Donegal sees 6% increase in NPW, Q1 net income sits at $6m

US primary holding company Donegal Group has reported a 6.0% increase in net premiums written (NPW) for the first quarter of 2024, reaching $251.4 million, compared to $237.3 million from the prior year quarter.

The firm explained that the $14.1 million increase in NPW included Commercial Lines, which saw a $0.9 million decrease that the company attributes primarily to planned attrition in regions that they are exiting or executing ongoing profit improvement initiatives as part of their state-specific strategies.

As well as this, the increase in NPW also included Personal Lines, which saw a $15 million increase that Donegal Group attributes primarily to a continuation of renewal premium rate increases and strong policy retention.

Moreover, Donegal’s combined ratio for the quarter was 102.4%, compared to last year’s 101.2%. Loss ratio sat at 66.3%, while expense ratio was 35.7%.

In addition, weather-related losses were $10.8 million, or 4.7 percentage points of the loss ratio, for Q1 compared to $14.1 million, or 6.5 percentage points of the loss ratio, from the prior year.

Donegal noted that the weather-related loss ratio for the first quarter of 2024 was in line with their previous five-year first-quarter average.

Large fire losses, which the firm defines as individual fire losses in excess of $50,000, for the first quarter of 2024 were $15.0 million, or 6.6 percentage points of the loss ratio.

Further, Donegal also posted a net income of $6 million for the quarter, compared to $5.2 million from the prior year.

Kevin G. Burke, President and Chief Executive Officer, commented: “We entered 2024 with a renewed emphasis on executing on clearly defined strategies that include targeted new business growth, multiple initiatives to enhance our underwriting performance and further modernization of our operations for greater effectiveness and efficiency. Additionally, we committed to a multi-year expense management initiative that is strategically designed to mitigate the 2024 peak impact of allocated expenses associated with the technology advancements Donegal Mutual Insurance Company has implemented in recent years.”

Adding: “Our net premium growth in the first quarter of 2024 was predominantly fueled by ongoing renewal premium increases that were supported by commercial lines new business acquisitions that fit within the framework of our refined underwriting criteria. While the increase in commercial new business writings is notable, it was largely offset by planned attrition from regions earmarked for exit or profit enhancement pursuant to our state-specific strategies.”

He continued, “In the first quarter of 2024, our underwriting profitability reflected the impact of average weather-related losses, higher severity of large fire losses than we experienced in recent quarterly periods and atypical workers’ compensation reserve development related to prior-year losses. We expect that the underwriting enhancements actively underway, in conjunction with an accelerating earned premium impact of rate increases we implemented over the past year will result in further improvement in our underwriting results as the year progresses. We remain steadfast in our commitments to achieve sustained excellent financial performance and to capitalize on opportunities for profitable growth as the means of creating long-term shareholder value.”

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