DGICA Shareholder/Stockholder Letter Transcript:
Intentional
Strategies.
Steady
Progress.
20
23
Annual Report
Relentless
Pursuit.
Intentional
Strategies.
Our strategic plan emphasizes several
primary strategies, including achieving
sustained excellent nancial performance,
strategically modernizing our operations
to transform our business, capitalizing
on opportunities to grow pro tably and
delivering a superior experience to our
agents and policyholders.
We have developed clear strategic
Steady
Progress.
goals and have many tactical initiatives
underway as we strive to execute on
plans to achieve these strategies.
DONEGAL GROUP INC. is an insurance
Relentless
Pursuit.
holding company that offers property
and casualty insurance through its wholly
owned insurance subsidiaries. Our Class
A common stock and Class B common
stock trade on the NASDAQ Global Select
Market under the symbols DGICA and
DGICB, respectively.
Our insurance subsidiaries and Donegal
Mutual Insurance Company have inter-
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20
23
related operations and conduct business
together as the Donegal Insurance Group.
The Donegal Insurance Group, which is
rated A (Excellent) by A.M. Best Company,
offers property and casualty insurance
products through our network of independent insurance agencies in 23 states.
Financial Highlights
YEAR ENDED DECEMBER 31,
2023
2022
2021
2020
2019
$ 882,071,386
$ 822,489,450
$ 776,015,201
$ 742,040,339
$ 756,078,400
40,853,215
34,016,112
31,125,631
29,504,466
29,514,955
INCOME STATEMENT DATA
Premiums earned
Investment income, net
Investment gains (losses)
3,172,807
(10,184,797)
6,477,286
2,777,919
21,984,617
927,337,984
848,220,546
816,465,791
777,819,910
812,451,471
5,063,476
(3,638,099)
30,338,508
63,272,503
57,081,030
637,972
(1,678,694)
5,084,334
10,457,251
9,929,286
4,425,504
(1,959,405)
25,254,174
52,815,252
47,151,744
Basic earnings (loss) per share - Class A
0.14
(0.06)
0.83
1.84
1.68
Diluted earnings (loss) per share - Class A
0.14
(0.06)
0.83
1.83
1.67
Cash dividends per share - Class A
0.68
0.66
0.64
0.60
0.58
Basic earnings (loss) per share - Class B
0.11
(0.07)
0.74
1.65
1.51
Diluted earnings (loss) per share - Class B
0.11
(0.07)
0.74
1.65
1.51
Cash dividends per share - Class B
0.61
0.59
0.57
0.53
0.51
Total revenues
Income (loss) before income tax expense (bene t)
Income tax expense (bene t)
Net income (loss)
BALANCE SHEET DATA AT YEAR END
Total investments
$ 1,327,053,645 $ 1,304,657,242 $ 1,276,845,897 $ 1,221,201,784 $ 1,110,553,363
Total assets
2,266,293,888
Debt obligations
2,243,349,335
2,255,175,399
2,160,520,324
1,923,161,131
35,000,000
35,000,000
35,000,000
90,000,000
40,000,000
Stockholders equity
479,745,354
483,593,012
531,036,087
517,774,120
451,015,519
Book value per share
14.39
14.79
16.95
17.13
15.67
TOTAL REVENUES
TOTAL ASSETS
STOCKHOLDERS EQUITY
$ 950
$ 2.50
$ 535
$ 850
$ 2.25
$ 485
$ 750
$ 2.00
$ 435
$ 650
$ 1.75
$ 385
[ in millions ]
$ 550
23
22
21
[ in billions ]
20
19
$ 1.50
23
22
21
[ in millions ]
20
19
$ 335
23
22
21
20
19
1
Intentional
Strategies.
We expect numerous pro t improvement initia-
tives we implemented in the past several years
will converge to positively impact underwriting
results in 2024.
We further re ned our state-level strategies and
action plans to identify pro table growth opportunities and drive highly coordinated marketing
and underwriting activities in each region.
We ceased writing and began non-renewing all
commercial policies in Georgia and Alabama due
to sustained pro t challenges in those states.
Steady
Progress.
We continued to diversify the geographic foot-
print of our insured property risks to improve our
mix of business and reduce the overall impact of
losses from severe weather events.
We implemented new analytical tools to enhance
underwriting decision-making when evaluating
individual risks and classes of business.
We launched new and modernized commercial
lines products and capabilities to attract new
small business accounts that we will prioritize
for pro table future growth.
Relentless
Pursuit.
We implemented signi cant renewal premium
rate increases across both the commercial lines
and personal lines segments to offset elevated
loss cost trends and achieve target returns.
We realigned our regional structure and solidi ed
leadership in our regional operations to achieve
further ef ciencies, increased effectiveness and
greater economies of scale in our operations.
We launched targeted expense reduction and
expense management efforts to achieve meaningful cost reductions in 2024 and beyond.
We completed the planning phase for develop-
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ment of our nal major commercial lines systems
release that will include a new commercial package policy and modernize the other commercial
products remaining on our legacy systems.
We began systematic conversion of legacy
personal lines renewal policies to our new technology platform and completed planning for the
remaining conversion effort that will allow us to
sunset our legacy systems when completed.
To Our Stockholders
YEAR IN REVIEW
While we made steady progress toward the achievement
of our intentional strategies during 2023, our nancial
results fell short of our expectations. The results we
achieved during the year were not re ective of the many
initiatives our dedicated teams executed in an effort to
drive sustained excellent nancial performance.
While we saw measurable improvement in our commercial lines results for 2023, our personal lines results
demonstrated the need for additional rate increases to
offset higher average impacts of severe weather and
increased severity of liability claims.
Although economic in ation trends appear to be
moderating in some areas, loss costs remain elevated
due to labor shortages and higher prices to repair and
replace damaged automobiles and properties. We have
made signi cant strides in responding to these challenges,
and we continue to monitor social in ation impacts on
liability loss settlements, including higher jury awards, the
growing use of litigation funding and a general increase
in attorney involvement and litigation when losses occur.
In light of these in ationary trends, we will continue to
re ne and execute pro t improvement actions to
enhance our nancial performance.
3
3/15/2024 Letter Continued (Full PDF)