Friday, insurance holding company Donegal Group Inc. (DGICA) reported a decrease in net income, impacted mainly by weather-related losses.
Donald Nikolaus, president and chief executive officer, said, "We are disappointed to report a level of earnings that did not meet our expectations for the second quarter of 2009, but we recognize that our results are not immune from the effects of weather and challenging economic conditions."
For the quarter, net income declined to $4.39 million or $0.18 per share of class A common stock ($0.16 per share of class B common stock), from $6.32 million or $0.25 per class A share ($0.23 per class B share) in the prior-year period.
On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items. Revenues for the period were $94.79 million compared to $93.97 million in the comparable period a year ago. Analysts expected the company to post revenues of $95.01 million for the quarter.
Net premiums earned for the quarter edged down to $87.54 million from $87.33 million in the year-ago quarter. Net premiums written for the second quarter of 2009 were $93.58 million, down 1% from $94.49 million last year.
For the quarter, net investment income was $5.27 million, down from $5.79 million a year earlier. Net realized investment gains for the quarter were $445 thousand compared with a loss of $673 thousand last year.
The company noted that its combined ratio was 101.8%, reflecting the impact weather-related losses, prior accident year reserve development of about $3.2 million and the impact of two large workers' compensation claims that totaled $1.2 million after reinsurance. In the comparable period last year, combined ratio was 97.6%, which was also impacted by severe weather events.
The company also noted that pre-tax weather-related losses impacted the second quarter results by about $8 million after reinsurance.
For the six-month period, net income plunged to $4.56 million or $0.18 per share of Class A common stock (0.16 per share of Class B common stock), from $12.88 million or $0.52 per share of Class A common stock ($0.47 per share of Class B common stock) in the same period last year.
Year-to-date, total revenues were $190.28 million, up from $183.76 million last year.
Further, the company declared quarterly dividend of $0.11 per share of Class A common stock and $0.10 per share of Class B common stock payable on August 17 to stockholders of record as of the close of business on August 3, 2009.
DGICA is currently trading at $16.20, down 1.04%, on the Nasdaq.
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