US primary holding company Donegal Group has announced a net income of $3.7 million for the first quarter of 2020, compared to $23.0 million in the prior year quarter.
Net investment losses stand at $10.7 million for the quarter, compared to net investment gains of $18.1 million for the prior year quarter, that included $12.7 million from the sale of Donegal Financial Services Corporation.
Net premiums earned were $187.3 million for Q1, a 0.4% decrease compared to the first quarter of 2019.
Donegal also announced net premiums written of $198.2 million, a decrease of 0.8% compared to the first quarter of 2019.
Combined ratio was 97.0%, compared to 99.3% for the prior-year quarter.
Net development of reserves for losses incurred in prior accident years of $4.3 million decreased the loss ratio for the first quarter of 2020 by 2.3 percentage points, compared to $4.0 million that decreased the loss ratio for the first quarter of 2019 by 2.1 percentage points.
The expense ratio was 33.4% for the first quarter of 2020, compared to 32.6% for the first quarter of 2019.
Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc., noted, “Net income for the first quarter of 2020 benefitted from solid underwriting performance, with the 97.0% combined ratio for the first quarter of 2020 comparing favorably to the 99.3% combined ratio for the prior-year quarter.
“We continued to gain traction on underwriting initiatives we have implemented to improve profitability. Our commercial lines segment continued to perform well in spite of ongoing commercial automobile profitability challenges, and we are pleased with the continuing growth we achieved in that segment.
“The favorable underwriting performance was partially offset by net investment losses, primarily related to the decline in the market value of equity securities we held at March 31, 2020. Setting aside the impact of equity market volatility primarily related to COVID-19, we were pleased with our operating performance for the first quarter of 2020.”
Jeffrey D. Miller, Executive Vice President and Chief Financial Officer of Donegal Group Inc., added, “Net premiums written declined slightly as we continued to shift our business mix toward a greater proportion of commercial lines where we have historically achieved higher levels of profitability.
“The loss ratio was 62.6% for the first quarter of 2020, compared to 65.5% for the prior-year quarter, with the decrease largely due to a combination of improving loss cost trends in our core lines of business and relatively mild winter weather conditions throughout our operating regions.
“The expense ratio for the first quarter of 2020 increased modestly, in part due to our continuing implementation of new technology initiatives that will ultimately enhance our operational capabilities and efficiency.
“We recorded a $1.6 million income tax benefit during the first quarter of 2020 related to the anticipated carryback of 2018 net operating losses to past tax years, as allowed under the Coronavirus Aid, Relief and Economic Security Act that was enacted in March 2020.”