Increased weather-related and large fire losses during the first six months of 2017, combined with reserving activity, is expected to push Donegal Group Inc. to report a net loss during the second-quarter of 2017.
A statement from the company claims that weather-related losses added roughly $20.1 million to its losses for Q2 2017, which includes a provision of around $3.6 million for additional weather-related losses experienced but not yet reported (as at June 30th, 2017), and also $2.7 million from events that took place in the opening three months of the year.
The increase in weather-related losses is almost double the firm’s previous five-year average for Q2 weather-related losses of $10.5 million, representing an increase of just under 92%. The company says the claims are a result of numerous wind and hail events that impacted its operating regions throughout the second-quarter.
The insurance holding company states that none of the loss accumulations from the events exceeded its $5 million third-party catastrophe reinsurance retention.
Adding further pressure to the firm’s Q2 operating performance, Donegal experienced increased large fire losses of $7.6 million in the period, which is up from the $3.7 million reported a year earlier.
“The Company attributes this increase to a higher volume of fire losses that impacted the Company’s homeowners line of business,” said Donegal.
The firm has also reported that it increased its loss and loss expense reserves by around $5.8 million in the period, and which is related to higher-than-expected severity of commercial automobile liability, and commercial multi-peril losses that Donegal experienced in 2015 and 2016.
“As a result of the increased claims and reserving activity, the Company currently expects to report a net loss between $0.07 and $0.09 per diluted share of its Class A common stock for the second quarter of 2017,” said Donegal.