Reinsurance News

Donegal Group reports Q3 $10.4mn net loss

27th October 2022 - Author: Jack Willard

US primary holding company Donegal Group has reported a net loss of $10.4 million in the third quarter of 2022, compared to a net loss of $6.7 million from the same period last year.

donegal-group-logoNet premiums earned for the quarter increased by 5% to $206.1 million, compared to $196.2 million from the prior year quarter.

Additionally, the company also reported a 4.7% increase in net premiums written for Q3 22, at $206.2 million, compared to $197 million from Q3 21.

Moreover, Donegal Group reported a combined ratio of 109.6% for the quarter, compared to 107.7% from last year’s third quarter. The company stated that the increase was largely due to elevated weather-related and fire loss activity.

Donegal Group’s expense ratio for the third quarter was 33.4% compared to 31.5% for the third quarter of 2021. The increase in the expense ratio primarily reflected higher technology costs related to our ongoing systems modernization initiatives.

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“We are strategically managing premium growth in the challenging current economic environment and continue to focus on strategies and tactics that we believe will yield long-term profit improvement,” said Kevin G. Burke, President and Chief Executive Officer of Donegal Group Inc .

“Weather-related loss activity for the third quarter of 2022 was in line with our historical run rate for the third quarter. Large fire losses had a significant adverse impact on our commercial segment quarterly results. While we did not identify any commonality among the locations or causes of the large fire losses, the increased average severity of these losses compared to the prior-year quarter reflects in part ongoing inflationary increases in the costs of labor and materials.

“We and other insurance carriers have experienced higher impact from fire losses in recent years compared to historical norms, and we are increasing our utilization of internal and third-party data to analytically identify underlying or emerging risk characteristics we should be considering in our new business and renewal underwriting decisions.”

Burke, continues: “Overall, we remain encouraged by strong premium retention levels that were bolstered by substantial rate increases we have taken across the majority of our lines of business throughout 2022. In light of ongoing inflation impact on loss trends, we expect to continue implementing premium rate increases in the fourth quarter of 2022 and in 2023. The execution of individual state strategies during 2022 has led to higher-than-average premium growth in well-performing states and reduced exposures in underperforming states.

“We are refining further our state strategies for 2023 to focus on specific geographies and classes of business we have identified as most promising for profitable future growth. As earned premiums reflect higher premium rates and loss costs stabilize in future periods, we believe the ongoing execution of our strategic plan will lead to improved results. We are also making significant strides in our ongoing modernization initiatives, which we believe are positioning us well to excel in the years ahead.”

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