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Donegal posts robust Q2 results as net income hits $22.7mn

28th July 2020 - Author: Charlie Wood

US primary holding company Donegal Group posted a net income of $22.7 million for the second quarter of 2020, compared to $4.8 million in the prior year quarter.

donegal-group-logoKevin G. Burke, President and Chief Executive Officer of Donegal Group, attributed this improvement to a continuation of the solid underwriting performance reported in the previous quarter.

Net premiums earned decreased 2.3% to $184.4 million compared to Q2 2019.

Net premiums written stands at $193.7 million, down 2.1%.

Combined ratio fell to 92.3%, compared to 102.0% in the prior year quarter.

RMS

The company’s commercial lines segment continued to operate at a profitable level, with a statutory combined ratio of 93.5% for the second quarter of 2020.

“Our personal lines segment generated a statutory combined ratio of 88.1% for the second quarter of 2020, which was a significant improvement from 108.5% for the prior-year quarter,” said Burke.

“Personal automobile claim counts trended higher as driving activity returned to higher levels during the month of June, and we do not expect the favorable automobile loss experience to carry into the third quarter.”

Jeffrey D. Miller, Executive Vice President and Chief Financial Officer of Donegal Group, added, “Net premiums written continued to be characterized by an increase in commercial lines activity and a decline in personal lines activity.

“Overall net premiums written declined slightly as an 8.7% reduction in personal lines net premiums written offset 4.0% growth in commercial lines net premiums written.

“The loss ratio was 57.1% for the second quarter of 2020, compared to 69.7% for the prior-year quarter, with the decrease largely due to lower frequency of automobile claims.”

Miller added that the expense ratio for the second quarter of 2020 increased to 34.3% from 31.3%, due primarily to our establishment during the second quarter of 2020 of $1.6 million in reserves for potential credit losses related to uncollectible premiums due to the effect of COVID-19 economic disruption.

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