Friday, Donegal Group Inc. (DGICA), an insurance holding company, reported a sharp decline in first quarter earnings, which fell far short of analysts' estimate, hurt by higher losses and loss expenses related to weather conditions and fire. The company also announced an increase in quarterly dividend.
Donegal's net income for the first quarter declined to $0.16 million or $0.01 per share of Class A common stock from $6.56 million or $0.26 per share of Class A common stock for the prior-year quarter. Three analysts polled by Thomson Reuters expected the company to earn $0.08 per share. Analysts' estimates typically exclude special items.
Earnings for the recent quarter were impacted by higher losses and loss expenses from claim activity attributable to severe winter weather in the company's operating areas and an unusually large number of fire losses. Net losses and loss expenses for the quarter grew to $65.95 million from $53.79 million in the comparable period a year ago.
Quarterly revenues rose 6.3% to $95.49 million from $89.79 million in the prior-year period, but came in below the Street estimate of $98.15 million.
Net premiums earned was up at $88.35 million, a 7.7% increase over $82.0 million a year ago.
Net investment income slipped to $5.36 million from $5.69 million in the comparable period last year.
Additionally, the company said it expects 2009 reinsurance costs will be comparable to those incurred for 2008.
The company announced a regular quarterly cash dividend payable May 15, 2009 of $0.1125 per share of Class A common stock and $0.10 per share of Class B common stock to stockholders of record as of the close of business on May 1, 2009. These dividends represent percentage increases of 7.1% for the company's class A common stock and 8.1% for the company's class B common stock.
DGICA is trading up $0.11 or 0.79% at $14.11 on a volume of about six thousand shares.
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