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Donegal Group Inc. Announces Fourth Quarter And Full Year 2010 Results

Stocks in this article: DGICA DGICB

MARIETTA, Pa., Feb. 25, 2011 (GLOBE NEWSWIRE) -- Donegal Group Inc. (Nasdaq:DGICA) (Nasdaq:DGICB) today reported that its net income for the full year 2010 was $11.5 million, or $.46 per share of Class A common stock, compared to $18.8 million, or $.76 per share of Class A common stock for the full year 2009. Revenues for the full year 2010 were $408.8 million, an increase of 5.8% over the full year 2009, with net premiums earned of $378.0 million, a 6.5% increase over the year-earlier period.

Net income for the fourth quarter ended December 31, 2010 was $4.6 million, or $.18 per share of Class A common stock, compared to $7.5 million, or $.30 per share of Class A common stock, for the fourth quarter of 2009. The Company's net income for the fourth quarter of 2009 included $3.6 million of pre-tax realized investment gains, which contributed $.10 to the Company's net income per share of Class A common stock on an after-tax basis for the year-earlier period. Revenues for the fourth quarter of 2010 were $105.7 million, an increase of 4.1% over the fourth quarter of 2009, with net premiums earned of $98.7 million, an 8.3% increase over the year-earlier period.

Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group Inc., noted, "We are pleased with the growth in our net premiums earned for the full year 2010 compared to 2009. Donegal Group continues to benefit from growth in markets we entered via acquisition over the past several years. We completed our acquisition of Michigan Insurance Company effective December 1, 2010, and we look forward to the premium growth that company will bring to us over time."

Michigan Insurance Company writes various lines of property and casualty insurance exclusively in Michigan, a state in which the Donegal Insurance Group did not conduct business previously. Michigan Insurance had direct written premiums of $105.4 million and net written premiums of $27.1 million for the year ended December 31, 2010.  Effective December 1, 2010, Michigan Insurance Company terminated its 75% quota share reinsurance agreement with its former majority owner and entered into a 50% quota share reinsurance agreement with external reinsurers and a 25% quota share reinsurance agreement with Donegal Mutual Insurance Company.  Donegal Mutual will place the business it assumes from Michigan Insurance Company into the pooling agreement with Atlantic States Insurance Company. As a result, approximately 45% of Michigan Insurance Company's underwriting activity will be included in Donegal Group's consolidated results for 2011.  The Company included the results of operations of Michigan Insurance Company in its consolidated results of operations as of December 1, 2010. Michigan Insurance Company's results of operations for the month of December 2010 did not materially impact the Company's consolidated results of operations for 2010. The Company's consolidated balance sheet as of December 31, 2010 included Michigan Insurance Company's assets and liabilities, which the Company acquired and adjusted to estimated fair value as of December 1, 2010.

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