a demand for payment could potentially lead to a future demand for payment on another coverage under the same policy or another policy they have issued. In recent years, our insurance subsidiaries have noted an increase in the period of time between the occurrence of a casualty loss event and the date at which they receive notice of a liability claim. Changes in the length of time between the loss occurrence date and the claim reporting date affect the actuaries’ ability to predict loss frequency accurately and the amount of IBNR reserves our insurance subsidiaries require. Our insurance subsidiaries generally create a claim file for a policy at the claimant level by type of coverage and generally recognize one count for each claim event. In certain lines of business where it is common for multiple parties to claim damages arising from a single claim event, our insurance subsidiaries recognize one count for each claimant involved in the event. Atlantic States recognizes one count for each claim event, or claimant involved in a multiple-party claim event, related to losses Atlantic States assumes through its participation in its pooling agreement with Donegal Mutual. Our insurance subsidiaries accumulate the claim counts and report them by line of business. |
Impact of New Accounting Standa
Impact of New Accounting Standards | 3 Months Ended |
Mar. 31, 2022 | |
Impact of New Accounting Standards [Abstract] | |
Impact of New Accounting Standards | 12 - Impact of New Accounting Standards In September 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 Regulation S-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. |
Organization (Policies)
Organization (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Organization [Abstract] | |
Organization | Donegal Mutual Insurance Company (“Donegal Mutual”) organized us as an insurance holding company on August 26, 1986. Our insurance subsidiaries, Atlantic States Insurance Company (“Atlantic States”), Southern Insurance Company of Virginia (“Southern”), the Peninsula Insurance Group (“Peninsula”), which consists of Peninsula Indemnity Company and The Peninsula Insurance Company and Michigan Insurance Company (“MICO”), and our affiliates write personal and commercial lines of property and casualty coverages exclusively through a network of independent insurance agents in certain Mid-Atlantic, Midwestern, New England, Southern and Southwestern states. At March 31, 2022, we had three 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. At March 31, 2022, Donegal Mutual held approximately 41% of our outstanding Class A common stock and approximately 84% of our outstanding Class B common stock. This ownership provides Donegal Mutual with approximately 70% of the total voting power of our common stock. Our insurance subsidiaries and Donegal Mutual have interrelated operations due to a pooling agreement and other intercompany agreements and transactions. While each company maintains its separate corporate existence, our insurance subsidiaries and Donegal Mutual conduct business together as the Donegal Insurance Group. As such, Donegal Mutual and our insurance subsidiaries share the same business philosophy, the same management, the same employees and the same facilities and offer the same types of insurance products. Atlantic States, our largest subsidiary, participates in a proportional reinsurance agreement, or pooling agreement, with Donegal Mutual. Under the pooling agreement, Donegal Mutual and Atlantic States contribute substantially all of their respective premiums, losses and loss expenses to the underwriting pool, and the underwriting pool, acting through Donegal Mutual, then allocates 80% of the pooled business to Atlantic States. Thus, Donegal Mutual and Atlantic States share the underwriting results of the pooled business in proportion to their respective participation in the underwriting pool. In addition, Donegal Mutual has a 100% quota-share reinsurance agreement with Southern Mutual Insurance Company, or Southern Mutual. Donegal Mutual places its assumed business from Southern Mutual into the underwriting pool. Donegal Mutual completed the merger of Mountain States Mutual Casualty Company, or 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, Mountain States Indemnity Company and Mountain States Commercial Insurance Company (collectively, the “Mountain States insurance subsidiaries”), 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 the Mountain States insurance subsidiaries as the Mountain States Insurance Group in four Southwestern states. 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 began to place the business of the Mountain States Insurance Group into the underwriting pool. The same executive management and underwriting personnel administer products, classes of business underwritten, pricing practices and underwriting standards of Donegal Mutual and our insurance subsidiaries. In addition, as the Donegal Insurance Group, Donegal Mutual and our insurance subsidiaries share a combined business plan to achieve market penetration and underwriting profitability objectives. The products our insurance subsidiaries and Donegal Mutual market are generally complementary, thereby allowing the Donegal Insurance Group to offer a broader range of products to a given market and to expand the 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 versus 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, the underwriting pool homogenizes the risk characteristics of all business that Donegal Mutual and Atlantic States write directly. The business Atlantic States derives from the underwriting pool represents a significant percentage of our total consolidated revenues. |
Impact of New Accounting Stan_2
Impact of New Accounting Standards (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Impact of New Accounting Standards [Abstract] | |
Impact of New Accounting Standards | In September 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 Regulation S-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. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerators and Denominators Used in Basic and Diluted Per Share Computations | The table below presents for the periods indicated a reconciliation of the numerators and denominators we used to compute basic and diluted net income per share for our Class A common stock and our Class B common stock: 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 — 128 — 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 |
Antidilutive Securities Excluded From Computation of Earnings Per Share | We did not include outstanding options to purchase the following number of shares of Class A common stock in our computation of diluted earnings per share because the exercise price of the options exceeded the average market price of our Class A common stock during the applicable periods. Three Months Ended March 31, 2022 2021 Number of options to purchase Class A shares excluded 5,434,934 6,051,359 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Amortized Cost and Estimated Fair Values of Fixed Maturities | The amortized cost and estimated fair values of our fixed maturities at March 31, 2022 were as follows: 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 $ — $ 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 The amortized cost and estimated fair values of our fixed maturities at December 31, 2021 were as follows: 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 — 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 and Estimated Fair Value of Fixed Maturities by Contractual Maturity | We show below the amortized cost and estimated fair value of our fixed maturities at March 31, 2022 by contractual maturity. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties . 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 |
Cost and Estimated Fair Values of Equity Securities | The cost and estimated fair values of our equity securities at March 31, 2022 were as follows: Cost Gross Gains Gross Losses Estimated Fair Value (in thousands) Equity securities $ 35,307 $ 18,795 $ 56 $ 54,046 The cost and estimated fair values of our equity securities at December 31, 2021 were as follows: Cost Gross Gains Gross Losses Estimated Fair Value (in thousands) Equity securities $ 43,263 $ 20,413 $ 256 $ 63,420 |
Gross Investment Gains and Losses before Applicable Income Taxes | We present below gross gains and losses from investments and the change in the difference between fair value and cost of investments: Three Months Ended March 31, 2022 2021 (in thousands) Gross realized gains: Fixed maturities $ 234 $ 193 Equity securities 843 73 Real estate 477 — 1,554 266 Gross realized losses: Fixed maturities 69 222 Equity securities 824 — 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 |
Fixed Maturities with Unrealized Losses | We held fixed maturities with unrealized losses representing declines that we considered temporary at March 31, 2022 as follows: 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 We held fixed maturities with unrealized losses representing declines that we considered temporary at December 31, 2021 as follows: 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 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Information [Abstract] | |
Financial Data by Segment | Financial data by segment for the three months ended March 31, 2022 and 2021 is as follows: 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 |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Line of Credit Facility [Line Items] | |
FHLB of Stock Purchased, Collateral Pledged and Assets Related | The table below presents the amount of FHLB of Pittsburgh stock Atlantic States purchased, collateral pledged and assets related to Atlantic States’ membership in the FHLB of Pittsburgh at March 31, 2022. FHLB of Pittsburgh stock purchased and owned $ 1,575,600 Collateral pledged, at par (carrying value $39,728,104) 40,871,156 Borrowing capacity currently available 2,703,399 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Investments in Available-for-Sale Fixed Maturity and Equity Securities | The following table presents our fair value measurements for our investments in available-for-sale fixed maturity and equity securities at March 31, 2022: 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 $ — $ 34,745 $ — Obligations of states and political subdivisions 56,305 — 56,305 — Corporate securities 215,173 — 215,173 — Mortgage-backed securities 210,672 — 210,672 — Equity securities 54,046 51,759 2,287 — Total investments in the fair value hierarchy $ 570,941 $ 51,759 $ 519,182 $ — The following table presents our fair value measurements for our investments in available-for-sale fixed maturity and equity securities at December 31, 2021: 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 $ — $ 32,185 $ — Obligations of states and political subdivisions 57,378 — 57,378 — Corporate securities 221,611 — 221,611 — Mortgage-backed securities 221,455 — 221,455 — Equity securities 63,420 61,130 2,290 — Totals $ 596,049 $ 61,130 $ 534,919 $ — |
Liabilities for Losses and Lo_2
Liabilities for Losses and Loss Expenses (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Liability for Losses and Loss Expenses [Abstract] | |
Summary of Insurance Subsidiaries' Liabilities for Losses and Loss Expenses | We summarize activity in our insurance subsidiaries’ liabilities for losses and loss expenses as follows: Three Months Ended 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 |
Organization (Details)
Organization (Details) | 3 Months Ended |
Mar. 31, 2022SegmentState | |
Organization [Abstract] | |
Number of operating segments | Segment | 3 |
Number of states | State | 4 |
Atlantic States [Member] | |
Organization [Abstract] | |
Percentage of share in results of pooled business subsidiary | 80.00% |
Donegal Mutual Insurance Company [Member] | |
Organization [Abstract] | |
Voting power percentage of outstanding common stock | 70.00% |
Premiums and losses related to certain products | 100.00% |
Donegal Mutual Insurance Company [Member] | Class A Common Stock [Member] | |
Organization [Abstract] | |
Stock ownership percentage held by major shareholder | 41.00% |
Donegal Mutual Insurance Company [Member] | Class B Common Stock [Member] | |
Organization [Abstract] | |
Stock ownership percentage held by major shareholder | 84.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Minimum percentage of class A common stock declared dividend excess over class B dividend | 10.00% | |
Class A Common Stock [Member] | ||
Numerator: [Abstract] | ||
Allocation of net income | $ 10,986 | $ 8,742 |
Denominator: [Abstract] | ||
Weighted-average shares outstanding (in shares) | 25,787,000 | 24,768,000 |
Basic earnings per share (in dollars per share) | $ 0.43 | $ 0.35 |
Numerator: [Abstract] | ||
Allocation of net income | $ 10,986 | $ 8,742 |
Denominator: [Abstract] | ||
Number of shares used in basic computation (in shares) | 25,787,000 | 24,768,000 |
Weighted-average shares effect of dilutive securities [Abstract] | ||
Director and employee stock options (in shares) | 22,000 | 128,000 |
Number of shares used in diluted computation (in shares) | 25,809,000 | 24,896,000 |
Diluted earnings per share (in dollars per share) | $ 0.43 | $ 0.35 |
Class B Common Stock [Member] | ||
Numerator: [Abstract] | ||
Allocation of net income | $ 2,159 | $ 1,788 |
Denominator: [Abstract] | ||
Weighted-average shares outstanding (in shares) | 5,577,000 | 5,577,000 |
Basic earnings per share (in dollars per share) | $ 0.39 | $ 0.32 |
Numerator: [Abstract] | ||
Allocation of net income | $ 2,159 | $ 1,788 |
Denominator: [Abstract] | ||
Number of shares used in basic computation (in shares) | 5,577,000 | 5,577,000 |
Weighted-average shares effect of dilutive securities [Abstract] | ||
Director and employee stock options (in shares) | 0 | 0 |
Number of shares used in diluted computation (in shares) | 5,577,000 | 5,577,000 |
Diluted earnings per share (in dollars per share) | $ 0.39 | $ 0.32 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share [Abstract] | ||
Number of options to purchase Class A shares excluded (in shares) | 5,434,934 | 6,051,359 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | Nov. 30, 2021 | |
Reinsurance Transactions [Abstract] | |||
Loss reinsurance agreement contracts retention amount | $ 2,000,000 | ||
Return from estimated surplus | $ 3,000,000,000 | ||
Receivable from reinsurance claims | 0 | $ 18,112,800 | |
Property Insurance [Member] | |||
Reinsurance Transactions [Abstract] | |||
Catastrophe reinsurance, set retention amount | 2,000,000 | ||
Maximum amount of loss coverage under reinsurance agreement of property catastrophe | 38,000,000 | ||
Liability Insurance [Member] | |||
Reinsurance Transactions [Abstract] | |||
Catastrophe reinsurance, set retention amount | 2,000,000 | ||
Maximum amount of loss coverage under reinsurance agreement of property catastrophe | 73,000,000 | ||
Workers' Compensation Insurance [Member] | |||
Reinsurance Transactions [Abstract] | |||
Catastrophe reinsurance, set retention amount | 2,000,000 | ||
Maximum amount of loss coverage under reinsurance agreement of property catastrophe | $ 18,000,000 | ||
Third Party Reinsurance [Member] | |||
Reinsurance Transactions [Abstract] | |||
Percentage of accumulation of losses | 100.00% | ||
Catastrophe reinsurance, set retention amount | $ 15,000,000 | ||
Maximum amount of loss coverage under reinsurance agreement of property catastrophe | $ 185,000,000 | ||
Atlantic States [Member] | |||
Reinsurance Transactions [Abstract] | |||
Percentage of share in results of pooled business subsidiary | 80.00% | ||
Donegal Mutual [Member] | |||
Reinsurance Transactions [Abstract] | |||
Percentage of share in results of pooled business owned by third party | 20.00% | ||
Percentage of accumulation of losses | 100.00% | ||
Catastrophe reinsurance, set retention amount | $ 2,000,000 | ||
Maximum amount of loss coverage under reinsurance agreement of property catastrophe | 13,000,000 | ||
Additional coverage amount | $ 5,000,000 |
Investments, Amortized Cost and
Investments, Amortized Cost and Estimated Fair Values of Fixed Maturities (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Held to Maturity [Abstract] | ||
Amortized cost | $ 690,691,302 | $ 668,104,568 |
Gross unrealized gains | 8,794,000 | 32,032,000 |
Gross unrealized losses | 31,578,000 | 2,736,000 |
Estimated fair value | 667,907,000 | 697,401,000 |
Available for Sale [Abstract] | ||
Total available for sale, amortized cost | 533,772,000 | 523,293,000 |
Gross unrealized gains | 1,897,000 | 11,964,000 |
Gross unrealized losses | 18,774,000 | 2,628,000 |
Estimated fair value | 516,894,776 | 532,629,015 |
U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | ||
Held to Maturity [Abstract] | ||
Amortized cost | 89,848,000 | 89,268,000 |
Gross unrealized gains | 310,000 | 1,923,000 |
Gross unrealized losses | 4,139,000 | 1,015,000 |
Estimated fair value | 86,019,000 | 90,176,000 |
Available for Sale [Abstract] | ||
Total available for sale, amortized cost | 37,003,000 | 32,501,000 |
Gross unrealized gains | 0 | 144,000 |
Gross unrealized losses | 2,258,000 | 461,000 |
Estimated fair value | 34,745,000 | 32,184,000 |
Obligations of States and Political Subdivisions [Member] | ||
Held to Maturity [Abstract] | ||
Amortized cost | 395,793,000 | 371,436,000 |
Gross unrealized gains | 5,884,000 | 17,857,000 |
Gross unrealized losses | 21,439,000 | 948,000 |
Estimated fair value | 380,238,000 | 388,345,000 |
Available for Sale [Abstract] | ||
Total available for sale, amortized cost | 57,822,000 | 55,459,000 |
Gross unrealized gains | 456,000 | 2,002,000 |
Gross unrealized losses | 1,973,000 | 83,000 |
Estimated fair value | 56,305,000 | 57,378,000 |
Corporate Securities [Member] | ||
Held to Maturity [Abstract] | ||
Amortized cost | 190,105,000 | 191,147,000 |
Gross unrealized gains | 2,594,000 | 11,576,000 |
Gross unrealized losses | 5,844,000 | 773,000 |
Estimated fair value | 186,855,000 | 201,950,000 |
Available for Sale [Abstract] | ||
Total available for sale, amortized cost | 219,350,000 | 215,669,000 |
Gross unrealized gains | 1,307,000 | 6,817,000 |
Gross unrealized losses | 5,484,000 | 874,000 |
Estimated fair value | 215,173,000 | 221,612,000 |
Mortgage-Backed Securities [Member] | ||
Held to Maturity [Abstract] | ||
Amortized cost | 14,945,000 | 16,254,000 |
Gross unrealized gains | 6,000 | 676,000 |
Gross unrealized losses | 156,000 | 0 |
Estimated fair value | 14,795,000 | 16,930,000 |
Available for Sale [Abstract] | ||
Total available for sale, amortized cost | 219,597,000 | 219,664,000 |
Gross unrealized gains | 134,000 | 3,001,000 |
Gross unrealized losses | 9,059,000 | 1,210,000 |
Estimated fair value | $ 210,672,000 | $ 221,455,000 |
Investments, Summary (Details)
Investments, Summary (Details) - USD ($) | Nov. 30, 2013 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 |
Investments [Abstract] | ||||
Net unrealized losses arising prior to reclassification date | $ 15,100,000 | |||
Amortization of other comprehensive loss | $ 149,475 | $ 371,265 | ||
Accumulated other comprehensive (loss) income | $ (17,306,674) | $ 3,283,551 | ||
Minimum [Member] | ||||
Investments [Abstract] | ||||
Percentage of which the company held security of any issuer | 10.00% | 10.00% | ||
Obligations of States and Political Subdivisions [Member] | ||||
Investments [Abstract] | ||||
Aggregate fair value of bond held | $ 283,600,000 | $ 284,900,000 | ||
Amortized cost of bond held | 296,100,000 | 272,700,000 | ||
Special Revenue Bonds [Member] | ||||
Investments [Abstract] | ||||
Aggregate fair value of bond held | 152,900,000 | 160,800,000 | ||
Amortized cost of bond held | $ 157,500,000 | $ 154,200,000 | ||
Education Bonds [Member] | ||||
Investments [Abstract] | ||||
Percentage of investments in special revenue bonds | 48.00% | 48.00% | ||
Water and Sewer Utility Bonds [Member] | ||||
Investments [Abstract] | ||||
Percentage of investments in special revenue bonds | 35.00% | 35.00% | ||
Accumulated Net Unrealized Investment Losses [Member] | ||||
Investments [Abstract] | ||||
Accumulated other comprehensive (loss) income | $ (5,000,000) | $ (5,200,000) |
Investments, Amortized Cost a_2
Investments, Amortized Cost and Estimated Fair Value of Fixed Maturities by Contractual Maturity (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Held To Maturity [Abstract] | ||
Due in one year or less, amortized cost | $ 60,854,000 | |
Due after one year through five years, amortized cost | 84,257,000 | |
Due after five years through ten years, amortized cost | 223,309,000 | |
Due after ten years, amortized cost | 307,326,000 | |
Mortgage-backed securities, amortized cost | 14,945,000 | |
Amortized cost | 690,691,302 | $ 668,104,568 |
Available For Sale [Abstract] | ||
Due in one year or less, amortized cost | 29,090,000 | |
Due after one year through five years, amortized cost | 148,499,000 | |
Due after five years through ten years, amortized cost | 105,650,000 | |
Due after ten years, amortized cost | 30,936,000 | |
Mortgage-backed securities, amortized cost | 219,597,000 | |
Total available for sale, amortized cost | 533,772,000 | 523,293,000 |
Held To Maturity [Abstract] | ||
Due in one year or less, estimated fair value | 62,484,000 | |
Due after one year through five years, estimated fair value | 85,415,000 | |
Due after five years through ten years, estimated fair value | 216,052,000 | |
Due after ten years, estimated fair value | 289,161,000 | |
Mortgage-backed securities, estimated fair value | 14,795,000 | |
Total held to maturity, estimated fair value | 667,907,000 | 697,401,000 |
Available For Sale [Abstract] | ||
Due in one year or less, estimated fair value | 29,320,000 | |
Due after one year through five years, estimated fair value | 145,592,000 | |
Due after five years through ten years, estimated fair value | 101,917,000 | |
Due after ten years, estimated fair value | 29,394,000 | |
Mortgage-backed securities, estimated fair value | 210,672,000 | |
Total available for sale, estimated fair value | $ 516,894,776 | $ 532,629,015 |
Investments, Cost and Estimated
Investments, Cost and Estimated Fair Value of Equity Securities (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Cost and Estimated Fair Value of Equity Securities [Abstract] | ||
Cost | $ 35,307,000 | $ 43,263,000 |
Gross gains | 18,795,000 | 20,413,000 |
Gross losses | 56,000 | 256,000 |
Estimated fair value | $ 54,046,368 | $ 63,419,973 |
Investments, Gross Investment G
Investments, Gross Investment Gains and Losses before Applicable Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Net Gains and Losses from Investments [Abstract] | |||
Gross realized gains | $ 1,554,000 | $ 266,000 | |
Gross realized losses | 893,000 | 222,000 | |
Gross Realized Gain/Loss on Investments | 661,000 | 44,000 | |
Gross unrealized gains on equity securities | 18,795,000 | $ 20,413,000 | |
Gross unrealized losses on equity securities | (56,000) | $ (256,000) | |
Net investment (losses) gains | (76,247) | 2,469,054 | |
Fixed Maturities [Member] | |||
Net Gains and Losses from Investments [Abstract] | |||
Gross realized gains | 234,000 | 193,000 | |
Gross realized losses | 69,000 | 222,000 | |
Real Estate [Member] | |||
Net Gains and Losses from Investments [Abstract] | |||
Gross realized gains | 477,000 | 0 | |
Equity Securities [Member] | |||
Net Gains and Losses from Investments [Abstract] | |||
Gross realized gains | 843,000 | 73,000 | |
Gross realized losses | 824,000 | 0 | |
Gross unrealized gains on equity securities | 716,000 | 3,204,000 | |
Gross unrealized losses on equity securities | $ (1,453,000) | $ (779,000) |
Investments, Fixed Maturities w
Investments, Fixed Maturities with Unrealized Losses (Details) $ in Thousands | Mar. 31, 2022USD ($)Securities | Dec. 31, 2021USD ($) |
Debt Securities, Fair Value and Unrealized Losses by Fixed Maturities [Abstract] | ||
Less than 12 months, fair value | $ 664,495 | $ 267,089 |
Less than 12 months, unrealized losses | 38,913 | 4,049 |
More than 12 months, fair value | 99,961 | 39,341 |
More than 12 months, unrealized losses | $ 11,439 | 1,315 |
Fixed Maturities [Member] | ||
Debt Securities, Fair Value and Unrealized Losses by Fixed Maturities [Abstract] | ||
Number of fixed maturity securities classified as available for sale | Securities | 593 | |
U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | ||
Debt Securities, Fair Value and Unrealized Losses by Fixed Maturities [Abstract] | ||
Less than 12 months, fair value | $ 52,488 | 27,691 |
Less than 12 months, unrealized losses | 2,816 | 412 |
More than 12 months, fair value | 31,710 | 28,426 |
More than 12 months, unrealized losses | 3,581 | 1,064 |
Obligations of States and Political Subdivisions [Member] | ||
Debt Securities, Fair Value and Unrealized Losses by Fixed Maturities [Abstract] | ||
Less than 12 months, fair value | 231,429 | 56,655 |
Less than 12 months, unrealized losses | 19,976 | 899 |
More than 12 months, fair value | 28,289 | 7,091 |
More than 12 months, unrealized losses | 3,436 | 132 |
Corporate Securities [Member] | ||
Debt Securities, Fair Value and Unrealized Losses by Fixed Maturities [Abstract] | ||
Less than 12 months, fair value | 188,463 | 92,737 |
Less than 12 months, unrealized losses | 8,531 | 1,610 |
More than 12 months, fair value | 25,649 | 1,463 |
More than 12 months, unrealized losses | 2,797 | 37 |
Mortgage-Backed Securities [Member] | ||
Debt Securities, Fair Value and Unrealized Losses by Fixed Maturities [Abstract] | ||
Less than 12 months, fair value | 192,115 | 90,006 |
Less than 12 months, unrealized losses | 7,590 | 1,128 |
More than 12 months, fair value | 14,313 | 2,361 |
More than 12 months, unrealized losses | $ 1,625 | $ 82 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Premiums earned: [Abstract] | ||
Premiums earned | $ 199,248,624 | $ 187,251,600 |
Net investment income | 7,858,881 | 7,510,578 |
Investment (losses) gains | (76,247) | 2,469,054 |
Total revenues | 207,626,717 | 197,969,898 |
Underwriting income (loss): [Abstract] | ||
Net investment income | 7,858,881 | 7,510,578 |
Investment (losses) gains | (76,247) | 2,469,054 |
Income before income tax expense | 16,226,239 | 12,750,685 |
Operating Segments [Member] | ||
Premiums earned: [Abstract] | ||
Premiums earned | 199,249,000 | 187,252,000 |
Net investment income | 7,859,000 | 7,511,000 |
Investment (losses) gains | (76,000) | 2,469,000 |
Other | 595,000 | 738,000 |
Total revenues | 207,627,000 | 197,970,000 |
Underwriting income (loss): [Abstract] | ||
SAP underwriting income (loss) | 4,704,000 | (3,205,000) |
GAAP adjustments | 3,725,000 | 5,982,000 |
GAAP underwriting income | 8,429,000 | 2,777,000 |
Net investment income | 7,859,000 | 7,511,000 |
Investment (losses) gains | (76,000) | 2,469,000 |
Other | 14,000 | (6,000) |
Income before income tax expense | 16,226,000 | 12,751,000 |
Commercial Lines [Member] | Operating Segments [Member] | ||
Premiums earned: [Abstract] | ||
Premiums earned | 124,329,000 | 109,226,000 |
Underwriting income (loss): [Abstract] | ||
SAP underwriting income (loss) | 62,000 | (8,242,000) |
Personal Lines [Member] | Operating Segments [Member] | ||
Premiums earned: [Abstract] | ||
Premiums earned | 74,920,000 | 78,026,000 |
Underwriting income (loss): [Abstract] | ||
SAP underwriting income (loss) | $ 4,642,000 | $ 5,037,000 |
Borrowings, Line of Credit (Det
Borrowings, Line of Credit (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2022 | Aug. 31, 2020 | |
FHLB of Pittsburgh [Member] | Atlantic States [Member] | |||
Federal Home Loan Bank of Stock Purchased, Collateral Pledged and Assets Related [Abstract] | |||
FHLB stock purchased and owned | $ 1,575,600 | ||
Collateral pledged, at par (carrying value $39,728,104) | 40,871,156 | ||
Borrowing capacity currently available | 2,703,399 | ||
Collateral pledged at carrying value | 39,728,104 | ||
Lines of Credit [Member] | Manufacturers and Traders Trust Company [Member] | |||
Line of Credit Facility [Abstract] | |||
Unsecured demand line of credit | $ 20,000,000 | ||
Outstanding borrowings | 0 | ||
Line of credit facility remaining borrowing capacity | $ 20,000,000 | ||
Lines of Credit [Member] | Manufacturers and Traders Trust Company [Member] | LIBOR [Member] | |||
Line of Credit Facility [Abstract] | |||
Interest rate | 2.00% | ||
Lines of Credit [Member] | FHLB of Pittsburgh [Member] | Atlantic States [Member] | |||
Line of Credit Facility [Abstract] | |||
Federal home loan bank, cash advance at fixed rate advances | $ 35,000,000 | ||
Fixed interest rate on advance | 1.74% | ||
Debt instrument due date | Mar. 31, 2021 | Aug. 31, 2024 | |
Debt issued amount | $ 50,000,000 | ||
Fixed interest rate | 0.83% |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-Based Compensation [Abstract] | ||
Compensation expense in stock compensation plans | $ 244,140 | $ 292,795 |
Income tax benefit of stock compensation plans | 51,269 | 61,487 |
Unrecognized compensation expense related to nonvested share-based compensation granted under the plan | $ 1,200,000 | |
Weighted average period of unrecognized compensation expense | 1 year 9 months 18 days | |
Cash from option exercises | $ 12,321 | 4,400,000 |
Tax benefit for tax deductions related to option exercises | $ 153 | $ 149,156 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | $ 516,894,776 | $ 532,629,015 |
Equity securities, at fair value | 54,046,368 | 63,419,973 |
U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 34,745,000 | 32,184,000 |
Obligations of States and Political Subdivisions [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 56,305,000 | 57,378,000 |
Mortgage-Backed Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 210,672,000 | 221,455,000 |
Recurring Basis [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Equity securities, at fair value | 54,046 | 63,420 |
Total investments in the fair value hierarchy | 570,941 | 596,049 |
Recurring Basis [Member] | U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 34,745 | 32,185 |
Recurring Basis [Member] | Obligations of States and Political Subdivisions [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 56,305 | 57,378 |
Recurring Basis [Member] | Corporate Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 215,173 | 221,611 |
Recurring Basis [Member] | Mortgage-Backed Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 210,672 | 221,455 |
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Equity securities, at fair value | 51,759 | 61,130 |
Total investments in the fair value hierarchy | 51,759 | 61,130 |
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 0 | 0 |
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Obligations of States and Political Subdivisions [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 0 | 0 |
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 0 | 0 |
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Mortgage-Backed Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 0 | 0 |
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Equity securities, at fair value | 2,287 | 2,290 |
Total investments in the fair value hierarchy | 519,182 | 534,919 |
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 34,745 | 32,185 |
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Obligations of States and Political Subdivisions [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 56,305 | 57,378 |
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 215,173 | 221,611 |
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-Backed Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 210,672 | 221,455 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Equity securities, at fair value | 0 | 0 |
Total investments in the fair value hierarchy | 0 | 0 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 0 | 0 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Obligations of States and Political Subdivisions [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 0 | 0 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | 0 | 0 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mortgage-Backed Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Available for sale, at fair value | $ 0 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Abstract] | ||
Other deferred tax assets, net | $ 32.5 | $ 28.1 |
DGI Parent [Member] | ||
Operating Loss Carryforwards [Abstract] | ||
Valuation allowance related to the portion of operating loss carryforwards | $ 7.9 | |
Earliest Tax Year [Member] | ||
Operating Loss Carryforwards [Abstract] | ||
Tax years open for examination | 2016 | |
Latest Tax Year [Member] | ||
Operating Loss Carryforwards [Abstract] | ||
Tax years open for examination | 2021 |
Liabilities for Losses and Lo_3
Liabilities for Losses and Loss Expenses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Liability for Claims and Claims Adjustment Expense [Abstract] | ||
Balance at January 1 | $ 1,077,620,301 | $ 962,007,000 |
Less reinsurance recoverable | (451,261,000) | (404,818,000) |
Net balance at January 1 | 626,359,000 | 557,189,000 |
Incurred related to [Abstract] | ||
Current year | 134,432,000 | 127,433,000 |
Prior years | (16,549,000) | (8,213,000) |
Total incurred | 117,883,000 | 119,220,000 |
Paid related to [Abstract] | ||
Current year | 40,293,000 | 35,584,000 |
Prior years | 76,088,000 | 65,192,000 |
Total paid | 116,381,000 | 100,776,000 |
Net balance at end of period | 627,861,000 | 575,633,000 |
Plus reinsurance recoverable | 443,726,000 | 421,346,000 |
Balance at end of period | $ 1,071,587,385 | $ 996,979,000 |
Percentage of development | 2.60% | 1.50% |