EX-99.1 3 ex-991.txt EXHIBIT 99.1 DONEGAL GROUP INC. ANNOUNCES EARNINGS FOR THIRD QUARTER Ralph G. Spontak Senior Vice President and Chief Financial Officer Phone (717) 426-1931 Fax (717) 426-7009 For Immediate Release --------------------- MARIETTA, Pennsylvania, October 15, 2003 - Donegal Group Inc. (Nasdaq: DGICA and DGICB) today reported its results of operations for the quarter and nine months ended September 30, 2003. The Company reported net income of $4,001,385, or $.40 per share on a diluted basis, compared to $3,015,676, or $.33 per share on a diluted basis, in the third quarter of 2002. These results were achieved despite property claims from Hurricane Isabel that totaled $1 million, net of reinsurance, and reduced net income by $650,000, or $.07 per share on a diluted basis, for the quarter ended September 30, 2003. The Company's excellent underwriting results continued through the third quarter of this year with a combined ratio for the third quarter of 96.8%, compared to 99.5% for the third quarter of 2002. The Company's loss ratio showed improvement from a year earlier to 65.9% for the third quarter of 2003 compared to 69.3% for the third quarter of 2002 despite the hurricane related losses that added approximately 2 percentage points to the third quarter 2003 loss ratio. The strong results helped the Company increase its book value per common share to $15.69 as of September 30, 2003. "Our third quarter underwriting results were solid despite Hurricane Isabel hitting our primary operating area", stated Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group. Mr. Nikolaus further stated that "the underwriting discipline to restrict catastrophe exposures, combined with our reinsurance programs, have limited the financial impact of a major weather event just as they were designed to do." Net income was $13,114,770, or $1.37 per share on a diluted basis, for the first nine months of 2003, compared to $8,375,226, or $.91 per share on a diluted basis for the first nine months of 2002. The Company's net income for the first three quarters of 2003 exceeded its net income for all of 2002. The Company's combined ratio for the nine months ended September 30, 2003 was 95.4%, compared to 100.2% for the nine months ended September 30, 2002, with all major lines of business showing improvement over the prior year. Revenues for the third quarter of 2003 were $54,285,753, an increase of 6.3% over a year earlier, with net premiums earned for the third quarter of $49,719,584, also a 6.3% increase over the third quarter of 2002. The lower interest rate environment impacted investment income which decreased 8.2% to $3,326,603 compared to $3,623,262 for the third quarter of 2002 despite an increase in average invested assets. The Company will hold a conference call and webcast on Wednesday October 15, beginning at 11:00 A. M. Eastern Time. You may participate in the conference call by calling 1-800-299-7635 (International 617-786-2901) Passcode I. D. 13708300. An instant replay of the conference call will be available for 10 days by calling 1-888-286-8010 (Passcode I. D. 40638284). All statements contained in this release that are not historic facts are based on current expectations. Such statements are forward-looking (as defined in the Private Securities Litigation Reform Act of 1995) in nature and involve a number of risks and uncertainties. Actual results may vary materially. The factors that could cause actual results to vary materially include: The ability of the Company to maintain profitable operations, the adequacy of the Company's reserves for losses and loss adjusting expenses, business and economic conditions in the Company's primary operating areas, competition from various insurance and non-insurance businesses, changes in regulatory requirements, weather events and other risks that may be described from time to time in the reports Donegal files with the Securities and Exchange Commission. Undue reliance should not be placed on any such forward-looking statements. Donegal Group Inc. is a regional property-casualty insurance holding company doing business in 14 Mid-Atlantic and Southern states through its insurance subsidiaries, Atlantic States Insurance Company and Southern Insurance Company of Virginia. (Tables Follow)
Third Quarter Ended ------------------------------------------------------------- September 30, September 30, 2003 2002 ----------------------------- ------------------------------- Net premiums earned $49,719,584 $46,792,748 Investment income, net of investment expenses 3,326,603 3,623,262 Realized investment gains (losses) 408,873 (201,190) Total revenues 54,285,753 51,085,417 Net income $4,001,385 $3,015,676 Net income per common share Basic $ 0.43 $ 0.33 Diluted $ 0.40 $ 0.33 Nine Months Ended ------------------------------------------------------------- September 30, September 30, 2003 2002 ----------------------------- ------------------------------- Net premiums earned $146,082,154 $138,355,520 Investment income, net of investment expenses 10,006,831 11,063,848 Realized investment gains (losses) 494,763 (13,931) Total revenues 159,297,990 151,856,266 Net income $ 13,114,770 $ 8,375,226 Net income per common share Basic $ 1.42 $ 0.92 Diluted $ 1.37 $ 0.91
Consolidated Statements of Income (unaudited; in thousands, except share data)
Third Quarter Ended ------------------------------------------------------------- September 30, September 30, 2003 2002 ------------------------------ ------------------------------ Net premiums earned $ 49,720 $ 46,793 Investment income, net of investment expenses 3,326 3,623 Realized investment gains (losses) 409 (201) Lease income 215 201 Service charge income 616 670 --- --- Total revenues 54,286 51,086 ------ ------ Losses and loss expenses 32,760 32,424 Amortization of deferred policy acquisition costs 7,874 7,365 Other underwriting expenses 7,239 6,512 Other expenses 310 159 Policyholder dividends 242 280 Interest 358 249 --- --- Total expenses 48,783 46,989 ------ ------ Income before income taxes 5,503 4,097 Income tax expense 1,502 1,081 ----- ----- Net income $ 4,001 $ 3,016 ========= ======= Net income per common share Basic $ 0.43 $ 0.33 -------- ------- Diluted $ 0.40 $ 0.33 ------- ------- Supplementary Financial Analysts' Data Weighted average number of shares outstanding Basic 9,315,339 9,098,935 --------- --------- Diluted 9,905,492 9,197,933 --------- --------- Net written premiums $ 53,009 $ 48,831 -------- -------- Book value per common share $ 15.69 $ 14.37 -------- --------
Nine Months Ended ------------------------------------------------------------- September 30, September 30, 2003 2002 ----------------------------- ------------------------------- Net premiums earned $146,082 $138,355 Investment income, net of investment expenses 10,007 11,064 Realized investment gains (losses) 495 (14) Lease income 629 590 Service charge income 1,879 1,861 Other Income 206 - ------- ------- 159,298 151,856 ------- ------- Total revenues Losses and loss expenses 94,268 95,857 Amortization of deferred policy acquisition costs 22,861 22,095 Other underwriting expenses 21,532 19,813 Other expenses 985 872 Policyholder dividends 711 852 Interest 880 870 ------- -------- Total expenses 141,237 140,359 ------- ------- Income before income taxes 18,061 11,497 Income tax expense 4,946 3,122 ------ ----- Net income $ 13,115 $ 8,375 ======== ======= Net income per common share Basic $ 1.42 $ 0.92 ------- ------- Diluted $ 1.37 $ 0.91 ------- -------
Supplementary Financial Analysts' Data
Net written premiums $ 156,533 $ 148,798 --------- --------- Weighted average number of shares outstanding Basic 9,265,308 9,063,109 --------- --------- Diluted 9,590,809 9,166,314 --------- --------- Consolidated Balance Sheet (unaudited; in thousands, except share data) September 30, 2003 December 31, 2002 ------------------ ----------------- ASSETS Investments: Fixed Maturities: Held to maturity, at amortized cost $ 113,746 $ 86,702 Available for sale, at fair value 178,898 194,732 Equity securities, at fair value 24,956 21,836 Short-term investments, at cost, which approximates fair value 40,720 29,029 ------ ------ Total investments 358,320 332,299 Cash 4,953 1,125 Premiums in course of collection 28,618 26,287 Reinsurance receivable 82,776 83,207 Accrued investment income 3,553 3,815 Deferred policy acquisition costs 16,223 14,567 Prepaid reinsurance premiums 31,930 27,854 Property and equipment, net 4,194 4,430 Deferred income taxes 7,102 6,956 Other assets 3,929 678 ----- --- Total assets $ 541,598 $ 501,218 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Unpaid losses and loss Adjustment expenses $ 216,653 $ 210,692 Unearned premiums 135,530 121,002 Accounts payable and accrued 6,668 6,584 expenses Debt 27,800 19,800 Due to affiliates 4,441 4,080 Other liabilities 4,107 5,877 ----- ----- Total liabilities 395,199 368,035
Stockholders' Equity Preferred stock $1.00 par value; authorized 2,000,000 shares, none issued Class A common stock, $.01 par value, authorized 30,000,000 shares, issued 6,403,342 and 6,269,093 shares and 64 63 outstanding 6,321,818 and 6,187,569 shares Class B common stock, $.01 par value authorized 10,000,000 shares, issued 3,051,811 and 31 30 3,024,742 shares and outstanding 3,011,049 and 2,983,980 shares Additional paid-in capital 63,288 60,652 Accumulated other comprehensive 5,328 4,912 Income Retained earnings 78,580 68,418 Treasury stock, at cost (892) (892) ----- ----- Total stockholders' equity 146,399 133,183 ------- ------- Total liabilities and stockholders' equity $ 541,598 $ 501,218 ========= =========